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Jupai Holdings Limited BRICKWORKS INVESTMENT COMPANY LIMITED
Incorporated in Victoria
ABN: 23 106 719 868
CORPORATE DIRECTORY
Directors
Robert Dobson Millner
David Capp Hall
Alexander James Payne
Secretary
John de Gouveia
Non-Executive Director and Chairman
Non-Executive Director
Non Executive Director
Registered Office
Level 2
160 Pitt Street Mall
Sydney 2000
NSW
Telephone:
Facsimile:
Postal Address:
GPO Box 5015
Sydney 2001
(02) 9210 7000
(02) 9210 7099
Auditors
Travis & Travis
1/114 Longueville Road
Lane Cove 2066
Investment Manager
Souls Funds Management Limited
Level 2
160 Pitt Street Mall
Sydney 2000
Share Registry
Computershare Investor Services Pty Limited
60 Carrington Street
Sydney 2000
Australian Stock Exchange Code
Ordinary Shares
BKI
2
BRICKWORKS INVESTMENT COMPANY LIMITED
Contents
Financial Highlights
Company Profile
Chairman’s Address
List of Investments at 30 June 2004
Directors’ Report
Corporate Governance
Statement of Financial Performance
Statement of Financial Position
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
ASX Additional Information
Page No.
4
5
6
7
10
13
22
23
24
25
38
39
40
3
BRICKWORKS INVESTMENT COMPANY LIMITED
• Profit after tax of $3.59 million for the 7 months to 30 June 2004
FINANCIAL HIGHLIGHTS
• Earnings per share for the period of 2.10 cents
• Fully franked final dividend of 2 cents per share
• Net asset backing per share at 30 June 2004 of 105.7 cents per share
• Total portfolio value as at 30 June 2004 of $183.8 million
• Composition of assets at 30 June 2004 using the Global Industry Classification Standard
(GICS)
CLASSIFICATION
% OF TOTAL ASSETS
Banks
Capital Goods
Commercial Services and Supplies
Consumer Durables & Apparel
Diversified Financials
Energy
Food, Beverage & Tobacco
Food & Staples Retailing
Health Care Equipment & Services
Insurance
Materials
Media
Pharmaceuticals & Biotechnology
Retailing
Telecommunication Services
Transportation
Utilities
Total Investments
Bank Deposits
Total Assets
46.7
3.2
1.5
0.3
6.2
1.3
0.6
1.8
0.1
1.1
20.4
2.3
0.3
0.9
3.4
1.9
1.0
93.0
7.0
100.0
4
BRICKWORKS INVESTMENT COMPANY LIMITED
COMPANY PROFILE
Brickworks Investment Compa ny Limited is a Listed Investment Company on the Australian Stock
Exchange. The Company invests in a diversified portfolio of Australian shares, trusts and interest
bearing securities.
The Company was formed on 17 October 2003 to take over the investment portfolio of Brickworks
Limited.
Shares in the Company were listed on the Australian Stock Exchange Limited commencing 12
December 2003.
At 30 June 2004, market capitalisation of the Company was $167.8 million.
Corporate Objectives
The Company aims to generate an increasing income stream for distribution to its shareholders in the
form of franked dividends, to the extent of its available imputation tax credits, through long-term
investment in a portfolio of assets that are also able to deliver long term capital growth to
shareholders.
Investment Strategy
The Company is a long-term investor in companies, trusts and interest bearing securities with a focus
on Australian entities. It primarily seeks to invest in well-managed businesses with a profitable history
and with the expectation of sound dividend and distribution growth.
Dividend Policy
The Company will pay the maximum amount of realised profits after tax to its shareholders in the form
of franked dividends to the extent permitted by the Corporations Act, the Income Tax Assessment Act
and prudent business practices from profits obtained through interest, dividends and other income it
receives from its investments.
Dividends will be declared by the Board of Directors out of realised profit after tax, excluding realised
capital profit from any disposals of long-term investments.
Portfolio Management
The Company has appointed Souls Funds Management Limited to act as Portfolio Manager and
provide investment advisory services to the Board of Directors and its Investment Committee,
including the implementation and execution of investment decisions and the day to day administration
of the investment portfolio.
The Company also engages Corporate and Administrative Services Pty Ltd to provide accounting and
company secretarial services.
5
BRICKWORKS INVESTMENT COMPANY LIMITED
________________________________________________________________________ ________
CHAIRMAN’S ADDRESS
Dear Shareholders,
I am pleased to enclose the 1st Annual Report of Brickworks Investment Company limited for the year
ended 30 June 2004.
The Company Listed on the Australian Stock Exchange on 12 December 2003 and from that time
until 30 June 2004 it has recorded a net profit after tax of $ 3.59 million.
The strong performance result achieved by the company was also a feature of the S&P/ASX 200
index, which also reached record levels during the last six months.
During the period since listing on the ASX major investment purchases have included Australian Gas
Light Company Limited, Alumina Limited, Alesco Limited (Entitlement Offer), Insurance Australia
Group Limited, Graincorp Limited, Rural Press Limited preferred shares and Telstra Corporation
Limited. In addition, share options held in Lindsay Australia Limited, New Hope Corporation Limited
and SP Telecommunications Limited were exercised and converted to ordinary shares.
Total purchases during the period amounted to $ 5.7 million against total sales of $ 6.5 million
represented by sales in Ammtec Limited, Crane Group Limited and National Bank of Australia
Limited.
The outlook for calendar 2004 and beyond is positive and the directors are confident that the full year
reporting season should result in a favourable reporting period with companies at least maintaining
their dividends. In addition, Brickworks Investment Company Limited is in a strong financial position
with sufficient cash reserves to enable it to continue to look at opportunities should they arise.
Earnings per Share, NTA and Dividends
Earnings per share for the period was 2.10 cents and the Net Tangible Asset Backing (NTA) of the
company at 30 June 2004 was 105.7 cents per share.
I am also pleased to report that based on the profits earned by the company during the period, the
directors have declared the payment of a fully franked dividend of 2 cents per share which will be paid
on 31st August 2004.
On behalf of my fellow directors I would like to thank shareholders for their support during the period
and the Board, along with its Investment Manager look forward to delivering long term sustainable
growth and performance to its shareholders.
