australianethical
ANNUAL REPORT TO
SHAREHOLDERS
Year ended 30 June 2008
1800 021 227 • www.austethical.com.au
australianethical
investment + superannuation
R
Financial summary to 30 June 2008
as at
30 June 2008
30 June 2007
30 June 2006
30 June 2005
Current assets ($’000)
Non-current assets ($’000)
Current liabilities ($’000)
Non-current liabilities ($’000)
Net assets ($’000)
6 362
11 152
2 658
113
8 381
5 174
4 879
2 293
76
7 684
5 176
3 103
1 928
77
6 274
5 833
701
1 456
31
5 047
2000
1800
1600
1400
1200
1000
800
600
400
200
0
0
0
0
1
$
200
180
160
140
120
100
80
60
40
20
0
s
t
n
e
c
n
o
i
l
l
i
m
$
650
600
550
500
450
400
350
300
250
200
150
100
50
0
Profit after tax (NPAT)
1819.2
1651.8
1362.6
784.4
459.8
2004
2005
2006
2007
2008
Year ending 30 June
Basic earnings per share
194.8
170.3
150.3
89.6
52.9
2004
2005
2006
2007
2008
Year ending 30 June
Funds under management
(ex distribution)
552
562
417
311
267
2004
2005
2006
2007
2008
As at 30 June
n
o
i
l
l
i
m
$
%
13
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
30
27
24
21
18
15
12
9
6
3
0
e
r
a
h
s
r
e
p
s
t
n
e
c
200
180
160
140
120
100
80
60
40
20
0
Revenue
14.06
12.47
9.66
7.42
5.90
2004
2005
2006
2007
2008
Year ending 30 June
Return on equity
26.1
24.1
20.6
16.4
10.4
2004
2005
2006
2007
2008
Year ending 30 June
Dividends paid
192
165
85
72
52
2004
2005
2006
2007
2008
Year ending 30 June
2005 figures in the above tables and graphs have been adjusted where necessary as for first time adoption of Australian equivalents to International
Financial Reporting Standards (AIFRS).
AUSTRALIAN ETHICAL INVESTMENT LTD
Contents
Chair’s report
Chief executive officer’s report
Sustainability report
Corporate governance statement 2008
Directors’ report
Financial statements
Shareholder information
Corporate directory
Corporate vision and mission
4
5
7
10
14
27
58
59
59
Charter
The Company will order its affairs so as to
provide for and to support:
the development of workers’ participation in the ownership and
control of their work organisations and places;
a.
b.
The Company will also order its affairs so
as to avoid activity which is considered to
unnecessarily:
i.
pollute land, air or waters;
the production of high quality and properly presented products
and services;
ii.
destroy or waste non-recurring resources;
c.
the development of locally based ventures;
d.
the development of appropriate technological systems;
iii.
extract, create, produce, manufacture, or market materials,
products, goods or services which have a harmful effect on
humans, non-human animals or the environment;
e.
the amelioration of wasteful or polluting practices;
iv.
market, promote or advertise, products or services in a
misleading or deceitful manner;
f.
the development of sustainable land use and food production;
g.
the preservation of endangered eco-systems;
h.
activities which contribute to human happiness, dignity and
education;
v.
create markets by the promotion or advertising of unwanted
products or services;
vi.
acquire land or commodities primarily for the purpose of
speculative gain;
the dignity and well being of non-human animals;
vii.
create, encourage or perpetuate militarism or engage in the
manufacture of armaments;
the efficient use of human waste;
viii.
entice people into financial over-commitment;
i.
j.
k.
the alleviation of poverty in all its forms;
l.
the development and preservation of appropriate human
buildings and landscapes.
ix.
exploit people through the payment of low wages or the
provision of poor working conditions;
x.
discriminate by way of race, religion or sex in employment,
marketing, or advertising practices;
AUSTRALIAN ETHICAL INVESTMENT LTD
Chair’s report
A sound year during troubled times
The board is pleased to report that Australian Ethical
Investment Ltd has had another sound year in terms of
profit and return on equity, with a dividend declaration of
$1.65 per share and a return on equity of 20.6%. While both
these figures are somewhat lower than our 2007 record
returns, they are very good in light of the market turbulence
experienced over the past six months. Our balance sheet
remains strong with the ability to finance our strategic
initiatives discussed below.
With market volatility at record levels, it is worthwhile to
review the fundamental growth prospects of our industry.
The board is confident that our growth prospects remain
strong, despite the market downturn. Our trusts have held
up well relative to the market through the downturn. Our
Equity Trust and Large Companies Share Trust in particular
have outperformed their respective benchmarks strongly
during the last few rocky months.
While the overall ethical market in Australia is still quite small
- about $17 billion - it is growing very fast. Investments that
systematically take environmental, social and governance
issues into account outgrew mainstream investing by more
than double in the year to June 2007. They grew by 43%,
from $12 billion to $17 billion, compared to 20% growth in
the managed investments industry overall.
Within this high growth stream, Australian Ethical has a
brand which is true to form, strong, and the envy of many
others in the area. However, our brand recognition lags
behind where it could be, partly because we have not had
the capacity for large scale marketing expenditure and
partly because we have focused on deep green niche target
markets. We are currently in the middle of a two year project
to address this, including:
•
•
the development of marketing messages that are
tangible and more accessible than the principles of the
Charter
close work with asset consultants and rating agencies
to improve their understanding of our products.
We are confident that this will bear fruit in the next two
years.
Our retail superannuation business has steadily grown
as a percentage of our total business over the last five
years, and now represents well over 50% of our funds
under management. This business is much less sensitive
to market fluctuations than our managed investments
AUSTRALIAN ETHICAL INVESTMENT LTD
4
business and we are confident that this part of our business
will continue to grow strongly. The board is mindful of recent
statements by the government regarding the high cost of
retail superannuation funds and has a strategy in place to
minimise the impact of any government intervention in this
area.
We are pleased to advise shareholders that our search for
high quality non-executive directors has borne fruit this year,
with the appointment of Andre Morony and Les Coleman
to the board. Non-executive directors, Justine Hickey
and Andre Morony bring to our board wide external funds
management experience, while Les Coleman has deep risk
management expertise.
Caroline Le Couteur has indicated that she will not be
standing for re-election to the board this year meaning that
the board will shortly comprise a majority of non-executive
directors. I would personally like to thank Caroline for her
significant contribution to the board of Australian Ethical over
the last 17 years and for her commitment over that time to
our Charter.
We continue our 2007 strategy of broadening our marketing
reach beyond our traditional support base. A 2008 strategy
meeting also identified the need for a review of our internal
IT systems, and this is now underway to ensure our systems
are robust to deal with future growth.
I have enjoyed my first year as chair and can personally
attest to the qualities of Anne O’Donnell as CEO and
managing director of Australian Ethical. While many boards
are changing CEO during these troubled times, I have
full confidence in Anne to deliver shareholder returns in a
sustainable way. Anne has recruited a strong team around
her, including Martin Halloran, our new chief investment
officer and Paul Harding-Davis, our new head of distribution.
I believe this team will take the best of Australian Ethical,
which is our people, our ethical investment processes and
our Charter, and use them in new and exciting ways which
will grow our company into the future.
Naomi Edwards
Chair
0
0
0
0
6
$
0
0
0
0
5
$
5
4
9
7
$
0
0
0
5
$
Grants to community
organisations
Bluegreen Films - ‘Sustainability & Co’ a
three part documentary series on corporate
sustainability and governance will be produced
by Bluegreen Films.
MSAP - University of NSW Medical Students’ Aid
Project will stock a community store with school
and household essentials, purchase a motorised
canoe, fuel and one year’s salary for a canoe
pilot to transport the products to remote riverside
markets.
Barefoot Economy
Engineers Without Borders - Tonle Sap Lake
Project
Australian Marine Conservation Society
WaterAid Australia
ACT Eden Monaro Cancer Support Group
New Internationalist Publications
Edmund Rice Centre for Justice and Community
Education
Pedal Power ACT
Fair Trade Association of Australia and New Zealand
Animals Asia Foundation (Australia)
Child Wise
Rainforest Rescue
Royal Institute for Deaf and Blind Children
Sustainable Maleny
The Qld. Society for Crippled Children
Asian Women at Work
Bush Heritage Australia
Clean Ocean Foundation
Romero Centre
Trees For Life
Broken Hill & District Hearing Resource Centre
Kuusa Services Centre
The Australian Conservation Foundation
0
0
0
3
$
A full description of all the grant recipients is available on the
website www.austethical.com.au/cg
Chief Executive’s report
The financial year ended 30 June 2008 reflects a year of two
halves. The Australian Ethical Investment group performed
strongly in the first half of the year however the full year result
reflects the volatility and uncertainly that has been experienced
in global financial markets. The Australian Ethical trusts had
no direct exposure to any ‘sub-prime’ investments, however
we have experienced the impact of falling asset prices and
depressed investor sentiment. The company recorded a
consolidated net profit of $1.65 million. This trading result
represents a decrease on the previous financial year’s excellent
result of $1.82m. Whilst it is disappointing to record a decrease
in year on year profit, given the difficult circumstances
experienced in the financial markets I consider this a good
result.
The company achieved strong growth in funds under
management during the first half of the financial year with funds
peaking at $645m. This growth and the revenue generated
cushioned the impact of downward market movements
which occurred in the second half of the financial year. As at
30 June 2008, funds under management totalled $562m (ex
distribution). This compares with funds under management of
$552m (ex distribution) as at 30 June 2007.
The relative flatness in funds under management, combined
with some increased costs and additional expenditure on
business development, resulted in the cost to income ratio
increasing from 76% in 2007 to 80%. This increase is in
contrast with the steadily declining trend experienced in the
past four financial years. Return on equity was also impacted
falling from 26.1% to 20.6%.
The Australian Ethical Trusts performed credibly in a year of
poorly performing financial markets with the returns for three of
our five trusts exceeding their benchmarks. This was a good
result and important as the success and growth of our business
is dependant on the performance of the Australian Ethical
trusts. We remain committed to investing in quality companies
taking into account ethical and financial strength and ensuring
our returns are commensurate with the risk profile of an
individual trust.
The Australian Ethical Retail Superannuation Fund has
continued to experience steady inflow of funds in line with
expectations. On 1 April 2008 we transited the administration
of our superannuation fund to a new service provider. This
process has not been without its difficulties and we have
incurred one-off costs as part of this process. Despite these
transitional problems it is apparent the move will result in a
more robust administration of the superannuation fund. In the
past the fee structure of the administrator was linked to funds
5
AUSTRALIAN ETHICAL INVESTMENT LTD
loyal customer base. Whilst we are mindful of the need to
monitor our costs closely, we do not intend to undertake any
radical changes to our business model at this time.
As previously flagged we are keen to attract increased
non-retail investment. We continue to implement strategies
which will allow us to tap into the growing commercial interest in
sustainable investment. We also believe the rise in shareholder
activism offers some exciting opportunities which complement
our expertise and have the potential to expand our customer
base. We are currently exploring the possibility of bringing to
market a product which will tap into this trend.
All the staff at Australian Ethical have been working hard in what
has been a very difficult financial market. I would like to thank
them for their diligence and commitment. I would also like to
thank you, our shareholders, for your ongoing support and I
look forward to seeing you at the annual general meeting on 27
November.
Anne O’Donnell
Chief executive officer and managing director
Chief Executive’s report
under management. The new structure is not linked to funds
under management and we estimate this new arrangement will
result in savings greater than half a million dollars in the current
financial year.
When considering the level of dividend the directors are mindful
of the significant franking credits held by the company and the
need to ensure we have sufficient capital to provide prudent
reinvestment into the business. The directors have decided that
shareholders will be paid a final dividend (fully franked) of $1.20
per ordinary share. Added to the interim dividend of 0.45 cents
per share, the total dividend for the 2007–08 financial year will
be $1.65 per share.
The Australian Ethical Retail Superannuation Fund was awarded
the inaugural Infinity Award at the Conference of Major Super
Funds (CMSF) in March 2008. The award signifies the Fund as
Australia’s most environmentally and socially conscious fund
and a leader in sustainable investment and sustainable business
practices.
Trevor Pearcey House continues to meet high standards
of energy efficiency and to provide our employees with a
comfortable and productive working environment. Interest in the
building continues to be strong and this has been very useful in
raising the profile of Australian Ethical generally. In July this year,
our refurbishment won the Banksia Environmental Foundation
award for the Built Environment. The Prime Minister is the
Chief Patron of the awards and the win comes on the 20 year
anniversary of the awards.
Outlook
A significant portion of investment in the Australian Ethical trusts
comes from retail clients. This money has traditionally been
‘sticky’ in times of market downturn and historically the trusts
have not experienced significant outflows. However, Australian
Ethical is not immune to market volatility and negative investor
sentiment. It is highly likely we will see the impact of these
factors in our funds under management and revenue numbers
during the 2008−09 financial year. A decline in revenue has the
potential to impact company profitability.
Offsetting potential declines in revenue are savings which
will flow from changes we have made to our custodian and
superannuation administration providers. The company will
continue to focus on building and servicing its clients and
streamlining its processes, ensuring scalability and efficiency of
operations. During challenging financial periods it is tempting to
take the easy option and cut costs dramatically and potentially
endanger future growth opportunities. Australian Ethical is
fortunate in that we have a unique product offering and a very
AUSTRALIAN ETHICAL INVESTMENT LTD
6
Sustainability Report
Australian Ethical remains committed to conducting our own operations
in accordance with the Australian Ethical Charter. Below are some of this
year’s sustainability highlights. Further information on Australian Ethical’s
social, environmental and economic performance will be provided in the
company’s 2008 sustainability report.
Awards
Australian Ethical won a number of sustainability awards this year.
Keep Australia Beautiful 2007 ACT Sustainable Cities Awards - August 2007
Australian Ethical Investment was awarded ‘Overall Winner’ in the Keep Australia
Beautiful 2007 ACT Sustainable Cities Awards. The award recognises the
sustainable refurbishment of our Trevor Pearcey House premises.
Resource Recovery Award - October 2007
Australian Ethical Investment won the Resource Recovery Award as part of the
national Australian Sustainable Cities Awards.
Six-star Green Star Certified Rating by the Green Building Council of Australia
- October 2007
Trevor Pearcey House was awarded the ‘world leadership’ rating of 6 stars by the
Green Building Council of Australia – the third building in Australia to receive such
a rating. The Green Star rating system, an initiative of the Green Building Council
of Australia, evaluates the environmental design and performance of Australian
buildings based on a number of criteria, including energy and water efficiency,
quality of indoor environments and resource conservation.
First runner up for Best SME Report at the CR Reporting Awards 2007 - March, 2008
Australian Ethical Investment’s 2006 Sustainability Report was awarded first runner up
for Best SME Report at the CR Reporting Awards 2007. Global and independent, the
CR Reporting Awards identify and acknowledge the best in corporate non-financial
reporting. The CR Reporting Awards are managed by CorporateRegister.com - the
world’s largest online directory of corporate responsibility and sustainability reports.
Infinity Award presented to the Australian
Ethical Retail Superannuation Fund for the most
environmentally and socially conscious fund
– March 2008
Banksia Built Environment Award received for Trevor Pearcey House from the
Banksia Environmental Foundation Awards – July 2008
Trevor Pearcey House won the Banksia Environmental Foundation award for the
Built Environment. The Banksia Environmental national Awards, now in its 20th
year, are regarded as the most prestigious environmental awards in Australia.
The Prime minister, Kevin Rudd, is the Chief Patron of the awards. Deputy Prime
Minister, Julia Gillard and the Minister for the Environment, Heritage and the Arts,
Peter Garret attended the awards evening.
AUSTRALIAN ETHICAL INVESTMENT LTD
Trevor Pearcey House – First full financial year of performance data!
The 2007–08 year was Australian Ethical’s first full financial year in our refurbished business premises, Block E of Trevor
Pearcey House. So how did it perform?
Energy use
During 2007–08 (our first full year in Trevor Pearcey House),
Australian Ethical used 346 247 MJ or 380 MJ/sqm of
energy (69 150 kWh of electricity and 97 306 MJ of gas).
On a per square metre basis, this represents a 48 per cent
reduction on our 2006–07 energy use (8 months in the
Downer offices and 4 months in Trevor Pearcey House) and
a 63 per cent reduction on our 2005–06 energy use (our last
full year at the Downer offices).
Electricity use per square metre fell by 29 per cent, from
107 kWh/sqm in 2006–07 to 76 kWh/sqm in 2007–08.
When compared to 2005–06, our last full year in the Downer
offices, the decrease was 39 per cent. Gas use per square
metre fell from 339 MJ/sqm in 2006–07 to 107 MJ/sqm in
2007–08, representing a decrease of 68 per cent. Compared
to 2005–06, the decrease was 82 per cent.
To neutralise the greenhouse gas impact of our energy
use, Australian Ethical purchased 100 per cent accredited
Green Power from ActewAGL and purchased carbon credits
from Climate Friendly https://climatefriendly.com/. If we
had not done this, greenhouse gas emissions from energy
use at Trevor Pearcey House during 2007–08 would have
totalled 79.65 tonnes CO2-e or 0.087 tonnes CO2-e/sqm.
This is still 72 per cent lower than the greenhouse gas
emissions from an average Canberra office building and
highlights the environmental benefits that can be achieved by
refurbishing and fitting out an existing office block according
to green building design principles. The refurbishment was
undertaken using a conventional budget and used accepted,
conventional and low-technology design principals. Further
information on the Trevor Pearcey House refurbishment can
be found on Australian Ethical’s website.
AUSTRALIAN ETHICAL INVESTMENT LTD
Water use
During 2007–08, Australian Ethical used 99 kL or 0.11kL/
sqm of mains water. This is 85 per cent less than the median
Canberra office water consumption benchmark of 0.72
kL/sqm. On a per square metre basis, water use in 2007–08
was 66 per cent lower than in 2006–07 and 73 per cent
lower than in 2005–06.
