MILTON CORPORATION LIMITED
ABN 18 000 041 421
An Australian Listed Investment Company
Listed since 1958
ANNUAL REPORT 2015
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 22,500 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 in March and
September.
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 2.
Special fully franked dividends may be paid out of special investment revenue.
Milton provides exposure to a diversified portfolio of companies and trusts listed on the Australian Securities
Exchange.
Milton’s $2.7 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 0.12% 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
Dividend History
Chairman’s Review of the 2015 Financial Year
Classification of Investments
Five Year Financial Summary
Milton Corporation Foundation
Directors’ Report
1
2
3
4
6
6
11
Remuneration Report
Auditor’s Independent Declaration
Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Directory
ASX Information
14
18
19
45
46
48
49
*
Corporate Governance Statement is available on the company website www.milton.com.au/governance and
is lodged with ASX with this Annual Report.
Calendar
Final dividend & special dividend:
- Ex dividend date
- Payment date
Share Purchase Plan closes
Annual General Meeting:
- To be held at
13 August 2015
3 September 2015
22 September 2015
15 October 2015 at 3pm
Sofitel Sydney Wentworth,
Level 4, The Adelaide Room
61-101 Phillip Street, Sydney
Key performance charts
2015
2014
2013
2012
2011
0
20
40
60
80
100
120
140
Underlying operating profit $ m Special investment revenue $ m
Profit after tax
Net profit after tax for the 2015 financial year
was $128 million including special investment
revenue after tax of $3.0 million
Earnings per share
Earnings per share for the 2015 financial year
were 20.1 cents.
Underlying earnings per share, which
excludes special investment revenue after tax,
amounted to 19.6 cents.
Fully franked dividends per share
Ordinary dividends in 2015 were increased to
18.4 cents per share.
A special dividend of 0.4 cents per share was
declared in addition to the final dividend.
A special dividend has been declared in four
of the last five years.
Net tangible asset backing per share
The net tangible asset backing before
provision for tax on unrealised capital gains
(NTA) at 30 June 2015 was $4.39.
The provision for tax on unrealised capital
gains at 30 June 2015 was $0.49 per share.
2015
2014
2013
2012
2011
2015
2014
2013
2012
2011
2015
2014
2013
2012
2011
0
5
Underlying eps
cents
10
15
20
Special earnings per share
0
5
Interim
cents
Final
10
15
20
Special
$0.00
$1.00
$2.00
$3.00
$4.00
NTA
CGT provision
1
Milton dividend history
Milton has a sound track record of increasing dividends over the long term.
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.
The historical dividends per share have been adjusted to account for the sub-division of shares on the
introduction of decimal currency, bonus shares issued, and the five for one share split in October 2013.
Dividends since listing
Special dividends Ordinary dividends
e
r
a
h
s
r
e
p
$
0.20
0.18
0.16
0.14
0.12
0.10
0.08
0.06
0.04
0.02
-
Total returns
Long term investors in Milton have received increasing dividends and an increase in the value of their
investment.
For example the fully franked ordinary dividend for the 2015 year was 114% higher than that paid in the 2000
year and the share price at 30 June 2015 was 152% higher than at 30 June 2000.
The following graph compares the company’s total returns over a range of periods with that of the accumulation
return of the All Ordinaries index. Like the accumulation return the total returns assume the dividends have
been reinvested when the shares trade ex dividend.
m
u
n
n
a
r
e
p
t
n
e
c
r
e
P
25.0
20.0
15.0
10.0
5.0
0.0
TPR
TSR
XAOAI
Totalportfolio returns (TPR) are after expenses and tax liabilities
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 do not take into account the benefit of franking credits
1 year
5.1
3.2
5.7
3 Years
14.8
18.9
14.5
5 Years
10 Years
15 Years
10.6
12.1
9.4
2
7.3
8.0
7.0
10.3
11.1
7.8
Chairman’s Review of the 2015 financial year
Net profit for the 2015 financial year was a record $128 million and the weighted average earnings per share
were 20.1 cents.
The net profit included special investment revenue totaling $3 million which your directors exclude from the
calculation of underlying operating profit (UOP).
The 6.5% increase in UOP was largely due to the increase in ordinary dividends received from the majority of
companies in the diversified equity investment portfolio. Importantly franked dividend receipts increased by
$8 million to $110 million.
The property development joint ventures delivered another sound performance with pre tax profits of
$6.3 million being marginally less than the $6.4 million reported in 2014. The largest of these joint venture
developments, Ellenbrook in Western Australia, was awarded the prestigious FIABCI World Prix d’Excellence
Award for 2015 by the International Real Estate Federation for the best master-planned community in the world.
The company continued to operate efficiently with total administration expenses increasing by less than 1%.
These expenses represented 0.12% of average total assets for the 2015 year.
As Milton is internally managed its expenses are unaffected by changes in the market values of its investments
and it pays no performance fees therefore ensuring shareholders are the beneficiaries of improved
performance.
The lift in underlying operating profit provided the opportunity to increase the fully franked ordinary dividends
paid to shareholders. Both the interim and final dividends were increased so that the full year ordinary dividend
of 18.4 cents per share was 4.5% higher than the prior year.
A special dividend of 0.4 cents per share was paid to pass on the benefits of the special investment revenue
received during the year. Over the last five years Milton has paid four special dividends totaling 2.3 cents per
share.
The company is in a strong financial position with total assets of $2.8 billion and no borrowings at
30 June 2015. The assets comprised an investment portfolio of long term holdings of Australian listed
companies and trusts valued at $2.66 billion as well as liquid assets such as cash, dividends receivable and
other financial assets with a total value of $131 million and investments in joint ventures of $20 million.
Asset composition
Investment portfolio
94%
Liquid assets
5%
Other including
Property jvs
1%
3
The investment portfolio consists of 95 companies and trusts. While many of the investments are well
represented in the All Ordinaries Index their selection has been based on the assessed merits of each company
and its ability to pay dividends and not based on any index weighting.
Details of each investment held at 30 June 2015 are shown on pages 7 to 10.
The following asset classification table shows the composition of Milton’s assets by sector.
Classification(1)
Opening
position
Additions
Disposals(3)
Change in
value
Closing
position
Income
Weighting
$ million
$ million
$ million
$ million
$ million
$ million
%
Banks
1,008.3
Consumer staples
Materials
Energy
Diversified financials
Insurance
Commercial services
Telecommunications
Real estate
Healthcare
Retailing
Utilities
Capital goods
Transport
Media
Other shares
259.8
258.6
209.0
153.7
122.1
113.9
91.5
59.7
59.2
57.4
48.8
47.7
40.0
11.1
34.2
12.6
7.4
15.8
5.4
13.7
5.6
2.8
6.0
5.2
3.1
4.1
5.1
4.3
16.8
0.9
6.8
Total listed investments
Liquids(2)
Property joint ventures
Other assets(3)
Total
2,575.0
115.1
148.8
20.6
4.1
2,748.5
(0.1)
(11.9)
(0.9)
-
-
-
(3.2)
-
(3.7)
-
(1.8)
-
(8.5)
(11.8)
(2.3)
(0.6)
(44.8)
(0.2)
1,020.6
(14.2)
(21.0)
(33.0)
16.2
6.0
(31.0)
25.7
7.9
17.6
25.2
4.3
(8.4)
11.3
1.7
3.6
241.1
252.5
181.4
183.6
133.7
82.5
123.2
69.1
79.9
84.9
58.2
35.1
56.4
11.4
43.4
55.4
11.1
10.6
8.4
7.6
6.4
2.8
4.6
3.2
1.5
2.0
2.3
1.8
2.4
1.2
1.3
11.7
2.657.0
122.6
131.4
20.7
4.5
4.1
6.3
4.6
36.3
8.6
9.0
6.4
6.5
4.8
2.9
4.4
2.5
2.8
3.0
2.1
1.2
2.0
0.4
1.6
94.4
4.7
0.7
0.2
2813.6
137.6
100.0
(1)
(2)
Investments are grouped according to their asset classes using the Global Industry Classification Standard (“GICS”) codes.