Yours sincerely,
Robert Millner
Chairman
Sydney
2 August 2004
6
BRICKWORKS INVESTMENT COMPANY LIMITED
List of securities held and their market value at 30 June 2004 were:
Stock
No. of
Shares
Held
Market
Value
($’000)
Portfolio
Weight
%
Banks
Bendigo Bank Limited
Bank of Queensland Limited
Bank of Queensland Limited - REPS
Commonwealth Bank
National Australia Bank Limited
National Income Securities
St George Bank Limited
St George Bank Limited - PRYMES
Westpac Banking Corporation
Capital Goods
Alesco Corporation Limited
Wesfarmers Limited
Commercial Services & Supplies
Brambles Industries Limited
Coates Hire Limited
Spotless Group Limited
Consumer Durables & Apparel
Gazal Corporation Limited
Diversified Financials
Choiseul Investments Limited
Macquarie Bank Limited
Milton Corp Limited
Suncorp-Metway Limited
Energy
Santos Limited
Woodside Petroleum Limited
349,942
95,382
5,000
659,024
1,573,690
4,160
447,750
1,500
123,872
258,980
139,518
222,952
255,303
113,901
3,296
924
535
21,471
46,959
423
9,859
162
2,180
85,809
1,709
4,102
5,811
1,338
863
538
2,739
1.8%
0.5%
0.3%
11.7%
25.6%
0.2%
5.4%
0.1%
1.2%
46.7%
0.9%
2.2%
3.2%
0.7%
0.5%
0.3%
1.5%
226,865
599
0.3%
216,049
109,693
105,203
153,028
70,000
110,000
4,127
3,716
1,412
2,173
11,428
485
1,834
2,319
2.2%
2.0%
0.8%
1.2%
6.2%
0.3%
1.0%
1.3%
7
BRICKWORKS INVESTMENT COMPANY LIMITED
List of securities (continued)
Stock
Food, Beverages & Tobacco
Graincorp Limited
Food & Staples Retailing
Woolworths Limited
Health Care Equipment & Services
Clover Corporation Limited
Insurance
No. of
Shares
Held
Market
Value
($’000)
Portfolio
Weight
%
90,535
1,086
0.6%
282,700
3,223
1.8%
858,000
257
0.1%
Insurance Australia Group Limited
392,200
1,961
1.1%
Materials
Alumina Limited
BHP Billiton Limited
Bluescope Steel Limited
Campbell Bros Limited
Illuka Resources Limited
New Hope Corporation Limited
Onesteel Limited
PaperlinX Limited
Smorgon Steel Group - Reset Preference
Wattyl Limited
WMC Resources Limited
Media
Fairfax (John) Holdings Limited
Publishing & Broadcasting Limited
Rural Press Limited
Rural Press Limited - Preferred Shares
Pharmaceuticals & Biotechnology
679,013
687,836
137,568
198,000
140,000
14,060,452
125,281
175,000
45,926
673,881
661,313
158,549
115,000
70,000
210,700
3,585
8,619
927
1,307
633
15,748
312
849
100
2,244
3,254
37,578
591
1,478
543
1,648
4,260
2.0%
4.7%
0.5%
0.7%
0.3%
8.6%
0.2%
0.5%
0.1%
1.2%
1.8%
20.4%
0.3%
0.8%
0.3%
0.9%
2.3%
Australian Pharmaceutical Ind Limited
248,738
639
0.3%
8
BRICKWORKS INVESTMENT COMPANY LIMITED
List of securities (continued)
Stock
Retailing
Angus & Coote (Holdings) Limited
Colorado Group Limited
Telecommunications Services
SP Telecommunications Limited
SP Telecommunications Limited Rights
Telstra
Transportation
Lindsay Australia Limited
Macquarie Infrastructure Group
Qantas Airways Limited
Utilities
Australian Gas Light Company
No. of
Shares
Held
65,000
200,000
2,300,000
1,022,223
586,000
1,868,000
761,038
112,500
Market
Value
($’000)
Portfolio
Weight
%
543
1,024
1,567
3,105
255
2,948
6,308
588
2,511
396
3,495
0.3%
0.6%
0.9%
1.7%
0.1%
1.6%
3.4%
0.3%
1.4%
0.2%
1.9%
156,200
1,895
1.0%
Bank Deposit
12,792
7.0%
TOTAL PORTFOLIO
183,766
100%
The Company is not a substantial shareholder in any of the investee corporation in accordance with
the Corporations Act 2001, as each equity investment represents less than 5% of issued capital of the
investee corporation.
9
BRICKWORKS INVESTMENT COMPANY LIMITED
________________________________________________________________________ ________
DIRECTORS’ REPORT
The directors of Brickworks Investment Company Limited (the Company) present the following report
for the period 17 October 2003 to 30 June 2004.
1. Directors
The following persons were directors of the Company since incorporation and up to the date of this
report:
Robert Dobson Millner – Non-Executive Director and Chairman
Mr Millner has over 20 years experience as a Company Director. Mr Millner is Chairman of
Washington H Soul Pattinson and Company Limited and other listed public companies.
David Capp Hall, FCA, FAICD – Independent Non-Executive Director
Mr Hall is a Chartered Accountant with experience in corporate management and finance. He holds
directorships in other companies and is the Chairman of the audit committee.
Alexander James Payne, B.Comm, Dip Cm, FCPA, FCIS, FCIM - Non-Executive Director
Mr Payne is chief financial officer of B rickworks Limited and has considerable experience in finance
and investment.
2. Review of the Company’s operations and results
The Company was incorporated on 17 October 2003 with the objective to acquire and manage the
investment portfolio of Brickworks Limited. Acquisition of the investment portfolio was complete at the
close of business on 8 December 2003
During the period 17 October 2003 to 8 December 2003, the Company did not trade.
Shares in the Company were listed on the Australian Stock Exchange Limited commencing 12
December 2003.
The Company aims to hold long term investment in companies, trusts and interest bearing securities
of well managed Australian businesses that would grow in value over time, while at the same time,
generating an increasing income stream through dividends, distributions and interest payments.
Portfolio Performance and Results
The directors are pleased to report a profit after tax for the period of $3,589,908.
The investment portfolio has also performed well and has increased in value by approximately $15.1
million since acquired from Brickworks Limited, representing an increase of 9.74% which is
comparable with the increase in the All Ordinaries Index of 9.88% during the period.
3. Significant changes in the state of affairs
Other than as stated above and in the accompanying Financial Report, there were no significant
changes in the state of affairs of the Company during the reporting period.
10
BRICKWORKS INVESTMENT COMPANY LIMITED
________________________________________________________________________ ________
DIRECTORS’ REPORT - Continued
4. Likely Developments and Expected Results
The operations of the Company will continue with planned investments in Australian equities and
fixed interest securities. No information is included on the expected results of those operations and
the strategy for particular investments, as it is the opinion of the directors that this information would
prejudice the interests of the Company if included in this report.
5. Significant Events after Balance Date
The directors are not aware of any matter or circumstance that has arisen since the end of the year to
the date of this report that has significantly affected or may significantly affect:
i.
the operations of the Company and the entity that it controls
ii.
the results of those operations; or
iii.
the state of affairs of the Company in subsequent years
6. Environmental Regulations
The Company’s operations are not materially affected by environment regulations.
7. Dividends
There were no dividend payments for the period ended 30 June 2004.
Since the end of the financial year the directors have recommended the payment of a final ordinary
dividend of $3,424,539 (2 cents per share fully franked) to be paid on 31 August 2004 out of retained
profits at 30 June 2004.
8. Meetings of Directors
The numbers of meetings of the Company’s Board of Directors and each board committee held
during the period to 30 June 2004, and the numbers of meetings attended by each Director were:
Board
Investment
Audit
Attended
6
6
6
Eligible to
attend
6
6
6
Attended
7
-
7
Eligible to
attend
7
-
7
Attended
1
1
1
Eligible to
attend
1
1
1
RD Millner
DC Hall
AJ Payne
11
BRICKWORKS INVESTMENT COMPANY LIMITED
________________________________________________________________________ ________
DIRECTORS’ REPORT - Continued
9. Directors and other Officers’ Emoluments
Payment to non-executive directors is fixed at $150,000 until shareholders, by ordinary resolution,
approve some other fixed sum amount. This amount is to be divided amongst the Directors as they
may determine.
These fees exclude any additional fee for any service based agreement which may be agreed from
time to time, and also excludes statutory superannuation and the reimbursement of out of pocket
expenses.
Details of the nature and amount of each Non – Executive Director’s emoluments in respect of the
period to 30 June 2004 were:
Primary
$
20,000
15,000
-
Superannuation
$
1,800
1,350
13,625
Equity
Compensation
$
-
-
-
Other
Compensation
$
-
-
-
Total
$
21,800
16,350
13,625
RD Millner
DC Hall
AJ Payne
There were no retirement allowances provided for the retirement of non-executive directors.
10. Beneficial and relevant interest of Directors in Shares of the Company
As at the date of this report, details of Directors who hold shares in the Company for their own benefit
or who have an interest in holdings through a third party and the total number of such shares held are
listed as follows:
RD Millner
DC Hall
AJ Payne
11. Directors and Officers’ Indemnity
No of Shares
914,000
50,001
50,001
The Constitution of the Company provides indemnity against liability and legal costs incurred by
Director and Officers to the extent permitted by Corporations Act.
