A n n u a l R e p o r t 2 0 1 3
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 2013
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
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Consolidated Statement of Profit or
Loss and Other Comprehensive Income
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
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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
Chris Webster
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:
info@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 4
35 Havelock Street
WEST PERTH WA 6005
Telephone: +61 8 9426 8999
Bankers
Westpac Banking Corporation
109 St Georges Terrace
PERTH WA 6000
Securities Exchange Listings
Euroz Limited shares and options are listed
on the Australian Securities Exchange
(ASX: EZL and EZLO).
Website Address
www.euroz.com.au
E u r o z
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 financial
services company with a consistent track
record of strong shareholder returns.
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 $8,084,979 (2012:
$16,882,373) and a net profit after tax of $6,304,532
(2012: $11,760,189). This profit equates to earnings
per share for the financial year to 30 June 2013 on a
normalised basis of 3.8 cents.
The Directors have declared a final dividend of
5.0 cents per share (fully franked) in addition to the
interim dividend of 1.5 cents per share fully franked.
The profit from last year’s result was achieved in
particularly challenging market conditions. Continued
pressure on market volumes, particularly in small
resources has affected the trading and business
environment that we operate in; however we are
seeing a gradual improvement in sentiment across the
financial markets.
The performance from Westoz Funds Management in
terms of returns for investors was up from the previous
year. Funds under management as at 30 June 2013
were $246m. The gross investment return for the year
was 6% for Westoz Investment Company Limited
and flat 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. At the date of this report Euroz
Limited has invested approximately $59.5m in Westoz
Investment Company Limited and Ozgrowth Limited.
A total of $151m of fully franked dividends have been
paid to our shareholders over the last thirteen 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.
As disclosed to the market in August, I will be stepping
down as Chairman of Euroz Limited at the 2013 Annual
General Meeting. I am honoured to have served the
position of Chairman for the past 13 years and look
forward to enjoying the continued success of the
company in a different capacity. The Company is in the
good hands of an enthusiastic and talented group of
individuals and I am confident of their future success.
Finally, I would like to thank all the staff, shareholders
and clients who have supported me and Euroz over
the last 13 years. It has been an incredible journey.
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
Jun-13
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
Jun-13
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
Jun-13
Cents per share
Westoz Funds Management Pty Ltd Funds Under Management
n
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l
i
m
$
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e
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e
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$
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
Jun-13
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
The strong performance of both the Western Australian
economy and commodity prices over our 13 year
history has assisted us to report excellent shareholder
returns over time. During this period we have generated
$179 million of net profits and paid $151 million in fully
franked dividends for our Euroz Limited shareholders
which on any measure has been an outstanding
achievement.
Whilst our businesses all remain firmly Western
Australian focussed it is worth remembering that the
financial performance of all our Group companies is
closely linked to the market cycle. We are not a widget
factory that has predictable growing demand for
our products every year and whilst we always aim to
improve and refine our strategies we should not forget
the overarching impact that the market cycle will have
on our businesses.
We should not logically expect to repeat the heady
profits of 2006-2008 every single year and neither
should we expect the very difficult markets of 2000-
2002 or of the past financial year to repeat every year
either.
Instead we should regard the cycle of the last year or
so as a period in which we felt secure with our strong
balance sheet, where we limited our mistakes, where
we continued to retain key employees but most
importantly where we are aware that this is a time of
opportunity. In a time where our direct competitors
are enduring further paralysing staff and cost cutting
measures I am pleased to report that in recent
months we have laid the foundations for an improved
performance into the next cycle.
Our staff are our most important asset and we are
currently going through some modest internal
change and a refining of our strategies that are already
generating improved commitment and sentiment in
our people. In broking it can sometimes be difficult
attracting quality new staff but we have been modest
net hirers in recent months and I expect this trend to
continue.
The past year saw a significant “hunt for yield” and a
major divergence in performance occurred between
industrial and resource shares. Whilst the ASX200
Accumulation index finished the financial year up 22.7%
the Small Resources index, which is a good indicator for
our investment universe, finished the year down by a
staggering 48%.
These difficult markets for us therefore led to lower
market turnover and completed equity capital
raisings but we are pleased to report that our all of our
businesses managed to remain profitable for the year.
Our Group net profit for the year was $6.3 million which
reflects modest profits in Euroz Securities and Westoz
Funds Management plus the increasingly important
equity accounted profit contributions from our
investments in the Westoz Investment Company (WIC)
and Ozgrowth Limited (OZG).
A summary of our major financial highlights for the
year include:
•
•
•
Normalised net profit of $5.5 million.
Payment of $9.4 million in fully franked dividends.
Cash and investments of $125 million
(pre- dividend).
Euroz Limited
Euroz Limited is the holding company for our two
core businesses; Euroz Securities and Westoz Funds
Management.
Euroz Limited also manages cash and investments in its
own right with the major investments being our 24.09%
holding in WIC and a 36.58% holding in OZG. These key
investments cost $59.5 million and at June 30 they had a
look through (NTA) value of $68.5 million.
4 Annual Report 2013
Euroz Securities Limited
Westoz Funds Management
Farewell/ The Future
Euroz Securities is our highly specialised
stockbroking business that provides
research, dealing and corporate finance
services to our well established retail,
institutional and corporate client base.
Deal flow from Euroz Securities will tend
to have an effect on all of our Group
businesses and the past year saw more
limited opportunities given the difficult
macro environment.
Our Research department is the frontline of
our broking organisation and their efforts
in finding new coverage and in depth
information will reap rewards into the next
cycle.
We were pleased with the contribution
from our Institutional department whose
long term trusted relationships with both
domestic and offshore institutional investors
continue to give us excellent Equity Capital
Markets distribution when deals arise.
Our Retail Dealing department has required
some regeneration and we are currently
hiring additional, experienced advisers to
add more depth to our team.
Our Corporate Finance department has
endured one of the quietest ECM markets
for many years but we have also made
new hiring’s here and our pipeline of
opportunities has recently improved.
Westoz Funds Management is responsible
for managing the funds of the Westoz
Investment Company Limited and
Ozgrowth Limited. It earns income on a
percentage of funds under management
and on possible outperformance fees.
As we are the largest shareholder in each of
these companies the performance of these
funds is absolutely critical to us and similarly
aligns our interests with their respective
shareholders.
The Westoz Investment Company Limited
reported investment returns of 6.1 % and
paid dividends of $11.5 million (9c per
share) for the past financial year.
Ozgrowth Limited reported a modest fall
of 0.2% over the year. Despite this fall, the
Company paid dividends of $5.4 million
(1.5c per share) for the past financial year.
Both investment companies are targeting
similar dividend payments in the current
financial year.
We are pleased to report that Westoz Funds
Management have made a number of
successful initiatives to narrow the discount
to NTA that these companies trade at on the
ASX and we acknowledge that more work
can be done in this area.
We remain very conscious that the primary
desire from Euroz Limited and indeed all of
their respective shareholders is improved
investment performance.
The past 13 years has seen many great
achievements at the Euroz Group where
we have established a major position in WA
Capital Markets and built an extremely solid
balance sheet and generated significant
profits for shareholders. Throughout this
entire time we have been led by our
Executive Chairman, Mr Peter Diamond who
has recently notified us of his intention to
retire at the upcoming AGM.
Peter has made a massive contribution
to the entire Euroz Group during these
13 years. He has been the driving force
behind the establishment of Westoz Funds
Management and his vision of creating a
parochial and locally focussed WA funds
management group has been fully realised.
Peter has also been a major architect of
our strategy to build our balance sheet
from some $4 million when he started to
approximately $125 million of cash and
investments today.
I have been privileged to work with Peter
over the past 22 years and I thank him for
the many opportunities he has brought to
our Group and for his excellent counsel and
advice.
Peter leaves our Group in fantastic shape
and I am sure all staff look forward to
maintaining a strong relationship with him
and join me in thanking him for his efforts
over many years.
Our Directors are optimistic that our Group
is well positioned to capitalise on improved
markets and we look forward to better
times ahead.
Euroz Group Organisational chart
36.58% Equity Stake
24.09% Equity Stake
Andrew McKenzie
Managing Director
ABN 53 000 364 465
ASX CODE: EZL
100%
100%
ASX CODE: OZG
ASX CODE: WIC
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
Jay Hughes
Executive Director
Ben Laird
Executive Director
Ben Laird has been with Euroz since 2001 working on the
institutional sales desk. Ben is a Chartered Financial Analyst
(CFA) and also holds a post graduate diploma from the
Financial Services Institute of Australasia (FINSIA) and a
Bachelor of Science Degree from Curtin University.
Andrew McKenzie
Managing Director
Andrew holds a Bachelor of Economics, is an Associate of
the Financial Services Institute of Australasia (FINSIA) and is a
Fellow of the Australian Institute of Company Directors (FAICD).
Andrew has worked in the stockbroking industry since 1991.
Rob Black
Executive Director
Rob is the Head of Institutional Sales and is responsible for
servicing domestic and international institutions. Rob holds
a Bachelor of Business from Curtin University with majors in
Finance and Accounting, and is a Graduate of the Australian
Institute of Company Directors (AICD).
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
the Financial Services Institute of Australasia (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
(SAA).
Peter Diamond
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
the chairman of Westoz Investment Company Limited (WIC)
and Ozgrowth Limited (OZG). He holds a Bachelor of Business
from Curtin University and is a Member of Certified Practicing
Accountants Australia (CPA).
