More annual reports from Black Knight:
2023 ReportPeers and competitors of Black Knight:
Fair Oaks Income LimitedAnnual Report
for year ended 30 June 2008
BRICKWORKS INVESTMENT COMPANY LIMITED
ABN 23 106 719 868
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
ABN: 23 106 719 868
CORPORATE DIRECTORY
Directors
Robert Dobson Millner
Non-Executive Director and Chairman
David Capp Hall
Non-Executive Director
Alexander James Payne
Non-Executive Director
Geoffrey Guild Hill
Non-Executive Director
Secretary
Richard Pillinger
Registered Office
Level 2
160 Pitt Street Mall
Sydney NSW 2000
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 14
15 Castlereagh Street
Sydney 2000
Share Registry
Computershare Investor Services Pty Limited
60 Carrington Street
Sydney 2000
Australian Stock Exchange Code
Ordinary Shares
BKI
Website
http//:www.brickworksinvestments.com.au
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
Contents
Financial Highlights
Investment Portfolio at 30 June 2008
Group Profile
Chairman’s Address
Directors’ Report
Corporate Governance
Income Statement
Balance Sheet
Statement of changes in Equity
Cash Flow Statement
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
Auditor’s Independence Declaration
ASX Additional Information
Page No.
2
4
7
8
10
15
23
24
25
26
27
45
46
47
48
2008 Annual Report
1
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
FINANCIAL HIGHLIGHTS
(cid:2) Revenue Performance
% Change
Amount of
Change
$’000
Dividend/distribution income – Ordinary
Dividend/distribution income - Special
Up
Down
36.45%
42.67%
4,605
(664)
to
to
(cid:2) Profits
$’000
17,236
892
% Change
Amount of
Change
Up
46.79%
Down
42.67%
Up
Up
Up
Up
272.31%
51.21%
% Change
12.48%
15.92%
$’000
5,832
(664)
2,478
7,646
Amount of
Change
(cents)
0.72
1.10
$’000
to
18,296
to
to
to
to
to
892
3,388
22,576
$’000
6.49
8.01
Operating profit after tax but before
special dividend income and realised
gains on investment portfolio
Dividend Income - Special
Realised gains on investment portfolio
after tax
Net profit for the year attributable to
shareholders
(cid:2) Earnings per share
Basic earnings per share before
special dividend income and realised
gains on investment portfolio
Basic earnings per share after special
dividend income and realised gains
on investment portfolio
(cid:2) Fully franked final dividend of 3.0 cents per share.
This brings the total fully franked dividends for the year to 6.0 cents per share (2007: 5.3 cents per share)
(cid:2) Total portfolio value as at 30 June 2008 of $437.6 million (2007: $423.0 million)
(cid:2) Net Tangible Asset (NTA) History:
NTA Before Tax
NTA After Tax
$1.08
$1.06
$1.28
$1.20
$1.43
$1.32
$1.69
$1.51
$1.52
$1.41
30/06/04
30/06/05
30/06/06
30/06/07
30/06/08
2
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
FINANCIAL HIGHLIGHTS (continued)
(cid:2) Share Price History
30/06/04
30/06/05
30/06/06
30/06/07
30/06/08
BKI Prospectus IPO issued @ $1.00
December 2003
Annual % Growth
(cid:2) Dividend History (cents per share)
$0.98
-
$1.09
11.2%
$1.35
23.9%
$1.51
11.9%
$1.22
-19.2%
Interim
Final
Special
Total
30/06/04
30/06/05
30/06/06
30/06/07
30/06/08
-*
2.0
-
2.0
2.1
2.2
-
4.3
2.5
2.5
1.0
6.0
2.6
2.7
-
5.3
3.0
3.0
-
6.0
* This Company was listed on ASX 12 December 2003, no interim dividend is applicable.
2008 Annual Report
3
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
List of securities held and their market value at 30 June 2008 were:
Stock
Banks
Australia and New Zealand Banking Group Limited
Bank of Queensland Limited
Bendigo Bank Limited
Commonwealth Bank
National Australia Bank Limited
St George Bank CPS
St George Bank CPS II
St George Bank Limited
Westpac Banking Corporation
Capital Goods
Alesco Corporation Limited
GWA International Limited
Commercial Services & Supplies
Brambles Limited
Campbell Brothers Limited
Salmat Limited
Skilled Group Limited
Consumer Durables & Apparel
Gazal Corporation Limited
Consumer Services
Crown Limited
Tabcorp Holdings Limited
Tatts Group Limited
Diversified Financials
Australian Securities Exchange Limited
Choiseul Investments Limited
Huntley Investment Company Limited
Macquarie Group Limited
Milton Corporation Limited
Perpetual Limited
4
Shares
Held
209,182
150,382
485,392
729,930
1,583,690
10,000
165
521,860
203,172
176,645
1,310,000
505,952
306,629
786,085
394,826
211,865
75,574
253,900
800,128
30,100
1,082,985
6,981,320
136,650
106,326
52,510
Fair
Value
($’000)
Portfolio
Weight
%
3,916
1,955
5,305
29,307
41,920
966
16
14,148
4,063
101,596
1,219
3,275
4,494
4,412
8,371
2,138
1,184
16,105
402
402
701
2,488
1,872
5,061
945
5,588
5,061
6,644
2,049
2,239
22,526
0.89%
0.45%
1.21%
6.70%
9.58%
0.22%
0.00%
3.23%
0.93%
23.21%
0.28%
0.75%
1.03%
1.01%
1.91%
0.49%
0.27%
3.68%
0.09%
0.09%
0.16%
0.57%
0.43%
1.16%
0.22%
1.28%
1.16%
1.52%
0.47%
0.51%
5.15%
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
Shares
Held
Fair
Value
($’000)
Portfolio
Weight
%
List of securities (continued):
Stock
Energy
Caltex Australia Limited
New Hope Corporation Limited
Santos Limited
Woodside Petroleum Limited
Food, Beverages & Tobacco
Coca Cola Amatil Limited
Graincorp Limited
Lion Nathan Limited
Food & Staples Retailing
AWB Limited
Metcash Limited
Wesfarmers Limited
Woolworths Limited
86,950
14,060,452
70,000
215,484
436,000
91,044
227,300
782,000
1,385,833
284,625
571,000
Health Care Equipment & Services
Clover Corporation Limited
858,000
Insurance
AMP Limited
AXA Asia Pacific Holdings Limited
Insurance Australia Group Limited
QBE Insurance Group Limited
Suncorp-Metway Limited Convertible
Preference Shares
Suncorp-Metway Limited
Materials
Alumina Limited
BHP Billiton Limited
Bluescope Steel Limited
Orica Limited Step up Preference Securities
Onesteel Limited
Rio Tinto Limited
Wattyl Limited
2008 Annual Report
516,865
426,000
1,076,446
65,096
40,000
383,000
809,013
927,629
233,568
10,000
690,000
28,753
673,881
1,130
74,099
1,499
14,524
91,252
3,052
737
1,941
5,730
1,885
5,128
10,614
13,961
31,588
133
133
3,453
1,994
3,714
1,449
4,040
4,979
19,629
3,819
40,361
2,623
951
5,134
3,888
943
57,719
0.26%
16.93%
0.34%
3.32%
20.85%
0.70%
0.17%
0.44%
1.31%
0.43%
1.17%
2.43%
3.19%
7.22%
0.03%
0.03%
0.79%
0.46%
0.85%
0.33%
0.92%
1.14%
4.49%
0.87%
9.22%
0.60%
0.22%
1.17%
0.89%
0.22%
13.19%
5
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
List of securities (continued):
Stock
Media
Consolidated Media Holdings
Fairfax Media Limited
Ten Network Holdings Limited
West Australian Newspapers Holdings Limited
Real Estate
Westfield Group
Retailing
Shares
Held
75,574
1,921,163
747,429
348,048
193,157
ARB Corporation Limited
513,437
Telecommunications Services
SP Telemedia Limited
Telstra Corporation Limited
Transportation
Lindsay Australia Limited
Macquarie Infrastructure Group
Qantas Airways Limited
Transurban Group
Utilities
AGL Energy Limited
Babcock & Brown Infrastructure Group
BBI EPS Limited
3,322,223
2,436,000
3,120,034
762,329
602,500
134,581
431,700
1,087,124
946,011
Fair
Value
($’000)
Portfolio
Weight
%
249
5,591
1,020
2,750
9,610
3,141
3,141
1,854
1,854
598
10,329
10,927
530
1,738
1,832
569
4,669
6,173
739
653
7,565
0.06%
1.28%
0.23%
0.63%
2.20%
0.72%
0.72%
0.42%
0.42%
0.14%
2.36%
2.50%
0.12%
0.40%
0.42%
0.13%
1.07%
1.41%
0.17%
0.15%
1.73%
Total Investments
Bank Deposit
394,001
43,645
90.03%
9.97%
TOTAL PORTFOLIO
437,646
100.00%
The Company is not a substantial shareholder in any of the investee corporations in accordance with the
Corporations Act 2001, as each equity investment represents less than 5% of the issued capital of the
investee corporation.
