Annual Report 2012
30 June 2012
For personal use only
Eureka Group Holdings Limited and controlled entities
Table of Contents
CONTENTS
Chairman’s Review
Directors’ Report
Security Holder Information
Corporate Governance
Auditor’s Independence Declaration
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Corporate Directory
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EGH ANNUAL REPORT 2012
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Eureka Group Holdings Limited and controlled entities
Chairman’s Review
On behalf of Directors, I present the Annual Report of
Eureka Group Holdings Limited
“Group” or
“Company”) for the year ended 30 June 2012.
(the
The Group reported EBITDA for FY 2012 of $1,632k (FY
2011: loss $240k) and a net profit after tax for FY 2012 of
$686k (FY 2011: loss $1,243k). This is an encouraging
result after three years of difficult restructuring.
There were many positive milestones in 2012. These are
expected to have a positive impact on 2013:
- The Group won management contracts for four new
villages (three of which it had previously lost) and is
expecting to win a management contract for 2
further villages in the short term. In addition to the
ongoing management income from the caretaking
of common areas and letting of units, the Group
expects to win the exclusive right to sell units in
these villages.
been
- Various operating divisions of the Group have
stand-alone
operated
historically
businesses. Each had its own accounting system
and
team. The various systems were not
compatible, leading to administrative inefficiency.
These entities are now fully merged.
as
resources
Through these changes, the Group has been able
towards village
to apportion more
less on
manager support and significantly
management
administrative
duplications. The transition has been complex and
time consuming, but is now complete (with the
exception of a small number of short
term
management contracts).
staffing
and
-
In the latter part of FY 2011 and 1st half of FY 2012,
the Group undertook a review of all management
contracts, service contracts, leases and general
expenses. The Group also completed (with the
exception of one major client) the changeover to
villages being managed on an
independent
contractor basis. It should be noted that occupancy
in villages managed on an independent contractor
basis averaged approximately 88% in FY 2012,
while villages managed on an employee basis
averaged at approximately 74%. The Group’s
overall occupancy averaged approximately 81%.
- Furthermore, a number of service contracts have
been terminated and a number of leases terminated
or renegotiated where they were unprofitable for the
Group. A review of charges to all tenants was
undertaken to ensure no over / under charging
occurred. The merger of the divisions into one office
has also led to isolation of extraneous costs that,
whilst minor individually, aggregated to a significant
amount throughout the course of the financial year.
Directors consider the Group to now be very lean,
but with more focus on village manager support and
significantly
corporate overhead. With
restructuring costs and cost cutting substantially
completed, management have been able to focus
less
on four key drivers of revenues and asset values in
the Group’s management rights contracts, namely:
(1) occupancy;
(2) length of contracts
(3) services uptake; and
(4) rental management of all individual units.
We feel these changes give the Group a base for
long term profitability.
-
process
the Company completed
required
the
In Queensland,
the
accreditation
Residential Services Accreditation Act.
This
process has made Eureka the largest accredited
service provider in Queensland. The disciplines
required to be accredited have been rolled-out
legislative
in anticipation of similar
nationally
requirements around the country.
under
- The Board engaged leading management rights
agent Resort Brokers Pty Ltd to review the valuation
methodology of the carrying values of various
management rights held by the Group. This has
provided the Group with a framework to value the
management rights it holds on a periodic basis. The
review undertaken by Resort Brokers indicates that
on an overall basis the management rights owned
by the Group are valued at around $6.2m higher
than
the consolidated
statement of financial position. Under AASB 138,
the Group is unable to revalue these rights. The
valuation methodology is predicated primarily upon
the profitability and remaining term of each contract.
they are
recorded
in
- During the reporting period, the Group reduced its
bank debt to $3,599k from $3,999k. Following a
review the Group’s banking facilities in June 2012,
the National Australia Bank extended the Group’s
facilities to 31 July 2013.
Other Notable Events
The restructure mentioned above and in previous reports
has been led by Greg Rekers, Kerry Potter and Sharon
Alderwick. The attention to detail, determination and
effort put in by the team has enabled the various difficult
processes being undertaken in a period of significant
change. The efforts of this team to date have been
exceptional. To this end, Mr Rekers and Mr Potter, who
have previously been consulting to the Group, were
appointed Executive Director and Director of Operations
respectively during the period. Sharon Alderwick has
been appointed General Manager.
•
• Meadowbrook management rights were sold at
book value $475k lowering bank debt to $3,599k.
ATO clarification of GST in the retirement industries
resulted in certain food sales being GST-free.
Refunds of GST have been received.
New contract terms for Mackay, Rockhampton,
Cairns and Slacks Creek management rights are
expected to enhance long-term value and income
from 1 December 2011. One of management’s key
•
EGH ANNUAL REPORT 2012
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Chairman’s Review
long term tasks is continuing to seek and gain
extensions of management contracts. The Group is
in dispute with owners of the YVE portfolio. This
portfolio is material from a revenue perspective but
marginal from an EBITDA perspective.
The Group has reviewed all management rights
contracts with the view to enforcing rights in all
cases and ensuring all revenue is captured. The
Group has terminated all unprofitable contracts.
All management rights contracts are now profitable,
are
some marginal. Management
albeit
concentrating on
increasing occupancy and
services uptake to further increase profitability.
The Group raised $254K from a shareholder share
purchase plan and $100K from an unsecured
convertible noted issue.
During the year the group made initial steps to
broaden its services. Significant progress has been
•
•
•
•
made in the areas of level 3 assisted living and in
preparing the group to apply for status as an
approved services provider under the aged care
act. To this end, on 1 July 2012 we appointed Sue
Payne to be CEO of Care who brings extensive
industry experience to the Group. This is an
important phase in future growth of Eureka.
Outlook
The board and management look forward to profit growth
in FY 2013. The group has a stable, passionate and
capable management team and a strong base from
which to move forward.
Lachlan McIntosh
Chairman
EGH ANNUAL REPORT 2012
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Eureka Group Holdings Limited and controlled entities
Directors’ Report
The Directors present their report on Eureka Group
Holdings and controlled entities (“EGH”, the “Group”, the
“Company” or the “Consolidated Entity”) for the year
ended 30 June 2012.
4. DIVIDENDS
No dividends have been paid during the year (2011:
$Nil). No dividends
for FY 2012 have been
recommended at the date of this report.
1.
PRINCIPAL ACTIVITIES
5. CAPITAL STRUCTURE
The principal activities of the Consolidated Entity during
the year were:
The number of ordinary shares on issue at 30 June 2012
was 73,092,932.
• Provision of specialist property asset management
services targeting the management of all asset
classes of retirement accommodation;
• Providing accommodation and tailored services to a
broad market of retiree residents with discretionary
and non-discretionary spend characteristics; and
• Project Management and consulting.
2.
REVIEW OF OPERATIONS AND RESULTS
The year ended 30 June 2012 was an encouraging
one. There were a number of positive operational
restructuring activities and the winning of four new
management rights contracts (three of which had
previously been lost) which are reflected in an overall
earnings before
tax, depreciation and
amortisation (EBITDA) of $1,632k (2011: loss of $240k),
and net profit after tax of $686k (2011 loss of $1,243k)
interest,
The Company’s financial position has strengthened on
the back of the positive financial year results and, if future
objectives are met, will further strengthen.
As discussed in the Chairman’s report, the Group is now
operating from one platform with focus on the village
manager supported by a stable management team. As
also discussed, the Group has (apart from one major
client) completed the move to independent contractors
from employees managing the village. This change has
made the administration of the Group much simpler and
provides a more predictable revenue stream than when
employees are engaged.
The Group operates in a steady industry providing
essential services to Australia’s senior population. Given
current and
the
Company considers its service to remain in demand over
a long period of time.
forecast demographic dynamics,
Overall, the board feels that the changes made will lead
to a successful 2013 financial year.
3. SIGNIFICANT CHANGES
IN THE STATE OF
AFFAIRS
During 2012, the Group merged all of its operations into
one entity.
As discussed in the Chairman’s report, this merger has
cut out significant head office costs and eliminated
duplications caused by having similar operating entities
trading separately. For financial year 2012, this has
resulted in the Group having only one business segment.
This has been an important step in the restructuring
process of the Group.
6. SHARE CAPITAL, REDEEMABLE CONVERTIBLE
NOTES AND SHARE OPTIONS
On 30 November 2011 (at the Annual General Meeting)
shareholders approved the issue of 530,000 secured and
773,000 unsecured redeemable convertibles notes of
$1.00 each (Notes) with 6 2/3 attaching Options
(Options) for each note – or a total of 8,691,010 options.
The Notes are convertible into shares at the lower of
$0.08 or 90% of the VWAP during the last 5 business
days on which trading in share on the ASX occurred prior
to but not including the date of issue of the conversion
notice.
The Notes attract an interest rate of 12.5% per annum
and mature at the second anniversary of issue.
The Options are exercisable at $0.15 and expire at the
second anniversary of issue.
As at 30 June 2012, the Group had 20,000 secured notes
and 120,000 unsecured notes and all of the issued
options outstanding.
7. LIKELY DEVELOPMENTS AND EXPECTED
RESULTS
After the great strides of financial year 2012, the
company is actively seeking to grow the business on a
conservative basis. The company is already growing its
consultancy division and project marketing division. Also,
with the hiring of experienced new staff, the company
expects to be appointed manager of further villages on
profitable terms.
These items, along with continuing to seek to improve the
profitability of individual villages leads us to believe that
profit improvement will continue in the 2013 financial
year.
8. SUBSEQUENT EVENTS
EGH undertook a shareholder share purchase plan which
closed on 10 July 2012. EGH raised $254,000 through
the issuance of 2,540,000 ordinary shares.
On 1 August 2012, the Company issued $200,000
unsecured convertible notes expiring in February 2014.
The convertible notes have a conversion price of $0.10
(subject to shareholder approval) and carry an interest
rate of 12.5% per annum.
The Company was party to litigation with Garden Estates
Hackham Pty Ltd and Garden Estates Christie Downs
Pty Ltd , both which had receivers and managers
appointed as at 30 June 2012. The dispute was settled
on 17 August 2012 on confidential terms, resulting in the
Company being appointed (subject to body corporate
ratification) to manage the villages for the long term and
to also market for sale the units in the villages.
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Directors’ Report
Other than the above mentioned items, there are no
further material subsequent events.
9. ENVIRONMENTAL REGULATION
The Consolidated Entity’s operations are not subject to
any particular or significant environmental regulation
under a law of the Commonwealth or of a State or
Territory.
10. INDEMNIFICATION AND
OFFICERS OR AUDITORS
INSURANCE OF
During or since the end of the financial year the
consolidated entity has not given any indemnity or
entered into any agreement to indemnify any person who
is or has been an officer or an auditor of the Company.
During the financial year the consolidated entity has paid
a premium of $24,060 for Directors’ and Officers’ liability
for current and former Directors and Officers.
11. NON-AUDIT SERVICES
During the year, the Company’s auditor, BDO East Coast
Partnership (formerly PKF East Coast Practice), did not
perform any non-audit services.
12. PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court to bring
proceedings on behalf of the Company or intervene in
any proceedings to which the Company is a party for the
purposes of
the
Company for all or any part of those proceedings. The
Company was not a party to any such proceedings
during the year.
taking responsibility on behalf of
13. DIRECTORS AND MEETINGS ATTENDED
The names of all Directors who held office since the
beginning of the year together with the numbers of
meetings the Company’s Directors held during the year,
and the numbers of meetings attended by each Director
are:
Director's
Meetings
Audit Committee
Meetings
Name
Held
Attended
Held
Attended
Lachlan
McIntosh
Paul Fulloon
David
Rosenblum
Greg Rekers
Kerry Potter
Nirmal
Hansra
6
6
6
2
2
2
6
5
4
2
2
2
2
2
2
-
-
-
2
2
2
-
-
-
*David Rosenblum, Greg Rekers, Kerry Potter and Nirmal Hansra attended
all meetings that they were able to attend as directors.
The remuneration committee did not hold any meetings
during the financial year.
14. INFORMATION ON DIRECTORS
The details of each Director’s qualifications, experience
and special responsibilities for those in office during the
year are:
is a Member of
LACHLAN MCINTOSH – NON EXECUTIVE CHAIRMAN
Lachlan McIntosh has a Bachelor of Commerce degree
Institute of Chartered
the
and
Accountants in Australia. He specialises in corporate
finance and mergers and acquisitions. He has had
substantial experience in the real estate and retirement
accommodation
significant
experience in the franchising industries and mining
services industries.
along with
industry
Lachlan is also the Managing Director of 22 Capital Pty.
Ltd. and Director of ASX listed Industrea Limited (since
April 2004).
GREG REKERS – EXECUTIVE DIRECTOR (appointed
24 April 2012) AND HEAD OF REAL ESTATE
Greg leads the company’s real estate activities. Greg is
also a director of Navigator Property Group (NPG), a
consultancy specialising
the areas of property
in
development and project marketing.
Greg worked for PRD Gold Coast, a national and
international property marketing company where he was
a leading project salesman. Upon departing PRD, Greg
continued to be highly successful in providing project
marketing services to numerous property developers,
which then led to the creation of NPG.
Other listed company directorships in the last 3 years: nil
KERRY POTTER – EXECUTIVE DIRECTOR (appointed
24 April 2012) & CHIEF OPERATING OFFICER
Kerry is the company’s Chief Operating Officer. Kerry is
also a director of Navigator Property Group, a
consultancy specialising
the areas of property
in
development and project marketing.
Kerry holds a Bachelor of Commerce degree and
worked with the Commonwealth public service in 1987
where he had been a director of the Government’s real
estate arm. Kerry then became the Director of Project
Marketing for PRD Gold Coast, a successful national and
international organisation. After
leaving PRD, Kerry
became CEO of Raine and Horne Queensland and
Chesterton International. Kerry then became the principal
and hands-on director of numerous development
residential and commercial projects for various consortia
in the period 2000 to 2007.
Other listed company directorships in the last 3 years: nil
NIRMAL HANSRA – NON EXECUTIVE DIRECTOR
(appointed 24 April 2012)
Nirmal holds a Master of Commerce degree from
University of NSW and is a Fellow of the Australian
Institute of Company Directors, Institute of Chartered
Accountants
in Australia and Australian Society of
Certified Practicing Accountants.
He has over 40 years of business management and
corporate advisory experience. During this time Nirmal
had roles as CFO / Finance Director of companies such
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Directors’ Report
as Industrea Limited, ISoft Group Limited, Australian
Pharmaceutical Industries Limited and Ruralco Holdings
Limited.
Nirmal is a non-executive director and chairman of the
finance, audit and risk committee of both Council of the
Ageing (COTA) in New South Wales and NF Australia.
He is also a non-executive director of Campbell Page
Limited.
Other listed company directorships in the last 3 years: Nil
DAVID ROSENBLUM – NON EXECUTIVE DIRECTOR
(resigned 24 April 2012)
David has had over 20 years of corporate advisory
experience specialising in corporate development and
corporate turnaround. He works in a very hands-on
manner with key people in client businesses.
