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A N N U A L R E P O R T 2 0 1 2
C o n t e n t s
Chairman’s Report
Managing Director’s Report
Euroz Securities Limited Directors’ Profiles
Euroz Securities Limited Operating Divisions
Westoz Funds Management
Euroz Group Community Activities
Financial Report 2012
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
2
4
6
10
11
12
13
14
25
26
Consolidated Income Statement
33
Consolidated Statement of Comprehensive Income
34
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
Shareholder Information
Euroz Securities Limited Contact Details
35
36
37
39
67
68
70
71
C o r p o r a t e D i r e c t o r y
Euroz Limited
ABN 53 000 364 465
Directors
Peter Diamond
Executive Chairman
Andrew McKenzie
Managing Director
Jay Hughes
Executive Director
Doug Young
Executive Director
Greg Chessell
Executive Director
Company Secretary
Anthony Hewett
Principal registered
office and place of business
Euroz Limited
ABN 53 000 364 465
Level 18 Alluvion
58 Mounts Bay Rd
Perth Western Australia 6000
Telephone: +61 8 9488 1400
Facsimile: +61 8 9488 1477
Email:
Website:
info@euroz.com.au
www.euroz.com.au
Share and Debenture Registers
Computershare Investor Services Pty Ltd
Level 2 Reserve Bank Building
45 St Georges Terrace
PERTH WA 6000
Telephone: 1300 787 575
Auditor
PKF Mack & Co
Chartered Accountants
Level 3
35 Havelock Street
WEST PERTH WA 6005
Telephone: +61 8 9322 2798
Bankers
Westpac Banking Corporation
109 St Georges Terrace
PERTH WA 6000
Securities Exchange Listings
Euroz Limited shares are listed
on the Australian Securites Exchange
(ASX: EZL and EZLO).
Website Address
www.euroz.com.au
L o c a l K n o w l e d g e
G l o b a l D i s t r i b u t i o n
We are a focused, specialist fi na nc ia l
se r vice s company w ith a consi ste nt t ra c k
record of strong shareholder ret ur ns.
Euroz Limited 1
C h a i r m a n ’s R e p o r t
The Directors of Euroz Limited are pleased
to announce a pre-tax profit of $16,882,373
(2011: $34,409,119) and a net profit after
tax of $11,760,189 (2011: $26,566,040).
This profit equates to earnings per share
for the financial year to 30 June 2012 on a
normalised basis of 7.3 cents.
The Directors have declared a final dividend
of 6.5 cents per share (fully franked) in
addition to the interim dividend of 1.5 cents
per share fully franked.
Last year’s result was achieved in particularly
challenging market conditions. Turbulence
in financial markets around the world
has affected the trading and business
environment that we operate in, and we
expect these conditions to continue in the
near future.
Due to challenging market conditions
the performance from Westoz Funds
Management in terms of returns for investors
was down from the previous year. Funds
under management as at 30 June 2012 were
$257m. The gross investment return for the
year was minus 5.1% for Westoz Investment
Company Limited and 1.7% for Ozgrowth
Limited. Since inception, both investment
companies have returned above average
returns.
The Directors believe that our funds
management strategy will continue to reap
benefits for shareholders and investors alike
in the long term and through all market
conditions. Euroz Limited will continue
to invest in Westoz Funds Management
products and new initiatives. At the date
of this report Euroz Limited has invested
approximately $57.5m in Westoz Investment
Company Limited and Ozgrowth Limited.
Upon payment of the final dividend of the
year ended 30 June 2012, a total of $142m of
fully franked dividends have been paid to our
shareholders over the last twelve years.
The Directors believe our long term future
remains in focusing on West Australian
based initiatives and that from time to
time conditions in our market can be very
challenging. In acknowledging that we are
still in a difficult market, we remain positive
that our consistent strategy and strong
balance sheet will provide the Group with a
solid platform for growth in the medium to
long term.
The contribution of our employees this
year has again been a significant factor in
our continued profitability. Our employees’
motivation is also supported by their strong
share ownership in the company which is
currently around 45% of Euroz Limited.
The Directors would like to thank our three
core stakeholders: our shareholders, staff and
clients for their support and efforts in what
has been a challenging year. Euroz Limited is
currently trading profitably, has no debt and
with a strong balance sheet, is optimistic that
even in these challenging markets we look
forward to the opportunities that our strong
base and motivated employees can deliver us
in the future.
Peter Diamond
Executive Chairman
2 Annual Report 2012
Euroz Limited Profit Before Tax & Net Profit After Tax
Jun-01
Jun-02
Jun-03
Jun-04
Jun-05
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
1H Profit Before Tax
2H Profit Before Tax
Net Profit After Tax
Euroz Limited Dividend History
Jun-01
Jun-02
Jun-03
Jun-04
Jun-05
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
1H Dividend Per Share
2H Dividend Per Share
Euroz Limited NTA Per Share
Jun-01
Jun-02
Jun-03
Jun-04
Jun-05
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
Cents per share
Westoz Funds Management Pty Ltd Funds Under Management
n
o
i
l
l
i
m
$
e
r
a
h
s
r
e
p
s
t
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e
C
e
r
a
h
s
r
e
p
s
t
n
e
C
n
o
i
l
l
i
m
$
60
50
40
30
20
10
0
30
25
20
15
10
5
0
100
80
60
40
20
0
400
350
300
250
200
150
100
50
0
Jun-01
Jun-02
Jun-03
Jun-04
Jun-05
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
NTA after unrealised
Euroz Limited 3
M a n a g i n g D i r e c t o r ’s
R e p o r t
to come
Euroz Limited remains true to it’s original
strategy of being a Western Australian
focused company that provides specialised
stockbroking, corporate finance and funds
management services.
We very much appreciate our staff ’s loyalty
and in turn they remain our greatest asset.
We remain firmly committed to making Euroz
an enjoyable, secure and rewarding place to
work.
The past year continues the five year trend
of extremely volatile trading conditions
since the GFC. Like many businesses we have
experienced solid trading months which are
often then undermined by any combination
of uncertainties. These may take the form
of European concerns, weaker Chinese
growth and/or alternating commodity price
movements.
Stable market conditions give traditional
investors the confidence to invest and this
continuing volatility is clearly affecting
this decision making. This lack of investor
confidence is demonstrated through lower
overall daily ASX turnover for all participants
in the past year.
I commented in last year’s Annual Report that
we were seeing unprecedented competition
from both small and larger players. We can
now report that our competition has been
severely impacted by these difficult trading
conditions and I believe that over time our
relative market position and profitability will
be seen to have improved.
Given this backdrop and the increasingly
competitive landscape it has created, we
are extremely pleased with our overall
results for the financial year. Our entire team
has worked hard to produce profits and
dividends that, whilst down on previous
periods, are significantly better than almost
all of our competitors, either large or small.
Our Group net profit after tax of $11,760,189
can therefore be regarded as one of our best
ever financial results.
Major financial highlights for the past
financial year include:
•
•
•
•
Normalized net profit after tax of $10,447,425
Payment of 8 cents in fully franked dividends
NTA steady at 84 cents per share
Cash and investments of $118m at
30 June 2012
As in previous downturns we have resisted
the industry practice of shedding staff but we
have made some modest cost adjustments to
our businesses.
Euroz Limited
Euroz Limited(ASX code: EZL) is the listed
holding company for all our businesses
and is the major investor in our two Listed
Investment Companies (LIC’s): Westoz
Investment Company Limited (ASX code:
WIC) and Ozgrowth Limited (ASX code: OZG).
As at 30 June 2012 we have invested $57.5m
in these two companies which have a look
through NTA of $67.5m.
During the past year we have continued
to increase our ownership in these two
companies through a combination of on-
market buying and their own respective
ongoing buy backs.
As we consolidate their respective earnings
into our consolidated Group results, these
investments will have an increasing effect on
our reported earnings.
Euroz Securities
Euroz Securities is our stockbroking business
that provides highly specialised research,
dealing and corporate finance services to our
established retail, institutional and corporate
client base.
The stock picking and deal flow from these
activities provide leverage to our entire
Group. We continue to question and refine
our basic strategy to look to improve our
share of the small-mid cap market.
It is worth commenting on the increasing
emergence of High Frequency Trading (HFT )
and unregulated “dark pool” trading. These
are significant issues that will continue to
affect the integrity and confidence of our
markets and they require urgent attention
from our regulators.
The past year has seen lower ASX brokerage
revenues but our corporate finance revenues
have increased on the previous year. We are
particularly pleased with a major increase
in our merger and acquisition and advisory
revenues.
4 Annual Report 2012
euroz group
organisational
Westoz Funds Management
chart to come
Westoz Funds Management is responsible
for managing the funds of Westoz
Investment Company Limited and
Ozgrowth Limited.
As at 30 June 2012 these funds under
management totalled $257 million.
Whilst both of these funds are absolute
return funds and our focus remains firmly
on absolute profitability, we are pleased
that both funds outperformed the ASX All
Ordinaries Accumulation Index during this
difficult investing year.
We will continue to focus on building
reliable dividend streams for shareholders
to better align their share prices with their
LIC peers.
Westoz Investment Company Limited
reported investment returns for the past
year of minus 5.1% and paid fully franked
dividends of 4 cents for the period.
In Summary
We are extremely pleased with the
financial results of the past year and we
are constantly improving our major market
position in Western Australian capital
markets.
We continue to invest capital and resources
in all of our businesses and believe that
when markets inevitably improve we
will reap significant rewards for all our
shareholders.
Our strong balance sheet continues to
differentiate us from our competitors
and gives our Director’s and staff the
confidence to pursue our well defined
strategies.
I would like to thank all of our loyal clients,
staff and shareholders for their respective
contributions.
Ozgrowth Limited reported investment
returns of 1.7% and a fully franked dividend
of 1 cent per share for the period.
Andrew McKenzie
Managing Director
We are pleased to note that both funds
have paid $69 million in fully franked
dividends since inception.
Euroz Group Organisational chart
35.25% Equity Stake
22.77% Equity Stake
100%
100%
Euroz Limited 5
E u r o z S e c u r i t i e s L i m i t e d
D i r e c t o r s ’ P r o f i l e s
Peter Diamond
Executive Chairman
Peter has worked in the stockbroking industry since 1986. He is responsible for dealing with institutional
and high net worth clients both domestically and overseas. Peter is also chairman of Westoz Investment
Company Limited and Ozgrowth Limited. He holds a Bachelor of Business and is a Member of Certified
Practicing Accountants Australia (CPA).
Jay Hughes
Executive Director
Jay has worked in stockbroking since 1986, starting his career on the trading floor. He is an Institutional
Dealer specialising in promoting Australian stocks to international clients. Jay holds a Graduate Diploma in
Applied Finance and Investment from Financial Services Institute of Australasia (FINSIA). He was recognised
as an affiliate of ASX in December 2000 and was admitted in May 2004 as a Practitioner Member (Master
Stockbroking) of the Stockbrokers Association of Australia (SAA).
Andrew Mckenzie
Managing Director
Andrew holds a Bachelor of Economics (B. Econ), is an Associate of FINSIA and a Fellow of the Australian
Institute of Company Directors (FAICD). Andrew has worked in the stockbroking industry since 1991.
Douglas Young
Executive Director
Doug is Head of Corporate Finance. He has over 25 years of corporate finance experience, covering
mergers and acquisitions, debt and equity raisings in domestic and international financial markets,
corporate restructuring and other corporate finance transactions. He holds a Bachelor of Commerce
(UWA), is a graduate in Applied Finance from FINSIA, a Fellow of FINSIA and a Fellow of the Australian
Society of Certified Practising Accountants (CPA).
Greg Chessell
Executive Director
Greg is Head of Research and is our senior resources analyst. He spent 10 years working as a geologist in
WA prior to entering the stockbroking industry in 1995. Greg holds a B.App.Sc. in Geology and a Grad. Dip.
Business qualification.
6 Annual Report 2012
Andrew Clayton
Executive Director
Andrew is a research analyst specialising in resource companies. He has worked in the stockbroking
industry since 1994. Andrew holds a Bachelor of Science (Hons) in Geology, as well as a Diploma in Finance
from the Financial Services Institute of Australia (FINSIA).
Anthony Brittain
Executive Director
Anthony is the Chief Operating and Financial Officer. Prior to joining Euroz he spent 7 years at a WA
stockbroker holding roles including Executive General Manager and Head of Operations. Prior to that
Anthony worked in London and Singapore for 7 years with a UK fund manager. Anthony holds a Bachelor
of Commerce (UWA), is a member of the Institute of Chartered Accountants (CA), a Certified Information
Systems Auditor (CISA), holds a Grad. Diploma in Applied Finance and Investment from FINSIA, is a
Graduate of the Australian Institute of Company Directors and is a member (Master Stockbroking) of the
Stockbrokers Association of Australia (SAA).
Austen Fresson
Executive Director
Austen has over ten years of mergers, acquisitions and divestitures experience in both the UK and
Australia, focused on the upstream oil and gas sector. Austen holds a Bachelor of Law and a Bachelor of
Commerce (UWA) . He is a member of the Institute of Chartered Accountants in Australia (CA) and FINSIA
(Grad. Diploma in Applied Finance & Investment).
Ben Laird
Executive Director
Ben holds a Bachelor of Science degree and a post-graduate Diploma in Finance with FINSIA. He is also a
Level 2 candidate for the Chartered Financial Analyst (CFA) program and has been with Euroz since 2001.
Euroz Limited 7
E u r o z S e c u r i t i e s L i m i t e d
D i r e c t o r s ’ P r o f i l e s
Brian Beresford
Executive Director
Prior to joining Euroz, Brian was a corporate finance partner at PwC, which he joined in 2007 when PwC
acquired GEM Consulting (GEM). Brian was a director and shareholder of GEM, and had previously worked
for Arthur Andersen in London. He has managed capital raisings, and provided advisory services to clients
across the resources, mining services, engineering, technology and manufacturing sectors. Brian holds
a Masters in Finance from London Business School, and a Bachelor of Commerce and Bachelor of Laws
(UWA).
Gavin Allen
Executive Director
Prior to joining Euroz Securities, Gavin was a senior manager in the Corporate Finance division of a major
accounting firm, specialising in the financial analysis of mergers and acquisitions. Gavin has a Bachelor of
Commerce, is a member of the Institute of Chartered Accountants in Australia (CA) and holds a Chartered
Financial Analyst (CFA) designation.
James Mackie
Executive Director
James has been working in the stockbroking industry since 1998. He holds a Bachelor of Commerce in
Finance and a Graduate Diploma also in Finance. His role is servicing high net worth investors on the retail
desk.
Jon Bishop
Executive Director
Jon is a resource analyst focused upon both the mining and oil & gas sectors. He has more than 10 years
technical and commercial experience within the petroleum and minerals industries. Jon holds a Bachelor
of Science (Hons) in Geology, as well as a Graduate Diploma in Applied Finance and Investment from
FINSIA.
Lucas Robinson
Executive Director
Lucas has been advising in the stockbroking industry since 1998. He holds a Bachelor of Commerce (UWA)
with a double major in Finance and Marketing with a minor in Business Law.
NB. Lucas Robinson was appointed as Executive Directors of Euroz Securities Limited in July 2012.
8 Annual Report 2012
Nick McGlew
Executive Director
Nick has over 12 years experience in mergers, acquisitions, corporate and commercial law and corporate
finance with major firms in Australia and the United States. He holds a Bachelor in Economics (UWA) and
Master of Laws (NYU, Corporate).
Richard Caldow
Executive Director
Richard holds a Bachelor of Commerce with a double major in Accounting & Finance. Richard has worked
as an advisor in the stockbroking industry since 1992 and previously worked in chartered accounting.
Russell Kane
Executive Director
Russell has worked in the stockbroking industry since 1994. He holds a Bachelor of Business and is
responsible for servicing both domestic institutions and high net worth clients, with a particular emphasis
on WA based resources and industrials stocks.
Rob Black
Executive Director
Rob has been working in the stockbroking industry since 1995 and has spent time based in Sydney,
Melbourne and London. Rob is Head of Institutional Dealing and is responsible for servicing domestic and
international institutions. Rob holds a Bachelor of Business with majors in Finance and Accounting, and is a
Graduate of the Australian Institute of Company Directors.
Simon Yeo
Executive Director
Simon is Head of Retail Dealing and specialises in servicing high net worth clients and domestic
institutions. He has been in the stockbroking industry since 1993. Simon has a Bachelor of Commerce
(UWA) and was previously a chartered accountant and member of the Institute of Chartered Accountants
(CA).