This is an exceptional result and highlights the benefits of
incorporating water efficient features in the refurbishment of
Trevor Pearcey House. These features include:
•
•
•
•
•
taps upgraded to 4L per minute, showerheads to 5A
fittings - 6L per minute
upgrade of the existing single flush toilets to dual flush
with a 9/4.5L system.
urinals upgraded with a Sani-Sleeve low water use
system reducing water use by 95%
rainwater tanks collecting from the roof and plumbed for
use in flushing the toilets
garden drip irrigation with moisture sensor
Climate change and the associated reduction in rainfall in
south eastern Australia has resulted in significantly lower
runoff into our streams and rivers. This, combined with
the over-allocation and inefficient use of water has placed
immense pressure on our river systems and water supplies.
The installation of water efficient features in all existing and
new commercial buildings would result in significant savings
of our most precious resource.
Energy use for the financial years 2005–06, 2006–07 and 2007–08*
Energy Use
Financial year
Energy MJ**
Energy MJ/sqm
Electricity kWh
Electricity kWh/sqm
Gas MJ
Gas MJ/sqm
GHG emissions (tonnes CO2-e)
GHG emissions (tonnes CO2-e/sqm)
2005–06
669 113
1 037
79 644
124
382 393
593
107.86
0.167
2006–07
505 271
725
76 248
107
230 779
339
93.46
0.133
* 2007–08 unaudited results. ** Sum of total gas and electricity usage, where 1 kWh = 3.6 MJ.
Community Grants Scheme
As prescribed in Australian Ethical’s constitution, 10 per
cent of our profit is donated to charitable, benevolent and
conservation purposes as part of our contribution to a positive
and sustainable society. In 2008 Australian Ethical paid
$200,891 to 25 organisations involved in a wide range of
environmental, charitable and community activities.
The grants consist of two components – two major project
grants and a number of smaller grants. The large major project
grants are typically made to one social and one conservation
project that have a lasting tangible impact.
The major project grants for 2008 were awarded to Bluegreen
Films and Medical Students Aid Project.
Bluegreen Films is ….
Bluegreen Films’ grant will enable production of a half hour television
program focussing on corporate sustainability and governance
issues. The program will examine examples of corporate behaviour
where business as usual may not be the way to go.
Medical Students’ Aid Project (MSAP) is an aid organisation
based at University of New South Wales which aims to
provide targeted assistance to communities and hospitals in
the developing world. MSAP will collaborate with ‘HandUp
Congo’ www.handupcongo.org to support the Congolese
women’s NGO ‘Fondation Lucie Otaenga’ in Lotumbe, a
remote regional health hub in the Democratic Republic of
Congo’s Equatorial Province. MASP’s grant will be used
to stock a community store with school and household
essentials, purchase a motorised canoe, petrol and one year’s
salary for a canoe pilot to allow Fondation Lucie Otaenga
to sell these products at riverside markets and at the same
time help medical workers access isolated communities.
Profits will be used to purchase and distribute nets to combat
malaria, the leading cause of infant mortality in the Democratic
Republic of Congo.
Organisations awarded grants under Australian Ethical’s
community grants program 2008 are listed right.
Further information on our Community Grants scheme,
including application guidelines and selection criteria, can be
found on the company website.
Organisation
Bluegreen Films
Medical Students Aid Project
Barefoot Economy Ltd
Engineers Without Borders - Tonle Sap Lake
Project
Australian Marine Conservation Society
WaterAid Australia
ACT Eden Monaro Cancer Support Group
Inc
New Internationalist Publications Pty Ltd
Edmund Rice Centre for Justice and
Community Education
Pedal Power ACT
Fair Trade Association of Australia and New
Zealand Inc.
Animals Asia Foundation (Australia) Limited
Child Wise
Rainforest Rescue
Royal Institute for Deaf and Blind Children
Sustainable Maleny
The Qld. Society for Crippled Children
(known as) MontroseAccess
Asian Women at Work Inc
Bush Heritage Australia
Clean Ocean Foundation
Romero Centre
Trees For Life Incorporated
Broken Hill & District Hearing Resource
Centre Inc
Kuusa Services Centre
The Australian Conservation Foundation Inc.
2007–08
346,247
380
69 150
76
97 306
107
79.65
0.087
Amount
$60,000
$50,000
$7,900
$7,900
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$3,000
$3,000
$3,000
$3,000
$3,000
$3,000
$3,000
$3,000
$3,000
$3,000
$3,000
$3,000
$3,000
$3,000
$3,000
Total
AUSTRALIAN ETHICAL INVESTMENT LTD
$200,891
Corporate governance statement 2008
This statement discloses the extent to which Australian
Ethical Investment Ltd has followed the best practice
recommendations set down by the ASX Corporate
Governance Council during the reporting period. This
statement has been prepared with reference to the first edition
of the Council’s Principles of Good Corporate Governance and
Best Practice Recommendations. Australian Ethical will report
against the second edition of the Principles in its 2009 annual
report.
The Council’s Principles of Good Corporate Governance and
Best Practice Recommendations provide a framework for
good governance set out in ten core principles and 28 specific
recommendations.
While the ASX Listing Rules only require exception reporting
against the specific recommendations, Australian Ethical has
provided information on its corporate governance practices
against all recommendations.
Lay solid foundations for management and
oversight
Australian Ethical has formalised the functions reserved to the
board and those delegated to management. Responsibility for
any function not delegated to management remains with the
board.
The primary responsibilities of the board include:
•
•
•
•
•
appointment and appraisal of the performance of the
CEO;
the approval of annual financial statements;
the establishment of the goals of the company and
strategic plans to achieve those goals;
the review and adoption of annual budgets for the financial
performance of the company and monitoring the results
on a regular basis; and
risk management, including ensuring that the company
has implemented adequate systems of internal controls,
together with appropriate monitoring of compliance
activities.
Structure the board to add value
Independent directors
The time in office, skills, experience and expertise of each
director in office as at the date of this report is included in the
directors’ report.
The company regards an independent director as a director
who is not a member of management (i.e. a non-executive
director) and who:
1.
2.
is not a substantial shareholder of the company or
an officer of, or otherwise associated directly with, a
substantial shareholder of the company;
has not within the last three years been employed in
an executive capacity by the company or another group
member, or been a director after ceasing to hold any such
employment;
3.
4.
5.
6.
7.
within the last three years has not been a principal or
employee of a material professional adviser or a material
consultant to the company or another
group member, or an employee materially associated with
the service provided;
is not a material supplier or customer of the company
or other group member, or an officer of or otherwise
associated directly or indirectly with a material supplier or
customer;
has no material contractual relationship with the company
or another group member other than as a director of the
company;
has not served on the board for a period which could,
or could reasonably be perceived to, materially interfere
with the director’s ability to act in the best interests of the
company;
is free from any interest and any business or other
relationship which could, or could reasonably be perceived
to, materially interfere with the director’s ability to act in the
best interests of the company.
Unless there are specific qualitative factors relevant to
the relationship, the board is generally of the view that a
quantitative materiality threshold arises at 10% of the relevant
amount – considered from both the company’s perspective
and that of the other party.
The board of Australian Ethical did not comprise a majority
of independent directors during the reporting period. For two
months of the reporting period, the board comprised an equal
number of executive directors and independent directors (three
out of six directors on the board). For the remaining months
of the reporting period, the board comprised a majority of
executive directors.
Pauline Vamos (independent) resigned from the board effective
31 August 2007.
Anne O’Donnell (executive director) was appointed by the
board on 29 May 2008.
On 1July 2008 the Board appointed Dr Les Coleman and
André Morony to the board. Both Dr Coleman and Mr Morony
are non-executive directors. Mr Morony is an independent
director. Dr Coleman serves on the Investment Policy
Committee of United Funds Management Ltd, a wholly owned
subsidiary of SMF Funds Management Limited, which is a
substantial shareholder. As Dr Coleman is associated with a
substantial shareholder (albeit in a limited way), the board does
not classify Dr Coleman as an independent director.
Caroline Le Couteur has advised the board that she will
not stand for re-election at the forthcoming Annual General
Meeting.
It is therefore anticipated that at the conclusion of the
upcoming Annual General Meeting, the board will consist of
four non-executive directors (three of whom will be regarded
as independent) and three executive directors.
The board’s view is that this composition represents a good
long term balance between executive and non-executive /
independent directors, with the right mix of independence,
AUSTRALIAN ETHICAL INVESTMENT LTD
10
competence and alignment with the Australian Ethical Charter.
The board carries out its responsibilities according to its
Constitution, regulatory requirements, and an overall mandate,
including the following:
•
•
•
•
•
•
the board must comprise at least three and not more then
ten directors;
the board is bound by the Australian Ethical Charter
that is set out in the Australian Ethical Constitution. The
Charter sets out 23 ethical principles to be applied to the
operations and activities of the company;
each director is committed to the Australian Ethical
Code of Conduct that governs the conduct of
employees and directors. The code is consistent with
the recommendations that form part of the Corporate
Governance Council’s Principles 3 and 10;
all available information on items to be discussed at a
board meeting is provided to each director prior to that
meeting;
the board has adopted a policy for the management of
conflicts of interest;
with the prior approval of the chair, each director has the
right to seek independent legal and other professional
advice at the company’s expense on any aspect of the
company’s operations or undertakings in order to fulfil their
duties and responsibilities as directors.
Chair of the board
The company’s chair was an independent director throughout
the reporting period.
Nomination committee
During the period the company had no nomination
committee. The board does not intend to establish such a
committee because such a move would be inefficient, given
the company’s size. The functions normally performed by
a nomination committee will be performed by the board as
a whole, will be delegated to the chair or will be performed
by one or more delegated directors. During the reporting
period, the board delegated responsibility to Justine Hickey
(independent) and Howard Pender (executive) to undertake a
search for further directors, which lead to the appointments of
Dr Coleman and Mr Morony.
Promote ethical and responsible decision
making
Code of conduct
The company has a code of conduct which applies to all staff.
It is available on the company’s website.
Share trading
The company’s code of conduct covers share trading. During
the reporting period, the code of conduct required that, as
a general rule, ‘staff and directors should not buy or sell AEI
shares between the close of the financial year or half-year and
the publication of the company’s results’.
ASX Listing Rules, directors must advise the ASX of any
transactions conducted by them in securities of the company
which they own or in which they have a relevant interest.
Directors, employees and their associates must not engage in
insider trading, nor the disclosing of inside information to third
parties. The company periodically conducts seminars about
its share trading policy and educates staff about the offence of
insider trading.
Safeguard integrity in financial reporting
CEO and CFO sign-off of financial reports
The company requires the chief executive officer and the
chief financial officer to state in writing to the board that the
company’s financial reports present a true and fair view, in
all material respects, of the company’s financial condition
and operating results and are in accordance with relevant
accounting standards.
Audit committee
Throughout the period, the board had an audit committee
consisting of three members. Up to 31 August 2007, the
audit committee consisted of independent directors and the
company secretary. From 31 August, the audit committee
consisted of one independent director (Ms Naomi Edwards),
one external member (Ms Ruth Medd) and the company
secretary. Ms Medd is chair of the company’s subsidiary,
Australian Ethical Superannuation Pty Ltd.
The qualifications of those appointed to the audit committee
are provided in the directors’ report, as are the number
of meetings of the committee and attendances at those
meetings.
The audit committee does not consist of only non-executive
directors (it has one external member (Ms Medd) and the
company secretary is also a member). Ms Medd chairs the
committee.
The audit committee provides a forum for effective
communication between the board and the external auditors.
The role of the committee is to advise the board on the
maintenance of an appropriate framework of financial internal
control and appropriate discharge of ‘trading company’
fiduciary obligations for the company and its subsidiary,
Australian Ethical Superannuation Pty Ltd.
A charter for the audit committee appears on the company’s
website.
The board is of the view that notwithstanding that the audit
committee does not comply with all the Corporate Governance
recommendations on membership, it is nonetheless able to
perform its functions with independence and diligence.
In particular:
•
•
the committee includes the company secretary who
is responsible to the chair of the board and the board
generally on governance matters;
at a number of meetings the committee speaks directly
to the external auditor in the absence of executive
management.
In accordance with the Corporations Act 2001 and the
The audit committee considers the performance and
11
AUSTRALIAN ETHICAL INVESTMENT LTD
independence of the external auditor over the course of a
reporting period. In selecting an external auditor the board
seeks competence, industry experience, integrity and
independence. In normal circumstances, appointment of the
external auditor will typically continue for a significant number
of years. Rotation of external audit engagement partners will
occur in accordance with the rotation requirements of the
Corporations Act 2001.
Make timely and balanced disclosure
The company has written policies and procedures designed
to ensure compliance with the ASX Listing Rule disclosure
requirements. The disclosure policy appears on the company’s
website.
Respect the rights of shareholders
The company maintains a comprehensive and informative
‘shareholder centre’ on its website which provides
shareholders (and others) with up to date information about
the corporate activities of the company. The website also
provides shareholders with guidance on a range of issues
concerning the management of their shareholdings.
regularly and the criteria and working standards set out in the
guide are periodically reviewed.
A description of the company’s risk management policy and
internal compliance and control systems is on the company’s
website.
The chief executive officer and chief financial officer certify
to the board that the integrity of the financial statements are
founded on a sound system of risk management and internal
compliance and control.
The chief executive officer and risk management officer certify
to the board that its internal control and risk management
systems are operating efficiently and effectively throughout the
group.
Encourage enhanced performance
Board and director evaluation
The directors undertake an annual self-assessment of their
collective and individual performance and seek specific
feedback from the senior management team. An assessment
was undertaken in the relevant period.
Australian Ethical produces a newsletter, Aim High, for trust
and superannuation investors, and since listing the company
has introduced a shareholder newsletter. It has revised its
annual general meeting arrangements to promote participation
and dissemination of information and has ensured access to
the external auditor at these meetings.
Australian Ethical also produces a sustainability report for
shareholders and other stakeholders on the triple bottom line
performance of Australian Ethical (available on the company’s
website). The sustainability report is produced using the Global
Reporting Initiative guidelines.
A questionnaire concerning board and individual performance
is completed by each director in respect of themselves and
for each other director and the results collected by the board
chair. The board as a whole then considers and discusses
the results of the questionnaire at a board meeting. The
board chair also talks to each director individually about their
performance and generally on the evaluation and comments
received from their peers. The results of the questionnaire are
examined from both a qualitative and quantitative perspective.
Where discussed at a board meeting, results and any action
plans are documented in board minutes.
The company complies with the corporate governance
guidelines for notices of meeting.
Recognise and manage risk
The board is responsible for the company’s system of internal
controls. The board monitors the operational and financial
aspects of the company’s activities and, through the audit
committee, the board considers the recommendations and
advice of external auditors and other external advisers on the
operational and financial risks that face the company.
The board monitors that appropriate actions are taken to
ensure the company has an appropriate internal control
environment in place to manage the key risks identified.
Recently the board has delegated to its Compliance and Risk
Committee the responsibility:
•
•
to oversee and monitor the implementation of the
company’s risk management systems;
to review on a quarterly basis the company’s risk registers
and recommend to the board any changes to those risk
registers.
The company has established an ‘AEI Guide for Risk
Management’ and sectional risk registers that document the
major risks facing the company and the way in which these
risks are to be managed. The risk registers are updated
Key executive evaluation
The performance of executives is evaluated in accordance with
the company’s annual performance review guidelines. For the
chief executive officer, the review is conducted by the board
chair. For other executives, the review is undertaken by the
chief executive officer.
The process is as follows:
•
•
•
•
•
receive 360° comments from staff (and directors if
applicable);
review comments once received and incorporate into the
annual review as considered appropriate. Emphasis is on
themes or perceptions rather than specific comments;
complete a draft of the annual performance review and
provide to the executive for discussion;
discuss the annual performance review with the executive
– cover key responsibilities, overall performance, key
behaviours, review achievements against previous year’s
objectives, discuss objectives for the coming year, discuss
aspirations and areas for improvement;
review competencies and qualifications to ensure
they remain applicable to the position. If not, a training
program must be developed to bring the executive to the
appropriate level; and
AUSTRALIAN ETHICAL INVESTMENT LTD
12
•
investigate what specific training may be suitable and
available.
In respect of the chief executive officer, the chair presents
the results of the review to the board, the board has an
opportunity to provide feedback to the chief executive officer,
and to consider recommendations from the chair on the chief
executive officer’s remuneration package.
Remunerate fairly and responsibly
Remuneration policy
Australian Ethical’s remuneration policy is designed to accord
with the principles of the Australian Ethical Charter, as set out
in the constitution of the company. It is designed to ensure
Australian Ethical does not
“exploit people through the payment of low wages or
the provision of poor working conditions”
and to facilitate:
“the development of workers participation in the
ownership and control of their work organisations and
places”
During the relevant period Australian Ethical sought to apply
remuneration policy for all staff in an equitable fashion.
During the reporting period, remuneration for one senior
manager included an ‘at risk’ component linked to
performance criteria. The performance criteria required
the manager to achieve business development objectives
on: funds under management; engagement with asset
consultants, ratings agencies and institutional clients; and
development of marketing strategies / collateral. These
performance conditions were chosen to align the manager’s
objectives with those set out in the company’s strategic plan.
The chief executive officer was responsible for assessing
whether the performance conditions were met. The chief
executive officer was able to assess both the quantitative and
qualitative aspects of the performance criteria.
The company may consider performance based incentive
arrangements for other staff in the future.
All permanent staff (including the chief executive officer and
executive directors) received a cash salary and participated in
the staff bonus and employee share ownership plan. Except
for the senior manager described above, cash remuneration
was not subject to set performance hurdles.
All permanent staff are eligible to participate in the staff bonus
which is determined by the Constitution. Each year the bonus
is set with reference to the profit of the company. Each full-
time staff member receives the same amount, part-time staff
receive a pro-rata amount. The Constitution provides that the
bonus can be (and often has been) satisfied by the issue of
shares.
Under the employee share ownership plan a pool of
options, which would, if exercised, have amounted to 5%
of the existing ordinary share capital was issued to staff. All
permanent, non probationary staff as at 30 June of the relevant
year were eligible to participate in the plan. The exercise price
of the options was set at 10% in excess of the market price of
the shares. The number of options received by an individual
staff member depended on their salary level. The options
are not exercisable for a period of three years from their date
of grant. In most circumstances, options will lapse where
an employee’s employment ceases before the options are
exercisable. The options confer no voting or dividend rights.
Australian Ethical has a mix of full-time and part-time staff and
endeavours to provide flexible employment arrangements
within business needs.
