Invacare Annual Report 2004

FY2004 Annual Report · Invacare
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ANNUAL REPORT 2004

 
 
 
 
 
InvoCare Locations

InvoCare Funeral Homes

Twin Towns Funerals
  Tweed Heads

William Riley Funerals
  Lismore

Sydney
Allan Drew Funerals 
  Castle Hill

Economy Funerals
  All areas

Guardian Funeral 
providers
A F Anderson Funerals 
  Granville

Allen Matthews Funerals
  Cremorne 
  North Ryde

Bruce Maurer Funerals 
  Crows Nest

Butler Funerals 
  Camden 
  Campbelltown

Dignified Funerals 
  Burwood 
  Five Dock

Guardian Funerals 
  Blacktown

J & C Hardy Funerals 
  Hurstville
  Rockdale

J.W. Chandler Funerals 

Richmond

  Windsor

Labor Funerals 
  Bankstown

Macarthur District 
Funerals
  Leppington

Metcalfe & Morris Funerals
  Parramatta

Metropolitan Funeral 
Homes
  Bankstown 
  Rockdale

Parkway Funerals 
  Dee Why

Sydney Funeral Services
  Minchinbury

ACT
Guardian Funeral 
providers

Tobin Brothers Funerals 
(ACT)
  Belconnen
  Kingston
  Queanbeyan

White Lady Funerals
  Belconnen
  Kingston

NSW
Central Coast
Simplicity Funerals 
  Bateau Bay
  Erina
  Toukley East
  Woy Woy

White Lady Funerals
  Wyoming

Illawarra

Economy Funerals
  All areas

Guardian Funeral 
providers

Hansen & Cole Funerals
  Bulli
  Kembla Grange
  Wollongong

Newcastle & Hunter
David Lloyd Funerals –
incorporating Beresfield 
and Parsons Funerals
  Adamstown
  Belmont
  Beresfield

Economy Funerals
  All areas

White Lady Funerals
  Charlestown
  Mayfield

North Coast
Casino Funerals 
  Casino

Kevin Geaghan Funerals
  Ballina

Simplicity Funerals 
  Tweed Heads

InvoCare Cemeteries and Crematoria

NSW
Castlebrook  
Memorial Park 
  Rouse Hill 

Forest Lawn  
Memorial Park 
  Leppington

Lake Macquarie 
Memorial Park
  Ryhope

Lakeside Memorial Park
  Dapto

Lung Po Shan 
Information Centre 
  Haymarket

Newcastle  
Memorial Park
  Beresfield

Northern Suburbs 
Memorial Gardens  
and Crematorium
  North Ryde

Simplicity Funerals 
  Balgowlah  
   Chatswood
  Liverpool
  Mascot
  Miranda
  Newtown
  Paddington
  Randwick
  Smithfield
  Warrawee

Universal Chung Wah 
Funerals
  Fairfield

White Lady Funerals 
  Bankstown 
  Bondi Junction 
  Eastwood
  Manly
  Mosman
  Narrabeen
  Pennant Hills
  Penrith
  Roseville
  Sutherland

QLD
George Hartnett 
Funerals
  Cleveland
  Holland Park 
  Redcliffe
  Sandgate
  Wynnum

Cannon & Cripps Funerals 
– A George Hartnett  
Funeral Home
  Kelvin Grove

J & H Reed | O. Bottcher 
& Son Funerals

Ipswich

Simplicity Funerals 
  Buranda
  Kedron
  Miami
  Parkwood

Somerville Funerals
  Nerang
  Southport

White Lady Funerals
  Chelmer
  Gold Coast
  Kelvin Grove
  Tanah Merah

Value Funerals
  All areas

Pinegrove  
Memorial Park 
  Eastern Creek

Po Fook Shan 
Information Centre
  Cabramatta

Rookwood Memorial 
Gardens and 
Crematorium
  Rookwood

Provinciale Servizio 
Funebre
  Coburg   

Simplicity Funerals
  Carnegie
  Frankston
  Reservoir
  Sunshine

Value Funerals
  All areas

White Lady Funerals
  Caulfield South
  Heidelberg
  South Melbourne

WA
Mareena Purslowe  
& Associates Funerals
  Subiaco
  Willetton

Oakwood Funeral Home
  Booragoon
  Rockingham

Purslowe Funerals 
  Midland
  North Perth
  Northam
  South Fremantle
  Victoria Park
  Wangara

Simplicity Funerals
  Kelmscott
  Osborne Park

Value Funerals
  All areas

SA
Blackwell Funerals
  Morphett Vale
  Payneham
  Prospect
  Torrensville

Pengelley & Knabe 
Funerals – Member of the 
Blackwell Funerals Group
  Glenside 

Simplicity Funerals 
  Black Forest 
  Enfield
  Victor Harbor

Value Funerals
  All areas

White Lady Funerals
  Hillcrest
  Plympton

VIC
Le Pine Funerals
  Box Hill
  Camberwell
  Dandenong
  Eltham
  Glen Waverley
  Greensborough

Ivanhoe
  Kew East 
  Mordialloc
  Oakleigh
  St Kilda
  Thornbury

Le Pine Heritage 
Funerals
  Croydon
  Ferntree Gully
  Healesville
  Lilydale

Le Pine Asian Funerals
  Glen Waverley

Mulqueen Funerals 
  Coburg
  Epping 
  Greensborough

QLD
Albany Creek  
Memorial Park 
  Bridgeman Downs 

Allambe Memorial Park
  Nerang

Mt Thompson  
Memorial Gardens  
  Holland Park

Tweed Heads  
Memorial Gardens 
  Tweed Heads South

69

For more details visit www.invocare.com.au

.

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Contents
Financial Highlights  2
Chairman’s Message  3
Simplicity Funerals  4
White Lady Funerals  6
Traditional Funeral Brands  8
Cemeteries and Crematoria  10
CEO Review  12
Directors’ and Financial Reports  17
Shareholder Information  66
Corporate Information  68
InvoCare Locations  69

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T

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
InvoCare Annual Report 2004

commemorating life

The most important component of 
everything we do is meeting the personal 
needs of the family.  

We advise the families who we assist of the options available to them 
to make the funeral and memorial everything they would like it to be. 
That means showing our willingness to cater for traditional through 
to contemporary ceremonies, being mindful of cultural requirements, 
religious beliefs and special requests.

InvoCare’s focus is on excellence in service delivery to allow families 
the opportunity to commemorate a life in the manner they choose.  

1

InvoCare Annual Report 2004

Financial Highlights

Year ended 31 December 2004

• Net Proﬁt after tax up 47% to $17.1 million

• Sales Revenue (Operating) up 6% to $148.3 million

• Operating EBITDA up 10% to $44.8 million

• EBITDA Margin up 5% to 30.2%

• Earnings Per Share up 51% to 18.1 cents

RESULTS AT A GLANCE

$ million unless stated

Sales Revenue (Operating) 

EBITDA (Operating) 

Proﬁt from sales of ﬁxed assets 

Proﬁt after tax before Goodwill Amortisation  

Net Proﬁt after Tax  

Gross Assets 

Net Assets 

2004 

148.3 

44.8 

1.7 

19.6 

17.1 

279.0 

75.7 

2003 

140.3 

40.5 

2.7 

14.1 

11.6 

291.1 

64.1 

Earnings per Share (Basic)  

18.1 cents 

12.0 cents 

Prepaid Funerals Funds (in trust)  

198.6 

169.5 

Funerals Homes (number) 

Cemeteries & Crematoria (number) 

Employees (Full Time Equivalent numbers)  

123 

12 

809 

124

12

806 

% Change 

+  6

+  10

-  37

+  39

+  47

-  4

+  18

+  51

+  17

2

 
 
 
 
  
 
  
  
  
• Sales Revenue (Operating) up 6% to $148.3 million

InvoCare Annual Report 2004

Chairman’s Message

One of the most pleasing aspects of InvoCare’s 

We were pleased to report that during the year our 

performance for the year ended 31 December 

debt has been reduced by $23.5 million or 15%, which 

2004 was exceeding the 2004 Prospectus forecast 

is $9.0 million ahead of our Prospectus forecast.

performance in terms of revenues and proﬁt after tax 

even though the number of deaths was in line with  

that forecast.

The proﬁt after tax for the year exceeded the 

Prospectus forecast by 37%, or 26% if you exclude 

the asset sale gains, based on a revenue increase 

of 3%. EPS growth was 36% above the Prospectus 

forecast while there were also improvements in free 

In January we welcomed Roger Penman to the Board 

as a replacement for John Murphy who resigned 

from the Board on 28 February 2005. Mr Penman 

is a Principal in the national accounting ﬁrm WHK 

Greenwoods and a specialist in taxation, advisory 

and business services. I convey to Mr Murphy 

the appreciation of the Board for his invaluable 

contribution over the past four years.

cash ﬂow and debt repayments.

We are strongly committed to appropriate corporate 

These results have enabled the Board to maintain 

its policy of a payout ratio of 75% of after tax proﬁts 

adjusted for amortisation and declare a fully franked 

ﬁnal dividend of 9.0 cents per share following 

the interim dividend of 6.4 cents per share. The 

total dividend for the year of 15.4 cents per share 

represents an increase of 20% over the Prospectus 

forecast.

As you will read in Richard Davis’ CEO Review, 

InvoCare has made solid progress during 2004 and 

remains well positioned for continuing growth with 

the number of deaths expected to increase over 

time. Growth is also likely to come from increased 

market share as the Company continues to develop 

and promote its major brands, pursue acquisition 

opportunities as well as its strategies to increase 

cemeteries and crematoria memorialisation. The 

potential to increase operating margins due to the 

relatively ﬁxed nature of many costs, along with the 

Company’s ability to generate cash, should lead to an 

enhancement of shareholder value. 

governance controls and continue to embrace the 

ASX Corporate Governance Guidelines and CLERP 9 

reforms. Our Audit Committee, Risk Committee and 

Remuneration Committee have functioned effectively 

during the year. Preparations for adoption of the new 

AASB standards which are the Australian equivalent 

to the International Financial Reporting Standards and 

will apply in the 2005 year, are well in hand.

On behalf of the Board and all the Shareholders, 

I congratulate and thank all the Company’s 

management and employees for their effort and 

contribution in achieving the excellent 2004 result.

Ian Ferrier 
Chairman

3

Simplicity Funerals provide a simple, respectful, digniﬁed 

and affordable service that is both  

practical and ﬂexible.

4

“ When people come to 
a funeral director, they 
are often distressed 
and feel overwhelmed 
by the prospect of 
having to arrange a 
funeral. The satisfaction 
I get is from making 
that process as easy 
as possible.”

 Simon Davidson, 
Simplicity Manager, VIC.

www.simplicityfunerals.com.au

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L

 
 
 
 
 
 
 
 
  
Our aim is provide excellent funeral service to families of 

every race and religion. We are a dedicated team  

of women who offer the assurance of absolute support 

and professional attention with genuine care.  

We are committed to the training of staff in all areas 

of funeral service with the vision of providing the best 

service available in this honourable profession.  

Because our families are our highest priority,  

our mission is to provide this service with honesty,  

care and respect.

6

“ I have worked for White 
Lady for many years 
and everyone who 
sees you in the uniform 
recognises who you 
are and appreciates the 
approach we take  
and the work we do. 
I’m proud of the way 
we lead the industry by 
always adding those 
extra touches to  
make a difference 
to families.” 

   Sharyn Schubert, Regional Manager, SA,  

www.whiteladyfunerals.com.au

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S

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
traditional funeral brands

We have generations of local experience offering 

the highest standard of professional and personal 

service. We will gently guide you through the funeral 

arrangement process. We strive to make each funeral 

reﬂect the life of the individual.

8

“ I am in the unique 
position where both my 
son and I are Regional 
Managers and have 
been a part of the 
industry for many years.  
Every day we have the 
opportunity not just to 
guide families, but to 
assist our local 
communities and 
work closely with 
them.”

   Warwick Hansen,  

Regional Manager, NSW,  

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L

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
cemeteries and crematoria

Our Parks and Gardens provide a sanctuary where 

reﬂections and thoughts can ﬂourish and resonate in a 

tranquil, inviting environment. They are places of natural 

landscaped beauty that provide family and friends with 

a place to go to commemorate and celebrate the lives 

of those who have passed away. They offer a wide 

choice of memorial options designed to reﬂect personal 

aesthetics, meet cultural and religious requirements  

– all within a wide range of budgets. They are restful 

places, where one can just reﬂect.

10

“ We are constantly 
developing our grounds 
to enhance them and 
demonstrate we care. 
Memorials play such 
an important role for 
families in providing a 
focus to reﬂect on a 
loved one’s life. That’s 
why I view our Parks 
and Gardens as so 
much more than a 
traditional cemetery 
or crematorium”

   Kathyn Taylor,  

Regional Manager,  
Family Service, NSW

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InvoCare Annual Report 2004

CEO Review

I am pleased to report that InvoCare has completed a 

During the year the Company reduced its debt by 

successful year with respect to both ﬁnancial results 

15% or $23.5 million to $131.5 million, exceeding its 

and strategic initiatives. The Financial Highlights 

Prospectus debt reduction forecast by 62%. 

on page 2 illustrate the performance across key 

parameters showing the solid growth in revenues and 

the excellent growth in proﬁtability. The results reﬂect 

the Company’s and staff’s commitment to service as 

much as its overall market share position. 

The strong ﬁnancial result enabled the Board to 

declare a ﬁnal fully franked dividend of 9 cents per 

share. The total dividend paid or payable for the year 

amounted to 15.4 cents per share fully franked, a 

20% increase on that forecast in the Prospectus. 

Strategically, we continued our focus on service 

This dividend together with the growth in the share 

levels, major brand awareness improvement, 

price during the year has delivered superior returns  

asset management enhancement, including the 

to shareholders.

performance of the prepaid funds under management, 

and acquisitions. 

FUNERAL HOMES

Sales revenues from our 123 funeral homes was 

FINANCIAL OVERVIEW

$97.1 million – 3% above our forecasts and up from 

For the year ended 31 December 2004, sales 

$91.9 million in 2003. We also achieved the forecast 

revenues exceeded our forecasts by 3%. For the full 

1% growth in funeral services performed. Thus the 

year the number of funerals performed was in line with 

revenue gain was a composite of price increases, 

our forecast, although there were fewer deaths in the 

volume growth and the mix of funerals in relation to 

second six months of the year than expected. Overall 

location and brand. Also contributing was the focus 

the number of deaths for 2004 is expected to be in line 

on product offerings and a better than expected 

with forecasts, but the Australian Bureau of Statistics 

contribution from prepaid funerals performed due 

information is not yet available.

to improved investment returns. We estimate there 

has been a small overall increase in market share 

in the markets in which InvoCare operates. White 

Lady Funerals and Simplicity Funerals in particular 

experienced growth in their market share. We will 

continue to build on this in 2005. 

InvoCare generated $17.1 million in proﬁt after tax 

in 2004, which was 37% above the Prospectus 

forecast and up from $11.6 million for the previous 

year. This was due to the increase in sales revenues 

of 6% on the prior year, an improvement in operating 

margins largely attributable to the ﬁxed nature of the 

Company’s cost base and a proﬁt generated from 

asset sales. The earnings per share amounted to 

18.1 cents up 36% on the Prospectus forecast  

and up 51% from 2003.

12

“ InvoCare generated 
$17.1 million in proﬁt 
after tax in 2004, 
which was 37% 
above the Prospectus 
forecast and up from 
$11.6 million for the 
previous year.”

   Richard Davis, CEO

The brand awareness of our major brands remained 

The efforts of our professional and committed staff 

strong, both nationally with Simplicity Funerals and 

cannot be forgotten in this list of achievements. They 

White Lady Funerals and with the major ‘traditional 

are the front line for InvoCare, delivering professional 

style’ brands operating in each state. The new 

services, care and support to families. Their 

Guardian umbrella brand introduced in the past 

compassion and personal approach to each family 

year in NSW, is slowly growing its brand awareness. 

make a difference not just to the Company’s overall 

The introduction of new signage and a continued 

performance, but most importantly to the individual 

advertising campaign will further assist this growth. 

families who appreciate their guidance at what for 

We have opened three new funeral homes in the past 

year, 2 in Melbourne at Frankston and Reservoir with 

another in Sydney’s north west at Richmond. In 2005 

we expect to open three more new funeral homes, 

with one scheduled to open shortly at Manly in Sydney 

and at least 2 other new funeral homes planned for 

key markets around the country.

most is an emotional and stressful time.

CEMETERIES & CREMATORIA

Sales revenues from our 12 cemeteries and crematoria 

(Memorial Parks and Gardens) was $51.2 million, 3% 

above our forecasts and up 6 % from $48.4 million 

in 2003. This 6% growth compared to 2003 can be 

attributed to an increase in cremation and burial services 

The client satisfaction index generated from our 

including prepaid services and adjustments in pricing. 

surveys, shows a 6% increase in 2004. The survey is 

sent to all our client families after the funeral service 

and around 40% respond. One of the key indicators 

from this survey is that 97% of families say they would 

deﬁnitely or probably recommend the services of an 

InvoCare funeral home. It also shows 88% believe 

InvoCare’s prices were in line with or below  

consumer expectations.

Despite strong competition, InvoCare’s market share 

showed a small increase. To date there has not been 

any material ﬁnancial impact from the October 2004 

opening of Macquarie Park crematorium, at North 

Ryde in Sydney. Further cremation competition is 

likely as the Catholic Cemeteries Board pursues the 

establishment of a crematorium within the Catholic 

section of Rookwood Cemetery. If established, the 

Company’s leased crematorium within the grounds  

of Rookwood Cemetery will be affected. 

13

InvoCare Annual Report 2004

CEO Review continued

Crypt construction delays and lower than expected 

PREPAID FUNERAL FUNDS

deaths adversely affected revenue performance in the 

13% of the funerals the Company conducted in 2004 

second half of the year. 

were prepaid. This ﬁgure is consistent with previous 

Strategically the Company continues to focus on 

increasing the number of memorials from cremations 

within the cemeteries and crematoria locations where 

currently some 30% of cremations result in a memorial 

being placed at the location. Whilst there has been 

no material change in this rate in recent times, we 

are continuing to develop strategies and educate the 

years. As at 31 December 2004 $198.6 million was 

independently managed in trust funds, up 17% on 

the previous year. Gross returns for funds under 

management for the past year of 17.2% is an increase 

over the prior year of 229%. This gross return excludes 

investment management fees and administration fees 

which are currently at 1.9%. 

public on the beneﬁts of having a memorial.

During the year the investment bias has moved 

A new survey is being introduced to send to client 

families who choose to have a memorial in one of our 

to where equities comprise 52% of the portfolio 

compared to 50% in the prior year.

Memorial Parks or Gardens. From this survey we will 

This improved investment return has also contributed 

be able to generate information similar to our client 

to an increase in funeral revenues as prepaid funerals 

funeral surveys.

are performed.

Our operations and family service staff play a key role 

in ensuring the Memorial Parks and Gardens continue 

to present themselves as beautiful and peaceful 

places for people to reﬂect. They all provide an 

invaluable function in ensuring a life, which is important 

to family and friends, is not forgotten. Our cemeteries 

and crematoria staff continues to set high levels of 

excellence and as such lead the industry. 

CASH FLOWS & ACQUISITIONS 

There were no acquisitions in 2004. Unrealistic pricing 

expectations have inhibited any opportunities to 

date and we do not believe it likely that a signiﬁcant 

acquisition will be completed in 2005. However we are 

still actively seeking opportunities for acquisitions. 

