australianethical
ANNUAL REPORT
TO SHAREHOLDERS
Year ended 30 June 2010
1800 021 227 • www.australianethical.com.au
australianethical
investment + superannuation
®
Contents
Chair and Managing Director’s report
Results overview
Sustainability Report
Corporate governance statement 2010
Directors’ report
Directors’ particulars
Directors’ meetings
Financial statements
Shareholder information
Corporate directory
Corporate vision and mission
Charter
2
4
6
8
13
15
19
33
67
68
68
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 water
b.
the production of high quality and properly presented
products and services
c.
the development of locally based ventures
d.
the development of appropriate technological systems
e.
the amelioration of wasteful or polluting practices
ii.
destroy or waste non-recurring resources
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
f.
the development of sustainable land use and
food production
v.
create markets by the promotion or advertising
of unwanted products or services
g.
the preservation of endangered eco-systems
h.
activities which contribute to human happiness,
dignity and education
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
i.
the dignity and well being of non-human animals
viii.
entice people into fi nancial over-commitment
j.
the effi cient use of human waste
k.
the alleviation of poverty in all its forms
l.
the development and preservation of appropriate
human buildings and landscape
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
2
AUSTRALIAN ETHICAL INVESTMENT LTD
Financial summary to 30 June 2010
as at
30 June 2010
30 June 2009
30 June 2008
30 June 2007
Current assets ($’000)
Non-current assets ($’000)
Current liabilities ($’000)
Non-current liabilities ($’000)
Net assets ($’000)
6,303
4,797
2,946
98
8,056
6,362
4,790
2,658
113
8,381
5,174
4,879
2,293
76
7,684
Revenue
14.06
14.07
13.13
12.47
6,369
4,686
2,519
83
8,453
9.66
2006
2007
2008
2009
2010
Year ending 30 June
Dividends paid
192
165
200
147
85
2006
2007
2008
2009
2010
Funds under management
610
572
547
614
458
2006
2007
2008
2009
2010
As at 30 June
Profit after tax (NPAT)
1819.2
1651.8
1362.6
1202.8
1022.6
2006
2007
2008
2009
2010
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
200
180
160
140
120
100
80
60
40
20
0
n
o
i
l
l
i
m
$
e
r
a
h
s
r
e
p
s
t
n
e
c
Year ending 30 June
Year ending 30 June
Basic earnings per share
194.8
170.3
150.3
121.6
103.0
%
2006
2007
2008
2009
2010
30
27
24
21
18
15
12
9
6
3
0
Return on equity
26.1
24.1
20.6
14.8
12.5
2006
2007
2008
2009
2010
Year ending 30 June
Year ending 30 June
AUSTRALIAN ETHICAL INVESTMENT LTD
1
n
o
i
l
l
i
m
$
0
0
0
$
s
t
n
e
c
700
600
500
400
300
200
100
0
2000
1800
1600
1400
1200
1000
800
600
400
200
0
200
180
160
140
120
100
80
60
40
20
0
Chair and Managing Director’s report
Naomi Edwards - Chair
Phillip Vernon - Managing Director
Dear Shareholder
Operating environment
The year under review has been characterised by an improved
but still volatile operating environment in world markets and
the fi nalisation of a number of regulatory reviews into fi nancial
services which will lead to quite a changed landscape.
Financial results and dividends
Our net profi t after tax was $1,022,555 down by 15%
from the previous year. However, after taking into account
some one-off adjustments (explained in detail in the annual
accounts) our underlying net profi t increased by 51%. Funds
under management were $613.8 million, an increase of 12%
over the previous year.
The directors declared a total dividend of $2.00 for the year,
an increase of 36% over the previous year. This comprised
an interim dividend of $0.50 plus a fi nal standard dividend
of $0.50. A special dividend of $1.00 was declared after
taking into account the capital needs of the business and
other factors.
A detailed explanation of the results is available in the full
company annual report on our website.
Community grants
The company’s constitution requires 10% of operating
profi t (after notional tax) be provisioned for charitable and
conservation purposes. In 2010 grants of $124,941 will be
made. This sees our total contribution over the years of our
community grants surpass $1 million. We are proud of this
important milestone in our commitment to the community.
Our revenues are reliant on the state of the share markets.
Over the past year the market has risen from a low in March
2009 to reach a high in March 2010. This has had a positive
impact on our revenues and has led to our underlying profi ts
increasing signifi cantly compared to the previous year.
However, the volatile state of the markets over the past few
years have caused many investors to avoid share market
investments altogether.
Performance of our funds
Our investment funds have continued to perform well over
the longer-term. Our Smaller Companies Trust achieved
4.9% in the past year compared to 10.3% achieved by its
benchmark (the S&P/ASX Small Industrials); however over
three years it outperformed by 14.4% (its return was negative
3.7% compared to negative 18.1% for the benchmark).
The nature of our investment style is such that our funds
are less volatile than the market as a whole and will tend
not to fall as far when the market is going down, but also
will not necessarily perform as well when the market goes
up. We remain confi dent that our investment processes
developed over more than 22 years will continue to provide
competitive long-term investment performance to our clients.
In September 2009 our Smaller Companies Trust was
upgraded by Lonsec (one of the leading managed funds
rating agencies) from Investment Grade to Recommended.
This confi rmed the steady progress we are making in
strengthening our investment processes and performance.
2
AUSTRALIAN ETHICAL INVESTMENT LTD
Product development
Outlook, strategy and focus
During the year we made some changes to our product suite
to better refl ect the needs of our clients.
Climate Advocacy Fund
The new Climate Advocacy Fund broadens our product range
with a fund structured to engage with companies and put
resolutions at annual general meetings. The fund aims to
encourage better climate performance, especially around
carbon disclosure. As an index fund, it is also an alternative
to the active management of our existing product range.
Global Smart Energy
We also re-positioned our International Equities Trust with
the theme globalsmartenergy. The International Equities
Trust now targets investment in companies involved in
global sustainable energy supply and demand. This dual
focus on both the supply and demand side of energy use
will allow it to benefi t from the opportunities presented in
combating and managing the impact of climate change.
Property Trust
The Property Trust was launched in response to demand from
investors looking for an opportunity to invest in sustainable
property and an alternative to the volatility of the share market.
The fund’s foundation investment is the 64 Allara Street
commercial building in the Canberra central business district.
Superannuation options
We have restructured our superannuation options to make
the choices for members simpler and more aligned with
offerings in the market. Two new options were introduced -
the Conservative and the Climate Advocacy.
Other initiatives
Improved client service
We have strong loyalty amongst our clients and a strong
affi nity with our network of advisers who support us. Our
clients and advisers expect more from us than a purely
transactional experience. During the year we embarked
on a program to signifi cantly improve our capacity to provide
a better service experience.
New portfolio management system
A project to replace our existing portfolio management
system is scheduled for completion by the end of this
calendar year and is aimed at reducing risk while improving
effi ciency and functionality.
The investment market outlook continues to be extremely
uncertain. However, we believe that our investment style
offers our investors consistent returns over the long-term
with less volatility than the broader investment market.
We have a fi rm belief that our style ‘suits the times.’
Within the socially responsible investment sector, we have
a strong reputation and brand built on our pioneering
heritage and strong conviction to selecting ethical
investments. As mainstream organisations increasingly
compete with us in this sector, for our clients we continue
to stand apart in commitment to sustainable investment.
Our key areas of focus over the coming year are:
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(cid:129)
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investment in and continued improvement of our client
service experience to encourage our clients to remain
with us over the full cycle of their investing life
a continued focus of marketing effort on the retail direct
channel in which we have a distinct point of difference
amongst our core client base, and to increase the number
of default employers contributing to our super fund
a continued development of our relationship with,
and products for, the adviser market to take advantage
of opportunities where advisers are repositioning
their businesses to respond to increasing demand for
true-to-label responsible investments.
We thank all of our shareholders for your continued support
and look forward to the coming year with strong focus
and optimism.
Naomi Edwards
Chair
Phillip Vernon
Managing Director
AUSTRALIAN ETHICAL INVESTMENT LTD
3
Results overview
Key points:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
Net profi t after tax (NPAT) was $1.0 million (15% lower
than the previous fi nancial year)
Funds under management were $613.8 million (before
distribution) at 30 June 2010 (an increase of 12.1% over
the previous year)
Revenues were $14.1 million (an increase of 7.1% over
the previous year)
Expenses were $12.5 million (an increase of 10.2% over
the previous year)
(cid:129)
Return on equity with reference to NPAT (RoE) for the
year is 12.5% (down from 14.8% for 2008-09).
The result should be read in light of the following one-off
events during the year that impacted the results, namely:
(cid:129)
(cid:129)
Senior staff departure expenses of $482,000; and
Adjustments in respect of fee errors related to the prior
year but adjusted in the current year of $261,000.
After taking these items into account, the result is an
increase in underlying NPAT of 51% with an RoE of 18.9%.
These results are summarised in the table below.
2009
2010
Change
Funds under management
$547.4 million
$613.8 million
12%
Revenue
Expenses
Operating profi t
Community grants
EBITDA
Depreciation/amortisation/options/rights
Tax
Net profi t after tax
Underlying profi t
Adjustments (gross)
–Fee revenue error
–Add back senior staff departure cost
Tax on adjustments
Net underlying profi t after tax
Dividend payment
The Board has adopted a dividend payment policy that will
target a dividend payout ratio of between 80% and 100%
of net profi t after tax in a given year subject to the capital
requirements of the business.
The Board has determined that a fi nal dividend of $0.50
per share be declared resulting in a full year dividend of
$1.00 per share. In addition, following a review of the
balance sheet, the future capital requirements of the
business and other issues, the Board has determined
that a special dividend of $1.00 per share is appropriate
and therefore declared.
In declaring this special dividend the Board considered:
(cid:129)
(cid:129)
(cid:129)
regulatory requirements;
internal operational and strategic requirements;
franking account balance and value to the shareholder;
4
AUSTRALIAN ETHICAL INVESTMENT LTD
$000
13,131
(10,639)
$000
14,068
(11,661)
2,493
(141)
2,352
(529)
(620)
1,203
(261)
–
78
1,020
2,407
(125)
2,282
(676)
(583)
1,023
261
482
(223)
1,543
7%
(10%)
(3%)
11%
(3%)
(28%)
6%
(15%)
51%
(cid:129)
timing considerations including historical issues affecting
the balance sheet such as the purchase of Trevor
Pearcey House, the global fi nancial crises and the
maturity of the business; and
(cid:129)
the strong positive cash fl ow position of the company.
The dividend reinvestment plan (DRP) will not operate in
respect of these payments.
A summary of dividend payments related to the past two
years is as follows:
2009
2010 Change
Interim (cents per share)
Final (cents per share)
Special (cents per share)
Total (cents per share)
Dividend paid ($m)
15
132
-
147
1.5
50
50
100
200
2.0
% of net profi t after tax
120%
197%
36%
36%
65%
Comments on fi nancial results
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
Underlying net profi t after tax improved to similar levels
achieved prior to the onset of the global fi nancial crisis.
This is refl ective of the partial recovery of global markets
from a very low base reached in March 2009 to higher,
yet still volatile, levels (our revenues are primarily based
on funds under management and therefore sensitive to
movements in the market as a whole).
Funds under management increased by $66.4 million
up by 12.1% over the previous year. Approximately $29.5
million of this increase was due to net infl ows for the year
whilst $36.9 million was due to market movements and
other factors.
Our net infl ows were achieved in the context of a
diffi cult market environment in which many investors
were cautious and were either not investing or were
withdrawing their investment from managed funds.
Revenues increased by $1.0 million representing an
increase of 7% over the previous year. A signifi cant impact
on revenue for the year were fee errors related to the
prior year but adjusted in the current year amounting to
$261,000. After adjusting current and prior year revenue
numbers for these errors, revenue growth was 11%,
roughly in-line with the growth in funds under management.
Revenue margins reduced slightly due to fee discounting
on entry fees due to industry trends and an increasing
proportion of our business coming from the lower revenue
margin wholesale market.
Operating expenses increased by $1.0 million, an increase
of 10% over the previous year. Expenses were signifi cantly
impacted by costs associated with the departure of senior
staff during the year amounting to $482,000. After taking
this item into account operating expense growth is 5.1%
over the previous year.
After adjusting for the one-off costs associated with
senior staff leaving, employment costs increased by 7%.
A signifi cant part of this increase is attributable to non
cash share-based payments expense associated with
the introduction of the new employee share ownership
plan aligning packages with industry norms.
Superannuation administration costs increased by 8%.
This refl ects a 5% increase in average member numbers,
and increased per member administration charges under
the contract. The administration charges were increased
from 1 April 2010 and refl ect CPI increases.
Other increases in expenses refl ect increased investment
in information technology to more effi ciently perform our
investment management and client service functions.
Increased spending in sales and marketing, consulting
fees and product development have also impacted on
the result.
Receivables are higher than the prior year with the
balance relating predominantly to receivables from the
managed investment schemes (concerning management
fees and reimbursable expenses). This year also includes
a receivable from the managed investment schemes
related to the implementation costs of the new portfolio
administration platform. A signifi cant portion of the
receivables balance has been paid in July 2010.
Other comments on the year
under review
(cid:129)
(cid:129)
(cid:129)
During the year Ms Anne O’Donnell stepped down
from her role as Chief Executive Offi cer (CEO) of the
company. Ms O’Donnell had been with Australian Ethical
for nine years and through that time had both grown the
company and positioned it well for the next stage of its
growth. Following a comprehensive recruitment process
the board was pleased to announce the appointment
of Mr Phillip Vernon as the new CEO. Mr Vernon has
25 years experience in fi nancial services covering funds
management, capital markets and superannuation.