Australian Ethical monitors employee’s salaries against the
wider market and reviews salary levels annually. The company
adopts an in-principle guideline of paying individual staff a
total fixed remuneration based on 80% to 120% range of the
50th percentile identified in a biennial salary survey, with an
unweighted average of 95–105% and with appropriate macro
economic indexation of comparator benchmarks over time.
The guideline would not be implemented in such a way that
salaries would reduce where there was a market crash in
relevant salaries.
Remuneration committee
The board has a remuneration committee. The members of
the remuneration committee at the end of the reporting period
were Naomi Edwards and Justine Hickey. The charter for
the remuneration committee is available on the company’s
website.
Details of remuneration
Details of remuneration paid to directors and executives during
the reporting period is set out in the directors’ report. The
reporting distinguishes between the structure of non-executive
director remuneration and that of executive directors.
Equity-based remuneration
Equity-based remuneration for executive directors has
previously been approved by shareholders. The employee
share ownership plan was approved by shareholders at the
annual general meeting held in November 2005.
Recognise the legitimate interests of
stakeholders
The proper purpose of Australian Ethical is to promote
ethical/socially responsible investment. By the very nature
of Australian Ethical, the board is committed to the highest
standards of conduct and ethical practices in guiding the
business activities of Australian Ethical and its subsidiary. This
includes transparency in the way in which it does business
and clarity of communication to its members and other
stakeholders. Its code of conduct, as mentioned earlier in this
report, expects this of each employee and each director.
The company has developed a corporate governance section
on its website. The board has directed that detailed and
comprehensive information on the company’s corporate
governance arrangements and copies of relevant policies
and charters are to be placed on that website. It welcomes
comments and suggestions from stakeholders on any element
of its corporate governance program.
13
AUSTRALIAN ETHICAL INVESTMENT LTD
Directors’ report
The directors of Australian Ethical Investment Limited, the
controlling entity, present their report on the company and its
controlled entity for the financial year ended 30 June 2008. In
compliance with the Corporations Act 2001, the directors report
as follows:
Directors
The name of each person who has been a director during the
year ended 30 June 2008 and to the date of this report are:
Name
Time in Office
Caroline Le Couteur 17 years
James Thier
Howard Pender
Naomi Edwards
Pauline Vamos
Justine Hickey
Anne O’Donnell
Dr Les Coleman
André Morony
17 years
17 years
3 years
1 years
1 years
< 1 years
< 1 years
< 1 years
Resigned 31 August 2007
Appointed 29 May 2008
Appointed 1 July 2008
Appointed 1 July 2008
Directors have been in office since the start of the financial year to
the date of this report unless otherwise stated.
Company Secretaries
The name of each person who was a company secretary of the
company as at the end of the financial year are:
Name
Philip George
Principal activities
The principal activity of the controlling entity during the
financial year was to manage six public offer ethical investment
trusts (registered managed investment schemes). The
controlling entity’s wholly owned subsidiary, Australian Ethical
Superannuation Pty Limited, was trustee of the Australian Ethical
Retail Superannuation Fund during the financial year.
Other than as described, there were no other significant changes
in the nature of the controlling entities activities during the year.
Operating results
The consolidated entity (Australian Ethical Investment Limited and
its wholly owned subsidiary, Australian Ethical Superannuation
Pty Ltd) has recorded a consolidated net profit after income
tax expense for the year ending 30 June 2008 of $1,651,790.
This result is a 9% decrease on the result of $1,819,177 for the
previous financial year.
Review of operations
The 2008 result reflects the volatility and uncertainly that has been
experienced in global financial markets following the “sub-prime’
crisis in the USA. Whilst the Australian Ethical trusts had no direct
exposure to any of these financial instruments the trusts have
experienced the impact of falling asset prices and depressed
investor sentiment.
The company experienced strong growth in funds under
management during the first half of the financial year with funds
under management peaking at $645M. This growth and the
AUSTRALIAN ETHICAL INVESTMENT LTD
14
revenue generated cushioned the impact of downward market
movements and a decline in investor confidence which occurred
in the second half of the financial year. As at 30 June 2008,
funds under management totalled $562M (ex. distribution).
This compares with funds under management of $552M (ex.
distribution) as at 30 June 2007. The aggregate distribution
amount paid for the current period was $9M, compared to a
distribution the previous year of $59M.
The flatness in funds under management, combined with
some increased costs and additional expenditure on business
development resulted in an increase in the costs to income
ratio - increasing from 76% in 2007 to 80%. This increase is in
contrast with the steadily declining trend experienced in the past
4 financial years. Return on equity was also impacted falling from
26.1% to 20.6%
The superannuation business (Australian Ethical Superannuation
Pty Ltd) again contributed significantly to the group result and
superannuation continues to be a growth engine of the business.
The 2007/2008 financial year results include one-off costs
incurred in transitioning the administration of the superannuation
fund to a new administration provider.
As required under the company’s constitution, an amount of
$200,891 has been provisioned as tithe for this year and will
be donated to a number of non-profit organisations for useful
charitable, benevolent or conservation purposes.
Except as described under Principal Activities above, during
the 2007/2008 financial year the company did not make any
significant changes to its core funds management operations.
Mr David Ferris resigned as Chief Investment Officer early in
2008. Mr James Jordan undertook the role until it was filled in
August 2008. Mr Paul Harding-Davis was appointed as Head of
Distribution in January 2008. The appointment of Mr Harding-
Davis supports the company’s stated strategy of broadening
our reach beyond our direct retail customer base. There were
no other significant changes in management or organisational
structure.
The company continues to apply the principles of the Australian
Ethical Charter in its investment and business activities.
Financial position
The company’s capital structure and policies remain relatively
simple. The company currently has no debt and capital not
required for working purposes is held as an investment in Trevor
Pearcey House and in an investment portfolio comprising triple A
rated (or equivalent) securities, senior bank debt and corporate
rated debt.
Maintenance of a certain level of capital is a condition of the
company’s Australian Financial Services Licence. The company
currently meets the $5.0M capital requirement above which no
extra capital is required as a result of increased funds under
management.
The company has a comprehensive risk management process
designed to deal with significant operational risks as identified by
management and the directors.
Business strategies, future prospects and
likely developments
A significant portion of investment in the Australian Ethical trusts
comes from retail clients. The company’s retail investors have
traditionally been “sticky” in times of market downturn and
historically the trusts have not experienced significant outflows
at these times. However, Australian Ethical is not immune to
market volatility and negative investor sentiment. It is highly
likely that these factors will impact FUM, revenue and profitability
during the 2008/2009 financial year.
Offsetting these impacts are savings which the company expects
will flow from recent changes to custodian and superannuation
administration providers. The company will continue to focus on
building and servicing its clients and streamlining its processes,
ensuring scalability and efficiency of operations.
The company reviews its product offerings annually and this
analysis forms the basis of decisions regarding product offerings.
The company believes that the rise in shareholder activism offers
some exciting opportunities to leverage its expertise and to
expand its customer base. The company is currently exploring
the possibility of bringing to market a product which will take
advantage of this trend.
administrator. AES believes that United has failed to provide
the contracted services and that it has valid claims for damages
against United. United is seeking payment of monies invoiced
to AES for the service in the reporting period (approximately
$250,000). Notwithstanding the dispute, and without any
prejudice to AES’ claims, AES has recognised as expenses the
disputed invoices in its 2008 financial statements consistent with
a conservative accounting approach. Similarly, a liability for the
disputed amount will be included on the AES balance sheet.
The approach of AES is reflected in the consolidated financial
statements. AES and United continue to discuss the claims and
disputed invoices.
No other matters or circumstances have arisen since the end of
the financial year which significantly affected or may significantly
affect the operations of Australian Ethical Investment Ltd and
its controlled entity, the results of those operations or the state
of affairs of Australian Ethical Investment Ltd in financial years
subsequent to the financial year ended 30 June 2008, other than
as outlined in this report.
At this time the company has no plans to make any significant
changes to its core operations in the coming financial year.
Other information relating to business strategies and likely
developments has not been disclosed because it may cause
unreasonable prejudice to those activities.
Directors’ indemnification
The constitution of the controlling entity provides a general
indemnity for officers of the company against liabilities incurred
in that capacity, including costs and expenses in successfully
defending legal proceedings.
Events subsequent to balance date
Dr Les Coleman and Mr André Morony were appointed to the
Board effective 1 July 2008.
Mr Martin Halloran has been appointed as the company’s Chief
Investment Officer. He will take up his role in late August 2008.
The directors have declared that a final dividend of $1.20 per
ordinary share (fully franked) be paid to shareholders. This is in
addition to the interim dividend of 45 cents per ordinary share
paid in March 2008. The total dividend for the year will be $1.65
per share.
The Board notes that the declaration and quantum of any future
dividend will depend on the company’s ongoing performance
and capital requirements. In particular, no inference should be
drawn about the quantum of any future dividend based on the
quantum of 2007-08 dividend, or on the dividend payout ratio for
the 2007-08 year.
On 27 August 2008 the board authorised the grant of 49,200
options to staff. The terms and conditions attached to the
options are as set under the employee share ownership scheme
approved at the 2005 annual general meeting, except that
the board has decided to include two additional terms. The
additional terms relate to vesting due to a change of control
and a first right of refusal to buy-back shares issued upon the
exercise of the options where the company has an employee
share buy-back in place. As these terms were not included in the
scheme approved at the 2005 annual general meeting, the issue
of these options will count towards the 15% limit imposed under
Listing Rule 7.1 of the Australian Securities Exchange. The board
intends to seek member approval under Listing Rule 7.4 for the
grant of these options at the 2008 annual general meeting. If
approval is obtained, the issue of the options will no longer count
towards the 15% limit.
Australian Ethical Superannuation Pty Ltd (‘AES’) is in dispute
with United Funds Management Limited (United), its former fund
During the financial year, the company paid a premium in respect
of a contract insuring the directors of the company (as named
above), the company secretary, and all officers of the company
and of any related body corporate against a liability incurred as
such a director, secretary or officer to the extent permitted by
the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the
premium.
During the year the company entered into deeds of indemnity,
insurance and access with directors and officers which provides a
general indemnity against liabilities incurred in that capacity to the
extent permitted by the Corporations Act 2001.
The deed obligates the company to use its reasonable
endeavours to obtain and maintain insurance for the benefit of
a director or officer of the company and any subsidiary, to the
extent that such coverage is available in the market on terms
which the company reasonably considers financially prudent and
on terms consistent with the practice of comparable companies
operating in similar markets.
The deed also provides that the company will pay on behalf of
the director or officer or lend to the director or officer the amount
necessary to pay the reasonable legal costs incurred by the
director or officer in defending an action for a liability incurred as
a director or officer of the company or a subsidiary on such terms
as the company reasonably determines. The director or officer
must repay to the company such legal costs if they become
legal costs for which the company was not permitted by law to
indemnify the director or officer. The company need not pay
or provide a loan to the director or officer to the extent that the
director or officer is actually reimbursed for legal costs as they fall
due under an insurance policy or otherwise.
The company has not otherwise, during or since the financial
year, indemnified or agreed to indemnify a director, officer or
auditor of the company or of any related body corporate against
a liability incurred as such director, officer or auditor.
15
AUSTRALIAN ETHICAL INVESTMENT LTD
Directors’ particulars
Qualifications, experience and special
responsibilities
Caroline Le Couteur
B.Ec., B.Bus., Grad.Dip.(Env. & Dev. Man.), FAICD
Executive Director
Howard Pender
B.A.(Hons)
Executive Director
Caroline has been committed to environmental conservation
and social justice throughout her life. She is a member of the
national council of the Australian Conservation Foundation and
has been a candidate for the Greens in both ACT and Federal
elections. Caroline has held senior government positions in
information management. She is the company’s information
technology manager and, until September 2002, was also the
funds administrator.
Howard received a university medal in economics from
the Australian National University. He worked at the
Commonwealth Treasury and then as Senior Economist
at Bankers Trust in Sydney. From 1992 to 1997, he was a
Visiting Fellow in the Centre for International and Public Law at
the Australian National University. Howard has been a director
of two other ASX listed companies. Howard is a director of
Australian Ethical Superannuation Pty Ltd and is a member of
the finance and investment committees.
James Thier
B.Sc.(Hons)
Executive Director
Naomi Edwards
BSc (Hons) FIA FIAA FNZSA
Non-Executive Chair
James has had academic experience as a researcher and has
taught in the faculties of economics, environmental studies
and geography at the University of NSW. He has held senior
positions in local government and within peak bodies of the
credit union movement. James is the company’s business
development manager. James is also a director of Australian
Ethical Superannuation Pty Ltd and is on the investment
and compliance committees. In 2007 James, undertook
a Churchill Fellowship to examine the mechanisms of
shareholder advocacy.
Naomi is a Fellow of the Institute of Actuaries and has a
high level of financial experience with practical conservation
and environmental links. Naomi was Partner in charge of
the financial services industry group within Deloitte Touche
Tohmatsu in Sydney and leader of the financial services
practice for Trowbridge Consulting for many years. She has
undertaken pro bono work providing actuarial assistance
for environmental and social organisations. Naomi chairs
the remuneration committee and is a member of the audit,
investment and compliance and risk committees. Naomi is
also a director of Australian Ethical Superannuation Pty Ltd.
AUSTRALIAN ETHICAL INVESTMENT LTD
16
Justine Hickey
BCom GAICD SAFin ASIP(UK)
Non-Executive Director
Dr Les Coleman
B.Eng.(Hons), B.Sc.(Hons), M.Ec., PhD
Non-Executive Director
Justine has over 15 years experience in investment and
funds management, as an equities portfolio manager and in
senior management. She was Head of Equities at Suncorp
Investment Management in Brisbane until 2004 and previously
a Portfolio Manager at Flemings Investment Management
(now JP Morgan) in the UK. Justine is a director of Hyperion
Flagship Investments Ltd and chairs the Youth Enterprise Trust
Foundation - which supports disadvantaged youth. She also
is a member of the investment committees of Dalton Nicol
Reid and the University of Melbourne. Justine was recently
appointed a director of the Rio Tinto Staff Fund Pty Ltd .
Justine chairs the investment committee and is a member of
the finance and remuneration committees.
Les has been a trustee of two superannuation funds, a
director of ten companies involved in finance, retail and
distribution and has over 20 years experience in senior
management positions. Since 2004, Les has been a Senior
Lecturer at the Finance Department of the University of
Melbourne and has published many articles and papers,
particularly in the area of risk management. For four years Les
was a weekly columnist with The Australian newspaper.
Anne O’Donnell
BA MBA FAICD
Managing Director
André Morony
B.Ec.(Hons), M.Ec.
Non-Executive Director
Prior to joining Australian Ethical, Anne held a senior
management position with the ANZ Bank and has extensive
knowledge of the finance industry. Whilst at ANZ, Anne
was a staff elected director of the ANZ Staff Superannuation
Fund, which managed $1B on behalf of 24,000 members.
Anne is the chair of the finance committee, and attends
meetings of the company’s investment, compliance and risk,
and remuneration committees. She is also a director of the
Community CPS Australia Credit Union.
André started his 30 years in the finance sector at the
Commonwealth Treasury, representing Australia at the
Organisation for Economic Cooperation and Development
before taking various roles at Bankers Trust (BT) including as
Chief Economist and Chief Investment Officer. From 2001-
2006, André was Chief Investment Officer at ARIA, and he
currently sits on the boards of ABN AMRO Investments
Australia, Challenger LBC Terminals Jersey Limited and Steam
Packet Group. He is also on the Catholic Superannuation
Fund investment committee.
17
AUSTRALIAN ETHICAL INVESTMENT LTD
Directors meetings
The number of directors’ meetings (including meetings of committees of directors of which not all directors are members) and
number of meetings attended by each of the directors of the controlling entity during the financial year are:
Board meetings
Audit committee
Finance committee
Investment
committee
Remuneration
committee
Compliance
committee
No.
attended
No.
eligible
to
attend
No.
eligible
to
attend
No.
attended
No.
eligible
to
attend
No.
attended
No.
attended
No.
eligible
to
attend
No.
eligible
to
attend
No.
attended
No.
eligible
to
attend
No.
attended
Caroline Le Couteur
James Thier
Howard Pender
Naomi Edwards
Pauline Vamos
Justine Hickey
Anne O’Donnell
7
7
7
7
1
7
2
7
7
7
7
1
7
2
-
-
-
3
1
-
-
-
-
-
3
1
-
-
--
-
9
-
1
9
1
-
-
9
-
1
8
1
-
4
4
4
-
4
-
-
4
4
4
-
4
-
-
-
-
2
-
2
-
-
-
-
2
-
2
-
-
4
-
3
1
-
-
-
4
-
3
1
-
-
Directorships held in other listed entities in the last three years
Name
Pauline Vamos
Justine Hickey
André Morony
Entity
Plan B Group Holdings Limited
Hyperion Flagship Investments Limited
Macquarie Private Capital Group Limited
Directors’ relevant interests in securities of the company
Parent Entity Directors
Fully paid ordinary shares
numbers
Share option
numbers
Caroline Le Couteur
James Thier
Howard Pender
Justine Hickey
Anne O’Donnell
49,436
49,739
49,712
700
8,982
5,944
4,749
3,913
-
8,940
Directors’ holdings in registered schemes made available by the company
Caroline Le Couteur holds 918.6569 units in the Australian Ethical Balanced Trust.
Anne O’Donnell holds 4061.8233 units in the Australian Ethical Large Companies Share Trust.
Issue of shares and options to executive directors – ASX Listing Rule 10.14
The number of shares and options issued to executive directors under the employee share ownership plan is detailed in this
Report. Shareholder approval for the issue of shares and options to executive directors was obtained under ASX listing rule
10.14 at the Annual General Meeting held in November 2006.
Remuneration report
The information which follows through to the end of the section titled Employment contracts of directors and senior
executives is subject to audit by the external auditor.
AUSTRALIAN ETHICAL INVESTMENT LTD
18
Board meetings
Audit committee
Finance committee
Investment
committee
Remuneration
committee
Compliance
committee
No.
No.
No.
No.
No.
No.
No.
No.
No.
No.
No.