14

Net cash ﬂows were strong in the year assisted by 

In order to enhance our key funeral home brands in 

proceeds from the sale of assets and lower than 

particular, we are developing brand blue prints. This 

expected capital expenditure due to delays in  

will also assist us with a direction for future growth of 

gaining development approvals from Councils for 

the brands. The Company has identiﬁed key segments 

major refurbishment works. This contributed to the 

of the market and continues to position its brands to 

improved debt reduction mentioned earlier.

cater for each segment.

During the year, 20% of our vehicle ﬂeet was replaced 

Whilst the industry remains fragmented, the Company 

in keeping with our vehicle management policy of an 

continues to face active competition in the markets in 

average vehicle life of 5 years.

which it operates.

As a consequence of the strong cash ﬂow and lack of 

InvoCare continues working with the industry 

acquisition activity, the Company is currently reviewing 

and other stakeholder groups as various state 

its capital management program. 

Governments review their legislation in respect of the 

OVERVIEW OF OPERATIONS

Four non-strategic or non-performing funeral homes 

were sold in the past year at Ipswich (QLD), Burwood 

& Healesville (VIC) and Victor Harbor (SA) generating 

$1.3 million in proﬁt. Whilst the revenue and proﬁt 

contribution from these locations was not material, a 

proportion of both should be retained as the Company 

retains a presence in the markets utilising other 

Company facilities in the areas. Further non-strategic 

property has been identiﬁed for divestment in 2005. 

The Company continues to focus on the strategic 

importance and effective returns of its locations and in 

doing so has embarked on a long-term property plan 

for the Company, commencing with Sydney. 

Key sites have also been identiﬁed for an upgrade in 

facilities. For example, our main operational centre in 

Western Australia at North Perth is being upgraded. 

In Queensland, work is nearing completion on a new 

condolence lounge and the upgrading of the Chapels 

at Albany Creek Memorial Park in Brisbane. Other 

upgrade works have been identiﬁed and are being 

scheduled for completion over for the next two years.

industry. The majority of the focus in 2004 was on 

consumer protection, including minimum standards  

of service. 

Importantly all of InvoCare’s locations continue to 

foster relationships within the local communities in 

which they serve. These efforts are not just based on 

sponsorship, but often extend to volunteering time, 

facilities and assisting in raising funds. We value these 

local activities, because we view them as essential 

to participate at this level. Working with the local 

community aside from relationship building also  

helps to demystify the industry and reach many people 

at a time far less emotional than after the death of a 

loved one.

InvoCare continues to be committed to training and 

developing its employees with extensive ‘learning 

and development’ programs catering to key areas of 

the business. We now have a network of accredited 

trainers within the organisation who focus on delivering 

programs, which ensure the Company sets the highest 

15

InvoCare Annual Report 2004

CEO Review continued

standards for the way its staff conduct themselves 

Finally I would like to take this opportunity to thank  

and service our client families. We are constantly 

my management team and all the dedicated 

developing these programs and will shortly also  

employees of InvoCare who have worked so hard to 

launch some computer based learning programs.

generate this performance.

Richard Davis 
Chief Executive Ofﬁcer

InvoCare’s new ﬁnancial system and funeral operating 

system have been successfully implemented on time 

and within budget. The resource utilisation system for 

our funeral operations is scheduled to be rolled out in 

the ﬁrst half of this year. This will be followed by a new 

operating system for cemeteries and crematoria. 

The Company has appointed two full time 

Occupational Health and Safety (OHS) personnel  

who have undertaken audits across Australia.  

They are working with internal and external resources 

to develop ways to eliminate or minimise risks within 

the workplace in a structured manner. Currently we  

are reviewing our manual handling procedures, an 

area identiﬁed as a major area of potential injury and 

lost working days. 

LOOKING AHEAD

Since InvoCare listed in December 2003, we have 

successfully exceeded our forecasts.

We have shown the capacity to grow organically 

leveraging from our strong brands, professional 

service and wide network of locations and thus 

provide sustainable growth.

Whilst InvoCare’s results will always be affected by 

the number of deaths, our positioning in the market 

and the strategies we are putting in place position the 

Company well for the future.

16

Directors’ and Financial Reports

Directors’ Report  18
Corporate Governance Statement  24
Financial Report  
  Statements of Financial Performance  31
  Statements of Financial Position  32
  Statements of Cash Flows  33
  Notes to the Financial Statements  34
  Directors’ Declaration  63
Independent Audit Report  64

17

InvoCare Annual Report 2004

Directors’ Report

The Directors submit their report on the consolidated 

REVIEW OF OPERATIONS

entity consisting of InvoCare Limited (the Company) 

The key highlights for the year include:

and the entities it controlled for the year ended 

31 December 2004. InvoCare Limited and its 

controlled entities together are referred to as InvoCare 

or the consolidated entity in this Financial Report.

DIRECTORS

Unless indicated otherwise, the following persons 

were Directors of InvoCare Limited during the whole of 

the ﬁnancial year and until the date of this report:

Ian Ferrier

Richard Davis

Michael Grehan

John Murphy (resigned 28 February 2005)

Christine Clifton

Richard Fisher

Roger Penman (appointed 1 January 2005)

PRINCIPAL ACTIVITIES

–  The consolidated net proﬁt for the year after tax 

attributable to members of InvoCare Limited was 

$17.1 million compared to the Prospectus forecast 

of $12.5 million and $11.6 million in 2003. This 

proﬁt includes gain on sale of assets of $1.7 million 

(before tax) compared to the Prospectus forecast 

of $0.1 million and $2.7 million in 2003. Reﬁnancing 

costs during the year were $Nil compared to 

$2.1 million (before tax) in 2003.

–  Revenues from operating activities were 

$148.3 million, an increase of 5.7% over the previous 

year and 2.8% higher than the Prospectus forecast. 

The increases are attributable to a combination of a 

higher number of deaths, higher average prices and 

a small improvement in market share.

–  Earnings per share (basic) were 18.1 cents per 

share (2003: 12.0 cents per share) compared to the 

Prospectus forecast of 13.3 cents per share. Details 

InvoCare is Australia’s leading private provider of 

are set out in Note 30 of the ﬁnancial statements.

services to the funeral industry. There were no 

signiﬁcant changes in the nature of these activities 

during the year. 

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There have been no signiﬁcant changes in the state of 

the Company’s affairs during the ﬁnancial year.

–  InvoCare has continued implementation of its new 

Guardian branding and marketing strategy in the 

Sydney market during 2004 to complement the 

strong branding position already in place of its 

national brands, White Lady and Simplicity.

18

–  Marketing of prepaid funerals continued during 

FUTURE DEVELOPMENTS AND RESULTS

the year and at December 2004 InvoCare had 

Information on likely developments in the operations 

$198.6 million (2003: $169.5 million) of funds in 

of the consolidated entity and the expected results 

trust for prepaid funerals and prepaid cemetery and 

of operations have not been included in this report 

crematoria services. This is an increase of 17.2% 

because the Directors believe it would be likely to 

compared to December 2003. During 2004, 13% 

result in unreasonable prejudice to the consolidated 

of funerals performed were previously prepaid with 

entity.

InvoCare.

–  Signiﬁcant progress was made in the development 

ENVIRONMENTAL REGULATION AND 
PERFORMANCE

and implementation of new IT systems for the 

InvoCare is committed to the protection of the 

ﬁnancial and operational aspects of the business. 

environment, the health and safety of its employees, 

These are on track to be ﬁnalised in 2005, or in the 

customers and the general public, as well as 

case of prepaid funerals, in 2006.

DIVIDENDS

An interim fully franked dividend for the year ended 

31 December 2004 of $6,080,191 (6.4 cents per fully 

paid share) was paid on 12 October 2004.

compliance with all applicable environmental laws, 

rules and regulations in the jurisdictions in which 

the consolidated entity operates its business. The 

consolidated entity is subject to environmental 

regulation in respect of its operations, including some 

regulations covering the disposal of mortuary and 

Since the end of the ﬁnancial year, the Directors have 

pathological waste and the storage of hazardous 

recommended on 12 April 2005 the payment of a 

materials. InvoCare has Environmental Risk 

ﬁnal fully franked ordinary dividend of $8,550,268 

Management Systems in place at its appropriate 

(9.0 cents per fully paid share) out of retained proﬁts at 

locations. 

31 December 2004.

There have been no claims during the year and 

The total of the interim and ﬁnal dividends relating 

the Directors believe InvoCare has complied with 

to the year ended 31 December 2004 is consistent 

all relevant environmental regulations and holds all 

with the Directors’ intention to maintain a dividend 

relevant licences.

INFORMATION ON DIRECTORS

Details of the Directors’ qualiﬁcations and experience 

are set out on the following pages.

payout ratio of 75% of net proﬁt after tax before 

goodwill amortisation, which is the maximum normally 

permitted under the terms of the Company’s debt 

facility agreements.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

There have been no signiﬁcant events occurring after 

balance date which have signiﬁcantly affected or may 

signiﬁcantly affect either InvoCare’s operations or 

results of those operations or InvoCare’s state of affairs 

in future ﬁnancial years.

19

InvoCare Annual Report 2004

Directors’ Report continued

Mr Ian Ferrier CA
Chairman of the Board
Chairman of Remuneration Committee
Member of Risk Committee

Mr Richard Davis BEc
Chief Executive Ofﬁcer

Mr Michael Grehan BAcc, MBA
Chief Operating Ofﬁcer

Ian Ferrier has held the position 

Richard has held the position of 

Michael Grehan has held the 

of Chairman of InvoCare Limited 

Chief Executive Ofﬁcer of InvoCare 

position of Chief Operating Ofﬁcer 

since 2001. Ian is a Senior 

Founding Partner of Ferrier 

Limited since 1995. Richard is a 

of InvoCare Limited since March 

Director of The Over 50s Guardian 

2000 and was appointed as a 

Hodgson Accountants, Australia’s 

Friendly Society Limited. Richard 

Director of InvoCare Limited on 

largest ﬁrm of reconstruction 

accountants. Ian is Chairman 

of Port Douglas Reef Resorts 

was recruited to the position of 

24 October 2003. Prior to joining 

Chief Financial Ofﬁcer of Chase 

InvoCare, Michael held senior 

Corporation’s funeral business 

management positions across 

and a Non-Executive Director of 

in 1989 and stayed on in this 

a number of different industries. 

McGuigan Simeon Wines Limited, 

position when the business was 

These included Managing Director 

Macquarie Goodman Management 

acquired by Industrial Equity 

of National Jet Systems, Group 

Limited and Reckon Limited. As 

Limited, following which he 

Financial Controller overseeing all 

senior partner of Ferrier Hodgson, 

became Chief Executive Ofﬁcer. 

ﬁnancial and commercial activities 

Ian has gained vast experience 

in numerous commercial ﬁelds. 

Ian is a Fellow of the Institute of 

Prior to joining the funeral industry, 

of Qantas’ subsidiary businesses, 

Richard worked in venture capital 

including Regional Airlines, 

and as an accounting partner of 

Flight Catering, Resorts, Freight 

Chartered Accountants in Australia 

Bird Cameron. Richard holds a 

and Property, and a long-term 

and a Member of the Hong Kong 

Bachelor of Economics from the 

secondment as General Manager 

Society of Accountants.

University of Sydney.

Purchasing, Distribution with 

Carrier Air-conditioning. Prior to 

moving into management, Michael 

was a chartered accountant 

specialising in insolvency with 

KPMG, including two years spent 

in the United States with the 

ﬁrm. Michael holds a Bachelor 

of Business Accountancy and a 

Master of Business Administration 

from the Queensland University of 

Technology.

20

Mr Roger Penman BEC FCA FTIA
Non-Executive Director
Chairman of Audit Committee  
(from 28 February 2005)
Member of Remuneration Committee  
(from 28 February 2005)

Dr Christine (Tina) Clifton
MB BS (HONS), BHA, FRACMA
Non-Executive Director
Chairman of Risk Committee
Member of Audit Committee

Mr Richard Fisher MEc, LLB
Non-Executive Director
Member of Risk Committee
Member of Audit Committee

Roger Penman was appointed as 

Tina Clifton is a registered medical 

Richard Fisher is a partner at Blake 

a Director of InvoCare Limited on 

practitioner. Tina has been a 

Dawson Waldron specialising in 

1 January 2005 and commenced 

Director of InvoCare Limited since 

corporate law, and also holds the 

his roles on the Audit Committee 

24 October 2003 and her other 

position of Chairman of Partners. 

and Remuneration Committee on 

current directorships include HCF, 

He has been a Director of InvoCare 

28 February 2005. Roger has been 

Ambri Limited and IWPE Nominees 

Limited since 24 October 2003. 

a partner of WHK Greenwoods 

Pty Limited. Tina was formerly a 

Richard is a former part-time 

(part of the Investor Group 

Director of the Garvan Institute 

Limited) since 1986. Previously 

of Medical Research, the Victor 

Commissioner at the Australian 

Law Reform Commission and is 

he was a senior tax manager 

Chang Cardiac Research Institute 

a current International Consultant 

in the tax consulting division of 

and St Vincents Hospitals. Prior to 

for the Asian Development Bank 

Arthur Andersen for 11 years. 

2001 Tina held various positions in 

and Member of the Library Council 

He is a Fellow of the Institute of 

the public and private healthcare 

of NSW. Richard holds a Master 

Chartered Accountants and the 

sectors including Chief Executive 

of Economics from the University 

Taxation Institute of Australia with 

Ofﬁcer of the Sisters of Charity 

of New England and a Bachelor 

over 30 years tax consulting and 

Health Service in New South Wales 

of Laws from the University of 

general business experience. 

and deputy Chief Executive Ofﬁcer 

Sydney.

Roger has extensive experience 

of the Northern Sydney Area 

with mergers, acquisitions, 

Health Service. From 1980 to 1988 

complex taxation and other tax 

Tina was a general practitioner. 

issues. He is also a specialist 

Tina holds degrees in medicine 

adviser to many professional 

and health administration and 

practices on tax, accounting and 

specialist qualiﬁcations in medical 

general business matters.

administration.

21

InvoCare Annual Report 2004

Directors’ Report continued

MR JOHN MURPHY BComm, MComm, CA, FCPA
Non-Executive Director
Chairman of Audit Committee (until 28 February 2005)
Member of Remuneration Committee (until 28 February 2005)

COMPANY SECRETARY
MR KENNETH MEALEY BComm, CPA
Chief Financial Ofﬁcer

Kenneth Mealey has held the position of Company 

Secretary and Chief Financial Ofﬁcer since joining 

the consolidated entity in 1994. Prior to joining the 

consolidated entity, Kenneth had considerable 

senior management and ﬁnancial experience across 

several industries, including ﬁve years as Finance 

Director and Company Secretary of previously listed 

company Hunter Douglas Limited, two years as 

Technology Division Finance Director for Lend Lease 

Corporation and ten years as Director of Finance and 

Administration at Otis Elevator Company Pty Limited. 

Kenneth holds a Bachelor of Commerce from the 

University of New South Wales and is a member of 

CPA Australia.

John Murphy resigned as a Director of InvoCare 

Limited on 28 February 2005, having been appointed 

in May 2001. John is Managing Director of Investec 

Wentworth Private Equity Pty Limited, a leading 

Australian private equity ﬁrm, and sits on the Board 

of each of the fund’s seven investments. John is 

also a Director of Investec Bank (Australia) Limited, 

Southcorp Limited and the First Wine Fund Limited. 

Before founding the private equity business, ﬁve 

years ago, John spent 25 years with an international 

accounting ﬁrm including 14 years as a global partner. 

In that time John held a number of Australian and 

Asia Paciﬁc management roles and has extensive 

experience in the areas of Corporate Recovery, 

Corporate Finance and Mergers and Acquisitions. 

John holds a Bachelor and Master of Commerce from 

the University of New South Wales. John is a member 

of the Institute of Chartered Accountants in Australia 

and a Fellow of CPA Australia.

MEETINGS OF DIRECTORS

During the year ended 31 December 2004, the number of meetings of the Board of Directors and of each Board 

Committee and the number of meetings attended by each of the Directors are as follows:

Full Board 
Meetings 
No. eligible   No. attended 
to attend 

Audit 
No. eligible   No. attended 
to attend 

Meetings of Committees 
Remuneration 
No. eligible   No. attended 
to attend 

Risk
No. eligible   No. attended 
to attend 

Ian Ferrier 

Richard Davis 

John Murphy 

Michael Grehan  

Christine Clifton  

Richard Fisher  

14 

14 

14 

14 

14 

14 

12 

14 

13 

14 

13 

13 

– 

– 

6 

– 

6 

6 

– 

6* 

6 

6* 

6 

5 

6 

– 

6 

– 

– 

– 

6 

6* 

6 

– 

– 

– 

4  

– 

– 

– 

4 

4 

4

4*

1*

4*

4

3

* Attended as an invited guest of the Committee

22

 
 
 
 
 
 
 
 
RETIREMENT, ELECTION AND CONTINUATION IN 
OFFICE OF DIRECTORS

In accordance with the Constitution of InvoCare 

Limited, at each Annual General Meeting the following 

Directors must retire from ofﬁce:

ROUNDING

The Company is of a kind referred to in Class Order 

98/0100 issued by the Australian Securities and 

Investments Commission, relating to the “rounding 

off” of amounts in the Directors’ Report and Financial 

–  one-third (or a number nearest one-third) of the 

Report. Amounts in the Directors’ Report and Financial 

number of Directors (excluding from the number 

Report have been rounded off to the nearest thousand 

of Directors the Managing Director, who is exempt 

dollars (where rounding is applicable) in accordance 

from retirement by rotation, and any other Director 

with that Class Order.  

appointed by the Directors either to ﬁll a casual 

vacancy or as an addition to the existing Directors); 

and

–  any other Director who has held ofﬁce for three years 

or more since last being elected; and

–  any other Director appointed to ﬁll a casual vacancy 

CORPORATE GOVERNANCE

In recognising the need for the highest standards of 

corporate behaviour and accountability, the Directors 

of InvoCare Limited support and have adhered to the 

principles of corporate governance. The Company’s 

corporate governance statement is contained in the 

or as an addition to the existing Directors.

following section.

Christine Clifton (by rotation) and Roger Penman 

This report is made in accordance with a resolution of 

(appointed by the Directors on 1 January 2005) will 

the Directors

retire as Directors at the Annual General Meeting and, 

being eligible, offer themselves for re-election.

DIRECTORS’ AND EXECUTIVES’ REMUNERATION, 
SHARES, OPTIONS AND OTHER TRANSACTIONS

Details relating to Directors’ and executives’ 

remuneration, shares, options and other transactions 

are set out in Note 33 of the ﬁnancial statements.

Ian Ferrier 
Director

INDEMNIFICATION AND INSURANCE OF DIRECTORS

During the ﬁnancial year, InvoCare paid a premium to 

insure Directors and ofﬁcers of the consolidated entity. 

The insurance policy speciﬁcally prohibits disclosure of 

the nature and liability covered and the amount of the 

premium paid.

Richard Davis 
Director

Sydney 
30 March, 2005

23

InvoCare Annual Report 2004

Corporate Governance

INVOCARE LIMITED (“the Company”) and the Board 

The Board has decided not to establish a Nomination 

are committed to achieving and demonstrating 

Committee in view of the relatively small number 

the highest standards of corporate governance. 

of Directors and that such a Committee would not 

The Company complies with the best practice 

be a more efﬁcient mechanism than the full Board 

recommendations released by the ASX Corporate 

for detailed selection and appointment practices. 