Liquids include cash, term deposits, hybrid securities and dividends receivable.
(3) Disposals include capital returns of $6.6 million.
In 2015 a total of $115 million was invested in 44 companies and trusts. This included $10 million in National
Australia Bank through participation in its recent entitlements issue. Other larger investments included $8.6
million in BHP Billiton, $6.4 million in Woolworths, $6.3 million in Macquarie Group and $6 million in Telstra.
Companies added to the portfolio during the year were BT Investment Management, Cover-More Group and
Regis Healthcare.
The acquisitions were partly funded by disposals totaling $38 million. These disposals included the takeover of
Toll Holdings and the sale of Metcash shares. Capital returns from UGL and Wesfarmers amounted to $6.6
million.
The Share Purchase Plan provided an additional $35.6 million in October 2014 when 8 million shares were
issued to 3,400 shareholders who took up the offer to subscribe for up to $15,000 in shares.
Participation in the Share Purchase Plan will be offered again in September 2015. The Share Purchase Plan
rules have been amended so that the issue price of the shares will be at a discount of 2.5% to the lower of the
volume weighted average share price (VWAP) for the 3 business days following the dividend ex date on
14 August 2015 or the VWAP for the 3 business days ending on the offer closing date of 22 September 2015.
It is pleasing to note that support for the Dividend Reinvestment Plan increased during the year with 1.4 million
shares being issued to shareholders who elected to receive all or part of their dividend as new Milton shares.
4
The Dividend Reinvestment Plan will operate for the final and special dividends. The pricing of the new DRP
shares will be based on the volume weighted average selling price of Milton shares over the five business days
commencing on the first trading day after the dividend record date being 18 August 2015.
At the end of the 2015 financial year Milton had 640.3 million shares on issue to over 22,500 shareholders and
its market capitalisation was $2.88 billion. The share price of $4.50 was 2.5% above the net tangible asset
backing per share, before provision for tax on unrealised capital gains, of $4.39.
Had the entire investment portfolio been sold at 30 June 2015 a capital gains tax liability of $0.49 per share
would have been realised. However Milton is a long term investor and there is no intention to do so.
Outlook
Milton will continue to seek to increase the size of its portfolio by investing in well run companies that are likely
to grow their dividends over the long term.
The market as a whole appears to be fully valued however ongoing low interest rates are likely to support these
valuations. From time to time this support may be tested as investors with differing investment time frames
react to short term macro issues.
Based on current estimates investment income from the portfolio is expected to increase over the year.
In the absence of unforeseen circumstances directors expect to be able to at least maintain Milton’s full year
ordinary dividend rate of 18.4 cents per share.
R. D. MILLNER
Chairman
Sydney, 6 August 2015
5
Five Year Financial Summary
Underlying operating profit after tax(1) ($million)
Underlying earnings per share (cents)
Profit after tax ($million)
Earnings per share (cents)
Administration costs as % of average total assets
Interim dividend (cents per share)
Final dividend (cents per share)(2)
Full year ordinary dividend (cents per share)
Special dividend (cents per share)
Net assets(2) at 30 June ($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
2015
2014
2013
2012
2011
125.0
117.4
108.5
102.7
19.6
18.8
17.8
16.9
128.0
120.3
111.2
103.4
20.1
0.12
8.5
9.9
18.4
0.4
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
2,811
2,746
2,375
1,997
2,112
4.39
3.90
4.50
5451
8.0
12.1
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)
640.2
630.8
610.5
608.0
616.5
22,514
21,055
19,309
19,008
19,490
(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 and before providing for the ordinary final and special dividends.
(3) After provision for tax on unrealised capital gains and before providing for the ordinary final and special dividends.
Where applicable values 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 2015 to $2.1 million.
The Foundation’s assets can now support annual distributions of $110,000 and in 2015; fourteen organisations
received much needed support from the Milton Foundation.
The Foundation has provided $1.9 million of assistance to the community since its establishment.
The Foundation is a deductible gift recipient registered with the Australian Charities and Not-for-profits
Commission (ACNC) 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, 6 August 2015
6
Holding
Fair Value
$'000
3,046,545
19,500
2,000
433,570
7,306,078
5,709,708
3,033,075
444,992
4,757,857
10,451,306
2,735,886
1,194,512
3,636,921
1,666,463
3,234,567
1,202,766
803,229
1,610,689
188,987
1,194,512
583,618
793,037
3,628,921
378,014
1,466,434
362,290
161,862
1,053,604
2,835,533
2,903,973
98,099
1,960
191
2,190
93,299
70,001
258,205
2,149
158,483
336,009
1,020,586
11,792
16,389
98,378
9,749
44,637
6,880
5,791
6,201
4,022
2,497
31,369
8,263
6,496
252,464
28,453
13,418
3,094
1,780
5,257
110,670
78,291
240,963
LISTED INVESTMENTS BY SECTOR AT 30 JUNE 2015
Banks
Australia & New Zealand Banking Group Limited
- ordinary shares
- convertible preference shares
- capital notes 2
Auswide Bank Limited (formerly Wide Bay Australia)
Bank of Queensland Limited
Bendigo and Adelaide Bank Limited
Commonwealth Bank of Australia
MyState Limited
National Australia Bank Limited
Westpac Banking Corporation
Materials
Adelaide Brighton Limited
Amcor Limited
BHP Billiton Limited
Boral Limited
Brickworks Limited
Dulux Group Limited
Fletcher Building Limited
Incitec Pivot Limited
Orica Limited
Orora Limited
Rio Tinto Limited
Sims Group Limited
South32 Limited
Consumer Staples
Blackmores Limited
Coca-Cola Amatil Limited
Graincorp Limited
Select Harvests Limited
Treasury Wine Estates Limited
Wesfarmers Limited
Woolworths Limited
7
LISTED INVESTMENTS BY SECTOR AT 30 JUNE 2015
Diversified Financials
Argo Investments Limited
ASX Limited
Australian Foundation Investment Company Limited
BKI Investment Company Limited
BT Investment Management Limited
Carlton Investments Limited
Diversified United Investment Limited
Equity Trustees Limited
IOOF Holdings Limited
Macquarie Group Limited
Perpetual Limited
Energy
New Hope Corporation Limited
Origin Energy Limited
Santos Limited
Washington H. Soul Pattinson & Company Limited
Woodside Petroleum Limited
Worley Parsons Limited
Insurance
AMP Limited
Austbrokers Limited
Cover-More Group 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
Telecommunication
Telstra Corporation Limited
TPG Telecom Limited
Retailing
A.P. Eagers Limited
ARB Corporation Limited
Automotive Holdings Group Limited
Premier Investments Limited
8
Holding
985,766
532,965
1,294,772
1,223,866
250,143
356,778
378,845
490,205
975,075
555,849
1,359,278
1,290,107
702,174
1,683,469
9,174,640
865,342
425,112
2,121,110
1,044,795
1,831,425
5,126,282
3,000
12,000
2,618,375
3,074,732
14,615,253
3,731,553
5,833,107