Russell Kane
Executive Director
Russell has worked in the stockbroking industry since 1994.
He holds a Bachelor of Business from Curtin University and is
responsible for servicing both domestic institutions and high
net worth clients, with a particular emphasis on WA based
resources and industrials stocks.
6 Annual Report 2013
Lucas Robinson
Executive Director
Simon Yeo
Executive Director
Lucas has been advising in the stockbroking industry since
1998 advising retail clients. He holds a Bachelor of Commerce
from the University of Western Australia (UWA) with a double
major in Finance and Marketing and a minor in Business Law.
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 Graduate Diploma in Applied Finance
and Investment from the Financial Services Institute of
Australasia (FINSIA), is a Graduate of the Australian Institute of
Company Directors and is a member (Master Stockbroking) of
the Stockbrokers Association of Australia (SAA).
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 from the University of Western Australia and
was previously a member of the Institute of Chartered
Accountants (CA).
James Mackie
Executive Director
James has been working in the stockbroking industry since
1998. He holds a Bachelor of Commerce from Curtin University
and a Graduate Diploma from the Financial Services Institute
of Australasia (FINSIA). His role is servicing high net worth
investors on the retail desk.
Richard Caldow
Executive Director
Richard holds a Bachelor of Commerce with a double major
in Accounting and Finance from the University of Western
Australia. Richard has worked as an advisor in the stockbroking
industry since 1992 and previously as a chartered accountant.
Richard Caldow Absent
Euroz Limited 7
Jon Bishop
Executive Director
Greg Chessell
Head of Research
Jon is a resource analyst focused upon both the mining and
oil and 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
from the University of Western Australia, as well as a Graduate
Diploma in Applied Finance and Investment from the Financial
Services Institute of Australasia (FINSIA).
Andrew Clayton
Executive Director
Andrew is a research analyst specialising in resource
companies. He has worked in the stockbroking industry since
1995. Andrew holds a Bachelor of Science (Hons) in Geology
from Melbourne University, as well as a Diploma in Finance
from the Financial Services Institute of Australasia (FINSIA).
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 Bachelor of
Applied Science in Geology from The University of Technology,
Sydney (UTS) and a Graduate Diploma in Business from Curtin
University.
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.
8 Annual Report 2013
Brian Beresford
Executive Director
Douglas Young
Head of Corporate Finance
Prior to joining Euroz, Brian was a partner in the Corporate
Finance division of PwC, which he joined in 2007 when PwC
acquired GEM Consulting (GEM). Brian was a director and
shareholder of GEM. 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
from the University of Western Australia.
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 from the University of Western Australia,
a Bachelor of Laws from Bond (Bond) and a Master of Laws
from New York University (NYU).
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 from the University of Western Australia (UWA) and
is a fellow and graduate of the Financial Services Institute of
Australasia (FINSIA).
Brent Bonadeo
Executive Director
Prior to commencing employment with Euroz, Brent was
Managing Director, oil and gas at RBC Capital Markets and
a Director in Investment Banking at Merrill Lynch. He has
profound experience in Oil and Gas, Mining and Metals,
Infrastructure and Financial Services. Brent holds a Master in
Business Administration for the Australian Graduate School of
Management and Bachelor of Economics from the University
of Western Australia.
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:
–
–
–
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Capital Raisings
Mergers and Acquisitions
Strategic Planning and Reviews
Privatisation and Reconstructions
Established track record in raising equity capital via:
–
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Initial Public Offerings (IPO)
Placements
Rights Issues
Euroz has raised $390m 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
–
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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:
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Quality research
Personalised service
Wealth creation
•
Client services
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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
–
–
–
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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 ten 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:
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–
–
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Quality advice and idea generation
Efficient execution
Regular company contact
Site visits
Roadshows
10 Annual Report 2013
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 $245m of funds under management at 30 June 2013. 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. Since inception in May 2005, Westoz Investment Company Limited has grown
its net asset per share from $1.00 to $1.22 at 30 June 2013 and has paid 54.0 cents per share in fully
franked dividends.
Ozgrowth Limited has been listed on the ASX since January 2008. Having raised its capital at its capital at
20.0 cents per share at its establishment, it has grown net assets per share to 21.1 cents at 30 June 2013
and paid 5.8 cents per share in dividends.
Westoz Investment Company Limited and Ozgrowth Limited have now paid $85m 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 Dermot Woods is an Executive Director of the
manager and oversees the construction of its
investment portfolios.
Mr Rees has worked in a range of roles focused
on Australian investment markets for the last
26 years. He has previously managed large
institutional investment portfolios and developed
several early stage investment opportunities until
he joined Westoz in April 2005.
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 5 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 6 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 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 6 students through to graduation. Each year we will
support 3 more students – by 2014, 9 students will benefit 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 2013
F i n a n c i a l R e p o r t 2 0 1 3
Euroz Limited 13
Direc tors’ R epor t
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 2013.
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
R Kane
A Clayton
A Brittain
G Allen
R Black
B Beresford
B Laird
J Bishop
J Mackie
N McGlew
A Fresson
L Robinson
B Bonadeo
P Rees
D Woods
S Joyner
Position
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Employer
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited
Euroz Securities Limited (Resigned 8 May 2013)
Euroz Securities Limited
Euroz Securities Limited ( Appointed 5 July 2013)
Westoz Funds Management Pty Ltd
Westoz Funds Management Pty Ltd
Non – Executive Director
Westoz Funds Management Pty Ltd (Appointed 19 September 2012)
Company Secretary
Chris Webster held the position of Company Secretary at the end of the financial year. Chris was appointed Company Secretary in
January 2013. Chris has worked in the Financial Services Industry since 2003 holding a variety of positions in Sales, Operations, Risk and
Compliance with Euroz in Perth and Deutsche Bank in London.
14 Annual Report 2013
Direc tors’ R e por t
Principal activities
During the year the principal activities of the Euroz Group consisted of:
(a) Stockbroking;
(b) Corporate Finance; and
(c) Funds Management
(d)
Investing
Review of results
The Directors of Euroz Limited are pleased to announce a consolidated pre-tax profit of $8,084,979 for the year ended 30 June 2013.
The consolidated net profit after tax was $6,304,532 compared with the 2012 year consolidated net profit after tax of $11,760,189. This
profit represents basic earnings per share of 4.38 cents versus 8.20 cents in the 2012 year.
The Directors have declared a final dividend of 5.0 cents per share fully franked which, combined with the interim dividend of 1.5 cent per
share, represents a total dividend of 6.5 cents per share fully franked.
Review of operations
Stockbroking
Principal Trading
Funds Management
Unallocated revenue
Segment revenues
Segment results
2013
$
23,936,708
9,819,875
2,839,100
3,557,169
2012
$
47,564,481
45,889,043
2,882,683
2,403,935
40,152,852
98,740,142
2013
$
2,049,475
(240,619)
1,371,224
3,124,452
6,304,532
2012
$
9,652,609
(132,361)
1,441,604
798,337
11,760,189
These results have been achieved through strong contributions from all divisions of the business.
Operating and Financial Review
The purpose of this review is to set out information that shareholders may require to assess Euroz’s operations, financial position, and
business strategies and prospects for future financial years. This information complements and supports the Financial Report presented
herein.
Disclosure of operations
The Euroz Group is principally involved in the following activities:
(a) Stockbroking;
(b) Corporate Finance;
(c) Funds Management, and
(d) Investing
Euroz Limited 15
Direc tors’ R epor t
Our operations are conducted entirely from one office in Perth, Western Australia. Details regarding our operations are outlined below:
(a)
Stockbroking
Our stockbroking division comprises 3 main areas as follows:
(i)
Equities Research
•
•
•
•
Highly rated research from market leading research team of 6 analysts
Our views are highly rated by Australian and international institutions
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:
–
–
–
–
Morning Note: Overnight market updates
Weekly Informer: Compilation of all company reports throughout the preceding week
Quarterly and/or Semi-annual Review: Regular coverage on mid-cap companies in book format
Company Reports: Detailed analysis on companies as opportunities emerge
(ii)
Institutional Dealing
•
•
•
One of the largest institutional small to mid-cap dealing desks in the Australian market
Extensive client base of Australian and International institutional investors with strong relationships with the small
company fund managers
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
(iii)
Retail Dealing
•
•
•
•
•
•
•
A unique and predominantly “high net worth” client base (s.708 compliant investors)
Significant capacity to support new issues and construct first class retail share registers
Exposure to high net worth clients via in-house conferences and one-on-one presentations
Team of highly experienced and qualified private client advisors
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
16 Annual Report 2013
Direc tors’ R e por t
(b)
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:
–
–
–
–
Equity Capital Raisings and Underwriting
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
(c)
Funds Management
Westoz Funds Management is responsible for $246m of funds under management at 30 June 2013. 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 small to mid-cap market for the past year and declared 9¢ in
fully franked dividends for FY 2013 (compared with 4¢ in FY 2012).
Ozgrowth Limited has been listed on the ASX since January 2008 and reported a small positive investment return and a fully franked
dividend of 1.5¢ for FY 2013 (compared with 1¢ in FY 2012).
Westoz Investment Company Limited and Ozgrowth Limited have now paid $85m in dividends to shareholders since inception.
