MILTON CORPORATION LIMITED
ABN 18 000 041 421
An Australian Listed Investment Company
Listed since 1958
ANNUAL REPORT 2014
Profile
Milton was established as a private investment vehicle for four shareholders in 1938. It became a public
company in 1950 and listed on the Sydney Stock Exchange in 1958. Milton is now an investment vehicle for
more than 21,000 shareholders and it is listed on the Australian Securities Exchange under the code MLT.
Objective
Milton’s objective is to hold a diversified portfolio of assets that generates a growing income stream for
distribution to shareholders in the form of increasing fully franked dividends and provides capital growth in the
value of the shareholders’ investments.
Investment philosophy
Milton is predominantly a long term investor in companies and trusts that are well managed, with a profitable
history and an expectation of increasing dividends and distributions. Turnover of investments is low and capital
gains arising from disposals are reinvested.
Milton holds liquid assets such as cash and term deposits and it may invest in hybrid securities as well as real
property development through joint ventures.
Value proposition
Milton provides a reliable income stream through the payment of fully franked dividends semi annually
Ordinary fully franked dividends are paid out of profit after tax excluding special investment revenue and
acquisition related costs of subsidiaries. Dividends have been paid every year since listing and all dividends
have been fully franked since the introduction of franking. Refer to the dividend history graph on page 3.
Special fully franked dividends may be paid out of special investment revenue when this revenue has
accumulated to a material amount.
Milton provides exposure to a diversified portfolio of companies and trusts listed on the Australian Securities
Exchange
Milton’s $2.6 billion equity investment portfolio, which represents 94% of total assets, comprises interests in
companies and trusts which are expected to provide an increase in investment revenue over the long term.
Consistent application of this investment philosophy over many years has created a portfolio that is not aligned
with any securities exchange index. A list of investments by sector commences on page 7 and the classification
of investments is detailed in the Chairman’s Review on page 4.
Milton’s efficient, internally managed structure provides all of the above for less than 0.13% per annum of total
assets.
Milton’s directors oversee the performance of its executives who are employed by the company to manage its
investments. All employees are focussed on operating efficiently and maximising returns to shareholders.
Contents
Key Performance Charts
Chairman’s Review of the 2014 Financial Year
Dividend History
Classification of Investments
Five Year Financial Summary
Milton Corporation Foundation
Listed Investments by Sector at 30 June 2014
Directors’ Report
1
2
3
4
6
6
7
11
Remuneration Report
Auditor’s Independent Declaration
Corporate Governance Statement
Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Directory
ASX Information
14
18
19
22
45
46
48
49
Calendar
Final dividend & special dividend:
- Ex dividend date
- Payment date
Share Purchase Plan closes
Annual General Meeting:
- To be held at
14 August 2014
3 September 2014
19 September 2014
16 October 2014 at 3 pm
UNSW CBD Campus
Level 7, 1 O’Connell Street, Sydney
Key performance charts
120
117
111
109
103
103
Profit
($ millions)
94
91
73
69
NTA per share
(Dollars)
3.30
3.03
3.47
3.22
3.28
3.09
4.35
3.86
3.89
3.52
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
Net Profit
Underlying operating profit
NTA before tax on unrealised capital gains per share
NTA after tax on unrealised capital gains per share
Earnings per share
(cents)
16.8
15.6
16.2
17.0
14.7
19.3
18.8
18.3
17.8
16.9
Dividends per share
(cents)
1.0
7.8
8.0
7.2
0.4
9.4
0.5
8.6
7.0
7.4
7.6
7.8
8.2
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
Eps
Underlying eps
Interim
Final
special
Total returns
(Per cent per annum)
Totalportfolio returns (TPR) are after expenses and tax
liabilities and do not take into account the benefits of
franking credits
Totalshareholder returns (TSR) are after expenses and
do not take into account the benefit of franking credits
All Ordinaries accumulation returns (XAOAI) are
before expenses and tax liabilities and do not take into
account the benefit of franking credits
TPR
TSR
XAOAI
1 year
16.5
28.6
17.6
3 Years
5 Years
10 Years
15 Years
12.7
18.8
9.7
12.3
14.5
11.0
9.2
10.2
8.8
10.3
11.3
8.5
1
Chairman’s Review of the 2014 financial year
Profit review
Net profit after tax was $120.3 million, 8.2% higher than that reported last year whilst the underlying operating
profit, which excludes special investment revenue and acquisition related costs of a subsidiary, was $117.4
million, also up 8.2%.
The main factors that influenced the result were:
• Growth in franked dividend income,
• Increased profits from the property joint ventures,
• Low interest rates earned on liquid assets,
• Ongoing cost control and
• Earnings on the funds raised from the issue of shares during the year,
The 8.7% growth in franked dividend income resulted from increased dividends from many of the companies in
the portfolio as well as dividends received from most of the additions to the investment portfolio.
The ongoing low interest rate environment helped to maintain strong demand for housing sites in Milton’s
property development joint ventures near Perth and with sound management of the developments, earnings
increased by 28% to $6.4 million.
However, the low interest rates affected the earnings on the liquid assets with interest income falling by 16% to
$4.7 million.
Milton remains one of the most efficient investment vehicles listed on the Australian Security Exchange (ASX)
with total administration expenses of $3.3 million representing less than 0.13% of average total assets. The
administration expenses include the cost of communicating with shareholders, managing the share registry and
ASX listing fees which were all affected by the five for one share split in October 2013, the issue of new shares
during the year and the 8% increase in number of Milton shareholders to over 21,000.
In the 2014 financial year capital was increased by a total of $78 million through the reinstatement of the Share
Purchase Plan, the introduction of the Dividend Reinvestment Plan and an acquisition of an unlisted investment
company.
The weighted average earnings per share for the 2014 year were 5.5 % higher at 19.3 cents.
Dividends
Ordinary
The corporate objective is to pay increasing fully franked dividends and the directors are also mindful that a
reliable income stream is important to many shareholders. Accordingly the dividend policy is to pay a high
percentage of underlying operating profit to shareholders as ordinary dividends.
The total ordinary dividends increased by 7.3 cents per share to 17.6 cents per share and absorbed 94.3% of
the underlying operating profit for 2014.
Special
The level of special dividend income earned can fluctuate from year to year and therefore this income is
excluded from the net profit in determining the underlying operating profit. When the level of special dividend
income accumulates to a significant amount a special dividend may be declared.
A fully franked special dividend of 0.4 cents per share was declared out of the special investment revenue
received in 2014 earnings. This compares with the special dividend of 0.5 cents paid in the prior year.
2
Chairman’s Review of the 2014 financial year (continued)
Milton dividend history
Dividends have been paid every year since listing in 1958 and every dividend paid, since franking was
introduced in 1987, has been fully franked.
The chart below illustrates the growth in Milton’s dividends since 1958 based on the following assumptions:
1,000 shares were purchased for £1,000 ($2,000) in 1958, dividends have NOT been reinvested and no further
shares have been purchased.
Through the sub-division of shares on the introduction of decimal currency, bonus share issues, and the share
split, the number of shares held would have increased to 28,531 and they would have been valued at $129,530
at 30 June 2014. The annual ordinary fully franked dividend on these shares would have increased to $5,021 in
2014 from $160 in 1959. In addition the 2014 special fully franked dividend would have been $114.
Fully franked since franking was introduced in 1987
Ordinary dividend
Special dividend
$5,021
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
Net asset backing
The net asset backing (NTA) is disclosed to the
ASX each month and is commonly used by
investors and their advisers as a guide to the
value of a Milton share.
The monthly movement in the NTA will
normally be determined by the change in value
of the investments and the movement in
retained earnings.
Over the 2014 financial year the NTA, before
provision for tax on unrealised capital gains,
increased in value by 11.9% to $4.35 per
share.
At 30 June 2014 the assets included an
investment portfolio of Australian listed equities
valued at $2.6 billion and cash including term
deposits of $0.1 billion.
Net profit after tax
Change in value of investments
Total return (1)
Share issues
Dividends paid during year
Total movement in NTA
Net assets(1) at 30 June 13
Net assets(1) at 30 June 14
$
millions
$
per share
120.3
278.8
399.1
78.1
(107.0)
370.2
2,375.1
2,745.3
3.89
4.35
Provision for tax on unrealised capital gains
(308.8)
Net assets after provision for tax
2,436.9
3.86
(1) before provision for tax on unrealised capital gains
The investments are held for the long term and there is no intention to dispose of the investment portfolio
however the accounting standards require a provision to be made in the financial statements for the capital
gains tax that may arise if the portfolio was realised.
At 30 June 2014 that provision was $0.3 billion and the NTA, after this provision was $3.86 per share.
3
Chairman’s Review of the 2014 financial year (continued)
Portfolio
The investments, which are held for the long term, are actively managed by three analysts and the managing
director. These executives are responsible for making portfolio recommendations for the consideration and
approval of the investment committee.
During the year the Investment Committee met 21 times and approved purchases totalling $94 million and
disposals amounting to $13 million.
The purchases were spread over 43 companies with the larger investments being in Bank of Queensland,
Equity Trustees, Insurance Australia Group, Rio Tinto and Transurban Group.
Carsales.com and WDS were added to the portfolio during the year.
Companies in the portfolio that were affected by demergers or corporate activity included Amcor, Brambles,
Trust Company, Westfield Retail Trust and Westfield Group. As a result of this activity the portfolio now includes
Orora, Scentre Group and Westfield Corporation. Milton elected to receive $24 million worth of Perpetual scrip
as consideration for the merger with Trust Company.
During the year holdings of QBE Insurance Group and Metcash were reduced whilst holdings in Alumina, APN
News & Media, Fairfax Media and Recall Holdings were removed from the portfolio.
The portfolio was increased by a further $14 million through the acquisition of an unlisted investment company.
The consistent application of Milton’s investment philosophy over many years has determined the composition
of the portfolio of investments. It comprises companies and trusts that are listed on the Australian Securities
Exchange that can be expected to produce a reliable source of dividends for payment on to shareholders over
the long term. Whilst the portfolio is not aligned with any index many of its investments are well represented in
the All Ordinaries Index.
The following asset classification table shows the composition of Milton’s assets by sector.
Classification(1)
Banks
Consumer staples
Materials
Energy
Commercial services
Insurance
Diversified financials
Telecommunications
Capital goods
Real estate
Other shares
Utilities
Healthcare
Retailing
Media
Total listed investments
Cash & liquids(2)
Other assets(3)
Total
Opening
position
Additions(4)
Disposals
Change in
value
Closing
position
Income
Share of
total assets
$ million
$ million
$ million
$ million
$ million
$ million
%
151.7
1,008.3
845.0
254.7
217.3
180.9
117.5
117.5
110.0
76.5
39.6
48.8
51.7
39.9
50.9
40.5
11.7
11.8
4.9
15.7
7.0
3.1
9.6
8.7
1.7
3.2
6.8
21.2
5.0
2.4
5.0
0.5
(0.2)
(1.9)
(0.9)
-
-
2.1
26.5
21.1
(6.7)
(2.6)
(2.4)
(1.4)
-
(0.2)
(2.4)
(1.2)
-
(0.1)
(0.1)
(2.2)
36.4
13.3
5.1
6.5
2.5
3.9
6.0
12.0
1.1
259.8
258.6
209.0
113.9
122.1
153.7
91.5
47.7
59.7
74.2
48.8
59.2
57.4
11.1
2,202.5
106.6
(13.2)
279.1
2,575.0
129.0
46.6
2,378.1
126.0
47.5
2,748.5
51.9
11.5
8.9
7.2
4.8
5.4
5.8
4.2
1.9
3.5
2.7
2.1
1.3
2.2
0.6
114.0
4.7
10.9
129.6
36.7
9.5
9.4
7.6
4.1
4.4
5.6
3.3
1.7
2.2
2.7
1.8
2.2
2.1
0.4
93.7
4.6
1.7
100.0
(1)
Investments are grouped according to their asset classes using the Global Industry Classification Standard (“GICS”) codes. Full details
of the investments at 30 June 2014 are reported on pages 7 to 10.
(2) Cash & liquid assets include cash, term deposits and hybrid securities.
(3) Other assets include receivables and investments in real property development through joint ventures.
(4) Additions include investments that were held by the unlisted investment company that was acquired on 31 January 2014.
4
Chairman’s Review of the 2014 financial year (continued)
Capital initiatives
Shareholders approved a five for one share split in October 2013. The splitting of the shares was intended to
benefit shareholders by creating improved liquidity and turnover in the trading of the Company’s shares and
increasing affordability of the shares to retail investors.
The value of shares traded in the year to 30 June 2014 were higher than prior years as can be seen in the
Turnover of Milton Shares table below.
Turnover of Milton Shares
Premium (Discount) to NTA
2012
2013
2014
Annual turnover ($m)
98.3
110.8
174.4
The increased turnover coincided with a reduction
in the level of discount relative to NTA at which the
shares traded over that same period.
The closing price of Milton shares on 30 June 2014
was $4.54, which was a premium of 4.3% to NTA.
(See graph on right.)
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
-12%
The Share Purchase Plan (SPP) was reintroduced in September 2013 with shares issued at $3.82 being a
discount of 2.5% to the volume weighted average share price for the three days immediately after the shares
traded ex dividend on 15 August 2013. The issue was well supported with $63 million being raised.
The SPP is once again being offered in 2014 with the same pricing mechanism.
