Annual Report 2013
30 June 2013
ABN: 15 097 241 159
EGH ANNUAL REPORT 2013
1
CONTENTS
Chairman’s Review
Directors’ Report
Security Holder Information
Corporate Governance
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other 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
PAGE
3
4
12
13
16
17
18
19
20
21
50
51
53
EGH ANNUAL REPORT 2013
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Eureka Group Holdings Limited and controlled entities
Chairman’s Review
Chairman’s Review
On behalf of Directors, I present the Annual Report of Eureka Group Holdings Limited (the “Group”, “Company”, or “EGH”)
for the year ended 30 June 2013.
The Group reported EBITDA for FY 2013 of $865,296 (FY 2012: $1,632,463) and net profit after tax of $74,932 (FY 2012:
$686,488). This reduction is specifically due to one-off costs associated with applying to become an aged care provider, the
impact of termination of a management contract noted below and the delay in settlement of property sale affecting
commission income.
Key Business Drivers
With the business model now simplified, earnings growth and value of management rights for the existing portfolio is driven
by unit occupancy, services uptake and length of management rights contract. During the year, overall occupancy increased
from 81% to 89%, which is a pleasing result. We believe that with limited rental accommodation available for seniors in
Australia, occupancy should continue to increase in our villages. Services income including catering fees also increased by
51% during the year in villages we continue to manage. Continuing this trend of increased occupancy and services uptake is
vital to profit growth in 2014.
The Group manages 29 Seniors Rental Villages with a total number of 1,763 units. The weighted average term of these
management agreements is 9.5 years. We strive each year to maintain or increase this average, so as to maintain or
increase the value of Management Rights.
Notable Events
FY 2013 was a period of stability from a management perspective for the Group. For the large part, management were able
to focus on the long term management contracts in place. In September 2012, a large management contract called Young
Village Estates was terminated. As previously announced, this contract provided over 50% of FY 2012 revenue, but
relatively modest EBITDA. Termination of this contract has led to lower revenue in FY 2013 and costs relating to termination
lowered group EBITDA.
In respect of the longer term growth of the business during 2013, the Group has two major projects: one which is on hold
and the other which is proceeding well for the long term benefit of the Company. The project on hold is the application made
by the Company to become an approved service provider under the Aged Care Act. The Company has expensed $374,804
during the year on this project. The money spent has significantly tightened the Company’s policies and procedures and
assisted with the other major project; however, at this time, the Company is not an approved service provider and is unlikely
to be one in the short term. As a Board, we decided that until we can grow the company further, we are unable to justify the
ongoing cost of this project. The other major project is in relation to becoming accredited to provide Level 3 Supported
Living Services under the Residential Services Accreditation Act. This project is virtually complete and whilst we await
confirmation from the Queensland Government, from 1 July 2013, we are providing Level 3 Services to village residents.
Providing such services will give the Group certain cost exemptions which will improve profitability of individual villages and
provide some further revenue streams. As the project completes for each village, there is an immediate profit increase due
to government subsidies for Level 3 accredited providers.
During the year, the Group continued to improve its balance sheet. Bank debt decreased from $3,599,000 to $3,309,000
and there was a significant reduction of overall liabilities. To further improve the balance sheet, the Company has
determined that it will sell three small management rights, where the company owns the managers unit on site. These
villages, whilst profitable do not cover the cost of capital for the Company. Sale of these rights is expected to generate cash
over $1,700,000 and significantly lower bank debt without lowering net profit after tax. One of these three rights is under a
conditional contract for $515,000. If this contract goes unconditional, it will settle in October 2013. The others are currently
on the market, with sales expected in early 2014.
Value of Management Rights
The Board continues to engage leading management rights agent Resort Brokers Pty. Ltd. to review the valuation
methodology of the carrying values of the various management rights owned by the Group. The review undertaken by
Resort Brokers indicates that on an overall basis the management rights owned by the Group are valued at significantly
higher than they are recorded in the Consolidated Statement of Financial Position. Under AASB 138 the group is unable to
revalue these rights.
Outlook
With continuing stable management and provision of Level 3 Supported Living Services, the Company expects profit
improvement in the business in 2014. As part of its growth strategy, the Company is currently undertaking Due Diligence on
the Epic Group of Companies and it will announce the results of this exercise in due course.
Lachlan McIntosh
Chairman
EGH ANNUAL REPORT 2013
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Eureka Group Holdings Limited and controlled entities
Directors’ Report
The Directors present their report on Eureka Group Holdings Ltd and controlled entities (“EGH”, the “Group”, the “Company”
or the “Consolidated Entity”) for the year ended 30 June 2013.
1.
PRINCIPAL ACTIVITIES
The principal activities of the Consolidated Entity during the year were:
• 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 performance of the Group as represented by the results of operations for the year, were as follows:
Performance Measure
Net profit
Add back:
Interest
Tax
Depreciation
Amortisation
Earnings before interest, tax, depreciation and amortisation (EBITDA)
The reduction in EBITDA of $767,167 was represented by:
Consolidated
30 June 2013
30 June 2012
74,932
490,683
-
88,693
210,988
865,296
686,488
668,369
-
99,627
177,979
1,632,463
-
-
-
one-off costs ($374,804) associated with being an aged care service provider;
the termination of the Young Village Estates management contract resulting in a decrease in revenue of
$4,210,637 and a corresponding drop in expenses of $3,983,380 compared to FY2012. Management fee revenue
charged for the management of the Young Village Estates also decreased by $264,048;
the delay of a property sale affecting commission income;
Financing costs reduced during the 30 June 2013 year as a result of several official cash rate reductions flowing through to
debt facility rates and repayments being applied to debt reduction.
The Group continues to improve its financial position. Bank debt decreased from $3,599,000 to $3,309,000. Also included
in current liabilities are amounts owing to shareholders amounting to $1,036,643. 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.
To further improve the balance sheet, the Group has determined that it will sell three small management rights, where the
group owns the managers unit on site. These villages, whilst profitable do not cover the cost of capital for the Company.
Sale of these rights is expected to generate cash of over $1,700,000 and significantly lower bank debt without lowering net
profit after tax. One of these three rights is under a conditional contract for $515,000. If this contract goes unconditional, it
will settle in October 2013. The others are currently on the market, with sales expected in early 2014.
The Group operates in a steady industry providing essential services to Australia’s senior population. During the period
overall occupancy levels across the villages increased as well as services income at villages that the group continues to
manage. Given current and forecast demographic dynamics, the Company considers its service to remain in demand over a
long period of time.
Overall, the board feels that continued focus will lead to a successful 2014 financial year.
3. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes to the operations of the Group in 2013 apart from the termination of the Young Village
Estate portfolio.
4. DIVIDENDS
No dividends have been paid during the year (2012: $Nil). No dividends for FY 2013 have been recommended at the date of
this report.
5. CAPITAL STRUCTURE
The number of ordinary shares on issue at 30 June 2013 was 75,632,932 (2012: 73,092,932).
EGH ANNUAL REPORT 2013
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Eureka Group Holdings Limited and controlled entities
Directors’ Report
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.
On 1 August 2012 EGH issued 225,000 unsecured convertible notes of $1.00 each. The Notes are convertible into shares
at $0.10.
The Notes attract an interest rate of 12.50% per annum and mature on 1 February 2014.
As at 30 June 2013 the Group had 225,000 unsecured notes outstanding.