Euroz Limited 9
E u r o z S e c u r i t i e s L i m i t e d
O p e r a t i n g D i v i s i o n s
Retail Dealing
Corporate Finance
•
•
•
•
Our corporate business is focused on developing strong,
long term relationships with our clients
Clients are provided with specialised Corporate Advisory
services in:
–
–
–
–
Capital Raisings
Mergers and Acquisitions
Strategic Planning and Reviews
Privatisation and Reconstructions
Established track record in raising equity capital via:
–
–
–
Initial Public Offerings (IPO)
Placements
Rights Issues
Euroz has raised $810.5m in new equity this financial year
•
•
•
•
•
Team of highly experienced and qualified private client
advisors
Focus on dealing with high net worth individuals
Extensive research support - high quality research on
WA based resource and industrial companies enable our
advisors to provide quality investment and trading advice
Specialised broking allows
–
–
Close interaction between research analysts and
private client advisors
Timely communication of ideas with clients
Sophisticated investors are able to participate in many of our
corporate capital raisings
• We pride ourselves on offering a tailored service to our
clients based on:
–
–
–
Quality research
Personalised service
Wealth creation
•
Client services
–
–
Exclusive web based research
Web based access to portfolios and ledgers
Equities Research
Institutional Dealing
•
•
•
•
•
•
Team of seven experienced analysts with access to the latest
online news and financial information
Based on fundamental analysis, strict financial modelling
and regular company contact
Goal: Identify and maximise equity investment opportunities
for our clients
Approach: Intimate knowledge of the companies we cover
Coverage: Broad cross section of mostly WA based industrial
& resource companies
Research Products
–
–
–
–
Daily Briefing: Overnight market updates
Weekly Informer: Compilation of all company reports
throughout the preceding week
Quarterly and/or Semi-annual Review: Regular
coverage on midcap companies in book format
Company Reports: Detailed analysis on companies as
opportunities emerge
•
•
•
Largest institutional dealing desk based in Western Australia
Team of eleven institutional dealers with an extensive client
base of Australian and International investors
Distribution network strength - long standing relationships
with major institutional investors in the small to mid cap
market
• Western Australia’s geographic isolation makes it difficult
for institutional investors to maintain close contact with
companies based here - investors can rely on our “on the
ground” information
•
Institutional dealing team “highly focused” on providing the
following services:
–
–
–
–
–
Quality advice and idea generation
Efficient execution
Regular company contact
Site visits
Roadshows
10 Annual Report 2012
W e s t o z F u n d s M a n a g e m e n t
Westoz Funds Management is responsible for $257m of funds under management at 30 June 2012. It manages funds under mandates
from two Listed Investment Companies; Westoz Investment Company Limited and Ozgrowth Limited. Both companies have enjoyed
competitive portfolio returns since inception.
Westoz Investment Company Limited commenced trading on the ASX in September 2009 after 4 years as an unlisted company. Westoz
Investment Company Limited reported an investment return in line with the market for the past year and declared 4¢ in fully franked
dividends.
Ozgrowth Limited has been listed on the ASX since January 2008 and reported a small positive investment return and a fully franked
dividend of 1.0¢ for the past year.
Westoz Investment Company Limited and Ozgrowth Limited have now paid $69m in dividends to shareholders since inception.
Philip Rees
Executive Director (Westoz Funds Management)
Dermot Woods
Executive Director (Westoz Funds Management)
Mr Philip Rees is an Executive Director of the manager and
is responsible for the operation and development of the
manager’s business.
Mr Rees has worked in a range of roles focused on Australian
investment markets for the last 26 years. He has previously
managed
investment portfolios and
developed several early stage investment opportunities until he
joined Westoz in April 2005.
institutional
large
Mr Dermot Woods is an Executive Director of the manager and
oversees the construction of its investment portfolios.
Mr Woods joined Westoz funds management in 2007. He has
previously worked as an industrial analyst for Euroz Securities
and prior to this role, as a fund manager specialising in European
equities.
Euroz Limited 11
E u r o z G r o u p C o m m u n i t y
A c t i v i t i e s
Euroz Charitable Foundation
Euroz Green Office Initiative
In recognition of changing business and community
attitudes toward increasing environmental responsibility
in both the home and office we have formalised some
simple environmental policies for the Euroz Group of
companies. The Euroz Group of companies seeks to
promote an environmentally aware workplace through a
series of key objectives.
Our move to a new, premium 4.5 star NABERS Energy
rated building in early September 2010 is consistent
with our green office initiatives and has facilitated the
achievement of some of our targets whereby we aim
to increase recycling and reduce waste, reduce the use
of power, reduce energy consumption and purchase
environmentally friendly products.
This initiative has been strongly supported by members
of the Euroz Group of companies since its inception five
years ago.
The Euroz Group has been fortunate to have benefited
from strong investment markets and a vibrant local
economy over many years. Euroz are proudly West
Australian focused and we believe we have an obligation
to give back to Western Australian charities in need.
In 2007, the Euroz Charitable Foundation was formed in
a Private Ancillary Fund (PAF) structure through which
Euroz could make donations, invest these funds and make
distributions to worthy charities and contribute to the
broader community.
During the past 5 years all businesses within the Euroz
Group and many of our staff members have made
consistent donations to the Foundation. The funds of the
Foundation are now significant and we will continue to
contribute and make a difference to Western Australian
charities.
Euroz Securities Scholarships
In addition to direct donations, Euroz have collaborated
with The University of Western Australia in a program to
provide financial assistance to outstanding students who
otherwise would not have the opportunity to further their
studies.
Euroz Securities is offering equity and merit based
scholarships to assist students in financial hardship and
achieve academic success.
The scholarship program was inaugurated in 2012 and
currently supports three students through to graduation.
Each year we will support three more students – by 2015,
nine students will benefit annually from a Euroz Securities
Scholarship.
Beneficiaries
The Euroz Charitable Foundation has been delighted to
support the following charities, amongst others, during
the past financial year:
f o r
k i ds at PMH and Rotary pro j e c t
s
12 Annual Report 2012
F i n a n c i a l R e p o r t 2 0 1 2
Euroz Limited 13
Your Directors present their report on the consolidated group consisting of Euroz Limited and the entities it controlled at the end of, or
during the year ended 30 June 2012.
Directors and executive disclosures
The following persons were Directors of Euroz Limited at any time during or since the end of the financial year and up to the date of this
report:
Executive Chairman
Peter Diamond
Executive Directors
Andrew McKenzie - Managing Director
Jay Hughes – Director
Doug Young – Director
Greg Chessell – Director
Executives with the greatest authority for strategic direction and management
The following persons were the executives (other than Directors of the parent entity) with the greatest authority for the strategic direction
and management of the consolidated entity (“specified executives”) during the financial year and up to the date of this report:
Name
R Caldow
S Yeo
O Foster
R Kane
A Clayton
A Brittan
G Allen
R Black
M Argento
B Beresford
B Laird
J Bishop
J Mackie
N McGlew
A Fresson
L Robinson
P Rees
D Woods
Position
Employer
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited (resigned 3 November 2011)
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited (resigned 30 June 2012)
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited (appointed 1 July 2012)
Westoz Funds Management Pty Ltd
Westoz Funds Management Pty Ltd
Company Secretary
Anthony Hewett held the position at the end of the financial year. Anthony was appointed Company Secretary in 2007 and brings to the
role more than a decade of experience in Operations, Risk and Compliance having worked for a variety of firms in Perth.
14 Annual Report 2012
Directors’ Report
Principal activities
During the year the principal activities of the Euroz Group consisted of:
(a) Stockbroking;
(b) Corporate Finance;
(c) Funds Management, and
(d)
Investing
Review of results
The Directors of Euroz Limited are pleased to announce a consolidated pretax profit of $16,882,373 for the year ended 30 June 2012.
The consolidated net profit after tax was $11,760,189 compared with the 2011 year’s consolidated net profit after tax of $26,566,040. This
profit represents basic earnings per share of 8.20 cents versus 19.38 cents in the 2011 year.
The Directors have declared a final dividend of 6.5 cents per share fully franked which, combined with the interim dividend of 1.5 cent per
share, represents a total dividend of 8 cents per share fully franked.
Review of operations
Stockbroking
Principal Trading
Funds Management
Unallocated revenue
Segment revenues
Segment results
2012
$
47,564,481
45,889,043
2,882,683
2,403,935
2011
$
49,225,611
9,547,185
9,154,027
2,085,537
2012
$
9,652,609
(132,361)
1,441,604
798,337
2011
$
9,916,246
1,574,237
5,661,366
9,414,191
98,740,142
70,012,360
11,760,189
26,566,040
These results have been achieved through strong contributions from all divisions of the business.
Financial position
The net assets of the consolidated group have increased from $118,518,350 at 30 June 2011 to $120,722,032 at 30 June 2012.
This increase has largely resulted from adjustments to the carrying value of investments as at 30 June 2012.
The company’s strong financial performance has enabled it to continue to pay dividends to shareholders during the year while
maintaining a healthy working capital ratio. The consolidated group’s working capital, being current assets less current liabilities, has
increased from $45,289,428 in 2011 to $45,918,414 in 2012.
During the past six years the company has invested in expanding each of its business units to secure its long term success. In particular it
has made strategic investments in the investment products of Westoz Funds Management Pty Ltd. The company’s holdings in associated
entities are valued at $67,480,289 as at 30 June 2012.
The Directors believe the company is in a strong and stable financial position to expand and grow its current operations.
Earnings per share
Basic earnings per share
Diluted earnings per share
2012
Cents
8.20
8.11
2011
Cents
19.38
16.66
Euroz Limited 15
Directors’ Report
2012
$
2011
$
Dividends - Euroz Limited
Dividends paid or provided for during the financial year were as follows:
Interim ordinary dividend of 1.5 cent (2011 – 3 cents) per fully paid ordinary share was paid on 25
January 2012.
2,554,359
4,296,456
Provision for final ordinary dividend for 30 June 2012 of 6.5 cents (2011 – 15 cents) per fully paid
ordinary share paid on 27 July 2012.
9,341,110
21,134,214
11,895,469
25,430,670
Significant changes in the state of affairs
There have been no significant changes in the state of affairs of the consolidated group during the year.
Share options
A total of 2,814,625 options were exercised during the year at an exercise price of $0.75. At the date of this report, there are 3,543,088
unissued ordinary shares of Euroz Limited under option.
After balance date events
The Directors are not aware of any other matter or circumstance subsequent to 30 June 2012 that has significantly affected, or may
significantly affect:
(a)
the consolidated group’s operations in future financial years; or
(b)
the results of those operations in future financial years; or
(c) the consolidated group’s state of affairs in future financial years.
Likely developments and expected results of operations
The Directors are confident that a strong statement of financial position and established business platforms will support the company
in increasingly volatile market conditions. However, it is likely that we will continue to experience volatile trading conditions in the next
financial year.
Further information on likely developments in the operations of the consolidated group and the expected results of operations have not
been included in this report because the Directors believe it would be likely to result in unreasonable prejudice to the consolidated group.
Environmental regulation
The consolidated group is not subject to significant environmental regulation in respect of its operations.
16 Annual Report 2012
Directors’ Report
Information on Directors
Particulars of directors’ interests
in shares and options of
Euroz Limited
Experience
Special responsibilities and qualifications
Ordinary shares
Options
Director
P Diamond
Chairman
Mr Diamond has worked in
the stockbroking industry
since 1986.
Executive Chairman
Chairman of Audit Committee
Chairman of Remuneration Committee
Holds a Bachelor of Business Degree (BBus) and is
a member of CPA Australia.
A McKenzie
Managing Director
Mr McKenzie has worked in
the stockbroking industry
since 1991.
Managing Director
Member of Audit Committee
Member of Remuneration Committee
J Hughes
Director
Mr Hughes has worked in
the stockbroking industry
since 1986.
Holds a Bachelor of Economics Degree, is an
Associate of the Financial Services Institute of
Australia (FINSIA) and is a Fellow of the Australian
Institute of Company Directors.
Member of the Remuneration Committee
Holds a Graduate Diploma in Applied Finance and
Investment from FINSIA. He was recognised as
an affiliate of the ASX in December 2000 and was
admitted in May 2004 as a Practitioner Member
(Master Stockbroking) of the Stockbrokers
Association of Australia.
10,000,000
10,000,000
10,000,000
D Young
Director
Mr Young has worked in
corporate finance
since 1984.
Head of Corporate Finance of our 100% owned
subsidiary Euroz Securities Limited.
4,250,000
He holds a Bachelor of Commerce degree from
the University of Western Australia and a Graduate
Diploma in Applied Finance from FINSIA, is a
Fellow of FINSIA and a Fellow of the Australian
Society of Certified Practising Accountants.
G Chessell
Director
Mr Chessell has worked in
the stockbroking industry
since 1996.
Head of Research of our 100% owned subsidiary
Euroz Securities Limited and is our senior
resources analyst.
3,102,000
Greg holds a B.App.Sc. degree in geology and a
Grad. Dip. Business qualification.
-
-
-
-
-
Meetings of Directors
The numbers of meetings of the company’s board of Directors held during the year ended 30 June 2012, and the numbers of meetings
attended by each director were:
Committee Meetings
Director
Peter Diamond
Andrew McKenzie
Jay Hughes
Greg Chessell
Doug Young
Directors Meetings
Audit
Remuneration
Number eligible
to attend
Number
attended
Number eligible
to attend
Number
Attended
Number eligible
to attend
Number
attended
14
14
14
14
14
13
13
8
13
12
1
1
-
-
-
1
1
-
-
-
12
12
12
-
-
12
12
12
-
-
Euroz Limited 17
Directors’ Report
Remuneration report (audited)
This Remuneration Report outlines the director and executive remuneration arrangements of the Company and the Group in accordance
with the requirements of the Corporations Act 2001 and its regulations. It also provides the remuneration disclosures required by
paragraphs Aus 25.4 to Aus 25.7.2 of AASB 124 Related Party Disclosures, which have been transferred to the Remuneration Report in
accordance with Corporations Regulation 2M.6.04. For the purposes of this report Key Management Personnel of the group are defined
as those persons having authority for the strategic management and direction of the group including any director (whether executive or
otherwise) of the parent company, and includes the five executives in the parent and the group receiving the highest remuneration.
Directors and executives remuneration
Remuneration packages are set at levels that are intended to attract and retain executives capable of managing the consolidated entity’s
operations. The board undertakes regular reviews of its performance and the performance of the board against expectations made at the
start of the year. Performance related bonuses are available to executives based on their performance and that of the company.
Remuneration policy
The remuneration policy has been tailored to align the interests of shareholders, Directors and executives. There have been three
methods applied in achieving this aim, the first being a participation in the profit share pool, the second being commission and the third
being Head of Retail incentive. The company believes this policy to have been effective in increasing shareholder wealth since inception.
The following table shows the gross revenue, profits and dividends for the last five years for the listed entity, as well as the share price at
the end of the respective financial years.
2008
$
2009
$
2010
$
2011
$
2012
$
Revenue (including net profit/(loss) of associates)
121,889,088
43,288,071
76,080,544
77,806,998
97,609,657
Net profit after tax
Share price at year end
41,931,627
10,335,056
26,331,750
26,566,040
11,760,189
4.00
0.93
1.28
1.62
1.15
Dividends paid or recommended
34,560,000
9,625,081
15,890,339
25,430,670
11,895,469
The objective of the company’s remuneration framework is to ensure reward for performance is competitive and appropriate to the
results delivered. The Board / Remuneration Committee ensure that executive rewards satisfy the following key criteria for good reward
governance practices:
–
–
–
–
–
competitiveness and reasonableness
acceptability to shareholders
performance linked
transparency
capital management.
The company has structured an executive remuneration framework that is market competitive and complimentary to the reward strategy
of the organisation.
Directors’ fees
No Directors fees are paid.
Base pay
Directors and executives are offered a competitive base and participation in the profit share pool. Base pay for senior executives is
reviewed semiannually by the Remuneration Committee to ensure that executive’s pay is competitive with the market, and is also
reviewed upon promotion or additional responsibilities.
There is no guarantee of base pay increases fixed in any senior executive or Directors contracts.
Executives are offered a competitive salary that comprises of a base salary inclusive of superannuation and a combination of some of the
following, dependant on the terms of the individual employment contract:
–
–
–
Participation in the profit share pool
Commission
Head of Retail incentive
18 Annual Report 2012
Directors’ Report
Equity based payments
There is no entitlement to equity based remuneration.
Commission
Executives that do not participate in the profit share pool are paid either a bonus or commission on the income they have generated for
the company. This is calculated on a sliding scale set out in the employment contract.
Short-term incentives
Cash incentives (profit share) are calculated on 30% of pre tax profit from Euroz Securities Limited and are payable in December and / or
June. Using these criteria ensures reward is only available when value has been created for shareholders. The distribution of the profit
share is leveraged to performance as described below.
Profit share pool
The Remuneration Committee determines the allocation of the 30% pretax profit on an ongoing basis. In consultation with relevant
department heads the committee uses the following informal criteria to assist in the allocation
–
–
–
–
–
–
Ability to perform individual tasks within the relevant department
Ability to add value and innovate beyond the job standard specifications
Development of new and existing client relationships
Ability to interact with other relevant departments as part of a larger team approach
Relevant industry salary benchmarking
General requirements to attract and retain staff.
The three executives on the Remuneration Committee are also entitled to participate in the profit share pool. In these circumstances two
members assess the performance of the third member.
Head of Retail (HOR) incentive
The calculation of this payment is based on the overall performance of the members of the Retail Desk and the management of the Retail Desk.
Details of remuneration
Details of the nature and amount of each element of the emoluments of each director of Euroz Limited and each of the specified
executives of the consolidated entity are set out in the following tables.
Executive directors of Euroz Limited
Short-term
Profit Share/
bonus
$
440,000
440,000
440,000
440,000
440,000
Other benefits
$
30,427
36,769
24,421
24,901
8,752
Post
employment
Super-
annuation
$
25,000
25,000
25,000
50,000
25,000
Base salary
$
296,316
296,316
296,316
271,316
296,316
Total
$
791,743
798,085
785,737
786,218
770,068
1,456,580
2,200,000
125,270
150,000
3,931,851
275,000
275,000
275,000
244,615
229,231
590,000
590,000
590,000
590,000
590,000
31,225
30,911
28,549
25,891
17,757
25,000
25,000
25,000
50,000
25,000
921,225
920,911
918,549
910,506
861,988
2012
P Diamond
A McKenzie
J Hughes
D Young
G Chessell
Total
2011
P Diamond
A McKenzie
J Hughes
D Young (appointed 8 Feb 2011)
G Chessell (appointed 8 Feb 2011)
Total
1,298,846
2,950,000
134,333
150,000
4,533,179
Current Directors did not receive any Directors fees.