A Dividend Reinvestment Plan (DRP) was introduced in January 2014 to provide a facility for shareholders to
reinvest their interim dividends. The DRP will continue to be offered with each dividend as it broadens the
appeal of Milton to a greater number of shareholders.
Accordingly the DRP will be available for the 2014 final dividend and special dividend which are payable on
3 September 2014. The last day for receipt of DRP participation forms will be 19 August 2014 which is the first
trading day after the record date.
Outlook
Australian companies continue to operate in an uncertain environment. Many have already restructured their
businesses so that they may benefit as conditions improve however revenue growth remains a challenge.
Uncertainty is also likely to challenge investors over the year ahead and this may provide Milton with
opportunities to invest the $100 million it had available for investment at 30 June 2014. The issue of Milton
shares under the Share Purchase Plan and Dividend Reinvestment Plan will increase the investable funds.
Dividend income from the company’s portfolio is currently anticipated to increase in 2015 and in the absence of
unforeseen circumstances, this should enable the full year ordinary dividend of 17.6 cents per share to at least
be maintained.
R. D. MILLNER
Chairman
Sydney, 7 August 2014
5
Five Year Financial Summary
Underlying operating profit after tax(1) ($million)
Underlying earnings per share (cents)
Profit after tax ($million)
Earnings per share (cents)
Administration costs as % of average total assets
Interim dividend (cents per share)
Final dividend (cents per share)*
Full year ordinary dividend (cents per share)
Special dividend (cents per share)
*LIC Capital Gain paid as part of final dividend
(cents per share)
Net assets(2) at 30 June ($million)
Net asset backing per share(2) at 30 June($)
Net asset backing per share(3) at 30 June($)
Last sale price at 30 June ($)
All Ordinaries Index at 30 June
Ten year Total Shareholder Return (% per annum)
Five year Total Shareholder Return (% per annum)
Shares on issue (million)
Number of shareholders
2014
2013
2012
2011
2010
117.4
108.5
102.7
18.8
17.8
16.9
120.3
111.2
103.4
19.3
0.13
8.2
9.4
17.6
0.4
18.3
0.14
7.8
8.6
16.4
0.5
-
-
17.0
0.16
7.6
8.0
15.6
-
-
90.5
16.2
93.9
16.8
0.17
7.4
7.8
15.2
1.0
-
2,746
2,375
1,997
2,112
4.35
3.86
4.54
5382
10.2
14.5
3.89
3.52
3.68
4775
8.3
4.0
3.28
3.09
3.04
4135
6.7
(3.0)
3.47
3.22
3.12
4660
7.8
(0.4)
68.9
14.7
73.1
15.6
0.17
7.0
7.2
14.2
-
0.4
1,603
3.30
3.03
3.20
4325
10.7
4.0
630.8
610.5
608.0
616.5
485.5
21,055
19,309
19,008
19,490
15,890
(1) Underlying operating profit after tax excludes special investment revenue and acquisition related costs of subsidiaries.
(2) Before provision for tax on unrealised capital gains net of tax on unrealised capital losses and before providing for the ordinary final
and special dividends.
(3) After provision for tax on unrealised capital gains net of tax on realised capital losses and before providing for the ordinary final and
special dividends.
All prior years’ per share values and number of shares on issue in the table above have been adjusted to account for the increase in
number of shares as a result of the 5:1 share split in October 2013.
Milton Corporation Foundation (ABN 95 051 921 133)
The Foundation was established in 1988 to support charitable organisations, particularly those which direct
assistance to persons that are disadvantaged in the community.
The objective is to create a vehicle with sufficient capital that can make regular meaningful donations from the
earnings derived from its investments. Contributions from Milton, shareholders and others over the years have
helped to grow the Foundation’s total assets at 30 June 2014 to $2 million.
The Foundation’s assets can now support annual distributions of $100,000 and in 2014, fourteen organisations
received much needed support from the Milton Foundation.
The Foundation has provided $1.8 million of assistance to the community since its establishment.
The Foundation is a deductible gift recipient and donations of $2 or more are tax deductible.
You can support the Foundation by forwarding a cheque to:
The Trustees, Milton Corporation Foundation,
PO Box R1836,
Royal Exchange NSW 1225.
J F Church
Chairman of Trustees
Sydney, 7 August 2014
6
LISTED INVESTMENTS BY SECTOR AT 30 JUNE 2014
Holding
Fair Value
$'000
Banks
Australia & New Zealand Banking Group Limited
- ordinary shares
- convertible preference shares
- capital notes 2
Bendigo and Adelaide Bank Limited
Bank of Queensland Limited
Commonwealth Bank of Australia
- ordinary shares
- PERLS V
National Australia Bank Limited
- ordinary shares
- convertible preference shares
MyState Limited
Wide Bay Australia Limited
Westpac Banking Corporation
Consumer Staples
Blackmores Limited
Coca-Cola Amatil Limited
Graincorp Limited
Metcash Limited
Select Harvests Limited
Treasury Wine Estates Limited
Wesfarmers Limited
Woolworths Limited
Materials
Adelaide Brighton Limited
Amcor Limited
Arrium Limited
BHP Billiton Limited
Boral Limited
Brickworks Limited
DuluxGroup Limited
Fletcher Building Limited
Incitec Pivot Limited
Orica Limited
Orora Limited
Rio Tinto Limited
Sims Group Limited
7
2,970,045
19,500
2,000
5,709,708
7,306,078
3,033,075
500
4,404,523
300
444,992
433,570
10,451,306
378,014
1,466,434
362,290
4,047,559
161,862
1,053,604
2,863,064
2,725,473
2,357,886
1,194,512
4,251,050
3,382,121
1,666,463
3,234,567
395,011
803,229
1,610,689
188,987
1,194,512
567,618
793,037
99,021
2,007
208
69,658
89,061
245,315
102
144,380
31
2,065
2,385
354,091
1,008,324
10,282
13,872
3,043
10,686
832
5,279
119,791
95,991
259,776
8,135
12,459
3,380
121,418
8,749
44,217
2,236
6,570
4,671
3,681
1,702
33,665
7,676
258,559
LISTED INVESTMENTS BY SECTOR AT 30 JUNE 2014
Energy
New Hope Corporation Limited
Origin Energy Limited
Santos Limited
Woodside Petroleum Limited
Washington H. Soul Pattinson & Company Limited
Worley Parsons Limited
Diversified Financials
Argo Investments Limited
ASX Limited
Australian Foundation Investment Company Limited
BKI Investment Company Limited
Carlton Investments Limited
Diversified United Investment Limited
Equity Trustees Limited
IOOF Holdings Limited
Macquarie Group Limited
Perpetual Limited
Insurance
AMP Limited
Austbrokers Limited
Insurance Australia Group Limited
- ordinary shares
- convertible preference shares
IAG Finance (NZ) Limited perpetual reset exchangeable notes
QBE Insurance Group Limited
Suncorp Group Limited
Commercial Services
ALS Limited
Brambles Limited
McMillan Shakespeare Limited
Transfield Services Limited
Telecommunication
Telstra Corporation Limited
TPG Telecom Limited
8
Holding
1,290,107
629,174
1,424,787
823,342
9,174,640
396,112
985,766
496,965
1,294,722
1,223,866
354,809
378,845
441,541
702,075
466,349
1,359,278
2,121,110
1,024,795
4,814,075
3,000
12,000
2,618,375
3,074,732
11,235,037
1,280,966
100,000
1,519,032
13,310,253
3,731,553
Fair Value
$ 000
3,457
9,199
20,317
33,815
135,326
6,896
209,010
7,521
17,712
8,002
2,013
9,669
1,364
9,264
5,897
27,808
64,403
153,653
11,242
11,058
28,114
319
1,284
28,462
41,632
122,111
99,542
11,772
917
1,649
113,880
70,909
20,561
91,470
LISTED INVESTMENTS BY SECTOR AT 30 JUNE 2014
Real Estate
Australand Property Group
Aveo Group (formerly FKP Property Group)
BWP Trust
CFS Retail Property Trust Group
Finbar Group Limited
Goodman Group
Lend Lease Group
Scentre Group
Stockland Group
Westfield Corporation
Healthcare
Cochlear Limited
CSL Limited
Ramsay Health Care Limited
Sonic Healthcare Limited
Retailing
A.P. Eagers Limited
ARB Corporation Limited
Automotive Holdings Group Limited
David Jones Limited
Noni B Limited
Premier Investments Limited
Utilities
AGL Energy Limited
APA Group
Capital Goods
Bradken Limited
Cardno Limited
GWA Group Limited
Leighton Holdings Limited
Reece Australia Limited
Sedgman Limited
UGL Limited
WDS Limited
9
Holding
832,732
1,498,282
1,584,008
7,846,000
2,782,249
646,376
464,539
1,667,480
2,150,940
760,000
33,800
592,198
153,442
615,925
5,833,107
744,741
2,243,171
356,090
729,296
590,250
2,390,954
1,705,833
826,514
1,204,699
2,275,000
757,865
133,085
2,021,674
1,451,191
1,047,983
Fair Value
$ 000
3,697
3,086
3,928
16,006
4,535
3,264
6,090
5,336
8,346
5,435
59,723
2,085
39,411
6,982
10,674
59,152
33,307
9,116
8,188
1,403
343
5,016
57,373
37,012
11,753
48,765
3,141
7,614
5,983
14,953
4,024
1,011
9,926
1,006
47,658
LISTED INVESTMENTS BY SECTOR AT 30 JUNE 2014
Transport
Lindsay Australia Limited
Qube Holdings Limited
Sydney Airport
Transurban Group
Toll Holdings Limited
Consumer Services
Crown Resorts Limited
InvoCare Limited
Tatts Group Limited
Media
Amalgamated Holdings Limited
Seven Group Holdings Limited – TELYS4 preference shares
Seven West Media Limited
Information Technology
Carsales.com Limited
Automobiles & Components
Fleetwood Corporation Limited
Schaffer Corporation Limited
Holding
3,200,000
2,568,000
1,453,629
2,743,081
1,311,348
267,301
1,836,903
2,223,955
781,476
7,000
1,678,311
332,000
228,000
68,999
Fair Value
$ 000
1,088
5,855
6,134
20,271
6,689
40,037
4,042
18,571
7,272
29,885
7,291
617
3,156
11,064
3,516
3,516
531
408
939
Total Listed Investments by Sector
2,574,894
10
Directors’ Report
For the year ended 30 June 2014
The directors present their report together with the financial statements of the consolidated entity (“Milton”)
consisting of Milton Corporation Limited and its subsidiaries for the financial year ended 30 June 2014 and the
independent auditor’s report thereon.
Directors
The directors of Milton at any time during or since the end of the financial year are:
Robert D. Millner FAICD Independent non-executive chairman.
Director of Milton Corporation Limited since 1998 and appointed chairman in 2002.
Chairman of the Investment and Remuneration Committees. Extensive experience in the investment industry.
Other current directorships:
Director of Australian Pharmaceutical Industries Limited since 2000, Chairman of BKI Investment Company
Limited since 2003, Director of Brickworks Limited since 1997 and appointed chairman in 1999, Director of New
Hope Corporation Limited since 1995 and appointed chairman in 1998, Director of TPG Telecom Limited since
2000, Director of Washington H. Soul Pattinson & Company Limited since 1984 and appointed chairman in 1998.
Former directorships in the last three years:
Exco Resources Limited from November 2012 to January 2013 (company delisted in January 2013), Northern
Energy Corporation Limited from February 2011 (company delisted in October 2011) and Souls Private Equity
Limited from 2004 to 2012 (company delisted in January 2012).
John F. Church FCSA, F Fin, FAICD Independent non-executive director.
Director of Milton Corporation Limited since 1986.
Member of the Investment Committee.
A Solicitor and Notary Public and over 41 years experience in the investment industry.
Graeme L. Crampton B.Ec, FCA, FAICD Independent non-executive director.
Director of Milton Corporation Limited since 2009.
Chairman of the Audit Committee and a member of the Remuneration Committee.
A Chartered Accountant and former partner of a major firm of Chartered Accountants for more than 30 years and
has extensive experience in the investment industry.
Former directorships in the last three years:
Souls Private Equity Limited from 2011 to 2012.
Kevin J. Eley CA, F Fin, FAICD Independent non-executive director.
Director of Milton Corporation Limited since 2011.
Member of the Investment and Audit Committees.
A Chartered Accountant and has extensive experience in the investment industry.
Other current directorships:
Director of Equity Trustees Limited since 2011, HGL Limited since 1985 and
PO Valley Energy Limited since 2012.
Former directorships in the last three years:
Kresta Holdings Limited from 2011 to February 2014.
Francis G. Gooch B.Bus, CPA Managing director.
Managing Director of Milton Corporation Limited since 2004 and chief executive since 1999.
Member of the Investment Committee.
A Certified Practising Accountant and over 29 years experience in the finance and investment industries.
Ian A. Pollard BA (Macq), MA (Oxon), D Phil (IMC), FIAA, FAICD Independent non-executive director.
Director of Milton Corporation Limited since 1998.
Member of the Audit and Remuneration Committees.
An Actuary and over 37 years of involvement in the investment industry.
Other current directorships:
Director and Chairman of Billabong International Limited since 2012 and Director of SCA Property Group since
2012.
