Australian Ethical
Annual Report
Year ended 30 June 2012
1800 021 227 | australianethical.com.au
Contents
Chair and Managing Director’s Report ...............................................................................................3
Financial Summary .............................................................................................................................6
2012 Community Grants ...................................................................................................................9
Directors’ Particulars ........................................................................................................................11
Directors’ Report ..............................................................................................................................13
Remuneration Report 2012 ..............................................................................................................18
Corporate Governance Statement 2012 ..........................................................................................25
Auditor’s Independence Declaration ................................................................................................32
Financial Statements ........................................................................................................................34
Independent Auditor’s Report ..........................................................................................................64
Shareholder Information ...................................................................................................................65
Shareholder Calendar
Annual General Meeting ........................................................................................22 November 2012
Interim Results Announcement ............................................................................... 28 February 2013
Record Date for Interim Dividend ................................................................................ 15 March 2013
Payment Date for Interim Dividend ............................................................................. 29 March 2013
Annual Results Announcement .................................................................................. 30 August 2013
These dates may change at the company’s discretion.
Contact Us
Phone:
Fax:
Email:
Web:
Post:
Registered address:
1800 021 227
02 9252 1987
enquiries@australianethical.com.au
australianethical.com.au
Australian Ethical Investment Ltd
Reply Paid 3993, Sydney NSW 2001
Australian Ethical Investment Ltd
Trevor Pearcey House (Block E)
Traeger Court,34 Thynne Street
Bruce ACT 2617
Chair and Managing Director’s
Report
Dear shareholder,
The 2012 financial year has been one of significant
change for Australian Ethical. Like all financial
services companies, we continue to face a world
that has fundamentally shifted.
The global financial crisis is now some five years
old, markets continue to be down significantly
from their peak, investors continue to be nervous
and regulatory change is turning the financial
services industry on its head putting pressure on
fees and hence revenues.
ASX All Ordinaries Index
(Five years to 30 June 2012)
Down 40% from
peak in 2007
Down 11% in
last 12 months
7,500
6,500
5,500
4,500
3,500
2,500
In the face of this, three years ago, Australian
Ethical found itself inadequately positioned to face
such challenges. It was a high cost, high priced
business with poorly structured products and was
not able to meet basic client service standards
required to operate in the market. Most critically,
the company was heavily reliant for its revenues
on up-front fees that were soon to be removed
through regulation.
Over the past few years we have achieved a lot in
addressing these issues and setting the company
up for a sustainable, long term future. In particular,
during the 2012 financial year we have made
significant improvements in our products, client
service and costs.
In addition, new client growth results have been
very encouraging particularly in light of current
market conditions, nervous investor sentiment and
a rapidly evolving financial services environment.
Over the 12 months to 30 June 2012, we had
net new individual client growth of 5% across
managed funds and superannuation. We also
increased the number of default superannuation
employer clients by 20% (from 248 to 297).
Our ethical approach
In all of this, nothing changes who we are or what
we represent.
Our philosophy remains that people should be
able to save and invest in a way that looks after
society and the environment and provides financial
performance and security. Our investment
criteria remains the highest ethical conviction in
the market. Our exit during the year from Origin
Energy because of its exposure to Coal Seam Gas
is evidence of our continued willingness to take a
stand on key ethical issues.
We do, however, wish the company to be able
to continue to deliver on this promise in such a
way that allows it to not just remain viable, but to
grow. The larger we are, the more influence we
have to change the world for the better. To that
end, over the last few months we conducted
market and customer research, the result of
which is a refreshed Australian Ethical brand
plus an enhanced insight into our potential for
sustainable growth.
The key areas of insight from the research were:
• There is a huge opportunity to expand our
reach into our natural market. Australian Ethical
is the only truly “green” investment manager
and superannuation fund in Australia and our
research shows that almost three-quarters
of our 18,000 clients identify themselves as
Greens voters. 1.2 million people voted for the
Greens at the last election. This is what we call
our natural market and should still be a hugely
fertile source of new clients and growth.
• Commitment to the Australian Ethical brand is
still very high relative to our mainstream and
ethical competitors. However, the awareness
of our brand amongst even the natural market
is quite low compared to where it should
be. We need to communicate to this wider
audience more effectively so that more people
understand who we are and what we offer.
• We are known as offering ‘the best ethical
option’ by our clients. This is a reputation that
we fully intend on retaining. However, we have
found that we need to vastly improve the trust
1800 021 227 | australianethical.com.au 3
australianethical people have in our investment performance
and the competitiveness, attractiveness and
service levels of our products. This will mean
greater communication of our investment
expertise to increase the level of trust from
clients. More trust will translate to high average
balances as client trust us with more of their
life savings.
Business improvements
During the 2012 financial year we have made
significant improvements in the following areas:
• Enhanced products – we have improved
the insurance options available to our
superannuation fund members, lowered the
fees on our Cash Trust (formerly the Income
Trust), removed the upfront fees on all our
products and lowered the fees on our Smaller
and Larger Companies Trusts and Climate
Advocacy Fund for wholesale clients
•
Improved service – we have upgraded our
portfolio administration operations, invested
in improved call centre and customer
management systems and recently we
appointed Russell Investments to be our
superannuation administrator from April 2013,
which will provide a much improved and lower
cost service to members.
• Reduced costs – in order to be able to
implement these changes and to properly
position ourselves for what will be a lower fee
environment in the years to come, we have
had to reduce our costs with staff numbers
reducing from 50 to 36 over the course of the
past year.
These improvements and adjustments were
absolutely necessary to ensure the long term
sustainability of the company. Without them the
company was at risk of not surviving.
Regulatory changes ahead
The financial services industry is going through
significant regulatory changes that impact the
business in a number of ways. In particular:
• Capital requirements for funds management
businesses will change in November 2012
requiring greater liquidity to be held to
comply with licensing requirements. This will
be challenging to meet whilst we hold real
estate, such as our Canberra premises, on
our balance sheet. It also has an impact on
dividends; and
• Two new areas of legislation (Future of
Financial Advice and MySuper) have combined
to impact fees in a number of ways. In general,
this legislation has led to lower fees and a more
competitive environment. In particular it means
the abolition of up-front fees. On 1 July 2012,
as noted above, we removed up-front fees on
all of our products in order to position us for
this new environment.
Financial results
Our net profit after tax (NPAT) was $0.402
million for the 12 months to 30 June 2012 (FY12)
whilst our underlying profit after tax (UPAT) was
$0.859 million.
The NPAT result reflects lower revenues due to
lower funds under management, arising from
lower market values and the continued reduction
of inflows across the industry, and our decision to
gradually reduce management fees. These factors
have been offset somewhat by a reduction in
operating costs the full benefit of which was not
realised in FY12
The result also includes a number of one off items
such as a three yearly revaluation of the Canberra
office building, redundancy costs associated
with a business restructuring to lower operating
costs and costs incurred in respect of shareholder
actions conducted throughout the year.
Shareholder activity
During the year a general meeting was called by
a group of shareholders. Whilst we fully respect
shareholders exercising their rights, the board
objects strongly to the manner in which this
campaign was conducted. As one indication,
some 105 resolutions were lodged over more than
a dozen separate visits to the company, each one
causing much speculation and disruption amongst
staff. Resolutions were constantly amended,
directors were nominated without consent and
in other cases withdrawn, causing unnecessary
work for our team. The process was extremely
destabilising at a time when the business can least
afford it. The direct cost impact on the company
as a result of the campaign was $125,000.
The indirect cost impact on the business was
immeasurable and far greater.
The outcome of the meeting was a vote firmly
in favour of the board and the strategies being
implemented by it. These strategies are, in the
board’s view, necessary to properly position the
company to survive and thrive in a vastly more
competitive and challenging environment. Whilst
these changes have impacted many people,
corporate shareholder activity should not be
used to pursue personal agendas. We fully
expect the shareholders to respect the vote of the
shareholders as a whole as the company can ill
afford another such campaign.
4
Director changes
In closing
The transformation of the company through the
past financial year and continuing into this year
is considerable. The changes have occurred by
nature of the financial environment in which we are
operating plus the strategic business imperatives
for Australian Ethical’s long term future. Our
sincere thanks and appreciation go to all our
staff and shareholders who have along the way
provided constructive input and shown ongoing
commitment to the business.
During the year we welcomed Louise Herron to the
board. Whilst Louise’s tenure was short-lived (she
recently became Chief Executive of the Sydney
Opera House), she made a significant contribution
to the company.
Following Louise’s resignation, Steve Gibbs was
appointed to the board. Steve brings with him a
wealth of experience relevant to our business.
He has been Chief Executive of ARIA, the
Commonwealth Government superannuation
fund and Executive Director of the Australian
Institute of Superannuation Trustees. He has a
long held involvement in Responsible Investment
and was on the panel that originally proposed
the United Nations Principles of Responsible
Investment. We welcome Steve and look forward
to his contribution.
Phillip Vernon
Managing Director
André Morony
Chair
1800 021 227 | australianethical.com.au 5
australianethical Financial Summary
Profit After Tax ($m)
Return On Equity (%)
1.7
1.2
1.0
1.1
0.4
20.6
18.8
17.1
12.5
5.9
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Year ending 30 June
Year ending 30 June
Funds Under Management ($m)
Basic Earnings Per Share ($)
614
644
627
1.70
1.22
1.03
1.13
572
547
0.40
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
As at 30 June (before distribution)
Year ending 30 June
Revenue ($m)
14.1
14.1
13.1
Dividends Paid ($)
15.7
14.8
1.65
1.47
2.00
1.70
0.60
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Year ending 30 June
Year ending 30 June
Funds Under Management
By Product
Funds Under Management
By Channel
Managed
Funds
$225.55m
Super
$391.73m
Advised
$237.98m
Direct
$379.30m
6
Financial results
Net profit after tax (NPAT):
$0.402 million
Full year underlying profit after tax (UPAT):
$0.859 million
Key factors impacting the result were:
• Lower market values – The All Ordinaries
Index dropped 11% over the period. As our
revenues are primarily related to funds under
management, this had a direct impact.
•
Impairment to building – A non-cash
impairment charge of $210,000 was incurred
arising from a three yearly revaluation of
the property at Trevor Pearcey House in
Bruce, ACT. The reduced value is due to the
more subdued commercial property market
in Canberra.
Net profit after tax
Revenue
Expenses
Operating profit
Community grants
EBITDA
Depreciation/amortisation/options/rights
Tax
Net profit after tax
Adjustments (gross)
• Add back employment restructure expenses
• Add back property revaluation
• Add back legal costs for shareholder actions
• Deduct acquisition fee Lawley House
Tax on adjustments
Underlying profit after tax
* Restated.
• Business restructuring – redundancy costs
of $319,000 were incurred as the business
restructured to reduce operating costs to
position it for a more competitive, lower fee
environment in the future. This has reduced
staff numbers from 50 to 36. The full year
benefit of these cost reductions were not felt in
these results.
• Shareholder action – during the year a group
of shareholders called a general meeting.
Direct costs incurred in respect of the
campaign were $125,000 primarily in respect
of legal costs incurred as a result numerous
misleading allegations made.
After taking these last three items into account,
the result is a decrease in underlying NPAT of
12%. This result is summarised in the table below.
2011*
($,000)
2012
($,000)
% Change
15,744
(13,124)
14,793
(13,359)
2,620
(153)
2,467
(677)
(665)
1,125
445
-
-
(651)
62
981
1,434
(53)
1,379
(658)
(320)
401
319
210
125
0
(196)
859
(6%)
(2%)
(45%)
(44%)
3%
52%
(64%)
(12%)
1800 021 227 | australianethical.com.au 7
australianethical
Balance sheet
Dividend
The balance sheet holds a number of assets that
the board believe are inappropriate for a company
of our size and nature. The company is looking
to realise these assets in an orderly manner
and reinvest the proceeds in liquid and cash
equivalents. In particular:
• The company purchased its own premises in
Canberra in 2006 and undertook significant
renovations over the course of 2006 and 2007
to bring it to 6 star Green Star rating standard.
Whilst the board is supportive of the company
occupying appropriately rated premises, it
is of the view that it is inappropriate for the
company to own real estate. We have entered
into a marketing and sales agreement with
CBRE to sell the property.
• The company has, over the past few years,
supported the activities of the Climate
Advocacy Fund (CAF) an index fund that
engages in shareholder advocacy in relation to
climate change. In particular it has purchased
shares in the companies that the CAF was
putting resolutions to on behalf of nominees
in order to allow the resolutions to be put.
Unrealised losses in respect of these activities
amount to $106,000. We will be selling these
investments over coming months.
• The company has, in the past, invested some
surplus cash in unit trusts that it manages.
These will also be liquefied and reinvested into
cash or cash equivalents.
Final dividend:
35 cents per share, fully franked
Total FY12 dividend:
60 cents per share, fully franked.
In determining the final dividend, the board took
into account the following:
• Regulatory requirements, in particular
the new capital requirements effective in
November 2012;
• The uncertainty in the market;
• Future potential strategic requirements.
Record date:
21 September 2012.
Dividend payment date:
5 October 2012. (The dividend reinvestment plan
will not operate in respect of the final dividend.)
2011
(cents per
share)
2012
(cents per
share)
45.0
100.0
25.0
170.0
25.0
35.0
-
60.0
Dividends
Interim
Final
Special
Total dividend
8
2012 Community Grants
As prescribed in Australian Ethical’s constitution,
10% of our profit is donated to charitable,
benevolent and conservation purposes as part
of our contribution to a positive and sustainable
society. This is one of the highest levels of
corporate giving in Australia based on percentage
of profits. It is something that the shareholders,
staff and directors should be very proud of.
Traditionally, the grant recipients have been
shortlisted by a small committee of staff members
and voted on by employees and directors of
Australian Ethical. The committee ensure that
each shortlisted organisation or project is of the
highest quality and in keeping with the Australian
Ethical Charter. This year, for the first time, we
invited all our shareholders to vote on which
organisation or project should receive grants.
Shareholder involvement was high with votes from
approximately 150 people received.
Grant applications were received from almost 300
different organisations. There was a skew towards
society based projects although the voting was
overwhelmingly in favour of wildlife conservation.
Australian Ethical will be donating a total of
$40,000 to 11 organisations as part of its 2012
community grants scheme. This brings the total
amount gifted to communities over the last 12
years to more than $1.3 million.
This year’s grants range in size from $3,000 to
$10,000 and include donations to charities that
work across Australia and overseas. The following
table shows the breakdown of grant recipients
for 2012.