6
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
GROUP PROFILE
Brickworks Investment Company Limited (the Group) is a Listed Investment Company on the Australian Stock
Exchange. The Group invests in a diversified portfolio of Australian shares, trusts and interest bearing securities.
The Group was formed on 17 October 2003 to take over the investment portfolio of Brickworks Limited.
Shares were listed on the Australian Stock Exchange Limited commencing 12 December 2003.
At 30 June 2008 the market capitalisation of the Group was $355.0 million.
Corporate Objectives
The Group aims to generate an increasing income stream for distribution to its shareholders in the form of fully
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 Group 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 Group will pay the maximum amount of realised profits after tax to its shareholders in the form of fully
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 Group 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 Directors
have previously announced that management of the Listed Investment Portfolio will be brought in house on
expiry of the current agreement with Souls Funds Management Limited on 1 December 2008.
The Group also engages Corporate and Administrative Services Pty Ltd to provide accounting and group
secretarial services.
2008 Annual Report
7
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
CHAIRMAN’S ADDRESS
Dear Shareholders,
I am pleased to enclose the fifth Annual Report of Brickworks Investment Company Limited for the year ended
30th June 2008.
The consolidated profit for the Group after providing for income tax increased by 51.2% to $22,576,000 (2007
$14,930,000).
Revenue from the investment portfolio comprising ordinary dividend income increased by 36.4% to
$17,236,000, whilst revenue from special dividend income decreased during the year by 42.7% to $892,000.
At the 30th June 2008 the portfolio of investments was valued at $437.6 million compared to $423.0 million as
at June 2007.
The Group’s portfolio return continues to outperform the ASX/S&P 300 Accumulation Index return as shown below:
Period
6 Months to 30 June 2008
12 Months to 30 June 2008
24 Months to 30 June 2008
Portfolio Return*
BKI
-4.6%
-6.0%
6.7%
ASX/S&P 300
-16.1%
-13.7%
5.6%
* Portfolio Return measured by change in NTA backing per share plus dividend reinvested
During the year, the Group was successful in raising $54.1million additional share capital through a Share
Placement, Share Purchase Plan and the Dividend Reinvestment Plan.
Portfolio Movements
Major investment purchases during the year were Suncorp-Metway Limited Convertible Preference Shares,
AMP Limited, Tattersall’s Group Limited, Woolworths Limited and Metcash; while the final instalment for Telstra
(T3) shares was completed.
Net purchases amounted to $75.6 million excluding shares acquired on takeovers.
The only sales were Consolidated Rutile Limited, Coventry Group Limited, APA Group, Babcock and Brown
Power, Babcock and Brown Wind Partners Group and Illuka Resources Limited for a total of $5.6 million.
There were takeovers of Alinta Limited by Babcock and Brown and HPAL Limited by Salmat Limited. Publishing
and Broadcasting Limited was split into Crown Limited and Consolidated Media Holdings Limited.
Also, there was a merger during the year between Adelaide Bank Limited and Bendigo Bank.
8
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
CHAIRMAN’S ADDRESS - Continued
List of Top 20 Securities held as at 30 June 2008:
Stock
New Hope Corporation Limited
1
National Australia Bank Limited
2
BHP Billiton Limited
3
4
Commonwealth Bank
5 Woodside Petroleum Limited
6
St George Bank Limited
7 Woolworths Limited
8 Wesfarmers Limited
Telstra Corporation Limited
9
10 Campbell Brothers Limited
11 Macquarie Group Limited
12 AGL Energy Limited
13
14 Choiseul Investments Limited
15 Bendigo Bank Limited
16 Onesteel Limited
17 Metcash Limited
18 Huntley Investment Company Limited
19 Suncorp-Metway Limited
20 Brambles Limited
Fairfax Media Limited
Shares
Held
14,060,452
1,583,690
927,629
729,930
215,484
521,860
571,000
284,625
2,436,000
306,629
136,650
431,700
1,921,163
1,082,985
485,392
690,000
1,385,833
6,981,320
383,000
505,952
Fair
Value
($’000)
74,099
41,920
40,361
29,307
14,524
14,148
13,961
10,614
10,329
8,371
6,644
6,173
5,591
5,588
5,305
5,134
5,128
5,061
4,979
4,412
Portfolio
Weight *
%
18.81%
10.64%
10.24%
7.44%
3.69%
3.59%
3.54%
2.69%
2.62%
2.12%
1.69%
1.57%
1.42%
1.42%
1.35%
1.30%
1.30%
1.28%
1.26%
1.12%
* Weighting is a percentage of the listed portfolio only, excluding cash assets
Dividends
I am pleased to report that based on the profits earned by the Group during the year the directors have
declared the payment of a final fully franked dividend of 3.0 cents per share which will be paid on 29 August
2008. This final dividend includes an attributable LIC capital gain of 0.5 cents per share which will enable some
shareholders to claim a tax deduction.
This brings the total ordinary dividend paid for the year 30th June 2008 to 6.0 cents per share compared to
5.3 cents last year, an increase of 13.2%.
Earnings per Share and NTA
Following the increased capital base resulting from the capital raising initiatives during the year, the earnings per
share for the year were 8.01 cents (2007: 6.91 cents) an increase of 15.9%.
The Net Tangible Asset Backing (NTA) of the group at 30th June 2008 was $ 1.52 before tax (2007: $1.69) and
the after tax Net Asset Backing per share was $1.41 (2007: $1.51).
Outlook
In these uncertain times where high interest rates, concerns over high inflation and tight credit conditions are
contributing to high share market volatility, the $43.6m cash holdings of the group at 30 June 2008 puts it in a
very strong position to take advantage of opportunities should they arise in the next financial year.
Yours sincerely,
Robert Millner
Chairman
Sydney, 6 August 2008
2008 Annual Report
9
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
DIRECTORS’ REPORT
The directors of Brickworks Investment Company Limited present the following report on the Company and its
controlled entities (the Group) for the year ended 30 June 2008.
1. Directors
The following persons were directors since the start of the financial year and up to the date of this report unless
otherwise stated:
Robert Dobson Millner – Non-Executive Director and Chairman
Mr Millner has over 20 years experience as a Company Director. During the past three years, Mr Millner has
also served as a director of the following other listed companies:
• Milton Corporations Limited*
• Choiseul Investments Limited*
• New Hope Corporation Limited*
• Washington H Soul Pattinson and Company Limited*
• SP Telemedia Limited*
• Brickworks Limited*
• Souls Private Equity Limited*
• Australian Pharmaceutical Industries Limited*
* denotes current directorship
Special Responsibilities:
• Chairman of the Board
• Chairman of the Remuneration Committee
• Chairman of the Nomination Committee
• Chairman of the Investment Committee
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. During the past three years,
Mr Hall also served as a director of the following listed companies:
• Undercoverwear Limited
• Ainsworth Game Technology Limited
Special Responsibilities:
• Chairman of the Audit Committee
• Member of the Remuneration Committee
• Member of the Nomination Committee
10
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
DIRECTORS’ REPORT - Continued
Alexander James Payne, B.Comm, Dip Cm, FCPA, FCIS, FCIM - Non-Executive Director
Mr Payne is chief financial officer of Brickworks Limited and has considerable experience in finance and
investment and is a member of the audit committee.
Special Responsibilities:
• Member of the Audit Committee
• Member of the Investment Committee
• Member of the Remuneration Committee
• Member of the Nomination Committee
Geoffrey Guild Hill, B.Econ., MBA, FCPA, ASIA FAICD – Independent Non-Executive Director
A merchant banker, Mr Hill has identified and implemented mergers and takeovers and has acted for a wide
range of corporate clients in Australia and overseas.
During the past three years, Mr Hill has served as a director of the following listed companies:
• Huntley Investment Company Limited*
• Heritage Gold NZ Limited*
• Hills Industries Limited*
• Souls Private Equity Limited (alternate director)
• Enterprise Energy NL
• Biron Capital Limited
• Undercoverwear Limited
* denotes current directorship
Special Responsibilities:
• Member of the Audit Committee
• Member of the Remuneration Committee
• Member of the Nomination Committee
2. Company Secretary
Richard Pillinger, BSc, CA
Mr Pillinger was appointed as Company Secretary of Brickworks Investment Company Limited on 26 March
2008. Mr Pillinger is a Chartered Accountant with extensive experience in public practice and commercial
financial roles.
Mr J de Gouveia resigned as Company Secretary on 15 November 2007. Mr G S Bruce was appointed as
temporary Company Secretary on that date and resigned on the appointment of Mr. Pillinger.
3. Principal Activities
The principal activities of the Group during the financial year were that of a Listed Investment Company (LIC)
primarily focused on long term investment in ASX listed securities. There have been no significant changes in
the nature of those activities during the year.
