australianethical
ANNUAL REPORT TO
SHAREHOLDERS
Year ended 30 June 2009
1800 021 227 • www.australianethical.com.au
australianethical
investment + superannuation
®
Financial summary to 30 June 2009
as at
30 June 2009
30 June 2008
30 June 2007
30 June 2006
Current assets ($’000)
Non-current assets ($’000)
Current liabilities ($’000)
Non-current liabilities ($’000)
Net assets ($’000)
6 369
4 686
2 519
83
8 453
6 362
4 790
2 658
113
8 381
5 174
4 879
2 293
76
7 684
5 176
3 103
1 928
77
6 274
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
1202.8
784.4
n
o
i
l
l
i
m
$
2005
2006
2007
2008
2009
Year ending 30 June
Basic earnings per share
194.8
170.3
150.3
89.6
121.6
%
2005
2006
2007
2008
2009
Year ending 30 June
Funds under management
(ex distribution)
552
562
535
417
311
2005
2006
2007
2008
2009
As at 30 June
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
13.13
9.66
7.42
2005
2006
2007
2008
2009
Year ending 30 June
Return on equity
26.1
24.1
16.4
20.6
14.8
2005
2006
2007
2008
2009
Year ending 30 June
Dividends paid
192
165
147
85
72
2005
2006
2007
2008
2009
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 2009
Directors’ report
Financial statements
Shareholder information
Corporate directory
Corporate vision and mission
Charter
4
5
6
8
12
27
58
59
59
The Company will order its affairs so as to
provide for and to support:
a. the development of workers’ participation in the ownership and
control of their work organisations and places;
The Company will also order its affairs so
as to avoid activity which is considered to
unnecessarily:
i. pollute land, air or waters;
b. 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;
e. the amelioration of wasteful or polluting practices;
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;
i.
the dignity and well being of non-human animals;
j.
the efficient use of human waste;
k. the alleviation of poverty in all its forms;
l.
the development and preservation of appropriate human
buildings and landscapes.
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;
iv. market, promote or advertise, products or services in a
misleading or deceitful manner;
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;
vii. create, encourage or perpetuate militarism or engage in the
manufacture of armaments;
viii. entice people into financial over-commitment;
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;
xi. contribute to the inhibition of human rights generally.
AUSTRALIAN ETHICAL INVESTMENT LTD
Chair’s report
Significant investments for the future
Australian Ethical has recorded a solid result for 2009, with a
dividend declaration of $1.47 per share and a return on equity of
14.8%. While both these figures are lower than our 2008 returns
($1.65 per share and 20.6%, respectively) they are reasonable in
light of the market turbulence experienced over the past twelve
months. The last year has been a difficult one for Australian
financial services companies. A number have collapsed. Many
have found their business model to be inadequate in such times.
Many have suffered a loss of investor funds and/or poor returns
on the funds they manage. Australian Ethical has not been
immune from the pressures. Nevertheless our business and
our balance sheet remain strong with the ability to finance the
strategic initiatives discussed below.
Your board is absolutely committed to growing Australian
Ethical and to regaining the momentum lost during the
global financial crisis. Our passion to grow the company
stems from three imperatives:
1. Growing funds under management will allow us to achieve
economies of scale which will in turn support ongoing
investments in the systems and marketing campaigns that
our people and brand deserve, and will enable ongoing
delivery of excellent returns to shareholders.
2. We believe that the planet faces urgent environmental
problems and that growing our model of sustainable
and ethical investment will help companies and
investors who want to solve these problems.
3. We want to provide our staff, customers and shareholders
with the excitement and satisfaction that comes from
being able to deliver real change, new opportunities and
leadership in the field of sustainable investment.
We continue to believe that our key strength lies in our
true to label brand, our consistently excellent investment
performance and our strongly committed retail customer
base. During 2009, board and management have
considered the issue of how best to capitalise on the
Australian Ethical brand, while recognising that many people
are nervous about the stock market in general and stock
picking in particular.
To this end, we have developed two new trusts this year
which we believe will have considerable appeal to both retail
and institutional investors:
Australian Ethical Property Trust – this trust aims to provide
a lower risk vehicle for investors, while capitalising on
government and consumer support for green buildings. It is
unique in the market, and once it starts to grow will be an
exciting option within our product suite.
Climate Advocacy Fund – this is a new type of trust in the
Australian market. It will be a low fee, passive portfolio
construction, index fund that advocates in a responsible
way through its shareholdings on matters relevant to the
4
AUSTRALIAN ETHICAL INVESTMENT LTD
Australian Ethical Charter. It will have a particular focus in the
early years on climate and environmental issues, but may
also engage with investee companies on broader issues
under our Charter, such as social issues.
But new products alone will not be enough to achieve the
growth target we have set ourselves. We also need to improve
our distribution reach, including into financial planning groups
and self managed super funds. On the financial planning
front we are considering a variety of options that will give us
better leverage with financial planning groups and make our
products more attractive to them. We launched a new PDS
for our trusts on 1 October which includes a new fee structure
which we expect will be more attractive to planners and
direct investors alike. We continue to increase the number
of presentations to financial planning groups and to improve
relationships with them. We have also launched a new website
which will help retail investors to invest with us and advisers to
access the information they need.
On the institutional front, we are focused on overcoming
obstacles to winning institutional mandates. Our progress here
has been slower than desired, but the board and company
remain committed to penetrating this market segment.
Last year I flagged that we would be reviewing some of
our systems. This review has been carried out and resulted
in the decision to outsource our trust registry function to
Registries Limited. We have also recognised the need to
replace our internal asset management system. Replacing
these systems will enable us to deliver better service to our
customers and investment team alike.
The coming financial year will include several one-off
expenses (including CEO transition costs, new systems
expenditure and new PDS and website production) that
will impact profit in 2009–10. These expenditures are
investments for the future and, together with improving
market conditions, means that Australian Ethical is well
positioned to lift performance over the coming years.
We remain focused on a clear vision of providing truly ethical
investments to our clients, spreading the reach of our approach
through a clear growth strategy and making investments over
the next 12 months that will significantly lower our cost base
going forward and deliver economies of scale.
I would like to thank all of our shareholders for your
continued support of our company and what we stand for.
We are working hard to deliver excellent returns to you, to
make a positive contribution to the community and to be a
great employer.
On that note, I would like to thank Anne O’Donnell for her
hard work and contribution to the company over nine years
as CEO of Australian Ethical. During those nine years,
Australian Ethical has professionalised, listed on the ASX
and maintained its strongly ethical approach – no small
achievement. I am not yet in a position to announce who will
replace Anne as CEO but we expect to do this by the end of
November. The next CEO will be a person who retains the
deep ethical commitment of Australian Ethical while being a
significant force in driving its growth into the future.
Naomi Edwards
Chair
Chief Executive’s report
As this will be my last report to you as CEO, I thought I
would indulge in a little retrospection. There is always so
much to do that it is easy to lose sight of what we have
achieved. Occasionally, it is useful to pause and look back.
When I joined Australian Ethical in late 2000 the company
had $85 million funds under management and profitability
was minimal. We were little known in the mainstream
financial market, indeed those who did know us considered
us a quaint market oddity and I remain convinced that
industry colleagues expected me to turn up to meetings in a
caftan and were disappointed when I did not.
There have been many challenges in our journey to
increase the professionalism of the organisation and to
grow our business and to do so in a way which did not
compromise our commitment to the ethical charter. We
have built a strong and profitable business which has
weathered the most difficult of financial times well. We are
now recognised as an expert in our field and respected for
the commitment we have shown to our principles. We have
met the challenges of continuous changes in legislation
which have been thrust upon us. Today Australian Ethical
has a very professional and dedicated senior team and
our key person risk has been significantly reduced. These
achievements are the result of a team effort. I have been
privileged to lead that team and I am very proud that
through our growth and significant change we have been
able to retain the core of our distinct culture.
Australian Ethical has produced a solid result during a period
of unprecedented turmoil in the global financial markets. We
recorded a consolidated net profit after income tax of $1.2m.
This trading result represents a decrease on the previous
financial year’s result of $1.6m. 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 reasonable result.
The company has experienced a number of positives during
the past 12 to 18 months. We have a strong balance sheet
with no debt, we have not experienced any significant
change in historic outflow patterns and the majority of our
funds have achieved excellent relative performances. Market
uncertainty and volatility did impact investor confidence,
and inflow into our managed funds and superannuation
were down through the period. Whilst our funds under
management fell to a low of $461 million in March 2009,
we have seen a significant turn around since that time. Our
funds under management are now above $600 million and
inflows are returning.
The Australian Ethical Superannuation Fund continues to be
a growth engine of the business. Despite some regrettable
disruptions during transition to our new superannuation
administrator, membership of our superannuation fund
continues to grow steadily with the business contributing
strongly to our overall result.
This year we have adopted industry practice in relation to
cost allocations to the managed funds and superannuation
fund. This change, along with savings which will continue
to flow from changes we have previously made to our
custodian and superannuation administration providers,
have the potential to positively impact our profitability going
forward.
The last 12 to 18 months have been a very difficult and
often trying time. It has been my privilege to lead such a
hard working and dedicated team. I hand over control of
the company to my successor in the knowledge that the
company is in great shape and has a bright future. I would
like to thank all my wonderful staff for their support during
my tenure. I would also like to thank a number of past staff
who were vital in the establishment of the company. Their
vision and commitment helped us to establish a business
model which has survived these difficult times. I look
forward to seeing you at the annual general meeting on
the 19 November.
Anne O’Donnell
Chief Executive Officer
AUSTRALIAN ETHICAL INVESTMENT LTD
5
Sustainability Report
Australian Ethical remains committed to conducting our operations in
accordance with the Australian Ethical Charter. Below are some of the
year’s sustainability highlights. Further information on Australian Ethical’s
social, environmental and economic performance will be provided in the
company’s 2009 sustainability report.
Awards
Australian Ethical won a number of sustainability awards this year.
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 twentieth 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 Equities Trust awarded the Ethical Investor Fund of the Year Award at
the 2008 Australian Sustainability Awards – December 2008
Lonsec, the award judge said ‘the fund scored highly on the depth of socially
responsible investment and was a clear outperformer over the assessed period.’ The
Australian Ethical Equities Trust was ranked second, first, first and first over one, two,
three and five years out of 40 Multi-Sector High Growth funds (Morningstar).
Infinity Award presented to the Australian Ethical Retail Superannuation Fund for the most
environmentally and socially conscious fund – March 2009
For the second year in a row, the Australian Ethical Retail Superannuation Fund won
the Infinity Award at the Conference of Major Super Funds (CMSF). The Infinity Award,
presented by SuperRatings, signifies the Fund as Australia’s most environmentally and
socially conscious fund and a leader in sustainable investment and sustainable
business practices.
First runner up for Best SME Report at the CR Reporting Awards 2008 – March, 2009
Australian Ethical Investment’s 2007 Sustainability Report was awarded first runner up
for Best SME Report at the CR Reporting Awards 2008. 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.
Awarded 5 star NABERS Energy whole building rating for Trevor Pearcey House – June 2009
NABERS benchmarks a building’s greenhouse impact on a scale of one to five, one star
being the most polluting and five stars the least. The rating system assists owners and
tenants to reduce energy use, energy costs and greenhouse emissions. The NABERS
Energy rating is effective until July 2010.
AUSTRALIAN ETHICAL INVESTMENT LTD
Grants to community organisations
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 2009 Australian Ethical
paid $140,868 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.
$45,000 awarded to Co-operation in
Development (CO-ID)
The building schools, bringing hope project aims to provide
free basic education to children in Bangladesh.
The successful CO-ID primary school in the 5 Doors area,
one of the poorest areas of Bangladesh, is under threat
following the partial collapse of a nearby levy. CO-ID will use
the grant to rebuild a new combined primary and secondary
school with an elevated protective mud wall.
The new style of school to be constructed will provide the
base for expanded education over the next twenty years.
This will enable CO-ID to provide free education and training
to more students. Stationery and other necessities will also
be provided. In addition, evening education will be made
available to senior students aged over nine who have had to
leave school to enter the workforce.
www.fredhyde.org
Mini-documentary competition on the
theme ‘Corporate Responsibility and the
Environment’
Australian Ethical wishes to promote better public
understanding of the link between corporate actions and the
state of the natural environment. Australian Ethical provide
$40,000 to sponsor a prize for very short documentaries
(for example mash-ups) on this subject. The prize will be
awarded at a documentary film-making conference to be
held in Adelaide in late February 2010. Australian Ethical will
collaborate with the Documentary Australia Foundation to
promote the competition.
Further information on our Community Grants scheme,
including application guidelines and selection criteria is
available on our website.