(d)
Investing
Our core investments consist of significant shareholdings in Westoz Investment Company Limited (WIC.ASX) totalling 24.09% and
Ozgrowth Limited. (OZG.ASX) totalling 36.58%. The investment focus of these funds is on small to mid-cap ASX listed securities, generally
with a connection to Western Australia.
Disclosure of operations — Profit
Net profit after tax for FY 2013 was $6.3m down by 47% from $11.8m.
The Directors are pleased with this result and that all of our operating businesses remained profitable for the year. Our business model has
withstood extremely challenging business conditions during this period.
The equity accounted value of our investments in the Westoz Investment Company Limited (“WIC”) and Ozgrowth Limited (“OZG”) can
have a major impact on our reported profit numbers. Whilst the value of these investments was up on the full year, our group normalised
net profit after tax was lower than at the half year result due to a fall in the value of these investments in the second half.
Disclosure of operations — Sales
Revenue has decreased by 59% from $98.8m to $40.1m with significant reductions in stockbroking and principal trading revenue.
(a)
Stockbroking and Corporate Finance
Stockbroking revenue was down by 46% from $47.5m in FY12 to $25.8m in FY13 as a result of lower brokerage volumes and the lower
volume of equity market capital raisings in our Corporate Finance division. Reduced brokerage in equities trading reflects the depressed
equities market volumes in small to mid-cap equities. Euroz Securities is solely focused on the ASX cash equities market and although our
market share of ASX trading volumes has remained relatively consistent over the past 5 years the overall turnover of ASX cash equities was
down on the previous year.
In addition the lower volume of equity market capital raisings in our Corporate Finance division was offset only slightly by increased
corporate advisory mandates. In FY13 Euroz raised $391m of new capital compared to $810m in FY12. Again this is a reflection of the
depressed state of the small to mid-cap equities market.
Euroz Limited 17
Direc tors’ R epor t
(b)
Principal Trading
Revenue from principal trading reduced by 78% from $45.9m in FY12 to $9.8m in FY13. Trading volumes from Principal Trading was
unusually high in FY12 due to a number of in-the-money option exercises conducted and funded for a small number of high net worth
corporate clients.
(c)
Funds Management
Revenue from Funds Management was stable at $2.8m for FY13 compared to $2.8m for FY12 division reflecting consistent management
fee revenues on relatively unchanged levels of funds under management without any performance fees having been generated for FY12
or FY13.
Disclosure of business strategies and prospects — Growth
Volatile commodity prices and resource markets continue to affect our deal flow and turnover in the short term but we remain confident
that our Group is well positioned for better markets when they return.
This 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.
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.
Disclosure of business strategies and prospects—Material business risks
The past year continues the six 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.
We continue to see unprecedented competition from both small and larger players. We have previously reported that our competition has
been severely impacted by these difficult trading conditions and we 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.
Financial position
The net assets of the consolidated group have decreased from $120,722,032 at 30 June 2012 to $117,752,143 in 2013. This decrease has
largely resulted from adjustments to the carrying value of investments as at 30 June 2013.
The company’s 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 decreased from
$45,918,414 in 2012 to $42,025,077 in 2013.
During the past seven 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 $68,515,611 as at 30 June 2013.
Our Group remains in an extremely sound financial position with cash and investments of $125m as at 30 June 2013. We have Net
Tangible Assets (NTA) of 82¢ per share and no debt. Euroz has a proud history of consistent profits and dividends having paid $151m in
fully franked dividends over 13 years.
18 Annual Report 2013
Direc tors’ R e por t
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
Dividends Euroz Limited
Dividends paid or provided for during the financial year were as follows:
Interim ordinary dividend of 1.5 cents (2012 – 1.5 cents) per fully paid ordinary share was paid on
25 January 2013.
Provision for final ordinary dividend for 30 June 2013 of 5.0 cents (2012 – 6.5 cents) per fully paid
ordinary share paid on 31 July 2013
2013
Cents
4.38
4.35
2013
$
2012
Cents
8.20
8.11
2012
$
1,549,718
2,554,359
7,802,622
9,352,340
9,341,110
11,895,469
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 105,092 options were exercised during the year at an exercise price of $0.75. At the date of this report, there are 3,437,996
unissued ordinary shares of Euroz Limited under option.
Environmental regulation
The consolidated group is not subject to significant environmental regulation in respect of its operations.
After balance date events
Peter Diamond, the Chairman of the Company has announced his intention to retire at the forthcoming Annual General Meeting. Mr
Diamond has been an Executive Director and Chairman of the Company for 13 years.
It is the intention, following Mr Diamond’s retirement, that Mr Andrew McKenzie, the current Managing Director will be appointed
Executive Chairman of the Company.
The Directors are not aware of any other matter or circumstance subsequent to 30 June 2013 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.
Euroz Limited 19
Direc tors’ R epor t
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.
10,000,000
10,000,000
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
10,000,000
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
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 2013, and the numbers of meetings
attended by each Director were:
Directors Meetings
Audit
Remuneration
Number eligible
to attend
Number
attended
Number eligible
to attend
Number
Attended
Number eligible
to attend
Number
attended
Committee Meetings
13
13
13
13
13
13
13
12
11
11
1
1
-
-
-
1
1
-
-
-
12
12
12
-
-
12
12
12
-
-
Director
Peter Diamond
Andrew McKenzie
Jay Hughes
Greg Chessell
Doug Young
20 Annual Report 2013
Direc tors’ R e por t
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. 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.
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 generally effective in increasing shareholder wealth since
inception. However as outlined below the policy is currently under review.
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.
2009
$
2010
$
2011
$
2012
$
2013
$
Revenue (including net profit/(loss) of associates)
43,288,071
76,080,544
77,806,998
97,609,657
40,152,852
Net profit after tax
Share price at year end
10,335,056
26,331,750
26,566,040
11,760,189
6,304,532
0.93
1.28
1.62
1.15
1.00
Dividends paid or recommended
9,625,081
15,890,339
25,430,670
11,895,469
9,352,340
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 is currently reviewing its executive remuneration framework to ensure that it is market competitive and complimentary
to the reward strategy of the organisation. This will encompass review of the profit share pool percentage as well as consideration of
employee share option and performance rights schemes.
Directors’ fees
No Directors fees are paid.
Base pay
Directors and executives are offered a competitive base salary and participation in the profit share pool. Base pay for senior executives
is reviewed semi annually 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
Euroz Limited 21
Direc tors’ R epor t
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 discretionary 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 traditionally 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% pre tax 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
2013
P Diamond
A McKenzie
J Hughes
D Young
G Chessell
Total
Short-term
Profit Share/
bonus
$
120,000
120,000
120,000
120,000
120,000
600,000
Base salary
$
251,616
251,616
251,616
251,616
260,146
1,266,610
Post employment
Other benefits
$
Superannuation
$
31,699
24,519
18,467
26,026
9,357
25,000
25,000
25,000
25,000
16,470
Total
$
428,315
421,135
415,083
422,642
405,973
110,068
116,470
2,093,148
Current Directors did not receive any Directors fees.
2012
P Diamond
A McKenzie
J Hughes
D Young
G Chessell
Total
296,316
296,316
296,316
271,316
296,316
440,000
440,000
440,000
440,000
440,000
30,427
36,769
24,421
24,901
8,752
25,000
25,000
25,000
50,000
25,000
791,743
798,085
785,737
786,217
770,068
1,456,580
2,200,000
125,270
150,000
3,931,850
Current Directors did not receive any Directors fees.
22 Annual Report 2013
Performance
related
%
28%
28%
29%
28%
30%
56%
55%
56%
56%
57%
Direc tors’ R e por t
Specified executives of the consolidated group
2013
Short-term
Name
R Caldow*
S Yeo*
A Clayton*
R Kane*
G Allen *
R Black *
A Brittain *
N McGlew *
P Rees**
D Woods **
B Beresford*
B Laird*
J Bishop*
A Fresson*
J Mackie*
L Robinson *
Total
2012
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
Base Salary
$
Profit Share/
Bonus
$
Other
Benefits
$
66,055
86,887
220,068
187,219
187,219
220,068
211,538
182,687
190,452
198,481
260,146
167,160
220,068
272,567
66,055
72,460
-
20,000
90,000
110,000
60,000
120,000
30,000
30,000
90,000
90,000
50,000
75,000
120,000
-
2,000
2,000
14,154
14,637
13,726
13,726
11,570
12,574
14,128
13,074
13,521
11,357
13,726
11,668
3,126
10,568
5,010
1,273
2,809,130
889,000
177,838
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
3,233,849
3,546,821
501,523
* Director of Euroz Securities Limited
** Director of Westoz Funds Management Pty Ltd
Post
employment
Super
annuation
$
12,701
16,470
16,470
16,021
16,021
16,470
25,000
15,891
24,225
16,196
16,470
22,071
16,470
16,470
15,791
14,776
Total
$
199,813
491,128
340,264
326,966
274,810
369,112
280,666
241,652
318,198
316,034
340,342
275,899
359,664
299,605
230,471
188,549
277,513
4,853,173
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
223,594
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
8,485,672
Commission
$
106,903
353,134
-
-
-
-
-
-
-
-
-
-
-
-
141,615
98,040
699,692
105,232
331,062
-
-
-
-
-
-
-
-
-
-
-
-
-
-
401,694
837,988
Performance
related
%
54%
76%
26%
34%
22%
33%
11%
12%
28%
28%
15%
27%
33%
-
62%
53%
47%
69%
37%
57%
47%
44%
59%
40%
46%
35%
35%
25%
57%
55%
61%
61%
86%
Euroz Limited 23
Direc tors’ R epor t
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 performance related 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 2013 of $248,000 (2012 - $310,000) 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 2013 of $248,000 (2012- $310,000) 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 2013 of $248,000 (2012 - $310,000) 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 2013 of $248,000 (2012 - $310,000) 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 2013 $248,000 (2012 - $310,000) 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 2013 of $72,000 (2012 - $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 2013 of $72,000 (2012 - $80,000) plus HOR bonus and
commission.