Governance Council in March 2003, unless otherwise 

New Directors are given an orientation regarding the 

stated.

The relationship between the Board and Senior 

business including corporate governance policies, all 

other corporate policies and procedures, committee 

structures and responsibilities and reporting 

Management is important to InvoCare’s long-term 

procedures.

success. Day to day management of InvoCare’s affairs 

and the implementation of the corporate strategy and 

The Chairman is elected by the full Board.

policy initiatives are formally delegated by the Board  

InvoCare’s Constitution requires one third of the 

to the Chief Executive Ofﬁcer (“CEO”) and Senior 

Directors, any other Director who has held ofﬁce for 

Executives as set out in InvoCare’s delegations policy. 

three years or more since last being elected and any 

These delegations are reviewed regularly.

Director who was appointed to either ﬁll a casual 

A description of InvoCare’s main corporate governance 

practices is set out below. All these practices, unless 

otherwise stated, were in place for the entire year.

vacancy or as an addition to the existing Directors 

since the previous Annual General Meeting (“AGM”) 

must retire from ofﬁce at the conclusion of the AGM 

each year and may offer themselves for re-election 

THE BOARD OF DIRECTORS

at that meeting. The Managing Director is exempt 

Board Composition

from retirement by rotation and is not counted in 

The Board currently comprises six Directors, being 

determining the number of Directors to retire by 

four Non-Executive Directors (including the Chairman) 

rotation.

and two Executive Directors. The roles of Chairman 

and CEO are separate. The skills, experience and 

expertise of each Director are set out in the Directors’ 

Report under the heading “Information on Directors”.

The Board has assessed the independence of 

Non-Executive Directors in light of their interests 

and relationships and considers them all to be 

independent.

There is and will at all times be a Non-Executive 

Chairman of the Board and a majority of  

Non-Executive Directors.

24

Responsibilities

–  ratifying the appointment and/or removal and 

The Board of Directors is responsible for reviewing 

contributing to the performance assessment of the 

and approving the strategic direction of InvoCare 

members of the Senior Management team including 

and for overseeing and monitoring its business and 

the Chief Operating Ofﬁcer (COO), Chief Financial 

affairs including maintenance of sound corporate 

Ofﬁcer (CFO) and the Company Secretary

governance.

–  ensuring there are effective management processes 

The Board reviews and approves InvoCare’s strategic 

in place and approving major corporate initiatives

and business plans and guiding policies. Day  

to day management of InvoCare’s affairs is delegated 

to the CEO and Senior Executives.

The responsibilities of the Board include:

–  enhancing and protecting the reputation of InvoCare

–  ensuring the signiﬁcant risks facing InvoCare, 

including those associated with its legal compliance 

obligations, have been identiﬁed and appropriate 

–  contributing to the development of and approving 

and adequate control, monitoring, accountability and 

the corporate strategy

reporting mechanisms are in place

–  reviewing and approving business plans, the annual 

–  reporting to shareholders

budget and ﬁnancial plans including available 

resources and major capital expenditure initiatives

– overseeing and monitoring:

–  ensuring a high standard of corporate governance 

practice 

In fulﬁlling these functions, the Directors seek to 

  –  organisational performance and the achievement 

enhance shareholder value and protect the interests  

of InvoCare’s strategic goals and objectives

of stakeholders.

  –  compliance with InvoCare’s code of conduct

Non-Executive Directors

  –  progress of major capital expenditures and 

other signiﬁcant corporate projects including any 

acquisitions or divestments

  – capital management.

The four Non-Executive Directors meet, as required, at 

the conclusion of scheduled Board meetings without 

the presence of management, to discuss the operation 

of the Board and a range of other matters. Relevant 

matters arising from these meetings are shared with 

–  monitoring ﬁnancial performance including approval 

the full Board.

of the annual and half-year Financial Reports and 

liaison with InvoCare’s auditors.

–  appointment, performance assessment and, if 

necessary, removal of the CEO

25

InvoCare Annual Report 2004

Corporate Governance continued

Chairman and Chief Executive Officer (CEO)

Independent Professional Advice

The Chairman is responsible for leading the Board, 

Directors and Board Committees have the right, in 

ensuring that Board activities are organised and 

connection with their duties and responsibilities, to 

efﬁciently conducted and for ensuring Directors are 

seek independent professional advice at InvoCare’s 

properly briefed for meetings. The CEO is responsible 

expense. Prior written approval of the Chairman is 

for implementing InvoCare’s strategies and policies. 

required, but this will not be unreasonably withheld.

The Board charter speciﬁes that these are separate 

roles to be undertaken by separate people.

Commitments

Performance Assessment

The Chairman annually assesses the performance 

of individual Directors and meets with Directors to 

The Board holds at least eight meetings each 

discuss this assessment. The Chairman’s performance 

year. Additional meetings may be held as deemed 

is reviewed by the Board. Directors conform to the 

necessary to address signiﬁcant matters as they 

Board’s agreed performance criteria for Directors.

arise. At least two of the meetings include visits to 

operations and meeting employees.

Board Committees

The Board has established a number of Committees 

The number of Board meetings and Committee 

to assist in the execution of its duties and to 

meetings and the number of meetings attended 

allow detailed consideration of complex issues. 

by each Director are disclosed in the Company’s 

Ultimate responsibility rests with the Board and the 

Directors’ Report under the heading “Meetings  

responsibilities of the Board and its members are not 

of Directors”.

diminished through the existence of these committees.

The Chairman and the CEO meet regularly to discuss 

Current Committees of the Board are the Audit 

key issues and performance trends of InvoCare. 

Committee, Risk Committee and Remuneration 

Other Directors maintain contact with relevant Senior 

Committee. Each is comprised entirely of  

Managers arising from dealings on Committees.

Non-Executive Directors. The Committee structure 

Each month the Directors receive a detailed operating 

and membership is reviewed on an annual basis.

review from the CEO regardless of whether or not a 

Each of these Committees has developed its own 

Board meeting is being held.

written charter setting out its role and responsibilities, 

Conflict of Interests

Potential conﬂicts of interest by Directors will be 

reported to the Board and if necessary Directors will 

be excluded from discussion of the relevant matter 

and will not vote on that matter.

composition, structure, membership requirements and 

the manner in which the Committee is to operate.  

All of these charters will be reviewed on an annual 

basis. All matters determined by Committees are 

submitted to the full Board as recommendations for 

Board decision.

26

Minutes of Committee meetings are tabled at the 

The Committee also assumes responsibility for 

immediately subsequent Board meeting. Additional 

management of succession planning, including the 

requirements for speciﬁc reporting by the Committees 

implementation of appropriate Executive development 

to the Board are addressed in the charter of the 

programmes and ensuring adequate arrangements are 

individual Committees.

in place, so that appropriate candidates are recruited 

Remuneration Committee

for later promotion to senior positions.

The Remuneration Committee comprises the 

Audit Committee

Chairman of the Board, Ian Ferrier, and one other 

The Audit Committee comprises three Non-Executive 

Non-Executive Director, currently Roger Penman 

Directors. The committee is currently chaired by Roger 

who was appointed as a Director on 1 January 2005 

Penman, with the other members being Christine 

and became a member of the committee upon the 

Clifton and Richard Fisher. John Murphy chaired the 

resignation of John Murphy on 28 February 2005. 

committee during the 2004 ﬁnancial year and up until 

John Murphy was a committee member during the 

his resignation as a Director on 28 February 2005. The 

2004 ﬁnancial year and up until his resignation.

members possess sufﬁcient technical expertise and 

The Committee, when deemed necessary, obtains 

independent advice on the appropriateness of 

remuneration packages.

The Remuneration Committee advises the Board on 

remuneration policies and practices generally, and 

makes speciﬁc recommendations on remuneration 

knowledge of the industry to fulﬁl the functions of the 

Committee. The Committee meets at least four times 

each year.

The Audit Committee operates in accordance with 

a charter which is reviewed annually. The main 

responsibilities of the Committee are to:

packages and other terms of employment for 

–  assist the Board in fulﬁlling its oversight of the 

Executive Directors, other Senior Executives and Non-

reliability and integrity of ﬁnancial management, 

Executive Directors. 

accounting policies, asset management and ﬁnancial 

Executive remuneration and other terms of 

reporting, including annual and half yearly reports

employment are reviewed annually by the Committee 

–  advise the Board on internal control including relating 

having regard to personal and corporate performance, 

to ﬁnancial statements, due diligence, information 

contribution to long-term growth, relevant comparative 

technology and ﬁnancial systems integrity

information and independent expert advice. As well 

as a base salary, remuneration packages include 

superannuation, performance-related bonuses and 

fringe beneﬁts. 

The Committee is responsible for reviewing and 

approving any long-term incentive plans for the 

Company’s employees. 

–  establish and maintain an effective internal audit 

function, if necessary, outsourcing to independent 

professional internal auditors

–  oversee the scope of work, relationship with 

management, appointment, fees, independence and 

effectiveness of the external auditor

–  recommend the removal of the external auditor if 

appropriate

–  recommend improvements for the correlation 

between ﬁnancial and non-ﬁnancial information  

and reports

27

InvoCare Annual Report 2004

Corporate Governance continued

–  strengthen the role and inﬂuence of Non-Executive 

The Audit Committee has authority, within the scope of 

Directors

its responsibilities, to seek any information it requires 

–  review and monitor the propriety of any related party 

from any employee or external party.

transactions

External Auditor

–  review processes and controls for the identiﬁcation 

and management of strategic, ﬁnancial and 

information technology risks (“Financial Risks”)

–  review and monitor InvoCare’s compliance with the 

Corporations Act and ASX Listing Rules

The policy of InvoCare and the Audit Committee is to 

appoint an external auditor which clearly demonstrates 

quality and independence. The performance of the 

external auditor is reviewed and assessed annually. 

PricewaterhouseCoopers was appointed as the 

external auditor in 1994. It is PricewaterhouseCoopers’ 

–  report to the Board all matters relevant to the 

policy to rotate audit engagement partners on 

Committee’s responsibilities.

In fulﬁlling its responsibilities, the Audit Committee:

listed companies at least every seven years, and in 

accordance with that policy a new audit engagement 

partner was introduced for the year ended  

–  receives regular reports from management and the 

31 December 2000. This policy will be amended to a 

external auditor

ﬁve year rotation to comply with the requirements  

–  meets with the external auditor at least twice a year 

of CLERP 9.

without the presence of management

–  requires the CEO and CFO to state in writing to the 

Board that InvoCare’s Financial Reports present 

a true and fair view, in all material respects, of 

InvoCare’s ﬁnancial condition and operational results 

An analysis of fees paid to the external auditor, 

including a break-down of fees for non-audit services, 

is provided in Note 34 – Remuneration of auditor. 

It is the policy of the external auditor to provide an 

annual declaration of its independence to the Audit 

and are in accordance with relevant accounting 

Committee.

standards

–  reviews any signiﬁcant disagreements between the 

auditor and management, irrespective of whether 

they have been resolved

–  provides the external auditor with a clear line of 

direct communication at any time to either the 

Chairman of the Audit Committee or the Chairman of 

the Board. 

28

Certification of Financial Reports

–  the management of operational and compliance 

The CEO and CFO have stated in writing to the 

risks, including but not limited to:

Board that the Financial Report for the year ended 

31 December 2004 is complete and presents a true 

and fair view, in all material respects, of the ﬁnancial 

  –  InvoCare’s insurance program

  – environmental policy and issues

condition and operational results of the Company 

  – occupational health and safety

and the consolidated entity and is in accordance with 

relevant accounting standards.

This statement is based on an operating system of 

  – disaster recovery strategy

  – litigation against InvoCare

risk management and internal compliance which 

  –  industry related regulatory compliance

implements policies adopted by the Board.

  –  compliance with the policy framework in place 

The Company adopted this reporting structure for the 

from time to time

year ended 31 December 2004.

Risk Committee

  –  internal controls over operational risks

  –  InvoCare’s overall operational risk management 

The Risk Committee comprises three Non-Executive 

program.

Directors. It is chaired by Christine Clifton and the 

other members are Richard Fisher and Ian Ferrier. 

The members possess sufﬁcient technical expertise 

The Committee, when deemed necessary, obtains 

independent advice on risk management matters.

and industry knowledge to fulﬁl the functions of the 

The Risk Committee does not have responsibility in 

Committee. The Committee meets at least twice  

relation to ﬁnancial and information technology risk 

each year.

management, which is the focus of InvoCare’s Audit 

The Risk Committee operates in accordance with 

Committee.

a charter which is reviewed annually. The main 

Code of Conduct

responsibilities of the Committee are:

InvoCare has developed a code of conduct (the code) 

–  to establish a sound system of risk oversight and 

management and internal control under which 

InvoCare can identify, assess, monitor and  

manage risk

–  to inform investors of material changes to the risk 

proﬁle of InvoCare and maintain appropriate risk 

management practices and systems throughout the 

operations of InvoCare

which applies to all Directors and employees. The 

code is updated as necessary to ensure it reﬂects the 

highest standards of behaviour and professionalism 

and the practices necessary to maintain conﬁdence in 

InvoCare’s integrity.

In summary, the code requires that at all times all 

InvoCare personnel act with the utmost integrity, 

objectivity and in compliance with the letter and the 

spirit of the law and InvoCare policies.

Securities Trading Policy

The purchase and sale of InvoCare Limited securities 

by Directors and senior employees is only permitted 

during the 30 day period following release of the  

half-yearly and annual ﬁnancial results to the 

market and the AGM of InvoCare. Any transactions 

undertaken must be notiﬁed to the Company 

Secretary in advance.

29

InvoCare Annual Report 2004

Corporate Governance continued

At the AGM, shareholders have the opportunity to 

direct any questions to the Board, and the external 

auditor is available to answer shareholder questions 

about the audit and auditor’s report.

Continuous Disclosure and Shareholder 
Communication

The CEO or Company Secretary have been nominated 

as responsible for communications with the 

shareholders and the ASX. This includes responsibility 

for ensuring compliance with the continuous 

disclosure requirements in the ASX listing rules and 

overseeing and co-ordinating information disclosure 

to the ASX, analysts, brokers, shareholders, the media 

and the public.

All information disclosed to the ASX is posted on 

InvoCare’s web site as soon as it is disclosed to 

the ASX. When analysts are briefed on aspects 

of InvoCare’s operations, the material used in the 

presentation is released to the ASX and posted on 

InvoCare’s web site. Procedures have also been 

established for reviewing whether any price sensitive 

information has been inadvertently disclosed, and  

if so, this information is also immediately released  

to the market.

All shareholders will receive a copy of InvoCare’s 

Annual Report and Half Yearly Report (unless a 

shareholder has speciﬁcally requested not to receive 

the document). In addition, InvoCare seeks to 

provide opportunities for shareholders to participate 

through electronic means. All recent InvoCare 

announcements, media brieﬁngs, details of InvoCare 

meetings, press releases and Financial Reports are 

available on InvoCare’s website www.invocare.com.

au. Shareholders are also able to direct any questions 

relating to the Company’s securities to the share 

registry, ASX Perpetual Registrars Limited.

30

Statements of Financial Performance 

For the year ended 31 December 2004

Revenues from ordinary activities 

Finished goods and consumables used 
Salaries and employee benefits expenses 
Depreciation and amortisation expenses 
Interest expenses 
Refinancing costs 
Advertising and public relations expenses 
Occupancy and facilities expenses 
Motor vehicle expenses 
Written down value of assets sold or  
disposed and costs incurred 
Other expenses from ordinary activities 

Profit from ordinary activities  
before income tax expense 
Income tax expense relating to  
ordinary activities 

Profit from ordinary activities  
after income tax expense 

Net profit 
Net profit attributable to outside  
equity interest 

Net profit attributable to members  
of InvoCare Limited 

Total changes in equity attributable  
to members of InvoCare Limited other  
than those resulting from transactions  
with owners as owners 

Consolidated 

InvoCare Limited

2004 
$’000 

2003 
$’000 

2004 
$’000 

2003
$’000

Notes 

2 

3 

3 
3 
3 

155,271 

150,758 

23,754 

25,590

(22,388) 
(53,431) 
(8,967) 
(11,895) 
– 
(5,539) 
(10,514) 
(3,343) 

(2,080) 
(11,060) 

(21,183) 
(50,536) 
(9,931) 
(14,115) 
(2,148) 
(5,722) 
(9,794) 
(3,204) 

(5,083) 
(11,442) 

– 
– 
– 
(11,160) 
– 
– 
– 
– 

–
–
–
(13,337)
(2,148)
–
–
–

– 
(767) 

–
(722)

26,054 

17,600 

11,827 

9,383

4 

(8,909) 

(5,917) 

(1,700) 

(710)

17,145 

11,683 

10,127 

8,673

17,145 

11,683 

10,127 

8,673

25 

(57) 

(45) 

– 

–

24 

17,088 

11,638 

10,127 

8,673

17,088 

11,638 

10,127 

8,673

Basic earnings per share (cents per share)  
Diluted earnings per share (cents per share) 

30 
30 

Cents 

18.1 
17.8 

Cents 

12.0
11.7

The above statements of financial performance should be read in conjunction with the accompanying notes.

31

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
InvoCare Annual Report 2004

Statements of Financial Position 

As at 31 December 2004

Current assets 
Cash assets 
Receivables 
Inventories 
Property 
Other assets 
Total current assets 

Non-current assets 
Receivables 
Other financial assets 
Property, plant and equipment 
Deferred tax assets 
Intangible assets 
Other assets 
Total non-current assets 
Total assets 

Current liabilities
Payables 
Interest-bearing liabilities 
Current tax liabilities 
Provisions 
Deferred revenue 
Total current liabilities 

Non-current liabilities
Payables 
Interest-bearing liabilities 
Deferred tax liabilities 
Provisions 
Deferred revenue 
Total non-current liabilities 
Total liabilities 
Net assets 

Equity 
Parent entity interest 
Contributed equity 
Retained profits 
Total parent entity interest in equity 
Total outside equity interest 
Total equity 

Notes 

Consolidated 

InvoCare Limited

2004 
$’000 

2003 
$’000 

2004 
$’000 

2003
$’000

26 
6 
7 
8 
9 

10 
11 
12 
4 
13 
14 

15 
16 
4 
17 
18 

19 
20 
4 
21 
22 

23 
24 

25 

687 
15,040 
10,945 
2,990 
2,809 
32,471 

7,325 
– 
203,323 
5,422 
23,805 
6,687 
246,562 
279,033 

15,534 
17 
3,763 
4,978 
2,773 
27,065 

29 
131,532 
2,479 
3,431 
38,823 
176,294 
203,359 
75,674 

7,143 
14,567 
9,962 
4,313 
2,718 
38,703 

7,306 
– 
206,539 
6,022 
26,302 
6,195 
252,364 
291,067 

18,380 
2,515 
3,962 
4,563 
2,619 
32,039 

365 
152,549 
2,328 
3,008 
36,664 
194,914 
226,953 
64,114 

231 
– 
– 
– 
92 
323 

173,929 
15,641 
– 
615 
– 
– 
190,185 
190,508 

222 
– 
450 
– 
– 
672 

– 
131,500 
– 
– 
– 
131,500 
132,172 
58,336 

2,437
2,542
–
–
92
5,071

189,782
15,641
–
637
–
–
206,060
211,131

2,363
2,500
42
–
–
4,905

–
152,500
–
–
–
152,500
157,405
53,726

52,589 
22,041 
74,630 
1,044 
75,674 

52,026 
11,033 
63,059 
1,055 
64,114 

52,589 
5,747 
58,336 
– 
58,336 

52,026
1,700
53,726
–
53,726

The above statements of financial position should be read in conjunction with the accompanying notes.