0
0
0
5
4
$
0
4
$
0
0
0
5
$
Co-operation in Development Organisation
will construct a school in a remote part of the
Ganges Delta, Bangladesh. It will provide free
education for kindergarten and primary students,
as well as evening classes for senior students
(aged over nine) who have had to leave school to
enter the workforce.
The Australian Ethical Superannuation Fund continues to be
a growth engine of the business. Despite some regrettable
disruptions during transition to our new superannuation
An Australian Ethical initiated mini-documentary
administrator, membership of our superannuation fund
competition on the theme ‘Corporate
continues to grow steadily with the business contributing
Responsibility and the Environment’
strongly to our overall result.
0
0
0
Australian Marine Conservation Society
ACT Eden Monaro Cancer Support Group
This year we have adopted industry practice in relation to
cost allocations to the managed funds and superannuation
fund. This change, along with savings which will continue
to flow from changes we have previously made to our
custodian and superannuation administration providers,
have the potential to positively impact our profitability going
forward.
ACT Frogwatch
Alzheimer’s Australia NSW
Barefoot Economy
Australian Red Cross
Bush Heritage Australia
The last 12 to 18 months have been a very difficult and
often trying time. It has been my privilege to lead such a
hard working and dedicated team. I hand over control of
the company to my successor in the knowledge that the
company is in great shape and has a bright future. I would
like to thank all my wonderful staff for their support during
my tenure. I would also like to thank a number of past staff
who were vital in the establishment of the company. Their
vision and commitment helped us to establish a business
model which has survived these difficult times. I look forward
to seeing you at the annual general meeting on the 19
November.
Sydney Cochlear Implant Centre
Free the Bears Fund
Pedal Power ACT
The Grey Man
Wildcare Queanbyan
0
0
8
2
$
CARE Australia
Condobolin and Districts Landcare
Anne O’Donnell
Chief Executive Officer
East Timor Women Australia
Hope Street - Urban Compassion
International Women’s Development Agency
International Women’s Development Agency
New Internationalist Publications
NSW Wildlife Information Rescue & Education Service
Sea Turtle Foundation
Spinal Cord Injuries Australia
The Cerebral Palsy Foundation
WaterAid Australia
0
0
5
1
$
A full description of all the grant recipients is available on the
website www.australianethical.com.au
AUSTRALIAN ETHICAL INVESTMENT LTD
Corporate governance statement 2009
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 second
edition of the Council’s Principles of Good Corporate
Governance and Best Practice Recommendations.
The Council’s Principles of Good Corporate Governance
and Best Practice Recommendations provide a framework
for good governance set out in eight core principles and 27
specific recommendations.
Australian Ethical has provided information on its corporate
governance practices against all recommendations. This
corporate governance statement will be placed onto the
corporate governance section of the company’s website.
Principle 1 - Lay solid foundations for
management and oversight
Australian Ethical has formalised the functions reserved to
the board and those delegated to management.
Board responsibilities
The Australian Ethical Board is directly responsible for the
following activities.
• Setting the strategic direction of Australian Ethical
• Annual appraisal of the Board
• Approval of Board committee fees
• Recommendation to shareholders on the aggregate level
of directors’ fees
• Approval of individual director fees
• Appointment and removal of the CEO
• Annual appraisal of the CEO
• Approval of the annual operational and capital
expenditure budget and any material revisions
• Approval of major contracts, acquisitions or disposals
which have not been approved in the budget
• Authorisation of Board project expenditure
• Accept and sign-off of the annual audited accounts and
directors’ report for the Australian Ethical group
• Approval of the issue of shares and options
• Approval of significant changes to unit trust fees,
including discount programs
• Approval of significant changes to products or product
offerings
• Approval of the constitutional bonus and tithe amounts
• Approval of the terms and conditions for any employee
share ownership scheme, or if shareholder approval is
required, approval of recommendations to shareholders
• Approval of employee performance based remuneration
programs
• Approval of dividend payments and any DRP
• Authorisation of the issue of the Trust PDS
• Approval of risk management and compliance programs
• Approval of significant company policies
• Approval of indemnity, crime, director and officer and
similar insurance programs
• Protection and promotion of the Australian Ethical Charter
The Board makes the following general delegations.
Chair of the Board
The chair of the board is delegated with all necessary
authority to carry out the following functions:
Inside the boardroom
• Acting as the link between the board and the company
when the CEO is unable to perform this role;
• Establishing and maintaining an effective working
relationship with the CEO;
• Setting the tone for the board, including the
establishment of a common purpose;
• Chairing board meetings efficiently and shaping the
agenda in relation to goals, strategy, budget and
executive performance;
• Work with the Company Secretary and CEO to ensure
that appropriate information is presented to the Board;
• Ensuring contributions by all board members and
reaching consensus when making decisions;
• Motivating board members and where appropriate
•
dealing with underperformance;
Instituting the process for appraising board members
individually and the board as a whole;
• Overseeing conducting and finalising negotiations
for the CEO’s employment and evaluating the CEO’s
performance;
• Assisting with the selection of board committee members.
Outside the boardroom
• Communicating with shareholders on matters of
corporate governance;
• Chairing shareholder meetings – annual and
extraordinary general meetings (AGMs and EGMs);
• Ensuring compliance with ASX Listing Rules and
•
•
continuous disclosure requirements;
Increasingly, being available to speak with large
institutional investors;
In conjunction with the CEO, communicating Board
views to staff.
Board Committees
Board committees are delegated with all necessary
authority to carry out their functions as set out in Board
committee charters.
CEO
Other than in respect of:
those responsibilities reserved to the Board;
•
• delegations (general or specific) made by the Board to the
Chair, Board Committees, Directors or other senior executives,
the CEO is delegated with all necessary authority to run
Australian Ethical on an ongoing, day to day basis.
Specifically the CEO is delegated with responsibility and
authority for the following:
•
•
Implementing the strategic direction set by the Board;
Implementing the risk management and compliance
programs approved by the Board;
• Approval and maintenance of Expenditure and Payment
Guidelines;
• Approval and maintenance of Employee Authorisations;
8
AUSTRALIAN ETHICAL INVESTMENT LTD
• Employment, termination and suspension of staff;
• Employee remuneration;
• Employee policies and procedures.
The above responsibilities and delegations are made public
through the publication of this statement and the inclusion
of the statement in the corporate governance section of the
company’s website.
Evaluating the performance of senior executives
The performance of executives is evaluated in accordance
with the company’s annual performance review guidelines.
For the CEO, the review is conducted by the board chair. For
other executives, the review is undertaken by the CEO.
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
investigate what specific training may be suitable and
available;
•
•
• where remuneration is subject to the achieve of
performance hurdles, review and discuss the
achievement of those hurdles and determine the amount
of any performance based remuneration.
In respect of the CEO, the chair presents the results
of the review to the board. The board then has an
opportunity to provide feedback to the CEO, and to
consider recommendations from the chair on the CEO’s
remuneration package.
An evaluation of the performance of senior executives was
undertaken in the financial year in accordance with the
process described above.
Principle 2 - Structure the board to add value
Independent directors
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.
is not a substantial shareholder of the company or
an officer of, or otherwise associated directly with, a
substantial shareholder of the company;
2. 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. 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;
4.
5. has no material contractual relationship with the
company or another group member other than as a
director of the company;
6. has not served on the board for a period which could, or
7.
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.
These areas reflect the relationships set out as relevant in
the ASX Corporate Governance Council’s Principles and
Recommendations.
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 classification of directors who held office during or since
the end of the financial year is as follows:
Retired 27 November
2008
Name
Position
Caroline Le Couteur Executive,
James Thier
Howard Pender
Naomi Edwards
(Chair)
non-independent
Executive,
non-independent
Executive,
non-independent
Independent
Justine Hickey
Independent
Anne O’Donnell
(CEO)
Les Coleman
Executive
Resigned directorship
11 August 2009
Non-executive,
non-independent
André Morony
Independent
The board of Australian Ethical did not comprise a majority
of independent directors during the reporting period. For the
first five months of the reporting period, the board comprised
four non executive directors (three of whom are considered
independent) and four executive directors. For the remaining
seven months, the board comprised four non executive
directors (three of whom are considered independent) and
three executive directors.
Les 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 such he is associated with a substantial
shareholder (albeit in a limited way), and therefore given the
above criteria is not classified as an independent director.
AUSTRALIAN ETHICAL INVESTMENT LTD
9
At the date of this report, the board has an equal number
of independent and non-independent directors, with four
non-executive directors out of a board of six directors.
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 board’s approach to composition is to seek to
maintain a good long term balance between executive
and non-executive / independent directors, with the right
mix of independence, 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;
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
The Board established a nominations committee in February
2009 by expanding the responsibilities of the Remuneration
committee, to form the Remuneration and Nominations
Committee. Naomi Edwards and Justine Hickey are the
members of the Remuneration and Nominations Committee.
Attendance at meetings are detailed in the directors’ report.
A summary of the Committee’s charter is available from the
corporate governance section of the company’s website.
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.
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
10
AUSTRALIAN ETHICAL INVESTMENT LTD
An assessment in accordance with the above process was
undertaken in the relevant period.
Director skills and experience
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.
Selection and appointment of directors and re-
appointment of incumbents
The Remuneration and Nominations Committee has the
following responsibilities:
Corporate governance statement 2009
• assess the necessary and desirable competencies of
directors;
• ensure the directors have the appropriate mix of
competencies to enable the board to discharge its
responsibilities effectively;
• develop board succession plans to ensure an appropriate
balance of skills, experience and expertise is maintained;
• make recommendations to the board relating to the
appointment and retirement of directors.
The Remuneration and Nominations committee will at least
annually consider the above responsibilities, the current
board composition, any nominations or suggestions for
directorship, and the assessment of incumbent directors and
make recommendations to the board on composition.
Principle 3 - Promote ethical and responsible
decision making
Code of conduct
The company has a code of conduct which applies to
directors and staff. It is available on the company’s website.
Share trading
The company has a share trading policy which applies to
directors and staff. It is available on the company’s website.
Principle 4 - Safeguard integrity in financial
reporting
Audit committee
Throughout the period, the board had an Audit Committee
consisting of three members.
Up to 31 December 2008, the Audit Committee consisted
of one independent director (Naomi Edwards), one external
member (Ruth Medd) and the company secretary.
On 1 January 2009, the Audit Committee merged with
the Compliance and Risk Committee to form the Audit,
Compliance and Risk Committee. The membership of the
Audit, Compliance and Risk Committee is one external
member (Ruth Medd, chair), one independent director (Naomi
Edwards) and one non-executive director (Les Coleman).
Ms Medd is the independent chair of the company’s
Corporate governance statement 2009
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.
company’s website). The sustainability report is produced
using the Global Reporting Initiative guidelines.
The company complies with the corporate governance
guidelines for notices of meeting.
The Committee does not consist of only non-executive
directors of the company (it has one external member).
A summary of the charter for the audit committee appears
on the company’s website.
Corporate governance statement 2009
In particular:
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 consistent with the spirit
of the recommendations and the committee is able to perform
its functions with independence and diligence.
the committee is comprised only of non-executives;
•
• at a number of meetings the committee speaks directly
to the external auditor in the absence of executive
management.
The Committee considers the performance and 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.
Principle 5 - Make timely and balanced
disclosure
The company has written policies and procedures designed
to ensure compliance with the ASX Listing Rule disclosure
requirements and accountability at senior executive level for
compliance. The disclosure policy appears in the corporate
governance section on the company’s website.
Principle 6 - Respect the rights of
shareholders
The company does not have separately documented
policy for shareholder communication, but it 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, including company announcements. A facility
is available to shareholders to be advised via e-mail when
announcements are made. The company’s website also
provides shareholders with guidance on a range of issues
concerning the management of their shareholdings.
The company 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.
The company also produces a sustainability report for
shareholders and other stakeholders on the triple bottom
line performance of Australian Ethical (available on the
Principle 7 - Recognise and manage risk
Policies for the oversight and management of
material business risks
The company has established policies for the oversight and
management of material business risks. The company’s
risk management guide is available from the corporate
governance section of the company’s website.
The board has required management to implement a risk
management system consistent with the company’s risk
management guide. The board has required management
to report to it on whether material business risks are being
appropriately managed. During the relevant period, management
has reported to the board’s Audit, Compliance and Risk
Committee and directly to the board as to the effectiveness of the
entity’s management of its material business risks.
The CEO and risk management officer certify to the board
that its internal control and risk management systems are
operating efficiently and effectively throughout the group.
CEO and CFO sign-off of financial reports
The company requires the CEO and the CFO 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.
The CEO 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 control, and
that the system is operating effectively in all material respects
in relation to financial risks.
