ANNUAL REPORT 2014
EUROZ
We are a specialist financial
services company with a
consistent track record of
strong shareholder returns.
Contents
Executive Chairman’s Report
Euroz Limited Directors’ Profiles
Euroz Securities Limited Managing Director’s Report
Euroz Securities Limited Directors’ Profiles
Euroz Securities Operating Divisions
Westoz Funds Management
Westoz Investment Management
Euroz Group Community Activities
Financial Report 2014
Directors’ Report
Auditor’s Independence Declaration
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Corporate Governance Statement
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 Auditor’s Report
Shareholder Information
Euroz Securities Limited Contact Details
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CoRPoRAte DIReCtoRY
Euroz Limited
ABN 53 000 364 465
Directors
Andrew McKenzie
Executive Chairman
Jay Hughes
Executive Director
Doug Young
Executive Director
Greg Chessell
Executive Director
Russell Kane
Executive Director
Simon Yeo
Executive Director
Company Secretary
Chris Webster
Associate Director
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
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 are listed on the
Australian Securities Exchange (ASX: EZL)
Website Address
www.euroz.com
2 Annual Report 2014
Executive Chairman’s Report
exeCutIve ChAIRMAn’s RePoRt
Euroz Limited is proud to have now
distributed $167 million in fully franked
dividends to its shareholders over the past
14 years.
A change in accounting treatment
announced earlier this year required us
to value our investments in the Westoz
Investment Company (WIC) and Ozgrowth
Limited (OZG) at market value rather than
at NTA. For comparison purposes this would
have increased the previous year’s net profit
after tax from $6.3 million to $11.1 million.
In the context of current markets and the
performance of our competitors we are
therefore very pleased with this year’s profit
result which represents an increase of
139% over last year’s restated result.
These strong financial results have been
driven by much improved profitability in
both Westoz Funds Management and Euroz
Securities Limited plus an increase in the
market value of our investments in
WIC and OZG.
The profitability of Westoz Funds
Management has been driven by excellent
returns from both WIC and OZG which
have reported investment performance for
the year of 21.2% and 24.1% respectively.
This year WIC and OZG have also returned
$5.6 million of fully franked dividends
to Euroz Limited through our significant
shareholdings in both companies.
Whilst our resource related markets have
seen some improvement in the last year,
Euroz Securities can report that whilst
overall revenue was up 25% our daily ASX
turnover remains subdued and was down
on the previous year’s comparison. However,
this lower brokerage turnover was more
than offset by a strong increase in Equity
Capital Market (ECM) related activity.
Euroz Securities was involved in 13 ECM
transactions for the year raising $611 million
for Western Australian connected enterprise.
We have recently announced to the market
two major initiatives to expand both our
broking and funds management activities:
• The formation of Westoz Investment
Management, a new 80/20 joint venture
between Euroz Limited and former CEO of
MLC Mr Steve Tucker, will look to establish
new investment products that leverage
the established Westoz brand
name and track record.
• Euroz Securities acquired Blackswan
Equities in a share based transaction that
will nearly double the size of our Private
Client dealing team. The Blackswan
culture is very closely aligned to our
own and this transaction will provide
significant revenue and cost synergies
to our combined business in the years
ahead. We welcome the Blackswan team
to Euroz and are confident that our
complementary strengths will also provide
increased opportunities for all clients in
the combined Euroz business.
We have always had the philosophy that a
strong and conservative balance sheet will
provide opportunities for us in both good
and difficult markets and can now report
cash and investments at 30 June of
$136.6 million.
Our most important asset however, is our
staff and it is their increased efforts as
both shareholders and employees that
has been the major contributing factor to
these excellent results. We call on all staff
to remain enthusiastic and committed to
growing our Euroz and Westoz brands in
the future.
Our strong Western Australian market
position, a committed group of employees
who are also material shareholders and
a significant balance sheet lead your
Directors to remain optimistic on the
outlook for your company.
Andrew McKenzie
Executive Chairman
euroz Limited is a Western
Australian focused financial
services company and is the
parent company for our core
funds management (Westoz
Funds Management Pty Ltd and
Westoz Investment Management
Pty Ltd) and securities business
(euroz securities Limited).
The Directors of Euroz Limited are pleased
to announce a net profit after tax of
$26.5 million. The Directors have declared
and now paid a final fully franked dividend
of 9 cents per share, which combined with
the interim dividend of 1.75 cents per share
represents dividends of 10.75 cents for the
full year.
Executive Chairman’s Report
Euroz Limited 3
Euroz Limited Profit Before Tax and Net Profit After Tax
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Jun 01
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Profit Before Tax
Net Profit After Tax
Euroz Limited Dividend History
Jun 01
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Jun 04
Jun 05
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Jun 07
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Jun 12
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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 Jun 14
Westoz Funds Management Pty Ltd Funds Under Management
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
Jun 14
4 Annual Report 2014
Euroz Limited Directors’ Profiles
euRoz LIMIteD DIReCtoRs’ PRoFILes
Andrew McKenzie
(Executive Chairman)
Jay Hughes
(Executive Director)
Douglas Young
(Executive Director)
Andrew is Executive Chairman of Euroz
Limited and Euroz Securities Limited, is
an Executive Director of Westoz Funds
Management Limited and a board member
of the Stockbrokers Association of Australia
(SAA). Andrew holds a Bachelor of
Economics from the University of Western
Australia (UWA), is an individual Master
Member of the Stockbrokers Association of
Australia and was previously an Associate of
the Financial Services Institute of Australasia
(FINSIA) and 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 ASX in December 2000 and was admitted
in May 2004 as a Practitioner Member
(Master Stockbroking) of the Stockbrokers
Association of Australia (SAA).
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).
Euroz Limited Directors’ Profiles
Euroz Limited 5
Greg Chessell
(Executive Director)
Russell Kane
(Executive Director)
Simon Yeo
(Executive Director)
Greg is Head of Research and is our senior
resources analyst. He spent 10 years working
as a geologist in WA prior to entering the
stockbroking industry in 1995. Greg holds a
Bachelor of Applied Science in Geology from
the University of Technology, Sydney (UTS)
and a Graduate Diploma in Business from
Curtin University.
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.
Simon has worked in the Stockbroking
industry since 1993. In November 2000
he established the Private Client division
of Euroz Securities which he headed up
until earlier this year before moving to a
specialised role within our Institutional Sales
team. Simon holds a Bachelor of Commerce
from the University of Western Australia
(UWA) and was previously a chartered
accountant and Member of the Institute of
Chartered Accountants (CA).
6 Annual Report 2014
Managing Director’s Report
euRoz seCuRItIes LIMIteD
MAnAgIng DIReCtoR’s RePoRt
Our Private Client department has continued
to build on its quality advisory services
over the last 12 months. Whilst our core
competency of Western Australian resources
and related stocks have remained under
pressure versus the broad market’s appetite
for blue chip, yield driven performance and
record levels of IPO activity, our team has
continued to expand the services offered to
our private clients and we are extremely well
placed for the inevitable turnaround in our
investment universe.
In particular there have been two important
and strategic developments over the last
12 months:
Firstly, the merger with Blackswan Equities
is a significant growth opportunity in our
Private Client business, boosting our number
of advisors to 36 and placing us at the top
in any measure in terms of quality private
client broking in Western Australia. We
have a team in place that is the envy of
our competitors, and we are the leaders
in the state in providing quality advice to
our clients.
Secondly, the development of our Wealth
Management department where we are
embarking on offering holistic fee for
service wealth management products to
clients. There have been significant efforts
by a number of staff in establishing this
department which, on writing this report,
we are on the cusp of rolling out. I thank all
involved in this and I, and the board of Euroz
Securities, are genuinely excited about the
product we will have to offer for the benefit
of our clients.
Our Institutional Sales desk remains one
of the largest in the country specialising in
small to mid cap stocks. Through our long
term, domestic and international institutional
client relationships we offer an unrivalled
ability to promote and deal in quality
Western Australian stocks. We are “the
eyes and ears” in Western Australia for our
clients. Like our Private Client department,
the Institutional desk’s overall brokerage was
down for the period with a general trend
over the year towards more blue chip stocks,
IPOs and corporate activity all competing
with client’s secondary market activity. We
remain confident of a strong turnaround in
the coming period and we are extremely well
positioned to capitalise on any upturn in
client activity.
The Research team continues to build
on its solid reputation in the market. We
are fortunate to have a talented team of
professionals providing our clients with
quality, analytical based research. Quality
research has always been, and remains, the
core of our business and we have benefited
from continued efforts in identifying new
opportunities and ideas coming through.
Our corporate income was strong for the
year on the back of a significant increase
in the value of transactions. For the year
we were involved in 13 capital raisings,
raising a gross total of $610.7 million
for our corporate clients. The pipeline of
work going forward remains solid, and our
increased Private Client and Institutional
Dealing teams will be an significant force in
executing capital raisings going forward.
Euroz Securities has always differentiated
itself from our competitors with our team
approach. Any client, be it a private investor,
an institution or a corporate client, knows
that when they engage Euroz they are not
just engaging one or a few individuals,
but they have the whole team working for
them. This team culture flows through the
organisation and I am proud of everyone’s
efforts over the last financial year and know
that we have the absolute best team in
place to capitalise on future opportunities
going forward.
Rob Black
Managing Director
Euroz Securities Limited
this last financial year has been
one of significant transition for
euroz securities. We have seen
a renewed focus in growing our
core stockbroking business,
combined with a number of
exciting initiatives driven at
expanding both our broking and
wealth management services.
Financially, we recorded a strong result, with
Euroz Securities contributing ~ $5.3million
to the Group’s total net profit versus last
year’s contribution of $1.8million.
This was driven by a significant improvement
in corporate revenues for the year, offset
by slightly lower figures derived from
brokerage income.
38.52% Equity Stake*26.10% Equity Stake*100% ASX CODE: EZLASX CODE: OZG* As at 1 July 2014100% 80% NewNewNewASX CODE: WICABN 53 000 364 465INVESTMENT MANAGEMENT LIMITED 8 Annual Report 2014
Euroz Securities Limited Directors’ Profiles
euRoz seCuRItIes LIMIteD
DIReCtoRs’ PRoFILes
Rob Black
(Managing Director)
Anthony Brittain
(Executive Director)
Andrew Clayton
(Executive Director)
Andrew is a research analyst specialising in
resource companies. He has worked in the
stockbroking industry since 1994. Andrew
holds a Bachelor of Science (Hons) in
Geology from Melbourne University, as well
as a Diploma in Finance from the Financial
Services Institute of Australia (FINSIA).
Rob has been working in the stockbroking
industry since 1995 and has spent time
based in Sydney, Melbourne and London.
Rob is Head of Institutional Sales and is
responsible for servicing domestic and
international institutions. Rob holds a
Bachelor of Business in Finance and
Accounting, and is a graduate of
the Australian Institute of Company
Directors (AICD).
Anthony is the Chief Operating and Financial
Officer. Prior to joining Euroz he spent seven
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 from the University
of Western Australia (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).
Euroz Securities Limited Directors’ Profiles
Euroz Limited 9
Ben Laird
(Executive Director)
Brent Bonadeo
(Executive Director)
Brian Beresford
(Executive Director)
Ben has worked in the stockbroking
industry since 2001. He is a institutional
dealer responsible for servicing domestic
and international institutions. He holds
a Bachelor of Science, a Post Graduate
Diploma in Finance with the Financial
Services Institute of Australasia (FINSIA)
and a Chartered Financial Analyst
(CFA) designation.