813,065
3,058,342
590,250
Fair Value
$’000
7,857
21,265
7,924
2,038
2,114
11,306
1,330
9,995
8,766
45,246
65,735
183,576
2,438
8,405
13,182
123,306
29,621
4,425
181,377
12,769
9,403
4,359
28,605
305
1,237
35,793
41,294
133,765
89,737
33,472
123,209
54,539
10,594
12,203
7,526
84,862
LISTED INVESTMENTS BY SECTOR AT 30 JUNE 2015
Holding
Fair Value
$’000
Commercial Services
ALS Limited
Brambles Limited
McMillan Shakespeare Limited
Transfield Services Limited
Healthcare
Cochlear Limited
CSL Limited
Ramsay Health Care Limited
Regis Healthcare Limited
Sonic Healthcare Limited
Real Estate
Aveo Group (formerly FKP Property Group)
BWP Trust
Federation Centres (formerly CFS Retail Property Trust Group)
Finbar Group Limited
Goodman Group
Lend Lease Group
Scentre Group
Stockland Group
Westfield Corporation
Utilities
AGL Energy Limited
APA Group
Transport
Lindsay Australia Limited
Qube Holdings Limited
Sydney Airport
Transurban Group
Capital Goods
Bradken Limited
Cardno Limited
CIMIC Limited (formerly Leighton Holdings)
GWA Group Limited
Reece Australia Limited
Sedgman Limited
UGL Limited
9
10,731,037
1,399,966
231,321
1,404,032
33,800
592,198
169,542
456,076
615,925
1,498,282
1,584,008
6,453,335
2,782,249
1,108,376
464,539
1,733,474
2,668,940
760,000
2,67,869
2,005,833
7,504,000
3,857,000
2,609,629
3,328,081
826,514
1,204,699
791,239
817,170
185,124
2,021,674
1,451,191
62,777
14,840
2,797
2,001
82,415
2,709
51,207
10,422
2,353
13,162
79,853
3,866
4,847
18,844
3,311
6,950
6,982
6,501
10,943
6,931
69,175
41,641
16,528
58,169
3,377
9,064
12,996
30,951
56,388
1,186
3,891
17,209
1,863
6,426
1,385
3,077
35,037
LISTED INVESTMENTS BY SECTOR AT 30 JUNE 2015
Consumer Services
Crown Resorts Limited
InvoCare Limited
Tatts Group Limited
Media
Amalgamated Holdings Limited
Seven Group Holdings Limited – TELYS4 preference shares
Information Technology
Carsales.com Limited
Automobiles & Components
Schaffer Corporation Limited
Holding
267,301
1,865,903
2,313,955
867,921
7,000
867,000
68,999
Fair Value
$’000
3,261
22,577
8,608
34,446
10,884
537
11,421
8,835
8,835
335
335
Total Listed Investments by Sector
2,656,876
10
Directors’ Report
For the year ended 30 June 2015
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 2015 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).
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 42 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 & Risk Committee and a member of the Remuneration Committee.
A Chartered Accountant and former partner of a major firm of Chartered Accountants for more than 31 years and
has extensive experience in the investment industry.
Kevin J. Eley CA, F Fin, FAICD Independent non-executive director.
Director of Milton Corporation Limited since 2011.
Member of the Investment and Audit & Risk 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 30 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 & Risk and Remuneration Committees.
An Actuary and over 38 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
R.D. Millner
J.F. Church
G.L. Crampton
K.J. Eley
F.G. Gooch
I.A. Pollard
A
6
6
6
6
6
6
B
6
6
6
6
6
6
A
17
17
*
18
18
*
B
18
18
*
18
18
*
Audit & Risk
Committee
Meetings
A
B
*
*
5
5
*
5
*
*
5
5
*
5
Nomination
Committee
Meetings
Remuneration
Committee
Meetings
A
*
1
*
*
1
1
B
*
1
*
*
1
1
A
1
*
1
*
*
1
B
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 $128.0 million (2014: $120.3 million). Milton
is in a sound financial position with net assets after provision for tax on unrealised capital gains at 30 June 2015
of $2.5 billion (2014: $2.4 billion) and no debt.
The operating and financial reviews are contained in the Chairman’s Review which begins on page 3.
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 2014 ordinary fully franked
- Special 2014 fully franked
- Interim 2015 ordinary fully franked
Declared after end of year and not provided for
- Final 2015 ordinary fully franked
- Special 2015 fully franked
Cents
per share
Total amount
$’000
Date of payment
9.4
0.4
8.5
9.9
0.4
59,298
2,523
54,361
63,385
2,561
3 September 2014
3 September 2014
3 March 2015
3 September 2015
3 September 2015
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.
Events subsequent to reporting date
Apart from the information contained in note 25 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 3 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 17 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
13,226,795
28,501,495
158,405
107,290
853,985
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 2015.
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, CGMA, CPA, AICM, AGIA, ACIS was appointed secretary and Chief
Financial Officer in December 2012. Mr. Seneviratne joined Milton as the senior accountant in March 2010 and
also held the position of assistant company secretary from March 2012. Prior to joining Milton, he has held a
number of senior finance roles with private companies for over 6 years as Finance Controller/Manager and has
over 4 years experience in corporate finance and credit in the banking and financial services sector. He is also
an associate member of the Governance Institute of Australia (GIA) and Institute of Chartered Secretaries and
Administrators (ICSA).
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 20 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 & Risk 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 & Risk Committee fee
Member of the Audit & Risk Committee fee
Member of the Investment Committee fee
2015
$
130,884
65,442
5,791
3,283
5,791
2014
$
127,072
63,536
5,622
3,188
5,622
The total remuneration paid to non executive directors in 2015 was $422,382 (2014: $410,080).
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 2015 is
$190,905 (2014: $190,905).
Remuneration of executives
Executive remuneration is a key element of the 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 its 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 2015,
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 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 19b to the
financial statements).
14
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.
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 $1,000 to be paid in the form of Milton shares (refer note 19a to the financial
statements).
Eligible executives are provided with life, total and permanent disablement and salary continuance insurance.
The overall level of executive reward takes into account the performance of Milton over a number of years. Key
performance indicators for Milton over five years are tabled below.
Key performance indicators
Profitability
Underlying operating profit ($million)
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
2015
2014
2013
2012
2011
125.0
6.5
19.61
4.3
18.4
4.6
0.4
4.39
0.9
117.4
108.5
102.7
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
2,811
2,746
2,375
1,997
2,112
8.0
7.3
7.0
10.2
9.2
8.8
8.3
9.3
9.2
6.7
7.5
7.1
7.8
8.5
7.4
(1) Before provision for tax on unrealised capital gains and before providing for the ordinary final dividend.
At Milton’s 2014 Annual General Meeting, shareholders supported the remuneration report for the 2014
financial year with 88.7% 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 2014.