1800 021 227 | australianethical.com.au 9
australianethical Major grant recipient
Rainforest Rescue – Gunung Leuser
National Park, North Sumatra
Rainforest Rescue provided us with a good
overview of their project to save the last viable
habitat of the Sumatran Orangutan through the
protection of the World Heritage listed tropical
rainforests of the Gunung Leuser National Park
(GLNP) from deforestation and the expansion
of illegal oil palm plantations. The GLNP also
provides vital habitat for critically endangered
species including the Sumatran Tiger, rhinoceros
and elephant.
Outcomes of this project will be to remove 60
hectares of illegally planted oil palms within the
The 2012 allocation
boundaries of the National Park, and replant with
60,000 rainforest trees. This work will be done by
the local farming communities living alongside
the GLNP, creating employment for economically
disadvantaged people. These farmers already
have an established co-operative where they will
propagate and grow the trees in the nursery, and
also monitor and patrol the site to prevent hunting
and logging.
More information can be found on the website
rainforestrescue.org.au/ourprojects/save-
arainforest-orangutan.html
Organisation
Project
State
Major Grant $10,000
Rainforest Rescue
Minor Grants $3,000
Rainforest Rescue – Gunung Leuser National
Park, North Sumatra
Queensland
Bonorong Wildlife Santuary
Co-operative Eastern Quoll Breeding Programme
Tasmania
Communities @ Work
Environment Victoria
Yellow Van
Home Planet
Free the Bear Fund
Solar Power for Sun Bears
Greening Australia WA
Transforming the Mortlock North
Gunawirra
Inner Suburbs Nutrition Project
Perth Advocates for the Earth
Planting for Black Cockatoos
ACT
Victoria
Western
Australia
Western
Australia
New South
Wales
Western
Australia
Sea Turtle Foundation
Sea Turtle Field Research & Monitoring Equipment Queensland
The Orangutan Project
Wildlife Protection Units
Western
Australia
Trees for Evelyn & Atherton
Tablelands
Peterson Creek Freeman Revegetation
Queensland
10
Directors’ Particulars
australianethical
André Morony, Chairman
BEc (Hons), MEc
André joined the board of Australian Ethical as a non-executive director in
June 2008 and was appointed Chairman in February 2011. He chairs the
People, Remuneration and Nominations Committee and is a member of the
Investment Committee.
André is a highly regarded and experienced individual within the Government and
finance industry. His career spans over 40 years and started at the Commonwealth Treasury
where he worked in a number of financial policy areas. He also represented Australia for three years at the
Organisation for Economic Cooperation and Development (OECD) in Paris.
After leaving Government in 1986, Andre's roles included Chief Economist and Chief Investment Officer
at Bankers Trust Australia (now BT) and Chief Investment Officer for the Commonwealth Government's
superannuation scheme (ARIA). He currently sits on the investment committee of GESB, the Western
Australian Government employees’ superannuation fund.
Phil Vernon, Managing Director
BEc, MCom, MBA, FCPA, GAICD
Phil joined Australian Ethical as Chief Executive Officer in December 2009
and was appointed Managing Director in July 2010. He is also a director of
Australian Ethical Superannuation.
Phil has 25 years experience in financial services including funds management
and superannuation. Prior to Australian Ethical he was a member of the Executive
Committee of Perpetual Limited heading up the Corporate Trust Division. He has
extensive experience in strategy, people management and leadership, corporate governance and
industry regulation.
Phil's commitment to responsible investment commenced at a time when Perpetual were facing
criticism from the environmental movement for its significant shareholding in Gunns. With relationships
in the environment movement he had a unique insight to both sides of the debate. Phillip furthered his
commitment in the area and is currently a Director of Planet Ark, a not for profit environmental organisation
and RIAA, the Responsible Investment Association Australasia.
1800 021 227 | australianethical.com.au 11
Justine Hickey, Non-Executive Director
BCom, SAFin, GAICD, ASIP
Justine has been an independent non-executive director since March
2007. She chairs the Investment Committee and is a member of the People,
Remuneration and Nominations Committee.
Justine has over 20 years experience as a senior executive in the investment and
funds management industry. Previously she was Head of Equities at Suncorp Investment Management
in Brisbane and a Portfolio Manager at Flemings Investment Management (now JP Morgan) in the UK.
Justine is a director of Rio Tinto Staff Super Fund Pty Ltd and a member of the investment committees of
boutique fund manager, Dalton Nicol Reid and the University of Melbourne.
Justine is the chairman of Evolve Foundation (previously the Youth Enterprise Trust Foundation), whose
mission is to assist disadvantaged young people to transition into a confident and productive adulthood.
She is also a director of RSPCA Queensland, the state's oldest, largest and leading animal welfare charity.
Justine is a member of RIAA, the Responsible Investment Association of Australasia.
Steve Newnham, Executive Director BA, LLB, DFP
Steve joined the board in December 2010 as a non-executive director.
In 2012, he became an executive director, chiefly responsible for sales
and marketing.
Steve has over 20 years experience in the financial industry. He was Head of
Distribution at Zurich Financial Services, chairman of a financial planning dealer
group Financial Lifestyle Solutions, director of a wrap platform and a financial
planning administration business, and Executive Vice President of BT Financial Group.
He was also an early member of the Financial Planning Association Future 2 Foundation awareness and
fund raising committee.
Steve has significant involvement with community and social justice activities, working on homeless
shelter support schemes, indigenous fellowship programs, environmental and drought relief projects and
mental health awareness initiatives. In addition, he has been a member of the Australian Rowing and Surf
Lifesaving teams and spent 15 years as a surf lifesaver.
Stephen Gibbs, Non-Executive Director BEc, MBA
Stephen joined the board in July 2012 as a non-executive director. He is
also on the Audit, Compliance & Risk and the People, Remuneration &
Nominations committees; he has also been appointed as a director of
Australian Ethical Superannuation Pty Limited.
Stephen is a director of Hastings Funds Management and Chair of CAER
(Corporate Analysis Enhanced Responsibility). He was formerly Chair of the
Responsible Investment Academy Advisory Council.
From early 2000 he was CEO of ARIA, the trustee of the PSS and CSS – the superannuation schemes
for federal government employees. When Stephen left ARIA in January 2008 it had close to $A20 billion
under management. Prior to ARIA Stephen was the Executive Officer of the Australian Institute of
Superannuation Trustees (AIST). His earlier career was in the trade union movement.
Other career highlights for Stephen include his personal invitation from the then UN General Secretary
to join the steering committee and investor group which developed what became the United Nations
Principles of Responsible Investment–UNPRI and membership of the ASX Corporate Governance Council
from its inception until 2008.
12
Directors’ Report
The directors of Australian Ethical Investment Limited, the controlling entity, present their report on
the company and its controlled entity for the financial year ended 30 June 2012. In compliance with the
Corporations Act 2001, the directors report as follows:
Directors
The name of each person who was a director during the year ended 30 June 2012 and to the date of this
report is set out in the table below.
Name
Time in office
Term
André Morony
Phillip Vernon
Justine Hickey
Stephen Newnham
Howard Pender
Les Coleman
Louise Herron
Stephen Gibbs
4 years
2 years
5 years
2 years
19 years
3 years
<1 year
<1 year
Full year
Full year
Full year
Appointed 12 December 2011
Ceased 17 November 2011
Ceased 17 November 2011
Appointed 20 February 2012 Ceased 25 July 2012
Appointed 25 July 2012
Directors have been in office since the start of the financial year to the date of this report unless
otherwise stated.
Company secretaries
Review of operations
The name of each person who was a company
secretary of the company as at the end of the
financial year and to the date of this report is set
out in the table below.
Name
Term
Tom May
Full year
Gary Leckie
Ceased 23 May 2012
Principal activities
The principal activity of the controlling entity
during the financial 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 financial year. Other than as described
in this report, there were no significant changes
in the nature of the controlling entity’s activities
during the year.
The consolidated entity, Australian Ethical
(Australian Ethical Investment Limited and its
wholly owned subsidiary, Australian Ethical
Superannuation Pty Ltd), recorded a consolidated
net profit after income tax expense for the year
ending 30 June 2012 of $402,155, a 64% decrease
on the result of the previous financial year; based
on restated 2011 consolidated net profit.
Return on equity for the year is 5.9%, down
from 17.1% in 2010-11. Earnings per share has
decreased 64% to 40.1 cents per share and the
cost to income ratio has increased to 93%. All of
the comparisons in this paragraph are as against
the restated 2011 consolidated net profit.
Further details of business operations are included
in the Chair and Managing Director’s report.
Financial position
At the year end, Australian Ethical’s net assets
are $6,844,431. The company has no debt and
is generating positive returns and cash flow.
1800 021 227 | australianethical.com.au 13
australianethical Dividends
Dividends paid or declared by the company to members since the end of the previous financial year were:
Cents per share
Total amount $
Franked/
unfranked
Date of payment
Declared and paid during the financial year
Final 2011
Special 2011
Interim 2012
Total
100
25
25
Declared after end of year
1,003,035
250,758
250,758
1,504,551
Franked
Franked
Franked
7/10/2011
7/10/2011
After balance sheet date, the directors declared the following dividend:
Final 2012
35
351,062
Franked
7/10/122
2 Planned payment date
Events subsequent to
reporting date
Upfront fees on all products were removed on
1 July 2012. This was done in response to two
new pieces of legislation (Future of Financial
Advice and MySuper) which have combined to
impact fees in a number of ways. In general,
this legislation has led to lower fees and a more
competitive environment and in particular the
abolition of up-front fees. The removal of up-front
fees on all of our products was done in order to
position us for this new environment.
In August 2012 the company entered into a
marketing agreement for the sale of Trevor
Pearcey House; our preference is for a leaseback
arrangement to be entered into following any sale.
This was done following a review of the capital
management policy which also took into account
impending regulatory changes that will require the
company to hold a greater proportion of its assets
as liquid assets.
Other than as outlined in this report, no matters
or circumstances have arisen since the end of
the financial year which have or may significantly
affect the operations of Australian Ethical
Investment Ltd and its controlled entity, the
results of those operations or the state of affairs
of Australian Ethical Investment Ltd in financial
years subsequent to the financial year ended
30 June 2012.
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 financial years has not
been included in this report because disclosure
of the information would be likely to result in
unreasonable prejudice to the consolidated entity.
Directors’ indemnification
The constitution of the controlling entity provides
a general indemnity for officers of the company
against liabilities incurred in that capacity,
including costs and expenses in successfully
defending legal proceedings.
During the financial year, the company paid a
premium to insure the directors (named above),
the company secretary and all officers of the
company and of any related body corporate
against a liability incurred as a director, secretary
or officer to the extent permitted by the
Corporations Act 2001. The contract of insurance
prohibits disclosure of the nature of the liability
and the amount of the premium.
During the year the company entered into or
maintained deeds of indemnity, insurance and
access (Deed) with directors and officers which
provides a general indemnity against liabilities
incurred in that capacity to the extent permitted
by the Corporations Act 2001.
The Deed obligates the company to use its
reasonable endeavours to obtain and maintain
insurance for the benefit of a director or officer
14
of the company and any subsidiary, to the extent
that such coverage is available in the market on
terms which the company reasonably considers
financially prudent and on terms consistent with
the practice of comparable companies operating
in similar markets.
The Deed also provides that the company will pay
on behalf of the director or officer or lend to the
director or officer the amount necessary to pay
the reasonable legal costs incurred by the director
or officer in defending an action for a liability
incurred as a director or officer of the company
or a subsidiary on such terms as the company
reasonably determines. The director or officer
must repay to the company such legal costs if
they become legal costs for which the company
was not permitted by law to indemnify the director
or officer. The company need not pay or provide a
loan to the director or officer to the extent that the
director or officer is actually reimbursed for legal
costs as they fall due under an insurance policy
or otherwise.
The company has not otherwise, during or
since the financial year, indemnified or agreed
to indemnify a director, officer or auditor of
the company or of any related body corporate
against a liability incurred as such director, officer
or auditor.
Director’s meetings
The number of directors’ meetings (including meetings of committees of directors of which not all directors
are members) and number of meetings attended by each of the directors of the controlling entity during
the financial year are set out below.
Director
Board
Investment
People,
remuneration
and nominations
Audit, compliance
and risk
Eligible
Attend Eligible
Attend Eligible
Attend Eligible
Attend
André Morony
Phillip Vernon
Justine Hickey
Stephen Newnham
Howard Pender
Les Coleman
Louise Herron
Stephen Gibbs
Ruth Medd
8
8
8
8
2
3
4
-
-
8
8
8
7
2
3
4
-
-
4
-
4
-
1
-
-
-
-
4
-
4
-
1
-
-
-
-
5
-
5
-
-
-
1
-
-
5
-
5
-
-
-
1
-
-
-
-
-
4
-
6
1
-
6
-
-
-
4
-
6
1
-
6
Directorships held in other listed entities in the last three years
Name
Entity
Period of directorship
Justine Hickey
Hyperion Flagship Investments Limited
4 years
1800 021 227 | australianethical.com.au 15
australianethical Directors’ relevant interests in securities of the company
Parent entity directors
Fully paid ordinary
shares
Share options
Performance rights
2012
2011
2012
2011
André Morony
Phillip Vernon
Justine Hickey
Stephen Newnham
Howard Pender
Les Coleman
Louise Herron
Stephen Gibbs
-
-
-
-
1,200
1,200
-
-
49,852
49,852
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,326
-
-
-
2012
-
2011
-
5,744
2,798
-
-
-
-
-
-
-
-
-
-
-
-
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.
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
Termination
payment
provided
under the
contract
Phillip
Vernon
Stephen
Newnham
David
Macri
Ongoing 12 weeks
Ongoing 12 weeks
Ongoing 12 weeks
Adam Kirk Ongoing 12 weeks
Philip
George
Paul
Smith
Ongoing 12 weeks
Ongoing 4 weeks
None
except for
accrued
leave and
payment
in lieu of
notice.
Rights as at the date of this report
Rights over unissued shares as at the date of this
report are as follows:
Performance
rights reference
Number of rights
on issue
AEFAW
AEFAY
AEFAA
AEFAB
4,010
11,340
13,585
12,578
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.
16
Shares issued upon the exercise of options
4,760 ordinary shares of the company were issued during the year ended 30 June 2012 on the conversion
of performance rights granted under the company’s employee share ownership plan.
No further shares have been issued since that date to the date of this report. No amounts are unpaid on
any of the shares.
Non-director committee members and company secretary particulars
Name
Qualifications Experience
Ruth Medd
BSc
Dip Comp
Science CPA
MAICD
Les Coleman B.Eng.(Hons),
B.Sc.(Hons),
M.Ec., PhD
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 committee. Ruth is currently on the board
of the NFAW Ltd (National Foundation for Australian Women) and
WOB Pty Ltd. 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.