Principle 8 - Remunerate fairly and
responsibly
Remuneration committee
The board has a Remuneration and Nominations committee.
The members of the Committee throughout the relevant
period were Naomi Edwards and Justine Hickey. Details of
attendance at meetings of the Committee are provided in the
directors’ report. The charter for the Committee is available in
the corporate governance section of 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 report distinguishes the structure of non-executive
director remuneration and that of executive directors. Non-
executive directors receive fees for serving as a director in
the form of cash payments, plus mandated superannuation
contributions. They do not participate in bonus or equity
schemes designed for the remuneration of executives.
AUSTRALIAN ETHICAL INVESTMENT LTD
11
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 2009. 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 2009 and to the date of this report are:
Name
Time in Office
Caroline Le Couteur 18 years
Retired 27 November 2008
James Thier
Howard Pender
Naomi Edwards
Justine Hickey
Anne O’Donnell
Les Coleman
André Morony
18 years
18 years
4 years
2 years
1 year
1 year
1 year
Resigned 11 August 2009
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 managed funds
(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 in this report, there were no 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 2009 of $1,202,752. This
result is a 27% decrease on the result of $1,651,790 for the
previous financial year.
Review of operations
The financial result for 2009 reflects a careful navigation by
Australian Ethical through the turmoil of the global financial
markets over the last twelve to eighteen months. While inflows
have reduced significantly, particularly to our non-superannuation
managed funds, we have held outflows at a stable level and
preserved investor confidence in both our brand and our
nvestment approach. We continue to have a strong balance
sheet with no debt, stable net inflows into our superannuation
12
AUSTRALIAN ETHICAL INVESTMENT LTD
fund and excellent relative performance of the majority of our
managed funds.
Market uncertainty and net outflows for our non-superannuation
managed funds have impacted our funds under management.
Our funds under management fell to a low of $461M in March
2009. This was a 28% decrease from our peak of $645M in
December 2007, less than the general falls experienced by the
market (the All Ordinaries index experienced a 55% decrease
from its peak in November 2007 to its low in March 2009). Since
March 2009 the market has stabilised and indeed rallied and we
have experienced increased average monthly inflows into the
managed funds. This appears to reflect a return to more positive
investor sentiment generally. As at 30 June 2009, funds under
management totalled $535M (ex. distribution). This compares
with funds under management of $562M (ex. distribution) as
at 30 June 2008. The aggregate distribution amount paid for
the current period was $3.5M, compared to a distribution the
previous year of $9M. Funds under management currently stands
at $573M.
In response to market difficulties and uncertainties during the year
we instigated a number of cuts to expenditure, principally in the
areas of salary and wages, consultants, training and travel. We
also adopted industry practice in relation to cost allocation to the
managed funds and superannuation fund.
Despite these measures the fall in funds under management
resulted in an increase in the costs to income ratio¹- increasing
from 80% in 2008 to 83% in 2009. This increase is in contrast
with the steadily declining trend experienced in the period prior
to the global financial crisis. Return on equity was also impacted
falling from 20.6% to 14.8%.
In April 2008 the administration of the superannuation fund
was transitioned to a new service provider. As is often
experienced with transitions of this nature, a number of issues
arose during the process resulting in delays in completing the
transition. Regrettably there were disruptions to some clients,
and the level of disruption was exacerbated by a greater than
anticipated demand for service during the volatile financial times.
Membership of the superannuation fund continues to grow and
the superannuation business (Australian Ethical Superannuation
Pty Ltd) again contributed significantly to the group result.
Superannuation continues to be the growth engine of the
business.
As required under the company’s constitution, an amount of
$140,868 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.
Martin Halloran was appointed Chief Investment Officer in August
2008, bringing considerable experience and strength to the AEI
investment team. In November 2008, the company’s Information
Technology Manager (and executive director), Caroline Le
Couteur, left the company. Except as described in this report, the
company did not make any significant changes to its core funds
management operations during the 2008/2009 financial year.
The company continues to apply the principles of the Australian
Ethical Charter in its investment and business activities.
Financial position
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
¹ Tithes expense is not included in costs when calculating this ratio.
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 the 2008-09 dividend, or on the dividend payout ratio for the
2008-09 year.
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 2009, other than
as outlined in this report.
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.
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 or maintained 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
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
urrently 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
In recent months we have seen a stabilisation of markets and
a significant rally. There is considerable debate however on the
pace of recovery and whether the worst effects of the global
financial crisis are now behind us. While Australian Ethical has
a strong product offering for the future and retains a loyal retail
investor base, it is not immune to market volatility and negative
investor sentiment and the coming months will be navigated
with caution.
During this and the preceding financial year Australian Ethical
made a number of changes to its operations which have had
a positive impact on expenses. 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 decides
on their appropriateness. Reviews during the last financial
year resulted in a decision to withdraw the World Trust and to
establish a Property Trust. We have maintained access to ethical
international investments via our existing International Equities
Trust. Work has continued on a product that will tap the rise in
shareholder activism and concerns about climate change. We
expect to bring this product to the market during the current
financial year. We believe this product has the potential to offer
exciting opportunities to leverage our expertise and expand our
customer base.
We continue to work on our marketing and distribution
arrangements, with a campaign planned around the launch of our
new product disclosure statements and website later this year.
The company has been exploring a number of possible alliance’s
however at this time the company has no plans to make any
significant changes to its core operations.
Other information relating to business strategies and likely
developments has not been disclosed because it may cause
unreasonable prejudice to those activities.
Events subsequent to balance date
On 11 August 2009 the company announced that Anne
O’Donnell, CEO and Managing Director would end her
employment effective 11 December 2009. The Board has
commenced a search for a replacement CEO and expects to
complete this by November 2009.
The directors have declared that a final dividend of $1.32 per
ordinary share (fully franked) be paid to shareholders. This is in
addition to the interim dividend of 15 cents per ordinary share
paid in March 2009. The total dividend for the year will be $1.47
per share.
The Board notes that the declaration and quantum of any future
AUSTRALIAN ETHICAL INVESTMENT LTD
13
Naomi Edwards
BSc (Hons) FIA FIAA FNZSA
Non-Executive Chairperson
Howard Pender
B.A.(Hons)
Executive Director
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 and nominations committee and is a member
of the audit, compliance and risk committee. Naomi is also a
director of Australian Ethical Superannuation Pty Ltd.
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 Australian Securities Exchange-listed companies.
Howard is a director of Australian Ethical Superannuation Pty
Ltd and is a member of the board’s investment committee.
Howard was the company’s project manager for its multi-
award winning 6 Star Green Star rated building.
James Thier
B.Sc.(Hons)
Executive Director
Justine Hickey
BCom GAICD SAFin ASIP(UK)
Non-Executive Director
James has had academic experience as a researcher and has
taught in the faculties of economics, environmental studies
and geography at the University of New South Wales. 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. James was recently
awarded a Churchill Fellowship to examine the mechanisms of
shareholder advocacy.
Justine has over 17 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. Justine is
a director of Hyperion Flagship Investments Ltd and the Rio
Tinto Staff Super Fund. She is a member of the investment
committees of Dalton Nicol Reid and the University of
Melbourne. For several years, Justine has been involved
with the Youth Enterprise Trust (YET), a charity that helps
young people in need discover a sense of their self worth and
purpose. Justine chairs the investment committee and is a
member of the remuneration and nominations committee.
14
AUSTRALIAN ETHICAL INVESTMENT LTD
Directors’ report
Dr Les Coleman
B.Eng.(Hons), B.Sc.(Hons), M.Ec., PhD
Non-Executive Director
André Morony
B.Ec.(Hons), M.Ec.
Non-Executive Director
André started his 30 years in the finance sector at the
Commonwealth Treasury, where he worked in a number of
financial policy areas and also represented Australia for three
years at the Organisation for Economic Cooperation and
Development in Paris. He then had various roles at Bankers
Trust Australia (BT) including as Chief Economist and Chief
Investment Officer where he was responsible for over $40
billion of investments. From 2001-2006, André was Chief
Investment Officer at ARIA, the Australian Government
employees’ $16 billion superannuation fund. André believes
that the ‘active’ investment industry should play an important
role in maintaining the health of the modern market economy
by directing capital towards industries and firms generating
higher returns and away from industries in decline. He was
attracted to Australian Ethical because its approach adds
another dimension to this idea. By operating in accordance
with its Ethical Charter, it directs capital to industries and
firms that not only offer the prospect of above average
returns but also offer more general benefits to society and
the environment. André currently sits on the boards of RBS
Funds Management (Australia) Ltd , GESB Mutual Limited,
Challenger LBC Terminals Jersey Limited and Steam Packet
Group. He is also on the Catholic Superannuation Fund
investment committee. André is a member of the board’s
investment committee.
Caroline Le Couteur B.Ec., B.Bus., Grad.Dip.(Env. &
Dev. Man.), FAICD
Executive Director
Retired 27 November 2008
Les has been a trustee of two superannuation funds, and
a director of ten companies involved in finance, retail and
distribution. He has over 20 years experience in senior
operational, planning and finance roles in Australia and
overseas with Anglo American Corporation and ExxonMobil
Corporation. He is currently a member of the investment
committee of United Funds Management (a subsidiary of
IOOF Holdings Limited), and since 2004 has taught in the
Finance Department of the University of Melbourne. His
particular research interests are corporate risk and non-
financial indicators of superior firm performance, especially
ethics and sustainability. He is a regular contributor to print
and broadcast media, including four years as a weekly
columnist with The Australian newspaper, and has published
several books and numerous articles and papers. Les is on
the audit, compliance and risk committee.
Anne O’Donnell
BA MBA FAICD
Managing Director
Resigned 11 August 2009
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.
She is a director of the Community CPS Australia Credit
Union. Anne’s employment with the company will end on 11
December 2009.
Caroline left the company after being elected to the ACT
Legislative Assembly. Caroline was the company’s Information
Technology manager.
AUSTRALIAN ETHICAL INVESTMENT LTD
15
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
Audit (merged
31 December)
Finance (ceased
31 December)
Investment
Remuneration &
Nominations
Compliance and
risk (merged 31
December)
Audit
Compliance
and Risk
(commenced 1
January)
Eligible
Attend
Eligible Attend
Eligible
Attend
Eligible Attend
Eligible
Attend
Eligible
Attend
Eligible
Attend
Caroline Le Couteur
James Thier
Howard Pender
Naomi Edwards
Justine Hickey
Anne O’Donnell
Andre Morony
Les Coleman
2
7
7
7
7
7
7
7
2
7
7
7
7
7
6
7
-
-
-
1
-
-
-
-
-
1
-
-
5
-
5
5
-
-
5
5
5
-
2
4
1
4
-
2
-
1
4
1
4
-
2
-
-
-
-
2
2
-
-
2
2
2
2
-
2
-
2
-
-
-
-
-
-
-
3
-
-
-
3
3
2
Directorships held in other listed entities in the last three years
Name
Justine Hickey
André Morony
Entity
Period of directorship
Hyperion Flagship Investments Limited
3 years
Macquarie Private Capital Group Limited
1.5 years
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
51,367
50,252
700
11,988
-
4,313
4,308
-
8,582
Directors’ holdings in registered schemes made available by the company
Caroline Le Couteur holds 1449.5079 units in the Australian Ethical Balanced Trust.
Anne O’Donnell holds 5116.2306 units in the Australian Ethical Large Companies Share Trust.
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.
16
AUSTRALIAN ETHICAL INVESTMENT LTD
Directors’ report
Eligible
Attend
Eligible Attend
Eligible
Attend
Eligible Attend
Eligible
Attend
Eligible
Attend
Eligible
Attend
Caroline Le Couteur
James Thier
Howard Pender
Naomi Edwards
Justine Hickey
Anne O’Donnell
Andre Morony
Les Coleman
2
7
7
7
7
7
7
7
2
7
7
7
7
7
6
7
1
-
-
-
-
-
-
-
-
1
5
5
5
-
-
5
-
5
5
-
-
-
2
4
1
4
-
2
-
1
4
1
4
-
2
-
-
-
-
2
2
-
-
2
2
December)
and Risk
(commenced 1
January)
2
2
-
2
-
2
-
-
-
-
3
-
-
-
-
-
-
3
3
2
Board
Audit (merged
Finance (ceased
Investment
Remuneration &
Compliance and
Audit
31 December)
31 December)
Nominations
risk (merged 31
Compliance
Name
Position
Caroline Le Couteur
Director, executive
Retired 27 November 2008
Names and positions of key management personnel (directors and named executives) at
any time during the financial year
Parent entity directors
James Thier
Howard Pender
Naomi Edwards
Justine Hickey
Anne O’Donnell
Les Coleman
André Morony
Executives
Name
Martin Halloran
Philip George
Ruth Medd
Gary Leckie
Director, executive
Director, executive
Chairperson, non-executive
Director, non-executive
Managing Director, executive
Resigned 11 August 2009
Director, non-executive
Director, non-executive
Position
Chief Investment Officer
Appointed 27 August 2008
Company secretary / legal counsel
Director of wholly-owned entity
Chief Financial Officer
Paul Harding Davis
Head of Distribution
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. each of the 5 named company executives who receive
2.