11
Directors’ meetings
The number of directors’ meetings (including meetings of committees of directors) and the number of meetings
attended by each of the directors of Milton during the financial year were:
Director
Directors’
Meetings
Investment
Committee Meetings
Audit
Committee
Meetings
Nomination
Committee
Meetings
R.D. Millner
J.F. Church
G.L. Crampton
K.J. Eley
F.G. Gooch
I.A. Pollard
A
6
6
6
6
5
6
B
6
6
6
6
6
6
A
18
21
*
20
21
*
B
21
21
*
21
21
*
A
*
*
5
5
*
5
B
*
*
5
5
*
5
A
*
1
*
*
1
1
B
*
1
*
*
1
1
Remuneration
Committee
Meetings
A
B
1
*
1
*
*
1
1
*
1
*
*
1
A - Number of meetings attended.
B - Number of meetings held during the time the director held office or was a member of the committee during the year.
* - Not a member of the relevant committee.
Principal activities
The principal activity of Milton is investment. Milton invests in companies and trusts, real property development,
fixed interest securities, and liquid assets such as cash and term deposits. There has been no significant
change in the nature of this activity during the financial year.
Operating and financial review
The consolidated profit after income tax of Milton for the year was $120.3 million (2013: $111.2 million). Milton
is in a sound financial position with net assets after provision for tax on unrealised capital gains at 30 June 2014
of $2.4 billion (2013: $2.2 billion) and no debt.
The operating and financial reviews are contained in the Chairman’s Review on page 2.
Significant changes in the state of affairs
There were no significant changes in the state of affairs of Milton during the past financial year other than as
disclosed in the financial statements.
Dividends
Dividends paid or declared by Milton to members since the end of the previous financial year were:
Declared and paid during the year
- Final 2013 ordinary fully franked
- Special 2013 fully franked
- Interim 2014 ordinary fully franked
Declared after end of year and not provided for
Cents
per share
Total amount
$’000
Date of payment
43.0(1)
2.5(1)
8.2
52,523
3,054
51,443
4 September 2013
4 September 2013
4 March 2014
- Final 2014 ordinary fully franked
9.4
59,298
3 September 2014
- Special 2014 fully franked
(1) Final 2013 ordinary dividend of 43cps and special 2013 dividend of 2.5cps were based on shares on issue prior to the
share split.
No LIC capital gain was included in the above dividends.
All the dividends paid by Milton since franking was introduced in 1987 have been fully franked.
3 September 2014
2,523
0.4
Events subsequent to reporting date
Apart from the information contained in note 24 to the financial statements, no matter or circumstance has
arisen since the end of the financial year that has or may significantly affect the operations, results or state of
affairs of Milton in subsequent financial years.
12
Likely developments
Milton will continue its investment activities consistent with its objective of generating increasing revenue for
distribution to its shareholders from its diversified portfolio of assets.
The performance of Milton’s investments is subject to and influenced by many external factors and therefore it
is not appropriate to predict the future results of the investments and Milton’s performance.
The Chairman’s Review commencing on page 2 of the Annual Report contains information relating to Milton’s
past performance, operations and outlook.
Environmental regulations
There are no significant environmental regulations that apply directly to Milton.
Directors’ relevant interests
No director has or has had any interest in a contract entered into since the last Directors’ Report or any contract
or proposed contract with Milton or any subsidiary or any related entity other than as disclosed in note 22 to the
financial statements.
The relevant interest of each director in the capital of Milton at the date of this report is as follows:
Director
R.D. Millner
J.F. Church
G.L. Crampton
K.J. Eley
F.G. Gooch
I.A. Pollard
No. of Shares
13,089,725
28,485,645
148,295
103,920
803,985
87,540
Indemnification and insurance of directors, officers and auditors
Neither Milton nor any related entity has indemnified or agreed to indemnify, paid or agreed to pay any
insurance premium which would be prohibited under Section 199A or Section 199B of the Corporations Act
2001 during or since the financial year ended 30 June 2014.
The directors have not included details of the nature of the liabilities covered or the amount of the premium paid
in respect of the directors’ and officers’ liability and legal expenses insurance contracts as such disclosure is
prohibited under the terms of the contracts.
Secretary
Mr Nishantha Seneviratne MBA, ACMA, CPA, AICM, GradDipACG was appointed secretary and Chief
Financial Officer in December 2012. Prior to that, he held the role of senior accountant at Milton from March
2010 and was appointed assistant company secretary in March 2012. He has held senior finance positions in
private companies for over 6 years and has over 4 years experience in corporate finance and credit in the
banking sector. He is an associate member of CIMA(UK), CPA and holds a graduate diploma in Applied
Corporate Governance.
Non-audit services
During the year, Moore Stephens Sydney, Milton’s auditor, has performed certain non-audit services in addition
to its statutory duties. Details of the amounts paid to the auditors and related practices of the auditor are
disclosed in note 4 to the consolidated financial statements.
The board has considered the non-audit services provided during the year by the auditor and is satisfied that
the provision of those non-audit services during the year by the auditor is compatible with, and did not
compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:
- All non-audit services were subject to the corporate governance procedures adopted by Milton and
have been reviewed and approved by the Audit Committee to ensure they do not impact on the
integrity and objectivity of the auditor, and
- The non-audit services provided do not undermine the general principles relating to auditor
independence as set out in Professional Statement APES110 Code of Ethics for Professional
Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a
management or decision making capacity for Milton, acting as an advocate for Milton or jointly sharing
risks and rewards.
The auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is set out
on page 18.
13
Remuneration Report
This report, which is audited, details the policy for determining the remuneration of directors and executives and
provides specific details of their remuneration.
Remuneration of non-executive directors
Non-executive directors are paid base fees, committee fees and superannuation contributions.
Fees are not linked to Milton’s performance and no bonuses are paid or options issued.
Each year the base fees and committee fees are determined by the board of directors who take into account
the demands made on directors and the remuneration of non executive directors of comparable Australian
companies.
Base fees and committee fees (including superannuation contributions)
Chairman base fee
Director base fee
Chairman of the Audit Committee fee
Member of the Audit Committee fee
Member of the Investment Committee fee
2013
124,580
62,290
5,512
3,125
5,512
2014
127,072
63,536
5,622
3,188
5,622
The total remuneration paid to non executive directors in 2014 was $410,080 (2013: $402,038).
In October 2011 shareholders approved an increase to the maximum non-executive directors’ total
remuneration to $700,000.
Non-executive directors, who were appointed before 30 June 2003, are entitled to retirement benefits in
accordance with a shareholder approved scheme. In June 2003 the board resolved to cap retirement benefits
for all directors at the amounts provided as at 30 June 2003. The total balance provided at 30 June 2014 is
$190,905 (2013: $190,905).
Remuneration of executives
Executive remuneration is a key element of Milton’s staff retention strategy which is designed to attract and
retain appropriately qualified and experienced professionals who share Milton’s goals and values and will seek
to deliver superior long term returns to Milton shareholders.
The remuneration of the managing director and senior executives is reviewed annually by the Remuneration
Committee which then makes recommendations to the board for its consideration and approval.
In formulating its recommendations the Remuneration Committee considers:
• the short term and long term performance of the Company as measured by dividend growth and total
returns.
• the contribution of the managing director and the senior executives to this performance,
• market trends in remuneration in terms of both quantum and structure and
• the remuneration of key management personnel of other listed investment companies with similar long
term investment philosophies and objectives.
Executive remuneration includes a component known as the Total Employment Cost Package (TECP), and it
may include a cash bonus component and an equity component.
The TECP includes cash salary, company contributions to superannuation and it may include non monetary
benefits such as the provision of a motor vehicle and car parking.
No executive is entitled to a guaranteed bonus however the board may award a cash bonus to reward an
executive’s outstanding contribution to the achievement of Milton’s objectives. The board will consider
qualitative measures such as contribution to the investment process, participation in board discussions,
timeliness and accuracy of reports and staff development when assessing executive performance.
In determining the amount of any bonus the board has regard to quantitative measures such as underlying
operating earnings per share, dividends per share and total returns relative to the market as a whole. In 2014,
the cash bonus was less than 15% of each executive’s TECP.
The equity component of the remuneration package encourages executives to have an investment in Milton so
that their interests are aligned with the shareholders’ interests.
The equity component is delivered through participation in the Senior Staff Share Plan (“SSSP”), which was
approved by shareholders at Milton’s Annual General Meeting on 9 October 2001 (refer note 17b to the
financial statements).
In accordance with the terms of the SSSP, the directors determine the maximum number of shares for which
the executive may apply. All SSSP shares are acquired on the market and held on behalf of the executives by
the trustee of the SSSP. The price offered to the executive shall be at a discount of one cent per share to the
market value of the shares.
14
Executives are required to hold the SSSP shares for a minimum period of three years however the benefit to
the executive is increased through long term ownership to the extent dividends are paid and the Milton share
price appreciates.
Milton provides an interest free loan to the executives to fund the acquisition of each parcel of SSSP shares.
Each loan is repaid by the application of the after tax proceeds from the dividends paid on the SSSP shares.
The opportunity cost to Milton of providing the loan is the notional interest. The Remuneration Committee
includes this cost when it reviews each executive’s TECP.
SSSP shares may not be sold, transferred, mortgaged or otherwise dealt with by the executive for a period of
three years from the date of issue or until the executive ceases employment with Milton.
If the executive’s employment ceases, the executive may within 30 days repay the loan and direct the trustee to
transfer the shares to the executive or, provided the value of the shares is greater than the loan outstanding,
direct the trustee to sell the shares, repay the loan and distribute the balance to the executive. Otherwise the
trustee will sell the shares when so directed by Milton and apply the proceeds to the repayment of the loan.
The board considers that the SSSP is appropriately designed to encourage long term ownership of shares by
executives, which then aligns their interests with that of Milton’s predominantly long term shareholder base.
Executives, other than the managing director, may participate in the Employee Share Plan (“ESP”) which
provides for a bonus of up to $1,000 to be paid in the form of Milton shares (refer note 17a to the financial
statements).
Eligible executives are provided with life, total and permanent disablement and salary continuance insurance.
The overall level of executive reward takes into account the performance of Milton over a number of years. Key
performance indicators for Milton over five years are tabled below.
Key performance indicators (All prior year per share values in the table above have been adjusted for the 5:1 share split )
2014
2013
2012
2011
2010
Profitability
Underlying operating profit ($million)
117.4
108.5
102.7
Growth in underlying operating profit (%)
Underlying earnings per share (cents)
Growth in underlying earnings per share (%)
Dividend
Full year ordinary dividend (cents per share)
Growth in full year ordinary dividend (%)
Special dividend (cents per share)
Capital
Net asset backing per share(1) at 30 June($)
Growth (decline) in net asset backing per share (%)
Net assets(1) at 30 June ($million)
Total Return
Ten year Total Shareholder Return
Ten year Total Portfolio Return
Ten year accumulation return
of the All Ordinaries Index
8.2
18.8
5.5
17.6
7.3
0.4
4.35
11.9
5.7
17.8
5.5
16.4
5.1
0.5
3.89
18.4
13.5
16.9
4.5
15.6
2.6
-
3.28
(5.4)
90.5
31.3
16.2
9.6
15.2
7.0
1.0
3.47
5.1
2,746
2,375
1,997
2,112
10.2
9.2
8.8
8.3
9.3
9.2
6.7
7.5
7.1
7.8
8.5
7.4
68.9
(6.4)
14.7
(13.3)
14.2
(9.0)
-
3.30
9.3
1,603
10.7
10.2
7.1
(1) Before provision for tax on unrealised capital gains net of tax on realised capital losses and before providing for the ordinary final
dividend.
At Milton’s 2013 Annual General Meeting, shareholders supported the remuneration report for the 2013
financial year with 86.3% of the proxies in favour of the resolution to approve the report. The resolution to
approve the remuneration report was passed by a show of hands at the Annual General Meeting held in
October 2013.
15
Details of remuneration
Amounts of remuneration
Details of the remuneration of each non-executive director of Milton Corporation Limited, the managing director
and specified executives of Milton for the years ended 30 June 2013 and 2014 are set out in the following
tables.
Non-executive directors of Milton Corporation Limited
R.D. Millner
Chairman
J.F. Church
Director
G.L. Crampton
Director
K.J. Eley
I.A. Pollard
Director
Director
Total remuneration
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
Short
Term
Benefits
Fees
$
121,460
119,350
63,303
62,204
45,158
43,802
55,185
65,071
61,075
60,014
346,181
350,441
Post
Employment
Superannuation
Total
paid
Retirement
Provision(1)
$
11,234
10,742
5,855
5,598
24,000
24,000
17,181
5,856
5,649
5,401
63,919
51,597
$
132,694
130,092
69,158
67,802
69,158
67,802
72,346
70,927
66,724
65,415
410,080
402,038
$
55,905
55,905
90,000
90,000
-
-
-
-
45,000
45,000
190,995
190,995
(1) The directors’ retirement benefits have been capped at the balance provided at 30 June 2003.
Managing director and executives of Milton Corporation Limited and its subsidiaries
Short Term Benefits
Salary
Cash
bonus
$
2014
2013
2014
2013
466,506
443,741
155,606
122,340
(1)
$
66,500
25,000
21,053
13,761
2014
2013
2014
2013
-
140,004
-
-
622,112
706,085
87,553
38,761
Non
monetary
benefits
(2)
$
33,302
41,910
-
-
-
2,812
33,302
44,722
Post
Employ-
ment
Super-
annuation
$
20,013
20,008
16,341
12,249
-
15,308
36,354
47,565
Other
long term
benefits
(3)
Share
based
payments
Total
(4)
$
118,361
132,885
6,789
4,540
$
14,848
18,325
-
-
$
719,530
681,869
199,789
152,890
-
4,025
-
25,583
-
187,732
14,848
22,350
125,150
163,008
919,319
1,022,491
F.G. Gooch
Managing director
D.N. Seneviratne
CFO, secretary
(appointed 21/12/12)
A.R. Davison
CFO, secretary
(resigned 15/04/13)
Total
remuneration
(1) Represents 100% of cash bonus paid or payable which vested in the year.