He holds a Bachelor of Commerce degree from the
University of Queensland. He has enjoyed substantial
retail,
experience across most
new
service
technology and franchising.
including
industries, marine, manufacturing,
industries
Other listed company directorships in the last 3 years: nil
PAUL FULLOON – NON EXECUTIVE DIRECTOR
Paul Fulloon is an Executive Director of Albion Business
Centre Pty Ltd a Brisbane based consultancy specializing
in the restructuring of small businesses.
He holds an Advanced Diploma of Business (Accounting)
from Victoria University of Technology. He has been the
Accountant/Company Secretary and Director a number of
public corporations and has been a member of statutory
committees.
Other listed company directorships in the last 3 years: nil
15. COMPANY SECRETARY
JAMES FAY- COMPANY SECRETARY
James was appointed as Company Secretary in July
2009. James has a Bachelor of Financial Administration
degree and is a member of CPA Australia. James has
over 25 years experience
in public practice and
commercial accounting roles. James is also Managing
Director of Fay & Redman Pty Ltd Certified Practising
Accountants.
16. KEY MANAGEMENT PERSONNEL
The details of each key management personnel’s
qualifications, experience and special responsibilities for
those in office during the year (excluding Head of Real
Estate and Chief Operating Officer noted above) are:
SHARON ALDERWICK – GENERAL MANAGER
Sharon Alderwick has been involved with Residential
Property Management and working with large rent rolls
for the past 15 years. For eight of those years she had
and
held
in Business Development
positions
Management, overseeing staff and running of the rent
roll. Her prior experience is in accountancy. Sharon
brings to the Company a vast knowledge of Property
Management and along with her attention to detail is a
valuable asset.
TROY NUNAN – FINANCIAL CONTROLLER
Troy Nunan has a Bachelor of Business degree and is a
member of CPA Australia. He has experience in a range
of
finance,
manufacturing, construction and professional services.
industries
including
banking
and
for
Troy has worked
listed, unlisted and private
companies for over 15 years. Troy brings to our
company substantial experience in process improvement
and implementing organisational change.
17. INTEREST IN SHARES AND OPTIONS
Ordinary
Shares
Options over
ordinary
shares
Lachlan McIntosh
10,308,336
1,000,500
Paul Fulloon
David Rosenblum
Nirmal Hansra
Greg Rekers*
Kerry Potter*
-
-
250,000
2,578,940
2,574,773
-
-
133,400
800,400
800,400
Total Directors
15,712,049
2,734,700
Greg Rekers*
Kerry Potter*
Sharon Alderwick
Troy Nunan
Total Executives
*these are the same holdings
2,578,940
2,574,773
347,657
-
800,400
800,400
100,500
-
5,501,370
1,701,300
EGH ANNUAL REPORT 2012
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Directors’ Report
18. REMUNERATION REPORT (AUDITED)
(a) KEY MANAGEMENT PERSONNEL
The names of persons who were key management personnel of Eureka Group Holdings Limited at any time during the
financial year are shown in the following table. Key management personnel are defined as those who have a direct impact
on the strategic direction of the Company.
Name
Directors
Role
Period in role
Lachlan McIntosh
Non-Executive Director
Paul Fulloon
Non-Executive Director
20/07/09 – ongoing
05/12/08 – ongoing
David Rosenblum
Non-Executive Director
17/05/11 – 24/04/2012
Nirmal Hansra
Non-Executive Director
Greg Rekers
Kerry Potter
Executives
Greg Rekers
Kerry Potter
Executive Director
Executive Director
Head of Real Estate
Chief Operating Officer
Sharon Alderwick
General Manager
24/04/2012 – ongoing
24/04/2012 – ongoing
24/04/2012 – ongoing
17/05/11 – ongoing
17/05/11 – ongoing
17/05/11 – ongoing
Troy Nunan
Financial Controller
02/04/2012 – ongoing
(b) PRINCIPLES OF COMPENSATION OF KEY MANAGEMENT PERSONNEL
Compensation of key management personnel comprise fees determined having regard to industry practice and the need to
obtain appropriately qualified independent persons.
Compensation of key management personnel is determined by the Board. Consideration is given to normal commercial
rates of remuneration for similar levels of responsibility and to the Company’s financial performance. Emoluments comprise
salaries, bonuses, and contributions to superannuation funds, options and shares.
All executives have detailed job descriptions with identified key performance indicators against which annual reviews are
compared in relationship between the benefits contained in the employment contracts and the Company’s performance in
the 2012 financial year.
The Board continually reviews management’s performance and its own performance having regard to company
performance and shareholder wealth.
(c) REMUNERATION CONSULTANTS
The Group did not engage any remuneration consultants during the 2012 financial year.
EGH ANNUAL REPORT 2012
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Eureka Group Holdings Limited and controlled entities
Directors’ Report
(d) REMUNERATION FOR THE YEAR
Remuneration provided to Directors and executives during the financial year is shown in the following table:
Year ending 30 June 2012
Short Term
Post
Employment
Salary & fees
(Fixed) $
Bonus
$
Superannuation
$
Share
Based
Shares
$
Other
Long
Term
$
Directors
Lachlan McIntosh
Paul Fulloon
David Rosenblum
Nirmal Hansra
Greg Rekers
Kerry Potter
Total
Executives
Greg Rekers
Kerry Potter
Sharon Alderwick
Troy Nunan*
Total
60,000
19,867
13,323
5,750
-
-
98,940
206,932
206,932
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
103,845
10,000
27,500
-
545,209
10,000
10,246
2,475
12,721
-
-
-
-
-
-
-
-
-
-
-
-
* Troy Nunan commenced employment on 9 March 2012.
Total
$
60,000
19,867
13,323
5,750
-
-
98,940
206,932
206,932
124,091
29,975
567,930
-
-
-
-
-
-
-
-
-
-
-
-
% of
Bonus
that was
paid
% of Bonus
or grant
that was
forfeited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100%
100%
8.06%
91.94%
-
-
100%
-
Year ending 30 June 2011
Short Term
Post
Employment
Salary & fees
(Fixed) $$
Bonus
$
Superannuation
$
Share
Based*
Shares
$
Other
Long
Term
$
Total
$
% of
Bonus
that was
paid
% of Bonus
or grant
that was
forfeited
Directors
Lachlan McIntosh
Paul Fulloon
David Rosenblum
Andrew Kemp*
Jury Wowk*
Total
Executives
Mike Bosel
Mike Hayes
Greg Rekers
Kerry Potter
Sharon Alderwick
Paul Dolan*
Loretta Byers*
Total
37,255
23,534
5,600
11,200
25,105
102,694
304,890
-
-
-
-
-
-
-
-
-
-
-
-
-
-
180,498
10,000
16,245
92,015
92,015
66,346
29,718
238,477
-
-
-
-
1,003,959
10,000
-
-
5,971
2,675
21,463
46,354
* The following people ceased to be key management personnel during the year.
-
-
-
-
-
-
-
-
-
-
37,255
23,534
5,600
11,200
25,105
-
-
102,694
-
-
-
-
-
-
-
-
-
-
-
-
-
-
304,890
92,015
92,015
72,317
32,393
259,940
-
- 1,060,313
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
206,743
4.84%
95.16%
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Directors’ Report
(e) SERVICE AGREEMENTS
On appointment to the board, all non-executive directors enter into a service agreement with the Company in
the form of a letter of appointment. The letter summarises the board policies and terms, including remuneration,
relevant to the office of director.
Remuneration and other terms of employment for the chief executive officer, chief financial officer and the other
key management personnel are also formalised in service agreements.
The details of these agreements for executive key management personnel are as follows:
Greg Rekers (Executive Director & Head of Real Estate)
Agreement Commenced 24 April 2012
Term of the Agreement:
The Agreement may be terminated by the Company after the first anniversary of the contract provided that the
Company pays Mr Rekers a lump sum equal to the value of the salary package for one year. The agreement
may also be terminated by the Company in the event of grave misconduct.
Details:
Mr Rekers remuneration comprises a consulting fee of $180,000 plus 40% of all sales commissions (consulting
fee is half of the total payment to Navigator Property Group). Mr Rekers’ remuneration also comprises
additional incentives equal to 50% of his base fee, for reaching agreed upon budgets, adhering to all relevant
legislative requirements and reporting financials in a timely manner. Mr Rekers is responsible for the
departments of real estate, property development and project marketing for the Company. The directors believe
that the remuneration is appropriate for the duties allocated to Mr Rekers. Upon termination subject to
adherence of contractual clauses, Mr Rekers is entitled to a lump sum equal to the value of the salary package
for 1 year. Mr Rekers will receive no entitlements if terminated for grave misconduct.
Kerry Potter (Executive Director & Chief Operations Officer)
Agreement Commenced 24 April 2012
Term of the Agreement:
The Agreement may be terminated by the Company after the first anniversary of the contract provided that the
Company pays Mr Potter a lump sum equal to the value of the salary package for one year. The agreement
may also be terminated by the Company in the event of grave misconduct.
Details:
Mr Potters’ remuneration comprises a consulting fee of $180,000 plus 40% of all sales commissions (consulting
fee is half of the total payment to Navigator Property Group). Mr Potters’ Remuneration also comprises
additional incentives equal to 50% of his base fee, for reaching agreed upon budgets, adhering to all relevant
legislative requirements and reporting financials in a timely manner. Mr Potter is responsible for the day to day
management and operations of the company. The directors believe that the remuneration is appropriate for the
duties allocated to Mr Potter. Upon termination subject to adherence of contractual clauses, Mr Potter is entitled
to a lump sum equal to the value of the salary package for 1 years. Mr Potter will receive no entitlements if
terminated for grave misconduct.
Troy Nunan (Chief Financial Officer)
Agreement Commenced 9 March 2012
Term of the agreement:
The agreement may be terminated by either the Company or Mr Nunan with one month’s notice or by the
Company in the event of a material breach of misconduct by Mr Nunan.
Details:
Mr Nunan’s remuneration comprises a salary of $110,000 plus superannuation contributions. Mr Nunan’s
remuneration also contains additional incentives for lowering the costs of operating the business. This incentive
will be paid if cost reduction targets are met to a maximum of $30,000. Mr Nunan is responsible for the finance
division and the accounting and finance functions of the Company and its associated companies. The directors
believe that the remuneration is appropriate for the duties allocated Mr Nunan. There are no pay-outs upon
resignation or termination, outside of industrial regulations.
EGH ANNUAL REPORT 2012
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For personal use only
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Sharon Alderwick (General Manager)
Agreement Commenced 1September 2011
Term of the Agreement:
The agreement may be terminated by either the Company or Mrs Alderwick with one months’ notice or by the
Company in the event of a material breach of misconduct by Mrs Alderwick.
Details:
Mrs Alderwicks remuneration comprises a salary of $100,000 plus superannuation contributions. Mrs Alderwick
is responsible for the day to day operations of the Company and its associated companies. The directors
believe that the remuneration is appropriate for the duties allocated Mrs Alderwick, There are no pay-outs upon
resignation or termination, outside of industrial regulations.
(f) RELATIONSHIP BETWEEN REMUNERATION AND COMPANY PERFORMANCE
The following table shows the revenue, net profit before tax, earnings per share, share price and dividend per share for the
past 5 years of the Company. The factors that are considered to affect remuneration are summarised below:
2008
($)
2009
($)
2010
($)
2011
($)
2012
($)
Revenue
NPBT
EPS
Share price at year end*
DPS
24,515,851
(33,002,957)
18,702,665
(7,023,941)
11,247,998
(1,061,846)
14,099,699
(1,242,627)
15,593,470
686,488
(84.26)
6.00
0.00
(5.53)
1.20
0.00
(0.56)
1.30
0.00
(3.51)
0.09
0.00
1.37
0.10
0.00
*on 10 August 2010 there was a 10 for 1 share consolidation
This concludes the remuneration report, which has been audited.
19. AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration under Section 307C is included in this report on page 16.
20. DECLARATION
This report is made in accordance with a resolution of the Directors.
Lachlan McIntosh
Chairman
Dated in Brisbane this 18th day of September, 2012
EGH ANNUAL REPORT 2012
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Eureka Group Holdings Limited and controlled entities
Security Holder Information
Distribution of Securities as at 17 September 2012
Number
of
Securities
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total Security Holders
No of
Shareholders
243
106
29
76
82
536
Marketable Shares
There were 346 holders of less than a marketable parcel of 5,000
shares holding a total of 335,772 shares.
Voting Rights
Ordinary Shares carry voting rights of one vote per share. Options
carry no voting rights.
Twenty Largest Ordinary Shareholders at 17 September 2012
No of Ordinary Shares
Held
% of Issued Share
Capital
KATHLAC PTY LIMITED
WAVET FUND NO 2 PTY LTD
CO-INVESTOR CAPITAL PARTNERS PTY LTD
BYDAND CAPITAL PTY LIMITED
NAVIGATOR PROPERTY GROUP P/L
22 CAPITAL PTY LTD
M R & S J GORDON PTY LTD
QFM NOMINEES PTY LTD
JELLYFISH GLOBAL INVESTMENTS
DEALCITY PTY LIMITED
ALISTER WRIGHT
WAYNE BLOOMER
CO-INVESTOR CAPITAL PARTNERS (NZ) LTD
DSCC HOLDINGS PTY LTD
MARBLE TOWERS PTY LTD
ESCOR INVESTMENTS PTY LTD
VBS INVESTMENTS PTY LTD
IGNITION CAPITAL PTY LTD
MR ROBERT JAMES HALLINAN & MRS FAYE ELIZABETH
HALLINAN
MR WILLIAM HENRY SUMMERS & MRS DIANORA SUMMERS
Total
5,883,336
5,823,828
5,742,154
5,159,767
4,907,879
4,425,000
3,342,378
2,808,024
2,500,000
2,290,995
2,134,309
1,494,314
1,322,015
1,243,442
1,190,584
1,120,160
1,107,945
1,021,586
1,012,154
1,000,000
55,529,870
7.78
7.70
7.59
6.82
6.49
5.85
4.42
3.71
3.31
3.03
2.82
1.98
1.75
1.64
1.57
1.48
1.46
1.35
1.34
1.32
73.41
Largest Option Holders at 17 September 2012
No of Options Held
% of Issued Options
NAVIGATOR PROPERTY GROUP P/L
Total
1,600,800
1,600,800
18.42%
18.42%
Securities in which Directors have a Relevant Interest at 17
September 2012
Lachlan McIntosh
Paul Fulloon
David Rosenblum
Nirmal Hansra
Greg Rekers
Kerry Potter
Total
Ordinary Shares
10,308,336
-
-
250,000
2,578,940
2,574,773
5,403,713
Options
1,000,500
-
-
133,400
800,400
800,400
2,734,700
EGH ANNUAL REPORT 2012
12
For personal use only
Eureka Group Holdings Limited and controlled entities
Corporate Governance
INTRODUCTION
This statement outlines the key corporate governance
practices that are in place for the Group and to which
both the Board collectively and the Directors individually
are committed. In formulating and adopting its corporate
governance principles, the Directors have adopted and
complied with ASX Corporate Governance Principles and
Recommendations, 2nd edition.