Les is on the Audit, Compliance & Risk committee and is also a director
of Australian Ethical Superannuation Pty Limited. Les has been a
trustee of two superannuation funds, and a director of ten companies
involved in finance, retail and distribution. He has over 20 years
experience in senior operational, planning and finance roles in Australia
and overseas with Anglo American Corporation and ExxonMobil
Corporation. He is currently a member of the investment committee of
United Funds Management (a subsidiary of IOOF Holdings Limited),
and since 2004 has taught in the Finance Department of the University
of Melbourne. His particular research interests are corporate risk and
non-financial indicators of superior firm performance, especially ethics
and sustainability. He is a regular contributor to print and broadcast
media, including four years as a weekly columnist with The Australian
newspaper, and has published several books and numerous articles
and papers.
Philip George BSc LLB ACIS Philip was on the board of Australian Ethical Superannuation Pty
Tom May
BA LLB MBA
Ltd until his resignation on 29 August 2012. 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 firm
Minter Ellison and conducted a commercial legal practice in partnership
for two years.
Tom has experience in the superannuation and distribution aspects of
financial services law. He has been a lawyer since 1990 when he was
a legal officer 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.
1800 021 227 | australianethical.com.au 17
australianethical Remuneration Report 2012
This report sets out the remuneration
arrangements for all key management personnel
(KMP) for the year. KMP is defined under the
Corporations Act 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
information contained in the Remuneration
Report has been audited by the company’s
external auditor and named directors and
executives are key management personnel of
the consolidated entity.
At the 2011 AGM, the Remuneration Report
received 40% of the vote against it. There were
no specific comments at the Meeting criticising
any aspect of the remuneration report. Australian
Ethical Investment has a long history of paying
below market salaries. This includes KMPs, the
Managing Director and Non-executive Directors.
The directors are of the view that the vote received
against the 2011 Remuneration Report was not
about the remuneration of KMP’s, rather, as a
result of misleading information distributed by a
few shareholders.
We therefore encourage shareholders to read
this remuneration report carefully before
deciding on how to vote. A vote of greater than
25% against the 2012 Remuneration Report
will result in the board being subjected to a
spill motion.
Remuneration policy
and structure
Australian Ethical Investment Limited’s
remuneration policy is designed to create a
motivating environment for staff where they
feel appropriately paid and incentivised for
the contribution they make to the performance
of the company.
The remuneration philosophy is consistent with
the principles of the Australian Ethical Charter
and Constitution. In particular:
•
it is designed to ensure that Australian Ethical
facilitates “the development of workers
participation in the ownership and control of
their work organisations and places” (Charter
element (a))
•
•
it is designed so as to not “exploit people
through the payment of low wages or the
provision of poor working conditions” (negative
Charter element (ix))
the incentive structure meets the requirements
of Rule 15.1(c) of the AEI Constitution which
provides that:
– prior to recommending or declaring any
dividend, provision must be made for a
bonus or incentive for staff to be paid
of up to 30 percent (30%) of what the
profit for that year would have been had
not the bonus or incentive payment been
deducted; and
–
these bonuses may be in cash or shares.
This constraint applies only to the Profit
Participation Scheme below. The other
schemes outlined in this document are part
of the remuneration structure.
Principles guiding the design of the remuneration
structure are as follows:
• Pay people fairly for the work that they do
• Build long term ownership in the company
amongst employees
• Reward people according to their contribution
to the company’s performance
• Align shareholder interests and the company’s
capacity to pay
• Attract and retain talented people
• Promote the values of the Charter
i) Non-executive Directors
A review of Non-executive Directors
remuneration is undertaken annually, taking
into account recommendations from the
People, Remuneration and Nominations
Committee. The review includes the positions
of Chairman and Non-executive Directors,
duties undertaken, accountability and market
rates, and has shown that Non-executive
Directors’ remuneration has been consistently
below that of comparative companies.
However, there has been no increase in
remuneration since 2008.
In addition to fixed remuneration, Non-
executive Directors are entitled to be paid
reasonable expenses, remuneration of
additional services and superannuation
18
contributions. They also receive payment for
serving on board committees.
Performance-based remuneration
Non-executive Director remuneration is
not linked to company performance and
they are not eligible to participate in staff
incentive plans.
The company seeks to reward employees for
results and ongoing commitment through the
provision of cash bonus schemes and equity
based schemes as outlined below:
ii) Key Management Personnel
a) Staff Bonus Plan
The board seeks to reward KMP’s through
the same process as all staff, based on
positive contributions and company results.
The remuneration structure for KMP’s is based
on a number of factors including position in
the company, the scope and impact of an
individual’s contribution to the performance
of the company and the achievement of
agreed objectives. All remuneration for KMP’s
is reviewed against market rates for roles
requiring similar skills and experience.
Managing Director and
KMP performance
An annual assessment of the Managing Director
is completed by the Chair and is overseen by the
board, with input from the People, Remuneration
and Nominations Committee. The review
includes a 360 review process, measurement of
performance against agreed KPI’s and company
performance.
The bonus received by the Managing Director
during 2011/12 is shown in Table 1.
Remuneration Elements and relates to the
previous financial year of 2010/2011. This flows
from a formula linking the bonus to year on
year profit changes and reflects an increase
in the results for that previous financial year.
The bonus paid in respect of the financial year
ended 2011/2012 is lower ($22,000) reflecting
the lower profits of this financial year. In addition,
$20,000 was “clawed back” in respect of bonuses
previously paid due to a restatement of previous
year’s financial results (see paragraph below and
Note 27 of the attached financial report).
In turn, the Managing Director is responsible for
reviewing the performance of senior management
and whether performance requirements are
met. Both quantitative and qualitative data is
used to determine whether performance criteria
are achieved.
All permanent staff are eligible to participate
in an annual staff bonus plan. Under the
company’s Constitution, before the directors
recommend or declare a dividend to be paid
out of profits of any one year, they must pay
a bonus to current employees which is:
i) Set by reference to the profit of the
company for that year; and
ii) Can be up to 30% of the company profit.
Historically, all staff across the organisation,
irrespective of position (and including KMP),
received the same bonus paid in cash under
this constitutional provision. In the 2011/12
performance year, employees received a cash
bonus of $5,000 in respect of the 2010/11
financial year. The amount accrued per person
in respect of the 2011/12 financial year is
$3,000 per person. The bonus is pro-rated for
permanent part-time staff and staff who have
not completed a full year with the company.
b) Employee Share Incentive Schemes
Under the employee share incentive scheme
(ESIS), a pool of performance rights which
would, if exercised, amount to less than 5%
per annum of the company’s existing ordinary
share capital, is made available. This scheme
was originally approved by members at the
2008 Annual General Meeting. The ESIS is split
into two categories: general and individual.
The performance rights that have been issued
during the current year are subject to the terms
and conditions of the scheme rules.
i)
Individual Category
The individual ESIS is provided to senior
and eligible investment staff. The number
of performance rights issued is based
on company performance, individual
performance and the achievement of
agreed KPI’s.
Performance rights issued under the
individual category are linked to the
performance of the company’s managed
funds for eligible investment staff.
The following attributes determine whether
1800 021 227 | australianethical.com.au 19
australianethical the performance rights convert into
ordinary shares:
• For all participants in the individual
ESIS, employment must continue until
a specified date.
• For investment staff, the number of
shares issued to each employee in
respect of their performance rights
under this category will be adjusted up
or down by a maximum 20%, depending
on the absolute performance of the
company’s management investment
schemes for which the employee has
responsibility or provides significant
input. The nominated managed
investment scheme is agreed between
the company and the employee and
the performance is measured over the
relevant performance period.
ii) General Category
All permanent employees, including
KMP, participate in the general ESIS.
The number of performance rights issued
to each staff member is based on their
relative remuneration.
Performance rights issued under the
general category have two hurdles. Firstly,
they are subject to a three year employment
condition and secondly, shares will only
be issued in respect of the performance
rights where return on equity meets the
established levels.
The following attributes determine
whether shares will be issued in respect
of the rights:
• Employment must continue until a
specified date.
• The arithmetic average return on equity
(AROE) must exceed 15% per annum or
no shares shall be awarded at the end of
the performance period.
•
•
If the AROE exceeds 15% per annum
but is less than 20% per annum, half
the maximum number of shares shall
be awarded.
If the AROE is equal to or greater than
20% per annum the maximum number
of shares shall be awarded.
• AROE is determined as the arithmetic
average of return on equity over each six
month period calculated using audited
half-year financial statements.
• The performance is measured over a
rolling three year period.
c) Individual Bonuses
During the reporting year, five KMP’s were
paid ‘at risk’ components as part of their
remuneration. The general split of ‘at risk’
components is as follows:
• 50% company results
• 50% personal objectives
Performance criteria were used to determine the
amount of the payments and the payments are
shown in the following tables.
Proposed changes to
remuneration structure from
July 2012
A review of the company’s remuneration structure
was conducted in 2011/12 covering:
• Better alignment of incentive programs with
the company’s capacity to pay
• Better alignment of individual and company
performance to short term incentive plans
• Aligning payment more closely to the relevant
performance year
• The balance of reward options including cash
and performance rights
• Market based long term incentive structures
• The capacity to issue additional long term
incentives to key staff
• Reducing retention risk through the provision
of market-based incentive programs for
identified staff
The changes are aimed at strengthening the
alignment of performance-based remuneration to
shareholders’ interests and AEI’s strategic plan.
20
Conditions of Employment
a) Employment Contracts
Hedging policy
Directors and executives participating in the
company’s equity-based plans are prohibited from
entering into any transaction which would have
the effect of hedging or otherwise transferring
to any other person the risk of any fluctuation
in the value of any unvested entitlement in the
company’s securities.
TABLE 1: REMUNERATION ELEMENTS
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 performance
rights during the financial year.
Non-executive directors receive their total
remuneration as cash or superannuation
contributions. No element is dependent
on performance.
All KMP’s have formal contracts of
employment and are permanent employees
of Australian Ethical Investment Ltd. None
of the contracts contain a pre-determined
duration of employment or a termination
date. The contracts for service between the
company and KMP’s are on a continuing basis;
no changes to the contractual arrangements
are expected in the immediate future.
b) Consultancy Agreements
The company also commenced a consultancy
agreement with Morse Consulting Pty Limited
for the provision of management services to
the company’s finance team. The agreement
commenced on 28 November 2011 and is due
for review on 20 August 2012. The agreement
may be terminated subject to a notice
period of two weeks. Costs incurred amount
to $191,800.
c) Special Exertions
The board approved a ‘special exertion’ with
a rate variation to Ms Louise Herron, for the
provision of additional work for the company.
The agreement commenced on 4 May 2012
for a two month period, concluding on 25 July
2012. Costs incurred are included in Table 1:
Remuneration Elements.
1800 021 227 | australianethical.com.au 21
australianethical Name
Directors
Position
Andre Morony**
Non-executive Director, Chairman
Non-executive Director
Term
Full Year
Phillip Vernon*
Executive Director, Managing Director
Full Year
Justine Hickey
Non-executive Director
Full Year
Steve Newnham*** Non-executive Director
Howard Pender
Executive Director
Non-executive Director
Executive Director
Until 12 December 2011
Employment commenced 12 December 2011
Retired 17 November 2011
Employment ended 1 July 2011
Les Coleman
Non-executive Director
Directorship ended 17 November 2011
Ruth Medd
Chairman, Australian Ethical Superannuation
Full Year
Louise Herron
Non-executive Director
Appointed 20 February 2012
Resigned 25 July 2012
Naomi Edwards
James Thier****
Non-executive Director, Chairman
Resigned 23 March 2011
Executive Director
Steve Gibbs
Non-executive Director
Current Executives
Retired 17 November 2010
Appointed 25 July 2012
David Macri*
Chief Investment Officer
Appointed 13 February 2012
161,798
5,000
16,144
4,492
60,151
Adam Kirk
General Manager, Business Development
Employment commenced 9 August 2011
Philip George*
General Manager, Program Office
Full Year
Paul Smith
General Manager, Strategy & Marketing
Employment commenced 8 July 2011
Past Executives
James Jordan*
Chief Investment Officer
Employment ended 28 March 2012
Gary Leckie*
Chief Financial Officer
Employment ended 23 May 2012
Tim Xirakis
Head of Client Relationships
Employment ended 8 August 2011
Paul Harding Davis
Head of Distribution
Employment ended 5 January 2011
101,316
10,250
11,502
-9,812
57,459
170,715
The five highest paid KMP's for the year ended 30 June 2012.
*
** The increase in Andre Morony's fees reflects his appointment as Chairman of the board in March 2011
*** Stephen Newnham became an employee of the company in December 2011
**** James Thier was not a KMP in 2011/12
22
SHORT TERM
BENEFITS
POST
EMPLOYMENT
LONG
TERM
BENEFITS
BENEFITS
EQUITY
Salary, fees
and Leave
STI
Superannuation
Leave
Payments
$
$
$
$
$
Termination
Benefits
$
Long
Service
Settled
Share-
based
5,751
5,483
52,870
40,316
2,668
-702
11,251
136,834
11,960
3,915
2,729
30,288
23,429
2,565
2,578
12,645
1,193
6,263
12,189
2,228
2,352
2,790
2,804
901
4,273
-88
12,221
14,440
3,477
11,196
92,681
Year
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
43,361
30,259
269,032
272,330
28,409
28,593
150,176
13,234
16,382
135,444
24,671
26,084
30,901
31,101
23,324
47,410
15,304
122,525
191,950
189,576
196,182
158,424
175,501
256,524
176,446
204,509
17,724
181,756
67,500
2,251
2,978
12,937
4,000
41,684
3,259
19,168
4,000
13,138
4,000
16,296
3,774
18,982
17,797
13,626
5,879
5,680
3,244
25,466
16,006
20,533
23,285
17,991
18,244
5,538
16,191
7,014
6,143
3,615
-8,277
-796
5,129
15,327
16,380
12,823
15,958
84,694
Total
$
47,276
32,988
425,441
343,809
30,974
31,171
165,489
14,427
158,777
173,822
26,898
28,436
33,691
33,905
24,224
51,683
110,327
163,859
247,585
212,020
252,840
239,665
175,294
244,732
304,538
217,220
234,856
133,121
223,034
Name
Directors
Position
Andre Morony**
Non-executive Director, Chairman
Non-executive Director
Term
Full Year
Phillip Vernon*
Executive Director, Managing Director
Full Year
Justine Hickey
Non-executive Director
Full Year
Steve Newnham*** Non-executive Director
Until 12 December 2011
Executive Director
Employment commenced 12 December 2011
Howard Pender
Non-executive Director
Executive Director
Retired 17 November 2011
Employment ended 1 July 2011
Les Coleman
Non-executive Director
Directorship ended 17 November 2011
Ruth Medd
Chairman, Australian Ethical Superannuation
Full Year
Louise Herron
Non-executive Director
Appointed 20 February 2012
Resigned 25 July 2012
Non-executive Director, Chairman
Resigned 23 March 2011
Naomi Edwards
James Thier****
Executive Director
Steve Gibbs
Non-executive Director
Current Executives
Retired 17 November 2010
Appointed 25 July 2012
David Macri*
Chief Investment Officer
Appointed 13 February 2012
Adam Kirk
General Manager, Business Development
Employment commenced 9 August 2011
Philip George*
General Manager, Program Office
Full Year
Paul Smith
General Manager, Strategy & Marketing
Employment commenced 8 July 2011
Past Executives
James Jordan*
Chief Investment Officer
Employment ended 28 March 2012
Gary Leckie*
Chief Financial Officer
Employment ended 23 May 2012
Tim Xirakis
Head of Client Relationships
Employment ended 8 August 2011
Paul Harding Davis
Head of Distribution
Employment ended 5 January 2011
*
The five highest paid KMP's for the year ended 30 June 2012.