(2) Non monetary benefits include the provision of a motor vehicle, parking, the cost of life, total & permanent disablement
insurance and salary continuance insurance provided through nominated superannuation funds.
(3) Other long term benefits comprise changes in long service leave provisions.
(4) Represents the notional value of interest on loans provided to acquire shares in Milton under the Senior Staff Share
Plan and cost of shares purchased under the Employee Share Plan.
There are no fixed term employment contracts between Milton and its employees. Employment may be
terminated with four weeks notice by either Milton or the employee. There are no provisions for any termination
payments other than for unpaid annual and long service leave.
16
Share based compensation, Senior Staff Share Plan equity holdings and loans
The movements during the reporting period are as follows:
Executives’ shareholdings in relation to the Senior Staff Share Plan - Number of shares held
(All holdings below have been adjusted to account for the 5:1 share split)
F.G. Gooch
Managing director
D.N. Seneviratne
CFO, secretary
A.R. Davison
CFO, secretary
(resigned 15/04/13)
Opening
Balance
700,000
625,000
17,500
17,500
-
237,500
2014
2013
2014
2013
2014
2013
Received as
Remuneration
Closing
Balance
75,000
75,000
35,000
-
-
-
775,000
700,000
52,500
17,500
-
-
Loans in relation to the Senior Staff Share Plan
Details regarding loans outstanding at the reporting date to specified directors and specified executives, are as
follows:
Opening
Balance
$
1,840,320
1,683,932
48,521
50,635
-
665,824
2014
2013
2014
2013
2014
2013
Net
change
$
197,606
156,388
133,091
2,114
-
(665,824)
Closing
Balance
$
2,037,926
1,840,320
181,612
48,521
Highest
balance in
the period
$
2,135,181
1,920,264
186,120
50,635
Notional
Interest
(1)
$
118,361
132,885
5,789
3,540
-
-
-
665,824
-
25,583
F.G. Gooch
Managing director
D.N. Seneviratne
CFO, secretary
(appointed 21/12/12)
A.R. Davison
CFO, secretary
(resigned 15/04/13)
(1) The notional interest has been included under “Share Based Payment” in the remuneration of the managing director and the executive
disclosed on page 16. Notional interest is based on the applicable FBT benchmark interest rate, which for the year averaged 6.27%
(2013: 7.18%).
Apart from loan balances shown above, there were no loans outstanding from key management personnel.
Terms and conditions of the loans are referred to in note 17b to the financial statements.
Share holdings of key management personnel and their related parties – Number of shares held
(All holdings below have been adjusted to account for the 5:1 share split)
Opening
Balance
Received as
Remuneration
Other
Acquisitions
2014
2013
2014
2013
2014
2013
993,685
918,685
75,000
75,000
-
18,440
35,000
18,125
-
-
240,060
315
-
-
-
3,920
-
-
Closing
Balance
1,072,605
993,685
53,440
18,440
-
-
F.G. Gooch
Managing director
D.N. Seneviratne
CFO, secretary
(appointed 21/12/12)
A.R. Davison
CFO, secretary
(resigned 15/04/13)
Rounding off
The company is of a kind referred to in Class Order 98/100 issued by the Australian Securities & Investments
Commission and in accordance with that Class Order, amounts in the Directors’ Report and financial report
have been rounded off to the nearest thousand dollars, unless otherwise stated.
Signed in accordance with a resolution of the directors.
R. D. MILLNER
Chairman
Sydney, 7 August 2014
17
Level 15, 135 King Street
Sydney NSW 2000
T +61 (0)2 8236 7700
F +61 (0)2 9233 4636
www.moorestephens.com.au
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF MILTON CORPORATION LIMITED
In accordance with the requirements of section 307C of the Corporations Act 2001 , as lead auditor for
the audit of Milton Corporation Limited for the year ended 30 June 2014, I declare that, to the best of
my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the
Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
Moore Stephens Sydney
Chartered Accountants
Martin J. (Joe) Shannon
Partner
Dated in Sydney this 7th day of August 2014.
Moore Stephens Sydney ABN 90 773 984 843.
Liability limited by a scheme approved under Professional Standards Legislation*
*Other than for the acts or omissions of financial services licensees. An independent member of Moore Stephens International Limited -
members in principal cities throughout the world The Sydney Moore Stephens firm is not a partner or agent of any other Moore Stephens firm.
18
Corporate Governance Statement
This statement outlines Milton’s main corporate governance practices which have been in place
throughout the financial year.
The Board considers it essential that directors and staff of Milton employ sound corporate governance
practices in carrying out their duties and responsibilities. Accordingly a code of conduct has been
issued to detail the expected behaviour required to ensure Milton acts with integrity and objectivity.
A number of committees, which operate in accordance with their respective charters, have been
established to assist the board in carrying out its responsibilities.
Milton has placed its corporate governance statement on its website: www.milton.com.au. The Board
Charter, Code of Conduct, Audit, Nomination and Remuneration Committee charters and share trading,
communication, disclosure, performance evaluation and risk management policies are available on this
website.
The ASX Corporate Governance Council released its “Principles of Good Corporate Governance and
Best Practice Recommendations” (“Recommendations”) in March 2003 and these were revised in
August 2007 and in June 2010. The third edition of the Corporate Governance Principles and
Recommendations was released on 27 March 2014 and is effective from 1 July 2014. The ASX Listing
Rules require listed companies to identify those Recommendations that have not been followed and the
reasons for not following them.
The directors consider that Milton’s corporate governance practices do comply with the
Recommendations.
Board of directors
The Board charter details the composition and the role and responsibilities of the Board and their
relationship with management to accomplish the board's primary role of promoting the long-term
success of Milton.
The Board is accountable to shareholders for the performance of Milton. It oversees the activities and
performance of management and provides an independent and objective view of Milton’s performance.
The Board which is comprised of a majority of independent non-executive directors and one executive
director is equipped with a mix of skills and considerable experience in the investment industry.
The details of the directors, their experience, qualifications, term of office, and independent status are
set out in the Directors’ Report.
The Recommendations state that to be considered independent, directors must be “a non-executive
director who is not a member of management and who is free of any business or other relationship that
could materially interfere with (or could reasonably be perceived to materially interfere with) the
independent exercise of their judgement.”
All directors except Mr R. D. Millner would satisfy all the tests of the Recommendations and are
considered as being independent. Milton’s chairman, Mr R. D. Millner, is also chairman of Washington
H. Soul Pattinson & Co Limited, a substantial shareholder of Milton.
The Recommendations state that the determination of the independence of a director is to be dealt with
by the board of directors who are to consider all relevant facts and circumstances on a case by case
basis.
The Washington H. Soul Pattinson holding of less than 6% of Milton’s issued capital represents less
than 5% of Washington H. Soul Pattinson’s assets and therefore the Board considers it is unlikely to
impact the chairman’s independence.
The Board is of the opinion that the thinking and actions of Mr R. D. Millner and his commitment to
represent the interests of all shareholders is not impaired, and he is considered by the Board as a
whole to be independent.
In accordance with the Corporations Act 2001, any director who has an interest of any kind in relation to
any matter dealt with at a board or committee meeting is required to advise the meeting and abstain
from participation in the decision process.
All non-executive directors are subject to re-election at least every three years.
Independent professional advice may be sought by a director at Milton’s expense with the prior
approval of the chairman. A copy of advice received by the director is made available to the chairman to
be dealt with at his discretion.
19
The Board meets regularly to review management reports on the investment portfolio and on the
operational and financial performance of Milton.
The directors agreed in 2003 to phase out retirement benefits, with the amount to be paid to each
director upon retirement limited to the provision in the financial statements as at 30 June 2003, details
of which are disclosed on page 16.
Board committees
The Board has established committees to assist it in carrying out its responsibilities. The charters that
identify the roles and responsibilities of the following committees have been approved by the Board and
are available on Milton’s web site.
The Audit Committee, consisting of at least three independent non-executive directors, reviews the
effectiveness of the risk management and internal controls, the reliability of financial information and the
appointment and effectiveness of the external auditor. To assist in this function the committee may
invite the external auditor and senior executives to report to meetings. Any significant non-audit
services to be provided by the external auditors must be approved in advance by the Audit Committee.
The Audit Committee considers that the provision of those non-audit services provided to date by the
external auditor would not affect the auditor’s independence.
The Investment Committee, consisting of three independent non-executive directors and the managing
director, meets regularly to review the investment portfolio and to make investment decisions within
defined limits. All directors may attend the Investment Committee meetings. The defined limits are
reviewed by the Board from time to time.
The Nomination Committee consists of those directors who are not seeking re-election. This committee
reviews the composition of the Board annually and makes recommendations on the appropriate skill
mix, personal qualities, expertise and diversity. Performance of the Board and its committees are
reviewed annually in July by the Nomination Committee while performance of individual directors is
subject to continuous review by the Chairman. Performance evaluation of the Board and its committees
for 2013/14 financial year has been completed in accordance with the Performance Evaluation Policy of
Milton.
The Remuneration Committee, consisting of three independent non-executive directors, advises the
Board on remuneration policies and practices generally, and makes specific recommendations to the
Board annually on remuneration packages and other terms of employment for senior executives and
directors. The Remuneration Committee formally reviews the performance of the Managing Director.
Performance of each senior executive is reviewed each year by the Managing Director and reported to
the Remuneration Committee. Annual reviews of the Managing Director and senior executives for the
2013/14 financial year were completed in accordance with Milton’s performance evaluation policy as
disclosed on Milton’s website.
An independent committee is appointed to deal with matters that may be potentially influenced by
related parties. The Committee will comprise of all members of the board excluding the board member
who is a related party to the matter considered.
Trading policy in relation to listed securities
This trading policy is provided to all directors and employees so that they are aware of the restrictions
that apply to them in relation to their dealing in securities.
The policy has been developed to ensure that directors and employees comply with insider trading
provisions of the Corporations Act and to avoid the risk that they are perceived to have traded while in
the possession of insider information.
Milton encourages directors and employees to have a personal financial interest in Milton by acquiring
and holding shares on a long term basis.
Short term dealing in and short selling of Milton securities by its directors and employees is not
permitted.
The buying or selling of shares is not permitted by any director or employee of Milton or their immediate
family when that person is in possession of price sensitive information in relation to those shares that is
not available to the market.
This trading restriction is a requirement of the Corporations Act and it applies to dealing in Milton
securities and other listed securities.
Price sensitive information must be treated as confidential and must not be communicated to third
parties who may use the information inappropriately.
20
The following trading restrictions apply regardless of whether the director or employee or their
immediate family is in possession of price sensitive information.
Directors and employees of Milton or their immediate family may not purchase or sell Milton shares in
the following blackout periods:-
i) from the end of the month until the day after the announcement of the net tangible asset
backing per share (NTA) for that month and
ii) from the end of the half year or full year until the day after the results for the half year or full
year are announced to the market.
It is the responsibility of directors and employees to advise the secretary of any intention to deal in
Milton’s securities and the secretary must be advised when the dealing occurs.
Directors or employees or their immediate family who intend to deal in Milton shares during the closed
periods must receive prior approval from the Chairman. Such requests, which must be made in writing,
will only be approved in exceptional circumstances, which include severe financial hardship.
The restrictions on buying or selling Milton shares by directors or employees or their immediate family
in the blackout periods do not apply in the following situations of passive trading in Milton shares:
a. the transfer of securities already held by directors or employees or their immediate family into a
superannuation fund or similar scheme where the above are a beneficiary;
b. the acceptance of a takeover offer;
c. trading under an offer or invitation made to all or most of the company’s security holders, such
as a rights issue, a security purchase plan, a dividend reinvestment plan and an equal access
buy-back, where the plan that determines the timing and structure of the offer has been
approved by the Board. This includes decisions relating to whether or not to take up the
entitlements and the sale of entitlements required to provide for the take up of the balance of
entitlements under a renounceable pro rata issue;
d. accepting an offer to participate in an employee securities plan; and
e. any such similar transaction determined by the directors to be a passive dealing.
Continuous disclosure and shareholder communication
The secretary has been nominated as the person responsible for communications with the ASX. This
role includes responsibility for ensuring compliance with the continuous disclosure requirements of the
ASX listing rules.
The Board reviews and approves all announcements to the ASX, except for the monthly net asset
backing announcements which are reviewed by the chief financial officer and the managing director.
Milton has established a website to enhance communication with its shareholders and potential
investors. The website contains historical information, copies of all information disclosed to the ASX
and a Governance Policies section that includes details of the various committee charters and policies.
Shareholders who have advised Milton of their email addresses, are notified by email of all
announcements to the ASX. The Milton Communications Policy is available on Milton’s website.
Risk management
The managing director and chief financial officer report annually to the Audit Committee on Milton’s risk
management system and provide written confirmation to the Board that the integrity of the financial
statements are founded on a sound system of risk management and internal control which is operating
effectively in all material respects in relation to financial reporting.