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 (UWA).
Prior to joining Euroz, Brian was a corporate
finance partner at PwC, which he joined in
2007 when PwC acquired GEM Consulting
(GEM). Brian was a Director and shareholder
of GEM, and had previously worked for
Arthur Andersen in London. He has managed
capital raisings, and provided advisory
services to clients across the resources,
mining services, engineering, technology and
manufacturing sectors. Brian holds a Masters
in Finance from London Business School,
and a Bachelor of Commerce and Bachelor
of Laws from the University of Western
Australia (UWA).
10 Annual Report 2014
Euroz Securities Limited Directors’ Profiles
David Curnow
(Executive Director)
Gavin Allen
(Executive Director)
James Mackie
(Executive Director)
David has worked in the stockbroking
industry since 2000 and has spent his time
in London and Sydney. He is an institutional
dealer responsible for servicing domestic
and international institutions. He holds a
Bachelor of Commerce from the University
of Western Australia (UWA), is a Chartered
Accountant and holds a Graduate Diploma
in Applied Finance and Investment with the
Financial Services Institute of Australasia
(FINSIA) designation.
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 holds
a Bachelor of Commerce, is a member of
the Institute of Chartered Accountants
in Australia (CA) and holds a Chartered
Financial Analyst (CFA) designation.
James has been working in the stockbroking
industry since 1998. James is the Head of
Private Client Dealing and services high
net worth investors. He holds a Bachelor
of Commerce from Curtin University and
a Graduate Diploma from the Financial
Services Institute of Australasia (FINSIA).
Jon Bishop
(Executive Director)
Lucas Robinson
(Executive Director)
Nick McGlew
(Executive Director)
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 (UWA), as
well as a Graduate Diploma in Applied
Finance and Investment from the Financial
Services Institute of Australia (FINSIA).
Lucas has been advising in the stockbroking
industry since 1998. 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.
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 of Economics
from the University of Western Australia
(UWA), a Bachelor of Laws from Bond
and Master of Laws from New York
University (NYU).
Euroz Securities Limited Directors’ Profiles
Euroz Limited 11
Tony Kenny
(Executive Director)
Tim Weir
(Executive Director)
Tom Loh
(Executive Director)
Tony has worked in stockbroking since
1996, starting his career at Porter Western
Limited. Prior to joining Euroz Tony was a
founding partner and an Executive Director
of Blackswan Equities Limited a Perth
based wealth management and investment
advisory firm.
Tim has completed a Bachelor of Business
in Economics and Finance. He began his
stockbroking career with Porter Western
Limited in 1993 as a Private Client Adviser
and served as a partner of the business
until it was acquired by Macquarie Bank in
1999. He manages a high net worth client
base and served as an Executive Director
at Blackswan Equities Limited prior to
joining Euroz.
Tom has over 12 years of experience in ECM
transactions, corporate advisory mandates
and mergers and acquisitions with a focus
on the resources sector. He holds a Bachelor
of Business and a Graduate Diploma in
Finance and Investment.
Tim Lyons
(Executive Director)
Tim has worked in the stockbroking industry
for over 25 years and was previously
Executive Chairman of Blackswan Equities
where his role included maintaining the
firm’s corporate relationships and servicing
his high net worth private client base.
12 Annual Report 2014
Euroz Securities Operating Divisions
euRoz seCuRItIes
oPeRAtIng DIvIsIons
Private
Client
Dealing
Equities
Research
• Team of highly experienced and qualified private
• Sophisticated investors are able to participate in
client advisors
many of our corporate capital raisings
• Focus on dealing with high net worth individuals
• We pride ourselves on offering a tailored service to
• 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
our clients based on:
» Quality research
» Personalised service
» Wealth creation
• Client services
private client advisors
» Exclusive web based research
» Timely communication of ideas with clients
» Web based access to portfolios and ledgers
• Team of 8 experienced analysts with access to the
• Research Products
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 and resource companies
» 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 midcap companies in book format
» Company Reports: Detailed analysis on companies
as opportunities emerge.
Corporate
Finance
• Our corporate business is focused on developing
strong, long term relationships with our clients
• Clients are provided with specialised Corporate
Advisory services in:
» Capital Raisings
» Mergers and Acquisitions
» Strategic Planning and Reviews
» Privatisation and Reconstructions
• Established track record in raising equity capital via:
» Initial Public Offerings (IPO)
» Placements
» Rights Issues
• Euroz has raised $610m in new equity this
financial year
Institutional
Sales
• Largest institutional dealing desk based in Western
Australia
contact with companies based here - investors can
rely on our “on the ground” information
• Team of eleven institutional dealers with an
• Institutional dealing team “highly focused” on
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
providing the following services:
» Quality advice and idea generation
» Efficient execution
» Regular company contact
» Site visits
» Roadshows
Westoz Funds Management
Euroz Limited 13
Westoz FunDs MAnAgeMent
Westoz Funds Management
is responsible for $260 million
of funds under management
at 30 June 2014. 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
$1.295 at 30 June 2014 and has paid 63
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 cents per share
at its establishment, it has grown net assets
per share to 23.5 cents at 30 June 2013 and
paid 7.3 cents per share in dividends.
Westoz Investment Company Limited
and Ozgrowth Limited have now paid
over $100m in dividends to shareholders
since inception.
Philip Rees
Executive Chairman
(Westoz Funds Management)
Mr Philip Rees is the Executive Chairman
of the manager and is responsible for the
operation and development of the manager’s
business.
Mr Rees has worked in a range of roles
focused on Australian investment markets
for the last 27 years. He has previously
managed large institutional investment
portfolios and developed several early stage
investment opportunities until he joined
Westoz in April 2005.
Dermot Woods
Executive Director
(Westoz Funds Management)
Mr Dermot Woods is an Executive Director
of the manager and oversees the
construction of its investment portfolios.
Mr Woods joined Westoz Funds
Management in 2007. He has previously
worked as an industrial analyst for Euroz
Securities and prior to this role, as a fund
manager specialising in European equities.
Board of Directors:
Philip Rees, Dermot Woods,
Stephen Tucker, Simon Joyner,
Jay Hughes, and Andrew Mackenzie
Westoz InvestMent MAnAgeMent
euroz has recently established a
new funds management venture,
in conjunction with stephen
tucker. the objective of the new
venture is to build funds under
management using the existing
expertise of the group as a basis
for further development.
Stephen Tucker
(Westoz Investment Management)
Executive Chairman
Board of Directors:
Philip Rees, Dermot Woods, Stephen Tucker,
Jay Hughes, and Andrew Mackenzie
Mr Stephen Tucker is Executive Chairman
Tucker of Westoz Investment Management
and holds 20% of the issued equity of
the manager.
He has been involved in the Australian
financial services industry for over twenty
five years and brings a broad range of
experience to Westoz, most prominently
gained through his role as Chief Executive
Officer of MLC from 2004 until 2013. As
CEO, he had responsibility for MLC, NAB
Private Wealth and JB Were.
14 Annual Report 2014
Euroz Group Community Activities
euRoz gRouP CoMMunItY ACtIvItIes
Euroz Charitable Foundation
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.
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.
During the past 7 years the Euroz Charitable
Foundation has donated in excess of
$678,000 to a broad range of charities in
Western Australia. In addition to financial
support, employees of the Euroz Group
are encouraged to volunteer their time to
charities in and around their communities.
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
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.
euroz 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 seven years ago.
FINANCIAL REPORT 2014
FOR THE YEAR ENDED 30 JUNE
16 Annual Report 2014
Directors’ Report
Directors’ Report
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 2014.
The following persons were Directors of Euroz Limited (“Euroz”) at any time during or since the end of the financial year and up to the date of
this report:
Executive Chairman
Andrew McKenzie – Executive Chairman
Peter Diamond (Resigned 30 October 2013)
Executive Directors
Jay Hughes – Director
Doug Young – Director
Greg Chessell – Director
Russell Kane – Director
Simon Yeo – Director
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.
Principal activities
During the year the principal activities of the Euroz Group consisted of:
(a) Stockbroking;
(b) Funds Management; and
(c) Investing
Review of results
The Directors of Euroz Limited are pleased to announce a consolidated pretax profit of $35,784,030 (2013: $14,570,950) for the year ended 30
June 2014.
The consolidated net profit after tax was $26,547,100 compared with the 2013 year consolidated net profit after tax of $11,122,304. This profit
represents basic earnings per share of 18.29 cents versus 7.73 cents in the 2013 year.
Directors’ Report
Euroz Limited 17
Review of operations
The Directors have declared a final dividend of 9 cents per share fully franked which, combined with the interim dividend of 1.75 cent per share,
represents a total dividend of 10.75 cents per share fully franked.
Stockbroking
Principal Trading
Funds Management
Investment Income
Segment revenues
Segment results
2014
$
29,013,405
18,844,057
9,083,064
21,236,414
78,176,940
2013
$
23,936,710
9,819,875
2,839,100
9,383,931
45,979,616
2014
$
4,071,319
1,591,948
5,545,843
15,337,990
26,547,100
2013
$
3,069,360
(240,619)
1,371,224
6,922,339
11,122,304
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 rt presented herein.
Disclosure of operations
The consolidated group is principally involved in the following activities:
(d) Stockbroking;
(e) Funds Management; and
(f) Investing
Our operations are conducted entirely from one office in Perth, Western Australia. Details of our operations are outlined below:
(a) Stockbroking
Our stockbroking division comprises 4 main areas as follows:
(i) Equities Research
• Highly rated research from market leading research team of seven 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
18 Annual Report 2014
Directors’ Report
(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 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) Private Clients
• A unique and predominantly “high net worth” client base (s.708 compliant investors)
• Significant capacity to support new issues and construct quality 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
• On 1 July 2014 Euroz completed the acquisition of Blackswan Equities Limited. As at the date of this report Blackswan staff and clients have
successfully transitioned to Euroz premises and trading with Euroz Securities, and we remain confident that we will realise significant revenue,
cost and operational synergies in the merged Group.
• 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
(iv) Corporate Finance
• Our corporate finance 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
Directors’ Report
Euroz Limited 19
(b) Funds Management
Westoz Funds Management Pty Ltd (“WFM”) is responsible for $260 million of funds under management at 30 June 2014. It manages funds under
mandates from two listed investment companies; Westoz Investment Company Limited (“WIC) and Ozgrowth Limited (“OZG”). Both companies
have enjoyed competitive portfolio returns since inception.
WIC commenced trading on the ASX in September 2009 after 4 years as an unlisted company. WIC reported an investment return well ahead of the
small to mid-cap market for the past year and declared 9¢ in fully franked dividends for FY 2014 (compared with 9¢ in FY 2013).
OZG has been listed on the ASX since January 2008 and also reported an investment return well ahead of the market and paid a fully franked
dividend of 1.5¢ for FY 2014 (compared with 1.5¢ in FY 2013).
WIC and OZG have now paid $102 million in dividends to shareholders since inception.
On 1 July 2014 a new subsidiary, Westoz Investment Management Limited (“WIM”) was formed with Euroz owning 80% and Mr Steve Tucker, who
will be the Executive Chairman, owning 20%.
(c) Investing
Euroz Limited owns significant shareholdings in Westoz Investment Company Limited (WIC.ASX) totalling 26.10% and Ozgrowth Limited.
(OZG.ASX) totalling 38.52%. 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 2014 was $26.5 million up 139% from $11.1 million.