No.
eligible
attended
eligible
attended
eligible
attended
eligible
attended
eligible
attended
eligible
attended
to
attend
to
attend
to
attend
to
attend
to
attend
to
attend
Caroline Le Couteur
James Thier
Howard Pender
Naomi Edwards
Pauline Vamos
Justine Hickey
Anne O’Donnell
7
7
7
7
1
7
2
7
7
7
7
1
7
2
-
-
-
3
1
-
-
-
-
-
3
1
-
-
--
-
9
-
1
9
1
-
-
9
-
1
8
1
-
4
4
4
-
4
-
-
4
4
4
-
4
-
-
-
-
2
-
2
-
-
-
-
2
-
2
-
-
4
-
3
1
-
-
-
4
-
3
1
-
-
Names and positions of key management personnel (directors and named executives) at
any time during the financial year
Parent entity directors
Name
Position
Share option
numbers
Caroline Le Couteur
Director, executive
James Thier
Director, executive
Howard Pender
Director, executive
Naomi Edwards
Chairperson, non-executive
Pauline Vamos
Justine Hickey
Chairperson, non-executive
Resigned 31 August 2007
Director, non-executive
Anne O’Donnell
Managing Director, executive
Appointed 29 May 2008
Les Coleman
André Morony
Executives
Name
David Ferris
Philip George
Ruth Medd
Gary Leckie
Director, non-executive
Appointed 1 July 2008
Director, non-executive
Appointed 1 July 2008
Position
Investment manager
Resigned 27 March 2008
Company secretary / legal counsel
Director of wholly-owned entity
Chief financial officer
Paul Harding Davis
Head of Distribution
Appointed 14 January 2008
Tim Xirakis
Finance Investment Manager
The Corporations Act 2001 requires disclosure of compensation of key management personnel. Key management personnel is
defined as persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or
indirectly, including any director (whether executive or otherwise) of that entity.
The Corporations Act 2001 also requires disclosure of the remuneration of:
1.
2.
each of the 5 named company executives who receive the highest remuneration for that year; and
if consolidated financial statements are required—each of the 5 named relevant group executives who receive the
highest remuneration for that year.
With the exception of Ruth Medd, the above named directors and executives are key management personnel of the company.
Ruth Medd is a group executive.
Remuneration policy
Directors
The aggregate amount of remuneration payable to directors for the performance of their duties as directors is set by the
company in general meeting from time to time. In proposing any motions on director remuneration to a general meeting, the
board has regard to market rates for directorships in similar companies operating in similar industries. It also has regard to
recommendations from its Remuneration Committee. Within the approved aggregate amount, fees paid to individual directors
for services as a director are determined by the Board. Currently, the chair receives a higher amount, with other directors
receiving an equal amount.
Under the constitution, directors are also entitled to be paid reasonable expenses, remuneration for extra services, retirement
benefits and superannuation contributions. In particular, directors are paid for serving on board committees.
There are currently no arrangements to pay any director a retirement benefit.
Secretaries, senior managers, executive directors and group executives
During the reporting period, the company’s remuneration policy was to treat all staff (including secretaries, senior mangers,
19
AUSTRALIAN ETHICAL INVESTMENT LTD
executive directors and group executives) in an equitable
fashion. During the reporting period, remuneration for one
senior manager included an ‘at risk’ component linked to
performance criteria. All permanent staff (including secretaries,
senior mangers, executive directors) received a cash salary and
participated in a staff bonus and employee share ownership
scheme. The arrangements did not apply to non executive
directors.
For the one senior manager with an at risk component,
the performance conditions required the manager to
achieve business development objectives on: funds under
management; engagement with asset consultants, ratings
agencies and institutional clients; and development of marketing
strategies / collateral. These performance conditions were
chosen to align the manager’s objectives with those set out
in the company’s strategic plan. The managing director was
responsible for assessing whether the performance conditions
were met. The managing director was able to assess both the
quantitative and qualitative aspects of the performance criteria.
The company’s general remuneration policy also accords with
the Australian Ethical Charter, as set out in the constitution of
the company. It is designed to ensure the company does not
“exploit people through the payment of low wages or
the provision of poor working conditions”
and to facilitate:
“the development of workers participation in the ownership
and control of their work organisations and places.”
The company reviews individual remuneration annually. As
part of this process it benchmarks its remuneration levels
and its policies on employee benefits and work / life balance.
Individual staff remuneration is considered with reference to the
benchmarks and in accordance with guidelines approved by
the board. The board aims to remunerate responsibly and fairly,
with reference to the market.
All permanent staff are eligible to participate in an annual staff
bonus. Under the company’s constitution, before the directors
recommend any dividend to be paid out of profits of any one
year, they must pay a bonus to current employees which is set
by reference to the profit of the company for that year. Each
full time staff member receives the same bonus amount and
part-time staff (or those not employed full-time through the full
year) receive a pro-rata amount. The company’s constitution
provides that the bonus can be (and often has been) satisfied
by the issue of shares, under the employee share ownership
scheme.
Also, under an employee share ownership scheme which
operated during the reporting period, a pool of options which
would, if exercised, amount to 5% of the company’s existing
ordinary share capital were issued to staff. All permanent, non-
probationary staff were eligible to participate in the plan. The
options were issued for nil consideration and the price at which
the options are exercisable was set at 10% in excess of the
market price of the shares as at the date of grant. The number
of options received by an individual staff member depended on
their remuneration. Options are not exercisable for a period of
three years from their date of grant. At the end of the three year
period, options must be exercised within a three month exercise
AUSTRALIAN ETHICAL INVESTMENT LTD
20
window or they lapse. During the three month exercise
window, options can also be sold once, with the transferee
then needing to exercise during the three month window, or the
options lapse. In most circumstances, options will also lapse
where an employee’s employment ceases before the options
are exercisable. The options confer no voting or dividend rights.
Performance-based remuneration and
company performance
The payment of the staff bonus is set by reference to the profit
of the company for a relevant year. Higher company profits
in a year correspondingly increase the aggregate amount that
directors could determine be paid to current employees as a
bonus.
Details of options issued under the employee share ownership
plan are set out under remuneration policy above. Options are
performance based in two ways. Firstly, in most cases, staff
must remain an employee for three years from the date of grant
of the options to be entitled to exercise them. Option value can
only be realised if an employee contributes a significant further
period of service to the company. Secondly, option value can
only be realised if the market value of the underlying shares
increase by 10% between the period of grant and the period
when the options can be exercised.
The remuneration policy discussed above has broadly been
in place for the current and the previous five financial years,
except that an individual performance based element was
introduced for one senior manager during the reporting period.
Dividends through the same period have increased from a
dividend out of the profits of the 2001/2002 year of 20 cents
per share to a dividend out of the 2006/2007 year profits of 192
cents per share. The dividend declared by the directors for the
2007/2008 year is 165 cents per share.
The company’s shares have traded on the ASX since 17
December 2002. Movements in closing share price at the
beginning and end of financial years since listing are as follows:
Date
17 December 2002
30 June 2003
30 June 2004
30 June 2005
30 June 2006
30 June 2007
30 June 2008
Closing Daily Price
$12.50
$11.30
$13.00
$17.20
$28.50
$48.00
$34.00
The company’s earnings over the last five years are as follows:
Year
2003/2004
Adoption of AIFRS
2004/2005
2005/2006
2006/2007
2007/2008
Earnings
$459,761
$784,419
$1,362,612
$1,819,177
$1,651,790
Remuneration details for the year ended 30 June 2008
Parent entity directors’ remuneration
S hort-term em ployee benefits
2008
C as h S alary
S T I
O th er
P os t E m -
ploym ent
benefits
S u p er
O ther
T erm ination
S hare-bas ed P aym ent
S 300A (1)(e)
S 300A (1)(e)(vi)
Long-term
B enefits
B enefits
P ro p o rtio n o f
V alu e o f o p tio n s
rem u n eratio n
as p ro p o rtio n o f
B o n u s
O p tio n s
T o tal
p erfo rm an c e
rem u n eratio n %
an d F ees
$
c as h b o n u s
$
$
$
C aroline Le C outeur
Jam es T hier
H oward Pender
N aom i Edwards
Pauline Vam os
Justine H ickey
Anne O 'D onnell
T otal
G eorge Pooley
C aroline Le C outeur
Jam es T hier
H oward Pender
N aom i Edwards
Pauline Vam os
Justine H ickey *
T otal
2007
142,503
157,324
159,245
58,416
9,249
26,651
213,858
767,246
19,749
142,449
143,516
138,954
39,300
52,223
17,314
553,505
6,000
4,800
3,900
6,000
20,700
5,500
3,575
9,075
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,230
13,566
13,420
5,257
750
2,408
18,760
67,391
-
12,017
11,804
11,633
3,150
4,205
741
43,550
$
3,544
3,191
3,171
6,250
16,156
3,431
2,016
2,089
7,536
-
-
-
-
-
-
-
$
S h ares
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,759
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
15,044
12,743
12,709
25,410
65,906
7,907
5,928
6,082
-
-
-
-
-
-
-
$
180,321
191,624
192,445
63,673
9,999
29,059
270,278
937,399
19,749
171,304
167,023
162,333
42,450
56,428
18,055
related %
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8.3
6.6
6.6
9.4
4.6
3.5
3.7
-
-
-
-
-
-
-
3,759
19,917
637,342
Named executives remuneration (including other key management personnel)
O ther
T erm ination
S hare-bas ed P aym ent
S 300A (1)(e)
S 300A (1)(e)(vi)
S hort-term em ployee benefits
C as h S alary
an d F ees
S T I
O th er
c as h b o n u s
P os t E m -
ploym ent
benefits
S u p er
Long-term
B enefits
B enefits
$
$
$
$
$
$
2008
2007
D avid F erris
Philip G eorge
R uth M edd
G ary Leckie
T im Xirakis
Paul H arding D avis
T otal
Anne O 'D onnell
D avid F erris
M ark Batem an
Philip G eorge
R uth M edd
G ary Leckie
T otal
165,939
177,416
35,488
152,178
160,430
91,566
783,017
190,804
158,681
140,481
162,880
28,500
118,374
799,720
-
-
-
-
6,000
6,000
6,000
16,000
34,000
5,500
5,500
5,500
5,500
22,000
-
-
-
-
-
-
-
-
-
-
-
-
10,938
15,365
3,194
13,594
15,381
8,950
67,422
17,259
13,843
7,076
14,088
1,800
10,257
64,323
-
-
-
-
3,643
4,572
3,515
1,749
13,479
5,659
5,046
3,503
2,849
17,057
P ro p o rtio n o f
V alu e o f o p tio n s
rem u n eratio n
as p ro p o rtio n o f
O p tio n s
T o tal
p erfo rm an c e
rem u n eratio n %
$
$
related %
20,378
20,740
14,843
14,918
70,879
12,043
9,307
7,916
9,754
5,974
-
-
-
203,140
223,164
38,682
191,187
200,244
118,265
974,682
231,265
192,167
160,973
195,725
30,300
142,954
-
-
-
-
-
13.5
-
-
-
-
-
-
10.0
9.3
7.8
7.5
-
-
5.2
4.8
4.9
5.0
-
4.2
B o n u s
S h ares
$
5,885
-
-
-
-
-
-
-
-
-
-
5,885
5,290
5,290
44,994
953,384
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Cash bonus compensation benefits
Details of cash bonuses paid to key management personal are included in the remuneration tables set out above. The
annual staff cash bonuses were paid on 24 September 2007. The cash bonus for Mr Harding-Davis was paid on 13 June
2008. The nature of the cash bonuses and the criteria used to determine the amount of the payments are detailed in the
remuneration policy and in the discussion on performance based remuneration and company performance.
Analysis of bonuses included in remuneration
The vesting profile of short term-incentive bonuses are detailed below. No amounts vest in future financial years in respect of
the short term-incentive bonuses for the 2008 year.
21
AUSTRALIAN ETHICAL INVESTMENT LTD
S hort term incentive bonus
C as h bonus
(1)
P erform ance
bonus ($)
% ves ted in
year
% forfeited in
year (2)
P arent E ntity Directors
Caroline Le Couteur
James Thier
Howard Pender
Anne O'Donnell
Nam ed executives (including other key m anagem ent pers onnel)
Philip George
Gary Leckie
Tim Xirakis
Paul Harding Davis
6000
4800
3900
6000
6000
6000
6000
-
-
-
-
-
-
-
-
16000
100%
100%
100%
100%
100%
100%
100%
69%
-
-
-
-
-
-
-
31%
(1) Details of cash and performance bonus have been provided in the director's report under remuneration policy
(2) The amounts forfeited are due to the performance or service criteria not being met in relation to the current
financial year
Equity based remuneration
Equity based remuneration consists of grants of options under the company’s employee share ownership plan. Details of the
employee share ownership plan (including the service and performance criteria) are provided in the section on remuneration
policy above and in Note 24 of the attached financial report.
Options over ordinary shares granted as compensation during reporting period
P arent E ntity Direc tors
Caroline Le Couteur
James Thier
Howard Pender
Naomi Edwards
Pauline Vamos
Justine Hickey
Anne O'Donnell
Number of
options
ves ted
during 2008
Number of
options
granted during
2008 (1)
2,513
2,058
861
-
-
-
2,865
8,297
1,791
1,517
1,513
-
-
-
3,025
7,846
G rant date
24/09/2007
24/09/2007
24/09/2007
24/09/2007
Named exec utives (inc luding other key management pers onnel)
David Ferris
Philip George
Ruth Medd
Gary Leckie
Tim Xirakis
Paul Harding Davis
2,551
-
-
1,275
-
-
3,826
2,426
2,469
-
1,767
1,776
-
8,438
24/09/2007
24/09/2007
-
24/09/2007
24/09/2007
-
Fair value per
option at grant
date (2) ($)
E xerc is e
pric e per
option ($)
Firs t exerc is e
/expiry date
Las t
exerc is e
/expiry
date
8.40
8.40
8.40
-
-
-
8.40
8.40
8.40
-
8.40
8.40
-
57.57
57.57
57.57
-
-
-
57.57
57.57
57.57
-
57.57
57.57
-
24/09/2010 23/12/2010
24/09/2010 23/12/2010
24/09/2010 23/12/2010
-
-
-
24/09/2010 23/12/2010
-
-
-
24/09/2010 23/12/2010
24/09/2010 23/12/2010
-
24/09/2010 23/12/2010
24/09/2010 23/12/2010
-
-
-
(1) Each option above is granted by Australian Ethical Investment Limited (AEI) and is for one ordinary share in AEI.
(2) Options were granted as part of remuneration and the recipient did not otherwise pay for the grant of the options.
Exercise of options during the reporting period
During the reporting period the following shares were issued on the exercise of options previously granted as compensation.
There are no amounts unpaid on the shares.
AUSTRALIAN ETHICAL INVESTMENT LTD
22
P arent E ntity Directors
Num ber of s hares
Caroline Le Couteur
James Thier
Howard Pender
Anne O'Donnell
Nam ed executives (including other key m anagem ent pers onnel)
David Ferris
Gary Leckie
2513
2058
861
2865
2551
1275
A m ount paid $
/s hare
16.28
16.28
16.28
16.28
16.28
16.28
Analysis of options over ordinary shares granted as compensation
Details of vesting profiles of options granted as compensation are detailed below:
P arent E ntity Directors
O ptions granted
% ves ted in year
% forfeited in
year
Caroline Le Couteur
James Thier
Howard Pender
Anne O'Donnell
O ption
S eries
AEFAI
AEFAQ
AEFAS
AEFAT
AEFAI
AEFAQ
AEFAS
AEFAT
AEFAI
AEFAQ
AEFAS
AEFAT
AEFAI
AEFAQ
AEFAS
AEFAT
Num ber
2513
2243
1910
1791
2058
1800
1432
1517
861
931
1469
1513
2865
3006
2909
3025
Nam ed executives (including other key m anagem ent pers onnel)
David Ferris
Philip George
Gary Leckie
Tim Xirakis
AEFAI
AEFAQ
AEFAS
AEFAT
AEFAQ
AEFAS
AEFAT
AEFAI
AEFAQ
AEFAS
AEFAT
AEFAS
AEFAT
2551
2611
2248
2426
1550
2356
2469
1275
1387
1443
1767
1387
1776
Date
23/09/2004
21/09/2005
22/09/2006
24/09/2007
23/09/2004
21/09/2005
22/09/2006
24/09/2007
23/09/2004
21/09/2005
22/09/2006
24/09/2007
23/09/2004
21/09/2005
22/09/2006
24/09/2007
23/09/2004
21/09/2005
22/09/2006
24/09/2007
21/09/2005
22/09/2006
24/09/2007
23/09/2004
21/09/2005
22/09/2006
24/09/2007
22/09/2006
24/09/2007
F inancial years
in w hich grant
ves ts
23/09/2007
21/09/2008
22/09/2009
24/09/2010
23/09/2007
21/09/2008
22/09/2009
24/09/2010
23/09/2007
21/09/2008
22/09/2009
24/09/2010
23/09/2007
21/09/2008
22/09/2009
24/09/2010
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100%
100%
100%
-
-
-
-
-
-
-
-
-
23/09/2007
21/09/2008
22/09/2009
24/09/2010
21/09/2008
22/09/2009
24/09/2010
23/09/2007
21/09/2008
22/09/2009
24/09/2010
22/09/2009
24/09/2010
100%
-
-
-
100%
-
-
-
100%
-
-
-
100%
-
-
-
100%
-
-
-
-
-
-
100%
-
-
-
-
-
Modification of terms of options
Terms of options issued under the employee share ownership plan were not altered or modified during the reporting period.
Analysis of movements in options
The movement in options during the reporting period (by value) is set out below:
23
AUSTRALIAN ETHICAL INVESTMENT LTD
G ranted
as part of
R emuner-
ation (1)
$
V alue of
Options ex-
erc is ed in
Fin Y ear
(2)
$
V alue of
Options
Laps ed in
Fin Y ear
(3)
$
P arent E ntity Direc tors
Caroline Le Couteur
James Thier
Howard Pender
Naomi Edwards
Pauline Vamos
Justine Hickey
Anne O'Donnell
15,044
12,743
12,709
-
-
-
25,410
65,906
Named exec utives (inc luding other key management pers onnel)
David Ferris
Philip George
Ruth Medd
Gary Leckie
Tim Xirakis
Paul Harding Davis
20,378
20,740
-
14,843
14,918
-
70,879
94,790
77,628
30,755
-
-
-
108,068
311,241
91,122
-
-
45,543
-
-
136,665
-
-
-
-
-
-
-
-
47,588
-
-
-
-
-
47,588
(1) Values are based on a valuation performed on the options at grant date using the Black-Scholes model. None of the value
of the options granted was paid to the key management personnel in the financial year. Key management personnel may
realise value from this option grant in the 2010/11 year when the options are exercisable.