The Board considers an internal audit function is not necessary due to the nature and size of Milton’s
operations. The external auditors report to the Audit Committee on risk management issues identified
during the course of the audit. The risk management policy is available on Milton’s website.
Diversity
The board has established a diversity policy which is available on Milton’s website.
The key element of the diversity policy is that Milton will seek the best person available for the position
which will not be influenced by gender, age, ethnicity or cultural background.
In relation to the appointment of a new director, the board will seek male and female candidates with
the appropriate skills and investment experience to complement the current directors.
At 30 June 2014 the proportion of women employed by Milton was: total Milton employees, 57%; board
of directors, 0%; and senior positions, 14%.
21
Milton Corporation Limited
Consolidated income statement
for the year ended 30 June 2014
Ordinary dividends and distributions
2a
114,281
Note
2014
$'000
Interest
Net gains on trading portfolio
Other revenue
Operating Revenue
2013
$'000
105,839
5,637
293
412
4,717
785
310
120,093
112,181
Share of net profits of joint ventures – equity accounted
Special dividends and distributions
Income from operating activities
19b
2b
6,412
3,050
5,013
2,744
129,555
119,938
Administration expenses
Acquisition related costs of subsidiaries
Profit before income tax expense
(3,347)
(58)
(3,214)
(46)
126,150
116,678
Income tax expense thereon
3
(5,856)
(5,461)
Profit attributable to shareholders of Milton
120,294
111,217
Basic and diluted earnings per share
7
19.27
18.26(1)
Cents
Cents
(1)The basic and diluted earnings per share in the 2013 financial statement were 91.3cps. This number has
been adjusted to account for the increase in number of shares as a result of the 5 for 1 share split in
October 2013.
The consolidated income statement is to be read in conjunction with the notes to the consolidated
financial statements.
22
Milton Corporation Limited
Consolidated statement of comprehensive income
for the year ended 30 June 2014
2014
$’000
2013
$’000
Profit
120,294
111,217
Other comprehensive income
Items that will not be reclassified to profit and loss
Revaluation of investments
Provision for tax expense on revaluation of investments
278,786
(85,717)
351,997
(105,991)
Other comprehensive income, net of tax
193,069
246,006
Total comprehensive income for the period
attributable to the shareholders of Milton
313,363
357,223
The consolidated statement of comprehensive income is to be read in conjunction with the notes to the
consolidated financial statements.
23
Milton Corporation Limited
Consolidated statement of financial position
as at 30 June 2014
Current assets
Cash
Receivables
Other financial assets
Total current assets
Non-current assets
Receivables
Investments
Joint ventures – equity accounted
Plant and equipment
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Payables
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Issued capital
Capital profits reserve
Asset revaluation reserve
Retained profits
Note
2014
$’000
2013
$’000
8
9a
10
9b
11
19c
12
13
14
116,193
22,758
10,046
148,997
3,409
2,574,965
20,644
50
466
2,599,534
114,804
23,170
14,410
152,384
2,925
2,202,530
19,664
52
538
2,225,709
2,748,531
2,378,093
882
1,122
61
2,065
309,177
439
309,616
311,681
834
1,112
60
2,006
223,282
412
223,694
225,700
2,436,850
2,152,393
1,462,552
78,815
718,044
177,439
1,384,438
91,332
512,458
164,165
Total equity attributable to shareholders of Milton
2,436,850
2,152,393
The consolidated statement of financial position is to be read in conjunction with the notes to the
consolidated financial statements.
24
Milton Corporation Limited
Consolidated statement of changes in equity
for the year ended 30 June 2014
Issued
capital
$’000
Capital
profits
reserve
$’000
Asset
revaluation
reserve
$’000
Retained
profits
$’000
Total
equity
$’000
Balance at 1 July 2013
1,384,438
91,332
512,458
164,165
2,152,393
Profit
Other Comprehensive Income:
Total comprehensive income
Net realised losses
Transactions with
shareholders:
Share issues
Dividends paid
Balance at 30 June 2014
-
-
-
-
-
-
-
-
193,069
193,069
120,294
-
120,294
120,294
193,069
313,363
(12,517)
12,517
-
-
78,114
-
1,462,552
-
-
78,815
-
-
718,044
-
(107,020)
177,439
78,114
(107,020)
2,436,850
Balance at 1 July 2012
1,373,857
98,411
259,373
149,032
1,880,673
-
-
-
-
-
-
-
-
246,006
246,006
111,217
-
111,217
111,217
246,006
357,223
(7,079)
7,079
-
-
Profit
Other Comprehensive Income:
Total comprehensive income
Net realised losses
Transactions with
shareholders:
Share issues
Dividends paid
Balance at 30 June 2013
1,384,438
91,332
512,458
10,581
-
-
-
-
-
-
(96,084)
164,165
10,581
(96,084)
2,152,393
The consolidated statement of changes in equity is to be read in conjunction with the notes to the consolidated
financial statements.
25
Milton Corporation Limited
Consolidated statement of cash flows
for the year ended 30 June 2014
Note
Cash flows from operating activities
Dividends and distributions received
Interest received
Distributions received from joint venture entities
Other receipts in the course of operations
Proceeds from sales of trading securities
Payments for trading securities
Other payments in the course of operations
Income taxes paid
Net cash provided by operating activities
18a
Cash flows from investing activities
Proceeds from disposal of investments
Payments for investments in equities and trusts
Payments for investments in joint ventures
Cash on acquisition of subsidiaries
Payments for acquisition of subsidiaries
Payments for plant and equipment
Loans repaid by other entities
Loans advanced to other entities
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Payments for issue of shares
Ordinary dividends paid
Net cash used in financing activities
2014
$’000
116,640
5,254
6,383
261
935
(150)
(3,248)
(5,483)
120,592
19,479
(94,407)
(950)
118
(58)
(15)
202
(689)
(76,320)
64,363
(226)
(107,020)
(42,883)
2013
$’000
105,553
5,782
4,700
412
583
(202)
(3,149)
(5,496)
108,183
22,062
(36,470)
(1,009)
67
(46)
(5)
790
(284)
(14,895)
-
(18)
(96,084)
(96,102)
Net increase (decrease) in cash assets held
1,389
(2,814)
Cash assets at the beginning of the year
Cash assets at the end of the year
8
114,804
116,193
117,618
114,804
The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated
financial statements.
26
Milton Corporation Limited
Notes to the consolidated financial statements for the year ended
30 June 2014
1.
Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise
stated. The financial statements include the consolidated entity (“Milton”) consisting of Milton
Corporation Limited and its subsidiaries.
a. Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian
Accounting Standards, Australian accounting interpretations, other authoritative pronouncements of
the Australian Accounting Standards Board and the Corporations Act 2001.
These financial statements have been prepared on an accruals basis and are based on the historical
cost basis except as modified by the revaluation of certain financial assets and liabilities measured at
fair value.
Unless otherwise stated under the option available in ASIC Class Order 98/100, the financial
statements are presented in Australian dollars and all values are rounded to the nearest thousand
dollars ($'000).
New and amended standards adopted:
Milton adopted AASB-13 Fair Value Measurement and AASB 2011-8 Amendments to Australian
Accounting Standards arising from AASB-13
beginning on or after 1 January 2013. These standards were adopted for the half year reporting
period commencing 1 July 2013 which explain how to measure fair value and enhance fair value
disclosures. Although, there is no effect on the measurement of Fair Value of Milton’s assets and
liabilities, Milton has enhanced its disclosures on fair value measurements of its quoted investments
under note 1(g) below as per the requirements of these two new standards.
which is mandatory for annual reporting periods
AASB-9 Financial Instruments Standard which applies to annual reporting periods commencing on or
after 1 January 2017 was early adopted by Milton since the 2010 financial year. No other new
accounting standards and interpretations that are available for early adoption but not yet adopted at
30 June 2014, will result in any material change in relation to the financial statements of Milton.
b. Basis of consolidation
The consolidated financial statements include the financial statements of Milton, being the parent
entity and its subsidiaries. The balances and effects of transactions between subsidiaries included in
the consolidated financial statements have been eliminated in full.
i) Subsidiaries
The financial statements of subsidiaries are prepared for the same reporting period as the parent
entity, using consistent accounting policies.
Where entities have come under the control of the parent entity during the year, their operating
results have been included in the group from the date control was obtained. Entities cease to be
consolidated from the date on which control is transferred out of the group and the consolidated
financial statements include the result for the part of the reporting period during which the parent
entity had control.
27
1. Summary of significant accounting policies (continued)
ii) Joint arrangements
Under AASB 11 Joint Arrangements, investments in joint arrangements are classified as either joint
operations or joint ventures based on rights and obligations arising from the joint arrangement rather
than the legal structure of the joint arrangement. Milton has assessed the nature of its joint
arrangements and determined that all current interests are joint ventures and thus accounted for
using the equity method.
c. Income tax
The income tax expense is the tax payable on the current year’s taxable income based on the current
income tax rate applicable for the year adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences between the tax bases of assets and liabilities and their carrying
amounts in the financial statements, and to unused tax losses.
Deferred tax is recognised using the balance sheet method.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only
if it is probable that future taxable amounts will be available to utilise those temporary differences and
losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying
amount and tax bases of investments in subsidiaries where the parent entity is able to control the
timing of the reversal of the temporary differences and it is probable that the differences will not
reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current
tax assets and liabilities.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected
to apply when the assets are recovered or liabilities are settled, based on those tax rates which are
enacted or substantively enacted. The relevant tax rates are applied to the cumulative amounts of
deductible and taxable temporary differences to measure the deferred tax asset or liability. An
exception is made for certain temporary differences arising from the initial recognition of an asset or a
liability. No deferred tax asset or liability is recognised in relation to these temporary differences if
they arose in a transaction, other than a business combination, that at the time of the transaction did
not affect either accounting profit or taxable profit or loss.
Deferred tax balances attributable to revaluation amounts are recognised directly in equity through
the asset revaluation reserve.
Milton Corporation Limited (the parent entity) and its wholly-owned subsidiaries have formed an
income tax consolidated group. Each entity in the group recognises its own current and deferred tax,
except for any deferred tax assets arising from unused tax losses from subsidiaries, which are
immediately assumed by the parent entity. The current tax liability of each group entity is
subsequently assumed by the parent entity. There is no tax funding agreement between Milton
Corporation Limited and its subsidiaries.
d. Cash
Cash includes cash at bank, deposits at call and term deposits, and is recognised at fair value.
Interest from deposits and bank accounts is brought to account on an accruals basis as it is earned.
e. Trading securities
Trading securities are recognised initially at cost and subsequently measured at fair value.
Changes in fair value are taken directly through the income statement.
Dividends are brought to account on the date that the shares are traded "ex-dividend".
28
1. Summary of significant accounting policies (continued)
f. Other liquid securities
Other liquid securities include listed securities such as reset preference shares which are classified
as equity instruments and may be realised within 12 months.
Other liquid securities are recognised initially at cost and Milton has elected to present subsequent
changes in fair value in other comprehensive income through the asset revaluation reserve after
deducting a provision for the potential deferred capital gains tax liability.
On disposal, the cumulative gain or loss, net of tax thereon, is transferred from the asset revaluation
reserve to the capital profits reserve.
Distribution income from these securities is brought to account on the day that these securities trade
“ex-dividend”.
g. Investments
Subsidiaries
Investments in subsidiaries are carried at net asset value which approximates fair value of the
controlled entities.
Income from dividends is brought to account when they are declared.
Other companies
Investments are recognised initially at cost and Milton has elected to present subsequent changes in
fair value of equity instruments in other comprehensive income through the asset revaluation reserve
after deducting a provision for the potential deferred capital gains tax liability as these investments
are long term holdings of equity instruments.
Quoted investments are valued continuously at fair value, which is determined by the unadjusted last-
sale price quoted on the Australian Securities Exchange at the measurement date. Use of unadjusted
last sale price in an active market such as the Australian Securities Exchange falls within the Level 1
fair value hierarchy of measuring fair value under AASB 13.
When an investment is disposed, the cumulative gain or loss, net of tax thereon, is transferred from
the asset revaluation reserve to the capital profits reserve.
Dividends and distributions are brought to account on the date that the investment trades "ex-
dividend".
De-merger dividends arising from company de-consolidations are treated as a return of capital and
not as a dividend.
h. Employee benefits
The provision for employee entitlements relates to amounts expected to be paid to employees for
long service leave and annual leave (including on-costs) and is based on legal and contractual
entitlements and assessments having regard to experience in relation to staff departures and leave
utilisation. Employees are not paid on termination for untaken personal/carer’s leave.
Under the Employee Share Plan, shares are acquired for employees as part of their remuneration
and the cost of the shares is recorded in employee benefit expenses (refer note 17a).
Under the Senior Staff Share Plan, shares are acquired for eligible employees as part of their
remuneration and held on their behalf by the trustee of the Plan. The purchase of the Plan Shares is
financed by a loan from Milton (refer note 17b).
i. Operating segments
The consolidated entity operates in Australia only and the principal activity is investment.
j. Business Combinations
The acquisition method of accounting has been used to account for all business combinations,
regardless of equity instruments or other assets acquired. The business combinations have been
accounted from the date Milton attained control of the subsidiaries. The considerations transferred for
the acquisitions comprise of the fair values of the identifiable assets transferred and the liabilities
assumed.
Costs related to the acquisitions, other than those associated with the issue of equity securities, are
expensed to the consolidated income statement as incurred.
