For personal use only
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
Table of Contents
Page
Corporate Directory
Chairman’s Report 2015
Review of Operations
Directors’ Report
Remuneration Report - Audited
Auditor’s Independence Declaration
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 Cashflows
Notes to Financial Statements
Declaration by Directors
Independent Auditors’ Report
Shareholder Information
4
5
6
8
11
16
17
27
28
29
30
31
71
72
75
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For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
CORPORATE DIRECTORY
Hudson Investment Group Limited
ACN 004 683 729
ABN 25 004 683 729
Registered and Corporate Office
Level 2
Hudson House
131 Macquarie Street
Sydney NSW 2000
Telephone: +61 2 9251 7177
+61 2 9251 7500
Fax:
www.higl.com.au
Website:
Auditors
K.S. Black & Co
ABN 48 117 620 556
Level 6
350 Kent Street
Sydney NSW 2000
Telephone: +61 2 8839 3000
Lawyers
Piper Alderman
Level 23, Governor Macquarie Tower
1 Farrer Place
Sydney NSW 2000
Telephone: +61 2 9253 9999
Bankers
St George Bank Limited
Level 14, 182 George St
Sydney NSW 2000
Telephone: +61 2 9236 2230
Australia & New Zealand Banking
Group Limited
Level 16, 20 Martin Place
Sydney NSW 2000
Telephone: +61 2 9216 2200
Commonwealth Bank of Australia
Corporate Financial Services
Business & Private Banking
Level 9, Darling Park 1
201 Sussex Street
Sydney NSW 2000
Telephone: +61 2 9118 7031
Board of Directors
John W Farey (Executive Chairman)
Alan Beasley (Managing Director)
John J Foley
Joint Company Secretaries
Julian Rockett
Henry Kinstlinger
Share Registry
Computershare Investor Services Pty
Limited
GPO Box 2975
Melbourne VIC 3001
Telephone: 1300 850 505 (within
Australia)
ASX Code – HGL
Hudson
shares are
Securities Exchange.
Investment Group Limited
listed on the Australian
report
financial
the
This
Consolidated
of
Entity
Hudson Investment Group Limited and
its controlled entities.
covers
consisting
Hudson Investment Group Limited is a
company limited by shares,
incorporated and domiciled in Australia.
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For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
CHAIRMAN’S REPORT 2015
On behalf of the Board of Directors, I present the Annual Report for Hudson Investment Group Limited (the
Company) for the twelve months to 31 December 2015. The Company recorded a consolidated net loss of
$5.03 million from operations compared to a net loss of $15.05 million in the previous corresponding period.
This loss resulted from an operating profit of $1.59 million however impacted by a one off loss of $6.6 million,
being cost of the demerger of Hudson Pacific Group approved by shareholders at an extraordinary General
Meeting in May 2015.
Shareholders will recall that the demerger resulted in shareholders receiving 1 direct share in Hudson Pacific
Group Limited for every share held in HGL and retaining their shares in HGL.
Total shareholders’ funds as at 31 December 2015 are $3.11 million and Net Tangible Asset backing per share is
1.2 cents.(Shareholders should be aware that the NTA per share of HPG should be added to this figure for
comparative purposes.)
The Company’s industrial property is located at Warnervale comprising a 44.5 hectare site along Sparks and
Mountain Roads. Part of the site is leased to Bunnings Group Limited (which is 100% owned by Wesfarmers
Limited) and to Better Concrete Products Pty Ltd. The Board of Directors are considering various options and
business models to develop the surplus industrial land to enhance shareholder value.
As mentioned in our Review of Operations, our Warnervale Property was revalued subsequent to balance date
31/12/2015 and shows an increase of $2.20 million to $12.75 million. This increase in valuation will be taken up
in the 2016 financial accounts.
We thank you for your loyal support and your continuing involvement as shareholders of the Company.
John W Farey
Executive Chairman
31 March 2016
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For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
REVIEW OF OPERATIONS
Corporate
On 14 March 2016 the Company announced that it had received an updated Warnervale property valuation
conducted by an independent valuer increasing the value of the Warnervale property to $12.75 million, an
increase of 21%.
On 11 March 2016 the Company announced that it was not proceeding with the proposed share sale and
demerger of the Warnervale property through an in-specie distribution of shares to existing shareholders as
the Australian Securities and Investments Commission did not grant relief from particular parts of the
Corporations Act as the proposal required. The proposed share sale and demerger was initially announced on 3
December 2015 following an agreement between Hudson’s majority shareholders RafflesCo Limited and Raffles
Nominees Pty Ltd to sell their shares to Huahan International Holdings (Hong Kong) Co. Limited.
On 7 December 2015 the Company announced that Tan Sri Ibrahim Menudin, Dato’ Mohd Zaid Ibrahim and
John Dawkins had resigned as directors of the company.
On 2 July 2015 the Company issued 1,770,843 new shares at 2.4 cents each under a share purchase plan.
On 1 June 2015 Dato’ Mohd. Zaid Ibrahim, Tan Sri Ibrahim Menudin and John Dawkins AO were appointed
directors of the Company.
On 23 April 2015 the Company’s shareholders approved the demerger and in-specie distribution of Hudson
Pacific Group Limited to its existing shareholders. This demerger was completed in May 2015.
On 23 March 2015 the Company announced a proposed demerger and in-specie distribution of Hudson Pacific
Group Limited with a proposed capital reduction of $4.365 million in the Company.
On 19 January 2015 Alan Beasley was appointed Managing Director of the Company. Juliana Tan resigned as a
director.
Warnervale
A 44.5 hectare site, comprising a factory and office complex on 4.5 hectares of land along Sparks and Mountain
Roads Warnervale on the NSW Central Coast is part leased to Bunnings Group Limited, 100% owned by
Wesfarmers Limited. The other part is leased to Better Concrete Products Pty Ltd, part of the Tellam Group.
The NSW Department of Planning in late 2008 rezoned part of this site. We have been discussing appropriate
zoning for the industrial land which we trust will be clarified soon.
The site is located close to the Sydney – Newcastle Freeway, 100km north of Sydney and 60km south of
Newcastle.
Located within proximity of existing and proposed local landmarks, including:
Warnervale Town Centre
Proposed $500 million China Theme Park development
Warnervale Airport
Woolworths Wyong Distribution Warehouse
Situated within the Warnervale Employment Zone, in which Wyong Council states they are aiming to
create 6,000 jobs and $1.5 billion in investment.
The Property comprises approximately:
16.5 hectares of industrial land with a net 10.4 hectares currently undeveloped
7.6 hectares zoned SP2 for water management
20.4 hectares zoned E2 environment special use
The Board of Directors are currently considering various options with interested parties to develop
the Company’s surplus industrial land.
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
Outlook for 2016
The management of Hudson is reviewing the Company’s property at Warnervale to develop a strategic position
to increase its value. The Warnervale area is experiencing a surge in development by government and the
private sector with a number of projects completed, progressing, and proposed.
Wyong Council in August 2015 released a 25 year forward vision statement projecting significant ongoing
development for the area.
Since balance date 31/12/2015, we have received an independent valuation for our Warnervale Property which
shows an increase of $2.2 million to $12.75 million. This increased valuation will be taken up in the 2016 year
financial accounts.
The Company plans to take advantage of the current situation and investment environment in the region to
better enhance the property’s value for shareholders.
Alan Beasley
Managing Director
31 March 2016
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
DIRECTORS’ REPORT
Your Directors present their report together with the financial statements on the consolidated entity (referred to
hereafter as the Group) consisting of Hudson Investment Group Limited (the Company) and the entities it
controlled at the end of or during the year ended 31 December 2015.
Principal
activities
Operating
results
The principal activities of the Group during the course of the financial year were as follows:
-Investment and development of properties in Australia
The consolidated net loss after tax for the financial year ended 31 December 2015 was $5.03
million compared to a net loss after tax of $15.05 million for the previous corresponding financial
year.
Total Shareholders’ Funds as at 31 December 2015 are $3.11 million (2014: $8.1 million) and the
Net Tangible Asset per share is 1.2 cents (2014: 3.1 cents).
Review of
Operations
Information on the operations of the Group and its business strategies and prospects are disclosed
in both the Chairman’s Report 2015 and the Review of Operations contained on pages 6 to 7 of this
Annual Report.
Dividends
The Directors of the Company do not recommend that any amount be paid by way of dividend
(2014: nil).
Litigation
On 9 April 2015 the Company’s application for special leave in its action against Atanaskovic
Hartnell, the company’s former solicitors was refused. A settlement has been reached in relation to
legal costs. Hudson Pacific Group Limited will pay the costs under an agreed indemnity.
Meetings of
Directors
The number of Directors’ Meetings and Directors’ Committee Meetings held, and the number of
these meetings attended by each of the directors of the Company during the financial year were:
Directors Meetings
Remuneration
Committee Meetings
Audit Committee
Meetings
Director
Attended
Attended
Held
Whilst in
Office
Held
Whilst in
Office
Attended Held Whilst
in Office
A Beasley1
Tan Sri
Ibrahim
Menudin2
J Farey
J Foley
John
Dawkins2
Dato Mohd
Zaid Ibrahim2
J Tan3
3
2
3
4
2
2
1
3
4
4
4
4
4
1
0
2
2
2
0
0
0
0
2
2
2
0
0
0
0
2
2
2
0
0
0
0
2
2
2
0
0
0
1Alan Beasley appointed on 19 January 2015
2Tan Sri Ibrahim Menudin, John Dawkins and Dato Mohd Zaid Ibrahim were appointed on 1 June
2015 and retired on 7 December 2015
3Juliana Tan retired on 19 January 2015
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
INFORMATION ON DIRECTORS AND MANAGEMENT
DIRECTORS
The following persons held office as Directors of the Company at any time during or since the end of the
financial year:
Executive Chairman
Managing Director Appointed 19 Jan 2015
Non-Executive Director
John W Farey
Alan P Beasley
John J Foley
Dato Mohd Zaid Ibrahim Non-Executive Chairman Appointed 1 Jun 2015 and retired 7 Dec 2015
Non-Executive Director Appointed 1 Jun 2015 and retired 7 Dec 2015
Tan Sri Ibrahim
Non-Executive Director Appointed 1 Jun 2015 and retired 7 Dec 2015
John Dawkins
Retired 19 Jan 2015
Executive Director
Juliana Tan
All Directors have been in office since the commencement of the financial year unless otherwise stated.
John Farey, B.Com, FAIM, FAICD
Executive Chairman - appointed on 1 February 2002
Experience and Expertise
Other Current Directorships of
Listed Companies
Former Directorships in the Last
Three Years of Listed Companies
Special Responsibilities
Interests in Shares and Options
None
Chairman of the Board
Member of the Audit Committee
Direct interest in 10,000 shares
John W Farey has over 45 years’ experience in financial services including
merchant and investment banking.
None
Alan Beasley, B.Ec, CPA, FGIA, FAICD
Managing Director - appointed on 19 January 2015
Experience and Expertise
Other Current Directorships of
Listed Companies
Former Directorships in the Last
Three Years of Listed Companies
Special Responsibilities
Mr Beasley is a Non-Executive Director and former Director of a number
of publicly listed and unlisted companies. Mr Beasley was educated at
the University of New England (BEc) and Stanford Graduate Business
School, USA.
None
Non-Executive Chairman and Director – Admiralty Resources NL
Managing Director
Interests in Shares and Options
Direct interest in 1,000,000 shares.
John Foley BD LLB BL (Dub) MAICD
Non-Executive Director - appointed on 6 August 2014
Experience and expertise
Other Current Directorships of
Listed Companies
Former Directorships in the Last
Three Years of Listed Companies
Special Responsibilities
Mr Foley has wide-ranging experience
manufacturing, legal, financial and investment related industries.
His commercial and
experience to the Company.
Citigold Corporation Limited
in resources,
legal background provides knowledge and
industrial,
Non-Executive Director – Frontier Capital Group Limited
Member of Audit Committee
Chair of the Remuneration Committee
Interests in Shares and Options
Nil
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
MANAGEMENT
Julian Rockett, B.A., LL.B. GDLP
Joint Company Secretary
Experience and Expertise
Henry Kinstlinger
Joint Company Secretary
Experience and Expertise
Mr Rockett was appointed to the position of Company Secretary on 27
July 2012. His background is in government services and commercial
law. Mr Rockett is the Company Secretary of Hudson Resources
Limited. Mr Rockett also acts as in-house counsel and advises several
other listed and non-listed entities in legal and corporate advisory
matters and is a principal director of Karma Lawyers.
Henry Kinstlinger has, for the past thirty years, been actively involved
in the financial and corporate management of a number of public
companies and non-governmental organisations. He is currently the
Company Secretary of Australian Bauxite Limited, Sovereign Gold
Company Limited, Frontier Capital Group Limited and Raffles Capital
Limited. He is a corporate consultant with broad experience in investor
and community relations and corporate and statutory compliance.
Francis Choy MCom MBA FCPA (HK) FCPA CA
Chief Financial Officer
Experience and Expertise
Francis Choy has held a number of senior positions in corporate
financial management roles throughout Australia and South East Asia.
He has extensive experience in project finance, compliance, acquisition
and investment appraisals.
He has been involved in project finance, financial management of
property development and telecommunication projects in South East
Asia.
He held senior financial roles for numerous public listed companies
both in Hong Kong and Australia.
LIKELY DEVELOPMENTS
Information on likely developments in the operations of the Group, known at the date of this report has been
covered generally within the report. In the opinion of the Directors providing further information would
prejudice the interests of the Group.
MATTERS SUBSEQUENT TO BALANCE DATE
Since balance date the Board of Directors instructed an Independent Valuer, JLL (Jones Lang LaSalle Advisory
Services Pty Ltd) to provide a valuation for the Warnervale Property.
JLL have now provided a complete and comprehensive market valuation to the Board. The result is a valuation
of $12.75 million, an increase of $2.2 million.
The increased valuation will be acknowledged in the 2016 financial accounts.
At the date of this report there are no other matters or circumstances that have arisen since 31 December
2015 that have significantly affected or may significantly affect:
The operations, in financial years subsequent to 31 December 2015 of the Group;
The results of those operations; or
The state of affairs, in financial years subsequent to 31 December 2015 of the Group.
ENVIRONMENTAL REGULATIONS
There has been no breach of environmental regulations during the financial year or in the period subsequent to
the end of the financial year and up to the date of this report.
The Company aims to ensure that the highest standard of environmental care is achieved, and that it complies
with all relevant environmental legislation. The Directors are mindful of the regulatory regime in relation to the
impact of the Company’s activities on the environment.
To the best of the Directors’ knowledge, the Group has adequate systems in place to ensure compliance with
the requirements of all environmental legislation described above and are not aware of any breach of those
requirements during the financial year and up to the date of the Directors’ Report.
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
REMUNERATION REPORT - AUDITED
The information provided in this Remuneration Report has been audited as required by Section 308 (3c) of the
Corporations Act 2001.
This report outlines the remuneration arrangements in place for Directors and Executives of the Company.
REMUNERATION COMMITTEE
The Remuneration Committee reviews and approves policy for determining Executives’ remuneration and any
amendments to that policy.
The whole board sits as the Remuneration Committee which makes recommendations to the Board on the
remuneration of Executive Directors (including base salary, incentive payments, equity awards and service
contracts) and remuneration issues for Non-Executive Directors.
The Committee meets as often as required but not less than once per year.
The Committee met once during the period and Committee members attendance record is disclosed in the
table of Directors Meetings shown on page 7.
Options granted to directors and key management personnel do not have performance conditions. As such the
Group does not have a policy for directors and key management personnel removing the “at risk” aspect of
options granted to them as part of their remuneration.