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.
The above named directors and executives are key
management personnel of the consolidated entity.
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 the remuneration and nominations
committee. Within the approved aggregate amount, fees paid
to individual directors for services as a director are determined
by the Board. During the relevant period, the chair received 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 and
superannuation contributions. In particular, directors are paid
for serving on board committees.
There are 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, executive directors and group executives) in an
equitable fashion. All permanent staff (including secretaries,
senior managers and executives) received a cash salary
and participated in a staff bonus and employee share
ownership scheme. The arrangements did not apply to
non-executive directors.
During the reporting period, remuneration for three senior
managers included an ‘at risk’ component linked to
performance criteria.
For the senior managers with an at risk component, the
performance conditions required the executives to achieve
objectives related to: return on equity; cost to income ratio;
project delivery; funds under management; engagement with
asset consultants, ratings agencies and institutional clients;
and development of marketing strategies / collateral.
The performance conditions were chosen to align the senior
manager’s objectives with those set out in the company’s
AUSTRALIAN ETHICAL INVESTMENT LTD
17
strategic plan. The remuneration and nominations committee
was responsible for assessing whether the managing director
met their performance conditions. The managing director was
responsible for assessing whether the other senior managers
had met their performance conditions. In both cases,
quantitative and qualitative aspects were able to be assessed.
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 or declare a dividend to be paid out
of profits of any one year, they must pay a bonus2 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 employee share ownership arrangements.
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 options3 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 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.
At the 2008 Annual General Meeting, shareholders approved
an Employee Share Incentive Scheme (‘ESIS’). The ESIS
will replace the employee share ownership arrangements
described above. The ESIS will also be used to provide
broader performance based pay arrangements in future, with
benefits linked to measures such as the company’s return on
18
AUSTRALIAN ETHICAL INVESTMENT LTD
equity and the performance of its managed funds.
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 individual performance based elements were
introduced for some senior managers over the last two years.
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 2007/2008 year profits of
165 cents per share. The dividend declared by the directors
for the 2008/2009 year is 147 cents per share.4
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
30 June 2009
Closing Daily Price5
$12.50
$11.30
$13.00
$17.20
$28.50
$48.00
$34.00
$22.00
2 See Note 1(k) in the attached financial report
3 See Note 24 in the attached financial report
4 An interim dividend of 15 cents per share was paid in March 2009, so the final payment to
shareholders will be 132 cents per share.
5 Where shares were not traded on the day specified, the price quoted is the closing daily
price when trades did occur on the dat earlier than the closest date specified.
Directors’ report
AUSTRALIAN ETHICAL INVESTMENT LIMITED
A.B.N 47 003 188 930
AND CONTROLLED ENTITY
The company’s earnings over the last five years are as follows:
Year
2004/2005
Earnings
$784,419
2005/2006
The company’s earnings over the last five years are as follows:
2006/2007
$1,362,612
2007/2008
2008/2009
$1,819,177
$1,651,790
$1,202,752
Remuneration details for the year ended 30 June 2009
Parent entity directors’ remuneration
Short-term em ployee benefits
Post Em-
ploym ent
benefits
Other
Long-term
Benefits
Term ination
Benefits
S hare-based Payment
2009 Cash Salary
Caroline Le C outeur
Jam es Thier
Howard Pender
Naom i Edwards
Justine Hic key
A nne O 'D onnell
A ndré Morony
Les Colem an
Total
Caroline Le C outeur
Jam es Thier
Howard Pender
Naom i Edwards
P auline Vam os
Justine Hic key
A nne O 'D onnell
Total
2008
an d Fees
$
52,964
158,515
165,096
71,500
30,000
224,420
23,500
24,000
749,995
142,503
157,324
159,245
58,416
9,249
26,651
213,858
767,246
S TI
cash bonus
$
O ther
Super
$
$
6,000
26,300
-
-
-
5,000
-
-
37,300
6,000
4,800
3,900
-
-
-
6,000
20,700
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,485
15,863
14,171
6,435
2,700
20,973
2,115
2,160
68,902
13,230
13,566
13,420
5,257
750
2,408
18,760
67,391
$
Bo nus
Shares
$
-
1,000
3,900
-
-
6,000
-
-
10,900
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Optio ns
Total
$
-
4,979
4,840
-
-
23,726
-
-
33,545
15,044
12,743
12,709
-
-
-
25,410
65,906
$
64,546
209,954
191,385
77,935
32,700
286,446
25,615
26,160
914,741
180,321
191,624
192,445
63,673
9,999
29,059
270,278
937,399
$
1,097
3,297
3,378
-
-
6,327
-
-
14,099
3,544
3,191
3,171
-
-
-
6,250
16,156
S300A(1)(e)(i)
P ropo rtion of
remu neration
performance
related
S 300A(1)(e)(vi)
Value of options
as proportion of
remuneration
%
-
10.7
-
-
-
1.7
-
-
-
-
-
-
-
-
-
%
-
2.4
2.5
-
-
8.3
-
-
8.3
6.6
6.6
-
-
-
9.4
Approval for the issue of shares and options to executive directors was obtained under ASX listing rule 10.14 at the Annual General
Meetings held in either November 2006 or November 2008, except for the issue of $6000 worth of shares to Anne O’Donnell in lieu of
payment of a $6000 cash bonus under the employee share ownership scheme. As agreed with the Australian Securities Exchange, these
shares were sold immediately once the failure to obtain shareholder approval was discovered. A loss was made on the sale of the shares.
Named executives remuneration (including other key management personnel)
Short-term employee benefits
Post Em-
ployment
benefits
Other
Long-term
Benefits
Termination
Benefits
Share-based Payment
Cash Salary
an d Fees
$
STI
cash bonus
$
O ther
Super
$
$
$
$
Bo nus
Shares
$
Optio ns
Total
$
$
2009
2008
Philip G eorge
Ruth Medd
G ary Leckie
Tim Xirakis
Paul Harding Davis
Martin Halloran
Total
David F erris
Philip G eorge
Ruth Medd
G ary Leckie
Tim Xirakis
Paul Harding Davis
Total
177,375
42,000
178,422
190,597
193,503
201,721
983,618
165,939
177,416
35,488
152,178
160,430
91,566
783,017
6,000
-
6,000
6,000
32,535
-
50,535
-
6,000
-
6,000
6,000
16,000
34,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,831
3,780
15,990
15,789
19,697
11,517
82,604
10,938
15,365
3,194
13,594
15,381
8,950
67,422
S300A(1)(e)(i)
Propo rtion of
remu neration
performance
related
S300A(1)(e)(vi)
Value of options
as proportion of
remuneration
%
-
-
-
-
12.4
-
-
-
-
-
-
13.5
%
8.7
-
7.7
7.3
3.6
-
10.0
9.3
-
7.8
7.5
-
3,558
-
5,284
3,675
3,989
4,173
20,679
-
3,643
-
4,572
3,515
1,749
13,479
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,770
-
2,770
5,885
-
-
-
-
-
5,885
19,434
-
17,194
16,979
9,498
-
63,105
222,198
45,780
222,890
233,040
261,992
217,411
1,203,311
20,378
20,740
-
14,843
14,918
-
70,879
203,140
223,164
38,682
191,187
200,244
118,265
974,682
AUSTRALIAN ETHICAL INVESTMENT LTD
19
AUSTRALIAN ETHICAL INVESTMENT LIMITED
A.B.N 47 003 188 930
AND CONTROLLED ENTITY
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 of $6000 per FTE employee were paid on 22 September
2008. The performance based cash bonuses for Mr Harding-Davis and Mr James Thier were paid on
16 July 2009. The performance based cash bonus for Ms Anne O’Donnell has not yet been paid, but
is expected to be paid in September this year. 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 2009 year.
P arent Entity Directors
C arolin e Le C outeur
Jam es T hier
H oward Pend er
A nne O 'D onnell
N ame d exe cutiv es (includ ing othe r key m anag emen t pe rson nel)
P hilip G eorge
G ary Lec kie
T im Xira kis
P aul Ha rding Davis
6,000
6,000
6,000
-
Sh ort term in centiv e bonu s
Cash bo nus
(1)
$
P erform anc e
bo nus
$
Share bon us
$
Vested in
year
%
Forfeited
in year (2)
%
6,000
3,800
-
-
-
22,500
-
5,000
-
-
-
32,535
-
1,000
3,900
6,000
-
-
-
2,770
1 00
9 0
1 00
1 7
1 00
1 00
1 00
6 5
-
1 0
-
8 3
-
-
-
3 5
(1) D etails of ca sh an d per form anc e bon us ha ve bee n pro vided in the director's report unde r rem uneration policy
(2) T he amounts forfe ited are due to the perform ance or s ervice criteria not being m et in relation to th e current
financial year
Equity based remuneration
Equity based remuneration consisted 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
P a r e n t E n t it y D ir e c t o r s
C a r o lin e L e C o u te u r
J a m e s T h ie r
H o w a rd P e n d e r
N a o m i E d w a r d s
J u s tin e H ic k e y
A n n e O 'D o n n e ll
A n d ré M o ro n y
L e s C o le m a n
N u m b e r o f
o p t i o n s
v e s t e d
d u r in g 2 0 0 9
N u m b e r o f
o p t io n s
g r a n te d
d u r i n g 2 0 0 9 (1 )
2 ,2 4 3
1 ,8 0 0
9 3 1
-
-
3 ,0 0 6
-
-
7 ,9 8 0
-
1 ,3 6 4
1 ,3 2 6
-
-
2 ,6 4 8
-
-
5 ,3 3 8
G r a n t d a t e
-
1 / 1 2 /2 0 0 8
1 / 1 2 /2 0 0 8
-
-
1 4 /1 0 /2 0 0 8
-
-
N a m e d e x e c u t iv e s ( in c lu d in g o th e r k e y m a n a g e m e n t p e r s o n n e l)
P h ilip G e o rg e
R u th M e d d
G a ry L e c k ie
T im X ir a k is
P a u l H a rd in g D a v is
M a r tin H a llo r a n
1 ,5 5 0
-
1 ,3 8 7
-
-
-
2 ,9 3 7
2 ,1 6 9
-
1 ,9 1 9
1 ,8 9 5
1 ,0 6 0
-
7 ,0 4 3
1 4 /1 0 /2 0 0 8
-
1 4 /1 0 /2 0 0 8
1 4 /1 0 /2 0 0 8
1 4 /1 0 /2 0 0 8
-
F a ir v a lu e p e r
o p t io n a t g r a n t
d a t e (2 ) ( $ )
E x e r c is e p r ic e
p e r o p tio n ($ )
F ir s t e x e r c is e
/ e x p ir y d a te
L a s t
e x e r c is e
/e x p ir y
d a te
-
3 .6 5
3 .6 5
-
-
8 .9 6
-
-
8 .9 6
-
8 .9 6
8 .9 6
8 .9 6
-
-
3 2 .2 7
3 2 .2 7
-
-
3 2 .2 7
-
-
3 2 .2 7
-
3 2 .2 7
3 2 .2 7
3 2 .2 7
-
-
1 4 /1 0 /2 0 1 1
1 4 /1 0 /2 0 1 1
-
1 4 /1 0 /2 0 1 1
-
-
-
-
1 3 /0 1 /2 0 1 2
1 3 /0 1 /2 0 1 2
-
-
1 3 /0 1 /2 0 1 2
-
-
1 4 /1 0 /2 0 1 1
-
1 4 /1 0 /2 0 1 1
1 4 /1 0 /2 0 1 1
1 4 /1 0 /2 0 1 1
-
1 3 /0 1 /2 0 1 2
-
1 3 /0 1 /2 0 1 2
1 3 /0 1 /2 0 1 2
1 3 /0 1 /2 0 1 2
-
( 1 ) E a c h o p tio n a b o v e is g ra n t e d b y A u s tr a lia n E th ic a l In v e s tm e n t L im ite d (A E I) a n d is fo r o n e o rd in a ry s h a r e in A E I.
( 2 ) O p tio n s w e r e g ra n te d a s p a rt o f r e m u n e ra tio n a n d th e re c ip ie n t d id n o t o th e r w is e p a y fo r th e g r a n t o f th e o p tio n s .
20
AUSTRALIAN ETHICAL INVESTMENT LTD
Directors’ report
AUSTRALIAN ETHICAL INVESTMENT LIMITED
A.B.N 47 003 188 930
AND CONTROLLED ENTITY
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.