During the period to 30 June 2004, the Co mpany has paid premiums in respect of an insurance
contract to insure each of the officers against all liabilities and expenses arising as a result of work
performed in their respective capacities.
This report is made in accordance with a resolution of the directors.
Robert D Millner
Director
Sydney
2 August 2004
12
BRICKWORKS INVESTMENT COMPANY LIMITED
_______________________________________________________________________________
CORPORATE GOVERNANCE
Brickworks Investment Company Limited (the Company) was incorporated on 17 October 2003 and
since that date the Board are committed to achieving and demonstrating the highest standards of
corporate governance. Unless otherwise stated, the Company has
followed best practice
recommendations set by the ASX Corporate Governance Council during the reporting period
The Board of directors (hereinafter referred to as the Board) is responsible for the corporate
governance of the Company and its controlled entities. The directors of the Company and its
controlled entities are required to act honestly, transparently, diligently, independently, and in the best
interests of all shareholders in order to increase shareholder value.
The directors are responsible to the shareholders for the performance of the company in both the
short and the longer term and seek to balance sometimes competing objectives in the best interests
of the Company as a whole. Their focus is to enhance the interests of shareholders and other key
stakeholders and to ensure the Company is properly managed.
The Company’s main corporate governance practices in place throughout the year are discussed in
this section.
The Board of Directors
The Board operates in accordance with the broad principles set out in its charter.
Role of the Board
The responsibilities of the board include:
•
•
contributing to the development of and approving the corporate strategy
reviewing and approving business results, business plans, the annual budget and financial
plans
• authorising and monitoring the investment portfolio
• ensuring regulatory compliance
•
reviewing internal controls
• ensuring adequate risk management processes
• monitoring the Board composition, director selection and Board processes and performance
• overseeing and monitoring:
-
organisational performance and the achievement of the Company’s strategic
goals and objectives
compliance with the Company’s code of conduct
• monitoring financial performance including approval of the annual report and half-year
-
financial reports and liaison with the Company’s auditors
• appointment and contributing to the performance assessment of the portfolio manager and
other external service providers
• enhancing and protecting the reputation of the Company
•
reporting to shareholders.
The terms and conditions of appointment and retirement of new directors are set out in a formal letter
of appointment that includes:
term of the appointment
•
• powers and duties
• determination of remuneration
• dealings in the Company securities including notification requirements
•
conflicts of interest and disclosure policies
•
indemnity and insurance arrangements
• access to independent professional advice
•
review of appointment
13
BRICKWORKS INVESTMENT COMPANY LIMITED
_______________________________________________________________________________
CORPORATE GOVERNANCE - Continued
Board Composition
The key elements of the Board composition include:
• ensuring, where practicable to do so, that a majority of the Board are independent directors
•
the Board of the Company currently comprises 1 independent non -executive director and 2
non executive directors
• non-executive directors bring a fresh perspective to the board’s consideration of strategic, risk
and performance matters and are best placed to exercise independent judgement and review
and constructively challenge the performance of management
the Company is to maintain a mix of directors on the Board from different backgrounds with
complementary skills and experience
the Board seeks to ensure that:
•
•
-
-
at any point in time, its membership represents an appropriate balance
between directors with experience and knowledge of the Company and
directors with an external perspective
the size of the Board is conducive to effective discussion and efficient
decision making.
•
in recognition of the importance placed on the investment experience of the directors and the
Board’s role in supervising the activities of the portfolio manager, the majority of the Board
are not independent directors. Refer discussion detailed under “Directors’ Independence” on
page 15.
Details of the members of the Board, their experience, expertise, qualifications and independent
status are set out in the directors’ report under the heading “Directors”.
Term of Office
The company’s Constitution specifies that all directors must retire from office no later than the third
annual general meeting (AGM) following their last election. Where eligible, a director may stand for
re-election in accordance with company’s Constitution.
Chairman
The Chairman is a non-executive director who is responsible for leading the Board, ensuring directors
are properly briefed in all matters relevant to their role and responsibilities, facilitating Board
discussions and managing the Board’s relationship with external service providers.
Board Meetings
Details of directors’ attendance at Board meetings are set out in the Directors’ Report on page 11.
The Board meets formally at least 6 times a year. In addition, it meets whenever necessary to deal
with specific matters needing attention between the scheduled meetings.
Meeting agendas are established by the Chairman and Company Secretary to ensure adequate
coverage of financial, strategic, compliance and other major areas throughout the year.
Copies of Board papers are circulated in advance of meetings. Directors are always encouraged to
participate with a robust exchange of views and to bring their independent judgment to bear on the
issues and decisions at hand. The Board highly values its relationship with the portfolio manager
which is based on openness and trust.
14
BRICKWORKS INVESTMENT COMPANY LIMITED
_______________________________________________________________________________
CORPORATE GOVERNANCE - Continued
Performance Assessment
The Board undertakes an annual self assessment of its collective performance. The results and any
action plans are documented together with specific performance goals which are agreed for the
coming year. The self assessment:
compares the performance of the Board with the requirements of it’s Charter
sets forth the goals and objectives of the Board for the upcoming year
•
•
• effects any improvements to the Board charter deemed necessary or desirable.
The performance evaluation is conducted in such manner as the Board deems appropriate. In
addition, each Board committee undertakes an annual self assessment on the performance of the
committee and achievement of committee objectives.
The Chairman annually assesses the performance of individual directors and meets privately with
each director to discuss this assessment. The Chairman’s performance is reviewed by the Board.
Directors’ Independence
Assessing the independence of directors is undertaken in accordance with the best practice
recommendations released by the Australian Stock Exchange Corporate Governance Council in
March 2003.
When assessing the independence of directors and the Chairman under recommendation 2.1 and 2.1
of the best practice recommendations released by the Australian Stock Exchange Corporate
Governance Council, both Mr Millner and Mr Payne, although meeting other criteria, and bringing
independent judgement to bear on their respective roles, are both not defined as independent
directors, primarily due to the fact that both Messrs Millner and Payne are officers of Brickworks
Limited, who is a substantial shareholder of the company. The Company has not followed
recommendation 2.1 and 2.2 due to the following reasons;
• The Board are of the opinion that all directors exercise and bring to bear an unfettered and
independent judgement towards their duties . Brickworks Investment Company Limited listed
on the Australian Stock exchange on 12 December 2003 to take over the investment portfolio
of Brickworks Limited and the Board is satisfied that both Messrs Millner and Payne play an
important role in the continued success and performance of the portfolio.
In relation to director independence, materiality is determined on both quantitative and qualitative
bases. An amount of over 5% of annual turnover of the Company is considered material. In addition,
a transaction of any amount or a relationship is deemed material if knowledge of it impacts the
shareholders’ understanding of the director’s performance.
Avoidance of conflicts of interests of Directors
In accordance with the Corporations Act 2001 (Cth), any director with a material personal interest in a
matter being considered by the Board must not be present when the matter is being considered, and
may not vote on the matter.
Independent Professional Advice
Directors and board committees have the right, in connection with their duties and responsibilities, to
seek independent professional advice at the Company’s expense. Prior approval of the Chairman is
required, but this will not be unreasonably withheld.
15
BRICKWORKS INVESTMENT COMPANY LIMITED
______________________________________________________________________________
CORPORATE GOVERNANCE - Continued
Corporate Reporting
The portfolio manager and the administrative and company secretarial service provider, namely Souls
Funds Management Ltd and Corporate & Administrative Services Pty Ltd have made the following
certifications to the Board:
•
•
that the Company’s financial reports are complete and present a true and fair view, in all
material respects, of the financial condition and operational results of the Company and its
consolidated entities in accordance with all mandatory professional reporting requirements
that the above statement is founded on a sound system of internal cont rol and risk
management which implements the policies adopted by the Board and that the Company’s
risk management and internal control is operating effectively and efficiently in all material
respects.