** The increase in Andre Morony's fees reflects his appointment as Chairman of the board in March 2011
*** Stephen Newnham became an employee of the company in December 2011
**** James Thier was not a KMP in 2011/12
SHORT TERM
BENEFITS
POST
EMPLOYMENT
BENEFITS
LONG
TERM
BENEFITS
Salary, fees
and Leave
$
STI
$
Superannuation
$
Long
Service
Leave
$
EQUITY
Settled
Share-
based
Payments
$
Termination
Benefits
$
43,361
30,259
269,032
272,330
28,409
28,593
150,176
13,234
16,382
135,444
24,671
26,084
30,901
31,101
23,324
47,410
15,304
122,525
67,500
2,251
2,978
14,440
3,915
2,729
30,288
23,429
2,565
2,578
12,645
1,193
6,263
12,189
2,228
2,352
2,790
2,804
901
4,273
-88
12,221
5,751
5,483
52,870
40,316
2,668
-702
11,251
136,834
11,960
3,477
11,196
92,681
161,798
5,000
16,144
4,492
60,151
191,950
189,576
196,182
158,424
175,501
256,524
176,446
204,509
17,724
181,756
12,937
4,000
41,684
3,259
19,168
4,000
13,138
4,000
16,296
3,774
18,982
17,797
13,626
5,879
5,680
3,244
25,466
16,006
20,533
23,285
17,991
18,244
5,538
16,191
7,014
6,143
3,615
-8,277
-796
5,129
15,327
16,380
12,823
15,958
84,694
Total
$
47,276
32,988
425,441
343,809
30,974
31,171
165,489
14,427
158,777
173,822
26,898
28,436
33,691
33,905
24,224
51,683
110,327
163,859
247,585
212,020
252,840
239,665
175,294
244,732
304,538
217,220
234,856
133,121
223,034
101,316
10,250
11,502
-9,812
57,459
170,715
Year
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
1800 021 227 | australianethical.com.au 23
australianethical
Equity based remuneration consisting of rights
under the company’s employee share incentive
scheme are provided above and in Note 25 of the
attached financial report.
Restatement of 2010/11 financial
statements
The 2010/11 financial statements were restated
due to a change in accounting policy resulting in
a reduction in net profit after tax by $157,502; this
is explained more fully in Note 27 of the attached
financial report. The People, Remuneration
and Nominations Committee determined that
a portion of the bonus issued to Mr Phillip
Vernon for the 2010/11 year would be reversed
($20,000) as a result of the restatement. The
committee determined that there would be no
further claw-back of bonuses paid as a result of
the restatement.
TABLE 2: REMUNERATION RECEIVED
The following table sets out the actual
remuneration received by executives at Australian
Ethical Investment including cash paid and the
value of equity vested.
Elements of remuneration
related to performance
Elements of remuneration
not related to performance
Non salary
cash based
incentives
%
Shares
%
Rights/
Options
%
Fixed Salary/
Fees
%
Total
%
Name
Directors
Andre Morony
Phillip Vernon
Justine Hickey
Steve Newnham
Howard Pender
Les Coleman
Louise Herron
Current Executives
David Macri
Adam Kirk
Philip George
Paul Smith
0
15
0
0
0
0
0
0
0
3
0
Executives who left during the year
James Jordan
Gary Leckie
Tim Xirakis
15
7
27
This directors’ report, incorporating the
remuneration report, is signed in accordance with
a resolution of the board of directors.
André Morony
Chairman
Dated: 27 September 2012
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
12
0
0
0
0
0
24
0
10
0
0
0
26
100
73
100
100
100
100
100
76
100
87
100
85
93
47
100
100
100
100
100
100
100
100
100
100
100
100
100
100
24
Corporate Governance
Statement 2012
Australian Ethical Investment
Limited & Controlled Entity
This statement has been prepared under the
ASX Corporate Governance Principles and
Recommendations with 2010 Amendments (2nd
edition) (“Principles and Recommendations”)
and discloses the extent to which Australian
Ethical Investment Ltd (“company”) has followed
the Principles and Recommendations during the
reporting period.
This statement will be posted to the corporate
governance section of the company’s website.
Principle 1 – lay solid foundations
for management and oversight
The company has formalised the functions
reserved to the board and those delegated
to management.
Board responsibilities
The board is directly responsible for the
following activities.
• Setting the strategic direction of
Australian Ethical
• Annual appraisal of the board
• Approval of board committee fees
• Approval of the issue of shares and options
• Approval of significant changes to unit trust
fees, including discount programs
• Approval of significant changes to products or
product offerings
• Approval of the constitutional bonus and
tithe amounts
• Approval of the terms and conditions for any
employee share ownership scheme, or if
shareholder approval is required, approval of
recommendations to shareholders
• Approval of employee performance based
remuneration programs
• Approval of dividend payments and any DRP
• Authorisation of the issue of the Trust PDS
• Approval of risk management and
compliance programs
• Approval of significant company policies
• Approval of indemnity, crime, director and
officer and similar insurance programs
• Protection and promotion of the Australian
Ethical Charter
The following general delegations are also
in place.
The Chair of the board – is delegated with
all necessary authority to carry out the
following functions:
• Recommendation to shareholders on the
aggregate level of directors’ fees
Inside the boardroom
• 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
• Acceptance and sign-off of the annual
audited accounts and directors’ report for
the Australian Ethical group
• Acting as the link between the board and the
company when the CEO is unable to perform
this role;
• Establishing and maintaining an effective
working relationship with the CEO;
• Setting the tone for the board, including the
establishment of a common purpose;
• Chairing board meetings efficiently and
shaping the agenda in relation to goals,
strategy, budget and executive performance;
• Work with the company Secretary and CEO
to ensure that appropriate information is
presented to the board;
1800 021 227 | australianethical.com.au 25
australianethical • Ensuring contributions by all board
members and reaching consensus when
making decisions;
• Approval and maintenance of
Employee Authorisations;
• Employment, termination and suspension
• Motivating board members and where
of staff;
appropriate dealing with underperformance;
• Oversee the process for appraising board
members individually and the board as
a whole;
• Overseeing conducting and finalising
negotiations for the CEO’s employment and
evaluating the CEO’s performance;
• Assisting with the selection of board
committee members.
Outside the boardroom
• Communicating with shareholders on matters
of corporate governance;
• Chairing shareholder meetings – annual
and extraordinary general meetings (AGMs
and EGMs);
• Ensuring compliance with ASX Listing Rules
and continuous disclosure requirements;
• Speaking with large investors;
•
In conjunction with the CEO, communicating
board views to staff.
Board committees – are delegated with all
necessary authority to carry out their functions as
set out in board committee charters.
The CEO – is delegated with all necessary
authority to run Australian Ethical on an ongoing,
day to day basis other than those responsibilities
reserved to the board and delegations (general
or specific) made by the board to the Chair,
board committees, directors or other senior
executives. Specifically the CEO is delegated with
responsibility and authority for the following:
•
•
Implementing the strategic direction set by
the board;
Implementing the risk management and
compliance programs approved by the board;
• Approval and maintenance of Expenditure and
Payment Guidelines;
• Employee remuneration;
• Employee policies and procedures.
The above responsibilities and delegations are
made public through the publication of this
statement and its inclusion in the corporate
governance section of the company’s website.
Evaluating the performance of
senior executives
Executive performance is evaluated in accordance
with the company’s annual performance review
guidelines. The Chair conducts the CEO’s
performance review. The CEO conducts the
performance reviews of other senior executives.
In relation to senior executives the CEO completes
a draft performance review and discusses it with
the relevant executive. The discussion also covers:
• objectives for the coming year, aspirations and
areas for improvement;
•
the executives competencies and qualifications
to ensure they remain applicable. If not, a
training program is developed to bring the
executive to the appropriate level; and
• where remuneration is subject to performance
hurdles, the achievement of those hurdles is
reviewed and the amount of any performance
based remuneration is determined.
In relation to the CEO, the process is for the Chair
to solicit feedback from the senior management
team, conduct the review and 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 CEO and senior executives
was undertaken in the financial year in accordance
with the processes described above.
26
Principle 2–structure the
board to add value
Independent directors
A director is an independent director if they are
not a member of management (a non-executive
director) and who:
•
is not a substantial shareholder (as defined
in the Corporations Act) or an officer of,
or otherwise associated directly with, a
substantial shareholder of the company;
• has not within the last three years been
employed in an executive capacity by the
company or another group member, or
been a director after ceasing to hold any
such employment;
• within the last three years has not been
a principal or employee of a material
professional adviser or a material consultant
to the company or another group member,
or an employee materially associated with the
service provided;
•
is not a material supplier or customer of the
company or other group member, or an officer
of or otherwise associated directly or indirectly
with a material supplier or customer;
• has no material contractual relationship with
the company or another group member other
than as a director of the company;
• has not served on the board for a period which
could, or could reasonably be perceived to,
materially interfere with the director’s ability to
act in the best interests of the company;
•
is free from any interest and any business
or other relationship which could, or could
reasonably be perceived to, materially interfere
with the director’s ability to act in the best
interests of the company.
The list reflects the relationships set out in the
Principles and Recommendations.
Unless there are specific qualitative factors
relevant to the relationship, the board is generally
of the view that a quantitative materiality threshold
arises at 10% of the relevant amount – considered
from both the company’s perspective and that of
the other party.
The classification of directors who held office during or since the end of the financial year is set out below.
Director
Status
André Morony (Chair)
Justine Hickey
Phillip Vernon
Stephen Newnham
Stephen Gibbs
Louise Herron
Independent
non-executive director
Independent
non-executive director
Non independent
executive director
Non independent
executive director
Non independent
non-executive director
Independent
non-executive director
Steve was a non-executive director at the start of the
period; he commenced employment with the company
on 12 December 2011
Steve was appointed on 25 July 2012.
Louise was appointed on 20 February 2012 and
resigned on 25 July 2012 to take up her appointment
as Sydney Opera House CEO.
Les Coleman
Non independent
non-executive director
Directorship ended at the conclusion of the AGM held
on 17 November 2011.
Howard Pender
Non independent
Executive Director
Directorship ended at the conclusion of the AGM held
on 17 November 2011.
1800 021 227 | australianethical.com.au 27
australianethical On 1 July 2011 the board was evenly balanced
between independent and non independent
directors. Following the AGM on 17 November
2011 there were more independent directors than
non independent directors. Over the course of the
year a further independent director, Louise Herron,
was appointed. On 30 June 2012 the board
comprised of three independent non-executive
directors and two executive directors.
Steve Gibbs was appointed after the end of
the period. Steve is the Chair of the Centre for
Australian Ethical Research Pty Ltd which is a
major supplier of ethical research services to the
company. Consequently, because Steve is an
officer of a material supplier, he is classified as a
non independent director.
Over time the board has moved from one
dominated by executives to one more consistent
with the ASX guidelines. The board’s approach is
to keep moving in this direction as it represents
best corporate governance and alignment with the
Australian Ethical Charter.
Independent legal and other
professional advice
Subject to the qualifications below director’s
have a right to seek independent legal and other
professional advice at the company’s expense
on any aspect of the company's operations or
undertakings in order to fulfil their duties and
responsibilities as directors. The right of directors
to seek independent legal and other professional
advice at the company’s expense is subject to
them complying with the following requirements:
• They must have the prior approval of the Chair
to seek the specific independent legal and
other professional advice;
• They must ensure that the costs are
reasonable; and
• Any advice received must be made available to
the rest of the board unless either the Chair or
the board agree that the rest of the board does
not need to see the advice.
Chair of the board
André Morony, the Chair during the reporting
period, is considered an independent director.
Nomination Committee
The board has a People, Remuneration and
Nominations Committee. André Morony and
Justine Hickey were the members of the
Committee at the commencement of the
reporting period. Louise Herron was appointed on
22 February 2012. (Following Louise’s resignation
on 25 July 2012 the Committee is once again
comprised of André Morony and Justine Hickey.)
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 feedback from the senior
management team.
A questionnaire concerning board and individual
performance is completed by each director and
the results collected by the Chair. The board as a
whole then considers and discusses the results of
the questionnaire at a board meeting. The 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.
An assessment in accordance with the above
process was undertaken in the relevant period.
Director skills and experience
The time in office, skills, experience and expertise
of each director in office as at the date of this
report is included in the directors’ report.
Selection and appointment of directors and re-
appointment of incumbents
The People, Remuneration and Nominations
Committee has the following responsibilities:
• 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, diversity,
experience and expertise is maintained;
• make recommendations to the board relating
to the appointment and retirement of directors.
The People, Remuneration and Nominations
Committee considers the above responsibilities,
the current board composition, any nominations
or suggestions for directorship and the
assessment of incumbent directors when making
recommendations to the board on composition
on an annual basis. A review of the board
Competency Matrix and training requirements was
undertaken during the period.
28
Principle 3–promote ethical and
responsible decision making
The company is an ethical investment company
that manages money in accordance with the
Australian Ethical Charter. The Charter is in the
company’s constitution and informs all aspects of
the company’s operations. The Charter is available
on the company’s website.
• 75% of either gender up to 31 December 2016;
or
• 60% of either gender after 31 December 2016.
As at 30 June 2012, 40% of the board and 11% of
AEI’s Management were female.
Principle 4–safeguard integrity in
financial reporting
Code of conduct
The company has a code of conduct that applies
to directors and staff. It is available on the
company’s website.
Share trading
The company has a share trading policy that
applies to directors and staff. It was released to
the ASX on 22 December 2010 and is available on
the company’s website.