The Directors are pleased with this result and that all of our operating businesses remained profitable for the year.
The market value of our investments in the WIC and OZG can have a major impact on our reported profit numbers. Both companies showed strong
gains in market value over the period.
Disclosure of operations — Sales
Revenue has increased by 70% from $46 million to $78.2 million with significant increase in stockbroking, principal trading and funds
management revenue.
(a) Stockbroking and Corporate Finance
Stockbroking revenue was up by 21% from $23.9 million in FY13 to $29 million in FY14 as a result of increased Equity Capital Market (“ECM”)
raisings in our Corporate Finance division. Euroz Securities is involved in 13 ECM transactions this year raising $611 million.
(b) Principal Trading
Revenue from Principal Trading increased by 92% from $9.8 million in FY13 to $18.8 million in FY14.
(c) Funds Management
Revenue from Funds Management was increased to $9.08 million for FY14 compared to $2.8 million for FY13 division reflecting the improvement
in investment returns and associated performance fees having been generated for FY14.
(d) Investment Income
Investment income increased 126% from $9.4 million in FY13 to $21.2 million in FY14.
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 this volatility to continue in the near future.
20 Annual Report 2014
Directors’ Report
The Directors believe our long term future remains in focusing on West Australian based initiatives and that from time to time conditions in our
markets can be very challenging. In acknowledging that we are still in a volatile 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 seven 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 economic
concerns, political instability, inflation 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 in Euroz Securities during the past year.
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, are significantly better than most of our competitors, either large
or small.
Financial position
The net assets of the consolidated group have increased from $105.3 million at 30 June 2013 to $117.1 million in 2014. This increase has largely
resulted from adjustments to the carrying market value of investments as at 30 June 2014.
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 $42 million in
2013 to $40.8 million in 2014.
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.
Our group remains in an extremely sound financial position with cash and investments of $136.6 million as at 30 June 2014. We have Net Tangible
Assets (NTA) of 80¢ per share and no debt. Euroz has a proud history of consistent profits and dividends having paid $167.4 million in fully franked
dividends over 14 years.
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:
2014
Cents
18.29
18.27
2013
Cents
7.73
7.68
2014
$
2013
$
Interim ordinary dividend of 1.75cents (2013 – 1.5 cents) per fully paid ordinary share was paid
on 28 January 2014.
2,558,431
1,549,718
Provision for final ordinary dividend for 30 June 2014 of 9.0 cents (2013 –
5.0 cents) per fully paid ordinary share paid on 25 July 2014.
13,702,841
16,261,272
7,802,622
9,352,340
Directors’ Report
Euroz Limited 21
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 3,239,306 options were exercised during the year at an exercise price of $0.75. 198,591 options expired on 1 March 2014. There are no
options left on issue at 30 June 2014 (2013: 3,437,897).
Environmental regulation
The consolidated group is not subject to significant environmental regulation in respect of its operations.
After balance date events
On 1 July 2014 a new subsidiary, Westoz Investment Management Limited (“WIM”) was formed with Euroz owning 80% and Mr Steve Tucker, who
will be the Executive Chairman, owning 20%.
On 1 July 2014 Euroz Securities Limited, acquired 100% of the ordinary shares of Blackswan Equities Limited for the total consideration of
5,200,000 Euroz shares ($6,604,000). Refer to note 30 for further details.
Other than these matters the Directors are not aware of any other matter or circumstance subsequent to 30 June 2014 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.
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.
Information on Directors
Particulars of Directors’ interests in
shares and options of Euroz Limited
Director
Experience
Special responsibilities and qualifications
Ordinary shares
Options
P Diamond
Executive
Chairman
(Resigned 30
October 2013)
A McKenzie
Executive
Chairman
Mr Diamond has
worked in the
stockbroking industry
since 1986.
Mr McKenzie has
worked in the
stockbroking industry
since 1991.
Executive Chairman
*
Chairman of Remuneration Committee (to October
2013)
Holds a Bachelor of Business Degree (BBus) and is a
member of CPA Australia.
Member of Remuneration Committee
11,000,001
-
-
Holds a Bachelor of Economics Degree, is an
individual Master Member of the Stockbrokers
Association of Australia, and was previously an
Associate of the Financial Services Institute of
Australia (FINSIA) and Fellow of the Australian
Institute of Company Directors.
22 Annual Report 2014
Directors’ Report
Information on Directors
Particulars of Directors’ interests in
shares and options of Euroz Limited
Experience
Special responsibilities and qualifications
Ordinary shares
Options
Director
J Hughes
Director
Mr Hughes has
worked in the
stockbroking industry
since 1986.
Chairman of Remuneration Committee
(from October 2013)
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.
11,000,000
D Young
Director
Mr Young has worked
in corporate finance
since 1984.
Head of Corporate Finance of our 100% owned
subsidiary Euroz Securities Limited.
Chairman of Audit Committee
4,467,862
G Chessell
Director
Mr Chessell has
worked in the
stockbroking industry
since 1996.
R Kane
Director
Mr Kane has worked
in the stockbroking
industry since 1994.
S Yeo
Director
Mr Yeo has worked
in the stockbroking
industry since 1993.
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.
Head of Research of our 100% owned subsidiary
Euroz Securities Limited and is our senior resources
analyst.
Member of Audit Committee
Greg holds a B.App.Sc. degree in geology and a Grad.
Dip. Business qualification.
Responsible for servicing both domestic institutions
and high net worth clients.
Member of Underwriting Committee.
Member of Compliance Committee.
He holds a Bachelor of Business from Edith Cowan
University.
Established the Private Client division of Euroz
Securities which he headed up until earlier this
year before moving to a specialised role within the
Institutional Dealing team.
Member of Audit Committee
He holds a Bachelor of Commerce degree from UWA.
3,990,728
2,717,911
3,858,289
*No amounts disclosed due to resignation during the year.
-
-
-
-
-
Directors’ Report
Euroz Limited 23
Meetings of Directors
The numbers of meetings of the company’s Board of Directors held during the year ended 30 June 2014, and the numbers of meetings attended by
each Director were:
Director
Peter Diamond (Resigned 30 October 2013)
Andrew McKenzie
Jay Hughes
Doug Young
Greg Chessell
Russell Kane
Simon Yeo
Directors Meetings
Committee Meetings
Audit
Remuneration
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
6
15
15
15
15
9
9
6
15
15
12
14
9
8
-
-
-
2
2
-
2
-
-
-
2
2
-
2
4
12
12
-
-
-
-
4
12
12
-
-
-
-
Remuneration Report (audited)
This Remuneration Report outlines the Key Management Personnel (KMP) 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.
Key Management Personnel 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 KMP based on their performance and that of the Company.
Remuneration Policy
The remuneration policy has been designed to align the interests of shareholders, Directors and executives. There are three separate methods
applied in achieving this aim, the first being a participation in the profit share pool (with a 25% allocation of any bonus into the Performance
Rights Plan which has a vesting criteria of 3 years of service), the second being commission and the third being Head of Private Client incentive.
The Company believes this policy to have been generally effective in increasing shareholder wealth since inception.
The following table shows the gross revenue, profits and dividends for the last five years for the listed entity, as well as the share price at the end of
the respective financial years.
2010
$
2011
$
2012
$
2013
$
2014
$
Revenue (including net profit/(loss) of
associates and or gain/(loss) on fair valuing of
investment entities)
Net profit after tax
Share price at year end
76,080,544
77,806,998
97,609,657
45,979,616
78,176,940
26,331,750
26,566,040
11,760,189
11,122,304
26,547,100
1.28
1.62
1.15
1.00
1.30
Dividends paid or recommended
15,890,339
25,430,670
11,895,469
9,352,340
16,261,272
24 Annual Report 2014
Directors’ Report
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
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
semiannually by the Remuneration Committee to ensure that executive’s pay is competitive with the market, and is also reviewed upon promotion
or additional responsibilities.
There is no guarantee of base pay increases fixed in any senior executive or Directors contracts.
Executives are offered a competitive salary that comprises of a base salary inclusive of superannuation and a combination of some of the following,
dependant on the terms of the individual employment contract:
• Participation in the profit share pool – performance rights plan
• Commission
• Head of Private Client incentive
Equity based payments
During the year, a Performance Rights Plan was established which is an integrated element of the bonus/profit share plan. The annual bonus/profit
share pool is established as a percentage of profits with eligible staff being invited to participate. This pool is allocated 75% in cash and 25% in equity
to the participants. Employees may be awarded a Performance Right at the beginning of the year. The number of shares that Performance Right will
convert into is dependent on the profit pool at the end of the year and each eligible employees allocation within that pool. The shares issued will only
vest to the employee after 3 years subsequent service following the initial year.
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 calculated on 40% 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 40% pretax profit on an ongoing basis. In consultation with relevant Department
Heads the Committee uses the following informal criteria to assist in the allocation
• Ability to perform individual tasks within the relevant department
• Ability to add value and innovate beyond the job standard specifications
• Development of new and existing client relationships
• Ability to interact with other relevant departments as part of a larger team approach
• Relevant industry salary benchmarking
• General requirements to attract and retain staff.
The three executives on the Remuneration Committee are also entitled to participate in the profit share pool. In these circumstances two members
assess the performance of the third member.
Head of Private Client (HOPC) incentive
The calculation of this payment is based on the overall performance of the members of the Private Client Desk and the management of the
Private Client Desk.
Directors’ Report
Euroz Limited 25
Details of remuneration
Details of the nature and amount of each element of the emoluments of each Key Management Personnel of the Group are set out in the following tables.
Short-term
Post
Employment
Share Based
Payment
Commission
Superannuation
Performance
Rights
Total
Performance
related
2014
P Diamond
(Resigned 30
Base
salary
Profit
Share/
bonus
Other
benefits
$
$
$
October 2013)
92,599
-
244,597
A McKenzie
275,385
225,000
25,756
J Hughes
D Young
G Chessell
R Kane (Appointed
5 November 2013)
S Yeo (Appointed
5 November 2013)
R Black
P Rees
A Brittain
Total
282,610
225,000
20,092
265,385
150,000
24,132
275,385
150,000
10,599
264,899
187,500
17,352
271,703
150,000
16,803
61,502
274,918
180,000
13,873
199,846
187,500
13,782
230,769
97,500
14,705
-
-
-
$
-
-
-
-
-
-
$
$
7,305
25,000
17,775
35,000
25,000
-
344,501
18,750
18,750
12,500
12,500
569,891
564,227
487,017
473,484
24,570
15,625
509,946
17,775
17,775
23,853
24,980
12,500
530,283
15,000
15,625
501,566
440,606
8,125
376,079
%
0
39
40
31
32
37
28
36
43
26
2,433,499
1,552,500
401,691
61,502
219,033
129,375
4,797,600
Current Directors did not receive any Directors fees.
2013
P Diamond
A McKenzie
J Hughes
D Young
G Chessell
A Brittain
Total
Base salary
Profit Share/
bonus
$
251,616
251,616
251,616
251,616
260,146
211,538
1,478,148
$
120,000
120,000
120,000
120,000
120,000
30,000
630,000
Short-term
Other
benefits
$
31,699
24,519
18,467
26,026
9,357
14,128
124,196
Current Directors did not receive any Directors fees.