29
1. Summary of significant accounting policies (continued)
k. Critical accounting estimates and judgments
Judgements, estimates and assumptions are required to prepare financial statements.
(i) Offset deferred tax assets from realised capital losses against deferred tax liabilities from
unrealised capital gains:
Deferred tax liabilities have been recognised for capital gains tax on the unrealised gains in the
investment portfolio at current tax rates.
As Milton does not intend to dispose of the investment portfolio this tax may not be payable at the
amount disclosed in note 13. Any tax liability that may arise on disposal of investments is subject to
tax legislation relating to the treatment of capital gains and the applicable tax rate at the time of
disposal.
Deferred tax assets have been recognised relating to carried forward capital losses, based on current
tax rates. Utilisation of the tax losses requires the realisation of capital gains in subsequent years and
the ability to satisfy certain tests at the time the losses are recouped. The deferred tax assets related
to carried forward capital losses have been offset against the related deferred tax liabilities as
disclosed in note 13.
(ii) Classification of joint arrangements as joint ventures:
Milton engages in property development joint ventures through its wholly owned subsidiaries. It has
non controlling interests in three property development joint venture partnerships through separate
joint venture entities.
Each joint venture partnership agreement provides that partners have rights to the net assets of the
partnership.
Accordingly, the directors have determined that each joint venture partnership is to be classified as a
joint venture and accounted for using the equity method.
Apart from (i) and (ii) above, there are no key assumptions or sources of estimation uncertainty that
have a risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year.
30
2. Revenue
a. Ordinary dividends and distributions from
Investments held in portfolio at 30 June
Investments sold during the year
b. Special dividends and distributions from
Investments held in portfolio at 30 June
3.
Income tax expense
Prima facie income tax expense calculated at 30% on the profit
before income tax expense
Increase (decrease) in income tax expense due to:
Tax offset for franked dividends
Non taxable distributions
(Over)/Under provision in prior year
Other differences
Income tax expense on profit
4. Auditor’s remuneration
Auditors of the company
Audit and review services
Related practice of the auditor
Due diligence
Liquidation of non-operating subsidiary
5. Ordinary and special fully franked dividends
a. Recognised in the current year
A final ordinary dividend of 43(1) cents per share in respect of the
2013 year paid on 4 September 2013 (2012: an ordinary final
dividend in respect of the 2012 year of 40 (1) cents per share paid
on 34 September 2012)
A special dividend of 2.5(1) cents per share in respect of 2013
year paid on 4 September 2013 (2012: Nil)
An ordinary interim dividend of 8.2 cents per share paid on
4 March 2014 (2013: 7.8(2) cents per share paid on 6 March
2013)
b.
Not recognised in the current year
Since the end of the financial year, the directors declared an
ordinary final dividend in respect of the 2014 year of 9.4 cents
per share and special dividend of 0.4 cents per share payable
on 3 September 2014 (2013: ordinary final dividend of 8.6 (2)
cents per share and special dividend of 0.5(2) cents per share
paid on 4 September 2013)
2014
$’000
2013
$’000
114,104
177
114,281
3,050
3,050
105,620
219
105,839
2,744
2,744
37,845
35,003
(31,892)
-
(148)
51
5,856
(29,148)
(412)
10
8
5,461
107
19
2
128
104
10
-
114
52,523
48,650
3,054
-
51,443
107,020
47,434
96,084
61,821
55,577
(1)Dividends paid on the number of shares prior to the share split.
(2)Comparatives adjusted to reflect the increase in number of shares as a result of the share split.
31
5. Ordinary and special fully franked dividends (continued)
c. Dividend franking account
The amount of franking credits available to shareholders for
the subsequent financial year, adjusted for franking credits that
will arise from the payment of the current tax liability
Subsequent to year end, the franking account will be reduced
by the proposed final and special dividends to be paid on
3 September 2014 (2013: final and special dividends)
2014
$’000
2013
$’000
116,757
111,550
(26,495)
90,262
(23,819)
87,731
The franking account balance would allow Milton to frank additional dividend payments up to an
amount of $210,611,044 (2013:$204,705,527) which represents 33 cents per share
(2013: 34 cents per share(1)).
6.
Listed Investment Company capital gain account
Balance of the Listed Investment Company (LIC) capital gain
account available to shareholders for the subsequent financial
year
1,255
1,190
Distributed LIC capital gains may entitle certain shareholders to a special deduction in their income tax
return. LIC capital gains available for distribution are dependent upon the disposal of investment
portfolio holdings which qualify for LIC capital gains and the receipt of LIC capital gain distributions.
7.
Earnings per share
Basic earnings per share
Profit attributable to shareholders of the parent entity
cents
19.27
$’000
120,294
cents
18.26(1)
$’000
111,217
No.
No.
Weighted average number of ordinary shares used in the
calculation of basic earnings per share
624,416,028
609,021,193(1)
Diluted earnings per share figures are the same because there are no potential dilutive ordinary shares.
8. Cash
Cash at bank
Deposits at call
Term deposits
$’000
$’000
2,257
29,718
84,218
116,193
2,782
16,224
95,798
114,804
The weighted average interest rate for cash and deposits at call as at 30 June 2014 is 3.1% p.a.
(2013: 3.3% p.a.). Term deposits have an average maturity date of September 2014 (2013: August
2013) and an average interest rate of 3.5% (2013: 4.2% pa).
(1) Comparatives adjusted to reflect the increase in number of shares as a result of the 5:1 share split
in October 2013.
32
9.
a.
Receivables
Receivables – current
Income receivable
Sundry debtors
b.
Receivables – non-current
2014
$’000
22,754
4
22,758
2013
$’000
23,166
4
23,170
Senior staff share plan loans (refer note 17b)
3,409
2,925
c.
Terms and conditions
Sundry debtors are due within 30 days and no interest is charged.
10. Other financial assets
Other liquid securities - at fair value
Prepaid expenses
11.
Investments – non-current
Quoted investments - at fair value
Unquoted investments - at fair value
a.
Included in quoted investments are:
Shares in other corporations
Stapled securities in other corporations
Units in trusts
b.
Included in unquoted investments are:
Units in trusts
c.
Investments disposed of during the year
Fair value at disposal date
Equity investments
Loss on disposal after tax
Equity investments
9,857
189
10,046
14,205
205
14,410
2,574,894
2,202,504
71
26
2,574,965
2,202,530
2,487,638
2,136,433
67,322
19,934
45,164
20,907
2,574,894
2,202,504
71
71
26
26
17,811
20,306
(12,517)
(7,179)
The disposals occurred in the normal course of Milton’s operations as a listed investment company or
as a result of takeovers or mergers.
33
12.
Deferred tax assets
The balance comprises temporary differences attributable to :
Revenue tax losses carried forward
Provisions
Retirement benefit obligations
Share issue expenses
Other
Total deferred tax assets
Movements:
Balance at 1 July
(charged) to the income statement
Credited to equity
Balance at 30 June
To be recovered within 12 months
To be recovered after more than 12 months
13.
Deferred tax liabilities
The balance comprises temporary differences attributable to:
Amounts recognised directly in equity:
Revaluation of investments
Realised capital losses
Amounts recognised in profit:
Realised capital gains
Income receivable which is not assessable for tax until
receipt
Movements:
Balance at 1 July
Charged to income statement
Charged to other comprehensive income
(Credited) to equity
Balance at 30 June
To be settled within 12 months
To be settled beyond 12 months
2014
$’000
3
255
57
37
114
466
538
(140)
68
466
130
336
466
2013
$’000
12
247
57
6
216
538
786
(253)
5
538
128
410
538
310,440
(18,499)
223,521
(17,348)
832
832
16,404
309,177
223,282
178
85,717
-
309,177
-
16,277
223,282
116,901
459
105,991
(69)
223,282
-
309,177
223,282
34
14.
Issued capital
a. Movement in share capital
Balance at 1 July 2013
Share Purchase Plan
Shares issued as consideration for acquisition
Dividend Reinvestment Plan
Less : Transaction costs (net of tax)
Balance at 30 June 2014
b. Movement in number of shares
Balance at 1 July 2013
Share purchase plan
Share Split(1)
Shares issued as consideration for acquisition
Dividend Reinvestment Plan
Balance at 30 June 2014
2014
$’000
2013
$’000
1,384,438
1,373,857
63,563
13,910
799
(158)
-
10,594
-
(13)
1,462,552
1,384,438
Number of
shares
Number of
shares
122,147,119
121,625,655
3,324,432
501,886,204
3,280,382
187,207
-
-
521,464
-
630,825,344
122,147,119
(1) The 125,471,551 shares held on 18 October 2013 were split on the basis of 5 shares for each
existing share resulting in the increase of 501,886,204 shares.
b.
Ordinary shares
All capital consists of fully paid ordinary shares which are listed on the ASX and carry one vote per
share and the right to receive dividends.
15.
Nature and purpose of reserves
Changes in fair value of investments are presented in other comprehensive income through the asset
revaluation reserve as referred to in note 1g.
Upon disposal of investments, the net gain or loss is transferred from the asset revaluation reserve
to the capital profits reserve as referred to in note 1g.
16.
Management of financial risk
The risks associated with the financial instruments, such as investments and cash, include market
risk, credit risk and liquidity risk.
The Audit Committee has approved policies and procedures to manage these risks. The
effectiveness of these policies and procedures is continually reviewed by management and annually
by the Audit Committee.
a.
Financial instruments’ terms, conditions and accounting policies
Milton’s significant accounting policies are included in note 1, and the terms and conditions of each
class of financial asset, financial liability and equity instrument, both recognised and unrecognised at
the reporting date, are included under the appropriate note for that instrument.
b.
Net fair values
The carrying amounts of financial instruments in the consolidated statement of financial position
approximate their net fair value.
35
c.
Credit risk exposures
Milton’s principal credit risk exposures arise from the investment in liquid assets, such as cash, bank
term deposits and income receivable.
The risk that a financial loss will occur because a counterparty to a financial instrument fails to
discharge an obligation is known as credit risk. The credit risk on Milton’s financial assets, excluding
investments, is the carrying amount of those assets.
Individual bank limits have been approved by the board for the investment of cash.
Income receivable comprises accrued interest and dividends and distributions which were brought to
account on the date the shares or units traded ex-dividend.
There are no financial instruments overdue.
All financial assets and their recoverability are continuously monitored by management and reviewed
by the board on a quarterly basis.
d. Market risk
Market risk is the risk that changes in market prices will affect the fair value of the financial
instrument.
Milton is exposed to market risk through the movement of the security prices of the companies and
trusts in which it is invested.
The market value of individual companies fluctuates daily and the fair value of the portfolio changes
continuously, with this change in the fair value recognised through the asset revaluation reserve.
Investments represent 94% (2013: 93%) of total assets. A 5% movement in the market value of
investments in each of the companies and trusts within the portfolio would result in a 4.7%
(2013: 4.6%) movement in the net assets before provision for tax on unrealised capital gains at
30 June 2014 (2013: 30 June 2013). The net asset backing before provision for tax on unrealised
capital gains would move by 20 cents per share at 30 June 2014 (2013: 18 cents at 30 June 2013).
Milton’s management regularly monitors the performance of the companies within its portfolio and
makes portfolio recommendations which are considered by the Investment Committee. The Milton
board reviews the portfolio on a quarterly basis.
Milton is not exposed to foreign currency risk as all its investments are quoted in Australian dollars.
The fair value of Milton’s other financial instruments is unlikely to be materially affected by a
movement in interest rates as they generally have short dated maturities and variable interest rates.
e.
Liquidity risk
Liquidity risk is the risk that Milton is unable to meet its financial obligations as they fall due.
Milton manages liquidity risk by monitoring forecast and actual cashflows.
f.
Capital risk management
The parent entity invests its equity in a diversified portfolio of assets that generates a growing
income stream for distribution to shareholders in the form of fully franked dividends.
The capital base is managed to ensure there are funds available for investment as opportunities
arise. Capital may be increased through the issue of shares under the Share Purchase Plan and the
Dividend Reinvestment Plan. Shares may also be issued through rights issues and as consideration
for acquisition of unlisted companies.
g.
Fair value measurement
Financial instruments carried at fair value are comprised of investments and other financial assets.
The fair value of these financial instruments is the quoted prices (unadjusted) in active markets for
identical assets. The Australian Securities Exchange is the active market for all financial
instruments.
36
17.
a.
Employee entitlements
Employee Share Plan
The Employee Share Plan ("ESP") is available to all eligible employees to acquire ordinary shares in
Milton in lieu of a cash bonus of up to $1,000 per year as part of the employee’s remuneration. The
transaction and administration costs of acquiring the shares and administering the plan are paid by
Milton.
During the year, 250 shares (2013: 252 shares) were acquired by Milton on behalf of eligible
employees under the ESP at a cost of $4,925 (2013: $3,999) with a total market value at
30 June 2014 of $5,675.
Any shares acquired cannot be disposed of or transferred until the earlier of 3 years from the date of
issue or acquisition or on the date that the employee's employment ceases with Milton.
b.
Senior Staff Share Plan
The Senior Staff Share Plan ("SSSP") was approved by shareholders at Milton's Annual General
Meeting on 9 October 2001. Eligible employees are given the opportunity to apply for Plan Shares in
Milton which are subscribed for or acquired and held on their behalf by the trustee of the plan. The
purchase of these Plan Shares is financed by an interest-free limited recourse loan from Milton with
recourse only to Plan Shares. The loan will be repaid partially from any dividends received. Milton
administers the SSSP and meets the transactional and administration costs.
