Centuria Annual Report 2011 2[1]
-
Upload
mark-kumarasinhe -
Category
Documents
-
view
215 -
download
0
Transcript of Centuria Annual Report 2011 2[1]
-
7/31/2019 Centuria Annual Report 2011 2[1]
1/101
Centuria Capital LimitedAnnual Report 2011
Committed
-
7/31/2019 Centuria Annual Report 2011 2[1]
2/101
Centuria Annual Report 2011
Contents
3 AboutCenturiaCapital
5 ChairmansReview7 ChiefExecutivesReport8 CenturiaPropertyFunds
10 CenturiaFinancialServices14 DirectorsReport19 RemunerationReport29 AuditorsIndependenceDeclaration30 CorporateGovernanceStatement36 FinancialStatements101 CorporateDirectory
Centuria Capital Limited and Controlled Entities ABN 22 095 454 336Annual Report for the year ended 30 June 2011
Annual Report 2011
Management Directory
Centuria Capital Limited
JohnMcBainMatthewCoy
JulianBlackleyYujitaChaudriTroyDafterPeterMcDonagh
ChiefExecutiveOfcerChiefFinancialOfcer
GroupHeadofFinanceGroupTaxManagerHeadofComplianceHeadofReverseMortgages
Centuria Property Funds Limited
JasonHuljichDavidGoveyRowanWallJohnTaylorAndreBaliSebastianUgarteJeremyRobothamJacquesDuvenageMarkJonesBenHarvie
DougHoskinsMicahSchulz
CEO-PropertyHeadofAssetsHeadofStrategicPropertyLimitedHeadofDistributionHeadofDevelopmentAcquisitionsManagerNationalLeasingManagerNationalPortfolioManager
FundManagerFundManager
FundManagerFundManager
Centuria Life Limited
TerryReidAnneHamiehRitaVarvakis
AshNakhlaSeanWebster
GeneralManagerHeadofDistribution
Operations&RiskManager
InvestorServicesTeamLeaderInvestmentManager
-
7/31/2019 Centuria Annual Report 2011 2[1]
3/101
1
TomorrowItsnotwhatyouexpecttoreadaboutwhenyouopenanannualreport.Butthisyear,wecouldnotaccuratelyshowcaseourachievementsbyonlylookingback.
Theconsolidationofourbrandsthisyearhasbeenfarmorethanasimplefacelift.Itisabout transformingourbusinesstotakeadvantageoftheopportunitiesthemarketconditionswillpresent.
Takingusfromacollectionofcompanies,toasinglediversiedfundsmanager.Fromasmallboutiqueplayer,toagrowinggroupsoughtafterbyinformedinvestors.
Ourambitioniscertain.TobeoneofAustraliasmostdynamicandsuccessfuldiversiedfundmanagers.Wevesetacoursetotakeusplacesdefyingtheconventionalthinkingoftheindustrytogiveourinvestorsfresherideaswithsolidandreliablereturns,whileretainingthesamelevelofpersonalservicewevealwayshad.
Thisyear,wehavechangedourbusinessforthebetter.WehavetransformedourselvesfromtheOverFiftyGroup,intoCenturiaCapital.
Andtransportedourselvesfromyesterday,intotomorrow.
-
7/31/2019 Centuria Annual Report 2011 2[1]
4/101
Centuria Annual Report 20112
Highlights$Group total funds under management (FUM)at 30 June 2011
1.93 billion
Increase in Group FUM
from 30 June 2010 to 30 June 2011
2010
2011 16%
Total number of clientsat 30 June 2011
112,500
$Centuria Property Funds FUM
at 30 June 2011
1billion 40 %
Annual Report 2011
-
7/31/2019 Centuria Annual Report 2011 2[1]
5/101
3
About Us
Today,CenturiaCapitalisanASX-listeddiversiedfundsmanagerwithcloseto$2billioninfundsundermanagement.Asinglecompany,withasingledirection,andasinglesetofvaluesbutwiththeagility
affordedbyadiversiedofferingofpropertyfundsandnancialservices.