Performance
related
$
56%
55%
56%
56%
57%
64%
64%
64%
65%
68%
Euroz Limited 19
Directors’ Report Specified executives of the consolidated group
2012
Name
R Caldow*
S Yeo*
O Foster*
(resigned 3 November 2011)
A Clayton*
R Kane*
G Allen *
R Black *
A Brittain *
N McGlew *
P Rees**
D Woods **
M Argento*
(resigned 30 June 2012)
B Beresford*
B Laird*
J Bishop*
A Fresson*
J Mackie*
Total
2011
R Caldow*
S Yeo*
K Paganin*
O Foster*
A Clayton*
R Kane*
M Hepburn*
G Allen *
R Black *
A Brittain *
N McGlew *
P Rees**
D Woods **
M Argento*
B Beresford*
Total
Short-term
Base Salary
$
Profit Share/
Bonus
$
Other Benefits
$
Commission
$
Post
employment
Super
annuation
$
Total
$
Performance
related
%
90,935
156,115
113,960
222,970
184,248
197,663
216,310
197,663
192,470
178,280
202,855
330,919
305,541
150,398
226,739
222,464
44,319
-
100,000
75,000
350,000
200,000
185,000
350,000
155,208
200,000
130,000
130,000
220,000
440,000
219,613
390,000
390,000
12,000
14,049
20,798
3,850
13,749
13,748
11,640
14,118
13,474
12,870
13,100
8,464
325,788
9,798
7,384
1,369
12,661
4,663
3,215,849
3,546,821
501,523
105,232
331,062
-
-
-
-
-
-
-
-
-
-
-
-
-
-
401,694
837,988
73,393
73,394
36,878
199,801
146,002
155,803
132,506
155,803
146,083
190,000
185,000
170,447
204,801
98,585
71,200
-
132,019
12,825
22,603
261,704
384,615
-
505,334
325,000
348,872
288,872
149,436
288,872
398,498
210,000
300,000
205,000
205,000
190,000
150,000
15,265
16,002
14,766
6,137
13,632
14,988
13,580
13,561
7,775
9,965
4,692
450
-
-
-
-
-
-
-
-
-
-
-
-
-
13,378
15,775
7,888
25,000
25,000
25,000
15,775
25,000
25,000
49,575
25,000
15,775
15,775
25,000
25,000
15,775
15,775
223,595
623,750
200,698
611,719
422,996
419,303
596,203
391,345
430,340
370,955
366,319
892,482
771,114
402,395
643,108
640,900
478,451
365,491
8,585,613
15,199
15,199
23,216
15,199
24,412
14,611
9,193
14,611
14,173
25,000
25,000
49,553
15,199
6,757
4,293
363,121
627,830
565,428
555,265
535,288
474,052
297,272
472,918
573,742
438,580
523,561
432,775
434,965
300,034
225,943
2,039,696
3,191,569
671,575
646,319
271,615
6,820,774
47%
69%
37%
57%
47%
44%
59%
40%
46%
35%
35%
25%
57%
55%
61%
61%
86%
72%
82%
0%
59%
65%
61%
50%
61%
69%
48%
57%
47%
47%
63%
66%
* Director of Euroz Securities Limited
** Director of Westoz Funds Management Pty Ltd
20 Annual Report 2012
Directors’ Report Service agreements
Remuneration and other terms of employment for the Directors and specified executives are formalised in service agreements. Each
of these agreements provide for the provision of performancerelated cash bonuses and other benefits. Other major provisions of the
agreements relating to remuneration are set out below.
Peter Diamond, Chairman
•
Term of contract ongoing employment contract
•
•
Base Salary, inclusive of superannuation for the year ended 30 June 2012 of $310,000 (2011 - $300,000) plus profit share.
Payment on termination of employment by the employer, other than for gross misconduct three months salary.
Andrew McKenzie, Managing Director
•
Term of contract ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $310,000 (2011- $300,000) plus profit share.
Payment on termination of employment by the employer, other than for gross misconduct three months salary.
Jay Hughes, Director
•
Term of contract ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $310,000 (2011 - $300,000) plus profit share.
Payment on termination of employment by the employer, other than for gross misconduct three months salary.
Greg Chessell, Director
•
Term of contract ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $310,000 (2011 - $300,000) plus profit share.
Payment on termination of employment by the employer, other than for gross misconduct three months salary.
Doug Young, Director
•
Term of contract ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 $310,000 (2011 - $300,000) plus profit share.
Payment on termination of employment by the employer, other than for gross misconduct three months salary.
Richard Caldow, Director Euroz Securities Limited
•
Term of contract ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $80,000 (2011 - $80,000) plus commission.
Payment on termination of employment by the employer, other than for gross misconduct commission earned.
Simon Yeo, Director Euroz Securities Limited
•
Term of contract ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $80,000 (2011 - $80,000) plus HOR bonus and
commission.
Payment on termination of employment by the employer, other than for gross misconduct commission earned.
Oliver Foster, Director Euroz Securities Limited (resigned 3 November 2011)
•
Term of contract ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $215,000 (2011 - $215,000) plus profit share.
Payment on termination of employment by the employer, other than for gross misconduct three months salary.
Andrew Clayton, Director Euroz Securities Limited
•
Term of contract ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $250,000 (2011 - $171,002) plus profit share.
Payment on termination of employment by the employer, other than for gross misconduct three months salary.
Russell Kane, Director Euroz Securities Limited
•
Term of contract ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $215,000 (2011 - $171,002) plus profit share.
Payment on termination of employment by the employer, other than for gross misconduct three months salary.
Euroz Limited 21
Directors’ Report Anthony Brittain, Director Euroz Securities Limited
•
Term of contract ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $215,000 (2011 - $215,000) plus profit share.
Payment on termination of employment by the employer, other than for gross misconduct three months salary.
Gavin Allen, Director Euroz Securities Limited
•
Term of contract ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $215,000 (2011 - $171,002) plus profit share.
Payment on termination of employment by the employer, other than for gross misconduct three months salary.
Robert Black, Director Euroz Securities Limited
•
Term of contract ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $250,000 (2011 - $170,000) plus profit share.
Payment on termination of employment by the employer, other than for gross misconduct three months salary.
Nick McGlew, Director Euroz Securities Limited
•
Term of contract ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $210,000 (2011 - $210,000) plus profit share.
Payment on termination of employment by the employer, other than for gross misconduct three months salary.
Maurice Argento, Director Euroz Securities Limited (resigned 30 June 2012)
•
Term of contract ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $310,000 (2011 - $300,000) per annum plus profit share.
Payment on termination of employment by the employer, other than for gross misconduct three months salary.
Brian Beresford, Director Euroz Securities Limited
•
Term of contract ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $310,000 (2011 - $300,000) plus profit share.
Payment on termination of employment by the employer, other than for gross misconduct three months salary.
Benjamin Laird, Director Euroz Securities Limited
•
Term of contract ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $180,000 (2011 - $160,000) plus profit share.
Payment on termination of employment by the employer, other than for gross misconduct three months salary.
Jonathan Bishop, Director Euroz Securities Limited
•
Term of contract ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $250,000 (2011 - $215,000) plus profit share.
Payment on termination of employment by the employer, other than for gross misconduct three months salary.
Austen Fresson, Director Euroz Securities Limited
•
Term of contract ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $230,000 (2011 - $230,000) plus profit share.
Payment on termination of employment by the employer, other than for gross misconduct three months salary.
Jamie Mackie, Director Euroz Securities Limited
•
Term of contract ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $80,000 (2011 - $40,000) plus profit share.
Payment on termination of employment by the employer, other than for gross misconduct commission earned.
Phil Rees, Director Westoz Funds Management Pty Ltd
•
Term of contract – ongoing employment contract minimum period 1 year
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $220,000 (2011 - $220,000) plus bonus
Payment on termination of employment by the employer other than for gross misconduct – three months salary.
Dermot Woods, Director Westoz Funds Management Pty Ltd
•
Term of contract – ongoing employment contract minimum period 1 year
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2012 of $220,000 (2011 - $220,000) plus bonus
Payment on termination of employment by the employer other than for gross misconduct – three months salary
22 Annual Report 2012
Directors’ Report Sharebased compensation
No options or shares were issued to Directors or specified executives during the year ended 30 June 2012.
Share holdings
The number of shares held at the date of this report by each director of Euroz Limited and each of the key management personnel of the
consolidated group, including their personal-related entities, are set out below.
No of ordinary
shares
No of options over
ordinary shares
Directors of Euroz Limited
Ordinary shares
P Diamond
A McKenzie
J Hughes
G Chessell
D Young
Key management personnel of the consolidated entity
Ordinary shares
R Caldow
S Yeo
O Foster (resigned 3 November 2011)
P Rees
R Kane
A Clayton
A Brittain
G Allen
R Black
N McGlew
D Woods
M Argento (resigned 30 June 2012)
B Beresford
B Laird
J Bishop
J Mackie
A Fresson
Loans to directors and executives
10,000,000
10,000,000
10,000,000
3,102,000
4,250,000
4,950,000
3,520,000
-
1,100,000
2,370,000
2,100,000
303,400
500,000
1,800,000
237,791
373,260
1,000,000
2,000,000
655,000
102,612
847,000
278,511
-
-
-
-
-
-
-
-
-
233,000
100,000
-
41,200
360,000
4,940
-
-
-
60,000
-
-
-
No loans were made to Directors of Euroz Limited and the key management personnel of the consolidated group, including their
personallyrelated entities during the year.
Indemnifying officers
During the financial year, Euroz Limited paid a premium to insure the Directors and secretaries of the company and its Australian based
controlled entities. The liabilities insured include costs and expenses that may be incurred in defending civil or criminal proceedings that
may be brought against the officers in their capacity as officers of entities in the consolidated group.
Euroz Limited 23
Directors’ Report
Proceedings on behalf of 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 purpose of taking responsibility on behalf of the company for all or any part of those proceedings.
The company was not a party to such proceedings during the year.
Non-audit services
The following non-audit services were provided by the group’s auditor, PKF Mack & Co. The Directors are satisfied that the provision of
non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The
nature and scope of each type of non-audit service provided means that auditor independence was not compromised.
PKF Mack & Co. received or are due to receive the following amounts for the provision of non-audit services:
Tax compliance services
Auditor’s Independence Declaration
$
15,600
The lead auditor’s independence declaration for the year ended 30 June 2012 has been received and follows the Directors report.
This report is made in accordance with a resolution of the Directors.
Peter Diamond
Chairman
Andrew McKenzie
Director
Date: 20 August 2012
24 Annual Report 2012
Directors’ Report
Auditor ’s I ndependence D ec la ra ti o n
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF EUROZ LIMITED
In relation to our audit of the financial report of Euroz Limited for the year ended 30 June 2012, to the best
of my knowledge and belief, there have been no contraventions of the auditor independence requirements
of the Corporations Act 2001 or any applicable code of professional conduct.
AUDITOR’S INDEPENDENCE DECLARATION
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF EUROZ LIMITED
TO THE DIRECTORS OF EUROZ LIMITED
PKF MACK & CO
In relation to our audit of the financial report of Euroz Limited for the year ended 30 June 2012, to the best
of my knowledge and belief, there have been no contraventions of the auditor independence requirements
of the Corporations Act 2001 or any applicable code of professional conduct.
In relation to our audit of the financial report of Euroz Limited for the year ended 30 June 2012, to the best
of my knowledge and belief, there have been no contraventions of the auditor independence requirements
of the Corporations Act 2001 or any applicable code of professional conduct.
SIMON FERMANIS
PARTNER
PKF MACK & CO
20 AUGUST 2012
PKF MACK & CO
WEST PERTH,
WESTERN AUSTRALIA
SIMON FERMANIS
PARTNER
SIMON FERMANIS
PARTNER
20 AUGUST 2012
WEST PERTH,
WESTERN AUSTRALIA
20 AUGUST 2012
WEST PERTH,
WESTERN AUSTRALIA
15
15
15
Euroz Limited 25
Introduction – the Euroz Group
Euroz Limited (“Euroz”) is the listed holding company of the Euroz group of companies (“the Euroz Group”). The Euroz Group consists of
Euroz together with its wholly owned subsidiaries Euroz Securities Limited (“Euroz Securities”) and Westoz Funds Management Limited
(“Westoz Funds Management”).
Euroz Securities conducts a substantial stockbroking and corporate finance business which generates the majority of the revenues of the
Euroz Group and which employs the majority of staff within the Euroz Group. Revenue generated by Euroz Securities is paid by way of
dividends to Euroz. Euroz Securities holds an Australian Financial Services Licence (“AFSL”) and is regulated by the Australian Securities
and Investments Commission (“ASIC”) pursuant to the Corporations Act 2001 and the ASIC Market Integrity Rules. Euroz Securities is a
Participant of the ASX Group and is regulated pursuant to the Operating Rules of the ASX Group.
Westoz Funds Management is a specialist manager of equity funds managing the portfolios of Westoz Investment Company Limited and
Ozgrowth Limited which are both listed investment companies. Revenue generated by Westoz Funds Management through management
and performance fees is paid by way of dividends to Euroz. Westoz Funds Management also holds an AFSL and its activities are therefore
regulated by ASIC pursuant to the Corporations Act.
Approach to Corporate Governance
Euroz is committed to maintaining a high standard of corporate governance. In this regard, Euroz has adopted the ASX Corporate
Governance Council’s Corporate Governance Principles and Recommendations with 2010 Amendments (“2010 Principles and
Recommendations”).
In considering its approach to Corporate Governance in the context of the 2010 Principles and Recommendations, Euroz has taken
account of the following:
•
•
•
•
•
Euroz is a holding company and the majority of the activity within the Euroz Group is conducted by its wholly owned subsidiary
Euroz Securities which conducts a substantial stockbroking and corporate advisory business.
Euroz Securities and Westoz Funds Management are subject to a rigorous regulatory regime (administered by both ASX and ASIC,
where applicable) which includes extensive governance, risk management and reporting obligations.
Each member of the Board works day to day in the business of the Euroz Group and each member holds a substantial quantity of
Euroz shares.
Many staff within the Euroz Group are largely remunerated by commission based payments and many staff hold Euroz shares.
In these circumstances, the interests of the Directors and staff of the Euroz Group are closely aligned to the interests of Euroz’s
shareholders.
Euroz has a relatively small number of employees and operates from a single location.
In these circumstances, Euroz has decided to adopt an owner-manager model (“the Direct Governance Model”) to Corporate Governance.
The key features of the Direct Governance Model being that:
•
•
each member of the Board and the senior executives work in an operational capacity in the business of the Euroz Group on a daily
basis;
Corporate Governance is largely achieved as a result of this close operational involvement rather than via the use of mechanisms
and structures which are more suited to different types of businesses including those which have large numbers of employees who
operate from various locations; and
• many corporate governance related issues are dealt with as part of compliance related activities that the Euroz Group undertakes
pursuant to obligations created by the Corporations Act, the ASIC Marker Integrity Rules and the Operating Rules of the ASX Group.
More generally, Euroz believes that the Direct Governance Model (as opposed to other corporate governance mechanisms and structures)
is best suited to dealing with the various types of risk that are an inherent and unavoidable part of conducting a stockbroking and
corporate advisory style business.
In accordance with ASX Listing Rule 4.10.3, Euroz provides the following statement regarding the extent to which it has followed the 2010
Principles and Recommendations.
26 Annual Report 2012
Corporate Governance Statement Principle 1: Lay Solid Foundations For Management And Oversight
Recommendation 1.1: Companies should establish the functions reserved to the Board and those delegated to senior
executives and disclose those functions.
The Board has adopted a Charter which sets out the role and functions of Board. The Charter is available from Euroz’s website.
In accordance with the Direct Governance Model, the members of the Board are also the most senior executives of the Euroz Group
and play an integral part in the day-to-day management of the Group’s activities. Accordingly, Euroz does not delegate functions in the
manner anticipated by this Recommendation.
The roles and responsibilities of the Board are to:
•
•
•
•
•
•
•
•
•
•
Oversee control and accountability of the company.
Set broad targets, objectives and strategies.
Monitor financial performance.
Assess and review risk exposure and management.
Oversee compliance, corporate governance and legal obligations.
Approve all major purchases, disposals, acquisitions and issue of new shares.
Approve the annual and half-year financial statements.
Appoint and remove the Company’s Auditor.
Appoint and assess the performance of the Managing Director and members of the senior management team.
Report to shareholders.
The Directors due to their long association with Euroz, their extensive relevant business experience and the fact that their interests are
closely aligned to shareholders’ interests clearly understand what is required of them. Accordingly, Euroz has formed the view that letters
of appointment are not required with respect to the Directors.
Similarly in the context of the matters referred to above, with respect to senior executives (including the Company Secretary and the Chief
Operating Officer/Chief Financial Officer of Euroz Securities), Euroz has formed the view that written position statements are not required
at this time.
Recommendation 1.2: Companies should disclose the process for evaluating performance of senior executives.
The performance of senior executives is reviewed by the Board on an annual basis and also pursuant to the Board’s involvement in the day
to day operations of the Euroz Group. The performance of senior executives is assessed against 3 broad criteria:
•
•
•
the financial performance of the respective group or department managed by the senior executive (as applicable);
the extent to which the senior executive has contributed to the Euroz Group achieving its organisational aims with a particular focus
on the maintenance of the commercial reputation of the Euroz Group; and
the extent to which the senior executive has personally and each member of staff under his or her control has acted in a manner
which is in accordance with Euroz’s compliance related policies and procedures.
Each member of the Board assesses other Board members performance against these criteria.
The Remuneration Policy set out on pages 18-19 of the Directors Report outlines the methodology used to assess the performance and
remuneration of the members of the Board.
Recommendation 1.3: Companies should provide the information indicated in the Guide to reporting on Principle 1.
This information is set out above.
Euroz Limited 27
Corporate Governance Statement Principle 2: Structure The Board To Add Value
Recommendation 2.1: A majority of the Board should be independent Directors.