•
•
•
PRINCIPLE 1
LAY SOLID FOUNDATIONS FOR MANAGEMENT AND
OVERSIGHT
Functions and Responsibilities of the Board
fulfill
times
The Board will at all
its overriding
responsibility to act honestly, conscientiously and fairly,
in accordance with the law, and in the interests of
Shareholders, its employees and those with whom it
deals. The Board of Directors is responsible for the
review and approval of the strategic direction of EGH and
for the oversight and monitoring of its business and
affairs. In addition, it is responsible for those matters
reserved to it by law and reserves to itself the following
matters and all power and authority in relation to those
matters:
• Oversight of the Group including its control and
accountability systems;
• Reviewing and overseeing the operation of systems
of risk management and internal compliance and
control, codes of ethics and conduct, and legal and
regulatory compliance;
• Monitoring Senior Management’s performance and
implementation of strategy, and ensuring appropriate
resources are available;
•
•
•
•
•
Approving and monitoring the progress of major
capital expenditure, capital management, and
acquisitions and divestments;
Approving and monitoring
reporting;
financial and other
Performance of investment and treasury functions;
The overall corporate governance of the Group
including the strategic direction, establishing goals
for management and monitoring the achievement of
these goals; and
To assist in the execution of its responsibilities, the
Board has the authority to establish Committees
(and delegate powers accordingly) to consider such
matters as it may consider appropriate.
PRINCIPLE 2
STRUCTURE THE BOARD TO ADD VALUE
The composition of the Board is determined according to
the following principles:
•
The Board must comprise members with a broad
range of experience, expertise, skills and contacts
relevant to the Group and its business (See Director
Profiles);
increased where
There must be at least four Directors and this may
be
that
additional expertise is required in specific areas or
when an outstanding candidate is identified;
the Board considers
The Chairman must be a non-executive Director who
is also Independent;
At least half of the Board must be non-executive
Directors and at least two of whom must also be
Independent;
The composition of the current board is slightly
different to the above principles and is expected to
remain so during its consolidation period. The board
has appointed Lachlan McIntosh as Non-executive
Chairman. Lachlan is a non-executive Director but is
not independent. The Board has taken into account
the fact Lachlan specialises in corporate finance,
restructurings and
turnarounds and
corporate
mergers and acquisitions; and
•
The Group has two Independent Directors in Paul
Fulloon and Nirmal Hansra and three non-executive
Directors out of a total of five.
Each Director has the right to seek independent
legal or other professional advice at the Company’s
expense. Prior approval from the Chairman is
required but may not be unreasonably withheld or
delayed.
Committees
The Board may establish Committees to assist it in
carrying out its function and for its effective and efficient
performance, and will adopt a charter
for each
Committee established dealing with the scope of its
responsibility and relevant administrative and procedural
arrangements. Best practice recommendations by the
ASX recommend the establishment of formal Audit,
Remuneration and Nomination Committees;
the
responsibilities normally delegated to the Remuneration
and Nomination committees are included in the charter of
the Board.
PRINCIPLE 3
PROMOTE ETHICAL AND RESPONSIBLE DECISION
MAKING
Ethical Standards and Values
All Directors and Officers of EGH must act with the
utmost integrity and objectivity, striving at all times to
enhance the reputation and performance of the Company
and, where possible, act in accordance with the interests
of Shareholders, staff, clients and all other stakeholders
of EGH. The Directors must comply with the Code of
Ethics in the exercise of their duties.
in relation
The Board has adopted a Diversity Policy that outlines
the objectives
to gender, age, cultural
background and ethnicity. The policy considers the
benefits of diversity, ways to promote a culture of
diversity, factors to be taken into account in the selection
process of candidates for Board and senior management
positions in the company, education programs to develop
skills and experience in preparation for Board and senior
management positions, processes to include review and
appointment of directors, and identify key measurable
EGH ANNUAL REPORT 2012
13
For personal use only
Eureka Group Holdings Limited and controlled entities
Corporate Governance
diversity performance objectives for the Board, CEO and
senior management.
The Diversity Policy is available upon request.
As a measurement of gender diversity, the proportion of
women employees in the consolidated entity as at 30
June 2012 is as follows:
Women on the board
0%
Women in senior executive positions
Women in the organisation
25%
50%
Responsibility for diversity has been included in the
Board Charter and the Remuneration Charter.
Dealings in Securities
The Constitution permits Directors to acquire Securities in
the Company. Company policy prohibits any dealing in,
or procuring
in
accordance with the Code of Conduct for Transactions in
Securities.
in Securities except
the dealing
PRINCIPLE 4
SAFEGUARD INTEGRITY IN FINANCIAL REPORTING
The Audit Committee is established by the Board to
assist it and report to it in relation to the matters with
which it is charged with responsibility. The role of the
Audit Committee is to advise on the establishment and
maintenance of a framework of internal controls and
appropriate ethical standards for the management of the
Group. It also gives the Board additional assurance
regarding the quality and reliability of financial information
prepared for use by the Board in determining policies or
for inclusion in the financial report. The Audit Committee
has responsibility for reviewing the risk management
framework and policies within the Group and monitoring
their implementation. Details of meetings and members
are provided in the annual report.
The Audit Committee currently has three members,
Nirmal Hansra (Chairman), Lachlan McIntosh and Paul
Fulloon. The blend of experience and skills assembled on
the Committee is considered appropriate for EGH at this
stage of its development.
The Executive Directors and Financial Controller must
each provide a statement to the Board with any financial
report to the effect that the Company’s risk management
and internal compliance and control system is operating
efficiently and effectively in all material respects.
Financial Reporting
The external auditors are selected according to criteria
set by
include most
significantly:
the Audit Committee which
•
The lack of any current or past connection or
association with the Group or with any member of
Senior Management that could in any way impair, or
be seen to carry with it any risk of impairing, the
independent external view they are required to take
in relation to the Group;
•
•
Their general reputation
independence and
probity and professional standing within the business
community; and
for
Their knowledge of the industry within which the
Group operates.
Audit staff employed by the external audit partner,
including the partner or other principal with overall
responsibility for the engagement, are required to be
rotated periodically, and in any event at intervals not
exceeding five years, so as to avoid any risk of impairing
the independent external view that the external auditors
are required to take in relation to the Group.
The Board approves an annual budget prepared by
Management and reviewed and commented on by the
Audit and Risk Committee. Actual results, including profit
and
flow
loss statement, balance sheet and cash
statement, are reported on a monthly basis against
budget, and revised forecasts for the year are prepared
regularly.
Price Sensitive Information, and generally all information
reasonably required by an investor to make an informed
assessment of the Group’s activities and results, is
reported to the ASX in accordance with continuous
disclosure requirements, which are considered as a
standing agenda item at each regular meeting of the
Audit Committee as well as of the Board.
Quality and Integrity of Personnel
The Company’s policies are detailed in the Group
Operating Policies and Procedures Manuals. Written
confirmation of compliance with policies is obtained from
all staff members. Formal appraisals are conducted at
least annually for all employees.
Investment Appraisal
EGH has clearly defined guidelines
for capital
expenditure. These include annual budgets, detailed
appraisal, and review procedures, levels of authority and
due diligence requirements where businesses are being
acquired or divested.
Operating Unit Controls
Financial controls and procedures, including information
systems controls are detailed in the Group Operating
Policies and Procedures Manuals.
PRINCIPLE 5
MAKE TIMELY AND BALANCED DISCLOSURE
The Board understands and respects
that prompt
disclosure of price sensitive information is integral to the
efficient operation of the ASX’s securities market and
complies with guideline of continuous and ongoing
disclosure.
PRINCIPLE 6
RESPECT THE RIGHTS OF SHAREHOLDERS
to ensure
The Board aims
that Shareholders are
informed of all major developments affecting the Group’s
to
state of affairs.
Shareholders through the distribution of financial reports,
is communicated
Information
EGH ANNUAL REPORT 2012
14
For personal use only
Eureka Group Holdings Limited and controlled entities
Corporate Governance
through
the ASX,
announcements
shareholder
newsletters and a comprehensive website. Shareholders
are encouraged to attend the Annual General Meeting at
which the Company’s auditors are also present to answer
shareholders questions. The Company complies with the
Guidelines for this principle.
PRINCIPLE 7
RECOGNISE AND MANAGE RISK
The Board and Management are responsible for the
identification of significant business risks and review of
the major risks affecting each business segment and
development of strategies to mitigate these risks. Major
business risks arise from such matters as actions by
competitors, changes in government policy and use of
information systems.
The Executive Directors and Financial Controller must
each provide a statement to the Board to the effect that
the Company’s risk management and internal compliance
and control system is operating efficiently and effectively
in all material respects.
PRINCIPLE 8
REMUNERATE FAIRLY AND RESPONSIBLY
EGH’s current practices in this area will be regularly
reviewed to ensure compliance with the Guidelines.
Remuneration of Directors and Executives
fully
disclosed in the annual report.
is
The Board has established a Nomination and
Remuneration Committee and has adopted a Nomination
and Remuneration Committee Charter.
The Nomination and Remuneration Committee:
(cid:1) is chaired by Nirmal Hansra who is an independent
director; and
(cid:1) consists of all non-executive board members.
EGH ANNUAL REPORT 2012
15
For personal use only
Eureka Group Holdings Limited and controlled entities
Auditor’s Independence Declaration
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 10, 1 Margaret Street
Sydney NSW 2000
Australia
DECLARATION OF INDEPENDENCE BY KIM COLYER TO THE DIRECTORS OF EUREKA GROUP HOLDINGS
LIMITED
As lead auditor of Eureka Group Holdings Limited for the year ended 30 June 2012, I declare that, to the best
of my knowledge and belief, there have been no contraventions of:
1. the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
2. any applicable code of professional conduct in relation to the audit.
This declaration is in respect Eureka Group Holdings Limited and the entities it controlled during the period.
K L Colyer
Partner
BDO East Coast Partnership
Brisbane, 18 September 2012
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an
Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO international Ltd, a UK company limited by guarantee, and form
part of the international BDO network of independent members firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or
omissions of financial services licensees) in each state or Territory other than Tasmania.
EGH ANNUAL REPORT 2012
16
For personal use only
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2012
Revenue
Other Income
Expenses
Food, beverage and consumables
Impairment - management rights and goodwill
Employee benefits expenses
Finance costs
Community operating expenses
Marketing expenses
Consultancy expenses
Depreciation & amortisation expenses
Lease expenses
Other expenses
Total Expenses
Profit / (Loss) before income tax expense from
continuing operations
Income tax expense / (benefit)
Profit / (Loss) from continuing operations
Profit / (Loss) for the year
Note
3
3
4
4
5
Consolidated
30 June 2012
$
15,539,834
Restated
30 June 2011
$
13,691,698
53,636
408,001
9,000,168
-
1,032,886
668,369
328,789
27,906
627,021
277,606
36,000
2,908,237
14,906,982
7,739,587
179,782
2,238,410
759,102
440,768
29,074
277,160
243,908
330,000
3,104,535
15,342,326
686,488
(1,242,627)
-
686,488
686,488
-
(1,242,627)
(1,242,627)
Other comprehensive income
-
-
Total Comprehensive Income for the year
686,488
(1,242,627)
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
21
21
1.37
1.35
(3.51)
(3.51)
The consolidated statement of comprehensive income is to be read in conjunction with the accompanying notes.
EGH ANNUAL REPORT 2012
17
For personal use only
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of Financial Position
AS AT 30 JUNE 2012
Consolidated
Note
30 June 2012
$
Restated
30 June 2011
$
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Assets classified as held for sale
Other
Total Current Assets
Non-Current Assets
Property, plant and equipment
Intangible assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Other financial liabilities
Provisions
Total Current Liabilities
Non-Current Liabilities
Other financial liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Share capital
Accumulated losses
Total Equity
6
7
8
9
11
12
13
16
14
16
14
895,059
738,233
61,098
2,003,631
209,453
3,907,474
1,050,485
5,475,710
6,526,195
368,747
579,334
38,371
2,530,983
62,601
3,580,036
1,158,423
5,412,780
6,571,203
10,433,669
10,151,239
1,937,135
1,427,047
73,459
3,437,641
3,299,000
-
3,299,000
6,736,641
3,697,028
2,800,877
5,815,872
138,228
8,754,977
-
16,488
16,488
8,771,465
1,379,774
17
43,930,780
42,300,014
(40,233,752)
(40,920,240)
3,697,028
1,379,774
The consolidated statement of financial position is to be read in conjunction with the accompanying notes
EGH ANNUAL REPORT 2012
18
For personal use only
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2012
Consolidated
Note
30 June 2012
$
30 June 2011
$
Cash flows from operating activities
Receipts from customers
Payments to suppliers & employees
Interest received
Finance costs
Net cash flow from (used in) operating activities
18(b)
Cash flows from investing activities
Payments for property, plant and equipment
Refund from acquisition of Griffith Financial Investment
Proceeds from sale of management rights and managers unit
15,873,487
14,796,904
(15,285,814)
(15,560,779)
37,318
(522,925)
102,066
(77,231)
-
543,670
1,661
(535,576)
(1,297,790)
(117,355)
14,198
380,000
Payment for subsidiary, net of cash acquired
-
(201,000)
Payments for intangible assets
Net cash flow from investing activities
Cash flows from financing activities
Proceeds from other financial liabilities
Repayments of other financial liabilities
Proceeds from share issues
Payments for share issue costs
Net cash flow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of financial year
Cash and cash equivalents at end of financial year
18(a)
(240,909)
225,530
366,096
(400,000)
350,000
(117,380)
198,716
526,312
368,747
895,059
-
75,843
903,000
(470,000)
830,000
(15,000)
1,248,000
26,053
342,694
368,747
The consolidated statement of cash flows is to be read in conjunction with the accompanying notes.
EGH ANNUAL REPORT 2012
19
For personal use only
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2012
Consolidated
Share Capital
$
Accumulated Losses
$
Total
$
2012
Balance at 1 July 2011
42,300,014
(40,920,240 )
1,379,774
Profit / (Loss) for the year
Other comprehensive income
Total comprehensive income for the year
-
-
-
686,488
-
686,488
Transactions with owners in their
capacity as owners:
Debt converted into equity
Shares issued during the year
Capital raising cost
1,398,146
350,000
(117,380)
1,630,766
-
-
-
-
686,488
-
686,488
1,398,146
350,000
(117,380)
1,630,766
Balance at 30 June 2012
43,930,780
(40,233,752)
3,697,028
2011
Balance at 1 July 2010
Profit / (Loss) for the year
Adjustment on correction of error
Other comprehensive income
Total comprehensive loss for the year
Transactions with owners in their
capacity as owners:
Debt converted into equity
Shares issued during the year
Capital raising cost
40,494,564
(39,677,613)
816,951
-
-
-
-
(1,051,391)
(191,236)
-
(1,051,391)
(191,236)
-
(1,242,627)
(1,242,627)
990,047
830,000
(14,597)
1,805,450
-
-
-
990,047
830,000
(14,597)
1,805,450
Balance at 30 June 2011
42,300,014
(40,920,240)
1,379,774
The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.