Ournewname,CenturiaCapital,markstheconsolidationofallourbrandsintothissingleentityandthebeginningofaninspiredfuture,aswesetourselvesambitiousgrowthtargetstobecomeAustraliasmostdynamicfundsmanagementgroup.
Where investors come rstWerechallengingtheconventionsofourindustryandsettingourselvesapartfromourcompetition,byalwaysputtingourinvestorsinterestsrst.Wecanalsoboastindustry-leadingexperience,andahands-onapproachtoourinvestorsneedsthatseesusconstantlystrivingto
comeupwithfresh,innovativeideas.Andnotonlydoweofferourinvestorsawiderangeofinvestmentoptionsacrossourtwocomplementarybusinesses,werealsoformingrelationshipswiththemthatcan
lastalifetime.Buildingtrust,asmuchaswebuildwealth.
Thevalueofourexperienceisevidentinthesuccessofourdiversication.OurtwocorebusinessesarewhattrulysetsCenturiaCapitalapart.Theyallowustocometothemarketfromtwodistinctanglesatthesametime.Thismeansmorewaystoattractnewinvestors,aswellas
greaterstability,andhigherrevenuesforthecompanyasawhole.
Bothsidesofthebusinessareperformingwellintoughconditions.AndaswemarktheendofourrstnancialyearasCenturia,wedosoonveryrmfootingwearesettotakegreatstridestowardsanuncompromisinglysuccessfulfuture.
$Underlying earnings before interestand taxto 30 June 2011
10.5million
$Underlying net prot after tax
to 30 June 2011
6.4million
Corporate gearing(excluding non-recoursedebt and convertible notes)to 30 June 2011
%8.9
$Value of reverse mortage book
at 30 June 2011
192million
Full-year dividendsat 30 June 2011
6.0 20%
-
7/31/2019 Centuria Annual Report 2011 2[1]
6/101
Centuria Annual Report 20114
Transform
Annual Report 2011
-
7/31/2019 Centuria Annual Report 2011 2[1]
7/101
5
OtherhighlightsincludetherebrandingofthemajorityofbusinessunitsundertheCenturiabrandandtheunmarketableparcelsharebuy-back,whichculminatedinthebuy-backofover2.5millionsecurities.
IamparticularlyproudoftheinvestorrightsinitiativeswhichtheGrouphasputinplace.
TheBoardandmanagementareunanimousintheirbeliefthatinthepastsomefundsmanagementpracticeshavefavouredthemanagerattheexpenseoftheinvestor.
Thisyear,beginningwithournewpropertyfunds,ourinvestorshavebeenofferedarangeoftermsthatplacethemrmlybackinthecentreoftheinvestmentequation.Youcanreadmoreaboutthisonourwebsite:www.centuria.com.au.
The outlook and our future
Wewillcontinuetovigorouslypursueour
growthstrategyinthecurrentnancialyearandbeyond.WebelieveCenturiaCapitaliswellpositionedtobenetfromtheopportunitiesavolatilemarketwillpresent.
OnceagainIwouldliketothankmyfellowdirectors,theseniorexecutiveteamandallofourstaffforalloftheirhardworkduringthelastyear.
Toourshareholders,thankyouforyourcontinuingsupport.Welookforwardtoworkinghardonyourbehalf,expandingthegroupdespitetheprevailingconditions.
IlookforwardtoseeingyouatourAnnualGeneralMeetinginMelbourneonFriday28October2011.
Roger Dobson
Chairman
Roger Dobson
ChairmanLLB(Hons)LL.M
Dear Shareholders,
TheprimaryfocusforCenturiaCapitalinthe2011nancialyearhasbeentodeliverresultsinlinewithourcommitmenttostrongcompanygrowth.