Our Chief Investment Offi cer (CIO), Martin Halloran
resigned in May 2010 to take up a senior role in the
Australian Public Service. He was replaced by James
Jordan, previously our Head of Research. As a result
of these changes and subsequent management
restructuring, some of our funds were placed on Fund
Watch or Hold pending a review of the changes. The
rating of the Smaller and Larger Companies Trusts were
recently reinstated to Recommended and Investment
grade respectively.
As has been widely commented upon, there have been
numerous reviews into the regulation of the fi nancial
services industry leading to a signifi cantly changed
landscape in the coming years. Although there is some
uncertainty with the current political situation we are
potentially looking at a changed remuneration environment
for fi nancial advisers, enhanced fi duciary duties of advisers
and superannuation trustees, the introduction of a low
cost, single investment option superannuation strategy
for mandatory contributions and initiatives to streamline
the operations of the superannuation industry.
We are supportive of measures that improve the effi ciency,
transparency and simplicity of products for consumers. We
have been a strong advocate for paying adviser service fees
over trailing commissions for many years with our systems
and processes already established to cater for this trend.
We have also recently introduced the low cost Climate
Advocacy Fund and associated superannuation investment
option. In general, we are monitoring the development of
these changes closely and will further adapt our business
as appropriate.
AUSTRALIAN ETHICAL INVESTMENT LTD
5
Sustainability Report
australianethical 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 our social, environmental and economic
performance will be provided in the company’s 2010
sustainability report.
Awards
australianethical was a fi nalist in two sustainability awards
this year.
Finalist in the ASFA Comms 09 Awards – July 2009
australianethical Superannuation was a fi nalist in The
Green Campaign award category at the Association
of Superannuation Funds of Australia (ASFA) Comms
09 Awards. The Green Campaign category highlighted
integrated campaigns that best demonstrated
green initiatives.
Finalist in the Sustainability Reporting category
at the 2010 Australasian Reporting Awards (ARA)
– June 2010
australianethical Investment’s 2009 Sustainability Report
was a fi nalist in the Sustainability Reporting category at
the Australasian Reporting Awards (ARA). The ARA aims
to promote excellence in reporting through the publication
of informative and factual reports.
Grants to community organisations
As prescribed in australianethical’s constitution, 10 per
cent of our profi t is donated to charitable, benevolent
and conservation purposes as part of our contribution
to a positive and sustainable society. In 2010, $124,941
was paid to organisations involved in a wide range of
environmental, charitable and community activities. Since
the inception of our community grants, over $1 million has
now been donated
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.
6
AUSTRALIAN ETHICAL INVESTMENT LTD
Launch of green property fund
In October 2009 Greens MLA Caroline Le Couteur offi cially
launched the australianethical Property Trust at its fl agship
building, 64 Allara Street, Canberra. The fund seeks to invest
in energy effi cient buildings with a minimum 5 Star Green
Star rating, as well as medical and allied health facilities
and social infrastructure.
A 5 Star Green Star rating from the Green Building Council
of Australia (GBCA) signifi es Australian Excellence.
Global smart energy
In January 2010 the International Equities Trust was
repositioned to focus on globalsmartenergy. The new
focus targets investment in companies involved in global
sustainable energy supply and demand.
The fund provides specialist exposure to renewable energy
supply through sources such as wind, solar and geothermal,
as well as exposure to effi cient and adaptive technologies
in areas such as electric vehicles, recycling and smart
grid systems.
Events subsequent to balance date
Climate Advocacy Fund resolutions
On 21 September 2010 the Climate Advocacy Fund
launched Australia’s fi rst climate change shareholder
resolutions, which are aimed at protecting shareholder
returns against the risks of climate change and at maximising
investment opportunities.
Australian-listed Woodside Petroleum, Aquila Resources,
Paladin Energy and Oil Search were the companies chosen
for the fi rst resolutions, which focus on disclosure of
emissions and strategies to manage climate change risk.
australianethical is sponsoring the resolutions which also
have the support of The Climate Institute. The resolutions
request the disclosure of a company’s:
(cid:129)
(cid:129)
(cid:129)
carbon emissions
strategies to reduce emissions
capital investment assumptions around future
carbon prices and its use in making long-term
investment decisions.
It is hoped that institutional investors such as superannuation
funds will be supporters of the resolutions as they sit fi rmly
within the UN Principles on Responsible Investment (UN
PRI). Half the funds under management of Australian asset
managers fall under these principles.
Community grants
allocation
0
0
0
0
3
$
0
0
0
5
$
0
0
0
3
$
Two $30,000 special project grants
will be anounced later in 2010
Engineers without Borders Australia
WIRES
Free the Bears Fund
I Give a Buck Foundation
Central Coast Kids in Need Inc.
IWDA
FareShare Australia Inc
Activ Foundation
Eurobodalla Meals on Wheels Co-op Ltd
Muscular Dystrophy Queensland
Animalia Wildlife Shelter
Animals Asia Foundation
Barefoot Economy
Coast Shelter
Deal Communication Centre Inc
0
0
0
2
$
RiverSmart Australia Ltd
Casa Care Inc
Cystic Fibrosis Qld
Timor Leste Vision Inc
Greening Australia Capital Region
A full description of all the grant recipients is available
on the website www.australianethical.com.au
AUSTRALIAN ETHICAL INVESTMENT LTD
7
Corporate governance statement 2010
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
specifi c 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.
(cid:129)
(cid:129)
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(cid:129)
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(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
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 signifi cant changes to unit trust fees,
including discount programs
Approval of signifi cant 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
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
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 signifi cant company policies
Approval of indemnity, crime, director and offi cer and
similar insurance programs
(cid:129)
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
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
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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 effi ciently 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 fi nalising negotiations for the
CEO’s employment and evaluating the CEO’s performance;
(cid:129)
Assisting with the selection of board committee me
mbers.
Outside the boardroom
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
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.
8
AUSTRALIAN ETHICAL INVESTMENT LTD
Board Committees
Board committees are delegated with all necessary
authority to carry out their functions as set out in Board
committee charters.
CEO
The CEO is delegated with all necessary authority to run
Australian Ethical on an ongoing, day to day basis other than:
(cid:129)
(cid:129)
those responsibilities reserved to the Board;
delegations (general or specifi c) made by the Board
to the Chair, Board committees, Directors or other
senior executives,
Specifi cally the CEO is delegated with responsibility and
authority for the following:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
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;
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:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
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 specifi c 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;
(cid:129)
(cid:129)
(cid:129)
review competencies and qualifi cations 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 specifi c training may be suitable
and available;
where remuneration is subject to the achievement 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, our process is for the chair to present
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 fi nancial 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.
1 of the company
2.
3.
4.
5.
6.
7.
is not a substantial shareholder
or an offi cer of, or otherwise associated directly with,
a substantial shareholder of the company;
has not within the last three years been employed in
an executive capacity by the company or another group
member, or been a director after ceasing to hold any
such employment;
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 offi cer of or otherwise
associated directly or indirectly with a material supplier
or customer;
has no material contractual relationship with the company
or another group member other than as a director of
the company;
has not served on the board for a period which could,
or could reasonably be perceived to, materially interfere
with the director’s ability to act in the best interests of
the company;
is free from any interest and any business or other
relationship which could, or could reasonably be
perceived to, materially interfere with the director’s
ability to act in the best interests of the company.
1 As defi ned in section 9 of the Corporations Act 2001
AUSTRALIAN ETHICAL INVESTMENT LTD
9
8.
These areas refl ect the relationships set out as relevant
in the ASX Corporate Governance Council’s Principles
and Recommendations.
Unless there are specifi c 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 classifi cation of directors who held offi ce during
or since the end of the fi nancial year is as follows:
Resigned
directorship on
11 August 2009
Name
Anne O’Donnell
(CEO, Managing
Director)
James Thier
Howard Pender
Naomi Edwards
(Chair)
Position
Executive
Executive,
non-independent
Executive,
non-independent
Independent
Justine Hickey
Independent
Les Coleman
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
fi rst six weeks of the reporting period, the board comprised
four non-executive directors (three of whom are considered
independent) and three executive directors. For the remainder
of the reporting period, the board comprised four non-executive
directors (three of whom are considered independent) and two
executive directors.
Les Coleman serves on an investment committee that has
responsibilities for funds invested by related parties of SMF
Funds Management Limited, which is a substantial shareholder
in the company. As such he is associated with a substantial
shareholder (albeit in a limited way), and therefore given the
above criteria is not classifi ed as an independent director.
At the close of the reporting period, the board had an equal
number of independent and non-independent directors, with
four non-executive directors out of a board of six directors.
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.
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
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
confl icts 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 fulfi l
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 has a Remuneration and Nominations committee.
Naomi Edwards and Justine Hickey are the members of
the Remuneration and Nominations committee. Attendance
at meetings is 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 specifi c
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 examined from both
a qualitative and quantitative perspective.
Where discussed at a board meeting, results and any action
plans are documented in board minutes.
An assessment in accordance with the above process was
undertaken in the relevant period.
The board carries out its responsibilities according to
its Constitution, regulatory requirements, and an overall
mandate, including the following:
(cid:129)
the board must comprise at least three and not more
then ten directors;
Director skills and experience
The time in offi ce, skills, experience and expertise of each
director in offi ce as at the date of this report is included in
the directors’ report.
10
AUSTRALIAN ETHICAL INVESTMENT LTD
Selection and appointment of directors
and re-appointment of incumbents
The Remuneration and Nominations committee has the
following responsibilities:
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.
In particular:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
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 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 on an annual basis.
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
fi nancial reporting
Audit committee
Throughout the period, the board had an Audit committee
consisting of three members being 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 subsidiary, Australian
Ethical Superannuation Pty Ltd.
The qualifi cations of those appointed to the Audit committee
are provided in the directors’ report, as are the number of
meetings of the committee and attendances at those meetings.
The committee does not consist of only non-executive
directors of the company (it has one external member,
Ruth Medd who is a director, but not an executive director,
of the company’s subsidiary).
(cid:129)
(cid:129)
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 signifi cant 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. However, the website includes
comprehensive and informative sections which provide
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 has a reqular sequence of communication
points with investors and members including a newsletter, Aim
High, for trust and superannuation investors, and since listing
the company has also produced 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
company’s website). The sustainability report is produced
using the Global Reporting Initiative guidelines.
A summary of the charter for the Audit committee appears
on the company’s website.
The company complies with the corporate governance
guidelines for notices of meeting.
AUSTRALIAN ETHICAL INVESTMENT LTD
11
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.
Principle 7 - Recognise and manage risk
Policies for the oversight and management of
material business risks and internal controls
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 offi cer certify to the board
that its internal control and risk management systems are
operating effi ciently and effectively throughout the group.
CEO and CFO sign-off of fi nancial reports
The company requires the CEO and the CFO to state in
writing to the board that the company’s fi nancial reports
present a true and fair view, in all material respects, of the
company’s fi nancial condition and operating results and are
in accordance with relevant accounting standards.
The CEO and chief fi nancial offi cer certify to the board that
the integrity of the fi nancial statements is founded on a sound
system of risk management and internal control, and that
the system is operating effectively in all material respects in
relation to fi nancial reporting risks.
During the reporting period the company became aware
of systems errors in the calculation of administration and
management fees charged to the Australian Ethical managed
funds, the details of which are in the ASX Announcement
dated 18 June 2010.
The company is migrating to a new valuation and unit pricing
system with the aim of enhancing audit controls over the
calculation of administration and management fees. The
implementation of this new system is an opportune time
to conduct a further, more fundamental review of the risk
management system. This review will cover the assessment
of material risks, the systems in place to monitor and manage
those risks and the systems used to identify material changes
to the risks faced by the company.
12
AUSTRALIAN ETHICAL INVESTMENT LTD
Directors’ report
The directors of Australian Ethical Investment Limited, the
controlling entity, present their report on the company and
its controlled entity for the fi nancial year ended 30 June
2010. 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 2010 and to the date of this report are:
Name
Time in
offi ce
James Thier
19 years
Howard Pender 19 years
Naomi Edwards 5 years
Justine Hickey
3 years
Anne O’Donnell 1 year
Resigned 11 August 2009
Les Coleman
2 years
André Morony
2 years
Phillip Vernon
<1 year
Appointed 27 July 2010
Directors have been in offi ce since the start of the fi nancial
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 fi nancial year are:
Name
Philip George
Gary Leckie
Principal activities
The principal activity of the controlling entity during the
fi nancial year was to manage seven 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
fi nancial year.
Other than as described in this report, there were no
signifi cant changes in the nature of the controlling entities
activities during the year.
Review of operations
The consolidated entity, Australian Ethical (Australian
Ethical Investment Limited and its wholly owned subsidiary,
Australian Ethical Superannuation Pty Ltd), has recorded
a consolidated net profi t after income tax expense for the
year ending 30 June 2010 of $1,022,555. This result is a
15% decrease on the result of $1,202,752 for the previous
fi nancial year.
The reported result has been adversely affected by two
signifi cant one-off issues:
(cid:129)
(cid:129)
Emplo
yment expenses include $482,000 related to costs
associated with the departure of senior staff including the
managing director; and
Revenue has been reduced by $261,000 related to fee
errors applicable to the comparative year but only realised
and booked in the current year.