The Company adopted this reporting structure for the year ended 30 June 2004.
Board Committees
The Board has established a number of committees to assist in the execution of its duties and to
allow detailed consideration of complex issues. Current committees of the Board are the investment
committee, nomination committee and the remuneration and audit committees. The committee’s
structure and membership is reviewed on an annual basis. All matters determined by committees are
submitted to the full Board as recommendations for Board decisions.
Investment Committee
The Company has established an Investment Committee effective from 12 December 2003.
The investment committee consists of the following members:
RD Millner (Chairman)
AJ Payne
Details of these directors’ qualifications, experience and attendance at investment committee
meetings held during the year are set out in the Directors’ Report on page 11.
The main responsibilities of the committee are to:
• assess the information and recommendation received by the portfolio manager regarding the
present and future investment needs of the Company
• assess the performance of the portfolio manager
• evaluating investment performance.
16
BRICKWORKS INVESTMENT COMPANY LIMITED
_______________________________________________________________________________
CORPORATE GOVERNANCE - Continued
Nomination Committee
The Company has embraced the best practice recommendations released by the Australian Stock
Exchange Corporate Governance Council in March 2003 and established a Nominations Committee
effective from 12 December 2003.
The nomination committee consists of the following members:
RD Millner (Chairman)
DC Hall
AJ Payne
Details of these directors’ qualifications, experience and attendance at nom ination committee
meetings held during the year are set out in the Directors’ Report on page 11.
The main responsibilities of the committee are to:
• assess the membership of the Board having regard to present and future needs of the
Company
• assess the independence of directors to ensure the majority of the Board are independent
directors
• propose candidates for Board vacancies in consideration of qualifications, experience and
domicile
• oversee board succession
• evaluating Board performance.
New directors are provided with a letter of appointment setting out their responsibilities, rights and the
terms and conditions of their employment.
The nominations committee charter provides guidance for the selection and appointment of new
directors.
Audit Committee
The members of the audit committee at the date of this annual financial report are:
DC Hall (Chairman)
RD Millner
AJ Payne
Details of these directors’ qualification, experience and attendance at audit committee meetings are
set out in the Directors’ Report on page 11.
The audit committee operates in accordance with a charter.
The Chairman of the audit committee is an independent, non-executive director. The Chairman of the
Audit Committee is also required to have accounting or related financial expertise, which includes
past employment, professional qualification or other comparable experience. The other members of
the audit committee are all financially literate and have a strong understanding of the industry in
which the Company operates.
17
BRICKWORKS INVESTMENT COMPANY LIMITED
___ ___________________________________________________________________________
CORPORATE GOVERNANCE - Continued
Audit Committee - continued
The audit committee’s role and responsibilities, composition, structure and membership requirements
are documented in an audit committee charter, which has been approved by the Board and is
reviewed annually.
The main responsibilities of the committee are to:
•
•
•
•
•
review, assess and approve the annual report, half-year financial report and all other financial
information published by the Company or released to the market
reviewing the effectiveness of the organisation’s internal control environment covering:
-
-
-
effectiveness and efficiency of operations
reliability of financial reporting
compliance with applicable laws and regulations
• oversee the effective operation of the risk management framework
•
recommend to the Board the appointment, removal and remuneration of the external auditors,
and review the terms of their engagement, the scope and quality of the audit and assess
performance and consider the independence and competence of the external auditor on an
ongoing basis. The Audit Committee receives certified independence assurances from the
external auditors
review and approve the level of non-audit services provided by the external auditors and
ensure it does not adversely impact on auditor independence. The external auditor will not
provide services to the Company where the auditor would have a mutual or conflicting
interest with the Company; be in a position where they audit their own work; function as
management of the Company; or have their independence impaired or perceived to be
impaired in any way.
review and monitor related party transactions and assess their priority
report to the Board on matters relevant to the committee’s role and responsibilities
In accordance with the audit committee charter, the Company requires that the external audit
engagement partner and review partner be rotated very five years.
In fulfilling its responsibilities, the audit committee requires the portfolio manager and the
administrative and company secretarial service provider, namely Souls Funds Management Ltd and
Corporate & Administrative Services Pty Ltd to state in writing to the Board that the Company’s
financial reports presents a true and fair view, in all material respects, of the Company’s and its
consolidated entities financial condition, operational results and are in accordance with the relevant
accounting standards.
The external auditors, the portfolio manager and the administrative and company secretarial service
provider, namely Souls Funds Management Ltd and Corporate & Administrative Services Pty Ltd are
invited to attend meetings at the discretion of the audit committee.
18
BRICKWORKS INVESTMENT COMPANY LIMITED
_______________________________________________________________________________
CORPORATE GOVERNANCE - Continued
Remuneration Committee & Policies
The Company has embraced the best practice recommendations released by the Australian Stock
Exchange Corporate Governance Council in March 2003 and established a Remuneration Committee
effective from 12 December 2003.
The remuneration committee consists of the following members:
RD Millner (Chairman)
DC Hall
AJ Payne
Details of these directors’ qualifications, experience and attendance at remuneration committee
meetings are set out in the Directors’ Report on page 11.
The Remuneration Committee oversees and review remuneration packages and other terms of
employment for executive management. In undertaking their roles the Committee members consider
reports from external remuneration experts on recent developments on remuneration and related
matters.
The Company does not have any employees due to the nature of its business and the use of external
service providers. If the use of external service providers was to change in the future, any person
engaged in an executive capacity would be required sign a formal employment contract at the time of
their appointment covering a range of matters including their duties, rights, responsibilities, and any
entitlements on termination. In such circumstances, executive remuneration and other terms of
employment would also be reviewed annually by the committee having regard to personal and
corporate performance, contribution to long term growth, relevant comparative information and
independent expert advice. As well as a base salary, remuneration in such circumstances could be
expected to include superannuation, performance-related bonuses and fringe benefits.
Fees for non-executive directors reflect the demands on and responsibilities of our directors. Non-
executive directors are remunerated by way of base fees and statutory superannuation contributions
and do not participate in schemes designed for the remun eration of executives. Non -executive
directors do not receive any options, bonus payments or nor are provided with retirement benefits
other than statutory superannuation.
Further information on directors’ and executives’ remuneration is set out in the directors’ report and
notes 15 to 18 to the financial statements.
The Remuneration Committee’s terms of reference include responsibility for reviewing any
transactions between the organisation and the directors, or any interest associated with the directors,
to ensure the structure and terms of the transaction are in compliance with the Corporations Act 2001
and are appropriately disclosed.
The remuneration committee operates in accordance with a charter.
19
BRICKWORKS INVESTMENT COMPANY LIMITED
______________________________________________________________________________
CORPORATE GOVERNANCE - Continued
Corporate Governance Framework
The Board is committed to the highest standards of corporate governance, which it requires as
fundamental to all its activities.
External service providers are required to provide a Corporate Governance Declaration (the
Declaration) to the Board on an annual basis.
External service providers are required to confirm in the annual Statements that to the best of their
knowledge and belief and having made appropriate inquiries of their own staff and consultants
regarding the Company and its controlled entities (the Group) that, in the interests of directors,
shareholders and other key stakeholders the service provider has applied corporate governance
practices mandated by the Board at all times.
The Declaration covers the following:
• disclosure of the Groups’ operations in the Board meeting papers.
•
•
satisfaction of all matters arising from prior Board meetings
the maintenance of financial records that correctly record and explain the Group’s
transactions and financial position and performance to enable true and fair financial
statements to be prepared and audited or reviewed in accordance with all applicable
Accounting Standards and other mandatory professional reporting requirements
compliance with statutory and prudential obligations and details of all lodgments in
accordance with these obligations
•
• maintenance of ethical conduct by execution of duties with the utmost integrity, objectivity and
professionalism at all times
• notification to the Company Secretary of all purchases and sales of Company securities,
directly and indirectly and disclosure in the Board papers.