32

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Cash Flows

For the year ended 31 December 2004

Cash flows from operating activities 
Receipts from customers 
Payments to suppliers and employees 
Interest received 
Other revenue 
Dividend received 
Interest paid 
Refinancing costs paid 
Income tax paid 
Net cash flows from operating activities 

Notes 

Consolidated 

InvoCare Limited

2004 
$’000 

2003 
$’000 

2004 
$’000 

2003
$’000

168,824 
(128,784) 
494 
2,741 
– 
(12,007) 
– 
(8,357) 
22,911 

161,413 
(119,266) 
683 
2,054 
– 
(14,841) 
(2,148) 
(4,361) 
23,534 

960 
(2,908) 
16,714 
– 
6,080 
(11,160) 
– 
(1,270) 
8,416 

480
(778)
18,110
–
7,000
(14,062)
(2,148)
(2,102)
6,500

26 

Cash flows from investing activities 
Proceeds from sale of property, plant and equipment 
Purchase of property, plant and equipment 
Net cash flows (used in)/from investing activities 

Cash flows from financing activities 
Proceeds from issues of ordinary shares 
Payment for share buy-back 
Proceeds from borrowings 
Repayment of borrowings 
Repayment of convertible notes 
Payment of dividends –  
InvoCare Limited shareholders 
Payment of dividends – Outside Equity Interest 
Repayment of finance lease principal 
Proceeds from repayment of loan by controlled entity 
Net cash flows (used in) financing activities 

Net (decrease)/increase in cash held 
Cash at the beginning of the financial year 
Cash at the end of the financial year 

26 

3,744 
(4,011) 
(267) 

7,129 
(6,054) 
1,075 

– 
– 
– 

–
–
–

563 
– 
2,000 
(25,500) 
– 

(6,080) 
(68) 
(15) 
– 
(29,100) 

(6,456) 
7,143 
687 

2,026 
(25,000) 
65,000 
(19,580) 
(30,000) 

(15,000) 
(67) 
(41) 
– 
(22,662) 

1,947 
5,196 
7,143 

563 
– 
2,000 
(25,500) 
– 

(6,080) 
– 
– 
18,395 
(10,622) 

(2,206) 
2,437 
231 

2,026
(25,000)
65,000
(19,580)
(30,000)

(15,000)
–
–
18,444
(4,110)

2,390
47
2,437

The above statements of cash flows should be read in conjunction with the accompanying notes.

33

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
InvoCare Annual Report 2004

Notes to the Financial Statements

For the year ended 31 December 2004

1.  SUMMARY OF SIGNIFICANT 
ACCOUNTING POLICIES

Basis of accounting
This general purpose financial report has been prepared 
in accordance with the requirements of the Accounting 
Standards, other authoritative pronouncements of the 
Australian Accounting Standards Board, Urgent Issues 
Group Consensus Views and the Corporations Act 2001.

It is prepared in accordance with the historical cost 
convention.

Comparatives
Where necessary, comparatives have been reclassified 
and repositioned for consistency with current year 
disclosures.

Changes in accounting policies
The accounting policies adopted are consistent with 
those of the previous financial year. 

Principles of consolidation
The consolidated financial statements incorporate the 
assets and liabilities of all entities controlled by InvoCare 
Limited (the Company) and the results of all controlled 
entities. InvoCare Limited and its controlled entities 
together are referred to as the consolidated entity or 
InvoCare. The effects of all transactions between entities 
in the consolidated entity are fully eliminated. Outside 
equity interests in the results and equity of controlled 
entities are shown separately in the consolidated 
Statements of Financial Performance and Statements  
of Financial Position respectively.

Where control of an entity is obtained during a financial 
year, its results are included in the consolidated 
Statements of Financial Performance from the date on 
which control commences. Where control of an entity 
ceases during a financial year its results are included  
for that part of the year during which control existed.

Revenue recognition
Revenue is recognised to the extent that it is probable 
that the economic benefits will flow to the entity and 
the revenue can be reliably measured. Revenue is 
recognised as set out below:

Funeral operations
Revenue is recognised when the funeral service is 
performed.

InvoCare enters into prepaid funeral contracts providing 
for future funeral services at prices prevailing when 
agreements are signed. Payments under these contracts 
are placed in trust (pursuant to InvoCare’s policy and, 
where relevant, state laws). The monies held in trust for 
individual prepaid funeral contracts are not controlled 
by InvoCare and are not recognised in the financial 
statements.

Cemeteries and crematoria operations
Sales of at-need and pre-need interment or inurnment 
rights are recognised immediately as revenue. Sales 
of associated memorials and other merchandise and 
burial and cremation services are recognised when the 
memorial or merchandise is determined as delivered or 
service is performed. Revenues relating to undelivered 
memorials and merchandise and unperformed services 
are deferred. Cash relating to recognised and deferred 
revenue on sale of rights, memorials and merchandise 
is recorded in the financial statements upon receipt. 
However, similarly to prepaid funeral services, monies  
for prepaid burial and cremation services are placed in 
trust until the service is performed. 

Deferred selling costs
Selling costs applicable to prepaid funeral service 
contracts, net of any administrative fees recovered,  
are expensed as incurred.

Direct selling costs applicable to deferred revenue 
on undelivered memorials and merchandise and 
unperformed burial and cremation services are deferred 
until the revenue is recognised.

Income tax
Tax effect accounting procedures are followed whereby 
the income tax expense in the Statements of Financial 
Performance is matched with the accounting profit after 
allowing for permanent differences. The future tax benefit 
relating to tax losses is not carried forward as an asset 
unless the benefit is virtually certain of realisation. Income 
tax on cumulative timing differences is set aside to the 
deferred income tax or the future income tax benefit 
accounts at the rates which are expected to apply when 
those timing differences reverse.

Maintenance and repairs
Maintenance, repair costs and minor renewals are 
charged as expenses as incurred, except where they 
relate to the replacement of a component of an asset,  
in which case the costs are capitalised and depreciated 
in accordance with Note 1 – Depreciation of property, 
plant and equipment, below.

Goods and Services Tax (GST)
Cash flows are included in the Statements of Cash Flows 
on a gross basis and 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.

Cash
For the purposes of the Statements of Cash Flows, 
cash includes deposits at call with financial institutions 
and other highly liquid investments with short periods to 
maturity which are readily convertible to cash on hand 
and are subject to an insignificant risk of changes in 
value, net of any outstanding bank overdrafts.

When in use, bank overdrafts are carried at the principal 
amount. Interest is charged as an expense as it accrues.

34

1.  SUMMARY OF SIGNIFICANT 

ACCOUNTING POLICIES (CONTINUED)

Receivables
All trade receivables are recognised at the amounts 
receivable from the date of recognition. Collectibility  
of trade debtors is reviewed on an ongoing basis.  
Debts which are known to be uncollectible are written 
off. A provision for doubtful debts is raised when some 
doubt as to collection exists.

Inventories
Inventories are stated at the lower of cost and net 
realisable value. Cost comprises direct materials and, 
where appropriate, a proportion of variable and fixed 
overhead. Costs are assigned to individual items of 
inventory predominantly on the basis of weighted 
average cost.

Acquisition of assets
The purchase method of accounting is used for all 
acquisitions of assets regardless of whether equity 
instruments or other assets are acquired. Cost is 
determined as the fair value of the assets given up, 
shares issued or liabilities undertaken at the date of 
acquisition plus incidental costs directly attributable  
to the acquisition.

Where settlement of any part of cash consideration 
is deferred, the amounts payable in the future are 
discounted to their present value as at the date of the 
acquisition. The discount rate used is the incremental 
borrowing rate, being the rate at which a similar 
borrowing could be obtained from an independent 
financier under comparable terms and conditions.

Recoverable amount of non-current assets
Non-current assets are valued at cost except where 
this exceeds the recoverable amount. The recoverable 
amount of an asset is the net amount expected to be 
recovered through the net cash inflows arising from its 
continued use and subsequent disposal.

Where the carrying amount of a non-current asset is 
greater than its recoverable amount the asset is written 
down to its recoverable amount. Where net cash inflows 
are derived from a group of assets working together, 
recoverable amount is determined on the basis of the 
relevant group of assets. The decrement in the carrying 
amount is recognised as an expense in net profit or loss 
in the reporting period in which the recoverable amount 
write-down occurs.

The expected net cash flows included in determining 
recoverable amounts of non-current assets are not 
discounted. 

Depreciation of property, plant and equipment
Depreciation is calculated on a straight line basis to 
write off the net cost of each item of property, plant and 
equipment (excluding freehold land) over its expected 
useful life to the consolidated entity. Estimates of 
remaining useful lives are made on a regular basis for  
all assets, with annual reassessments for major items. 
The expected useful lives are as follows:

Buildings 

Plant and equipment 

40 years

3 – 10 years

Cemetery land
Cemetery land is carried at cost less accumulated 
amortisation. Cost includes the cost of acquisitions and 
improvements. The consolidated entity sells interment 
and inurnment rights in perpetuity, while retaining title  
to the property. Cemetery land is amortised, as the right 
to each plot is sold, to write off the net cost of the land 
over the period in which it is utilised and an economic 
benefit has been received.

Leasehold improvements
The cost of improvements to or on leasehold properties 
is amortised over the unexpired period of the lease 
or the estimated useful life of the improvement to the 
consolidated entity, whichever is the shorter.

Leased non-current assets
A distinction is made between finance leases which 
effectively transfer from the lessor to the lessee 
substantially all the risks and benefits incident to 
ownership of leased non-current assets, and operating 
leases under which the lessor effectively retains 
substantially all such risks and benefits.

Finance leases are capitalised. A lease asset and liability 
are established at the present value of minimum lease 
payments. Lease payments are allocated between the 
principal component of the lease liability and the interest 
expense.

The leased asset is amortised on a straight line basis 
over the term of the lease, or where it is likely that the 
consolidated entity will obtain ownership of the asset,  
the life of the asset. The leased asset held at the 
reporting date is being amortised over three years.

Operating lease payments are charged to the 
Statements of Financial Performance in the period in 
which they are incurred, as this represents the pattern  
of benefits derived from the leased assets.

Intangible assets – goodwill
Where an entity or operation is acquired, the identifiable 
net assets acquired are measured at fair value. The 
excess of the fair value of the cost of acquisition over the 
fair value of the identifiable net assets acquired, including 
any liability for restructuring costs, is brought to account 
as goodwill and amortised on a straight line basis over 
20 years, being the period during which the benefits are 
expected to arise. The cost of acquisition is discounted 
where settlement of any part of cash consideration is 
deferred.

35

InvoCare Annual Report 2004

Notes to the Financial Statements

For the year ended 31 December 2004

Derivative financial instruments
The consolidated entity enters into interest rate swap 
agreements. The net amount receivable or payable under 
interest rate swap agreements is progressively brought 
to account over the period to settlement. The amount 
recognised is accounted for as an adjustment to interest 
and finance charges during the period and included in 
other debtors or other creditors at each reporting date.

When an interest rate swap is terminated early and the 
underlying hedged transactions are still expected to 
occur as designated, the gains or losses arising on the 
swap upon its early termination continue to be deferred 
and are progressively brought to account over the period 
during which the hedged transactions are recognised.

When an interest rate swap is terminated early and the 
underlying hedged transactions are no longer expected 
to occur as designated, the gains or losses arising on 
the swap upon its early termination are recognised in the 
Statements of Financial Performance as at the date of 
the termination.

Borrowing costs
Borrowing costs are recognised as expenses in the 
period in which they are incurred.

Earnings per share (EPS)
Basic EPS is calculated as net profit after tax attributable 
to members, divided by the weighted average number of 
ordinary shares outstanding during the financial year. The 
weighted average number of ordinary shares for 2003 
has been adjusted for the effects of the share split. 

Diluted EPS is calculated as net profit after tax 
attributable to members divided by the weighted average 
number of ordinary shares and dilutive potential ordinary 
shares, for 2003 adjusted for the effects of the share 
split.

Dividends
When necessary, provision is made for the amount 
of any dividend declared, determined or publicly 
recommended by the Directors on or before the end of 
the financial year but not distributed at balance date.

Interest-bearing liabilities
Interest-bearing liabilities are carried at their principal 
amounts which represent the present value of future 
cash flows associated with servicing the debt. Interest is 
accrued over the period it becomes due and is recorded 
as part of other creditors.

Employee benefits

Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, annual leave 
and, where applicable, accumulating sick leave are 
recognised in respect of employees’ services up to 
the reporting date, and are measured at the amounts 
expected to be paid when the liabilities are settled, plus 
appropriate on-costs. Liabilities for non-accumulating 
sick leave are recognised when the leave is taken and 
measured at the rates paid or payable.

Long service leave
A liability for long service leave is recognised, and is 
measured as the present value of expected future 
payments to be made in respect of services provided 
by employees up to the reporting date, including 
appropriate on-costs. Consideration is given to expected 
future wage and salary levels, experience of employee 
departures and period of service. Expected future 
payments are discounted using market yields at the 
reporting date on national government bonds with 
terms to maturity and currency to match, as closely as 
possible, the estimated future cash outflows.

Bonus plans
A liability for employee benefits in the form of bonus 
plans is recognised in other creditors when there is no 
realistic alternative but to settle the liability and at least 
one of the following conditions is met:

–  there are formal terms in the plan for determining  

the amount of the benefit

–  the amounts to be paid are determined before the time 

of completion of the financial report, or

–  past practice gives clear evidence of the amount  

of the obligation.

Liabilities for bonus plans are expected to be settled 
within 12 months and are measured at the amounts 
expected to be paid when they are settled.

Employee Share Option Plan
Information relating to the Employee Share Option Plan is 
set out in Note 28 – Employee Benefits.

No accounting entries are made in relation to the 
Employee Share Option Plan until options are exercised, 
at which time the amounts receivable from participants 
are recognised in the Statements of Financial Position  
as share capital. The amounts disclosed for remuneration 
of Directors and Executives in Note 33 – Director and 
Executive Disclosures include the assessed fair values of 
options at the date they were granted, allocated equally 
over the period from grant date to vesting date.

36

Notes 

Consolidated 

InvoCare Limited

2004 
$’000 

2003 
$’000 

2004 
$’000 

2003
$’000

2.  REVENUES FROM ORDINARY  

ACTIVITIES

Revenues from operating activities 
Revenues from sale of goods 
Revenues from services 
Management fees 
Total revenues from operating activities 

Revenues from outside the operating activities 
Rent 
Administration fees 
Sundry income 
Dividends and distributions 

77,847 
70,445 
– 
148,292 

74,027 
66,260 
– 
140,287 

35 

187 
1,441 
1,113 

164 
1,385 
505 

– 
– 
960 
960 

– 
– 
– 

–
–
480
480

–
–
–

Wholly owned group – controlled entities 

– 

– 

6,080 

7,000

Interest revenues 

Other persons/corporations 
Wholly owned group – controlled entities 
Proceeds on the sale of non-current assets 
Total revenues from outside the operating activities 
Total revenues from ordinary activities 

35 

494 
– 
3,744 
6,979 
155,271 

683 
– 
7,734 
10,471 
150,758 

– 
16,714 
– 
22,794 
23,754 

–
18,110
–
25,110
25,590

3. EXPENSES AND GAINS
Expenses 
Cost of goods sold 

Depreciation of non-current assets 

Buildings 
Property, plant and equipment 
Total depreciation of non-current assets 

Amortisation of non-current assets 

Goodwill 
Cemetery land 
Leasehold land and buildings 
Leasehold improvements 
Plant and equipment under lease 
Total amortisation of non-current assets 
Total depreciation and amortisation expenses 

22,388 

21,183 

2,087 
3,700 
5,787 

2,497 
400 
128 
130 
25 
3,180 
8,967 

2,124 
4,651 
6,775 

2,497 
380 
129 
137 
13 
3,156 
9,931 

– 

– 
– 
– 

– 
– 
– 
– 
– 
– 
– 

–

–
–
–

–
–
–
–
–
–
–

37

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
InvoCare Annual Report 2004

Notes to the Financial Statements

For the year ended 31 December 2004

Consolidated 

InvoCare Limited

2004 
$’000 

2003 
$’000 

2004 
$’000 

2003
$’000

5 
11,160 
– 
730 
11,895 
– 
11,895 
64 
3,494 

4 
9,941 
3,394 
776 
14,115 
2,148 
16,263 
407 
3,310 

– 
11,160 
– 
– 
11,160 
– 
11,160 
– 
– 

–
9,941
3,394
2
13,337
2,148
15,485
–
–

1,664 

2,651 

– 

–

3. EXPENSES AND GAINS (CONTINUED)
Borrowing costs 
Interest expenses 
Finance lease 
Debentures 
Convertible notes 
Other interest 
Total interest expenses 
Refinancing costs 
Total borrowing costs 
Bad and doubtful debts – trade debtors 
Operating lease rental – minimum lease payments 

Gains 
Net gain on disposal of non-current assets 

4. INCOME TAX
The income tax expense for the financial year  
differs from the amount calculated on profit.  
The differences are reconciled as follows: 

Prima facie tax on profit from ordinary activities 

7,816 

5,280 

3,548 

2,815

Tax effect of permanent differences 
Amortisation of cemetery land 
Depreciation and amortisation of buildings 
Amortisation of goodwill 
Non-assessable capital gain 
Tax credit for intercorporate dividend 
Other items (net) 

Income tax expense attributable  
to ordinary activities 

Tax assets/(liabilities) 
Current tax payable 
Provision for deferred income tax – non-current 
Future income tax benefit – non-current 

120 
346 
749 
(263) 
– 
141 

113 
344 
749 
(273) 
– 
(296) 

– 
– 
– 
– 
(1,824) 
(24) 

–
–
–
–
(2,100)
(5)

8,909 

5,917 

1,700 

710

(3,763) 
(2,479) 
5,422 

(3,962) 
(2,328) 
6,022 

(450) 
– 
615 

(42)
–
637

Income tax losses
No part of the future income tax benefit shown above is attributable to operating tax losses or capital tax losses.

The consolidated entity had no operating tax losses as at either 31 December 2004 or 31 December 2003.

38

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated 

InvoCare Limited

2004 
$’000 

2003 
$’000 

2004 
$’000 

2003
$’000

4. INCOME TAX (CONTINUED)
Potential future income tax benefit as at  
31 December 2004 in respect of capital tax  
losses not brought to account, as realisation  
of the benefit is not regarded as virtually certain, is: 

– 

60 

– 

–

This future income tax benefit will only be obtained if:
(a)   future assessable income is derived of a nature and of an amount sufficient to enable the benefit of the capital 

losses to be realised, or

(b)  the losses are transferred to an eligible entity in the consolidated entity,
(c)  the conditions for deductibility imposed by tax legislation continue to be complied with, and
(d)  no changes in tax legislation adversely affect the consolidated entity in realising the benefit.

Tax consolidation
InvoCare Limited and its wholly owned subsidiaries have the option of implementing the tax consolidation 
legislation. At the date of this report no decision has been taken although it is anticipated the legislation will be 
adopted from 1 January 2004. This is not expected to have any significant impact on the consolidated assets, 
liabilities and results.