These issues have adversely impacted our cost to income
ratio which has increased from 85% to 88% and our return
on equity reducing from 15% to 13%. If these adjustments
are taken into consideration our underlying result would have
been $1.5 million showing an improved cost to income ratio
and return on equity.
Average funds under management (FUM) grew by 12.8%
with the year end FUM (before distribution) being $614
million compared to $547 million for the prior year end.
After the subdued economic climate during 2008-09 due
to the global fi nancial crises (GFC) our infl ows have grown
by 10% for the year ended 30 June 2010. Outfl ows have
reduced by 13% back to pre-GFC levels.
During the year Australian Ethical launched the Climate
Advocacy Fund, the Australian Ethical Property Trust and
established the Australian Ethical Global Smart Energy Fund.
Financial Position
At the year end, Australian Ethical net assets are $8,055,728.
The company has no debt and is generating positive returns
and cash fl ow.
Dividends
Dividends paid or declared by the company to members
since the end of the previous fi nancial year were:
Total
amount $
Franked/
unfranked
Date of
payment
Cents
per
Share
Declared and
paid during the
fi nancial year
Final 2009
132 1,308,854
Franked 16/10/2009
Interim 2010
50
496,570
Franked 26/03/2010
Total
1,805,424
Declared after
end of year
After balance
sheet date,
the directors
declared the
following
dividend:
Final 2010
50
496,570
Franked 15/10/2010
Special 2010
100
993,141
Franked 15/10/2010
AUSTRALIAN ETHICAL INVESTMENT LTD
13
was not permitted by law to indemnify the director or offi cer.
The company need not pay or provide a loan to the director
or offi cer to the extent that the director or offi cer 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 fi nancial
year, indemnifi ed or agreed to indemnify a director, offi cer
or auditor of the company or of any related body corporate
against a liability incurred as such director, offi cer or auditor.
Events subsequent to balance date
On 27 July 2010 the company’s chief executive offi cer,
Mr Phillip Vernon, was appointed Managing Director.
No other matters or circumstances have arisen since
the end of the fi nancial year which signifi cantly affected
or may signifi cantly 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 fi nancial years subsequent to the fi nancial
year ended 30 June 2010, other than as outlined in this report.
Likely developments and
business strategies
Further information about likely developments and business
strategies in the operations of the consolidated entity and
the expected results of those operations in future fi nancial
years has been addressed in the ASX announcement
accompanying our Appendix 4E disclosures.
Directors’ indemnifi cation
The constitution of the controlling entity provides a general
indemnity for offi cers of the company against liabilities incurred
in that capacity, including costs and expenses in successfully
defending legal proceedings.
During the fi nancial 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 offi cers
of the company and of any related body corporate against
a liability incurred as such a director, secretary or offi cer 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 (The Deed), insurance and access with
directors and offi cers 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 benefi t
of a director or offi cer of the company and any subsidiary,
to the extent that such coverage is available in the market
on terms which the company reasonably considers fi nancially
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 offi cer or lend to the director or offi cer the
amount necessary to pay the reasonable legal costs incurred
by the director or offi cer in defending an action for a liability
incurred as a director or offi cer of the company or a subsidiary
on such terms as the company reasonably determines. The
director or offi cer must repay to the company such legal
costs if they become legal costs for which the company
14
AUSTRALIAN ETHICAL INVESTMENT LTD
Directors’ particulars
Qualifi cations, experience and special responsibilities
Naomi Edwards
B.Sc.(Hons), FIA FIAA,
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 fi nancial experience with practical conservation
and environmental links. Naomi was Partner in charge of
the fi nancial services industry group within Deloitte Touche
Tohmatsu in Sydney and leader of the fi nancial 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 and is currently the project manager for the
establishment and operation of the Climate Advocacy Fund.
AUSTRALIAN ETHICAL INVESTMENT LTD
15
James Thier
B.Sc. (Hons),
Executive Director
Justine Hickey
B.Com, GAICD, SAFin, ASIP,
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 previously 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 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 a director of 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.
16
AUSTRALIAN ETHICAL INVESTMENT LTD
André Morony
B.Ec.(Hons), M.Ec.,
Non-Executive Director
Les Coleman
B.Eng.(Hons), B.Sc.(Hons), M.Ec., PhD,
Non-Executive Director
André started his 40 years in the fi nance sector at the
Commonwealth Treasury, where he worked in a number of
fi nancial 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 Offi cer where he was responsible for over $40
billion of investments. From 2001-2006, André was Chief
Investment Offi cer at ARIA, the Australian Government
employees’ $16 billion superannuation fund. André currently
sits on the boards of RBS Funds Management (Australia) Ltd
and is on the investment committee for GESB, the Western
Australian Government employee superannuation fund.
André is a member of the board’s investment committee.
Les has been a trustee of two superannuation funds, and
a director of ten companies involved in fi nance, retail and
distribution. He has over 20 years experience in senior
operational, planning and fi nance 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-
fi nancial indicators of superior fi rm 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.
AUSTRALIAN ETHICAL INVESTMENT LTD
17
Phillip Vernon
BEc MComm MBA FCPA,
Managing Director
Appointed 27 July 2010
Phillip has 25 years experience in fi nancial services covering
funds management, capital markets and superannuation.
Most recently he was a member of the executive committee
of Perpetual Limited heading up its Corporate Trust division.
He also has extensive experience in corporate governance
and industry regulation, having been the Chairman of the
Australian Securitisation Forum. Phillip has a long held
interest in sustainability and corporate social responsibility
and is a director of Planet Ark, an environmental not for
profi t organisation.
18
AUSTRALIAN ETHICAL INVESTMENT LTD
Directors’ meetings
The number of directors’ meetings (including meetings of committees of directors of which not all directors are members)
and number of meetings attended by each of the directors of the controlling entity during the fi nancial year are:
Director
Board
Investment
Remuneration and
nominations
Audit, compliance
and risk
Eligible
Attend
Eligible
Attend
Eligible
Attend
Eligible
Attend
James Thier
Howard Pender
Naomi Edwards
Justine Hickey
Anne O’Donnell
Andre Morony
Les Coleman
9
9
9
9
2
9
9
9
9
9
9
1
8
9
-
4
-
4
-
4
-
-
4
-
4
-
4
-
-
-
3
3
-
-
-
-
-
3
3
-
-
-
-
-
4
-
-
-
4
-
-
4
-
-
-
4
Directorships held in other listed entities in the last three years
Name
Entity
Period of directorship
Justine Hickey
Hyperion Flagship Investments Limited
André Morony
Macquarie Private Capital Group Limited
3 years
1 years
Directors’ relevant interests in securities of the company
Parent entity
directors
Fully paid ordinary
shares numbers
Share option numbers
Performance rights
2010
2009
2010
2009
2010
2009
Directors continuing
at 30 June 2010
James Thier
Howard Pender
Justine Hickey
Directors not -
continuing at
30 June 2010
Anne O’Donnell
51,367
49,852
700
51,367
50,252
700
2,881
2,839
-
4,313
4,308
-
319
320
-
10,488
11,988
5,673
8,582
-
-
-
-
-
Directors’ holdings in registered schemes made available by the company
None of the current directors have holdings in the registered schemes made available by the company. Several directors
are members of the Australian Ethical Retail Superannuation Fund.
Remuneration report
The information which follows through to the end of the section titled Employment contracts of directors and senior managers
is subject to audit by the external auditor.
Names and positions of key management personnel (directors and named executives) at any time during the fi nancial year
AUSTRALIAN ETHICAL INVESTMENT LTD
19
Parent entity directors
Name
James Thier
Howard Pender
Naomi Edwards
Justine Hickey
Anne O’Donnell
Les Coleman
André Morony
Executives
Name
Phillip Vernon
Martin Halloran
James Jordan
Philip George
Gary Leckie
Paul Harding Davis
Tim Xirakis
Position
Director, executive
Director, executive
Chairperson, non-executive
Director, non-executive
Managing director, executive
Resigned 11 August 2009
Director, non-executive
Director, non-executive
Appointed 7 December 2009
Resigned 30 June 2010
Appointed 7 June 2010
Position
Chief executive offi cer
Chief investment offi cer
Chief investment offi cer
Head of client services and product
Chief fi nancial offi cer / chief operating
offi cer
Head of distribution
Head of client relationships
The Corporations Act 2001 requires disclosure of
compensation of key management personnel. Key
management personnel is defi ned 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 fi ve named company executives who receive
the highest remuneration for that year; and
if consolidated fi nancial statements are required—each
of the fi ve named relevant group executives who receive
the highest remuneration for that year.
2.
The above named directors and executives are key
management personnel of the consolidated entity.
20
AUSTRALIAN ETHICAL INVESTMENT LTD
Remuneration policy
Directors
The aggregate amount of remuneration payable to non-
executive 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 non-executive 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 non-
executive directors for services as a non-executive director
are determined by the board. During the relevant period, the
chair received a higher amount, with other non-executive
directors receiving an equal amount.
Under the constitution, non-executive directors are also
entitled to be paid reasonable expenses, remuneration
for extra services and superannuation contributions. In
particular, non-executive directors are paid for serving
on board committees.
Executive directors receive remuneration as employees
of the company.
There are no arrangements to pay any director a
retirement benefi t.
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
managers, 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 incentive scheme. The arrangements did not apply
to non-executive directors.
During the reporting period, remuneration for a number
of 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: performance of the company’s managed
funds; 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
managers’ objectives with those set out in the company’s
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 benefi ts 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 profi ts of any one year, they must pay a bonus1 to current
employees which is set by reference to the profi t 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) satisfi ed by the issue of shares,
under employee share ownership arrangements.
An employee share ownership scheme operated up to the
2008-09 year. Under the scheme a pool of options which
would, if exercised, amount to 5% of the company’s existing
ordinary share capital were issued to staff each year. All
permanent, non-probationary staff were eligible to participate
in the plan. The options2 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, the
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, the options
also lapse where an employee’s employment ceases before
the options are exercisable. The options confer no voting or
dividend rights.
In the current reporting period, performance rights were issued
to staff under an employee share incentive scheme. This
scheme was approved at the 2008 Annual General Meeting.
Under the scheme participants are granted performance rights
to ordinary shares, subject to meeting specifi ed performance
criteria over the performance period. Ordinary shares will be
issued at the end of the performance period. The number of
shares that a participant will ultimately receive will depend on
the extent to which the performance criteria are met by the
company and, as applicable, the individual employee.
The scheme has two categories -a general category and
an individual category. All eligible employees participate in
the general category. Employees participating in the individual
category are subject to individual performance criteria.
10,819 rights were issued under the general category
and 5,511 were issued under the individual category.
Subject to the terms and conditions of the scheme rules,
the performance rights have the following attributes
determining whether shares will be issued in respect
of the rights:
General category
(cid:129)
(cid:129)
employment must continue until 30 June 2012;
the arithmetic average return on equity over the performance
period (AROE) must exceed 15% pa or no shares shall be
awarded at the end of the performance period;
(cid:129)
if the AROE exceeds 15% pa but is less than 20% pa,
half the maximum number of shares shall be awarded;
1
See Note 1(l) in the attached fi nancial report
2
See Note 25 in the attached fi nancial report
AUSTRALIAN ETHICAL INVESTMENT LTD
21
(cid:129)
(cid:129)
if the AROE is equal to or greater than 20% pa the
maximum number of shares shall be awarded.
AROE is determined as the arithmetic average of return
on equity over six month periods calculated using audited
half-year fi nancial statements.
(cid:129)
the performance period is the three fi nancial years
2009-10, 2010-11 and 2011-12.
Performance rights issued under the individual employee
share incentive scheme are linked to the performance of
the company’s managed funds as described above.
The remuneration policy discussed above has broadly been
in place for the current and the previous fi ve fi nancial years,
except that individual performance based elements have
been introduced for some senior managers and staff over
the last three years.
Individual category
(cid:129)
(cid:129)
employment must continue until 11 November 2010;
the number of shares that will be issued to each
employee in respect of their performance rights under
this category will be adjusted up or down by a maximum
20%, dependent on the absolute performance of one of
the company’s managed investment schemes, for which
the employee has responsibility or provides signifi cant
input. The nominated managed investment scheme has
been agreed between the company and the employee.
Performance will be measured over a performance period
of 1 July 2009 to 30 June 2010.
Performance-based remuneration
and company performance
The payment of the staff bonus is set by reference to the
profi t of the company for a relevant year. Higher company
profi ts in a year correspondingly increase the aggregate
amount that directors could determine be paid to current
employees as a bonus.
Details of options previously issued under the employee
share ownership plan are set out under remuneration policy
above. Options issued under the employee share ownership
plan were performance based in two ways. Firstly, they were
subject to a three year employment condition and 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.
By way of example, options issued under the scheme which
became exercisable in the 2009-10 year had an exercise
price of $32.50. The share price through the exercise period
was for the most part either lower than the exercise period
or only marginally higher. Given the share price at the time of
exercise, the result is that staff did not realise any signifi cant
benefi t from these options.
Performance rights issued under the general employee
share incentive scheme are performance based in two
ways. Firstly, they are subject to a three year employment
condition. Secondly, shares will only be issued in respect
of the performance rights where return on equity meets the
levels described above.