Payment on termination of employment by the employer, other than for gross misconduct - commission earned.
Andrew Clayton, Director Euroz Securities Limited
•
Term of contract - ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2013 of $225,000 (2012 - $250,000) 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 2013 of $193,500 (2012 - $215,000) plus profit share.
Payment on termination of employment by the employer, other than for gross misconduct - three months salary.
Anthony Brittain, Director Euroz Securities Limited
•
Term of contract - ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2013 of $225,000 (2012 - $215,000) plus profit share.
Payment on termination of employment by the employer, other than for gross misconduct - three months salary.
24 Annual Report 2013
Direc tors’ R e por t
Gavin Allen, Director Euroz Securities Limited
•
Term of contract - ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2013 of $193,500 (2012 - $215,000) 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 2013 of $225,000 (2012 - $250,000) 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 2013 of $189,000 (2012 - $210,000) 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 2013 of $248,000 (2012 - $310,000) 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 2013 of $180,000 (2012 - $180,000) 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 2013 of $225,000 (2012 - $250,000) 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 (Resigned 8 May 2013)
•
Term of contract - ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2013 of $225,000 (2012 - $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 2013 of $72,000 (2012 - $80,000) plus commission.
Payment on termination of employment by the employer, other than for gross misconduct - commission earned.
Lucas Robinson, Director Euroz Securities Limited
•
Term of contract - ongoing employment contract
•
•
Base salary, inclusive of superannuation for the year ended 30 June 2013 of $72,000 (2012 - $40,000) plus commission.
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 2013 of $220,000 (2012 - $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 2013 of $220,000 (2012 - $220,000) plus bonus
Payment on termination of employment by the employer other than for gross misconduct – three months salary
Euroz Limited 25
Direc tors’ R epor t
Share-based compensation
No options or shares were issued to Directors or specified executives during the year ended 30 June 2013.
Loans to Directors and Executives
No loans were made to Directors of Euroz Limited and the key management personnel of the consolidated group, including their
personally related entities during the year.
Indemnifying officers and auditor
During the financial year, Euroz Limited paid a premium of $549,038 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 has not
indemnified the auditor or paid any insurance premium on behalf of the auditor.
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
$
12,950
The lead auditor’s independence declaration for the year ended 30 June 2013 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: 28th August 2013
26 Annual Report 2013
Auditor ’s I ndependence D ec la ra ti o n
AUDITOR’S INDEPENDENCE DECLARATION
AUDITOR!S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF EUROZ LIMITED
TO THE DIRECTORS OF EUROZ LIMITED
In relation to our audit of the financial report of Euroz Limited for the year ended 30 June 2013, 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
PKF MACK & CO
SIMON FERMANIS
SIMON FERMANIS
PARTNER
PARTNER
28 AUGUST 2013
WEST PERTH,
WESTERN AUSTRALIA
Euroz Limited 27
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 full service stockbroking and corporate finance business and employs the majority of staff within the Euroz
Group. Profits generated by Euroz Securities are paid by way of dividends to Euroz. Euroz Securities holds an Australian Financial Services
License (“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 and Chi-X markets and is regulated pursuant to the
Operating Rules of those respective markets.
Westoz Funds Management is a specialist manager of equity funds. It currently has two mandates 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 the ASX, Chi-X 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.
Staff within the Euroz Group are largely remunerated by commission or profit share based payments and staff ownership of Euroz
shares is high. 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 adopts 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 businesses which have large numbers of employees operating from multiple locations; and
• many corporate governance related issues are dealt with as part of compliance obligations created by the Corporations Act, the ASIC
Marker Integrity Rules and the Operating Rules of the ASX and Chi-X markets.
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.
28 Annual Report 2013
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 21-22 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 29
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 20 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. Previously the role of the Chair and the Managing
Director have not been exercised by the same individual, however, Euroz may choose to do so in the future if the board deem it
appropriate and beneficial to the company.
Recommendation 2.4: The Board should establish a nomination committee.
Given the significant level of employee (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.
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 21-22 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 20 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
and Chi-X markets, 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.
Recommendation 2.6: Companies should provide the information indicated in the Guide to reporting on Principle 2.
This information is set out above.
30 Annual Report 2013
Corporate Governance Statement 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 and Chi-X 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. This position is reviewed and discussed annually at board level.
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 annually at board level.
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 board has formed this view given the particular characteristics of Euroz’s workforce, such disclosure
would be statistically meaningless. Euroz will review this position 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 31
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 Young (Chair),Mr McKenzie & Mr Chessell.
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 three members.
Given the size and composition of the Board, Euroz considers that it is not possible for Euroz to comply with this recommendation,
specifically with respect to independent and non-executive directors. However, in accordance with the matters 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 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. Euroz has a compliance
function which provides a variety of structured monitoring and review activities across the daily operations.
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.
Euroz is committed to ensuring that shareholders and the market are provided with full and timely information about its activities. Euroz is
committed to complying with its continuous disclosure obligations contained in the ASX Listing Rules and the Corporations Act 2001.
Euroz has established a Market Disclosure Committee as a management committee to be responsible for this policy. The members of
Euroz’s Market Disclosure Committee are the Chairman, Managing Director, Company Secretary, Chief Operating and Financial Officer and
the Euroz Board’s Executive Directors.
The Committee is convened on an ‘as needed’ basis to ensure that Euroz is in compliance with its requirements under the Listing Rules and
that all ASX releases are properly reviewed prior to release. The Disclosure Committee and this Policy have been endorsed by the Euroz Board.
32 Annual Report 2013
Corporate Governance Statement It is recognised that many ASX releases generate considerable comment in the marketplace. In addition, Euroz may receive queries from
analysts, brokers, shareholders, the media and the public. In order to oversee and coordinate disclosure, the following individuals are
Approved Spokespeople who are responsible for the business:
•
Chairman – Peter Diamond
•
Managing Director – Andrew McKenzie
Further details on the disclosure policy can be found in the Euroz Market Disclosure Policy which is available from the Euroz website.
Recommendation 5.2: Companies should provide the information indicated in the Guide to reporting on Principle 5.
A copy of the Euroz Market Disclosure Policy is available on the Euroz website.
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 Chi-X Australia. 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 Securities does however have a compliance committee that convenes monthly to discuss operational compliance with
the written policies and procedures relevant to that business unit.
Euroz Limited 33
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 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.
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.
The Euroz remuneration committee consists of Andrew McKenzie, Jay Hughes & Doug Young. Euroz has developed a Remuneration
Committee Charter that specifies the authority delegated to the Remuneration Committee by the Board of Directors of the Company and
sets out the roles, responsibilities, membership and operation of the Committee. A copy of the remuneration committee charter can be
found in the corporate governance section of the Euroz website.
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.
The remuneration committee ensures that remuneration satisfies the following key criteria:
•
•
•
•
•
enable the Company to attract, retain and motivate directors, executives and employees, resulting in value
creation for shareholders;
be fair and appropriate having regard to the performance of the Company and the relevant Director, executive or employee;
demonstrate the clear relationship between senior executives’ performance and remuneration.
comply with relevant legal requirements.
Detailed information regarding the remuneration paid to Directors and senior executives of the Euroz Group is set out at pages 7-14 of this report.
Recommendation 8.2: The remuneration committee should be structured so that it:
•
•
•
Consists of a majority of independent directors.
Is chaired by an independent chair.
Has at least three members.
As Euroz does not have any independent directors at this point in time, it is not possible to comply with this recommendation in full.
Recommendation 8.3: 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 recommendation is therefore not applicable to the Euroz Group. The remuneration
charter 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 22-23 of this report.
Recommendation 8.4: Companies should provide the information indicated in the Guide to reporting on Principle 8.
This information is set out above.
34 Annual Report 2013
Corporate Governance Statement Consolidated Sta tem ent of Prof it o r Lo s s a n d
O t her Comprehensive I ncome
For the year ended 30 June 2013
Revenue
Share of net profit (loss) of associates
Employee benefits expense
Depreciation and amortisation expenses
Regulatory expenses
Consultancy expenses
Conference and seminar expenses
Brokerage and underwriting expense
Communication expenses
Carrying amount of principal trading securities sold
Other expenses
Profit before income tax expense
Income tax expense
Profit after income tax expense for the year
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Items that may be reclassified subsequently to profit or loss
Other comprehensive income net of tax
Total comprehensive income for the year attributable to the owners
of Euroz Limited
Basic earnings per share
Diluted earnings per share
Notes
4
5
5
6
33
33
2013
$
2012
$
38,418,382
98,958,768
1,734,396
( 1,130,485)
(12,355,599)
( 20,796,411)
(1,199,457)
( 1,190,337)
(334,968)
( 315,842)
(1,486,311)
( 1,579,477)
(641,270)
( 1,451,490)
(2,680,973)
( 5,237,660)
(275,531)
( 307,419)
(9,275,000)
( 46,243,988)
(3,818,690)
( 3,823,286)
8,084,979
16,882,373
(1,780,447)
(5,122,184)
6,304,532
11,760,189
-
-
-
-
-
-
6,304,532
11,760,189
Cents
4.38
4.35
Cents
8.20
8.11
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with
the accompanying notes.