DIRECTORS’ AND OTHER KEY MANAGEMENT PERSONNEL REMUNERATION
The following persons were Directors of the Company during the financial year unless otherwise stated:
John W Farey
Alan P Beasley
John J Foley
Dato Mohd Zaid Ibrahim
Tan Sri Ibrahim Menudin
John Dawkins
Juliana Tan
Executive Chairman
Managing Director Appointed 19 Jan 2015
Non-Executive Director Appointed 6 Aug 2014
Non-Executive Chairman Appointed 1 Jun 2015 and retired 7 Dec 2015
Appointed 1 Jun 2015 and retired 7 Dec 2015
Non-Executive Director
Appointed 1 Jun 2015 and retired 7 Dec 2015
Non-Executive Director
Executive Director Retired 19 Jan 2015
The following persons were other key management personnel of Hudson Investment Group Limited during the
financial year:
Vincent Tan
Luisa Tan
Venkata Kambala
Julian Rockett
Francis Choy
CEO of Hudson Pacific Group Limited
Consultant
Director of Ecofix Pty Ltd
Company Secretary & In-house Counsel
Chief Financial Officer
Executives’ remuneration and other terms of employment are reviewed annually having regard to relevant
comparative information and independent expert advice. As well as basic salary, remuneration packages
include superannuation. Directors are also able to participate in an Employee Share Plan.
Remuneration packages are set at levels that are intended to attract and retain executives capable of managing
the Group’s operations. Consideration is also given to reasonableness, acceptability to shareholders and
appropriateness for the current level of operations.
Remuneration of Non-Executive Directors is determined by the Board based on recommendations from the
Remuneration Committee and the maximum amount approved by shareholders from time to time.
CASH BONUSES
No cash bonuses were granted during the financial year ended 31 December 2015. Cash bonuses granted to
directors and officers are at the discretion of the Remuneration Committee.
PERFORMANCE CONDITIONS
The elements of remuneration as detailed within the Remuneration Report are dependent on the satisfaction
of the individual’s performance and Hudson Investment Group’s financial performance.
The Board undertakes an annual review of its performance and the performance of the Board Committees.
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
Details of the nature and amount of each element of the remuneration of each Director of the Company and
each specified executive of the Company are set out in the following tables. The remuneration amounts are
the same for the Company and the Group.
Directors and Other Key Management Personnel of Hudson Investment Group Limited
Short Term Employee Benefits
Salary and
other fees
Travelling
Allowance
Post-Employment
Benefits
Superannuation
Long Term
Benefits
Long Service
Leave
Total
$
$
$
$
$
Consolidated
2015
Directors
Dato Mohd Zaid
Ibrahim
Alan P Beasley*
John W Farey
Tan Sri Ibrahim
Menudin
John Dawkins
John J Foley*
Juliana Tan**
Director - Total
KMP
Vincent Tan
Luisa Tan
Venkata Kambala
Julian Rockett
Francis Choy
KMP - Total
Consolidated
2014
Directors
John W Farey
Alan P Beasley*
John J Foley*
Juliana Tan**
Peter J Meers**
Director - Total
KMP
Vincent Tan
Venkata Kambala
Julian Rockett
Francis Choy
KMP - Total
-
125,000
36,667
-
-
-
15,000
176,667
80,000
50,000
50,000
25,000
75,148
280,148
$
88,399
-
-
210,000
-
298,399
240,000
150,665
73,115
250,000
713,780
-
5,400
3,600
-
-
-
-
9,000
3,600
-
3,600
-
-
7,200
-
-
10,683
-
-
-
1,425
12,108
5,700
-
4,750
2,375
7,600
20,425
$
$
$
10,800
-
-
-
-
10,800
2,700
10,800
-
-
13,500
31,913
-
-
17,334
-
49,247
16,875
14,116
6,852
23,883
61,726
-
-
7,806
-
-
-
248
-
130,400
58,756
-
-
-
16,673
8,054
205,829
992
-
952
417
1,324
3,685
1,092
-
-
3,497
-
4,589
2,977
1,543
1,514
8,781
14,815
90,292
50,000
59,302
27,792
84,072
311,458
$
132,204
-
-
230,831
-
363,035
262,552
177,124
81,481
282,664
803,821
* John J Foley was appointed on 6 August 2014, Alan P Beasley was appointed on 19 January 2015
** Peter J Meers retired on 26 August 2014, Juliana Tan retired on 19 January 2015
*** Dato Mohd Zaid Ibrahim, Tan Sri Ibrahim Menudin and John Dawkins appointed on 1 June 2015 and retired on 7
December 2015
The amounts reported represent the total remuneration paid by entities in the Group in relation to managing
the affairs of all the entities within the Group. The remuneration has not been allocated between the individual
entities within the Group as this would not be practicable.
There is no performance conditions related to any of the above payments.
There is no other element of Directors and other Key Management Personnel remuneration.
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
EXECUTIVE SERVICE AGREEMENTS
There was one service agreement in place formalising the terms of remuneration of Mr Beasley. The
agreement has no specific term and may be terminated by either party upon reasonable notice. The Company
may terminate the agreement in the event of serious misconduct by either party without any compensatory
payment.
SHARE OPTIONS GRANTED TO DIRECTORS AND OTHER KEY MANAGEMENT PERSONNEL
There were no options granted during or since the end of the financial year to any of the Directors or other Key
Management Personnel of the Company and the Group as part of their remuneration. At the date of this report
there were no unissued shares under option to Directors or other Key Management Personnel of the Company.
End of Remuneration Report
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
DIRECTORS’ INTEREST
The relevant interest of each Director in the share capital of the Company as shown in the Register of Directors’
Shareholdings as at the date of this report is:
Particulars of Directors’ Interest in the Issued Capital of the Company
Ordinary Shares (Number)
Direct
Interest
Employee
Share Plan
Indirect
Interest
Total
Director
John Farey
Alan Beasley
John J Foley
10,000
1,000,000
-
-
-
-
-
-
-
10,000
1,000,000
-
Please refer to Note 30 of the financial statements for details.
SHARES UNDER OPTION
No options over issued shares or interests in the Company were granted during or since the end of the financial
year and there were no options outstanding at the date of this report.
LOANS TO DIRECTORS AND OTHER KEY MANAGEMENT PERSONNEL
Loans were made to Directors or specified Executives of the Company and the Group under the Employee
Share Plan during the financial year and all loans were fully repaid at the date of this report. Please refer to
Note 30 for details.
DIRECTORS’ AND OFFICERS’ INDEMNITIES AND INSURANCE
During the financial year the Company paid an insurance premium, insuring the Company’s Directors, (as
named in this report), Company Secretary, Executive officers and employees against liabilities not prohibited
from insurance by the Corporations Act 2001.
A confidentiality clause in the insurance contract prohibits disclosure of the amount of the premium and the
nature of insured liabilities.
PROCEEDINGS ON BEHALF OF THE COMPANY
Other than the matter referred to in the Directors’ Report no person has applied to the Court under Section
237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in
any proceedings to which the Company is a party for the purposes of taking responsibility on behalf of the
Company for all or part of those proceedings.
No proceedings have been brought or intervened in or on behalf of the Company with leave of the Court under
Section 237 of the Corporations Act 2001.
ROUNDING OF AMOUNTS
The Company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities & Investments
Commission, relating to the “rounding off” of amounts in the Directors’ Report. Amounts in the Directors’
Report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain
cases, to the nearest dollar.
AUDITOR’S INDEPENDENCE DECLARATION
The Auditor’s Independence Declaration as required under Section 307C of the Corporations Act 2001 has been
received and is set out on page 16.
NON-AUDIT SERVICES
The Company may decide to employ the auditor on assignments additional to their statutory audit duties
where the auditor’s expertise and experience with the Group are important.
Details of the amounts paid or payable to the auditor K.S. Black & Co for audit and non-audit services provided
during the year are set out below.
The Board of Directors has considered the position and, in accordance with advice received from the audit
committee, is satisfied that the provision of the non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001.
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not
compromise the auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
all non-audit services have been reviewed by the audit committee to ensure they do not impact the
impartiality and objectivity of the auditor.
none of the services undermine the general principles relating to auditor independence as set out in
APES 110 Code of Ethics for Professional Accountants.
AUDITOR’S REMUNERATION
During the year the following fees were paid or payable for services provided by the Auditor of the parent
entity, its related practices and non-related audit firms:
Consolidated
2015
$
2014
$
Parent Entity
2015
$
2014
$
Audit services:
Amounts paid or payable to auditors
for audit and review of the financial
report for the entity or any entity in
the Group
Audit and review services fees
26,290
25,750
26,290
25,750
Taxation and other advisory services:
Amounts paid or payable to the
Auditor for non-audit taxation
services for the entity or any entity in
the Group for review and lodgement
of the income tax return
Taxation services
Advisory services
Total
AUDITOR
1,295
-
27,585
1,150
-
26,900
1,295
-
27,585
1,150
-
26,900
K.S. Black & Co continues in office in accordance with Section 327 of the Corporations Act 2001.
This Directors’ Report, incorporating the Remuneration Report, is signed in accordance with a Resolution of the
Board of Directors.
John W Farey
Executive Chairman
Signed at Sydney
31 March 2016
Alan Beasley
Managing Director
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For personal use only Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
CORPORATE GOVERNANCE STATEMENT
The Company has adopted a Corporate Governance Plan, which forms the basis of a comprehensive system of
control and accountability for the administration of corporate governance. The Board is committed to
administering the policies and procedures with openness and integrity, pursuing the true spirit of corporate
governance commensurate with the Company’s needs.
To the extent they are applicable to the Company, the Board has adopted the ASX Corporate Governance
Council’s Corporate Governance Principles and Recommendations 3rd Edition (“Principles and
Recommendations”).
In light of the Company’s size and nature, the Board considers that the current board is a cost effective and
practical method of directing and managing the Company. As the Company’s activities develop in size and
scope, the size of the Board and the implementation of additional corporate governance policies and structures
will be reviewed.
The Company’s main corporate policies and practices as at the date of this Prospectus are outlined below and
the Company’s full Corporate Governance Plan is available in the corporate governance information section of
the Company’s website (http://www.higl.com.au/Corporate-Governance).
(a)
Board Responsibilities
The Board is responsible for corporate governance of the Company. The Board develops strategies for the
Company, reviews strategic objectives and monitors performance against those objectives. The goals of the
corporate governance processes are to:
maintain and increase Shareholder value;
ensure a prudential and ethical basis for the Company’s conduct and activities;
ensure compliance with the Company’s legal and regulatory objectives consistent with these goals,
and to achieve this the Board assumes the following responsibilities:
a. developing initiatives for profit and asset growth;
b.
reviewing the corporate, commercial and financial performance of the Company on a regular
basis;
c. acting on behalf of, and being accountable to, the Shareholders; and
d.
identifying business risks and implementing actions to manage those risks and corporate
systems to assure quality.
The Company is committed to the circulation of relevant materials to Directors in a timely manner to facilitate
Directors’ participation in the Board discussions on a fully-informed basis;
(b)
Composition of the Board
Election of Board members is substantially the province of the Shareholders in general meeting.
However, subject thereto, the Company is committed to the following principles:
the Board is to comprise of persons with the appropriate skills, experience and attributes for the
Company and its business; and
the principal criteria for the appointment of new Directors is their ability to add value to the Company
and its business. All incumbent Directors bring an independent judgement to bear in deliberations and
the current representation is considered adequate given the stage of the Company’s development.
The names, qualifications and relevant experience of each Director are set out on page 8.
(c)
Code of Conduct
As part of its commitment to recognising the legitimate expectations of stakeholders and promoting practices
necessary to maintain confidence in the Company’s integrity, the Company has an established Code of Conduct
(the Code) to guide compliance with legal, ethical and other obligations to legitimate stakeholders and the
responsibility and accountability required of the Company’s personnel for reporting and investigating unethical
practices or circumstances where there are breaches of the Code.
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Annual Report 31 December 2015
These stakeholders include employees, clients, customers, government authorities, creditors and the
community as whole. This Code governs all of the Company’s commercial operations and the conduct of
Directors, employees, consultants, contactors and all other people when they represent the Company. This
Code also governs the responsibility and accountability required of the Company’s personnel for reporting and
investigating unethical practices.
The Board, management and all employees of the Group are committed to implementing this Code and each
individual is accountable for such compliance. A copy of the Code is given to all employees, contractors and
relevant personnel, including directors, and is available on the Company’s website (under “Corporate
Governance”).
(d)
Diversity Policy
The Board has adopted a diversity policy which provides a framework for the Company to achieve, among
other things, a diverse and skilled workforce, a workplace culture characterised by inclusive practices and
behaviours for the benefit of all staff, improved employment and career development opportunities for women
and a work environment that values and utilises the contributions of employees with diverse backgrounds,
experiences and perspectives.
(e)
Continuous Disclosure
The Board has designated the Company Secretary as the person responsible for overseeing and co-ordinating
disclosure of information to the ASX as well as communicating with the ASX.
The Board has established a written policy for ensuring compliance with ASX Listing Rule disclosure
requirements and accountability at senior executive level for that compliance. A copy of the Company’s
continuous disclosure policy can be found on the Company’s web site (under “Corporate Governance”).
(f)
Audit Committee and Management of Risk
The Company’s directors comprise the audit and risk committee.
(g)
Remuneration Arrangements
The Board will decide the remuneration of an executive Director, without the affected executive Director
participating in that decision-making process.
The total maximum remuneration of non-executive Directors is initially set by the Constitution and subsequent
variation is by ordinary resolution of Shareholders in general meeting in accordance with the Constitution, the
Corporations Act and the ASX Listing Rules, as applicable. The determination of non-executive Directors’
remuneration within that maximum will be made by the Board having regard to the inputs and value to the
Company of the respective contributions by each non-executive Director. The current amount has been set at
an amount not to exceed $200,000 per annum.
In addition, a Director may be paid fees or other amounts (subject to any necessary Shareholder approval) for
example non-cash performance incentives such as Options as determined by the Board where a Director
performs special duties or otherwise performs services outside the scope of the ordinary duties of a Director.
Directors are also entitled to be paid reasonable travelling, hotel and other expenses incurred by them
respectively in or about the performance of their duties as Directors. The Board reviews and approves the
remuneration policy to enable the Company to attract and retain executives and Directors who will create
value for Shareholders having consideration to the amount considered to be commensurate for a company of
its size and level of activity as well as the relevant Directors’ time, commitment and responsibility. The Board is
also responsible for reviewing any employee incentive and equity-based plans including the appropriateness of
performance hurdles and total payments proposed.
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Annual Report 31 December 2015
(h)
Shareholder Communications
The Board tries to ensure that Shareholders are provided with sufficient information to assess the performance
of the Company and its Directors and to make well-informed investment decisions. Information is
communicated to Shareholders through:
annual and half-yearly financial reports and quarterly reports;
annual and other general meetings convened for Shareholder review and approval of Board proposals;
continuous disclosure of material changes to ASX for open access to the public; and,
the Company maintains a website where all ASX announcements, notices and financial reports are
published as soon as possible after release to ASX.
The auditor is invited to attend the annual general meeting of Shareholders. The Chairman will permit
Shareholders to ask questions about the conduct of the audit and the preparation and content of the audit
report.
(i)
Trading in the Company’s Shares
The Company’s Share Trading Policy prohibits Directors from taking advantage of their position or information
acquired, in the course of their duties, and the misuse of information for personal gain or to cause detriment
to the Group.
Directors, senior executives and employees are required to advise the Company Secretary of their intentions
prior to undertaking any transaction in HIG securities.
If an employee, officer or director is considered to possess material non-public information, they will be
precluded from making a Security transaction until after the time of public release of that information.
A copy of the Company’s Share Trading Policy is available on the Company’s website (under “Corporate
Governance”).
(j)
Corporate Social Responsibility
The Company is committed to conducting its operations and activities in harmony with the environment and
society, and wherever practicable to work in collaboration with communities and government institutions in
decision-making and activities for effective, efficient and sustainable solutions.