2008 Annual Report
11
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
DIRECTORS’ REPORT - Continued
4. Operating Results
The consolidated profit of the Group after providing for income tax amounted to $22,576,000 (2007: $14,930,000).
5. Review of Operations
The Australian share market endured a difficult period during the year ending 30 June 2008 as a result of credit
issues and high interest rates and oil prices. Despite this, the group enjoyed another successful year with total
income from operating activities increasing by 39.37% and overall profits after tax increasing by 51.21%.
The investment focus during the year again concentrated on managing the existing portfolio by continuing to
add on its existing holdings as well as adding new companies and investment products to its investment
portfolio, such as Suncorp-Metway Limited Convertible Preference Shares.
In addition, to further increase the investment base a Share Placement was undertaken in September 2007
which raised $49.3 million and further strengthens the future earning base of the group.
6. Financial Position
The net assets of the Group increased during the financial year by $28.5 million to $411.4 million.
This movement has largely resulted from the following factors;
• Proceeds from share issues raising $51.2 million;
• Market value decrease in the investment portfolio of $32.7 million net of tax, and
• Retained profits.
7. Employees
The Group has nil employees as at 30 June 2008 (2007: Nil)
8. Significant changes in the state of affairs
Other than as stated above and in the accompany Financial Report, there were no significant changes in the
state of affairs of the Group during the reporting year.
9. Likely Developments and Expected Results
The operations of the Group will continue with planned investments in Australian equities and fixed interest
securities. The Directors have previously announced that management of the Listed Investment Portfolio will be
brought in-house on expiry of the current agreement with their outsourced Investment Manager on 1 December
2008. 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 Group
if included in this report.
10. 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 entities that it controls
ii. the results of those operations; or
iii. the state of affairs of the Company in subsequent years
12
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
DIRECTORS’ REPORT - Continued
11. Dividends
There were two dividend payments during the year ended 30 June 2008.
On 31 August 2007, a final ordinary dividend of $6,810,690 (2.7 cents per share fully franked) was paid out of
retained profits at 30 June 2007.
On 7 March 2008, an interim ordinary dividend of $8,615,012 (3.0 cents per share fully franked) was paid out
of retained profits at 31 December 2007.
In addition, the directors have declared a final ordinary dividend of $ 8,728,998 (3.0 cents per share fully
franked) out of retained profits at 30 June 2008 and payable on 29 August 2008.
12. Environmental Regulations
The Group’s operations are not materially affected by environmental regulations.
13. Meetings of Directors
The numbers of meetings of the Board of Directors and each board committee held during the year to 30 June
2008, and the numbers of meetings attended by each Director were:
Board
Investment
Audit
Attended
RD Millner
AJ Payne
DC Hall
GG Hill
7
7
7
7
Eligible
to attend
7
7
7
7
Attended
12
12
-
-
Eligible
to attend
12
12
-
-
Attended
2
2
2
2
Eligible
to attend
2
2
2
2
14. Remuneration Report
Other than the Directors acting in their capacity as directors, the Group had no employees during the year to
30 June 2008.
Payment to non-executive directors is fixed at $300,000 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 from the Parent and
controlled entities in respect of the year to 30 June 2008 were:
Primary
Superannuation
$
40,000
30,000
25,000
25,000
$
3,600
2,700
2,250
2,250
120,000
10,800
Equity
Compensation
$
-
Other
Compensation
$
-
-
-
-
-
-
-
-
-
RD Millner
DC Hall
AJ Payne
GG Hill
Total
There were no retirement allowances provided for the retirement of non-executive directors.
2008 Annual Report
Total
$
43,600
32,700
27,250
27,250
130,800
13
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
DIRECTORS’ REPORT - Continued
15. Beneficial and relevant interest of Directors in Shares of the Company
As at the date of this report, details of Directors who hold shares 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
GG Hill
Number of Shares
4,905,200
221,749
120,586
764,367
16. Directors and Officers’ Indemnity
The Constitution of the Parent provides indemnity against liability and legal costs incurred by Directors and
Officers to the extent permitted by Corporations Act.
During the year to 30 June 2008, the Group has paid premiums of $33,688 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.
17. Proceedings on Behalf of Group
No person has applied for leave of the Court to bring proceedings on behalf of the Group or intervene in any
proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all
or any part of those proceedings.
The Group was not a party to any such proceedings during the year.
18. Non-audit Services
The board of directors is satisfied that the provision of non-audit services during the year is compatible with the
general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied
that the services disclosed below did not compromise the external auditor’s independence for the following reasons:
• all non-audit services are reviewed and approved by the board of directors prior to commencement to ensure they
do not adversely affect the integrity and objectivity of the auditor; and
• the nature of the services provided do not compromise the general principles relating to auditor independence as
set out in the Institute of Chartered Accountants in Australia and CPA Australia’s Professional Statement F1:
Professional Independence.
The following fees (inclusive of GST) for non-audit services were paid to the external auditor, Travis & Travis, during
the year ended 30 June 2008:
Taxation services
$ 2,090
$ 2,090
19. Auditor’s Independence Declaration
The auditor’s independence declaration for the year ended 30 June 2008 has been received and can be found
on page 47.
This report is made in accordance with a resolution of the directors.
Robert D Millner
Director
Sydney 6 August 2008
14
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
CORPORATE GOVERNANCE
Brickworks Investment Company Limited (the Group) was incorporated on 17 October 2003 and since that
date the Board have been committed to achieving and demonstrating the highest standards of corporate
governance. Unless otherwise stated, the Group has followed best practice recommendations set by the ASX
Corporate Governance Council during the reporting year
The Board of directors (hereinafter referred to as the Board) are responsible for the corporate governance of the
Parent and its controlled entities. The directors of the Parent 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 Group in both the short and the
longer term and seek to balance sometimes competing objectives in the best interests of the Group as a
whole. Their focus is to enhance the interests of shareholders and other key stakeholders and to ensure the
Group is properly managed.
The Group’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:
(cid:2) contributing to the development of and approving the corporate strategy
(cid:2) reviewing and approving business results, business plans, the annual budget and financial plans
(cid:2) organisation and monitoring the investment portfolio
(cid:2) ensuring regulatory compliance
(cid:2) reviewing internal controls
(cid:2) ensuring adequate risk management processes
(cid:2) monitoring the Board composition, director selection and Board processes and performance
(cid:2) overseeing and monitoring:
- organisational performance and the achievement of the Group’s strategic goals and objectives
- compliance with the Group’s code of conduct
(cid:2) monitoring financial performance including approval of the annual report and half-year financial reports
and liaison with the Group’s auditors
(cid:2) appointment and contributing to the performance assessment of the portfolio manager and other
external service providers
(cid:2) enhancing and protecting the reputation of the Group
(cid:2) 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:
(cid:2) term of the appointment
(cid:2) powers and duties
(cid:2) determination of remuneration
(cid:2) dealings in the Group securities including notification requirements
(cid:2) conflicts of interest and disclosure policies
(cid:2) indemnity and insurance arrangements
(cid:2) access to independent professional advice
(cid:2) review of appointment.
2008 Annual Report
15
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
CORPORATE GOVERNANCE - Continued
Board Composition
The key elements of the Board composition include:
(cid:2) ensuring, where practicable to do so, that a majority of the Board are independent directors
(cid:2) the Board of the Group currently comprises 2 independent non-executive directors and 2 non-executive
directors
(cid:2) 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
(cid:2) the Group is to maintain a mix of directors on the Board from different backgrounds with complimentary
skills and experience
(cid:2) 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 Group and directors with an external perspective
- the size of the Board is conducive to effective discussion and efficient decision making.
(cid:2) 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 17.
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 the 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 13.
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.
16
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
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:
(cid:2) compares the performance of the Board with the requirements of it’s Charter
(cid:2) sets forth the goals and objectives of the Board for the upcoming year
(cid:2) 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, where necessary 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 2.2 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, which is a substantial shareholder of the Parent. The
Group has not followed recommendation 2.1 and 2.2 due to the following reasons;
(cid:2) 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 Group 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 Parent’s expense. Prior approval of the Chairman is required, but this
will not be unreasonably withheld.
2008 Annual Report
17
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
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:
(cid:2) that the Group’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 Parent and its consolidated entities in accordance
with all mandatory professional reporting requirements
(cid:2) that the above statement is founded on a sound system of internal control and risk management which
implements the policies adopted by the Board and that the Group’s risk management and internal
control is operating effectively and efficiently in all material respects.
The Group adopted this reporting structure for the year ended 30 June 2008.
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, the remuneration committee and audit committee. 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 Group 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 pages 10-14.
The main responsibilities of the committee are to:
(cid:2) assess the information and recommendations received from the portfolio manager regarding the present
and future investment needs of the Group
(cid:2) assess the performance of the portfolio manager
(cid:2) evaluating investment performance.