EGH ANNUAL REPORT 2012
20
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
1.
INTRODUCTION
Eureka Group Holdings Limited (covering the financial
statements of Eureka Group Holdings Limited and all of
its subsidiaries)
the
“Consolidated Entity”) for the year ended 30 June 2012
is a company incorporated and domiciled in Australia.
“Group” or
(“EGH” or
the
GOING CONCERN
The financial report has been prepared on a going
concern basis. This basis presumes that funds will be
available to finance future operations and that the
realisation of assets and liabilities will occur in the
normal course of business.
EGH is a for-profit entity for the purposes of preparing
the financial statements.
The going concern assumption is based on the
following steps taken by the Group:
Operations and principal activities
Operations comprise property management of Senior
Independent Living Communities.
Currency
The financial report is presented in Australian dollars
and rounded to the nearest dollar.
Registered office
Unit 7, 486 Scottsdale Drive, Varsity Lakes, QLD 4227.
Authorisation of financial report
The financial report was authorised for issue on 18
September 2012 by the Directors. The Directors have
the power to amend the financial report after issue.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF PREPARATION
The principal accounting policies adopted by EGH
comprising the parent entity Eureka Group Holdings
Limited and its subsidiaries are stated in order to assist
in the general understanding of the financial report.
The consolidated financial report is a general purpose
financial report which has been prepared in accordance
with Australian Accounting Standards and
the
Corporations Act 2001.
Compliance with IFRS
The consolidated financial report of EGH complies with
International Financial Reporting Standards (IFRSs)
and
International
Accounting Standards Board (IASB).
interpretations adopted by
the
New and amended standards adopted by the Group
None of the new standards and amendments to
standards that are mandatory for the first time for the
financial year beginning 1 July 2011 affected any of the
amounts recognised in the current period or any prior
period and is not likely to affect future periods.
Early adoption of standards
The Group has not elected
to apply any
pronouncements before their operative date in the
annual reporting period beginning 1 July 2011.
Historical cost convention
These financials statements have been prepared under
the historical cost convention, as modified by the
revaluation of available-for-sale
financial assets,
financial assets and
liabilities (including derivative
instruments) at fair value through profit or loss.
• The Group expects to realise its remaining assets
held for sale of $2,003,631 prior to end of June
2013. The Group has engaged Resort Brokers to
market these assets and discussions are being held
with prospective buyers;
Included in current liabilities are amounts owing to
shareholders amounting to $987,047. The Group
continues to retain the support of shareholder loan
providers to the extent that the group will work
within its cash flow capabilities for repayment of its
outstanding debts;
•
• The Directors believe the Group continues to have
the support of NAB and has a number of strategies
to maintain compliance with the facility covenants;
and
• The Group’s 12 month cash flow forecast shows
positive operating cash flows.
The Directors are confident of ongoing support from the
existing shareholders, shareholder loan providers and
the NAB and as such believe the Group will be able to
generate sufficient cash flows from operating activities
to fund ongoing working capital needs for at least a
period of twelve months from the date of the Directors’
report.
As a result the Directors believe that the going concern
basis of preparation is appropriate, and accordingly
have prepared the financial report on this basis.
The going concern basis presumes that funds will be
available to finance future operations and that the
realisation of assets and liabilities will occur in the
normal course of business.
CONSOLIDATION
This financial report covers the consolidated entity
consisting of Eureka Group Holdings Limited and its
controlled entities. Eureka Group Holdings Limited is
the ultimate parent entity.
The consolidated financial statements incorporate the
assets and liabilities of all entities controlled by Eureka
Group Holdings Limited as at 30 June 2012 and the
results of all controlled entities for the year then ended.
The effects of all transactions between entities in the
consolidated entity are eliminated in full.
indirectly,
Subsidiaries are entities controlled by the Company.
Control exists when the Company has the power,
directly or
financial and
operating policies of an entity so as to obtain benefits
from its activities. In assessing control, potential voting
rights that presently are exercisable or convertible are
taken into account. The financial statements of
to govern
the
EGH ANNUAL REPORT 2012
21
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
subsidiaries are included in the financial report from the
date that control commences until the date that control
ceases.
The acquisition of subsidiaries is accounted for using
the acquisition method of accounting. Refer to the
'business combinations' accounting policy for further
details. A change in ownership interest, without the loss
of control, is accounted for as an equity transaction,
where
the consideration
transferred and the book value of the share of the non-
controlling interest acquired is recognised directly in
equity attributable to the parent.
the difference between
the assets
it derecognises
Where the consolidated entity loses control over a
subsidiary,
including
goodwill, liabilities and non-controlling interest in the
subsidiary together with any cumulative translation
differences recognised in equity. The consolidated
entity recognises the fair value of the consideration
received and the fair value of any investment retained
together with any gain or loss in profit or loss.
REVENUE RECOGNITION
Management, Catering and Service Fees
The consolidated entity is entitled to receive a fee from
unit owners for managing the units under management
services agreements. The consolidated entity also
receives a fee from the tenants of the units for the
provision of catering and other services. Revenue is
recognised when the services are provided.
Interest Revenue
Interest revenue is recognised on a proportional basis
taking into account the interest rates applicable to the
financial assets.
INCOME TAX
Income tax expense comprises current and deferred
tax. Income tax expense is recognised in profit and
loss except to the extent that it relates to items
recognised directly in equity, in which case it is
recognised in equity.
Deferred tax is recognised using the balance sheet
method, providing for temporary differences between
the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for
taxation purposes. Deferred tax is not recognised for
the differences relating to investments in subsidiaries to
the extent that it is probable that it will not reverse in the
foreseeable future. Deferred tax is measured at the tax
rates that are expected to be applied to the temporary
differences when they reverse, based on the laws that
have been enacted or substantively enacted by the
reporting date. Deferred tax assets and liabilities are
offset when there is a legally enforceable right to offset
current tax assets and liabilities and when the deferred
tax balances relate to the same taxation authority. A
deferred tax asset is recognised to the extent that it is
probable that future taxable profits will be available
against which the temporary difference can be utilised.
Deferred tax assets are reviewed at each reporting date
and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
segments are presented using
OPERATING SEGMENTS
the
Operating
'management approach', where
information
presented is on the same basis as the internal reports
provided to the Chief Operating Decision Makers
('CODM') - being the Board of Directors. The CODM is
responsible for the allocation of resources to operating
segments and assessing their performance.
the
CASH AND CASH EQUIVALENTS
For the purpose of the statement of cash flows, cash
includes cash at bank and on hand as well as highly
liquid investments with short periods to maturity which
are readily convertible to cash on hand and are subject
to an insignificant risk of changes in value, net of
outstanding bank overdrafts.
TRADE AND OTHER RECEIVABLES
Trade receivables are initially recognised at fair value
and subsequently measured at amortised cost using
the effective interest method, less any provision for
impairment. Trade receivables are generally due for
settlement within 30 days.
Collectability of trade receivables is reviewed on an
ongoing basis. Debts which are known
to be
uncollectable are written off by reducing the carrying
amount directly. A provision for impairment of trade
receivables is raised when there is objective evidence
that the consolidated entity will not be able to collect all
amounts due according to the original terms of the
receivables. Significant
the
debtor, probability that the debtor will enter bankruptcy
or financial reorganisation and default or delinquency in
payments (more than 90 days overdue) are considered
indicators that the trade receivable may be impaired.
the
The amount of
difference between the asset’s carrying amount and the
present value of estimated
flows,
discounted at the original effective interest rate. Cash
flows
receivables are not
to short-term
discounted if the effect of discounting is immaterial.
financial difficulties of
impairment allowance
future cash
relating
the
is
Other receivables are recognised at amortised cost,
less any provision for impairment
PROPERTY PLANT & EQUIPMENT
Property plant and equipment is recognised at cost.
Depreciation and amortisation is calculated on the
straight line (SL) or diminishing value (DV) basis so as
to write off the net cost of each item of property, plant
and equipment over its expected useful life to the
consolidated entity. Rates used for each class of asset
are:
Class
Rate
Method
Plant and equipment
25-50%
SL/DV
Manager units
2.5%
SL
IMPAIRMENT OF ASSETS
Financial Assets
A financial asset is assessed at each reporting date to
determine whether there is any objective evidence that
it is impaired. A financial asset is considered to be
impaired if objective evidence indicates that one or
more events have had a negative effect on the
estimated future cash flows of that asset.
EGH ANNUAL REPORT 2012
22
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
An impairment loss in respect of a financial asset
measured at amortised cost is calculated as the
difference between its carrying amount, and the present
value of the estimated future cash flows discounted at
the original effective interest rate. An impairment loss
in respect of an available-for-sale financial asset is
calculated by reference to its fair value.
Individually significant financial assets are tested for
impairment on an individual basis. The remaining
financial assets are assessed collectively in groups that
share similar credit risk characteristics.
All impairment losses are recognised in profit or
loss. Any cumulative loss in respect of an available-for-
sale financial asset previously recognised in equity is
reclassified to profit or loss. Any impairment loss is
reversed if the reversal can be related objectively to an
event occurring after
loss was
the
impairment
recognised. For
financial assets measured at
amortised cost, the reversal is recognised in profit or
loss. For available-for-sale financial assets that are
equity securities, the reversal is recognised directly in
equity.
Non-Financial Assets
The carrying amounts of the Group’s non-financial
assets are reviewed at each reporting date to determine
whether there is any indication of impairment. If any
such indication exists then the asset’s recoverable
amount is estimated. For goodwill and intangible
assets that have indefinite lives, recoverable amount is
estimated at each reporting date.
The recoverable amount of an asset or cash-generating
unit is the greater of its value in use and its fair value
less costs to sell. In assessing value in use, the
estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects
current market assessments of the time value of money
and the risks specific to the asset. For the purpose of
impairment testing, assets are grouped together into
the smallest group of assets that generates cash
inflows from continuing use that are largely independent
of the cash inflows of other assets or groups of assets
(the “cash-generating unit”). The goodwill acquired in a
business combination, for the purpose of impairment
testing, is allocated to cash-generating units that are
expected
the
from
combination.
the synergies of
to benefit
An impairment loss is recognised if the carrying amount
of an asset or its cash-generating unit exceeds its
recoverable amount. Impairment losses are recognised
in profit or loss. Impairment losses recognised in
respect of cash-generating units are allocated first to
reduce the carrying amount of any goodwill allocated to
the units and then to reduce the carrying amount of the
other assets in the unit (group of units) on a pro rata
basis.
Impairment losses recognised in prior periods are
assessed at each reporting date for any indications that
the loss has decreased or no longer exists. Except for
goodwill, an impairment loss is reversed if there has
been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed
only to the extent that the asset’s carrying amount does
not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no
impairment loss had been recognised.
PROVISIONS
Provisions are recognised when the consolidated entity
has a present obligation,
future sacrifice of
economic benefits is probable, and the amount of the
provision can be measured reliably.
the
The amount recognised as a provision is the best
estimate of the consideration required to settle the
present obligation at reporting date, taking into account
the risks and uncertainties surrounding the obligation
DIVIDENDS
Provision is made for the amount of any dividend
declared, being appropriately authorised and no longer
at the discretion of the entity, on or before the end of
the reporting period but not distributed at the end of the
reporting period.
INVENTORIES
Inventories comprise catering stock only.
Catering stock is valued at the lower of cost and net
realisable value.
INTANGIBLES
Only intangibles that have been purchased or paid for
by the consolidated entity are recognised in the
accounts. Internally generated intangibles such as
the
management
consolidated entity has constructed are not recognised
in the accounts.
rights on Communities
that
Plans and trademarks have a finite life and are
recognised at cost and subsequently amortised using
the straight-line method over 5 years being
the
estimated useful life.
Management rights and letting rights have a finite life
and are carried at the lower of cost or recoverable
amount. The management rights and letting rights are
amortised using the straight line method over 40 years
being the estimated useful life.
Sales rolls have a finite life and are carried at the lower
of cost or
rolls are
amortised using the straight line method over 15 years
being the estimated useful life
recoverable amount. Sales
Goodwill is measured at cost less any accumulated
impairment losses. Goodwill is reviewed for impairment
annually or more frequently if events or changes in
circumstances indicate that the carrying value may be
impaired. Goodwill acquired is allocated to each of the
cash-generating units expected to benefit from the
combination’s synergies. Impairment is determined by
assessing
the cash-
generating unit to which the goodwill relates. Where the
recoverable amount of the cash-generating unit is less
than the carrying amount, an impairment loss is
recognised. Impairment losses for goodwill are not
subsequently reversed.
recoverable amount of
the
EGH ANNUAL REPORT 2012
23
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
TRADE AND OTHER PAYABLES
These amounts represent liabilities for goods and
services provided to the consolidated entity prior to the
end of the financial year and which are unpaid at that
date. The amounts are unsecured and are generally
settled within 30-60 days.
the
from
financial asset expire or
FINANCIAL ASSETS AND LIABILITIES
A financial instrument is recognised if the Consolidated
Entity becomes a party to the contractual provisions of
the instrument. Financial assets are derecognised if the
Consolidated Entity’s contractual rights to the cash
the
flows
Consolidated Entity transfers the financial asset to
another party without retaining control or substantially
all risks and rewards of the asset. Regular purchases
and sales of financial assets are accounted for at trade
date i.e. the date that the Consolidated Entity commits
itself to purchase or sell the asset. Financial liabilities
are derecognised if the Consolidated Entity’s obligation
specified in the contract expire or are discharged or
cancelled
if
initial recognition. Financial
FINANCIAL ASSETS AT FAIR VALUE THROUGH
PROFIT OR LOSS
An instrument is classified as at fair value through profit
and loss if it is held for trading or is designated as such
upon
instruments are
designated at fair value through profit or loss if the
group manages such investments and makes purchase
in
and sale decisions based on
risk
accordance with
initial
management or
recognition,
are
recognised in profit or loss when incurred. Financial
instruments at fair value through profit or loss are
measured at fair value, and changes are recognised in
profit or loss
the Group’s documented
investment strategy. Upon
costs
transaction
attributable
fair value
their
ASSETS CLASSIFIED AS HELD FOR SALE
Non-current assets and assets of disposal groups are
classified as held for sale if their carrying amount will be
recovered principally through a sale transaction rather
than through continuing use. They are measured at the
lower of their carrying amount and fair value less costs
to sell. For non-current assets or assets of disposal
groups to be classified as held for sale, they must be
available for immediate sale in their present condition
and their sale must be highly probable.