Globalandlocaleconomicenvironments
remainchallengingandwebelievethatconditionswillremainvolatileinthemediumterm.Thegrowthstrategywedevelopedin2010isbasedonacquiringassets(forourpropertyfundinvestors)andmanagementrightsatdiscountedlevels,andwasbasedonafundamentalassumptionthatmarketconditionswouldbetoughforsometime.
Duringthe2011nancialyearCenturiahasinvestedinadditionalseniormanagementinkeyfunctionsdistribution,operationalpropertyandfundsmanagement,nanceandtaxtoenableustoservicethe
additionalbusinesswehavegeneratedandtofurtherexpandourambitionswithnewacquisitions.
Whilethishasbeenattheexpenseofsomeprotability,IampleasedthatCenturiawasabletodeclaredividendsof6centsperordinaryshareforthe2011nancialyear,anincreaseof20%overthe2010year.
2011 Business Achievements
Thenancialhealthofthebusinesscontinuestoimprovewithcorporategearingnowbelow10%atyearendforboththe2010and2011
nancialyears.Thislowgearingmeansourabilitytoraisedebtandequitytoimplementourstrategyforincreasedfundsundermanagementandacquisitionsisenhanced.MaintainingthisheadroomistheresultofadedicatedBoardstrategy.
Aclearexampleofimplementingandachievingourgrowthtargetsisthesuccessfulgrowthfromourpropertyfundsmanagementactivities.Duringtheyear,thepropertydivisionpurchasedtwocommercialinvestmentpropertiesfornewpropertyfundsandwasawardedthemanagementrightsfor
amajornationalportfolioofformerBectonpropertyfunds.
Jointly,thesetransactionsgeneratedinexcessof$300millionofgrowthinfundsundermanagementandforthersttimepropertyfundsundermanagementexceeded$1billion.
Chairmans Review
-
7/31/2019 Centuria Annual Report 2011 2[1]
8/101
Centuria Annual Report 20116
Protect
Annual Report 2011
-
7/31/2019 Centuria Annual Report 2011 2[1]
9/101
7
Chief Executives Report
Dear Shareholders,
Ihavepleasureinupdatingyouontheperformanceandactivitiesfortheyearto30June2011andtheoutlookforCenturiaCapitalLimited.
Mandate for Growth
By2010,allrestructuringwasbehindus,includingtheeliminationof35%ofcorporateexpensesduringthe2008to2010period.Asstatedpreviously,theover-archingstrategyforthecompanyistoachievegrowthinwhatweforecasttobeongoingturbulentnancialmarkets.
WearegrowingCenturiaintoalargerdiversiednancialservicesbusinessandwhileourcommitmenttothisgoalisclear,theBoardhassethightargetsandthereismuchmoretodo.
Thisyearwesuccessfullyre-brandedtheOverFiftyGrouptoCenturiaCapitalincludingthe
consolidationofourmajordivisionsunderthisbrand.
Finally,wehavemadeimportantinvestmentsinsystemsandkeystaffduringtheyearwhilstthishasbeenattheexpenseofsomeprotabilitytheyareessentialcomponentsofourongoinggrowthplatform.
Centuria Property Fundsperformedstronglyduringtheperiod,establishingtwonewpropertyfundstotalling$68million.CenturiaisoneofahandfulofpropertyfundmanagerstohaveweatheredtheGFCandareabletoattract
debtandequitytotakeadvantageofhistoricallylowinvestmentpropertyvalues.
InDecember2010Centuriawasawardedthemanagementrightsfortwopropertyfundstotalling$240million,bringingtotalpropertyFUMto$1billionforthersttime,andmakingCenturiaoneofthetop3unlistedpropertyfundmanagersinAustralia.
Centuria Life continuestogenerateconsistent,strongreturnsfortheGroup,andyear-on-yearunderlyingnetprotfortheGrouprose2.4%to$9.14million,withFUMatyearendof$736million.Asyoucanseefromthechartopposite,
managedfundsunderthisdivisionhaveremainedrelativelystable.