In accordance with the Direct Governance Model, Euroz has elected to not comply with this recommendation with the result being that
no Director is an Independent Director. Euroz has made this decision as it has formed the view that in the circumstances set out above,
the interests of the Board are so closely aligned with the interests of shareholders that independent Directors are not required to achieve
an effective system of corporate governance.
More generally, given the specialised nature of Euroz’s business, the fact that a person, generally speaking, may not be a director of more
than one ASX Group Participant and the relatively low level of fees paid to non-executive Directors, Euroz has formed the view that it will
be difficult to attract suitable candidates to be non-executive Directors. However, the Board continues to keep this matter under review.
Each Director has the right to seek independent professional advice at the Company’s expense for which the prior approval of the
Chairman is required and which will be not unreasonably withheld.
The skills experience and expertise of each Director is set out at page 6 of the Annual Report.
It is not anticipated that the composition of the Board will change in the immediate future. Should it become apparent that it is likely that
new members will need to be appointed to the Board, Euroz will develop a policy about the mix of skills including diversity related issues
that should be taken account of in reviewing potential candidates to be a member of the Board.
The period of office held by each Director is set out at page 6 of the Annual Report.
Recommendation 2.2: The chair should be an independent director.
In accordance with the Direct Governance Model, Euroz has elected to not comply with this recommendation. Euroz has made this
decision as it has formed the view that in the circumstances set out above, the interests of the Board and its Chair are so closely aligned
with the interests of shareholders that an independent director as Chair is not required to achieve an effective system of corporate
governance.
Recommendation 2.3: The roles of chair and chief executive officer should not be exercised by the same individual.
Euroz, in its role as a holding company, does not have a Chief Executive Officer but an analogous role is undertaken in the form of the
Managing Director with respect to both Euroz Limited and Euroz Securities Limited. The role of the Chair and the Managing Director are
not exercised by the same individual.
Recommendation 2.4: The Board should establish a nomination committee.
Given that the composition of the Board is unlikely to vary in the near future and the significant level of employees (of the Euroz Group)
ownership, Euroz has formed the view that a nomination committee is not necessary for Euroz to achieve an effective system of corporate
governance.
Should it become necessary, Euroz will consider putting a Board selection process in place that is in accordance with this
Recommendation but which reflects the particular characteristics of Euroz’s business.
Recommendation 2.5: Companies should disclose the process for evaluating the performance of the Board, its
committees and individual Directors.
A review of the performance of the Board and its Directors is undertaken by each Director with respect to each other Director and the
performance of the Board itself on an annual basis and also as part of the day to day operations of the Euroz Group in accordance with the
matters set out with respect to Recommendation 1.2.
The Remuneration Policy set out on pages 18-19 of the Directors Report outlines the methodology used to assess the performance and
remuneration of the members of the Board.
With respect to the assessment of the performance of the Board and its directors, an outcome and an advantage of the Direct Governance
Model is that the Board has real time access to information regarding all aspects of Euroz’s operations and has direct access, at all times, to
the Company Secretary.
The Directors have extensive experience with respect to all aspects of the operations of the Euroz Group. In this regard, the section
“Information on Directors” set out on page 17 of the Directors Report outlines the experience and qualifications of the Directors. The
Directors, pursuant to obligations imposed by the Corporations Act the ASIC Market Integrity Rules and the Operating Rules of the ASX
Group and generally, undertake a substantial level of continuing education and therefore continue to be fully aware of developments with
respect to the industry and commercial environment in which Euroz operates.
28 Annual Report 2012
Corporate Governance Statement Recommendation 2.6: Companies should provide the information indicated in the Guide to reporting on Principle 2.
This information is set out above.
Principle 3: Promote Ethical And Responsible Decision-Making
Recommendation 3.1: Companies should establish a code of conduct and disclose the code or a summary of the code
as to:
•
•
•
the practices necessary to maintain confidence in the company’s integrity;
the practices necessary to take into account their legal obligations and the reasonable expectations of their
stakeholders; and
the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.
In its role as holding company and given the particular circumstances of the Euroz Group, Euroz does not have a code of conduct of the
type anticipated by this recommendation. However, Euroz Securities and Westoz Funds Management, in the context of the onerous
obligations imposed upon them by the Corporations Act, the ASIC Market Integrity Rules and the ASX Operating Rules (as applicable)
have detailed written compliance policies and procedures in place that include a code of conduct. These compliance policies and
procedures including the code of conduct apply to every person who works in the Euroz Group.
Due to their length it is not practical to make these compliance related policies and procedures available on Euroz’s website. More
generally, these policies and procedures contain intellectual property of the Euroz Group, the confidentiality of which the Euroz Group
wishes to maintain.
The Euroz Group is committed to all Directors and employees maintaining high standards of integrity and to ensuring that their activities
are in compliance with the letter and spirit of both the law and Euroz Group policies. In this regard, each Staff member is issued with
the Company’s Policies and Procedures Manual at the commencement of their employment with the Euroz Group Euroz conducts a
substantial level of training regarding the operation of these policies and procedures.
The Group provides a number of full time resources for the purpose of monitoring compliance with its policies and procedures. These
resources, by way of the Head of Risk Management and the Chief Operating Officer, report directly to the Board for matters of compliance,
governance and internal controls.
Recommendation 3.2: Companies should establish a policy concerning diversity and disclose the policy or a summary
of that policy. The policy should include requirements for the board to establish measurable objectives for achieving
gender diversity for the board to assess annually both the objectives and progress is achieving them.
Euroz has recently put in place a Diversity Policy that applies to each company within the Euroz Group. That policy is available from Euroz’s
website.
In accordance with the matters set out in the Diversity Policy, Euroz, given the small size and relatively stable nature of its workforce
has formed the view that it would not be appropriate or practical to, at this time, establish measurable objectives for achieving gender
diversity. The Board will review this position, at least, annually.
Recommendation 3.3: Companies should disclose in each annual report the measurable objectives for achieving
gender diversity set by the Board in accordance with the diversity policy and progress towards achieving them.
In accordance with the reasons set out above with respect to recommendation 3.2 Euroz does not, at this time, intend to comply with this
recommendation. However, this position will be reviewed, at least annually.
Recommendation 3.4: Companies should disclose in each annual report the proportion of women employees in the
whole organisation, women in senior executive positions and women on the Board.
Given the relatively small size of the Euroz Group’s workforce and the stable nature of that workforce Euroz does not, at this time, intend to
disclose this information. The Euroz has formed this view as given the particular characteristics of Euroz’s workforce, such disclosure would
be statistically meaningless. Euroz will review this position, at least, on an annual basis.
Recommendation 3.5: Companies should provide the information indicated in the Guide to reporting on Principle 3
This information is set out above.
Euroz Limited 29
Corporate Governance Statement Principle 4: Safeguard Integrity In Financial Reporting
Recommendation 4.1: the Board should establish an audit committee.
The Board has established an audit committee consisting of Mr Diamond and Mr McKenzie.
Recommendation 4.2: The audit committee should be structured so that it:
•
•
•
•
consists only of non-executive Directors;
consists of a majority of independent Directors;
is chaired by an independent chair, who is not chair of the Board; and
has at least 2 members.
Given the size and composition of the Board it Euroz considers that it is not possible for Euroz to comply with this recommendation.
However, in accordance with the matter set out above, the interests of the members of the audit committee are closely aligned with the
interests of shareholders in circumstances where the members of the audit committee have sufficient skills and experience such that they
are properly able to discharge this function.
Recommendation 4.3: the audit committee should have a formal charter
A Charter has been adopted which sets out the role and functions of Audit Committee. The Charter is available from Euroz’s website.
Further to the Charter, the Audit Committee meets at least twice a year. Its key roles and responsibilities are to:
•
•
•
•
•
•
•
Review the Company’s accounting policies.
Review the content of financial statements.
Review the scope of the external audit, its effectiveness and independence of the external audit.
Ensure accounting records are maintained in accordance with statutory and accounting standard requirements.
Monitor systems used to ensure financial and other information provided is reliable, accurate and timely.
Review the audit process with the external auditors to ensure full and frank discussion of audit issues.
Present half and full year financial statements to the Board.
A Partner of the Euroz’s auditor, PKF Mack & Co, and senior management of the Euroz Group may also attend meetings of the Audit
Committee by invitation.
Given the size and nature of Euroz’s business and in the context of the Direct Governance Model, Euroz has formed the view that it is not
necessary for Euroz to have an internal audit function so as to achieve its corporate governance objectives.
External Auditors are selected by the Board in consultation with relevant Euroz staff members as the Board see fit.
The rotation of engagement Partners is in accordance with regulatory requirements and is on a 5 year within a 7 year basis.
Recommendation 4.4: Companies should provide the information indicated in the Guide to reporting on Principle 4.
This information is set out above.
Principle 5: Make Timely And Balanced Disclosure
Recommendation 5.1: Companies should establish written policies designed to ensure compliance with ASX Listing
Rule disclosure requirements and to ensure accountability at senior executive level for that compliance and disclose
those policies or a summary of those policies.
Given the nature of its business, Euroz, its Directors and staff are fully aware of ASX Listing Rule disclosure requirements. In the context of
the Direct Governance Model and given the close alignment between the interests of shareholders, the Directors and staff of the Euroz
Group, Euroz has formed the view that it does not require written policies with respect to this issue. In this regard, Euroz views compliance
with this obligation as being the collective responsibility of the Directors and of the senior executives of the Euroz Group.
The Company Secretary has been appointed as the person responsible for communications with the Australian Securities Exchange. This
role includes responsibility for ensuring compliance with the continuous disclosure requirements of the ASX Listing Rules and overseeing
and co-ordinating information disclosure to the Australian Securities Exchange, analysts, brokers, shareholders, the media and the public.
30 Annual Report 2012
Corporate Governance Statement Recommendation 5.2: Companies should provide the information indicated in the Guide to reporting on Principle 5.
This information is set out above.
Principle 6: Respect The Rights Of Shareholders
Recommendation 6.1: Companies should design a communications policy for promoting effective communication
with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of
that policy.
Euroz is committed to keeping shareholders fully informed of significant developments. In addition to the public announcement of its
financial information and disclosure of significant matters pursuant to the ASX Listing Rules, the Company provides the opportunity for
shareholders to question the Board and senior executives about its activities at the Company’s annual general meeting.
The Company’s auditor, PKF Mack & Co, attends each annual general meeting and is available to answer questions from shareholders
about the conduct of the audit and the preparation and content of the auditor’s report.
Euroz’s website provides detailed information regarding the operations of the Euroz Group including copies of all information that has
been released to the market.
Given the relatively small size of Euroz’s shareholder base, Euroz has formed the view that it does not need to put a written
communications policy in place at this time.
Recommendation 6.2: Companies should provide the information indicated in the Guide to reporting on Principle 6.
This information is set out above.
Principle 7: Recognise And Manage Risk
Recommendation 7.1: Companies should establish policies for the oversight and management of business risks and
disclose a summary of those policies.
Euroz undertakes risk management in the context of the activities undertaken by the Euroz Group. The Euroz Group is subject to extensive
risk management obligations pursuant to the Corporations Act, the ASIC Market Integrity Rules and the Operating Rules of the ASX Group
and written policies and procedures are in place so as to ensure compliance with these obligations. Risk management is achieved by way
of the implementation of these policies and procedures in the context of the day to day involvement of the Board in the business of the
Euroz Group pursuant to the Direct Governance Model. In particular, the financial position of Euroz and matters of risk are considered by
the Board on a daily basis. The main area of exposure for Euroz is failure of trade settlements by clients and counter-parties in the context
of a third party clearing arrangement that has been entered into by Euroz Securities. Settlements and exposure are monitored on a daily
basis in the context of that third party clearing arrangement. Investments made by Euroz are undertaken pursuant to criteria determined
by the Board. Euroz’s investments are monitored by Board members on a daily basis. The Board is responsible for ensuring that controls and
procedures to identify, analyse, assess, prioritise, monitor and manage risk are in place, are being maintained and are being adhered to.
For the reasons set out above, Euroz has decided to not make the relevant policies and procedures available on its website.
Recommendation 7.2: the Board should require management to design and implement the risk management and
internal control system to manage the company’s material business risks and report to it on whether those risks are
being managed effectively. The Board should disclose that management has reported to it as to the effectiveness of
the company’s management of its material business risks.
In accordance with the above, risk management is dealt with pursuant to the Direct Governance Model and accordingly this
recommendation is not appropriate for Euroz. More generally, the Board performs an internal audit function in circumstances where
the interests of the Board are closely aligned with the interests of shareholders. Euroz engages external assistance with respect to this
issue, as required.
Euroz has formed the view that, in all of the circumstances set out above, it is not necessary for the Board to convene a risk
management committee.
Euroz Limited 31
Corporate Governance Statement Recommendation 7.3: The Board should disclose whether it has received assurance from the chief executive officer
(or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section
295A of the Corporations Act is founded on a sound system of risk management and internal control and that the
system is operating effectively in all material respects in relation to financial reporting risks.
Annually, the Chief Financial Officer states in writing to the Board that:
•
•
The statement given in accordance with best practice recommendation 4.1 (the integrity of financial statements) is founded on a
sound system of risk management and internal compliance and control which implements the policies adopted by the Board.
The company’s risk management and internal compliance and control system is operating efficiently and effectively in all material
respects.
Recommendation 7.4: Companies should provide the information indicated in the Guide to reporting on Principle 7.
This information is set out above.
Principle 8: Remunerate Fairly And Responsibly
Recommendation 8.1: The Board should establish a remuneration committee.
Euroz has formed the view that, given the relatively small size of the Board and the close alignment between the interests of Board
members and the interests of shareholders, a remuneration committee is not required. Instead, the Board performs the functions that
would otherwise be allocated to a remuneration committee. In this regard, the Board convenes separately as a remuneration committee.
In performing the functions that would be allocated to the remuneration committee the Board undertakes its functions according to the
principles set out below.
The objective of Euroz’s remuneration framework is to ensure reward for performance is competitive and appropriate to the results
delivered. The framework aligns executive reward with the creation of value for shareholders, and conforms to market best practice.
The remuneration committee ensures that executive remuneration satisfies the following key criteria:
•
•
•
•
•
Competitiveness and reasonableness.
Acceptability to shareholders.
Performance linked.
Transparency.
Capital management.
Euroz has structured an executive remuneration framework that is market competitive and complimentary to the reward strategy of the
organisation.
In accordance with the above, the remuneration committee has decided that there will be no equity-based remuneration paid to
Directors or staff of the Euroz Group.
Detailed information regarding the remuneration paid to Directors and senior executives of the Euroz Group is set out at pages 19-20 of
this report.
Recommendation 8.2: Companies should clearly distinguish the structure of non-executive Directors’ remuneration
from that of executive Directors and senior executives
Euroz does not have any non-executive Directors. The remuneration structure adopted by the Euroz Group is in accordance with the
mechanisms usually adopted within the stockbroking/financial advisory industries and is appropriate to Euroz’s circumstances and goals.
Detailed information regarding both the remuneration paid to Directors and Staff of the Euroz Group and the structure that underlies
remuneration payments is set out at pages 19-20.
Recommendation 8.3: Companies should provide the information indicated in the Guide to reporting on Principle 8.
This information is set out above.
32 Annual Report 2012
Corporate Governance Statement Consolidated I ncome Statement
For the year ended 30 June 2012
Revenue
Share of net profit (loss) of associates
Employee benefits expense
Depreciation and amortisation expenses
Regulatory expenses
Consultancy expenses
Conference and seminar expenses
Brokerage & underwriting expense
Communication expenses
Carrying amount of principal trading securities sold
Other expenses
Profit for the period
Income tax expense
Profit for the period
Basic earnings per share
Diluted earnings per share
Notes
4
5
5
6
33
33
2012
$
2011
$
98,740,142
70,012,360
( 1,130,485)
7,794,638
( 20,796,411)
(23,214,359)
( 1,190,337)
(1,145,045)
( 315,842)
(274,756)
( 1,579,477)
(2,008,990)
( 1,451,490)
(1,244,605)
( 5,237,660)
(3,182,413)
( 307,419)
(288,980)
( 46,243,988)
(7,870,761)
( 3,604,660)
(4,167,970)
16,882,373
34,409,119
(5,122,184)
(7,843,079)
11,760,189
26,566,040
Cents
8.20
8.11
Cents
19.38
16.66
The above Income Statements should be read in conjunction with the accompanying notes.