7. LIKELY DEVELOPMENTS AND EXPECTED RESULTS
In 2014, the Group must grow. Whilst it has a stable base, and earnings for 2014 look like improving materially from 2013,
the Group is at a point where it must grow. The Group is looking at a number of opportunities, including the Epic Group,
which has been announced to the market previously.
The Group is also exploring the possibility of acquiring a number of rental villages. It is in preliminary negotiations on 3
villages with the aim of significantly growing its tenanted income base during the year.
The application of Level 3 supported living services is also expected to increase occupancy and lower GST and Land Tax in
the upcoming period.
The Group will continue to seek to improve our balance sheet through consistent earnings and continue to seek to improve
our key drivers of occupancy, services take up, and contract length. With a stable management team focused on a clear
plan to increase occupancy and service uptake we feel we can grow the earnings of the Group substantially in 2014.
8. SUBSEQUENT EVENTS
The Company has executed a contract for sale of its manager’s unit and rights at Stafford for $515,000. This contract is
expected to settle in October 2013.
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 INSURANCE OF OFFICERS OR AUDITORS
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 $19,019 for Directors’ and Officers’ liability for
current and former Directors and Officers.
11. NON-AUDIT SERVICES
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor
are outlined in note 25 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 25 to the financial statements do not compromise the
external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
•
•
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor, and
none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board,
EGH ANNUAL REPORT 2013
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Eureka Group Holdings Limited and controlled entities
Directors’ Report
including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the
company, acting as advocate for the company or jointly sharing economic risks and rewards.
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 taking responsibility on behalf of the Company for all or any part of those
proceedings. The Company was not a party to any such proceedings during the year.
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
Remuneration
Committee Meetings
Name
Held
Attended
Held
Attended
Held
Attended
Lachlan McIntosh
Paul Fulloon
Greg Rekers
Kerry Potter
Nirmal Hansra
7
7
7
7
7
7
7
7
7
7
3
3
-
-
3
3
3
-
-
3
1
1
-
-
1
1
1
-
-
1
14. INFORMATION ON DIRECTORS
The details of each Director’s qualifications, experience and special responsibilities for those in office during the year are:
LACHLAN MCINTOSH – NON EXECUTIVE CHAIRMAN
Lachlan McIntosh has a Bachelor of Commerce degree and is a Member of the Institute of Chartered Accountants in
Australia. He specialises in corporate finance and mergers and acquisitions. He has had substantial experience in the real
estate and retirement accommodation industry along with significant experience in the franchising industries and mining
services industries.
Other listed company directorships in the last 3 years: Industrea Ltd (from May 2004 to December 2012), New Guinea Gold
Corporation (since April 2013), Allied Consolidated Ltd (from July 2006 to July 2012)
GREG REKERS – EXECUTIVE DIRECTOR 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 in the areas of property 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 AND CHIEF OPERATING OFFICER
Kerry is the company’s Chief Operating Officer. Kerry is also a director of Navigator Property Group, a consultancy
specialising in the areas of property development and project marketing.
Kerry holds a Bachelor of Commerce degree and worked with the Commonwealth public service until 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
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 as Industrea Limited, ISoft Group Limited, Australian Pharmaceutical Industries
Limited and Ruralco Holdings Limited.
EGH ANNUAL REPORT 2013
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Eureka Group Holdings Limited and controlled entities
Directors’ Report
Nirmal is a non-executive director and chairman of the finance, audit and risk committee of Campbell Page Ltd, Council of
the Ageing (COTA) in New South Wales and NF Australia Limited. He is also Chairman of Sejester Limited, non-executive
director of Kuringai Financial Services Limited and advisory board member of BTO Group Limited.
Other listed company directorships in the last 3 years: nil
PAUL FULLOON – NON EXECUTIVE DIRECTOR
Paul Fulloon is an Executive Director of Flex Accounting Pty Ltd a Brisbane based consultancy specialising 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
(resigned 24 April 2013)
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 year experience in public practice and commercial accounting roles. James is also Managing Director of
Fay & Redman Pty Ltd Certified Practising Accountants.
TROY NUNAN - COMPANY SECRETARY
Troy was appointed as Company Secretary in April 2013. Troy has a Bachelor of Business degree and is a member of CPA
Australia. Troy has over 15 years’ experience in commercial accounting roles. Troy is also the company’s Chief Financial
Officer.
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 held positions in Business Development and 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 – CHIEF FINANCIAL OFFICER
Troy Nunan has a Bachelor of Business degree and is a member of CPA Australia. He has experience in a range of
industries including banking and finance, manufacturing, construction and professional services.
Troy has worked for 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
Paul Fulloon
Nirmal Hansra
Greg Rekers*
Kerry Potter*
Total Directors
Greg Rekers*
Kerry Potter*
Sharon Alderwick
Troy Nunan
Total Executives
*these are the same holdings
10,308,336
-
400,000
2,653,940
2,649,774
16,012,050
2,653,940
2,649,774
347,657
-
5,651,371
1,000,500
-
133,400
800,400
800,400
2,734,700
800,400
800,400
-
-
1,600,800
EGH ANNUAL REPORT 2013
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Eureka Group Holdings Limited and controlled entities
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
Nirmal Hansra
Greg Rekers
Kerry Potter
Executives
Greg Rekers
Kerry Potter
Non-Executive Director
Non-Executive Director
Executive Director
Executive Director
Head of Real Estate
Chief Operating Officer
Sharon Alderwick
General Manager
20/07/09 – ongoing
05/12/08 – ongoing
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
Chief Financial Officer
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 aligns executive reward with the achievement of
strategic objectives and the creation of value for shareholders, and conforms to the market best practice for delivery of
reward. The Board of Directors (‘the Board’) ensures that executive reward satisfies the following key criteria for good
reward governance practices:
•
•
•
•
competitiveness and reasonableness;
acceptability to shareholders;
performance linkage / alignment of executive compensation, and
transparency.
The Remuneration Committee is responsible for determining and reviewing remuneration arrangements for its directors and
executives. Consideration is given to normal commercial rates of remuneration for similar levels of responsibility and the
Company’s financial performance. Emoluments comprise salaries, bonuses, and contributions to superannuation funds,
options and shares. The performance of the consolidated entity depends on the quality of its directors and executives. The
remuneration philosophy is to attract, motivate and retain high performance and high quality personnel.
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 2013 financial year.
Remuneration for certain individuals is directly linked to performance of the Group. Bonus payments are dependent on key
criteria, being EBITDA and moving the Group loss making position to a profit position. During the 2012 financial year this
was achieved.
The Remuneration Committee is of the opinion that continued improved results can be achieved in part by the adoption of
performance based compensation and is satisfied that this improvement will continue to increase shareholder wealth if
maintained over the coming years.
(c) REMUNERATION CONSULTANTS
The Group did not engage any remuneration consultants during the 2013 financial year.