WehaveappointedahighlyexperiencedHeadofDistributionandourgoalsforthisbusinessaretoachieveastableplatformofFUMandinparticular,tohighlighttheattractivenessofourcapitalguaranteedinvestmentsinthepresenthighlyvolatileinvestmentmarkets.
Investor Rights Initiative
Thepastfewyearshavebeentoughforinvestorsandthishardshiphasbroughtaboutadegreeofmistrusttowardsthefundmanagers
ingeneral.Webelievethatfundmanagersneedtorecognisethissituationandrebuildtrustwiththeinvestingcommunity.
Centuriatakesadifferentapproach:ournewpropertyfundshavealteredthebasisuponwhichfeesarecalculatedandvotingisconducted,heavilyinfavourofourinvestors.
The outlookfornancialmarketsinthe2011/12yearisoneofcontinuingmarketvolatility.Webelievethisvolatilitywillcontinuetomakethestable,low-riskreturnsgeneratedbyourpropertyfundsandinvestmentbondsattractive.Inaddition,thesemarketsfavourourcontinuedgrowthbyacquisitionstrategy,andwearelookingforwardtoreportingoursuccessestoyou.
Thankyouforyourinvestment.
John McBain
Chief Executive OfcerDip.UrbanValuation
John McBain
Chief Executive Ofcer
Key Business Highlights
Group Funds Under Management(FUM) increased 16%
Centuria Property Funds FUMincreased 40%
Full-year dividend up 20% to 6.0cents per share
Underlying EBIT of $10.5million and corporate gearingbelow 10%
-
7/31/2019 Centuria Annual Report 2011 2[1]
10/101
Centuria Annual Report 20118
Centuria 8 Australia Avenue Fund
Wealsomadesomeimportantacquisitions.200Creek
Street,Brisbaneamodern10-levelcommercialpropertyintheCBDwaswaspurchasedfor$37.7million,andhasperformedwellsinceitslaunchinMarch,providingan8.75%(annualised)distributiontoinvestors.
Centuria Property Funds
Year in review
Our property funds managementgroup has performed impressivelythis year with both subsidiaries Centuria Property Funds andCenturia Strategic Property producing some excellent results.ConsistentwithCenturiasgrowthstrategy,propertyfundsundermanagementhasincreased40%from30June2010to30June2011.Therehavebeenanumberofhighlights,includingbeingappointedastheResponsibleEntityofBectonOfceFundNo.2andBectonDiversied
DirectPropertyFund.Electedbyanoverwhelmingmajorityofinvestors,wewereentrustedwiththetwofundsatacombinedvalueof$240million.
New funds successfully launched
Centuria 200 Creek Street Fund
FundlaunchedMarch2011
Purchaseprice$37.7million
FundlaunchedJune2011
Purchaseprice$30.15million
Outlook
Lookingahead,thecomingyearlookspromising.Wecontinuetobenetfromhavingfewercompetitorsintheunlistedpropertysector,andifwecantakeadvantageofthisposition,weshouldseeconsiderablegrowthbasedlargelyondirectacquisitionofassets,andthepurchaseandintegrationofotherfundmanagers.
Jason HuljichCEOBComm,CommercialLaw
David GoveyHead of AssetsDip.Technology(Valuation)andGrad.Dip.TownPlanning
InJuneweacquiredabrandnewfullyleasedA-gradecommercialbuildingat8AustraliaAvenue,SydneyOlympicPark.Thepropertywaspurchasedfor$30.15
millionadiscountonthelatestvaluationandisexpectedtodeliveraninitialincomeyieldof8.00%.