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 2014 and 2015 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
Director
I.A. Pollard
Director
Total remuneration
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
Short
Term
Benefits
Fees
$
124,817
121,460
65,053
63,303
47,233
45,158
68,051
55,185
62,763
61,075
367,917
346,181
Post
Employment
Superannuation
Total
paid
Retirement
Provision(1)
$
11,858
11,234
6,180
5,855
24,000
24,000
6,465
17,181
5,962
5,649
54,465
63,919
$
136,675
132,694
71,233
69,158
71,233
69,158
74,516
72,346
68,725
66,724
422,382
410,080
$
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
(1)
$
$
2015
498,972 70,500
2014
466,506
66,500
2015 159,817
14,000
2014
155,606
21,053
2015
658,789
84,500
2014
622,112
87,553
Non
monetary
benefits
(2)
$
12,536
33,302
-
-
12,536
33,302
F.G. Gooch
Managing director
D.N. Seneviratne
CFO, secretary
Total remuneration
Post
Employ-
ment
Super-
annuation
Other
long term
benefits
(3)
Share
based
payments
Total
(4)
$
$
$
$
30,004
11,954
126,211
750,177
20,013
14,848
118,361
719,530
24,683
13,943
15,631
228,074
16,341
-
6,789
199,789
54,687
25,897
141,842
978,251
36,354
14,848
125,150
919,319
(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.
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
F.G. Gooch
Managing director
D.N. Seneviratne
CFO, secretary
Opening
Balance
775,000
700,000
52,500
17,500
2015
2014
2015
2014
Received as
Remuneration
Closing
Balance
50,000
75,000
25,000
35,000
825,000
775,000
77,500
52,500
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:
F.G. Gooch
Managing director
D.N. Seneviratne
CFO, secretary
Opening
Balance
$
2015
2,037,926
2014
2015
2014
1,840,320
181,612
48,521
Net
change
$
117,320
197,606
103,326
133,091
Closing
Balance
$
Highest
balance in
the period
$
2,155,246
2,261,672
Notional
Interest
(1)
$
126,211
2,037,926
2,135,181
118,361
284,938
293,486
181,612
186,120
15,631
5,789
(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 5.85%
(2014: 6.27%).
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 19b to the financial statements.
Share holdings of key management personnel and their related parties – Number of shares held
Opening
Balance
Received as
Remuneration
Other
Acquisitions
Closing
Balance
2015
1,072,605
50,000
7,252
1,129,857
2014
993,685
75,000
3,920
1,072,605
2015
53,690
25,217
2014 18,440
35,250
-
-
78,907
53,690
F.G. Gooch
Managing director
D.N. Seneviratne
CFO, secretary
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, 6 August 2015
17
Level 15, 135 King Street
Sydney NSW 2000
GPO Box 473
Sydney NSW 2001
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 2015, 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.
This declaration is in respect of Milton Corporation Limited and the entities it controlled during the
financial year.
Moore Stephens Sydney
Chartered Accountants
Melissa Alexander
Partner
Dated in Sydney this 6th day of August 2015.
Moore Stephens Sydney ABN 90 773 984 843. 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
FINANCIAL STATEMENTS CONTENTS
Financial Statements Page No.
Consolidated Income Statement 20
Consolidated Statement of Comprehensive Income 21
Consolidated Statement of Financial Position 22
Consolidated Statement of Changes in Equity 23
Consolidated Statement of Cash flows 24
Notes to the financial statements
Key Numbers:
1. Revenue 25
2. Tax 26
3. Earnings Per Share 28
4. Dividends Paid 28
5. Franking Account 29
6. Listed Investment Company Capital Gain Account 29
Assets:
7. Investments in Equity Instruments 30
8. Investment in Joint Venture Entities 31
9. Cash 32
10. Receivables 32
11. Other Financial Assets 32
Capital Management:
12. Share Capital 33
13. Reserves 33
Risk:
14. Critical accounting estimates, judgements and assumptions 34
15. Management of Financial Risk 34
16. Capital risk management 35
Group Structure:
17. Subsidiaries 36
Other Information:
18. Related Party Transactions 37
19. Share Based Payments 38
20. Auditor’s Remuneration 39
21. Parent Entity Disclosures 39
22. Summary of other accounting policies 40
23. Cash flow information 41
24. Contingent Liabilities 41
25. Events subsequent to reporting date 41
26. Holdings at Fair Value through Other Comprehensive Income at 30 June 2015 42
19
Milton Corporation Limited
Consolidated income statement
for the year ended 30 June 2015
Ordinary dividends and distributions
Interest
Net gains on trading portfolio
Other revenue
Operating Revenue
Share of net profits of joint ventures – equity accounted
Special dividends and distributions
Income from operating activities
Administration expenses
Acquisition related costs of subsidiaries
Profit before income tax expense
Note
2015
$'000
1a)
122,894
1c)
4,095
900
366
2014
$'000
114,281
4,717
785
310
1d)
8a)
1b)
128,255
120,093
6,310
3,006
6,412
3,050
137,571
129,555
(3,376)
-
(3,347)
(58)
134,195
126,150
Income tax expense thereon
2a)
(6,186)
(5,856)
Profit attributable to shareholders of Milton
128,009
120,294
Basic and diluted earnings per share
3)
Cents
20.08
Cents
19.27
The consolidated income statement is to be read in conjunction with the notes to the consolidated
financial statements.
20
Milton Corporation Limited
Consolidated statement of comprehensive income
for the year ended 30 June 2015
2015
$’000
2014
$’000
Profit
128,009
120,294
Other comprehensive income
Items that will not be reclassified to profit and loss
Revaluation of investments
Provision for tax expense on revaluation of investments
11,504
(3,573)
278,786
(85,717)
Other comprehensive income, net of tax
7,931
193,069
Total comprehensive income for the period
attributable to the shareholders of Milton
135,940
313,363
The consolidated statement of comprehensive income is to be read in conjunction with the notes to the
consolidated financial statements.
21
Milton Corporation Limited
Consolidated statement of financial position
as at 30 June 2015
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
9)
10a)
11)
10b)
7)
8b)
2c)
2d)
2015
$’000
2014
$’000
99,452
22,390
9,761
131,603
3,869
2,656,998
20,652
36
393
2,681,948
116,193
22,758
10,046
148,997
3,409
2,574,965
20,644
50
466
2,599,534
2,813,551
2,748,531
875
388
47
1,310
313,119
477
313,596
314,906
882
1,122
61
2,065
309,177
439
309,616
311,681
2,498,645
2,436,850
12)
13b)
13a)
1,504,589
64,971
739,819
189,266
1,462,552
78,815
718,044
177,439
Total equity attributable to shareholders of Milton
2,498,645
2,436,850
The consolidated statement of financial position is to be read in conjunction with the notes to the
consolidated financial statements.
22
Milton Corporation Limited
Consolidated statement of changes in equity
for the year ended 30 June 2015
Issued
capital
$’000
Capital
profits
reserve
$’000
Asset
revaluation
reserve
$’000
Retained
profits
Total
equity
$’000
$’000
Balance at 1 July 2014
1,462,552
78,815
718,044
177,439
2,436,850
Profit
Other Comprehensive Income:
Total comprehensive income
Net realised losses
Transactions with
shareholders:
Share issues
Dividends paid
Balance at 30 June 2015
-
-
-
-
-
-
-
-
7,931
7,931
128,009
-
128,009
128,009
7,931
135,940
(13,844)
13,844
-
-
42,037
-
1,504,589
-
-
64,971
-
-
739,819
-
(116,182)
189,266
42,037
(116,182)
2,498,645
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:
-
-
-
-
-
-
-
-
193,069
193,069
120,294
-
120,294
120,294
193,069
313,363
(12,517)
12,517
-
-
Share issues
Dividends paid
Balance at 30 June 2014
78,114
-
1,462,552
-
-
78,815
-
-
718,044
-
(107,020)
177,439
78,114
(107,020)
2,436,850
The consolidated statement of changes in equity is to be read in conjunction with the notes to the consolidated
financial statements.