Nomination Committee
The Group 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
GG Hill
Details of these directors’ qualifications and experience are set out in the Directors’ Report on page 10-14.
18
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
CORPORATE GOVERNANCE - Continued
Nomination Committee (continued)
The main responsibilities of the committee are to:
(cid:2) assess the membership of the Board having regard to present and future needs of the Group
(cid:2) assess the independence of directors to ensure the majority of the Board are independent directors
(cid:2) propose candidates for Board vacancies in consideration of qualifications, experience and domicile
(cid:2) oversee board succession
(cid:2) 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)
AJ Payne
GG Hill
RD Millner – resigned 10 June 2008
Details of these directors’ qualification, experience and attendance at audit committee meetings are set out in
the Directors’ Report on page 10-14.
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 Group operates.
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:
(cid:2) review, assess and approve the annual report, half-year financial report and all other financial information
published by the Group or released to the market
(cid:2) 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.
(cid:2) oversee the effective operation of the risk management framework
(cid:2) 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
2008 Annual Report
19
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
CORPORATE GOVERNANCE - Continued
Audit Committee (continued)
(cid:2) 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
Group where the auditor would have a mutual or conflicting interest with the Group; be in a position
where they audit their own work; function as management of the Group; or have their independence
impaired or perceived to be impaired in any way.
(cid:2) review and monitor related party transactions and assess their priority
(cid:2) report to the Board on matters relevant to the committee’s role and responsibilities
In accordance with the audit committee charter, the Group requires that the external audit engagement partner
and review partner be rotated every five years. In accordance with that policy, a new external audit firm will be
appointed for the year ending 30 June 2009.
The external auditor will attend the annual general meeting and be available to answer shareholder questions
about the conduct of the audit and the preparation and content of the audit report.
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 Group’s financial reports presents a true and fair view,
in all material respects, of the Parent’s and its consolidated entities financial condition, operational results and
are in accordance with the relevant accounting standards.
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.
Remuneration Committee & Policies
The Group 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
GG Hill
Details of these directors’ qualifications and experience are set out in the Directors’ Report on page 10-14.
The Remuneration Committee oversees and reviews remuneration packages and other terms of employment
for executive management (if any). In undertaking their roles the Committee members consider reports from
external remuneration experts on recent developments on remuneration and related matters.
The Group 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.
20
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
CORPORATE GOVERNANCE - Continued
Remuneration Committee & Policies (continued)
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 remuneration of executives. Non-executive directors do not receive any
options, bonus payments 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 note 20 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.
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 Parent 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:
(cid:2) disclosure of the Groups’ operations in the Board meeting papers.
(cid:2) satisfaction of all matters arising from prior Board meetings
(cid:2) 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
(cid:2) compliance with statutory and prudential obligations and details of all lodgements in accordance with
these obligations
(cid:2) maintenance of ethical conduct by execution of duties with the utmost integrity, objectivity and
professionalism at all times
(cid:2) 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 Group’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 Group 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 implementing stringent processes
and procedures to effectively manage investment risk.
2008 Annual Report
21
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
CORPORATE GOVERNANCE - Continued
Code of Conduct
The Group 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 Group’s integrity.
In summary, the Code requires that at all times all Group personnel act with the utmost integrity, objectivity and
in compliance with the letter and the spirit of the law and company policies.
The Group has developed a Share Trading Policy which has been fully endorsed by the Board and applies to all
directors and employees.
Share Trading Policy
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 are required to be advised to the Group within 3 days for notification to the ASX.
The directors are satisfied that the Group has complied with its policies on ethical standards, including trading
in securities.
Continuous Disclosure and Shareholder Communication
The Chairman and Company Secretary have been nominated as being the persons 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 Parent has written policies and procedures on information disclosure that focus on continuous disclosure
of any information concerning the Group 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 Group’s full annual report. Shareholders also are updated with the
Group’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.
22
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2008
Consolidated
Parent
Note
30/06/08
$’000
30/06/07
$’000
30/06/08
$’000
30/06/07
$’000
Revenue from investment portfolio
18,277
14,276
18,277
14,276
Revenue from bank deposits
3,731
1,505
3,731
1,421
Other income
5
14
5
-
Income from operating activities before net
gains on investment portfolio
Operating expenses
Operating profit before income tax expense
and net gains on investment portfolio
Income tax expense
Net operating profit before net gains on
investment portfolio
Gains on investment portfolio
Tax expense relating to net realised gains on
investment portfolio
Net gains on investment portfolio
Profit for the year attributable to members
of the Company
Basic earnings per share
Diluted earnings per share
2
3
4
4
18
18
22,013
15,795
22,013
15,697
2,006
1,671
2,005
1,670
20,007
14,124
20,008
14,027
(819)
(104)
(819)
(75)
19,188
14,020
19,189
13,952
4,625
1,300
4,625
1,300
(1,237)
3,388
(390)
910
(1,237)
3,388
(390)
910
22,576
14,930
22,577
14,862
2008
Cents
8.01
8.01
2007
Cents
6.91
6.91
This Income Statement should be read in conjunction with the accompany notes
2008 Annual Report
23
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2008
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Prepayments
Total Current Assets
NON-CURRENT ASSETS
Investment portfolio
Deferred tax assets
Consolidated
Parent
Note
30/06/08
$’000
30/06/07
$’000
30/06/08
$’000
30/06/07
$’000
6
7
8
9
43,645
51,547
43,642
51,543
4,413
15
2,782
16
4,413
2,896
15
17
48,073
54,345
48,070
54,456
394,001
371,491
489,387
466,877
498
1,050
497
1,074
Total Non-Current Assets
394,499
372,541
489,884
467,951
Total Assets
CURRENT LIABILITIES
Trade and other payables
Current tax liabilities
Total Current Liabilities
NON-CURRENT LIABILITIES
Trade and other payables
Deferred tax liabilities
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Revaluation reserve
Realised capital gains reserve
Retained profits
Total Equity
442,572
426,886
537,954
522,407
166
172
338
-
30,811
30,811
31,149
170
-
170
166
172
338
170
-
170
-
43,777
43,777
43,947
96,460
30,811
96,600
43,777
127,271
140,377
127,609
140,547
411,423
382,939
410,345
381,860
322,915
268,834
322,915
268,834
67,381
100,128
69,333
102,080
6,048
2,660
15,079
11,317
6,048
12,049
2,660
8,286
411,423
382,939
410,345
381,860
10
11
10
12
13
14
15
16
This Balance Sheet should be read in conjunction with the accompanying notes
24
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2008
Consolidated
Parent
Note
30/06/08
$’000
30/06/07
$’000
30/06/08
$’000
30/06/07
$’000
Total equity at the beginning of the year
382,939
275,332
381,860
274,321
Dividends paid
Issue of capital:
- dividend reinvestment plan
- rights issue
- share placement
- transaction costs
- share purchase plan
5 (a)
(15,426)
(12,733)
(15,426)
(12,733)
13 (b)
13 (b)
13 (b)
13 (b)
13 (b)
2,644
2,256
2,644
2,256
-
56,988
-
56,988
49,300
(1,117)
3,254
-
(374)
-
49,300
(1,117)
3,254
-
(374)
-
Total transactions with equity holders in
their capacity as equity holders
Revaluation of investment portfolio
38,655
(46,567)
46,137
66,486
38,655
46,137
(46,567)
66,486
Provision for tax on unrealised gains
13,820
(19,946)
13,820
(19,946)
Net unrealised gains recognised directly
in equity
Profit for the year
Total recognised income (including
unrealised gains) and expense for the year
14
(32,747)
22,576
46,540
14,930
(32,747)
46,540
22,577
14,862
(10,171)
61,470
(10,170)
61,402
Total equity at the end of the year
411,423
382,939
410,345
381,860
This Statement of Changes in Equity should be read in conjunction with the accompanying notes
2008 Annual Report
25
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE 2008
Consolidated
Parent
Note
30/06/08
$’000
30/06/07
$’000
30/06/08
$’000
30/06/07
$’000
Cash flows from operating activities
Payments to suppliers and employees
(2,257)
(1,797)
(2,256)
(1,785)
Other receipts in the course of operations
269
74
269
60
Dividends and distributions received
17,461
13,919
17,461
13,919
Interest received
Income tax refund
3,736
-
1,333
884
3,736
-
1,249
141
Net cash inflow from operating activities
17 (a)
19,209
14,413
19,210
13,584
Cash flows from investing activities
Payment for non current investments
(75,606)
(34,219)
(75,606)
(34,219)
Proceeds from sale of non current investments
10,321
2,697
10,321
2,697
Net cash (outflow) from investing activities
(65,285)
(31,522)
(65,285)
(31,522)
Cash flows from financing activities
Proceeds from issues of ordinary shares
50,957
56,463
50,957
56,463
Proceeds from borrowings
Dividends paid
-
-
-
4,050
5 (a)
(12,783)
(10,477)
(12,783)
(10,477)
Net cash inflow from financing activities
38,174
45,986
38,174
50,036
Net (decrease)/increase in cash held
Cash at the beginning of the year
Cash at the end of the year
6
(7,902)
51,547
43,645
28,877
22,670
51,547
(7,901)
51,543
43,642
32,098
19,445
51,543
This Cash Flow Statement should be read in conjunction with the accompanying notes
26
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial report is a general purpose financial report that has 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.