Diversity
The company has a diversity policy that includes
measurable objectives for achieving gender
diversity and requires annual assessment
against the objectives and progress in achieving
them. In November 2011, the board of directors
approved a Diversity Policy that includes
objectives for achieving gender diversity.
The Diversity Policy States:
“AEI’s board of directors will establish measurable
objectives for achieving gender diversity in the
workplace and will undertake a review of progress
against these objectives annually.”
The following Gender Diversity Targets have
been adopted:
Target Date
Target
30 June 2013
• 25% of the AEI board will
be female
• 25% of Management at AEI
will be female
31 December
2016
• 40% of the AEI board will be
female
• 40% of Management at AEI
will be female
While this policy is aimed at increasing female
representation at no time will AEI have more than:
Audit Committee
Throughout the period, the board had an Audit
Committee consisting of three members being
one external member (Ruth Medd, Chair of the
Audit Committee and also independent Chair
of the company’s subsidiary, Australian Ethical
Superannuation Pty Ltd) and two independent
non-executive directors.
In relation to the non-executive directors on
the Audit Committee: Steve Newnham left the
Committee after he became an employee; Steve
was replaced by Louise Herron who was on the
Committee from 22 February 2012 to the end of
the period. The other one non-executive director
throughout the period was Les Coleman.
The qualifications of those appointed to the Audit
Committee are provided in the directors’ report, as
are the number of meetings of the committee and
attendances at those meetings.
A summary of the Audit Committee’s Charter is on
the company’s website.
As the Audit Committee consists of two non-
executive directors of the company and one
external member, Ruth Medd who is not a director
of the company, it does not strictly speaking
comply with recommendation 4.2 “consists solely
of non-executive directors”. However, the board is
of the view that notwithstanding this the structure
of the Audit Committee is consistent with the spirit
of the recommendations and the Committee is
able to perform its functions with independence
and diligence. In particular it is noted that:
•
the Audit Committee is comprised only of non-
executives, is chaired by an independent chair
who is not the Chair of the board and has three
members;
• at a number of meetings the Audit Committee
speaks directly to the external auditor in the
absence of executive management.
The Audit Committee considers the performance
and independence of the external auditor over
the course of a reporting period. In selecting an
1800 021 227 | australianethical.com.au 29
australianethical external auditor the board seeks competence,
industry experience, integrity and independence.
In normal circumstances, appointment of the
external auditor will typically continue for a
significant number of years. Rotation of external
audit engagement partners occurs 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 a 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 corporate activities,
including company announcements;
the website also provides shareholders with
guidance on a range of issues concerning the
management of their shareholdings;
• a facility is available to shareholders to be
advised via e-mail when announcements
are made;
•
the company has a regular sequence of
communication points with investors and
members including a newsletter, Aim High,
for trust and superannuation investors;
• since listing the company has also produced
a shareholder newsletter;
•
the board recently resolved to hold AGM’s in
various locations to promote participation and
dissemination of information to all shareholders
not just those based in Canberra;
•
the company also produces a sustainability
report using Global Reporting Initiative
guidelines. The sustainability report is available
on the company’s website; and
•
the company complies with the corporate
governance guidelines for notices of meeting.
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 its 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 as to the effectiveness of the entity’s
management of its material business risks.
The CEO and risk management officer certify
to the board that its internal control and risk
management systems are operating efficiently
and effectively throughout the group.
CEO and CFO sign-off of financial reports
The company requires the CEO and the CFO
to state in writing to the board that the financial
reports present a true and fair view, in all material
respects, of the company’s financial condition
and operating results and are in accordance with
relevant accounting standards.
The CEO and CFO certify to the board that the
integrity of the financial 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
financial reporting risks.
30
Principle 8–remunerate fairly
and responsibly
People, Remuneration and
Nominations Committee
The board has a People, Remuneration and
Nominations Committee. The members of the
Committee at the commencement of the relevant
period were André Morony and Justine Hickey.
Louise Herron was appointed to this Committee
on 22 February 2012; her membership ended on
25 July 2012 when she resigned from the board.
Steve Gibbs was appointed in her place. Details
of attendance at meetings of the committee are
provided in the directors’ report. The Committee’s
Charter is available in the corporate governance
section of the company’s website.
Details of remuneration
Details of remuneration paid to directors and
key management personnel during the reporting
period are 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 superannuation
contributions. They do not participate in bonus
or equity schemes designed for the remuneration
of executives.
1800 021 227 | australianethical.com.au 31
australianethical Auditor’s Independence
Declaration
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF AUSTRALIAN ETHICAL
INVESTMENT LIMITED
ABN: 47 003 188 930
Report on The Financial Report
We have audited the accompanying financial report of Australian Ethical Investment Limited,
which comprises the statement of financial position as at 30 June 2012, and the statement of
comprehensive income, statement of changes in equity and statement of cash flows for the
year then ended, notes comprising a summary of significant accounting policies, other
explanatory information and the directors' declaration of the company and the consolidated
entity comprising the company and the entity it controlled at the year- end or from time to
time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary
to enable the preparation of the financial report that is free from material misstatement,
whether due to fraud or error. In Note 1 the directors also state, in accordance with
Accounting Standard AASB 101: Presentation of Financial Statements, that the financial
statements comply 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. Those Standards
require that we comply with relevant ethical requirements relating to audit engagements and
plan and perform the audit to obtain reasonable assurance whether the financial report is
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation of the financial report that gives
and true and fair view 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.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
32
Opinion
In our opinion:
(a) the financial report of Australian Ethical Investment Limited is in accordance with the
Corporations Act 2001; including:
(i)
(ii)
giving a true and fair view of the Company’s and Consolidated Entity’s
financial position as at 30 June 2012 and of their performance for the year
ended on that date; and
complying with Australian Accounting Standards and the Corporations
Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as
disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages to of the directors’ report for
the year ended 30 June 2012. 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.
Opinion
In our opinion, the Remuneration Report of Australian Ethical Investment Limited for the year
ended 30 June 2012, complies with Section 300A of the Corporations Act 2001.
THOMAS DAVIS & CO.
J G RYAN PARTNER
Chartered Accountants
SYDNEY,
27 September 2012
Liability limited by a scheme approved under Professional Standards Legislation.
1800 021 227 | australianethical.com.au 33
australianethical
Financial Statements
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Statement of financial position
as at 30 June 2012
Notes
Consolidated entity
Parent entity
2012
$
2011
Restated*
$
2012
$
2011
Restated*
$
7
8
9
13
10
11
12
9
13
14
15
16
15
16
2,309,587
1,715,999
350,412
19,156
173,598
2,554,689
3,245,297
496,423
-
232,306
2,102,684
1,073,168
350,412
46,554
142,323
2,298,126
2,698,177
496,423
-
189,988
4,568,752
6,528,715
3,715,141
5,682,714
3,621,747
17,746
33,757
396,685
4,040,747
45,355
61,820
607,503
3,621,747
17,745
349,757
395,170
4,040,747
45,355
377,820
606,108
4,069,935
4,755,425
4,384,419
5,070,030
8,638,687
11,284,140
8,099,560
10,752,744
1,538,173
-
283,589
2,587,710
443,545
533,024
1,123,761
-
283,589
2,339,705
443,545
533,024
1,821,762
3,564,279
1,407,350
3,316,274
35,087
74,117
34,926
56,123
35,087
74,117
34,926
56,123
109,204
91,049
109,204
91,049
1,930,966
3,655,328
1,516,554
3,407,323
6,707,721
7,628,812
6,583,006
7,345,421
17
6,038,301
302,071
367,349
5,915,219
1,131,904
581,689
6,038,301
302,071
242,634
5,915,219
1,131,904
298,298
6,707,721
7,628,812
6,583,006
7,345,421
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
*see note 27
The accompanying notes form part of these financial statements
16
34
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Statement of comprehensive income
for the year ended 30 June 2012
Notes
Consolidated entity
Parent entity
2012
$
2011
Restated*
$
2012
$
2011
Restated*
$
Revenue
3
14,792,790
15,744,031
12,642,119
14,928,938
Commissions paid to advisers
( 146,750)
( 175,660)
( 8,481)
( 15,048)
External services
( 3,469,806)
( 3,024,619)
( 1,701,853)
( 1,318,507)
Employee benefits expense
( 6,753,962)
( 7,628,517)
( 6,727,978)
( 7,611,134)
Depreciation
Occupancy costs
Communication costs
Other expenses
( 426,395)
( 421,258)
( 426,395)
( 421,258)
( 276,680)
( 271,218)
( 276,680)
( 262,184)
( 729,448)
( 748,853)
( 708,888)
( 747,597)
( 2,003,796)
( 1,531,231)
( 1,738,669)
( 1,440,464)
Impairment charge on building
11
( 210,000)
-
( 210,000)
-
Profit before community grants and income tax expense
775,953
1,942,675
843,175
3,112,746
Community grants expense
1 (h)
( 53,327)
( 152,802)
( 53,327)
( 152,802)
Profit before income tax
722,626
1,789,873
789,848
2,959,944
Income tax expense
Profit for the year
Other comprehensive income
4
( 320,471)
( 664,842)
( 229,015)
( 516,024)
402,155
1,125,031
560,833
2,443,920
Net gain/(loss) on revaluation of available-for-sale
investments
Other comprehensive income for the period, net of tax
( 50,172)
( 50,172)
( 26,580)
( 26,580)
( 50,172)
( 50,172)
( 26,580)
( 26,580)
Total comprehensive income for the period
351,983
1,098,451
510,661
2,417,340
Profit attributable to members of the parent entity
402,155
1,125,031
560,833
2,443,920
Total comprehensive income attributable to
members of the parent entity
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
*see note 27 and note 3
351,983
1,098,451
510,661
2,417,340
6
6
40.1
39.4
113.0
112.2
The accompanying notes form part of these financial statements
17
1800 021 227 | australianethical.com.au 35
australianethical
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Consolidated entity
Statement of changes in equity
for year ended 30 June 2012
Balance at 1 July 2010
Profit attributable to members of the group
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 2011
Net effect of a correction of an error:
Share-based payment expense
Note
Issued capital
ordinary
$
5,791,147
-
-
-
124,072
-
-
5,915,219
17
5
Asset
revaluation
reserve
$
Share-based
payment
reserve
$
( 40,677)
-
( 26,580)
( 26,580)
909,826
-
-
-
Retained
earnings
$
1,395,432
1,282,533
-
1,282,533
Total
$
8,055,728
1,282,533
( 26,580)
1,255,953
-
-
-
( 67,257)
( 124,072)
-
255,905
1,041,659
-
( 1,938,772)
-
739,191
-
( 1,938,772)
255,905
7,628,812
-
-
157,502
( 157,502)
-
Restated balance at 30 June 2011
5,915,219
( 67,257)
1,199,161
581,689
7,628,812
Balance at 1 July 2011
Profit attributable to members of the group
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
Transfer from share-based payments reserve to
retained earnings
Share-based payment expense
Balance at 30 June 2012
Parent entity
Balance at 1 July 2010
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 2011
Net effect of a correction of an error:
Share-based payment expense
5,915,219
-
-
-
( 67,257)
-
( 50,172)
( 50,172)
1,199,161
-
-
-
581,689
402,155
-
402,155
7,628,812
402,155
( 50,172)
351,983
17
5
123,082
-
-
-
( 123,082)
-
-
( 1,504,553)
-
( 1,504,553)
-
6,038,301
-
( 117,429)
( 888,057)
231,478
419,500
888,057
-
367,349
-
231,478
6,707,721
Note
Issued capital
y
ordinary
$
Asset
revaluation
reserve
$
Share-based
payment
reserve
$
Retained
earnings
$
g
Total
$
5,791,147
-
-
-
( 40,677)
-
( 26,580)
( 26,580)
909,826
-
-
-
( 206,850)
2,601,422
-
2,601,422
6,453,446
2,601,422
( 26,580)
2,574,843
17
5
124,072
-
-
5,915,219
-
-
-
( 67,257)
( 124,072)
-
255,905
1,041,659
-
( 1,938,772)
-
455,800
-
( 1,938,772)
255,905
7,345,421
-
-
157,502
( 157,502)
-
Restated balance at 30 June 2011
5,915,219
( 67,257)
1,199,161
298,298
7,345,421
Balance at 1 July 2011
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
Transfer from share-based payments reserve to
retained earnings
Share-based payment expense
Balance at 30 June 2012
5,915,219
-
-
-
( 67,257)
-
( 50,172)
( 50,172)
1,199,161
-
-
-
298,298
560,833
-
560,833
7,345,421
560,833
( 50,172)
510,661
17
5
123,082
-
-
-
( 123,082)
-
-
( 1,504,553)
-
( 1,504,553)
-
6,038,301
-
( 117,429)
( 888,057)
231,478
419,500
888,057
-
242,634
-
231,478
6,583,006
The accompanying notes form part of these financial statements.
18
36
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Consolidated entity
Statement of changes in equity
for year ended 30 June 2012
Restated balance at 30 June 2011
5,915,219
( 67,257)
1,199,161
581,689
7,628,812
Balance at 1 July 2010
Profit attributable to members of the group
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 2011
Net effect of a correction of an error:
Share-based payment expense
Balance at 1 July 2011
Profit attributable to members of the group
Other comprehensive income for the period
Total comprehensive income for the period
Transactions with owners in their capacity as
Transfer from share-based payments reserve to
owners:
Shares issued during the period
Dividends paid or provided for
retained earnings
Share-based payment expense
Balance at 30 June 2012
Parent entity
Balance at 1 July 2010
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 2011
Net effect of a correction of an error:
Share-based payment expense
Balance at 1 July 2011
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
retained earnings
Share-based payment expense
Balance at 30 June 2012
Transfer from share-based payments reserve to
Asset
Share-based
Issued capital
revaluation
Note
ordinary
reserve
$
$
payment
reserve
$
5,791,147
( 40,677)
909,826
( 26,580)
( 26,580)
Retained
earnings
$
1,395,432
1,282,533
Total
$
8,055,728
1,282,533
( 26,580)
1,282,533
1,255,953
17
5
124,072
( 124,072)
255,905
-
( 1,938,772)
( 1,938,772)
255,905
5,915,219
( 67,257)
1,041,659
739,191
7,628,812
157,502
( 157,502)
5,915,219
( 67,257)
1,199,161
( 50,172)
( 50,172)
581,689
402,155
402,155
7,628,812
402,155
( 50,172)
351,983
17
5
123,082
( 123,082)
-
( 1,504,553)
( 1,504,553)
6,038,301
( 117,429)
367,349
6,707,721
( 888,057)
888,057
231,478
419,500
231,478
Asset
Share-based
Issued capital
revaluation
Note
ordinary
y
reserve
$
$
payment
reserve
$
Retained
earnings
g
$
Total
$
5,791,147
( 40,677)
909,826
( 206,850)
6,453,446
( 26,580)
( 26,580)
2,601,422
2,601,422
( 26,580)
2,601,422
2,574,843
17
5
124,072
( 124,072)
255,905
-
( 1,938,772)
( 1,938,772)
255,905
5,915,219
( 67,257)
1,041,659
455,800
7,345,421
157,502
( 157,502)
5,915,219
( 67,257)
1,199,161
( 50,172)
( 50,172)
298,298
560,833
560,833
7,345,421
560,833
( 50,172)
510,661
17
5
123,082
( 123,082)
-
( 1,504,553)
( 1,504,553)
6,038,301
( 117,429)
242,634
6,583,006
( 888,057)
888,057
231,478
419,500
231,478
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Restated balance at 30 June 2011
5,915,219
( 67,257)
1,199,161
298,298
7,345,421
The accompanying notes form part of these financial statements.