EGH ANNUAL REPORT 2013
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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:
Short Term
Year ending 30 June 2013
Post
Employment
Share
Based
Salary &
fees (Fixed)
$
Bonus
$
Super-
annuation $
Shares
$
Other
Long
Term
$
Total
$
% of
Bonus
that
was
paid
% of
Bonus or
grant that
was
forfeited
Performance
related
%
Directors
Lachlan McIntosh
Paul Fulloon
Nirmal Hansra
Greg Rekers
Kerry Potter
Total
Greg Rekers
Kerry Potter
Sharon Alderwick
Troy Nunan
Total
55,000
18,334
30,000
-
-
103,334
-
-
-
-
-
-
289,035
30,000
226,198
30,000
116,923
30,000
110,000
-
742,156
90,000
-
-
-
-
-
-
-
-
13,223
9,900
23,123
Short Term
Year ending 30 June 2012
Post
Employment
Share
Based
Salary &
fees (Fixed)
$
Bonus
$
Super-
annuation $
Shares
$
Directors
Lachlan McIntosh
Paul Fulloon
David Rosenblum*
Nirmal Hansra**
Greg Rekers
Kerry Potter
Total
Executives
Greg Rekers
Kerry Potter
60,000
19,867
13,323
5,750
-
-
98,940
206,932
206,932
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sharon Alderwick
Troy Nunan***
Total
103,845
10,000
27,500
-
545,209
10,000
10,246
2,475
12,721
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
55,000
18,334
30,000
-
-
103,334
-
-
-
-
-
-
319,035
256,198
33%
33%
160,146
100%
119,900
855,279
-
-
-
-
-
-
-
-
67%
67%
-
-
-
-
-
-
-
-
-
37%
22%
18%
-
-
Total
$
% of
Bonus
that
was
paid
% of
Bonus or
grant that
was
forfeited
Performance
related
%
60,000
19,867
13,323
5,750
-
-
98,940
206,932
206,932
124,091
29,975
567,930
-
-
-
-
-
-
-
-
-
50%
-
-
-
-
-
-
-
-
-
100%
100%
50%
100%
-
-
-
-
-
-
-
13%
13%
3%
-
Other
Long
Term
$
* The following people ceased to be key management personnel during the year.
** Nirmal Hansra appointed director on 24th April 2012.
*** Troy Nunan commenced employment on 2nd April 2012.
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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 $200,000 plus 40% of all sales commissions (consulting fee is half of
the total payment to Navigator Property Group) and a travel allowance of $24,000. 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 $200,000 plus 40% of all sales commissions (consulting fee is half of
the total payment to Navigator Property Group) and a travel allowance of $24,000. 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 year. 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 as well as act as Company Secretary. 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.
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 Alderwick’s remuneration comprises a salary of $120,000 plus superannuation contributions and performance incentive
payment of up to $30,000. Mrs Alderwick is responsible for the day to day operations of the Company and its associated
companies. The directors believe that the remuneration is appropriate for the duties allocated Mrs Alderwick, There are no
pay-outs upon resignation or termination, outside of industrial regulations.
EGH ANNUAL REPORT 2013
10
Eureka Group Holdings Limited and controlled entities
Directors’ Report
(f) RELATIONSHIP BETWEEN REMUNERATION AND COMPANY PERFORMANCE
The following table shows the revenue, net profit before tax, earnings per share, share price and dividend per share for the
past 5 years of the Company. The factors that are considered to affect remuneration are summarised below:
2013
($)
2012
($)
2011
($)
2010
($)
2009
($)
Revenue
NPBT
EPS
Share price at year end
DPS
10,873,669
15,593,470
74,932
0.10
0.065
0.00
686,488
1.37
0.10
0.00
14,099,699
(1,242,627)
11,247,998
(1,061,846)
18,702,665
(7,023,941)
(3.51)
0.09
0.00
(0.56)
0.13
0.00
(5.53)
0.12
0.00
(g) NON-EXECUTIVE DIRECTOR REMUNERATION POLICY
Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the
directors. Non-executive directors’ fees and payments are reviewed annually by the Remuneration Committee. Non-
executive directors do not receive share options or other incentives.
Non-executive directors’ fees are determined within an aggregate directors’ fee pool limit, which is periodically
recommended for approval by shareholders. The maximum currently stands at $250,000 in aggregate plus statutory
superannuation.
The following fees have applied:
Base fees
-Chair
-Other non-executive directors
This concludes the remuneration report, which has been audited.
$
55,000
38,334
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 30th day of September, 2013
EGH ANNUAL REPORT 2013
11
Eureka Group Holdings Limited and controlled entities
Security Holder Information
Distribution of Securities as at 6 September 2013
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
226
99
21
78
77
501
Marketable Shares
There were 350 holders of less than a marketable parcel of 5,000
shares holding a total of 538,787 shares.
Voting Rights
Ordinary Shares carry voting rights of one vote per share. Options
carry no voting rights.
Twenty Largest Ordinary Shareholders as at 6 September 2013
No of Ordinary Shares
Held
% of Issued Share
Capital
CO-INVESTOR CAPITAL PARTNERS PTY LTD
WAVET FUND NO 2 PTY LTD
KATHLAC PTY LIMITED
BYDAND CAPITAL PTY LTD
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
DSCC HOLDINGS PTY LTD
MARBLE TOWERS PTY LTD
ESCOR INVESTMENTS PTY LTD
VBS INVESTMENTS PTY LTD
MR ROBERT JAMES HALLINAN & MRS FAYE ELIZABETH
HALLINAN
MR WILLIAM HENRY SUMMERS & MRS DIANORA SUMMERS
BRAMARJOD SUPTER PTY LTD
CONTEMPLATOR PTY LTD
Total
6,986,471
6,263,567
5,724,169
5,159,767
4,635,428
4,425,000
3,342,378
2,808,024
2,500,000
2,290,995
1,984,309
1,494,314
1,243,442
1,190,584
1,120,160
1,107,945
1,012,154
1,000,000
1,000,000
800,000
56,088,707
9.24
8.28
7.57
6.82
6.13
5.85
4.42
3.71
3.31
3.03
2.62
1.98
1.64
1.57
1.48
1.46
1.34
1.32
1.32
1.06
74.15
Largest Option Holders at 6 September 2013
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 6
September 2013
Ordinary Shares
Lachlan McIntosh
Paul Fulloon
Nirmal Hansra
Greg Rekers
Kerry Potter
Total
10,308,336
-
400,000
2,653,940
2,649,774
16,012,050
Options
1,000,500
-
133,400
800,400
800,400
2,734,700
EGH ANNUAL REPORT 2013
12
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
The Board will at all times fulfill 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 financial and other reporting;
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);
There must be at least four Directors and this may be increased where the Board considers that additional expertise is
required in specific areas or when an outstanding candidate is identified;
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, corporate turnarounds and restructurings and 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.
EGH ANNUAL REPORT 2013
13
Eureka Group Holdings Limited and controlled entities
Corporate Governance
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.
The Board has adopted a Diversity Policy that outlines the objectives in relation 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 and processes to
include review and appointment of directors. EGH promotes an inclusive workplace where employee differences in areas
like gender, age, culture, disability and lifestyle choice are valued. The unique skills, perspectives and experience that the
Group’s employees bring to the table encourage creativity and innovation in thought that better represents the Group’s
diverse customer base, ultimately driving improved business performance.
The policy does not include measureable objectives for achieving gender diversity as the Group has always had a policy of
actively encouraging gender diversity at all levels in the organisation and a culture that supports workplace diversity. This is
evidenced by the proportion of women employees in the consolidated entity as at 30 June 2013:
Women on the board
0%
Women in senior executive positions
Women in the organisation
25%
53%
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 the dealing in Securities except in accordance with the Code of Conduct for Transactions in Securities.
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 Chief Financial Officer 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 the Audit Committee which include most significantly:
•
•
•
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 for independence and probity and professional standing within the business community; and
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.