Euroz Limited 35
Consolidated Statement of Fina n ci a l Po s i t i o n
For the year ended 30 June 2013
Notes
2013
$
2012
$
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
50,506,440
53,741,715
775,345
813,033
842,953
1,775,702
1,458,820
2,321,929
52,937,771
59,298,166
5,000,000
5,000,000
68,515,611
67,480,289
169,130
942,003
1,272,055
2,000
2,126,185
947,903
75,898,799
75,556,337
128,836,570
134,854,543
1,803,801
638,428
1,238,111
1,487,851
8,470,465
10,653,790
10,912,694
13,379,752
91,351
80,382
171,733
542,668
210,091
752,759
11,084,427
14,132,511
117,752,143
120,722,032
89,451,519
89,373,600
186,000
186,000
28,114,624
31,162,432
117,752,143
120,722,032
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
36 Annual Report 2013
Consolidated Sta tem ent of Cha ng es i n Eq ui t y
For the year ended 30 June 2013
-
-
-
-
-
-
-
11,760,189
-
11,760,189
227,093
2,111,869
(11,895,469)
(9,556,507)
-
-
-
-
-
-
6,304,532
-
6,304,532
77,919
(9,352,340)
(9,274,421)
Issued
capital
$
Retained
earnings
$
Option premium
reserves
$
Total
$
87,261,731
31,070,619
186,000
118,518,350
Balance at 1 July 2011
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
Dividends to equity holders
-
-
-
-
2,111,869
11,760,189
-
11,760,189
227,093
-
-
(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
186,000
120,722,032
89,373,600
31,162, 432
186,000
120,722,032
Balance at 1 July 2012
Profit for the period
Changes in fair value of financial asset
Total comprehensive income for the period
Transactions with owners, recorded directly in equity
Shares issued during the period
Dividends to equity holders
-
-
-
6,304,532
-
6,304,532
77,919
-
-
(9,352,340)
Total contributions by and distributions to owners
77,919
(9,352,340)
Balance at 30 June 2013
89,451,519
28,114,624
186,000
117,752,143
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Euroz Limited 37
Consolidated Statement of Cash Flow s
For the year ended 30 June 2013
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)
28,194,055
49,010,336
Notes
2013
$
2012
$
Payments to suppliers and employees
(inclusive of goods and services tax)
Interest received
Proceeds from sale of trading shares
Income taxes (paid)/refunded
Payments for trading shares
(20,337,297)
(33,980,001)
7,856,758
15,030,335
2,017,103
9,481,049
2,714,338
44,259,537
(3,405,340)
(7,518,959)
(9,275,000)
(45,502,043)
Net cash flows from operating activities
31
6,674,570
8,983,208
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 decrease in cash and cash equivalents
Cash and cash equivalents at 1 July
1,530,238
(1,475,199)
(15,275)
(248,684)
1,514,963
(1,723,883)
77,919
2,110,969
(11,502,727)
(23,688,573)
(11,424,808)
(21,577,604)
(3,235,275)
(14,318,279)
53,741,715
68,059,994
Cash and cash equivalents at 30 June
7
50,506,440
53,741,715
.
The above Statements of Cash Flows should be read in conjunction with the accompanying notes
38 Annual Report 2013
Content s
Note 1. Statement of significant accounting policies
40
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
49
49
51
51
51
53
53
53
53
53
53
54
54
55
55
55
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
56
56
56
57
58
59
61
61
61
61
61
66
67
67
67
68
68
68
Euroz Limited 39
Notes to t he Fina ncial Statement s
For the year ended 30 June 2013
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 as appropriate for profit
oriented entities.
This financial report has been authorised by the Directors to be issued on 26 August 2013.
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 group or consolidated group), complies with Australian Accounting
Standards and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
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 2013 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 acquisition 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.
40 Annual Report 2013
Notes to the Financia l Statement s
For the year ended 30 June 2013
Note 1. Statement of significant accounting policies (continued)
(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 reporting date.
Deferred tax is accounted for using the reporting date 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.
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)
Business combinations
The acquisition method of accounting is used for all business combinations regardless of whether equity instruments or other
assets are acquired. The consideration transferred is the fair value of the assets given up, shares issued or liabilities undertaken at
the date of 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).
Euroz Limited 41
Notes to t he Fina ncial Statement s
For the year ended 30 June 2013
Note 1. Statement of significant accounting policies (continued)
(e)
Receivables
Trade receivables are recognised as current receivables as they are generally settled within 30 days from the date of recognition.
Collectability of trade receivables 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 receivables 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.
(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.
42 Annual Report 2013
Notes to the Financia l Statement s
For the year ended 30 June 2013
Note 1. Statement of significant accounting policies (continued)
(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.
(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 noncurrent 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.
Euroz Limited 43
Notes to t he Fina ncial Statement s
For the year ended 30 June 2013
Note 1. Statement of significant accounting policies (continued)
(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.
(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.
44 Annual Report 2013
Notes to the Financia l Statement s
For the year ended 30 June 2013
Note 1. Statement of significant accounting policies (continued)
(p)
Cash and cash equivalents
For purposes of the statement of cash flows, cash and cash equivalents 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 45
Notes to t he Fina ncial Statement s
For the year ended 30 June 2013
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.
46 Annual Report 2013
Notes to the Financia l Statement s
For the year ended 30 June 2013
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)
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.
(w)
Rounding of amounts
Amounts in this financial report have been rounded to the nearest dollar in accordance with class order 98/100.
Euroz Limited 47
Notes to t he Fina ncial Statement s
For the year ended 30 June 2013
Note 1. Statement of significant accounting policies (continued)
(x)
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.
(y)
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.
AASB No.
Title
Application
date of
standard*
Issue date
AASB 10
Consolidated Financial Statements
1 January 2013
August 2011
AASB 11
Joint Arrangements
1 January 2013
August 2011
AASB 12
Disclosure of Interests in Other Entities
1 January 2013
August 2011
AASB 13
Fair Value Measurement
1 January 2013
September 2011
AASB 119
Employee Benefits
1 January 2013
September 2011
AASB 2012-2
Amendments to Australian Accounting Standards –
Disclosures – Offsetting Financial Assets and Financial Liabilities
1 January 2013
June 2012
AASB 2012-5
Amendments to Australian Accounting Standards arising from Annual
Improvements 2009–2011 Cycle
1 January 2013
June 2012
AASB 2012-9
Amendment to AASB 1048 arising from the withdrawal of Australian
Interpretation 1039
1 January 2013
December 2012
AASB 2011-4
Amendments to Australian Accounting Standards to Remove Individual
Key Management Personnel Disclosure Requirements
1 July 2013
July 2011
AASB 1053
Application of Tiers of Australian Accounting Standards
1 January 2013
AASB 2012-3
Amendments to Australian Accounting Standards –Offsetting Financial
Assets and Financial Liabilities
1 January 2014
June 2010
June 2012
AASB 9
Financial Instruments
1 January 2015
December 2010
Australian Interpretations
20
21#
Stripping Costs in the Production Phase of a Surface Mine
1 Jan 2013
November 2011
Levies
1 January 2014
May 2013
48 Annual Report 2013
Notes to the Financia l Statement s
For the year ended 30 June 2013
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 49
Notes to t he Fina ncial Statement s
For the year ended 30 June 2013
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:
•
Share of profits and losses of equity-accounted investments
•
•
•
Assets and liabilities not specific to any segments
Deferred tax assets and liabilities
Current tax liabilities
Segment performance
2013
Sales and other fees
Interest revenue
Other revenues
Stockbroking
& Corporate
Activities
$
Principal
Trading
$
Funds
Management
$
Total
$
Unallocated
Items
$
Total
(Consolidated)
$
23,054,884
9,819,875
2,712,649
35,587,408
-
35,587,408
881,089
734
-
-
126,452
1,007,541
991,609
-
734
2,565,560
1,999,150
2,566,294
Total segment revenue
23,936,707
9,819,875
2,839,101
36,595,683
3,557,169
40,152,852
Segment net operating profit after tax
Depreciation and amortisation
Share of gain of associates
Gain from acquisition of further interests
in associate
2,049,475
1,197,232
-
-
(240,619)
1,371,224
3,181,080
3,124,452
6,304,532
-
-
-
2,225
1,199,457
-
-
-
-
-
1,734,396
831,090
1,199,457
1,734,396
831,090
Segment assets
Investments in associate
Capital expenditure
Segment liabilities
Cash flow information
28,272,091
813,033
3,842,684
32,927,808
95,474,960
128,402,768
-
15,275
4,038,257
-
-
-
-
-
-
68,515,611
68,515,611
15,275
-
15,275
993,884
5,032,141
5,618,484
10,650,625
Net cash flow from operating activities
2,540,568
206,049
2,936,343
5,682,960
991,610
Net cash flow from investing activities
(15,275)
Net cash flow from financing activities
-
-
-
-
-
(15,275)
1,530,238
-
(11,424,808)
(11,424,808)
6,674,570
1,514,963
2012
Sales and other fees
Other revenues
46,225,507
45,889,043
2,700,491
94,815,041
-
94,815,041
1,338,974
-
182,192
1,521,166
2,403,935
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
Interest revenue
Depreciation and amortisation
Share of associate
Segment assets
Investments in associate
Capital expenditure
Segment liabilities
Cash flow information
9,652,609
1,321,521
1,188,107
-
(132,361)
1,441,604
10,961,852
798,337
11,760,189
-
-
-
182,192
2,230
-
1,503,713
1,190,337
1,309,797
-
2,813,510
1,190,337
-
(1,130,485)
(1,130,485)
31,973,988
1,259,701
3,733,978
36,967,667
97,711,725
134,679,392
-
248,793
7,265,755
-
-
-
-
-
-
67,480,289
67,480,289
248,793
-
248,793
1,006,401
8,272,156
5,685,204
13,957,360
Net cash flow from operating activities
5,981,675
(1,242,505)
2,934,241
7,673,411
1,309,797
8,983,208
Net cash flow from investing activities
(248,684)
Net cash flow from financing activities
-
-
-
-
-
(248,684)
(1,475,199)
(1,723,883)
-
(21,577,604)
(21,577,604)
50 Annual Report 2013
Notes to the Financia l Statement s
For the year ended 30 June 2013
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
Other revenue
Gain arising from acquisition of further interests in associates (Note 12)
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
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
2013
$
2012
$
14,158,028
16,998,213
11,000,571
27,284,696
9,819,875
45,889,043
608,934
4,643,089
35,587,408
94,815,041
1,999,150
734
831,090
2,813,510
17,453
1,312,764
2,830,974
4,143,727
38,418,382
98,958,768
567,329
632,128
558,248
632,089
1,199,457
1,190,337
1,346,251
1,054,301
593,193
659,209
630,744
742,827
2,555,916
5,512,475
(775,469)
(390,291)
1,780,447
5,122,184
Numerical reconciliation between tax expense and pre-tax accounting profit
Income tax using company’s tax rate of 30% (2012: 30%)
2,425,494
5,064,712
Add tax effect of:
–
–
–
other non-allowable items
prior year under provision
share of loss of associate
Less tax effect of:
–
gain on acquisition of associates
Income tax attributable to entity
80,657
43,966
(520,319)
106,104
6,052
339,145
2,029,798
5,516,013
(249,351)
(393,829)
1,780,447
5,122,184
The applicable weighted average effective tax rates are as follows:
22.0%
30.3%
The decrease in the weighted average effective consolidated tax rate for 2013 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.