Euroz Limited 33
Consolidated Statement of Com preh en s i ve I n co me
For the year ended 30 June 2012
Profit for the period
Other comprehensive income/(expense)
2012
$
2011
$
11,760,189
26,566,040
-
-
Total comprehensive income for the period
11,760,189
26,566,040
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
34 Annual Report 2012
Consolidated Sta tem ent of Fina n ci a l Po s i t i o n
As at 30 June 2012
Notes
2012
$
2011
$
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total current assets
Non-current assets
Long term receivable
Investments accounted for using equity method
Financial assets
Plant and equipment
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Short term provisions
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Long term provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
21
53,741,715
68,059,994
1,775,702
1,458,820
2,321,929
1,909,730
348,675
2,184,432
59,298,166
72,502,831
5,000,000
5,000,000
67,480,289
65,596,600
2,000
219,746
2,126,185
3,067,837
772,752
563,305
75,381,226
74,447,488
134,679,392
146,950,319
1,238,111
1,487,851
2,057,798
3,494,336
10,653,790
21,661,269
13,379,752
27,213,403
367,517
210,091
577,608
548,361
670,205
1,218,566
13,957,360
28,431,969
120,722,032
118,518,350
89,373,600
87,261,731
186,000
186,000
31,162,432
31,070,619
120,722,032
118,518,350
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
Euroz Limited 35
Consolidated Statement of Cha ng es i n Eq ui t y
for the year ended 30 June 2012
Balance at 1 July 2010
Profit for the period
Changes in fair value of financial asset
Total comprehensive income for the period
Share
capital
$
Retained
profits
$
79,296,164
29,935,249
-
-
-
26,566,040
-
26,566,040
Transactions with owners, recorded directly in equity
Shares issued during the period
7,965,567
-
Dividends to equity holders
-
(25,430,670)
Total contributions by and distributions to owners
7,965,567
(25,430,670)
Balance at 30 June 2011
87,261,731
31,070,619
Balance at 1 July 2011
87,261,731
31,070,619
Profit for the period
Changes in fair value of financial asset
Total comprehensive income for the period
Transactions with owners, recorded directly in equity
Investee equity
-
-
-
-
Shares issued during the period
2,111,869
11,760,189
-
11,760,189
227,093
-
Dividends to equity holders
-
(11,895,469)
Total contributions by and distributions to owners
2,111,869
(11,668,376)
Balance at 30 June 2012
89,373,600
31,162,432
Asset
revaluation
reserves
$
Option
premium
reserves
$
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
186,000
109,417,413
-
-
-
-
-
-
26,566,040
-
26,566,040
7,965,567
(25,430,670)
(17,465,103)
186,000
118,518,350
186,000
118,518,350
-
-
-
-
-
-
-
11,760,189
-
11,760,189
227,093
2,111,869
(11,895,469)
(9,556,507)
186,000
120,722,032
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
36 Annual Report 2012
Consolidated Sta tem ent of Ca sh Flow s
For the year ended 30 June 2012
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)
Payments to suppliers and employees (inclusive of goods and services tax)
Dividends received
Interest received
Proceeds from sale of trading shares
Income taxes (paid)/refunded
Payments for trading shares
Notes
2012
$
2011
$
49,010,336
54,239,791
(33,980,001)
(34,694,192)
15,030,335
19,545,599
-
2,714,338
44,259,537
2,571
2,901,341
9,444,069
(7,518,959)
(7,193,455)
(45,502,043)
(7,949,366)
Net cash flows from operating activities
31
8,983,208
16,750,759
Cash flows from investing activities
Net (payments)/receipts from investments
Payments for plant and equipment
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from issues of shares and other equity securities
Dividends paid
Net cash flows from/(used in) financing activities
Net increase/(decrease) at cash and cash equivalents
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
(1,475,199)
2,066,701
(248,684)
(3,628,376)
(1,723,883)
(1,561,675)
2,110,969
7,965,567
(23,688,573)
(17,567,401)
(21,577,604)
(9,601,834)
(14,318,279)
5,587,250
68,059,994
62,472,744
7
53,741,715
68,059,994
The above Statements of Cash Flows should be read in conjunction with the accompanying notes.
Euroz Limited 37
Content s
Note 1.
Statement of significant accounting policies
39
Note 18. Short term provisions
Note 2. Significant accounting estimates
Note 19. Deferred tax liabilities
and judgements
Note 3.
Segment information
Note 4.
Revenue
Note 5.
Profit before income tax expense
Note 6.
Income tax
Note 7.
Cash and cash equivalents
Note 8.
Trade and other receivables
Note 9.
Inventories
Note 10. Other current assets
Note 11. Long term receivable
Note 12. Investments accounted for
using the equity method
Note 13. Financial assets
Note 14. Plant and equipment
Note 15. Deferred tax assets
Note 16. Trade and other payables
Note 17. Current tax liabilities
47
47
49
49
49
51
51
51
51
51
51
52
52
53
53
53
Note 20. Long term provisions
Note 21. Contributed equity
Note 22. Dividends
Note 23. Financial instruments
Note 24. Remuneration of auditors
Note 25. Contingent liabilities
Note 26. Commitments for expenditure
Note 27. Employee benefits
Note 28. Related parties
Note 29. Investments in controlled entities
Note 30. Events occurring after reporting date
Note 31. Reconciliation of cash flows
from operating activities
Note 32. Credit facilities
Note 33. Earnings per share
Note 34. Parent entity disclosures
Note 35. Company details
54
54
54
55
56
57
59
59
59
59
59
64
65
65
65
66
66
66
38 Annual Report 2012
Note 1. Statement of significant accounting policies
The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards,
other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.
This financial report has been authorised by the Directors to be issued on 20 August 2012
Euroz Limited is a listed public company, trading on the Australian Securities Exchange, limited by shares, incorporated and domiciled in
Australia. Euroz is a for profit entity for the purposes of preparing the financial statements.
The financial report of Euroz Limited and controlled entities (the consolidated group), complies with Australian Accounting Standards and
International Financial Reporting Standards (IFRS).
Separate financial information of the parent company has been included in Note 34 as permitted by amendments to the Corporations Act
2001. The financial report is presented in Australian dollars which is the group’s functional and presentation currency.
The following is a summary of the material accounting policies adopted by the consolidated group in the preparation of the financial
report. The accounting policies have been consistently applied, unless otherwise stated.
Basis of preparation
Reporting basis and conventions
The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-
current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.
Accounting policies
(a)
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all entities controlled by Euroz Limited (‘company’ or
‘parent entity’) as at 30 June 2012 and the results of all controlled entities for the year then ended. Euroz Limited and its controlled
entities together are referred to in this financial report as the consolidated entity. The effects of all transactions between entities in
the consolidated entity are eliminated in full.
Subsidiaries are all those entities over which the consolidated entity has the power to govern the financial and operating policies,
generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered when assessing whether the consolidated entity controls another
entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-
consolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the consolidated entity.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies
of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. All controlled
entities have a 30 June financial year end.
(b)
Income tax
The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items.
It is calculated using tax rates that have been enacted or are substantively enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised
from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on either accounting
profit or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled.
Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which
case the deferred tax is adjusted directly against equity.
Euroz Limited 39
Notes to the Financial StatementsFor the year ended 30 June 2012 Note 1. Statement of significant accounting policies (continued)
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which
deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse
change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future
assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.
Euroz Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the Tax
Consolidation Regime. Euroz Limited is responsible for recognising the current and deferred tax assets and liabilities for the tax
consolidated group. The group formed an income tax consolidated group to apply from 1 July 2003. The tax consolidated group
has entered a tax sharing agreement whereby each company in the group contributes to the income tax payable in proportion to
their contribution to the net profit before tax of the tax consolidated group.
(c)
Acquisition of investments
The purchase method of accounting is used for all business combinations regardless of whether equity instruments or other
assets are acquired. Cost is determined as the fair value of the assets given up, shares issued or liabilities undertaken at the date of
acquisition plus incidental costs directly attributable to the acquisition.
(d)
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be
reliably measured. The following specific recognition criteria must also be met before revenue is recognised:
–
–
–
–
–
Brokerage revenue earned from share trading on behalf of clients is recognised on completion of the transactions. That is, the
day the security is traded, not the day of settlement.
Underwriting, management fees and corporate retainers are brought to account when the fee in respect of the services
provided is receivable.
Share trading revenue from the sale of stocks in the jobbing account is recognised on the day the security is traded. Revenue
comprises the gross proceeds on sale of the security.
Interest income is recognised as it accrues.
Dividend revenue is recognised when the right to receive a dividend has been established.
All revenue is stated net of the amount of goods and services tax (GST).
(e)
Receivables
Trade debtors are recognised as current receivables as they are generally settled within 30 days from the date of recognition.
Collectability of trade debtors is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A
provision for doubtful debts is raised when some doubt as to collection exists.
All trade debtors relating to brokerage and principal trading have been transferred to Pershing Securities Australia Pty Ltd
(“Pershing”) who provides a trust account facility as part of the clearing and settlement service.
(f )
Inventories
Inventories are stocks held in the operating (jobbing) account at year end. All inventory is held at fair value. Refer to Note 1 (u) (i)
financial assets at fair value through profit or loss.
(g)
Investments
Interests in listed and unlisted securities are initially bought to account at cost.
Controlled entities are accounted for in the consolidated financial statements as set out in Note 1 (a).
Other securities are included at fair value at reporting date. Unrealised gains/losses on securities held for short term investment
are accounted for as set out in Note 1 (u) (i) financial assets at fair value through profit or loss. Unrealised gains/losses on securities
held for long term investment are accounted for as set out in Note 1 (u) (iii) available for sale financial assets.
40 Annual Report 2012
Notes to the Financial StatementsFor the year ended 30 June 2012 Note 1. Statement of significant accounting policies (continued)
(h)
Investments in associates
The Group’s investment in its associates is accounted for using the equity method of accounting in the consolidated financial
statements. The associates are entities over which the Group has significant influence and that are neither subsidiaries nor joint
ventures.
Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost plus
post-acquisition changes in the Group’s share of net assets of the associates. Goodwill or gain on bargain purchase relating to
an associate is included in the carrying amount of the investment and is not amortised. After application of the equity method,
the Group determines whether it is necessary to recognise any impairment loss with respect to the Group’s net investment in
associates. Goodwill or gain on bargain purchase included in the carrying amount of the investment in associate is not tested
separately, rather the entire carrying amount of the investment is tested for impairment as a single asset. If an impairment is
recognised, the amount is not allocated to the goodwill of the associate.
The Group’s share of its associates’ post-acquisition profits or losses is recognised in the statement of comprehensive income, and
its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are
adjusted against the carrying amount of the investment. Dividends receivable from associates are recognised in the parent entity’s
statement of comprehensive income as a component of other income.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long-term
receivables and loans, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf
of the associate.
The reporting dates of the associates and the Group are identical and the associates’ accounting policies conform to those used by
the Group for like transactions and events in similar circumstances.
(i)
Plant and equipment
Each class of plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation
and impairment losses.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable
amount from these assets. The recoverable amount is assessed as the greater of the fair value less costs to sell and the expected
net cash flows that will be received from the assets employment and subsequent disposal. The expected net cash flows are
discounted to their present values in determining recoverable amounts.
The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs
and an appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are
incurred.
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight line basis over their useful lives to the consolidated group
commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Leasehold improvements
Plant and equipment
Depreciation Rate
25%
25 – 33%
Artwork is not depreciated, but is reviewed annually for impairment.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are
included in the income statement. When revalued assets are sold, amounts included in the revaluation reserve relating to the asset
are transferred to retained earnings.
Euroz Limited 41
Notes to the Financial StatementsFor the year ended 30 June 2012
Note 1. Statement of significant accounting policies (continued)
(j)
Leasehold improvements
The cost of improvements to or on leasehold properties are amortised over the unexpired period of the lease or the estimated
useful life of the improvement to the consolidated group, whichever is the shorter.
(k)
Leased non current assets
A distinction is made between finance leases which effectively transfer from the lessor to the lessee substantially all the risks and
benefits incidental to ownership of leased non-current assets, and operating leases under which the lessor effectively retains
substantially all such risks and benefits.
Incentives received on entering into operating leases are recognised as liabilities. Lease payments are allocated between rental
expense and reduction of the liability.
Other operating lease payments are charged to the income statement in the periods in which they are incurred, as this represents
the pattern of benefits derived from the leased assets.
(l)
Trade and other creditors
Trade and other creditors also includes other liabilities for goods and services provided to the consolidated entity prior to the end
of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
All trade creditors relating to brokerage and principal trading have been transferred to Pershing who provides a trust account
facility as part of the clearing and settlement service.
(m) Dividends
Provision is made for the amount of any dividend declared and authorised by the directors on or before the end of the financial
year, but not distributed at reporting date.
(n) Options
The fair value of options in the shares of the company issued to directors and other parties is recognised as an expense in the
financial statements in relation to the granting of these options.
(o)
Employee benefits
(i) Wages, salaries and annual leave
Liabilities for wages, salaries and annual leave expected to be settled within 12 months of the reporting date are recognised
in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the
liabilities are settled.
(ii)
Employee benefits payable later than one year
Employee benefits payable later than one year have been measured at the present value of the estimated future cash
outflows to be made for those benefits. There have been no changes to the method used to calculate this liability.
(iii)
Superannuation
Contributions are made by the consolidated group to superannuation funds as stipulated by statutory requirements and are
charged as expenses when incurred.
(iv)
Employee benefit on costs
Employee benefit on costs, including payroll tax, are recognised and included in employee benefits liabilities and costs when
the employee benefits to which they relate are recognised as liabilities.
(v)
Options
The fair value of options granted is recognised as an employee benefit expense with a corresponding increase in equity. The
fair value is measured at grant date.
The fair value at grant date is independently determined using the Black-Scholes option pricing model that takes into
account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the non-
tradeable nature of the option, the share price at grant date and expected price volatility of the underlying share, the
expected dividend yield and the risk-free interest rate for the term of the option.
42 Annual Report 2012
Notes to the Financial StatementsFor the year ended 30 June 2012 Note 1. Statement of significant accounting policies (continued)
(vi)
Profit-sharing
The consolidated entity recognises a liability and an expense for profit-sharing based on a formula that takes into
consideration the profit attributable to the company’s employees after certain adjustments.
(vii)
Termination benefits
The consolidated entity recognises a liability and an expense when the entity demonstrate commitment to either terminate
the employee before the normal retirement date or provide termination benefits as a result of an offer made to the
employee prior to retirement date.
(p)
Cash and cash equivalents
For purposes of the statement of cash flows, cash includes deposits at call which are readily convertible to cash on hand and are
subject to an insignificant risk of changes in value, net of outstanding bank overdrafts.
(q)
Earnings per share
(i)
Basic earnings per share
Basic earnings per share is determined by dividing the net profit after income tax attributable to members 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 year.
(ii)
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.
(r)
Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure
purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-
sale securities) is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by
the consolidated entity is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
determined using valuation techniques. The consolidated entity uses a variety of methods and makes assumptions that are based
on market conditions existing at each reporting date. Quoted market prices or dealer quotes for similar instruments are used for
long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine fair value for
the remaining financial instruments.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair
values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at
the current market interest rate that is available to the consolidated entity for similar financial instruments.
(s)
Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not
recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the
asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of
GST.
Cash flows are presented in the statement of cash flow on a gross basis, except for the GST component of investing and financing
activities, which are disclosed as operating cash flows.
(t)
Comparative figures
When required by accounting standards, comparative figures have been adjusted to conform to changes in presentation for the
current financial year.
Euroz Limited 43
Notes to the Financial StatementsFor the year ended 30 June 2012 Note 1. Statement of significant accounting policies (continued)
(u)
Financial instruments
The consolidated group classifies its investments in the following categories: financial assets at fair value through profit or loss,
loans and receivables, and available-for-sale financial assets. The classification depends on the purpose for which the investments
were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation
at each reporting date.
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the
instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase or sale of the
asset (ie trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified ‘at fair value
through profit or loss’, in which case transaction costs are expensed to profit or loss immediately.
Classification and subsequent measurement
Financial instruments are subsequently measured at either of fair value, amortised cost using the effective interest rate method, or
cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing
parties. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation
techniques are adopted.
Amortised cost is calculated as:
–
–
–
–
the amount at which the financial asset or financial liability is measured at initial recognition;
less principal repayments;
plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity
amount calculated using the effective interest method; and
less any reduction for impairment.
The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to
the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums
or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument
to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an
adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss.
The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements
of accounting standards specifically applicable to financial instruments.
(i)
Financial assets at fair value through profit or loss
This category has two sub-categories; financial assets held for trading, and those designated at fair value through profit or
loss on initial recognition. A financial asset is classified in this category if acquired principally for the purpose of selling in the
short term or if so designated by management. The policy of management is to designate a financial asset if there exists the
possibility it will be sold in the short term and the asset is subject to frequent changes in fair value. Assets in this category
are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the
reporting date.
(ii)
Loans and receivables
Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They arise when the consolidated group provides money, goods or services directly to a debtor with no
intention of selling the receivable. They are included in current assets, except for those with maturities greater than 12
months after the reporting date which are classified as non-current assets. Loans and receivables are included in receivables
in the statement of financial position.
44 Annual Report 2012
Notes to the Financial StatementsFor the year ended 30 June 2012 Note 1. Statement of significant accounting policies (continued)
(iii)
Available-for-sale financial assets
Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either
designated in this category or not classified in any of the other categories. They are included in non-current assets.
Purchases and sales of investments are recognised on trade-date being the date on which the consolidated group commits
to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not
carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the
financial assets have expired or have been transferred and the consolidated entity has transferred substantially all the risks
and rewards of ownership.
Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair
value. Loans and receivables are carried at amortised cost using the effective interest method. Realised and unrealised
gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are
included in the income statement in the period in which they arise. Unrealised gains and losses arising from changes in
the fair value of non monetary securities classified as available-for-sale investments revaluation reserve are recognised in
equity in the “available for sale revaluation reserve”. When securities classified as available-for-sale are sold or impaired, the
accumulated fair value adjustments are included in the income statement as gains and losses from investment securities.
The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for
unlisted securities), the consolidated entity establishes fair value by using valuation techniques. These include reference to
the fair values of recent arm’s length transactions, involving the same instruments or other instruments that are substantially
the same, discounted cash flow analysis, and option pricing methods refined to reflect the issuer’s specific circumstances.
The consolidated group assesses at each reporting date whether there is objective evidence that a financial asset or group of
financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in
the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence
exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost
and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss, is removed
from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity
instruments are not reversed through the income statement.
(v)
Business combinations
Acquisitions by the group of additional interests in equity accounted investments are brought to account in accordance with the
provision of AASB 3 Business Combinations.
(w)
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. Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a business, are
included in the cost of the acquisition as part of the purchase consideration.
(x)
Rounding of amounts
Amounts in this financial report have been rounded to the nearest dollar in accordance with class order 98/100.
(y)
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial
assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount.
Recoverable amount is the higher of an asset’s fair value less costs to sell and value-in-use. The value-in-use is the present value of
the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to
which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.