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Statement of cash flows
for the year ended 30 June 2012
Notes
Consolidated entity
Parent entity
2012
$
2011
$
2012
$
2011
$
15,869,290
( 13,705,086)
-
95,589
( 550,692)
( 191,533)
( 152,801)
21,360,606
( 18,429,046)
-
95,885
( 357,731)
( 184,026)
( 125,396)
13,320,548
( 11,601,735)
372,055
86,805
( 418,912)
( 191,533)
( 152,801)
18,497,823
( 16,282,198)
1,665,953
76,271
( 87,001)
( 184,026)
( 125,396)
22 (b)
1,364,767
2,360,292
1,414,427
3,561,426
100,306
( 201,218)
( 33,564)
-
29,160
656,109
( 273,142)
( 191,352)
-
48,820
100,306
( 201,218)
( 33,564)
29,160
656,109
( 273,142)
( 191,352)
-
48,820
Cash flows from operating activities
Receipts from operations
Payment to suppliers & employees
Dividends received
Interest/distributions received
Income tax paid
Bonus
Community grants
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
( 105,316)
240,435
( 105,316)
240,435
Cash flows from financing activities
Proceeds from share issue
Share buy-back payment
Dividends paid
-
-
( 1,504,553)
-
-
( 1,938,772)
-
-
( 1,938,772)
( 1,504,553)
Net cash provided by (used in) financing activities
( 1,504,553)
( 1,938,772)
( 1,504,553)
( 1,938,772)
Net increase (decrease) in cash held
( 245,102)
661,955
( 195,442)
1,863,089
Cash at beginning of financial year
2,554,689
1,892,734
2,298,126
435,037
Cash at end of financial year
22 (a)
2,309,587
2,554,689
2,102,684
2,298,126
The accompanying notes form part of these Financial Statements
18
1800 021 227 | australianethical.com.au 37
19
australianethical
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2012
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, except for cash flow information 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 reporting date.
20
38
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2012
Note 1 - Statement of significant accounting policies - continued
b) Income tax - continued
Deferred tax is accounted for using the statement of financial position 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
21
1800 021 227 | australianethical.com.au 39
australianethical
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2012
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
reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the
asset’s carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying
amount. These 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 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.
22
40
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2012
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 reporting 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.
At each reporting 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.
Upon the exercise of options and rights the proceeds received, net of any directly attributable
transaction costs, are credited to share capital.
23
1800 021 227 | australianethical.com.au 41
australianethical
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2012
Note 1 - Statement of significant accounting policies – continued
Employee bonus
The group recognises a liability and an expense for bonuses and profit-sharing based on a
formula that takes into consideration the profit attributable to the company's shareholders
after certain adjustments. The group recognises a provision where contractually obliged or
where there is a past practice that has created a constructive obligation.
h) Community grants expense
The Company’s Constitution states that "the directors before recommending or declaring any
dividend to be paid out of the profits of any one year must have first:-
(i)
(ii)
paid or provisioned for payment to current employees, or other persons
performing work for the company, a work related bonus or incentive payment, set
at the discretion of the directors, but to be no more than 30 percent (30%) of what
the profit for that year would have been had not the bonus or incentive payment
been deducted"
"gifted or provisioned for gifting an amount equivalent to ten percent (10%) of
what the profit for that year would have been had not the above mentioned bonus
and amount gifted been deducted".
Provision for community grants expense has been made in the current year.
i) 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.
j) Cash and cash equivalents
Cash and cash equivalents include cash on hand and deposits held at call with banks.
k) 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).
l) 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 statement of financial position are
shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST
component of investing and financing activities, which are disclosed as operating cash flows.
24
42
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2012
Note 1 - Statement of significant accounting policies - continued
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
three 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 statement of financial position for $44,659, and
a staff loan for $7,455. The directors have determined that no provision for impairment is
required for these loans.
Accounting Standards not previously applied
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.
25
1800 021 227 | australianethical.com.au 43
australianethical
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2012
• AASB 1053: Application of Tiers of Australian Accounting Standards and AASB2010-2:
Amendments to Australian Accounting Standards arising from Reduced Disclosure
Requirements [AASB 1, 2, 3, 5, 7, 8, 101, 102, 107, 108, 110, 111, 112, 116, 117, 119, 121,
123, 124, 127, 128, 131, 133, 134, 136, 137, 138, 140, 141, 1050 & 1052 and Interpretations 2,
4, 5, 15, 17, 127, 129 & 1052] (applicable for annual reporting periods commencing on or after
1 July 2013).
AASB 1053 establishes a revised differential financial reporting framework consisting of two
tiers of financial reporting requirements for those entities preparing general purpose financial
statements:
− Tier 1: Australian Accounting Standards; and
− Tier 2: Australian Accounting Standards - Reduced Disclosure Requirements.
Since the group is a for-profit private sector entity that has public accountability, it does not
qualify for the reduced disclosure requirements for Tier 2 entities.
26
44
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2012
Note 2 - Auditors' remuneration
Remuneration of the auditors for:
Audit services
- Auditing the financial report
- Auditing the sustainability report
Non-audit services
Consolidated entity
Parent entity
2012
$
2011
Restated*
$
2012
$
2011
Restated*
$
39,900
-
39,188
5,900
35,000
-
34,538
5,900
- Tax and other accounting advice
4,000
3,462
4,000
3,462
Note 3 - Revenue
Operating activities
- Management fees net of rebates
- Entry fees
- Member & Withdrawal Fees
- Reimbursed expenses
- Dividend from wholly owned subsidiary
- Interest/distributions
- Wholly owned entity fee
- Other revenue
10,088,674
1,010,122
775,276
2,668,095
-
93,014
-
157,609
14,792,790
11,235,864
1,107,289
697,654
1,819,105
-
98,246
-
785,873
15,744,031
4,032,129
50,435
-
1,597,624
372,055
84,229
6,403,976
101,671
12,642,119
4,602,218
80,839
-
1,598,522
1,665,953
78,632
6,167,594
735,180
14,928,938
Total revenue
14,792,790
15,744,031
12,642,119
14,928,938
*Other fees for 2011 have been restated to reflect changed accounting treatment for expenses that the company pays and
subsequently seeks reimbursement from the Managed Trusts and Superannuation Fund. Other fees reflects the full amount
of expenses recovered for the Managed Trusts and Superannuation Fund. There has been a corresponding adjustment to
external services (Statement of Comprehensive Income) reflecting the full cost of services provided by third parties to the
Managed Trusts and Superannuation Fund.
27
1800 021 227 | australianethical.com.au 45
australianethical
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2012
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% (2011:30%)
- 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
Tax allowance on capital investment
Consolidated entity
Parent entity
2012
$
2011
Restated*
$
2012
$
2011
Restated*
$
87,992
232,479
320,471
828,581
(163,739)
664,841
(3,584)
232,599
229,015
679,763
(163,739)
516,024
216,788
-
536,962
-
-
236,954
-
887,983
-
-
91,456
148,818
34,241
69,443
943
321,415
2,130
124,022
2,483
665,597
34,236
69,443
943
433,032
2,076
124,022
2,483
1,165,382
-
( 944 )
-
-
( 755 )
-
( 111,617 )
( 944 )
( 499,785)
( 755)
-
Income tax expense attributable to entity
320,471
664,842
320,471
664,842
Allocation of income tax expense to wholly owned
entity under the tax sharing agreement
-
-
( 91,456)
( 148,818)
Income tax expense attributable to entity
320,471
664,842
229,015
516,024
The applicable weighted average effective tax
rates are as follows:
44%
37%
29%
17%
28
46
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2012
Note 5 - Dividends
(a) Distributions paid
Final fully franked dividend of 100 (2011: 50) cents
per share franked at the tax rate of 30%
(2011:30%)
Special fully franked dividend of 25 (2011: 100)
cents per share franked at the tax rate of 30%
(2011:30%)
Interim fully franked dividend of 25 (2011: 45)
cents per share franked at the tax rate of 30%
(2011:30%)
(b) Distributions declared
Final fully franked dividend of 35 (2011: 100) cents
per share franked at the tax rate of 30% (2011:
30%)
Special final fully franked dividend of 0 (2011: 25)
cents per share franked at the tax rate of 30%
(2011: 30%)
(c) Franking account
Balance of franking account at year end adjusted
for franking credits which will arise from income
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
Parent entity
2012
$
2011
Restated*
$
2012
$
2011
Restated*
$
1,003,036
496,570
1,003,036
496,570
250,758
993,141
250,758
993,141
250,759
1,504,553
449,061
1,938,772
250,759
1,504,553
449,061
1,938,772
351,062
997,913
351,062
997,913
-
249,478
-
249,478
871,804
1,380,710
150,455
721,349
534,596
846,114
(a) Earnings used to calculate basic EPS and
dilutive EPS
402,155
1,125,031
(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
Note 7 - Cash and cash equivalents
Cash on hand
Cash at bank
Deposits at call
1,001,859
18,751
996,004
6,886
1,020,610
1,002,890
300
185,773
2,123,514
2,309,587
300
171,559
2,382,830
2,554,689
300
5,958
2,096,426
2,102,684
300
10,000
2,287,826
2,298,126
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Deposits at call is money invested in high interest bank account. Interest is calculated daily based on daily bank deposit
rates.
29
1800 021 227 | australianethical.com.au 47
australianethical
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2012
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:
- Listed securities at fair value
- Units in unit trust at fair value
- Shares in wholly owned entity at cost
b. Loans comprise
- Loan to other entity
- Loan to staff
Consolidated entity
Parent entity
2012
$
2011
$
2012
$
2011
$
1,711,718
4,281
-
1,715,999
3,238,499
6,798
-
3,245,297
1,057,697
4,281
11,190
1,073,168
2,623,778
6,798
67,601
2,698,177
332,055
52,114
384,169
33,757
350,412
108,947
223,108
-
332,055
44,659
7,455
52,114
476,902
81,341
558,243
61,820
496,423
137,036
339,866
-
476,902
69,091
12,250
81,341
648,055
52,114
700,169
349,757
350,412
108,947
223,108
316,000
648,055
44,659
7,455
52,114
792,902
81,341
874,243
377,820
496,423
137,036
339,866
316,000
792,902
69,091
12,250
81,341
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 one staff member with the Fringe Benefits Tax interest rate set by the ATO.
Note 10 - Other current assets
Other
Prepayments
1,442
172,156
173,598
11,857
220,449
232,306
1,442
140,881
142,323
11,858
178,130
189,988
30
48
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2012
Note 11 - Property, plant and equipment
Consolidated entity
Parent entity
2012
$
2011
$
2012
$
2011
$
Land and buildings
Leasehold land
At cost
Total land
Buildings
At cost
Accumulated depreciation
Impairment loss
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
( 440,241 )
( 210,000 )
2,133,876
2,784,117
( 368,642 )
-
2,415,475
2,784,117
( 440,241)
( 210,000)
2,133,876
2,784,117
( 368,642)
-
2,415,475
2,363,876
2,645,475
2,363,876
2,645,475
2,964,106
( 1,706,235)
1,257,871
2,809,022
( 1,413,750)
1,395,272
2,964,106
( 1,706,235)
1,257,871
2,809,022
( 1,413,750)
1,395,272
Total property, plant and equipment
3,621,747
4,040,747
3,621,747
4,040,747
Movements in carrying amounts
Land
Balance at the beginning of year
Additions
Disposals
Carrying amount at the end of year
Carrying amount at the end of year
Buildings
Balance at the beginning of year
Additions
Disposals
Depreciation expense
Impairment loss
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
230,000
230,000
-
-
230,000
230,000
2,415,475
2,487,032
2,415,475
2,487,032
-
( 71,599)
( 210,000)
2,133,876
-
( 71,557)
-
2,415,475
-
( 71,599)
( 210,000)
2,133,876
-
( 71,557)
-
2,415,475
1,395,272
193,588
( 3,966)
( 327,023)
1,257,871
1,498,136
256,948
( 36,793)
( 323,019)
1,395,272
1,395,272
193,588
( 3,966)
( 327,023)
1,257,871
1,498,136
256,948
( 36,793)
( 323,019)
1,395,272
Total
3,621,747
4,040,747
3,621,747
4,040,747
As at 30 June 2012 a valuation of the Property asset (land and buildings) was conducted in accordance with the
company's policy. Based on advice received from independent valuers the directors determined that the value of
the property was below its carrying value and have noted an impairment of $210,000.