Risk Management
The Board is committed to the identification and quantification of risk throughout the Company’s
operations.
Considerable importance is placed on maintaining a strong control environment. There is an
organisational structure with clearly drawn lines of accountability. Adherence to the code of conduct is
required at all times and the Board actively promotes a culture of quality and integrity.
Management of investment risk is fundamental to the business of the Company being an investor in
Australian listed securities. Details of investment risk management policies are held by the portfolio
manager.
The Board operates to minimise its exposure to investment risk, in part, by the appointment of an
external portfolio manager who has proprietary systems, processes and procedures in place to
effectively manage investment risk.
20
BRICKWORKS INVESTMENT COMPANY LIMITED
______________________________________________________________________________
CORPORATE GOVERNANCE - Continued
Code of Conduct
The company has developed a Code of Conduct (the Code) which has been fully endorsed by the
Board and applies to all directors and external service providers and their employees. The code is
regularly reviewed and updated as necessary to ensure it reflects the highest standards of behaviour
and professionalism and the practices necessary to maintain confidence in the Company’s integrity.
In summary, the Code requires that at all times all company personnel act with the utmost integrity,
objectivity and in compliance with the letter and the spirit of the law and company policies.
Share Trading Policy
The company has developed a Share Trading Policy which has been fully endorsed by the Board and
applies to all directors and employees.
Directors, executives and employees may deal in Company securities, however they may not do so if
in possession of information which is price sensitive or likely to be price sensitive to the security’s
market price. Changes in a Director’s interest is required to be advised to the Company within 3 days
for notification to the ASX”
Continuous Disclosure and Shareholder Communication
The Chairman and Company Secretary have been nominated as being person responsible for
communications with the Australian Stock Exchange (ASX). This role includes the responsibility for
ensuring compliance with the continuous disclosure requirements in the ASX listing rules and
overseeing and co-ordinating information disclosure to ASX. The Chairman is responsible for
disclosure to analysts, brokers and shareholders, the media and the public.
The company has written policies and procedures on information disclosure that focus on continuous
disclosure of any information concerning the Company that a reasonable person would expect to
have a material effect on the price of the Company’s securities.
All information disclosed to the ASX is available on the ASX’s website within 24 hours of the release
to the ASX. Procedures have been established for reviewing whether price sensitive information has
been inadvertently disclosed, and if so, this information is also immediately released to the market.
All shareholders receive a copy of the Company’s full annual report. Shareholders also are updated
with the Company’s operations via monthly ASX announcements of the net tangible asset (NTA)
backing of the portfolio and other disclosure information. All recent ASX announcements and annual
reports are available on the ASX website, or alternatively, by request via email, facsimile or post.
21
BRICKWORKS INVESTMENT COMPANY LIMITED
STATEMENT OF FINANCIAL PERFORMANCE
FOR THE PERIOD TO 30 JUNE 2004
Note
Consolidated
Company
2004
$’000
2003
$’000
2004
$’000
2003
$’000
2
2
3
10,976
(7,366)
3,610
- 479
(649)
-
(170)
-
-
-
-
(20)
-
51
-
13
3,590
-
(119)
-
12
10,784
14,374
Revenue from ordinary activities
Expenses from ordinary activities
Profit from ordinary activities before income
tax expense
Income tax expense relating to ordinary
activities
Operating profit after income tax attributable to
members of Brickworks Investment Company
Limited
Increase in asset revaluation reserve
Total changes in equity other than those
resulting from transactions with owners as
owners
Basic earnings per share (cents per share)
15
2.10
The accompanying notes form part of these financial statements
-
(119)
-
-
-
-
-
22
BRICKWORKS INVESTMENT COMPANY LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2004
CURRENT ASSETS
Cash Assets
Receivables
Prepayments
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Other Financial Assets
Receivables
Deferred Tax Assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Payables
TOTAL CURRENT LIABILITIES
NON CURRENT LIABILITIES
Deferred Tax Liabilities
TOTAL NON CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
SHAREHOLDERS’ EQUITY
Contributed Equity
Reserves
Retained Profits
TOTAL SHAREHOLDERS’ EQUITY
Note
5
6(a)
7
6(b)
8
9
10
11
12
13
Consolidated
Company
2004
$’000
2003
$’000
2004
$’000
2003
$’000
12,792
1,989
23
14,804
-
5,835
- 4,926
23
10,784
-
-
170,974
-
1,355
172,329
187,133
-
-
-
-
-
73,501
87,000
1,355
161,856
172,640
-
-
-
-
-
-
-
-
-
92
92
-
-
-
-
92
92
-
-
-
4,630
4,630
-
-
4,630
4,630
-
-
4,722
-
4,722
-
182,411
-
167,918
-
168,037
10,784
3,590
182,411
-
-
-
-
168,037
-
(119)
167,918
-
-
-
-
The accompanying notes form part of these financial statements
23
BRICKWORKS INVESTMENT COMPANY LIMITED
STATEMENT OF CASH FLOWS
FOR THE PERIOD TO 30 JUNE 2004
Cash flows from operating activities
Payments to suppliers and employees
Income Tax paid
Other receipts in the course of operation
Dividends received
Interest Received
Net Cash Inflow/(Outflow) from operating activities
Cash flows from investing activities
Payment for purchasing subsidiary entity
Payment for investments
Proceeds on sale of investments
Net Cash Inflow/(Outflow) from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Repayment of borrowings
Loan to subsidiary entity
Net Cash Inflow/(Outflow) from financing activities
Net increase / (decrease) in cash held
Cash at the beginning of the period
Cash at the end of the period
Note
Consolidated
2004
$’000
2003
$’000
Company
2004
$’000
2003
$’000
(615)
(12)
20
3,612
597
3,602
-
-
-
-
-
-
(612)
-
19
-
479
(114)
(34,888)
(5,746)
6,656
(33,978)
-
-
-
-
(35,000)
-
-
(35,000)
128,168
(85,000)
-
43,168
12,792
-
12,792
-
-
-
-
128,168
-
(87,219)
40,949
-
-
-
5,835
-
5,835
14
14
5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The accompanying notes form part of these financial statements
24
BRICKWORKS INVESTMENT COMPANY LIMITED
________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD TO 30 JUNE 2004
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This general purpose financial report has been prepared in accordance with Accounting Standards ,
other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues
Group Consensus Views and the Corporations Act 2001.
Accounting policies are selected and applied in a manner which ensures that the resultant financial
information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of
the underlying transactions and other events is reported.
Except for equity investments, which are at market value, the financial report has been are prepared
in accordance with the historical cost convention. Where a choice exists between two or more
acceptable accounting methods, the notes fully explain the method adopted. The cost method of
accounting is used for all acquisitions of assets regardless of whether shares or other assets are
acquired. Cost is determined as the fair value of the purchase consideration at the date of acquisition
plus costs incidental to the acquisition.
(a)
Principles of consolidation
The consolidated financial statements include the financial statements of Brickworks
Investment Company Limited ("the Company"), being the parent entity, and its controlled
entities. The balances and effects of transactions between controlled entities included in
the consolidated financial statements have been eliminated.
Where controlled entities are acquired during the year, their results are included only from
the date control was obtained.
(b)
Investments
Listed Shares Held for Investment
Investments are initially recorded at cost and are re-valued to their fair value at the
reporting date. Fair value is determined by reference to the last quoted sale price on the
Australian Stock Exchange at the close of the business on the reporting date. Costs in
acquiring investments, such as brokerage are capitalised in the initial cost of the
investment.