(2) Values are based on the number of options excercised by Directors/Executives multiplied by the difference
between the share price at exercise date and the exercise price.Under the terms of the share based payment arrangement
exercise date and therefore share price can vary between option holders.
(3) David Ferris forfeited 100% of options granted, upon leaving the employment of Australian Ethical Investment Ltd.
The amounts listed in this column do not represent remuneration paid to Director/Executives
Hedging policy
On 27 August 2008, the board introduced a policy whereby directors and executives participating in the company’s equity-
based plans are prohibited from entering into any transaction which would have the effect of hedging or otherwise transferring
to any other person the risk of any fluctuation in the value of any unvested entitlement in the company’s securities.
Explanation of relative proportions of elements of remuneration that are related to
performance
Non-executive directors receive their total remuneration as cash or superannuation contributions. No element is dependent
on performance.
Except as discussed below, the remuneration of executive directors, secretaries and senior managers is not subject to
individual performance conditions. People holding these positions are entitled to participate in the staff bonus and employee
share ownership scheme described above. Options granted during the financial year, when valued using a Black Scholes
valuation methodology as at grant date, make up a very small proportion of the overall remuneration of people holding these
positions.
For one senior manager, the performance related component of their remuneration accounted for 13.5% of their total
remuneration.
Employment contracts of directors and senior executives
For each individual whose remuneration has been disclosed in this report and is employed under an employment contract,
the details of the employment contract are as follows:
AUSTRALIAN ETHICAL INVESTMENT LTD
24
Name
Duration of contract
Period of termination
notice required
Termination payment provided for under the
contract
Caroline Le Couteur
Ongoing
James Thier
Howard Pender
Anne O’Donnell
Gary Leckie
Philip George
Paul Harding Davis
Tim Xirakis
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
4 weeks
2 weeks
12 weeks
12 weeks
2 weeks
12 weeks
12 weeks
4 weeks
None except for accrued leave and any
payment in lieu of notice.
Non-director committee members and company secretary particulars
Name
Qualifications
Experience
Ruth Medd
B.Sc., Dip Comp Science, CPA,
MAICD, Non-Executive Chairper-
son
Philip George BSc LLB
Ruth is currently on the board of the NFAW Ltd (National Foundation for
Australian Women), WOB Pty Ltd and the Infants Home, Ashfield. Ruth
is Chair of the company’s wholly-owned subsidiary Australian Ethical
Superannuation Pty Ltd. Ruth also Chair’s the company’s audit and
compliance and risk committees. Ruth started in IT in the 1970s. Since
then she has been a senior public servant, a broadcasting regulator, the
inaugural Company Secretary at Telstra and the Executive Director of
an industry association.
Philip has experience in commercial law, corporate governance and
project management. He has been a company secretary and legal
counsel for listed companies for over six years. He was a senior asso-
ciate at the national law firm Minter Ellison and conducted a commercial
legal practice in partnership for two years.
Options as at the date of this report
Options over unissued shares as at the date of this report are as follows:
Options Reference
Number of options on issue
Exercise Period
Exercise Price
AEFAQ
AEFAS
AEFAT
Totals
36,080
36,357
41,837
114,274
21/9/08 to 20/12/08
22/9/09 to 21/12/09
24/9/10 to 23/12/10
$24.82
$32.50
$57.57
All options are over unissued shares in the company. Unexercised options expire at the end of the exercise period. No
option holder has any right under the options to participate in any other share issue of the company or of any other entity.
Shares issued upon the exercise of options
The following ordinary shares of the company were issued during the year ended 30 June 2008 on the exercise of options
granted under the company’s employee share ownership plan. No further shares have been issued since that date to the
date of this report. No amounts are unpaid on any of the shares.
Shares issued upon
exercise of options
Amount paid per share
34,506
$16.28
Auditor’s declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 forms part of
this report and follows at the end of the report.
Non-audit services
The directors, in accordance with advice from the audit committee, are satisfied that the provision of the non-audit services
25
AUSTRALIAN ETHICAL INVESTMENT LTD
by the auditor during the year is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001. The directors are satisfied that the services disclosed in the financial report did not compromise the
external auditor’s independence because the provision of non-audit services is minor and in most cases is ancillary or related
to audit activities. The directors are not aware of any circumstances that would prevent the external auditor from exercising
objective and impartial judgement in relation to the conduct of the audit.
Details of non-audit services provided by the auditor are set out in Note 2 of the attached financial report.
Other specific information
Other specific information has been disclosed in the attached financial report as referenced in the table below:
Disclosure
Dividends
Options – issued during the financial year and since the
end of the financial year
Financial Statement Reference
Note 5
Note 24
Signed in accordance with a resolution of the Board of Directors.
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Howard Pender
Director
Dated: 26 September 2008
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C
OF THE CORPORATIONS ACT 2001
AUIDTOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C
OF THE CORPORATIONS ACT 2001
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2008 there have been:
(i)
no contraventions of the auditor independence requirements as set out in the Corporations
Act 2001 in relation to the audit; and
(ii)
no contraventions of any applicable code of professional conduct in relation to the audit.
THOMAS DAVIS & CO.
P.L. WHITEMAN PARTNER
Date 26 September 2008
Liability limited by a scheme approved under Professional Standards Legislation
AUSTRALIAN ETHICAL INVESTMENT LTD
26
Date 26 September 2008
Liability limited by a scheme approved under Professional Standards Legislation
16
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Financial statements for year ended 30 June 2008
Current assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Other current assets
Total current assets
Non-current assets
Property, plant & equipment
Financial assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Short-term provisions
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Other long-term provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
Balance Sheet
as at 30 June 2008
Notes
Consolidated Entity
Parent Entity
2008
$
2007
$
2008
$
2007
$
7
8
9
10
11
9
12
13
15
14
15
2,552,238
1,812,410
1,748,774
248,491
1,672,464
1,487,185
1,830,430
183,644
1,049,089
1,246,646
1,748,774
204,245
643,525
1,379,251
1,830,430
162,275
6,361,913
5,173,723
4,248,754
4,015,481
4,205,801
94,744
489,784
4,328,138
158,000
392,435
4,205,801
410,744
485,584
4,328,138
474,000
391,385
4,790,329
4,878,573
5,102,129
5,193,523
11,152,242
10,052,296
9,350,883
9,209,004
2,115,330
110,702
432,097
1,681,284
279,307
331,953
2,048,476
110,702
432,097
1,869,901
279,307
331,953
2,658,129
2,292,544
2,591,275
2,481,161
33,285
79,338
33,248
42,371
33,285
79,338
33,248
42,371
112,623
75,619
112,623
75,619
2,770,752
2,368,163
2,703,898
2,556,780
8,381,490
7,684,133
6,646,985
6,652,224
16
16
16
5,740,791
334,821
2,305,878
4,949,532
200,687
2,533,914
5,740,791
334,821
571,373
4,949,532
200,687
1,502,005
8,381,490
7,684,133
6,646,985
6,652,224
The accompanying notes form part of these financial statements
17
27
AUSTRALIAN ETHICAL INVESTMENT LTD
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Income Statement
for the year ended 30 June 2008
Notes
Consolidated Entity
Parent Entity
2008
$
2007
$
2008
$
2007
$
Revenue
3
14,064,371
12,467,148
10,618,566
9,870,632
Commissions paid to advisers
( 284,450)
( 260,467)
( 75,477)
( 61,390)
External services
( 2,981,077)
( 2,803,039)
( 1,066,833)
( 1,077,421)
Employee benefits expense
( 6,257,080)
( 4,976,651)
( 6,241,118)
( 4,956,578)
Depreciation
Occupancy costs
Communication costs
Other expenses
( 285,736)
( 225,320)
( 285,736)
( 225,320)
( 196,340)
( 316,447)
( 187,013)
( 310,894)
( 839,144)
( 597,178)
( 789,496)
( 543,537)
( 568,428)
( 407,195)
( 538,793)
( 380,558)
Profit before tithe and income tax expense
2,652,116
2,880,851
1,434,100
2,314,934
Tithes expense
1 (k)
( 200,891)
( 224,964)
( 200,891)
( 224,964)
Profit before income tax
2,451,225
2,655,887
1,233,209
2,089,970
Income tax expense
Profit for the year
Profit attributable to members of the
parent entity
Basic Earnings per share (cents per share)
Diluted earnings per share (cents per share)
4
16
6
6
The accompanying notes form part of these financial statements
( 799,435)
( 836,710)
( 284,015)
( 384,218)
1,651,790
1,819,177
949,194
1,705,752
1,651,790
1,819,177
949,194
1,705,752
170.3
165.4
194.8
185.6
AUSTRALIAN ETHICAL INVESTMENT LTD
28
18
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Statement of Changes in Equity
for the year ended 30 June 2008
Notes
Consolidated Entity
Parent Entity
2008
$
2007
$
2008
$
2007
$
Total equity at beginning of financial period
7,684,133
6,273,783
6,652,224
5,355,299
Available-for-sale investments:
Valuation gains/(losses) taken to equity
Transferred to profit or loss on sale
( 60,166)
-
3,811
7,464
( 60,166)
-
3,811
7,464
Employee share options
176,266
96,607
176,266
96,607
Income tax on items taken directly to or
transferred directly from equity
18,034
( 1,143)
18,034
( 1,143)
Net income recognised directly in equity
134,134
106,739
134,134
106,739
Profit for the financial year
1,651,790
1,819,177
949,194
1,705,752
Total recognised income and expense for the
period
Transactions with equity holders in their capacity
as equity holders:
Contribution of equity, net of transaction costs
Dividends provided for or paid
Total equity at the end of the financial
period
Total recognised income and expense for the
financial year is attributable to:
Equity holders of the parent
1,785,924
1,925,916
1,083,328
1,812,491
791,259
( 1,879,826)
( 1,088,567)
321,109
( 836,675)
( 515,566)
791,259
( 1,879,826)
( 1,088,567)
321,109
( 836,675)
( 515,566)
16
8,381,490
7,684,133
6,646,985
6,652,224
1,785,924
1,785,924
1,925,916
1,925,916
1,083,328
1,083,328
1,812,491
1,812,491
The accompanying notes form part of these financial statements
19
29
AUSTRALIAN ETHICAL INVESTMENT LTD
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Cash flow statement
for the year ended 30 June 2008
Notes
Consolidated Entity
Parent Entity
2008
$
2007
$
2008
$
2007
$
14,899,240
( 11,606,829)
-
285,547
( 1,047,296)
( 221,168)
( 224,964)
12,535,315
( 9,467,091)
-
286,760
( 992,589)
( 192,285)
( 173,132)
11,173,592
( 9,389,198)
500,000
195,822
( 423,764)
( 221,168)
( 224,964)
9,679,684
( 7,770,366)
942,248
232,674
( 644,781)
( 192,285)
( 173,132)
21 (b)
2,084,530
1,996,978
1,610,320
2,074,042
1,117,397
( 184,139)
( 1,100,000)
66,438
1,192,683
( 1,974,986)
( 500,000)
15,070
1,117,397
( 184,139)
( 1,100,000)
66,438
1,192,683
( 1,974,986)
( 500,000)
15,070
Cash flows from operating activities
Receipts from operations
Payment to suppliers & employees
Dividends received
Interest/distributions received
Income tax paid
Bonus
Tithe
Net cash provided by (used in) operating
activities
Cash flows from investing activities
Proceeds from sale of investments
Purchase of property, plant & equipment
Purchase of investments
Repayment of loans
Net cash provided by (used in) investing activities
( 100,304)
( 1,267,233)
( 100,304)
( 1,267,233)
Cash flows from financing activities
Proceeds from share issue
Share buy-back payment
Dividends paid
954,328
( 178,954)
( 1,879,826)
392,921
( 92,761)
( 836,675)
954,328
( 178,954)
( 1,879,826)
392,921
( 92,761)
( 836,675)
Net cash provided by (used in) financing activities
( 1,104,452)
( 536,515)
( 1,104,452)
( 536,515)
Net increase (decrease) in cash held
879,774
193,230
405,564
270,294
Cash at beginning of financial year
1,672,464
1,479,234
643,525
373,231
Cash at end of financial year
21 (a)
2,552,238
1,672,464
1,049,089
643,525
The accompanying notes form part of these Financial Statements
AUSTRALIAN ETHICAL INVESTMENT LTD
30
20
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2008
Notes to the financial statements for the year ended 30 June 2008
Note 1 - Statement of significant accounting policies
The financial report is a general purpose financial report that has been prepared in
accordance with Australian Accounting Standards, other authoritative pronouncements of the
Australian Accounting Standards Board and the Corporations Act 2001.
The financial report covers the consolidated entity of Australian Ethical Investment Limited
and its wholly owned entity Australian Ethical Superannuation Pty Ltd and Australian Ethical
Investment Limited as an individual parent entity. Australian Ethical Investment Limited is a
listed public company and both the parent and wholly owned entity are incorporated and
domiciled in Australia.
The nature of the operations and principal activities of the consolidated entity are described at
note 19.
The financial report of Australian Ethical Investment Limited and its wholly owned entity, and
Australian Ethical Investment Limited as an individual parent entity comply with all Australian
equivalents to International Financial Reporting Standards (AIFRS) in their entirety.
The following is a summary of the material accounting policies adopted by the consolidated
entity in the preparation of the financial report. The accounting policies have been
consistently applied, unless otherwise stated.
Basis of preparation
The financial report has been prepared on an accruals basis and is based on historical costs
modified by the revaluation of selected financial assets for which the fair value basis of
accounting has been applied.
Accounting Policies
a) Principles of consolidation
A controlled entity is any entity Australian Ethical Investment Limited has the power to control
the financial and operating policies of so as to obtain benefits from its activities.
All controlled entities have a June financial year-end.
All inter-company balances and transactions between entities in the consolidated entity,
including any unrealised profits or losses, have been eliminated on consolidation. Accounting
policies of controlled entities have been changed where necessary to ensure consistencies
with those policies applied by the parent entity.
The consolidated financial statements comprise the financial statements of Australian Ethical
Investment Limited and its wholly owned entity Australian Ethical Superannuation Pty Limited.
b) Income tax
The charge for current income tax expenses is based on the profit for the year adjusted for
any non-assessable or disallowed items. It is calculated using tax rates that have been
enacted or are substantively enacted by the balance sheet date.
21
31
AUSTRALIAN ETHICAL INVESTMENT LTD
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2008
Note 1 - Statement of significant accounting policies - continued
b) Income tax - continued
Deferred tax is accounted for using the balance sheet liability method in respect of temporary
differences arising between the tax bases of assets and liabilities and their carrying amounts
in the financial statements. No deferred income tax will be recognised from the initial
recognition of an asset or liability, excluding a business combination, where there is no effect
on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the
asset is realised or liability is settled. Deferred tax is credited in the income statement except
where it relates to items that may be credited directly to equity, in which case the deferred tax
is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax
profits will be available against which deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on
the assumption that no adverse change will occur in income taxation legislation and the
anticipation that the consolidated entity will derive sufficient future assessable income to
enable the benefit to be realised and comply with the conditions of deductibility imposed by
the law.
Australian Ethical Investment Limited and its wholly owned entity Australian Ethical
Superannuation Pty Ltd have formed an income tax consolidated group under the Tax
Consolidation System. Australian Ethical Investment Limited is responsible for recognising the
current and deferred tax assets and liabilities for the tax consolidated group. The group
notified the Australian Tax Office (ATO) on 24 March 2004 that it had formed an income tax
consolidated group to apply from 1 July 2002. The tax consolidated group has entered a tax
sharing agreement whereby each company in the group contributes to the income tax
payable in proportion to their contribution to the net profit before tax of the tax consolidated
group. Under the tax sharing agreement Australian Ethical Superannuation Pty Ltd agrees to
pay its share of the income tax payable to Australian Ethical Investment Limited on the same
day that Australian Ethical Investment Limited pays the ATO for group tax liabilities.
c) Property, plant and equipment
Each class of property, plant and equipment is carried at cost or fair value less, where
applicable, any accumulated depreciation and impairment losses.
Property
Leasehold land and buildings are shown at cost less any accumulated depreciation and any
accumulated impairment losses.
Any accumulated depreciation at the date of revaluation is eliminated against the gross
carrying amount of the asset and the net amount is restated to the re-valued amount of the
asset.
Plant and equipment
Plant and equipment are measured on the cost basis less depreciation and impairment
losses.
1The carrying amount of plant and equipment is reviewed annually by directors to ensure it is
not in excess of the recoverable amount from these assets. The recoverable amount is
assessed on the basis of the expected net cash flows that will be received from the assets
22
AUSTRALIAN ETHICAL INVESTMENT LTD
32
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2008
Note 1 - Statement of significant accounting policies - continued
c) Property, plant and equipment - continued
employment and subsequent disposal. The expected net cash flows have been discounted to
their present values in determining recoverable amounts.
Depreciation
The depreciable amount of all fixed assets including buildings, is depreciated over their
estimated useful lives to the consolidated entity commencing from the time the asset is held
ready for use.
The depreciation rates used for each class of assets are:
Class of fixed asset
Depreciation
Rates
Depreciation Basis
Buildings
Furniture, fittings and equipment
Software
Straight line
2.5%-20%
10% to 37.5%
Straight line/Diminishing value
18.75% to 40% Straight line/Diminishing value
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each
balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the
asset’s carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying
amount. These gains and losses are included in the income statement. When re-valued
assets are sold, amounts included in the revaluation reserve relating to that asset are
transferred to retained earnings.
d) Financial instruments
Recognition
Financial instruments are initially measured at cost on trade date, which includes transaction
costs, when the related contractual rights or obligations exist. Subsequent to initial recognition
these instruments are measured as set out below.