22
AUSTRALIAN ETHICAL INVESTMENT LTD
Remuneration details for the year ended 30 June 2010
Parent entity directors’ remuneration
Short-term benefi ts
Post-
employment
benefi ts
Long-
term
benefi ts
Equity-settled share-
based payments
Parent entity
director’s
remuneration
Salary,
fees
and
leave
$
Cash
bonus
$
Other
$
Super-
annuation
$
Long
service
leave
$
Termination
benefi ts
$
Shares
$
Options
$
Rights
$
Total
$
Caroline Le
Couteur
2010
-
-
2009 52,964 6,000
James Thier
2010 122,576 14,150
Howard
Pender
Naomi
Edwards
Justine
Hickey
Anne
O’Donnell
André
Morony
2009 158,515 26,300
2010 132,334 2,626
2009 165,096
2010 81,000
2009 71,500
2010 31,950
2009 30,000
-
-
-
-
-
2010 95,938 4,000
2009 224,420 5,000
2010 25,000
2009 23,500
-
-
-
-
Les Coleman 2010 26,000
2009 24,000
Total parent
entity
director’s
remuneration
2010 514,798 20,776
2009 749,995 37,300
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,485
1,097
12,874
3,604
-
-
-
-
-
-
-
-
-
-
-
64,546
- 9,439 162,643
15,863
3,297
-
1,000
4,979
- 209,954
12,652
3,856
-
-
- 9,469 160,937
14,171
3,378
-
3,900
4,840
- 191,385
7,290
6,435
2,876
2,700
-
-
-
-
-
-
-
-
8,718
2,927
235,000
-
-
-
-
-
-
-
-
-
-
-
88,290
-
77,935
-
34,826
-
32,700
- 346,583
20,973
6,327
-
6,000
23,726
- 286,446
2,250
2,115
2,340
2,160
-
-
-
-
-
-
-
-
49,000
10,387
235,000
-
-
-
-
-
-
-
-
-
-
27,250
-
25,615
-
28,340
-
26,160
- 18,908 848,869
68,902
14,099
- 10,900
33,545
- 914,741
AUSTRALIAN ETHICAL INVESTMENT LTD
23
Named executives remuneration (including other key management personnel)
Short-term benefi ts
Post-
employment
benefi ts
Long-
term
benefi ts
Equity-settled share-
based payments
Named
executives
(including
other KMP)
remuneration
Salary,
fees and
leave
$
Other
$
Cash
bonus
$
Super-
annuation
$
Long
service
leave
$
Termination
benefi ts
$
Shares
$
Options
$
Rights
$
Total
$
Philip
George
2010 179,638
4,000
2009 177,375
6,000
Ruth Medd
2010
42,350
2009
42,000
-
-
Gary Leckie 2010 179,309
4,000
2009 178,422
6,000
Tim Xirakis
2010 184,881
4,000
2009 190,597
6,000
Paul Harding
Davis
2010 196,696 21,500
2009 193,503 32,535
2010 245,064
3,366
2009 201,721
2010 154,135
2009
-
-
-
-
2010 150,951
3,200
2009
-
-
2010 1,333,024 40,066
2009 983,618 50,535
Martin
Halloran
Phillip
Vernon
James
Jordan
Named
executives
(including
other KMP)
remuneration
Cash bonus compensation benefi ts
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,836
(8,483)
15,831
3,558
3,690
3,780
-
-
16,206
1,510
15,990
5,284
15,779
1,510
15,789
3,675
19,491
3,989
-
-
-
-
-
-
-
-
-
-
- 14,825 205,816
-
19,434
- 222,198
-
-
-
-
-
-
46,040
-
45,780
- 14,973 215,998
-
17,194
- 222,890
-
- 14,588 220,758
-
16,979
- 233,040
-
- 15,712 257,388
19,697
3,989
-
2,770
9,498
- 261,992
15,017
4,937
11,517
4,173
12,799
2,981
-
-
14,013
4,179
-
-
112,831
10,623
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 48,066 316,450
-
- 217,411
-
8,204 178,119
-
-
-
- 40,471 212,814
-
-
-
- 156,839 1,653,383
82,604
20,679
-
2,770
63,105
- 1,203,311
Details of cash bonuses paid to key management personal are included in the remuneration tables set out above. The annual
staff cash bonuses of $4,000 per FTE employee were paid on 11 September 2009. 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.
24
AUSTRALIAN ETHICAL INVESTMENT LTD
Analysis of bonuses included in remuneration
The vesting profi le of short term-incentive bonuses are detailed below. No amounts vest in future fi nancial years in respect
of the short term-incentive bonuses for the 2010 year.
Cash bonus (1)
$
Performance
bonus
$
Share bonus
$
Vested in year
%
Forfeited in
year (2)
%
Parent entity directors
James Thier
Howard Pender
Anne O’Donnell
Named executives
(including other KMP)
Philip George
Gary Leckie
Tim Xirakis
Paul Harding Davis
Martin Halloran
James Jordan
3,212
2,626
4,000
4,000
4,000
4,000
4,000
3,366
3,200
10,938
-
-
-
-
-
17,500
-
-
-
-
-
-
-
-
-
-
-
88
100
100
100
100
100
70
100
100
12
-
-
-
-
-
30
-
-
(1) Details of cash and performance bonus have been provided in the director’s report under remuneration policy
(2) The amounts forfeited are due to the performance or service criteria not being met in relation to the current fi nancial year
Equity based remuneration
Equity based remuneration consists of grants of options and rights under the company’s employee share ownership plan
and employee share incentive scheme. Details of the share plans (including the service and performance criteria) are provided
in the section on remuneration policy above and in Note 25 of the attached fi nancial report.
Set out in the following table are the holdings of equity instruments granted to the KMP that existed during the reporting
period and includes details of vesting profi les of options/rights granted as compensation.
AUSTRALIAN ETHICAL INVESTMENT LTD
25
Option holdings:
KMP option
holdings
Option
class
Grant
date
Fair
value
at grant
date
No.
granted
No.
vested &
excercised
% of
grant
vested
No.
expired
% of
grant
forfeited
Financial
year in
which
grant
vests
Parent entity
directors
James Thier
Howard
Pender
AEFAS
AEFAT
AEFAV
22-Sep-06
24-Sep-07
1-Dec-08
$4.14
$8.40
$3.65
2010 Total
2009 Total
AEFAS
AEFAT
AEFAV
2010 Total
2009 Total
22-Sep-06
24-Sep-07
1-Dec-08
$4.14
$8.40
$3.65
-
-
-
-
-
-
-
-
100% ( 1,432)
100% 22-Sep-09
-
-
-
-
-
-
24-Sep-10
14-Oct-11
100% ( 1,432)
1,364
( 1,800)
100%
-
-
-
-
-
-
-
-
-
100% ( 1,469)
100% 22-Sep-09
-
-
-
-
-
-
24-Sep-10
14-Oct-11
100% ( 1,469)
1326
( 931)
100%
-
100% ( 2,909)
100% 22-Sep-09
Anne O'Donnell AEFAS
22-Sep-06
AEFAT
AEFAU
24-Sep-07
14-Oct-08
2010 Total
2009 Total
Philip George
AEFAS
22-Sep-06
AEFAT
AEFAU
24-Sep-07
14-Oct-08
$4.14
$8.40
$8.96
$4.14
$8.40
$3.65
Gary Leckie
Tim Xirakis
2010 Total
2009 Total
AEFAS
AEFAT
AEFAU
2010 Total
2009 Total
AEFAS
AEFAT
AEFAU
2010 Total
2009 Total
22-Sep-06
24-Sep-07
14-Oct-08
$4.14
$8.40
$3.65
22-Sep-06
24-Sep-07
14-Oct-08
$4.14
$8.40
$3.65
Paul Harding
Davis
AEFAU
14-Oct-08
$3.65
2010 Total
2009 Total
James Jordan AEFAT
24-Sep-07
AEFAU
14-Oct-08
$8.40
$3.65
2010 Total
2009 Total
26
AUSTRALIAN ETHICAL INVESTMENT LTD
-
-
-
-
-
-
-
-
-
-
-
-
100% ( 2,909)
2,648
( 3,006)
100%
-
-
-
-
( 2,356)
100%
-
-
-
-
( 2,356)
100%
2,169
( 1,550)
100%
-
-
-
-
-
-
-
-
-
-
-
24-Sep-10
14-Oct-11
22-Sep-09
24-Sep-10
14-Oct-11
-
-
-
-
-
-
-
-
100% ( 1,443)
100% 22-Sep-09
-
-
-
-
-
-
24-Sep-10
14-Oct-11
100% ( 1,443)
1,919
( 1,387)
100%
-
-
-
-
-
1,895
-
-
1,060
-
1,243
-
-
-
-
-
-
-
-
-
-
-
-
100% ( 1,387)
100% 22-Sep-09
-
-
-
-
100% ( 1,387)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24-Sep-10
14-Oct-11
14-Oct-11
24-Sep-10
14-Oct-11
-
-
-
-
-
-
-
Rights holdings:
KMP rights
holdings
Rights
class
Grant date Fair value
at grant
date
No.
granted
Value of
rights
granted
($)
No. vested
and
excercised
% of
grant
vested
No.
lapsed
Value of
rights
lapsed
($)
% of
grant
lapsed
Parent entity
directors
James Thier
AEFAW 30-Nov-09
$29.59
319
$9,439
2010 Total
319
$9,439
2009 Total
-
-
Howard
Pender
AEFAW 30-Nov-09
$29.59
320
$9,469
2010 Total
320
$9,469
2009 Total
-
-
Philip George AEFAW 30-Nov-09
$29.59
501
$14,825
2010 Total
501
$14,825
2009 Total
-
-
Gary Leckie
AEFAW 30-Nov-09
$29.59
506
$14,973
2010 Total
506
$14,973
2009 Total
-
-
Tim Xirakis
AEFAW 30-Nov-09
$29.59
493
$14,588
2010 Total
493
$14,588
2009 Total
-
-
Paul Harding
Davis
AEFAW 30-Nov-09
$29.59
531
$15,712
2010 Total
531
$15,712
2009 Total
-
-
Martin
Halloran
AEFAX
30-Nov-09
$32.91
966
$31,791
AEFAW 30-Nov-09
$29.59
550
$16,275
2010 Total
1516
$48,066
2009 Total
-
-
Phillip Vernon AEFAW 17-Dec-09
$25.88
317
$8,204
2010 Total
317
$8,204
2009 Total
-
-
James Jordan AEFAX
30-Nov-09
$32.91
862
$28,368
AEFAW 30-Nov-09
$29.59
409
$12,102
2010 Total
1271
$40,471
2009 Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(966)
$22,411
100%
(550)
$12,760
100%
(1,516)
$35,171
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-v
AUSTRALIAN ETHICAL INVESTMENT LTD
27
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
fl uctuation in the value of any unvested entitlement in the
company’s securities.
Explanation of relative proportions of elements
of remuneration that are related to performance
Non-executive directors receive their total remuneration
as cash or superannuation contributions. No element is
dependent on performance.
Except as 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 schemes described above. Rights granted
during the fi nancial year, when valued at grant date, make up
a small proportion of the overall remuneration of people holding
these positions.
The following table illustrates the proportion of remuneration
that was performance and non-performance based and the
proportion of remuneration received in the form of options/
rights during the fi nancial year
Proportion of elements of remuneration
related to performance
Proportion of elements of
remuneration not related
to performance
Non-salary
cash-based
incentives
%
Shares
%
Options /
rights
%
Fixed
salary/ fees
%
Total
%
7
-
-
-
-
-
-
-
-
-
-
7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6
6
-
-
-
-
-
7
-
7
7
6
15
5
19
87
94
100
100
100
100
100
93
100
93
93
87
85
95
81
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Parent entity directors’ remuneration
James Thier
Howard Pender
Naomi Edwards
Justine Hickey
Anne O’Donnell
André Morony
Les Coleman
Named executives (including other KMP)
Philip George
Ruth Medd
Gary Leckie
Tim Xirakis
Paul Harding Davis
Martin Halloran
Phillip Vernon
James Jordan
28
AUSTRALIAN ETHICAL INVESTMENT LTD
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
Duration of contract
Period of termination
notice required
James Thier
Ongoing
2 weeks
Termination payment
provided for under
the contract
None except for accrued
leave and any payment in
lieu of notice.
Howard Pender
Phillip Vernon
Gary Leckie
Philip George
Paul Harding Davis
Tim Xirakis
James Jordan
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
12 weeks
12 weeks
12 weeks
12 weeks
12 weeks
12 weeks
12 weeks
Options and rights as at the date of this report
Options/rights over unissued shares as at the date of this report are as follows:
Options reference
Number of options
on issue
Exercise period
Exercise price
AEFAT
AEFAU
AEFAV
Totals
31,853
34,139
2,690
68,682
24/9/10 to 23/12/10
14/10/11 to 13/1/12
14/10/11 to 13/1/12
$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.
Performance rights reference
Number of rights on issue
AEFAW
AEFAX
Totals
9,931
4,545
14,476
All performance rights are over unissued shares in the company. Performance rights expire if the performance conditions
are not met at the end of the performance period. No holder of performance rights is entitled to, by virtue of holding the
performance rights, 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 2010 on the exercise of options
granted under the company’s employee share ownership plan.
Shares issued upon exercise of options
1,585
Amount paid per share
$32.50
No further shares have been issued since that date to the date of this report. No amounts are unpaid on any of the shares.