EGH ANNUAL REPORT 2013
14
Eureka Group Holdings Limited and controlled entities
Corporate Governance
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 loss statement, balance sheet and cash flow 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
The Board aims to ensure that Shareholders are informed of all major developments affecting the Group’s state of affairs.
Information is communicated to Shareholders through the distribution of financial reports, announcements through the ASX,
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 Chief Financial Officer 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 is fully disclosed in the annual report.
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 2013
15
Eureka Group Holdings Limited and controlled entities
Auditor’s Independence Declaration
Tel: +61 7 3237 5999
Fax: +61 2 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane Qld 4000
GPO Box 457 Brisbane QLD 4001
Australia
DECLARATION OF INDEPENDENCE BY K L COLYER TO THE DIRECTORS OF EUREKA GROUP HOLDINGS
LIMITED
As lead auditor of Eureka Group Holdings Limited for the year ended 30 June 2013, I declare that, to the best
of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
2. No contraventions of 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
Director
BDO Audit Pty Ltd
Brisbane, 30 September 2013
.
BDO Audit Pty Ltd ABN 33 134 022 870 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 Audit Pty Ltd 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 member firms.
EGH ANNUAL REPORT 2013
16
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2013
Note
3
3
4
4
5
Revenue
Other Income
Expenses
Food, beverage and consumables
Impairment - management rights
Impairment- assets held for sale
Employee benefits expenses
Finance costs
Community operating expenses
Marketing expenses
Consultancy expenses
Depreciation & amortisation expenses
Lease expenses
Other expenses
Total Expenses
Profit before income tax expense from
continuing operations
Income tax expense / (benefit)
Profit from continuing operations
Profit for the period
Other comprehensive income
Items that may be reclassified to profit or loss
Items that will not be reclassified to profit or loss
Other comprehensive income for the period, net
of tax
Consolidated
30 June 2013
$
10,873,669
30 June 2012
$
15,539,834
4,771
53,636
7,359,976
8,322,954
34,266
37,080
954,659
490,683
20,904
4,154
468,018
299,681
626,902
507,185
-
-
1,032,886
668,369
328,789
27,906
627,021
277,606
713,214
2,908,237
10,803,508
14,906,982
74,932
-
74,932
74,932
-
-
-
686,488
-
686,488
686,488
-
-
-
Total Comprehensive Income for the period
74,932
686,488
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
21
21
0.10
0.09
1.37
1.35
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.
EGH ANNUAL REPORT 2013
17
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of Financial Position
AS AT 30 JUNE 2013
Consolidated
Note
30 June 2013
$
30 June 2012
$
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Assets classified as held for sale
Other current assets
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
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
465,676
530,587
41,543
1,492,725
92,100
2,622,631
1,290,686
5,467,707
6,758,393
9,381,024
610,420
1,761,643
42,444
2,414,507
2,949,000
2,949,000
5,363,507
4,017,517
895,059
738,233
61,098
2,003,631
209,453
3,907,474
1,050,485
5,475,710
6,526,195
10,433,669
1,937,135
1,427,047
73,459
3,437,641
3,299,000
3,299,000
6,736,641
3,697,028
17
44,176,337
43,930,780
(40,158,820)
(40,233,752)
4,017,517
3,697,028
The consolidated statement of financial position is to be read in conjunction with the accompanying notes
EGH ANNUAL REPORT 2013
18
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2013
Cash flows from operating activities
Receipts from customers
Payments to suppliers & employees
Interest received
Finance costs
Net cash provided (used) in operating activities
18(b)
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of management rights and managers unit
Payments for intangible assets
Net cash provided (used) in 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 provided (used) in financing activities
Net increase (decrease) 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)
Consolidated
Note
30 June 2013
$
30 June 2012
$
12,139,007
15,873,487
(12,100,344)
(15,285,814)
4,771
(490,683)
(447,249)
(75,384)
-
(72,298)
(147,682)
274,596
(290,000)
189,395
(8,443)
165,548
(429,383)
895,059
465,676
37,318
(522,925)
102,066
(77,231)
543,670
(240,909)
225,530
366,096
(400,000)
350,000
(117,380)
198,716
526,312
368,747
895,059
The consolidated statement of cash flows is to be read in conjunction with the accompanying notes.
EGH ANNUAL REPORT 2013
19
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2013
2013
Balance at 1 July 2012
Profit / (Loss) for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their
capacity as owners:
Debt converted into equity
Shares issued during the year
Capital raising cost
Consolidated
Share Capital
$
Accumulated Losses
$
Total
$
43,930,780
(40,233,752)
3,697,028
-
-
-
64,605
189,395
(8,443)
245,557
74,932
-
74,932
-
-
-
-
74,932
-
74,932
64,605
189,395
(8,443)
245,557
Balance at 30 June 2013
44,176,337
(40,158,820)
4,017,517
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
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
-
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
The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.
EGH ANNUAL REPORT 2013
20
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
1.
INTRODUCTION
Eureka Group Holdings Limited (covering the financial statements of Eureka Group Holdings Limited and all of its
subsidiaries) (“EGH” or the “Group” or the “Consolidated Entity”) for the year ended 30 June 2013 is a company
incorporated and domiciled in Australia.
EGH is a for-profit entity for the purposes of preparing the financial statements.
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 30 September 2013 by the Directors.
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
interpretations adopted by the International Accounting Standards Board (IASB).
New and amended standards adopted by the Group
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board that are mandatory for the current period. The adoption of these Accounting
Standards and Interpretations did not have any significant impact on the financial performance or position of the Group.
The following Accounting Standards and Interpretations are most relevant to the Group:
AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income
The amendments require grouping together of items within Other Comprehensive Income on the basis of whether they
will eventually be ‘recycled’ to profit or loss (reclassification adjustments). The change provides clarity about the nature
of items presented as Other Comprehensive Income and the related tax presentation.
Changes to presentation – classification of expenses
Eureka Group Holdings Limited has decided in the current financial year to change the classification of its expenses in
the income statement with regards to the “Food, beverage and consumable” category, and the “Lease expenses”
category. We believe that this will provide more relevant information to our stakeholders as these expenses are better
reflected based on this classification. The comparative information has been reclassified accordingly.
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 2012.
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.
EGH ANNUAL REPORT 2013
21
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
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.
The going concern assumption is based on the following steps taken by the Group:
• The Group expects to realise its remaining assets held for sale of $1,492,725 prior to end of June 2014. Subsequent
to year end, the Group entered into a conditional contract to sell one of these assets for $515,000 and if the contract
goes unconditional, it will settle in October 2013. The remaining assets held for sale are currently on the market.
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 $1,036,643. 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’ declaration.
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 2013 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.
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or
indirectly, to govern the 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 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 difference between 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.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets 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.
EGH ANNUAL REPORT 2013
22
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
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.
OPERATING SEGMENTS
Operating segments are presented using the 'management approach', where the 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.
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 financial difficulties of 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 amount of the impairment allowance is the difference between the
asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest
rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.
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.
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 the impairment loss was 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.
EGH ANNUAL REPORT 2013
23
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
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 to benefit from the synergies of the combination.
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, the future sacrifice of economic benefits
is probable, and the amount of the provision can be measured reliably.
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 management rights on Communities that the consolidated entity has
constructed are not recognised in the accounts.