During the year, 162,500 (1) shares (2013: 90,000 (1) shares) were acquired by the trustee of the plan
on behalf of eligible employees under the SSSP at a cost of $638,857 (2013: $283,583). The loans
to eligible employees are as disclosed in note 9b. The shares acquired by the trustee during the year
had a market value of $737,750 at $4.54 per share as at 30 June 2014.
Any shares acquired are held in the name of the trustee and classified as Restricted Shares which
cannot become Unrestricted Shares until the earlier of 3 years from the date of issue to the trustee or
acquisition by the trustee or on the date that the employee’s employment ceases with Milton. The
trustee may transfer Unrestricted Shares to the participant provided that any outstanding loan has
been repaid in full.
No shares were disposed by the trustee during the year. (2013: 237,500 (1) shares were disposed by
the trustee and proceeds of $646,086 were applied to fully repay loans of the retiring executive).
(1)Shares issued adjusted to account for the increase in number of shares as a result of the share
split.
18.
Note to the cash flow statements
a.
Reconciliation of net profit to net cash provided by
operating activities
Profit
Share of net profits of joint ventures – equity accounted
Distributions received from joint venture entities
Depreciation of non-current assets
Acquisition related costs of subsidiaries
Increase in receivables
Increase in payables and provisions
Increase/(decrease) in income taxes payable
Net cash provided by operating activities
2014
$’000
2013
$’000
120,294
(6,412)
6,383
17
58
(155)
34
373
111,217
(5,013)
4,700
19
46
(2,798)
46
(34)
120,592
108,183
b.
Non-cash financing and investing activities
As described in note 21.b Milton acquired an unlisted investment company through the issue of
3,280,382 new Milton shares with a fair value of $13,909,832 (2013: Issued 521,464 shares to
acquire an unlisted investment company with a fair value of $9,913,031).
37
19.
a.
Investment in joint venture entities
Details of joint venture entities
Companies in the consolidated entity have entered into joint ventures to develop real property.
These joint ventures which are held by subsidiaries have been accounted for using the equity
accounting principles.
b.
Contribution from joint venture entities
Milton has interests in the following joint venture entities:
33.33% interest in the Ellenbrook Syndicate Joint Venture
contribution to operating profit before tax (2013:33.33%)
23.33% interest in the Mews Joint Venture
contribution to operating profit before tax (2013:23.33%)
50% interest in the LWP Huntlee Syndicate No 2 Joint
Venture (2013 : 50%)
Share of net profits of joint ventures
c.
Consolidated interest in the assets and liabilities of the
joint ventures
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Provision for diminution in value
Net assets
2014
$’000
6,010
682
(280)
6,412
21,750
11,639
(3,578)
(8,624)
21,187
(543)
20,644
2013
$’000
4,610
415
(12)
5,013
19,060
13,106
(1,866)
(10,093)
20,207
(543)
19,664
d.
Contingent liabilities and commitments
Each venturer is liable for its share of the debts of the joint ventures. The finance facilities have
recourse only to the assets of the joint ventures. The LWP Huntlee Syndicate No 2 Joint Venture
was formed in June 2010 and Milton is committed to providing further capital of $0.831 million over
the next year (2013: $1.188 million). Apart from this commitment there are no further financial
commitments.
20.
Parent entity disclosures
In accordance with the Corporations Amendment (Corporate Reporting Reform) Act 2010 and the
Corporations Act 2001 the following summarised parent entity information is set out below.
As at, and throughout, the financial year ended 30 June 2013 the parent entity is Milton Corporation
Limited.
Profit of the parent entity
Profit for the year
Total comprehensive income for the year
$’000
115,801
308,870
$’000
107,715
353,720
38
20.
Parent entity disclosures (continued)
Financial position of the parent entity as at 30 June
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Total equity of the parent entity comprising of
Issued capital
Capital profits reserves
Asset revaluation reserve
Retained profits
Total equity attributable to shareholders of the parent
entity
21.
Particulars in relation to subsidiaries
a. Milton Corporation Limited’s subsidiaries
The following subsidiaries have been included in the
consolidated accounts:
85 Spring Street Properties Pty Ltd
Chatham Investment Co. Pty Limited
Incorporated Nominees Pty Limited
Milhunt Pty Limited
The parent entity and all subsidiaries are incorporated in
Australia.
2014
$’000
2013
$’000
141,319
2,829,893
80,929
393,043
152,301
2,463,731
85,020
311,338
2,436,850
2,152,393
1,462,552
1,384,438
87,394
765,020
121,884
99,911
554,940
113,104
2,436,850
2,152,393
Interest held %
100
100
100
100
100
100
100
100
b. Acquisition of subsidiaries
During the year ended 30 June 2014, Milton acquired 100% of the shares of an unlisted investment
company for a consideration of 3,280,382 new Milton shares with a fair value of $13,909,832.
c.
Disposal of subsidiaries
The unlisted investment company acquired during the year was placed into voluntary liquidation in
June 2014. (2013: Unlisted investment company acquired during 2013 year was placed into
voluntary liquidation).
22.
a.
Related parties
Directors and Key Management Personnel compensation
Short-term benefits
Other long-term benefits
Post-employment benefits
Share-based payments
$’000
1,089
15
100
124
1,328
$’000
1,140
23
99
163
1,425
Information regarding individual directors’ and executives’ compensation and equity instruments
disclosures, as permitted by Corporations Regulations 2M.3.03, are provided in the Remuneration
Report section of the Directors’ Report on pages 14 to 17.
39
22. Related parties (continued)
b. Shareholdings of non-executive directors and their related parties – number of shares held
Non-executive directors and their related parties held 12.5% (2013:12.8%) of the voting power of Milton as
at year end. A number of non-executive directors and their related parties acquired shares in Milton during
the year on an arm’s length basis. Movements in the number of shares held are given below. There were no
amounts outstanding from or due to any non-executive director or their related parties as at 30 June 2014.
Number of shares at beginning of the year
Adjustment for Share Split in October 2013
Acquired during the year
Disposed during the year
Number of shares held at end of year
2014
No of shares
2013
No of shares
15,639,656
62,777,040
164,604
15,655,002
-
20,369
-
(35,715)
78,581,300
15,639,656
c. Loans to key management personnel and their related parties
Details regarding loans outstanding at the reporting date to key management are as given below. No loans
were granted to related parties of any key management personnel.
Balance at beginning of the year
Loans advanced
Loan Repaid
Balance at end of the year
2014
$
1,888,841
432,460
(101,763)
2,219,538
2013
$
2,400,391
236,332
(747,882)
1,888,841
Notional interest
124,151
162,008
Terms and conditions of the loans are referred to in note 17b and details of loans to individual key
management personnel are disclosed on the remuneration report on page 17.
d. Other related party transactions
All non-executive directors have entered into the Deed of Indemnity, Insurance and Access that was
approved at the Annual General Meeting held on 10 October 2000. Milton has a Remuneration and
Retirement Benefits Deed with each of the non-executive directors except Messrs G.L Crampton and
K.J. Eley. During the 30 June 2004 year, Milton and the directors varied the Remuneration and Retirement
Benefits Deed, whereby the maximum retirement benefit payable to a non-executive director on retirement
will be the provision for the director as at 30 June 2003. Apart from the details disclosed in this note no
director has entered into a material contract with the parent entity or Milton since the end of the previous
financial year and there were no material contracts involving directors’ interests subsisting at the end of the
year.
40
Loans to and from subsidiaries
Loans have been made between the parent entity (and) wholly owned subsidiaries for capital
transactions. The loans between the parent and its subsidiaries have no fixed date of repayment
and are non-interest bearing.
Balance at beginning of the year
Loans advanced from subsidiaries
Loan advanced to subsidiaries
Balance at end of the year
2014
$
84,521,583
6,466,875
(11,544,331)
79,444,127
2013
$
72,149,885
13,387,148
(1,015,450)
84,521,583
Other arrangement with non executive director
Mr J.F. Church rented office space from Milton at commercial rates from 1 July 2013 to 30 June 2014
and rental income received by Milton during the financial year was $12,971 (2013: $13,726).
23.
Contingencies
At the reporting date the directors are not aware of any material contingent liabilities.
24.
Events subsequent to reporting date
Since the end of the financial year, the directors declared an ordinary fully franked final dividend of
9.4 cents per share and a special fully franked dividend of 0.4 cents per share payable on
3 September 2014.
This financial report was authorised for issue in accordance with a resolution of directors on 7 August
2014.
41
25. Holdings at Fair Value through Other Comprehensive Income at 30 June 2014
The following holdings are valued at fair value through Other Comprehensive Income.
2014
$’000
Investments in equity instruments
Adelaide Brighton Limited
AGL Energy Limited
ALS Limited
Alumina Limited
Amalgamated Holdings Limited
Amcor Limited
AMP Limited
A.P. Eagers Limited
APA Group
APN News & Media Limited
ARB Corporation Limited
Argo Investments Limited
Arrium Limited
ASX Limited
Austbrokers Holdings Limited
Australand Property Group
Australia & New Zealand Banking Group Limited
- ordinary shares
- convertible preference shares
- capital notes 2
Australian Foundation Investment Company Limited
Automotive Holdings Group Limited
Aveo Group (formerly FKP Property Group)
Bank of Queensland Limited
Bendigo & Adelaide Bank Limited
BHP Billiton Limited
BKI Investment Company Limited
Blackmores Limited
Boral Limited
Bradken Limited
Brambles Limited
Brickworks Limited
BWP Trust
Cardno Limited
Carlton Investments Limited
Carsales.com Limited
CFS Retail Property Trust Group
Coca-Cola Amatil Limited
Cochlear Limited
Commonwealth Bank of Australia
- ordinary shares
- PERLS V
Commonwealth Property Office Fund
Crown Resorts Limited
CSL Limited
David Jones Limited
Diversified United Investment Limited
Dulux Group Limited
Equity Trustees Limited
Finbar Group Limited
Fletcher Building Limited
Fairfax Media Limited
FKP Property Group
Fleetwood Corporation Limited
Goodman Group
Goldman Sachs JB Were Collateral Mezzanine Fund
42
8,135
37,012
99,542
-
7,291
12,459
11,242
33,307
11,753
-
9,116
7,521
3,380
17,712
11,058
3,697
99,021
2,007
208
8,002
8,188
3,086
89,061
69,658
121,418
2,013
10,282
8,749
3,141
11,772
44,217
3,928
7,614
9,669
3,516
16,006
13,872
2,085
245,315
102
-
4,042
39,411
1,403
1,364
2,236
9,265
4,535
6,570
-
-
532
3,264
-
2013
$’000
6,925
33,373
103,855
485
6,125
11,897
9,015
23,741
6,492
327
8,490
5,227
3,116
14,939
11,170
2,898
82,597
1,975
199
7,095
4,270
-
57,053
57,497
102,213
1,629
10,184
6,852
3,475
10,909
41,079
3,068
4,646
7,486
-
15,942
17,377
1,962
209,482
101
1,897
3,237
36,151
908
811
312
3,509
1,481
5,735
1,600
1,223
821
902
5
25. Holdings at Fair Value through Other Comprehensive Income at 30 June 2014 (continued)
Graincorp Limited
Gresham Private Equity Co-Investment Fund
GWA Group Limited
Insurance Australia Group Limited
- ordinary shares
- convertible preference shares
IAG Finance(NZ) Limited Perpetual Reset Exchangeable Notes
Incitec Pivot Limited
InvoCare Limited
IOOF Holdings Limited
Leighton Holdings Limited
Lend Lease Group
Lindsay Australia Limited
Macquarie Group Limited
McMillan Shakespeare Limited
Metcash Limited
MyState Limited
National Australia Bank Limited
- ordinary shares
- convertible preference shares
New Hope Corporation Limited
Noni B Limited
Orica Limited
Origin Energy Limited
Orora Limited
Perpetual Limited
Premier Investments Limited
QBE Insurance Group Limited
Qube Holdings Limited
Ramsay Health Care Limited
Reece Australia Limited
Rio Tinto Limited
Santos Limited
Scentre Group
Schaffer Corporation Limited
Sedgman Limited
Select Harvests Limited
Seven Group Holdings Limited – TELYS4 preference shares
Seven West Media Limited
Sims Group Limited
Sonic Healthcare Limited
Stockland Group
Suncorp Group Limited
Sydney Airport
Tankstream Ventures
Tatts Group Limited
Telstra Corporation Limited
Toll Holdings Limited
TPG Telecom Limited
Transfield Services Limited
Transurban Group
Treasury Wine Estates Limited
The Trust Company Limited
UGL Limited
43
2014
$’000
3,043
21
5,983
28,114
319
1,284
4,671
18,571
5,897
14,953
6,090
1,088
27,808
917
10,686
2,065
144,380
31
3,457
343
3,681
9,199
1,702
64,403
5,017
28,462
5,855
6,982
4,024
33,665
20,317
5,336
408
1,011
832
617
3,155
7,677
10,674
8,346
41,632
6,134
50
7,272
70,909
6,688
20,561
1,648
20,271
5,279
-
9,926
2013
$’000
4,235
21
5,460
20,577
306
1,234
4,375
19,295
3,298
11,709
3,743
280
20,689
1,618
16,395
1,887
130,200
-
4,606
520
3,903
4,866
-
29,174
2,573
41,398
2,278
3,758
3,167
23,822
17,630
-
298
1,071
529
593
3,076
6,550
9,012
7,485
33,768
1,461
-
3,528
63,347
6,015
13,135
1,170
14,582
5,955
16,143
10,042
25. Holdings at Fair Value through Other Comprehensive Income at 30 June 2014 (continued)
Washington H. Soul Pattinson & Company Limited
WDS Limited
Wesfarmers Limited
- ordinary shares
- partially protected shares
Westfield Corporation
Westfield Group
Westfield Retail Trust
Westpac Banking Corporation
Wide Bay Australia Limited
Woodside Petroleum Limited
Woolworths Limited
Worley Parsons Limited
Other liquid securities
AMP Limited – notes
APT Pipelines Limited
Bank of Queensland Limited – convertible preference shares
Colonial Group – subordinated notes
Commonwealth Bank of Australia - Perls III
Goodman Funds Management – perpetual listed unsecured
securities
Macquarie CPS Trust – convertible preference shares
Westpac Banking Corporation - preference shares (stapled
preferred securities)
Woolworths Limited notes II
2014
$’000
135,326
1,006
119,791
-
5,434
-
-
354,090
2,385
33,815
95,991
6,896
2,574,965
-
1,074
5,425
1,032
977
1,139
-
-
210
9,857
2013
$’000
120,123
-
103,235
10,516
-
7,688
2,433
301,729
2,276
28,749
86,322
4,923
2,202,530
2,678
1,052
5,257
1,018
926
1,064
1,000
1,000
210
14,205
44
DIRECTORS’ DECLARATION
1. In the opinion of the directors of Milton Corporation Limited:
(a) the consolidated financial statements and notes that are set out on pages 22 to 44 and the
Remuneration report, that is set out on pages 14 to 17 in the Directors’ report are in accordance with
the Corporations Act 2001, including:
(i) giving a true view of the consolidated entity’s financial position as at 30 June 2014 and of its
performance for the financial year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations
2001; and
(b) there are reasonable grounds to believe that Milton Corporation Limited will be able to pay its debts as
and when they become due and payable.