(z)
New standards and interpretations not yet adopted
The AASB has issued the following new and amended accounting standards and interpretations that have mandatory application
dates for future reporting periods. The Group has decided against early adoption of these standards, and has not yet determined
the potential impact on the financial statements from the adoption of these standards and interpretations.
Euroz Limited 45
Notes to the Financial StatementsFor the year ended 30 June 2012 Note 1. Statement of significant accounting policies (continued)
AASB No.
Title
9
10
11
12
13
Financial Instruments
Consolidation
Joint Arrangements
Disclosure of Interests in Other Entities
Fair Value Measurement
1053
Application of Tiers of Australian Accounting Standards
2010 – 2
2010 – 7
Amendments to Australian Accounting Standards arising from
Reduced Disclosure Requirements
Amendments to Australian Accounting Standards arising from AASB 9
(December 2010)
[AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132,
136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127]
Operative Date
(Annual reporting periods
beginning on or after)
1 Jan 2015
1 Jan 2013
1 Jan 2013
1 Jan 2013
1 Jan 2013
1 Jul 2013
1 Jul 2013
Issue Date
Dec 2010
Aug 2011
Aug 2011
Aug 2011
Sep 2011
Jun 2010
Jun 2010
Dec 2010
1 Jan 2013
2010 – 8
Amendments to Australian Accounting Standards
– Deferred Tax: Recovery of Underlying Assets
Dec 2010
1 Jan 2012
[AASB 112]
2010 – 10
Further Amendments to Australian Accounting Standards
– Removal of Fixed Dates for First-time Adopters
Dec 2010
1 Jan 2013
[AASB 2009-11 & AASB 2010-7]
2011 - 4
Amendments to Australian Accounting Standards to Remove
Individual Key Management Personnel Disclosure Requirements
Jul 2011
1 Jul 2013
[AASB 124]
2012 - 2
Amendments to Australian Accounting Standards
– Disclosures – Offsetting Financial Assets and Financial Liabilities
Jun 2012
1 Jan 2013
[AASB 7 & AASB 132]
2012 - 3
Amendments to Australian Accounting Standards
– Offsetting Financial Assets and Financial Liabilities
Jun 2012
1 Jan 2014
[AASB 132]
2012 - 5
Amendments to Australian Accounting Standards arising from
Annual Improvements 2009–2011 Cycle
Jun 2012
1 Jan 2013
[AASB 1, AASB 101, AASB 116, AASB 132 & AASB 134 and Interpretation 2]
Australian Interpretations
20
Stripping Costs in the Production Phase of a Surface Mine
Nov 2011
1 Jan 2013
46 Annual Report 2012
Notes to the Financial StatementsFor the year ended 30 June 2012 Note 2. Significant accounting estimates and judgements
Estimates and judgements incorporated in the financial statements are based on historical knowledge and best available current
information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained
both externally and within the group.
Key estimates
(i)
Impairment
At each reporting date, the group compares the carrying values and market values of the associates to determine whether there is
any indication of impairment. If significant and prolonged impairment indicators exist, any excess of the associate’s carrying value
over the recoverable amount is expensed to the income statement. Refer to note 12 regarding the equity accounting of associates.
Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of
the cash-generating unit to which the asset belongs.
Key judgements
(i)
Classification of inventories
The group has decided to classify investments in listed securities as held for trading. These securities are accounted for at fair value.
Any increments or decrements in their value at year end are charged or credited to the income statement.
(ii)
Taxation
Judgement is required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised on the statement
of financial position. Deferred tax assets, including those arising from temporary differences, are recognised only where it is
considered more likely than not they will be recovered, which is dependent on the generation of sufficient future taxable profits.
Deferred tax liabilities arising from temporary differences are recognised to the extent that there are future profits.
Note 3. Segment information
Identification of reportable segments
The group has identified its operating segments based on the internal reports that are reviewed and used by the executive team (the chief
operating decision makers) in assessing performance and in allocating resources.
Types of products and services
Stockbroking
Stockbroking business offering trading of Australian securities, post trade reporting, corporate finance opportunities, provision of
company research.
Principal trading
Principal trading relates to the purchase and sale of securities by the consolidated group.
Funds management
The consolidated group provides advice in relation to fund management.
Basis of accounting for purpose of reporting by operating segments
The accounting policies used by the group in reporting segments internally are consistent with those adopted in the financial statements
of the group, unless otherwise stated.
Segment assets and liabilities
Where an asset is used across multiple segments, the asset is allocated to that segment that receives majority economic value from that
asset.
Liabilities are allocated to segments where there is a direct nexus between the liability and the operations of the segment.
Euroz Limited 47
Notes to the Financial StatementsFor the year ended 30 June 2012 Note 3. Segment information (continued)
Unallocated items
The following items of revenue, expenses, assets and liabilities are not allocated to operating segments as they are not considered part of
the core operations of any segments:
•
Dividend revenue
•
•
•
•
•
Fair value gains or losses on financial instruments
Share of profits and losses of equity-accounted investments
Corporate assets and liabilities not specific to any segments
Deferred tax assets and liabilities
Current tax liabilities
Segment performance
2012
Sales and other fees
Other revenues
Stockbroking
$
Principal
Trading
$
Funds
Management
$
Total
$
Unallocated
Items
$
Total
(Consolidated)
$
46,225,507
1,338,974
45,889,043
-
2,700,491
182,192
94,815,041
1,521,166
-
2,403,935
94,815,041
3,925,101
Total segment revenue
47,564,481
45,889,043
2,882,683
96,336,207
2,403,935
98,740,142
Segment net operating profit after tax
9,652,609
(132,361)
1,441,604
10,961,852
798,337
11,760,189
Interest revenue
Depreciation and amortisation
Share of associate
1,321,521
1,188,107
-
-
-
-
182,192
2,230
-
1,503,713
1,190,337
-
1,309,797
-
(1,130,485)
2,813,510
1,190,337
(1,130,485)
Segment assets
31,973,988
1,259,701
3,733,978
36,967,667
97,711,725
134,679,392
Investments in associate
Capital expenditure
Segment liabilities
-
248,793
7,265,755
-
-
-
-
-
-
248,793
67,480,289
-
67,480,289
248,793
1,006,401
8,272,156
5,685,204
13,957,360
Cash flow information
Net cash flow from operating activities
Net cash flow from investing activities
Net cash flow from financing activities
2011
Sales and other fees
Other revenues
5,981,675
(248,684)
-
(1,242,505)
-
-
2,934,241
-
-
7,673,411
(248,684)
-
1,309,797
(1,475,199)
(21,577,604)
8,983,208
(1,723,883)
(21,577,604)
47,730,545
1,495,066
9,547,185
-
8,974,867
179,160
66,252,597
1,674,226
-
2,085,537
66,252,597
3,759,763
Total segment revenue
49,225,611
9,547,185
9,154,027
67,926,823
2,085,537
70,012,360
Segment net operating profit after tax
9,916,246
1,574,237
5,661,366
17,151,849
9,414,191
26,566,040
Interest revenue
Depreciation and amortisation
Share of associate
1,392,803
1,144,507
-
-
-
-
179,160
538
-
1,571,963
1,145,045
-
1,347,278
-
7,794,638
2,919,241
1,145,045
7,794,638
Segment assets
32,920,874
348,675
5,967,911
39,237,460
107,712,859
146,950,319
Investments in associate
Capital expenditure
Segment liabilities
Cash flow information
-
3,627,846
7,762,756
-
-
-
-
-
-
3,627,846
65,596,600
-
65,596,600
3,627,846
3,381,939
11,144,695
17,287,273
28,431,968
Net cash flow from operating activities
9,275,914
1,690,253
5,183,577
16,149,744
601,015
16,750,759
Net cash flow from investing activities
(3,628,376)
Net cash flow from financing activities
-
-
-
-
-
(3,628,376)
2,066,701
(1,561,675)
-
(9,601,834)
(9,601,834)
48 Annual Report 2012
Notes to the Financial StatementsFor the year ended 30 June 2012
Note 4. Revenue
Revenue from operating activities
Brokerage
Underwriting and management fees
Proceeds on sale of principal trading shares
Corporate retainers
Other income
Interest received
Dividends received
Other revenue
Fair value gain on derivatives
Gain arising from acquisition of further interests in associates
Total Revenue
Note 5. Profit before income tax expense
Profit for the year arrived at after charging following expenses
Plant and equipment – depreciation
Leasehold improvements – amortisation
Employee entitlements costs
Rental expenses relating to operating lease
Superannuation expense
Fair value of unrealised loss
Note 6. Income tax
The components of tax expense comprise:
Current tax
Deferred tax
2012
$
2011
$
16,998,213
27,284,696
45,889,043
4,643,089
22,846,828
31,767,263
9,468,579
2,091,321
94,815,041
66,173,991
2,813,510
2,919,241
-
17,453
-
1,094,138
2,571
104,279
(131,849)
944,127
3,925,101
3,838,369
98,740,142
70,012,360
558,248
632,089
451,536
693,509
1,190,337
1,145,045
405,157
1,054,301
630,744
742,827
145,789
1,244,708
533,602
(78,606)
5,512,475
(390,291)
7,648,412
194,667
5,122,184
7,843,079
Numerical reconciliation between tax expense and pre tax accounting profit
Income tax using company’s tax rate of 30% (2011: 30%)
5,064,712
10,322,736
Add tax effect of:
–
–
–
–
imputation credits
other non-allowable items
prior year under provision
share of loss of associate
Less tax effect of:
–
–
rebateable fully franked dividends
gain on acquisition of associates
Income tax attributable to entity
-
106,104
6,052
339,145
231
115,009
27,503
-
5,516,013
10,465,479
-
(771)
(393,829)
(2,621,629)
5,122,184
7,843,079
The applicable weighted average effective tax rates are as follows:
30.3%
22.8%
Euroz Limited 49
Notes to the Financial StatementsFor the year ended 30 June 2012 Note 6. Income tax (continued)
2012
$
2011
$
The increase in the weighted average effective consolidated tax rate for 2012 is due to the reduction to the effect of the accounting
requirement to recognise the gain on acquisition of associates, and share of net loss of associates.
Reconciliations
i.
Gross movements
The overall movement in the deferred tax account is as follows:
Balance at 1 July
Recognised in income statement
Recognised in other comprehensive income
Balance at 30 June
ii.
Deferred tax liability
Movement in temporary differences during the year
Fair value gain adjustments
Balance at 1 July
Recognised in the income statement
Balance at 30 June
Other
Balance at 1 July
Recognised in the income statement
Balance at 30 June
iii.
Deferred tax assets
Movement in temporary difference during the year
Fair value gain adjustments
Balance at 1 July
Recognised in other comprehensive income
Balance at 30 June
Provisions
Balance at 1 July
Recognised in the income statement
Balance at 30 June
Tax losses
14,944
390,291
-
405,235
52,289
(227,440)
(175,151)
496,072
46,596
542,668
183,918
(194,667)
25,693
14,944
77,982
(25,693)
52,289
153,753
342,319
496,072
-
-
-
-
-
-
563,305
209,447
772,752
415,653
147,652
563,305
No part of the deferred tax asset shown in Note 15 is attributable to tax losses. The directors advise that the potential future income
tax benefit at 30 June 2012 in respect of tax losses not brought to account is nil.
Tax consolidation legislation
Euroz Limited and its wholly-owned Australian subsidiaries implemented the tax consolidation legislation as of 1 July 2003. The
accounting policy on implementation of the legislation is set out in Note 1(b). The impact on the income tax expense for the year
is disclosed in the tax reconciliation above.
The entities have also entered into a tax sharing and funding agreement. Under the terms of this agreement, the wholly-owned
entities reimburse Euroz Limited for any current income tax payable by Euroz Limited arising in respect of their activities. The
reimbursements are payable at the same time as the associated income tax liability falls due and have therefore been recognised
as a current tax-related receivable by Euroz Limited. In the opinion of the directors, the tax sharing agreement is also a valid
agreement under the tax consolidation legislation and limits the joint and several liability of the wholly-owned entities in the case
of a default by Euroz Limited.
The wholly-owned entities have fully compensated Euroz Limited for deferred tax liabilities assumed by Euroz Limited on the date
of the implementation of the legislation and have been fully compensated for any deferred tax assets transferred to Euroz Limited.
50 Annual Report 2012
Notes to the Financial StatementsFor the year ended 30 June 2012 Note 7. Cash and cash equivalents
Cash at bank and on hand
Note 8. Trade and other receivables
Trade debtors
2012
$
2011
$
53,741,715
68,059,994
1,775,702
1,909,730
All trade debtors relating to brokerage and principal trading have been transferred to Pershing who provides a trust account facility as part
of the clearing and settlement service.
Note 9. Inventories
Securities in unlisted companies (at cost) (i)
Trading securities in listed companies (at cost) (i)
Fair value adjustments (ii)
Total
(i) These securities are held for trade purposes.
(ii) The fair value adjustment is based on the closing price of each investment at year end.
Note 10. Other current assets
Prepayments
Accrued income
Total
Note 11. Long term receivable
Security deposit (unsecured)
527,000
1,720,094
(788,274)
-
394,122
(45,447)
1,458,820
348,675
513,035
1,808,894
2,321,929
541,854
1,642,578
2,184,432
5,000,000
5,000,000
Deposit held by Pershing (clearing participant on behalf of Euroz Securities Limited) in order to meet the capital requirements under
ASX Clear Pty Ltd.
Note 12. Investments accounted for using the equity method
Associated company
67,480,289
65,596,600
(a) Movements during the year in equity accounted
investment in associated companies
Balance at 1 July
Add:
Recognised as investment during the year
Gain arising from acquisition of further interests in associate
Share of profits/(loss) after tax
65,596,600
58,792,688
5,877,470
1,312,764
2,426,942
944,126
(1,434,090)
7,264,655
Acquisition on additional interest in associate during the year (Note 1(v))
303,605
544,890
Less:
Dividend received/receivable
Balance at 30 June
(4,176,060)
(4,376,701)
67,480,289
65,596,600
Euroz Limited 51
Notes to the Financial StatementsFor the year ended 30 June 2012 Note 12. Investments accounted for using the equity method (continued)
(b)
Interest held in the associated company
Name of entity
Ozgrowth Limited
Westoz Investment Company Limited
Country of
Incorporation
Principal activity
Australia
Australia
Investment company
Investment company
Summarised financial information in respect of the group’s associates is set out below:
(c)
Summarised financial information
Financial position:
Total assets
Total liabilities
Net assets
Share of associates’ net assets
Financial performance:
Total revenue
Total profit/(loss) for the year after tax
Note 13. Financial assets
Fair value movement on derivatives (i)
Total
Ownership interest
2012
%
35.25%
22.77%
2012
$
2011
%
31.76
20.93
2011
$
256,809,686
286,598,020
(13,650,755)
(34,138,215)
243,158,931
252,459,805
67,480,289
65,596,600
7,707,403
(5,946,607)
51,789,081
31,716,373
2,000
2,000
219,746
219,746
(i) The company is a listed company. The company’s fair value at year end is determined by the current share price as at 30 June 2012.
Non-current assets pledged as security
See Note 32 for information on non-current assets pledged as security by the parent entity or its controlled entities.
Note 14. Plant and equipment
Leasehold improvements
At cost
Less: Accumulated amortisation
Software
At cost
Less: Accumulated depreciation
Office equipment
At cost
Less: Accumulated depreciation
Furniture, fixtures and fittings
At cost
Less: Accumulated depreciation
52 Annual Report 2012
2,528,511
(1,260,023)
1,268,488
31,811
(8,925)
22,886
1,190,475
(630,711)
559,764
587,965
(312,918)
275,047
2,524,118
(627,935)
1,896,183
31,170
(28,625)
2,545
1,061,736
(343,445)
718,291
603,846
(153,028)
450,818
2,126,185
3,067,837
Notes to the Financial StatementsFor the year ended 30 June 2012
Note 14. Plant and equipment (continued)
Reconciliations
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the current and
previous financial year are set out below:
2012
Carrying amount at 1 July 2011
Additions
Depreciation/amortisation expense (Note 5)
Leasehold
improvements
$
Plant and
equipment
$
Total
$
1,896,183
1,171,654
3,067,837
4,393
(632,089)
244,292
248,685
(558,248)
(1,190,337)
Carrying amount at 30 June 2012
1,268,487
857,698
2,126,185
2011
Carrying amount at 1 July 2010
Additions
Depreciation/amortisation expense (Note 5)
225,220
2,364,472
(693,509)
359,287
584,507
1,263,903
3,628,375
(451,536)
(1,145,045)
Carrying amount at 30 June 2011
1,896,183
1,171,654
3,067,837
Note 15. Deferred tax assets
Deferred tax asset (Note 6)
Deferred tax assets comprises:
Provisions
Total
Note 16. Trade and other payables
Trade creditors
Other payables and accruals
Total
2012
$
2011
$
772,752
563,305
772,752
563,305
772,752
563,305
65,312
310,207
1,172,799
1,747,591
1,238,111
2,057,798
All trade creditors relating to brokerage and principal trading have been transferred to Pershing who provides a trust account facility as
part of the clearing and settlement service.
Note 17. Current tax liabilities
Provision for taxation
1,487,851
3,494,336
Euroz Limited 53
Notes to the Financial StatementsFor the year ended 30 June 2012
Note 18. Short term provisions
Dividends
Employee entitlements (annual leave)
Employee entitlements (long service leave)
Total
Dividends
2012
$
2011
$
9,341,110
21,134,214
602,920
709,760
527,055
-
10,653,790
21,661,269
This provision represents the dividend declared by the board to be paid out to shareholders on or before reporting date.