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 recoverable amount. Sales rolls are amortised using
the straight line method over 15 years being the estimated useful life
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 recoverable amount of 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.
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.
EGH ANNUAL REPORT 2013
24
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
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 flows from the
financial asset expire or if the 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
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
initial recognition. Financial instruments are designated at fair value through profit or loss if the group manages such
investments and makes purchase and sale decisions based on their fair value in accordance with the Group’s
documented risk management or investment strategy. Upon initial recognition, attributable transaction costs 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
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 non-derivative financial instruments are measured after initial recognition at amortised cost using the effective
interest method less any impairment losses.
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-term and long-term
borrowings, amortisation of discounts or premiums relating to borrowings, amortisation of ancillary costs in connection
with the arrangement of borrowings and finance lease charges.
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 to the instruments and the counterparties as well as
management’s assumptions about probabilities of payments and compliance with and attainment of the set out terms
and conditions.
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, the taxation authority is included as part of receivables or
payables.
EGH ANNUAL REPORT 2013
25
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
LEASES
Operating lease payments are recognised as an expense on a straight line basis over the lease term.
BORROWINGS
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are 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 effective interest method. Fees paid on the
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 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.
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.
Current tax expense/income, deferred tax liabilities and deferred assets arising from temporary differences of the
members of the 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 from unused tax losses of the subsidiaries is assumed
by the head entity in the tax-consolidation group and are recognised by the Company as amounts payable (receivable)
to /(from) other entities in the tax-consolidation group 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.
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.
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 the funding obligations of members of the tax-consolidation group in respect of tax amounts.
The tax funding arrangements require payments to/ from the head entity to the current tax liability/ (asset) assumed to be
the head entity and any tax-loss deferred 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.
The head entity, in conjunction with other members of the tax-consolidated group, has also entered into a tax sharing
agreement. The 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.
CAPITAL MANAGEMENT
The Consolidated Entity considers its share capital and retained earnings as capital.
EGH ANNUAL REPORT 2013
26
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
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.
BUSINESS COMBINATIONS
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is 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 proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as
incurred to profit or loss.
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 classified as equity is not remeasured and its subsequent settlement is accounted for within
equity.
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 to have been issued for no consideration in relation to dilutive potential
ordinary shares
USE OF JUDGEMENTS AND ESTIMATES
The preparation of financial statements requires management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual
EGH ANNUAL REPORT 2013
27
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
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 judgements in applying accounting
policies that have most significant effect on the amount recognised in the financial statements are described as follows:
Goodwill
The consolidated entity tests annually, or more 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 life
intangible assets at each reporting date by 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 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 period of the management 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
consideration, the Directors believe the amortisation period should be similar to the life of the property rather than
agreement period.
PARENT ENTITY
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity
only.
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
Where the parent entity has provided financial guarantees in relation to loans and payables of 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.
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
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2013
reporting periods. Eureka Group Holdings Limited assessment of the impact of these new standards and interpretations
is set out below.
AASB 9: Financial Instruments, 2009-11 Amendments to Australian Accounting Standards arising from AASB 9
and 2010-7 Amendments to Australian Accounting Standards arising from AASB 9
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 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 irrevocable election on 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
EGH ANNUAL REPORT 2013
28
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
requirements nor would there be any ‘recycling’ of gains or losses through profit or loss on disposal. The accounting for
financial liabilities continues 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 create an accounting mismatch. Eureka Group Holdings Limited will adopt this standard from 1
July 2015 but the impact of its adoption is yet to be assessed.
AASB 10: Consolidated Financial Statements
This standard replaces part of IAS 27: 'Consolidated and Separated Financial Statements' and is applicable for annual
reporting periods beginning on or after 1 January 2013. This new standard introduces a new definition of control that
determines which entities are consolidated. This new definition of control may potentially lead to the consolidation of
entities that were not previously included in Eureka Group Holdings Limited resulting in more assets and liabilities on the
books. Based on Eureka Group Holdings Limited current structure the adoption of this revised standard from 1 July 2013
will have no impact on Eureka Group Holdings Limited.
AASB 12: Disclosure of interest in other Entities
This standard is applicable for annual reporting periods beginning on or after 1 January 2013. This standard clarifies the
disclosure requirements for all forms of interests in other entities including joint arrangements, associates, special
purpose vehicles and other off balance sheet vehicles. Eureka Group Holdings Limited is assessing the impact of this
standard.
AASB 13: Fair Value Measurement
This standard is applicable for annual reporting period beginning on or after 1 January 2013 and establishes a single
course of guidance for determining the fair value of assets and liabilities. As the standard does not introduce any new
requirements for the use of fair value, its impact on adoption from 1 July 2013 should be minimal, although there will be
increased disclosure requirements.
AASB 2011-4 Amendments 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 individual KMP in the notes to the financial statements and the directors report. As the aggregate
disclosures are still required by AASB 124 and during the transitional period 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 Eureka
Group Holdings Limited.
AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint
Arrangements Standards
The amendments are applicable to annual reporting periods beginning on or after 1 January 2013. The amendments
make numerous consequential changes to a range of Australian Accounting Standards and Interpretations, following the
issuance of AASB 10, AASB 11, AASB 12 and revised AASB 127 and AASB 128. Eureka Group Holdings Limited has
yet to determine to potential effect of this standard.
AASB 11: Joint Arrangements
This standard replaces IAS 31: 'Interest in Joint Ventures' and is applicable for annual periods beginning on or after 1
January 2013. This new standard introduces new rules which classify joint arrangements as either a joint operation or
joint venture. Under the new standard, proportionate consolidation is not allowed and all joint ventures must be equity
accounted. All joint arrangements held by Eureka Group Holdings Limited will need to be reassessed to determine
whether the joint operation or joint venture classification is appropriate, and therefore the potential impacts of a change
on the presentation of the Financial Statements. The adoption of this standard from 1 July 2013 will not have a material
impact on Eureka Group Holdings Limited.
AASB 128: Investments in Associates and Joint Ventures (reissued)
This standard is applicable to annual reporting periods beginning on or after 1 January 2013. The standard has been
modified to remove specific guidance that is now contained in AASB 10, AASB 11 and AASB 12. The adoption of this
revised standard from 1 July 2013 will not have a material impact on Eureka Group Holdings Limited.
AASB 119: Employee Benefits (September 2011) and AASB 2011-10 Amendments to Australian Accounting
Standards arising from AASB 119 (September 2011)
EGH ANNUAL REPORT 2013
29
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
This revised standard and its consequential amendments are applicable to annual reporting periods beginning on or after
1 January 2013. The amendments change the definition of short term employee benefits, from ‘due to’ to ‘expected to’
be settled within 12 months. This will require annual leave that is not expected to be wholly settled within 12 months to
be discounted allowing for expected salary levels in the future period when the leave is expected to be taken. The
adoption of this revised standard from 1 July 2013 will not have a material impact on Eureka Group Holdings Limited.
AASB 2012-10 Amendments to Australian Accounting Standards – Transition Guidance and Other Amendments
These amendments are applicable to annual reporting periods beginning on or after 1 January 2013. They amend AASB
10 and related standards for the transition guidance relevant to the initial application of those standards. The
amendments clarify the circumstances in which adjustments to an entity’s previous accounting for its involvement with
other entities are required and the timing of such adjustments. The adoption of these amendments will not have a
material impact on Eureka Group Holdings Limited.
AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011
Cycle
The amendments are applicable to annual reporting periods beginning on or after 1 January 2013. The amendments
affect 5 Australian Accounting Standards as follows: confirmation that repeat application of AASB 1 ‘First Time Adoption
of Australian Accounting Standards’ is permitted; clarification of borrowing cost exemption in AASB 1; clarification of the
comparative information requirements when an entity provides an optional third column or is required to present a third
statement of financial position in accordance with AASB 101 ‘Presentation of Financial Statements’; clarification that
servicing of equipment covered by AASB 116 ‘Property, Plant and Equipment’, if such equipment is used for more than
one period; clarification that the tax effect of distributions to holders of equity instruments and equity transaction costs in
AASB 132 ‘Financial Instruments: Presentation’ should be accounted for in accordance with AASB 112 ‘Income Taxes’;
and clarification of the financial reporting requirements in AASB 134’Interim Financial Reporting’ and the disclosure
requirements of segment assets and liabilities. The adoption of these amendments from 1 July 2013 will not have a
material impact on Eureka Group Holdings Limited.
EGH ANNUAL REPORT 2013
30
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
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
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 2013
$
30 June 2012
$
4,616,285
2,874,231
748,980
1,551,901
1,082,272
10,873,669
4,430,038
5,070,427
3,224,661
1,296,320
1,518,388
15,539,834
4,771
-
4,771
37,318
16,318
53,636
Consolidated
30 June 2013
$
30 June 2012
$
Payments under operating leases
626,902
713,214
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
490,683
490,683
668,369
668,369
201,639
9,349
210,988
48,513
40,180
88,693
168,637
9,342
177,979
75,484
24,143
99,627
Defined contribution superannuation expense
66,807
66,782
EGH ANNUAL REPORT 2013
31
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
Note 5: Income tax
The components of tax expense comprise:
Current tax
Deferred tax expense on temporary differences current year
Deferred tax asset not recognised on current year loss
Profit before income tax expense
Income tax calculated at 30% (2012: 30%)
Tax effect on permanent differences
- Entertainment
- Fines/Penalties
- Capital profits
- Amortisation of intangibles
Deferred tax asset not recognised on current year loss
Income tax expense
Consolidated
30 June 2013
$
30 June 2012
$
22,480
160
53,897
196,812
(22,640)
(250,709)
-
74,932
22,480
130
30
-
-
-
686,488
205,946
531
-
(9,162)
53,394
(22,640)
(250,709)
-
-
Tax losses
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit at 30%
35,256,163
34,780,364
10,576,849
10,434,109
Unrecognised deferred tax assets
Temporary differences which have not been recognised:
Employee benefits
Assessable temporary differences
Potential tax benefit at 30%
Unrecognised deferred tax liabilities
Temporary differences which have not been recognised:
Assessable temporary differences
Unrecognised deferred tax liabilities relating to the above temporary differences
at 30% (2012: 30%)
61,031
849,558
273,176
118,084
306,450
127,360
10,400
3,120
-
-
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 2013
32
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
Note 6: Trade and other receivables
Trade & other debtors
Provision for doubtful debts
Total 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 2013
$
30 June 2012
$
534,336
(3,749)
530,587
788,233
(50,000)
738,233
Consolidated
30 June 2013
$
30 June 2012
$
41,543
41,543
61,098
61,098
Consolidated
30 June 2013
$
30 June 2012
$
939,965
552,760
-
1,492,725
1,251,219
728,157
24,255
2,003,631
1. One managers unit at Chermside and the management rights
2. One managers unit at Stafford and the management rights
3. One managers unit at Cleveland and the management rights; and
4. The management rights at Albury and Wodonga.
Subsequent to year end, the Group entered into a conditional contract to sell one of these assets for
$515,000 and if the contract goes unconditional, it will settle in October 2013. The Group has engaged
Resort Brokers to market the remaining assets and expects to sell these assets in the second half of
the 2014 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 2013
$
30 June 2012
$
92,100
92,100
209,453
209,453
EGH ANNUAL REPORT 2013
33
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
Name of Entity
Note 10: Investment in subsidiaries
SCV No. 1 Pty Ltd
SCV No. 2 Pty Ltd
Country of
Formation or
Incorporation
Equity Holding
30-Jun-13
30-Jun-12
%
%
Australia
100%
100%
Australia
100%
100%
SCV Leasing Pty Ltd (formerly SCV No. 3 Pty Ltd)
Australia
100%
100%
Eureka Property Pty Ltd (formerly SCV Services Pty Ltd)
Australia
100%
100%
SCV Manager Pty Ltd
Australia
100%
100%
Compton's Villages Australia Unit Trust
Australia
100%
100%
Compton's Caboolture Pty Ltd
Australia
100%
100%
Eureka Care Communities Pty Ltd
Australia
100%
100%
EGH ANNUAL REPORT 2013
34
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
Note 11: Property, plant & equipment
30 Jun 2013
30 Jun 2012
Consolidated
Managers units at cost
Accumulated depreciation
Plant & equipment at cost
Accumulated depreciation
Total property, plant & equipment
$
1,237,693
(132,588)
1,105,105
848,380
(662,799)
185,581
1,290,686
$
859,535
(127,647)
731,888
1,070,486
(751,889)
318,597
1,050,485
Movements during the year ending 30 June 2013
Manager's Units
$
Plant &
Equipment
$
Total
$
Consolidated
Opening written down value
731,888
318,597
1,050,485
Additions at cost
Disposals
63,776
11,608
75,384
-
(130,866)
(130,866)
Transfer to/from Assets Held for Sale
349,621
34,755
Depreciation expense
(40,180)
(48,513)
384,376
(88,693)
Closing written down value
1,105,105
185,581
1,290,686
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
Plant &
Equipment
$
421,347
58,276
(85,542)
(75,484)
318,597
Total
$
1,158,423
77,231
(85,542)
(99,627)
1,050,485
EGH ANNUAL REPORT 2013
35
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
Note 12: Intangible assets
Intellectual property - at cost
Management rights - at cost
Impairment of management rights
Accumulated amortisation
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 2013
$
1
4,098,488
(34,266)
(673,249)
3,390,973
27,749
(26,623)
1,126
138,571
(18,479)
120,092
1,955,515
5,467,707
30 June 2012
$
1
3,861,237
-
(471,610)
3,389,627
27,749
(26,517)
1,232
138,571
(9,236)
129,335
1,955,515
5,475,710
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 (2012: 2%) to the most recent
years’ cash flows;
2. the terminal value was calculated using a growth rate of 2% (2012: 2%);
3. cash flows have been discounted using a pre-tax discount rate of 25% (2012: 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 projected 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 2013
36
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
Movements during the year ending 30 June 2013
Consolidated
Opening written down value
Additions at cost
Impairment of management
rights
Transfer from assets held for
sale
Amortisation expense
Closing written down value
Intellectual
Property
$
1
Management
Rights
$
3,389,627
Plans &
Trademarks
$
Sale
Rolls
$
1,232 129,335
Goodwill
$
Total
$
1,955,515 5,475,710
-
-
-
-
1
71,297
(34,266)*
165,954
(201,639)
3,390,973
-
-
-
-
-
-
-
-
-
71,297
(34,266)
165,954
(106)
(9,243)
-
(210,988)
1,126
120,092
1,955,515
5,467,707
*Based on the impairment review performed at 30 June 2013, the management rights of Maryborough was impaired. The impairment was
due to the Group decision to cancel the management rights contract.