Revaluation increments and decrements are taken to the Asset Revaluation Reserve after
deducting a provision for potential deferred capital gains tax to the extent that they are
able to be offset by credits in the Asset Revaluation Reserve, otherwise they are included
in the Profit from ordinary activities. On the disposal of investments, the balance in the
Asset Revaluation Reserve relating to the disposed asset is transferr ed to the Capital
Profit Reserve.
25
BRICKWORKS INVESTMENT COMPANY LIMITED
________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD TO 30 JUNE 2004 (continued)
(c)
Taxes
Income Tax
Current tax for the period is calculated on profit from ordinary activities adjusted for non-
assessable and non-deductible items and is based on tax rates and tax laws that have
been enacted or substantively enacted, at the reporting date.
Deferred tax is accounted for using the comprehensive balance sheet liability method
whereby deferred tax assets and liabilities are recognised on all temporary differences
arising from differences between the carrying amounts of assets and liabilities in the
financial statements and their corresponding tax base.
Deferred tax relates to the movement in the net deferred tax asset/liability for the period
and is recognised as an expense or revenue in profit from ordinary activities, unless the
deferred tax relates to an amount that is credited or debited directly to equity, in which
case the deferred tax is also recognised in equity.
Deferred tax assets and liabilities are measured at the tax rates that are expected to
apply to the period when the asset or liability is recovered or settled.
Deferred tax liabilities have not been recognised on assessable temporary differences
arising from investments in controlled entity where the parent entity can control the timing
of distributions and it is probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax assets are recognised for deductible temporary differences, unused tax
losses and unused tax credits only if it is probable that future taxable amounts will be
available against which the deductible temporary differences, unused tax losses and
unused tax credits can be utilised.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except:
i)
ii)
where the GST incurred on a purchase of goods and services is not
recoverable from the taxation authority, in which case the GST is
recognised as part of the cost of acquisition of the asset or as part of the
expense item as applicable; and
receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included
as part of receivables or payables in the Statement of Financial Position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST
component of cash flows arising from investing and financing activities, which is
recoverable from, or payable to, the taxation authority are classified as operating cash
flows.
26
BRICKWORKS INVESTMENT COMPANY LIMITED
________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD TO 30 JUNE 2004 (continued)
(d)
(e)
Tax Consolidation
The Company has formed an income tax consolidated group under the Tax Consolidation
Regime with its wholly owned subsidiary for the financial year ending 30 June 2004.
Members of the group have entered into a tax sharing agreement in order to allocate
income tax expense between the Company and its subsidiary on a pro-rata basis. In
addition, the agreement also provides for the allocation of income tax liabilities should the
head entity default on its tax payment obligation. Brickworks Investment Company
Limited is responsible for recognising the current and deferred tax assets and liabilities
for the tax consolidated group.
Cash
For purposes of the statement of cash flows, cash includes deposits at call which are
readily convertible to cash on hand and which are used in the cash management function
on a day-to-day basis, net of outstanding bank overdrafts.
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow
to the entity and the revenue can be reliably measured. The following specific recognition
criteria must also be met before revenue is recognised:
Sale of Investments
Control of the right to equity has passed to the buyer.
Interest
Control of the right to receive the interest proceeds. Interest from cash on deposit is
recognised in accordance with the terms and conditions that apply to the deposit.
Dividend
Control of the right to receive the dividend proceeds. Dividends from listed entities is
recognised as income on the date the shares are traded “ex -dividend”. De-merger
dividends arising from company de-consolidations are treated as a return of capital and
not as a dividend.
Realised Gain/Loss
Realised gains or losses on investments are calculated as the difference between sale
proceeds and carrying value of investments determined on a first-in-first-out (FIFO) basis.
Cost of Investment
Cost of investment is solely related to the costs incurred in acquiring the equities,
including incidental costs.
(f)
Receivables
Receivables are recognised as amounts to be received in the future for goods and
services rendered, whether or not billed by the consolidated entity. Assets are commonly
settled within 30 days for other debtors. Related party receivables are payable at call.
27
BRICKWORKS INVESTMENT COMPANY LIMITED
________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD TO 30 JUNE 2004 (continued)
(g)
(h)
Trade Creditors and accruals
Liabilities are recognised for amounts to be paid in the future for goods and services
received, whether or not billed to the consolidated entity.
Liabilities are commonly settled:
(i)
(ii)
Within 3 days ( transaction date + 3 days) for equity purchases ; and
Within 30 days for other creditors and accruals.
Earnings per share
Basic EPS is calculated as net profit attributable to members, adjusted to exclude costs
of servicing equity (other than dividends), divided by the weighted average number of
ordinary shares, adjusted for any bonus element.
Diluted EPS is calculated as net profit attributable to members, adjusted for:
i)
ii)
Costs of servicing equity (other than dividends);
The after tax effect of dividends and interest associated with dilutive potential
ordinary shares that have been recognised as expenses; and
iii) Other non-discretionary changes in revenues or expenses during the period that
would result from the dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive ordinary shares,
adjusted for any bonus element.
(i)
Contributed Equity
Issued and paid up capital is recognised at the fair value of the consideration received by
the Company. Any transaction costs arising from the issue of ordinary shares are
recognised directly in equity as a reduction of the share proceeds received.
(j)
Rounding
The amounts contained in this report and in the half-year financial report have been
rounded to the nearest $1,000 (where rounding is applicable) under the option available
to the Company under ASIC Class Order 98/0100. The Company is an entity to which the
Class Order applies.
(k) Adoption of International Financial Reporting Standards
The Company commenced its operation from 12 December 2003 and has since adopted
Australian Equivalents to International Financial Reporting Standards. There are no key
differences in the entity’s accounting policies which will arise from the adoption of IFRS.
28
BRICKWORKS INVESTMENT COMPANY LIMITED
________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD TO 30 June 2004 (continued)
2.
PROFIT FROM ORDINARY ACTIVITIES
Profit from ordinary activities before income tax
expense includes the following revenues and
expenses whose disclosure is relevant in explaining
the financial performance of the entity:
(i) Revenue from ordinary activities
Proceeds from sale of investments
Rebateable dividends
Rebateable dividends – special
Non – rebateable dividends
Interest received - notes
Interest received – bank deposits
(ii) Expenses
Carrying costs of investments disposed
Directors fees and related expenses
Management expenses
Professional costs
General expenses
Consolidated
Company
2004
$’000
2003
$’000
2004
$’000
2003
$’000
6,656
3,499
43
181
55
542
10,976
6,717
52
360
87
150
7,366
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
479
479
-
52
360
87
150
649
-
-
-
-
-
-
-
-
-
-
-
-
-
3. INCOME TAX
The aggregate amount of income tax expense attributable to the year differs from the amount prima
facie payable on profits from ordinary activities. The difference is reconciled as follows:
Income tax calculated at 30%
Tax effect of permanent differences which
(reduce)/increase tax payable:
- Franked dividends received
Income tax expense
1,083
(1,063)
20
-
-
-
(51)
-
(51)
-
-
-
29
BRICKWORKS INVESTMENT COMPANY LIMITED
________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD TO 30 June 2004 (continued)
4. FRANKING ACCOUNT BALANCE
Consolidated
Com pany
2004
$’000
2003
$’000
2004
$’000
2003
$’000
Balance of franking account after allowing for payment of
income tax provided for in the financial statements and
receipt of dividends recognised as receivables and
deducting franking credits used in the payment of
dividends recognised as a liability at the reporting date.