Available-for-sale financial assets
The consolidated entity holds only available for sale financial assets. Available for sale
financial assets are assets not classified as financial assets at fair value through profit and
loss, loans and receivables, or held-to-maturity investments. Available-for-sale financial
assets are reflected at fair value. Unrealised gains and losses arising from changes in fair
value are taken directly to equity.
Fair value
Fair value is determined based on current bid prices for all quoted investments. Valuation
techniques are applied to determine the fair value for all unlisted securities, including recent
arm’s length transactions, reference to similar instruments and option pricing models.
23
33
AUSTRALIAN ETHICAL INVESTMENT LTD
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2008
Note 1 - Statement of significant accounting policies – continued
d) Financial instruments– continued
Impairment
At each reporting date, the group assess whether there is objective evidence that a financial
instrument has been impaired. In the case of available-for sale financial instruments, a
prolonged decline in the value of the instrument is considered to determine whether an
impairment has arisen. Impairment losses are recognised in the income statement.
e) Impairment of assets
At each reporting date, the group reviews the carrying values of its tangible and intangible
assets to determine whether there is any indication that those assets have been impaired. If
such an indication exists, the recoverable amount of the asset, being the higher of the asset’s
fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any
excess of the asset’s carrying value over it recoverable amount is expensed to the income
statement.
Where it is not possible to estimate the recoverable amount of an individual asset, the group
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
f) Employee benefits
Provision is made for the company’s liability for employee benefits arising from services
rendered by employees to balance date. Employee benefits that are expected to be settled
within one year have been measured at the amounts expected to be paid when the liability is
settled, plus related on-costs. Employee benefits payable later than one year have been
measured at the present value of the estimated future cash outflows to be made for those
benefits.
Share options
Share based compensation benefits are provided to employees via the Australian Ethical
Investment Limited employee share ownership plan. Share options have been granted
annually to employees and details are disclosed in the annual financial report.
Share options granted before 7 November 2002 and/or vested before 1 January 2005
No expense is recognised in respect of these options. The shares are recognised when the
options are exercised and the proceeds received allocated to share capital.
Share options granted on or after 7 November 2002 and vested after 1 January 2005
The fair value of options granted under the Australian Ethical Investment Limited employee
share ownership plan is recognised as an employee benefit expense with a corresponding
increase in equity. The fair value is measured at grant date and recognised over the vesting
period.
At each balance sheet date, the entity revises its estimate of the number of options that are
expected to become exercisable. The employee benefit expense recognised each period
takes into account the most recent estimate.
Upon the exercise of options, the balance of the options reserve relating to those options is
transferred to share capital and the proceeds received, net of any directly attributable
transaction costs, are credited to share capital.
AUSTRALIAN ETHICAL INVESTMENT LTD
34
24
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2008
Note 1 - Statement of significant accounting policies – continued
f) Employee benefits - continued
Employee bonus
The group recognises a liability and an expense for bonuses and profit-sharing based on a
formula that takes into consideration the profit attributable to the company's shareholders
after certain adjustments. The group recognises a provision where contractually obliged or
where there is a past practice that has created a constructive obligation.
g) Provisions
Provisions are recognised when the group has a legal or constructive obligation, as a result of
past events, for which it is probable that an outflow of economic benefits will result and that
outflow can be reliably measured.
h) Cash and cash equivalents
Cash and cash equivalents include cash on hand and deposits held at call with banks.
i) Revenue
Revenue from the rendering of a service is recognised upon the delivery of the service to the
customers.
Interest revenue is recognised on a proportional basis taking into account the interest rates
applicable to the financial assets.
All revenue is stated net of the amount of goods and services tax (GST).
j) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the
amount of GST incurred is not recoverable from the Australian Tax Office. In these
circumstances the GST is recognised as part of the cost of acquisition of the asset or as part
of an item of the expense. Receivables and payables in the balance sheet are shown
inclusive of GST.
Cash flows are presented in the cash flow statement on a gross basis, except for the GST
component of investing and financing activities, which are disclosed as operating cash flows.
k) Tithes expense
The Company’s Constitution states that "the directors before recommending or declaring any
dividend to be paid out of the profits of any one year must have first:-
(i)
(ii)
paid or provisioned for payment to current employees, or other persons
performing work for the company, a work related bonus or incentive payment, set
at the discretion of the directors, but to be no more than 30 percent (30%) of what
the profit for that year would have been had not the bonus or incentive payment
been deducted"
"gifted or provisioned for gifting an amount equivalent to ten percent (10%) of
what the profit for that year would have been had not the above mentioned bonus
and amount gifted been deducted".
25
35
AUSTRALIAN ETHICAL INVESTMENT LTD
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2008
Note 1 - Statement of significant accounting policies - continued
l) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of
the company, by the weighted average number of ordinary shares outstanding during the
financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per
share to take into account the after income tax effect of the interest and other financing costs
associated with dilutive potential ordinary shares and the weighted average number of shares
assumed to have been issued for no consideration in relation to dilutive potential ordinary
shares.
m) Comparative figures
Where required comparative figures have been adjusted to conform with changes in
presentation for the current financial year.
Critical accounting estimates and judgements
The directors evaluate estimates and judgments incorporated into the financial report based
on historical knowledge and best available current information. Estimates assume a
reasonable expectation of future events and are based on current trends and economic data,
obtained both externally and within the group.
Key estimates – annual leave and long service leave provision
Future average salary increases have been estimated at 5%. This increase has been
incorporated into the annual leave and long service leave provision.
Key judgements
Australian Ethical Investment Limited has a loan receivable from the Centre for Australian
Ethical Research recorded as an asset on its balance sheet for $105,946. The directors have
determined that no provision for impairment is required for this loan.
26
AUSTRALIAN ETHICAL INVESTMENT LTD
36
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2008
Note 2 - Auditors' remuneration
Remuneration of the auditors for:
Audit services
- Auditing the financial report
- Auditing the Custodian transition
- Auditing the Administrator transition
- Auditing the sustainability report
Non-audit services
- Tax and other accounting advice
- Internal control and risk review
Note 3 - Revenue
Operating activities
- Management fees net of rebates
- Entry fees
- Member & Withdrawal Fees
- Other fees
- Dividend from wholly owned subsidiary
- Interest/distributions
- Wholly owned entity fee
- Other revenue
Consolidated Entity
Parent Entity
2008
$
2007
$
2008
$
2007
$
34,000
5,000
10,000
5,000
30,500
-
-
4,600
30,000
2,500
-
5,000
27,000
-
-
4,600
3,000
7,000
3,450
16,500
3,000
7,000
3,000
15,000
10,737,924
1,861,872
444,513
653,080
-
272,819
-
94,163
14,064,371
9,429,699
1,837,914
380,693
453,283
-
275,292
-
90,267
12,467,148
5,127,584
501,215
-
653,080
500,000
183,095
3,563,238
90,354
10,618,566
4,935,178
484,170
-
453,283
942,248
221,205
2,752,623
81,925
9,870,632
Total revenue
14,064,371
12,467,148
10,618,566
9,870,632
27
37
AUSTRALIAN ETHICAL INVESTMENT LTD
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2008
Note 4 - Income tax expense
a) The components of tax expense comprise:
- Current tax
- Deferred tax
b) The prima facie tax payable on profit from
ordinary activities before income tax is reconciled
to the income tax expense as follows:
Prima facie tax payable on profit from ordinary
activities before income tax at 30% (2007:30%)
- Consolidated entity
- Parent entity
- Other members of the income tax consolidated
group net of intercompany transactions
Add: tax effect of:
- Other non-allowable items
- Share options expensed during year
- Under provision for income tax in prior year
Less: tax effect of:
- Rebateable fully franked dividends
- Non-assessable income
- Franking and foreign tax credits
Consolidated Entity
Parent Entity
2008
$
2007
$
2008
$
2007
$
878,691
(79,256)
799,435
915,888
(79,178)
836,710
360,121
(76,106)
284,015
468,196
(83,978)
384,218
735,368
-
796,766
-
-
369,963
-
626,991
-
-
515,420
452,641
1,077
52,879
10,616
799,940
1,455
28,982
11,119
838,322
1,062
52,879
10,616
949,940
1,413
28,982
11,119
1,121,146
-
-
( 505 )
-
( 738 )
( 874 )
( 150,000 )
-
( 505 )
( 282,675)
( 738)
( 874)
Income tax expense attributable to entity
799,435
836,710
799,435
836,859
Allocation of income tax expense to wholly owned
entity under the tax sharing agreement
-
-
( 515,420)
( 452,641)
Income tax expense attributable to entity
799,435
836,710
284,015
384,218
The applicable weighted average effective tax
rates are as follows:
33%
32%
23%
18%
AUSTRALIAN ETHICAL INVESTMENT LTD
28 38
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2008
Note 5 - Dividends
Distributions paid
Final fully franked dividend of 152 (2007: 50) cents
per share franked at the tax rate of 30%
(2007:30%)
Interim fully franked dividend of 45 (2007: 40)
cents per share franked at the tax rate of 30%
(2007:30%)
Declared final fully franked dividend of 120 (2007:
152) cents per share franked at the tax rate of 30%
(2007: 30%)
Balance of franking account at year end adjusted
for franking credits which will arise from income tax
payments in the following year.
Subsequent to year-end, the franking account
would be reduced by the declared dividend
reflected above as follows:
Note 6 - Earnings per share
(a) Earnings used to calculate basic EPS and
dilutive EPS
(b) Weighted average number of ordinary shares
outstanding during the year used in calculation of
basic EPS
Weighted average number of options outstanding
Weighted average number of ordinary shares
outstanding during the year used in calculation of
dilutive EPS
Note 7 - Cash and cash equivalents
Cash on hand
Cash at bank
Deposits at call
Consolidated Entity
Parent Entity
2008
$
2007
$
2008
$
2007
$
1,437,025
458,631
1,437,025
458,631
442,801
1,879,826
378,044
836,675
-
442,801
1,879,826
378,044
836,675
1,180,804
1,436,566
1,180,804
1,436,566
1,616,777
1,543,029
506,059
1,110,718
615,671
927,358
1,651,790
1,819,177
970,020
934,002
28,745
45,960
998,765
979,962
300
222,476
2,329,462
2,552,238
300
32,114
1,640,050
1,672,464
300
4,793
1,043,996
1,049,089
300
3,165
640,060
643,525
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Deposits at call is money invested in high interest bank account. Interest is calculated daily based on
daily bank deposit rates.
29 39
AUSTRALIAN ETHICAL INVESTMENT LTD
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2008
Note 8 - Trade and other receivables
Trade receivables
Other
Amounts receivable - wholly owned entity
Note 9 - Financial assets
Available-for-sale financial assets
Loans
Less non-current portion
Current portion
a. Available-for-sale financial assets comprise:
- Money market deposit at cost
- Mortgage backed security at fair value
- Bank note at fair value
- Units in unit trust at fair value
- Shares in wholly owned entity at cost
Consolidated Entity
Parent Entity
2008
$
2007
$
2008
$
2007
$
1,785,510
26,900
-
1,812,410
1,446,758
40,427
-
1,487,184
1,100,702
26,900
119,044
1,246,646
1,114,818
40,427
224,006
1,379,251
1,737,572
105,946
1,843,518
94,744
1,748,774
1,815,158
173,272
1,988,430
158,000
1,830,430
2,053,572
105,946
2,159,518
410,744
1,748,774
2,131,158
173,272
2,304,430
474,000
1,830,430
1,100,000
287,681
-
349,891
-
1,737,572
500,000
408,502
502,030
404,626
-
1,815,158
1,100,000
287,681
-
349,891
316,000
2,053,572
500,000
408,502
502,030
404,626
316,000
2,131,158
The money market deposits are at fixed interest rates of 8% and 8.13% with maturity dates
of 25 November 2008 and 24 September 2008. They are investment grades rated by S&P.
The mortgage backed security is at a floating interest rate of BBSW + 0.39, has a maturity
date of 24 October 2009 and is investment grade rated by S&P.
b. Loans comprise
- Loan to other entity
105,946
105,946
173,272
173,272
105,946
105,946
173,272
173,272
The loan is provided to an independent entity.
The loan is at a fixed interest rate of 9.0% and matures 1 August 2015.
Note 10 - Other current assets
Other
Prepayments
6,102
242,389
248,491
22,160
161,484
183,644
6,102
198,143
204,245
22,160
140,115
162,275
AUSTRALIAN ETHICAL INVESTMENT LTD
30 40
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2008
Note 11 - Property, plant and equipment
Consolidated Entity
Parent Entity
2008
$
2007
$
2008
$
2007
$
Land and buildings
Leasehold land
At cost
Total land
Buildings
At cost
Accumulated depreciation
Total buildings
Total land and buildings
Plant and equipment
At cost
Accumulated depreciation
Total plant and equipment
230,000
230,000
230,000
230,000
230,000
230,000
230,000
230,000
2,784,117
( 157,503 )
2,626,614
2,784,117
( 83,191 )
2,700,926
2,784,117
( 157,503)
2,626,614
2,784,117
( 83,191)
2,700,926
2,856,614
2,930,926
2,856,614
2,930,926
2,075,929
( 726,742)
1,349,187
1,991,339
( 594,127)
1,397,212
2,075,929
( 726,742)
1,349,187
1,991,339
( 594,127)
1,397,212
Total property, plant and equipment
4,205,801
4,328,138
4,205,801
4,328,138
Movements in carrying amounts
Land
Balance at the beginning of year
Additions
Disposals
Carrying amount at the end of year
Buildings
Balance at the beginning of year
Additions
Disposals
Depreciation expense
Carrying amount at the end of year
Plant and equipment
Balance at the beginning of year
Additions
Disposals
Depreciation expense
Carrying amount at the end of year
230,000
-
-
230,000
230,000
-
-
230,000
230,000
-
-
230,000
230,000
-
-
230,000
2,700,926
-
( 74,312)
2,626,614
2,056,435
705,040
-
( 60,549)
2,700,926
2,700,926
-
( 74,312)
2,626,614
2,056,435
705,040
-
( 60,549)
2,700,926
1,397,212
176,524
( 13,125)
( 211,424)
1,349,187
326,718
1,244,747
( 9,482)
( 164,771)
1,397,212
1,397,212
176,524
( 13,125)
( 211,424)
1,349,187
326,718
1,244,747
( 9,482)
( 164,771)
1,397,212
Total
4,205,801
4,328,138
4,205,801
4,328,138
31
41
AUSTRALIAN ETHICAL INVESTMENT LTD
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2008
Consolidated Entity
Parent Entity
2008
$
2007
$
2008
$
2007
$
Note 12 - Deferred tax assets
The balance comprises temporary differences
attributable to:
Amounts recognised in profit or loss
Employee benefits
Tithe
Audit fees
Amounts recognised directly in equity
Financial asset revaluations
Movements
Opening balance at 1 July
Credited (charged) to the income statement
Credited (charged) to equity
Closing balance at 30 June
Note 13 - Trade and other payables
Trade payables
Sundry payables and accrued expenses
Employee bonus
Amounts payable to wholly owned entity
Note 14 - Deferred tax liabilities
The balance comprises temporary differences
attributable to:
Amounts recognised in profit or loss:
Stamp duty on leasehold property:
Tax deferred income
Amounts recognised in equity:
Available-for-sale financial assets
Movements
Opening balance at 1 July
Credited/(charged) to the income statement
Credited/(charged) to equity
Closing balance at 30 June
398,213
60,267
15,600
474,080
313,517
67,488
11,430
392,435
398,213
60,267
11,400
469,880
313,517
67,488
10,380
391,385
15,704
-
15,704
-
489,784
392,435
485,584
391,385
392,435
81,645
15,704
489,784
315,246
79,178
( 1,989)
392,435
391,385
78,495
15,704
485,584
309,396
83,978
( 1,989)
391,385
288,131
1,532,119
295,080
-
2,115,330
300,249
1,143,015
238,020
-
1,681,284
173,630
1,131,715
295,080
448,051
2,048,476
195,764
974,252
238,020
461,865
1,869,901
30,896
2,389
33,285
33,248
2,389
( 2,352)
33,285
30,896
-
2,352
33,248
30,896
-
2,352
33,248
30,896
2,389
33,285
33,248
2,389
( 2,352)
33,285
30,896
-
2,352
33,248
30,896
2,352
33,248
AUSTRALIAN ETHICAL INVESTMENT LTD
32 42
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2008
Note 15 - Provisions
Current
Employee benefits - long service leave
Non-Current
Employee benefits - long service leave
Note 16 - Movements in equity
Issued capital
Ordinary shares
Fully paid ordinary shares at the beginning of the
financial year 945,109 (2007 - 916,559) shares
Issue of share capital
Shares issued during the year under the employee
share ownership plan:
302 on 24 September 2007 (share bonus)
24,644 on 9 November 2007 (options exercised)
8,413 on 30 November 2007 (options exercised)
1,449 on 18 December 2007 (option exercised)
703 on 22 September 2006 (share bonus)
24,146 on 31 October 2006 (options excercised)
2,781 on 28 November 2006 (options exercised)
6,851 on 15 January 2007 (option exercised)
2,798 on 5 October 2007 (dividend reinvestment
plan)
4,711 on 19 October 2007 (dividend reinvestment
plan)
Shares bought back during the year
3,423 on 17 October 2007
5,931 on 31 October 2006
Balance 30 June
984,003 (2007 - 945,109) shares
Consolidated Entity
Parent Entity
2008
$
2007
$
2008
$
2007
$
432,097
432,097
331,953
331,953
432,097
432,097
331,953
331,953
79,338
79,338
42,371
42,371
79,338
79,338
42,371
42,371
4,949,532
4,628,423
4,949,532
4,628,423
-
-
-
-
20,949
340,700
39,240
96,667
15,885
401,204
136,964
23,590
-
-
-
-
146,279
246,291
-
-
-
-
20,949
340,700
39,240
96,667
15,885
401,204
136,964
23,590
-
-
-
-
146,279
246,291
( 178,954)
-
( 176,447)
( 178,954)
-
( 176,447)
5,740,791
4,949,532
5,740,791
4,949,532
33 43
AUSTRALIAN ETHICAL INVESTMENT LTD
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2008
Consolidated Entity
Parent Entity
2008
$
2007
$
2008
$
2007
$
Note 16 - Movements in equity - continued
At 30 June 2008 there were 984,003 fully paid ordinary shares which have no par value.