Our aim is to minimize our environmental footprint and safeguard the environment while sharing the benefits
of our business with our employees and the community and contribute to economic and social development,
minimizing our environmental footprint and safeguarding the environment, now and for future generations.
(k)
Departures from recommendations
The Company is required to report any departures from the recommendations in its annual financial report.
The Company’s compliance and departures from Recommendations as at the date of this Prospectus are set
out in the following table:
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Annual Report 31 December 2015
ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations
PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
PRINCIPLE
Response
Recommendation 1.1
The entity should have and disclose a charter, which
sets out the the respective roles and responsibilities
of the board, the Chair and management; and
includes a description of those matters expressly
reserved to the board and those delegated to
management
Recommendation 1.2
The entity should undertake appropriate checks
before appointing a person, or putting forward to
security holders a candidate for election, as a
director.
The entity should provide security holders with all
material information in its possession relevant to a
decision on whether or not to elect or re-elect a
director.
Complies.
The Company’s Corporate Governance Plan includes a
specific
Board Charter, which discloses
responsibilities of the Board. The responsibilities
delegated to the senior management team are set
out in the Board Charter.
the
The Board Charter can be viewed at the Company’s
website http://www.higl.com.au
Complies.
The Company has conducted appropriate checks for
all current Directors.
The Company will undertake appropriate checks
described in Guidance Note 1, paragraph 3.15 issued
by the ASX before appointing a person, or putting
forward to Shareholders a candidate for election, as a
Director.
Recommendation 1.3
The entity should have a written agreement with each
director and senior executive setting out the terms of
their appointment.
Complies.
Recommendation 1.4
The company secretary of the entity should be
accountable directly to the board, through the chair,
on all matters to do with the proper functioning of
the board.
Recommendation 1.5
The entity 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 the progress in
achieving them.
The entity should disclose in its annual report the
measureable objectives for achieving gender diversity
set by the board in accordance with the diversity
policy and its progress towards achieving them.
Complies.
The Joint Company Secretaries have been appointed
and are accountable directly to the Board, through
the Chairperson, on all matters to do with the proper
functioning of the Board.
Complies.
The Board has established a Diversity Policy.
The Diversity Policy is disclosed on the Company’s
website.
The entity should disclose in its annual report the
proportion of women employees in the whole
organisation, women in senior executive positions
and women on the board.
Details of the Company’s measurable objectives for
achieving gender diversity and its progress towards
achieving them and the entity’s gender diversity
figures are set out in the Company’s annual report.
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Annual Report 31 December 2015
Recommendation 1.6
The entity should have and disclose a process for
periodically evaluating the performance of the board,
its committees and individual directors and disclose,
in relation to each reporting period, whether a
performance evaluation was undertaken in the
reporting period in accordance with that process.
Recommendation 1.7
The entity should have and disclose a process for
periodically evaluating the performance of its senior
executives; and disclose, in relation to each reporting
period, whether a performance evaluation was
undertaken in the reporting period in accordance
with that process
PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE
Recommendation 2.1
The entity’s board should have a nomination
committee which has at least three members, a
majority of whom are independent directors; and is
chaired by an independent director.
The entity should disclose the charter of the
committee, the members of the committee; and as at
the end of each reporting period, the number of
times the committee met throughout the period and
the individual attendances of the members at those
meetings.
If the entity does not have a nomination committee,
it should disclose that fact and the processes it
employs to address board succession issues and to
ensure that the board has the appropriate balance of
skills, knowledge, experience, independence and
diversity to enable it to discharge its duties and
responsibilities effectively.
Recommendation 2.2
The entity should have and disclose a board skills
matrix setting out the mix of skills and diversity that
the board currently has or is looking to achieve in its
membership.
Will comply.
The Company will disclose the process for evaluating
the performance of the Board, its committees and
individual directors in its future annual reports.
Details of the performance evaluations undertaken
will be set out in future annual reports.
Complies.
Senior executive key performance indicators are set
annually, with performance appraised by the Board,
and reviewed in detail by the Board.
The internal review is to be conducted on an annual
basis and if deemed necessary an independent third
party will facilitate this internal review.
Details of the performance evaluations undertaken
will be set out in future annual reports.
Does not comply.
The Company does not have a nomination committee
Currently the role of the nomination committee is
undertaken by the full Board. The Company intends
to establish a nomination committee once the
Company’s operations are of sufficient magnitude.
The Company does not have a nomination
committee. The Board evaluates the skills,
experience of its members and then determines
whether additional members should be invited to the
Board to complement or replace the existing
members.
Does not yet comply.
The Company intends to develop a board skill matrix
setting out the mix of skills and diversity the Board
has and requires. The skill matrix will be available at
the Company’s website once finalised.
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Annual Report 31 December 2015
Recommendation 2.3
The entity should disclose the names of the directors
considered by the board to be independent directors
and the length of service of each director.
The entity should disclose if a director has an interest,
position, association or relationship of the type
described in Box 2.3 of the ASX Corporate
Governance Principles and Recommendation (3rd
edition) but the board is of the opinion that it does
not compromise the independence of the director,
the nature of the interest, position, association or
relationship in question and an explanation of why
the board is of that opinion
Recommendation 2.4
Complies.
John Foley is an independent director
Alan Beasley was appointed a director on 19 January
2015
The independence of the directors and length of
service of each director are set out in the Company’s
annual report.
Details of any relevant interest, position, association
or relationship impacting upon a director’s
independence are set out in the Company’s annual
report.
A majority of the board of the entity should be
independent directors.
Does not comply.
Recommendation 2.5
The chair of the board of the entity should be an
independent director and, in particular, should not be
the same person as the CEO / Managing Director of
the entity.
Recommendation 2.6
The entity should have a program for inducting new
directors and provide appropriate professional
development opportunities for directors to develop
and maintain the skills and knowledge needed to
perform their role as directors effectively.
PRINCIPLE 3: ACT ETHICALLY AND RESPONSIBLY
Recommendation 3.1
The entity should establish a code of conduct for its
directors, senior executives and employees and
disclose the code or a summary of the code.
The Company has three directors. One of these
directors is an independent director.
Does not comply.
The Chairman is not independent but is not the
Managing Director. The Company currently does not
have a separate CEO. The Board considers that given
its current size and structure, it is neither appropriate
nor cost effective to have a distinct CEO.
Does not yet comply.
Currently the induction of new directors and plan for
professional development is managed informally by
the full Board.
The Company intends to develop a formal program
for inducting new directors and providing appropriate
professional development opportunities consistent
with the development of the Company.
Complies.
The Board has a Code of Conduct to guide compliance
with legal, ethical and other obligations to legitimate
stakeholders and the responsibility and accountability
required of the Group’s personnel for reporting and
investigating unethical practices or circumstances
where there are beaches of the Code.
The Code of Conduct is available on the Company’s
website.
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Annual Report 31 December 2015
PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING
Recommendation 4.1
The board of the entity should have an audit
committee, which consists only of non-executive
directors, a majority of which are independent
directors and is chaired by an independent chair that
is not the chair of the board.
The entity should disclose the charter of the
committee, the members of the committee and as at
the end of each reporting period, the number of
times the committee met throughout the period and
the individual attendances of the members at those
meetings.
Recommendation 4.2
The board should disclose whether it has, before
approving the entity’s financial statements for the
financial period receive assurance from its Chief
Executive Officer (or equivalent) and the Chief
Financial Officer (or equivalent) a declaration that the
financial records of the entity have been properly
maintained and that the financial statements comply
with the appropriate accounting standards and give a
true and fair view of the financial position and
performance of the entity and that the opinion has
been formed on the basis of a sound system of risk
management and internal control which is operating
effectively in all material respects in relation to
financial reporting risks.
Recommendation 4.3
A listed entity that has an AGM should ensure that its
external auditor attends its AGM and is available to
answer questions from security holders relevant to
the audit.
Partially complies.
The board has established an audit and risk
committee Charter.
Members of the committee comprise the whole
board of directors who have appropriate and relevant
financial experience to act in this capacity.
A summary of the charter and details of the number
of times the audit and risk committee met throughout
the period and the individual attendances of the
members at those meetings are set out in the
Company’s annual report.
The full audit and risk committee charter is available
on the Company’s website
Complies.
The Board requires the Managing Director and Chief
Financial Officer to provide such a statement before
approving the entity’s financial statements for a
financial period.
Complies.
The external auditor attends AGMs and is available to
answer questions from Security Holders relevant to
the audit.
PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE
Recommendation 5.1
The entity 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.
Complies.
The Company has a written policy on information
disclosure. The focus of these policies and procedures
is continuous disclosure and improving access to
information for investors.
The Company’s continuous disclosure policy can be
viewed at the Company’s website.
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Annual Report 31 December 2015
PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS
Recommendation 6.1
The entity should provide information about itself
and its governance to investors via its website.
Complies.
Recommendation 6.2
The entity should design and implement an investor
relations program to facilitate effective two-way
communication with investors.
Recommendation 6.3
The entity should disclose the policies and processes
it has in place to facilitate and encourage
participation at meetings of security holders.
Recommendation 6.4
The entity should give security holders the option to
receive communications from, and send
communications to, the entity and its security registry
electronically.
PRINCIPLE 7: RECOGNISE AND MANAGE RISK
Recommendation 7.1
The board of a listed entity should have a committee
or committees to oversee risk, each of which has at
least three members, a majority of whom are
independent directors and is chaired by an
independent director.
The entity should disclose the charter of the
committee, the members of the committee and at
the end of each reporting period, the number of
times the committee met throughout the period and
the individual attendances of the members at those
meetings.
The Company has provided specific information about
itself and its key personnel and has developed a
comprehensive Corporate Governance Plan.
Details can be found at the Company’s website.
Complies.
The Company has established a Shareholder’s
Communication Policy. The Company recognises the
importance of forthright communications and aims to
ensure that the shareholders are informed of all
major developments affecting the Company.
Details of the Shareholder’s Communication Policy
can be found on the Company’s website.
Complies.
The Shareholder’s Communication Policy is available
on the Company’s website and details are set out in
the Company’s annual report.
Complies.
The Company has provided the option to receive
communications from, and send communications to,
the entity and its security registry electronically.
Complies.
The Board has established an audit and risk
committee to oversee risk which is comprised of the
whole Board.
Complies
The Company’s charter for the audit and risk
committee is available at the Company’s website and
the details of the number of times the committee met
and the individual attendances is set out in the
Company’s annual report.
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
Recommendation 7.2
The board or board committee should review the
entity’s risk management framework at least annually
to satisfy itself that it continues to be sound, to
determine whether there have been any changes in
the material business risk the entity faces and to
ensure that they remain with the risk appetite set by
the board.
The entity should also disclose in relation to each
reporting period, whether such a review has taken
place
Recommendation 7.3
The entity should disclose if it has an internal audit
function, how the function is structured and what
role it performs. If the entity does not have an
internal audit function, the entity should disclose that
fact and the processes it employs for evaluating and
continually improving the effectiveness of its risk
management and internal control processes.
Complies.
The Company’s Corporate Governance Plan includes a
Risk Management Review Procedure and Compliance
and Control policy.
The Board determines the Company’s “risk profile”
and is responsible for overseeing and approving risk
management strategy and policies, internal
compliance and internal control.
The Board has delegated to the audit and risk
committee the responsibility for implementing the
risk management system.
Details of the number of times the committee
conducted a risk management review in relation to
each reporting period will be disclosed in its annual
reports.
Does not yet comply.
The Board has delegated the internal audit function
to the audit and risk committee and intends to
establish and implement the structure and role of the
internal audit function.
The Company will disclose the details of the internal
audit function in its future annual reports.
Recommendation 7.4
The entity should disclose whether it has any material
exposure to economic, environmental and social
sustainability risks and, if it does, how it manages or
intends to manage those risks.
Complies.
The Company has an Audit and Risk committee
appointed to manage economic sustainability and
risk.
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Annual Report 31 December 2015
PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY
Recommendation 8.1
The board should establish a remuneration
committee which has at least three members, a
majority of whom are independent directors and is
chaired by an independent director.
If the entity does not have a remuneration
committee, the entity should disclose that fact and
the processes it employs for setting the level and
composition of remuneration for directors and senior
executives and ensuring that such remuneration is
appropriate and not excessive.
Recommendation 8.2
The entity should separately disclose its policies and
practices regarding the remuneration of non-
executive directors and the remuneration of
executive directors and other senior executives.
Recommendation 8.3
If the entity has an equity-based remuneration
scheme it should have a policy on whether
participants are permitted to enter into transactions
(whether through the use of derivatives or otherwise)
which limit the economic risk of participating in the
scheme; and disclose that policy or a summary of it.
Does not yet comply due to the size of the Company.
The entire board undertakes the functions normally
delegated to a Remuneration Committee.
The Board has adopted a Remuneration Committee
Charter.
However, the Company is not of a size that justifies
having a separate Remuneration Committee so
matters typically considered by such a committee are
dealt with by the full Board.
The Board has reviewed, through independent
sources, the level and composition of remuneration
for Directors and senior executives to ensure that
such remuneration is appropriate and not excessive.
Complies.
The Company distinguishes the structure of Non-
executive Directors’ remuneration from Executive
Directors and senior executives.
Details of the policies and practices regarding
remuneration are set out in the Company’s annual
report.
The Remuneration Committee Charter is disclosed on
the Company’s website.
Complies.
The Company’s Share Trading Policy prohibits
executive staff from undertaking hedging or other
strategies that could limit the economic risk
associated with Company Securities issued under any
equity based remuneration scheme.
The Share Trading Policy can be viewed on the
Company’s website
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2015
Consolidated
Parent Entity
2015
2014
2015
2014
Notes
$’000
$’000
$’000
$’000
4
5
6 (a)
6 (b)
6 (c)
7
33(b)
Revenue
Cost of sales
Other income and expenses
Cost of providing services and administration
expenses
Finance income
Finance expenses
Share of profit of equity accounted investee
PROFIT/(LOSS) BEFORE INCOME TAX
EXPENSE
Income tax benefit/(expense)
PROFIT/(LOSS) AFTER TAX FOR THE YEAR
OTHER COMPREHENSIVE INCOME
Demerger and distribution in specie
Tax expenses
Other comprehensive income after tax
Total comprehensive income
Profit attributable to non-controlling interests
TOTAL COMPREHENSIVE INCOME / (LOSS)
ATTRIBUTABLE TO MEMBERS OF THE
PARENT ENTITY
4,782
(2,858)
3,839
(3,247)
847
(1,823)
50
1,590
13,125
(7,760)
(3,696)
(3,962)
1,647
(14,965)
62
(15,549)
-
1,590
490
(15,059)
-
-
6,345
(273)
-
-
-
6,072
-
6,072
-
-
(19,648)
(41)
6
(6,600)
-
(26,283)
-
(26,283)
(6,626)
-
(6,626)
-
-
-
(8,459)
-
(8,459)
-
-
-
(5,036)
-
(15,059)
(15,059)
-
(2,387)
-
(26,283)
-
(5,036)
(15,059)
(2,387)
(26,283)
Earnings/(Loss) per shares
Basic earnings/(loss) per share (cents)
Diluted earnings/(loss) per share (cents)
22
22
Cents
(1.94)
(1.94)
Cents
(5.84)
(5.84)
The above Statement should be read in conjunction with the accompanying notes.