23
Milton Corporation Limited
Consolidated statement of cash flows
for the year ended 30 June 2015
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
Note
2015
$’000
126,021
4,345
7,133
318
4,019
(3,119)
(3,321)
(6,402)
Net cash provided by operating activities
23a)
128,994
Cash flows from investing activities
Proceeds from disposal of investments
Proceeds from repayment of capital
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
17,821
1,658
(94,407)
(950)
118
(58)
(15)
202
(689)
(76,320)
64,363
(226)
(107,020)
38,311
6,568
(115,147)
(831)
-
-
-
209
(671)
(71,561)
42,117
(109)
(116,182)
(74,174)
(42,883)
Net increase (decrease) in cash assets held
(16,741)
1,389
Cash assets at the beginning of the year
Cash assets at the end of the year
116,193
9)
99,452
114,804
116,193
The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated
financial statements.
24
Milton Corporation Limited
Notes to the consolidated financial statements: Key Numbers
for the year ended 30 June 2015
1.
Revenue
Milton’s revenue is derived from dividends, distributions, interest income, profit from joint ventures and
income arising from the trading.
2015
$’000
2014
$’000
a. Ordinary dividends and distributions
Milton receives ordinary dividend income and trust distributions from its long term investments in
companies and trusts listed on the Australian Securities Exchange.
Investments held in portfolio at 30 June
Investments sold during the year
b. Special dividends and distributions
119,504
3,390
122,894
114,104
177
114,281
This special revenue is received on an ad hoc basis and cannot be relied upon each year.
Investments held in portfolio at 30 June
Investments sold during the year
2,915
91
3,006
3,050
-
3,050
Dividends and distributions are brought to account on the dates that the securities trade "ex-dividend".
Demerger dividends arising from company de-consolidations are treated as a return of capital and not
as a dividend.
c. Interest
Milton earns interest on its cash, term deposits and other liquid assets.
Interest from deposits & cash
Interest income from other liquid securities
3,883
212
4,095
4,301
416
4,717
Interest on cash and term deposits is brought to account on an accruals basis. Interest on other liquid
securities is recognised on the date these securities trade ex dividend.
d. Net gains from trading portfolio
Net gains/(loss) from trading portfolio
900
785
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 from trading securities are brought to account on the dates the securities trade “ex-dividend”.
25
Milton Corporation Limited
Notes to the consolidated financial statements: Key Numbers
for the year ended 30 June 2015
2.
Tax
This note provides analysis of Milton’s income tax expense, shows amounts that are recognised
directly in equity and how the tax expense is affected by non-assessable and non-deductible items.
The note also details the deferred tax assets and liability balances and their movements.
a. Reconciliation of Income Tax Expense to prima facie tax
payable
Profit before income tax
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
(Over) provision in prior year
Other differences
Income tax expense on profit
b. Tax expense composition
Current tax on profits for the year
(Over) provision in prior year
Decrease in deferred tax assets (note 2c)
Increase in deferred tax liabilities (note 2d)
c. Deferred tax assets
The balance comprises temporary differences attributable to :
Provisions
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
26
2015
$’000
2014
$’000
134,195
126,150
40,259
37,845
(34,305)
(31,892)
(285)
517
6,186
5,997
(285)
105
369
6,186
336
42
15
393
466
(105)
32
393
126
267
393
(148)
51
5,856
5,686
(148)
140
178
5,856
332
37
97
466
538
(140)
68
466
130
336
466
Milton Corporation Limited
Notes to the consolidated financial statements: Key Numbers
for the year ended 30 June 2015
d. 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:
Gains on scrip for scrip rollovers
Income receivable which is not assessable for tax until receipt
Movements:
Balance at 1 July
Charged to income statement
Charged to other comprehensive income
Balance at 30 June
To be settled beyond 12 months
2015
$’000
2014
$’000
320,445
310,440
(23,978)
(17,667)
16,043
609
16,043
361
313,119
309,177
309,177
223,282
369
3,573
313,119
313,119
178
85,717
309,177
309,177
The income tax expense for the period 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 and any unused tax losses.
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 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 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.
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.
Deferred tax balances attributable to revaluation amounts are recognised directly in equity through the
asset revaluation reserve.
27
Milton Corporation Limited
Notes to the consolidated financial statements: Key Numbers
for the year ended 30 June 2015
e. Offsetting deferred tax balances :
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current
tax assets and liabilities.
Deferred tax assets from realised capital losses are offset 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 2d above. 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 relating to carried forward capital losses have been recognised 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 2d.
3.
Earnings Per Share
Basic earnings per share
Profit attributable to shareholders of the parent entity
2015
Cents
2014
Cents
20.08
19.27
$’000
$’000
128,009
120,294
No.
No.
Weighted average number of ordinary shares used in the
calculation of basic earnings per share
637,607,867
624,416,028
Diluted earnings per share and basic earnings per share are the same because there are no potential
dilutive ordinary shares.
4.
Dividends Paid
a. Recognised in the current year
An ordinary final dividend of 9.4 cents per share in respect of the
2014 year paid on 3 September 2014 (2014: an ordinary final
dividend in respect of the 2013 year of 8.6
paid on 4 September 2013)
(1) cents per share
A special dividend of 0.4 cents per share in respect of 2014 year
paid on 3 September 2014 (2014: 0.5
September 2013)
(1) cents paid on 4
An ordinary interim dividend of 8.5 cents per share paid on
3 March 2015 (2014: 8.2 cents per share paid on 4 March 2014)
2015
$’000
2014
$’000
59,298
52,523
2,523
54,361
116,182
3,054
51,443
107,020
(1)Comparatives adjusted to reflect the increase in number of shares as a result of the share split.
28
Milton Corporation Limited
Notes to the consolidated financial statements: Key Numbers
for the year ended 30 June 2015
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 2015 year of 9.9 cents
per share and a special dividend of 0.4 cents per share payable
on 3 September 2015 (2014: ordinary final dividend of 9.4 cents
per share and special dividend of 0.4 cents per share paid on 3
September 2014)
2015
$’000
2014
$’000
65,946
61,821
5.
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 2015 (2014: final and special dividends)
121,237
116,757
(28,263)
92,974
(26,495)
90,262
The franking account balance would allow Milton to frank additional dividend payments up to an
amount of $216,940,197 (2014:$210,611,044) which represents 34 cents per share (2014: 33 cents
per share).
6.
Listed Investment Company capital gains account
Balance of the Listed Investment Company (LIC) capital gain
account available to shareholders for the subsequent financial
year
1,255
1,255
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.
29
Milton Corporation Limited
Notes to the consolidated financial statements: Assets
for the year ended 30 June 2015
7.
Investment in equity instruments
Milton is predominantly a long term investor in companies and trusts listed on the Australian Securities
Exchange.