5. DIVIDENDS PAID OR PROVIDED FOR
Dividends paid during the year 
Dividend paid to InvoCare Limited shareholders 

Interim dividend for the year ended  
31 December 2004 of 6.4 cents paid  
12 April 2004 – fully franked based on  
tax paid @ 30% 
Dividend of 20 cents paid 27 March 2003  
prior to listing – fully franked based on  
tax paid @ 30% 

Dividend paid to Outside Equity Interest 

Dividend of 8.4 cents paid 21 May 2004  
(2003: 11 September 2003) – fully franked  
based on tax paid @ 30% 

Dividends proposed and not recognised as a liability  
In addition to the above dividends, since the  
end of the financial year, the Directors have  
recommended the payment of a final dividend  
to InvoCare Limited shareholders of 9 cents per  
fully paid ordinary share, fully franked based on  
tax paid at 30%. The aggregate amount of the  
proposed dividend expected to be paid on  
12 April 2005 out of retained profits at  
31 December 2004, but not recognised  
as a liability at year end, is 

Franking credit balance 
The amount of franking credits available for  
subsequent financial years are: 
–  franking account balance as at the end of  

the financial year at 30% 

–  franking credits that will arise from the  
payment of income tax payable as at  
the end of the financial year 

6,080 

– 

6,080 

–

– 

15,000 

– 

15,000

68 
6,148 

67 
15,067 

– 
6,080 

–
15,000

8,550 

– 

8,550 

–

10,722 

4,854 

2,636 

1,366

3,763 
14,485 

3,962 
8,816 

450 
3,086 

42
1,408

The consolidated amounts include franking credits that would be available to the parent entity if distributable profits 
of controlled entities were paid as dividends.

39

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
InvoCare Annual Report 2004

Notes to the Financial Statements

For the year ended 31 December 2004

Notes 

Consolidated 

InvoCare Limited

2004 
$’000 

2003 
$’000 

2004 
$’000 

2003
$’000

6. RECEIVABLES (CURRENT)
Trade debtors 
Provision for doubtful debts 

Other debtors 
Loan to controlled entity (i) 

10 

15,941 
(1,366) 
14,575 

465 
– 
15,040 

15,759 
(1,536) 
14,223 

344 
– 
14,567 

Terms and conditions
(i) 

 Details of the terms and conditions relating to the above financial instrument are set out  
in Note 10 – Receivables (non-current).

7. INVENTORIES (CURRENT)
Work in progress – at cost 
Finished goods – at cost 

8. PROPERTY (CURRENT)
Land and buildings 
Freehold land – at cost 

Buildings – at cost 
Accumulated depreciation 

Total written down amount 

823 
10,122 
10,945 

– 
9,962 
9,962 

1,394 

1,921 

1,970 
(374) 
1,596 
2,990 

2,845 
(453) 
2,392 
4,313 

– 
– 
– 

– 
– 
– 

– 
– 
– 

– 

– 
– 
– 
– 

–
–
–

–
2,542
2,542

–
–
–

–

–
–
–
–

Freehold land and buildings
Land and buildings held for sale are classified as current assets as they are expected to be sold within 12 months 
of year end.

9. OTHER ASSETS (CURRENT)
Prepayments 
Deferred selling costs 

2,331 
478 
2,809 

2,276 
442 
2,718 

92 
– 
92 

92
–
92

40

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10. RECEIVABLES (NON-CURRENT)
Trade debtors (i) 
Provision for doubtful debts 

Security deposits 
Other debtor 
Loan to controlled entity (ii) 

Consolidated 

InvoCare Limited

2004 
$’000 

2003 
$’000 

2004 
$’000 

2003
$’000

7,357 
(490) 
6,867 

58 
400 
– 
7,325 

7,732 
(887) 
6,845 

61 
400 
– 
7,306 

– 
– 
– 

–
–
–

– 
– 
173,929 
173,929 

–
–
189,782
189,782

Terms and conditions
(i) 

 Trade debtors are non-interest bearing and are receivable through regular instalments within a maximum period 
of 60 months from the original invoice date.

(ii)  The loan to a controlled entity bears interest at 9% (2003: 9%) and has no fixed terms of repayment.

11. OTHER FINANCIAL ASSETS (NON-CURRENT)
Shares in controlled entity – unlisted (i) 

– 

– 

15,641 

15,641

(i) 

 The unlisted shares at cost relate to InvoCare Limited’s 100% (2003: 100%) ownership interest  
in InvoCare Australia Pty Limited (formerly Service Corporation International Australia Pty Limited).

All the shares held are classified as ordinary shares.
Refer Note 36 – Investment in controlled entities for details of controlled entities.

12. PROPERTY, PLANT AND EQUIPMENT (NON-CURRENT)
Land and buildings 
Cemetery land – at cost 
Accumulated amortisation 

106,022 
(3,436) 
102,586 

106,017 
(3,036) 
102,981 

Freehold land – at cost 

Buildings – at cost 
Accumulated depreciation 

Leasehold land and buildings – at cost 
Accumulated amortisation 

Leasehold improvements – at cost 
Accumulated amortisation 

Total land and buildings 

32,976 

33,393 

66,487 
(16,564) 
49,923 

4,470 
(1,454) 
3,016 

1,392 
(842) 
550 
189,051 

66,412 
(14,725) 
51,687 

4,470 
(1,326) 
3,144 

1,438 
(747) 
691 
191,896 

– 
– 
– 

– 

– 
– 
– 

– 
– 
– 

– 
– 
– 
– 

–
–
–

–

–
–
–

–
–
–

–
–
–
–

41

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
InvoCare Annual Report 2004

Notes to the Financial Statements

For the year ended 31 December 2004

12. PROPERTY, PLANT AND EQUIPMENT  
(NON-CURRENT) (CONTINUED)
Plant and equipment 
Operating plant and equipment – at cost 
Accumulated depreciation 

Plant and equipment under lease – at cost 
Accumulated amortisation 

Total plant and equipment 

Assets under construction 
Assets under construction – at cost 

Total property, plant and equipment 
At cost 
Accumulated depreciation and amortisation 
Total written down amount 

Consolidated 

InvoCare Limited

2004 
$’000 

2003 
$’000 

2004 
$’000 

2003
$’000

50,184 
(36,829) 
13,355 

73 
(31) 
42 
13,397 

48,280 
(35,961) 
12,319 

73 
(6) 
67 
12,386 

875 

2,257 

262,479 
(59,156) 
203,323 

262,340 
(55,801) 
206,539 

– 
– 
– 

– 
– 
– 
– 

– 

– 
– 
– 

–
–
–

–
–
–
–

–

–
–
–

Current valuation of land and buildings
The Directors’ valuation of land and buildings as at 31 December 2004 amounted to $225.8 million. As land  
and buildings are measured on the cost basis, the valuation has not been brought to account. 
The basis of the valuation of land and buildings, except cemetery and crematorium properties, was fair value being 
the amounts for which the assets could be exchanged between willing parties in an arm’s length transaction, based 
on an active market for similar properties in the same location and condition. The basis of valuation of cemetery 
and crematorium properties is historic cost, being the price at which the properties were acquired by InvoCare, less 
accumulated depreciation and amortisation since acquisition. The Directors believe this is a reasonable valuation 
due to there being no active market in cemetery and crematorium properties.

Assets pledged as security
Details of the non-current assets pledged as security are set out in Note 20 – Interest-bearing liabilities  
(non-current).

42

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12. PROPERTY, PLANT AND EQUIPMENT (NON-CURRENT) (CONTINUED)
Reconciliations
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of 
the current financial year are set out below for the consolidated entity. The parent entity does not hold any property, 
plant and equipment.

Cemetery 
land 
$’000 

Freehold  
land 
$’000 

land and  
Buildings  buildings  
$’000 

$’000 

ments  equipment 
$’000 
$’000 

  Leasehold   Leasehold 

Plant and  
improve-   Plant and   equipment  

Assets  
under  
leased  construction 
$’000 

$’000 

Total
$’000

Carrying amount  
1 January 2004 
Current 
Non-current 
Total opening  
amount 
Additions 
Disposals 
Depreciation/ 
amortisation  
expense 
Transfers 
Total closing  
amount 
Representing  
closing amount
Current 
Non-current 

– 
102,981 

1,921 
33,393 

2,392 
51,687 

– 
3,144 

– 
691 

– 
12,319 

102,981 
– 
– 

35,314 
– 
(944) 

54,079 
493 
(961) 

3,144 
– 
– 

691 
2 
(13) 

12,319 
3,516 
(162) 

– 
67 

67 
– 
– 

– 

4,313
2,257  206,539

2,257  210,852
4,011
(2,080)

– 
– 

(400) 
5 

– 
– 

(2,087) 
(5) 

(128) 
– 

(130) 
– 

(3,700) 
1,382 

(25) 
– 

– 
(1,382) 

(6,470)
–

102,586 

34,370 

51,519 

3,016 

550 

13,355 

42 

875  206,313

– 
102,586 
102,586 

1,394 
32,976 
34,370 

1,596 
49,923 
51,519 

– 
3,016 
3,016 

– 
550 
550 

– 
13,355 
13,355 

– 
42 
42 

– 

2,990
875  203,323
875  206,313

Consolidated 

InvoCare Limited

2004 
$’000 

2003 
$’000 

2004 
$’000 

2003
$’000

13. INTANGIBLES
Goodwill 
Accumulated amortisation 

49,976 
(26,171) 
23,805 

49,976 
(23,674) 
26,302 

14. OTHER ASSETS (NON-CURRENT)
Deferred selling costs 

6,687 

6,195 

15. PAYABLES (CURRENT)
Trade creditors 
Other creditors and accruals 
Deferred cash settlement for  
business interests acquired 

3,089 
12,145 

300 
15,534 

4,375 
13,447 

558 
18,380 

– 
– 
– 

– 

– 
222 

– 
222 

–
–
–

–

–
2,363

–
2,363

Terms and conditions
Trade and other creditors are non-interest bearing and are normally settled on 30 – 60 day terms

43

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
InvoCare Annual Report 2004

Notes to the Financial Statements

For the year ended 31 December 2004

Notes 

Consolidated 

InvoCare Limited

2004 
$’000 

2003 
$’000 

2004 
$’000 

2003
$’000

16.  INTEREST-BEARING LIABILITIES (CURRENT)
Secured 
Borrowings secured by fixed and floating  
charges – cash advance facility 
Lease liability secured by charge over  
leased assets 

– 

17 
17 

2,500 

15 
2,515 

– 

– 
– 

2,500

–
2,500

Terms and conditions
Details of the terms and conditions of the above financial instruments are set out in Note 20 – Interest-bearing 
liabilities (non-current).

17. PROVISIONS (CURRENT)
Employee entitlements 

28 

4,978 

4,563 

18. DEFERRED REVENUE (CURRENT)
Prepaid crematorium and cemetery revenue 

2,773 

2,619 

19. PAYABLES (NON-CURRENT)
Deferred cash settlement for business  
interests acquired  

29 

365 

– 

– 

– 

–

–

–

Terms and conditions
At balance date, InvoCare had a deferred cash settlement representing the present value of the remaining 
consideration payable for the acquisition of business interests, discounted at the prevailing commercial borrowing 
rate of 9% at the time the business interests were acquired. 

20. INTEREST-BEARING LIABILITIES (NON-CURRENT)
Secured 
Borrowings secured by fixed and floating charges 
– debentures 
– cash advance facility 
Lease liability secured by charge over  
leased assets 

109,000 
22,500 

32 
131,532 

130,000 
22,500 

109,000 
22,500 

130,000
22,500

49 
152,549 

– 
131,500 

–
152,500

Terms and conditions
InvoCare executed revised financing agreements with a syndicate of bankers in December 2003 providing total 
borrowing facilities of $165 million, including a debenture stock facility of $130 million, cash advance facility of 
$30 million and a working capital facility of $5 million. As at 31 December 2004, the available borrowing facilities 
amounted to $157.5 million and $131.8 million (2003: $155 million) had been drawn down on these facilities.

(i)  Debentures
Debentures issued at balance date amount to $109 million (2003: $130 million) and bear interest at a variable rate 
(based on BBR) plus a margin of 1.80% (2003: 2.05%). The interest rate at 31 December 2004 was 7.5% (2003: 
7.6%) paid quarterly in arrears with a maturity date of 30 September 2006. Separate interest rate swap contracts 
apply to no less than 75% of the debentures.
After making a compulsory repayment of $5 million in 2004, the remaining debentures have no set repayment 
terms, apart from repayment at the maturity date, 30 September 2006. Due to strong positive cash flows during 
the financial year, by 31 December 2004 InvoCare Limited had made $16 million voluntary, early, redrawable debt 
repayments on the debenture facility. These early repayments may be applied against $10 million compulsory 
repayment obligations on the cash advance facility during 2005.

44

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20. INTEREST-BEARING LIABILITIES (NON-CURRENT) (CONTINUED)
(i)  Debentures (continued)
The debentures are secured by fixed and floating charges over all the assets and undertakings of the consolidated 
entity, except those of Oakwood Funerals Pty Limited and Macquarie Memorial Park Pty Limited. The aggregate 
total assets of these two companies are $6.7 million (2003: $6.6 million).
The debentures require compliance with a number of covenants which were met as at 31 December 2004  
(and 31 December 2003).

(ii)  Cash advance facility
The cash advance facility at balance date bears interest at a variable rate (based on BBR) plus a margin of  
1.80% (2003: 2.05%). The interest rate at 31 December 2004 was 7.6% (2003: 7.7%) paid quarterly in arrears  
with a maturity date of 30 September 2006. Separate interest rate swap contracts apply to no less than 75%  
of the closing balance.
The cash advance facility has two components. The bullet repayment facility amounts to $10 million and at 
31 December 2004 $5 million (2003: $5 million) had been drawn down. This amount is not repayable until the 
maturity date, 30 September 2006. The amortising facility amounts to $20 million and at 31 December 2004 
$17.5 million (2003: $20 million) had been drawn down. Repayments on the amortising facility are $2.5 million  
in 2004, $10 million in 2005 and $7.5 million in 2006.
The cash advance facility is secured in the same manner as the debenture stock facility.
Due to strong positive cash flows during the financial year, by 31 December 2004 InvoCare Limited had made 
$16 million voluntary, early, redrawable debt repayments on the debenture facility. These repayments may 
be applied against $10 million compulsory repayment obligations on the cash advance facility during 2005. 
Accordingly, the total amount of the cash advance facility has been classified as a non-current liability in the 
Statements of Financial Position.

(iii) Finance leases
Finance leases have an average lease term of three years with the option to purchase the asset at the  
completion of the lease term for the asset’s market value. The average discount rate implicit in the leases  
is 9.1% (2003: 9.1%). Lease liabilities are secured by a charge over the leased assets.

Consolidated 

InvoCare Limited

2004 
$’000 

2003 
$’000 

2004 
$’000 

2003
$’000

Financing facilities available
Unrestricted access was available at  
balance date to the following lines of credit:
Total facilities 
– working capital facility 
– debenture stock facility 
– cash advance facilities 

Used at balance date 
– working capital facility 
– debenture stock facility 
– cash advance facilities 

Unused at balance date 
– working capital facility 
– debenture stock facility 
– cash advance facilities 

5,000 
125,000 
27,500 
157,500 

319 
109,000 
22,500 
131,819 

4,681 
16,000 
5,000 
25,681 

5,000 
130,000 
30,000 
165,000 

– 
130,000 
25,000 
155,000 

5,000 
– 
5,000 
10,000 

5,000 
125,000 
27,500 
157,500 

5,000
130,000
30,000
165,000

319 
109,000 
22,500 
131,819 

–
130,000
25,000
155,000

4,681 
16,000 
5,000 
25,681 

5,000
–
5,000
10,000

The working capital facility may be drawn at any time. The interest rate on this facility is variable.

45

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
InvoCare Annual Report 2004

Notes to the Financial Statements

For the year ended 31 December 2004

Notes 

Consolidated 

InvoCare Limited

2004 
$’000 

2003 
$’000 

2004 
$’000 

2003
$’000

21. PROVISIONS (NON-CURRENT)
Employee entitlements 

28 

3,431 

3,008 

22. DEFERRED REVENUE (NON-CURRENT)
Prepaid crematorium and cemetery revenue 

38,823 

36,664 

– 

– 

–

–

In addition to deferred crematorium and cemetery revenue, monies held in trust not controlled by InvoCare  
for prepaid funeral contracts and prepaid burial and cremation services amounted to $198.6 million  
(2003: $169.5 million). The monies held in trust will only be recognised as revenue when the services are  
performed (refer “Revenue recognition” in Note 1 – Summary of significant accounting policies).

23. CONTRIBUTED EQUITY
Issued and paid up capital 
Ordinary shares fully paid 

52,589 

52,026 

52,589 

52,026

2004 

2003

Number  
of shares 

$’000 

Number
of shares 

$’000

Movements in ordinary shares on issue 
Beginning of the financial year 
Movement prior to listing 
– bought back during the year prior to listing (i) 
– issued prior to listing 
– conversion of preference shares to ordinary shares (ii)   
Total before share split 
Total after share split and at date of listing (ii) 

  93,918,733 

52,026  15,000,000 

15,000

– 
– 
– 
– 
– 

(3,125,000) 
– 
– 
1,985,000 
–  47,500,000 
–  61,360,000 
–  93,753,273 

(5,000)
1,943
40,000
51,943
51,943

Movement after listing 
– issued pursuant to exercise of share options (note 28)  
End of the financial year 

1,084,245 
  95,002,978 

563 

165,460 
52,589  93,918,733 

83
52,026

Movements in preference shares on issue 
Beginning of the financial year 
Movement prior to listing 
– bought back during the year prior to listing (i) 
– conversion to ordinary shares prior to listing (ii) 
End of the financial year 

– 

– 
– 
– 

–  60,000,000 

60,000

– 
– 
– 

(12,500,000) 
(47,500,000) 
– 

(20,000)
(40,000)
–

(i) 

 After 31 December 2002 the Directors reviewed InvoCare’s financial position and capital structure and noted the 
significant reduction in bank loans achieved by accelerated repayments since the loans were originally advanced 
in May 2001. The Directors concluded that additional debt finance to pay a fully franked dividend and share 
buy-back would not materially prejudice InvoCare’s creditors.
 On 28 March 2003, 3,125,000 ordinary shares fully paid to $1 (representing 21% of ordinary shares) and 
12,500,000 preference shares fully paid to $1 (representing 21% of preference shares) were bought back.  
The ordinary and preference shares were repurchased for $1.60 per share for a total cost of $25,000,000.
(ii)   Immediately prior to the IPO pursuant to a Prospectus dated 31 October 2003, all the preference shares were 
converted to ordinary share status on 2 December 2003. All ordinary shares were then subject to a share split 
of approximately 1.528 new ordinary shares for each existing ordinary share resulting in a total of 93,753,273 
ordinary shares at a total paid up value of $51,942,900. The holders of 93,142,105 ordinary shares offered 
a 100% sell down of their respective interests in InvoCare Limited and received all the sale proceeds, less 
applicable costs. InvoCare Limited did not raise any capital from the IPO.

Terms and conditions
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in 
proportion to the number of and amounts paid on the shares held. 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.