Post Employment
Superannuation
Total
Performance
related
$
25,000
25,000
25,000
25,000
16,470
25,000
$
428,315
421,135
415,083
422,642
405,973
280,666
141,470
2,373,814
%
28
28
29
28
30
11
26 Annual Report 2014
Directors’ Report
Service agreements
Remuneration and other terms of employment for the Key Management Personnel 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, Executive Chairman (Resigned 30 October 2013)
• Term of contract ongoing employment contract
• Base salary, inclusive of superannuation for the year ended 30 June 2014 of $305,000 (2013 - $248,000) plus profit share.
• Payment on termination of employment by the employer, other than for gross misconduct three months salary.
Andrew McKenzie, Executive Chairman
• Term of contract ongoing employment contract
• Base salary, inclusive of superannuation for the year ended 30 June 2014 of $305,000 (2013- $248,000) 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 2014 of $305,000 (2013 - $248,000) 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 2014 $305,000 (2013 - $248,000) 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 2014 of $305,000 (2013 - $248,000) plus profit share.
• Payment on termination of employment by the employer, other than for gross misconduct three months salary. Russell Kane, Director
• Term of contract ongoing employment contract
• Base salary, inclusive of superannuation for the year ended 30 June 2014 of $305,000 (2013 - $193,500) plus profit share.
• Payment on termination of employment by the employer, other than for gross misconduct three months salary.
Simon Yeo, Director
• Term of contract ongoing employment contract
• Base salary, inclusive of superannuation for the year ended 30 June 2014 of $305,000 (2013 - $72,000) 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 2014 of $305,000 (2013 - $225,000) plus profit share.
• Payment on termination of employment by the employer, other than for gross misconduct three months salary.
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 2014 of $275,000 (2013 - $220,000) plus bonus
• 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 2014 of $265,000 (2013 - $225,000) plus profit share.
• Payment on termination of employment by the employer, other than for gross misconduct three months salary.
Directors’ Report
Euroz Limited 27
Shareholdings of Key Management Personnel
The movement during the reporting year in the number of shares in Euroz Limited held, directly, indirectly or beneficially, by each member of Key
Management Personnel, including related parties, is as follows:
2014
Ordinary shares
P Diamond (Resigned 30 October 2013)
A McKenzie
J Hughes
D Young
G Chessell
R Kane
S Yeo
R Black
P Rees
A Brittain
Balance at 1
July 2013
Granted as
remuneration
On exercise of
options
Bought and
(sold)
Balance at 30
June 2014
10,000,000
10,000,000
10,000,000
4,250,000
3,102,000
2,370,000
3,520,000
1,810,000
1,100,000
303,400
46,455,400
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
233,000
-
360,000
-
-
-
500,000
500,000
100,000
478,000
20,000
230,000
430,000
100,000
80,000
*
10,500,000
10,500,000
4,350,000
3,580,000
2,623,000
3,750,000
2,600,000
1,200,000
383,400
593,000
2,438,000
39,486,400
*No amounts disclosed due to resignation during the year.
2013
Ordinary shares
P Diamond
A McKenzie
J Hughes
D Young
G Chessell
A Brittain
Balance at 1
July 2012
Granted as
remuneration
On exercise of
options
Bought and
(sold)
Balance at 30
June 2013
10,000,000
10,000,000
10,000,000
4,250,000
3,102,000
303,400
37,655,400
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,000,000
10,000,000
10,000,000
4,250,000
3,102,000
303,400
37,655,400
28 Annual Report 2014
Directors’ Report
Performance Rights held by Key Management Personnel
The movement during the reporting period in performance rights in Euroz Limited held, directly, indirectly or beneficially, by each Key Management
Person, including related parties, is as follows:
2013
Performance Rights
P Diamond (Resigned 30 October 2013)
A McKenzie
J Hughes
D Young
G Chessell
R Kane
S Yeo
R Black
P Rees
A Brittain
Balance at 1 July 2013
Granted as remuneration
Balance at 30 June 2014
-
-
-
-
-
-
-
-
-
-
-
-
1
1
1
1
1
1
1
1
1
9
-
1
1
1
1
1
1
1
1
1
9
These performance rights were issued in accordance with the Performance Rights Plan. Option holdings of Key Management Personnel.
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:
2014
Balance at
1 July 2013
Granted as
Remuneration
Exercised
Bought
Balance
at 30 June
2014
Total
exercisable
at 30 June
2014
Total not
exercisable
at 30 June
2014
Options
P Diamond
(Resigned
30 October 2013)
A McKenzie
J Hughes
D Young
G Chessell
R Kane
S Yeo
R Black
P Rees
A Brittain
-
-
-
-
-
233,000
-
360,000
-
-
593,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
233,000
-
360,000
-
-
593,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Directors’ Report
Euroz Limited 29
2013
Balance at
1 July 2012
Granted as
Remuneration
Exercised
Bought
Balance
at 30 June
2014
Total
exercisable
at 30 June
2014
Total not
exercisable
at 30 June
2014
Options
P Diamond
A McKenzie
J Hughes
D Young
G Chessell
A Brittain
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Share based compensation
A performance right was issued to certain members of Key Management Personnel as part of their annual bonus / profit share plan. The fair value
of each right is calculated as 25% of each member’s bonus entitlement. The performance rights are subject to a 3 year vesting period. Total fair
values of performance rights issued was $457,500.
Loans Key Management Personnel
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 $422,400 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.
30 Annual Report 2014
Directors’ Report
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
$
28, 650
Auditor’s independence declaration
The lead auditor’s independence declaration for the year ended 30 June 2014 has been received and follows the Directors report.
This report is made in accordance with a resolution of the Directors.
Andrew McKenzie
Executive Chairman
Date: 28 August 2014
Russell Kane
Director
Date: 28 August 2014
Auditor’s Independence Declaration
Euroz Limited 31
Auditor’s Independence Declaration
For the year ended 30 June 2014
To the Directors of Euroz Ltd,
In relation to our audit of the financial report of Euroz Ltd for the year ended 30 June 2014, to the best of my knowledge and belief, there have
been no contraventions of the auditor independence requirements of the corporations act 2001 or any applicable code of professional conduct.
PKF Mack & Co
Simon Fermanis
Partner
28 August 2014
West Perth,
Western Australia
32 Annual Report 2014
Corporate Governance Statement
Corporate Governance Statement
For the year ended 30 June 2014
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 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 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 funds management
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.
Corporate Governance Statement
Euroz Limited 33
Corporate Governance Statement
For the year ended 30 June 2014
PRINCIPLE 1. LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
Recomendation 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.
Recomendation 1.2 Companies should disclose the process for evaluating performance of senior executives.
The performance of senior executives is reviewed by the Board on a semi-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 8-9 of the Directors’ Report outlines the methodology used to assess the performance and remuneration
of the members of the Board.
Recomendation 1.3 Companies should provide the information indicated in the Guide to reporting on Principle 1.
This information is set out above.
34 Annual Report 2014
Corporate Governance Statement
Corporate Governance Statement
For the year ended 30 June 2014
PRINCIPLE 2. STRUCTURE THE BOARD TO ADD VALUE
Recomendation 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 7 of the Annual Report.
The period of office held by each Director is set out at page 2 of the Annual Report.
Recomendation 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.
Recomendation 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. Andrew McKenzie is the Executive Chairman of Euroz Limited. Robert
Black is the Managing Director of Euroz Securities Limited and Andrew McKenzie is the Executive Chairman. Previously the role of the Chair and the
Managing Director had not been exercised by the same individual.
Recomendation 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
Recomendation 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 8-9 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 7 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.
Recomendation 2.6 Companies should provide the information indicated in the Guide to reporting on Principle 2.
This information is set out above.
Corporate Governance Statement
Euroz Limited 35
Corporate Governance Statement
For the year ended 30 June 2014
PRINCIPLE 3. PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING
Recomendation 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.
Recomendation 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.
Recomendation 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.
Recomendation 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.
Recomendation 3.5 Companies should provide the information indicated in the Guide to reporting on Principle 3
This information is set out above.
36 Annual Report 2014
Corporate Governance Statement
Corporate Governance Statement
For the year ended 30 June 2014
PRINCIPLE 4. SAFEGUARD INTEGRITY IN FINANCIAL REPORTING
Recomendation 4.1 The Board should establish an audit committee.
The Board has established an audit committee consisting of Mr Young (Chair), Mr McKenzie, Mr Yeo & Mr Chessell.
Recomendation 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.
Recomendation 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.
Recomendation 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
Recomendation 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.
Corporate Governance Statement
Euroz Limited 37
Corporate Governance Statement
For the year ended 30 June 2014
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.
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:
• Executive Chairman (Euroz Limited & Euroz Securities Limited) – Andrew McKenzie
• Managing Director (Euroz Securities Limited) – Robert Black
Further details on the disclosure policy can be found in the Euroz Market Disclosure Policy which is available from the Euroz website.
Recomendation 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
Recomendation 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.
Recomendation 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
Recomendation 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.
Recomendation 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.
38 Annual Report 2014
Corporate Governance Statement
Corporate Governance Statement
For the year ended 30 June 2014
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. Two board members of the Euroz Group attend the monthly compliance meeting.
Recomendation 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.
Recomendation 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
Recomendation 8.1 The Board should establish a remuneration committee.
The Euroz remuneration committee consists of Andrew McKenzie, Jay Hughes & Robert Black. 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 7-15 of this report.
Recomendation 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.
Recomendation 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 7-15 of this report.
Recomendation 8.4 Companies should provide the information indicated in the Guide to reporting on Principle 8.
This information is set out above.