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:
2015
$’000
2014
$’000
2,656,876
2,574,894
122
71
2,656,998
2,574,965
2,537,519
2,487,638
95,666
23,691
67,322
19,934
2,656,876
2,574,894
Units in trusts
122
71
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.
Listed 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.
c. Investments disposed of during the year
The disposals occurred in the normal course of Milton’s operations as a listed investment company or
as a result of takeovers or mergers.
Fair value at disposal date
Equity investments
Loss on disposal after tax
Equity investments
38,311
17,811
(20,631)
(12,517)
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 as disclosed in note 13.
30
Milton Corporation Limited
Notes to the consolidated financial statements: Assets
for the year ended 30 June 2015
8.
Investment in joint venture entities
Milton has a long history of investing in property development joint ventures. Wholly owned subsidiaries
of Milton have investments in separate joint venture entities that have non-controlling interests in three
property development joint venture partnerships.
a. 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 (2014:33.33%)
23.33% interest in The Mews Joint Venture
contribution to operating profit before tax (2014:23.33%)
50% interest in the LWP Huntlee Syndicate No 2 Joint
Venture (2014: 50%)
Share of net profits of joint ventures
b. Consolidated interest in the assets and liabilities of the joint
venture entities
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Provision for diminution in value
Net assets
2015
$’000
2014
$’000
6,319
6,010
648
682
(657)
6,310
20,902
15,083
(4,537)
(10,253)
21,195
(543)
20,652
(280)
6,412
21,750
11,639
(3,578)
(8,624)
21,187
(543)
20,644
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.
Each joint venture partnership agreement provides that partners have rights to the net assets of the
partnership. Accordingly, 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’.
Under the ‘Equity Method’, Milton’s investments in joint ventures are valued initially at cost and
periodically adjusted for changes in value due to Milton’s share in the joint ventures’ income or losses,
distributions and any call payments.
c. Contingencies and capital commitments
Guarantee entered into by the parent company
Milton has agreed to provide a financial guarantee facility totalling $11 million to support prepayments
received by a joint venture in which LWP Huntlee Syndicate No 2 has a 23.75% interest. This facility,
which is on commercial terms, is secured by a second ranking mortgage over the real property of the
joint venture as well as guarantees provided by other related entities of the joint venture. At 30 June
2015, $3.1 million of this facility had been utilised.
Other than the above, the directors are not aware of any material contingent liabilities, contingent
assets or capital commitments as at 30 June 2015.
31
Milton Corporation Limited
Notes to the consolidated financial statements: Assets
for the year ended 30 June 2015
9.
Cash
Cash at bank
Deposits at call
Term deposits
2015
$’000
2,535
9,662
87,255
99,452
2014
$’000
2,257
29,718
84,218
116,193
The weighted average interest rate for cash and deposits at call as at 30 June 2015 is 2.1% p.a.
(2014: 3.1% p.a.). Term deposits have an average maturity date of September 2014 (2014:
September 2014) and an average interest rate of 2.8% (2014: 3.5% pa).
10. Receivables
a. Receivables – current
Dividends receivable
Interest receivable
Sundry debtors
b. Receivables – non-current
21,707
22,130
676
7
624
4
22,390
22,758
Senior staff share plan loans (refer note 19b)
3,869
3,409
c. Terms and conditions
Sundry debtors are due within 30 days and no interest is charged.
11. Other financial assets
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 at fair value
Prepaid expenses
9,597
164
9,761
9,857
189
10,046
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.
32
Milton Corporation Limited
Notes to the consolidated financial statements: Capital Management
for the year ended 30 June 2015
Milton offers its shareholders the opportunity to increase their holdings by participation in the Share Purchase
Plan and in the Dividend Reinvestment Plan. Milton may also increase its capital through renounceable rights
issues and acquisition of investment companies with the consideration being the issue of Milton shares. The
last such acquisition was completed in February 2014.
12. Share capital
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.
Movement in share capital
No. of
shares
2015
$’000
No of
shares
2014
$’000
Opening balance
630,825,344
1,462,552
122,147,119
1,384,438
Share Purchase Pan
Share Split(1)
Share issued as consideration
for acquisition
Dividend Reinvestment Plan(2)
Less: Transaction costs
(net of tax)
8,019,673
35,687
3,324,432
63,563
501,886,204
-
-
-
-
-
1,410,638
6,426
187,207
3,280,382
13,910
799
-
(76)
-
(158)
Closing balance
640,255,655
1,504,589
630,825,344
1,462,552
(1)In October 2013, Milton’s shares were split on the basis of 5 shares for each existing share resulting
in an increase of 501,886,204 shares.
(2)Milton’s Dividend Reinvestment Plan (DRP) offers shareholders the option to reinvest all or part of
their dividend in new ordinary shares. In the current year, Milton issued 698,365 new shares in
September 2014 and 712,273 new shares in March 2015 (2014: 187,207 issued in March 2014) under
the DRP.
13. Reserves
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 7b. Upon disposal of investments, the net gain or loss is
transferred from the asset revaluation reserve to the capital profits reserve.
a. Asset revaluation reserve
Opening balance
Revaluation of investments net of provision for tax
Net realised losses
b. Capital profits reserve
Opening balance
Net realised losses
33
2015
$’000
718,044
7,931
13,844
739,819
78,815
(13,844)
64,971
2014
$’000
512,458
193,069
12,517
718,044
91,332
(12,517)
78,815
Milton Corporation Limited
Notes to the consolidated financial statements: Risk
for the year ended 30 June 2015
This section of the notes discusses Milton’s exposure to various risks and shows how these could affect
Milton’s financial position and performance.
14. Critical accounting estimates, judgements and assumptions
Judgements, estimates and assumptions are required to prepare financial statements.
Apart from the below, 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.
i) Deferred tax liabilities from unrealised capital gains are offset against deferred tax assets
from realised capital losses as disclosed in Note 2e.
ii) Classification of joint arrangements as joint ventures as disclosed in Note 8.
15. Management of financial risk
The risks associated with the financial instruments, such as investments and cash, include credit,
markets and liquidity risks which could affect Milton’s future financial performance.
The Audit & Risk 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 & Risk Committee.
a. 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 financial loss will occur because of 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.
34
Milton Corporation Limited
Notes to the consolidated financial statements: Risk
for the year ended 30 June 2015
b. Market risk
Market risk is the risk that changes in market prices will affect the fair value of the financial instrument.
The fair value is determined by the unadjusted last sale price quoted on the Australian Securities
Exchange at the measurement date.
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% (2014: 94%) 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%
(2014: 4.7%) movement in the net assets before provision for tax on unrealised capital gains at
30 June 2015 (2014: 30 June 2014). The net asset backing before provision for tax on unrealised
capital gains would move by 21 cents per share at 30 June 2015 (2014: 20 cents at 30 June 2014).
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.
c. 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.
16. 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 renounceable rights issues and as
consideration for acquisition of unlisted companies.
35
Milton Corporation Limited
Notes to the consolidated financial statements: Group Structure
for the year ended 30 June 2015
The consolidated financial statements include the financial statements of Milton, being the parent entity and
its subsidiaries. Details of subsidiaries are disclosed in Note 17b below. The balances and effects of
transactions between subsidiaries included in the consolidated financial statements have been eliminated in
full.
17. 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.
The financial statements of subsidiaries are prepared for the same reporting period as the parent entity,
using consistent accounting policies.
a. 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.