Euroz Limited 51
Notes to t he Fina ncial Statement s
For the year ended 30 June 2013
Note 6. Income tax (continued)
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
2013
$
2012
$
405,235
775,469
-
14,944
390,291
-
1,180,704
405,235
-
-
-
542,668
(451,317)
91,351
175,151
258,651
433,802
772,752
65,501
838,253
52,289
(52,289)
-
496,072
46,596
542,668
-
175,151
175,151
563,305
209,447
772,752
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 2013 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.
52 Annual Report 2013
Note 7. Cash and cash equivalents
Cash at bank and on hand
Note 8. Trade and other receivables
Trade receivables
2013
$
2012
$
50,506,440
53,741,715
775,345
1,775,702
All trade receivables 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
527,000
1,528,646
1,720,094
(1,242,613)
(788,274)
813,033
1,458,820
477,443
365,510
513,035
1,808,894
842,953
2,321,929
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 companies
68,515,611
67,480,289
(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
67,480,289
65,596,600
1,961,083
831,090
5,877,470
1,312,764
1,533,486
(1,434,090)
Acquisition on additional interest in associate during the year (Note 1(v))
200,986
303,605
Less:
Dividend received/receivable
Balance at 30 June
(3,491,323)
(4,176,060)
68,515,611
67,480,289
Euroz Limited 53
Notes to the Financial StatementsFor the year ended 30 June 2013
Note 12. Investments accounted for using the equity method (continued)
(b)
Interest held in the associated companies
Name of entity
Ozgrowth Limited
Westoz Investment Company Limited
Ownership interest
Country of
Incorporation
Australia
Australia
Principal activity
Investment company
Investment company
2013
%
36.58%
24.09%
2012
%
35.25%
22.77%
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
Financial instrument at fair value (i)
2013
$
2013
$
246,057,653
256,809,686
(14,007,557)
(13,650,755)
232,050,096
243,158,931
68,515,611
67,480,289
253,389,621
7,707,403
7,370,506
(5,946,607)
169,130
2,000
(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 2013.
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
54 Annual Report 2013
2,528,511
2,528,511
(1,892,151)
(1,260,023)
636,360
1,268,488
42,619
(16,205)
26,414
31,811
(8,925)
22,886
1,073,173
1,190,475
(897,020)
176,153
573,287
(470,211)
103,076
942,003
(630,711)
559,764
587,965
(312,918)
275,047
2,126,185
Notes to the Financial StatementsFor the year ended 30 June 2013
Note 14. Plant and equipment (continued)
Reconciliations
Reconciliations of the carrying amounts of each class of plant and equipment at the beginning and end of the current and previous
financial years are set out below:
2013
Carrying amount at 1 July 2012
Additions
Leasehold
improvements
$
Plant and
equipment
$
Total
$
1,268,487
-
857,698
15,275
2,126,185
15,275
Depreciation/amortisation expense (Note 5)
(632,128)
(567,329)
(1,199,457)
Carrying amount at 30 June 2013
636,359
305,644
942,003
2012
Carrying amount at 1 July 2011
Additions
Depreciation/amortisation expense (Note 5)
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
Note 15. Deferred tax assets
Deferred tax asset (Note 6)
Note 16. Trade and other payables
Trade creditors
Other payables and accruals
Total
2013
$
2012
$
1,272,055
947,903
67,526
1,736,275
1,803,801
65,312
1,172,799
1,238,111
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
638,428
1,487,851
Euroz Limited 55
Notes to the Financial StatementsFor the year ended 30 June 2013
Note 18. Short term provisions
Dividends
Employee entitlements (annual leave)
Employee entitlements (long service leave)
Total
Dividends
2013
$
2012
$
7,190,724
9,341,110
611,899
667,842
602,920
709,760
8,470,465
10,653,790
This provision represents the dividend declared by the board before the reporting date and to be paid out to shareholders subsequent to
year end.
Movements in each class of provisions, other than employee benefits, are set out below:
Carrying amount at 1 July 2012
Additional provisions recognised
Amounts paid out
Carrying amount at 30 June 2013
Note 19. Deferred tax liabilities
Deferred tax liability (Note 6)
Note 20. Long term provisions
Lease incentive
Employee entitlements (long service leave)
Total
Lease incentive
9,341,110
9,352,341
21,134,214
11,895,469
(11,502,727)
(23,688,573)
7,190,724
9,341,110
91,351
542,668
-
80,382
80,382
49,879
160,212
210,091
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, which expired on 31 January 2013.
Movements in each class of provisions, other than employee benefits, are set out below:
Carrying amount at 1 July 2012
Amounts paid out
Carrying amount at 30 June 2013
Lease incentive
49,879
(49,879)
-
56 Annual Report 2013
Notes to the Financial StatementsFor the year ended 30 June 2013
Note 21. Contributed equity
(a)
Share capital
Ordinary shares
Issued and paid up capital
- consisting of ordinary shares
(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
Consolidated entity
2013
Shares
2012
Shares
2013
$
2012
$
143,814,479
143,709,388
89,451,519
89,373,600
Consolidated entity
2013
Shares
2012
Shares
143,709,388
140,894,763
-
-
105,091
2,814,625
143,814,479
143,709,388
(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
Exercise of options
At the end of the reporting period
(d) Ordinary shares
Consolidated entity
2013
$
2012
$
89,373,600
87,261,731
77,919
2,111,869
89,451,519
89,373,600
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 105,092 options were exercised during the year at an exercise price of $0.75. There are 3,437,996 number of options on
issue at 30 June 2013 (2012: 3,543,088). 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 57
Notes to the Financial StatementsFor the year ended 30 June 2013 Note 22. Dividends
Ordinary shares
Interim dividend for the half year ended 31 December 2012 of 1.5 cents
(2012 – 1.5 cents) per fully paid ordinary share paid on 25 January 2012.
2013
$
2012
$
Fully franked based on tax paid @ 30%
2,161,616
2,554,359
Final dividend declared and provided for at 30 June 2013 of 5.0 cents
(2012 – 6.5 cents) per fully paid ordinary share
Fully franked based on tax paid @ 30%
Total dividends provided for or paid
Franked dividends
7,190,724
9,341,110
9,352,340
11,895,469
The franked portions of the dividends recommended after 30 June 2013 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 2013.
Consolidated group
2013
$
2012
$
Franking credits available for subsequent financial years based on a tax rate of 30% (2012: 30%)
12,440,077
11,206,555
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.
58 Annual Report 2013
Notes to the Financial StatementsFor the year ended 30 June 2013
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
1,803,801
1,238,111
2013
$
2012
$
(iii)
Credit risk
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 2013.
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. Trade receivables are usually paid within 30
days.
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.
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 receivables are past due (2012: Nil).