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2015
Consolidated
Parent Entity
2015
2014
2015
2014
Notes
$’000
$’000
$’000
$’000
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Financial assets
Inventories
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Receivables
Property, plant and equipment
Investment properties
Financial assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Financial liabilities
Employee benefits provision
Other liabilities
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables
Financial liabilities
Deferred tax liability
Other liabilities
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued Capital
Reserves
Accumulated losses
Total equity attributable to equity
holders of the parent entity
Non-controlling interest
8
9
10
11
12
9
13
14
10
15
16
17
18
15
16
7
18
19
93
(97)
-
-
13
9
-
-
10,554
-
10,554
10,563
108
-
1
-
109
1,520
5,818
-
-
3
7,341
7,450
3,113
140
1,644
1,637
2,197
223
5,841
3,028
2,892
32,489
5,032
43,441
49,282
1,174
1,385
420
337
3,316
13,236
20,825
-
3,409
388
37,858
41,174
8,108
1
2
-
-
10
13
-
-
-
5,718
5,718
5,731
24
-
1
-
25
214
-
-
-
3
217
242
5,489
1
-
-
-
12
13
31
-
-
7,821
7,852
7,865
-
-
-
30
30
-
-
-
-
-
-
30
7,835
20
21(a)
21(b)
52,110
5,626
(54,623)
3,113
-
52,069
5,626
(49,587)
52,110
-
(46,621)
52,069
-
(44,234)
8,108
5,489
7,835
-
-
-
TOTAL EQUITY
3,113
8,108
5,489
7,835
The above Statement should be read in conjunction with the accompanying notes.
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2015
Consolidated
Notes
Issued
Capital
Reserves
Accumulated
Losses
Total Equity
Balance at 1 January 2015
Share issued
Share issuing costs
Profit/(Loss) for the year
Balance at 31 December 2015
Balance at 1 January 2014
Profit/(Loss) for the year
Currency translation
difference
Balance at 31 December 2014
Parent Entity
Balance at 1 January 2015
Share issued
Share issuing cost
Profit/(loss) for the year
Balance at 31 December 2015
Balance at 1 January 2014
Share issued
Profit/(loss) for the year
Balance at 31 December 2014
20
20
20
20
20
20
$’000
52,069
43
(2)
-
52,110
52,040
-
29
52,069
$’000
5,626
-
-
-
5,626
5,627
-
(1)
5,626
$’000
(49,587)
-
-
(5,036)
(54,623)
(34,528)
(15,059)
-
(49,587)
$’000
8,108
43
(2)
(5,036)
3,113
23,139
(15,059)
28
8,108
Issued
Capital
Reserves
Accumulated
Losses
Total Equity
$’000
52,069
43
(2)
-
52,110
52,040
29
-
52,069
$’000
-
-
-
-
-
-
-
-
-
$’000
(44,234)
-
-
(2,387)
(46,621)
(17,951)
-
(26,283)
(44,234)
$’000
7,835
43
(2)
(2,387)
5,489
34,089
29
(26,283)
7,835
The above Statement should be read in conjunction with the accompanying notes.
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For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 31 DECEMBER 2015
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Net cash provided by/(used in) operating
activities
Cash flows from investing activities
Proceeds from sale of investments
Advance from/(to) other parties
Advance from/(to) controlled entities
Payments for investment properties
improvements
Payments for purchases of investments
Payments for property, plant and equipment
Net cash (used in)/ provided by investing
activities
Cash flows from financing activities
Proceeds from share placement
Share issuing cost
Drawdown from bank borrowings
Repayment of bank borrowings
Net cash provided by /(used in) financing
activities
Net (decrease)/ increase in cash and cash
equivalents
Cash and cash equivalents at the beginning of the
year
Cash and cash equivalents at the end of the year
8
Notes
Consolidated
2015
$’000
2014
$’000
Parent Entity
2015
$’000
2014
$’000
4,869
(5,332)
2
(334)
12,834
(9,846)
9
(1,229)
-
(257)
2
-
24
(795)
1,768
(255)
-
(21)
6
-
(15)
-
651
-
-
-
-
12,758
(1,362)
-
(20)
(14,090)
(525)
-
-
214
-
-
-
2,000
-
(1,670)
-
(354)
-
651
(3,239)
214
(24)
43
(2)
56
-
97
29
(2)
1,841
(701)
1,167
(47)
(304)
140
93
444
140
43
(2)
-
-
41
-
1
1
29
-
-
-
29
(10)
11
1
The above Statement should be read in conjunction with the accompanying notes.
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
1.
CORPORATE INFORMATION
The consolidated financial statements and notes of the Company for the year ended 31 December 2015
were authorised for issue in accordance with a resolution of the directors and covers Hudson Investment
Group Limited (the Company) as the parent entity as well as the group consisting of Hudson Investment
Group Limited and its subsidiaries as required by the Corporations Act 2001 (the Group).
The consolidated financial statements and notes are presented in Australian currency.
Hudson Investment Group Limited is a company limited by shares incorporated in Australia whose shares
are publicly traded on the Australian Securities Exchange.
2.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
a.
Basis of preparation
This general purpose financial report has been prepared in accordance with Australian Accounting
Standards, Australian Accounting Interpretations, other authoritative pronouncements of the
Australian Accountancy Standards Board and the Corporations Act 2001.
Statement of Compliance
Australian Accounting Standards ('AASBs') include Australian equivalents to International Financial
Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report of Hudson
Investment Group Limited also complies with International Financial Reporting Standards.
Critical accounting estimates and judgements
Details of critical accounting estimates and assumptions about the future made by management at
reporting date are set out below:
–
Impairment of assets
The Company assesses impairment at each reporting date by evaluating conditions specific
to the Group that may lead to impairment of assets. Where an impairment trigger exists, the
recoverable amount of the asset is determined. Calculations performed in assessing
recoverable amounts incorporate a number of key estimates.
Critical judgements
Management have made the following judgements when applying the Group's accounting policies:
– Recognition of deferred tax assets
In line with the Group’s accounting policy (Note 2f) and as disclosed in Note 7, deferred tax
assets have not been recognised.
– Measurement of financial assets
If there is an active market for financial assets they have been fairly valued in line with
market prices, if not they are carried at cost.
–
Fair value of Hudson Pacific Group Limited shares on demerger. The fair value was
determined as less than the Company value of net assets demerged based on the 2014
audited financial statements.
Going Concern
This financial report has been prepared on a going concern basis, which contemplates the continuity
of business activities and the realisation of assets and payments of liabilities in the normal course of
business.
The directors believe the Company will be able to pay its debts as and when they fall due and to
fund near term anticipated activities.
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
2.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued
Historical cost convention
These financial statements have been prepared on an accruals basis and are based on the historical
cost convention except for where noted in these accounting policies.
Material accounting policies adopted in the preparation of these financial statements are presented
below and have been consistently applied unless otherwise stated.
ASIC Class Order 98/100
The Company is of a kind referred to in ASIC Class Order 98/100, issued by the Australian Securities
and Investments Commission, relating to the 'rounding off' of amounts in the financial report.
Amounts in the financial report have been rounded off in accordance with that Class Order to the
nearest thousand dollars, or in certain cases, the nearest dollar.
b.
Principles of consolidation
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of
Hudson Investment Group Limited (“the parent entity”) as at the reporting date and the results of
all subsidiaries for the year then ended. Hudson Investment Group Limited and its subsidiaries
together are referred to in this financial report as the Group.
Subsidiaries are all those entities over which the Group has the power to govern the financial and
operating policies so as to obtain benefits from the entity’s activities, generally accompanying a
shareholding of more than one-half of the voting rights. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered when assessing whether the
Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They
are de-consolidated from the date that control ceases. The financial performance of those entities
is included only for the period of the year that they were controlled.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the
Group.
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.
Minority interests in the results and equity of subsidiaries are shown separately in the consolidated
Statement of Profit or Loss and Other Comprehensive Income and Statement of Financial Position
respectively.
Investments in subsidiaries are accounted for at cost in the individual financial statements of
Hudson Investment Group Limited.
c.
Segment reporting
A business segment is a group of assets and operations engaged in providing products or services
that are subject to risks and returns that are different to those of other business segments. A
geographical segment is engaged in providing products or services within a particular economic
environment and is subject to risks and returns that are different from those of segments operating
in other economic environments. Reporting to management by segments is on this basis.
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
2.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued
d.
Foreign currency transactions and balances
(i)
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using
the currency of the primary economic environment in which the entity operates (‘the
functional currency’). The financial statements are presented in Australian dollars, which is
Hudson Investment Group Limited’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the translation at year-end exchange
rates of monetary assets and liabilities denominated in foreign currencies are recognised in
the Statement of Profit or Loss and Other Comprehensive Income.
(iii) Group companies
The results and financial position of all the Group entities that have a functional currency
different from the presentation currency are translated into the presentation currency as
follows:
assets and liabilities for each Statement of Financial Position presented are
translated at the closing rate at the date of that Statement of Financial Position;
income and expenses for each Statement of Profit or Loss and Other
Comprehensive Income are translated at average exchange rates (unless this is
not a reasonable approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are translated at the
dates of the transactions);
retained earnings are translated at the exchange rates prevailing at the date of
transactions; and
all resulting exchange differences are recognised as a separate component of
equity.
On consolidation, exchange differences arising from the translation of any net investment in
foreign entities, and of borrowings and other currency instruments designated as hedges of
such investments, are taken to shareholders’ equity. When a foreign operation is sold or
borrowings repaid a proportionate share of such exchange differences are recognised in the
Statement of Profit or Loss and Other Comprehensive Income as part of the gain or loss on
the sale where applicable.
e. Revenue recognition
Revenue is recognised at the fair value of consideration received or receivable. Amounts disclosed
as revenue are net of returns, trade allowances and duties and taxes paid. The following specific
recognition criteria must also be met before revenue is recognised:
Sale of Goods
Revenue from sale of goods is recognised when the significant risks and rewards of ownership have
passed to the buyer and can be reliably measured. Risks and rewards are considered passed to
buyer when goods have been delivered to the customer.
Interest
Interest revenue is recognised as it accrues taking into account the effective yield on the financial
asset.
Rental Income
Rental income on investment properties is accounted for on a straight-line basis over the lease
term. Contingent rentals are recognised as income in the periods when they are earned.
All revenue is stated net of the amount of goods and services tax (GST).
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
2.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued
f.
Income tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable
income based on the income tax rate adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences between the tax bases of assets and liabilities and their
carrying amounts in the financial statements, and to unused tax losses.
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 which are
enacted or substantively enacted. The relevant tax rates are applied to the cumulative amounts of
deductible and taxable temporary differences to measure the deferred tax asset or liability. An
exception is made for certain temporary differences arising from the initial recognition of an asset
or a liability. No deferred tax asset or liability is recognised in relation to these temporary
differences if they arose in a transaction, other than a business combination, that at the time of the
transaction did not affect either accounting profit or taxable profit or loss.
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.
Deferred tax liabilities and assets are not recognised for temporary differences between the
carrying amount and tax bases of investments in controlled entities where the parent entity is able
to control the timing of the reversal of the temporary differences and it is probable that the
differences will not reverse in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also
recognised directly in equity.
The Company and its wholly owned entities are part of a tax-consolidated group under Australian
taxation law. Hudson Investment Group Limited is the head entity in the tax-consolidated group.
Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary
differences of the members of the tax-consolidated group are recognised in the separate financial
statements of the members of the tax-consolidated group using the ‘separate taxpayer within
group’ approach. Current tax liabilities and assets and deferred tax assets arising from unused tax
losses and tax credits of the members of the tax-consolidated group are recognised by the Company
(as head entity in the tax-consolidated group).
The amounts receivable/payable under tax funding arrangements are due upon notification by the
entity which is issued soon after the end of each financial year. Interim funding notices may also be
issued by the head entity to its wholly owned subsidiaries. These amounts are recognised as current
inter-company receivables or payables.
g. Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except:
where the GST incurred on a purchase of goods and services is not recoverable from the
taxation authority, in which case the GST is recognised as part of the cost of acquisition of
the asset or as part of the expense item as applicable; and
receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the Statement of Financial Position.
Cash flows are included in Statement of Cash Flows on a gross basis except for the GST component
of cash flows arising from investing and financing activities, which is recoverable from, or payable
to, the taxation authority, are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or
payable to, the taxation authority.
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
2.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued
h.
Cash and cash equivalents
For the purposes of the Statement of Cash Flows, cash includes cash and cash equivalents on hand
and at call deposits with banks or financial institutions, investment in money market instruments
maturing within less than 3 months, net of bank overdrafts.
i.
Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised
cost, less provision for doubtful debts. Trade receivables are due for settlement no more than 60
days from the date of recognition.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be
uncollectible are written off. A provision for doubtful receivables is established when there is
objective evidence that entities in the Group will not be able to collect all amounts due according to
the original terms of receivables.
j.
Inventories
Inventories include raw materials, work in progress and finished goods.
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials,
direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter
being allocated on the basis of normal operating capacity. Costs are assigned to individual items of
inventory on the basis of weighted average costs. Net realisable value is the estimated selling price
in the ordinary course of business less the estimated costs of completion and the estimated costs
necessary to make the sale.
k.
Impairment of assets
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. The recoverable amount is the higher
of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash
generating units).
Non-financial assets that suffered an impairment are reviewed for possible reversal of the
impairment at each reporting period.
l.
Financial instruments
Recognition and initial 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 (i.e. trade date accounting is
adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the
instrument is classified ‘at fair value through profit or loss’, in which case transaction costs are
expensed to profit or loss immediately.
Classification and subsequent measurement
Finance 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.
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
2.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued
Amortised cost is calculated as:
(a) the amount at which the financial asset or financial liability is measured at initial recognition;
(b) less principal repayments;
(c) 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
(d) 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
Financial assets are classified at ‘fair value through profit or loss’ when they are either
held for trading for the purpose of short-term profit taking, derivatives not held for
hedging purposes, or when they are designated as such to avoid an accounting mismatch
or to enable performance evaluation where a group of financial assets is managed by key
management personnel on a fair value basis in accordance with a documented risk
management or investment strategy. Such assets are subsequently measured at fair
value with changes in carrying value being included in profit or loss.
(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 and are subsequently measured at
amortised cost.
Loans and receivables are included in current assets, except for those which are not
expected to mature within 12 months after reporting date. (All other loans and
receivables are classified as non-current assets.)
(iii) Held-to-maturity investments
Held-to-maturity
investments are non-derivative financial assets that have fixed
maturities and fixed or determinable payments, and it is the Group’s intention to hold
these investments to maturity. They are subsequently measured at amortised cost.
Held-to-maturity investments are included in non-current assets, except for those which
are expected to mature within 12 months after reporting date. (All other investments are
classified as current assets.)
If during the period the Group sold or reclassified more than an insignificant amount of
the held-to-maturity
the entire held-to-maturity
investments category would be tainted and reclassified as available-for-sale.
investments before maturity,
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
2.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued
(iv) Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either not
suitable to be classified into other categories of financial assets due to their nature, or
they are designated as such by management. They comprise investments in the equity of
other entities where there is neither a fixed maturity nor fixed or determinable
payments.
Available-for-sale financial assets are included in non-current assets, except for those
which are expected to be disposed of within 12 months after reporting date. (All other
financial assets are classified as current assets.)
(v) Financial Liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently
measured at amortised cost.
Fair value
Fair value is determined based on current bid prices for all quoted investments. Valuation
techniques are applied to determine the fair value for all unlisted securities, including recent arm’s
length transactions, reference to similar instruments and option pricing models.
Impairment
At the end of each reporting period, the Group assesses whether there is objective evidence that a
financial instrument has been impaired. In the case of available-for-sale financial instruments, a
prolonged decline in the value of the instrument is considered to determine whether impairment
has arisen. Impairment losses are recognised in the statement of comprehensive income.
De-recognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or
the asset is transferred to another party whereby the entity no longer has any significant continuing
involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised
where the related obligations are either discharged, cancelled or expired. The difference between
the carrying value of the financial liability extinguished or transferred to another party and the fair
value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is
recognised in profit or loss.
m. 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 is based on quoted market prices at
the Statement of Financial Position date. The quoted market price used for financial assets held by
entities in the 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 is determined using
valuation techniques. Entities in the Group use a variety of methods and make assumptions that are
based on market conditions existing at each balance 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 entities in the Group for similar financial instruments.