Movements in each class of provisions, other than employee benefits, are set out below:
Carrying amount at 1 July 2011
Additional provisions recognised
Amounts paid out
Carrying amount at 30 June 2012
Note 19. Deferred tax liabilities
Deferred tax liability (Note 6)
Deferred tax liability comprises:
Fair value gain adjustments
Other
Total
Note 20. Long term provisions
Lease incentive
Employee entitlements (long service leave)
Total
Lease incentive
Dividends
21,134,214
11,895,469
(23,688,573)
9,341,110
2012
$
2011
$
367,517
548,361
(175,151)
542,668
52,289
496,072
367,517
548,361
49,879
160,212
210,091
129,524
540,681
670,205
This provision represents the amounts of incentive received under the lease agreement for Level 14, 1 William Street, which is being
amortised over the life of the lease.
Movements in each class of provisions, other than employee benefits, are set out below:
Lease incentive
129,524
(79,645)
49,879
Carrying amount at 1 July 2011
Amounts paid out
Carrying amount at 30 June 2012
54 Annual Report 2012
Notes to the Financial StatementsFor the year ended 30 June 2012 Note 21. Contributed equity
(a)
Share capital
Ordinary shares
Consolidated entity
Consolidated entity
2012
Shares
2011
Shares
2012
$
2011
$
Issued and paid up capital - consisting of ordinary
shares
143,709,388
140,894,763
89,373,600
87,261,731
(b) Movements in ordinary share capital
At the beginning of the reporting period
Shares issued during the year
Exercise of options (i)
At the end of the reporting period
Consolidated entity
2012
Shares
2011
Shares
140,894,763
132,570,140
-
2,814,625
3,480,000
4,844,623
143,709,388
140,894,763
(i) Options were exercised at various times during the financial year. The options were granted on 27 February 2009 at an exercise price of
75 cents and expire on 1 March 2014.
(c) Movements in ordinary share capital
At the beginning of the reporting period
Shares issued during the year
Excercise of options
Capital raising costs
At the end of the reporting period
(d) Ordinary shares
Consolidated entity
2012
$
2011
$
87,261,731
79,296,164
-
2,111,869
4,350,000
3,633,467
-
(17,900)
89,373,600
87,261,731
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the
number of and amounts paid on the shares held. Ordinary shares have no par value.
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 upon a
poll each share is entitled to one vote.
(e) Options
A total of 2,814,625 options were exercised during the year at an exercise price of $0.75. There are 3,543,088 number of options on
issue at 30 June 2012 (2011: 6,357,713). These options are convertible into shares at $0.75.
(f )
Option Reserves
The option reserve records items recognised as expenses on valuation of share based payments. There has been no movement in
the options reserve.
(g)
Capital Management
The Directors primary objective is to maintain a capital structure that ensures the lowest cost of capital available to the group. At
reporting date, the group has no external borrowings.
As a holder of Australian Financial Services Licenses the group is subject to externally imposed capital requirements, which have been
complied with during the year.
Euroz Limited 55
Notes to the Financial StatementsFor the year ended 30 June 2012 Note 22. Dividends
Ordinary shares
Interim dividend for the half year ended 31 December 2011 of 1.5 cents
(2011 - 3 cents) per fully paid ordinary share paid on 28 January 2012.
2012
$
2011
$
Fully franked based on tax paid @ 30%
2,554,359
4,296,456
Final dividend declared and provided for at 30 June 2012 of 6.5 cents
(2011 – 15 cents) per fully paid ordinary share
Fully franked based on tax paid @ 30%
Total dividends provided for or paid
Franked dividends
9,341,110
21,134,214
11,895,469
25,430,670
The franked portions of the dividends recommended after 30 June 2012 will be franked out of existing franking credits or out of franking
credits arising from the payment of income tax in the year ending 30 June 2012.
Consolidated group
2012
$
2011
$
Franking credits available for subsequent financial years based on a tax rate of 30% (2011: 30%)
11,206,555
7,132,251
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
(a)
franking credits that will arise from the payment of the current tax liability
(b)
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date
(c)
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date, and
(d)
franking credits that may be prevented from being distributed in subsequent financial years.
The consolidated amounts include franking credits that would be available to the parent entity if distributable profits of controlled entities
were paid as dividends.
56 Annual Report 2012
Notes to the Financial StatementsFor the year ended 30 June 2012
Note 23. Financial instruments
(a)
Financial risk management
The group’s financial instruments consist of deposits with banks, trade receivables and payables, short term investments and
available for sale investments. Derivative financial instruments are not used by the group. Senior executives meet regularly to
analyse and monitor the financial risk associated with the financial instruments used by the group.
(b)
Financial risk exposure and management
(i)
Interest rate risk
The group has no borrowings and therefore is not exposed to interest rate risk associated with debt. The group has
significant cash reserves and the interest income earned from these cash reserves will be effected by movements in the
interest rate. A sensitivity analysis has been provided in the note to illustrate the effect of interest rate movements on interest
income earned.
(ii)
Liquidity risk
The group manages liquidity risk using forward cashflow projections, maintaining cash reserves and having no borrowings or
debt. In addition, at reporting date, the group has unutilised credit facilities totalling $20,000,000.
Trade and other payables are expected to be paid as follows:
Less than 1 month
(iii)
Credit risk
2012
$
2011
$
1,238,111
2,057,798
The maximum exposure to credit risk, excluding the value of any collateral or security, at reporting date is the carrying
amount of the financial assets disclosed in the statement of financial position. There is no collateral or security held for those
assets at 30 June 2012.
Credit risk arises from exposure to customers and deposits with banks. Senior management monitors its exposure to
customers on a regular basis to ensure recovery and repayment of outstanding amounts. Cash deposits are only made with
Australian based banks. All trade debtors relating to brokerage and principal trading have been transferred to Pershing who
provides a trust account facility as part of the clearing and settlement service.
The group invests in listed held for trade financial assets. These investments are held in companies listed on the Australian
Securities Exchange and are considered to be liquid in nature. The group also invests in unlisted held for trading financial
assets. The financial performance and return of all investments are regularly reviewed by senior management.
Exposure to credit risk
The carrying amount of the consolidated entity’s financial assets represents the maximum credit exposure.
The consolidated entity’s maximum exposure to credit risk at the reporting date was:
Financial assets at fair value through profit or loss
Cash and cash equivalents
Receivables
Financial assets held for trading
Long term deposit
Impairment losses
None of the consolidated entity’s other receivables are past due (2011: Nil)
Carrying Amount
2012
$
2011
$
2,000
219,746
53,741,715
68,059,994
1,775,702
1,458,820
5,000,000
1,909,730
348,675
5,000,000
61,978,237
75,538,145
Euroz Limited 57
Notes to the Financial StatementsFor the year ended 30 June 2012
Note 23. Financial instruments (continued)
(iv)
Financial instruments composition and maturity analysis
Weighted Average Effective
Interest Rate
Floating
Interest Rate
Non Interest
Bearing
2012
%
2011
%
2012
$
2011
$
2012
$
2011
$
FINANCIAL ASSETS
Cash and cash equivalents
4.44
4.81
53,741,715
68,059,994
Receivables
Financial assets held for
trading
Financial assets at fair value
through profit and loss
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,909,730
1,458,820
348,675
2,000
219,746
Long term deposit
2.75
3.5
5,000,000
5,000,000
-
-
Total financial assets
FINANCIAL LIABILITIES
58,741,715
73,059,994
1,460,820
2,478,151
Trade and other payables
-
-
-
-
1,238,111
2,057,798
(iv)
Sensitivity analysis
The Group has performed a sensitivity analysis in relation to interest income and movements in interest rates. The analysis
highlights the post tax effect on the current year’s results and equity which would have resulted from movement in interest
rates with all other variables remaining constant.
Change in profit
–
–
increase in interest rate by 1%
decrease in interest rate by 1%
Change in equity
–
–
increase in interest rate by 1%
decrease in interest rate by 1%
(v)
Fair Value
2012
$
2011
$
411,192
(411,192)
476,420
(476,420)
411,192
(411,192)
476,420
(476,420)
The following table details the consolidated entities fair value of financial instruments categorised by the following levels:
Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices)
Level 3: Inputs for the assets or liability that are not based on observable market data (unobservable inputs)
2012
Assets
Ordinary shares
Total Assets
Level 1
Level 2
Level 3
Total
931,820
931,820
527,000
527,000
-
-
1,458,820
1,458,820
58 Annual Report 2012
Notes to the Financial StatementsFor the year ended 30 June 2012
Note 24. Remuneration of auditors
Assurance services
Audit services
Audit and review of financial reports for the company
Fees paid to PKF Mack & Co firm
Taxation services
Tax compliance services
Fees paid to PKF Mack & Co firm
Note 25. Contingent liabilities
2012
$
2011
$
97,000
156,200
15,600
15,000
The parent entity and consolidated group had contingent liabilities at 30 June 2012 as follows:
Secured guarantees in respect of:
operating lease of a controlled group entity
791,000
791,000
Note 26. Commitments for expenditure
(a)
Operating leases
Commitments for minimum lease payments in relation to noncancellable operating leases
are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
Commitments not recognised in the financial statements
1,052,485
3,936,012
3,368,089
1,126,508
3,948,029
4,408,558
8,356,586
9,483,095
The lease on the premises at Level 14, 1 William Street is for the period of 10 years commencing on 1 February 2003 and expiring
on 31 January 2013 has been sublet to Rio Tinto until the expiry of the lease.
The lease on the premises at Level 18, 54-58 Mounts Bay Road is for the period of 10 years commencing 2 July 2010 and expiring
on 1 July 2020.
Note 27. Employee benefits
Employee benefit and related on-costs liabilities
Provision for employee entitlements – current
Aggregate employee benefit and related oncosts liabilities
Note 28. Related parties
All key management personnel have the title of director.
(a)
Key Management Personnel Compensation
Short-term employee benefits
–
–
Executive Directors
Specified executives
Post-employment benefits
–
–
Executive Directors
Specified executives
Total compensation
1,472,892
1,472,892
1,067,736
1,067,736
Group
2012
$
2011
$
3,781,851
8,220,122
4,383,179
6,549,159
12,001,973
10,932,338
150,000
365,491
515,491
150,000
271,615
421,615
12,517,464
11,353,953
Euroz Limited 59
Notes to the Financial StatementsFor the year ended 30 June 2012 Note 28. Related parties (continued)
(b)
Individual directors’ and executives’ compensation disclosure
Information regarding individual directors’ and executives’ compensation and some equity instruments disclosures as required by
Corporation Regulation 2M.3.03 is provided in the remuneration report section of the directors’ report.
Apart from the details disclosed in this note, no director has entered into a material contract with the group since the end of the
previous financial year and there were no material contracts involving directors’ interest existing at year end.
(c)
Parent entity
The ultimate parent entity within the Group is Euroz Limited.
(d) Wholly-owned group transactions
(i)
Loans to key management personnel
There were no loans to key management personnel at the end of the year.
(ii)
Shareholdings of key management personnel
The movement during the reporting period in the number of shares in Euroz Limited held, directly, indirectly or beneficially,
by each key management person, including related parties, is as follows:
Balance at
1 July 2011
Grant as
remuneration
On exercise
of options
Bought &
(sold) *
Balance at
30 June 2012
2012
Directors of Euroz Limited
Ordinary shares
P Diamond
A McKenzie
J Hughes
G Chessell
D Young
10,000,000
9,150,000
9,900,000
3,102,000
4,202,001
Key management personnel of the consolidated entity
Ordinary shares
R Caldow
S Yeo
O Foster
(resigned 3 November 2011)
P Rees
R Kane
A Clayton
A Brittain
G Allen
R Black
N McGlew
D Woods
4,500,000
3,200,000
2,101,200
1,100,000
2,330,000
2,000,000
303,400
500,000
1,800,000
217,806
350,000
M Argento (resigned 30 June 2012)
1,000,000
B Beresford
(appointed 21 March 2011)
B Laird
J Bishop
J Mackie
A Fresson
2,000,000
655,000
91,112
847,000
260,511
59,610,030
*Only disclosed to date of resignation
60 Annual Report 2012
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
750,000
-
-
-
450,000
320,000
-
-
29,377
100,000
-
-
-
7,485
23,260
-
-
-
-
-
-
-
100,000
100,000
-
47,999
-
-
-
-
10,623
-
-
-
10,000
12,500
-
-
-
-
11,500
-
-
10,000,000
10,000,000
10,000,000
3,102,000
4,250,000
4,950,000
3,520,000
2,101,200*
1,100,000
2,370,000
2,100,000
303,400
500,000
1,810,000
237,791
373,260
1,000,000*
2,000,000
655,000
102,612
847,000
260,511
1,680,122
292,622
61,582,774
Notes to the Financial StatementsFor the year ended 30 June 2012
Note 28. Related parties (continued)
2011
Directors of Euroz Limited
Ordinary shares
P Diamond
A McKenzie
J Hughes
G Chessell
D Young
9,000,000
9,100,000
9,400,000
3,102,000
4,000,000
Key management personnel of the consolidated entity
Ordinary shares
R Caldow
S Yeo
K Paganin (resigned 22 July 2010)
O Foster
P Rees
M Hepburn
R Kane
A Clayton
A Brittain
G Allen
R Black
N McGlew (appointed 1 July 2010)
D Woods (appointed 1 July 2010)
M Argento (appointed 14 February 2011)
B Beresford (appointed 21 March 2011)
*Only disclosed to date of resignation
4,500,000
3,200,000
4,905,522
2,101,200
1,000,000
1,222,000
2,330,000
2,000,000
265,400
500,000
1,800,000
150,094
350,000
-
-
58,926,216
Balance at
1 July 2010
Grant as
remuneration
On exercise
of options
Bought &
(sold) *
Balance at
30 June 2011
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
900,000
50,000
500,000
-
202,001
-
-
-
-
100,000
-
-
-
-
-
-
-
-
-
-
100,000
10,000,000
-
-
-
-
-
-
-
-
-
-
-
-
38,000
-
-
67,712
-
9,150,000
9,900,000
3,102,000
4,202,001
4,500,000
3,200,000
4,905,522*
2,101,200
1,100,000
1,222,000
2,330,000
2,000,000
303,400
500,000
1,800,000
217,806
350,000
1,000,000
1,000,000
2,000,000
2,000,000
1,752,001
3,205,712
63,883,929
Euroz Limited 61
Notes to the Financial StatementsFor the year ended 30 June 2012 Note 28. Related parties (continued)
(iii) Option holdings of key management personnel
The movement during the reporting period in the number of options over ordinary shares in Euroz Limited held, directly,
indirectly or beneficially, by each key management person, including related parties, is as follows:
Balance at
1 July 2011
Granted as
remuneration Exercised
Bought
Balance at
30 June 2012
Total
exercisable at
30 June 2012
Total not
exercisable at
30 June 2012
2012
Directors of Euroz Limited
Ordinary shares
P Diamond
A McKenzie
J Hughes
G Chessell
D Young
-
750,000
-
-
-
-
-
-
-
-
-
(750,000)
-
-
-
Key management personnel of the consolidated entity
-
-
-
-
-
-
-
-
-
-
-
66,765
12,425
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
200,000*
200,000*
-
-
233,000
233,000
100,000
100,000
-
-
41,200
41,200
338,016
338,016
4,940
4,940
-
-
-
-
-
-
60,000
60,000
-
-
-
-
-
-
(450,000)
(320,000)
-
-
(29,377)
(100,000)
-
-
-
(7,485)
(23,260)
-
-
-
-
-
-
(1,680,122)
79,190
977,156
977,156
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Ordinary shares
R Caldow
S Yeo
O Foster
(resigned 3 November
2011)
P Rees
R Kane
A Clayton
A Brittain
G Allen
R Black
N McGlew
D Woods
M Argento
(resigned 30 June 2012)
B Beresford
B Laird
J Bishop
J Mackie
A Fresson
450,000
320,000
200,000
-
262,377
200,000
-
41,200
271,251
-
23,260
-
-
60,000
-
-
-
2,578,088
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
62 Annual Report 2012
Notes to the Financial StatementsFor the year ended 30 June 2012 Note 28. Related parties (continued)
(iv) Option holdings of key management personnel
Balance at
1 July 2010
Granted as
remuneration
Exercised
Bought
Balance at
30 June 2011
Total
exercisable at
30 June 2011
Total not
exercisable at
30 June 2011
2011
Directors of Euroz
Limited
Ordinary shares
P Diamond
A McKenzie
J Hughes
G Chessell
D Young
900,000
800,000
500,000
-
202,001
-
-
-
-
-
(900,000)
(50,000)
(500,000)
-
(202,001)
Key management personnel of the consolidated entity
Ordinary shares
R Caldow
S Yeo
K Paganin
(resigned 22 July 2010)
O Foster
P Rees
M Hepburn
(resigned 8 February
2011)
R Kane
A Clayton
A Brittain
G Allen
R Black
N McGlew
(appointed 1 July 2010)
D Woods
(appointed 1 July 2010)
M Argento
(appointed14 February
2011)
B Beresford
(appointed 21 March
2011)
450,000
320,000
391,552
200,000
100,000
122,200
233,000
200,000
-
41,200
180,000
-
23,260
-
-
4,663,213
*Only disclosed to date of resignation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(100,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
750,000
750,000
-
-
-
-
-
-
450,000
450,000
320,000
320,000
27,239
418,791
418,791*
-
-
-
200,000
200,000
-
-
122,200
122,200*
29,377
262,377
262,377
-
-
-
200,000
200,000
-
-
41,200
41,200
91,251
271,251
271,251
-
-
-
-
-
-
23,260
23,260
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Euroz Limited 63
(1,752,001)
147,867
3,559,079
3,559,079
Notes to the Financial StatementsFor the year ended 30 June 2012 Note 28. Related parties (continued)
The company has applied the option under Corporations Amendments Regulation to transfer key management personnel
remuneration disclosures required by AASB 124 paragraphs 25.4 to 25.7.2 to the Remuneration Report in the Directors’ report.