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
Euroz Limited 39
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2014
Revenue
Gain on fair value movement on investment entities
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
Notes
4
5
5
6
2014
$
63,227,567
14,949,373
Restated
2013
$
41,078,617
4,900,999
(14,324,704)
(12,355,599)
(845,543)
(271,711)
(1,199,457)
(334,968)
(1,550,395)
(1,486,311)
(930,459)
(641,270)
(2,098,450)
(2,680,973)
(229,650)
(18,344,234)
(3,797,764)
(275,531)
(9,275,000)
(3,159,557)
35,784,030
(9,236,930)
14,570,950
(3,448,646)
Profit after income tax expense for the year
26,547,100
11,122,304
Other comprehensive income
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
-
-
26,547,100
11,122,304
33
33
Cents
18.29
18.27
Cents
7.73
7.68
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
40 Annual Report 2014
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
For the year ended 30 June 2014
Notes
2014
$
Restated
2013
$
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total current assets
Noncurrent assets
Long term receivable
Investment entities at fair value
Financial assets
Plant and equipment
Deferred tax assets
Total noncurrent assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Short term provisions
Total current liabilities
Noncurrent liabilities
Deferred tax liabilities
Long term provisions
Total noncurrent 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
55,388,472
50,506,440
922,962
2,998,576
916,885
775,345
813,033
842,953
60,226,895
52,937,771
5,000,000
5,000,000
73,232,177
54,598,004
-
198,092
961,782
169,130
942,003
2,737,393
79,392,051
63,446,530
Restated
1 July 2012
$
53,741,715
1,775,702
1,458,820
2,321,929
59,298,166
5,000,000
47,076,260
2,000
2,126,185
4,081,891
58,286,336
139,618,946
116,384,301
117,584,502
1,858,614
2,317,486
15,238,301
19,414,401
3,041,462
23,628
3,065,090
1,803,801
638,428
8,470,465
10,912,694
91,351
80,382
171,733
1,238,111
1,487,851
10,653,790
13,379,752
542,668
210,091
752,759
22,479,491
11,084,427
14,132,511
117,139,455
105,299,874
103,451,991
90,924,294
89,451,519
266,978
186,000
25,948,183
15,662,355
89,373,600
186,000
13,892,391
117,139,455
105,299,874
103,451,991
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
Consolidated Statement of Changes in Equity
Euroz Limited 41
Consolidated Statement of Changes in Equity
For the year ended 30 June 2014
Issued
capital
$
Retained
earnings
$
Share based
payment
reserve
$
Option
premium
reserves
$
Total
$
Restated
Balance at 1 July 2012
Profit for the period
Total comprehensive income for the period
89,373,600
13,892,391
-
-
11,122,304
11,122,304
Transactions with owners, recorded directly in equity
Shares issued during the period
Dividends to equity holders
Total contributions by and
distributions to owners
77,919
-
-
(9,352,340)
77,919
(9,352,340)
Balance at 30 June 2013
89,451,519
15,662,355
Balance at 1 July 2013
Profit for the period
Total comprehensive income for the period
89,451,519
15,662,355
-
-
26,547,100
26,547,100
Transactions with owners, recorded directly in equity
Shares issued during the period
Treasury shares
Share based payments
Dividends to equity holders
Total contributions by and
distributions to owners
2,615,480
(1,142,705)
-
-
-
-
-
(16,261,272)
-
-
-
-
-
-
-
-
-
-
-
-
266,978
-
186,000
103,451,991
-
-
-
-
-
11,122,304
11,122,304
77,919
(9,352,340)
(9,274,421)
186,000
105,299,874
186,000
105,299,874
-
-
26,547,100
26,547,100
(186,000)
2,429,480
-
-
-
(1,142,705)
266,978
(16,261,272)
1,472,775
(16,261,272)
266,978
(186,000)
(14,707,519)
Balance at 30 June 2014
90,924,294
25,948,183
266,978
-
117,139,455
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
42 Annual Report 2014
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
For the year ended 30 June 2014
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)
Payments to suppliers and employees (inclusive of goods and services tax)
Notes
2014
$
2013
$
37,030,613
28,194,055
(22,732,912)
(20,337,297)
14,297,701
7,856,758
Interest received
Proceeds from sale of trading shares
Income taxes (paid)
Payments for trading shares
1,574,326
19,158,477
(2,832,150)
(19,752,073)
Net cash flows from operating activities
31
12,446,281
2,017,103
9,481,049
(3,405,340)
(9,275,000)
6,674,570
Cash flows from investing activities
Net (payments)/receipts from investments
Dividends received
Payments for plant and equipment
Payment for treasury shares
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
Cash and cash equivalents at 30 June
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
(4,572,875)
(1,961,321)
5,572,639
(101,631)
(1,142,705)
(244,572)
3,491,559
(15,275)
-
1,514,963
2,429,479
77,919
(9,749,156)
(11,502,727)
(7,319,676)
(11,424,808)
4,882,032
(3,235,275)
50,506,440
53,741,715
7
55,388,472
50,506,440
Notes to the Financial Statements
Euroz Limited 43
Notes to the Financial Statements
Contents
Note 1.
Statement of significant accounting policies
44
Note 20.
Long term provisions
Note 2.
Significant accounting estimates
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.
Investment entities at fair value
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
Note 18. Short term provisions
Note 19. Deferred tax liabilities
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. Restatement of comparatives
Note 35. Parent entity disclosures
Note 36. Company details
Distribution of Shareholders
52
52
55
55
56
57
58
58
58
58
58
59
60
61
61
61
61
62
62
62
64
64
66
67
67
67
67
69
70
71
71
72
72
74
74
78
44 Annual Report 2014
Notes to the Financial Statements
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 as issued by the Australian Accounting Standards Board and the Corporations Act 2001 as appropriate for “for-
profit” oriented entities.
This financial report has been authorised by the Directors to be issued on 28 August 2014. The Directors have the power to amend and reissue the
financial statements.
Euroz Limited is a listed public company, trading on the Australian Securities Exchange, limited by shares, incorporated and domiciled in Australia.
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 35 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. Amounts are rounded to the nearest
dollar in accordance with class order 98/100.
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 2014 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 group.
Subsidiaries are all those entities over which the consolidated group has control. The consolidated group controls an entity when the consolidated
group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated group. 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 group.
A change in ownership interest without the loss of control, is accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable
to the parent.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the group. All controlled entities have a 30 June financial year end.
(b) Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate
for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the
adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or
liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
• When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a
business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or
• When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal
can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
Notes to the Financial Statements
Euroz Limited 45
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will
be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred tax assets recognised are
reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously
unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities
and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different
taxable entity's which intend to settle simultaneously.
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 to account for business combinations regardless of whether equity instruments or other assets are
acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred
by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination,
the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All
acquisition costs are expensed as incurred to profit or loss.
On the acquisition of a business, the consolidated group assesses the financial assets acquired and liabilities assumed for appropriate classification
and designation in accordance with the contractual terms, economic conditions, the consolidated group’s operating or accounting policies and
other pertinent conditions in existence at the acquisition-date.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the acquiree and
the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the
consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase
to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment
of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred
and the acquirer's previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised
and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and
circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the
acquisition or (ii) when the acquirer receives all the information possible to determine fair value.
(d) Revenue recognition
Revenue is recognised when it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. Revenue
is measured at the fair value of consideration received or receivable. 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), where applicable
46 Annual Report 2014
Notes to the Financial Statements
(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 uncollectable are written off. A provision for impairment 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
Controlled entities are accounted for in the consolidated financial statements as set out in Note 1 (a), excluding investment entities (which are
deemed to be controlled) which are accounted for at fair value at reporting date.
Other securities are accounted for 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) Plant and equipment
Each class of plant and equipment is carried at cost as indicated less, where applicable, any accumulated depreciation and impairment losses.
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%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
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.
(i) 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.
(j) Leases
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.
(k) 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. Due to their short-term nature they are measured at amortised cost and not discounted. 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.
Notes to the Financial Statements
Euroz Limited 47
(l) 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.
(m) 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.
(n) 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/performance rights
The fair value of options/performance rights 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/performance right, the vesting and performance criteria, the impact of dilution, the non-tradeable
nature of the option/performance right, 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/performance right.
(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.
(o) 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.
(p) 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.
48 Annual Report 2014
Notes to the Financial Statements
(q) Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the
price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date; and assumes that the transaction will take place either: in the principle market; or in the absence of a principal market, in the most
advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their
economic best interest. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that
are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant
observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the inputs
used in making the measurements. Classifications are reviewed each reporting date and transfers between levels are determined based on a
reassessment of the lowest level input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the
valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change
in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in
the latest valuation and a comparison, where applicable, with external sources of data.
(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 group 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 group 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 group 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) Treasury Shares
Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in
profit or loss on the purchase, sale, issue or cancellation of the group’s own equity instruments. Any difference between the carrying amount and
the consideration, if reissued, is recognised in share-based payments reserve. Share options exercised during the reporting period are satisfied with
treasury shares.
(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.
Notes to the Financial Statements
Euroz Limited 49
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.
(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 group 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 group 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
50 Annual Report 2014
Notes to the Financial Statements
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.
(iv) Impairment of financial assets
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) Current/non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is current when: it is expected to be realised or intended to be sold or consumed in normal operating cycle; it is held primarily for the
purpose of trading; it is expected to be realised within twelve months after the reporting period; or the asset is cash or cash equivalent unless
restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as
non-current.
A liability is current when: it is expected to be settled in normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled
within twelve months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least twelve months
after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
(w) Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a business, are included in the cost of the
acquisition as part of the purchase consideration.
(x) 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
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 early adopted AASB 2013-5 and effect of this early adoption is detailed in note 12 and note 34. The group has
decided against early adoption of the remaining standards, and has not yet determined the potential impact on the financial statements from the
adoption of these standards and interpretations.
The consolidated group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any significant impact on the accounting policies of the
consolidated entity from the adoption of these Accounting Standards and Interpretations are disclosed below.
AASB 10 Consolidated Financial Statements
The consolidated entity has applied AASB 10 from 1 July 2013, which has a new definition of 'control'. Control exists when the reporting entity is
exposed, or has the rights, to variable returns from its involvement with another entity and has the ability to affect those returns through its 'power'
over that other entity. A reporting entity has power when it has rights that give it the current ability to direct the activities that significantly affect
the investee's returns. The consolidated entity not only has to consider its holdings and rights but also the holdings and rights of other shareholders
in order to determine whether it has the necessary power for consolidation purposes.
AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13.
Notes to the Financial Statements
Euroz Limited 51
The consolidated entity has applied AASB 13 and its consequential amendments from 1 July 2013. The standard provides a single robust
measurement framework, with clear measurement objectives, for measuring fair value using the 'exit price' and provides guidance on measuring
fair value when a market becomes less active. The 'highest and best use' approach is used to measure
non-financial assets whereas liabilities are based on transfer value. The standard requires increased disclosures where fair value is used.
AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirement.
The consolidated group has applied 2011-4 from 1 July 2013, which amends AASB 124 'Related Party Disclosures' by removing the disclosure
requirements for individual Key Management Personnel ('KMP'). Corporations and Related Legislation Amendment Regulations 2013 and
Corporations and Australian Securities and Investments Commission Amendment Regulation 2013 (No.1) now specify the KMP disclosure
requirements to be included within the Directors' report.
AASB No.
AASB 9
AASB 2012-3
AASB 2013-3
AASB 2013-4
AASB 2013-9
AASB 2014-1
AASB 1031
AASB 14
Title
Financial Instruments
Amendments to Australian Accounting
Standards – Offsetting Financial Assets
and Financial Liabilities
Amendments to AASB 136 –
Recoverable amount disclosures for
non-financial assets
Amendments to Australian Accounting
Standards – notation of derivatives
and continuation of hedge accounting
Amendments to Australian Accounting
Standards - Conceptual Framework,
Materiality and Financial Instruments
Part A - Conceptual Framework
Part B - Materiality
Part C - Financial Instruments
Amendments to Australian Accounting
Standards
Part A - Annual Improvements 2010 -
2012 and 2011 - 2013 Cycles
Part B - Defined Benefit Plans:
Employee Contributions (Amendments
to AASB 119)
Part C - Materiality
Part D - Consequential Amendments
arising from AASB 14 Regulatory
Deferral Accounts
Part E - Financial Instruments
Materiality (Revised)
Regulatory Deferral Account
Amendments to IAS 16 PP&E
and IAS 38 Intangible Assets^
Clarification of Acceptable Methods
of Depreciation and Amortisation
(Amendments to IAS 16 and IAS 38)
Application date of standard* Issue date
1 January 2018
1 January 2014
December 2010
June 2012
1 January 2014
June 2013
1 January 2014
July 2013
Part A - 20 December 2013
December 2013
Part B - 1 January 2014
Part C - 1 January 2015
June 2014
Part A - 1 July 2014
Part B - 1 July 2014
Part C - 1 July 2014
Part D - 1 January 2016
Part E - 1 January 2015
1 January 2014
1 January 2016
1 January 2016
December 2013
June 2014
May 2014
IFRS 15^
Revenues from Contracts
with Customers
1 January 2017
May 2014
52 Annual Report 2014
Notes to the Financial Statements
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.
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.
Investments
The consolidated group invests in listed and unlisted securities from which it derives dividends.
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.