The financial report covers the parent entity of Brickworks Investment Company Limited and controlled entities,
and Brickworks Investment Company Limited as an individual parent entity. Brickworks Investment Company
Limited is a listed public company, incorporated and domiciled in Australia.
The financial report of Brickworks Investment Company Limited and controlled entities, and Brickworks
Investment Company Limited as an individual parent entity comply with all International Financial Reporting
Standards (IFRS) in their entirety.
The following is a summary of the material accounting policies adopted by the group in the preparation of the
financial report. The accounting policies have been consistently applied, unless otherwise stated.
Basis of Preparation
The accounting policies set out below have been consistently applied to all years presented.
Reporting Basis and Conventions
The financial report has been prepared on an accruals basis and is based on historical costs modified by the
revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis
of accounting has been applied.
Accounting Policies
a.
Principles of Consolidation
A controlled entity is any entity Brickworks Investment Company Limited has the power to control the
financial and operating policies of so as to obtain benefits from its activities.
A list of controlled entities is contained in Note 22 to the financial statements. All controlled entities have
a June financial year-end.
All inter-company balances and transactions between entities in the group, including any unrealised
profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been
changed where necessary to ensure consistencies with those policies applied by the parent entity.
Where controlled entities have entered or left the group during the year, their operating results have been
included/excluded from the date control was obtained or until the date control ceased.
Minority equity interests in the equity and results of the entities that are controlled are shown as a
separate item in the consolidated financial report.
b.
Income Tax
The charge for current income tax expense is based on the profit for the year adjusted for any non-
assessable or disallowed items. It is calculated using the tax rates that have been enacted or are
substantially enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences
arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.
No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a
business combination, where there is no effect on accounting or taxable profit or loss.
2008 Annual Report
27
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008 (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
b.
Income Tax (continued)
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised
or liability is settled. Deferred tax is credited in the income statement except where it relates to items that
may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be
available against which deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the
assumption that no adverse change will occur in income taxation legislation and the anticipation that the
group will derive sufficient future assessable income to enable the benefit to be realised and comply with the
conditions of deductibility imposed by the law.
Brickworks Investment Company Limited and its wholly-owned Australian subsidiaries have formed an
income tax consolidated group under the tax consolidation regime. Each entity in the group recognises its
own current and deferred tax liabilities, except for any deferred tax liabilities resulting from unused tax losses
and tax credits, which are immediately assumed by the parent entity. The current tax liability of each group
entity is then subsequently assumed by the parent entity. The group notified the Australian Tax Office that it
had formed an income tax consolidated group to apply from 12 December 2003. The tax consolidated
group has entered a tax sharing agreement whereby each group 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.
c.
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.
Financial assets at fair value through income
A financial asset is classified in this category if acquired principally for the purpose of selling in the short
term or if so designated by management and within the requirements of AASB 139: Recognition and
Measurement of Financial Instruments. Derivatives are also categorised as held for trading unless they
are designated as hedges. Realised and unrealised gains and losses arising from changes in the fair
value of these assets are included in the income statement in the period in which they arise.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market and are stated at amortised cost using the effective interest rate method.
Held-to-maturity investments
These investments have fixed maturities, and it is the group’s intention to hold these investments to
maturity. Any held-to-maturity investments held by the group are stated at amortised cost using the
effective interest rate method.
Available-for-sale financial assets
Available-for-sale financial assets include any financial assets not included in the above categories.
Available-for-sale financial assets are reflected at fair value. Unrealised gains and losses arising from
changes in fair value are taken directly to equity.
Fair value
Fair value is determined based on current bid prices for all quoted investments.
28
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008 (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
d.
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
its recoverable amount is expensed to the income statement.
e.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term
highly liquid investments with original maturities of 12 months or less, and bank overdrafts. Bank
overdrafts are shown within short-term borrowings in current liabilities on the balance sheet.
f.
Revenue
Sale of investments occur when the control of the right to equity has passed to the buyer.
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to
the financial assets.
Dividend revenue is recognised when the right to receive a dividend has been established.
Revenue from the rendering of a service is recognised upon the delivery of the service to the customers.
All revenue is stated net of the amount of goods and services tax (GST).
g.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of
GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables
and payables in the balance sheet are shown inclusive of GST.
Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of
investing and financing activities, which are disclosed as operating cash flows.
h.
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to
changes in presentation for the current financial year.
i.
Rounding of Amounts
The parent has applied the relief available to it under ASIC Class Order 98/100 and accordingly, amounts
in the financial report and directors’ report have been rounded off to the nearest $1,000.
Critical Accounting Estimates and Judgments
The preparation of this financial report requires the use of certain critical estimates based on historical
knowledge and best available current information. This requires the directors and management to exercise their
judgement in the process of applying the Group’s accounting policies.
The carrying amounts of certain assets and liabilities are often determined based on estimates and
assumptions of future events. In accordance with AASB 112: Income Taxes deferred tax liabilities have been
recognised for Capital Gains Tax on unrealised gains in the investment portfolio at the current tax rate of 30%.
As the Group does not intend to dispose of the portfolio, this tax liability may not be crystallised at the amount disclosed
in Note 12. In addition, the tax liability that arises on disposal of those securities may be impacted by changes in tax
legislation relating to treatment of capital gains and the rate of taxation applicable to such gains at the time of disposal.
2008 Annual Report
29
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008 (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Critical Accounting Estimates and Judgments (continued)
Apart from this, there are no other key assumptions or sources of estimation uncertainty that have a risk of causing
a material adjustment to the carrying amount of certain assets and liabilities within the next reporting period.
Australian Accounting Standards not yet effective
The Group has not yet applied any Australian Accounting Standards or Australian Accounting Interpretations
that have been issued as at balance date but are not yet mandatory for the year ended 30 June 2008. The
impact of these new standards and interpretations has been assessed and is set out below:
1. Revised AASB 101 Presentation of Financial Statements and AASB 2007-8 Amendments to Australian
Accounting Standards arising from AASB 101
A revised AASB 101 was issued in September 2007 and is applicable for annual reporting periods beginning
on or after 1 January 2009. It requires the presentation of a statement of comprehensive income and makes
changes to the statement of changes in equity, but will not affect any of the amounts recognised in the financial
statements. If an entity has made a prior period adjustment or has reclassified items in the financial statements,
it will need to disclose a third balance sheet (statement of financial position), this one being as at the beginning
of the comparative period. The Group intends to apply the revised standard from 1 July 2009.
No other non-mandatory standards are considered applicable to the Group.