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
2.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued
n.
Property, plant and equipment
Land and buildings are shown at fair value, based on periodic valuations by external independent
valuers, less subsequent depreciation for buildings. Any accumulated depreciation at the date of
revaluation is eliminated against the gross carrying amount of the asset and the net amount is
restated to the re-valued amount of the asset. All other plant and equipment is stated at historical
cost less depreciation. Historical cost includes expenditure that is directly attributable to the
acquisition of the items.
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 Statement of Comprehensive Income during the financial period in
which they are incurred.
Increases in the carrying amounts arising on revaluation of land and buildings are credited to the
asset revaluation reserve in equity. A revaluation surplus is credited to the asset revaluation
reserve included within shareholder’s equity unless it reverses a revaluation decrease on the same
asset previously recognised in the Statement of Profit or Loss and Other Comprehensive Income. A
revaluation deficit is recognised in the Statement of Profit or Loss and Other Comprehensive
Income unless it directly offsets a previous revaluation surplus on the same asset in the asset
revaluation reserve. On disposal, any revaluation reserve relating to sold assets is transferred to
retained earnings. Independent valuations are performed regularly to ensure the carrying amounts
of land and buildings do not differ materially from the fair value at the Statement of Financial
Position date.
Land is not depreciated. Depreciation on other assets is calculated using the straight line, over their
estimated useful lives, as follows:
Plant and equipment
Buildings
5 – 15 years (depreciation rate 6.7% to 20%)
30 years (depreciation rate 3.4%)
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each
Statement of Financial Position date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount (note 2 (m)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These
are included in the Statement of Profit or Loss and Other Comprehensive Income.
o.
Investment property
Investment property is held for long-term rental yields and is not occupied by the Group.
Investment property is carried at fair value, which is based on active market prices, adjusted, if
necessary, for any difference in the nature, location or condition of the specific asset. If this
information is not available, the Group uses alternative valuation methods such as recent prices in
less active markets or discounted cash flow projections. These valuations are reviewed annually.
Changes in fair values are recorded in the Statement of Profit or Loss and Other Comprehensive
Income as part of other income.
p.
Leases
Company as lessee
Leases of property, plant and equipment where the Group has substantially all the risks and
rewards of ownership but not the legal ownership are classified as finance leases and capitalised at
inception of the lease at the fair value of the leased property, or if lower, at the present value of the
minimum lease payments. Lease payments are apportioned between the finance charges and
reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance
of the liability. Finance charges are charged to the Statement of Profit or Loss and Other
Comprehensive Income over the lease period so as to produce a constant periodic rate of interest
on the remaining balance of the liability for each period.
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Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
2.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued
Capitalised leased assets are depreciated on a straight line basis over the shorter of the estimated
useful life of the asset or the lease term.
Leases where the lessor retains substantially all the risks and rewards of ownership of the net asset
are classified as operating leases. Payments made under operating leases (net of incentives received
from the lessor) are charged to the Statement of Profit or Loss and Other Comprehensive Income
on a straight-line basis over the period of the lease.
Lease incentives under operating leases are recognised as a liability and amortised on a straight line
basis over the life of the lease term.
Company as lessor
Lease income from operating leases is recognised in the Statement of Profit or Loss and Other
Comprehensive Income on a straight-line basis over the lease term. Initial direct costs incurred in
negotiating operating leases are added to the carrying value of the leased asset and recognised as
an expense over the lease term on the same bases as the lease income.
q.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of
financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of
recognition.
r.
Provisions
Provisions are recognised when the group has a legal or constructive obligation, as a result of past
events, for which it is probable that an outflow of economic benefits will result and the outflow can
be reliably measured.
Provisions are measured using the best estimate of the amounts required to settle the obligation at
the end of the reporting period.
s. Other liabilities
Other liabilities comprise non-current amounts due to related parties that do not bear interest and
are repayable within one year of Statement of Financial Position date.
Income received in advance relates to car park income that will be brought to account over the life
of the car space contracts.
t.
Employee benefits
Wages, Salaries and Annual Leave
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be
settled within one year of Statement of Financial Position date are recognised in other liabilities in
respect of employees' services rendered up to Statement of Financial Position date and are
measured at amounts expected to be paid when the liabilities are settled.
Long Service Leave
The liability for long service leave is recognised in the provision for employee benefits and
measured as the present value of expected future payments to be made in respect of services
provided by employees up to the reporting date.
In determining the liability, consideration is given to employee wage increases and the probability
that the employee may satisfy resting requirements. Those cash flows are discounted using market
yields on national government bonds with terms to maturity that match the expected timing of cash
flows.
Page | 39
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued
u.
Issued capital
Ordinary shares are classified as equity.
Costs directly attributable to the issue of new shares or options are shown as a deduction from the
equity proceeds, net of any income tax benefit.
v.
Share-based payments
Ownership-based remuneration is provided to employees via an employee share option plan and
employee share plan.
Share-based compensation is recognised as an expense in respect of the services received,
measured on a fair value basis.
The fair value of the options at grant date is independently determined using a Black Scholes option
pricing model that takes into account the exercise price, the term of the option, the vesting and
performance criteria, the impact of dilution, the non-tradeable nature of the option, the share price
at grant date and expected price volatility of the underlying share, the expected dividend yield and
the risk-free interest rate for the term of the option.
The fair value of the options granted excludes the impact of any non-market vesting conditions (for
example, profitability and sales growth targets). Non-market vesting conditions are included in
assumptions about the number of options that are expected to become exercisable. At each
Statement of Financial Position date, the Group revises its estimate of the number of options that
are expected to become exercisable. The employee benefit expense recognised each period takes
into account the most recent estimate.
Upon the exercise of options, the balance of the share-based payments reserve relating to those
options is transferred to share capital.
w. Earnings per share (EPS)
Basic EPS is calculated as net profit attributable to members, adjusted to exclude costs of servicing
equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted
for any bonus element.
Diluted EPS is calculated as net profit attributable to members, adjusted for costs of servicing equity
(other than dividends), the after tax effect of dividends and interest associated with dilutive
potential ordinary shares that have been recognised as expenses; and other non-discretionary
changes in revenues or expenses during the period that would result from the dilution of potential
ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential
ordinary shares, adjusted for any bonus element.
x. New Accounting Standards for Application
The AASB has issued new and amended accounting standards and interpretations that have
mandatory application dates for future reporting periods. The group has decided against early
adoption of these standards. We have reviewed these standards and interpretations and there are
none having any material effect.
y. Discontinued operations
The trading results for business operations disposed during the year are disclosed separately as
discontinued operations in the statement of profit or loss and other comprehensive income. The
amount disclosed includes any related impairment losses recognised and any gains or losses
arising on disposal.
Page | 40
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
3.
FINANCIAL RISK MANAGEMENT
a.
General objectives, policies and processes
In common with all other businesses, the Group is exposed to risks that arise from its use of
financial instruments. This note describes the Group’s objectives, policies and processes for
managing those risks and the methods used to measure them. Further quantitative information in
respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its
objectives, policies and processes for managing those risks or the methods used to measure them
from previous periods unless otherwise stated in this note.
The Board has overall responsibility for the determination of the Group’s risk management
objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the effective implementation of the
objectives and policies to the Group’s finance function. The Groups' risk management policies and
objectives are therefore designed to minimise the potential impacts of these risks on the results of
the Group where such impacts may be material. The Board receives reports from the Chief Financial
Officer through which it reviews the effectiveness of the processes put in place and the
appropriateness of the objectives and policies it sets. The Group’s finance function also review the
risk management policies and processes and report their findings to the Audit Committee.
The overall objective of the Board is to set polices that seek to reduce risk as far as possible without
unduly affecting the Group’s competitiveness and flexibility.
Further details regarding these policies are set out below.
The Group and the parent entity hold the following financial instruments:
Financial assets
Current
Cash and cash equivalents
Trade and other receivables
Financial assets
Non-current
Trade and other receivables
Financial assets
Financial liabilities
Current
Trade and other payables
Financial liabilities
Non-current
Trade and other payables
Financial liabilities
Consolidated
2015
$’000
2014
$’000
Parent Entity
2015
$’000
2014
$’000
93
(97)
-
-
-
140
1,644
1,637
3,028
5,032
(4)
11,481
1
2
-
1
-
-
-
5,718
5,721
31
7,821
7,853
108
-
1,174
1,385
1,520
5,818
7,446
13,236
20,825
36,620
24
-
214
-
238
-
-
-
-
-
Page | 41
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
3.
FINANCIAL RISK MANAGEMENT continued
b.
Credit risk
Credit risk is the risk that the other party to a financial instrument will fail to discharge their
obligation resulting in the Group incurring a financial loss. This usually occurs when debtors or
counterparties to derivative contracts fail to settle their obligations owing to the Group excluding
the available for sale financial assets.
The maximum exposure to credit risk at balance date is the carrying amount of the financial assets,
excluding the available for sale financial assets, as summarised under note(a) above.
For banks and financial institutions, only independently rated parties are accepted and each deposit
account is kept to under $1 million to ensure that it is covered by the Governments bank deposit
guarantee scheme.
The maximum exposure to credit risk at balance date by country is as follows:
Australia
c.
Liquidity risk
Consolidated
Parent Entity
2015
$’000
-
-
2014
$’000
25,066
25,066
2015
$’000
2014
$’000
2
2
31
31
Liquidity risk is the risk that the Group may encounter difficulties raising funds to meet
commitments associated with financial instruments that is, borrowing repayments. Bank loans are
detailed below. The funds were provided by bankers for the Group and the Parent Company. It is
the policy of the Board of Directors that treasury reviews and maintains adequate committed credit
facilities and the ability to close-out market positions.
Page | 42
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
3.
FINANCIAL RISK MANAGEMENT continued
Maturity Analysis of financial liabilities
Consolidated 2015
Current
Trade and other payables
Financial Liabilities
Non-current
Trade and other payables
Financial Liabilities
Total financial liabilities
at amortised cost
Consolidated 2014
Current
Trade and other payables
Financial Liabilities
Non-current
Trade and other payables
Financial Liabilities
Total financial liabilities
at amortised cost
Parent Entity 2015
Current
Trade and other payables
Non-current
Other liabilities
Total financial liabilities at
amortised cost
Parent Entity 2014
Current
Trade and other payables
Non-current
Other liabilities
Total financial liabilities
at amortised cost
Carrying
Amount
$'000
Contractual
Cash flows
$'000
< 6 mths
$'000
6- 12
mths
$'000
1-3 years
> 3 years
$'000
$'000
108
-
1,520
5,818
108
-
1,520
5,818
108
-
-
-
7,446
7,446
108
1,174
1,385
1,174
1,385
1,159
1,069
13,236
20,825
13,236
20,825
-
-
-
-
-
-
-
15
316
-
-
-
-
1,520
5,818
7,338
-
-
-
-
-
-
-
-
-
13,236
14,746
-
6,079
36,620
36,620
2,228
331
27,982
6,079
Carrying
Amount
$'000
Contractual
Cash flows
$'000
< 6 mths
$'000
6- 12
mths
$'000
1-3 years
> 3 years
$'000
$'000
24
24
24
-
-
-
214
-
-
-
-
-
238
24
24
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Page | 43
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
3.
FINANCIAL RISK MANAGEMENT continued
d.
Market risk
Market risk arises from the use of interest bearing, tradable and foreign currency financial
instruments. It is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in interest rates (interest rate risk), foreign exchange rates (currency
risk) or other market factors (other price risk).
(i)
Interest rate risk
The Group does not apply hedge accounting.
The Group is constantly monitoring its exposure to trends and fluctuations in interest rates in
order to manage interest rate risk.
For further details of exposure to interest rate risk refer Note 17 Financial Liabilities.
Sensitivity Analysis
The following tables demonstrate the sensitivity to reasonably possible changes in interest
rates, with all other variables held constant, of the Group’s profit after tax (through the
impact on floating rate borrowings). There is no impact on the Group’s equity.
Consolidated
2015
Financial Liabilities
Tax charge of 30%
After tax increase/(decrease)
Consolidated
2014
Financial Liabilities
Tax charge of 30%
After tax increase/(decrease)
Carrying
Amount
$'000
+1%
-1%
Interest Rate
$'000
Interest Rate
$'000
5,818
-
5,818
22,210
22,210
(58)
18
40
(222)
67
(155)
58
(18)
40
222
(67)
155
(ii) Currency risk
The Group’s policy is, where possible, to allow group entities to settle liabilities denominated
in their functional currency (AUD) with the cash generated from their own operations in that
currency. Where group entities have liabilities denominated in a currency other than their
functional currency (and have insufficient reserves of that currency to settle them) cash
already denominated in that currency will, where possible, be transferred from elsewhere
within the Group.
In order to monitor the continuing effectiveness of this policy, the Group receives forecast,
analysed by the major currencies held by the Group, of liabilities due for settlement and
expected cash reserve.
There is no foreign currency loan as at reporting date (2014: Nil).
(iii) Other price risk
The Group takes advice from professional advisers as to when to sell shares quoted at market
value.
Page | 44
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
3.
FINANCIAL RISK MANAGEMENT continued
Consolidated
2015
Shares at fair value
Tax charge (30%)
After tax increase/(decrease)
Consolidated
2014
Shares at fair value
Tax charge (30%)
After tax increase/(decrease)
There is no concentration of risk.
e.
Capital risk management
Carrying
Amount
+10%
Profit & Loss
-10%
Profit & Loss
$'000
$'000
$'000
-
-
-
6,669
6,669
-
-
-
667
(200)
467
-
-
-
(667)
200
(467)
In managing its capital, the Group’s primary objectives are to pay dividends and maintain liquidity.
These objectives dictate any adjustments to capital structure. Rather than set policies, advice is
taken from professional advisors as to how to achieve these objectives. There has been no change
in either of these objectives, or what is considered capital in the year.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce
debt.
Consistently with others in the industry, the Group and the parent entity monitor capital on the
basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is
calculated as total borrowings (including 'Financial liabilities' and 'trade and other payables' as
shown in the Statement of Financial Position) less cash and cash equivalents. Total capital is
calculated as 'equity' as shown in the Statement of Financial Position (including minority interest)
plus net debt.
It is the Group’s policy to maintain its gearing ratio at a healthy and manageable level. The
Group’s gearing ratio at the Statement of Financial Position date is as follows:
Gearing ratios
Total borrowings
Less: cash and cash equivalents
Net debt
Total equity
Total capital
Gearing Ratio
Consolidated
2015
$'000
5,818
(93)
5,725
3,113
8,838
64%
2014
$'000
22,210
(140)
22,070
8,108
30,178
Parent Entity
2015
$'000
-
2014
$'000
-
-
-
5,489
5,489
(0)
-
7,835
7,835
N/A
73%
N/A
There have been no other significant changes to the Group’s capital management objectives,
policies and processes in the year nor has there been any change in what the Group considers to
be its capital.
Page | 45
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
4. REVENUE
Sale of goods
Rendering of services
Rental Income
Corporate services fee Income
5. OTHER INCOME AND EXPENSES
Consolidated
Parent Entity
2015
2014
2015
2014
$’000
$’000
$’000
$’000
2,222
872
1,144
544
6,276
1,956
1,131
3,762
-
-
-
-
4,782
13,125
-
-
-
-
-
-
Net gain/(loss) on disposal of investments
Change in fair value of financial assets
Change in fair value of investment property
Others
(2,434)
6,273
-
-
2,141
(7,415)
371
1,207
2,892
3,451
-
2
141
(19,811)
-
22
3,839
(3,696)
6,345
(19,648)
6.
EXPENSES
The profit/(loss) before income tax is arrived
after (charging)/crediting the following specific
amounts:
a.