AUSTRALIAN ETHICAL INVESTMENT LTD
29
Non-director committee members and company secretary particulars
Name
Qualifi cations
Experience
Ruth Medd
B.Sc., Dip Comp
Science, CPA, MAICD
Philip George
BSc LLB ACIS
Gary Leckie
BEc CA
Tom May
BA LLB MBA
Ruth is currently on the board of the NFAW Ltd (National Foundation for
Australian 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, compliance and risk committees. Ruth started in IT in
the 1970s. Since then she has been a senior public servant, a broadcasting
regulator, the inaugural Company Secretary at Telstra and the Executive
Director of an industry association.
Philip has experience in commercial law, corporate governance and project
management. He has been a company secretary and legal counsel for listed
companies for over seven years. He was a senior associate at the national law
fi rm Minter Ellison and conducted a commercial legal practice in partnership
for two years.
Gary is a Chartered Accountant who is responsible for the fi scal management
and operational activities of the Australian Ethical group. Gary has more than
ten years experience in the fi nancial services industry. Prior to working in
the fi nancial services industry Gary was employed with big four accounting
fi rm Deloitte.
Tom has experience in the superannuation and distribution aspects of fi nancial
services law. He has been a lawyer since 1990 when he was a legal offi cer
in the federal government. He subsequently worked in house with funds
management and life insurance companies before working in private practice
in London and Tokyo.
Auditor’s declaration
Other specifi c information
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.
The company’s shares have traded on the ASX since
17 December 2002. Movements in closing share price
at the beginning and end of fi nancial years since listing
are as follows:
Non-audit services
The directors, in accordance with advice from the audit
committee, are satisfi ed 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 satisfi ed
that the services disclosed in the fi nancial 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 fi nancial report.
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
30 June 2010
Closing daily price3
$12.50
$11.30
$13.00
$17.20
$28.50
$48.00
$34.00
$22.00
$23.20
30
AUSTRALIAN ETHICAL INVESTMENT LTD
Where shares were not traded on the day specifi ed, the price quoted
3
is the closing daily price when trades did occur on the day earlier than
and closest to the date specifi ed.
The company’s earnings over the last fi ve years are as follows:
Year
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
Earnings
$1,362,612
$1,819,177
$1,651,790
$1,202,752
$1,022,555
Other specifi c information has been disclosed in the attached fi nancial report
as referenced in the table below:
Disclosure
Dividends
Rights –issued during the fi nancial year since the end of the
fi nancial year4
Signed in accordance with a resolution of the board of directors.
Financial Statement Reference
Note 5
Note 25
Phillip Vernon
Managing Director
Dated: 30 August 2010
4
The fi nancial statements show rights issued during the fi nancial year. No rights have been issued since the end of the fi nancial year to the date of this report.
AUSTRALIAN ETHICAL INVESTMENT LTD
31
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 2010 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 30 August 2010
Liability limited by a scheme approved under Professional Standards Legislation
32
AUSTRALIAN ETHICAL INVESTMENT LTD
Financial statements for year ended 30 June 2010
Statement of financial position
as at 30 June 2010
Notes
Consolidated entity
2010
$
2009
$
1,892,734
3,050,029
998,441
24,474
337,195
2,614,467
1,800,859
1,673,953
-
279,367
Parent entity
2010
$
2009
$
435,037
2,604,874
998,441
213,987
297,283
1,226,311
1,288,930
1,673,953
-
235,262
7
8
9
13
10
11
12
9
13
14
16
15
16
6,302,873
6,368,646
4,549,622
4,424,456
4,215,168
46,297
100,505
435,083
4,139,581
-
82,492
464,200
4,215,168
46,297
416,505
433,688
4,139,581
-
398,492
459,850
4,797,053
4,686,273
5,111,658
4,997,923
11,099,926
11,054,919
9,661,280
9,422,379
2,495,424
-
451,046
1,756,373
227,200
535,406
2,659,060
-
451,046
1,952,798
227,200
535,406
2,946,470
2,518,979
3,110,106
2,715,404
34,805
62,923
33,732
49,003
34,805
62,923
33,732
49,003
97,728
82,735
97,728
82,735
3,044,198
2,601,714
3,207,834
2,798,139
8,055,728
8,453,205
6,453,446
6,624,240
17
5,791,147
869,149
1,395,432
5,739,635
535,269
2,178,301
5,791,147
869,149
( 206,850)
5,739,635
535,269
349,336
8,055,728
8,453,205
6,453,446
6,624,240
Current assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Current tax assets
Other current assets
Total current assets
Non-current assets
Property, plant & equipment
Intangible assets
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
The accompanying notes form part of these financial statements
AUSTRALIAN ETHICAL INVESTMENT LTD
33
Statement of comprehensive income
for the year ended 30 June 2010
Notes
Consolidated entity
2010
$
2009
$
Parent entity
2010
$
2009
$
Revenue
3
14,067,899
13,131,431
11,891,805
10,652,895
Commissions paid to advisers
( 194,080)
( 177,235)
( 32,394)
( 15,305)
External services
( 2,358,711)
( 2,498,375)
( 898,684)
( 1,044,339)
Employee benefits expense
( 7,339,724)
( 6,411,326)
( 7,316,108)
( 6,373,530)
Depreciation and amortization
( 358,491)
( 298,503)
( 358,491)
( 298,503)
Occupancy costs
Communication costs
Other expenses
( 245,823)
( 216,069)
( 232,939)
( 200,896)
( 774,633)
( 648,233)
( 774,633)
( 611,851)
( 1,065,991)
( 917,879)
( 994,545)
( 795,030)
Profit before tithe and income tax expense
1,730,446
1,963,811
1,284,011
1,313,441
Tithes expense
1 (l)
( 124,941)
( 140,868)
( 124,941)
( 140,868)
Profit before income tax
1,605,505
1,822,943
1,159,070
1,172,573
Income tax expense
Profit for the year
Other comprehensive income
4
( 582,950)
( 620,191)
90,168
( 64,281)
1,022,555
1,202,752
1,249,238
1,108,292
Net gain/(loss) on revaluation of available-for-sale investments
Other comprehensive income for the year, net of tax
18,645
18,645
( 22,679)
( 22,679)
18,645
18,645
( 22,679)
( 22,679)
Total comprehensive income for the year
1,041,200
1,180,073
1,267,883
1,085,613
Profit attributable to members of the parent entity
1,022,555
1,202,752
1,249,238
1,108,292
Total comprehensive income attributable to
members of the parent entity
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
1,041,200
1,180,073
1,267,883
1,085,613
6
6
103.0
102.0
121.6
121.6
The accompanying notes form part of these financial statements
34
AUSTRALIAN ETHICAL INVESTMENT LTD
Consolidated entity
Statement of changes in equity
for year ended 30 June 2010
Balance at 1 July 2008
Profit attributable to members of the parent entity
Other comprehensive income for the period
Total comprehensive income for the period
Note
Issued
capital
ordinary
$
5,740,791
-
-
-
Transactions with owners in their capacity as
Shares issued during the period
Dividends paid or provided for
Share-based payment expense
Balance at 30 June 2009
17
( 1,156)
-
-
5,739,635
( 36,643)
-
( 22,679)
( 22,679)
-
-
-
( 59,322)
Asset
revaluation
reserve
$
Share-based
payment
reserve
$
Retained
earnings
$
2,305,878
1,202,752
-
1,202,752
Total
$
8,381,490
1,202,752
( 22,679)
1,180,073
371,464
-
-
-
-
-
223,127
594,591
-
( 1,330,329)
-
2,178,301
( 1,156)
( 1,330,329)
223,127
8,453,205
Balance at 1 July 2009
Profit attributable to members of the parent entity
Other comprehensive income for the period
Total comprehensive income for the period
Transactions with owners in their capacity as
Shares issued during the period
Dividends paid or provided for
Share-based payment expense
Balance at 30 June 2010
Parent entity
Balance at 1 July 2008
Profit attributable to members of the parent entity
Other comprehensive income for the period
Total comprehensive income for the period
Transactions with owners in their capacity as
owners:
Shares issued during the period
Dividends paid or provided for
Share-based payment expense
Balance at 30 June 2009
Balance at 1 July 2009
Profit attributable to members of the parent entity
Other comprehensive income for the period
Total comprehensive income for the period
Transactions with owners in their capacity as
owners:
Shares issued during the period
Dividends paid or provided for
Share-based payment expense
Balance at 30 June 2010
5,739,635
( 59,322)
594,591
2,178,301
8,453,205
-
-
-
-
18,645
18,645
-
-
-
1,022,555
-
1,022,555
1,022,555
18,645
1,041,200
51,512
-
-
5,791,147
-
-
-
( 40,677)
-
-
315,235
909,826
-
( 1,805,424)
-
1,395,432
51,512
( 1,805,424)
315,235
8,055,728
Note
Issued
capital
ordinary
$
Asset
revaluation
reserve
$
Share-based
payment
reserve
$
Retained
earnings
$
Total
$
5,740,791
( 36,643)
371,464
571,373
6,646,985
-
-
-
-
( 22,679)
( 22,679)
-
-
-
1,108,292
-
1,108,292
1,108,292
( 22,679)
1,085,613
17
( 1,156)
-
-
5,739,635
-
-
-
( 59,322)
-
-
223,127
594,591
-
( 1,330,329)
-
349,336
( 1,156)
( 1,330,329)
223,127
6,624,240
5,739,635
( 59,322)
594,591
349,336
6,624,240
-
-
-
-
18,645
18,645
-
-
-
1,249,238
-
1,249,238
1,249,238
18,645
1,267,883
51,512
-
-
5,791,147
-
-
-
( 40,677)
-
-
315,235
909,826
-
( 1,805,424)
-
( 206,850)
51,512
( 1,805,424)
315,235
6,453,446
AUSTRALIAN ETHICAL INVESTMENT LTD
35
Statement of cash flows
for the year ended 30 June 2010
Notes
Consolidated entity
2010
$
2009
$
Parent entity
2010
$
2009
$
14,111,414
( 12,274,001)
-
130,785
( 812,425)
( 170,904)
( 135,644)
14,241,650
( 11,926,618)
-
201,146
( 467,942)
( 245,201)
( 200,891)
9,906,897
( 10,558,223)
1,797,057
101,847
( 161,346)
( 170,904)
( 135,644)
10,401,154
( 9,625,550)
1,202,596
148,295
36,734
( 245,201)
( 200,891)
22 (b)
849,225
1,602,144
779,684
1,717,137
1,847,723
( 500,035)
( 1,133,628)
( 49,889)
18,783
1,185,344
( 239,450)
( 1,141,871)
11,118
1,847,723
( 500,035)
( 1,133,628)
( 49,889)
18,783
1,185,344
( 239,450)
( 1,141,871)
11,118
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
Loans to staff
Repayment of loans
Net cash provided by (used in) investing activities
182,954
( 184,859)
182,954
( 184,859)
Cash flows from financing activities
Proceeds from share issue
Share buy-back payment
Dividends paid
51,512
-
( 1,805,424)
171,084
( 195,811)
( 1,330,329)
51,512
-
( 1,805,424)
171,084
( 195,811)
( 1,330,329)
Net cash provided by (used in) financing activities
( 1,753,912)
( 1,355,056)
( 1,753,912)
( 1,355,056)
Net increase (decrease) in cash held
( 721,733)
62,229
( 791,274)
177,222
Cash at beginning of financial year
2,614,467
2,552,238
1,226,311
1,049,089
Cash at end of financial year
22 (a)
1,892,734
2,614,467
435,037
1,226,311
The accompanying notes form part of these financial statements
36
AUSTRALIAN ETHICAL INVESTMENT LTD
Notes to the financial statements for the year ended 30 June 2010
Note 1 - Statement of significant accounting policies
Basis of preparation
The financial statements are general purpose financial statements that have been prepared in
accordance with Australian Accounting Standards, Australian Accounting Interpretations,
other authoritative pronouncements of the Australian Accounting Standards Board and the
Corporations Act 2001.
Australian Accounting Standards set out accounting policies that the AASB has concluded
would result in a financial report containing relevant and reliable information about
transactions, events and conditions. Compliance with Australian Accounting Standards
ensures that the financial statements and notes also comply with International Financial
Reporting Standards.
The financial statements have been prepared on an accruals basis and are based on
historical costs, modified, where applicable, by the measurement at fair value of selected non-
current assets, financial assets and financial liabilities.
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 following is a summary of the material accounting policies adopted by the consolidated
entity in the preparation of the financial statements. The accounting policies have been
consistently applied, unless otherwise stated.
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
37
Notes to the financial statements for the year ended 30 June 2010
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 statement of
comprehensive income 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
38
AUSTRALIAN ETHICAL INVESTMENT LTD
Notes to the financial statements for the year ended 30 June 2010
Note 1 - Statement of significant accounting policies - continued
c) Property, plant and equipment - continued
employment and subsequent disposal. The expected net cash flows have been discounted to
their present values in determining recoverable amounts.
Depreciation
The depreciable amount of all fixed assets including buildings, is depreciated over their
estimated useful lives to the consolidated entity commencing from the time the asset is held
ready for use.
The depreciation rates used for each class of assets are:
Class of fixed asset
Depreciation
rates
Depreciation basis
Buildings
Furniture, fittings and equipment
Software
Straight line
2.5%-20%
10% to 37.5%
Straight line/diminishing value
18.75% to 40% Straight line/diminishing value
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each
balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the
asset’s carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying
amount. These gains and losses are included in the statement of comprehensive income.