2. REVENUES
Rebateable dividends:
- other corporations
Rebateable dividends - special:
- other corporations
Non - rebateable dividends:
- other corporations
Trust distributions:
- other corporations
Interest income - bank deposits
Interest income - notes
Other revenue
Total Income
3. EXPENSES
Operating expenses
Administration expenses
Employment expense
Professional fees
Management fees
Total Expenditure
30
Consolidated
Parent
30/06/08
$’000
30/06/07
$’000
30/06/08
$’000
30/06/07
$’000
16,410
12,036
16,410
12,036
892
537
289
3,731
149
5
22,013
314
131
143
1,418
2,006
1,556
418
177
1,505
89
14
15,795
255
131
153
1,132
1,671
892
537
289
3,731
149
5
22,013
313
131
143
1,418
2,005
1,556
418
177
1,421
89
-
15,697
254
131
153
1,132
1,670
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008 (continued)
4. TAX EXPENSE
The aggregated amount of income tax expense attributable to the year differs from the amounts prima facie
payable on profits from ordinary activities. The difference is reconciled as follows:
Consolidated
Parent
30/06/08
$’000
30/06/07
$’000
30/06/08
$’000
30/06/07
$’000
(a) Operating profit before income tax expense
and net gains on investment portfolio
20,007
14,124
20,008
14,027
Tax calculated at 30% (2007:30%)
6,002
4,237
6,002
4,208
Tax effect of amounts which are not deductible
(taxable) in calculating taxable income:
- Franked dividends and distributions received
(5,190)
(4,078)
(5,190)
(4,078)
- (Over)/Under provision in prior year
Net tax expense on operating profit before net
gains on investments
Net gains on investments
Tax calculated at 30% (2007: 30%)
Tax effect of:
- difference between accounting and tax cost
bases for capital gains purposes
Tax expense on net gains on investments
Total Tax expense
Applicable weighted average effective tax rates
(b) The components of tax expense comprise:
Current tax
Deferred tax
(Over)/Under provision in prior year
7
819
4,625
1,388
(151)
1,237
2,056
8.3%
172
1,877
7
2,056
(55)
104
1,300
390
-
390
494
3.2%
-
549
(55)
494
2008 Annual Report
7
(55)
819
75
4,625
1,388
1,300
390
(151)
1,237
2,056
8.3%
172
1,877
7
2,056
-
390
465
3.0%
-
520
(55)
465
31
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008 (continued)
5. DIVIDENDS
(a) Dividends paid during the year
Final dividend for the year ended 30 June 2007 of
2.7 cents per share (2006: 2.5 cents per share) fully
franked at the tax rate of 30%, paid on 31 August 2007
Special dividend for the year ended 30 June 2006 of
1.0 cents per share fully franked at the tax rate 30%,
paid on 31 August 2006
Interim dividend for the year ended 30 June 2008 of
3.0 cents per share (2007: 2.6 cents per share) fully
franked at the tax rate 30%, paid on 7 March 2008
Total
Dividends paid in cash or invested in shares under
the dividend reinvestment plan ("DRP")
Paid in cash
Reinvested in shares via DRP
Total
Franking Account Balance
Balance of the franking account after allowing for tax
payable in respect of the current year's profits and the
receipt of dividends recognised as receivables
Impact on the franking account of dividends declared
but not recognised as a liability at the end of the
financial year (b) below
Net available
Consolidated
Parent
30/06/08
$’000
30/06/07
$’000
30/06/08
$’000
30/06/07
$’000
6,811
5,208
6,811
5,208
-
2,083
-
2,083
8,615
15,426
5,442
12,733
8,615
15,426
5,442
12,733
12,783
2,643
15,426
10,477
2,256
12,733
12,783
10,477
2,643
2,256
15,426
12,733
6,810
5,764
6,810
5,764
(3,741)
3,069
(2,919)
2,845
(3,741)
3,069
(2,919)
2,845
(b) Dividends declared after balance date
Since the end of the financial year the directors have declared a final dividend for the year ended 30 June 2008
of 3.0 cents per share (2007: final 2.7 cents per share) fully franked at the tax rate of 30%, payable on
29 August 2008, but not recognised as a liability at the end of the financial year. The final dividend includes an
attributable LIC capital gain of 0.5 cents per share.
6. CURRENT ASSETS - CASH AND CASH EQUIVALENTS
Cash at bank
Short term bank deposits
32
2,623
41,022
43,645
17,547
34,000
51,547
2,623
41,019
43,642
17,543
34,000
51,543
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008 (continued)
7. CURRENT ASSETS - TRADE AND OTHER RECEIVABLES
Dividends receivable
Distributions receivable
Interest receivable
Amounts receivable from controlled entities
Outstanding settlements
Other receivable
Consolidated
Parent
30/06/08
$’000
30/06/07
$’000
30/06/08
$’000
30/06/07
$’000
2,948
197
406
-
833
29
4,413
2,370
110
261
-
-
41
2,782
2,948
197
406
-
833
29
4,413
2,370
110
261
114
-
41
2,896
8. NON CURRENT ASSETS - INVESTMENT PORTFOLIO
Listed securities at fair value:
- Shares in other corporations
Shares in controlled entities at cost
394,001
-
394,001
371,491
-
371,491
394,001
95,386
489,387
371,491
95,386
466,877
9. NON CURRENT ASSETS - DEFERRED TAX ASSETS
The deferred tax asset balance comprises the
following timing differences and unused tax losses:
Transaction costs on equity issues
Accrued expenses
Tax losses
489
9
-
498
417
9
624
1,050
488
9
-
497
416
9
649
1,074
2008 Annual Report
33
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008 (continued)
9. NON CURRENT ASSETS - DEFERRED TAX ASSETS (continued)
Movements in deferred assets
Tax
Credited/
(Charged) Credited/ Balances
to Income
Statement
$'000
(Charged) Transferred
to Equity
$'000
In
$'000
Opening
Balance
$'000
Parent
Transaction costs on equity issues
Accrued expenses
Tax losses
Balance as at 30 June 2007
Transaction costs on equity issues
Accrued expenses
Tax losses
566
6
231
803
416
9
649
(310)
3
477
170
(407)
-
(617)
160
-
-
160
479
-
-
Balance as at 30 June 2008
1,074
(1,024)
479
Consolidated
Transaction costs on equity issues
567
(310)
160
Accrued expenses
Tax losses
Balance as at 30 June 2007
Transaction costs on equity issues
Accrued expenses
Tax losses
6
120
693
417
9
624
3
449
142
(407)
-
(617)
-
-
160
479
-
-
Balance as at 30 June 2008
1,050
(1,024)
479
10. TRADE AND OTHER PAYABLES
-
-
(114)
(114)
-
-
(25)
(25)
-
-
-
-
-
-
-
-
Over
Closing
Provision Balance
$'000
$'000
-
-
55
55
-
-
(7)
(7)
-
-
55
55
-
-
(7)
(7)
416
9
649
1,074
488
9
-
497
417
9
624
1,050
489
9
-
498
Current liabilities
Creditors and accruals
Non current liabilities
Amount due to controlled entities
11. CURRENT TAX LIABILITIES
Provision for income tax
34
Consolidated
Parent
30/06/08
$’000
30/06/07
$’000
30/06/08
$’000
30/06/07
$’000
166
-
172
170
166
170
-
-
96,460
96,600
172
-
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008 (continued)
12. NON CURRENT LIABILITIES - DEFERRED TAX LIABILITIES
The deferred tax liability balance comprises
the following timing differences:
Revaluation of investments held
Non rebateable dividend receivable and
interest receivable
Movements in deferred tax liabilities
Consolidated
Parent
30/06/08
$’000
30/06/07
$’000
30/06/08
$’000
30/06/07
$’000
30,603
43,617
30,603
43,617
208
30,811
160
43,777
208
30,811
160
43,777
Credited/
(Charged) Credited/ Balances
Tax
Opening to Income (Charged) Transferred
Balance Statement
to Equity
$'000
In
$'000
$'000
$'000
Over
Closing
Provision Balance
$'000
$'000
Parent
Revaluation of investment portfolio 23,063
Non rebateable dividends
receivable and interest receivable
78
Balance as at 30 June 2007
23,141
608
19,946
82
690
-
19,946
-
-
-
-
43,617
-
-
160
43,777
Revaluation of investment portfolio 43,617
806
(13,820)
-
-
30,603
Non rebateable dividends
receivable and interest receivable
160
Balance as at 30 June 2008
43,777
48
854
-
(13,820)
Consolidated
Revaluation of investment portfolio 23,063
608
19,946
Non rebateable dividends
receivable and interest receivable
78
Balance as at 30 June 2007
23,141
82
690
-
19,946
Revaluation of investment portfolio 43,617
806
(13,820)
Non rebateable dividends
receivable and interest receivable
160
Balance as at 30 June 2008
43,777
48
854
-
(13,820)
-
-
-
-
-
-
-
-
2008 Annual Report
-
-
-
-
-
-
-
-
208
30,811
43,617
160
43,777
30,603
208
30,811
35
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008 (continued)
13. SHARE CAPITAL
The Parent does not have an authorised share capital and the ordinary shares on issue have no par value.
(a) Issued and paid-up capital
290,966,594 ordinary shares
fully paid(2007: 252,247,770)
(b) Movement in ordinary shares
Beginning of the financial year
Issued during the year:
- share placement
- rights issue
- dividend reinvestment plan
- share purchase plan
- less net transaction costs
End of the financial year
Consolidated
Parent
30/06/08
$’000
30/06/07
$’000
30/06/08
$’000
30/06/07
$’000
322,915
268,834
322,915
268,834
2008
$’000
Number of
Shares
2007
$’000
Number of
Shares
252,247,770
268,834
208,324,328
209,964
34,000,000
-
2,007,442
2,711,382
290,966,594
49,300
-
2,644
3,254
(1,117)
322,915
-
42,213,292
1,710,150
-
252,247,770
-
56,988
2,256
-
(374)
268,834
In September 2007, the Parent issued 34,000,000 fully paid ordinary shares at $1.45 from an ordinary share
placement to raise additional funds to expand its investment portfolio.
Holders of ordinary shares participate in dividends and the proceeds on a winding up of the parent entity in
proportion to the number of shares held.
At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each
shareholder has one vote on a show of hands.
(c) Capital Management
The Group’s objective in managing capital is to continue to provide shareholders with attractive investment
returns through access to a steady stream of fully-franked dividends and enhancement of capital invested,
with goals of paying an enhanced level of dividends and providing attractive total returns over the medium to
long term.
The Group recognises that its capital will fluctuate in accordance with market conditions and in order to
maintain or adjust the capital structure, may adjust the amount of dividends paid, issue new shares from
time-to-time or return capital to shareholders.
The Group’s capital consists of shareholders equity plus net debt. The movement in equity is shown in the
Consolidated Statement of Changes in Equity. At 30 June 2008 net debt was $ Nil (2007: $Nil).