Carrying Amount
2013
$
169,130
2012
$
2,000
50,506,440
53,741,715
775,345
813,033
5,000,000
1,775,702
1,458,820
5,000,000
57,263,948
61,978,237
Euroz Limited 59
Notes to the Financial StatementsFor the year ended 30 June 2013
Note 23. Financial instruments (continued)
(iv)
Financial instruments composition and maturity analysis
Weighted Average Effective
Interest Rate
Floating
Interest Rate
Non Interest
Bearing
2013
%
2012
%
2013
$
2012
$
2013
$
2012
$
FINANCIAL ASSETS
Cash and cash equivalents
4.00
4.44
50,506,440
53,741,715
-
-
Trade and other
Receivables
Financial assets held for
trading
Financial assets at fair
value through profit
and loss
-
-
-
-
-
-
-
-
-
-
-
-
775,345
1,775,702
813,033
1,458,820
169,130
2,000
-
Long term deposit
2.00
2.75
5,000,000
5,000,000
-
Total financial assets
FINANCIAL LIABILITIES
55,506,440
58,741,715
1,757,508
3,236,522
Trade and other payables
-
-
-
-
1,803,801
1,238,111
(v)
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 a 1% p.a. 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%
(vi)
Fair Value
2013
$
2012
$
388,545
(388,545)
411,192
(411,192)
388,545
(388,545)
411,192
(411,192)
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)
2013
Assets
Ordinary shares
Total Assets
60 Annual Report 2013
Level 1
Level 2
Level 3
Total
286,033
286,033
527,000
527,000
-
-
813,033
813,033
Notes to the Financial StatementsFor the year ended 30 June 2013
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
2013
$
2012
$
102,000
97,000
17,000
15,600
Note 25. Contingent liabilities
The parent entity and consolidated group had contingent liabilities at 30 June 2013 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
928,942
5,209,775
1,165,384
1,052,485
3,936,012
3,368,089
7,304,101
8,356,586
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 on-costs 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
1,360,123
1,360,123
1,472,892
1,472,892
1,976,678
4,575,660
6,552,338
116,470
277,513
393,983
3,781,851
8,220,122
12,001,973
150,000
365,491
515,491
Total compensation
6,946,321
12,517,464
Euroz Limited 61
Notes to the Financial StatementsFor the year ended 30 June 2013
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
Corporations Regulation 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 2012
Grant as
remuneration
On exercise
of options
Bought &
(sold) *
Balance at
30 June 2013
2013
Directors of Euroz Limited
Ordinary shares
P Diamond
A McKenzie
J Hughes
G Chessell
D Young
10,000,000
10,000,000
10,000,000
3,102,000
4,250,000
Key management personnel of the consolidated entity
Ordinary shares
R Caldow
S Yeo
P Rees
R Kane
A Clayton
A Brittain
G Allen
R Black
N McGlew
D Woods
B Beresford
B Laird
J Bishop
J Mackie
A Fresson (Resigned 8 May 2013)
L Robinson (Appointed 1 July 2012)
B Bonadeo (Appointed 5 July 2013)
*Only disclosed to date of resignation
62 Annual Report 2013
4,950,000
3,520,000
1,100,000
2,370,000
2,100,000
303,400
500,000
1,810,000
237,791
373,260
2,000,000
655,000
102,612
847,000
260,511
310,000
-
58,791,574
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
1,810,000
237,791
373,260
2,000,000
655,000
102,612
847,000
260,511*
310,000
-
58,791,574
Notes to the Financial StatementsFor the year ended 30 June 2013
Note 28. Related parties (continued)
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
*Only disclosed to date of resignation
2,000,000
655,000
91,112
847,000
260,511
59,610,030
Balance at
1 July 2011
Grant as
remuneration
On exercise
of options
Bought &
(sold) *
Balance at
30 June 2012
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,000,000
750,000
100,000
10,000,000
-
-
-
100,000
10,000,000
-
3,102,000
47,999
4,250,000
450,000
320,000
-
-
29,377
100,000
-
-
-
7,485
23,260
-
-
-
-
-
-
-
-
-
-
4,950,000
3,520,000
2,101,200*
1,100,000
10,623
2,370,000
-
-
-
10,000
12,500
-
-
-
-
11,500
-
-
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
Euroz Limited 63
Notes to the Financial StatementsFor the year ended 30 June 2013
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 2012
Granted as
remuneration Exercised
Bought
Balance at
30 June 2013
Total
exercisable at
30 June 2013
Total not
exercisable at
30 June 2013
2013
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
P Rees
R Kane
A Clayton
A Brittain
G Allen
R Black
N McGlew
D Woods
B Beresford
B Laird
J Bishop
J Mackie
A Fresson
(Resigned 8 May 2013)
L Robinson
(Appointed 1 July 2012)
Brent Bonadeo
(Appointed 5 July 2013)
-
-
-
233,000
100,000
-
41,200
338,016
4,940
-
-
60,000
-
-
-
-
-
*Only disclosed to date of resignation
777,156
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
64 Annual Report 2013
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
233,000
233,000
100,000
100,000
-
-
41,200
41,200
21,984
360,000
360,000
-
-
-
-
-
-
-
-
-
4,940
4,940
-
-
-
-
60,000
60,000
-
-
-
-
-
-
-
-*
-
-
21,984
799,140
799,140
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Notes to the Financial StatementsFor the year ended 30 June 2013
Note 28. Related parties (continued)
(iv) Option holdings of key management personnel
2012
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
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
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
*Only disclosed to date of resignation
Wholly-owned group
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
66,765
12,425
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
200,000*
200,000*
-
-
233,000
100,000
-
233,000
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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.
Euroz Limited 65
Notes to the Financial StatementsFor the year ended 30 June 2013
Note 28. Related parties (continued)
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless otherwise stated.
2013
$
2012
$
Transactions with related parties consisting of:
(i) Subsidiaries
–
–
Loans advanced by Euroz Limited to subsidiaries
Payments of dividends to Euroz Limited by subsidiaries
2,234,958
3,000,000
5,180,513
10,350,000
(ii) Associated Companies
–
–
Dividends received by Euroz Limited from Associates
Management fee received by the Euroz Group from Associates
3,491,323
2,712,649
4,176,060
2,700,491
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 2013 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
145,139
50,160
Note 29. Investments in controlled entities
Name of entity
Euroz Securities Limited
Detail Nominees Pty Limited
Zero Nominees Pty Limited (i)
Country of
incorporation
Australia
Australia
Australia
Westoz Funds Management Pty Ltd
Australia
The ultimate parent entity in the wholly owned group is Euroz Limited.
(i) Owned by Euroz Securities Limited
A brief description of each entity as follows:-
Equity holding
Class of shares
Ordinary
Ordinary
Ordinary
Ordinary
2013
%
100
100
100
100
2012
%
100
100
100
100
Cost of
parent entity’s investment
2013
$
2012
$
25,000,000
25,000,000
-
-
-
-
1,450,000
1,450,000
(a) Euroz Limited – Group holding company listed on the Australian Stock Exchange. Euroz Limited manages cash and investments including
significant positions in Ozgrowth Limited and Westoz Investment Company Limited.
(b) Euroz Securities Limited – Financial services company providing stockbroking and corporate finance services with a focus on Western Australian
companies.
(c) Westoz Funds Management Pty Ltd – Manages the mandates for two listed investment companies, Ozgrowth Limited and Westoz Investment
Company Limited with a focus on investing in opportunities with a Western Australian connection.
(d) Zero Nominees – Custodian company holding shares on behalf of clients of Euroz Securities Limited.
(e) Detail Nominees - Dormant company that was previously used to for settlement obligation in relation to shares for the Group.
66 Annual Report 2013
Notes to the Financial StatementsFor the year ended 30 June 2013
Note 30. Events occurring after reporting date
Peter Diamond, the Chairman of the Company has announced his intention to retire at the forthcoming Annual General Meeting. Mr
Diamond has been an Executive Director and Chairman of the Company for 13 years.
It is the intention, following Mr Diamond’s retirement, that Mr Andrew McKenzie, the current Managing Director will be appointed
Executive Chairman of the Company.
The Directors are not aware of any other matter or circumstance subsequent to 30 June 2013 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 associates
Realised gain in associates
Changes in assets and liabilities
Decrease/(increase) in trade and other receivables
Decrease/(increase) in prepayments
Decrease/(Increase) in accrued income
(Increase)/decrease in inventories
Increase/(decrease) in deferred tax assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in current tax liabilities
Increase/(decrease) in provision for deferred tax liabilities
Increase/(decrease) in provisions (excluding dividends)
2013
$
2012
$
6,304,532
11,760,189
1,199,457
(1,734,396)
1,190,337
1,130,485
(831,164)
(1,094,138)
1,000,357
35,593
134,029
28,818
1,443,383
(166,316)
478,657
(65,501)
565,691
(849,423)
(709,968)
(162,648)
(1,110,144)
(209,447)
(818,788)
(2,006,485)
(180,844)
325,512
Net cash from operating activities
6,674,570
8,983,208
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
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 2013 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 2013 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.
Westoz Funds Management has given a bank guarantee totalling $20,000 to ASIC in support of its Australian Financial Services Licence.
Euroz Limited 67
Notes to the Financial StatementsFor the year ended 30 June 2013
Note 33. Earnings per share
Basic earnings per share
Diluted earnings per share
2013
Cents
4.38
4.35
2012
Cents
8.20
8.11
2013
Number
2012
Number
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.
143,803,394
143,457,112
144,857,250
145,096,323
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.