Parent Entity Directors
Caroline Le Couteur
James Thier
Howard Pender
Anne O'Donnell
Named executives (including other key management personnel)
Phillip George
Gary Leckie
(1) Shares issued are fully paid.
Number of
shares
Amount paid
$ /share (1)
2,243
1,800
931
3,006
1,550
1,387
24.82
24.82
24.82
24.82
24.82
24.82
Analysis of options over ordinary shares granted as compensation
Details of vesting profiles of options granted as compensation are detailed below:
P a r e n t E n t i t y D i r e c t o r s
C a r o lin e L e C o u te u r
J a m e s T h ie r
H o w a r d P e n d e r
A n n e O 'D o n n e l l
O p t i o n s g r a n t e d
N u m b e r
2 , 2 4 3
1 , 9 1 0
1 , 7 9 1
1 , 8 0 0
1 , 4 3 2
1 , 5 1 7
1 , 3 6 4
9 3 1
1 , 4 6 9
1 , 5 1 3
1 , 3 2 6
3 , 0 0 6
2 , 9 0 9
3 , 0 2 5
2 , 6 4 8
O p t i o n
S e r i e s
A E F A Q
A E F A S
A E F A T
A E F A Q
A E F A S
A E F A T
A E F A V
A E F A Q
A E F A S
A E F A T
A E F A V
A E F A Q
A E F A S
A E F A T
A E F A U
D a t e
2 1 / 0 9 / 2 0 0 5
2 2 / 0 9 / 2 0 0 6
2 4 / 0 9 / 2 0 0 7
2 1 / 0 9 / 2 0 0 5
2 2 / 0 9 / 2 0 0 6
2 4 / 0 9 / 2 0 0 7
1 /1 2 / 2 0 0 8
2 1 / 0 9 / 2 0 0 5
2 2 / 0 9 / 2 0 0 6
2 4 / 0 9 / 2 0 0 7
1 /1 2 / 2 0 0 8
2 1 / 0 9 / 2 0 0 5
2 2 / 0 9 / 2 0 0 6
2 4 / 0 9 / 2 0 0 7
1 4 / 1 0 / 2 0 0 8
% V e s t e d i n
y e a r
1 0 0
-
-
1 0 0
-
-
-
1 0 0
-
-
-
1 0 0
-
-
-
% F o r f e i t e d i n
y e a r
-
1 0 0
1 0 0
-
-
-
-
-
-
-
-
-
-
-
-
N a m e d e x e c u t i v e s ( i n c l u d i n g o t h e r k e y m a n a g e m e n t p e r s o n n e l)
P h il ip G e o r g e
G a r y L e c k i e
T i m X ir a k is
P a u l H a r d in g D a v i s
A E F A Q
A E F A S
A E F A T
A E F A U
A E F A Q
A E F A S
A E F A T
A E F A U
A E F A S
A E F A T
A E F A U
A E F A U
1 , 5 5 0
2 , 3 5 6
2 , 4 6 9
2 , 1 6 9
1 , 3 8 7
1 , 4 4 3
1 , 7 6 7
1 , 9 1 9
1 , 3 8 7
1 , 7 7 6
1 , 8 9 5
1 , 0 6 0
2 1 / 0 9 / 2 0 0 5
2 2 / 0 9 / 2 0 0 6
2 4 / 0 9 / 2 0 0 7
1 4 / 1 0 / 2 0 0 8
2 1 / 0 9 / 2 0 0 5
2 2 / 0 9 / 2 0 0 6
2 4 / 0 9 / 2 0 0 7
1 4 / 1 0 / 2 0 0 8
2 2 / 0 9 / 2 0 0 6
2 4 / 0 9 / 2 0 0 7
1 4 / 1 0 / 2 0 0 8
1 4 / 1 0 / 2 0 0 8
1 0 0
-
-
-
1 0 0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
F in a n c ia l
y e a r s i n
w h ic h g r a n t
v e s t s
2 1 / 0 9 / 2 0 0 8
2 2 / 0 9 / 2 0 0 9
2 4 / 0 9 / 2 0 1 0
2 1 / 0 9 / 2 0 0 8
2 2 / 0 9 / 2 0 0 9
2 4 / 0 9 / 2 0 1 0
1 4 / 1 0 / 2 0 1 1
2 1 / 0 9 / 2 0 0 8
2 2 / 0 9 / 2 0 0 9
2 4 / 0 9 / 2 0 1 0
1 4 / 1 0 / 2 0 1 1
2 1 / 0 9 / 2 0 0 8
2 2 / 0 9 / 2 0 0 9
2 4 / 0 9 / 2 0 1 0
1 4 / 1 0 / 2 0 1 1
2 1 / 0 9 / 2 0 0 8
2 2 / 0 9 / 2 0 0 9
2 4 / 0 9 / 2 0 1 0
1 4 / 1 0 / 2 0 1 1
2 1 / 0 9 / 2 0 0 8
2 2 / 0 9 / 2 0 0 9
2 4 / 0 9 / 2 0 1 0
1 4 / 1 0 / 2 0 1 1
2 2 / 0 9 / 2 0 0 9
2 4 / 0 9 / 2 0 1 0
1 4 / 1 0 / 2 0 1 1
1 4 / 1 0 / 2 0 1 1
Modification of terms of options
At the 2008 Annual General Meeting (held 27 November 2008) it was resolved to include the
following terms and conditions in option classes AEFAS and AEFAT.
“Where:
a takeover bid (as defined in the Corporations Act) is made for the Company and the bidder has
or acquires a relevant interest in more than 20% of the voting shares in the Company; or
in the reasonable opinion of the Board, another transaction is proposed under which control of
the Company is likely to pass from the then existing shareholders, including, without limitation,
a scheme of arrangement,
then options in classes AEFAS and AEFAT will become exercisable at that time, and must be
exercised within three months of becoming so exercisable, otherwise the options will lapse.
AUSTRALIAN ETHICAL INVESTMENT LTD
21
AUSTRALIAN ETHICAL INVESTMENT LIMITED
A.B.N 47 003 188 930
AND CONTROLLED ENTITY
In the event that:
the Company has announced a buy-back scheme to purchase shares resulting from the exercise
of options granted in classes AEFAS and AEFAT;
the option holder wishes to sell all or some of the shares resulting from the exercise of the
options during the exercise period for those options,
then the option holder will offer the Company a first right of refusal to match in quantum and price
any other offer made to purchase those shares from the option holder.”
The market price of the underlying company shares on 27 November 2008 was $27.00. The number
of options in classes AEFAS and AEFAT held by key management personnel are set out in the table
above. Each option is for one ordinary share in the company. The exercise price and time remaining
until expiry immediately before alteration is as follows:
It is the view of the directors that the difference between the total of the fair value of the options
affected by the alteration immediately before the alteration and the total of the fair value of the
options immediately after the alteration was immaterial.
Analysis of movements in options
The movement in options during the reporting period (by value) is set out below:
Gran ted
a s part of
Rem une r-
a tion (1)
$
V alue of
O ptio ns ex -
er cised in
F in Y ear ( 2)
$
V alue of
O ptio ns
L apse d in
Fin Y ear (3)
$
P arent Entity Dire ctors
C arolin e Le C outeu r
Jam es T hier
H oward Pend er
N aom i Edw ards
Justin e Hickey
A nne O 'D onnell
-
4,97 9
4,84 0
-
-
23,72 6
33,54 5
13 ,862
4 ,724
2 ,961
-
-
9 ,559
31 ,106
N ame d exe cutiv es (inclu ding oth er ke y man agem ent perso nne l)
P hilip G eorge
R uth M edd
G ary Lec kie
T im Xira kis
P aul Ha rding Davis
M artin Halloran
19,43 4
-
17,19 4
16,97 9
9,49 8
-
63,10 5
9 ,579
-
8 ,572
-
-
-
18 ,151
9,537
-
-
-
-
-
9,537
-
-
-
-
-
-
(1) Valu es a re bas ed o n a valu ation p erfo rm ed on the op tions at gra nt date usin g the Black-Sc holes mo del. No ne of the v alue
of the op tions g rante d was paid to the k ey m anage me nt personn el in the fina ncial year. Key m ana gem ent p erso nnel m ay
realise valu e fro m this op tion grant in the 20 11/12 ye ar whe n the options are exercisab le.
(2) Valu es a re bas ed o n the n um ber o f optio ns e xcercised by Direc tors /Exec utives m ultiplied by the differe nce
betw een th e sha re price at exercise date a nd the exercise price .Unde r the term s of the s hare base d paym ent a rrang em ent
exe rcise date and therefore s hare price can vary betwe en op tion ho lders .
(3) Ca roline LeCou teur forfeited 1 00% of op tions grante d, upo n leaving the em ployme nt of Australian E thical Investme nt Ltd .
Th e am ounts liste d in th is co lumn do n ot rep resen t rem une ration paid to Dire ctor/Exec utives
22
AUSTRALIAN ETHICAL INVESTMENT LTD
Directors’ report
AUSTRALIAN ETHICAL INVESTMENT LIMITED
A.B.N 47 003 188 930
AND CONTROLLED ENTITY
Hedging policy
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.
The relative proportion of the performance related component of remuneration for several senior
managers is set out above.
Except as detailed for those senior managers, the remuneration of executive directors, secretaries and
other senior managers is not subject to individual performance conditions. People in these positions
were 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 small proportion of the overall remuneration of people holding these
positions.
Employment contracts of directors and senior managers
For each individual whose remuneration has been disclosed in this report and is currently employed
under an employment contract, the details of the employment contract are as follows:
Name
James Thier
Howard Pender
Anne O’Donnell
Gary Leckie
Philip George
Paul Harding Davis
Tim Xirakis
Martin Halloran
Duration of contract
2 weeks
Ongoing
Ongoing
Employment ends 11 December 2009
12 weeks
12 weeks
12 weeks
12 weeks
12 weeks
12 weeks
Ongoing
Ongoing
Ongoing
Ongoing
12 weeks
Ongoing
Period of termination
notice required
Termination payment pro-
vided for under the contract
None except for accrued
leave and any payment in
lieu of notice.
The company advised the market on 11 August 2009 that on the date of Anne O’Donnell’s departure,
in addition to statutory leave payments, the company will pay to Ms O’Donnell an amount of
$235,000 (less applicable taxation) in recognition of her significant contribution to company growth
and profitability over her long tenure.
Experience
Non-director committee members and company secretary particulars
Name
Ruth Medd
Qualifications
B.Sc., Dip Comp Science, CPA,
MAICD, Non-Executive Chairperson
BSc LLB GradDipACG
Ruth is currently on the board of the NFAW Ltd (National Foundation for Aus-
tralian Women) and WOB Pty Ltd. Ruth is Chair of the company’s wholly-owned
subsidiary Australian Ethical Superannuation Pty Ltd. Ruth also Chairs 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 regula-
tor, the inaugural Company Secretary at Telstra and the Executive Director of an
industry association.
Philip George
Philip has experience in commercial law, corporate governance and project man-
agement. He has been a company secretary and legal counsel for listed companies
for over seven years. He was a senior associate at the national law firm Minter
Ellison and conducted a commercial legal practice in partnership for two years.
AUSTRALIAN ETHICAL INVESTMENT LTD
23
AUSTRALIAN ETHICAL INVESTMENT LIMITED
A.B.N 47 003 188 930
AND CONTROLLED ENTITY
Options as at the date of this report
Number of options on issue
Options over unissued shares as at the date of this report are as follows:
Exercise Period
Options Reference
AEFAS
AEFAT
AEFAU
AEFAV
Totals
32,952
37,488
40,771
2,690
113,901
14/10/11 to 13/1/12
14/10/11 to 13/1/12
22/9/09 to 21/12/09
24/9/10 to 231/12/10
Exercise Price
$32.50
$57.57
$32.27
$32.27
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 2009 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
34,707
Amount paid per share
$24.82
Of the 34,707 shares issued upon the exercise of options, 27,814 were bought back by the company.
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 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.
24
AUSTRALIAN ETHICAL INVESTMENT LTD
Directors’ report
AUSTRALIAN ETHICAL INVESTMENT LIMITED
A.B.N 47 003 188 930
AND CONTROLLED ENTITY
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.
Howard Pender
Director
Dated: 27 August 2009
6 The financial statements show options issued during the financial year. No options have been issued since the end of the financial year to
the date of this report.