Annual Report 2011
-
7/31/2019 Centuria Annual Report 2011 2[1]
11/101
9
35 Spring Street, Melbourne
Strong investor returns
AcquiredinFebruary2003for$35.3million
MajorityleasedtotheGovernmentwhichprovidedstrongincomereturnstoinvestorsoverthelifeoftheFund
Aschemewascommissionedfora40-storeyhigh-endresidentialredevelopment
ThesaleagreementallowsanewCenturiaDevelopmentFundtoreinvestintotheproject
Propertysoldin2010for$45.5million
Wepurchased35SpringStreetfor$35.3millionin2003.ThepropertywaswellpositionedattheParisEndofMelbourne,withexcellentviewsoverTreasuryGardens.Consequently,Centuriaprepareddetailedconceptplansforaresidentialdevelopmentofthesite.Onceasuitableschemehadbeendrawnup,anationalmarketingcampaignwasundertakenandthepropertywassoldtoamajorsuperannuationfund.
Priortothesale,thesittingGovernmenttenantsleasewasextendedinordertoprovidethepurchaserwithastrongincomestreambeforethefuturedevelopmentcommenced,furtherimproving
thesalepriceforinvestors.
Reaching $1 billion inFUM marks a signicantmilestone for usand demonstrates ourongoing success ingrowing the size and scaleof our property business.Jason Huljich
Before After
48
Number of properties under management
8.95%Weighted Average Cap Rate
$1billionTotal FUM at 30 June 2011
40%Increase % FUM (year-on-year)
$13 millionOperating earnings
Asset type Assettype
Ofce
Industrial
RetailBulkyGoods
SpecialtyUse
MixedUse
Retail
Properties by State
Sector diversication
Geographic diversication
Location
NewSouthWales
Victoria
Queensland
SouthAustralia
AustralianCapitalTerritory
NorthernTerritory
Weighted Average Lease Expiry
3.63years
-
7/31/2019 Centuria Annual Report 2011 2[1]
12/101
Centuria Annual Report 201110
92%
90%
88%
86%
84%
82%
80%
78%
Continued Strong Customer Retention Rate
Over Fifty Insuranc e Home Over Fifty Insurance Motor
2006 2007 2008 2009 2010 2011
The Centuria Life divisioncontinues to generate strongand stable cash earnings tothe Centuria Group.Thedivisionsfundsundermanagement(FUM)asat30June2011was$736million.ThisincludestheCenturiaLifeandGuardianFriendlySocietycapitalguaranteedandunitisedinvestmentbonds.
Terry Reid
General ManagerDip.Bus,CA
Rita Varvakis
Operation &Risk Manager
B.Bus.Accounting
Over Fifty Insurance
Centuria Financial Services
Year in review
Anne Hamieh
Centuria Life is focused on
a growth strategy to expandthe distribution of existingproducts and assessopportunities to developnew investment solutions.
AnotherareaofFinancialServicesisOverFiftyInsurance,withalmost27,500policiesacrossgeneral,travelormotorvehicleinsurance.ThisdivisionagainhadapositivecontributiontoCenturiaGroupearnings,andwearepositiveaboutthegrowthoutlookoverthenextyear.
Consistent returns
through volatile timesTheCapitalGuaranteedBondhasdeliveredpolicyholdersconsistentandhighernetreturnsinavolatileandchallengingenvironment.Policyholderscontinuedtohavetheircapitalandcreditedbonusespreservedthroughoutthisnancialyear.
Ourlargestbonds,theCapitalGuaranteedBondandIncomeAccumulationBondrepresentatotalFUMof$166millionand$234millionrespectively.
Redemptionshavefallenasimprovedreturnshavedemonstratedthevalueourguaranteedbondshaveaddedforpolicyholders.Wecontinuetofocusonstrategiestostrengthennetinows.
Anne Hamieh
Head of DistributionB.Eco,Grad.Dip.Appl.