31
1800 021 227 | australianethical.com.au 49
australianethical
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2012
Note 12 - Intangible Assets
Website development
At cost
Accumulated amortisation
Total intangibles
Website development
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
Community grants
Loss on sale of financial instrument
Building impairment
Audit fees
Amounts recognised directly in equity
Financial asset revaluations
Movements
Opening balance at 1 July
Credited (charged) to the income statement
Credited (charged) to equity
Closing balance at 30 June
Note 14 - Trade and other payables
Trade payables
Sundry payables and accrued expenses
Employee bonus
Note 15 - Tax liabilities
Current tax liabilities
Income tax payable
Deferred tax liabilities
The balance comprises temporary differences
attributable to:
Amounts recognised in profit or loss:
Stamp duty on leasehold property:
Tax deferred income
Movements
Opening balance at 1 July
Credited/(charged) to the income statement
Credited/(charged) to equity
Closing balance at 30 June
Consolidated entity
Parent entity
2012
$
2011
$
2012
$
2011
$
69,560
( 51,814 )
17,746
85,540
( 40,185)
45,355
69,560
( 51,814)
17,746
85,540
( 40,185)
45,355
45,355
7,630
( 7,467)
( 27,772)
17,746
46,297
25,740
-
( 26,682)
45,355
45,355
7,630
( 7,467)
( 27,772)
17,746
46,297
25,740
-
( 26,682)
45,355
19,156
19,156
-
-
46,554
46,554
-
-
252,295
15,998
1,930
63,000
13,136
346,359
50,326
396,685
396,685
607,503
( 232,320)
21,502
396,685
517,881
46,578
-
-
14,220
578,679
28,824
607,503
607,503
435,083
161,029
11,391
607,503
252,295
15,998
1,930
63,000
11,621
344,844
50,326
395,170
395,170
606,108
( 232,320)
21,382
395,170
517,881
46,578
-
-
12,825
577,284
28,824
606,108
606,108
433,688
161,029
11,391
606,108
243,197
1,195,633
99,343
1,538,173
411,535
1,971,145
205,029
2,587,710
26,452
997,966
99,343
1,123,761
394,251
1,740,426
205,029
2,339,705
-
-
443,545
443,545
-
-
443,545
443,545
30,896
4,191
35,087
34,926
161
-
35,087
30,896
4,030
34,926
34,805
121
-
34,926
30,896
4,191
35,087
34,926
161
-
35,087
30,896
4,030
34,926
34,805
121
-
34,926
32
50
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2012
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 997,913 (2011 - 993,141) shares
Issue of share capital
Shares issued during the year under the employee
share ownership plan:
Consolidated entity
Parent entity
2012
$
2011
$
2012
$
2011
$
283,589
283,589
533,024
533,024
283,589
283,589
533,024
533,024
74,117
74,117
56,123
56,123
74,117
74,117
56,123
56,123
5,915,219
5,791,147
5,915,219
5,791,147
4,772 on 23 November 2010 (rights exercised)
-
124,072
-
124,072
5,122 on 22 September 2011 (rights exercised)
123,082
-
123,082
-
Balance 30 June
1,003,035 (2011 - 997,913) shares
6,038,301
5,915,219
6,038,301
5,915,219
At 30 June 2012 there were 1,003,035 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,
(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 an Australian Ethical trust and listed securities. Detail provided in Note 9 and 11.
Management effectively manages the group's capital by assessing the group's financial risks and adjusting its capital
structure in response to changes in these risks and in the market. These responses include the management of
distributions to shareholders and share issues.
Maintenance of a certain level of capital is a condition of the company’s Australian Financial Services Licence.
The company currently meets the $5.0M capital requirement above which no extra capital is required as a result of
increased funds under management. The company will comply with the new capital rules (as per CO 11/1140 ) with
effect from 1 November 2012. These new capital rules require the company to:
(i) Maintain net tangible assets (NTA) of 0.5% of managed investment scheme assets (approximately $3M based on
current funds under management) if not acting as its own custodian.
(ii) Hold 50% of the NTA requirement in cash or cash equivalents
(iii) Hold the balance of NTA requirement in liquid assets (convertible within 6 months)
33
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australianethical
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2012
Consolidated entity
Parent entity
2012
$
2011
$
2012
$
2011
$
Note 18 – Events after the balance sheet date
Since the end of the financial year, the following material events have occurred:
1. In August 2012 an agreement was entered into to market Trevor Pearcey House for sale.
2. Upfront fees on all products were removed from 1 July 2012.
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
Liabilities 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
3,013,871
10,927,089
13,940,960
3,249,481
18,472,200
21,721,681
1,365,919
10,199,487
11,565,406
1,957,613
17,710,906
19,668,519
Rights of indemnities for liabilities incurred by the
consolidated entity and parent entity not recorded
in the financial statements were:
13,940,960
21,721,681
11,565,406
19,668,519
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.
34
52
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the consolidated financial statements for the half-year ended 30 June 2012
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 and 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
Managed funds
Super
Total
Managed funds
Super
30 June 2012
30 June 2011
$
$
$
$
$
Total
Restated*
$
5,781,860
6,403,976
84,229
8,917,917
-
8,784
14,699,777
6,403,976
93,013
7,016,759
6,167,594
78,632
8,629,026
-
19,614
15,645,785
6,167,594
98,246
Total segment revenue
12,270,065
8,926,701
21,196,766
13,262,985
8,648,640
21,911,625
Inter-segment eliminations
Total group revenue
(6,403,976)
14,792,790
(6,167,594)
15,744,031
Segment net profit before tax
963,268
556,404
1,519,672
2,622,030
795,165
3,417,195
Reconciliation of segment result to
group net profit/loss after tax
Income tax expense
(229,015)
(91,456)
(320,471)
(516,024)
(148,818)
(664,842)
Unallocated items
- Depreciation and amortisation
- Other corporate overheads *
Group net profit after tax
(426,395)
(370,651)
402,155
(421,258)
(1,206,064)
1,125,031
* Other corporate overheads includes staff bonus, community grants expense and staff options/rights expense.
(ii) Segment assets
30 June 2012
30 June 2011
Managed funds
$
Super
$
Total
$
Managed funds
$
Super
$
Total
$
Assets
8,099,560
893,714
8,993,274
10,752,744
914,998
11,667,742
Inter-segment eliminations
Total group assets
(iii) Segment liabilities
(354,587)
8,638,687
(383,602)
11,284,140
Liabilities
1,516,554
453,000
1,969,554
3,407,323
315,606
3,722,929
Inter-segment eliminations
Total group liabilities
(38,588)
1,930,966
(67,601)
3,655,328
35
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australianethical
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2012
Consolidated entity
Parent entity
2012
$
2011
Restated*
$
2012
$
2011
Restated*
$
Note 22 - Cash flow information
(a) Reconciliation of cash
Cash at the end of the financial year as shown in
the cash flow statement is reconciled to the
related items in the balance sheet as follows:
Cash on hand
Cash at bank
Deposits at call
300
185,773
2,123,514
2,309,587
300
171,559
2,382,830
2,554,689
300
5,958
2,096,426
2,102,684
300
10,000
2,287,826
2,298,126
(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
Share options/rights expensed
Impairment loss
Changes in assets and liabilities
(Increase) decrease in trade & other receivables
(Increase) decrease in prepayments & other assets
(Increase) decrease in deferred tax assets
Increase (decrease) in trade & other payables
Increase (decrease) in current tax liability
Increase (decrease) in deferred tax liability
402,155
1,125,031
560,833
2,443,920
426,395
( 668,631)
11,433
6,432
231,478
231,478
210,000
421,258
75,178
27,246
( 6,449)
413,407
413,407
-
426,395
( 668,631)
11,433
6,432
231,478
231,478
210,000
421,258
75,178
27,246
( 6,449)
413,407
413,407
-
1,529,355
58,709
232,320
( 612,336)
( 462,701)
160
( 199,654)
104,888
( 136,555)
92,276
443,545
121
1,557,465
47,665
232,440
(778,745)
(422,497)
160
( 30,088)
107,296
52,958
( 319,365)
375,944
121
Net cash provided by (used in) operating activities
1,364,769
2,360,292
1,414,428
3,561,426
36
54
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2012
Consolidated entity
Parent entity
2012
$
2011
$
2012
$
2011
$
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 Cash Trust,
Australian Ethical Larger Companies Trust, Australian Ethical International Equities Trust, Australian Ethical
World Trust, Australian Ethical Property Trust, Australian Ethical Fixed Interest Trust and the Climate Advocacy Fund).
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
(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
-
-
-
-
-
-
-
-
-
-
6,403,976
6,167,594
91,456
148,818
6,347,842
6,401,445
372,055
1,665,953
38,587
67,601
37
1800 021 227 | australianethical.com.au 55
australianethical
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2012
Consolidated Entity
Parent Entity
2012
$
2011
$
2012
$
2011
$
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 Cash Trust
- Australian Ethical Larger Companies Trust
- Australian Ethical International Equities Trust
- Australian Ethical Property Trust
- Climate Advocacy Fund
3,459,096
4,039,271
360,548
1,717,663
1,442,241
296,802
23,775
2,841,322
3,923,345
435,383
1,582,941
1,059,980
686,211
57,185
2,841,322
3,923,345
435,383
1,582,941
1,059,980
686,211
57,185
(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 Cash Trust
- Australian Ethical Larger Companies Trust
- Australian Ethical International Equities Trust
- Australian Ethical Property Trust
- Climate Advocacy Fund
253,495
204,500
88,251
130,247
102,249
34,201
-
240,292
194,334
84,361
123,348
97,167
34,384
-
240,292
194,334
84,361
123,348
97,167
34,384
-
3,459,096
4,039,271
360,548
1,717,663
1,442,241
296,802
23,775
253,495
204,500
88,251
130,247
102,249
34,201
-
(iii) Transactions whereby Australian Ethical Investment Limited seeks expense reimbursement from the Australian Ethical
Trusts in accordance with the trust deed.
Trusts in accordance with the trust deed.
- Australian Ethical Balanced Trust
- Australian Ethical Smaller Companies Trust
- Australian Ethical Cash Trust
- Australian Ethical Larger Companies Trust
- Australian Ethical International Equities Trust
- Australian Ethical Property Trust
- Climate Advocacy Fund
19,765
29,584
3,678
17,633
( 1,004)
28
-
19,765
29,584
3,678
17,633
( 1,004)
28
-
26,885
32,012
1,963
20,885
4,502
121
-
26,885
32,012
1,963
20,885
4,502
121
-
(iv) Transaction whereby Australian Ethical Investment Limited received a distribution payment from the Australian Ethical
Balanced Trust and Climate Advocacy Fund
2,883
4,665
2,883
4,665
38
56
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2012
Note 23 – Related party transactions - continued
Consolidated Entity
Parent Entity
2012
$
2011
$
2012
$
2011
$
b) Outstanding balances at balance date:
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 Cash Trust
- Australian Ethical Larger Companies Trust
- Australian Ethical International Equities Trust
- Australian Ethical World Trust
- Australian Ethical Property Trust
- Climate Advocacy Fund
438,059
491,102
93,853
235,973
168,801
6,501
64,300
6,992
189,557
330,638
24,397
193,177
88,584
-
59,896
5,174
189,557
330,638
24,397
193,177
88,584
-
59,896
5,174
438,059
491,102
93,853
235,973
168,801
6,501
64,300
6,992
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
223,108
233,479
223,108
233,479
-
106,386
-
102,452
4,281
-
3,316
3,482
4,281
-
3,316
3,482
39
1800 021 227 | australianethical.com.au 57
australianethical
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
Notes to the financial statements for the year ended 30 June 2012
Consolidated entity
Parent entity
2012
$
2011
$
2012
$
2011
$
Note 23 – Related party transactions - continued
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.)
(ii) Transactions between Australian Ethical
Superannuation Pty Limited and the Australian
Ethical Retail Superannuation Fund related to
contribution fee/ (rebate of contribution fee)
(iii) Transactions between Australian Ethical
Superannuation Pty Limited and the Australian
Ethical Retail Superannuation Fund related to
member admin fee/ (rebate of member admin fee)
(iv) Transactions between Australian Ethical
Superannuation Pty Limited and the Australian
Ethical Retail Superannuation Fund related to
other reimbursables/ (rebate of other
reimbursables)
Outstanding balances at end of period:
Outstanding balances at end of period:
Amounts receivable from/ (payable to) the
Australian Ethical Retail Superannuation Fund:
(i) Investment services/ (rebate of investment
services fee)
( 291,298)
232,201
959,687
1,026,450
775,276
697,654
1,070,471
226,299
( 172,722)
52,372
(ii) Contribution fee/ (rebate of contribution fee)
141,416
175,916
(iii) Member admin fee/ (rebate of member admin
fee)
(iv) Other reimbursables/ (rebate of other
reimbursables)
384,674
350,798
149,880
37,623
Terms and conditions
No provision for doubtful debts has 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.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
40
58
AUSTRALIAN ETHICAL INVESTMENT LIMITED A.B.N. 47 003 188 930 AND CONTROLLED ENTITY
Notes to the financial statements for the year ended 30 June 2012
Note 24 - Key management personnel compensation
a) Key management personnel
Names and positions of key management personnel (directors and named executives) at any time during the financial year
Parent entity directors
Name
Howard Pender
Justine Hickey
Les Coleman
Stephen Newnham
Louise Herron
André Morony
Phillip Vernon
Position
Director, non-executive
Director, non-executive
Director, non-executive
Director, Business Development, executive
Director, non-executive
Chairperson, non-executive
Managing Director ,executive
Other key management personnel
Name
Gary Leckie
Tim Xirakis
Adam Kirk
Paul Smith
Philip George
James Jordan
David Macri
Position
Chief Financial Officer
Head of Client Relationships
General Manager, Business Development
General Manager, Strategy & Communications
Head of Product & Client Services
Chief Investment Officer
Chief Investment Officer
b) Key management personnel compensation
Ceased 17 November 2011
Ceased 17 November 2011
Appointed (full time) 12 December 2011
Appointed 20 February 2012, ceased July 25, 2012
Resigned 23 May 2012
Resigned 8 August 2011
Appointed 9 August 2011
Appointed 11 July 2011
Resigned 28 March 2012
Appointed 13 February 2012
Short term employment benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
Total compensation
Economic Entity
2012
$
1,978,000
167,914
34,939
221,528
151,310
2,553,691
2011
$
1,698,879
151,363
19,073
57,459
127,143
2,053,917
Parent Entity
2012
$
1,956,070
164,567
34,939
221,528
151,310
2,528,414
2011
$
1,661,759
148,016
19,073
57,459
127,143
2,013,450
Further key management personnel remuneration details are included in the Remuneration Report section of the Directors' Report.
c) Equity instrument disclosures relating to key management personnel
Option Holdings
Number of options held by key management personnel.
KMP Options Holdings
Option Class
Balance at
beginning of
year
No. granted
No. expired
No. vested &
excercised
Balance at end of
year
Vested at
end of year
Vested &
excercisable at
end of year
Vested & un-
excercisable at
end of year
Parent Entity Directors
James Thier
Howard Pender
Named executives (including other key
management personnel)
Philip George
Gary Leckie
Tim Xirakis
James Jordan
AEFAV
2012 Total
2011 Total
AEFAV
2012 Total
2011 Total
AEFAU
2012 Total
2011 Total
AEFAU
2012 Total
2011 Total
AEFAU
2012 Total
2011 Total
AEFAU
2012 Total
2011 Total
1,364
1,364
2,881
1,326
1,326
2,839
2,169
2,169
4,638
1,919
1,919
3,686
1,895
1,895
3,671
1,243
1,243
2,389
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
( 1,364)
( 1,364)
( 1,517)
( 1,326)
( 1,326)
( 1,513)
( 2,169)
( 2,169)
( 2,469)
( 1,919)
( 1,919)
( 1,767)
( 1,895)
( 1,895)
( 1,776)
( 1,243)
( 1,243)
( 1,146)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,364
-
-
1,326
-
-
2,169
-
-
1,919
-
-
1,895
-
-
1,243
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
41
1800 021 227 | australianethical.com.au 59
australianethical
AUSTRALIAN ETHICAL INVESTMENT LIMITED A.B.N. 47 003 188 930 AND CONTROLLED ENTITY
Notes to the financial statements for the year ended 30 June 2012
Note 24 - Key management personnel compensation - continued
Rights Holdings
Number of Rights held by key management personnel.