For detailed information relating to the Australian Ethical Investment Limited employee share ownership plan,
including details of options issued, exercised and lapsed during the financial year and the options outstanding
at year-end, refer to note 24 Share-based payments
For information related to share options issued to key management personnel during the financial year
refer to the remuneration report contained within the Directors' report.
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the
number of shares held. At the shareholders meeting each ordinary share is entitled to one vote when a poll
is called, othewise each shareholder has one vote on a show of hands.
The company’s capital structure and policies remain relatively simple. The company currently has no debt and
capital not required for working purposes is held as an investment in Trevor Pearcey House and in an investment
portfolio comprising triple A securities, senior bank debt and corporate rated debt. Detail provided in Note 9 and 11.
Management effectively manages the group's capital by assessing the group's financial risks and adjusting its capital
structure in response to changes in these risks and in the market. These responses include the management of
distributions to shareholders and share issues.
Maintenance of a certain level of capital is a condition of the company’s Australian Financial Services Licence.
The company currently meets the $5.0M capital requirement above which no extra capital is required as a result of
increased funds under management.
Reserves
Available-for-sale financial assets revaluation reserve
Balance 1 July
Gross gains/ (losses)
Revaluation - gross
Deferred tax
Balance 30 June
$
5,489
-
( 60,166)
18,034
( 36,643)
( 4,643)
7,464
3,811
( 1,143)
5,489
5,489
-
( 60,166)
18,034
( 36,643)
( 4,643)
7,464
3,811
( 1,143)
5,489
Share-based payments reserve
Balance 1 July
Option expense
Balance 30 June
195,198
176,266
371,464
98,591
96,607
195,198
195,198
176,266
371,464
98,591
96,607
195,198
Total Reserves
334,821
200,687
334,821
200,687
The "Available-for-sale financial assets revaluation reserve" records revaluations to fair value of available
for sale financial assets.
The "Share-based payments reserve" records items recognised as expenses on valuation of employee
share options.
Retained earnings
Balance 1 July
Profit for the period
Total for the period
Dividends
Balance 30 June
Total Equity
2,533,914
1,651,790
1,651,790
( 1,879,826)
2,305,878
1,551,412
1,819,177
1,819,177
( 836,675)
2,533,914
1,502,005
949,194
949,194
( 1,879,826)
571,373
632,928
1,705,752
1,705,752
( 836,675)
1,502,005
8,381,490
7,684,133
6,646,985
6,652,224
AUSTRALIAN ETHICAL INVESTMENT LTD
34 44
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2008
Consolidated Entity
Parent Entity
2008
$
2007
$
2008
$
2007
$
Note 17 – Events after the balance sheet date
Since the end of the financial year, no material events that may have an impact on these financial statements
have occurred.
The financial report was authorised for issue on the directors' declaration date by the board of directors.
Note 18 - Economic dependence
The Consolidated Entity is dependent upon management fees received in its capacity as Responsible Entity of the
Australian Ethical Trusts and as Trustee of the Australian Ethical Retail Superannuation Fund.
Note 19 - Segment reporting
The Consolidated Entity operated within one business segment (Investment Management) which represents its
primary segment reporting format and one geographical segment.
Note 20 - Contingencies
Superannuation Administrator Transition
The wholly owned entity, Australian Ethical Superannuation Pty Ltd (AES) is in dispute with United Funds
Management Limited (United), its former fund administrator. AES believes that United has failed to provide the
contracted service and that it has valid claims for damages against United. United is seeking payment of monies
invoiced to AES for the service in the reporting period (approximately $250,000). Notwithstanding the dispute,
and without any prejudice to AES’ claims, AES has decided to recognise as expenses the disputed invoices in
its 2008 financial statements consistent with a conservative accounting approach. Similarly, a liability for the
disputed amount will be included on the AES balance sheet. The approach of AES will be reflected in Australian
Ethical’s consolidated financial statements. AES and United continue to discuss the claims and disputed
invoices.
Should the dispute be resolved in AES' favour there may be a positive impact on future income statements.
There is also the potential for future costs arising from issues related to the superannuation administration
transition.
Liabilties and assets of trusts and superannuation fund
Liabilities of the trusts and superannuation fund for which the Consolidated Entity and parent entity are
Responsible Entity and Trustee but not shown in the financial statements of the Consolidated Entity or parent
entity were:
Current liabilities
Payables
Provisions
Total liabilities
6,740,858
10,702,251
17,443,109
4,588,418
64,692,694
69,281,112
1,392,523
9,127,716
10,520,239
3,790,889
58,707,157
62,498,046
Rights of indemnities for liabilities incurred by the
Consolidated Entity and parent entity not recorded
in the financial statements were:
17,443,109
69,281,112
10,520,239
62,498,046
The trusts and superannuation fund hold sufficient assets to meet these liabilities as and when they fall due.
The assets of the trusts and superannuation fund
are not available to meet any liabilities of the
Consolidated Entity or parent entity acting in their
own right.
35 45
AUSTRALIAN ETHICAL INVESTMENT LTD
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2008
Consolidated Entity
Parent Entity
2008
$
2007
$
2008
$
2007
$
Note 21 - Cash flow information
(a) Reconciliation of cash
Cash at the end of the financial year as shown in
the cash flow statement is reconciled to the
related items in the balance sheet as follows:
Cash on hand
Cash at bank
Deposits at call
300
222,476
2,329,462
2,552,238
300
32,114
1,640,050
1,672,464
300
4,793
1,043,996
1,049,089
300
3,165
640,060
643,525
(b) Reconciliation of cash flow from operations
with net profit from ordinary activities after income
tax expense
Net profit from ordinary activities after income tax
expense
Non-cash flows in operating profit
Depreciation
Provisions
(Profit) loss on sale of property, plant & equipment
(Profit) loss on sale of investment
Share options expensed
Staff bonus paid in shares
Changes in assets and liabilities
(Increase) decrease in trade & other receivables
(Increase) decrease in prepayments & other assets
(Increase) decrease in deferred tax assets
Increase (decrease) in trade & other payables
Increase (decrease) in current tax liability
Increase (decrease) in deferred tax liability
1,651,790
1,819,177
949,194
1,705,752
285,736
137,111
13,125
-
176,266
15,885
225,320
107,797
9,442
11,178
96,607
20,949
285,736
137,111
13,125
-
176,266
15,885
225,320
107,797
9,442
11,178
96,607
20,949
( 324,337)
( 64,846)
( 79,256)
441,661
( 168,605)
-
( 448,190)
( 43,936)
( 79,178)
354,513
( 76,701)
-
28,531
( 41,970)
( 78,495)
186,191
( 63,643)
2,389
( 236,395)
( 68,032)
( 81,989)
461,987
( 176,585)
( 1,989)
Net cash provided by (used in) operating activities
2,084,530
1,996,978
1,610,320
2,074,042
(c) Non-cash financing and investing activities
Shares in Australian Ethical Investment Limited, to the value of $15,885 (2007: $20,949) were issued in lieu of
staff bonus.
AUSTRALIAN ETHICAL INVESTMENT LTD
36 46
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2008
Consolidated Entity
Parent Entity
2008
$
2007
$
2008
$
2007
$
Note 22 – Related party transactions
Australian Ethical Investment Limited is the ultimate parent entity and owns 100% of Australian Ethical
Superannuation Pty Ltd.
Australian Ethical Investment Limited acts as the Responsible Entity for the Australian Ethical Trusts
(Australian Ethical Balanced Trust, Australian Ethical Equities Trust, Australian Ethical Income Trust,
Australian Ethical Large Companies Share Trust, Australian Ethical International Equities Trust and
Australian Ethical World Trust).
Australian Ethical Superannuation Pty Ltd acts as trustee for the Australian Ethical Retail Superannuation Fund.
Transactions between related parties are on commercial terms and conditions no more favourable than
those available to other parties unless otherwise stated.
Australian Ethical Superannuation Pty Ltd
a) Transactions between Australian Ethical Investment Limited and its wholly owned entity, Australian Ethical
Superannuation Pty Ltd during the financial year consisted of:
(i) Transactions whereby Australian Ethical
Investment Limited provides management services
to the wholly owned entity on a cost recovery basis
(ii) Transactions between Australian Ethical
Investment Limited and its wholly owned entity
under the tax consolidation and related tax sharing
agreement referred to in note 1(b).
(iii) Transactions whereby Australian Ethical
Investment Limited collects management fee
income on behalf of wholly owned entity and on-
pays this management fee income to the wholly
owned entity on a monthly basis.
(iv) Transactions whereby Australian Ethical
Investment Limited receives a dividend from the
wholly owned entity referred to in note 3.
b) Outstanding balances at balance date:
Amounts receivable from wholly owned entity:
Management services
Taxation
Amounts payable to wholly owned entity:
Management fee income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,563,238
2,752,622
515,420
452,641
5,580,164
4,521,499
500,000
942,248
-
119,045
-
224,006
448,051
461,865
37 47
AUSTRALIAN ETHICAL INVESTMENT LTD
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2008
Consolidated Entity
Parent Entity
2008
$
2007
$
2008
$
2007
$
Note 22 – Related party transactions - continued
Australian Ethical Trusts
a) Transactions between Australian Ethical Investment Limited, as Responsible Entity, and the Australian
Ethical Trusts during the financial year consisted of:
(i) Transactions whereby Australian Ethical
Investment Limited provides investment services
to the Australian Ethical Trusts in accordance with
the Trust Deed.
- Australian Ethical Balanced Trust
- Australian Ethical Equities Trust
- Australian Ethical Income Trust
- Australian Ethical Large Companies Shares Trust
- Australian Ethical International Equities Trust
- Australian Ethical World Trust
(ii) Transactions whereby Australian Ethical
Investment Limited provides accounting services
to the Australian Ethical Trusts in accordance with
the Trust Deed.
- Australian Ethical Balanced Trust
- Australian Ethical Equities Trust
- Australian Ethical Income Trust
- Australian Ethical Large Companies Shares Trust
- Australian Ethical International Equities Trust
- Australian Ethical World Trust
(iii) Transactions whereby Australian Ethical
Investment Limited seeks expense reimbursement
from the Australian Ethical Trusts in accordance
with the Trust Deed.
- Australian Ethical Balanced Trust
- Australian Ethical Equities Trust
- Australian Ethical Income Trust
- Australian Ethical Large Companies Shares Trust
- Australian Ethical International Equities Trust
- Australian Ethical World Trust
(iv) Transaction whereby Australian Ethical
Investment Limited received a distribution payment
from the Australian Ethical Balanced Trust
b) Outstanding balances at balance date:
4,085,481
3,612,192
280,875
2,578,524
353,350
27,055
3,980,112
3,062,362
242,336
2,309,552
11,081
-
4,085,481
3,612,192
280,875
2,578,524
353,350
27,055
3,980,112
3,062,362
242,336
2,309,552
11,081
-
155,976
123,000
49,074
77,646
56,112
21,576
109,596
87,684
39,468
61,392
-
-
155,976
123,000
49,074
77,646
56,112
21,576
109,596
87,684
39,468
61,392
-
-
54,023
57,610
4,717
46,028
376
5,442
53,633
51,031
4,077
43,916
14
-
54,023
57,610
4,717
46,028
376
5,442
53,633
51,031
4,077
43,916
14
-
7,311
6,237
7,311
6,237
AUSTRALIAN ETHICAL INVESTMENT LTD
38 48
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2008
Consolidated Entity
Parent Entity
2008
$
2007
$
2008
$
2007
$
Note 22 – Related party transactions - continued
Amounts receivable from the Australian Ethical
Trusts in relation to investment services,
accounting services and reimbursable expenses:
- Australian Ethical Balanced Trust
- Australian Ethical Equities Trust
- Australian Ethical Income Trust
- Australian Ethical Large Companies Shares Trust
- Australian Ethical International Equities Trust
- Australian Ethical World Trust
Value of units held by Australian Ethical
Investment Limited in the Australian Ethical
Balanced Trust
Distribution receivable from AEBT
Australian Ethical Retail Superannuation Fund
a) Transactions between the Consolidated entity
and the Australian Ethical Retail Superannuation
Fund during the financial year consisted of:
(i) Transactions between Australian Ethical
Superannuation Pty Limited and the Australian
Ethical Retail Superannuation Fund related to
investment services/ (rebate of investment
services).
Outstanding balances at balance date:
Amounts receivable from/ (payable to ) the
Australian Ethical Retail Superannuation Fund:
Investment services/ (rebate of investment
services fee).
358,820
338,548
31,780
218,099
48,120
5,386
412,430
354,366
27,400
258,332
12,204
-
358,820
338,548
31,780
218,099
48,120
5,386
412,430
354,366
27,400
258,332
12,204
-
348,891
7,400
404,626
26,591
349,891
7,400
404,626
26,591
30,175
( 26,978)
21,284
( 1,465)
-
-
-
-
Terms and conditions
No provision for doubtful debts have been raised in relation to any outstanding balances and no expense has
been recognised in respect of bad or doubtful debts due from related parties.
Outstanding balances are unsecured and are repayable in cash.
39 49
AUSTRALIAN ETHICAL INVESTMENT LTD
AUSTRALIAN ETHICAL INVESTMENT LIMITED A.B.N. 47 003 188 930 AND CONTROLLED ENTITY
Notes to the financial statements for the year ended 30 June 2008
Note 23 - Key management personnel compensation
a) Key management personnel
Names and positions of key management personnel (directors and named executives) at any time during the financial year
Parent entity directors
Name
Pauline Vamos
Caroline Le Couteur
James Thier
Howard Pender
Naomi Edwards
Justine Hickey
Anne O Donnell
Position
Chairperson, non-executive
Director, executive
Director, executive
Director, executive
Chairperson, non-executive
Director, non-executive
Managing Director ,executive
Other key management personnel
Name
David Ferris
Gary Leckie
Tim XIrakis
Philip George
Paul Harding Davis
Position
Investment manager
Chief financial officer
Finance Investment Manager
Company secretary / legal counsel
Head of Distribution
b) Key management personnel compensation
Resigned 31 August 2007
Appointed 29 May 2008
Resigned 28 March 2008
Short term employment benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
Total compensation
Economic Entity
2008
$
2007
$
1,569,475
131,619
29,635
-
142,670
1,873,399
1,355,800
106,073
24,593
-
73,960
1,560,426
Parent Entity
2008
$
2007
$
1,474,892
123,519
29,635
-
142,670
1,770,716
1,264,631
98,873
24,593
-
73,960
1,462,057
Further key management personnel remuneration details are included in the Remuneration Report section of the Directors' Report.
c) Equity instrument disclosures relating to key management personne
Option Holdings
Number of options held by key management personnel.
Granted
as
Remun-
eration
Balance
01.07.07
Options
Exercised
Net
Change
Other
Balance
30.06.08
Total
Vested
30.06.08
Total
Exer-
cisable
30.06.08
Total
Unexer-
cisable
30.06.08
Parent Entity Directors
Caroline Le Couteur
James Thier
Howard Pender
Naomi Edwards
Pauline Vamos
Justine Hickey
Anne O'Donnell
6,666
5,290
3,261
-
-
-
8,780
1,791
1,517
1,513
-
-
-
3,025
Named executives (including other key management personnel
David Ferris
Philip George
Ruth Medd
Gary Leckie
Tim Xirakis
Paul Harding Davis
Total
7,410
3,906
-
4,105
1,387
-
40,805
2,426
2,469
-
1,767
1,776
-
16,284
( 2,513)
( 2,058)
( 861)
-
-
-
( 2,865)
( 2,551)
-
-
( 1,275)
-
-
( 12,123)
-
-
-
-
-
-
-
( 7,285)
-
-
-
-
-
( 7,285)
5,944
4,749
3,913
-
-
-
8,940
-
-
-
-
6,375
-
4,597
3,163
-
37,681
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,944
4,749
3,913
-
-
-
8,940
-
6,375
-
4,597
3,163
-
37,681
AUSTRALIAN ETHICAL INVESTMENT LTD
5050
40
AUSTRALIAN ETHICAL INVESTMENT LIMITED A.B.N. 47 003 188 930 AND CONTROLLED ENTITY
Notes to the financial statements for the year ended 30 June 2008
Note 23 - Key management personnel compensation - continued
Shareholdings
Number of Shares held by key management personnel.
Share in
lieu of
Cash
Bonus
Options
Exercised/
Shares
Issued (1)
Net
Change
Other (2)
Balance
30.06.08 (3)&(4)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,513
2,058
861
-
-
-
2,865
2,551
-
-
1,275
-
-
12,123
-
5
( 783)
-
-
-
-
( 888)
6
-
( 1,275)
-
-
( 2,935)
49,436
64,218
51,743
-
-
700
8,982
7,102
381
-
-
-
-
182,562
Parent Entity Directors
Caroline Le Couteur
James Thier
Howard Pender
Naomi Edwards
Pauline Vamos
Justine Hickey
Anne O'Donnell
Balance
01.07.07
46,923
62,155
51,665
-
-
700
6,117
Named executives (including other key management personnel
David Ferris
Philip George
Ruth Medd
Gary Leckie
Tim Xirakis
Paul Harding Davis
Total
5,439
375
-
-
-
-
173,374
(1) The amount paid for shares issued on exercise of options is $16.28 in all cases.
(2) Net change other refers to shares purchased or sold during the financial year.
(3) Shares issued are fully paid
(4) Balance represents shareholdings by key management personal including their
related parties as required by AASB 124 Related Party Disclosures.
Note 24 - Share based payments
The following share-based payment arrangements existed at 30 June 2008:
On 21 September 2005, 43,664 share options were granted to non-probationary employees under the Australian Ethical Investment Limited employee share ownership
plan. The options were issued for nil consideration, are not exercisable for 3 years from the date of issue, have an exercise price of $24.82 each and a 3 month window
in which to be exercised, and in most circumstances will lapse if the holder is no longer an employee of Australian Ethical Investment Limited. The options hold no
voting or dividend rights.
On 22 September 2006, 45,825 share options were granted to non-probationary employees under the Australian Ethical Investment Limited employee share ownership
plan. The options were issued for nil consideration, are not exercisable for 3 years from the date of issue, have an exercise price of $32.50 each and a 3 month window
in which to be exercised, and in most circumstances will lapse if the holder is no longer an employee of Australian Ethical Investment Limited. The options hold no
voting or dividend rights.