Cost of providing services and
administration expenses
Consolidated
Parent Entity
2015
2014
2015
2014
$’000
$’000
$’000
$’000
Consulting and professional expenses
Superannuation contribution expenses
Employee expenses and on costs
Lease payment
Legal expenses
(169)
(121)
(1,011)
(5)
(1,487)
(539)
(267)
(2,122)
(10)
(337)
b.
Finance income
Interest received
c.
Finance expenses
Interest paid
Depreciation and amortisation
Doubtful debt provision
Others
d.
Other comprehensive income
847
1,647
(793)
(154)
(820)
(56)
(1,823)
(2,221)
(363)
(12,265)
(116)
(14,965)
(11)
(1)
(10)
-
-
-
-
-
-
-
-
-
-
-
-
-
6
-
-
(6,600)
-
(6,600)
Demerger and distribution in specie
(6,626)
-
(8,459)
-
Page | 46
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
7.
INCOME TAX
a.
Income tax expense
Income tax expense
Current tax expense
Deferred tax expense
Total income tax expense/(benefit)
Deferred tax expense
Increase in deferred tax expense/(benefit)
b.
Numerical reconciliation of income tax to
prima facie tax payable
Profit/(loss) from continuing operations
before income tax expense
Income tax expense (benefit) calculated @
30% (2014:30%)
Deferred tax expenses relating to partly
owned subsidiaries outside of the tax
consolidated group
Tax losses not brought to account
Temporary differences not brought to
account
Tax losses not brought to account
Recoupment of prior year tax losses not
previously brought to account
Income tax expense/(benefit) at effective
tax rate of 30% (2014: 30%)
c.
Amounts recognised directly in equity
Aggregate current and deferred tax arising
during the reporting period and not
recognised in profit and loss but directly
debited or credited to equity:
Current income tax
Current income tax on transaction costs of
issuing equity instruments
Consolidated
2014
$’000
2015
$’000
Parent Entity
2014
$’000
2015
$’000
-
-
-
-
-
490
490
490
-
-
-
-
-
-
-
-
1,590
(15,549)
6,072
(26,283)
477
(4,665)
1,822
(7,885)
(1,875)
-
(963)
-
(4,049)
(4,094)
-
(2,284)
5,447
8,269
(859)
10,169
-
(490)
-
-
-
-
-
-
Page | 47
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
7.
INCOME TAX continued
d.
Unrecognised deferred tax assets and liabilities
The unrecognised deferred tax assets of
the Group includes $xxx (2014:
$2,493,085) in relation to carried forward
tax losses and $xxx (2014: $5,719,998) in
relation to carried forward capital losses.
Deferred tax assets and liabilities have not
been recognised in the statement of
financial position for the following items:
Prior year unrecognised tax losses now
ineligible due to change in tax
consolidation group
Other deductible temporary differences
and tax losses
Potential benefit/(expense) at 30%
(2014: 30%)
e.
Deferred tax assets
Deferred tax assets comprise temporary
differences attributable to:
Amounts recognised in profit and loss
Tax losses
Amounts recognised directly in equity
Share issue expenses
f.
Deferred tax liabilities
Deferred tax liabilities comprise temporary
differences attributable to:
Amounts recognised directly in equity
Revaluations of land and buildings
Amounts recognised in profit and loss
Capitalised exploration costs
Consolidated
2014
$’000
-
2015
$’000
-
Parent Entity
2014
$’000
-
2015
$’000
-
-
-
-
-
(6,248)
(13,647)
(3209)
(7,612)
(6,248)
(13,647)
(963)
(7,612)
(1,875)
(4,094)
(963)
(2,284)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Page | 48
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
8.
CASH & CASH EQUIVALENTS
Cash at bank and on hand
Cash held in trust accounts
Consolidated
Parent Entity
2015
$’000
93
-
93
2014
$’000
64
76
140
2015
$’000
1
-
1
2014
$’000
1
-
1
Weighted average interest rates
0.00%
0.02%
0.00%
0.00%
9.
TRADE AND OTHER RECEIVABLES
Current
Trade receivables (note a)
Less: Provision for doubtful debts
Advances to other entities (note b)
Less: Provision for doubtful debts
Other receivables (note c)
Non-Current
Advances to other entities (note b)
Advances to controlled entities (note d)
Less: Provision for doubtful debts
Employee share scheme (note e)
Less: Provision for employee share scheme
a.
Trade receivables past due but not impaired
Up to 3 months
3 to 6 months
b.
Advances to other entities and parties
Consolidated
2015
$’000
2014
$’000
Parent Entity
2015
$’000
2014
$’000
(87)
-
(87)
-
-
(10)
(97)
-
-
-
-
-
-
2,055
(937)
1,118
19,984
(19,269)
(189)
1,644
3,028
-
-
7,888
(7,888)
3,028
-
-
-
-
-
2
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,631
(20,600)
7,486
(7,486)
31
Consolidated
Parent Entity
2015
$’000
-
-
-
2014
$’000
1,182
19
1,201
2015
$’000
2014
$’000
-
-
-
-
-
-
Current
Three interest bearing full recourse loans of $Nil were assigned and settled during the year.
(2014:$1.46 million) Previously these loans were advanced to a consultant. The loans were secured
against shares and have fixed repayment term. The loans are repayable should the consultant leave
the Company. A provision of $900,000 was made in 2014. None were written down during the year.
The loans, together with all right and entitlement, were assigned and transferred to Hudson Pacific
Group under the demerger and distribution in specie process during the reporting year.
An interest bearing full recourse loan of $Nil (2014:$14.87 million) was advanced to one entity. The
loan is secured against shares and has fixed repayment term. A provision of $12.2 million was made
in 2014. None were written down during the year. The loans, together with all right and
entitlement, are assigned and transferred to Hudson Pacific Group under the demerger and
distribution in specie process during the reporting year.
Page | 49
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
9.
TRADE & OTHER RECEIVABLES continued
Two interest bearing full recourse loans of $Nil (2014:$0.38 million) were advanced to two entities.
The loans have no securities and have no repayment term. Provision of $0.38 million was made in
2014. None were written down during the year. The loans, together with all right and entitlement,
were assigned and transferred to Hudson Pacific Group under the demerger and distribution in
specie process during the reporting year.
Two non-interest bearing loans of $Nil (2014:$1.81 million) were advanced to two entities. The
loans have no securities and have no repayment term. Provision of $1.81 million was made as at
reporting date. None were written down during the year. The loans, together with all right and
entitlement, were assigned and transferred to Hudson Pacific Group under the demerger and
distribution in specie process during the reporting year.
Total provision for $Nil (2014: $19.2 million) was made at reporting date.
Non- Current
An interest bearing loan of Nil (2014: $1.18 million) was advanced to Frontier Capital Group (ASX:
FCG). The loan is secured against shares. FCG converted the debt by issuing 5.5 million FCG shares
to the Company. During the year none were written down. The remaining loans, together with all
right and entitlement, were assigned and transferred to Hudson Pacific Group under the demerger
and distribution in specie process during the reporting year.
An interest bearing secured loan of Nil (2014: $0.61 million) was advanced to Sovereign Gold
Company Limited (ASX: SOC). The loan was secured by shares. None were written down during the
year. The loans, together with all right and entitlement, were assigned and transferred to Hudson
Pacific Group under the demerger and distribution in specie process during the reporting year.
An interest bearing secured loan of Nil (2014: $1.22 million) was advanced to Raffles Capital Limited
(ASX: RAF). The loan was secured by shares. None were written down during the year. The loans,
together with all right and entitlement, were assigned and transferred to Hudson Pacific Group
under the demerger and distribution in specie process during the reporting year.
c.
Other receivables
These amounts relate to receivables for GST paid, deposits paid and balances of tenement disposal
proceeds.
d.
Advances to controlled entities
There are no advances to controlled entities that are past due but not impaired as measurement is
tied to recoverability. The advances are non-interest bearing and with no securities.
e.
Employee share plan
There are no debts recoverable under the Employee Share Plan that are past due which have not
been impaired. Refer to Note 29 and Note 30 for further details.
The total outstanding non-recourse loans are $nil (2014:$7,887,856). The full non-recourse loans
are recognised as share payment cost expenses in the previous financial year. All loans under the
Employee Share Plan were fully repaid during the year.
f.
Fair value and credit risk
Current trade and other receivables
Due to the short term nature of these receivables their carrying amount is assumed to approximate
their fair value.
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of
receivables mentioned above.
Non-current receivables
All non-current receivables from other entities are interest bearing, and are repayable on demand.
The fair value is approximately equivalent to the carrying value.
Page | 50
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
10.
FINANCIAL ASSETS
Consolidated
Parent Entity
2015
$’000
2014
$’000
2015
$’000
2014
$’000
Current
Australian listed equity securities
Provision for diminution in value*
Non-Current
Investment-controlled entities
Investment-equity securities
Provision for diminution in value*
-
-
-
-
-
-
-
5,758
(4,121)
1,637
-
11,644
(6,612)
5,032
-
-
-
-
-
-
5,718
-
-
5,718
24,094
6,488
(22,761)
7,821
*Financial assets are recorded by marking to market value. The fair value is approximately equivalent to
market value.
11.
INVENTORIES
Raw materials
Finished goods
12.
OTHER CURRENT ASSETS
Prepayments
Others
13. PROPERTY, PLANT AND EQUIPMENT
Building naming rights
At fair value (a)
Plant and equipment
At cost
Accumulated depreciation
Leased plant and equipment
At cost
Accumulated depreciation
Total property, plant and equipment
-
-
-
13
-
13
1,584
613
2,197
103
120
223
-
-
-
10
-
10
-
-
-
12
-
12
Consolidated
Parent Entity
2015
$’000
2014
$’000
2015
$’000
2014
$’000
-
-
-
-
-
-
-
-
900
6,214
(5,181)
1,033
1,247
(288)
959
2,892
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Page | 51
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
13. PROPERTY, PLANT AND EQUIPMENT CONTINUED
a.
The valuation basis of building naming rights is fair value being the amounts for which the assets could be
exchanged between willing parties in an arm’s length transaction, based on current prices in an active
market for similar properties in the same location and condition. The revaluation was based on an
independent assessment by a member of the Australian Property Institute.
b.
Security
Refer to Note 16 for information on non-current assets pledged as security.
c.
Reconciliations
Reconciliations of the carrying amounts of each class of property, plant & equipment at the beginning and
end of the current and previous financial year are set out below:
Building
naming
rights
Plant &
equipment
Leased
Plant &
Equipment
2015
Carrying amount at 1 January 2015
Transferred - demerger
Depreciation
Carrying amount at 31 December
2015
2014
Carrying amount at 1 January 2014
Additions
Depreciation
Carrying amount at 31 December
2014
$’000
900
(900)
-
-
900
-
-
900
$’000
1,033
(930)
(103)
-
1,165
125
(257)
1,033
Total
$’000
2,892
(2,737)
(155)
$’000
959
(907)
(52)
-
-
665
400
(106)
2,730
525
(363)
959
2,892
14.
INVESTMENT PROPERTIES
Non-current
Investment properties at fair value
a.
Valuation basis
Consolidated
2015
2014
$'000
$'000
Parent Entity
2015
$'000
2014
$'000
10,554
10,554
32,489
32,489
-
-
-
-
The basis of the valuation of investment properties is fair value being the amounts for which the properties
could be exchanged between willing parties in an arm’s length transaction, based on current prices in an
active market for similar properties in the same location and condition and subject to similar leases. The
revaluations were based on a combination of independent assessments made by a member of the Australian
Property Institute and directors’ valuations.
Investment properties at fair value
Directors' valuation on capital works
Independent valuation
Consolidated
2015
2014
$'000
$'000
Parent Entity
2015
$'000
2014
$'000
84
10,470
10,554
19
32,470
32,489
-
-
-
-
-
-
Page | 52
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
b.
Reconciliation
A reconciliation of the carrying amount of investment properties at the beginning and end of the current
financial year is set out below:
At fair value
Balance at beginning of year
Capital Works
Change in fair value
Transferred - demerger
Carrying amount at end of the year
Consolidated
2015
$'000
2014
$'000
Parent Entity
2015
$'000
2014
$'000
32,489
65
-
(22,000)
10,554
32,098
19
372
-
32,489
-
-
-
-
-
-
-
-
-
-
c.
Amounts recognised in profit and loss for investment properties
The following amounts have been recognised in the Statement of Profit or Loss and Other
Comprehensive Income
Rental and services income
1,045
Consolidated
2015
$'000
2014
$'000
3,087
Property running expenses
285
403
Parent Entity
2015
$'000
2014
$'000
-
-
-
-
d.
Non-current assets pledged as security
Refer to Note 16 for information on non-current assets pledged as security by the parent entity or its
controlled entities.
15.
TRADE AND OTHER PAYABLES
Current
Unsecured
Trade and other creditors
Other payables
Non-Current
Unsecured
Payable to related entities
Payable to controlled entities
Consolidated
2015
$'000
2014
$'000
Parent Entity
2015
$'000
2014
$'000
108
-
108
939
235
1,174
1,520
13,236
-
-
1,520
13,236
24
-
24
-
214
214
-
-
-
-
-
-
Page | 53
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
16.
FINANCIAL LIABILITIES
Current
Secured
Lease and hire purchase liabilities
Bank loans
Total current
Non-Current
Secured
Lease and hire purchase liabilities
Bank loans
Total non-current
Security for borrowings
Consolidated
2015
$’000
2014
$’000
Parent Entity
2015
$’000
2014
$’000
-
-
-
358
1,027
1,385
-
5,818
5,818
594
20,231
20,825
-
-
-
-
-
-
-
-
-
-
-
-
Bank loan is secured by first mortgages over the Group’s investment properties and fixed and floating
charges over assets of the Group. The loans are repayable in 2018. The rate of interest paid is a variable
rate of 4.75% (2014: 6.14%).
The facilities are subject to an annual review and compliance of financial covenants.
Assets pledged as security
The carrying amounts of non-current assets pledged as security are:
Investment Property
Land and buildings
Plant and equipment
Consolidated
2015
$’000
2014
$’000
Parent Entity
2015
$’000
2014
$’000
10,554
-
-
10,554
32,489
900
1,992
35,381
-
-
-
-
-
-
-
-
The fair value of borrowings is equivalent to the carrying amounts of loans and lease and hire purchase
liabilities.
Risk exposure
Information about the Group’s exposure to interest rate changes is provided in Note 3.
Page | 54
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
17.
EMPLOYEE BENEFITS PROVISION
Employee leave entitlements
1
420
1
-
Consolidated
2015
$'000
2014
$'000
Parent Entity
2015
$'000
2014
$'000
18. OTHER LIABILITIES
Current
Income received in advance
Accrued payable
Non-Current
Income received in advance
Consolidated
2015
$'000
2014
$'000
Parent Entity
2015
$'000
2014
$'000
-
-
-
-
-
49
288
337
3,409
3,409
-
-
-
-
-
-
30
30
-
-
Income received in advance represents income received up front for the user using the car park. Income is
allocated to the Statement of Profit or Loss and Other Comprehensive Income on equal apportionment
basis over the term of the agreements.
19.
PROVISIONS
Non-Current
Restoration provision
Employee leave entitlements
20.
ISSUED CAPITAL
Share capital
Ordinary shares
a. Movement during the period
Balance at beginning of the period
Share Issued
Share issuing cost
Balance at the end of the period
Consolidated
2015
$'000
2014
$'000
Parent Entity
2015
$'000
2014
$'000
-
3
3
50
338
388
-
3
3
-
-
-
Consolidated and
Parent Entity
2015
Shares
Number
2014
Shares
Number
Consolidated and
Parent Entity
2015
2014
$’000
$’000
260,316,865 258,546,022
52,110
52,069
258,546,022 257,821,022
725,000
-
260,316,865 258,546,022
1,770,843
-
52,069
43
(2)
52,110
52,040
29
-
52,069
Page | 55
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
20
ISSUED CAPITAL CONTINUED
.
b.
.