AUSTRALIAN ETHICAL INVESTMENT LTD
25
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
AUDITOR’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 2009 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 27 August 2009
Liability limited by a scheme approved under Professional Standards Legislation
17
26
AUSTRALIAN ETHICAL INVESTMENT LTD
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Financial statements for year ended 30 June 2009
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 2009
Notes
Consolidated Entity
2009
$
2008
$
Parent Entity
2009
$
2008
$
7
8
9
10
11
9
12
13
15
14
15
2,614,467
1,800,859
1,673,953
279,367
2,552,238
1,812,410
1,748,774
248,491
1,226,311
1,288,930
1,673,953
235,262
1,049,089
1,246,646
1,748,774
204,245
6,368,646
6,361,913
4,424,456
4,248,754
4,139,581
82,492
464,200
4,205,801
94,744
489,784
4,139,581
398,492
459,850
4,205,801
410,744
485,584
4,686,273
4,790,329
4,997,923
5,102,129
11,054,919
11,152,242
9,422,379
9,350,883
1,756,373
227,200
535,406
2,115,330
110,702
432,097
1,952,798
227,200
535,406
2,048,476
110,702
432,097
2,518,979
2,658,129
2,715,404
2,591,275
33,732
49,003
33,285
79,338
82,735
112,623
33,732
49,003
82,735
33,285
79,338
112,623
2,601,714
2,770,752
2,798,139
2,703,898
8,453,205
8,381,490
6,624,240
6,646,985
16
16
16
5,739,635
535,269
2,178,301
5,740,791
334,821
2,305,878
5,739,635
535,269
349,336
5,740,791
334,821
571,373
8,453,205
8,381,490
6,624,240
6,646,985
The accompanying notes form part of these financial statements
AUSTRALIAN ETHICAL INVESTMENT LTD
27
18
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Income Statement
for the year ended 30 June 2009
Notes
Consolidated Entity
2009
$
2008
$
Parent Entity
2009
$
2008
$
Revenue
3
13,131,431
14,064,371
10,652,895
10,618,566
Commissions paid to advisers
( 177,235)
( 284,450)
( 15,305)
( 75,477)
External services
( 2,498,375)
( 2,981,077)
( 1,044,339)
( 1,066,833)
Employee benefits expense
( 6,411,326)
( 6,257,080)
( 6,373,530)
( 6,241,118)
Depreciation
Occupancy costs
Communication costs
Other expenses
( 298,503)
( 285,736)
( 298,503)
( 285,736)
( 216,069)
( 196,340)
( 200,896)
( 187,013)
( 648,233)
( 839,144)
( 611,851)
( 789,496)
( 917,879)
( 568,428)
( 795,030)
( 538,793)
Profit before tithe and income tax expense
1,963,811
2,652,116
1,313,441
1,434,100
Tithes expense
1 (k)
( 140,868)
( 200,891)
( 140,868)
( 200,891)
Profit before income tax
1,822,943
2,451,225
1,172,573
1,233,209
Income tax expense
Profit for the year
Profit attributable to members of the
parent entity
4
( 620,191)
( 799,435)
( 64,281)
( 284,015)
16
1,202,752
1,651,790
1,108,292
949,194
1,202,752
1,651,790
1,108,292
949,194
Basic Earnings per share (cents per share)
Diluted earnings per share (cents per share)
6
6
121.6
121.6
170.3
165.4
The accompanying notes form part of these financial statements
28
AUSTRALIAN ETHICAL INVESTMENT LTD
19
Financial statements for year ended 30 June 2009
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 2009
Notes
Consolidated Entity
2009
$
2008
$
Parent Entity
2009
$
2008
$
Total equity at beginning of financial period
8,381,490
7,684,133
6,646,985
6,652,224
Available-for-sale investments:
Valuation gains/(losses) taken to equity
( 32,399)
( 60,166)
( 32,399)
( 60,166)
Employee share options
223,127
176,266
223,127
176,266
Income tax on items taken directly to or
transferred directly from equity
9,720
18,034
9,720
18,034
Net income recognised directly in equity
200,448
134,134
200,448
134,134
Profit for the financial year
1,202,752
1,651,790
1,108,292
949,194
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
1,403,200
1,785,924
1,308,740
1,083,328
( 1,156)
( 1,330,329)
( 1,331,485)
791,259
( 1,879,826)
( 1,088,567)
( 1,156)
( 1,330,329)
( 1,331,485)
791,259
( 1,879,826)
( 1,088,567)
16
8,453,205
8,381,490
6,624,240
6,646,985
1,403,200
1,403,200
1,785,924
1,785,924
1,308,740
1,308,740
1,083,328
1,083,328
The accompanying notes form part of these financial statements
AUSTRALIAN ETHICAL INVESTMENT LTD
29
20
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Cash flow statement
for the year ended 30 June 2009
Notes
Consolidated Entity
2009
$
2008
$
Parent Entity
2009
2008
$
$
14,241,650
( 11,926,618)
-
201,146
( 467,942)
( 245,201)
( 200,891)
14,899,240
( 11,606,829)
-
285,547
( 1,047,296)
( 221,168)
( 224,964)
10,401,154
( 9,625,550)
1,202,596
148,295
36,734
( 245,201)
( 200,891)
11,173,592
( 9,389,198)
500,000
195,822
( 423,764)
( 221,168)
( 224,964)
21 (b)
1,602,144
2,084,530
1,717,137
1,610,320
1,185,344
( 239,450)
( 1,141,871)
11,118
1,117,397
( 184,139)
( 1,100,000)
66,438
1,185,344
( 239,450)
( 1,141,871)
11,118
1,117,397
( 184,139)
( 1,100,000)
66,438
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
( 184,859)
( 100,304)
( 184,859)
( 100,304)
Cash flows from financing activities
Proceeds from share issue
Share buy-back payment
Dividends paid
171,084
( 195,811)
( 1,330,329)
954,328
( 178,954)
( 1,879,826)
171,084
( 195,811)
( 1,330,329)
954,328
( 178,954)
( 1,879,826)
Net cash provided by (used in) financing activities
( 1,355,056)
( 1,104,452)
( 1,355,056)
( 1,104,452)
Net increase (decrease) in cash held
62,229
879,774
177,222
405,564
Cash at beginning of financial year
2,552,238
1,672,464
1,049,089
643,525
Cash at end of financial year
21 (a)
2,614,467
2,552,238
1,226,311
1,049,089
The accompanying notes form part of these Financial Statements
30
AUSTRALIAN ETHICAL INVESTMENT LTD
21
Financial statements for year ended 30 June 2009
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 2009
Notes to the financial statements for the year ended 30 June 2009
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.
AUSTRALIAN ETHICAL INVESTMENT LTD
31
22
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 2009
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.
The 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
AUSTRALIAN ETHICAL INVESTMENT LTD
23
32
Notes to the financial statements for the year ended 30 June 2009 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 2009
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%
Straight line/Diminishing value
10% to 37.5%
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.
24
AUSTRALIAN ETHICAL INVESTMENT LTD
33
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 2009
Note 1 - Statement of significant accounting policies – continued
d) Financial instruments– continued
Impairment
At each reporting date, the group assesses 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.
34
AUSTRALIAN ETHICAL INVESTMENT LTD
25
Notes to the financial statements for the year ended 30 June 2009 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 2009
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".
26
AUSTRALIAN ETHICAL INVESTMENT LTD
35
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 2009
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
In estimating the annual leave and long service leave provision, no average salary increase
has been incorporated, reflecting the current economic environment.
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 $94,744. The directors have
determined that no provision for impairment is required for this loan.
New Accounting Standards for Application in Future Periods
The AASB has issued new, revised and amended standards and interpretations that have
mandatory application dates for future reporting periods. The group has decided against early
adoption of these standards. A discussion of those future requirements and their impact on
the group follows:
• AASB 3: Business Combinations, AASB 127 : Consolidated and Separate Financial
Statements, AASB 2008-3: Amendments to Australian Accounting Standards arising
from AASB 3 and AASB 127 [AASBs 1, 2, 4, 5, 7, 101, 107, 112, 114, 116, 121, 128,
131, 132, 133, 134, 136, 137, 138, & 139 and interpretations 9 & 107] (applicable for
annual reporting periods commencing from 1 July 2009) and AASB 2008-7:
Amendments to Australian Accounting Standards – Cost of an investment in a
Subsidiary, Jointly Controlled Entity or Associate [AASB 1, AASB 118, AASB 121,
AASB 127 & AASB 136] (applicable for annual reporting periods commencing from 1
January 2009). These standards are applicable prospectively and so will only affect
relevant transactions and consolidations occurring from the date of application. In this
regard, its impact on the group will be unable to be determined.
36
AUSTRALIAN ETHICAL INVESTMENT LTD
27
Notes to the financial statements for the year ended 30 June 2009 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 2009
• AASB 8: Operating Segments and AASB 2007-3: Amendments to Australian
Accounting Standards arising from AASB 8 [AASB 5, AASB 6, AASB 102, AASB 107,
AASB 119, AASB 127, AASB 134, AASB 136, AASB 1023 & AASB 1038] (applicable
for annual reporting periods commencing from 1 January 2009). AASB 8 replaces
AASB 114 and requires identification of operating segments on the basis of internal
reports that are regularly reviewed by the group’s Board for the purposes of decision
making. Separate reporting on the group’s managed funds business and
superannuation business will be reported in the notes.
• AASB 101: Presentation of Financial Statements , AASB 2007-8: Amendments to
Australian Accounting Standards arising from AASB 101, and AASB 2007-10: Further
Amendments to Australian Accounting Standards arising from AASB 101 (all
applicable to annual reporting periods commencing from 1 January 2009). The
revised AASB 101 and amendments supersede the previous AASB 101 and
redefines the composition of financial statements including the inclusion of a
statement of comprehensive income. There will be no measurement or recognition
impact on the group. If an entity has made a prior period adjustment or
reclassification, a third balance sheet as at the beginning of the comparative period
will be required.
• AASB 2008-1: Amendments to Australian Accounting Standard – Share-based
Payments: Vesting Conditions and Cancellations [AASB 2] (applicable for annual
reporting periods commencing from 1 January 2009). This Amendment to AASB 2
clarifies that vesting conditions consist of service and performance conditions only.
Other elements of a share-based payment transaction should therefore be
considered for the purposes of determining fair value. Cancellations are also required
to be treated in the same manner whether cancelled by the entity or by another party.
• AASB 2008-5, 6 & 2009-4, 5: Amendments to Australian Accounting Standards
arising from the Annual Improvements Project (July 2008) (AASB 2008-5) and AASB
2008-6: Further Amendments to Australian Accounting Standards arising from the
Annual Improvements Project (July 2008) (AASB 2008-6) detail numerous non urgent
but necessary changes to accounting standards arising from the IASB’s annual
improvements project. No changes are expected to materially affect the group.
• AASB 2009-2: Amendments to Australian Accounting Standards – Improving
Disclosures about Financial Instruments [AASB 4, AASB 7, AASB 1023 & AASB
1038] Improved disclosures related to fair value for each class of financial instrument
and maturity analysis, minor impact on group reporting.
28
AUSTRALIAN ETHICAL INVESTMENT LTD
37
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 2009
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
2009
$
2008
$
$
Parent Entity
2009
$
2008
$
37,220
-
-
5,500
34,000
5,000
10,000
5,000
3,770
-
3,000
7,000
32,720
-
-
5,500
3,280
-
30,000
2,500
-
5,000
3,000
7,000
9,745,880
1,439,173
503,448
1,102,776
-
191,671
-
148,483
13,131,431
10,737,924
1,861,872
444,513
653,080
-
272,819
-
94,163
14,064,371
4,484,603
188,605
-
1,102,776
1,202,596
138,819
3,445,918
89,578
10,652,895
5,127,584
501,215
-
653,080
500,000
183,095
3,563,238
90,354
10,618,566
Total revenue
13,131,431
14,064,371
10,652,895
10,618,566
38
AUSTRALIAN ETHICAL INVESTMENT LTD
29
Notes to the financial statements for the year ended 30 June 2009
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 2009
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% (2008:30%)
- 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
- Franking and foreign tax credits
- Tax allowance on capital investment
Income tax expense attributable to entity
Consolidated Entity
2009
$
2008
$
$
Parent Entity
2009
$
2008
$
584,440
35,751
620,191
878,691
(79,256)
799,435
28,380
35,901
64,281
360,121
(76,106)
284,015
546,883
-
735,368
-
-
351,772
-
369,963
-
-
555,910
515,420
1,982
66,938
15,977
631,780
-
( 682 )
( 10,907 )
620,191
1,077
52,879
10,616
799,940
-
( 505 )
-
799,435
1,962
66,938
15,977
992,559
( 360,779 )
( 682 )
( 10,907)
620,191
1,062
52,879
10,616
949,940
( 150,000)
( 505)
-
799,435
Allocation of income tax expense to wholly owned
entity under the tax sharing agreement
-
-
( 555,910)
( 515,420)
Income tax expense attributable to entity
620,191
799,435
64,281
284,015
The applicable weighted average effective tax
rates are as follows:
34%
33%
5%
23%
AUSTRALIAN ETHICAL INVESTMENT LTD
39
30
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 2009
Note 5 - Dividends
Distributions paid
Final fully franked dividend of 120 (2008: 152 )
cents per share franked at the tax rate of 30%
(2008:30%)
Interim fully franked dividend of 15 (2008: 45)
cents per share franked at the tax rate of 30%
(2008:30%)
Declared final fully franked dividend of 132 (2008:
120) cents per share franked at the tax rate of
30% (2008: 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:
Consolidated Entity
2009
$
2008
$
$
Parent Entity
2009
$
2008
$
1,181,596
1,437,025
1,181,596
1,437,025
148,733
1,330,329
442,801
1,879,826
148,733
1,330,329
442,801
1,879,826
1,308,854
1,180,804
1,308,854
1,180,804
1,629,081
1,616,777
560,937
1,068,144
506,059
1,110,718
Note 6 - Earnings per share
(a) Earnings used to calculate basic EPS and
dilutive EPS
1,202,752
1,651,790
(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
988,984
970,020
-
28,745
988,984
998,765
300
137,016
2,477,151
2,614,467
300
222,476
2,329,462
2,552,238
300
5,357
1,220,654
1,226,311
300
4,793
1,043,996
1,049,089
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.