Rights Class
Balance at
beginning of
year
No. granted
No.forfeited
No. vested &
excercised
Balance at end of
year
Vested at
end of year
Vested &
excercisable at
end of year
Vested & un-
excercisable at
end of year
KMP Rights Holdings
Parent Entity Directors
James Thier
Howard Pender
Phillip Vernon
Gary Leckie
Tim Xirakis
James Jordan
David Macri
AEFAY
AEFAW
2012 Total
2011 Total
AEFAY
AEFAW
2012 Total
2011 Total
AEFAB
AEFAA
AEFAY
AEFAW
2012 Total
2011 Total
689
319
1,008
319
736
320
1,056
320
-
-
2,481
317
2,798
317
AEFAB
AEFAA
AEFAY
AEFAW
2012 Total
2011 Total
AEFAB
AEFAA
AEFAY
AEFAW
2012 Total
2011 Total
AEFAB
AEFAY
AEFAW
2012 Total
2011 Total
AEFAB
AEFAA
AEFAY
AEFAW
2012 Total
2011 Total
AEFAB
AEFAA
AEFAY
AEFAW
2012 Total
2011 Total
985
501
1,486
501
-
-
1,008
506
1,514
506
982
493
1,475
493
-
-
868
409
1,277
1,271
-
-
666
150
816
150
-
-
-
689
-
-
-
736
1,474
1,472
-
-
2,946
2,481
390
1,105
-
-
1,495
985
696
1,134
-
-
1,830
1,008
646
-
-
646
982
1,803
1,457
-
-
3,260
915
2,362
827
-
-
3,189
666
( 689)
( 319)
( 1,008)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
( 696)
( 1,134)
( 1,008)
( 506)
( 3,344)
-
-
( 982)
( 493)
( 1,475)
-
( 1,803)
( 1,457)
( 868)
( 409)
( 4,537)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
( 909)
-
-
-
-
-
-
-
-
-
1,008
736
320
1,056
1,056
1,474
1,472
2,481
317
5,744
2,798
390
1,105
985
501
2,981
1,486
-
-
-
-
-
1,514
646
-
-
646
1,475
-
-
-
-
-
1,277
2,362
827
666
150
4,005
816
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Named executives (including other key management personnel)
Philip George
-
Share Holdings
Number of Shares held by key management personnel.
Parent Entity Directors
James Thier
Howard Pender
Justine Hickey
Balance at
beginning of
year
2012
2011
2012
2011
2012
2011
66,576
65,846
50,683
51,883
1,200
700
Named executives (including other key management personnel)
Philip George
Paul Harding Davis
James Jordan
2012
2011
2012
2011
2012
2011
1,104
1,104
760
1,598
909
-
Acquired / Granted
as Remuneration
On exercise of
options/ rights
Net Change
other (1)
Balance at end of
year (2) & (3)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
909
405
730
( 801)
( 1,200)
-
500
-
-
( 760)
( 838)
( 909)
-
66,981
66,576
49,882
50,683
1,200
1,200
1,104
1,104
-
760
-
909
(1) "Net change other" incorporates changes resulting from purchases, sales, forfeitures during the year.
(2) Shares issued are fully paid
(3) Balance represents shareholdings by key management personnel including their related parties as required by AASB 124 Related Party Disclosures
Key management Personnel Loans
Balance at
beginning of year Interest charged
Interest not
charged
Key Management Personnel
$
2012
2011
12,250.11
43,358.14
$
778.30
1,860.30
$
-
-
Write-off
$
Balance at end
of year
No. of Individuals
at end of year
$
7,454.99
12,250.11
-
-
1
1
(a) The Loan is repayable on 30 November 2013 and currently bears interest at 7.4 % per annum that is the FBT interest rate set by the ATO.
(b) In the 2011 -12 reporting period, there were no loans to individuals that exceeded $100,000 at any time.
42
60
AUSTRALIAN ETHICAL INVESTMENT LIMITED A.B.N. 47 003 188 930 AND CONTROLLED ENTITY
Notes to the financial statements for the year ended 30 June 2012
Note 25 - Share based payments
The following share-based payment arrangements existed at 30 June 2012:
During this reporting period, Australian Ethical Investment Limited issued 5,122 ordinary shares on conversion of 5,122 AEFAZ performance rights for nil consideration granted under its
employee share incentive scheme in April 2011. This conversion of performance rights resulted in an increase in ordinary shares of 5,122.
During 2010 reporting period, 10,819 performance rights (identifier: AEFAW) 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.
- 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
- The performance period is the financial years 2009/10, 2010/11 and 2011/12
During 2011 reporting period, 25,432 performance rights in two classes (identifiers: AEFAY and AEFAZ) 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.
During the reporting period 33,837 performance rights in two classes (identifiers: AEFAA and AEFAB) 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
AEFAA
19,195
Number Granted
AEFAB
14,642
Attributes
- employment must continue until 30 June 2014 -
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. - The
performance period is the financial years 2011/12, 2012/13 and 2013/14.
- employment must continue until 1 July 2012;
- 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; a
managed investment scheme has been agreed between the company and the employee.
Performance will be measured over a performance period of 1 July 2011 to 30 June 2012
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
Parent Entity
2012
Number
of
Rights
2011
Number
of
Rights
32,416
34,199
( 19,980)
( 5,122)
-
41,513
-
14,476
25,569
( 2,857)
( 4,772)
-
32,416
-
2012
Number
of
Rights
2011
Number
of
Rights
32,416
34,199
( 19,980)
( 5,122)
-
41,513
14,476
25,569
( 2,857)
( 4,772)
-
32,416
-
-
-
-
43
1800 021 227 | australianethical.com.au 61
australianethical
AUSTRALIAN ETHICAL INVESTMENT LIMITED A.B.N. 47 003 188 930 AND CONTROLLED ENTITY
Notes to the financial statements for the year ended 30 June 2012
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.
Weighted average fair value - Options
Consolidated Entity
2012
2011
Parent Entity
2012
2011
Number
of
Options
Weighted
Average
Exercise
Price
$
Number
of
Options
Weighted
Average
Exercise
Price
$
Number
of
Options
Weighted
Average
Exercise
Price
$
Outstanding at the beginning
of the financial year
Granted
Forfeited
Exercised
Expired
Outstanding at year-end
Exercisable at year-end
32,394
-
-
-
( 32,394)
-
-
32.27
-
-
-
32.27
-
-
68,682
-
( 4,435)
-
( 31,853)
32,394
-
44.00
-
32.27
-
57.57
32.27
-
32,394
-
-
-
( 32,394)
-
-
32.27
-
-
-
32.27
-
-
There were no options outstanding at 30 June 2012.
Weighted
Average
Exercise
Price
$
44.00
-
32.27
-
57.57
32.27
-
Number
of
Options
68,682
-
( 4,435)
-
( 31,853)
32,394
-
Included under employee benefits expense in the income statement is :
$14,070 (2011: $75,860) relating to options issued under the employee share ownership plan.
$217,407 (2011: $180,045) relating to rights issued under the employee share ownership plan.
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 13).
The main purpose of these financial instruments is to finance the consolidated entity’s operations. The consolidated entity has various other financial assets and liabilities such as trade
receivables and trade payables, which arise directly from its operations.
(b) Interest rate risk
The consolidated entity’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the effective weighted average
interest rates on classes of financial assets and financial liabilities is as follows:
Cash and cash equivalents
Trade and other receivables
Financial assets
Total financial assets
Trade and other payables
Total financial liabilities
Weighted average
effective interest rate
Floating interest rate
Fixed interest
rate within 1 year
2012
%
2011
%
2012
$
2011
$
2012
$
2011
$
4
9
5
9
2,309,287
2,554,389
5,202
4,862
2,314,489
2,559,251
-
-
13,155
13,155
-
-
-
-
Fixed interest rate
within 1 to 5 years
Non-interest bearing
-
-
Total
-
-
14,659
14,659
-
-
2012
$
2011
$
2012
$
2011
$
2012
$
2011
$
Cash
Trade and other receivables
Financial assets
Total financial assets
Trade and other payables
Total financial liabilities
-
-
33,757
33,757
-
-
-
-
61,820
61,820
-
-
300
1,715,999
332,055
300
3,245,297
476,902
2,309,587
1,715,999
384,169
2,554,689
3,245,297
558,243
2,048,354
3,722,499
4,409,755
6,358,229
1,538,173
2,587,710
1,538,173
2,587,710
1,538,173
2,587,710
1,538,173
2,587,710
44
62
AUSTRALIAN ETHICAL INVESTMENT LIMITED A.B.N. 47 003 188 930 AND CONTROLLED ENTITY
Notes to the financial statements for the year ended 30 June 2012
(c) Credit Risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the carrying amount, net of any provisions for impairment of
those assets, as disclosed in the balance sheet and notes to the financial statements.
Quantitative details related to financial assets is contained in note 9.
In relation to the financial asset – loan to independent entity – disclosed at note 9, the loan agreement between the parent entity and the independent entity provides for the parent to enforce a security over
the independent entity’s assets should a default in loan payments occur. The independent entity has not defaulted in loan payments over the six years of the loan.
Consideration of credit risk in relation to financial assets is incorporated into the finance committee risk considerations mentioned earlier in this note. The defined investment parameters governing the
approval of financial asset investments incorporates a sliding scale of risk exposure as follows:
- The maximum exposure to any one issuer is to be no greater than twenty five per cent of the portfolio;
- Minimum amount to be held in cash, AAA securities or senior bank debt is fifty per cent of the portfolio; and
- Minimum amount to be held in cash, AAA securities, senior bank debt, rated corporate debt or subordinated bank debt to be eighty per cent of the portfolio.
(d) Liquidity risk
The group carries no borrowing debt on the balance sheet and has sufficient reserves of cash, cash equivalents and liquid investments to assess the liquidity risk as low. The cash position and cash flows
are reviewed by the finance committee to ensure regulatory and future operational requirements are catered for.
Trade and other payables are expected to be paid as follows:
Less than 6 months
6 months to 1 year
1 to 5 years
Consolidated Entity
2012
$
1,234,874
303,299
-
1,538,173
2011
$ $
2,052,383
535,327
-
2,587,710
Parent Entity
2012
$
2011
$
820,462
303,299
-
1,123,761
1,806,802
535,327
-
2,342,129
Note 27 - Restatement of financial statements as a result of change in accounting policy and correction of an error
When finalising the 31 December 2011 interim financial statements it was determined that the timing of recognition of expenses associated with share based payments granted to employees was incorrect.
In general the accounting treatment previously adopted was to recognise the expense related to share based payments from the date of issue of the equity instrument (rights) through to vesting date.
However the correct accounting treatment under the Australian Accounting Standards is to recognise the expense from the date at which a constructive obligation to pay the share based payment exists.
Whilst this impacts financial results for periods since the inception of the employee share based payment scheme in 2009, it only materially impacts the 2010-11 prior period.
Specifically, in December 2011 a tranche of performance rights were issued to investment and management employees with a vesting date 1 July 2012. The value of the rights issued/owing was estimated
as $311,427. Previously this amount would have been recognised as an expense over the period December 2011 (issue date) to June 2012 (vesting date). However on further investigation it was
determined that these rights were in respect to performance of investment and management employees during the year ended 30 June 2011 (year 1) vesting at 1 July 2012 (year 2). Accordingly
approximately half of this amount should have been recognised as an expense in the year ended 30 June 2011.
The statement of financial position for 30 June 2011 included this error and hence resulted in the restatement of the following line items for the year ended 30 June 2011.
• Options/Rights reserve increased by $157,502
• Retained earnings decreased by $157,502
In addition the profit for 30 June 2011 was overstated by this error and hence resulted in the restatement of the following line items for the year ended 30 June 2011
• Options/Rights expense increased by $157,502
• Net profit after tax decreased by $157,502
30 June 2011 Comparative
year
Consolidated statement of
financial position (extract)
Equity
Issued Capital
Reserves
Retained earnings
Total Equity
Actual 30 June
2011 $
Correction of Error Adj $
Restated Actual
30 June 2011 $
5,915,219
974,402
739,191
7,628,812
157,502
(157,502)
-
5,915,219
1,131,904
581,689
7,628,812
45
1800 021 227 | australianethical.com.au 63
australianethical
Independent Auditor’s Report
Australian Ethical Investment Limited A.B.N. 47 003 188 930 and controlled entity
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C
OF THE CORPORATIONS ACT 2001
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2012 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.
J.G. RYAN PARTNER
Date 28 September 2012
Liability limited by a scheme approved under Professional Standards Legislation
15
64
Shareholder Information
Australian Ethical Investment Ltd
Analysis of Holdings as at 18 September 2012
Security Classes
Fully Paid Shares
Holdings Ranges
Holders
Total Units
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001+
Totals
697
79
9
14
1
800
174,813
171,416
65,781
406,604
196,472
%
17.221
16.887
6.480
40.056
19.355
1,015,086
100.000
1800 021 227 | australianethical.com.au 65
australianethical Australian Ethical Investment Ltd
Fully Paid Shares
Top 20 Holdings as at 18 September 2012
Holder Name
Balance
%
Substantial
Shareholder
Select Managed Funds Pty Ltd
196,472
19.355
Citicorp Nominees Pty Ltd
J A Thier
H Pender
C M Le Couteur
TR Lee
J M Boag
B A & A M McGregor
HB Sarjeant & Assoc Pty Ltd
E Y W & P B Y Tse
E A Iceton
D Thier
J I Ajani
P A & M W & K A Anderson
Garrett Smythe Ltd
A S Cook
M & A Beuchat
Skeet Nominees Pty Ltd
R M Myer
UBS Wealth Managemnent Australia Nominees Pty Ltd
57,112
51,367
49,852
49,436
36,933
33,683
24,447
20,140
18,080
16,500
14,879
13,000
10,613
10,562
9,892
9,667
9,140
7,332
7,160
5.626
5.060
4.911
4.870
3.638
3.318
2.408
1.984
1.781
1.625
1.466
1.281
1.046
1.041
0.974
0.952
0.900
0.722
0.705
Yes
Yes
Yes
66
Contact us
Phone:
Email:
Address:
Web:
1800 021 227
enquiries@australianethical.com.au
Reply Paid 3993, Sydney NSW 2001
australianethical.com.au
Fibre used in this paper comes from FSC certified forests which are well managed according to strict environmental, social and economic standards.
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