OTHER NON-DERIVATIVE FINANCIAL
INSTRUMENTS
Other
are
measured after initial recognition at amortised cost
using the effective interest method less any impairment
losses.
non-derivative
instruments
financial
EMPLOYEE BENEFITS
Salaries, Wages and Annual Leave
Liabilities for wages and salaries and annual leave are
recognised, and are measured as
the amounts
expected to be paid when the liabilities are settled
inclusive of on-costs. Sick leave is non-vesting and is
expensed as paid.
Long Service Leave
A liability for long service leave expected to be settled
within 12 months of the reporting date is recognised
and is measured as the amounts expected to be paid
when the liabilities are settled. The liability for long
service leave expected to be settled more than 12
months from the reporting date is recognised and
measured as the present value of expected future
payments to be made in respect of services provided by
employees up to the reporting date. Consideration is
given for expected future wage and salary levels,
experience of employee departures and periods of
service. Expected future payments are discounted
using market yields as at the reporting date on national
government bonds with the terms to maturity that
match, as closely as possible, the estimated future cash
outflows.
FINANCE COSTS
Finance costs incurred whilst Seniors’ Communities are
under construction are capitalised in the period in which
they are incurred. Once each project is completed and
ready for sale, subsequent finance costs are expensed
when incurred. All other finance costs are expensed
when incurred. Finance costs include interest on short-
long-term borrowings, amortisation of
term and
discounts or premiums
to borrowings,
amortisation of ancillary costs in connection with the
arrangement of borrowings and finance lease charges.
relating
BORROWINGS
costs
Borrowings
interest method. Fees paid on
Borrowings are initially recognised at fair value, net of
are
incurred.
transaction
subsequently measured at amortised cost. Any
difference between the proceeds (net of transaction
costs) and the redemption amount is recognised in
profit or loss over the period of the borrowings using the
the
effective
establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn
down. In this case, the fee is deferred until the draw
down occurs. To the extent there is no evidence that it
is probable that some or all of the facility will be drawn
down, the fee is capitalised as a prepayment for
liquidity services and amortised over the period of the
facility to which is relates.
The fair value of the liability portion of a convertible
bond is determined using a market interest rate for an
equivalent non-convertible bond. This amount
is
recorded as a liability on an amortised cost basis until
extinguished on conversion or maturity of the bonds.
The remainder of the proceeds is allocated to the
conversion option. This is recognised and included in
shareholders’ equity, net of income tax effects.
Borrowings are removed from the balance sheet when
the obligation specified in the contract is discharged,
cancelled or expired. The difference between the
carrying amount of a financial liability that has been
extinguished or transferred to another party and the
consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in profit
or loss as other income or finance costs.
Where the terms of a financial liability are renegotiated
and the entity issues equity instruments to a creditor to
EGH ANNUAL REPORT 2012
24
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
extinguish all or part of the liability (debt for equity
swap), a gain or loss is recognised in profit or loss,
which is measured as the difference between the
carrying amount of the financial liability and the fair
value of the equity instruments issued.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting
period.
SHARE BASED PAYMENTS
The entity has allocated to its employees and Directors,
shares and share options as part of their remuneration
packages. AASB 2 “Share Based Payments” require
that these payments and also payments made to other
counterparties in return for goods and services be
measured at the more readily determinable fair value of
the good/service or the fair values of the equity
instrument. This amount is expensed in the statement
of comprehensive income.
Where the grant date and the vesting date are different
the total expenditure calculated is allocated between
the two dates taking into account the terms and
conditions attached
the
the
counterparties as well as management’s assumptions
about probabilities of payments and compliance with
and attainment of the set out terms and conditions.
instruments and
to
LEASES
Operating
expense on a straight line basis over the lease term.
lease payments are recognised as an
GOODS AND SERVICES TAX
Revenues, expenses and assets are recognised net of
the amount of goods and services tax (GST), except
where the amount of GST incurred is not recoverable
from the taxation authority, it is recognised as part of
the cost of acquisition of an asset or as part of an item
of expense.
Receivables and payables are recognised inclusive of
GST.
The net amount of GST recoverable from, or payable
to,
included as part of
receivables or payables.
taxation authority
the
is
TAX CONSOLIDATION
The Company and its wholly-owned Australian resident
entities have formed a tax-consolidation group with
effect from 1 July 2003 and are therefore taxed as a
single entity from that date. The head entity within the
tax-consolidation group is Eureka Group Holdings
Limited.
the
Current tax expense/income, deferred tax liabilities and
deferred assets arising from temporary differences of
the members of
tax-consolidation group are
recognised in the separate financial statements of the
members of the tax-consolidation group using the
‘separate taxpayer within group’ approach by reference
to the carrying amounts of assets and liabilities in the
separate financial statements of each entity and the tax
values applying under tax consolidation.
Any current tax liabilities (assets) and deferred tax
assets arising
the
subsidiaries is assumed by the head entity in the tax-
from unused
losses of
tax
recognised by
consolidation group and are
the
Company as amounts payable (receivable) to /(from)
other entities
in
conjunction with any tax funding arrangement amounts
(refer below). Any difference between these amounts is
recognised by the Company as an equity contribution or
distribution.
tax-consolidation group
the
in
The Company recognises deferred tax assets arising
from unused tax losses of the tax-consolidation group
to the extent that it is probable that future taxable profits
of the tax-consolidation group will be available against
which the asset can be utilised.
Any subsequent period adjustments to deferred tax
assets arising from unused tax losses as a result of
revised assessments of the probability of recoverability
is recognised by the head entity only.
the
The
respect of
tax amounts.
Nature of Tax Funding Arrangements and Tax Sharing
Arrangements
The head entity in conjunction with other members of
the tax-consolidation group has entered into a tax
funding arrangement which sets out
funding
obligations of members of the tax-consolidation group
in
funding
arrangements require payments to/ from the head entity
to the current tax liability/ (asset) assumed to be the
head entity and any
tax asset
assumed by the head entity, resulting in the head entity
recognising an inter-entity receivable / (payable) equal
in amount to the tax liability/ (asset) assumed. The
inter-entity receivables/ (payables) are at call.
Contributions to fund the current tax liabilities are
payable as per the tax funding arrangement and reflect
the timing of the head entity’s obligation to make
payments for tax liabilities to the relevant authorities.
tax-loss deferred
tax
The head entity, in conjunction with other members of
the tax-consolidated group, has also entered into a tax
sharing agreement.
tax sharing agreement
provides for the determination of the allocation of
income tax liabilities between the entities should the
head entity default on its tax payment obligations.
The
CAPITAL MANAGEMENT
The Consolidated Entity considers its share capital and
retained earnings as capital.
When managing capital, the objective is to ensure the
Consolidated Entity continues as a going concern, as
well as to maintain optimum returns to shareholders
and benefits for other stakeholders. The Consolidated
Entity also aims to maintain a capital structure that
ensures the lowest cost of capital available to the entity.
The Consolidated Entity does not have any specific
capital targets and nor is it subject to any external
capital restrictions. The Board and Senior Management
meet monthly and review in detail the current cash
position and cash flow forecasts having regard to
planned expansions and takes the necessary action to
ensure sufficient funds are available.
EGH ANNUAL REPORT 2012
25
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
BUSINESS COMBINATIONS
The acquisition method of accounting is used to
regardless of
instruments or other assets are
for business combinations
account
whether equity
acquired.
The consideration
is
transferred
the sum of
the
acquisition-date fair values of the assets transferred,
equity instruments issued or liabilities incurred by the
acquirer to former owners of the acquiree and the
amount of any non-controlling interest in the acquiree.
For each business combination, the non-controlling
interest in the acquiree is measured at either fair value
or at
the acquiree's
identifiable net assets. All acquisition costs are
expensed as incurred to profit or loss.
the proportionate share of
On the acquisition of a business, the consolidated entity
assesses the financial assets acquired and liabilities
assumed for appropriate classification and designation
in accordance with the contractual terms, economic
conditions,
the consolidated entity's operating or
accounting policies and other pertinent conditions in
existence at the acquisition-date.
Where the business combination is achieved in stages,
the consolidated entity remeasures its previously held
equity interest in the acquiree at the acquisition-date
fair value and the difference between the fair value and
the previous carrying amount is recognised in profit or
loss.
Contingent consideration to be transferred by the
acquirer is recognised at the acquisition-date fair value.
Subsequent changes in the fair value of contingent
consideration classified as an asset or liability is
recognised in profit or loss. Contingent consideration
its
is not
classified as equity
subsequent settlement is accounted for within equity.
remeasured and
The difference between the acquisition-date fair value
of assets acquired, liabilities assumed and any non-
controlling interest in the acquiree and the fair value of
the consideration transferred and the fair value of any
pre-existing investment in the acquiree is recognised as
goodwill. If the consideration transferred and the pre-
existing fair value is less than the fair value of the
identifiable net assets acquired, being a bargain
purchase to the acquirer, the difference is recognised
as a gain directly in profit or loss by the acquirer on the
acquisition-date, but only after a reassessment of the
identification and measurement of the net assets
acquired, the non-controlling interest in the acquiree, if
any, the consideration transferred and the acquirer's
previously held equity interest in the acquirer.
Business combinations are initially accounted for on a
provisional basis. The acquirer retrospectively adjusts
the provisional amounts
recognised and also
recognises additional assets or liabilities during the
measurement period, based on new
information
obtained about the facts and circumstances that existed
at the acquisition-date. The measurement period ends
on either the earlier of (i) 12 months from the date of
the acquisition or (ii) when the acquirer receives all the
information possible to determine fair value.
CONTRIBUTED EQUITY
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of
new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
EARNINGS PER SHARE
Basic Earnings Per Share
Basic earnings per share is calculated by dividing the
profit attributable to the owners of the Company,
excluding any costs of servicing equity other than
ordinary shares, by the weighted average number of
ordinary shares outstanding during the financial year,
adjusted for bonus elements in ordinary shares issued
during the financial year.
Diluted Earnings Per Share
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take
into account the after income tax effect of interest and
other financing costs associated with dilutive potential
ordinary shares and the weighted average number of
shares assumed
for no
to have been
consideration in relation to dilutive potential ordinary
shares
issued
to make
financial statements
USE OF JUDGEMENTS AND ESTIMATES
requires
The preparation of
management
judgements, estimates and
assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from
these estimates. Estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in
which the estimate is revised and in any future periods
affected.
In particular, information about significant areas of
estimation uncertainty and critical
in
applying accounting policies that have most significant
effect on the amount recognised in the financial
statements are described as follows:
judgements
Goodwill
tests annually, or more
The consolidated entity
frequently, if events or changes in circumstances
indicate impairment on whether goodwill has suffered
any impairment. The recoverable amounts of cash-
generating units have been determined based on value-
in-use calculations. These calculations require the use
of assumptions, including estimated discount rates
based on the current cost of capital and growth rates of
the estimated future cash flows. Refer note 12 for
further information.
Impairment of Non-financial Assets other than Goodwill
and other indefinite life Intangible Assets
The consolidated entity assesses impairment of non-
financial assets other than goodwill and other indefinite
intangible assets at each reporting date by
life
evaluating conditions specific to the consolidated entity
and to the particular asset that may lead to impairment.
If an impairment trigger exists, the recoverable amount
of the asset is determined. This involves calculating the
fair value less cost to less using assumptions of
EGH ANNUAL REPORT 2012
26
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
multipliers, cash flow and profit. Refer to note 12 for key
assumptions used by management.
Amortisation of Management Rights
The consolidated entity amortises its management
rights over a period of 40 years. The amortisation
period used reflects the pattern in which the asset’s
future economic benefits are expected to be consumed
by the consolidated entity. In determining the useful life,
the consolidated entity considered the expected usage
of the assets, the legal rights over the asset and the
renewal
right
agreements. The management rights are attached to
each individual village’s property and include options or
the ability to renew the contract. Taking these points
into
the
amortisation period should be similar to the life of the
property rather than agreement period.
the management
the Directors
consideration,
believe
period
of
PARENT ENTITY
In accordance with the Corporations Act 2001, these
financial statements present
the
consolidated entity only.
results of
the
irrevocable election on
satisfy the business model test for managing the
financial assets and have certain contractual cash flow
characteristics. All other financial instrument assets are
to be classified and measured at fair value. This
standard allows an
initial
recognition to present gains and losses on equity
instruments (that are not held-for-trading) in other
comprehensive income, with dividends as a return on
these investments being recognised in profit or loss. In
addition, those equity instruments measured at fair
value through other comprehensive income would no
longer have to apply any impairment requirements nor
would there be any ‘recycling’ of gains or losses
through profit or loss on disposal. The accounting for
financial
to be classified and
measured in accordance with AASB 139, with one
exception, being that the portion of a change of fair
value relating to the entity’s own credit risk is to be
presented in other comprehensive income unless it
would
accounting mismatch. The
consolidated entity will adopt this standard from 1 July
2015 but the impact of its adoption is yet to be
assessed by the consolidated entity.
liabilities continues
create
an
The accounting policies of
the parent entity are
consistent with those of the consolidated entity, as
disclosed above, except for the following:
•
•
Investments in subsidiaries are accounted for at
cost, less any impairment, in the parent entity.
Investments in associates are accounted for at
cost, less any impairment, in the parent entity.
Financial Guarantees
financial
the parent entity has provided
Where
loans and payables of
to
guarantees
subsidiaries for no compensation, the fair values of
these guarantees are accounted for as contributions
and recognised as part of the cost of the investment.
in relation
COMPARATIVES
Where necessary, comparative information has been
reclassified to achieve consistency in disclosure with
current financial year amounts and other disclosures.
NEW ACCOUNTING STANDARDS AND
INTERPRETATIONS NOT YET ADOPTED
The following Australian Accounting Standards have
been issued or amended and are applicable to the
parent and consolidated entity but are not yet effective.
They have not been adopted in the preparation of the
financial statements at the reporting date. A discussion
of those requirements and their impact on the Group
follows:
AASB 9 Financial Instruments: This standard and its
consequential amendments are applicable to annual
reporting periods beginning on or after 1 January 2015
and completes phase I of the IASB's project to replace
IAS 39 (being the international equivalent to AASB 139
'Financial Instruments: Recognition and Measurement').
This standard
introduces new classification and
measurement models for financial assets, using a
single approach to determine whether a financial asset
is measured at amortised cost or fair value. To be
classified and measured at amortised cost, assets must
AASB 10 Consolidated Financial Statements: This
standard is applicable to annual reporting periods
beginning on or after 1 January 2013. The standard has
a new definition of ‘control’. Control exists when the
reporting entity is exposed, or has the rights, to variable
returns (e.g. dividends, remuneration, returns that are
not available to other interest holders including losses)
from its involvement with another entity and has the
ability to affect those returns through its ‘power’ over
that other entity. A reporting entity has power when it
has rights (e.g. voting rights, potential voting rights,
rights to appoint key management, decision making
rights, kick out rights) that give it the current ability to
direct the activities that significantly affect the investee’s
returns (e.g. operating policies, capital decisions,
appointment of key management). The consolidated
entity will not only have to consider its holdings and
the holdings and rights of other
rights but also
shareholders in order to determine whether it has the
necessary power
for consolidation purposes. The
adoption of this standard from 1 July 2013 may have an
impact where the consolidated entity has a holding of
less than 50% in an entity, has de facto control, and is
not currently consolidating that entity. The consolidated
entity will adopt this standard from 1 July 2013 but the
impact of its adoption is yet to be assessed by the
consolidated entity.