36
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008 (continued)
14. REVALUATION RESERVE
The Revaluation reserve is used to record increments and decrements on the revaluation of the investment
portfolio.
Balance at the beginning of the year
Revaluation of investment portfolio
Balance at the end of the year
Consolidated
Parent
30/06/08
$’000
30/06/07
$’000
30/06/08
$’000
30/06/07
$’000
100,128
(32,747)
67,381
53,588
46,540
100,128
102,080
(32,747)
69,333
55,540
46,540
102,080
15. REALISED CAPITAL GAINS RESERVE
The Realised capital gains reserve records gains or losses after applicable taxation arising from the disposal of
securities in the investment portfolio.
Balance at the beginning of the year
Net gains on investment portfolio transferred
from retained profits
Balance at the end of the year
2,660
1,750
2,660
1,750
3,388
6,048
910
2,660
3,388
6,048
910
2,660
16. RETAINED PROFITS
Retained profits at the beginning of the year
Net profit attributable to members of the company
Net gains on investment portfolio transferred to
realised capital gains reserve
Dividends provided for or paid
Retained profits at the end of the year
11,317
22,576
(3,388)
(15,426)
15,079
10,030
14,930
8,286
22,577
7,067
14,862
(910)
(12,733)
11,317
(3,388)
(15,426)
12,049
(910)
(12,733)
8,286
2008 Annual Report
37
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008 (continued)
17. RECONCILIATION OF CASH FLOW
(a) Reconcilation of cash flow from operating
activities to operating profit
Net Profit from ordinary activities
Non cash item :
Consolidated
Parent
30/06/08
$’000
30/06/07
$’000
30/06/08
$’000
30/06/07
$’000
22,576
14,930
22,577
14,862
- net gains on investment portfolio
(4,625)
(1,300)
(4,625)
(1,300)
Change in assets and liabilities, net of the effects
of purchase of subsidiaries
(Increase) / Decrease in receivables and prepayments
Increase / (Decrease) in payables
Increase / (Decrease) in deferred tax liabilities
Increase / (Decrease) in current tax liabilities
(Increase) / Decrease in deferred tax assets
Net cash inflow from operating activities
(b) Non-cash financing and investing activities
i) Dividend reinvestment plan
(797)
(2)
854
172
1,031
19,209
348
(58)
690
-
(197)
14,413
(797)
(2)
854
172
1,031
19,210
(509)
(49)
690
-
(110)
13,584
Under the terms of the dividend reinvestment plan, $2,644,000 (2007: $2,256,182) of dividends were paid
via the issue of 2,007,442 shares (2007: 1,710,150)
18. EARNINGS PER SHARE
Profit for the year
Earnings used in calculating basic and diluted
earnings per share
Weighted average number of ordinary shares used
in the calculation of basic and diluted earnings per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
Consolidated
30/06/08
$’000
30/06/07
$’000
22,576
14,930
22,576
14,930
2008
2007
No. ('000) No. ('000)
281,950
216,074
8.01
8.01
6.91
6.91
38
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008 (continued)
19. AUDITOR’S REMUNERATION
Remuneration of the auditor of the parent entity for:
(a) Auditing the financial report of the
Parent and the controlled entities
(b) Taxation services
(c) Due diligence investigations
Consolidated
Parent
30/06/08
$’000
30/06/07
$’000
30/06/08
$’000
30/06/07
$’000
29
2
-
31
29
7
2
38
29
2
-
31
29
7
2
38
20. DIRECTORS REMUNERATION
Payment to non-executive directors is fixed at $300,000 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 from the Parent and
controlled entities in respect of the year to 30 June 2008 were:
Primary
$
40,000
30,000
25,000
25,000
120,000
Superannuation
$
3,600
2,700
2,250
2,250
10,800
RD Millner
DC Hall
AJ Payne
GG Hill
Total
Equity
Compensation
$
-
-
-
-
-
Other
Compensation
$
-
-
-
-
-
Total
$
43,600
32,700
27,250
27,250
130,800
There were no retirement allowances provided for the retirement of non-executive directors.
Income paid or payable, or otherwise made available to
Non-Executive Directors of the consolidated entity in
connection with managing the affairs of the Parent and
controlled entities
Fees
Superannuation Guarantee amounts
2008
$
2007
$
120,000
10,800
130,800
120,000
10,800
130,800
Other than the Directors acting in their capacity as directors, the Group had no employees during the year to
30 June 2008.
2008 Annual Report
39
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008 (continued)
21. SUPERANNUATION COMMITMENTS
The Group contributes superannuation payments on behalf of directors in accordance with relevant legislation.
Superannuation funds are nominated by the individual directors and are independent of the Group.
22. RELATED PARTY TRANSACTIONS
Related parties of the Group fall into the following categories:
(i) Controlled Entities
(a) Acquisition of controlled entities
During 2008, the Group did not acquire any controlled entities.
At 30 June 2008, subsidiaries of the Parent were:
Brickworks Securities Pty Limited
Pacific Strategic Investments Pty Limited
Country of Incorporation Percentage Owned (%)
2007
100
100
Australia
Australia
2008
100
100
Transactions between the Parent and its controlled entities consist of loan balance from the Parent to its
controlled entities. No interest is charged on the loan balance to the controlled entities and no repayment
period is fixed for the loan.
(b) Disposal of controlled entities
There was no disposal of controlled entities in 2008 (2007: Nil).
(ii) Directors/Officers Related Entities
Persons who were Directors/Officers of Brickworks Investment Company Limited for part or all of the year
ended 30 June 2008 were:
Directors:
RD Millner
DC Hall
AJ Payne
GG Hill
Company Secretary: RJ Pillinger
G S Bruce
J de Gouveia
Pitt Capital Partners Limited
There were no transactions with Pitt Capital Partners Limited during the year (2007: $125,000).
40
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008 (continued)
(ii) Directors/Officers Related Entities (contiuned)
Souls Funds Management Limited
The Group has appointed Souls Funds Management Limited, an entity in which Messrs. RD Millner and GG Hill
have 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 Group agrees to pay Souls Funds Management Limited a monthly
management fee equal to one-twelfth of 0.35% of the assets of the Group in the preceding month under their
management.
Management fees paid or payable for the year ending 30 June 2008 were $1,417,805 (2007: $1,132,182); and
the management fee owed by the Group to Souls Funds Management Limited at 30 June 2008 was $126,413
(2007: $119,187).
Corporate and Administrative Services Pty Limited
The Group has appointed Corporate & Administrative Services Pty Limited, an entity in which Mr. RD Millner
has an indirect interest to provide the Group with administration, company secretarial services and preparation
of all financial accounts.
Administration and secretarial fees paid for services provided to the Parent and its controlled entities for the
year ending 30 June 2008 were $111,540 (2007: $111,540, including GST) and are at standard market rates.
No administration fees were owed by the Group to Corporate & Administrative Services Pty Limited as at 30
June 2008.
(iii) Transactions in securities
Aggregate number of securities acquired or disposed of by Directors or their Director-related entities:
Acquisition - Shares
Disposal - Shares
2008
2007
No. of Shares No. of Shares
2,039,795
-
1,876,434
-
During the year ended 30 June 2008, entities related to Directors acquired, under normal commercial terms,
shares in the Parent as follows:
(ii) Entities related to Mr RD Millner:
1,989,907 shares (2007: 1,046,365 shares)
(ii) Entities related to Mr DC Hall:
11,916 shares (2007: 47,231 shares)
(iii) Entities related to Mr AJ Payne:
33,806 shares (2007: 25,304 shares)
(iv) Entities related to Mr. GG Hill:
4,166 shares (2007: 757,534 shares)
Directors acquired shares through dividend reinvestment plan, share purchase plan or on-market purchase.
There has been no other change to Directors’ shareholdings during the year ended 30 June 2008.
Messrs RD Millner, DC Hall, AJ Payne and GG Hill, or their associated entities, being shareholders are entitled
to receive dividends.
2008 Annual Report
41
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008 (continued)
23. FINANCIAL REPORTING BY SEGMENTS
The Group operates predominately in the securities industry in Australia.
24. MANAGEMENT OF FINANCIAL RISK
The risks associated with the holding of financial instruments such as investments, cash, bank bills and
borrowings include market risk, credit risk and liquidity risk. The Audit Committee has approved the policies
and procedures that have been established to manage these risks. The effectiveness of these policies and
procedures is reviewed by the Audit Committee.
a) Financial instruments’ terms, conditions and accounting policies
The Group’s accounting policies are included in note 1, while the terms and conditions of each class of
financial asset, financial liability and equity instrument, both recognised and unrecognised at the balance date,
are included under the appropriate note for that instrument.
b) Net fair values
The carrying amounts of financial instruments in the balance sheets approximate their net fair value determined
in accordance with the accounting policies disclosed in note 1 to the accounts.
c) Credit risk
The risk that a financial loss will occur because counterparty to a financial instrument fails to discharge an
obligation is known as credit risk.