Notes to the Financial Statements
Euroz Limited 53
Principal
Trading
Funds
Management
Investment
Income
Unallocated
Items
Total
(Consolidated)
Segment performance
Stockbroking
and Corporate
Activities
$
$
$
$
-
2014
Sales and other fees
28,264,385
18,844,057
8,975,819
Interest revenue
Other revenues
745,813
3,207
-
-
107,245
714,402
-
20,522,012
Total segment revenue
29,013,405
18,844,057
9,083,064
21,236,414
Segment net operating
profit after tax
Depreciation and
amortisation
Gain on fair value of
investment entities
Segment assets
4,071,319
1,591,948
5,545,843
15,337,990
843,319
-
-
-
2,224
-
-
14,949,373
28,642,125
2,032,576
5,342,923
103,601,322
Fair value of investment
entities
Capital expenditure
-
101,631
Segment liabilities
2,491,930
-
-
-
-
-
73,232,177
-
1,176,457
18,811,104
$
-
-
-
-
-
-
-
-
-
-
-
$
56,084,261
1,567,460
20,525,219
78,176,940
26,547,100
845,543
14,949,373
139,618,946
73,232,177
101,631
22,479,491
Cash flow information
Net cash flow from
operating activities
Net cash flow from
investing activities
Net cash flow from
financing activities
3,099,745
(593,596)
9,225,730
714,401
-
12,446,281
(101,631)
-
-
-
-
-
999,764
(1,142,705)
(244,572)
-
(7,319,676)
(7,319,676)
54 Annual Report 2014
Notes to the Financial Statements
Principal
Trading
Funds
Management
Investment
Income
Unallocated
Items
Total
(Consolidated)
Segment performance
Stockbroking
and Corporate
Activities
$
2013
Sales and other fees
23,054,887
9,819,875
2,712,648
Interest revenue
Other revenues
881,089
734
-
-
126,452
991,609
-
8,392,322
Total segment revenue
23,936,710
9,819,875
2,839,100
9,383,931
$
$
$
-
3,069,360
(240,619)
1,371,224
6,922,339
1,197,232
-
-
-
2,224
-
-
4,900,999
6,624,139
813,033
3,842,685
105,104,444
Segment liabilities
736,916
-
15,275
-
-
-
-
-
54,598,004
-
1,006,401
9,341,110
Segment net operating
profit after tax
Depreciation and
amortisation
Gain on fair value of
investment entities
Segment assets
Fair value of
investment entities
Capital expenditure
Cash flow information
Net cash flow from
operating activities
Net cash flow from
investing activities
Net cash flow from
financing activities
Entity-wide disclosures
4,105,687
206,049
1,371,224
991,610
(15,275)
-
-
-
-
-
1,530,238
-
(11,424,808)
(11,424,808)
The consolidated group predominately operates with in the geographical region of Australia. Therefore, the total revenue and non-current assets are
reflected on the face of the financial statements.
During the year ended 30 June 2014 approximately 19% of the consolidated entity’s external revenue was derived from performance fees,
management fees and dividends from Ozgrowth Limited and Westoz Investment Company Limited.
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
35,587,410
1,999,150
8,393,056
45,979,616
11,122,304
1,199,457
4,900,999
116,384,301
54,598,004
15,275
11,084,427
6,674,570
1,514,963
Notes to the Financial Statements
Euroz Limited 55
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
Dividend received
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
Share based payments
2014
$
2013
$
11,651,450
24,380,270
18,844,058
1,208,483
56,084,261
14,158,028
11,000,571
9,819,875
608,934
35,587,408
1,567,460
1,999,150
3,207
5,572,639
7,143,306
736
3,491,323
5,491,209
63,227,567
41,078,617
2014
$
558,827
286,716
845,543
1,456,945
588,821
-
266,978
2013
$
567,329
632,128
1,199,457
1,346,251
593,193
659,209
-
56 Annual Report 2014
Notes to the Financial Statements
Note 6.
Income tax
The components of tax expense comprise:
Current tax
Deferred tax
2014
$
4,511,208
4,725,722
9,236,930
2013
$
3,448,646
-
3,448,646
Numerical reconciliation between tax expense and pre tax accounting profit
Income tax using company’s tax rate of 30% (2013: 30%)
10,735,209
4,371,285
Add tax effect of:
• other non-allowable items
• prior year under provision
• other
Less tax effect of:
• gain on acquisition of associates
• franked dividends received
49,147
65,760
58,606
80,792
43,966
-
10,908,722
4,496,043
-
-
1,671,792
1,047,397
Income tax attributable to entity
9,236,930
3,448,646
The applicable weighted average effective tax rates are as follows:
25.81%
23.67%
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
2,646,042
(4,725,722)
-
405,235
2,240,807
-
(2,079,680)
2,646,042
-
2,907,263
2,907,263
-
-
-
Notes to the Financial Statements
Euroz Limited 57
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
2014
$
91,351
42,848
3,041,462
1,899,140
(1,899,140)
-
838,253
123,529
961,782
2013
$
542,668
(451,317)
91,351
175,151
1,723,989
1,899,140
772,752
65,501
2,737,393
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 2014 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.
Note 7. Cash and cash equivalents
Cash at bank and on hand
2014
$
2013
$
55,388,472
50,506,440
58 Annual Report 2014
Notes to the Financial Statements
Note 8. Trade and other receivables
Trade receivables
2014
$
2013
$
922,962
775,345
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
2014
$
527,000
2,936,485
(464,909)
2,998,576
2013
$
527,000
1,528,646
(1,242,613)
813,033
2014
$
493,062
423,823
916,885
2013
$
477,443
365,510
842,953
2014
$
2013
$
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. Investment entities at fair value
Listed ordinary shares in investment entities at fair value through profit or loss
73,232,177
54,598,004
2014
$
2013
$
Notes to the Financial Statements
Euroz Limited 59
Reconciliation
Reconciliation of the fair values at the beginning and
end of the current financial year are set out below:
Opening fair value
Additions
Disposals
Revaluation increments
Closing fair value
2014
$
2013
$
54,598,004
4,493,584
-
47,076,260
1,961,084
-
14,140,589
5,560,660
73,232,177
54,598,004
The above investments represent investments in Ozgrowth Limited (38.52%)and Westoz Investment Company Limited (26.1%) that were
previously recognised as associate entities and equity accounted. Under the revised AASB 10 “Consolidated Financial Statements”, the definition
of control has changed. Both these investments fall into the new definition of control and therefore, the application of AASB 10 would by definition
result in these entities requiring consolidation. However, the Group has early adopted AASB 2013-5 in relation to accounting for investment
entities which permits investment entities to be fair valued through the statement of profit or loss and other comprehensive income provided the
Group satisfies the requirements of the standard. The companies are defined as investment entities as their principal activity is to buy, hold and
sell listed equities.
The effect of adopting AASB 10 and early adopting AASB 2013-5 is detailed in note 34 to the financial report.
Note 13. Financial Assets
Financial instrument at fair value
2014
$
-
2013
$
169,130
60 Annual Report 2014
Notes to the Financial Statements
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
2014
$
29,703
(23,210)
6,493
62,194
(36,025)
26,169
209,394
(129,304)
80,090
94,019
(8,679)
85,340
2013
$
2,528,511
(1,892,151)
636,360
42,619
(16,205)
26,414
1,073,173
(897,020)
176,153
573,287
(470,211)
103,076
198,092
942,003
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:
2014
Carrying amount at 1 July 2013
Additions
Depreciation/amortisation expense (Note 5)
Leasehold
improvements
$
Plant and
equipment
$
636,359
-
(629,867)
305,645
101,631
(215,676)
Total
$
942,004
101,631
(845,543)
Carrying amount at 30 June 2014
6,492
191,600
198,092
Notes to the Financial Statements
Euroz Limited 61
2013
Carrying amount at 1 July 2012
Additions
Depreciation/amortisation expense (Note 5)
Leasehold
improvements
$
Plant and
equipment
$
Total
$
1,268,487
-
857,698
15,275
2,126,185
15,275
(632,128)
(567,329)
(1,199,457)
Carrying amount at 30 June 2013
636,359
305,644
942,003
Note 15. Deferred tax assets
Deferred tax asset (Note 6)
Note 16. Trade and other payables
Trade creditors
Other payables and accruals
Total
2014
$
2013
$
961,782
2,737,393
2014
$
2013
$
67,526
1,858,614
1,736,275
1,858,614
1,803,801
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
Note 18. Short term provisions
Dividends
Employee entitlements (annual leave)
Employee entitlements (long service leave)
Total
2014
$
2,317,486
2013
$
638,428
2014
$
2013
$
13,702,841
7,190,724
684,186
851,274
611,899
667,842
15,238,301
8,470,465
62 Annual Report 2014
Notes to the Financial Statements
Dividends
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 2013
Additional provisions recognised
Amounts paid out
Carrying amount at 30 June 2014
Note 19. Deferred tax liabilities
Deferred tax liability (Note 6)
Note 20. Long term provisions
Employee entitlements (long service leave)
Note 21. Contributed equity
(a) Share capital
Ordinary shares
Issued and paid up capital consisting
of ordinary shares
2014
$
7,190,724
16,261,272
(9,749,155)
13,702,841
2013
$
9,341,110
9,352,341
(11,502,727)
7,190,724
2014
$
3,041,462
2014
$
23,628
2013
$
91,351
2013
$
80,382
2014
Shares
2013
Shares
2014
$
2013
$
146,153,785
143,814,479
90,924,294
89,451,519
Notes to the Financial Statements
Euroz Limited 63
2014
Shares
2013
Shares
143,814,479
143,709,388
(900,000)
3,239,306
-
105,091
146,153,785
143,814,479
2014
89,451,519
(1,142,705)
2,615,480
90,924,294
2013
89,373,600
-
77,919
89,451,519
(b) Movements in ordinary share capital
At the beginning of the reporting period
Acquisition of Treasury shares
Exercise of options (i)
At the end of the reporting period
(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.
(c) Movements in ordinary share capital
At the beginning of the reporting period
Acquisition of Treasury shares
Exercise of options
At the end of the reporting period
(d) Treasury Shares
Balance of treasury shares at the end
of the reporting period
2014
Shares
2013
Shares
2014
$
(900,000)
-
(1,142,705)
2013
$
-
Treasury shares were acquired by Employee Share Trust at various times during the year. The acquisition of Treasury shares forms part of the
Performance Right Plan.
(e) Ordinary shares
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.
(f) Options
A total of 3,239,306 options were exercised during the year at an exercise price of $0.75. There are no options left on issue at 30 June 2014
(2013: 3,437,996). The options that were not exercised during the year expired on 1 March 2014.
(g) Share based payments reserve
The reserve records items recognised as expenses on valuation of share based payments. The movement in the current period totalling $266,978
relates to the fair value of performance rights issued in the current year in connection with the Performance Rights Plan.
(h) 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 and significant cash reserves. As the holder of AFSLs and as a sponsoring broker of the ASX the group is exposed
to externally imposed capital requirements, which have been complied with at year end and throughout the year.
64 Annual Report 2014
Notes to the Financial Statements
Note 22. Dividends
2014
$
2013
$
Ordinary shares
Interim dividend for the half year ended 31 December 2013 of 1.75 cents
(2013 – 1.5 cents) per fully paid ordinary share paid on 28 January 2013.
Fully franked based on tax paid @ 30%
2,558,431
1,549,718
Final dividend declared and provided for at 30 June 2014 of 9.0 cents
(2013 –5 cents) per fully paid ordinary share
Fully franked based on tax paid @ 30%
13,702,841
7,802,622
Total dividends provided for or paid
16,261,272
9,352,340
Franked dividends
The franked portions of the dividends recommended after 30 June 2014 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 2014.