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)
The remaining amortisation period on a weighted average basis of the management rights are 32 years (2012: 33 years).
Note 13: Trade & other payables
Trade creditors and accruals
Total trade & other payables
Note 14: Provisions
Current
Annual leave entitlements
Non-Current
Long service leave entitlements
Total Provisions
Consolidated
30 June 2013
$
610,420
610,420
30 June 2012
$
1,937,135
1,937,135
Consolidated
30 June 2013
30 June 2012
$
42,444
-
42,444
-
$
73,459
-
73,459
Note 15: Dividends
No dividends were paid or proposed during financial year 2013 (2012 - $nil).
The balance of the franking account at 30 June 2013 was $nil (2012 - $nil).
EGH ANNUAL REPORT 2013
37
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
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 2013
Consolidated
30 June 2013
$
30 June 2012
$
1,036,643
365,000
360,000
1,761,643
2,949,000
2,949,000
4,710,643
987,047
140,000
300,000
1,427,047
3,299,000
3,299,000
4,726,047
As at 30 June 2013, the Group has access to a facility with the National Australia Bank (“NAB”), with a fully drawn limit of
$3,309,000 (2012: $3,599,000). The facility expires on 31 July 2014 and is secured by:
• Registered mortgages over managers’ units and other real estate at its Communities ($2,230,651).
• Deed of charge over the related management rights ($3,943,733)
• Guarantee and indemnity given by EGH and its controlled entities.
•
Fixed and floating charges over the assets of EGH and its controlled entities ($9,381,024).
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: $30,000 per month.
During the year and as at 30 June 2013, 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 2013.
TERMS AND CONDITIONS – 30 JUNE 2012
As at 30 June 2012, the Group had access to a facility with the National Australia Bank (“NAB”), with a fully drawn limit of
$3,599,000 (2011: $3,999,000) 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 the 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 complied with its covenants through to 30 June 2012.
This facility expired on 31 March 2012 and was extended to 31 July 2013.
EGH ANNUAL REPORT 2013
38
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
Commercial bills – secured
Total NAB facilities
30 June 2013
30 June 2012
Used
$
3,309,000
3,309,000
Unused
$
Used
$
3,599,000
3,599,000
-
-
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% (2012: 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.
On 1 August 2012 EGH issued 225,000 unsecured convertible notes of $1.00 each. The Notes are convertible into shares
at $0.10.
The Notes attract an interest rate of 12.50% per annum and mature on 1 February 2014.
As at 30 June 2013 the Group had 225,000 unsecured notes outstanding.
EGH ANNUAL REPORT 2013
39
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
Note 17: Share capital
30 June 2013
Number
30 June 2012
Number
30 June 2013
$
30 June 2012
$
Fully paid ordinary shares (number of shares)
75,632,932
73,092,932
44,176,337
43,930,780
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)
-
-
-
-
-
-
-
-
-
8,473,207
5,878,643
6,530,742
403,883
2,490,520
6,117,225
494,733
471,519
875,000
-
-
-
-
-
-
-
-
-
-
64,605
189,395
(8,443)
308,000
235,146
281,720
20,000
125,000
308,280
25,000
25,000
70,000
-
350,000
(117,380)
Shares issued at $0.1000 (Debt conversion)
646,050
Shares issued at $0.1000
Less: share issue costs
1,893,950
3,500,000
-
-
Shares on issue at end of year
75,632,932
73,092,932
44,176,337
43,930,780
Options on issue at beginning of year
Options expired
Options issued as part of convertible note issuance (noted 16 (c))
Total options on issue
Ordinary shares
30 June 2013
30 June 2012
Number of Options
8,941,010
-
-
8,941,010
315,000
(65,000)
8,691,010
8,941,010
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 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 were cancelled during FY 2012 upon
the resignation of Michael Hayes.
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 2013
40
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
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 – assets held for sale
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
(c) Non cash investing and financing activities
Consolidated
30 June
2013
30 June
2012
$
$
465,676
895,059
74,932
299,681
35,266
37,080
(76,503)
130,866
686,488
277,606
-
-
-
85,542
-
(16,318)
221,641
19,555
117,353
(158,899)
(22,727)
(146,852)
(1,276,105)
(521,517)
(31,015)
(447,249)
(81,257)
102,066
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 $64,605 of shareholders loan to shares
In the prior 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.
EGH ANNUAL REPORT 2013
41
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
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 2013
$
30 June 2012
$
465,676
530,587
996,263
895,059
738,233
1,633,292
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 2013
Gross
$
88,339
45,070
10,629
390,298
534,336
Allowance
$
-
-
-
(3,749)
(3,749)
30 June 2012
Gross
$
254,359
20,168
13,448
500,258
788,233
Allowance
$
-
-
-
(50,000)
(50,000)
EGH ANNUAL REPORT 2013
42
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
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 2012
$
50,000
(46,251)
-
3,749
61,993
(20,694)
8,701
50,000
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:
2013
Consolidated
Trade payables
Contractual Repayment
Amount
$
449,993
6 or less
Months
$
449,993
6 - 12
Months
$
1 – 2
years
$
More than 2
years
$
- -
-
Sundry creditors & accruals
160,427
160,427
- -
-
Commercial bills
Other financial liabilities
Total
2012
Trade payables
Sundry creditors & accruals
Commercial bills
Other financial liabilities
Total
3,309,000
180,000
180,000
2,949,000
-
1,401,643
5,321,063
1,401,643
- -
-
2,192,063
180,000
2,949,000
-
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
$
-
-
-
-
-
EGH ANNUAL REPORT 2013
43
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
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
Consolidated
30 June 2013
$
(28,433)
30 June 2012
$
(27,039)
1% decrease in interest rates – effect on profit after tax & equity
28,433
27,039
Note 20: Commitments for expenditure
a) Operating leases: group as lessee
Non‑cancellable operating leases
The group leases various managers’ units under non-cancellable operating leases expiring within two to twenty five 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 2013
$
487,136
30 June 2012
$
487,136
1,145,667
2,465,074
1,422,331
2,682,312
4,097,877
4,591,779
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 (2012: $Nil).
EGH ANNUAL REPORT 2013
44
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
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 2013
$
30 June 2012
$
74,932
686,488
75,521,590
49,967,419
4,827,586
1,013,661
80,349,176
50,981,080
0.10 Cents
1.37 Cents
0.09 Cents
1.35 Cents
Note 22: Related party transactions
(a) Key management personnel compensation
Short term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
Total
2013
$
935,490
23,123
-
-
2012
$
654,149
12,721
-
-
958,613
666,870
Detailed disclosures relating to key management personnel are set out in the remuneration report within the Directors'
Report.
EGH ANNUAL REPORT 2013
45
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
(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 2012*
Received as
Remuneration *
Shares
Acquired
Options
Exercised*
Net Change
Other *
Balance
30 June 2013
Directors:
Lachlan McIntosh
10,008,336
Paul Fulloon
Nirmal Hansra
Greg Rekers
Kerry Potter
Total
Executives:
-
250,000
2,578,940
2,574,773
15,412,049
Sharon Alderwick
347,657
Troy Nunan
Total
-
347,657
-
-
-
-
-
-
-
-
-
300,000
-
150,000
75,000
75,001
600,001
Balance
1 July 2011
Received as
Remuneration
Shares
Acquired
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,308,336
-
400,000
2,653,940
2,649,774
16,012,050
347,657
-
347,657
Net Change
Other *
Balance
30 June 2012
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
Options
Exercised
-
-
-
-
-
-
-
-
-
-
-
-
-
* Note that these shares were issued as part of the issue of convertible notes issue approved at the 2011 AGM.