2. The directors have been given the declarations required by Section 295A of the Corporations Act 2001
from the chief executive officer and chief financial officer for the financial year ended 30 June 2014.
Signed in accordance with a resolution of the directors.
R. D. MILLNER
Chairman
Sydney, 7 August 2014
45
Level 15, 135 King Street
Sydney NSW 2000
T +61 (0)2 8236 7700
F +61 (0)2 9233 4636
www.moorestephens.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF MILTON CORPORATION LIMITED
We have audited the accompanying financial report of Milton Corporation Limited and its Controlled Entities (the
consolidated entity), which comprises the consolidated statement of financial position as at 30 June 2014, the
consolidated income statement, the consolidated statement of comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes
comprising a summary of significant accounting policies and other explanatory information and the directors’
declaration of the consolidated entity comprising Milton Corporation Limited and the entities it controlled at the
year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of Milton Corporation Limited are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Act 2001 and for such internal control as the directors determine is
necessary to enable the preparation of the financial report that is free from material misstatement, whether due
to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical
requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance
whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the
risks of material misstatement of the financial report, whether due to fraud or error. In making those risk
assessments, the auditor considers internal controls relevant to the entity’s preparation of the financial report
that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls.
An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Moore Stephens Sydney ABN 90 773 984 843.
*Other than for the acts or omissions of financial services licensees. An independent member of Moore Stephens International Limited -
members in principal cities throughout the world The Sydney Moore Stephens firm is not a partner or agent of any other Moore Stephens firm.
Liability limited by a scheme approved under
Professional Standards Legislation*
46
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s Opinion
In our opinion, the financial report of Milton Corporation Limited and its Controlled Entities is in accordance with
the Corporations Act 2001, including:
(i) giving a true and fair view of Milton Corporation Limited’s consolidated financial position as at 30 June
2014 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and
the Corporations Regulations 2001.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 14 to 17 of the directors’ report for the year ended
30 June 2014. The directors of Milton Corporation Limited are responsible for the preparation and presentation
of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is
to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Auditor’s Opinion
In our opinion the Remuneration Report of Milton Corporation Limited for the year ended 30 June 2014,
complies with section 300A of the Corporations Act 2001.
Matters Relating to the Electronic Publication of the Audited Financial Report
the consolidated entity for the year ended 30 June 2014
This auditor’s report relates to the financial report of
included on Milton Corporation Limited ’s website. The company’s directors are responsible for the integrity of
Milton Corporation Limited’s website. We have not been engaged to report on the integrity of the Milton
Corporation Limited’s website. The auditor’s report refers only to the subject matter described above. It does
not provide an opinion on any other information which may have been hyperlinked to/from these statements. If
users of the financial report are concerned with the inherent risks arising from publication on a website, they are
advised to refer to the hard copy of the audited financial report to confirm the information contained in this
website version of the financial report.
Moore Stephens Sydney
Chartered Accountants
Martin J. (Joe) Shannon
Partner
Dated in Sydney this 7th day of August 2014.
47
DIRECTORY
DIRECTORS
MANAGEMENT
R. D. MILLNER - Chairman
F.G. GOOCH - Managing director
J. F. CHURCH
G.L. CRAMPTON
K.J. ELEY
F. G. GOOCH - Managing director
I. A. POLLARD
D.N. SENEVIRATNE - CFO, secretary
REGISTERED OFFICE AUDITORS
LEVEL 4, 50 PITT STREET MOORE STEPHENS SYDNEY
SYDNEY NSW 2000 CHARTERED ACCOUNTANTS
PHONE: (02) 8006 5357 LEVEL 15
FAX: (02) 9251 7033 135 KING STREET
EMAIL: general@milton.com.au SYDNEY NSW 2000
INTERNET: www.milton.com.au INTERNET:
www.moorestephens.com.au
SHARE REGISTRY
LINK MARKET SERVICES LIMITED
LOCKED BAG A14
SYDNEY SOUTH NSW 1235
PHONE: (02) 8280 7111
FAX: (02) 9261 8489
TOLL FREE: 1800 641 024
EMAIL: milton@linkmarketservices.com.au
INTERNET: www.linkmarketservices.com.au
48
TOP 20 SHAREHOLDERS AS AT 31 JULY 2014
ASX INFORMATION
NAME
Argo Investments Limited
Washington H. Soul Pattinson & Company Limited
Myora Pty Limited
Australian Foundation Investment Company Limited
Griffinna Pty Ltd
Danwer Investments Pty Limited
Bortre Pty Limited
Otterpaw Pty Ltd
JBF Holdings Pty Ltd
Chickenfeed Pty Ltd
Jamama Nominees Pty Limited
J S Millner Holdings Pty Limited
Macdawley Proprietary Limited
Gartfern Pty Limited
Hexham Holdings Pty Limited
Millane Pty Limited
A V L Investments Proprietary Limited
Ms Julia Jane Drew
Redemptorists
T N Phillips Investments Pty Ltd
Questor Financial Services Limited
SHARES
HELD
38,426,060
33,589,220
22,777,030
14,402,925
6,355,020
6,072,545
6,072,545
5,777,235
5,253,920
4,211,490
4,195,685
3,736,555
3,479,615
3,306,625
3,223,120
3,158,310
2,979,080
2,875,000
2,834,000
2,828,123
2,796,880
On 31 July 2014, there were 21,187 holders of ordinary shares in the capital of Milton. Holders
of ordinary shares are entitled to one vote per share.
Number of shares held Number of shareholders
1-1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
The number of holders of less than a marketable parcel of 25 shares
%
6.09
5.32
3.61
2.28
1.01
0.96
0.96
0.92
0.83
0.67
0.67
0.59
0.55
0.52
0.51
0.50
0.47
0.46
0.45
0.45
0.44
2,444
5,518
4,272
8,358
595
550
SUBSTANTIAL SHAREHOLDINGS As at 31 July 2014 the names and holdings of
substantial shareholders as disclosed in notices received by Milton are as follows:-
Substantial shareholders
Argo Investments Limited
Washington H. Soul Pattinson & Company Limited
Brickworks Limited(1)
(1)(Technical relevant interest as a result of its holding
in Washington H. Soul Pattinson & Company Limited)
Date of Notice
20 December 2010
20 December 2010
7 January 2014
No. of shares
41,300,140
33,585,220
33,589,220
OTHER INFORMATION
Milton is taxed as a public company.
There is no current on-market buy-back.
The total number of transactions in securities undertaken by Milton was 320 and the total
brokerage paid or accrued was $352,146.
49
ISSUES TO SHAREHOLDERS SINCE 19TH SEPTEMBER, 1985
(Commencement of Capital Gains Tax)
1 for 10 Bonus Issue from Capital Profits Reserve
Bonus in lieu of Dividend from Capital Profits Reserve
1 for 10 Bonus Issue from Capital Profits Reserve
Bonus in lieu of Dividend from Capital Profits Reserve
1 for 20 Bonus from Share Premium Reserve
1 for 20 Bonus from Capital Profits Reserve - a fully franked dividend
1 for 20 Cash Issue at $3 per share
1 for 10 Bonus from Share Premium Reserve
1 for 20 Cash Issue at $3 per share
1 for 20 Cash Issue at $3 per share
1 for 10 Bonus from Capital Profits Reserve - a fully franked dividend
1 for 10 Cash Issue at $4 per share
1 for 10 Bonus from Share Premium Reserve
1 for 10 Cash Issue at $4.75 per share
1 for 10 Bonus from Share Premium Reserve
3 Milton shares for 10 Chatham shares at $7.756022 per Milton share
3 Milton shares for 10 Matine shares at $7.756022 per Milton share
9 Milton shares for 40 Milkirk shares at $7.756022 per Milton share
1 for 10 cash issue at $8.20 per share
Share Purchase Plan at $8.75 per share
Share Purchase Plan at $8.86 per share
Share Purchase Plan at $10.79 per share
8,273,502 Milton shares issued for the acquisition of Cambooya Investments Limited
2,287,200 Milton shares issued for the acquisition of an unlisted investment company
Share Purchase Plan at $11.70 per share
1,739,112 Milton shares issued for the acquisition of an unlisted investment company
Share Purchase Plan at $13.21 per share
2,742,777 Milton shares issued for the acquisition of an unlisted investment company
496,809 Milton shares issued for the acquisition of an unlisted investment company
Share Purchase Plan at $14.10 per share
Share Purchase Plan at $17.11 per share
1,000,322 Milton shares issued for the acquisition of an unlisted investment company
1,476,254 Milton shares issued for the acquisition of an unlisted investment company
382,404 Milton shares issued for the acquisition of an unlisted investment company
278,103 Milton shares issued for the acquisition of an unlisted investment company
Share Purchase Plan at $19.60 per share
1,888,353 Milton shares issued for the acquisition of an unlisted investment company
1,895,976 Milton shares issued for the acquisition of an unlisted investment company
2,424,582 Milton shares issued for the acquisition of an unlisted investment company
252,477 Milton shares issued for the acquisition of an unlisted investment company
1,223,252 Milton shares issued for the acquisition of an unlisted investment company
Share Purchase Plan at $22.48 per share
Share Purchase Plan at $17.85 per share
3,555,958 Milton shares issued for the acquisition of an unlisted investment company
Share Purchase Plan at $16.08 per share
4,132,711 Milton shares issued for the acquisition of unlisted investment companies
2,446,521 Milton shares issued for the acquisition of an unlisted investment company
23,803,854 Milton shares issued for the acquisition of Choiseul Investments Limited
15.11.1985
19.05.1986
05.06.1987
05.06.1987
15.11.1988
15.11.1988
26.05.1989
10.11.1989
08.06.1990
24.05.1991
23.04.1992
11.05.1992
23.11.1994
12.12.1994
15.11.1995
06.07.1998
06.07.1998
06.07.1998
21.06.1999
10.11.1999
13.11.2000
13.11.2001
31.12.2001
28.06.2002
08.11.2002
31.12.2002
31.10.2003
11.03.2004
01.04.2004
29.10.2004
21.10.2005
17.08.2006
23.08.2006
28.08.2006
21.09.2006
16.10.2006
10.11.2006
23.03.2007
14.05.2007
20.06.2007
24.09.2007
19.10.2007
03.10.2008
19.02.2009
09.10.2009
26.02.2010
20.08.2010
16.12.2010
50
21.02.2013
30.09.2013
22.10.2013
24.02.2014
04.03.2014
521,464 Milton shares issued for the acquisition of an unlisted investment company
Share Purchase Plan at $19.12 per share
Share Split of 5 for 1 – number of issued shares increased by 501,886,204
3,280,382 Milton shares issued for the acquisition of an unlisted investment company
187,207 Milton shares issued under the DRP at $4.27 per share
"CPI" FOR CAPITAL GAINS TAX
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
March
-
74.4
81.4
87.0
92.9
100.9
105.8
107.6
108.9
110.4
114.7
119.0
120.5
120.3
121.8
June
-
75.6
82.6
88.5
95.2
102.5
106.0
107.3
109.3
111.2
116.2
119.8
120.2
121.0
122.3
September
71.3
77.6
84.0
90.2
97.4
103.3
106.6
107.4
109.8
111.9
117.6
120.1
119.7
121.3
123.4
December
72.7
79.8
85.5
92.0
99.2
106.0
107.6
107.9
110.0
112.8
118.5
120.3
120.0
121.9
51
NOTES
52