40
AUSTRALIAN ETHICAL INVESTMENT LTD
31
Notes to the financial statements for the year ended 30 June 2009
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 2009
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
- Units in unit trust at fair value
- Shares in wholly owned entity at cost
Consolidated Entity
2009
$
2008
$
$
Parent Entity
2009
$
2008
$
1,783,351
17,508
-
1,800,859
1,785,510
26,900
-
1,812,410
1,661,701
94,744
1,756,445
82,492
1,673,953
1,737,572
105,946
1,843,518
94,744
1,748,774
1,141,871
199,081
320,749
-
1,661,701
1,100,000
287,681
349,891
-
1,737,572
1,050,013
17,508
221,409
1,288,930
1,977,701
94,744
2,072,445
398,492
1,673,953
1,141,871
199,081
320,749
316,000
1,977,701
1,100,702
26,900
119,044
1,246,646
2,053,572
105,946
2,159,518
410,744
1,748,774
1,100,000
287,681
349,891
316,000
2,053,572
The money market deposits are at fixed interest rates of 3.87% and 4.00% with maturity
dates of 27 July 2009 and 28 July 2009. 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 2035 and is investment grade rated by S&P.
b. Loans comprise
- Loan to other entity
94,744
94,744
105,946
105,946
94,744
94,744
105,946
105,946
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
20,902
258,465
279,367
6,102
242,389
248,491
20,902
214,360
235,262
6,102
198,143
204,245
AUSTRALIAN ETHICAL INVESTMENT LTD
41
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 2009
Note 11 - Property, plant and equipment
Land and buildings
Leasehold land
At cost
Total land
Buildings
At cost
Accumulated depreciation
Total buildings
Consolidated Entity
2009
$
2008
$
$
Parent Entity
2009
$
2008
$
230,000
230,000
230,000
230,000
230,000
230,000
230,000
230,000
2,784,117
( 225,528 )
2,558,589
2,784,117
( 157,503 )
2,626,614
2,784,117
( 225,528)
2,558,589
2,784,117
( 157,503)
2,626,614
Total land and buildings
2,788,589
2,856,614
2,788,589
2,856,614
Plant and equipment
At cost
Accumulated depreciation
Total plant and equipment
2,274,759
( 923,767)
1,350,992
2,075,929
( 726,742)
1,349,187
2,274,759
( 923,767)
1,350,992
2,075,929
( 726,742)
1,349,187
Total property, plant and equipment
4,139,581
4,205,801
4,139,581
4,205,801
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
2,626,614
-
-
( 68,025)
2,558,589
1,349,187
239,704
( 7,421)
( 230,478)
1,350,992
2,700,926
-
-
( 74,312)
2,626,614
1,397,212
176,524
( 13,125)
( 211,424)
1,349,187
230,000
-
-
230,000
2,626,614
-
-
( 68,025)
2,558,589
1,349,187
239,704
( 7,421)
( 230,478)
1,350,992
230,000
-
-
230,000
2,700,926
-
-
( 74,312)
2,626,614
1,397,212
176,524
( 13,125)
( 211,424)
1,349,187
Total
4,139,581
4,205,801
4,139,581
4,205,801
An independent valuer was contracted to value the land and buildings at 30 June 2009. Based on this valuation
the cost value of land and building disclosed above is below the commercial valuation and therefore no
impairment has occurred.
42
AUSTRALIAN ETHICAL INVESTMENT LTD
33
Notes to the financial statements for the year ended 30 June 2009
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 2009
Consolidated Entity
2009
$
2008
$
$
Parent Entity
2009
$
2008
$
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
Movements
Opening balance at 1 July
Credited/(charged) to the income statement
Credited/(charged) to equity
Closing balance at 30 June
377,916
44,060
16,800
438,776
398,213
60,267
15,600
474,080
377,916
44,060
12,450
434,426
398,213
60,267
11,400
469,880
25,424
15,704
25,424
15,704
464,200
489,784
459,850
485,584
489,784
( 35,304)
9,720
464,200
392,435
81,645
15,704
489,784
253,776
1,330,217
172,380
-
1,756,373
288,131
1,532,119
295,080
-
2,115,330
30,896
2,836
33,732
33,285
447
-
33,732
30,896
2,389
33,285
33,248
2,389
( 2,352)
33,285
485,584
( 35,454)
9,720
459,850
224,206
1,131,968
172,380
424,244
1,952,798
30,896
2,836
33,732
33,285
447
-
33,732
391,385
78,495
15,704
485,584
173,630
1,131,715
295,080
448,051
2,048,476
30,896
2,389
33,285
33,248
2,389
( 2,352)
33,285
AUSTRALIAN ETHICAL INVESTMENT LTD
43
34
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 2009
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 984,003 (2008 - 945,109) shares
Issue of share capital
Shares issued during the year under the employee
share ownership plan:
660 on 23 September 2008 (share bonus)
4,567 on 27 October 2008 (option exercised)
27,814 on 6 November 2008 (options exercised)
2,326 on 26 November 2008 (options exercised)
302 on 24 September 2007 (share bonus)
26,644 on 9 November 2007 (options excercised)
8,413 on 30 November 2007 (options exercised)
1,449 on 18 December 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
27,814 on 6 November 2008
3,423 on 17 October 2007
Balance 30 June
991,556 (2008 - 984,003) shares
Consolidated Entity
2009
$
2008
$
$
Parent Entity
2009
$
2008
$
535,406
535,406
432,097
432,097
49,003
49,003
79,338
79,338
535,406
535,406
49,003
49,003
432,097
432,097
79,338
79,338
5,740,791
4,949,532
5,740,791
4,949,532
23,570
113,353
690,343
57,731
-
-
-
-
15,885
401,204
136,964
23,590
146,279
246,291
23,570
113,353
690,343
57,731
-
-
-
-
-
-
15,885
401,204
136,964
23,590
146,279
246,291
( 886,153)
( 886,153)
( 178,954)
( 178,954)
5,739,635
5,740,791
5,739,635
5,740,791
44
AUSTRALIAN ETHICAL INVESTMENT LTD
35
Notes to the financial statements for the year ended 30 June 2009
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 2009
Consolidated Entity
2009
$
2008
$
$
Parent Entity
2009
$
2008
$
Note 16 - Movements in equity - continued
At 30 June 2009 there were 991,556 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 and senior bank 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
Revaluation - gross
Deferred tax
Balance 30 June
Share-based payments reserve
Balance 1 July
Option expense
Balance 30 June
Total Reserves
$
( 36,643)
( 32,399)
9,720
( 59,322)
5,489
( 60,166)
18,034
( 36,643)
371,464
223,127
594,591
195,198
176,266
371,464
535,269
334,821
( 36,643)
( 32,399)
9,720
( 59,322)
371,464
223,127
594,591
535,269
5,489
( 60,166)
18,034
( 36,643)
195,198
176,266
371,464
334,821
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
2,305,878
1,202,752
1,202,752
( 1,330,329)
2,178,301
2,533,914
1,651,790
1,651,790
( 1,879,826)
2,305,878
571,373
1,108,292
1,108,292
( 1,330,329)
349,336
1,502,005
949,194
949,194
( 1,879,826)
571,373
8,453,205
8,381,490
6,624,240
6,646,985
36
AUSTRALIAN ETHICAL INVESTMENT LTD
45
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 2009
Consolidated Entity
2009
$
2008
$
$
Parent Entity
2009
$
2008
$
Note 17 – Events after the balance sheet date
On 11 August 2009 the company announced that Anne O’Donnell, CEO and Managing Director would end her employment
effective 11 December 2009. No other 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
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
4,537,926
4,454,713
8,992,639
6,740,858
10,702,251
17,443,109
3,037,326
3,521,480
6,558,806
1,392,523
9,127,716
10,520,239
Rights of indemnities for liabilities incurred by the
Consolidated Entity and parent entity not recorded
in the financial statements were:
8,992,639
17,443,109
6,558,806
10,520,239
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.
Superannuation Administrator Transition
Issues raised in relation to the superannuation administrator transition as per note 20 of the last full year financial statements have
been resolved with no material impact to the group accounts.
46
AUSTRALIAN ETHICAL INVESTMENT LTD
37
Notes to the financial statements for the year ended 30 June 2009 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 2009
Consolidated Entity
2009
$
2008
$
$
Parent Entity
2009
$
2008
$
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
137,016
2,477,151
2,614,467
300
222,476
2,329,462
2,552,238
300
5,357
1,220,654
1,226,311
300
4,793
1,043,996
1,049,089
(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
Share options expensed
Staff bonus paid in shares
Changes in assets and liabilities
1,202,752
1,651,790
1,108,292
949,194
298,503
72,973
7,167
223,127
23,570
285,736
137,111
13,125
176,266
15,885
298,503
72,973
7,167
223,127
23,570
9,185
( 31,017)
35,454
( 95,678)
65,114
447
285,736
137,111
13,125
176,266
15,885
28,531
( 41,970)
( 78,495)
186,191
( 63,643)
2,389
(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
11,634
( 30,876)
35,304
( 358,957)
116,500
447
( 324,337)
( 64,846)
( 81,645)
441,661
( 168,605)
2,389
Net cash provided by (used in) operating activities
1,602,144
2,084,530
1,717,137
1,610,320
(c) Non-cash financing and investing activities
Shares in Australian Ethical Investment Limited, to the value of $23,570 (2008: $15,885) were issued in lieu of
staff bonus.
AUSTRALIAN ETHICAL INVESTMENT LTD
47
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 2009
Consolidated Entity
2009
$
2008
$
$
Parent Entity
2009
$
2008
$
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:
Taxation and other
Amounts payable to wholly owned entity:
Management fee income
-
-
-
-
-
-
-
-
-
-
-
-
3,445,918
3,563,238
555,910
515,420
5,054,272
5,580,164
1,202,596
500,000
221,409
119,044
424,244
448,051
48
AUSTRALIAN ETHICAL INVESTMENT LTD
39
Notes to the financial statements for the year ended 30 June 2009
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 2009
Consolidated Entity
2009
$
2008
$
$
Parent Entity
2009
$
2008
$
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:
3,521,848
3,286,338
316,833
2,065,893
476,444
35,377
4,085,481
3,612,192
280,875
2,578,524
353,350
27,055
3,521,848
3,286,338
316,833
2,065,893
476,444
35,377
4,085,481
3,612,192
280,875
2,578,524
353,350
27,055
275,896
218,138
92,595
142,057
109,072
42,156
155,976
123,000
49,074
77,646
56,112
21,576
71,058
81,024
6,663
56,101
7,277
107
54,023
57,610
4,717
46,028
376
5,442
275,896
218,138
92,595
142,057
109,072
42,156
71,058
81,024
6,663
56,101
7,277
107
155,976
123,000
49,074
77,646
56,112
21,576
54,023
57,610
4,717
46,028
376
5,442
6,873
7,311
6,873
7,311
AUSTRALIAN ETHICAL INVESTMENT LTD
49
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 2009
Consolidated Entity
2009
$
2008
$
$
Parent Entity
2009
$
2008
$
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)
352,189
351,300
40,029
204,066
56,269
7,991
358,820
338,548
31,780
218,099
48,120
5,386
352,189
351,300
40,029
204,066
56,269
7,991
358,820
338,548
31,780
218,099
48,120
5,386
320,749
3,298
349,891
7,400
320,749
3,298
349,891
7,400
207,004
30,175
95,853
21,284
-
-
-
-
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.