EGH ANNUAL REPORT 2013
46
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
(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 2012
Received as
Remuneration
Options
Exercised
Net Change
Other
Balance
30 June 2013
Directors:
Lachlan McIntosh
1,000,500
Paul Fulloon
Nirmal Hansra
Greg Rekers*
Kerry Potter*
Total
Executives:
-
133,400
800,400
800,400
2,734,700
Sharon Alderwick
100,500
Troy Nunan
Total
-
100,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,500**
-
100,500
1,000,500
-
133,400
800,400
800,400
2,734,700
-
-
-
* 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 have expired during the year.
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
EGH ANNUAL REPORT 2013
47
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
(d) Other transactions with key management personnel
Kathlac Pty Ltd
As at 30 June 2013, total loans outstanding to Eureka Group Holdings Limited from Kathlac Pty Ltd, an entity associated
with Lachlan McIntosh, amounted to $18,616 (2012: $79,300) consisting of $16,223 principal and $2,393 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
2013
$
2012
$
79,300
-
(48,077)
2,393
(15,000)
18,616
208,105
45,003
(50,000)
26,192
(150,000)
79,300
22 Capital Pty Ltd
22 Capital Pty Ltd, an entity associated with Lachlan McIntosh, did not invoice for consulting services during the financial
year (2012: $288,887). At 30 June 2013 amount outstanding to 22 Capital Pty Ltd was $88,718 (2012: $148,718).
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 (2012: $39,600). As at 30 June 2013
amount outstanding to Dotted Line Pty Ltd was $Nil (2012: $Nil)
Sothertons Chartered Accountants
During the year, Sothertons Chartered Accountants, (of which Lachlan McIntosh is a shareholder) received tax advice
related fees of $29,693 on commercial terms (2012: $119,163). At 30 June 2013 amount outstanding to Sothertons was
$28,263 (2012: $3,307).
Griffith Scenic Village Pty Ltd
Griffith Scenic Village Pty Ltd, an entity associated with Lachlan McIntosh, paid the Group caretaking and management fees
of $48,462 on commercial terms. As at 30 June 2013 amount outstanding to Griffith Scenic Village Pty Ltd was $Nil (2012:
$Nil)
Gladstone Scenic Village Pty Ltd
Gladstone Scenic Village Pty Ltd, an entity associated with Lachlan McIntosh, paid the Group management fees of $20,513
on commercial terms. As at 30 June 2013 amount outstanding to Gladstone Scenic Village Pty Ltd was $Nil (2012: $Nil)
Elizabeth Vale Scenic Village Pty Ltd
Elizabeth Vale Scenic Village Pty Ltd, an entity associated with Lachlan McIntosh, paid the Group management fees of
$45,259 on commercial terms. As at 30 June 2013 amount outstanding to Elizabeth Vale Scenic Village Pty Ltd was $Nil
(2012: $Nil)
Note 23: Ultimate parent entity
The parent entity within the group is Eureka Group Holdings Limited, which is the ultimate parent entity within Australia.
Note 24: Contingent liability
There are no contingent liabilities or contingent assets at 30 June 2013 that require disclosure in the financial report.
Note 25: 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 areas 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 2013
48
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
Note 26: Remuneration of auditors
During the financial year the following fees were paid or payable for services
provided by the auditor of the company and its related practices:
Audit and other assurance services – BDO Audit Pty Ltd
(i)
Consolidated
30 June 2013
$
30 June 2012
$
Audit and review of financial statements
81,000
-
(ii) Audit and other assurance services – BDO East Coast Partnership
Audit and review of financial statements
(iii) Other Services – BDO (QLD) Pty Ltd
Aged Care Approvals Round (ACAR) application
Total
-
71,000
7,500
88,500
-
71,000
Note 27: Subsequent events
EGH has executed a contract for sale of its manager’s unit and rights at Stafford for $515,000. This contract is expected to
settle in October 2013.
Other than the above mentioned item, there are no further material subsequent events.
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 2013
30 June 2012
$
$
(720,215)
(442,794)
-
-
(720,215)
(442,794)
678,535
7,168,718
1,978,864
4,927,864
1,833,476
5,633,680
782,774
5,399,447
44,176,337
(41,935,483)
43,930,780
(43,696,547)
2,240,854
234,233
The parent entity had no guarantees in place as at 30 June 2013 and 30 June 2012.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2013 and 30 June 2012.
Capital commitments
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2013 and 30 June 2012.
EGH ANNUAL REPORT 2013
49
Eureka Group Holdings Limited and controlled entities
Directors’ Declaration
FOR THE YEAR ENDED 30 JUNE 2013
DECLARATION OF BY DIRECTORS
The directors of the company declare that:
1. The financial statements, comprising the consolidated statement of profit or loss and other 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 2013 and of its
performance for the year ended on that date.
2. The company has included in the notes to the financial statements an explicit and unreserved statement of
compliance with International Financial Reporting Standards.
3.
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.
4. The remuneration disclosures included in paragraph 18 of the directors’ report (as part of audited Remuneration
Report), for the year ended 30 June 2013, comply with section 300A of the Corporations Act 2001.
5. 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 30th day of September, 2013
EGH ANNUAL REPORT 2013
50
Eureka Group Holdings Limited and controlled entities
Independent Auditor's Report
FOR THE YEAR ENDED 30 JUNE 2013
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane Qld 4000GPO Box 457 Brisbane
QLD 4001
Australia
INDEPENDENT AUDITOR’S REPORT
To the 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 consolidated statement of financial position as at 30 June 2013, the consolidated statement of profit
or loss and other 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 and other explanatory information, and the directors’ declaration of the consolidated
entity comprising 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 company’s
preparation of the financial report that gives a true and fair view in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the company’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 Audit Pty Ltd ABN 33 134 022 870 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 Audit Pty Ltd 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 member firms.
EGH ANNUAL REPORT 2013
51
Eureka Group Holdings Limited and controlled entities
Independent Auditor's Report
FOR THE YEAR ENDED 30 JUNE 2013
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act
2001. We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the directors of Eureka Group Holdings Limited, would be in the same terms if given to the
directors as at the time of this auditor’s report.
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 2013 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 18 of the directors’ report for the year
ended 30 June 2013. 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
2013, complies with section 300A of the Corporations Act 2001.
BDO Audit Pty Ltd
K L Colyer
Director
Brisbane, 30 September 2013
BDO Audit Pty Ltd ABN 33 134 022 870 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 Audit Pty Ltd 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 member firms.
EGH ANNUAL REPORT 2013
52
Eureka Group Holdings Limited and controlled entities
Corporate Directory
FOR THE YEAR ENDED 30 JUNE 2013
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
Troy Nunan
Solicitors
HWL Ebsworth
Level 2 Brisbane
500 Queen St,
Brisbane Qld 4000
Tel:
Fax:
07 3002-6790
1300 368 717
Auditors
BDO Audit Pty Ltd
Level 10, 12 Creek Street
Brisbane Qld 4000
Tel:
Fax:
07 3237-5999
07 3221-9227
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 2013
53