AASB 12 Disclosure of Interests in Other Entities:
This standard sets out the required disclosures for
entities reporting under the two new standards, AASB
10 and AASB 11, and
the disclosure
requirements currently found in AASB 127 and AASB
128. Application of this standard by the Consolidated
Entity will not affect any of the amounts recognised in
the financial statements.
replaces
AASB13 Fair Value Measurement: This standard and
its consequential amendments are applicable to annual
reporting periods beginning on or after 1 January 2013.
The standard provides a single robust measurement
framework, with clear measurement objectives, for
measuring fair value using the ‘exit price’ and it
provides guidance on measuring fair value when a
EGH ANNUAL REPORT 2012
27
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
market becomes less active. The ‘highest and best use’
approach would be used to measure assets whereas
liabilities would be based on transfer value. The
consolidated entity has yet to determine the potential
effect of this standard.
2011-4 Amendments
AASB
to Australian
Accounting Standards to Remove Individual Key
Management Personnel Disclosure Requirement:
These amendments are applicable to annual reporting
periods beginning on or after 1 July 2013, with early
adoption not permitted. They amend AASB 124
‘Related Party Disclosures’ by removing the disclosure
requirements for individual key management personnel
(‘KMP’). The adoption of these amendments from 1 July
2013 will remove the duplication of information relating
to
financial
statements and the directors report. As the aggregate
disclosures are still required by AASB 124 and during
the
the requirements may be
included in the Corporations Act or other legislation, it is
expected that the amendments will not have a material
impact on the consolidated entity.
transitional period
individual KMP
the notes
the
to
in
EGH ANNUAL REPORT 2012
28
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
Note 3: Revenue
Catering
Service fees
Management
Property maintenance
Other revenue
Total revenue
Other income
Interest revenue
Gain on sale of assets held for sale
Gain on purchase through business combination
Other income
Note 4: Items included in profit/(loss)
Profit/(loss) before income tax
expense includes the following specific items:
Rental expense relating to operating leases
Consolidated
30 June 2012
$
30 June 2011
$
4,430,038
1,443,640
5,070,427
4,537,126
3,224,661
4,558,982
1,296,320
2,118,244
1,518,388
1,033,706
15,539,834
13,691,698
37,318
16,318
-
53,636
1,661
109,924
296,416
408,001
Consolidated
30 June 2012
$
30 June 2011
$
Minimum lease payments
36,000
330,000
Finance cost
-Interest and finance charges paid/payable for financial
liabilities not at fair value through profit or loss
Total finance cost
Amortisation
-Management rights
-Other intangibles
Total amortisation
Depreciation
-Plant & equipment
-Manager units
Total depreciation
668,369
759,102
668,369
759,102
168,637
9,342
177,979
97,251
-
97,251
75,484
24,143
99,627
91,719
54,938
146,657
Defined contribution superannuation expense
66,782
107,500
EGH ANNUAL REPORT 2012
29
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
Note 5: Income tax
The components of tax expense comprise:
Current tax
Deferred tax expense on temporary differences current year
Unrecognised deferred tax assets recouped
Profit / (Loss) before income tax expense
Income tax calculated at 30% (2011: 30%)
Tax effect on permanent differences
- Entertainment
- Capital profits
- Amortisation of intangibles
- Gain on bargain purchase
Unrecognised deferred tax assets recouped
Deferred tax assets not recognised
Income tax expense
Tax losses
Consolidated
30 June 2012
$
30 June 2011
$
53,897
196,812
(250,709)
-
-
-
-
-
686,488
(1,242,627)
205,946
(372,788)
531
(9,162)
53,394
-
(250,709)
74
-
108,497
(88,925)
-
-
353,142
-
Unused tax losses for which no deferred tax asset has been recognised
34,780,364
34,960,020
Potential tax benefit at 30%
10,434,109
10,488,006
Unrecognised temporary differences
Temporary differences which have not been recognised:
Employee benefits
Other
Potential tax benefit at 30%
118,084
306,450
127,360
340,651
739,922
324,172
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets
have not been recognised in respect of these items until it is probable that future taxable profits will be available
against which the Consolidated Entity can utilise these benefits.
EGH ANNUAL REPORT 2012
30
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
Note 6: Trade and other receivables
Trade & other debtors
Provision for doubtful debts
Total and trade and other receivables
Note 7: Inventories
Catering inventory – at cost
Total inventories
Note 8: Assets classified as held for sale
Managers units
Management rights
Property, plant & equipment
Total assets classified as held for sale
Assets held for resale consist of:
Consolidated
30 June 2012
$
30 June 2011
$
788,233
(50,000)
738,233
641,327
(61,993)
579,334
Consolidated
30 June 2012
$
30 June 2011
$
61,098
61,098
38,371
38,371
Consolidated
30 June 2012
$
30 June 2011
$
1,251,219
1,453,723
728,157
1,041,451
24,255
35,809
2,003,631
2,530,983
1. Two managers units, plant and equipment and the management rights at Slack’s Creek;
2. One managers unit at Stafford, plant and equipment and the management rights; and
3. One managers unit at Cleveland and the management rights.
The Group has engaged Resort Brokers to market these assets and expects to sell these assets in
the second half of 2013 financial year.
The Directors have considered the capital adequacy requirements of EGH, including cash flows
pertaining to operations and capital transactions. The Directors will continue in an orderly manner to
divest the non-core assets which includes real estate and low contribution management rights. This is
anticipated to reduce existing debt levels over the next 6 - 12 months.
Note 9: Other current assets
Prepayments
Total other current assets
Consolidated
30 June 2012
$
30 June 2011
$
209,453
209,453
62,601
62,601
EGH ANNUAL REPORT 2012
31
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
Name of Entity
Note 10: Investment in subsidiaries
SCV Group Limited ATF SunnyCove Cairns Unit Trust*
SCV Group Limited ATF SunnyCove Townsville Unit Trust*
SCV Group Limited ATF SunnyCove Mackay Unit Trust*
SCV No. 1 Pty Ltd
SCV No. 2 Pty Ltd
SCV No. 3 Pty Ltd
SCV Services Pty Ltd
SCV Manager Pty Ltd
Country of
Formation or
Incorporation
Equity Holding
30-Jun-12
30-Jun-11
%
%
Australia
Australia
Australia
-
-
-
100%
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
SCV Group Limited ATF SunnyCove Kelvin Grove Unit Trust*
Australia
-
100%
Compton's Villages Australia Unit Trust
Australia
100%
100%
Compton's Caboolture Pty Ltd
Australia
100%
100%
Village Care Pty Ltd
Australia
0%
100%
Eureka Care Communities Pty Ltd
Australia
100%
100%
*During the year, the entities’ assets and liabilities were transferred to the Parent Entity and were subsequently liquidated.
EGH ANNUAL REPORT 2012
32
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
Note 11: Property, plant & equipment
30 Jun 2012
30 June 2011
Consolidated
Managers units at cost
Accumulated depreciation
Plant & equipment at cost
Accumulated depreciation
Total property, plant & equipment
Movements during the year ending 30 June 2012
Manager's Units
Consolidated
Opening written down value
Additions at cost
Disposals
Depreciation expense
Closing written down value
$
737,076
18,955
-
(24,143)
731,888
Movements during the year ending 30 June 2011
Manager's Units
Consolidated
Opening written down value
Additions at cost
Additions through business acquisition
Disposals
Transfer to/from assets held for sale
Depreciation expense
Closing written down value
$
-
-
-
-
792,014
(54,938)
737,076
$
859,535
(127,647)
731,888
1,070,486
(751,889)
318,597
1,050,485
Plant &
Equipment
$
421,347
58,276
(85,542)
(75,484)
318,597
Plant &
Equipment
$
424,867
82,675
13,346
(15,827)
8,005
(91,719)
421,347
$
840,580
(103,504)
737,076
1,097,752
(676,405)
421,347
1,158,423
Total
$
1,158,423
77,231
(85,542)
(99,627)
1,050,485
Total
$
424,867
82,675
13,346
(15,827)
800,019
(146,657)
1,158,423
EGH ANNUAL REPORT 2012
33
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
Note 12: Intangible assets
Intellectual property - at cost
Management rights - at cost
Less accumulated amortisation and impairment
Carrying amount of management rights
Plans & trademarks - at cost
Less accumulated amortisation
Carrying amount of plans & trademarks
Sale rolls
Less accumulated amortisation
Carrying amount of sale rolls
Goodwill
Total intangible assets
Consolidated
30 June 2012
$
1
30 June 2011
$
1
3,861,237
(471,610)
3,389,627
27,749
(26,517)
1,232
138,571
(9,236)
129,335
3,620,328
(302,973)
3,317,355
27,749
(26,411)
1,338
138,571
-
138,571
1,955,515
5,475,710
1,955,515
5,412,780
The Group’s primary business activity is the management (through management rights agreements) of senior’s
accommodation throughout Australia. The Group’s primary intangible assets are management rights and goodwill. These
intangible assets, although separately classified per accounting standard requirements, all relate to the management of
senior’s accommodation. Their separate categorisation has arisen from acquisitions. Although the Group now predominantly
has a singular business activity and segment, the management rights intangible assets are amortised over 40 years,
reflecting the pattern in which the asset’s future economic benefits are expected to be consumed by the Group, while the
goodwill is tested periodically for impairment.
The recoverable amount of the Group’s goodwill has been determined by a value-in-use calculation using a discounted cash
flow model, based on a 2 year projection period approved by management and extrapolated for a further 3 years using a
steady rate, together with a terminal value.
Key assumptions are those to which the recoverable amount of an asset or cash-generating units is most sensitive.
The following key assumptions were used in the discounted cash flow model:
1. cash flows were projected over a five year period by applying a 2% growth rate (2011: 2%) to the most recent
years’ cash flows;
2. the terminal value was calculated using a growth rate of 2% (2011: 2%);
3. cash flows have been discounted using a pre-tax discount rate of 25% (2011: 25%);
4. cash flows do not take into account the management of any new villages; and
5. cash flows are based on historical results.
The 2% growth rate for the project cash flow is considered conservative when compared with the business activities over the
previous 12 months. The Group expects a steady growth in revenue under the new management team and business
structure.
The calculations at balance date indicate no impairment of the goodwill CGU. If the pre-tax discount rate applied to the cash
projections of the goodwill CGU was increased by 500 basis points, the recoverable amount of the CGU is still greater than
the carrying amount.
EGH ANNUAL REPORT 2012
34
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
Movements during the year ending 30 June 2012
Consolidated
Opening written down value
Additions at cost
Amortisation expense
Closing written down value
Intellectual
Property
$
1
Management
Rights
$
3,317,355
Plans &
Trademarks
$
Sale
Rolls
$
1,338 138,571
Goodwill
$
Total
$
1,955,515 5,412,780
-
240,909
-
-
-
1
(168,637)
3,389,627
(106)
(9,236)
1,232 129,335
1,955,515 5,475,710
-
-
240,909
(177,979)
Movements during the year ending 30 June 2011
Consolidated
Opening written down value
Additions at cost
Disposals at cost
Additions via business
combination
Impairment of management
rights*
Transfer to assets held for
sale
Amortisation expense
Closing written down value
Intellectual
Property
$
1
Management
Rights
$
3,629,319
Plans &
Trademarks
$
1,444
Sale
Rolls
$
-
Goodwill
$
Total
$
1,955,515 5,586,279
-
-
-
-
-
-
1
40,000
(102,960)
692,613
(179,782)
(678,517)
(83,318)
3,317,355
- 138,571
-
-
-
-
-
-
-
-
-
-
-
-
178,571
(102,960)
692,613
(179,782)
-
(678,517)
(106)
-
1,338 138,571
-
(83,424)
1,955,515 5,412,780
*Based on the impairment review performed at 30 June 2011, the management rights of Albury, Chermside, Inala, Meadowbrook, Stafford, Toowoomba and
Wynnum were impaired. The impairment calculations were based on application of a management right valuation methodology provided by Resort Brokers Pty Ltd.
The remaining amortisation period on a weighted average basis of the management rights are 33 years (2011: 34 years).
Note 13: Trade & other payables
Trade creditors and accruals – unsecured
Total trade & other payables
Note 14: Provisions
Current
Annual leave entitlements
Non-Current
Long service leave entitlements
Total Provisions
Consolidated
30 June 2012
$
1,937,135
1,937,135
30 June 2011
$
2,800,877
2,800,877
Consolidated
30 June 2012
30 Jun 2011
$
73,459
-
73,459
-
$
138,228
16,488
154,716
Note 15: Dividends
No dividends were paid or proposed during financial year 2012 (2011 - $Nil).
The balance of the franking account at 30 June 2012 was $Nil (2011 - $Nil).
EGH ANNUAL REPORT 2012
35
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
Note 16: Other Financial Liabilities
Current Liabilities
Shareholder loans
Convertible notes
Commercial bills – secured
Total Current
Commercial bills - secured
Total Non-Current
Total Other Financial Liabilities
(a) NAB Facility – Commercial bills and advances
TERMS AND CONDITIONS – 30 JUNE 2012
Consolidated
30 June 2012
$
30 June 2011
$
987,047
140,000
300,000
1,427,047
3,299,000
3,299,000
4,726,047
1,816,872
-
3,999,000
5,815,872
-
-
5,815,872
As at 30 June 2012, the Group has access to a facility with the National Australia Bank (“NAB”), with a fully drawn limit of
$3.599 million (2011: $3.999 million). The facility expires on 31 July 2013 and is secured by:
• Registered mortgages over managers’ units and other real estate at its Communities ($2,325,959).
• Deed of charge over the related management rights ($4,117,784)
• Guarantee and indemnity given by EGH and its controlled entities.
•
Fixed and floating charges over the assets of EGH and its controlled entities ($10,433,669).
National Australia Bank Ltd hold registered first mortgages over all real estate assets of the Group. It also holds a registered
mortgage debenture over all assets and undertakings of all Group assets with the exception of management rights owned by
Eureka Care Communities Pty Ltd. The Eureka Care Communities Pty Ltd management rights make up an immaterial
portion of the Group’s assets.
Repayment terms: $20,000 per month (from 1 July 2012 to 31 December 2012); $30,000 per month (1 January 2013 to 31
July 2013).
During the year and as at 30 June 2012, the Group had the following banking covenants:
Interest Coverage Ratio of 2.0 times to be maintained at all times.
•
• Maximum Operating Leverage Ratio of 2.5 times to be maintained at all times.