Wholly-owned group
The wholly-owned group consists of Euroz Limited and its wholly-owned controlled entities, Euroz Securities Limited, Detail
Nominees Pty Ltd, Zero Nominees Pty Ltd and Westoz Funds Management Pty Ltd Ownership interests in these controlled
entities are set out in Note 29.
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless otherwise stated.
2012
$
2011
$
Transactions with related parties consisting of:
(i) Subsidiaries
–
–
Loans advanced by Euroz Limited to subsidiaries
5,180,513
7,359,828
Payments of dividends to Euroz Limited by subsidiaries
10,350,000
16,450,000
(ii) Associated Companies
–
–
Dividends received by Euroz Limited from Associates
Performance fee received by the Euroz Group from Associates
– Management fee received by the Euroz Group from Associates
4,176,060
-
2,700,491
4,376,702
5,859,837
3,115,030
Ownership interests in related parties
Interests held in the following classes of related parties are set out in the following notes:
(a)
controlled entities - Note 29
Other transactions with directors and specified executives
During the year ended 30 June 2012 the Directors and key management personnel transacted share business through Euroz
Securities Limited on normal terms and conditions.
Aggregate amounts of the above transactions with Directors and key management personnel of the consolidated group:
Amounts recognised as revenue
Brokerage earned by Euroz Securities Limited on Directors’ accounts
50,160
73,481
Note 29. Investments in controlled entities
Name of entity
Euroz Securities Limited
Detail Nominees Pty Limited
Zero Nominees Pty Limited
Country of
incorporation
Australia
Australia
Australia
Westoz Funds Management Pty Ltd
Australia
Equity holding
Class of shares
Ordinary
Ordinary
Ordinary
Ordinary
2012
%
100
100
100
100
2011
%
100
100
100
100
Cost of
parent entity’s investment
2012
$
2011
$
25,000,000
25,000,000
-
-
-
-
1,450,000
1,450,000
The ultimate parent entity in the wholly owned group is Euroz Limited.
64 Annual Report 2012
Notes to the Financial StatementsFor the year ended 30 June 2012
Note 30. Events occurring after reporting date
The directors are not aware of any other matter or circumstance subsequent to 30 June 2012 that has significantly affected, or may
significantly affect:
(a) the consolidated entity’s operations in future financial years: or
(b) the results of those operations in future financial years: or
(c) the consolidated entity’s state of affairs in future financial years.
Note 31. Reconciliation of cash flows from operating activities
Profit for the period
Adjustments for:
Depreciation and amortisation
Share of net profits of associate
Realised gain in associates
Changes in assets and liabilities
Decrease/(increase) in trade debtors and other receivables
Decrease/(increase) in prepayments
Increase in accrued income
(Increase)/decrease in inventories
Increase in deferred tax asset
Decrease in trade creditors and other liabilities
Increase/(decrease) in provision for income taxes payable
Increase/(decrease) in provision for deferred tax liabilities
Increase in provisions
Net cash from operating activities
Note 32. Credit facilities
Unrestricted access was available at reporting date to the following lines of credit:
Credit standby arrangements
Bank overdrafts
Unused at reporting date
Bank overdrafts
2012
$
2011
$
11,760,189
26,566,040
1,190,337
1,130,485
1,145,045
(7,794,638)
(1,094,138)
(944,127)
134,029
28,818
(1,457,729)
(86,746)
(166,316)
(1,130,071)
(1,110,144)
(209,447)
(818,788)
(2,006,485)
(180,844)
325,512
37,411
(253,131)
(310,020)
480,651
422,104
75,970
8,983,208
16,750,759
20,000,000
20,000,000
20,000,000
20,000,000
Euroz Securities Ltd, a wholly owned subsidiary of Euroz Limited, has a bank overdraft facility as at 30 June 2012 for up to $10,000,000.
The facility may be drawn down at any time, is repayable on demand and interest is incurred at the standard variable rate. The facility is
secured by a fixed and floating charge over the assets of Euroz Limited and Euroz Securities Limited.
Euroz Limited has a bank overdraft facility as at 30 June 2012 for up to $10,000,000. The facility may be drawn down at any time, is
repayable on demand and interest is incurred at the standard variable rate. The facility is secured by a fixed and floating charge over the
assets of Euroz Limited.
Euroz Limited 65
Notes to the Financial StatementsFor the year ended 30 June 2012 Note 33. Earnings per share
Basic earnings per share
Diluted earnings per share
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares
used as the denominator in calculating basic earnings per share.
Weighted average number of ordinary shares and potential ordinary shares
used as the denominator in calculating diluted earnings per share.
2012
Cents
8.20
8.11
2011
Cents
19.38
16.66
2012
Number
2011
Number
143,457,112
137,062,530
145,096,323
159,497,978
The profit after tax figures used to calculate the earnings per share for both the basic and diluted calculations was the same as the profit
figure from income statement.
2012
$
2011
$
30,023,117
41,990,525
82,771,910
81,981,042
112,795,027
123,971,567
10,852,041
24,663,701
10,852,041
24,663,701
89,372,700
87,261,731
18,950,518
15,703,870
(6,566,232)
(3,843,735)
186,000
186,000
101,942,986
99,307,866
15,142,118
21,487,221
-
-
15,142,118
21,487,221
Note 34. Parent entity disclosures
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Equity
Issued capital
Retained earnings
Reserves
Asset revaluation reserve
Option premium reserve
Total equity
Financial performance
Profit for the year
Other comprehensive income
Total comprehensive income
Note 35. Company details
The registered office and principal place of business address of the company is:
Euroz Limited
Level 18 Alluvion
58 Mounts Bay Road
PERTH WA 6000
66 Annual Report 2012
Notes to the Financial StatementsFor the year ended 30 June 2012
Direc tors’ D e clarati on
For the year ended 30 June 2012
The directors declare that:
1.
The financial statements, notes and additional disclosures included in the Directors’ report and designated as audited, are in
accordance with the Corporations Act 2001 and:
(a)
(b)
(c)
comply with Accounting Standards and Corporations Regulations 2001;
giving a true and fair view of the company’s and consolidated group’s financial position as at 30 June 2012 and of their
performance for the year ended on that date;
the financial statements are in compliance with International Financial Reporting Standards, as stated in note 1 to the
financial statements.
2.
The Chief Executive Officer and Chief Financial Officer have declared that:
(a)
(b)
(c)
the financial records of the company for the financial year have been properly maintained in accordance with section 295A
of the Corporations Act 2001;
the financial statements and notes for the financial year comply with Accounting Standards; and
the financial statements and notes for the financial year give a true and fair view;
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.
This declaration is made in accordance with a resolution of the Board of Directors.
Peter Diamond
Director
Andrew McKenzie
Director
Date: 20 August 2012
Euroz Limited 67
I ndepend ent Audit R epor t
68 Annual Report 2012
69 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF EUROZ LIMITED Report on the Financial Report We have audited the accompanying financial report of Euroz Limited, which comprises the statements of financial position as at 30 June 2012, the statements of comprehensive income, the statements of changes in equity and the statements 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 Euroz Limited (the company) and the consolidated entity. The consolidated entity comprises the company and the entities it controlled at the year’s end or from time to time during the financial year. Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. 15 AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF EUROZ LIMITED In relation to our audit of the financial report of Euroz Limited for the year ended 30 June 2012, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. PKF MACK & CO SIMON FERMANIS PARTNER 20 AUGUST 2012 WEST PERTH, WESTERN AUSTRALIA
I ndependent Audit R epor t
Euroz Limited 69
70 Opinion In our opinion: (a) the financial report of Euroz Limited is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the company’s and consolidated entity’s financial positions as at 30 June 2012 and of their 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 1. Report on the Remuneration Report We have audited the Remuneration Report included in pages 6 to 12 of the directors’ report for the year ended 30 June 2012. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Opinion In our opinion, the Remuneration Report of Euroz Limited for the year ended 30 June 2012, complies with section 300A of the Corporations Act 2001. PKF MACK & CO SIMON FERMANIS PARTNER 20 AUGUST 2012 WEST PERTH, WESTERN AUSTRALIA 70 Opinion In our opinion: (a) the financial report of Euroz Limited is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the company’s and consolidated entity’s financial positions as at 30 June 2012 and of their 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 1. Report on the Remuneration Report We have audited the Remuneration Report included in pages 6 to 12 of the directors’ report for the year ended 30 June 2012. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Opinion In our opinion, the Remuneration Report of Euroz Limited for the year ended 30 June 2012, complies with section 300A of the Corporations Act 2001. PKF MACK & CO SIMON FERMANIS PARTNER 20 AUGUST 2012 WEST PERTH, WESTERN AUSTRALIA
Shareholding I nfor ma tion
Ordinary Shares at 30 September 2012
Distribution of Shareholders
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Rounding
Total
Unmarketable Parcels
Minimum $ 500.00 parcel at $ 0.0000 per unit
Top Twenty Shareholders
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Zero Nominees Pty Ltd
Navigator Australia Ltd
HSBC Custody Nominees (Australia) Limited
Icon Holdings Pty Ltd
Mr Simon David Yeo + Mrs Jennifer Dale Yeo
Ice Cold Investments Pty Ltd
Ice Cold Investments Pty Ltd
Thorney Holdings Pty Ltd
Mr Andrew William McKenzie + Mrs Catherine Patricia McKenzie
Mrs Rebecca Joy Foster
Australian Executor Trustees Limited
Ice Cold Investments Pty Ltd
Yandal Investments Pty Limited
National Nominees Limited
Westrade Resources Pty Ltd
Mrs Catherine Elizabeth Kane
BNM Holdings Pty Ltd
BNM Holdings Pty Ltd
Cape Bouvard Equities Pty Ltd
TPIC Pty Ltd
Total
Total Remaining Holders Balance
70 Annual Report 2012
Total Holders
335
638
385
777
118
Units
162,793
1,904,617
3,125,934
24,106,356
114,504,705
Issued Capital
%
0.11
1.32
2.17
16.76
79.63
0.01
2,253
143,804,405
100.00
Minimum
Parcel Size
0
Holders
205
Units
51929
Units
43,408,901
10,420,982
3,896,166
3,500,000
2,831,000
2,760,000
2,500,000
2,200,000
2,071,500
2,000,000
1,818,189
1,600,000
1,530,000
1,449,359
1,163,200
1,160,000
1,000,000
1,000,000
1,000,000
1,000,000
88,309,297
55,495,108
%
30.19
7.25
2.71
2.43
1.97
1.92
1.74
1.53
1.44
1.39
1.26
1.11
1.06
1.01
0.81
0.81
0.70
0.70
0.70
0.70
61.41
38.59
100.00
Euroz S ecur iti es Limited Contac t D e ta i ls
Institutional Dealing
Andrew McKenzie
Ben Laird
Chris Webster
Jay Hughes
Jonathan van Hazel
Peter Diamond
Peter Schwarzbach
Rob Black
Russell Kane
Tim Bunney
Corporate
Austen Fresson
Brian Beresford
David Riley
Douglas Young
Mark Laybourn
Nathan Ling
Nick McGlew
Robbie Harrison
Tamara Stampfli
Karlie Torrens
Equities Research
Andrew Clayton
Bridget Watkins
Gavin Allen
Greg Chessell
Jon Bishop
Kristan Harvey
Michael Skinner
Peta Gale
Richard Hamersley
Retail Dealing
Ben Statham
Brett Stapleton
Cameron Murray
Christian Zerovich
Giles McCaw
Ian Dodson
James Mackie
Joel Pember
Leigh Travers
Lucas Robinson
Matt Williamson
Nicholas Gorton
Richard Caldow
Richard Gardner
Ryan Stewart
Sian Hepburn
Simon Yeo
Stephen Grove
Tim Bennett
Tom Ruello
Operations
Adelaide de Vis
Alison Wreford
Angie Wood
Anthony Brittain
Anthony Hewett
Bindi Stickland
Catherine Horton
Dolly Lim
Emma Whitehurst
Jayde Gouveia
Hayley Graham
Sheri Chandran
Tania Castlehow
Fax +61 8 9488 1478
Managing Director
Institutional Advisor
Institutional Advisor
Institutional Advisor
Institutional Advisor
Executive Chairman
Institutional Advisor
Head of Institutional Dealing
Institutional Advisor
Dealers Assistant
Fax +61 8 9488 1458
Corporate Finance Executive
Corporate Finance Executive
Corporate Finance Executive
Head of Corporate Finance
Corporate Finance Executive
Corporate Finance Executive
Corporate Finance Executive
Corporate Finance Executive
Executive Assistant
Executive Assistant
Fax +61 8 9488 1479
Resources Analyst
Publications Junior
Industrials Analyst
Head of Research
Resources Analyst
Resources Associate Analyst
Resources Analyst
Publications & Events Coordinator
Industrials Analyst
Fax +61 8 9488 1477
Equities Advisor
Equities Advisor
Equities Advisor
Equities Advisor
Equities Advisor
Equities Advisor
Equities Advisor
Equities Advisor
Equities Advisor
Equities Advisor
Equities Advisor
Equities Advisor
Equities Advisor
Equities Advisor
Equities Advisor
Dealers Assistant
Head of Retail Dealing
Equities Advisor
Equities Advisor
Equities Advisor
Telephone
+61 8 9488 1407
+61 8 9488 1429
+61 8 9488 1412
+61 8 9488 1406
+61 8 9488 1443
+61 8 9488 1405
+61 8 9488 1492
+61 8 9488 1423
+61 8 9488 1426
+61 8 9488 1461
Telephone
+61 8 9488 1475
+61 8 9488 1493
+61 8 9488 1437
+61 8 9488 1434
+61 8 9488 1480
+61 8 9488 1472
+61 8 9488 1460
+61 8 9488 1490
+61 8 9488 1469
+61 8 9488 1421
Telephone
+61 8 9488 1427
+61 8 9488 1433
+61 8 9488 1413
+61 8 9488 1409
+61 8 9488 1481
+61 8 9488 1463
+61 8 9488 1431
+61 8 9488 1411
+61 8 9488 1414
Telephone
+61 8 9488 1417
+61 8 9488 1435
+61 8 9488 1440
+61 8 9488 1436
+61 8 9488 1462
+61 8 9488 1442
+61 8 9488 1416
+61 8 9488 1476
+61 8 9488 1482
+61 8 9488 1424
+61 8 9488 1466
+61 8 9488 1473
+61 8 9488 1403
+61 8 9488 1444
+61 8 9488 1441
+61 8 9488 1447
+61 8 9488 1404
+61 8 9488 1410
+61 8 9488 1432
+61 8 9488 1420
Telephone
Fax +61 8 9488 1477
+61 8 9488 1471
Compliance Assistant
+61 8 9488 1402
New Accounts Officer
+61 8 9488 1468
Office Assistant
Chief Operating and Financial Officer
+61 8 9488 1401
Company Secretary/ Head of Risk Mgt. +61 8 9488 1428
+61 8 9488 1439
Acting Head of Settlements
+61 8 9488 1446
Settlements/Nominees
+61 8 9488 1415
Financial Controller
+61 8 9488 1465
Settlements/Nominees
+61 8 9488 1474
New Accounts Assistant
+61 8 9488 1400
Reception
+61 8 9488 1485
Assistant Accountant
+61 8 9488 1425
Bookings
Email
amckenzie@euroz.com.au
blaird@euroz.com.au
cwebster@euroz.com.au
jhughes@euroz.com.au
jvanhazel@euroz.com.au
pdiamond@euroz.com.au
pschwarzbach@euroz.com.au
rblack@euroz.com.au
rkane@euroz.com.au
tbunney@euroz.com.au
Email
afresson@euroz.com.au
bberesford@euroz.com.au
driley@euroz.com.au
dyoung@euroz.com.au
mlaybourn@euroz.com.au
nling@euroz.com.au
nmcglew@euroz.com.au
rharrison@euroz.com.au
tstampfli@euroz.com.au
tmickle@euroz.com.au
Email
aclayton@euroz.com.au
bwatkins@euroz.com.au
gallen@euroz.com.au
gchessell@euroz.com.au
jbishop@euroz.com.au
kharvey@euroz.com.au
mskinner@euroz.com.au
pgale@euroz.com.au
rhamersley@euroz.com.au
Email
bstatham@euroz.com.au
bstapleton@euroz.com.au
cmurray@euroz.com.au
czerovich@euroz.com.au
gmccaw@euroz.com.au
idodson@euroz.com.au
jmackie@euroz.com.au
jpember@euroz.com.au
ltravers@euroz.com.au
lrobinson@euroz.com.au
mwilliamson@euroz.com.au
ngorton@euroz.com.au
rcaldow@euroz.com.au
rgardner@euroz.com.au
rstewart@euroz.com.au
shepburn@euroz.com.au
syeo@euroz.com.au
sgrove@euroz.com.au
tbennett@euroz.com.au
truello@euroz.com.au
Email
adevis@euroz.com.au
awreford@euroz.com.au
awood@euroz.com.au
abrittain@euroz.com.au
ahewett@euroz.com.au
bstickland@euroz.com.au
chorton@euroz.com.au
dlim@euroz.com.au
ewhitehurst@euroz.com.au
jgouveia@euroz.com.au
reception@euroz.com.au
schandran@euroz.com.au
tcastlehow@euroz.com.au
Westoz Funds Management Ltd
Phil Rees
Dermot Woods
Fax +61 8 9321 8288
Fund Manager
Fund Manager
Telephone
+61 8 9321 7015
+61 8 9321 7023
Email
prees@westozfunds.com.au
dwoods@westozfunds.com.au
Euroz Limited 71
72 Annual Report 2012
Euroz Limited
Level 18 Alluvion
58 Mounts Bay Road
Perth WA 6000
Telephone: (08) 9488 1400
Facsimile:
(08) 9488 1477
Website: www.euroz.com.au
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