When re-valued assets are sold, amounts included in the revaluation reserve relating to that
asset are transferred to retained earnings.
d) Intangible assets
The development of the company’s website was capitalised as an intangible asset and carried
at cost less accumulated amortisation and accumulated impairment losses. Amortisation is
recognised on a straight-line basis over its estimated useful live at two and half years. The
estimated useful life and amortisation method are reviewed at the end of each annual
reporting period, with the effect of any changes in estimates being accounted for on a
prospective basis.
e) 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.
AUSTRALIAN ETHICAL INVESTMENT LTD
39
Notes to the financial statements for the year ended 30 June 2010
Note 1 - Statement of significant accounting policies – continued
e) Financial instruments– continued
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.
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 statement of comprehensive
income.
f) 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 statement
of comprehensive income.
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.
g) 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 and rights
Share based compensation benefits are provided to employees via the Australian Ethical
Investment Limited employee share ownership plan. Share options and rights 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 and rights
that are expected to become exercisable. The employee benefit expense recognised each
period takes into account the most recent estimate.
40
AUSTRALIAN ETHICAL INVESTMENT LTD
Notes to the financial statements for the year ended 30 June 2010
Note 1 - Statement of significant accounting policies – continued
g) Employee benefits - continued
Upon the exercise of options and rights the proceeds received, net of any directly attributable
transaction costs, are credited to share capital.
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.
h) 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.
i) Cash and cash equivalents
Cash and cash equivalents include cash on hand and deposits held at call with banks.
j) 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).
k) 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 Taxation 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.
l) 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)
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"
AUSTRALIAN ETHICAL INVESTMENT LTD
41
Notes to the financial statements for the year ended 30 June 2010
Note 1 - Statement of significant accounting policies - continued
l) Tithes expense - continued
(ii)
"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".
m) 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.
n) 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, an average salary increase of
five percent has been incorporated.
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 $82,492. The directors have
determined that no provision for impairment is required for this loan.
Accounting Standards not previously applied
The Group has adopted the following new and revised Australian Accounting Standards
issued by the AASB which are mandatory to apply to the current interim period. Disclosures
required by these Standards that are deemed material have been included in this financial
report on the basis that they represent a significant change in information from that previously
made available.
Presentation of Financial Statements
AASB 101 prescribes the contents and structure of the financial statements. Changes
reflected in this financial report include:
(cid:120)
the replacement of the income statement with the statement of comprehensive income.
Items of income and expense not recognised in profit or loss are now disclosed as
42
AUSTRALIAN ETHICAL INVESTMENT LTD
Notes to the financial statements for the year ended 30 June 2010
Note 1 - Statement of significant accounting policies - continued
Accounting Standards not previously applied - continued
components of ‘other comprehensive income’. In this regard, such items are no longer
reflected as equity movements in the statement of changes in equity;
(cid:120)
the adoption of the single statement approach to the presentation of the statement of
comprehensive income; and
(cid:120) other financial statements are renamed in accordance with the Standard.
Operating Segments
From 1 July 2009, operating segments are identified and segment information disclosed on
the basis of internal reports that are regularly provided to, or reviewed by, the group’s chief
operating decision maker which, for the group, is the Board of Directors. In this regard, such
information is provided using different measures to those used in preparing the statement of
comprehensive income and statement of financial position. Reconciliations of such
management information to the statutory information contained in the interim financial report
have been included.
New accounting standards for application in future periods
The AASB has issued new, revised and amended accounting 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 9: Financial Instruments and AASB 2009-11: Amendments to Australian Accounting
Standards arising from AASB 9 [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 121, 127, 128,
131, 132, 136, 139, 1023 & 1038 and Interpretations 10 & 12] (applicable for annual reporting
periods commencing on or after 1 January 2013). These standards are applicable
retrospectively and amend the classification and measurement of financial assets. The group
has not yet determined the potential impact on the financial statements.
AASB 124: Related Party Disclosures (applicable for annual reporting periods commencing
on or after 1 January 2011). This standard removes the requirement for government related
entities to disclose details of all transactions with the government and other government
related entities and clarifies the definition of a related party to remove inconsistencies and
simplify the structure of the standard. No changes are expected to materially affect the group.
AASB 2009-8: Amendments to Australian Accounting Standards – Group Cash-settled Share-
based Payment Transactions [AASB 2] (applicable for annual reporting periods commencing
on or after 1 January 2010). These amendments clarify the accounting for group cash-settled
share-based payment transactions in the separate or individual financial statements of the
entity receiving the goods or services when the entity has no obligation to settle the share-
based payment transaction. The amendments incorporate the requirements previously
included in Interpretation 8 and Interpretation 11 and as a consequence, these two
Interpretations are superseded by the amendments. These amendments are not expected to
impact the group.
AUSTRALIAN ETHICAL INVESTMENT LTD
43
Notes to the financial statements for the year ended 30 June 2010
Note 1 - Statement of significant accounting policies – continued
New accounting standards for application in future periods – continued
AASB 2009-10: Amendments to Australian Accounting Standards – Classification of Rights Issues [AASB 132]
(applicable for annual reporting periods commencing on or after 1 February 2010). These amendments clarify that
rights, options or warrants to acquire a fixed number of an entity’s own equity instruments for a fixed amount in any
currency are equity instruments if the entity offers the rights, options or warrants pro-rata to all existing owners of the
same class of its non-derivative equity instruments. These amendments are no expected to impact the group.
AASB 2009-12: Amendments to Australian Accounting Standards [AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139,
1023 & 1031 and Interpretations 2, 4, 16, 1039 & 1052] (applicable for annual reporting periods commencing on or
after 1 January 2011). This standard makes a number of editorial amendments to a range of Australian Accounting
Standards and Interpretations, including amendments to reflect changes made to the text of International Financial
reporting Standards by the IASB. The standard also amends AASB 8 to require entities to exercise judgement in
assessing whether a government and entities known to be under the control of that government are considered a
single customer for the purposes of certain operating segment disclosures. These amendments are not expected to
impact the group.
AASB 2009-13: Amendments to Australian Accounting Standards arising from Interpretations 19 [AASB 1]
(applicable for annual reporting periods commencing on or after 1 July 2010). This standard makes amendments to
AASB 1 arising from the issue of Interpretation 19. The amendments allow a first-time adopter to apply the
transitional provisions in Interpretation 19. This standard is not expected to impact the group.
Note 2 - Auditors' remuneration
Remuneration of the auditors for:
Audit services
- Auditing the financial report
- Auditing the sustainability report
Non-audit services
Consolidated entity
2010
$
2009
$
Parent entity
2010
$
2009
$
38,279
5,750
37,220
5,500
33,629
5,750
32,720
5,500
- Tax and other accounting advice
3,371
3,770
3,371
3,280
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
10,801,006
1,349,887
536,221
1,162,694
-
123,949
-
94,142
14,067,899
9,745,880
1,439,173
503,448
1,102,776
-
191,671
-
148,483
13,131,431
4,701,333
157,968
-
1,162,694
1,797,057
95,011
3,892,705
85,038
11,891,805
4,484,603
188,605
-
1,102,776
1,202,596
138,819
3,445,918
89,578
10,652,895
Total revenue
14,067,899
13,131,431
11,891,805
10,652,895
44
AUSTRALIAN ETHICAL INVESTMENT LTD
Notes to the financial statements for the year ended 30 June 2010
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% (2009:30%)
- 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
Consolidated entity
2010
$
2009
$
Parent entity
2010
$
2009
$
560,819
22,131
582,950
584,440
35,751
620,191
(109,344)
19,176
(90,168)
28,380
35,901
64,281
481,651
-
546,883
-
-
347,721
-
351,772
-
-
673,118
555,910
1,891
94,570
5,582
583,694
1,982
66,938
15,977
631,780
1,820
94,570
5,582
1,122,811
1,962
66,938
15,977
992,559
-
( 744 )
-
-
( 682 )
( 10,907 )
( 539,117 )
( 744 )
( 360,779)
( 682)
( 10,907)
Income tax expense attributable to entity
582,950
620,191
582,950
620,191
Allocation of income tax expense to wholly owned
entity under the tax sharing agreement
-
-
( 673,118)
( 555,910)
Income tax expense attributable to entity
582,950
620,191
( 90,168)
64,281
The applicable weighted average effective tax rates
are as follows:
36%
34%
(8%)
5%
AUSTRALIAN ETHICAL INVESTMENT LTD
45
Notes to the financial statements for the year ended 30 June 2010
Note 5 - Dividends
(a) Distributions paid
Final fully franked dividend of 132 (2009: 120) cents
per share franked at the tax rate of 30% (2009: 30%)
Interim fully franked dividend of 50 (2009: 15) cents per
share franked at the tax rate of 30% (2009: 30%)
(b) Distributions declared
Final fully franked dividend of 50 (2009: 132) cents per
share franked at the tax rate of 30% (2009: 30%)
Special fully franked dividend 100 cents per share
franked at the tax rate of 30%
(c) Franking account
Balance of franking account at year end adjusted for
franking credits which will arise from income tax
payments in the following year.
Subsequent to year-end, the franking account would
be reduced by the declared dividend reflected above
as follows:
Note 6 - Earnings per share
Consolidated entity
2010
$
2009
$
Parent entity
2010
$
2009
$
1,308,854
1,181,596
1,308,854
1,181,596
496,570
1,805,424
148,733
1,330,329
496,570
1,805,424
148,733
1,330,329
496,570
1,308,854
496,570
1,308,854
993,141
-
993,141
-
1,418,530
1,629,081
638,448
780,082
560,937
1,068,144
(a) Earnings used to calculate basic EPS and dilutive
EPS
1,022,555
1,202,752
(b) Weighted average number of ordinary shares
outstanding during the year used in calculation of basic
EPS
Weighted average number of rights outstanding
Weighted average number of ordinary shares
outstanding during the year used in calculation of
dilutive EPS
992,385
9,516
988,984
-
1,001,901
988,984
Note 7 - Cash and cash equivalents
Cash on hand
Cash at bank
Deposits at call
300
1,020,195
872,239
1,892,734
300
137,016
2,477,151
2,614,467
300
6,842
427,895
435,037
300
5,357
1,220,654
1,226,311
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.
46
AUSTRALIAN ETHICAL INVESTMENT LTD
Notes to the financial statements for the year ended 30 June 2010
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
- Listed securities at fair value
- Units in unit trust at fair value
- Shares in wholly owned entity at cost
Consolidated entity
2010
$
2009
$
Parent entity
2010
$
2009
$
3,039,901
10,128
-
3,050,029
1,783,351
17,508
-
1,800,859
2,516,422
10,128
78,324
2,604,874
1,050,014
17,508
221,409
1,288,930
973,096
125,850
1,098,946
100,505
998,441
1,661,701
94,744
1,756,445
82,492
1,673,953
1,289,096
125,850
1,414,946
416,505
998,441
1,977,701
94,744
2,072,445
398,492
1,673,953
500,000
144,616
2,558
325,922
-
973,096
1,141,871
199,081
-
320,749
-
1,661,701
500,000
144,616
2,558
325,922
316,000
1,289,096
1,141,871
199,081
-
320,749
316,000
1,977,701
The money market deposit is at a fixed interest rate of 5.9% with maturity date of 31 August
2010 and is investment grade 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
- Loan to staff
82,492
43,358
125,850
94,744
-
94,744
82,492
43,358
125,850
94,744
-
94,744
The first loan is provided to an independent entity with a fixed interest rate of 9.0% and matures 1 August 2015.
Loan to staff is provided to two staff members under the terms of the employee share loan scheme (ESLS) to purchase
shares in the company. The loan is repayable by 30 November 2013 and currently bears interest of 6.65% per annum
as per the FBT rate set by the ATO.
Note 10 - Other current assets
Other
Prepayments
11,914
325,281
337,195
20,902
258,465
279,367
11,914
285,369
297,283
20,902
214,360
235,262
AUSTRALIAN ETHICAL INVESTMENT LTD
47
Notes to the financial statements for the year ended 30 June 2010
Note 11 - Property, plant and equipment
Consolidated entity
2010
$
2009
$
Parent entity
2010
$
2009
$
Land and buildings
Leasehold land
At cost
Total land
Buildings
At cost
Accumulated depreciation
Total buildings
Total land and buildings
Plant and equipment
At cost
Accumulated depreciation
Total plant and equipment
230,000
230,000
230,000
230,000
230,000
230,000
230,000
230,000
2,784,117
( 297,085 )
2,487,032
2,784,117
( 225,528 )
2,558,589
2,784,117
( 297,085)
2,487,032
2,784,117
( 225,528)
2,558,589
2,717,032
2,788,589
2,717,032
2,788,589
2,680,113
( 1,181,977)
1,498,136
2,274,759
( 923,767)
1,350,992
2,680,113
( 1,181,977)
1,498,136
2,274,759
( 923,767)
1,350,992
Total property, plant and equipment
4,215,168
4,139,581
4,215,168
4,139,581
Movements in carrying amounts
Land
Balance at the beginning of year
Additions
Disposals
Carrying amount at the end of year
Buildings
Balance at the beginning of year
Additions
Disposals
Depreciation expense
Carrying amount at the end of year
Plant and equipment
Balance at the beginning of year
Additions
Disposals
Depreciation expense
Carrying amount at the end of year
230,000
-
-
230,000
230,000
-
-
230,000
230,000
-
-
230,000
230,000
-
-
230,000
2,558,589
2,626,614
2,558,589
2,626,614
-
( 71,557)
2,487,032
-
( 68,025)
2,558,589
-
( 71,557)
2,487,032
-
( 68,025)
2,558,589
1,350,992
430,862
( 10,286)
( 273,431)
1,498,136
1,349,187
239,704
( 7,421)
( 230,478)
1,350,992
1,350,992
430,862
( 10,286)
( 273,431)
1,498,136
1,349,187
239,704
( 7,421)
( 230,478)
1,350,992
Total
4,215,168
4,139,581
4,215,168
4,139,581
An independent valuer was contracted to value the land and buildings at 30 June 2009. Independent valuation will
be conducted on a three year cycle in order to comply with accounting standard requirements on impairment. Based
on the valuation conducted in 2009 and assessment of the market since that date, the cost value of land and building
disclosed above is below the commercial valuation and therefore no impairment has occurred.