The credit risk on the Group’s financial assets, excluding investments, is the carrying amount of those assets.
The Group’s principal credit risk exposures arise from the investment in liquid assets, such as cash and bank
bills, and income receivable.
The spread of cash and bank bills between banks is reviewed monthly by the board to determine if it is within
agreed limits. Income receivable is comprised of accrued interest and dividends and distributions which were
brought to account on the date the shares or units traded ex-dividend.
There are no financial instruments overdue or considered to be impaired.
d) Market risk
Market risk is the risk that changes in market prices will affect the fair value of the financial instrument.
The Group is a long term investor in companies and trusts and is therefore exposed to market risk through the
movement of the share prices of the companies and trusts in which it is invested.
As the market value of individual companies fluctuates throughout the day, the fair value of the portfolio
changes continuously. The change in the fair value of the portfolio is recognised through the Revaluation
Reserve. Investments represent 89% (2007: 87%) of total assets.
A 5% movement in the market value of each of the companies and trusts within the portfolio would result in a
4% (2007: 4%) movement in the net assets before provision for tax on unrealised capital gains at 30 June 2008.
The net asset backing before provision for tax on unrealised capital gains would move by 6.8 cents per share
at 30 June 2008.
The market value of the portfolio could fall by 25% before any reduction in the value of the portfolio would be
recognised through the Income Statement.
The performance of the companies within the portfolio are monitored by the Investment Committee and the
Board as a whole.
42
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008 (continued)
24. MANAGEMENT OF FINANCIAL RISK (continued)
d) Market risk (continued)
The Group seeks to reduce market risk at the investment portfolio level by ensuring that it is not, in the opinion
of the Investment Committee, overly exposed to one Group or one particular sector of the market.
At 30 June, the spread of investments is in the following sectors:
Percentage of total investment
Amount
Sector
Banks
Energy
Materials
Bank deposits
Food & Staples Retailing
Diversified Financials
Insurance
Commercial Services and Supplies
Telecommunications Services
Media
Utilities
Food, Beverages & Tobacco
Consumer Services
Transportation
Capital Goods
Real Estate
Retailing
Consumer Durables and Apparel
Health Care Equipment & Services
Automobile & Components
Software and Services
2008
%
23.21
20.85
13.19
9.97
7.22
5.15
4.49
3.68
2.50
2.20
1.73
1.31
1.16
1.07
1.03
0.72
0.42
0.09
0.03
-
-
100.0
2007
%
31.54
9.69
11.65
12.18
4.37
5.77
3.54
3.60
2.54
3.90
2.34
1.01
0.61
1.74
4.37
0.31
0.00
0.12
0.02
0.14
0.56
100.0
2008
$’000
101,596
91,252
57,719
43,645
31,588
22,526
19,629
16,105
10,927
9,610
7,565
5,730
5,061
4,669
4,494
3,141
1,854
402
133
-
-
437,646
20076
$’000
133,438
40,995
49,296
51,547
18,488
24,417
14,976
15,239
10,725
16,479
9,894
4,290
2,573
7,340
18,480
1,302
-
487
90
609
2,373
423,038
Securities representing over 5% of the investment portfolio at 30 June were:
Percentage of total investment
Amount
Company
New Hope Corporation Limited
National Australia Bank Limited
BHP Billiton Limited
Commonwealth Bank
2008
%
18.8%
10.6%
10.2%
7.4%
47.0%
2007
%
8.2%
17.3%
8.2%
10.3%
44.0%
2008 Annual Report
2008
$’000
$74,099
$41,920
$40,361
$29,307
$185,687
20076
$’000
$30,371
$64,207
$30,483
$38,193
$163,254
43
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008 (continued)
24. MANAGEMENT OF FINANCIAL RISK (continued)
d) Market risk (continued)
The relative weightings of the individual securities and relevant market sectors are reviewed at each meeting of
the Investment Committee and the Board, and risk can be managed by reducing exposure where necessary.
There are no set parameters as to a minimum or maximum amount of the portfolio that can be invested in a
single company or sector.
The Group traded all investment transactions through a number of major broking firms with trades evenly
placed amongst those firms.
The Group is not exposed to foreign currency risk as all its investments are quoted in Australian dollars. The fair
value of the Group’s other financial instruments is unlikely to be materially affected by a movement in interest
rates as they generally have short dated maturities and fixed interest rates.
e) Liquidity risk
Liquidity risk is the risk that the Group is unable to meet its financial obligations as they fall due.
The Group has a zero level of gearing, and sufficient cash reserves to meet operating cash requirements at
current levels for well in excess of 5 years.
The Group’s other major cash outflows are the purchase of securities and dividends paid to shareholders and
the level of both of these is fully controllable by the Board.
Furthermore, the majority of the assets of the Group in the form of readily tradable securities which can be sold
on-market if necessary.
f) Capital risk management
The Group invests its equity in a diversified portfolio of assets that aim to generate a growing income stream for
distribution to shareholders in the form of fully franked dividends.
The capital base is managed to ensure there are funds available for investment as opportunities arise. Capital is
increased annually through the issue of shares under the Dividend Reinvestment Plan. Other means of
increasing capital include Rights Issues, Share Placements and Share Purchase Plans.
25. CONTINGENT LIABILITIES
The Group has no contingent liabilities at 30 June 2008.
26. AUTHORISATION
The financial report was authorised for issue on 6 August 2008 by the Board of Directors.
44
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
DIRECTORS’ DECLARATION
The directors of Brickworks Investment Company Limited declare that:
1.
The financial statements and notes, as set out on pages 23 to 44, are in accordance with the
Corporations Act 2001 and:
a.
b.
comply with Accounting Standards and the Corporations Regulations 2001; and
give a true and fair view of the financial position as at 30 June 2008 and of the performance
for the year ended on that date of the company and economic entity.
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 has been made after receiving the declaration required to be made to the directors
in accordance with section 295A of the Corporations Act 2001 for the financial year ending
30 June 2008.
2.
3.
This declaration is made in accordance with a resolution of the Board of Directors.
Robert D Millner
Director
Sydney
6 August 2008
2008 Annual Report
45
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
AUDITOR’S REPORT
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 AUDITOR’S REPORT
TO THE MEMBERS OF
BRICKWORKS INVESTMENT COMPANY LIMITED
Report on the Financial Report
We have audited the accompanying financial report of Brickworks Investment Company Limited (the parent) and Controlled Entities (the
consolidated entity), which comprises the balance sheet as at 30 June 2008, and the income statement, statement of changes in equity
and cash flow statement for the year ended on that date, a summary of significant accounting policies and other explanatory notes and the
directors’ declaration of the consolidated entity comprising the parent and the entities it controlled at the year’s end or from time to time
during the financial year.
Director’s Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian
Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes
establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material
misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that
are reasonable in the circumstances. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101: Presentation
of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards (IFRS) ensures that
the financial report, comprising the financial statements and notes, complies with IFRS.
Audit Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with
Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The
procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but
not 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.
Auditor’s Opinion
In our opinion:
(a)
The financial report of Brickworks Investment Company Limited and Controlled Entities is in accordance with the Corporations
Act 2001, including:
(i) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2008 and of their
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001; and
(b)
The financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
TRAVIS & TRAVIS
A.J. FAIRALL
Partner
Dated: 6 August 2008
Liability limited by a scheme approved under Professional Standards legislation.
46
1/114 Longueville Road
LANE COVE NSW 2066
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
AUDITOR’S INDEPENDENCE DECLARATION
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
Auditor’s Independence Declaration to the Directors of Brickworks Investment Company Limited
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2008 there have been:
(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the
audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
TRAVIS & TRAVIS
A.J. FAIRALL
Dated: 6 August 2008
1/114 Longueville Road, Lane Cove NSW
Liability limited by a scheme approved under Professional Standards legislation.
2008 Annual Report
47
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
ASX Additional Information
1) Equity Holders
At 31 July 2008, there were 8,466 holders of ordinary shares in the capital of the Parent. These holders were
distributed as follow:
No. of Shares held
1
– 1,000
1,001
– 5,000
5,001
– 10,000
10,001 – 100,000
100,001 and over
Total
Holding less than a marketable parcel of 385 shares
Votes of Members
Article 5.12 of the Company’s Constitution provides:
No. of Shareholders
364
1,539
1,492
4,781
290
8,466
189
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).
48
2008 Annual Report
B r i c k w o r k s I n v e s t m e n t C o m p a n y L i m i t e d
ASX Additional Information (continued)
The 20 largest holdings of the Company’s share as at 31 July 2008 are listed below:
Name
Brickworks Limited
Washington H Soul Pattinson & Co Ltd
Bougainville Copper Limited
Argo Investments Limited
J S Millner Holdings Pty Limited
Aust Executor Trustees Ltd
Continue reading text version or see original annual report in PDF format above