Consolidated group
2014
$
2013
$
Franking credits available for subsequent financial years based on
a tax rate of 30% (2013: 30%)
11,110,575
12,440,077
These dividends are fully-franked and therefore, there are no income tax consequences for the owners of Euroz Limited.
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.
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.
Notes to the Financial Statements
Euroz Limited 65
(ii) Liquidity risk
The group manages liquidity risk using forward cashflow projections, maintaining cash reserves and having no borrowings or debt. In
addition, at reporting date, the group has unutilised credit facilities totalling $20,000,000.
Trade and other payables are expected to be paid as follows:
Less than 1 month
(iii) Credit risk
2014
$
2013
$
1,858,614
1,803,801
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 2014.
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 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:
Cash and cash equivalents
Receivables
Long term deposit
Impairment losses
None of the consolidated entity’s receivables are past due (2013: Nil).
(iv) Financial instruments composition and maturity analysis
Carrying Amount
2014
$
2013
$
55,388,472
50,506,440
922,962
5,000,000
775,345
5,000,000
61,311,434
56,281,785
Weighted Average
Effective Interest Rate
Floating Interest
Rate
Non Interest Bearing
2014
%
2013
%
2014
$
2013
$
2014
$
2013
$
Financial Assets
Cash and cash equivalents
2.95
4.00
55,388,472
50,506,440
Trade and other Receivables
Financial assets held for trading
Financial assets at fair value through
profit and loss
Long term deposit
Total financial assets
Financial Liabilities
Trade and other payables
-
-
-
-
-
-
-
-
-
-
-
-
1.75
2.00
5,000,000
5,000,000
922,962
2,998,576
-
775,345
813,033
-
-
169,130
-
60,388,472
55,506,440
3,921,538
1,757,508
-
-
-
-
1,858,614
1,803,801
66 Annual Report 2014
Notes to the Financial Statements
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)
2014
Assets
Investments
Total Assets
2013
Assets
Investments
Total Assets
Level 1
Level 2
Level 3
Total
75,703,753
75,703,753
527,000
527,000
-
-
76,230,753
76,230,753
Level 1
Level 2
Level 3
Total
54,884,037
54,884,037
527,000
527,000
-
-
55,411,037
54,411,037
(v) Sensitivity analysis
Assuming all variables remain constant and the interest rate fluctuated by 1% at year end the effect on the group’s equity and profit as
follows:
Increase by 1%
Decrease by 1%
2014
$
603,885
(603,885)
2013
$
555,064
(555,064)
Assuming all variables remain constant and the equity market fluctuated by 5% at year end the effect on the group’s equity and profit is
as follows:
Increase by 5%
Decrease by 5%
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
2014
$
3,811,538
(3,811,538)
2013
$
2,770,552
(2,770,552)
2014
$
2013
$
114,000
102,000
16,650
17,000
Notes to the Financial Statements
Euroz Limited 67
Note 25. Contingent liabilities
The parent entity and consolidated group had contingent liabilities at 30 June 2014 as follows:
Secured guarantees in respect of:
operating lease of a controlled group entity
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
2014
$
2013
$
591,000
791,000
2014
$
2013
$
977,809
5,559,363
-
928,942
5,209,775
1,165,384
Commitments not recognised in the financial statements
6,537,172
7,304,101
The lease on the premises at Level 18, 54-58 Mounts Bay Road is for the period of 10 years commencing 2 July 2010 and expiring on 1 July 2020.
Note 27. Employee benefits
Employee benefit and related on-costs liabilities
Provision for employee entitlements – current
Aggregate employee benefit and related oncosts liabilities
Note 28. Related parties
(a) Key Management Personnel compensation
Short-term employee benefits
Post-employment benefits
Share Based payments
Total compensation
2014
$
2013
$
1,559,090
1,559,090
1,360,123
1,360,123
2014
$
4,449,192
219,033
129,375
2013
$
2,232,344
141,470
-
4,797,600
2,373,814
68 Annual Report 2014
Notes to the Financial Statements
(b) Individual Key Management Personnel compensation disclosure
Information regarding individual Key Management Personnel 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 Key Management Personnel has entered into a material contract with the group since the end of
the previous financial year and there were no material contracts involving Key Management Personnel interest existing at year end.
(c) Parent entity
The ultimate parent entity within the group is Euroz Limited.
(d) Share-based payments
During the year a performance right was issued to 45 employees. This performance right entitles the holder to a number of shares in Euroz Limited
calculated as 25% of their bonus entitlement for the year. At point of issue, these performance rights are subject to a 4 year vesting period. The fair
value of each performance right is calculated as 25% of the individuals bonus entitlement.
(e) Wholly-owned group transactions
Wholly-owned group
The wholly-owned group consists of Euroz Limited and its wholly-owned controlled entities. See Note 29.
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties
unless otherwise stated.
Transactions with related parties consisting of:
i. Subsidiaries
Loans advanced by Euroz Limited to subsidiaries
Payments of dividends to Euroz Limited by subsidiaries
ii. Associated Companies
Dividends received by Euroz Limited from Associates
Management fee received by the Euroz Group from Associates
Performance fee received by the Euroz Group from Associates
2014
$
2013
$
4,662,071
12,100,000
2,234,958
3,000,000
5,572,639
2,670,819
6,305,000
3,491,323
2,712,649
-
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 2014 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 Key Management Personnel
2014
$
2013
$
70,769
88,926
Notes to the Financial Statements
Euroz Limited 69
Note 29. Investments in controlled entities
Name of entity
Country of
incorporation
Class of
shares
Equity holding
Cost of parent entity's
investment
Euroz Securities Limited
Detail Nominees Pty Limited
Zero Nominees Pty Limited (i)
Westoz Funds Management Pty Ltd
Euroz Employee Share Trust
Ozgrowth Limited*
Westoz Investment Company Limited*
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
The ultimate parent entity in the wholly owned group is Euroz Limited.
(i) Owned by Euroz Securities Limited
2014
%
100
100
100
100
-
38.52
26.10
2013
%
2014
$
2013
$
100
25,000,000
25,000,000
100
100
100
-
36.52
24.10
-
-
-
-
1,450,000
1,450,000
-
-
-
-
-
-
A brief description of each entity as follows:-
(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 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.
(f) Euroz Limited Employee Share Trust vehicle established to acquire treasury shares on-market for distribution to eligible employees in connection
with the Performance Rights Plan.
*Although Ozgrowth Limited and Westoz Investment Company Limited are controlled entities, exemption from consolidation was derived from the
early adoption of AASB 2013-5 Investment Entities
70 Annual Report 2014
Notes to the Financial Statements
Note 30. Events occurring after reporting date
On 1 July 2014 a new subsidiary, Westoz Investment Management Limited (“WIM”) was formed with Euroz owning 80% and Mr Steve Tucker, who
will be the Executive Chairman, owning 20%.
On 1 July 2014 Euroz Securities Limited, acquired 100% of the ordinary shares of Blackswan Equities Limited for the total consideration of
$6,604,000. Blackswan Equities Limited is a stockbroking, investment management and corporate advisory firm. Euroz Limited has acquired
Blackswan Equities Limited to increase its market share and profitability under these areas.
Details of the acquisition is as follows:
Assets
Cash and cash equivalents
Receivables and other current assets
Financial assets
Deferred tax assets
Property, plant and equipment
Total assets acquired
Goodwill on acquisition
Liabilities
Trade and other current liabilities
Financial liabilities
Provisions
Fair value of net assets acquired
Representing:
Fair value of shares issued in Euroz Limited to the vendors
Fair value
$
5,824,004
908,058
316,571
195,405
146,063
7,390,101
2,833,112
10,223,213
1,156,083
2,131,781
331,349
3,619,213
6,604,000
6,604,000
The fair values in relation to the acquisition are provisional as the composition of the intangibles are undetermined.
Other than this matter, the Directors are not aware of any other matter or circumstance subsequent to 30 June 2014 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.
Notes to the Financial Statements
Euroz Limited 71
Note 31. Reconciliation of cash flows from operating activities
Profit for the period
Adjustments for:
Depreciation and amortisation
Share based payments
Realised gain arising from fair value of investment
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)
2014
$
2013
$
26,547,100
6,304,532
845,543
266,978
1,199,457
-
(19,464,807)
(2,565,560)
(147,617)
(15,619)
(58,313)
(2,185,543)
1,775,611
54,812
1,679,058
2,950,111
198,967
1,000,357
35,593
1,443,383
478,657
(65,501)
565,691
(849,423)
(709,968)
(162,648)
Net cash from operating activities
12,446,281
6,674,570
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
2014
$
2013
$
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 2014 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.
Subsequent to year end, these facilities have been cancelled.
72 Annual Report 2014
Notes to the Financial Statements
Note 33. Earnings per share
Basic earnings per share
Diluted earnings per share
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the
denominator in calculating basic earnings per share.
2014
Cents
18.29
18.27
2013
Cents
7.73
7.68
2014
Number
2013
Number
145,166,494
143,803,394
Weighted average number of ordinary shares and potential ordinary shares used as the
denominator in calculating diluted earnings per share.
145,299,592
144,857,250
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.
Note 34. Restatement of comparatives
Refer to note 12 for further information in relation to the nature and reasons for the restatement.
Extract
Statement of Financial Position
Total current assets
Investment entities
Deferred tax asset
Other non-current assets
Total assets
Total liabilities
Net assets
1 July 2012
$
Reported
Adjustment
59,298,166
67,480,289
947,903
7,128,185
-
(20,404,029)
3,133,988
-
1 July 2012
$
Restated
59,298,166
47,076,260
4,081,891
7,128,185
134,854,543
117,584,502
14,132,511
14,132,511
120,722,032
103,451,991
Notes to the Financial Statements
Euroz Limited 73
30 June 2013
$
Reported
Adjustment
52,937,771
68,515,611
1,272,055
6,111,133
-
(13,917,607)
1,465,338
30 June 2013
$
Restated
52,937,771
54,598,004
2,737,393
6,111,133
128,836,570
116,384,301
11,084,427
11,084,427
117,752,143
105,299,874
30 June 2013
$
38,418,382
1,734,396
-
(32,067,799)
2,659,706
(1,734,396)
5,560,660
30 June 2013
$
Restated
41,078,088
-
5,560,660
(32,067,799)
8,084,979
14,570,949
(1,780,447)
(1,668,198)
(3,448,645)
6,304,532
11,122,304
Extract
Statement of Financial Position
Total current assets
Investment entities
Deferred tax asset
Other non-current assets
Total assets
Total liabilities
Net assets
Extract
Revenue
Equity accounted investees
Fair value of investees
Total expense
Profit before tax
Income tax expense
Profit for the year
Statement of Profit or Loss and Other Comprehensive Income
Reported
Adjustment
Other comprehensive income net of tax
-
-
Total comprehensive income net of tax
6,304,532
11,122,304
Earnings per share
Basic (cents)
Diluted (cents)
4.38
4.35
7.73
7.68
74 Annual Report 2014
Notes to the Financial Statements
Note 35. Parent entity disclosures
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Equity
Issued capital
Retained earnings
Reserves
Share Based Payment Reserve
Asset revaluation reserve
Option premium reserve
Total equity
Financial performance
Profit for the year
Other comprehensive income
2014
$
2013
$
29,394,171
105,315,498
25,796,046
84,899,340
134,709,669
110,695,386
16,066,994
2,744,112
18,811,105
7,844,429
-
7,844,429
90,734,570
24,711,016
89,451,519
16,648,392
266,978
-
-
(3,434,956)
186,000
186,000
115,898,564
102,850,955
27,744,525
7,050,214
-
-
Total comprehensive income
27,744,525
7,050,214
Note 36. 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
Directors’ Declaration
Euroz Limited 75
Directors’ Declaration
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) comply with Accounting Standards and Corporations Regulations 2001;
(b) give a true and fair view of the company’s and consolidated group’s financial position as at 30 June 2014 and of their performance for the
year ended on that date;
(c) 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) (the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the
Corporations Act 2001;
(b) the financial statements and notes for the financial year comply with Accounting Standards; and
(c) 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.