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.
b. Milton Corporation Limited’s subsidiaries
The following subsidiaries have been included in the consolidated accounts. The parent entity and all
subsidiaries are incorporated in Australia:
Percentage of Interest held
85 Spring Street Properties Pty Ltd
Chatham Investment Co. Pty Limited
Incorporated Nominees Pty Limited
Milhunt Pty Limited
c. Acquisition of subsidiaries
2015
%
100
100
100
100
2014
%
100
100
100
100
No company acquisitions were made by Milton during the year ended 30 June 2015 (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. The unlisted investment company acquired during
2014 was placed into voluntary liquidation in June 2014.)
d. Business Combinations
The acquisition method of accounting has been used to account for all business combinations. 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.
36
Milton Corporation Limited
Notes to the consolidated financial statements: Other Information
for the year ended 30 June 2015
18. Related party transactions
a. Directors and Key Management Personnel compensation
Short-term benefits
Other long-term benefits
Post-employment benefits
Share-based payments
2015
$’000
1,124
26
109
142
1,401
2014
$’000
1,089
15
100
124
1,328
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 11 to 17.
b. Shareholdings of non-executive directors and their related parties – number of shares held
Non-executive directors and their related parties held 12.3% (2014:12.5%) of the voting power of
Milton as at year end. All shares acquired by non-executive directors and their related parties during
the year were purchased 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 2015
Number of shares at beginning of the year
Adjustment for Share Split in October 2013
Acquired during the year
No of
shares
78,581,300
-
194,360
No of
shares
15,639,656
62,777,040
164,604
Number of shares held at end of year
78,775,660
78,581,300
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
$
2,219,538
335,620
(114,974)
2,440,184
$
1,888,841
432,460
(101,763)
2,219,538
Notional interest
141,842
124,151
Notional interest is based on the applicable FBT benchmark interest rate for the year which averaged
5.85% (2014: 6.27%).
Terms and conditions of the loans are referred to in note 19b and details of loans to individual key
management personnel are disclosed on the remuneration report on page 14.
37
Milton Corporation Limited
Notes to the consolidated financial statements: Other Information
for the year ended 30 June 2015
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.
e. 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
2015
$
2014
$
79,444,127
84,521,583
3,636,766
6,466,875
(641,485)
(11,544,331)
82,439,408
79,444,127
f. Other arrangement with non executive director
Mr J.F. Church rented office space from Milton at commercial rates from 1 July 2014 to 30 June 2015
and rental income received by Milton during the financial year was $12,763 (2014: $12,971).
19. Share based payments
Under the Employee Share Plan, shares are acquired for employees as part of their remuneration and
the cost of the shares is recorded under employment costs.
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.
a. 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, 1,085 shares (2014: 1,250 (1) shares) were acquired by Milton on behalf of eligible
employees under the ESP at a cost of $4,980 (2014: $4,925) with a total market value at
30 June 2015 of $4,882.
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.
38
Milton Corporation Limited
Notes to the consolidated financial statements: Other Information
for the year ended 30 June 2015
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, 142,000 shares (2014: 162,500 (1) shares) were acquired by the trustee of the plan on
behalf of eligible employees under the SSSP at a cost of $635,441 (2014: $638,857). The loans to
eligible employees are as disclosed in note 10b. The shares acquired by the trustee during the year
had a market value of $639,000 at $4.50 per share as at 30 June 2015.
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.
(1)Shares issued adjusted to account for the increase in number of shares as a result of the share split.
20. Auditors Remuneration
Auditors of the company
Audit and review services
Related practice of the auditor
Due diligence
Liquidation of non-operating subsidiary
2015
$’000
2014
$’000
109
-
1
110
107
19
2
128
21. 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 2015 the parent entity is Milton Corporation
Limited.
Profit of the parent entity
Profit for the year
Total comprehensive income for the year
123,837
135,940
115,801
308,870
39
Milton Corporation Limited
Notes to the consolidated financial statements: Other Information
for the year ended 30 June 2015
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
2015
$’000
2014
$’000
131,591
2,898,393
83,904
399,748
141,319
2,829,893
80,929
393,043
2,498,645
2,436,850
1,504,589
1,462,552
73,549
790,967
129,540
87,394
765,020
121,884
Total equity attributable to shareholders of the parent entity
2,498,645
2,436,850
22. Summary of other accounting policies
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.
Accounting policies adopted in the preparation of these financial statements 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.
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.
New and amended standards adopted:
AASB 2015-2 Amendments to AASB 101 (Presentation of Financial Statements) which applies to
annual reporting periods commencing on or after 1 January 2016 has been early adopted for the
preparation of the 2015 financial statements and notes. This standard removed certain minimum
disclosure requirements from AASB 101 including the removal of reference to a ‘summary of significant
accounting policies’, allowing re-organisation and grouping of notes to the financial statements giving
prominence to the areas most relevant to understanding the organisation and encouraging companies
to no longer disclose information that is not material.
AASB-9 Financial Instruments Standard which applies to annual reporting periods commencing on or
after 1 January 2018 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 2015, will result in any material change in relation to the financial statements of Milton.
b. Rounding of amounts
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).
c. Operating segments
The consolidation entity operates in Australia and engages in investment as its principal activity. As
such Milton considers the business to have a single operating segment.
40
Milton Corporation Limited
Notes to the consolidated financial statements: Other Information
for the year ended 30 June 2015
23. Cash flow information
a. Reconciliation of net profit to net cash provided by
operating activities
Net 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
Decrease/(Increase) in receivables
(Decrease)/Increase in payables and provisions
(Decrease)/Increase in income taxes payable
2015
$’000
2014
$’000
128,009
(6,310)
7,133
14
-
369
(6)
(215)
120,294
(6,412)
6,383
17
58
(155)
34
373
Net cash provided by operating activities
128,994
120,592
b. Non-cash financing and investing activities
During the year ended 30 June 2015, Milton did not engage in any material non-cash investing or
financing transaction (2014: Issued 3,280,382 shares to acquire an unlisted investment company with
a fair value of $13,909,832).
24. Contingent liabilities
Apart from the contingent liability relating to the Huntlee joint venture disclosed in Note 8c, the
directors are not aware of any other material contingent liabilities
25. Events subsequent to reporting date
Since the end of the financial year, the directors declared a fully franked ordinary final dividend of
9.9 cents per share and a fully franked special dividend of 0.4 cents per share payable on
3 September 2015.
This financial report was authorised for issue in accordance with a resolution of directors on 6 August
2015.
41
26.
Holdings at Fair Value through Other Comprehensive Income at 30 June 2015
The following holdings are valued at fair value through Other Comprehensive Income.