48
AUSTRALIAN ETHICAL INVESTMENT LTD
Notes to the financial statements for the year ended 30 June 2010
Note 12 - Intangible assets
Website development costs
At cost
Accumulated amortisation
Total intangibles
Website development costs
Balance at the beginning of year
Additions
Disposals
Amortisation expense
Carrying amount at the end of year
Note 13 - Tax assets
Current tax assets
Tax refund receivable due to income tax overpayment
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
Consolidated entity
2010
$
2009
$
Parent entity
2010
$
2009
$
59,800
( 13,503 )
46,297
-
59,800
-
( 13,503)
46,297
24,474
24,474
-
-
-
-
-
-
-
-
-
-
59,800
( 13,503)
46,297
-
59,800
-
( 13,503)
46,297
213,987
213,987
-
-
-
-
-
-
-
-
-
-
362,580
40,850
14,220
417,650
377,916
44,060
16,800
438,776
362,580
40,850
12,825
416,255
377,916
44,060
12,450
434,426
17,433
25,424
17,433
25,424
435,083
464,200
433,688
459,850
Movements
Opening balance at 1 July
Credited (charged) to the statement of comprehensive income
Credited (charged) to equity
Closing balance at 30 June
464,200
( 21,126)
( 7,991)
435,083
489,784
( 35,304)
9,720
464,200
459,850
( 18,171)
( 7,991)
433,688
485,584
( 35,454)
9,720
459,850
Note 14 - Trade and other payables
Trade payables
Sundry payables and accrued expenses
Employee bonus
Amounts payable to wholly owned entity
Note 15 - 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 statement of comprehensive income
Credited/(charged) to equity
Closing balance at 30 June
436,714
1,864,510
194,200
-
2,495,424
253,776
1,330,217
172,380
-
1,756,373
313,031
1,655,441
194,200
496,388
2,659,060
224,206
1,131,968
172,380
424,244
1,952,798
30,896
3,909
34,805
33,732
1,073
-
34,805
30,896
2,836
33,732
33,285
447
-
33,732
30,896
3,909
34,805
33,732
1,073
-
34,805
30,896
2,836
33,732
33,285
447
-
33,732
AUSTRALIAN ETHICAL INVESTMENT LTD
49
Notes to the financial statements for the year ended 30 June 2010
Note 16 - Provisions
Current
Employee benefits - long service leave
Non-current
Employee benefits - long service leave
Note 17 - Issued capital
Ordinary shares
Fully paid ordinary shares at the beginning of the
financial year 991,556 (2009: 984,003) 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)
1,585 on 22 December 2009 (options excercised)
Shares bought back during the year:
27,814 on 6 November 2008
Balance 30 June
993,141 (2009 - 991,556) shares
Consolidated entity
2010
$
2009
$
Parent entity
2010
$
2009
$
451,046
451,046
535,406
535,406
451,046
451,046
535,406
535,406
62,923
62,923
49,003
49,003
62,923
62,923
49,003
49,003
5,739,635
5,740,791
5,739,635
5,740,791
-
-
-
-
51,512
-
23,570
113,353
690,343
57,731
-
-
-
-
51,512
-
23,570
113,353
690,343
57,731
-
( 886,153)
-
( 886,153)
5,791,147
5,739,635
5,791,147
5,739,635
At 30 June 2010 there were 993,141 fully paid ordinary shares which have no par value.
Options/rights
(i) For detailed information relating to the Australian Ethical Investment Limited employee share ownership plan
including details of options/rights issued, exercised and lapsed during the financial year and the options/rights
outstanding at year-end, refer to note 25 share-based payments.
(ii) For information related to share options and rights issued to key management personnel during the financial year
refer to the remuneration report contained within the directors' report.
Ordinary shares
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.
Capital management
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 $5.0 million capital requirement above which no extra capital is required as a result of
increased funds under management.
50
AUSTRALIAN ETHICAL INVESTMENT LTD
Notes to the financial statements for the year ended 30 June 2010
Consolidated entity
2010
$
2009
$
Parent entity
2010
$
2009
$
Note 18 – Events after the balance sheet date
Since the end of the financial year, no material events that may have an impact on these financial statements
have occurred.
The financial report was authorised for issue on the directors' declaration date by the board of directors.
Note 19 - 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 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
29,220,186
11,719,003
40,939,189
4,537,926
4,454,713
8,992,639
28,346,164
10,539,437
38,885,601
3,037,326
3,521,480
6,558,806
Rights of indemnities for liabilities incurred by the
consolidated entity and parent entity not recorded in
the financial statements were:
40,939,189
8,992,639
38,885,601
6,558,806
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.
AUSTRALIAN ETHICAL INVESTMENT LTD
51
Notes to the consolidated financial statements for the half-year ended 30 June 2010
Note 21 - Operating segments
The group has identified its operating segments based on the internal reports that are reviewed and used by the board of directors (chief
operating decision makers) in assessing performance and determining the allocation of resources.
Reportable segments disclosed are:
1) public offer managed funds (managed funds); and
2) public offer retail superannuation fund (super)
(i) Segment performance
Revenue
External sale
Inter-segment sale
Interest revenue
30 June 2010
30 June 2009
Managed funds
$
Super
$
Total
$
Managed funds
$
Super
$
Total
$
6,107,033
3,892,705
95,011
7,836,917
-
28,938
13,943,950
3,892,705
123,949
5,865,561
3,445,918
138,819
7,074,198
-
52,852
12,939,759
3,445,918
191,671
Total segment revenue
10,094,749
7,865,855
17,960,604
9,450,298
7,127,050
16,577,348
Inter-segment eliminations
Total group revenue
(3,892,705)
14,067,899
(3,445,918)
13,131,431
Segment net profit before tax
588,405
2,243,491
2,831,896
778,545
1,852,968
2,631,513
Reconciliation of segment result
to group net profit/loss after tax
Income tax expense
90,168
(673,118)
(582,950)
(64,281)
(555,910)
(620,191)
Unallocated items
- Depreciation and amortisation
- Other corporate overheads *
Group net profit after tax
(358,491)
(867,900)
1,022,555
(298,503)
(510,067)
1,202,751
* Other corporate overheads includes staff bonus, tithe expense, staff options/rights expense and the payment to the former Chief
Executive Officer.
(ii) Segment assets
30 June 2010
30 June 2009
Managed funds
$
Super
$
Total
$
Managed funds
$
Super
$
Total
$
Assets
9,661,280
2,518,170
12,179,450
9,422,379
2,594,193
12,016,572
Inter-segment eliminations
Total group assets
(iii) Segment liabilities
(1,080,224)
11,099,226
(961,653)
11,054,919
Liabilities
3,207,834
600,589
3,808,423
2,798,139
449,228
3,247,367
Inter-segment eliminations
Total group liabilities
(764,225)
3,044,198
(645,653)
2,601,714
52
AUSTRALIAN ETHICAL INVESTMENT LTD
Notes to the financial statements for the year ended 30 June 2010
Consolidated entity
2010
$
2009
$
Parent entity
2010
$
2009
$
Note 22 - Cash flow information
(a) Reconciliation of cash
Cash at the end of the financial year as shown in the
statement of cash flows is reconciled to the related
items in the statement of financial position as follows:
Cash on hand
Cash at bank
Deposits at call
300
1,020,195
872,239
1,892,734
300
137,016
2,477,151
2,614,467
300
6,842
427,895
435,037
300
5,357
1,220,654
1,226,311
(b) Reconciliation of cash flow from operations with net
profit from ordinary activities after income tax expense
Net profit from ordinary activities after income tax
expense
Non-cash flows in operating profit
Depreciation
Provisions
(Profit) loss on sale of property, plant & equipment
(Profit) loss on sale of investment
Share options/ rights expensed
Staff bonus paid in shares
Changes in assets and liabilities
(Increase) decrease in trade & other receivables
(Increase) decrease in current tax assets
(Increase) decrease in prepayments & other assets
(Increase) decrease in deferred tax assets
Increase (decrease) in trade & other payables
Increase (decrease) in current tax liability
Increase (decrease) in deferred tax liability
1,022,555
1,202,753
1,249,238
1,108,293
358,491
( 70,439)
19,659
-
315,235
-
298,503
72,973
7,167
-
223,127
23,570
358,491
( 70,439)
19,659
-
315,235
-
298,503
72,973
7,167
-
223,127
23,570
( 1,248,023)
( 24,474)
( 57,829)
21,126
739,051
( 227,201)
1,074
11,634
-
( 30,876)
35,304
( 358,957)
116,500
447
(1,485,227)
(213,987)
(62,022)
18,171
706,262
(56,771)
1,074
9,185
-
( 31,017)
35,454
( 95,678)
65,114
447
Net cash provided by (used in) operating activities
849,225
1,602,144
779,684
1,717,137
(c) Non-cash financing and investing activities
Shares in Australian Ethical Investment Limited, to the value of $0 (2009: $23,570) were issued in lieu of
staff bonus.
AUSTRALIAN ETHICAL INVESTMENT LTD
53
Notes to the financial statements for the year ended 30 June 2010
Consolidated entity
2010
$
2009
$
Parent entity
2010
$
2009
$
Note 23 – 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 Smaller Companies Trust, Australian Ethical Income Trust,
Australian Ethical Larger Companies Trust, Australian Ethical International Equities Trust,
Australian Ethical World Trust, and the Climate Advocacy Fund).
Note, During the financial year, the Climate Advocacy Fund and Australian Ethical Property Trust were established,
the Australian Ethical Equities Trust changed its name to the Australian Ethical Smaller Companies Trust and the
Australian Ethical Large Companies Share Trust changed its name to the Australian Ethical Larger Companies 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
-
-
-
-
-
-
-
-
-
-
-
-
3,892,705
3,445,918
673,117
555,910
5,987,343
5,054,272
1,797,057
1,202,596
78,324
221,409
496,388
424,244
54
AUSTRALIAN ETHICAL INVESTMENT LTD
Notes to the financial statements for the year ended 30 June 2010
Consolidated entity
2010
$
2009
$
Parent entity
2010
$
2009
$
Note 23 – 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 Smaller Companies Trust
- Australian Ethical Income Trust
- Australian Ethical Larger Companies Trust
- Australian Ethical International Equities Trust
- Australian Ethical World Trust
- Australian Ethical Property Trust
- Climate Advocacy Fund
(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 Smaller Companies Trust
- Australian Ethical Income Trust
- Australian Ethical Larger Companies Trust
- Australian Ethical International Equities Trust
- Australian Ethical World Trust
- Australian Ethical Property 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 Smaller Companies Trust
- Australian Ethical Income Trust
- Australian Ethical Larger Companies Trust
- Australian Ethical International Equities Trust
- Australian Ethical World Trust
- Australian Ethical Property Trust
(iv) Transaction whereby Australian Ethical Investment
Limited received a distribution payment from the
Australian Ethical Balanced Trust
b) Outstanding balances at balance date:
3,563,536
3,842,863
327,041
1,964,631
1,017,719
14,026
136,068
510
3,521,848
3,286,338
316,833
2,065,893
476,444
35,377
-
-
3,563,536
3,842,863
327,041
1,964,631
1,017,719
14,026
136,068
510
3,521,848
3,286,338
316,833
2,065,893
476,444
35,377
-
-
274,208
220,101
94,591
140,969
110,050
15,572
18,362
275,896
218,138
92,595
142,057
109,072
42,156
-
274,208
220,101
94,591
140,969
110,050
15,572
18,362
275,896
218,138
92,595
142,057
109,072
42,156
-
40,599
46,764
3,873
30,272
1,933
2,808
9
71,058
81,024
6,663
56,101
7,277
107
-
40,599
46,764
3,873
30,272
1,933
2,808
9
71,058
81,024
6,663
56,101
7,277
107
-
2,695
6,873
2,695
6,873
AUSTRALIAN ETHICAL INVESTMENT LTD
55
Notes to the financial statements for the year ended 30 June 2010
Consolidated entity
2010
$
2009
$
Parent entity
2010
$
2009
$
Note 23 – 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 Smaller Companies Trust
- Australian Ethical Income Trust
- Australian Ethical Larger Companies Trust
- Australian Ethical International Equities Trust
- Australian Ethical World Trust
- Australian Ethical Property Trust
- Climate Advocacy Fund
Value of units held by Australian Ethical Investment
Limited in the Australian Ethical Balanced Trust
Value of units held by Australian Ethical Investment
Limited in the Climate Advocacy Fund
Distribution receivable from Australian Ethical
Balanced Trust
Distribution receivable from Climate Advocacy Fund
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:
85,327
304,836
62,394
150,125
156,617
5,908
63,816
191
352,189
351,300
40,029
204,066
56,269
7,991
-
-
85,327
304,836
62,394
150,125
156,617
5,908
63,816
191
352,189
351,300
40,029
204,066
56,269
7,991
-
-
227,064
320,749
227,064
320,749
98,858
-
98,858
-
6,057
718
3,298
-
6,057
718
3,298
-
112,330
207,004
-
-
-
-
investment services/(rebate of investment services fee)
14,415
95,853
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.