46

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23. CONTRIBUTED EQUITY (CONTINUED)
Terms and conditions (continued)
Preference shares entitled the holder to participate in dividends and the proceeds on winding up of the Company in 
proportion to the number of and amounts paid on the shares held. Rights on winding up ranked higher than those 
ordinary shares. On a show of hands every holder of preference shares present at a meeting in person or by proxy, 
was entitled to one vote, and upon a poll each share was entitled to one vote. Preference shares were converted to 
ordinary shares on 2 December 2003.

Share options
Information relating to the share options is included in Note 28 – Employee Benefits.

24. RETAINED PROFITS
Retained profits 
Balance at the beginning of the year 
Net profit attributable to members  
of InvoCare Limited 
Total available for appropriation 
Dividends paid 
Balance at the end of the year 

25. OUTSIDE EQUITY INTEREST
Reconciliation of outside equity interest  
in controlled entities:
Share capital 

Opening balance of retained earnings 
Add share of operating profit 
Less dividends paid 

Closing balance of retained earnings 
Reserves 
Closing balance 

Consolidated 

InvoCare Limited

2004 
$’000 

2003 
$’000 

2004 
$’000 

2003
$’000

11,033 

14,395 

1,700 

8,027

17,088 
28,121 
(6,080) 
22,041 

11,638 
26,033 
(15,000) 
11,033 

10,127 
11,827 
(6,080) 
5,747 

8,673
16,700
(15,000)
1,700

800 
156 
57 
(68) 
145 
99 
1,044 

800 
178 
45 
(67) 
156 
99 
1,055 

26. STATEMENTS OF CASH FLOWS
Reconciliation of the net profit after income  
tax to the net cash flows from operations 
Net profit after tax 

Non-cash or non-operating items 

Depreciation of non-current assets 
Amortisation of non-current assets 
Net (profit) on disposal of property,  
plant and equipment 

Changes in operating assets and liabilities 

(Increase)/decrease in trade and other receivables 
(Increase)/decrease in inventory 
(Increase)/decrease in future income tax benefit 
(Increase)/decrease in other operating assets 
(Decrease)/increase in trade and other creditors 
(Decrease)/increase in deferred revenue 
(Decrease)/increase in tax provision 
(Decrease)/increase in deferred income tax liability 
(Decrease)/increase in provisions 
Net cash flow from operating activities 

17,145 

11,683 

10,127 

8,673

3 
3 

3 

5,787 
3,180 

6,775 
3,156 

(1,664) 

(2,651) 

(492) 
(983) 
600 
(583) 
(3,182) 
2,313 
(199) 
151 
838 
22,911 

479 
(621) 
(1,224) 
(1,102) 
1,576 
3,027 
2,530 
250 
(344) 
23,534 

47

– 
– 

– 

– 
– 
– 
22 
(2,141) 
– 
– 
408 
– 
– 
8,416 

–
–

–

–
–
(637)
(59)
(722)
–
(755)
–
–
6,500

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
InvoCare Annual Report 2004

Notes to the Financial Statements

For the year ended 31 December 2004

Consolidated 

InvoCare Limited

2004 
$’000 

2003 
$’000 

2004 
$’000 

2003
$’000

26. STATEMENTS OF CASH FLOWS (CONTINUED)
Reconciliation of cash 
Cash balance comprises: 

Cash on hand 
Cash at bank 
Closing cash balance 

47 
640 
687 

47 
7,096 
7,143 

– 
231 
231 

–
2,437
2,437

27. EXPENDITURE COMMITMENTS
Capital expenditure commitments 
Commitments for the acquisition of property, plant  
and equipment contracted for at the reporting date  
but not recognised as liabilities payable: 
– within one year 

Other expenditure commitments 
Commitments for the construction of crypts,  
contracted for at the reporting date but not  
recognised as liabilities payable: 
– within one year 

Lease expenditure commitments 
Operating leases 
Commitments for minimum lease  
payments in relation to non-cancellable  
operating leases are payable as follows: 
– within one year 
– later than one year and not later than five years 
– later than five years 
Aggregate lease expenditure contracted  
for at balance date 

1,803 

260 

788 

2,286 

2,878 
6,781 
13,633 

2,534 
5,144 
13,244 

23,292 

20,922 

– 

– 

– 
– 
– 

– 

Assets that are the subject of operating leases include property, motor vehicles and office equipment.

28. EMPLOYEE BENEFITS
Employee benefit and related on-costs liabilities
Included in other creditors and accruals
– current (Note 15) 
Provisions for employee entitlements 
– current (Note 17) 
Provisions for employee entitlements 
– non-current (Note 21) 
Aggregate employee benefit and related  
on-costs liabilities 

2,817 

2,693 

4,978 

4,563 

3,431 

3,008 

11,226 

10,264 

– 

– 

– 

– 

–

–

–
–
–

–

–

–

–

–

48

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated 

InvoCare Limited

2004 
No. 

2003 
No. 

2004 
No. 

2003
No.

28. EMPLOYEE BENEFITS (CONTINUED)
Employee numbers 
Number of full-time equivalent employees  
at the reporting date 

809 

806 

– 

–

Employee Share Options
InvoCare Limited has options over unissued shares granted to:
(a)   a Non-Executive Director, Ian Ferrier, on 8 May 2001 under a letter dated 1 May 2001. These options vested on 

8 May 2002 and were exercised during 2004.

(b)   executive management on 22 September 2003, including Michael Grehan, who was an Executive but not a 
Director at the time of grant, under the Employee Share Option Plan approved in a meeting of the Board of 
Directors. Further details are set out below.

(c)   an Executive Director, Richard Davis, on 8 May 2004 under a Service Agreement dated 8 May 2001.  

These options vested on the date of issue.

Details of the movements in the numbers of options over ordinary shares in InvoCare Limited held by each Director 
and Specified Executive are set out in Note 33.
 Each option granted over unissued shares of InvoCare Limited entitles the holder to subscribe for one fully paid 
ordinary share in the capital of the Company. Options are granted for no consideration and carry no dividend 
or voting rights. No option holder has any rights under the options to participate in any other share issue of the 
Company or any other entity.
The Directors have determined that a grant of options made to a participant in the Employee Share Option Plan will 
vest as follows:
(a)   for options with an exercise price of $0.50, one third of the number of options granted vested on  

22 September 2003, a further one third vested on 1 May 2004 and the final one third will vest on 1 May 2005,

(b)   for options with an exercise price of $0.59, one third of the number of options granted vested on 1 May 2004,  

a further one third will vest on 1 May 2005 and the final one third will vest on 1 May 2006, and
(c)   for options with an exercise price of $1.07, one third of the number of options granted will vest on  

1 May 2005, a further one third will vest on 1 May 2006 and the final one third will vest on 1 May 2007.

No option can be exercised until it has vested.
Unless otherwise determined, under the Employee Share Option Plan vested options of employees may be 
exercised at any time prior to the first to occur of:
– The expiry of five years from the date of issue,
–  Expiry of three months after the date upon which the option holder dies or voluntarily or without cause ceases  

to be employed by the consolidated entity, and

– Immediately upon the option holder’s employment by the consolidated entity being terminated with cause.

If InvoCare Limited makes a bonus issue of shares or other securities pro rata to holders of shares (other than an 
issue in lieu, or in satisfaction, of dividends or by way of dividend reinvestment) and no shares have been allotted in 
respect of an option before the record date for determining entitlements to the bonus issue, then that option, when 
exercised in accordance with the Employee Share Option Plan, will entitle the option holder to receive the number 
of shares that the option holder would have been entitled to under the bonus issue as if the option had been 
exercised and the shares allotted before that record date.
If InvoCare Limited makes a rights offer to all or most of the shareholders of the Company (other than in lieu of 
dividends or by way of dividend reinvestment) then the exercise price of the options will be reduced by the values of 
the theoretical rights of entitlement received in relation to each share (as determined by the formula expressed in the 
terms of the Plan).
The total number of shares issued upon exercise of the options under the Plan must not exceed 10% of the total 
number of shares on issue in the capital of InvoCare Limited (or shares capable of being issued under an equity 
security). However, if an applicable law at any time imposes a lower limit, then that lower limit will apply.
Once options issued under the Plan have reached their vesting dates options may be exercised in parcels of no 
less than 10,000 (or if the vested entitlement is less than 10,000 the full amount of that vested entitlement must 
be exercised) until the earlier of the fifth anniversary of the issue date, the date of sale of all the shares in InvoCare 
Limited and the occurrence of one of the events that causes the lapse of options.

49

 
 
 
 
 
 
 
 
 
 
InvoCare Annual Report 2004

Notes to the Financial Statements

For the year ended 31 December 2004

28. EMPLOYEE BENEFITS (CONTINUED)

Employee Share Options (continued) 
Set out below is a summary of the movement in options during the year, including those held by Directors.

Grant date 

8 May 2001* 
22 September 2003** 
22 September 2003** 
22 September 2003** 
8 May 2004*** 

Expiry 
date 

1 May 2006 
1 May 2006 
1 May 2007 
1 May 2008 
8 May 2009 

Exercise 
price 

$0.50 
$0.50 
$0.59 
$1.07 
$1.51 

Balance  
at start  
of year 

Issued  
during  
year 

Exercised  
during  
year 

Lapsed  
during  
year 

Balance
at end 
of year

302,401 
904,084 
702,843 
1,123,019 
– 
3,032,347 

302,401 
547,566 
234,278 

–
– 
– 
356,518
– 
– 
468,565
– 
– 
–  122,233  1,000,786
– 
988,565 
988,565
– 
– 
988,565  1,084,245  122,233  2,814,434

*  Options issued to a Director, Ian Ferrier, under a letter dated 8 May 2001
**  Options issued under the Employee Share Option Plan
***  Options issued to Richard Davis under a Service Agreement dated 8 May 2001.

Options exercised during the financial year and number of shares issued on the exercise of the options:

Exercise 
date 

2004 
29 June 2004  
29 June 2004  
30 August 2004 
31 August 2004 
31 August 2004 
1 September 2004 
1 September 2004 
Total 

2003
24 October 2003** 
29 December 2003 
Total 

Exercise 
price 

Fair value of  
shares issued* 

Options  
exercised 
Number 

Proceed from  
shares issued 
$

$0.50 
$0.59 
$0.50 
$0.50 
$0.59 
$0.50 
$0.59 

** 
$0.50 

$2.37 
$2.37 
$2.74 
$2.80 
$2.80 
$2.84 
$2.84 

$1.88 
$2.09 

254,653 
140,059 
302,401 
101,860 
25,464 
191,053 
68,755 
1,084,245 

3,032,912 
165,460 
3,198,372 

127,327
82,636
151,201
50,930
15,024
95,526
40,566
563,210

1,942,900
82,730
2,025,630

* 

** 

 The fair value of shares issued on the exercise of options after the Company listed on 4 December 2003 is the 
closing price at which the Company’s shares were traded on the ASX on the day of the exercise of the options. 
The fair values of shares issued before initial listing of the Company’s shares has been estimated as the closing 
price at which the Company’s shares were traded on the ASX on 4 December 2003.
 The number of options exercised on 24 October 2003 and the exercise price of those options have been 
disclosed as post share split amounts. These options, originally issued to a Director, Richard Davis, and 
exercised prior to the capital restructure and listing of InvoCare Limited, were not all exercised by Richard 
Davis. Richard Davis exercised 400,000 (611,168 post share split) options at $0.76 per share which increased 
net assets by $304,000. By agreement Macquarie Direct Investment A Limited, a former shareholder of 
InvoCare Limited, purchased and exercised 1,585,000 (2,421,744 post share split) options at $0.76 per share 
for 725,000 options, $0.90 per share for 430,000 options and $1.63 per share for 430,000 options which 
increased net assets by $1,638,900.

The aggregate number of shares issued to, and proceeds received from, employees on the conversion of options 
to shares during the financial year were 781,844 and $412,009 respectively (2003: 776,628 and $386,730).

Options vested at the reporting date:

Issued to employees (including Executive Directors) 
Issued to Non-Executive Directors 

50

2004 
Number 

2003
Number

988,565 
– 
988,565 

191,055
302,401
493,456

 
 
  
  
 
 
 
 
 
 
  
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
29. CONTINGENT LIABILITIES
The parent entity and consolidated entity had  
contingent liabilities at 31 December 2004 in  
respect of bank guarantees given in respect  
of leased premises of controlled entities to  
a maximum amount of: 

Consolidated 

InvoCare Limited

2004 
$’000 

2003 
$’000 

2004 
$’000 

2003
$’000

143 

225 

143 

225

No material losses are anticipated in respect of the above contingent liabilities.

30. EARNINGS PER SHARE
Reconciliation of earnings used  
in calculating basic and diluted  
earnings per share 
Net profit 
Adjustments: 
Net profit attributable to outside equity interest 
Earnings used in calculating basic  
and diluted earnings per share 

17,145 

11,683

(57) 

(45)

17,088 

11,638

Number  
of shares 
2004 

Number 
of shares 
2003 

Weighted average number of  
shares used as the denominator
Weighted average number of  
ordinary shares used in calculating  
basic earnings per share: 

  94,399,665  96,920,114

Weighted average number of ordinary  
shares and potential ordinary shares  
used in calculating diluted earnings per share 

  96,235,120  99,228,347

The average market price utilised in calculating the weighted average number of shares used in calculating diluted 
earnings per share was $2.56 (2003: $2.02).

Information concerning the classification of securities
Ordinary shares
In determining the 2003 weighted average number of shares for basic and diluted earnings per share the preference 
shares on issue (up to the listing in 2003) have been treated as ordinary shares as they fall within the definition of 
ordinary shares. In addition, the 2003 weighted average number of ordinary shares used to calculate the basic and 
diluted earnings per share has been adjusted for the change in the number of ordinary shares which occurred as a 
result of the share split in December 2003. The number of ordinary shares outstanding before the share split has been 
adjusted for the proportionate change in the number of ordinary shares outstanding as if the share split had occurred 
at the beginning of the 2003 year.

Options
Options granted are considered to be potential ordinary shares and have been included in the determination of diluted 
earnings per share. The options have not been included in the determination of basic earnings per share.

Details relating to the options are set out in Note 28 – Employee Benefits.

Subsequent movements in contributed equity
Since the end of the financial year, no ordinary shares have been issued pursuant to the Employee Share Option Plan.

There have been no other conversions to, calls of, or subscriptions for ordinary shares or issues of potential ordinary 
shares since the reporting date and before the completion of this financial report.

51

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
InvoCare Annual Report 2004

Notes to the Financial Statements

For the year ended 31 December 2004

31. SUBSEQUENT EVENTS
There have been no significant events that have occurred subsequent to 31 December 2004.

32. SEGMENT INFORMATION
InvoCare operates in one industry, being the funeral industry, and in one geographical location, being Australia.

33. DIRECTOR AND EXECUTIVE DISCLOSURES
(a)  Directors 
The following persons were Directors of the Company during the financial year:

Chairman – Non-Executive 
Ian Ferrier 

Executive Directors 
Richard Davis   Managing Director and Chief Executive Officer
Michael Grehan   Chief Operating Officer

Non-Executive Directors 
Christine Clifton 
Richard Fisher 
John Murphy 

(resigned 28 February 2005)

Roger Penman was appointed a Non-Executive Director on 1 January 2005.

(b) Specified Executives
The following persons were the five executives, other than Directors, with the greatest authority for the strategic 
direction and management of the consolidated entity (“Specified Executives”) during the financial year:

Name 

Position 

Employer

Kenneth Mealey 
Phillip Friery 
Jacobus Adrichem 

Armen Mikaelian 

John Fowler 

Chief Financial Officer 
Group Finance Manager 
National Operations Manager  
Cemeteries & Crematoria 
National Sales Manager 
Cemeteries & Crematoria 
General Manager Funerals Vic 

(c)  Remuneration of Directors and Executives
Principles used to determine the nature and amount of remuneration

InvoCare Australia Pty Limited
InvoCare Australia Pty Limited

InvoCare Australia Pty Limited

InvoCare Australia Pty Limited
InvoCare Australia Pty Limited

Non-Executive Directors
Policy
The Board’s primary focus is on the long term strategic direction and overall performance of the Company. 
Accordingly, Non-Executive Director remuneration is not targeted to short term results.

Fees paid to Non-Executive Directors are determined with the assistance of independent external advisers.

The remuneration policy is designed:

– to attract and retain competent and suitably qualified Non-Executive Directors;

– to motivate Non-Executive Directors to achieve InvoCare’s long term strategic objectives;

– to align the interests of Non-Executive Directors with the long term interests of shareholders.

Fee pool and other fees
Non-Executive Directors’ base fees for services as Directors are determined within an aggregate Directors’ fee pool 
limit, which is periodically approved by shareholders. At the date of this report the pool limit is $400,000, being the 
amount approved by shareholders at the Annual General Meeting held on 31 May 2004.

This remuneration is to be divided among the Non-Executive Directors in such proportion as the Board determines. 
During the year ended 31 December 2004, $265,000 of the fee pool was utilised, consistent with an undertaking 
made by the Chairman to shareholders at the Annual General Meeting held on 31 May 2004. Currently fees for  
Non-Executive Directors are $100,000 for the Chairman of the Board and $65,000 for each of the other three  
Non-Executive Directors.

52

 
 
 
 
33. DIRECTOR AND EXECUTIVE DISCLOSURES (CONTINUED)
Fee pool and other fees (continued)
This excludes any remuneration determined by the Directors where a Director performs additional or special duties 
for the Company. If a Director performs additional or special duties for the Company they may be remunerated as 
determined by the Directors and that remuneration can be in addition to the limit mentioned above. No fees for 
additional or special duties were paid to Non-Executive Directors during the year ended 31 December 2004.

Directors are entitled to be reimbursed for all reasonable costs and expenses incurred by them in the performance  
of their duties as Directors.

Equity participation
Non-Executive Directors may receive options as part of their remuneration, subject only to shareholder approval.  
No options are held by any Non-Executive Director at the date of this report.

Retiring allowances
No retiring allowances are paid to Non-Executive Directors.

Superannuation
Where relevant, total fees paid to Non-Executive Directors are inclusive of any superannuation guarantee charge  
and, at the discretion of each Non-Executive Director, may be paid into superannuation funds.

Executive Directors and Executive Management
Policy
The guiding principle underlying InvoCare’s executive remuneration philosophy is to ensure rewards are fair and 
reasonable having regard to both internal and external relativities and appropriately balanced between fixed and 
variable components and that all variable components are commensurate with performance and results delivered.

InvoCare’s remuneration policy is that:

– for each role, the balance between fixed and variable components should reflect market conditions;

– individual objectives should reflect the need for sustainable outcomes;

– all variable pay should be tightly linked to measurable personal and business group performance;

– total compensation be market competitive.

Approval
The Board Remuneration Committee makes recommendations to the Board of Directors in relation to the 
remuneration of the Chief Executive Officer (“CEO”).

The CEO recommends and the Remuneration Committee approves all executive remuneration within a defined 
budget, approved by the Board of Directors.

Fixed remuneration
Executives are offered market competitive base salary (including benefits). Base salary is reviewed on a regular  
basis against market data for comparable positions provided by independent remuneration consultants and selected 
survey data.

Adjustments to base salary are made based on increases in role scope or responsibility, pay position relative  
to market and relative performance in the role.

Short term incentives
Short term incentives in the form of cash bonuses are paid to selected executives based on measured performance 
against a range of mainly quantitative financial performance measures. These include EBIT targets, income accretion 
targets, debt reduction targets, qualitative measures of customer satisfaction and debtor days outstanding targets.