Finance&InvestmentandGrad.Dip.Management
Source:OverFiftyInsurance,30June2011
Annual Report 2011
-
7/31/2019 Centuria Annual Report 2011 2[1]
13/101
11
200,000
150,000
100,000
50,000
-
Jun
-11
Jun
-13
Jun
-15
Jun
-17
Jun
-19
Jun
-21
Jun
-23
Jun
-25
Jun
-27
Jun
-29
Jun
-31
Jun
-33
Jun
-35
Jun
-37
Jun
-39
Jun
-41
Jun
-43
Jun
-45
Embedded Value at 30 June 2011- 8.2% p.a. redemption rate ($000)
ANZ Loan BookOFG Mortgage Book $234millionFUM of Income Accumulation Bond
Total FUM (excluding reverse mortgages)
$736million
$166millionFUM of Capital Guaranteed Bond
27,453Total number of insurance policies
$192millionValue of Reverse Mortgages
27,795Total number of Centuria Life policies
Reverse Mortgages future value to shareholders
Wecontinuetomanageourreversemortgagebookforexistinginvestors.ThisremainsaconsistentlysteadyandprotablebusinessunitforCenturiaCapital.
Further,thereversemortgagebookhassignicantembeddedshareholderequity,whichwillincreaseovertime.
Thechartaboveillustratesthevaluetoshareholders.Astheloanfacilityisrepaidovertime,thevalueofthemortgagebookincreasesandbecomescashowpositive.Whentheloanisrepaidfully,theassetbalancerepresentspositivecashowtothecompany.
Growth opportunities
WehaveastrongfocusondrivingrevenuegenerationopportunitiesfortheFinancialServicesdivision.ThestrategicappointmentofaHeadofDistributionhighlightsthisfocus.Ourgrowthstrategyaimstoexpandthedistributionofexistinginvestmentbonds.Giventhecontinuouschangessurroundingsuperannuationlegislation,weseearenewedopportunityforinvestmentbondsasacomplementarylong-termsavingssolution.
Weunderstandthatmarketdynamicsarechangingandinvestorshavevaryingneedsandnancialobjectives.Wewillrespondtothesedemandsbyassessingsuitableopportunitiestodevelopnewinvestmentsolutionsthatcansupportourstrategy.
TheFinancialServicesdivisionhasbeenprotablein2011,andwearecondentthatthecombinationofstrategiesweimplementwillprovideaplatformforgrowthintheyearsahead.
Source:RiceWarner,30June2011
-
7/31/2019 Centuria Annual Report 2011 2[1]
14/101
Centuria Annual Report 201112
Annual Report 2011
Directors
-
7/31/2019 Centuria Annual Report 2011 2[1]
15/101
13
John McBain
Executive DirectorDip.UrbanValuation
Peter Done
Non-Executive DirectorB.Comm,FCA
Roger Dobson
Chairman LLB(Hons)LL.M
Jason Huljich
Executive DirectorB.Comm,CommercialLaw
Deepak Gupta
Non-Executive DirectorBCA,MBA,Cert.InvestmentAnalysis
Theabovenameddirectorsheldofceduringthewholeofthenancialyearandsincetheendofthenancialyear.
John McBainJohnhasbeenontheBoardsince2006andwasappointedCEOinApril2008.HewasthefounderofCenturiaPropertyFunds,whichwasacquiredbyOFG(nowCenturia)in2006.JohnisadirectorofsubsidiariesCenturiaStrategicPropertyLimited,CenturiaPropertyFundsLimitedandCenturiaLifeLimitedandadirectorofanassociatedcompanyMortgageportManagementPtyLimited.Johnserves
ontheInvestmentCommitteesofbothCenturiaLifeLimitedandOverFiftyGuardianFriendlySocietyLimited.Johnqualiedinpropertyvaluationandfrom1990to2006wasinvolvedinbothcommercialpropertyconsultingandthegrowthoftheunlistedpropertyfundmarketinAustralia.Priorto1990,JohnspentfouryearsasmanagingdirectorofaspecialistcommercialpropertyinvestmentcompanybasedintheUnitedKingdom.