The Group has complied with its covenants through 30 June 2012.
TERMS AND CONDITIONS – 30 JUNE 2011
As at 30 June 2011, the Group had drawn commercial advances and commercial bill facilities ($3.999 million limit)
from the National Australia Bank (“NAB”) secured by:
• Registered mortgages over managers’ units and other real estate at its Communities ($2,647,955)
• Deed of charge over the related management rights ($4,358,806).
• Guarantee and indemnity given the EGH and its entities including (SCV Manager Pty Ltd, SCV No. 2 Pty Ltd,
•
SCV No. 3 Pty Ltd, SCV No. 4 Pty Ltd, Village Care Pty Ltd and Compton’s Caboolture Pty Ltd).
Fixed and floating charges over the assets of Comptons Caboolture Pty Ltd, EGH Limited, SCV Manager Pty Ltd,
SCV No. 2, SCV No. 3, Village Care Pty Ltd and SCV Services Pty Ltd. ($10,151,239)
As at 30 June 2011, the Group had the following banking covenants:
Interest Coverage Ratio of 3.0 times after 1 July 2011.
•
• Minimum Operating Leverage Ratio of 3.5 times at 30 June 2011, 3.5 times for quarter ending September
2010, and 3.0 times for quarter ending December 2011.
Further, the Group had to meet the following milestones:
• By 30 April 2011, reduce the balance of the bill facility by a minimum of $130,000;
• By 30 June 2011, reduce the balance of the bill facility by a minimum of $280,000;
• By 31 August 2011, reduce the balance of the bill facility by a minimum of $500,000;
• By 31 October 2011, reduce the balance of the bill facility by a minimum of $750,000; and
• By 31 December 2011, reduce the balance of the bill facility by a minimum of $1,729,000.
This facility expired on 31 March 2012 and was extended to 31 July 2013.
EGH ANNUAL REPORT 2012
36
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
Commercial bills - secured
Total NAB facilities
30 June 2012
30 June 2011
Used
$
3,599,000
3,599,000
Unused
$
Used
$
3,999,000
3,999,000
-
-
Unused
$
-
-
(b) Shareholder loans
Shareholder loans are outstanding to Co-Investor Capital Partners Pty Ltd, Bydand Investments Pty Ltd and Kathlac Pty Ltd
(an entity associated with Lachlan McIntosh, Chairman of EGH). Refer to Note 22 for details. These loans are on an at call
basis, are unsecured and attract an interest rate of 12% (2011: 12%) per annum. Each of the shareholders has confirmed in
writing their support to the Group.
(c) Convertible notes
On 30 November 2011 (at the Annual General Meeting) shareholders approved the issuance of 530,000 secured and
773,000 unsecured redeemable convertibles notes of $1.00 each (Notes) with 6 2/3 attaching Options (Options) for each
note – or a total of 8,691,010 options.
The Notes are convertible into shares at the lower of $0.08 or 90% of the VWAP during the last 5 business days on which
trading in share on the ASX occurred prior to but not including the date of issue of the conversion notice.
The Notes attract an interest rate of 12.5% per annum and mature at the second anniversary of issuance.
The Options are exercisable at $0.15 and expire at the second anniversary of issuance.
As at 30 June 2012, the Group had $20,000 secured notes and $120,000 unsecured notes and all of the issued options
outstanding.
EGH ANNUAL REPORT 2012
37
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
Note 17: Share capital
30 June 2012
Number
30 June 2011
Number
30 June 2012
$
30 June 2011
$
Fully paid ordinary shares (number of shares)
73,092,932
37,857,460
43,930,780
42,300,014
Opening balance
Shares issued during the year:
Shares issued at $0.0363 (Note conversion)
Shares issued at $0.0400 (Note conversion)
Shares issued at $0.0431(Note conversion)
Shares issued at $0.0495 (Note conversion)
Shares issued at $0.0502 (Note conversion)
Shares issued at $0.0504 (Note conversion)
Shares issued at $0.0505 (Note conversion)
Shares issued at $0.0530 (Note conversion)
Shares issued at $0.0800 (Note conversion)
Shares issued at $0.100 (Cash)
Shares issued on 12/08/2010
Consolidation *
Shares issued for conversion of redeemable
convertible notes
Shares issued at $0.080 (Cash)
Shares issued at $0.080 (in lieu of Remuneration)
Shares issued at $0.080 (in lieu of Remuneration)
Less: share issue costs
37,857,460
239,611,742
42,300,014
40,494,564
8,473,207
5,878,643
6,530,742
403,883
2,490,520
6,117,225
494,733
471,519
875,000
3,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
308,000
235,146
281,720
20,000
125,000
308,280
25,000
25,000
70,000
350,000
-
-
-
-
-
-
-
-
-
-
123,514,793
(326,813,748)
732,173
312,500
250,000
250,000
-
-
-
-
-
-
1,645,222
-
109,825
25,000
20,000
20,000
-
(117,380)
(14,597)
Shares on issue at end of year
73,092,932
37,857,460
43,930,780
42,300,014
*On 10 August 2010 there was a 10 for 1 share consolidation
Options on issue at beginning of year
Options forfeited
Options expired
Options exercisable at $0.20 vesting after 36 months continuous employment and
expiring three years from date of issue
Options exercisable at $0.25 vesting after 36 months continuous employment and
expiring three years from date of issue
Options exercisable at $0.25 vesting after 36 months continuous employment and
expiring three years from date of issue
Options forfeited upon resignation; this relates to the $0.20 vesting after 36 months
Options forfeited upon resignation; this relates to the $0.25 vesting after 36 months
Options issued as part of convertible note issuance (noted 16 (c))
Options exercised
Total options on issue
*Figures for FY2011 are adjusted for the 1:10 share consolidation
30 June 2012
30 June 2011
Number of Options
315,000
-
(65,000)
-
-
-
-
-
8,691,010
-
955,000*
(890,000)
-
250,000
650,000
250,000
(250,000)
(650,000)
-
-
8,941,010
315,000
EGH ANNUAL REPORT 2012
38
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and proceeds on winding up of the Company in proportion to
the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a
meeting in person or by proxy is entitled to one vote, and on a poll, each share is entitled to one vote.
Ordinary shares have no par value and the company does not have a limited amount of authorised capital.
Options
In FY 2010 EGH issued 955,000 options (or 9,550,000 pre-consolidation) for nil consideration to executives. The remaining
65,000 (or 650,000 pre-consolidation) of these options expired on 14 July 2011.
In August 2010, the Company issued 250,000 options expiring on 2 July 2013 and exercisable into ordinary shares in the
Company at 25 cents (or 2.5 cents pre-consolidation) to Michael Hayes. These options remain outstanding.
On 30 November 2011 (at the Annual General Meeting) shareholders approved the issuance of 530,000 secured and
773,000 unsecured redeemable convertibles notes of $1.00 each (Notes) with 6 2/3 attaching Options (Options) for each
note – or a total of 8,691,010 options. The 8,691,010 options expiring on 6 December 2013, are exercisable into ordinary
shares in the Company at 15 cents.
EGH ANNUAL REPORT 2012
39
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
Note 18: Cash Flow Information
(a) Reconciliation of cash
Cash at bank and on hand
(b) Reconciliation of profit/(loss) for the year to net cash flow from operating
activities
Profit/(loss) for the year
Depreciation and amortisation
Impairment - management rights
Impairment - goodwill
Gain on acquisition
Other
(Gain)/Loss on sale of fixed assets
(Gain)/Loss on sale of assets held for sale
(Increase)/decrease in:
- trade and other receivables
- inventories
- other current assets
Increase/(decrease) in:
- payables
- provision for employee benefits
Net cash flow from/(used in) operating activities
Consolidated
30 June 2012
30 June 2011
$
$
895,059
368,747
686,488
277,606
-
-
-
-
85,542
(16,318)
(158,899)
(22,727)
(146,852)
(521,517)
(81,257)
102,066
(1,242,627)
243,908
167,507
96,899
(296,416)
28,367
-
(109,924)
(165,245)
17,044
43,778
21,043
(102,124)
(1,297,790)
(c) Non cash investing and financing activities
During the current financial year, the Group entered into the following non-cash investing and financing activities which are
not reflected in the consolidated statement of cash flows:
•
•
The group converted $235,145 of shareholders loan to convertible notes.
The convertible notes amounting to $1,398,145 from the conversion of shareholder loans were subsequently
converted to shares amounting to $1,398,145.
(d) Businesses acquired
Aggregate purchase consideration:
Cash and cash equivalents
Total aggregate purchase consideration
Aggregate fair value of assets and liabilities acquired:
Cash
Other identifiable assets acquired
Total aggregate fair value of assets and liabilities acquired
Gain on acquisition
Outflow of cash
-
-
-
-
-
-
-
313,206
313,206
111,919
497,703
609,622
296,416
201,287
EGH ANNUAL REPORT 2012
40
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
Note 19: Financial instruments
Overall policy
The Board of Directors have overall responsibility for the establishment and oversight of the risk management framework.
The Board of Directors are responsible for developing and monitoring risk management policy. Risk management policy is to
identify and analyse the risks faced by the entity, to set limits and controls, and to monitor risks and adherence to limits. Risk
management policy and systems are reviewed regularly to reflect changes in market conditions and Group’s activities. The
Group aims to develop a disciplined and constructive control environment in which all employees understand their roles and
obligations.
a) Credit risk
Credit risk is the risk of financial loss to the Consolidated Entity if a customer or counterparty to a financial instrument fails to
meet its contractual obligations, and arises principally from the Group’s receivables from customers and amounts due from
the senior independent living communities in accordance with management agreements in place.
Credit risk arises principally from the Consolidated Entity’s receivables and cash and cash equivalents.
Maximum exposure to credit risk
Cash and cash equivalents
Trade and other receivables
Consolidated
30 June 2012
$
30 June 2011
$
895,059
738,233
1,633,292
368,747
579,334
948,081
Trade and accounts receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristic of each customer or resident. The
Group has a diverse range of customers and residents and therefore there is no significant concentration of credit risk with
any single counterparty or group of counterparties.
The Directors have established a credit policy under which each new customer is analysed individually for creditworthiness
before the Group does business with them. The Consolidated Entity monitors and follows-up its accounts receivable to
ensure collections are being made promptly in accordance with contractual terms and conditions and actively pursues
amounts past due.
Where applicable, an allowance for impairment has been made, that represents the estimate of impairment losses in respect
to trade and other receivables. The Consolidated Entity has no concentrations of credit risk that have not been provided for.
The Consolidated Entity has not provided for the remaining amounts past due as management believes these amounts will
be recoverable.
Cash and cash equivalents
Deposits of cash are only held with approved banks and financial institutions.
The ageing of trade receivables at the reporting date was:
Due 0-30 days
Past due 30-60 days
Past due 60-90 days
Past due 90 + days
Total
Consolidated
30 June 2012
Gross
$
254,359
20,168
13,448
500,258
788,233
Allowance
$
-
-
-
(50,000)
(50,000)
30 June 2011
Gross
$
135,821
19,443
16,537
469,526
641,327
Allowance
$
-
-
-
(61,993)
(61,993)
EGH ANNUAL REPORT 2012
41
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
Movement in provision for doubtful debts
Opening doubtful debts provision
Bad debts written off
Increase to doubtful debts provision
Closing doubtful debts provision
b)
Liquidity risk
Consolidated
30 June 2012
$
30 June 2011
$
61,993
(20,694)
8,701
50,000
506,781
(482,231)
37,443
61,993
Liquidity risk is the risk that the Consolidated Entity will not be able to meet its financial obligations as they fall due. The
Consolidated Entity’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due. This process involves the review and updating of cash flow forecasts and, when
necessary, the obtaining of credit standby arrangements and loan facilities.
Contractual maturity analysis for financial instrument liabilities:
2012
Trade payables
Sundry creditors & accruals
Commercial bills
Other financial liabilities
Total
2011
Contractual Repayment
Amount
$
1,214,541
722,594
3,599,000
Consolidated
6 or less
Months
$
1,214,541
722,594
120,000
6 - 12
Months
$
-
-
1 – 2
years
$
-
-
180,000
3,299,000
1,127,047
1,127,047
-
-
6,663,182
3,184,182
180,000
3,299,000
More than 2
years
$
-
-
-
-
-
Consolidated
Contractual Repayment
Amount
$
6 or less
Months
$
6 - 12
Months
$
1 – 2
years
$
More than 2
years
$
Trade payables
Sundry creditors & accruals
Commercial bills
Shareholder loans
Total
1,055,449
1,055,449
1,745,428
1,745,428
-
-
3,999,000
1,599,000
2,400,000
1,816,872
8,616,749
1,816,872
-
6,216,749
2,400,000
-
-
-
-
-
-
-
-
-
-
EGH ANNUAL REPORT 2012
42
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
c) Market risk
Market risk is the risk that changes in market prices such as interest rates will affect the Consolidated Entity’s income or the
value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return.
d) Interest rate risk
The Consolidated Entity’s exposure to market interest rates relates primarily to the Group’s current debt obligations and
cash at bank. No interest rate swaps had been entered into during the term of the facility.
The Consolidated Entity constantly analyses its interest rate exposure. Within this analysis consideration is given to potential
renewals of existing positions, alternative financing, alternate hedging positions and the mix of fixed and variable interest
rates.
Sensitivity analysis for movement in interest rates:
Variable rate instruments
1% increase in interest rates – effect on profit after tax & equity
1% decrease in interest rates – effect on profit after tax & equity
Note 20: Commitments for expenditure
a) Operating leases: group as lessee
Consolidated
30 June 2012
$
30 June 2011
$
(27,039)
27,039
(36,303)
36,303
Non‑cancellable operating leases
The group leases various manager’s units under non-cancellable operating leases expiring within two to twenty years. The
leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.
Within 1 year
Greater than 1 year but not longer than 5 years
Greater than 5 years
Total
Consolidated
30 June 2012
$
197,000
335,172
472,454
1,004,626
30 June 2011
$
327,074
1,308,294
2,634,488
4,269,856
The amount disclosed for the lease of office space does not include any adjustments for CPI or market rental reviews
b) Capital expenditure
The Group has no capital expenditure contracted for at the reporting date (2011: $Nil).
EGH ANNUAL REPORT 2012
43
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
Note 21: Earnings per share
Net profit/(loss) used in calculating basic and diluted
earnings per share
Weighted average number of ordinary shares used in
calculating basic earnings per share (adjusted for
consolidation)
Adjustments made to ordinary shares & potential ordinary
shares as a result of convertible notes
Weighted average number of ordinary shares & potential
ordinary shares used in calculating diluted earnings per share
Basic earnings per share
Diluted earnings per share
Consolidated
30 June 2012
$
30 June 2011
$
686,488
(1,242,627)
49,967,419
35,396,851
1,013,661
-
50,981,080
35,396,851
1.37 Cents
(3.51) Cents
1.35 Cents
(3.51) Cents
Potential ordinary shares as a result of convertible notes issued subsequent to year end: 1,000,000.