30% Class C franking credits
2,305
-
2,305
-
5. CASH ASSETS
Cash at bank
Deposits at call
6. RECEIVABLES
(a) Current
Dividends receivable
Interest receivable
Receivable from related entity
Sundry Debtors
(b) Non-current
12,792
-
12,792
-
-
-
5,835
-
5,835
-
-
-
1,973
-
-
16
1,989
-
-
-
-
-
-
-
4,912
14
4,926
-
-
-
-
-
Loans to related entity – unsecured
-
-
87,000
-
7. OTHER FINANCIAL ASSETS
Listed securities at fair value:
- Shares in other corporations
- Converting and convertible notes and other interest
169, 754
-
-
-
bearing securities
Shares in subsidiary entity at cost
1,220
-
170, 974
-
-
-
-
73,501
73,501
-
-
30
BRICKWORKS INVESTMENT COMPANY LIMITED
________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD TO 30 June 2004 (continued)
8. DEFERRED TAX ASSETS
The deferred tax asset balance comprises the following
timing differences and unused tax losses:
Share issuing costs
Formation expenses
Current year capital losses
Current year income losses
Consolidated
Company
2004
$’000
2003
$’000
2004
$’000
2003
$’000
1,094
2
18
241
1,355
-
-
-
-
-
1,094
2
18
241
1,355
-
-
-
-
-
Deferred tax asset recognised directly in equity
1,367
-
1,367
-
9. PAYBLES
Creditors and accruals
92
-
92
-
10. DEFERRED TAX LIABILITIES
The deferred tax liability balance comprises the following
timing differences:
Revaluation of investments held by controlled entity
Non rebateable dividend receivable by controlled entity
4,622
8
4,630
-
-
-
4,622
8
4,630
-
-
-
Deferred tax liability recognised directly in equity
4,622
-
4,622
-
11. CONTRIBUTED EQUITY
(a) Issued and Paid-Up Capital
Consolidated
Company
2004
$’000
2003
$’000
2004
$’000
2003
$’000
171,226,981 Ordinary shares fully paid
168,037
-
168,037
-
(b) Movement in Ordinary Shares
There were 171,226,981 ordinary shares issued since the Company was incorporated on 17 October 2003
to 30 June 2004.
31
BRICKWORKS INVESTMENT COMPANY LIMITED
________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD TO 30 June 2004 (continued)
12. ASSET REVALUATION RESERVE
Consolidated
Company
2004
$’000
2003
$’000
2004
$’000
2003
$’000
-
10,784
10,784
-
3,590
-
3,590
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(119)
-
(119)
-
-
-
-
Balance at the beginning of the period
Revaluation of investments
Balance at the end of the year
13. RETAINED PROFITS
Retained profits at the beginning of the period
Net profit attributable to members of the Company
Dividends provided for or paid
Retained profits at the end of the year
14. CASH FLOW RECONCILIATION
(a) Reconciliation of cash flow from operations with
profits from ordinary activities after income tax
Net profit / (loss) after income tax
(Profit) / loss on disposal of investment
(Increase) / Decrease in receivables and prepayments
Increase / (Decrease) in creditors and accruals
Increase / (Decrease) in deferred tax liabilities
Increase / (Decrease) in provision for tax
(Increase) / Decrease in future tax benefit
Net cash (outflow) / inflow from operating activities
3,590
61
(150)
92
9
(12)
12
3,602
-
-
-
-
-
(119)
-
(36)
92
-
-
-
-
-
-
-
-
(51)
(114)
-
-
(b) Acquisition of subsidiary entity
During the period to 30 June 2004, the Company
acquired 100% of the controlled entity, Brickworks
Securities Pty Ltd.
Details of the transaction are:
Purchase consideration net of cash acquired
73,389
-
73,501
-
Cash consideration
34,888
-
35,000
-
Assets and liabilities held at acquisition date:
Receivables
Listed securities
Creditors
1,862
156,539
(85,012)
73,389
-
-
-
-
-
-
-
-
-
-
-
-
32
BRICKWORKS INVESTMENT COMPANY LIMITED
_______________________________________________________________ _________________
NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD TO 30 June 2004 (continued)
14. CASH FLOW RECONCILIATION (continued)
(c) Non-cash financing and investing activities
(i) Share issue
38,501,479 ordinary shares were issued at $1 each as part of the consideration for the
purchase of Brickworks Securities Pty Limited.
15. EARNINGS PER SHARE
The following reflects the income and share data used
in the calculation of basic and diluted earnings per
share:
Net Profit / (Loss)
Earnings used in calculating basic and diluted earnings
per share
Weighted average number of ordinary shares used in
the calculation of basic & diluted earnings per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
16. AUDITORS’ REMUNERATION
Consolidated
2004
$’000
2003
$’000
3,590
-
3,590
-
No.
(‘000)
171,227
2.10
2.10
-
-
-
Amounts received, or due and receivable by the auditors
for:
(a) Auditing the financial report of the Company and the
controlled entity
(b) Other services
Consolidated
Company
2004
$’000
2003
$’000
2004
$’000
2003
$’000
26
-
26
-
-
-
26
-
26
-
-
-
33
BRICKWORKS INVESTMENT COMPANY LIMITED
________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD TO 30 June 2004 (continued)
17. DIRECTORS REMUNERATION
Income paid or payable, or otherwise made
available to Non-Executive Directors by the
Company in connection with managing the
affairs of the Company
Fees
Superannuation Guarantee amounts
2004
2003
$
35,000
16,775
51,775
$
-
-
-
The number of Directors whose total remuneration from the Company was within the following bands:
$10,000 - $19,999
$20,000 - $29,999
Number of Directors
-
-
2
1
The Company had no employees during the period to 30 June 2004.
18. SUPERANNUATION COMMITMENTS
The Company contributes superannuation payments on behalf of directors of the consolidated entity
in accordance with relevant legislation. Superannuation funds are nominated by the individual
directors and are independent of the Company.
19. RELATED PARTY TRANSACTIONS
Related parties of the Company fall into the following categories:
(i) Controlled Entity
Brickworks Securities Pty Limited is 100% owned by the Company and is incorporated in Australia.
Transactions between the Company and its controlled entity consist of loan balance from the
Company to its controlled entity. No interest is charged on the loan balance to the controlled entity
and no repayment period is fixed for the loan.
(ii) Directors/Officers Related Entities
Persons who were Directors/Officers of Brickworks Investment Company Limited for part or all of the
period ended 30 June 2003 were:
Directors: RD Millner
DC Hall
AJ Payne
Company Secretary: JP de Gouveia
Pitt Capital Partners Limited
The Company has appointed Pitt Capital Partners Limited, an entity in which Mr. RD Millner has an
indirect interest, to act as financial adviser in respect of the listing of the Company’s shares. Total
fees paid to Pitt Capital Partners Limited were $788,811 including GST.
34
BRICKWORKS INVESTMENT COMPANY LIMITED
________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD TO 30 June 2004 (continued)
19. RELATED PARTY TRANSACTIONS (continued)
Souls Funds Management Limited
The Company has appointed Souls Funds Management Limited, an entity in which Mr. RD Millner
has an indirect interest, to act as investment manager for a period of 5 years from 24 October 2003.
Under the agreement between the two parties, the Company agrees to pay Souls Funds
Managem ent Limited a monthly management fee equal to one-twelfth of 0.35% of the total assets of
the Company in the preceding month.
The management fee paid for the period to 30 June 2004 was $ 359,549; and the management fee
owed by the Company to Souls Funds Management Limited at 30 June 2004 was $59,950.
Corporate and Administrative Services Pty Limited
The Company has appointed Corporate & Administrative Services Pty Limited, an entity in which Mr
RD Millner has an indirect interest and Mr JP de Gouveia has a direct interest, to provide the
Company with administration, company secretarial services and preparation of all financial accounts.
Administration fees paid for the period to 30 June 2004 were $60,866 including GST and are at
standard market rates.
No administration fees were owed by the Company to Corporate & Administrative Services Pty
Limited at 30 June 2004.