Performance targets are agreed with each executive at the beginning of the period and performance measured 
against targets set determining the value of cash bonus paid.

As executives gain seniority, the balance between fixed and variable components shifts to a higher percentage  
of “at risk” remuneration.

Long term incentives
InvoCare’s long term incentive policy aims to create a balance between corporate performance and retention  
of key executives.

The equity compensation provided to selected executives was initiated prior to the Initial Public Offering of InvoCare 
and was provided in the form of share options. Details are set out below under “Share-based compensation 
– options”.

InvoCare’s long term incentive practices have been reviewed in detail and proposed changes will be presented  
to shareholders for approval.

53

InvoCare Annual Report 2004

Notes to the Financial Statements

For the year ended 31 December 2004

33. DIRECTOR AND EXECUTIVE DISCLOSURES (CONTINUED)
Service agreements
Chief Executive Officer

–  Remuneration and other terms of employment for the CEO were formalised in a service agreement dated  

8 May 2001 with an initial term of two years, renewable each year for a further twelve months at the discretion  
of the Board of Directors.

–  The agreement provides for the provision of salary, short term performance related cash bonuses, superannuation 

and other benefits to be reviewed annually.

–  Termination may be effected with either six month’s notice or by payment of six month’s remuneration. In the event 
of termination, the agreement provides normal commercial restraint conditions for a period of twelve months after 
termination.

–  The agreement also provided for long term performance incentives by the grant of options over unissued shares  

in InvoCare Limited on 8 May 2004. Details of the share options are set out in Note 28.

Other executives

–  Remuneration and other terms of employment for the Specified Executives and other executives are formalised  

in letters of appointment.

–  Each of these appointments provide for the provision of base salary, short term performance related cash bonuses, 

superannuation and other benefits.

–  In addition, selected senior executives receive long term performance incentives and participate in the Company’s 
Employee Share Option Plan. Options were granted to them in September 2003. Details of these options are set  
in Note 28.

Details of remuneration
Details of the remuneration of each Director of InvoCare Limited and each of the five Specified Executives of the 
consolidated entity are set out in the following tables.

Primary 

Salary 
& Fees 
$ 

95,872 
55,000 
50,459 
– 

Cash 
bonus 
$ 

Non
monetary 
benefits 
$ 

Post Employment 

Equity 

Total

Super-  Retirement
benefits 
$ 

annuation 
$ 

Options
$ 

$

– 
– 
– 
– 

– 
– 
– 
– 

4,128 
– 
4,541 
55,000 

– 
– 
– 
– 

– 
– 
– 
– 

100,000
55,000
55,000
55,000

400,000  200,000 
300,000  150,000 
901,331  350,000 

28,896 
8,997 

36,000 
27,676 
37,893  127,345 

–  721,652  1,386,548
–  580,831  1,067,504
– 1,302,483  2,719,052

18,000 
200,000 
80,000 
13,500 
150,000 
60,000 
14,634 
22,650 
151,000 
30,367 
168,294  110,775 
140,000 
13,404 
16,800 
809,294  290,225  114,762   89,905 

25,940 
34,017 
7,934 
19,516 
27,355 

623,733
–  299,793 
323,695
66,178 
– 
249,151
52,933 
– 
366,096
37,144 
– 
– 
271,570
74,011 
–  530,059  1,834,245

189,343 

– 

41,892 

19,598 

– 

74,011 

324,844

Non-Executive Directors
Ian Ferrier 
John Murphy 
Christine Clifton 
Richard Fisher 
Executive Directors
Richard Davis 
Michael Grehan 
Total 

Specified Executives 
Kenneth Mealey 
Phillip Friery 
Jacobus Adrichem 
Armen Mikaelian 
John Fowler 
Total 

Other senior executive
Colin Purslowe* 

* 

 Colin Purslowe, General Manager Funerals WA, has been included in the above table in order that the 
remuneration of the five most highly paid executives is disclosed. The salary includes payout of leave 
entitlements.

54

 
 
 
 
 
 
 
 
 
 
 
33. DIRECTOR AND EXECUTIVE DISCLOSURES (CONTINUED)
Comparative information on either an individual or aggregate basis in respect of the remuneration of Directors and 
Specified Executives of InvoCare Limited for the year ended 31 December 2003 is not shown as this is the first 
financial report prepared since the issue of AASB 1046 “Director and Executive Disclosures by Disclosing Entities”.

Share-based compensation – options
The terms and conditions of each grant of options affecting remuneration in this or future reporting periods are  
as follows:

Grant date 

Expiry date 

Exercise price 

Value per option  
at grant date 

Date exercisable

22 September 2003* 

1 May 2006 

$0.50 

$1.32 

22 September 2003* 

1 May 2007 

$0.59 

$1.18 

22 September 2003* 

1 May 2008 

$1.07 

$0.69 

8 May 2004** 

8 May 2009 

$1.51 

$0.73 

1/3 on 22 September 2003,  
1/3 on 1 May 2004,  
1/3 on 1 May 2005
1/3 on 1 May 2004,  
1/3 on 1 May 2005,  
1/3 on 1 May 2006
1/3 on 1 May 2005,  
1/3 on 1 May 2006,  
1/3 on 1 May 2007
Upon release of audited  
results for the year ended  
31 December 2004

* 

** 

 Options granted at the discretion of the Directors to senior executives of the consolidated entity for no 
consideration under the Employee Share Option Plan. The options vest in 1/3 portions at various dates.  
When exercised, each option entitles the participant to acquire one fully paid ordinary share of the Company.
 Options granted for no consideration on 8 May 2004 to Richard Davis, Director and Chief Executive Officer, 
under a Service Agreement dated 8 May 2001. These options vested upon issue. When exercised, each 
option entitles Mr Davis to acquire one fully paid ordinary share of the Company. Under a voluntary escrow 
arrangement, Mr Davis agreed he would not dispose or otherwise deal in these options until the Company 
reports its audited financial results for the year ended 31 December 2004.

(d) Equity instrument disclosures relating to Directors and Specified Executives
Options provided as remuneration
Details of options over unissued ordinary shares in InvoCare Limited provided as remuneration to each Director and 
each of the five Specified Executives of the consolidated entity are set out below. Further information on the options  
is set out in Note 28.

The amounts disclosed for remuneration relating to options is the assessed fair value at grant date allocated equally 
over the period from grant date to vesting date. Fair values at grant date have been independently determined using 
a binomial option pricing model that takes into account the exercise price, the expected life of the option, the vesting 
and performance criteria, the impact of dilution, the non-tradeable nature of the option, the share price on grant date 
and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the 
expected life of the option.

No amounts are unpaid on any shares issued on the exercise of options.

55

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
InvoCare Annual Report 2004

Notes to the Financial Statements

For the year ended 31 December 2004

33. DIRECTOR AND EXECUTIVE DISCLOSURES (CONTINUED)
Option holdings
Details of the movements in the number of options over ordinary shares in InvoCare Limited held during the financial 
year by each Director and each of the five Specified Executives of the consolidated entity, including their personally-
related entities, are set out below:

  Name 

Directors
Ian Ferrier 
Richard Davis* 
Michael Grehan* 

Specified Executives
Kenneth Mealey 
Phillip Friery 
Jacobus Adrichem 
Armen Mikaelian 
John Fowler 

Balance at 
start of year 

Granted  

Exercised  
during    during year  
at exercise  
year as  
price $0.50 
remuneration 

Exercised  
during year 
at exercise  
price $0.59 

Balance  
at end  
of year 

  Vested and 
exercisable  
at end  
of year

Vested  
during year 

302,401 
– 
1,222,336 

– 
988,565 
– 

302,401 
– 

– 
– 
254,653  140,059 

– 
988,565 
827,624 

– 

–
988,565  988,565
–
267,386 

483,868 
140,092 
81,494 
122,233 
152,792 

– 
– 
– 
– 
– 

127,353 
12,765 
25,470 
– 
50,930 

38,198 
12,732 
5,093 
– 
12,732 

318,317 
114,595 
50,931 
122,233 
89,130 

165,524 
25,465 
30,558 
– 
38,198 

–
–
–
–
–

* 

 Under voluntary escrow arrangements, Richard Davis and Michael Grehan agreed they would not dispose  
or otherwise deal in these options until the Company reports its audited financial results for the year ended  
31 December 2004.

No options are vested and unexercisable at the end of the year.

Share holdings
Details of the movements in the number of ordinary shares in InvoCare Limited held during the financial year by each 
Director and each of the five Specified Executives of the consolidated entity, including their personally-related entities, 
are set out below:

Directors 
Ian Ferrier 
Richard Davis* 
Michael Grehan* 
John Murphy 
Christine Clifton 
Richard Fisher 

Specified Executives 
Kenneth Mealey 
Phillip Friery 
Jacobus Adrichem 
Armen Mikaelian 
John Fowler 

Balance at  
start of year 

Received 
during year  
on exercise  
of option 

Other 
 changes  
during year 

Balance  
at end 
 of year

– 
611,168 
– 
56,417 
110,000 
– 

302,401 
– 
394,712 
– 
– 
– 

(150,000)  152,401
–  611,168
–  394,712
56,417
– 
(10,000)  100,000
5,000

5,000 

– 
250 
1,000 
– 
– 

165,551 
25,497 
30,563 
– 
63,662 

(65,551)  100,000
10,747
(15,000) 
–
(31,563) 
–
– 
63,662
– 

* 

 Under voluntary escrow arrangements, Richard Davis and Michael Grehan agreed they would not dispose  
or otherwise deal in ordinary shares until the Company reports its audited financial results for the year ended  
31 December 2004.

56

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
33. DIRECTOR AND EXECUTIVE DISCLOSURES (CONTINUED)
(e) Loans to Directors and Executives
No loans have been made to Directors of InvoCare Limited or to any of the five Specified Executives of the 
consolidated entity, including their personally-related entities.

(f) Other transactions with Directors and Specified Executives
During the year, Investec Wentworth Pty Limited, of which John Murphy is a Director, provided professional advisory 
services to the consolidated entity on normal commercial terms and conditions amounting to $103,148.

During the year, Blake Dawson Waldron, of which Richard Fisher is a partner, provided professional legal services to 
the consolidated entity on normal commercial terms and conditions amounting to $31,097.

During the year, Hillmir Pty Ltd, an entity significantly influenced by a relative of Michael Grehan, provided professional 
advisory services to the consolidated entity on normal commercial terms and conditions amounting to $46,436.

The aggregate amount of the above transactions with Director-related entities recognised as an expense during the 
financial year was $180,681.

34. REMUNERATION OF AUDITOR

During the year the auditor of the parent  
entity and its related practices earned  
the following remuneration: 

PricewaterhouseCoopers – Australian firm 
Audit of financial reports of the entity or any  
entity in the consolidated entity 
Review of financial report of the consolidated entity 
Other audit-related work 
Total audit and other assurance services 

Advisory services 
Taxation 
Total other services 
Total remuneration of PricewaterhouseCoopers 

Related practices of PricewaterhouseCoopers  
Australian firm 
PricewaterhouseCoopers Legal 
PricewaterhouseCoopers Securities 
Total remuneration of related practices 
Total remuneration of auditors  
and related practices 

Consolidated 

InvoCare Limited

2004 
$'000 

2003 
$'000 

2004 
$'000 

2003
$'000

124,000 
40,000 
92,900 
256,900 

23,187 
152,500 
175,687 
432,587 

110,000 
40,000 
66,650 
216,650 

56,593 
157,082 
213,675 
430,325 

335,673 
45,000 
380,673 

159,039 
207,800 
366,839 

813,260 

797,164 

– 
– 
– 
– 

– 
– 
– 
– 

– 
– 
– 

– 

–
–
–
–

–
–
–
–

–
–
–

–

It is InvoCare’s policy to employ PricewaterhouseCoopers on assignments additional to their statutory audit  
duties where PricewaterhouseCoopers’ expertise and experience with the consolidated entity are important. 
These assignments are principally tax advice and advisory services, or where PricewaterhouseCoopers is awarded 
assignments on a competitive basis. It is InvoCare’s policy to seek competitive tenders for any major consulting 
projects.

57

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
InvoCare Annual Report 2004

Notes to the Financial Statements

For the year ended 31 December 2004

35. RELATED PARTY DISCLOSURES
Directors and Specified Executives
Disclosures relating to Directors and Specified Executives are set out in Note 33.

Transactions between InvoCare Limited and its controlled entities consist of:
(a)  Loan advanced by InvoCare Limited
(b)  Loan repaid to InvoCare Limited
(c)  The payment of interest on the above loan
(d)  The payment of dividends to InvoCare Limited, and
(e)  The payment of a management fee to InvoCare Limited.

Loan 
The loan made by InvoCare Limited to a controlled entity has no fixed terms of repayment. The aggregate amount 
receivable included in Note 6 – Receivables (current) and Note 10 – Receivables (non-current) totalled $173,929,000 
(2003: $192,324,000). Interest on the loan is charged at 9% (2003: 9%).

Repayments totalling $18,395,000 (2003: $16,303,000) were made during the year. In addition, interest revenue 
included in the determination of operating profit before income tax that resulted from transactions with the entity in  
the wholly owned group totalled $16,714,000 (2003: $18,110,000).

Dividends
A fully franked dividend of $6,080,191 (2003: $7,000,000) was received by InvoCare Limited from a controlled entity. 
This amount has been included in the determination of operating profit before income tax.

Management Fee
A management fee was charged by InvoCare Limited to a controlled entity during the year totalling $960,000  
(2003: $480,000). This amount is included in the determination of operating profit before income tax.

Former shareholder transactions
A former shareholder provided a loan of $30,000,000 in the form of convertible notes to InvoCare Limited until  
10 December 2003 when the convertible notes were repaid in full. The interest expense for the year ended  
31 December 2003 included $3,394,000 on the convertible notes.

58

36. INVESTMENTS IN CONTROLLED ENTITIES
The consolidated entity comprises the parent entity and the entities it controlled at the end of, or during,  
the financial year.

Parent Entity

InvoCare Limited

Name of entity 

Equity holding 

2004 
% 

2003 
% 

Cost of parent entity's
investment

2004 
$’000 

2003
$’000

InvoCare Australia Pty Limited (formerly  
Service Corporation International Australia Pty Limited)   
New South Wales Cremation Company Pty Limited 
Cremations (Newcastle) Holdings Pty Limited 
Cremations (Newcastle) Pty Limited 
Macquarie Memorial Park Pty Limited 
Macquarie Funeral Service Pty Limited 
Novocastrian Funerals Pty Limited 
Novocastrian Funerals Unit Trust 
Catholic Funerals Newcastle Pty Limited 
Mead & Purslowe Pty Limited 
Mead & Purslowe Trading Trust 
Oakwood Funerals Pty Limited^^ 
Dignity Pre-Arranged Funerals Pty Limited 
Memorial Guardian Plan Pty Limited 
Pine Grove Forest Lawn Funeral Benefit
Company Pty Limited 
Kitleaf Pty Limited 
The Australian Cremation Society Pty Limited 
Metropolitan Burial and Cremation Society
Funeral Contribution Fund Pty Limited 
Labor Funerals Contribution Fund Pty Limited 
Purslowe Custodians Pty Limited 
Beresfield Funerals Pty Limited 

100 
100 
100 
100 
83.14 
83.14 
100 
100 
100 
100 
100 
50 
100 
100 

100 
100 
100 

100 
100 
100 
100 

100 
100 
100 
100 
83.14 
83.14 
100 
100 
100 
100 
100 
50 
100 
100 

100 
100 
100 

100 
100 
100 
100 

15,641 
– 
– 
– 
– 
– 
– 
– 
– 
– 
– 
– 
– 
– 

– 
– 
– 

– 
– 
– 
– 
15,641 

15,641
–
–
–
–
–
–
–
–
–
–
–
–
–

–
–
–

–
–
–
–
15,641

All entities are incorporated and domiciled in Australia.
^^ 

 InvoCare Australia Pty Limited holds 50% of the shares in Oakwood Funerals Pty Limited, which is a 
controlling interest as it has the capacity to dominate decision making and operations of the company’s 
business activities.

59

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.4 

4.5 

n/a 

n/a 

9.0 

n/a 

7.5 

7.6 

n/a 

9.1 

# 

3.7^

4.5

n/a

3.8

9.0

n/a

7.6

7.7

12.0

9.1

#

InvoCare Annual Report 2004

Notes to the Financial Statements

For the year ended 31 December 2004

37. FINANCIAL INSTRUMENTS
(a) Interest rate risk exposures
The consolidated entity’s exposure to interest rate risks and the effective interest rates of financial assets and financial liabilities,  
both recognised and unrecognised at the reporting date, are as follows:

Floating  
interest rate 

Fixed interest rate maturing in:
Over 1 to  
1 year  
5 years 
or less 

Notes 

2004 
$’000 

2003 
$’000 

2004 
$’000 

2003 
$’000 

2004 
$’000 

2003 
$’000 

Non-interest- 
bearing 

2004 
$’000 

2003 
$’000 

2004 
$’000 

Weighted average

Total 

2003  2004 
$’000 
% 

interest rate
2003
%

Financial assets 

Cash 

Cash 

Trade and other  
debtors 

Security deposit 

26 

26 

6,10 

10 

461 

5,002 

– 

– 

– 

– 

– 

– 

– 

19 

226 

2,141 

– 

– 

– 

– 

Total financial assets 

461 

5,021 

226 

2,141 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

461 

226 

5,002 

2,141 

–  22,307  21,812 

22,307 

21,812 

– 

58 

42 

58 

61 

–  22,365  21,854 

23,052 

29,016 

Financial liabilities 

Trade and other  
creditors 

Deferred revenue 

Debentures 

15,19 

18,22 

– 

– 

– 

– 

16,20  109,000  130,000 

Cash advance facility 

16,20 

22,500 

25,000 

Convertible notes 

Lease liability 

Interest rate swap* 

20 

16,20 

– 

– 

– 

– 

282 

524 

29 

307  15,252  17,914 

15,563 

18,745 

–  41,596  39,283 

41,596 

39,283 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

17 

15 

32 

49 

– 

– 

– 

– 

– 

–  109,000  130,000 

– 

– 

– 

– 

22,500 

25,000 

– 

49 

– 

– 

64 

– 

  (119,425)  (136,000)  27,899 

20,994 

91,526  115,006 

Total financial liabilities 

12,075 

19,000 

28,198 

21,533 

91,587  115,362  56,848  57,197  188,708  213,092 

Net financial  
assets/(liabilities) 

(11,614) 

(13,979) 

(27,972) 

(19,392) 

(91,587)  (115,362)  (34,483)  (35,343)  (165,656)  (184,076) 

n/a  Not applicable for non-interest-bearing financial instruments.
^ 

 Account is the aggregate of nine bank accounts. Where the aggregate balance is greater than $5,000,000 a premium 
interest rate is received.
When the aggregate balance is overdrawn a rate of 9.1% (2003: 8.6%) is charged.
Notional principal amounts. Not recognised in financial statements.
 The disclosure of effective interest rates is not applicable to derivative financial instruments. For information on interest rates 
see below.

* 
# 

(b) Net fair value of financial assets and liabilities

On-balance sheet
The carrying amount of financial assets and liabilities approximates their fair value.

(c)  Off-balance sheet derivative instruments
InvoCare Limited is party to derivative financial instruments in the normal course of business in order to hedge exposure to 
fluctuations in interest rates.