2013
$
2012
$
25,796,046
30,023,117
84,899,340
82,771,910
110,695,386
112,795,027
7,844,429
7,844,429
10,852,041
10,852,041
89,451,519
89,373,600
16,648,392
18,950,518
(3,434,956)
(6,566,232)
186,000
186,000
102,850,955
101,943,886
7,050,214
15,142,118
-
-
7,050,214
15,142,118
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
68 Annual Report 2013
Notes to the Financial StatementsFor the year ended 30 June 2013
Direc tors’ D e clarati on
For the year ended 30 June 2013
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;
give a true and fair view of the company’s and consolidated group’s financial position as at 30 June 2013 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 in accordance with section 295A of the Corporations Act 2001
that:
(a)
(b)
(c)
the financial records of the company for the financial year have been properly maintained in accordance with section 286 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: 28th August 2013
Euroz Limited 69
I ndepend ent Audit R epor t
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR!S REPORT
TO THE MEMBERS OF
TO THE MEMBERS OF
EUROZ LIMITED
EUROZ LIMITED
Report on the Financial Report
Report on the Financial Report
We have audited the accompanying financial report of Euroz Limited, which comprises the statement of
financial position as at 30 June 2013, the statement of profit or loss and other comprehensive income, the
statement of changes in equity and the statement of cash flows for the year then ended, notes comprising
a summary of significant accounting policies and other explanatory information, and the directors!
declaration of 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
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
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
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act
2001.
70 Annual Report 2013
I ndependent Audit R epor t
Opinion
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 companyʼs and consolidated entityʼs financial positions as at
30 June 2013 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
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 21 to 25 of the directorsʼ report for the year
ended 30 June 2013. The directors of the company are responsible for the preparation and presentation of
the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
Opinion
Opinion
In our opinion, the Remuneration Report of Euroz Limited for the year ended 30 June 2013, complies with
section 300A of the Corporations Act 2001.
PKF MACK & CO
PKF MACK & CO
SIMON FERMANIS
SIMON FERMANIS
PARTNER
PARTNER
28 AUGUST 2013
WEST PERTH,
WESTERN AUSTRALIA
Euroz Limited 71
Shareholding I nfor ma tion
Ordinary Shares at 31 August 2013
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 $ 1.0350 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
Ice Cold Investments Pty Ltd
Icon Holdings Pty Ltd
HSBC Custody Nominees (Australia) Limited
Mr Simon David Yeo + Mrs Jennifer Dale Yeo
Ice Cold Investments Pty Ltd
Mr Andrew William McKenzie + Mrs Catherine Patricia McKenzie
Thorney Holdings Pty Ltd
Ice Cold Investments Pty Ltd
RBC Investor Services Australia Nominees Pty Limited
Mr Robert Hirzel Black
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
Westrade Resources Pty Ltd
Mrs Catherine Elizabeth Kane
BNM Holdings Pty Ltd
BNM Holdings Pty Ltd
Mrs Rebecca Joy Foster
TPIC Pty Ltd
Total
Total Remaining Holders Balance
72 Annual Report 2013
Total Holders
313
550
352
780
125
Units
146,343
1,661,707
2,818,368
26,427,328
113,083,756
Issued Capital
%
0.10
1.15
1.96
18.33
78.46
0.00
2,120
144,137,502
100.00
Minimum
Parcel Size
484
Holders
172
Units
33527
%
31.15
3.88
2.08
2.06
2.03
1.96
1.94
1.56
1.53
1.39
1.35
1.19
1.05
1.04
0.90
0.80
0.69
0.69
0.69
0.69
58.68
41.32
100.00
Units
44,894,001
5,589,582
3,000,000
2,966,200
2,919,259
2,831,000
2,800,000
2,251,500
2,200,000
2,000,000
1,945,751
1,710,000
1,511,210
1,505,443
1,300,000
1,160,000
1,000,000
1,000,000
1,000,000
1,000,000
84,583,946
59,553,556
Euroz S ecur ities Li mi ted Contac t D et a i ls
Institutional Dealing
Andrew McKenzie
Ben Laird
James Clement
Jay Hughes
Peter Diamond
Peter Schwarzbach
Rob Black
Russell Kane
Tim Bunney
Tom Ruello
Corporate
Brent Bonadeo
Brian Beresford
David Riley
Douglas Young
Mark Laybourn
Nick McGlew
Robbie Harrison
Rob Martino
Tamara Stampfli
Equities Research
Andrew Clayton
Bridget Watkins
Gavin Allen
Greg Chessell
Hayden Beamish
Jon Bishop
Michael Skinner
Peta Gale
Richard Hamersley
Retail Dealing
Ben Statham
Brett Stapleton
Cameron Murray
Christian Zerovich
David Salmon
Giles McCaw
James Mackie
Joel Pember
Jonathan van Hazel
Leigh Travers
Lucas Robinson
Matt Williamson
Nicholas Gorton
Phil Cosh
Richard Caldow
Richard Gardner
Ryan Stewart
Sian Hepburn
Simon Yeo
Stephen Grove
Operations
Adelaide Kosovich
Alison Wreford
Angelique Wood
Anthony Brittain
Bindi Stickland
Catherine Leadbeatter
Chris Webster
Dolly Lim
Emma Whitehurst
Hayley Graham
Jayde Gouveia
Peter Osborn
Sheri Chandran
Tania Castlehow
Fax +61 8 9488 1478
Managing Director
Institutional Advisor
Institutional Advisor
Institutional Advisor
Executive Chairman
Institutional Advisor
Head of Institutional Dealing
Institutional Advisor
Institutional Advisor
Institutional Advisor
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
Fax +61 8 9488 1479
Resources Analyst
Publications Assistant
Industrials Analyst
Head of Research
Resources Associate Analyst
Resources Analyst
Resources Analyst
Publications Coordinator
Industrials Analyst
Fax +61 8 9488 1477
Equities Advisor
Equities Advisor
Equities Advisor
Equities Advisor
Dealers Assistant
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
Telephone
+61 8 9488 1407
+61 8 9488 1429
+61 8 9488 1408
+61 8 9488 1406
+61 8 9488 1405
+61 8 9488 1492
+61 8 9488 1423
+61 8 9488 1426
+61 8 9488 1461
+61 8 9488 1420
Telephone
+61 8 9488 1475
+61 8 9488 1493
+61 8 9488 1437
+61 8 9488 1434
+61 8 9488 1480
+61 8 9488 1460
+61 8 9488 1490
+61 8 9488 1470
+61 8 9488 1469
Telephone
+61 8 9488 1427
+61 8 9488 1433
+61 8 9488 1413
+61 8 9488 1409
+61 8 9488 1463
+61 8 9488 1481
+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 1419
+61 8 9488 1462
+61 8 9488 1416
+61 8 9488 1476
+61 8 9488 1443
+61 8 9488 1482
+61 8 9488 1424
+61 8 9488 1466
+61 8 9488 1473
+61 8 9488 1442
+61 8 9488 1403
+61 8 9488 1444
+61 8 9488 1441
+61 8 9488 1447
+61 8 9488 1404
+61 8 9488 1410
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
+61 8 9488 1401
Chief Operating and Financial Officer
+61 8 9488 1439
Head of Settlements
+61 8 9488 1446
Settlements/Nominees
Company Secretary/ Head of Risk Mgt. +61 8 9488 1412
+61 8 9488 1415
Financial Controller
+61 8 9488 1465
Settlements/Nominees
+61 8 9488 1400
Reception
+61 8 9488 1474
New Accounts Assistant
+61 8 9488 1438
IT Systems Support
+61 8 9488 1485
Assistant Accountant
+61 8 9488 1425
Bookings
Email
amckenzie@euroz.com.au
blaird@euroz.com.au
jclement@euroz.com.au
jhughes@euroz.com.au
pdiamond@euroz.com.au
pschwarzbach@euroz.com.au
rblack@euroz.com.au
rkane@euroz.com.au
tbunney@euroz.com.au
truello@euroz.com.au
Email
bbonadeo@euroz.com.au
bberesford@euroz.com.au
driley@euroz.com.au
dyoung@euroz.com.au
mlaybourn@euroz.com.au
nmcglew@euroz.com.au
rharrison@euroz.com.au
rmartino@euroz.com.au
tstampfli@euroz.com.au
Email
aclayton@euroz.com.au
bwatkins@euroz.com.au
gallen@euroz.com.au
gchessell@euroz.com.au
hbeamish@euroz.com.au
jbishop@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
dsalmon@euroz.com.au
gmccaw@euroz.com.au
jmackie@euroz.com.au
jpember@euroz.com.au
jvanhazel@euroz.com.au
ltravers@euroz.com.au
lrobinson@euroz.com.au
mwilliamson@euroz.com.au
ngorton@euroz.com.au
pcosh@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
Email
akosovich@euroz.com.au
awreford@euroz.com.au
awood@euroz.com.au
abrittain@euroz.com.au
bstickland@euroz.com.au
cleadbeatter@euroz.com.au
cwebster@euroz.com.au
dlim@euroz.com.au
ewhitehurst@euroz.com.au
reception@euroz.com.au
jgouveia@euroz.com.au
posborn@euroz.com.au
schandran@euroz.com.au
tcastlehow@euroz.com.au
Westoz Funds Management Ltd
Dermot Woods
Phil Rees
Fax +61 8 9321 8288
Fund Manager
Fund Manager
Telephone
+61 8 9321 7023
+61 8 9321 7015
Email
dwoods@westozfunds.com.au
prees@westozfunds.com.au
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