Terms and conditions
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the
parent entity in proportion to the number of and amounts paid on the shares held. On a show of
hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one
vote, and upon a poll each share is entitled to one vote.
c. Options
There are no unissued ordinary shares of the Company under option at the date of this report.
d. Performance Options
No options were granted and issued during this year.
21 RESERVES AND ACCUMULATED LOSSES
a.
Reserves
Consolidated
2015
$’000
2014
$’000
Parent Entity
2015
$’000
2014
$’000
Asset revaluation reserve
Capital reserve
Foreign currency translation reserve
Movements in reserves
Asset revaluation reserve
Balance at start of period
Business combination movement
Balance at the end of period
Capital Profits Reserve
Balance at start of period
Business combination movement
Balance at the end of period
1,141
5,751
(1,266)
5,626
1,141
-
1,141
5,751
-
5,751
1,141
5,751
(1,266)
5,626
1,141
-
1,141
5,752
(1)
5,751
Foreign currency translation reserve
Balance at start of period
Currency translation differences
Balance at the end of period
(1,266)
-
(1,266)
(1,266)
-
(1,266)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The asset revaluation reserve records increments and decrements on the revaluation of individual
parcels of land and buildings. The balance standing to the credit of the reserve may be used to satisfy
the distribution of bonus shares to shareholders and is only available for the payment of cash
dividends in limited circumstances as permitted by law, net of capital gains tax payable.
The foreign currency translation reserve is used to record exchange differences on translation of
foreign controlled subsidiaries. The reserve is recognised in the Statement of Profit or Loss and Other
Comprehensive Income when the investment is disposed of.
b.
Accumulated losses
Balance at the beginning of the year
Profit/(loss) for the year
Consolidated
2015
$’000
(49,587)
(5,036)
2014
$’000
(34,528)
(15,059)
Parent Entity
2015
$’000
(44,234)
(2,387)
2014
$’000
(17,951)
(26,283)
Balance at the end of the year
(54,623)
(49,587)
(46,621)
(44,234)
Page | 56
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
22
EARNINGS / (LOSS) PER SHARE
.
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
Profit/(Loss) used in calculating basic and diluted
earnings/(loss) per share
2015
Cents
(1.94)
(1.94)
2015
$’000
(5,036)
2015
Shares
2014
Cents
(5.84)
(5.84)
2014
$’000
(15,059)
2014
Shares
Weighted average number of ordinary shares used as the
denominator in calculating basic earnings per share
259,283,873
257,881,439
Adjustments for calculation of diluted earnings per share
-
-
Weighted average number of ordinary shares used as the
denominator in calculating diluted earnings per share.
259,283,873
257,881,439
23
OPERATING SEGMENTS
.
The Consolidated Entity’s primary reporting format is business segments and its secondary reporting
format is geographical segments.
Business segments
The Consolidated entity is organised into the following divisions by product and service type.
Property investment & development
Development and administration of industrial property in eastern Australia.
Investment services
Equity investment in listed entities and providing corporate finance services.
Exploration and processing of minerals
Processing and distribution of attapulgite, (also known as Fuller’s Earth) which is an industrial clay
material used in the domestic and industrial absorbent, industrial oil refining, agricultural and
horticultural industries. In addition, it is involved in the exploration and development of coal mining
leases.
Geographical segments
All business segments operate principally within Australia.
Accounting policies
Segment revenues and expenses are those directly attributable to the segments and include any joint
revenue and expenses where a reasonable basis of allocation exists. Segment assets include all assets
used by a segment and consist principally of cash, receivables, inventories, intangibles and property,
plant and equipment, net of allowances and accumulated depreciation and amortisation. While most
assets can be directly attributed to individual segments, the carrying amount of certain assets used
jointly by two or more segments is allocated to segments on a reasonable basis. Segment liabilities
consist principally of payables, employee benefits, accrued expenses, provisions and borrowings.
Inter-segment transfers
Segment revenues, expenses and results include transfers between segments. All other intersegment
transfers are priced on an “arm’s-length” basis and are eliminated on consolidation.
Page | 57
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
23. OPERATING SEGMENTS continued
Primary reporting – business segments
Property
investment &
development
Investment
Services
Mineral,
processing &
exploration
Intersegment
eliminations/
unallocated
Consolidated
$’000
$’000
$’000
$’000
$’000
2015
Sales to external
customers
Intersegment sales
Total sales revenue
Other revenue
Total segment revenue
Segment result
Profit/(loss) before
income tax expense
Income tax expense
Net profit/(loss)
Segment assets
Segment liabilities
Acquisition of non-
current assets
Depreciation and
amortisation expense
2014
Sales to external
customers
Intersegment sales
Total sales revenue
Other revenue
Total segment revenue
Segment result
Profit/(loss) before
income tax expense
Income tax expense
Net profit/(loss)
Segment assets
Segment liabilities
Acquisition of non
current assets
Depreciation and
amortisation expense
2,015
161
2,176
-
2,176
898
-
898
10,764
7,422
65
-
3,196
1,914
5,110
-
5,110
2,648
-
2,648
87,849
49,092
20
-
2,223
-
2,223
-
2,223
(556)
-
(556)
-
-
-
144
6,386
-
6,386
-
6,386
(203)
-
(203)
24,620
13,539
519
337
-
(388)
(388)
-
(388)
(6,626)
-
(6,626)
(201)
28
-
-
-
(2,204)
(2,204)
-
(2,204)
-
(1,817)
(1,817)
(76,649)
(96,499)
-
-
4,782
-
4,782
845
5,627
(5,036)
-
(5,036)
10,563
7,450
65
155
13,125
-
13,125
-
13,125
(13,242)
(1,817)
(15,059)
49,282
41,174
545
363
544
227
771
845
1,616
1,248
-
1,248
-
-
-
11
3,543
290
3,833
-
3,833
(15,687)
-
(15,687)
13,462
75,042
6
26
Page | 58
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
24.
CASH FLOW INFORMATION
a.
Reconciliation of net cash provided by/(used in)
from operating activities to profit/(loss)
Consolidated
Parent Entity
2015
$’000
2014
$’000
2015
$’000
2014
$’000
(5,036)
2,434
6,626
154
820
(15,059)
(2,141)
-
363
12,265
(2,387)
(2,892)
8,459
-
-
(26,283)
(141)
-
-
6,600
-
(371)
-
-
(6,273)
7,415
(3,451)
19,810
(849)
2,197
(382)
1,191
213
(65)
(1,081)
-
-
(958)
-
(490)
4
-
2
10
-
-
-
-
(1)
-
-
-
(795)
1,768
(255)
(15)
Profit/(Loss) for the year
Gain on disposal of financial assets
Demerger
Depreciation and amortisation
Provision for doubtful debt
Change in fair value of investment
properties
Change in fair value of financial
assets
Change in operating assets and
liabilities:
(Increase)/decrease in trade and
other receivables
(Increase)/decrease in inventories
(Increase)/decrease in other current
assets
Increase/(decrease) in trade and
other creditors
(Increase) in deferred tax assets
Increase in deferred tax liabilities
Net cash provided by/(used in)
operating activities
b.
Significant non-cash transactions
No other significant non-cash transactions occurred during the year.
Page | 59
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
25.
CONTROLLED ENTITIES
Name of entity
Hudson Imports Pty Limited*
Hudson Marketing Pty Limited*
Hudson Pacific Group Limited*
Raffles Equities Limited*
Hudson Property Trust*
Bundaberg Coal Pty Ltd*
HSC Property Pty Limited*
Hudson Underwriting Limited*
Hudson Corporate Limited*
Hudson Asset Management Pty Limited*
Hudson Capital Corporation Pty Limited*
Sorbent Minerals Pty Ltd*
Ecofix Pty Ltd*
HTH Holdings Pty Limited*
EPC 1262 Pty Ltd*
Hudson Property Group Limited
Class of
Share
Equity Holding
Country of
formation or
incorporation
2015
%
0
0
0
0
0
0
0
0
0
0
0
0
0
100
0
100
2014
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
*Entities were transferred to Hudson Pacific Group Limited under the process of demerger and
distribution in specie.
26.
CONTINGENT ASSETS AND LIABILITIES
Guarantees
Cross guarantees under Class Order 98/1418 by Hudson Investment Group Limited, Hudson Property
Group Limited and its wholly owned controlled entities exist in respect of loans.
Deed Of Cross Guarantee
As at 31 December 2015, Hudson Investment Group Limited and HTH Holdings Pty Ltd entered a Deed
of Cross Guarantee under which each Company guarantees the debts of the others.
By entering into the deed, the wholly-owned entities have been relieved from the requirement to
prepare a financial report and Directors’ report under Class Order 98/1418 (as amended by Class
Order 98/2017) issued by the Australian Securities & Investments Commission.
The above companies represent a ‘Closed Group’ for the purposes of the Class Order, and as there
are no other parties to the Deed of Cross Guarantee that are controlled by Hudson Investment Group
Limited, they also represent the ‘Extended Closed Group’. These consolidated financial statements
for the year ended 31 December 2015 represent those of the “Closed Group”.
Page | 60
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
26
CONTINGENT ASSETS AND LIABILITIES continued
Litigation
On 9 April 2015 the Company’s application for special leave in its action against Atanaskovic Hartnell,
the company’s former solicitors was refused. A settlement has been reached in relation to legal costs.
Hudson Pacific Group Limited will pay the costs under an agreed indemnity.
27
COMMITMENTS
Lease commitments
Non-cancellable operating leases - future
minimum lease payments
Within one year
Later than one year but not later than 5 years
Later than 5 years
Finance lease - non-cancellable
Within one year
Later than one year but not later than 5 years
Later than 5 years
Total future minimum lease payments
Total future finance charges
Lease liabilities
Lease liabilities are represented in the
financial statements as follows:
Current
Non-current
Consolidated
2015
$’000
2014
$’000
Parent Entity
2015
$’000
2014
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
11
34
-
45
358
594
-
952
(120)
832
358
594
952
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The Group leases various copiers under non-cancellable operating leases expiring between 1 and 3
years. Nor do they include commitments for any renewal options on leases. Lease conditions do not
impose any restrictions on the ability of Hudson Investment Group Limited and its controlled entities
from borrowing further funds or paying dividends. The operating lease was assigned during the year.
The Group leases machinery at a carrying value of Nil (2014: $952,000) by way of finance leases
expiring within 4 years. The Group has the option to acquire the machinery on expiry at a nominal
value. There are no contingent rentals as part of finance lease arrangements and no restrictions on
the ability of Hudson Investment Group Limited and its controlled entities from borrowing further
funds (but not able to borrow for machine purchases) or paying dividends.
Page | 61
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
28.
EVENTS OCCURRING AFTER BALANCE DATE
Since balance date the Board of Directors instructed an Independent Valuer, JLL (Jones Lang LaSalle
Advisory Services Pty Ltd) to provide a valuation for the Warnervale Property.
JLL have now provided a complete and comprehensive market valuation to the Board. The result is a
valuation of $12.75 million, an increase of $2.2 million.
The increased valuation will be acknowledged in the 2016 financial accounts.
At the date of this report there are no other matters or circumstances, other than noted above, which
have arisen since 31 December 2015 that have significantly affected or may significantly affect:
The operations, in financial years subsequent to 31 December 2015 of the Group;
The results of those operations; or
The state of affairs in financial years subsequent to 31 December 2015 of the Group.
29.
SUPERANNUATION AND SHARE OWNERSHIP PLANS
Superannuation
Entities in the Group contribute to an accumulation fund, administered by a third party, to which all full
time and certain part time employees are invited to join.
Share ownership plans
Share ownership plans operated by the parent company and its controlled entities are detailed below.
Hudson Investment Group Employee Share Plan (ESP)
All employees of the Company and its controlled entities may participate in the ESP. Under the ESP,
monies are advanced to the participants to enable them to purchase ordinary shares of the Company
on the market. The non-recourse loans to participants bear interest at an amount equivalent to the
dividend paid on the shares and are repayable no later than ten years from the date of the loan.
Participants terminating their employment prior to the expiry date must sell their shares to the
Company at their original purchase price. Participants have the option of selling back shares in
accordance with certain conditions under the ESP rules. There are no limits to the amounts that might
be advanced under the ESP.
The net amount advanced under the plan during the year amounted to $Nil (2014: $Nil). The aggregate
number of shares purchased under the ESP by employees is Nil (2014: 59,473,000). At year- end, the
total non-recourse loans outstanding are Nil (2014: $7,887,856). The full amount of non-recourse loans
is recognised as an expense in previous years. All employee loans were settled during the reporting
year.
30.
KEY MANAGEMENT PERSONNEL DISCLOSURES
a.
Directors
The following persons were Directors of Hudson Investment Group Limited during the financial year
unless otherwise stated:
Executive Director
Managing Director
Non-Executive Director
John W Farey
Alan P Beasley
John J Foley
Dato Mohd Zaid Ibrahim Non-Executive Chairman appointed 1 Jun 2015, retired 7 Dec 2015
Tan Sri Ibrahim Non-Executive Director appointed 1 Jun 2015, retired 7 Dec 2015
John Dawkins Non-Executive Director appointed 1 Jun 2015, retired 7 Dec 2015
Juliana Tan
appointed 1 Feb 2002
appointed 19 Jan 2015
appointed 6 Aug 2014
Executive Director
retired 19 Jan 2015
b.
Other key management personnel
The following persons were key management personnel of Hudson Investment Group Limited
during the financial year:
CEO Hudson Pacific Group Limited
Consultant
Vincent Tan
Luisa Tan
Venkata Kambla Director of Ecofix Pty Ltd
Julian Rockett
Francis Choy
Company Secretary and In-house Counsel appointed 27 July 2012
Chief Financial Officer
appointed 1 February 2002
Page | 62
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
30.
KEY MANAGEMENT PERSONNEL DISCLOSURES continued
c.
Compensation of Directors and other key management personnel
Short Term Employee Benefits
Salary and
other fees
Travelling
Allowance
Post-Employment
Benefits
Superannuation
Long Term
Benefits
Long Service
Leave
Total
$
$
$
$
$
Consolidated
2015
Directors
Dato Mohd Zaid
Ibrahim***
John W Farey
Alan P Beasley*
Tan Sri Ibrahim
Menudin***
John Dawkins***
John J Foley*
Juliana Tan**
Director - Total
KMP
Vincent Tan
Luisa Tan
Venkata Kambala
Julian Rockett
Francis Choy
KMP - Total
Consolidated
2014
Directors
John W Farey
Alan P Beasley*
John J Foley*
Juliana Tan**
Peter J Meers**
Director - Total
KMP
Vincent Tan
Venkata Kambala
Julian Rockett
Francis Choy
KMP - Total
-
36,667
125,000
-
15,000
176,667
80,000
50,000
50,000
25,000
75,148
280,148
-
3,600
5,400
-
-
9,000
3,600
-
3,600
-
-
7,200
-
10,683
-
-
1,425
12,108
5,700
-
4,750
2,375
7,600
20,425
-
7,806
-
-
248
8,054
992
-
952
417
1,324
3,685
-
58,756
130,400
-
16,673
205,829
90,292
50,000
59,302
27,792
84,072
311,458
$
$
$
$
$
88,399
-
-
210,000
-
298,399
240,000
150,665
73,115
250,000
713,780
10,800
-
-
-
-
10,800
2,700
10,800
-
-
13,500
31,913
-
-
17,334
-
49,247
16,875
14,116
6,852
23,883
61,726
1,092
-
-
3,497
-
4,589
2,977
1,543
1,514
8,781
14,815
132,204
-
-
230,831
-
363,035
262,552
177,124
81,481
282,664
803,821
* John J Foley was appointed on 6 August 2014, Alan P Beasley was appointed on 19 January 2015
** Peter J Meers retired on 26 August 2014, Juliana Tan retired on 19 January 2015
*** Dato Mohd Zaid Ibrahim, Tan Sri Ibrahim Menudin and John Dawkins appointed on 1 June 2015 and retired on 7
December 2015
The amounts reported represent the total remuneration paid by entities in the Group in relation to managing
the affairs of all the entities within the Group. The remuneration has not been allocated between the individual
entities within the Group as this would not be practicable.