(iii) Transactions in securities of the Company
Aggregate number of securities of the Company acquired or disposed of by Directors or their
Director-related entities:
Acquisition - Shares
Disposal – Shares
2004
Units
1,014,002
-
During the period ended 30 June 2004, entities related to Directors acquired, under normal
commercial terms, shares in the Company as follows:
(i)
(ii)
(iii)
Entities related to Mr RD Millner: 914,000 shares
Entities related to Mr DC Hall: 50,001 shares
Entities related to Mr AJ Payne: 50,001 shares
Directors acquired shares through initial public offering or on-market purchase.
There has been no other change to Directors’ shareholdings in the Company during the period ended
30 June 2004.
Messrs RD Millner, DC Hall and AJ Payne, or their associated entities, being shareholders of the
Company are entitled to receive dividends from the Company.
20. FINANCIAL REPORTING BY SEGMENTS
The Company operates predominately in the securities industry in Australia.
35
BRICKWORKS INVESTMENT COMPANY LIMITED
________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD TO 30 June 2004 (continued)
21. FINANCIAL INSTRUMENTS
a) Interest Rate Risk
The Company’s exposure to interest rate risk as at the reporting date is as follows:
Weighted
Average
Interest Rate
%
Variable
Interest Rate
$’000
Non-Interest
Bearing
$’000
Total
$’000
2004
2003
2004
2003
2004
2003
2004
2003
Financial Assets
Cash
Converting preference
shares
Notes
Listed securities
Receivables and
prepayments
Financial Liabilities
Payables
3.95
7.27
6.75
-
-
-
-
-
-
-
-
-
12,792
797
423
-
-
-
-
-
-
-
-
169,754
-
-
-
-
12,792
797
423
169,754
-
-
-
-
-
14,012
-
-
2,012
171,766
-
-
2,012
185,778
-
-
-
-
92
-
92
-
b) Credit Risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in
financial loss to the Company. The Company has adopted the policy of only dealing with creditworthy
counterparties and obtaining sufficient collateral or other security where appropriate, as a means of
mitigating the risk of financial loss from defaults. The Group measures credit risk on a fair value basis.
The Group does not have any significant credit risk exposure to any single counterparty or any group
of counterparties having similar characteristics. The carrying amount of financial assets recorded in
the financial statements, net of any provisions for losses, represents the Group’s maximum exposure
to credit risk without taking account of the value of any collateral or other security obtained.
c) Concentration of investment risk
The Company minimises concentration of risk in relation to investments by spreading across different
sectors.
Spread of investments in the following sectors:
Percentage of total investment
Amount
Sector
Banks
Capital goods
Diversified Financials
Materials
Telecommunication Services
Other non concentrated
Bank deposits
2004
%
46.7
3.2
6.2
20.5
3.4
13.0
7.0
100.0
2003
%
-
-
-
-
-
-
-
-
2004
($’000)
85,809
5,811
11,428
37,578
6,308
24,040
12,792
183,766
2003
($’000)
-
-
-
-
-
-
-
-
36
BRICKWORKS INVESTMENT COMPANY LIMITED
________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD TO 30 June 2004 (continued)
21. FINANCIAL INSTRUMENTS (continued)
The Company traded all investment transactions through a number of major broking firms with trades
evenly placed amongst those firms.
d) Net Fair Value
The carrying amount of financial assets and financial liabilities recorded in the financial statements
represents their respective net fair values, determined in accordance with the accounting policies
disclosed in note 1 to the accounts.
22. COMPARATIVE INFORMATION
The Company was incorporated on 17 October 2003 and as such no comparative information is
available for the previous corresponding period.
37
BRICKWORKS INVESTMENT COMPANY LIMITED
________________________________________________________________________________
DIRECTORS’ DECLARATION___________________________________________________
The directors of Brickworks Investment Company Limited declare that:
1.
the financial statements and notes of the Company and consolidated entity as set out on pages
21 to 36, are in accordance with the Corporations Act 2001:
(a) give a true and fair view of the financial position as at 30 June 2004 and the
performance for the period ended on that date of the Company and consolidated
entity; and
(b) comply with Accounting Standards and the Corporations Regulations 2001;
2.
in the directors’ opinion there are reasonable grounds to believe that the Company will be able
to pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
Robert D Millner
Director
Sydney
2 August 2004
38
TRAVIS & TRAVIS CHARTERED ACCOUNTANTS
P.O. BOX 429
LANE COVE, AUSTRALIA
TELEPHONE: +61 2 9427 6555
FACSIMILE:+61 2 9427 5127
EMAIL: info@travisntravis.com.au
INDEPENDENT AUDIT REPORT
TO THE MEMBERS OF
BRICKWORKS INVESTMENT COMPANY LIMITED
SCOPE
The Financial Report and Director’s Responsibility
The Financial report comprises the statement of financial position, statement of financial performance, statement of cash
flows, accompanying notes to the financial statements, and the directors’ declaration for Brickworks Investment Company
Limited (The Company) and the consolidated entity for the year ended 30 June 2004. The consolidated entity comprises
both the company and the entities it controlled during that year.
The directors of the company are responsible for the preparation and true and fair presentation of the financial report in
accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records
and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting
estimates inherent in the financial report.
Audit Approach
We conducted an independent audit in order to express an opinion to the members of the company. Our audit was conducted
in accordance with Australian Auditing Standards, in order to provide reasonable assurance as to whether the financial report
is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgment,
selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive
evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected.
We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with
the Corporations Act 2001, including compliance with Accounting Standards and other mandatory financial reporting
requirements in Australia, a view which is consistent with our understanding of the company’s and the consolidated entity’s
financial position, and of their performance as represented by the results of their operations and cash flows.
We formed our audit opinion on the basis of these procedures, which included:
-
-
examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the
financial report; and
assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of
significant accounting estimates made by the directors.
While we considered the effectiveness of management’s internal controls over financial reporting when determining the
nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.
INDEPENDENCE
In conducting our audit, we followed applicable independence requirements of Australian professional ethical
pronouncements and the Corporations Act 2001.
AUDIT OPINION
In our opinion, the financial report of Brickworks Investment Company Limited is in accordance with:
(a)
the Corporations Act 2001, including
(i)
giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June
2004 and of their performance for the year ended on that date; and
complying with Accounting Standards in Australia and the Corporations Regulations 2001; and
(ii)
(b)
other mandatory financial reporting requirements in Australia.
TRAVIS & TRAVIS
A.J. FAIRALL
Partner
Dated: 2 August 2004
1/114 Longueville Road
LANE COVE NSW 2066
38
BRICKWORKS INVESTMENT COMPANY LIMITED
Stock Exchange Information
1) Equity Holders
At 30/07/2004, there were 7,731 holders of ordinary shares in the capital of the company. These
holders were distributed as follow:
No. of Shares held
No. of Shareholders
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Holding less than a marketable parcel of
521 shares
103
3,286
1,977
2,275
90
24
Votes of Members
Article 5.12 of the Company’s Constitution provides
a) Subject to this Constitution and any rights or restrictions attached to a class of Shares,
on a show of hands at a meeting of Members, every Eligible Member present has one
vote.
b) Subject to this Constitution and any rights or restrictions attached to a class of Shares,
on a poll at a meeting of Members, every Eligible Member present has :
(i) one vote for each fully paid up Share (whether the issue price of the Share was paid
up or credited or both) that the Eligible Member holds; and
(ii) a fraction of one vote for each partly paid up Share that the Eligible Member holds.
The fraction is equal to the proportion which the amount paid up on that Share
(excluding amounts credited) is to the total amounts paid up and payable (excluding
amounts credited on that Share.
40
BRICKWORKS INVESTMENT COMPANY LIMITED
The 20 largest holdings of the Company’s share as at 30 July 2004 are listed below:
Name
Brickworks Limited
Bougainville Copper Limited
Bougainville Copper Limited
Invia Custodian Pty Ltd
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