50
AUSTRALIAN ETHICAL INVESTMENT LTD
41
Notes to the financial statements for the year ended 30 June 2009
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 2009
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
Caroline Le Couteur
James Thier
Howard Pender
Naomi Edwards
Justine Hickey
Anne O Donnell
Les Coleman
André Morony
Position
Director, executive
Director, executive
Director, executive
Director, non-executive
Director, non-executive
Managing Director ,executive
Director, non-executive
Director, non-executive
Resigned 27 November 2008
Resigned 11 August 2009
Appointed 1 July 2008
Appointed 1 July 2008
Other key management personnel
Name
Gary Leckie
Tim XIrakis
Philip George
Paul Harding Davis
Martin Halloran
Position
Chief financial officer
Finance Investment Manager
Company secretary / legal counsel
Head of Distribution
Chief Investment Officer
b) Key management personnel compensation
Appointed 27 August 2008
Short term employment benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
Total compensation
Economic Entity
2009
$
2008
$
1,779,448
147,726
34,778
-
110,320
2,072,272
1,569,475
131,619
29,635
-
142,670
1,873,399
Parent Entity
2009
$
2008
$
1,684,770
139,941
34,778
-
110,320
1,969,809
1,474,892
123,519
29,635
-
142,670
1,770,716
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 personnel
Option Holdings
Number of options held by key management personnel.
Granted
as
Remun-
eration
Balance
01.07.08
Options
Exercised
Net
Change
Other
Balance
30.06.09
Total
Vested
30.06.09
Total
Exer-
cisable
30.06.09
Total
Unexer-
cisable
30.06.09
Parent Entity Directors
Caroline Le Couteur
James Thier
Howard Pender
Naomi Edwards
Justine Hickey
Anne O'Donnell
André Morony
Les Coleman
5,944
4,749
3,913
-
-
8,940
-
-
-
1,364
1,326
-
-
2,648
-
-
Named executives (including other key management personnel)
Philip George
Ruth Medd
Gary Leckie
Tim Xirakis
Paul Harding Davis
Martin Halloran
Total
6,375
-
4,597
3,163
-
-
37,681
2,169
-
1,919
1,895
1,060
-
12,381
( 2,243)
( 1,800)
( 931)
-
-
( 3,006)
-
-
( 1,550)
-
( 1,387)
-
-
-
( 10,917)
( 3,701)
-
-
-
-
-
-
-
-
-
-
-
-
-
( 3,701)
-
4,313
4,308
-
-
8,582
-
-
-
-
-
6,994
-
5,129
5,058
1,060
-
35,444
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,313
4,308
-
-
8,582
-
-
6,994
-
5,129
5,058
1,060
-
35,444
AUSTRALIAN ETHICAL INVESTMENT LTD
51
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 2009
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) 30.06.09 (3)&(4)
Balance
-
28
109
-
-
-
168
-
-
2,243
1,800
931
-
-
-
3,006
-
-
1,550
-
1,387
-
-
-
10,917
( 2,243)
( 200)
( 500)
-
-
-
( 168)
-
-
( 1,442)
-
( 1,387)
-
-
-
( 5,940)
49,436
65,846
52,283
-
-
700
11,988
-
-
489
-
-
-
78
-
180,820
Parent Entity Directors
Caroline Le Couteur
James Thier
Howard Pender
Naomi Edwards
Pauline Vamos
Justine Hickey
Anne O'Donnell
André Morony
Les Coleman
Balance
01.07.08
49,436
64,218
51,743
-
-
700
8,982
-
-
Named executives (including other key management personnel)
Philip George
Ruth Medd
Gary Leckie
Tim Xirakis
Paul Harding Davis
Martin Halloran
Total
381
-
-
-
-
-
175,460
-
-
-
-
78
-
383
(1) The amount paid for shares issued on exercise of options is $24.82 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 2009:
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 14 October 2008, 41,937 share options were granted to non-probationary employees under the Australian Ethical Investment Limited employee share
ownership plan and on 1 December 2008, 2,690 share options were granted to executive directors. The options were issued for nil consideration, are exercisable
from 14 October 2011, have an exercise price of $32.27 each and a three month window in which to be exercised. In most circumstances the options will lapse if
the holder is no longer an employee of Australian Ethical Investment Limited. The options hold no voting or dividend rights.
On 23 September 2008, 660 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 302 ordinary
shares, with the same terms, were granted on 24 September 2007).
52
AUSTRALIAN ETHICAL INVESTMENT LTD
43
Notes to the financial statements for the year ended 30 June 2009
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 2009
Note 24 - Share based payments - continued
Consolidated Entity
2009
2008
Weighted
Average
Exercise
Price
$
Weighted
Average
Exercise
Price
$
Number
of
Options
Parent Entity
2009
2008
Weighted
Average
Exercise
Price
$
Weighted
Average
Exercise
Price
$
Number
of
Options
Number
of
Options
Number
of
Options
Outstanding at the beginning
of the financial year
Granted
Forfeited
Exercised
Expired
Outstanding at year-end
116,753
39.31
118,995
25.11
116,753
39.31
118,995
25.11
44,627
( 8,523)
( 34,707)
( 1,373)
116,777
32.27
43.98
30.34
24.82
47,255
( 14,991)
( 34,506)
57.57
37.17
52.57
44,627
( 8,523)
( 34,707)
( 1,373)
32.27
43.98
30.34
24.82
47,255
( 14,991)
( 34,506)
57.57
37.17
52.57
40.76
116,753
39.31
116,777
40.76
116,753
39.31
Exercisable at year-end
-
-
-
-
-
-
-
-
There were 34,707 options exercised during the year ended 30 June 2009. The weighted average share price calculated as at exercise dates of these
options was $30.34.
The options outstanding at 30 June 2009 had a weighted average exercise price of $40.76 and a weighted average remaining
contractual life of 1.58 years. Exercise prices range from $32.27 to $57.57 in respect of options outstanding at 30 June 2009
The weighted average fair value of the options AEFAU granted on 14 October was $8.96 and AEFAV granted on 1 December 2008 was
$3.65 per share option.
This price of $8.96 for option AEFAU 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
$35.60
34.70%
4.84%
3.25 years
$32.27
This price of $3.65 for option AEFAV 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
$32.27
3.12
$27.00
34.70%
4.84%
Included under employee benefits expense in the income statement is :
$23,570 (2008: $15,885) relating to equity-settled share-based payment transactions for staff bonus; and
$223,127 (2008: $176,266) relating to options issued under the employee share ownership plan.
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.
AUSTRALIAN ETHICAL INVESTMENT LTD
53
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 2009
Note 25 - Financial instruments - continued
(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
Floating interest rate
2009
%
2008
% $ $
2008
2009
Fixed interest
rate within 1 year
2008
$ $
2009
5
5
7
8
2,614,167
2,551,938
519,829
637,572
-
-
1,154,124
-
-
1,111,202
3,133,996
3,189,510
1,154,124
1,111,202
-
-
-
-
-
-
-
-
Non-interest bearing
Total
Fixed interest rate
within 1 to 5 years
2009
$
2008
$ $ $
2009
2008
2008
$ $
2009
-
-
82,492
82,492
-
-
-
-
94,744
300
1,800,859
-
300
1,812,410
-
2,614,467
1,800,859
1,756,445
2,552,238
1,812,410
1,843,518
94,744
1,801,159
1,812,710
6,171,771
6,208,166
-
-
1,756,373
2,115,330
1,756,373
2,115,330
1,756,373
2,115,330
1,756,373
2,115,330
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 of the loan.
Consideration of credit risk in relation to financial assets is incorporated into the finance committee risk considerations. 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:
Consolidated Entity
2009
$
2008
$ $
Parent Entity
2009
$
2008
$
1,253,442
502,931
-
1,756,373
1,423,862
691,468
-
2,115,330
1,449,867
502,931
-
1,952,798
1,527,614
520,862
-
2,048,476
Less than 6 months
6 months to 1 year
1 to 5 years
(e) Net Fair Values
For other assets and other liabilities the net fair value approximates their carrying value.
54
AUSTRALIAN ETHICAL INVESTMENT LTD
45
Notes to the financial statements for the year ended 30 June 2009
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 2009
Note 25 - Financial instruments - 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%
Consolidated Entity
2009
$
2008
$ $
Parent Entity
2009
$
2008
$
62,686
(62,686)
63,790
(63,790)
34,923
(34,923)
33,733
(33,733)
AUSTRALIAN ETHICAL INVESTMENT LIMITED A.B.N. 47 003 188 930 AND CONTROLLED ENTITY
62,686
(62,686)
63,790
(63,790)
34,923
(34,923)
33,733
(33,733)
DIRECTORS' DECLARATION
The Directors of Austalian Ethical Investment Limited declare that:
1. the financial statements and notes, as set out on pages 18 to 46 and the additional disclosures in
the directors' report designated as audited are in accordance with the Corporations Act 2001:
(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 2009 and of the performance for the financial
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 accordance with
section 286 of the Corporations Act 2001;
(b) the financial statements and notes for the financial year comply with the Accounting Standards; and
(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 to pay its
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 27 August 2009
AUSTRALIAN ETHICAL INVESTMENT LTD
55
46
47
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 2009, 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
in accordance with Australian Accounting Standards (including the Australian Accounting
report
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
In
accounting policies; and making accounting estimates that are reasonable in the circumstances.
Note 1, the directors also state, in accordance with Accounting Standard AASB 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 to obtain reasonable assurance whether the financial report is free from material misstatement.
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.
In making those risk assessments, 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
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.
for
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
56
AUSTRALIAN ETHICAL INVESTMENT LTD
48
Notes to the financial statements for the year ended 30 June 2009 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, 2009 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, 2009. 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.
Auditor's Opinion
In our opinion the Remuneration Report of Australian Ethical Investment Limited for the year ended 30
June 2009, complies with section 300A of the Corporations Act 2001.
THOMAS DAVIS & CO.
P.L. WHITEMAN
PARTNER
Chartered Accountants
SYDNEY,
27 August, 2009
Liability limited by a scheme approved under Professional Standards Legislation
AUSTRALIAN ETHICAL INVESTMENT LTD
57
49
Shareholder information
The shareholder information set out below was current as at
15 September 2009.
Twenty largest shareholders
Substantial shareholders
Substantial shareholders of ordinary shares are specified in
the table of the top twenty shareholders set out right.
Ordinary shares
Name
Number
of ordinary
shares
%
Substantial
shareholders
196,472
19.815
Yes
James Andrew Thier 51,367
50,252
5.180
5.068
Yes
Yes
SMF Funds
Management Ltd
Mr Howard
Pender
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
Ms Anne Maree
O’Donnell
Mr Peter Alexander
Anderson
Mr Philip Julian
Eriksen & Mr Julian
Hans Erkisen
Mr Michel Beuchat
& Mrs Ann Beuchat
Est Mrs Hanneliese
Claire Graf
Mr Rodney Matthew
Myer
UBS Wealth Man-
agement Australia
Nominees Ptd Ltd
49,436
4.986
Yes
36,933
3.725
33,683
3.397
24,662
2.487
24,447
2.466
23,310
2.149
19,640
1.981
16,500
1.664
14,474
12,790
1.460
1.290
11,988
1.209
10,833
1.093
10,562
1.065
9,667
0.975
7,347
0.741
7,332
0.739
7,160
0.722
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
733
182,430
175,457
48,320
388,877
196,472
80
7
15
1
836
12
991,556
100.0
102
%
18.4
17.7
4.9
39.2
19.8
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
20
26
5
0
0
Units
12,862
68,797
32,242
0
0
51
113,901
%
11.3
60.4
28.3
0.0
0.0
100
58
AUSTRALIAN ETHICAL INVESTMENT LTD
Corporate directory
Australian Ethical Investment Ltd
ABN 47 003 188 930
Company secretary
Margaret Woods
Telephone: 02 6201 1960
Facsimile:
02 6201 1987
Email: mwoods@australianethical.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.australianethical.com.au
Share registry
Registries Limited
ABN 14 003 209 836
Street:
Telephone:
Facsimile:
Mail:
Email:
Level 2, 28 Margaret Street
Sydney NSW 2000
02 9290 9600
02 9279 0664
PO Box R67
Royal Exchange
Sydney NSW 1223
registries@registriesltd.com.au
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
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;
•
to conduct our own operations in accord with the items of
the Australian Ethical Charter, in particular we seek to:
• 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
australianethical
investment + superannuation
www.australianethical.com.au | 1800 021 227 |
®
AUSTRALIAN ETHICAL INVESTMENT LTD