56
AUSTRALIAN ETHICAL INVESTMENT LTD
AUSTRALIAN ETHICAL INVESTMENT LTD
57
58
AUSTRALIAN ETHICAL INVESTMENT LTD
AUSTRALIAN ETHICAL INVESTMENT LTD
59
Notes to the financial statements for the year ended 30 June 2010
Note 25 - Share based payments - continued
During the reporting period, Australian Ethical Investment Limited issued 1,585 ordinary shares for $51,512.50 on exercise of 1,585 share options
issued under its employee share ownership plan.The exercise of share options resulted in an increase in ordinary shares of 1,585.
During the reporting period 16,330 performance rights in two classes (identifiers: AEFAW and AEFAX) were granted. Under the Australian Ethical
Investment Limited employee share incentive scheme (ESIS) participants are granted performance rights to ordinary shares, subject to meeting
specified performance criteria over the performance period. The number of shares that the participant will ultimately receive will depend on the extent
to which the performance criteria are met by the company and the individual employee. These rights were issued for nil consideration. These rights
hold no voting or dividend rights. Subject to the terms and conditions of the ESIS rules, the performance rights have the following attributes
determining whether shares will be issued in respect of the rights.
ASX Code
AEFAW
Number granted
Attributes
10,819
- employment must continue until 30 June 2012
- the arithmetic average return on equity over the performance period (‘AROE’)
must exceed 15% p.a. or no shares shall be awarded at the end of the
performance period;
- if the AROE exceeds 15% p.a. but is less than 20% p.a., half the maximum
number of shares shall be awarded;
- if the AROE is equal to or greater than 20% p.a. the maximum number of
shares shall be awarded.
- AROE is determined as the arithmetic average of return on equity over six
month periods calculated using audited half-year financial statements
AEFAX
5,511
- The performance period is the financial years 2009/10, 2010/11 and 2011/12
- employment must continue until 11 November 2010;
- the number of shares that will be issued to each employee in respect of their
performance rights under this category will be adjusted up or down by a
maximum 20%, dependent on the absolute performance of one of the company's
managed investment schemes, for which the employee has responsibility or
provides significant input. The nominated managed investment scheme has been
agreed between the company and the employee. Performance will be measured
over a performance period of 1 July 2009 to 30 June 2010.
Performance rights reconciliation
Outstanding at the beginning
of the financial year
Granted
Forfeited
Exercised
Expired
Outstanding at year-end
Exercisable at year-end
Consolidated entity
2010
2009
Number
of
rights
Number
of
rights
Parent entity
2010
2009
Number
of
rights
Number
of
rights
-
16,330
( 1,854)
-
-
14,476
-
-
-
-
-
-
-
-
-
16,330
( 1,854)
-
-
14,476
-
-
-
-
-
-
-
-
-
-
Fair value - Rights
All rights were calculated at grant date based on the underlying share prices minus estimated net present value of future dividends that
the holders of rights are not entitled for.
60
AUSTRALIAN ETHICAL INVESTMENT LTD
Notes to the financial statements for the year ended 30 June 2010
Note 25 - Share based payments - continued
Weighted average fair value - Options
Consolidated entity
2010
2009
Parent entity
2010
2009
Weighted
average
exercise
price
$
Number
of
options
Number
of
options
Weighted
average
exercise
price
$
Weighted
average
exercise
price
$
Weighted
average
exercise
price
$
Number
of
options
Number
of
options
Outstanding at the beginning
of the financial year
116,777
40.76
116,753
39.31
116,777
40.76
116,753
39.31
Granted
Forfeited
Exercised
Expired
-
( 16,956)
( 1,585)
( 29,554)
32.27
42.78
31.00
31.00
44,627
( 8,523)
( 34,707)
( 1,373)
32.27
43.98
30.34
24.82
-
( 16,956)
( 1,585)
( 29,554)
32.27
42.78
31.00
31.00
44,627
( 8,523)
( 34,707)
( 1,373)
32.27
43.98
30.34
24.82
Outstanding at year-end
68,682
44.00
116,777
40.76
68,682
44.00
116,777
40.76
Exercisable at year-end
-
-
-
-
-
-
-
-
There were 1,585 options exercised during the year ended 30 June 2010. The weighted average share price calculated as at exercise
dates of these options was $31.00.
The options outstanding at 30 June 2010 had a weighted average exercise price of $44.00 and a weighted average remaining
contractual life of 1.05 years. Exercise prices range from $32.27 to $57.57 in respect of options outstanding at 30 June 2010
Included under employee benefits expense in the statement of comprehensive income is :
$190,602 (2009: $223,127) relating to options issued under the employee share ownership plan;
$124,633 (2009: Nil) relating to rights issued under the employee share ownership plan; and,
$0 (2009: $23,570) relating to equity settled share based payment transactions for staff bonus.
Note 26 - 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 14).
The main purpose of these financial instruments is to finance the consolidated entity’s operations. The consolidated entity has various
other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.
(b) Interest rate risk
The consolidated entity’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in
market interest rates and the effective weighted average interest rates on classes of financial assets and financial liabilities is as follows:
Weighted average
effective interest rate
Floating interest rate
Fixed interest
rate within 1 year
2010
% % $
2010
2009
2009
2010
$ $
2009
$
Cash and cash equivalents
Trade and other receivables
Financial assets
4
5
5
5
1,892,434
2,614,167
485,040
519,829
-
-
513,401
-
-
1,154,124
Total financial assets
2,377,474
3,133,996
513,401
1,154,124
Trade and other payables
Total financial liabilities
-
-
-
-
-
-
-
-
AUSTRALIAN ETHICAL INVESTMENT LTD
61
Notes to the financial statements for the year ended 30 June 2010
(b) Interest rate risk - continued
Fixed interest rate
within 1 to 5 years
Non-interest bearing
Total
2010
$
2009
2010
$ $
2009
2010
$ $
2009
$
Cash
Trade and other receivable
Financial assets
-
-
100,505
-
-
82,492
300
3,050,029
-
300
1,800,859
-
1,892,734
3,050,029
1,098,946
2,614,467
1,800,859
1,756,445
Total financial assets
100,505
82,492
3,050,329
1,801,159
6,041,709
6,171,771
Trade and other payables
Total financial liabilities
-
-
-
-
2,495,424
1,756,373
2,495,424
1,756,373
2,495,424
1,756,373
2,495,424
1,756,373
(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 statement of financial position 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 independen
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 term of the loan to date.
Consideration of credit risk in relation to financial assets is incorporated into executive management 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.
In relation to loans to staff disclosed in note 9, under the terms of the loan agreement, staff loans were used to purchase shares of Australian Ethical
Investment Ltd and the shares are used as security and registered under the subsidiary's name (Australian Ethical Superannuation Pty Ltd is the
trustee of the employee share loan scheme ) until the loans are paid off.
(d) Liquidity risk
The group carries no borrowing debt on the statement of financial position 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 executive management to ensure regulatory and future
operational requirements are catered for.
Trade and other payables are expected to be paid as follows:
Consolidated entity
2010
$
2009
$
Parent entity
2010
$
2009
$
1,994,991
500,433
-
2,495,424
1,253,442
502,931
-
1,756,373
2,158,627
500,433
-
2,659,060
1,449,867
502,931
-
1,952,798
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.
62
AUSTRALIAN ETHICAL INVESTMENT LTD
Notes to the financial statements for the year ended 30 June 2010
Note 26 - 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
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
2010
$
2009
$
Parent entity
2010
$
2009
$
47,555
(47,555)
62,686
(62,686)
18,402
(18,402)
34,923
(34,923)
47,555
(47,555)
62,686
(62,686)
18,402
(18,402)
34,923
(34,923)
AUSTRALIAN ETHICAL INVESTMENT LTD
63
64
AUSTRALIAN ETHICAL INVESTMENT LTD
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 statement of financial position as at 30 June 2010, and the statement of
comprehensive income, statement of changes in equity and statement of cash flows for the year
ended on that date, a summary of significant accounting policies and other explanatory notes and
the directors' declaration of
the consolidated entity comprising the Company and the entity it
controlled at the year's end or from to time during the financial year.
Directors' Responsibility for the Financial Report
The Directors of the Company are responsible for the preparation and fair presentation of the
financial report
in accordance with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing
and maintaining internal controls relevant to the preparation and fair presentation of the financial
report that is free from material misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that are reasonable in the
In Note 1, the directors also state, in accordance with Accounting Standard AASB
circumstances.
101: Presentation of Financial Statements,
that compliance with the Australian equivalents to
International Financial Reporting Standards ensures that the financial report, comprising the financial
statements and notes, complies with International Financial Reporting Standards.
Auditor's Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. These Auditing Standards require that
we comply with relevant ethical requirements relating to audit engagements and plan and perform
is free from material
the audit
misstatement.
to obtain reasonable assurance whether the financial report
In making those risk assessments,
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or
the auditor considers internal control relevant to the
error.
entity's preparation and fair presentation of the financial report in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
AUSTRALIAN ETHICAL INVESTMENT LTD
65
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, 2010 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 6 to 14 of the directors' report for the
year ended 30 June, 2010. 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 2010, complies with section 300A of the Corporations Act 2001.
THOMAS DAVIS & CO.
P.L. WHITEMAN
PARTNER
Chartered Accountants
SYDNEY,
30 August, 2010
Liability limited by a scheme approved under Professional Standards Legislation
66
AUSTRALIAN ETHICAL INVESTMENT LTD
Holdings
ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-
100,000
100,001+
Totals
Holdings
ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-
100,000
100,001+
Totals
Shareholder information
All information as at 20 September 2010
Twenty largest shareholders
Distribution of shareholdings
Ordinary shares
Ordinary shares
Name
Holders
Units
%
Number of
ordinary
shares
% Substantial
shareholder
760
188,422
198,402
35,621
91
5
14
18.983
19.989
3.589
Select Managed
Funds Pty Ltd
196,472 19.796
James Andrew Thier
51,339
5.173
Mr Howard Pender
49,743
5.012
Yes
Yes
Yes
373,660
37.645
Caroline Margaret
Le Couteur
49,436
4.981
1
196,472
19.794
Mr Trevor Roland Lee
36,933
3.721
871
992,577
100.000
Options issued under the Employee Options Scheme
Holders
Units
%
27
24
3
0
0
12,439
54,523
16,196
0
0
14.958
65.566
19.476
0.000
0.000
Mrs Judith
Margaret Boag
Ms Judith
Ingrouille Ajani
Mr Bruce Allan
Mcgregor & Mrs Ann
Marion Mcgregor
Citicorp Nominees
Pty Limited
Hb Sarjeant & Assoc
Pty Ltd
Dr Edward
Arthur Iceton
54
83,158
100.000
Daisy Thier
Mr Peter Alexander
Anderson
Mr Philip Julian
Eriksen & Mr Julian
Hans Eriksen
Ms Anne
Maree O’donnell
Mr Michel Beuchat &
Mrs Ann Beuchat
Mr Rodney
Matthew Myer
Ubs Wealth
Management
Australia Nominees
Pty Ltd
Mr Robert
Douglas Lewin
Mr Roger
William Sawkins
33,683
3.394
24,462
2.465
24,447
2.463
20,620
2.078
20,140
2.029
16,500
1.662
14,474
1.458
10,833
1.091
10,562
1.064
10,488
1.057
9,667
0.974
7,332
0.739
7,160
0.721
6,300
0.635
5,162
0.520
AUSTRALIAN ETHICAL INVESTMENT LTD
67
Corporate directory
Australian Ethical Investment Ltd
ABN 47 003 188 930
Company secretary
Tom May
Telephone: 02 6201 1953
Facsimile: 02 6201 1987
Email:
tmay@australianethical.com.au
Postal address
GPO Box 2435
Canberra ACT 2601
Registered offi ce / 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:
Level 2, 28 Margaret Street
Sydney NSW 2000
Telephone: 02 9290 9600
Facsimile: 02 9279 0664
Mail:
PO Box R67
Royal Exchange
Sydney NSW 1223
registries@registriesltd.com.au
Email:
www.registriesltd.com.au
Using the Registries Ltd website, shareholders are
able to view balances, transaction history and recent
dividend payments. They can also view and update
email addresses, annual report elections and tax fi le
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
(cid:129)
to conduct our own operations in accord with the items
of the Australian Ethical Charter, in particular we seek to:
By its operations Australian Ethical will promote a sea-
change in community-wide practice such that all investment
will be undertaken with an ethical purpose as well as in
pursuit of competitive return for chosen risk.
Australian Ethical’s mission
Australian Ethical’s mission is to provide those investors
who share our social and environmental aims (as set out
in our charter) with the means to earn a competitive return
for chosen risk whilst at the same time contributing to a just
and sustainable human society and the protection of the
natural environment.
In order to fulfi l our mission our goals are:
(cid:129)
(cid:129)
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;
(cid:129)
(cid:129)
(cid:129)
(cid:129)
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;
encourage, care for and provide educational
opportunity for our fellow workers, respect their
individual needs, aspirations and idiosyncrasies;
(cid:129)
and ensure our promotional material is comprehensive,
transparent and readily understood.
(cid:129)
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
69
australianethical
investment + superannuation
®
www.australianethical.com.au | 1800 021 227 |
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