2015
Market value
$’000
2014
Market value
$’000
Investments in equity instruments
Adelaide Brighton Limited
AGL Energy Limited
ALS Limited
Amalgamated Holdings Limited
Amcor Limited
AMP Limited
A.P. Eagers Limited
APA Group
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
Auswide Bank Limited (formerly Wide Bay Australia)
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
BT Investment Management Limited
BWP Trust
Cardno Limited
Carlton Investments Limited
Carsales.com Limited
CIMIC Limited (formerly Leighton Holdings)
Coca-Cola Amatil Limited
Cochlear Limited
Commonwealth Bank of Australia
- ordinary shares
- PERLS V
Cover-More Group Limited
Crown Resorts Limited
CSL Limited
David Jones Limited
Diversified United Investment Limited
Dulux Group Limited
Equity Trustees Limited
Federation Centres (formerly CFS Retail Trust
Property Group)
Finbar Group Limited
Fletcher Building Limited
Fleetwood Corporation Limited
Goodman Group
Graincorp Limited
42
11,792
41,641
62,777
10,884
16,389
12,769
54,539
16,528
10,594
7,857
-
21,265
9,403
-
98,099
1,960
191
7,924
2,190
12,203
3,866
93,299
70,001
98,378
2,038
28,453
9,749
1,186
14,840
44,637
2,114
4,847
3,891
11,306
8,835
17,209
13,418
2,709
258,205
-
4,359
3,261
51,207
-
1,330
6,880
9,995
18,844
3,311
5,791
-
6,950
3,094
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
2,385
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
14,953
13,872
2,085
245,315
102
-
4,042
39,411
1,403
1,364
2,236
9,265
16,006
4,535
6,570
532
3,264
3,043
26.
Holdings at Fair Value through Other Comprehensive Income at 30 June 2015
The following holdings are valued at fair value through Other Comprehensive Income.
2015
Market value
$’000
2014
Market value
$’000
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
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
Regis Healthcare 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
South32 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
UGL Limited
Washington H. Soul Pattinson & Company Limited
WDS Limited
43
21
1,863
28,605
305
1,237
6,201
22,577
8,766
6,982
3,377
45,246
2,797
-
2,149
158,483
-
2,438
-
4,022
8,405
2,497
65,735
7,526
35,793
9,064
10,422
6,426
2,353
31,369
13,182
6,501
335
1,385
1,780
537
-
8,263
13,162
6,496
10,943
41,294
12,996
101
8,608
89,737
-
33,472
2,001
30,951
5,257
3,077
123,306
-
21
5,983
28,114
319
1,284
4,671
18,571
5,897
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
135,326
1,006
26.
Holdings at Fair Value through Other Comprehensive Income at 30 June 2015
The following holdings are valued at fair value through Other Comprehensive Income.
Wesfarmers Limited
Westfield Corporation
Westpac Banking Corporation
Woodside Petroleum Limited
Woolworths Limited
Worley Parsons Limited
Other liquid securities
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
Woolworths Limited notes II
2015
Market value
$’000
2014
Market value
$’000
110,670
6,931
336,009
29,621
78,291
4,425
2,656,998
1,039
5,250
1,010
986
1,108
204
9,597
119,791
5,434
354,090
33,815
95,991
6,896
2,574,965
1,074
5,425
1,032
977
1,139
210
9,857
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 19 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 2015 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 2015.
Signed in accordance with a resolution of the directors.
R. D. MILLNER
Chairman
Sydney, 6 August 2015
45
Level 15, 135 King Street
Sydney NSW 2000
GPO Box 473
Sydney NSW 2001
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
Entities (the consolidated entity), which comprises the consolidated statement of financial position as
at 30 June 2015, 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.
and its Controlled
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.
accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
An audit also includes evaluating the appropriateness of
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. 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.
46
Independence
In conducting our audit, we have complied with the independence requirements of the
Act 2001. We have given the directors of Milton Corporation Limited a written Auditor’s Independence
Declaration, a copy of which is included in the financial report
Corporations
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 2015 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 2015. 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
2015, complies with section 300A of the Corporations Act 2001.
Moore Stephens Sydney
Chartered Accountants
Melissa Alexander
Partner
Dated in Sydney this 6th day of August 2015.
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
PHONE: (02) 8006 5357
FAX: (02) 9251 7033
EMAIL: general@milton.com.au
CHARTERED ACCOUNTANTS
LEVEL 15
135 KING STREET
SYDNEY NSW 2000
WEBSITE: www.milton.com.au
WEBSITE: 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
WEBSITE: www.linkmarketservices.com.au
48
TOP 20 SHAREHOLDERS AS AT 31 JULY 2015
ASX INFORMATION
NAME
Washington H soul Pattinson & Company Limited
Argo Investments Limited
Myora Pty Limited
Australian Foundation Investment Company Limited
Griffinna Pty Ltd
Danwer Investments Pty Ltd
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
Redemptorists
Ms Julia Jane Drew
T N Phillips Investments Pty Ltd
Yerong Pty Limited
SHARES
HELD
33,592,590
32,583,552
22,780,400
14,402,925
6,355,020
6,075,915
6,075,915
5,777,235
5,253,920
4,214,860
4,195,685
3,739,925
3,479,615
3,309,995
3,226,490
3,161,680
2,979,080
2,900,000
2,875,000
2,871,672
2,768,670
On 31 July 2015, there were 22,593 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
SUBSTANTIAL SHAREHOLDINGS As at 31 July 2015 the names and holdings of
substantial shareholders as disclosed in notices received by Milton are as follows:-
%
5.25
5.09
3.56
2.25
0.99
0.95
0.95
0.90
0.82
0.66
0.66
0.58
0.54
0.52
0.50
0.49
0.47
0.45
0.45
0.45
0.43
2,657
6,058
4,543
8,735
600
564
Substantial shareholders
Washington H. Soul Pattinson & Company Limited
Brickworks Limited(1)
Argo Investment Limited
(1)(Technical relevant interest as a result of its holding in Washington H. Soul Pattinson &
Company Limited)
Date of Notice
20 December 2010
7 January 2014
15 October 2014
No. of shares
33,585,220
33,589,220
36,412,935
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 461 and the total
brokerage paid or accrued was $519,014.
49
SHARE ISSUES HISTORY
Share Purchase Plan history
Date
10.11.1999
13.11.2000
13.11.2001
08.11.2002
31.10.2003
29.10.2004
21.10.2005
Issue price per share
$ 8.75
$ 8.86
$10.79
$11.70
$13.21
$14.10
$17.11
Acquisition of unlisted companies
Date
21.06.2002
31.12.2002
11.03.2004
01.04.2004
17.08.2006
23.08.2006
28.08.2006
21.09.2006
10.11.2006
Shares issued
2,287,200
1,739,112
2,742,777
496,809
1,000,322
1,476,254
382,404
278,103
1,888,353
Acquisition of listed investment companies
Date
31.12.2001
16.12.2010
Company
Cambooya Investments Limited
Choiseul Investments Limited
Dividend Reinvestment Plans
Date
16.10.2006
19.10.2007
03.10.2008
09.10.2009
30.09.2013
22.10.2013
01.10.2014
Date
23.03.2007
14.05.2007
20.06.2007
24.09.2007
19.02.2009
26.02.2010
20.08.2010
21.02.2013
24.02.2014
Issue price per share
$19.60
$22.48
$17.85
$16.08
$19.12
5 for 1 share split
$ 4.45
Shares issued
1,895,976
2,424,582
252,477
1,223,252
3,555,958
4,132,711
2,446,521
521,464
3,280,382
Shares issued
8,273,505
23,803,854
Date
04.03.2014
03.09.2014
03.03.2015
Share Split
Date
22.10.2013
Shares issued
187,207
698,365
712,273
Price
$4.27
$4.55
$4.56
Ratio
Five shares for one
The number of shares issued prior to this date have
not been adjusted for the share split.
A full list of issues to shareholders since commencement of Capital Gains Tax in September 1985 can be
found on the company’s website at www.milton.com.au
50
"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