Carrying amount 

Fair value

2004 
$'000 

2003 
$'000 

2004 
$'000 

2003
$'000

Financial liabilities 

Interest rate swaps, net liability 

– 

– 

2,459 

780

60

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
37. FINANCIAL INSTRUMENTS (CONTINUED)
Interest rate swap contracts
The debentures and cash advance facility currently bear an average variable interest rate of 7.50% (2003: 7.64%).  
It is policy to protect the majority of the loan agreement from exposure to increasing interest rates. In addition, the 
loan agreement requires at least 75% of the principal be covered by interest rate swaps. Accordingly, InvoCare has 
entered into interest rate swap contracts to reduce its exposure to adverse fluctuations in interest rates on debentures 
and cash advance facility. Swaps currently in place cover 91% (2003: 85%) of the debenture and cash advance 
facility principal outstanding.

Under the contracts, interest is paid at fixed rates and received at variable rates. The fixed weighted average interest 
rate is 5.757% (2003: 5.639%) and the variable rate is based on the BBSW which at the balance date was 5.600% 
(5.515%). The contracts have notional principal amounts with a similar maturity profile to the debentures and cash 
advance facility and require settlement of net interest receivable or payable each quarter coinciding with the dates on 
which interest is payable on the debentures and cash advance facility. There was no net amount receivable or payable 
on the swap contracts at the reporting date.

(d)  Credit risk exposures
The credit risk on financial assets of the consolidated entity which have been recognised on the statement of financial 
position, other than investment in shares, is generally the carrying amount, net of any provision for doubtful debts.

38. IMPACT OF ADOPTING AASB EQUIVALENTS TO IASB STANDARDS
The Australian Accounting Standards Board (AASB) is adopting IFRS for application to reporting periods beginning 
on or after 1 January 2005. The AASB has issued Australian equivalents to IFRS, and the Urgent Issues Group is in 
the process of issuing interpretations corresponding to IASB interpretations originated by the International Financial 
Reporting Interpretations Committee or the former Standing Interpretations Committee. The adoption of Australian 
equivalents to IFRS will be first reflected in InvoCare’s financial statements for the half year ending 30 June 2005 and 
the year ending 31 December 2005.

Entities complying with Australian equivalents to IFRS for the first time will be required to restate their comparative 
financial statements to amounts reflecting the application of IFRS to that comparative period. Most adjustments 
required on transition to IFRS will be made, retrospectively, against opening retained earnings as at 1 January 2004.

InvoCare has established a project team to manage the transition to Australian equivalents to IFRS, including training 
of staff as well as system and internal control changes necessary to gather all the required financial information. The 
project team is chaired by the Chief Financial Officer and reports to the Audit Committee.

To date, the project team with the help of external advisers, has analysed most of the Australian equivalents to IFRS 
and has identified a number of accounting policy changes that will be required. In some cases choices of accounting 
policies are available, including elective exemptions under Accounting Standard AASB 1 First-time Adoption of 
Australian Equivalents to International Financial Reporting Standards.

Major changes that will be required to InvoCare’s existing accounting policies include the following (references to new 
AASB standards below are to the Australian equivalents to IFRS issued in July 2004):

Income Tax
Under AASB 112 Income Taxes, deferred tax balances are determined using the balance sheet method which 
calculates temporary differences based on the carrying amounts of an entity’s assets and liabilities in the statement 
of financial position and their associated tax bases. In addition, current and deferred taxes attributable to amounts 
recognised directly in equity are also recognised directly in equity.

This will result in a change to the current accounting policy, under which deferred tax balances are determined using 
the income statement method, under which items are only tax effected if they are included in the determination of 
pre-tax accounting profit or loss and/or taxable income or loss and current and deferred taxes cannot be recognised 
directly in equity.

61

InvoCare Annual Report 2004

Notes to the Financial Statements

For the year ended 31 December 2004

38. IMPACT OF ADOPTING AASB EQUIVALENTS TO IASB STANDARDS (CONTINUED)
Intangible assets – goodwill
Under AASB 3 Business Combinations, amortisation of goodwill will be prohibited and will be replaced by annual 
impairment testing focusing on the cash flows of the related cash generating unit.

This will result in a change to the current accounting policy, under which goodwill is amortised on a straight line basis 
over the period during which the benefits are expected to arise and not exceeding 20 years.

Equity-based compensation benefits
Under AASB 2 Share-based Payments, equity-based compensation to employees will be recognised as an expense 
in respect of the services received.

This will result in a change to the current accounting policy, under which no expense is recognised for equity-based 
compensation.

Financial Instruments
Under AASB 139 Financial Instruments: Recognition and Measurement there may be impacts as a result of financial 
assets held by the Company being subjected to classification as either held for trading, held-to-maturity, available for 
sale or loans and receivables and, depending upon classification, measured at fair value or amortised cost.

The interest rate swap contracts will be carried at fair value on InvoCare’s balance sheet. Where hedge effectiveness 
tests are met, changes in the fair value of the swap contracts will be recognised in equity and released to the 
income statement over the term of the contract. Where hedge effectiveness tests are not met or the swaps are not 
designated in a hedging relationship, changes in the fair value of the swap contracts will be recognised in the income 
statement. This may result in increased volatility in the income statement.

Other Changes
The above should not be regarded as a complete list of changes in accounting policies that will result from the 
transition to Australian equivalents to IFRS.

62

 
Directors’ Declaration

In the Directors’ opinion: 

(a)  the ﬁnancial statements and notes are in accordance with the Corporations Act 2001 including:

(i)    complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional 

reporting requirements; and

(ii)   giving a true and fair view of the Company’s and consolidated entity’s ﬁnancial position as at  

31 December 2004 and of their performance, as represented by the results of their operations  

and their cash ﬂows, for the ﬁnancial year ended on that date; and

(b)   there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become 

due and payable.

This declaration is made in accordance with a resolution of the Directors.

Ian Ferrier 
Director 

Sydney 
30 March 2005

Richard Davis 
Director

63

 
 
 
InvoCare Annual Report 2004

Independent Audit Report

to the members of InvoCare Limited

AUDIT OPINION

In our opinion, the ﬁnancial report of InvoCare Limited:

–  gives a true and fair view, as required by the Corporations Act 2001 in Australia, of the ﬁnancial position of InvoCare 

Limited and the InvoCare Group (deﬁned below) as at 31 December 2004, and of their performance for the year 

ended on that date, and

–  is presented in accordance with the Corporations Act 2001, Accounting Standards and other mandatory ﬁnancial 

reporting requirements in Australia, and the Corporations Regulations 2001.

This opinion must be read in conjunction with the rest of our audit report.

SCOPE 
The Financial Report and Directors’ Responsibility

The ﬁnancial report comprises the statement of ﬁnancial position, statement of ﬁnancial performance, statement of 

cash ﬂows, accompanying notes to the ﬁnancial statements, and the directors’ declaration for both InvoCare Limited 

(the company) and the InvoCare Group (the consolidated entity), for the year ended 31 December 2004.  

The consolidated entity comprises both the company and the entities it controlled during that year.

The directors of the company are responsible for the preparation and true and fair presentation of the ﬁnancial 

report in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate 

accounting records and internal controls that are designed to prevent and detect fraud and error, and for the 

accounting policies and accounting estimates inherent in the ﬁnancial report.

Audit Approach

We conducted an independent audit in order to express an opinion to the members of the company. Our audit was 

conducted in accordance with Australian Auditing Standards, in order to provide reasonable assurance as to whether 

the ﬁnancial report is free of material misstatement. The nature of an audit is inﬂuenced by factors such as the use of 

professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive 

rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been 

detected. For further explanation of an audit, visit our website http://www.pwc.com/au/ﬁnancialstatementaudit.

We performed procedures to assess whether in all material respects the ﬁnancial report presents fairly, in 

accordance with the Corporations Act 2001, Accounting Standards and other mandatory ﬁnancial reporting 

requirements in Australia, a view which is consistent with our understanding of the company’s and the consolidated 

entity’s ﬁnancial position, and of their performance as represented by the results of their operations and cash ﬂows.

We formed our audit opinion on the basis of these procedures, which included:

–  examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the ﬁnancial 

report, and

–  assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of 

signiﬁcant accounting estimates made by the directors.

Our procedures include reading the other information in the Annual Report to determine whether it contains any 

material inconsistencies with the ﬁnancial report. 

While we considered the effectiveness of management’s internal controls over ﬁnancial reporting when determining 

the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.

Our audit did not involve an analysis of the prudence of business decisions made by directors or management.

64

INDEPENDENCE

In conducting our audit, we followed applicable independence requirements of Australian professional ethical 

pronouncements and the Corporations Act 2001.

PricewaterhouseCoopers 

John Gordon
Partner

Sydney 
30 March 2005

Liability is limited by the Accountant’s Scheme under the Professional Standards Act 1994 (NSW)

65

InvoCare Annual Report 2004

Shareholder Information

The shareholder information set out below was applicable as at 14 March 2005.

DISTRIBUTION OF EQUITY SECURITIES
Analysis of numbers of equity security holders by size of holding:

1 – 1,000 
1,001 – 5,000 
5,001 – 10,000 
10,001 – 100,000 
100,001 and over 

Class of equity securities
Options over 
ordinary 
shares

Ordinary 
shares 

1,075 
3,246 
1,167 
724 
44 
6,256 

-
-
-
5
6
11

There were 13 holders of less than a marketable parcel of ordinary shares (being 130 at a market price of $3.85 on 
14 March 2005) who hold a total of 671 ordinary shares.

EQUITY SECURITY HOLDERS
20 largest quoted equity security holders
The names of the 20 largest holders of quoted equity securities are listed below:

Name 

Westpac Custodian Nominees Ltd 

J P Morgan Nominees Australia Limited 

National Nominees Limited 

RBC Global Services Australia Nominees Pty Limited 

Equity Trustees Limited 

Government Superannuation Office 

Bond Street Custodians Limited 

Victorian Workcover Authority 

Queensland Investment Corporation 

UBS Private Clients Australia Nominees Pty Ltd 

ANZ Nominees Limited 

Transport Accident Commission 

IOOF Investment Management Limited 

Argo Investments Limited 

Citicorp Nominees Pty Limited 

Mr Richard H Davis 

AMP Life Limited 

Cogent Nominees Pty Limited 

The University of Melbourne 
Australian Executor Trustees Limited 

66

Ordinary shares

Number  
held 

Percentage of 
issued shares

11,022,872 

10,536,995 

9,920,440 

6,337,370 

2,661,917 

2,500,115 

2,495,236 

1,675,719 

1,604,120 

1,579,532 

1,375,168 

1,333,387 

728,768 

660,000 

630,467 

611,168 

596,851 

535,037 

11.60%

11.09%

10.44%

6.67%

2.80%

2.63%

2.63%

1.76%

1.69%

1.66%

1.45%

1.40%

0.77%

0.69%

0.66%

0.64%

0.63%

0.56%

528,737 
516,440 
57,850,339 

0.56%
0.54%
60.89%

 
 
  
 
 
 
 
 
 
EQUITY SECURITY HOLDERS (CONTINUED)
Unquoted equity securities

Options issued under the Employee Share Option Plan  
to take up ordinary shares 
Options issued to the Chief Executive Officer under a  
Service Agreement to take up ordinary shares 

Substantial holders
Substantial holders in the Company are set out below:

J P Morgan Chase & Co 

Deutsche Bank AG 

National Australia Bank Limited Group 

Goldman Sachs JBWere Group 

Number 
on issue 

Number 
of holders

1,825,869 

988,565 

10

1

Number shares held 

Percentage

9,444,268 

7,870,930 

7,507,151 

5,740,449 

9.94

8.28

7.90

6.04

VOTING RIGHTS
The voting rights attaching to each class of security are set out below:

Ordinary shares
 On a show of hands, each member present in person and each other person present as a proxy of a member, has 
one vote. On a poll each member present in person has one vote for each fully paid share held by the member and 
each person present as a proxy of a member has one vote for each fully paid share held by the member that the 
proxy represents.

Options
Options have no voting rights.

67

 
 
 
InvoCare Annual Report 2004

Corporate Information

ABN 42 096 437 393 

InvoCare Limited

Directors 

Ian Ferrier (Chairman)
Richard Davis (Managing Director and Chief Executive Officer)
Michael Grehan (Chief Operating Officer)
Roger Penman (Non-Executive Director)
Christine Clifton (Non-Executive Director)
Richard Fisher (Non-Executive Director)

Company Secretary 

Kenneth Mealey (Chief Financial Officer)

Annual General Meeting 

 The Annual General Meeting of InvoCare Limited will be held at The Westin Sydney,  
1 Martin Place, Sydney on Thursday 19 May, 2005

Registered Office 

Share Register 

 Level 4, 153 Walker Street 
North Sydney  NSW  2060

 Telephone: 02 9978 5200 
Facsimile: 02 9978 5299

Website: www.invocare.com.au

 ASX Perpetual Registrars Limited 
Level 8, 580 George Street 
Sydney  NSW  2000

 Toll free: 1300 854 911 
Facsimile:  02 9287 0303

website: www.asxperpetual.com.au

Stock Exchange Listing 

 InvoCare Limited is a company limited by shares that is incorporated  
and domiciled in Australia.

 InvoCare Limited’s shares are listed on the Australian Stock Exchange only.  
ASX code is IVC.

Auditors 

Solicitors 

Bankers 

 PricewaterhouseCoopers 
Darling Park Tower 2 
201 Sussex Street 
Sydney NSW 1171

 Coudert Brothers 
Level 8 Gateway 
1 Macquarie Place 
Sydney NSW 2000

 Australia and New Zealand Banking Group Limited 
20 Martin Place 
Sydney NSW 2000

68

 
 
 
 
 
 
 
 
 
 
InvoCare Locations

InvoCare Funeral Homes

Twin Towns Funerals
  Tweed Heads

William Riley Funerals
  Lismore

Sydney
Allan Drew Funerals 
  Castle Hill

Economy Funerals
  All areas

Guardian Funeral 
providers
A F Anderson Funerals 
  Granville

Allen Matthews Funerals
  Cremorne 
  North Ryde

Bruce Maurer Funerals 
  Crows Nest

Butler Funerals 
  Camden 
  Campbelltown

Dignified Funerals 
  Burwood 
  Five Dock

Guardian Funerals 
  Blacktown

J & C Hardy Funerals 
  Hurstville
  Rockdale

J.W. Chandler Funerals 

Richmond

  Windsor

Labor Funerals 
  Bankstown

Macarthur District 
Funerals
  Leppington

Metcalfe & Morris Funerals
  Parramatta

Metropolitan Funeral 
Homes
  Bankstown 
  Rockdale

Parkway Funerals 
  Dee Why

Sydney Funeral Services
  Minchinbury

ACT
Guardian Funeral 
providers

Tobin Brothers Funerals 
(ACT)
  Belconnen
  Kingston
  Queanbeyan

White Lady Funerals
  Belconnen
  Kingston

NSW
Central Coast
Simplicity Funerals 
  Bateau Bay
  Erina
  Toukley East
  Woy Woy

White Lady Funerals
  Wyoming

Illawarra

Economy Funerals
  All areas

Guardian Funeral 
providers

Hansen & Cole Funerals
  Bulli
  Kembla Grange
  Wollongong

Newcastle & Hunter
David Lloyd Funerals –
incorporating Beresfield 
and Parsons Funerals
  Adamstown
  Belmont
  Beresfield

Economy Funerals
  All areas

White Lady Funerals
  Charlestown
  Mayfield

North Coast
Casino Funerals 
  Casino

Kevin Geaghan Funerals
  Ballina

Simplicity Funerals 
  Tweed Heads

InvoCare Cemeteries and Crematoria

NSW
Castlebrook  
Memorial Park 
  Rouse Hill 

Forest Lawn  
Memorial Park 
  Leppington

Lake Macquarie 
Memorial Park
  Ryhope

Lakeside Memorial Park
  Dapto

Lung Po Shan 
Information Centre 
  Haymarket

Newcastle  
Memorial Park
  Beresfield

Northern Suburbs 
Memorial Gardens  
and Crematorium
  North Ryde

Simplicity Funerals 
  Balgowlah  
   Chatswood
  Liverpool
  Mascot
  Miranda
  Newtown
  Paddington
  Randwick
  Smithfield
  Warrawee

Universal Chung Wah 
Funerals
  Fairfield

White Lady Funerals 
  Bankstown 
  Bondi Junction 
  Eastwood
  Manly
  Mosman
  Narrabeen
  Pennant Hills
  Penrith
  Roseville
  Sutherland

QLD
George Hartnett 
Funerals
  Cleveland
  Holland Park 
  Redcliffe
  Sandgate
  Wynnum

Cannon & Cripps Funerals 
– A George Hartnett  
Funeral Home
  Kelvin Grove

J & H Reed | O. Bottcher 
& Son Funerals

Ipswich

Simplicity Funerals 
  Buranda
  Kedron
  Miami
  Parkwood

Somerville Funerals
  Nerang
  Southport

White Lady Funerals
  Chelmer
  Gold Coast
  Kelvin Grove
  Tanah Merah

Value Funerals
  All areas

Pinegrove  
Memorial Park 
  Eastern Creek

Po Fook Shan 
Information Centre
  Cabramatta

Rookwood Memorial 
Gardens and 
Crematorium
  Rookwood

Provinciale Servizio 
Funebre
  Coburg   

Simplicity Funerals
  Carnegie
  Frankston
  Reservoir
  Sunshine

Value Funerals
  All areas

White Lady Funerals
  Caulfield South
  Heidelberg
  South Melbourne

WA
Mareena Purslowe  
& Associates Funerals
  Subiaco
  Willetton

Oakwood Funeral Home
  Booragoon
  Rockingham

Purslowe Funerals 
  Midland
  North Perth
  Northam
  South Fremantle
  Victoria Park
  Wangara

Simplicity Funerals
  Kelmscott
  Osborne Park

Value Funerals
  All areas

SA
Blackwell Funerals
  Morphett Vale
  Payneham
  Prospect
  Torrensville

Pengelley & Knabe 
Funerals – Member of the 
Blackwell Funerals Group
  Glenside 

Simplicity Funerals 
  Black Forest 
  Enfield
  Victor Harbor

Value Funerals
  All areas

White Lady Funerals
  Hillcrest
  Plympton

VIC
Le Pine Funerals
  Box Hill
  Camberwell
  Dandenong
  Eltham
  Glen Waverley
  Greensborough

Ivanhoe
  Kew East 
  Mordialloc
  Oakleigh
  St Kilda
  Thornbury

Le Pine Heritage 
Funerals
  Croydon
  Ferntree Gully
  Healesville
  Lilydale

Le Pine Asian Funerals
  Glen Waverley

Mulqueen Funerals 
  Coburg
  Epping 
  Greensborough

QLD
Albany Creek  
Memorial Park 
  Bridgeman Downs 

Allambe Memorial Park
  Nerang

Mt Thompson  
Memorial Gardens  
  Holland Park

Tweed Heads  
Memorial Gardens 
  Tweed Heads South

69

For more details visit www.invocare.com.au

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Contents
Financial Highlights  2
Chairman’s Message  3
Simplicity Funerals  4
White Lady Funerals  6
Traditional Funeral Brands  8
Cemeteries and Crematoria  10
CEO Review  12
Directors’ and Financial Reports  17
Shareholder Information  66
Corporate Information  68
InvoCare Locations  69

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ANNUAL REPORT 2004