On 24 September 2007, 47,255 share options were granted to non-probationary employees under the Australian Ethical Investment Limited employee share ownership
plan. The options were issued for nil consideration, are not exercisable for 3 years from the date of issue, have an exercise price of $57.57 each and a 3 month window
in which to be exercised, and in most circumstances will lapse if the holder is no longer an employee of Australian Ethical Investment Limited. The options hold no
voting or dividend rights.
On 24 September 2007, 302 ordinary shares were issued under the employee share ownership plan . The shares carry full dividend and voting rights and are not
transferable for a period of 3 years, or until an employee leaves the company's employment whichever first occurs (In the comparative year 703 ordinary shares, with
the same terms, were granted on 22 September 2006).
During October 2007 Australian Ethical Investment Limited issued 7,509 new shares at an issue price of $52.28, under the company's Dividend Reinvestment Plan in
respect of the dividend payable.
5151
AUSTRALIAN ETHICAL INVESTMENT LTD
41
AUSTRALIAN ETHICAL INVESTMENT LIMITED A.B.N. 47 003 188 930 AND CONTROLLED ENTITY
Notes to the financial statements for the year ended 30 June 2008
Note 24 - Share based payments - continued
Outstanding at the beginning
of the financial year
Granted
Forfeited
Exercised
Expired
Outstanding at year-end
Number
of
Options
118,995
47,255
( 14,991)
( 34,506)
-
116,753
Consolidated Entity
2008
2007
Parent Entity
2008
2007
Weighted
Average
Exercise
Price
$
Weighted
Average
Exercise
Price
$
Number
of
Options
Number
of
Options
Weighted
Average
Exercise
Price
$
Weighted
Average
Exercise
Price
$
Number
of
Options
25.11
57.57
37.17
52.57
113,946
18.91
118,995
25.11
113,946
18.91
45,825
( 6,998)
( 33,778)
32.50
25.56
14.11
47,255
( 14,991)
( 34,506)
57.57
37.17
52.57
45,825
( 6,998)
( 33,778)
32.50
25.56
14.11
39.31
118,995
25.11
116,753
39.31
118,995
25.11
Exercisable at year-end
-
-
-
-
-
-
-
-
There were 34,506 options exercised during the year ended 30 June 2008. The weighted average share price calculated as at exercise dates
of these options was $52.57.
The options outstanding at 30 June 2008 had a weighted average exercise price of $39.31 and a weighted average remaining
contractual life of 1.53 years. Exercise prices range from $24.82 to $57.57 in respect of options outstanding at 30 June 2008
The weighted average fair value of the options granted during the year was $8.40
This price was calculated by using the Black Scholes option pricing model applying the following inputs:
Weighted average exercise price
Weighted average life of the option
Underlying share price
Expected share price volatility
Risk free interest rate
$52.00
22.50%
6.35%
3.25 years
$57.57
Included under employee benefits expense in the income statement is :
$15,885 (2007: $20,949) relating to equity-settled share-based payment transactions for staff bonus; and
$176,266 (2007: $96,607) relating to options issued under the employee share ownership plan.
AUSTRALIAN ETHICAL INVESTMENT LTD
52
42
AUSTRALIAN ETHICAL INVESTMENT LIMITED A.B.N. 47 003 188 930 AND CONTROLLED ENTITY
Notes to the financial statements for the year ended 30 June 2008
Note 25 - Financial instruments
(a) Financial risk management
The consolidated entity’s financial instruments consist of cash and cash equivalents (note 7), trade and other receivables (note 8), financial assets (note 9) and trade and other
payables (note 13).
The main purpose of these financial instruments is to finance the consolidated entity’s operations. The consolidated entity has various other financial assets and
liabilities such as trade receivables and trade payables, which arise directly from its operations.
(b) Interest rate risk
The consolidated entity’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the
effective weighted average interest rates on classes of financial assets and financial liabilities is as follows:
Weighted average
effective interest rate
2008
%
2007
%
Floating interest rate
2008
$
2007
$
Fixed interest
rate within 1 year
2008
2007
$ $
7
8
6
7
2,551,938
637,572
1,672,164
-
1,815,158
-
-
1,111,202
-
-
515,272
3,189,510
3,487,322
1,111,202
515,272
-
-
-
-
-
-
-
-
Fixed interest rate
within 1 to 5 years
2008
$
2007
$
Non-interest bearing
Total
2008
$
2007
$
2008
2007
$ $
-
-
94,744
94,744
-
-
-
-
158,000
300
1,812,410
-
300
1,487,185
-
2,552,238
1,812,410
1,843,518
1,672,464
1,487,185
1,988,430
158,000
1,812,710
1,487,485
6,208,166
5,148,079
-
-
2,115,330
1,681,284
2,115,330
1,681,284
2,115,330
1,681,284
2,115,330
1,681,284
Cash and cash equivalents
Trade and other receivables
Financial assets
Total financial assets
Trade and other payables
Total financial liabilities
Cash
Trade and other receivables
Financial assets
Total financial assets
Trade and other payables
Total financial liabilities
(c) Credit Risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the carrying amount, net of any
provisions for impairment of those assets, as disclosed in the balance sheet and notes to the financial statements.
Quantitative details related to financial assets is contained in note 9.
In relation to the financial asset – loan to independent entity – disclosed at note 9, the loan agreement between the parent entity and the independent entity provides for the parent
to enforce a security over the independent entity’s assets should a default in loan payments occur. The independent entity has not defaulted in loan payments over the six years o
the loan.
Consideration of credit risk in relation to financial assets is incorporated into the finance committee risk considerations mentioned earlier in this note. The defined investment
parameters governing the approval of financial asset investments incorporates a sliding scale of risk exposure as follows:
- The maximum exposure to any one issuer is to be no greater than twenty five per cent of the portfolio;
- Minimum amount to be held in cash, AAA securities or senior bank debt is fifty per cent of the portfolio; and
- Minimum amount to be held in cash, AAA securities, senior bank debt, rated corporate debt or subordinated bank debt to be eighty per cent of the portfolio.
(d) Liquidity risk
The group carries no borrowing debt on the balance sheet and has sufficient reserves of cash, cash equivalents and liquid investments to assess the liquidity risk as low. The cash
position and cash flows are reviewed by the finance committee to ensure regulatory and future operational requirements are catered for.
Trade and other payables are expected to be paid as follows:
Less than 6 months
6 months to 1 year
1 to 5 years
(e) Net Fair Values
Consolidated Entity
2008
$
2007
$
Parent Entity
2008
$
2007
$
1,423,862
691,468
-
2,115,330
1,248,572
432,712
-
1,681,284
1,527,614
520,862
-
2,048,476
1,437,189
432,712
-
1,869,901
For other assets and other liabilities the net fair value approximates their carrying value.
53
AUSTRALIAN ETHICAL INVESTMENT LTD
43
AUSTRALIAN ETHICAL INVESTMENT LIMITED A.B.N. 47 003 188 930 AND CONTROLLED ENTITY
Notes to the financial statements for the year ended 30 June 2008
Note 25 - Financial risk management - continued
(f) Sensitivity analysis
The group has performed a sensitivity analysis relating to its exposure to interest rate risk. This sensitivity analysis demonstrates the effect on the current year results and equity
which could result from a change in the interest rate (all other variables remaining constant). The sensitivity analysis is based only on cash and investments subject to a floating
interest rate.
Change in profit
- Increase in interest rate by 2%
- Decrease in interest rate by 2%
Change in equity
- Increase in interest rate by 2%
- Decrease in interest rate by 2%
Note 26 - Change in accounting policy
Consolidated Entity
2008
$
63,790
(63,790)
2007
$
59,746
(59,746)
Parent Entity
2008
$
2007
$
33,733
(33,733)
39,174
(39,174)
63,790
(63,790)
59,746
(59,746)
33,733
(33,733)
39,174
(39,174)
The following Australian Accounting Standards issued or amended, which are applicable to Australian Ethical
Investment Limited, but are not yet effective and have not been adopted in preparation of the financial statements
statements at reporting date are:
AASB
Amendment
2007-3
B Standard Affected
AASB 107: Cash Flow Statements
AASB 119: Employee Benefits
AASB 127: Consolidated and Separate Financial
Statements
AASB 134: Interim Financial Reporting
AASB 136: Impairment of Assets
New Standard
AASB 8: Operating Segments
2007-8
AASB 101: Presentation of Financial Statements
Nature of Change in
Accounting Policy
and Impact
Application Application
Date of the Date of the
Company
Standard
1-Jan-09
1-Jan-09
1-Jan-09
1-Jul-09
1-Jul-09
1-Jul-09
1-Jan-09
1-Jan-09
1-Jul-09
1-Jul-09
1-Jan-09
1-Jul-09
1-Jan-09
1-Jul-09
These amendments are
necessitated by the issuance of
AASB 8 Operating Segments.
The amendments are mainly to
ensure that terminology and
references related to AASB 8
are updated in the standards
affected and there will be little
impact on future financial
reports. There will be
changes to segment information
(more comprehensive) in the
interim financial report.
The group will provide more
comprehensive explicit
information related to its
investment management segment
and its superannuation segment
per the new standard. This
information is implicit with this
current financial report.
The revised AASB 101:
Presentation of Financial
Statements issued in September
2007 requires the presentation of
a statement of comprehensive
income and makes changes to the
statement of changes in equity
AASB 101
AASB 101: Presentation of Financial Statements
As above
1-Jan-09
1-Jul-09
2008-1
AASB 2: Share Based Payments
1-Jan-09
1-Jul-09
These amendments clarify that
vesting conditions comprise service
conditions and performance conditions
only and that other features of a
share-based payment transaction are
not vesting conditions. They also
specify that all cancellations, whether
by the entity or by other parties, should
the same accounting treatment.
No impact on future financial reports.
AUSTRALIAN ETHICAL INVESTMENT LTD
54
44
AUSTRALIAN ETHICAL INVESTMENT LIMITED A.B.N. 47 003 188 930 AND CONTROLLED ENTITY
DIRECTORS' DECLARATION
The Directors of Austalian Ethical Investment Limited declare that:
1. the financial statements and notes, as set out on pages 17 to 44 and the additional disclosures
the directors' report designated as audited are in accordance with the Corporations Act 2001:
27 54
(a) comply with accounting standards and the Corporations Regulations 2001; and
(b) give a true and fair view of the financial position as at 30 June 2008 and of the performance for
year ended on that date of the company and consolidated entity;
2. the Chief Executive Officer and Chief Finance Officer have each
declared that:
(a) the financial records of the company for the financial year have been properly maintained in
section 286 of the Corporations Act 2001;
(b) the financial statements and notes for the financial year comply with the Accounting Standards;
(c) the financial statements and notes for the financial year give a true and fair view.
3. in the directors’ opinion there are reasonable grounds to believe that the company will be able
debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
Director
Dated this 26 September 2008
55
AUSTRALIAN ETHICAL INVESTMENT LTD
45
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
AUSTRALIAN ETHICAL INVESTMENT LIMITED
Report on the Financial Report
We have audited the accompanying financial report of Australian Ethical Investment Limited (the
company) and Australian Ethical Investment Limited and controlled entity (the consolidated entity),
which comprises the balance sheet as at 30 June 2008, and the income statement, statement of
changes in equity and cash flow statement for the year ended on that date, a summary of significant
accounting policies and other explanatory notes and the directors' declaration of the consolidated
entity comprising the Company and the entity it controlled at the year's end or from to time during the
financial year.
Directors' Responsibility for the Financial Report
The Directors of the Company are responsible for the preparation and fair presentation of the
financial report
in accordance with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing
and maintaining internal controls relevant to the preparation and fair presentation of the financial
report that is free from material misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that are reasonable in the
In Note 1, the directors also state, in accordance with Accounting Standard AASB
circumstances.
101: Presentation of Financial Statements,
that compliance with the Australian equivalents to
International Financial Reporting Standards ensures that the financial report, comprising the financial
statements and notes, complies with International Financial Reporting Standards.
Auditor's Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. These Auditing Standards require that
we comply with relevant ethical requirements relating to audit engagements and plan and perform
the audit
is free from material
misstatement.
to obtain reasonable assurance whether the financial report
In making those risk assessments,
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or
error.
the auditor considers internal control relevant to the
entity's preparation and fair presentation of the financial report in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
AUSTRALIAN ETHICAL INVESTMENT LTD
4656
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001
Auditor's Opinion
In our opinion:
(a) the financial report of Australian Ethical Investment Limited and Australian Ethical Investment
Limited and Controlled Entity is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Company's and Consolidated Entity's financial position
as at 30 June, 2008 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001.
(b) the financial report also complies with International Financial Reporting Standards as
as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in (pages 7 to 14) of the directors' report for the
year ended 30 June, 2008. The directors of the Company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
18 to 25
Auditor's Opinion
In our opinion the Remuneration Report of Australian Ethical Investment Limited for the year ended
30 June 2008, complies with section 300A of the Corporations Act 2001.
THOMAS DAVIS & CO.
P.L. WHITEMAN
PARTNER
Chartered Accountants
SYDNEY,
26 September, 2008
Liability limited by a scheme approved under Professional Standards Legislation
57
47
AUSTRALIAN ETHICAL INVESTMENT LTD
Shareholder information
The shareholder information set out below was current as at
24 September 2008.
Twenty largest shareholders
Ordinary shares
Name
SMF Funds
Management Ltd
Mr Howard
Pender
%
Number
of ordinary
shares
Substantial
shareholders
194,021
19.70% Yes
49,821
5.06%
Yes
James Andrew Thier 49,767
49,436
5.05%
5.02%
Yes
Yes
Caroline Margaret
Le Couteur
Mr Trevor Roland
Lee
Mrs Judith Margaret
Burton
Ms Judith Ingrouille
Ajani
Mr Bruce Allan Mc-
Gregor & Mrs Ann
Marion McGregor
Gang - Gang Pty
Ltd
HB Sarjeant & assoc
Pty Ltd
Dr Edward Arthur
Iceton
Daisy Thier
Denholm Invest-
ments Pty Ltd
Mr Peter Alexander
Anderson
Mr Philip Julian
Eriksen & Mr Julian
Hans Erkisen
Mr Michel Beuchat
& Mrs Ann Beuchat
Ms Anne Maree
O’Donnell
Ms Susie Edwards
Est Mrs Hanneliese
Claire Graf
Mr Rodney Matthew
Myer
36,933
3.75%
33,683
3.42%
24,662
2.50%
24,447
2.48%
23,310
2.37%
19,142
1.94%
16,500
1.68%
14,479
13,690
1.47%
1.39%
10,833
1.10%
10,562
1.07%
9,667
0.98%
9,150
0.93%
7,941
7,347
0.81%
0.75%
7,332
0.74%
Substantial shareholders
Substantial shareholders of ordinary shares are specified in
the table of the top twenty shareholders set out right.
Voting rights
Ordinary shares
The voting rights attaching to ordinary shares are fully set
out in the company’s Constitution. In brief, at meetings of
members each member entitled to vote may vote in person
or by proxy or attorney, and:
•
•
on a show of hands has 1 vote; and
on a poll has 1 vote for every share held.
Options
No voting rights attach to any options on issue.
Distribution of shareholdings
Ordinary shares
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,000 – over
Totals
Non-marketable parcel
Holders
Units
%
692
173,855
17.656
79
9
16
1
797
15
173,120
17.582
66,407
6.744
429,357
43.604
141,924
14.413
984,663
100.000
141
Options issued under the Employee Options
Scheme
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,000 – over
Totals
Holders
9
27
4
0
0
Units
4,939
%
4.322
81,740
71.530
27,595
24.148
0
0
0.000
0.000
40
114,274
100.000
AUSTRALIAN ETHICAL INVESTMENT LTD
58
Corporate directory
Australian Ethical Investment Ltd
ABN 47 003 188 930
Company secretary
Philip George
Telephone: 02 6201 1994
Facsimile:
02 6201 1987
Email: pgeorge@austethical.com.au
Postal address
GPO Box 2435
Canberra ACT 2601
Registered office / place of business
Trevor Pearcey House (Block E)
Traeger Court
34 Thynne Street
Bruce ACT 2617
www.austethical.com.au
Share registry
Registries Limited
ABN 14 003 209 836
Street: Level 2, 28 Margaret Street
Sydney NSW 2000
Telephone:
Facsimile:
Mail:
02 9290 9600
02 9279 0664
PO Box R67
Royal Exchange
Sydney NSW 1223
registries@registriesltd.com.au
Email:
www.registriesltd.com.au
Using the Registries Ltd website, shareholders are able to
view balances, transaction history and recent dividend
payments. They can also view and update email addresses,
annual report elections and tax file numbers. Various forms
are also available for download to assist in the management
of shareholdings.
Stock exchange listing
Australian Securities Exchange ASX code:
AEF
Corporate vision and mission
Australian Ethical’s vision
•
to conduct our own operations in accord with the items of
the Australian Ethical Charter, in particular we seek to:
By its operations Australian Ethical will promote a sea-
change in community-wide practice such that all investment
will be undertaken with an ethical purpose as well as in
pursuit of competitive return for chosen risk.
Australian Ethical’s mission
Australian Ethical’s mission is to provide those investors
who share our social and environmental aims (as set out in
our charter) with the means to earn a competitive return for
chosen risk whilst at the same time contributing to a just and
sustainable human society and the protection of the natural
environment.
In order to fulfil our mission our goals are:
•
•
to select every investment with which we are involved in
accord with the Australian Ethical Charter;
to earn a competitive return for the chosen level of risk
upon every portfolio with which we are involved;
•
•
•
•
•
nurture staff participation and control of Australian
Ethical;
achieve a high standard of administrative service for
investors in our products;
ameliorate wasteful or polluting practices in our own
business operations;
envourage, care for and provide educational
opportunity for our fellow workers, respect their
individual needs, aspirations and idiosyncrasies;
and ensure our promotional material is comprehensive,
transparent and readily understood.
•
to generate and disseminate information regarding
standards of corporate behaviour and to engage in
dialogue with the corporate sector in terms of the items
set out in the Australian Ethical Charter.
AUSTRALIAN ETHICAL INVESTMENT LTD
AUSTRALIAN ETHICAL INVESTMENT LTD
australianethical
investment + superannuation
R