Note 22: Related party transactions
(a) Key management personnel compensation
Short term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
Total
2012
$
654,149
12,721
2011
$
1,116,653
46,354
-
-
-
-
666,870
1,163,007
Detailed disclosures relating to key management personnel are set out in the remuneration report within the Directors'
Report.
EGH ANNUAL REPORT 2012
44
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
(b) Number of shares held: Directors and other key management personnel
The numbers of securities held during the financial year by each director of and other key management personnel of the
group, including their personally related parties, are set out below. There were no shares granted during the reporting
period as compensation.
Balance
1 July 2011*
Received as
Remuneration *
Shares
Acquired
Options
Exercised*
Net Change
Other *
Balance
30 June 2012
Directors:
Lachlan McIntosh
5,881,774
Paul Fulloon
Nirmal Hansra
Greg Rekers
Kerry Potter
David Rosenblum
Total
Executives:
Sharon Alderwick
Troy Nunan
Total
-
-
-
-
-
5,881,774
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,126,562*
10,008,336
-
250,000*
2,578,940
2,574,773
-
-
250,000
2,578,940
2,574,773
-
9,530,275
15,412,049
347,657
347,657
-
-
347,657
347,657
* Note that these shares were issued as part of the issue of convertible notes issue approved at the 2011 AGM.
Balance
1 July 2010
*
Received as
Remuneration *
Shares
Acquired
1:10 Share
Consolidation
Net Change
Other *
Balance
30 June 2011
Directors:
Lachlan McIntosh
3,404,167
2,447,607
30,000
2,477,607
Paul Fulloon
Andrew Kemp
Jury Wowk
David Rosenblum
-
221,347
375,572
-
-
-
-
246,401
61,334
307,735
(529,082)**
-
-
-
-
-
-
(375,572)**
-
-
-
5,881,774
-
-
-
-
Total
Executives:
Mike Bosel
Mike Hayes
Loretta Byers
Greg Rekers
Kerry Potter
Sharon Alderwick
Total
4,001,086
2,694,008
91,334
2,785,342
(904,654)
5,881,774
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
* Figures for FY2011 are adjusted for the 1:10 share consolidation
** Resigned as director during the year.
EGH ANNUAL REPORT 2012
45
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
(c) Number of options held: Directors and other key management personnel
The numbers of options over ordinary securities held during the financial year by each director of the Group and other key
management personnel of the Group, including their personally related parties, are set out below:
Balance
1 July 2011
Received as
Remuneration
Options
Exercised
Net Change
Other**
Balance
30 June 2012
Directors:
Lachlan McIntosh
Paul Fulloon
Nirmal Hansra
Greg Rekers*
Kerry Potter*
Total
Executives:
Sharon Alderwick
Troy Nunan
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,500
1,000,500
-
133,400
800,400
800,400
-
133,400
800,400
800,400
2,734,700
2,734,700
100,500
100,500
-
-
100,500
100,500
* Note that options relating to Greg Rekers and Kerry Potter are the same options held by Navigator PL. All options are unlisted and were issued as part of the
issue of convertible notes issue approved at the 2011 AGM.
** Options issued are attached to the Convertible Notes issued during the year
Balance
1 July 2010
Received as
Remuneration
Options
Exercised
Net Change
Other
Balance
30 June 2011
Directors:
Lachlan McIntosh
Paul Fulloon
Andrew Kemp
Jury Wowk
David Rosenblum
Total
Executives:
Mike Bosel
Mike Hayes
Loretta Byers
Greg Rekers
Kerry Potter
Sharon Alderwick
-
-
-
-
-
-
-
-
65,000*
-
-
-
-
-
-
-
-
-
875,000
250,000
-
-
-
-
Total
65,000
1,125,000
* These options expired on 14 July 2011
** These options were cancelled on 16 may 2011
*** Resigned during the year.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(875,000)**
(250,000)***
(65,000)***
-
-
-
(1,190,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
EGH ANNUAL REPORT 2012
46
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
(d) Other transactions with key management personnel
Kathlac Pty Ltd
As at 30 June 2012, total loans outstanding to Eureka Group Holdings Limited from Kathlac Pty Ltd, an entity associated
with Lachlan McIntosh, amounted to $79,300 (2011: $208,105) consisting of $53,107 principal and $26,192 in capitalised
interest.
Balance at beginning of year
Increase in loan amount
Loan repayment made
Interest charged
Converted to convertible notes/shares
Balance at end of year
2012
$
208,105
45,003
(50,000)
26,192
(150,000)
79,300
2011
$
192,000
238,246
(30,000)
-
(192,141)*
208,105
*The loan balance of $192,141 was converted to shares on 12/08/2010.
22 Capital Pty Ltd
22 Capital Pty Ltd, an entity associated with Lachlan McIntosh, invoiced $288,887 for consulting services during the financial
year (2011: $Nil). These services were provided on commercial terms. 22 Capital was paid $140,169 during the 2012
financial year. At 30 June 2012 amount outstanding to 22 Capital Pty Ltd was $148,718 (2011: $Nil).
Dotted Line Pty Ltd
The Company trades from a premise owned by Dotted Line Pty Ltd, a company associated with Greg Rekers. The premises
is rented on commercial terms. During the year rent amount to $39,600 was paid (2011: $Nil). As at 30 June 2012 amount
outstanding to Dotted Line Pty Ltd was $Nil (2011: $Nil)
Sothertons Chartered Accountants
During the year, Sothertons Chartered Accountants, (of which Lachlan McIntosh is a shareholder) received tax advice
related fees of $119,163 on commercial terms (2011: $19,708). At 30 June 2012 amount outstanding to Sothertons was
$3,307 (2011: $13,064).
Shares issued for services rendered
In the financial year ended 30 June 2011, the Company issued shares in lieu of cash for services rendered in 2010, as voted
on in the Company’s EGM on 10 August 2010:
Key Management
Personnel
Fair value of
service
$
Share Price
$
22 Capital Pty Ltd
150,000
Pamela Pointon
Andrew Kemp
50,000
36,960
0.15
0.15
0.15
The fair value was measured at market price for the services rendered.
Note 23: Ultimate parent entity
The parent entity within the group is Eureka Group Holdings Limited, which is the ultimate parent entity within Australia.
EGH ANNUAL REPORT 2012
47
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
Note 24: Contingent liability
There are no contingent liabilities or contingent assets at 30 June 2012 that require disclosure in the financial report.
In the financial year ended 30 June 2011 a contingent liability of $40,000 existed due to previous bank guarantee facilities in
place secured by the Company.
Note 25: Auditors’ remuneration
BDO East Coast Partnership (formerly PKF East Coast Practice):
-
Audit and review of the financial statements
Total
Consolidated
30 June 2012
$
30 June 2011
$
71,000
71,000
56,500
56,500
Note 26: Subsequent events
EGH undertook a shareholder share purchase plan which closed on 10 July 2012. EGH raised $254,000 through the
issuance of 2,540,000 ordinary shares.
On 1 August 2012, the Company issued $100,000 unsecured convertible notes expiring February 2014. The convertible
notes have a conversion price of $0.10 (subject to shareholder approval) and carry an interest rate of 12.5% per annum.
The Company was party to litigation with Garden Estates Hackham Pty Ltd and Garden Estates Christie Downs Pty Ltd ,
both which had receivers and managers appointed as at 30 June 2012. The dispute was settled on 17 August 2012 on
confidential terms, resulting in the Company being appointed (subject to body corporate ratification) to manage the villages
for the long term and to also market for sale the units in the villages.
Note 27: Operating segments
Identification of reportable operating segments
The company operates in one segment, being the management of senior independent living communities. All of the
Company’s area of operations are currently located within Australia.
Operating segments have been determined on the basis of reports reviewed by the Board of Directors (who are identified as
the chief operating decision makers).
The financial results from this reportable segment are equivalent to the financial statements of the consolidated entity as a
whole.
The chief operating decision makers review the results of the consolidated entity on the above basis.
EGH ANNUAL REPORT 2012
48
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
Note 28: Parent entity disclosures
Information relating to Eureka Group Holdings Limited (parent entity):
Results of the parent entity
Profit/(loss) for the period
Other comprehensive income
Total comprehensive income for the period
Financial position of parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of parent entity comprising of:
Share capital
Retained earnings
Total equity
Guarantees
Consolidated
30 June 2012
30 June 2011
$
$
(442,794)
(1,730,649)
-
-
(442,794)
(1,730,649)
1,833,476
5,633,680
277,837
8,022,673
782,774
5,399,447
3,135,541
8,976,412
43,930,780
42,300,014
(43,696,547)
(43,253,753)
234,233
(953,739)
The parent entity had no guarantees in place as at 30 June 2012 and 30 June 2011.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2012 and 30 June 2011.
Capital commitments
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2012 and 30 June 2011.
EGH ANNUAL REPORT 2012
49
For personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2012
Note 29: Prior period error
During the 30 June 2011 financial year, the Group commenced its business restructure and as a result of the complexities
arising, aggregated costs amounting to $191,236 were not identified and were not accrued as at 30 June 2011.
The following line items in the comparative Consolidated Statement of Comprehensive Income and Consolidated Statement
of Financial Position have been adjusted to show the correct financial position of the consolidated entity as at 30 June 2011.
As the error does not affect the 2011 opening balances, the balance sheet as at 1 July 2010 has not been presented.
Consolidated Statement of Comprehensive Income
Extract
Total revenue
Total expenses
Profit / loss before income tax expense
Profit/loss for the year
Total comprehensive income for the year
Basic earnings per share (dollars per share)
Diluted earnings per share (dollars per share)
Consolidated Statement of Financial Position
Extract
Current liabilities
Trade and other payables
Other financial liabilities
Provisions
Total current liabilities
Non-current liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Accumulated losses
Total equity
30 June 2011
Reported
$
14,099,699
15,151,090
(1,051,391)
(1,051,391)
(1,051,391)
(0.0297)
(0.0297)
30 June 2011
Reported
$
2,609,641
5,815,872
138,228
8,563,741
16,488
16,488
8,580,229
1,571,010
Adjustment
$
-
30 June 2011
Restated
$
14,099,699
191,236
15,342,326
(191,236)
(191,236)
(191,236)
(0.0054)
(0.0054)
(1,242,627)
(1,242,627)
(1,242,627)
(0.0351)
(0.0351)
Adjustment
$
191,236
-
-
191,236
-
-
191,236
(191,236)
30 June 2011
Restated
$
2,800,877
5,815,872
138,228
8,754,977
16,488
16,488
8,771,465
1,379,774
42,300,014
(40,729,004)
1,571,010
-
42,300,014
(191,236)
(40,920,240)
(191,236)
1,379,774
EGH ANNUAL REPORT 2012
50
For personal use only
Eureka Group Holdings Limited and controlled entities
Directors’ Declaration
FOR THE YEAR ENDED 30 JUNE 2012
DECLARATION OF BY DIRECTORS
The directors of the company declare that:
1. The financial statements, comprising the consolidated statement of comprehensive income, consolidated statement
of financial position, consolidated statement of cash flows, consolidated statement of changes in equity,
accompanying notes, are in accordance with the Corporations Act 2001 and:
a. comply with Accounting Standards and the Corporations Regulations 2001; and
b. give a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of its
performance for the year ended on that date.
1. The company has included in the notes to the financial statements an explicit and unreserved statement of
compliance with International Financial Reporting Standards.
2.
In the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as
and when they become due and payable.
3. The remuneration disclosures included in paragraph 19 of the directors’ report (as part of audited Remuneration
Report), for the year ended 30 June 2012, comply with section 300A of the Corporations Act 2001.
4. The directors have been given the declarations by the chief executive officer and chief financial officer required by
section 295A.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the
directors by:
Lachlan McIntosh
Director
Dated in Brisbane this 18th day of September, 2012
EGH ANNUAL REPORT 2012
51
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Eureka Group Holdings Limited and controlled entities
Independent Auditor's Report
FOR THE YEAR ENDED 30 JUNE 2012
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 10, 1 Margaret Street
Sydney NSW 2000
Australia
INDEPENDENT AUDIT REPORT TO MEMBERS OF EUREKA GROUP HOLDINGS LIMITED
Report on the Financial Report
We have audited the accompanying financial report of Eureka Group Holdings Limited which comprises the
statement of financial position as at 30 June 2012, the consolidated statement of comprehensive income,
the consolidated statement of changes in equity and the consolidated statement of cash flows for the year
then ended, notes comprising a summary of significant accounting policies, other explanatory information,
and the directors’ declaration of Eureka Group Holdings Limited (the company) and the consolidated
entity. The consolidated entity comprises the company and the entities it controlled at the year’s end or
from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation
of Financial Statements, that the financial statements comply with International Financial Reporting
Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about 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 judgement, 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.
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO international Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent members firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the
acts or omissions of financial services licensees) in each state or Territory other than Tasmania.
EGH ANNUAL REPORT 2012
52
For personal use only
Eureka Group Holdings Limited and controlled entities
Independent Auditor's Report
FOR THE YEAR ENDED 30 JUNE 2012
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act
2001.
Opinion
In our opinion:
(a) the financial report of Eureka Group Holdings Limited is in accordance with the Corporations Act
2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and
of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in
Note 2.
Report on the Remuneration Report
We have audited the Remuneration Report included in paragraph 19 of the directors’ report for the year
ended 30 June 2012. The directors of the company are responsible for the preparation and presentation of
the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Eureka Group Holdings Limited for the year ended 30 June
2012, complies with section 300A of the Corporations Act 2001.
BDO East Coast Partnership
K L Colyer
Partner
Brisbane, 18 September 2012
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO international Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent members firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the
acts or omissions of financial services licensees) in each state or Territory other than Tasmania.
EGH ANNUAL REPORT 2012
53
For personal use only
Eureka Group Holdings Limited and controlled entities
Corporate Directory
FOR THE YEAR ENDED 30 JUNE 2012
Postal Address
Unit 7, 486 Scottsdale Drive, Varsity Lakes, QLD 4227
Board of Directors
Lachlan McIntosh (Non - Executive Chairman)
Paul Fulloon
Nirmal Hansra
Greg Rekers
Kerry Potter
Company Secretary
James Fay
Solicitors
HWL Ebsworth
Level 2 Brisbane
500 Queen St,
Brisbane Qld 4000
Tel:
Fax:
07 3002-6790
1300 368 717
Auditors
BDO East Coast Partnership (formerly PKF East Coast Practice)
Level 10, 1 Margaret Street
Sydney NSW 2000
Tel:
Fax:
02 9251-4100
02 9240-9821
Share Registry
Link Market Services – Brisbane
Level 12, 300 Queen Street
Brisbane Qld 4000
Call Centre
Fax
02 8280-7454
07 3228-4999
Listing Details
ASX Limited Brisbane
Code: Shares – EGH
Australian Business Number
15 097 241 159
EGH ANNUAL REPORT 2012
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For personal use only