There is no performance conditions related to any of the above payments.
There is no other element of Directors and other Key Management Personnel remuneration.
Page | 63
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
30. KEY MANAGEMENT PERSONNEL DISCLOSOURES continued
d.
Shareholdings and option holdings of key management personnel
Shares held in Hudson Investment Group Limited
The numbers of shares in the Company held during the financial year by each director of Hudson
Investment Group Limited and other key management personnel of the Group, including their
personally related parties, are set out below. There were no shares granted during the reporting
period as compensation.
Direct and indirect interest in ordinary shares
Ordinary Shares - Direct Interest
Balance at start
of year
shares
Changes during
the year
shares
Balance at end
of year
shares
2015
Directors
John W Farey
Alan P Beasley
John J Foley
Key Management Personnel
Vincent Tan
Francis Choy
2014
Directors
John W Farey
Alan P Beasley
John J Foley
Juliana Tan
Key Management Personnel
Vincent Tan
Ordinary Shares - Indirect Interest
2015
Directors
John W Farey
Alan P Beasley
John J Foley
Key Management Personnel
Vincent Tan
2014
Directors
John W Farey
Alan P Beasley
John J Foley
Juliana Tan
6,728,032
-
-
264,362
11,866,084
6,738,032
-
-
-
(6,718,032)
1,000,000
-
-
12,800,000
(11,866,084)
10,000
1,000,000
-
264,362
12,800,000
-
-
-
-
6,738,032
-
-
-
4,294,362
(4,030,000)
264,362
Balance at start
of year
shares
Changes during
the year
shares
Balance at end
of year
shares
-
-
-
30,000
-
-
-
-
-
-
-
4,294,362
-
-
-
(4,030,000)
-
-
-
30,000
-
-
-
264,362
Key Management Personnel
Vincent Tan
30,000
-
30,000
No options over unissued shares were granted during the year and no options have been granted in
the period since the end of the financial year and to the date of this report. At the date of this
report there were no unissued shares in the capital of the Company under option.
Page | 64
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
30. KEY MANAGEMENT PERSONNEL DISCLOSURES continued
e.
Loans to key management personnel
Details of loans made to Directors and other Key Management Personnel (KMP) of Hudson Investment
Group Limited are set out below:
(i). Aggregates for key management personnel
Consolidated
and Parent
Entity
Balance at
the start
of the year
Advance/
(Repayments)
/ (Transfers)
Interest
payable
for the
year
Balance at
the end of
the year
Number in
Group at
end of year
$
$
$
$
Additional
interest
otherwise
payable
$
2015
2014
5,313,188
(5,313,188)
5,313,188
-
-
-
-
5,313,188
-
4
318,790
318,790
(ii). Details of individuals with loans above $100,000 during the year are set out below.
Balance at
the start
of the year
Advance/
(Repayment)
/ (Transfer)
Interest
payable
for the
year
Balance as
at the end
of the
year
Highest
indebtedness
during the
year
Additional
interest
otherwise
payable*
$
$
$
$
$
$
1,560,459
(1,560,459)
900,000
1,184,988
(900,000)
(1,184,988)
1,667,741
(1,667,741)
5,313,188
(5,313,188)
1,560,459
900,000
1,184,988
1,667,741
5,313,188
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,560,459
93,627
900,000
1,184,988
54,000
71,099
1,667,741
100,064
5,313,188
318,790
1,560,459
1,560,459
93,627
900,000
1,184,988
900,000
1,184,988
54,000
71,099
1,667,741
1,667,741
100,064
5,313,188
5,313,188
318,790
2015
Directors
John W Farey
(ESP)
KMP
Vincent Tan (ESP)
Francis Choy (ESP)
David L Hughes
(ESP)
2014
Directors
John W Farey
(ESP)
KMP
Vincent Tan (ESP)
Francis Choy (ESP)
David L Hughes
(ESP)
* Market interest rate 6% (2014: 6%)
This represents the difference between interest charged at the latter and interest paid.
Terms and conditions of loans
All non-recourse loans relate to the individual’s participation in the Company’s ESP. Interest is paid only
from dividends paid by the Company during the year. Loans are secured against the Employee Share
Option Plan shares only. Loans are repayable should employees leave the Company. If an employee
leave the Company, all ESP plan shares will be returned to the Company within a specified period. None
were written down during the year. Full provision was made at the reporting date.
Page | 65
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
31.
RELATED PARTY DISCLOSURES
a.
Parent entities
The parent entity and ultimate Australian parent entity is Hudson Investment Group Limited (the
Company).
b.
Subsidiaries
Interests in subsidiaries are disclosed in Note 25.
Key management personnel compensation
c.
Key management personnel compensation information is disclosed in Note 30.
d.
Transactions with related parties
The following transactions occurred with related parties during the year
Consolidated
Parent Entity
2015
$
2014
$
2015
$
2014
$
Corporate services fee received
-
-
From Hudson Resources Limited
From RafflesCo Limited
Rental Income
-
-
From Hudson Resources Limited
From Hudson Capital Corporation Pty Ltd
408,000
105,000
408,000
-
134,408
111,244
150,000
120,000
Rental Expenses
-
Paid to Hudson Resources Limited
423,650
333,734
Purchase of Goods
-
From Hudson Resources Limited
325,781
203,226
-
-
-
-
-
-
-
-
-
-
-
-
Corporate services fees received
Consolidated group only
Hudson Corporate Limited (HCL) received a corporate services fee from Hudson Resources Limited of
$408,000 (2014: $408,000) as payment of recoveries for office administration and running expenses
incurred in HCL.
HCL received a corporate services fee from RafflesCo Limited of $105,000 (2014: Nil) as payment of
recoveries for office administration and running expenses incurred in HCL.
Rental income
Consolidated group only
Hudson Marketing Pty Ltd (HMPL) received rental income from Hudson Resources Limited
$134,408(2014: $111,244) for using the storage facilities in Geraldton plant.
Hudson Capital Corporation Pty Limited received rental income from HCL of $150,000 (2014:
$120,000) for using the building name and roof-top signage.
Rental expenses
Consolidated group only
HMPL incurred rental expenses of $423,650 (2014: $333,734) payable to both Hudson Resources
Limited and Hudson Minerals Limited (HML) for leasing the Geraldton property.
Purchase of goods
Consolidated group only
Hudson Marketing Pty Limited (HMPL), a subsidiary of the Company, purchased goods from Hudson
Resources Limited (HRL) incurring expenses of $325,781 (2014: $203,226).
Page | 66
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
Demerger of Hudson Pacific Group Limited
Under the demerger of Hudson Pacific Group Limited (HPGL) in April 2015, the following related
parties received Hudson Pacific Group Limited shares:
Rafflesco Limited
Raffles Nominees Pty Limited (* held on behalf on other parties)
Jt Capital Pty Ltd
Ms Yoke Tow Hong
Pacific Portfolio Investments
Sing Capital Pty Ltd
Ms Rachel Zhi Ting Tan
Hudson Corporate Limited
Ozberg Pty Limited
Union Pacific Investments Pty Ltd
Mr Alan Preston Beasley
HPGL Shares
89,600,000
61,821,378
19,183,362
15,157,648
9,144,208
6,287,858
3,143,000
3,129,688
1,300,000
1,241,999
1,000,000
e.
Outstanding balances
The following balances are outstanding at the reporting date in relation to transaction with related
parties:
Payable
Related Entities
-
-
Controlled Entities
Hudson Resources Limited
Hudson Pacific Group Limited
Receivable
Related Entities
-
Controlled Entities
Provision for doubtful debts
Raffles Capital Limited
Consolidated
Parent Entity
2015
$
2014
$
2015
$
2014
$
- 13,235,945
-
-
1,520,629
-
-
-
213,898
-
-
-
-
-
-
1,227,107
-
-
-
-
-
-
20,630,684
(20,600,000)
Payable – related entities
Hudson Resources Limited holds a $10.0 million (2014:$13 million) non-cumulative preference share
of Hudson Pacific Group Limited. Hudson Pacific Group Limited was de-merged during the year.
Hudson Resources further advanced a $Nil (2014:$235,945) interest bearing loan to Hudson
Corporate Ltd under one loan funding agreement.
Receivable – related entities
An interest bearing secured loan of $Nil (2014: $1.22 million) was advanced to Raffles Capital Limited
(ASX: RAF). The loan was secured by shares. None were written down during the year.
Provisions for doubtful debts have been raised in relation to outstanding non-interest bearing
balances from controlled entities amounting to $Nil (2014: $20,600,000). No expense has been
recognised in respect of bad or doubtful debts due from related parties.
f.
Guarantees
No guarantees were given or received from related parties during the year.
g.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market interest rates,
except that there are no fixed terms or repayment of loans between the parties.
Page | 67
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
32.
REMUNERATION OF AUDITORS
Audit services:
Amounts paid or payable to auditors for
audit and review of the financial report for
the entity or any entity in the Group
Consolidated
Parent Entity
2015
$
2014
$
2015
$
2014
$
Audit and review services fees
26,290
25,750
26,290
25,750
Taxation and other advisory services:
Amounts paid or payable to the Auditor for
non-audit taxation services for the entity or
any entity in the Group for review and
lodgement of the income tax return
Taxation services
Advisory services
Total
1,295
-
1,150
-
1,295
-
1,150
-
27,585
26,900
27,585
26,900
Page | 68
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
33. DISCONTINUED OPERATIONS
Hudson Investment Group Limited demerged its investment and mineral business in May 2015. That business
is now owned and operated by a separate and independent holding company, Hudson Pacific Group
Limited.
A Scheme of arrangement for the demerger of Hudson Pacific Group Limited, and steps to implement the
demerger were approved by Hudson Investment Group Limited shareholders at the scheme and general
meetings held on 23 April 2015. Following the successful outcome of this shareholder vote and the
satisfaction of other conditions Hudson Pacific Group is presented in discontinued operations.
Accounting for demerger transactions is addressed in Interpretation 17: Distributions of Non-cash Assets
to Owners. In accordance with this interpretation and AASB 137: Provisions, Contingent Liabilities and
Contingent Assets, the demerger distributions have been measured at the fair value of Hudson Pacific
Group Limited shares. A full list of entities demerged and further information on the accounting for
demerger transactions are set out in the Notice of General Meeting prepared for the scheme meeting
held in April 2015.
Financial information for Hudson Pacific Group for the period up to the date of demerger and other
discontinued operations is summarised below:
a)
Statement of Profit or Loss and Other Comprehensive Income and Cash Flow Information
2015
2014
Sales revenue
Other income
Operating expenses
Total operating profit/(loss)
Profit/(loss) on demerger
Profit/(loss) before tax
Tax expense
Profit for the year from discontinued operations
Net cash (outflow)/inflow from operating activities
Net cash inflow/(outflow) from investing activities
Net cash outflow from financing activities
Net increase in cash and cash equivalents
b)
Loss On Demerger
Fair value of Hudson Pacific Group Limited Limited
shares
Less: carrying value of net assets demerged
Loss on demerger
$’000
12,228
(4,067)
(22,555)
(14,394)
-
(14,394)
-
(14,394)
1,357
(3,219)
1,049
(813)
$’000
4,051
(2,392)
(2,765)
(1,106)
(6,626)
(7,732)
-
(7,732)
(1,340)
1,161
(127)
(306)
2015
$’000
23,459
(30,085)
(6,626)
Page | 69
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
c)
Statement of Financial Position Information
The carrying amounts of assets and liabilities for
discontinued operations were:
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Investments
Property, plant and equipment
Other assets
Total assets
Liabilities
Trade and other payables
Borrowings
Tax payable
Provisions
Other liabilities
Total liabilities
Net assets
Demerger
2015
2014
$’000
-
8,127
2,021
6,744
24,809
300
42,001
14,591
16,208
-
2,236
3,438
36,473
5,528
$’000
171
27,463
-
-
32,489
1,990
62,113
14,755
20,060
-
99
3,410
38,324
23,789
Page | 70
For personal use only
Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
DECLARATION BY DIRECTORS
The directors of the Company declare that:
1.
The financial statements, comprising the statement of comprehensive income, statement of financial
position, statement of cash flows, statement of changes in equity, accompanying notes, are in
accordance with the Corporations Act 2001 and:
(a) comply with Accounting Standards which as stated in accounting policy note 1 to the financial
statements, constitutes explicit and unreserved compliance with international Financial Reporting
Standards (IFRS); and
(b) give a true and fair view of the financial position as at 31 December 2015 and of the performance for
the year ended on that date of the Company and the Group.
2.
3.
4.
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.
The remuneration disclosures included on pages 11 to 13 of the Directors’ Report (as part of audited
Remuneration Report), for the year ended 31 December 2015, comply with section 300A of the
Corporations Act 2001.
The directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer
required by section 295A.
The entities identified in Note 26 are parties to the deed of cross guarantee under which each company
guarantees the debts of the others. At the date of this declaration there are reasonable grounds to believe that
the companies which are parties to this deed of cross guarantee will as a Group be able to meet any obligations
or liabilities to which they are, or may become, subject to, by virtue of the deed of cross guarantee described in
Note 26.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on
behalf of the directors by:
John W Farey
Executive Director
Sydney
31 March 2016
Alan Beasley
Managing Director
Page | 71
For personal use only
For personal use only For personal use only For personal use only Hudson Investment Group Limited ACN 004 683 729
Annual Report 31 December 2015
SHAREHOLDER INFORMATION
As at 29 February 2016
A. Substantial Holders
Those shareholders who have lodged notice advising substantial shareholding under the Corporations Act
2001 are as follows:
Shareholder
1.
Rafflesco Limited
B. Distribution of Equity Securities
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and above
Rounding
No. of Shares
% held
89,600,000
34.42
Total Holders
125
96
48
125
55
Units
54,133
254,385
405,408
4,902,766
254,700,173
% of Issued
Capital
0.02
0.10
0.16
1.88
97.84
0.00
100.00
Total
449
260,316,865
C. Unmarketable Parcels
Minimum $500.00 parcel at $0.0290 per unit
17,242
Minimum Parcel size
Holders
287
Units
959,010
D. Twenty Largest Shareholders
The names of the twenty largest holders of quotes equity securities aggregated are listed below:
Rank
Name
Units
% of Units
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Rafflesco Limited
Raffles Nominees Pty Limited (* held on behalf on other parties)
Citicorp Nominees Pty Limited
Jt Capital Pty Ltd
Ms Yoke Tow Hong
Pacific Portfolio Investments
Sing Capital Pty Ltd
Ms Rachel Zhi Ting Tan
Hudson Corporate Limited
Mr Trevor Neil Hay
Ozberg Pty Limited
Union Pacific Investments Pty Ltd
Mrs Choon Piang Lee
Mr Alan Preston Beasley
Mr Sat Pal Khattar
Ms Yee Kein Teh
Ms Mao Ying Zhang
Mr Cunxiang Wang
Mr John Stephen Calvert
Mr Sng You Thiam
Totals: Top 20 holders of FULLY PAID SHARES
Total Remaining Holders Balance
89,600,000
61,821,378
30,163,600
19,183,362
15,157,648
9,144,208
6,287,858
3,143,000
3,129,688
1,682,541
1,300,000
1,241,999
1,020,000
1,000,000
1,000,000
1,000,000
793,204
720,186
522,576
500,000
248,752,175
11,564,690
269,316,865
34.42
23.75
11.59
7.37
5.82
3.51
2.55
1.21
1.20
0.65
0.50
0.48
0.39
0.38
0.38
0.38
0.30
0.28
0.20
0.19
95.56
4.44
100.00
Page | 75
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