Andrew McKenzie
Director
Russell Kane
Director
Date: 28 August 2014
76 Annual Report 2014
Independent Auditor’s Report
Independent Auditor’s Report
For the year ended 30 June 2014
To members of Euroz Ltd
Report on the Financial Report
We have audited the accompanying financial report of Euroz Ltd (the company), which comprises the consolidated statement of financial position
as at 30 June 2014, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity
and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other
explanatory information, and the Directors’ declaration of the company and the consolidated entity. The consolidated entity comprises the company
and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The Directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with
Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the
preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note
1, the Directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements
comply with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian
Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and
perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures
selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s preparation of the financial report
that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independent Auditor’s Report
Euroz Limited 77
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Opinion
In our opinion:
(a) the financial report of Euroz Ltd is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014 and of its performance for the year ended on
that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 8 to 13 of the Directors’ report for the year ended 30 June 2014. The Directors of the
company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
Opinion
In our opinion, the Remuneration Report of Euroz Ltd for the year ended 30 June 2014, complies with section 300A of the Corporations Act 2001.
PKF MACK & CO
Simon Fermanis
Partner
28 August 2014
West Perth,
Western Australia
78 Annual Report 2014
Shareholder Information
Shareholder Information
Ordinary Shares at 31 August 2014
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
Total Holders
Units
Issued Capital %
316
524
326
820
176
131,288
1,549,732
2,575,201
28,030,120
121,658,604
0.09
1.01
1.67
18.21
79.03
-0.01
2,162
153,944,945
100.00
Unmarketable Parcels
Minimum $ 500.00 parcel at $1.23 per unit
Minimum
Parcel Size
407
Holders
184
Units
32844
Shareholder Information
Euroz Limited 79
Top 20 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
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NAVIGATOR AUSTRALIA LTD
ICE COLD INVESTMENTS PTY LTD
MR SIMON DAVID YEO + MRS JENNIFER DALE YEO
ICE COLD INVESTMENTS PTY LTD
MR ROBERT HIRZEL BLACK
MR ANDREW WILLIAM MCKENZIE + MRS CATHERINE PATRICIA MCKENZIE
ICON HOLDINGS PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
WESTRADE RESOURCES PTY LTD
ICE COLD INVESTMENTS PTY LTD
CITICORP NOMINEES PTY LIMITED
MR GREGORY CHESSELL + MRS MELANIE CHESSELL
REEF INVESTMENTS PTY LTD
HILLBOI NOMINEES PTY LTD
MRS CATHERINE ELIZABETH KANE
BNM HOLDINGS PTY LTD
BNM HOLDINGS PTY LTD
CYBERTOP PTY LTD
Total
Total Remaining Holders Balance
Units
35,303,962
5,127,640
3,636,509
3,541,463
3,000,000
2,800,000
2,575,000
2,566,243
2,530,000
2,028,563
2,000,269
2,000,000
1,835,372
1,502,439
1,500,500
1,289,540
1,220,050
1,000,000
1,000,000
1,000,000
77457550
76487395
%
22.93
3.33
2.36
2.30
1.95
1.82
1.67
1.67
1.64
1.32
1.30
1.30
1.19
0.98
0.97
0.84
0.79
0.65
0.65
0.65
50.32
49.68
80 Annual Report 2014
Euroz Securities Limited Contact Details
euRoz seCuRItIes LIMIteD
ContACt DetAILs
Institutional Sales
Andrew McKenzie
Ben Laird
David Curnow
Guy Lyons
Jay Hughes
Peter Schwarzbach
Rob Black
Russell Kane
Simon Yeo
Tim Bunney
Tom Ruello
Corporate
Brent Bonadeo
Brian Beresford
David Riley
Douglas Young
Nadene Hunter
Nick McGlew
Tom Loh
Equities Research
Andrew Clayton
Bridget Watkins
Gavin Allen
Greg Chessell
Jon Bishop
Julian Lake
Michael Skinner
Peta Gale
Richard Hamersley
Tim McCormack
Private Client Dealing
Ben Statham
Brett Stapleton
Brian Bates
Cameron Murray
Christian Zerovich
David Salmon
Duncan Relf
Giles McCaw
James Mackie
Jamie Mann
Jessica Ridley
Fax +61 8 9488 1478
Managing Director
Institutional Adviser
Institutional Adviser
Institutional Adviser
Institutional Adviser
Institutional Adviser
Managing Director/Head of Institutional Dealing
Institutional Adviser
Institutional Adviser
Institutional Adviser
Institutional Adviser
Fax +61 8 9488 1458
Corporate Finance Executive
Corporate Finance Executive
Corporate Finance Executive
Head of Corporate Finance
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Corporate Finance Executive
Corporate Finance Executive
Fax +61 8 9488 1479
Resources Analyst
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Fax +61 8 9488 1477
Investment Adviser
Investment Adviser
Investment Adviser
Investment Adviser
Investment Adviser
Associate Adviser
Investment Adviser
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Telephone
+61 8 9488 1407
+61 8 9488 1429
+61 8 9488 1422
+61 8 9346 0331
+61 8 9488 1406
+61 8 9488 1492
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+61 8 9488 1461
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Telephone
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+61 8 9488 1437
+61 8 9488 1434
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Telephone
+61 8 9488 1427
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+61 8 9488 1413
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Telephone
+61 8 9488 1417
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Email
amckenzie@euroz.com
blaird@euroz.com
dcurnow@euroz.com
glyons@euroz.com
jhughes@euroz.com
pschwarzbach@euroz.com
rblack@euroz.com
rkane@euroz.com
syeo@euroz.com
tbunney@euroz.com
truello@euroz.com
Email
bbonadeo@euroz.com
bberesford@euroz.com
driley@euroz.com
dyoung@euroz.com
nhunter@euroz.com
nmcglew@euroz.com
tloh@euroz.com
Email
aclayton@euroz.com
bwatkins@euroz.com
gallen@euroz.com
gchessell@euroz.com
jbishop@euroz.com
jlake@euroz.com
mskinner@euroz.com
pgale@euroz.com
rhamersley@euroz.com
tmccormack@euroz.com
Email
bstatham@euroz.com
bstapleton@euroz.com
bbates@euroz.com
cmurray@euroz.com
czerovich@euroz.com
dsalmon@euroz.com
drelf@euroz.com
gmccaw@euroz.com
jmackie@euroz.com
jmann@euroz.com
jridley@euroz.com
euRoz seCuRItIes LIMIteD
ContACt DetAILs
Euroz Securities Limited Contact Details
Euroz Limited 81
Private Clients Dealing
Joel Pember
Jonathan van Hazel
Lucas Robinson
Matt Williamson
Michael Bartley
Michael Bowden
Michael Fennell
Nicholas Blakiston
Nick Dempster
Paul Berson
Paul Cooper
Phil Grant
Richard Gardner
Ryan Stewart
Sian Hepburn
Stephen Grove
Steve Wood
Tim Lyons
Tim Weir
Tony Kenny
Operations
Adelaide Kosovich
Adelyn Gan
Alison Wreford
Angelique Wood
Anthony Brittain
Bindi Stickland
Chris Webster
Dolly Lim
Emma Whitehurst
Hayley Graham
Jayde Gouveia
Karen Kernaghan
Maddison Birch
Peter Osborn
Sheri Chandran
Tania Castlehow
Tricia Eastick
Fax +61 8 9488 1477
Investment Adviser
Investment Adviser
Investment Adviser
Investment Adviser
Investment Adviser
Investment Adviser
Investment Adviser
Associate Adviser
Investment Adviser
Investment Adviser
Investment Adviser
Investment Adviser
Investment Adviser
Investment Adviser
Dealers Assistant
Investment Adviser
Investment Adviser
Investment Adviser
Investment Adviser
Investment Adviser
Fax +61 8 9488 1477
Compliance Assistant
Assistant Accountant
New Accounts Officer
Office Assistant
Chief Operating and Financial Officer
Head of Settlements
Company Secretary/ Head of Risk Mgt.
Financial Controller
Settlements/Nominees
Reception
Compliance Assistant
Portfolio Administration Manager
Reception
IT Systems Support
Financial Accountant
Bookings
Settlements/Nominees
Westoz Funds Management Ltd
Dermot Woods
Phil Rees
Hayden Beamish
Fax +61 8 9321 8288
Fund Manager
Fund Manager
Associate Analyst
Telephone
+61 8 9488 1476
+61 8 9488 1443
+61 8 9488 1424
+61 8 9488 1466
+61 8 9346 0352
+61 8 9346 0307
+61 8 9346 0330
+61 8 9488 1473
+61 8 9346 0357
+61 8 9346 0328
+61 8 9346 0316
+61 8 9346 0306
+61 8 9488 1444
+61 8 9488 1441
+61 8 9488 1447
+61 8 9488 1410
+61 8 9346 0305
+61 8 9346 0324
+61 8 9346 0303
+61 8 9346 0302
Telephone
+61 8 9488 1471
+61 8 9488 1485
+61 8 9488 1402
+61 8 9488 1468
+61 8 9488 1401
+61 8 9488 1439
+61 8 9488 1412
+61 8 9488 1415
+61 8 9488 1465
+61 8 9488 1400
+61 8 9488 1474
+61 8 9346 0371
+61 8 9346 0338
+61 8 9488 1438
+61 8 9488 1446
+61 8 9488 1425
+61 8 9488 1467
Telephone
+61 8 9321 7023
+61 8 9321 7015
+61 8 9488 1463
Email
jpember@euroz.com
jvanhazel@euroz.com
lrobinson@euroz.com
mwilliamson@euroz.com
mbartley@euroz.com
mbowden@euroz.com
mfennell@euroz.com
nblakiston@euroz.com
ndempster@euroz.com
pberson@euroz.com
pcooper@euroz.com
pgrant@euroz.com
rgardner@euroz.com
rstewart@euroz.com
shepburn@euroz.com
sgrove@euroz.com
swood@euroz.com
tlyons@euroz.com
tweir@euroz.com
tkenny@euroz.com
Email
akosovich@euroz.com
agan@euroz.com
awreford@euroz.com
awood@euroz.com
abrittain@euroz.com
bstickland@euroz.com
cwebster@euroz.com
dlim@euroz.com
ewhitehurst@euroz.com
reception@euroz.com
jgouveia@euroz.com
kkernaghan@euroz.com
mbirch@euroz.com
posborn@euroz.com
schandran@euroz.com
tcastlehow@euroz.com
teastick@euroz.com
Email
dwoods@westozfunds.com
prees@westozfunds.com
hbeamish@westozfunds.com
euroz.com
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