Jason Huljich
JasonbecametheCEOofCenturiaPropertyFundsin2006andjoinedtheBoardin2007.Heisresponsibleforprovidingstrategicleadershipand
ensuringtheeffectiveoperationofCenturiaspropertyportfolio.HehasbeeninvolvedininvestmentpropertysyndicationinAustraliasince1996andhasdevelopedconsiderableexpertiseininvestmentpropertyselection,syndicatefeasibilityandsyndicatemanagement.JasoncurrentlysitsontheNationalExecutiveCommitteeofthePropertyFundsAssociation,thepeakindustrybodyrepresentingthe$32billiondirectpropertyinvestmentindustry.
Roger DobsonRogerwasappointedtotheBoardin2007.HeisChairmanoftheBoard,ChairmanoftheNominationandRemunerationCommitteeandisalsoamemberoftheAudit,RiskManagementandComplianceCommittee.RogerisaseniorpartnerofHenryDavisYorkandestablishedthermsbankingandnancepracticein1991.Rogerhasextensivelegalknowledgeofthepropertyfundsmanagementandnancialservicesindustries,aswellascorporate
governanceandregulatoryissues.
Peter DonePeterwasappointedtotheBoardin2007andistheChairmanoftheAudit,
RiskManagementandComplianceCommittee.HeisalsoamemberoftheNominationandRemunerationCommitteeandtheInvestmentCommittees.PeterwasapartnerofKPMGfor27yearsuntilhisretirementinJune2006.Hehasextensiveknowledgeinaccounting,auditandnancialmanagementinthepropertydevelopmentandnancialservicesindustries,corporategovernance,regulatoryissuesandBoardprocessesthroughhismanyseniorroles.
Deepak GuptaDeepakwasappointedtotheBoardin2007andisamemberoftheNominationandRemunerationCommittee,theAudit,RiskManagementandComplianceCommitteeandtheInvestmentCommittees.Deepakhas25yearsexperienceinthenancialservicesandinvestmentmanagementindustry.AstheExecutiveDirectorofTrusteesExecutorsLimited,heisresponsibleforthecompanysstrategic,operationalandnancialmanagement.Trustees
ExecutorscurrentlyhasNZ$55billionoffundsundersupervision,administrationormanagement.
-
7/31/2019 Centuria Annual Report 2011 2[1]
16/101
Centuria Annual Report 201114
Directors Report for the year ended 30 June 2011
Directorsholdordinaryinterests,withequalrightstoothershareholders.
Remuneration of directors and senior managementInformationabouttheremunerationofdirectorsandseniormanagementissetoutintheRemunerationReportofthisDirectorsReport.
Company secretaries
TerryReid,CharteredAccountant,hasbeentheCompanySecretarysinceDecember2007.HeisamemberoftheInstituteofCharteredAccountantsinAustralia.
MatthewCoy(B.Bus,CPA),ChiefFinancialOfcer,wasappointedinOctober2009asanadditionalCompanySecretarytobebasedinSydney.
R.W.Dobson
J.E.McBain
J.C.Huljich
P.J.Done
D.K.Gupta
-
600,000
400,000
-
-
655,390
4,363,861
2,189,116
303,812
109,735
Fully Paid Ordinary Shares
Number
Directors Share Options
ThedirectorsofCenturiasubmittheannualnancialreportoftheCompanyforthenancialyearended30June2011.InordertocomplywiththeprovisionsoftheCorporationsAct2001,thedirectorsreportasfollows:
Information about the directors and senior management
ThenamesandparticularsofthedirectorsofCenturiaduringorsincetheendofthenancialyearareoutlinedonthepreviouspage.
-
7/31/2019 Centuria Annual Report 2011 2[1]
17/101
15
Corporate structureCenturiaCapitalLimitedisacompanylimitedbysharesthatisincorporatedanddomiciledinAustralia.Thecompanyhaspreparedaconsolidatednancialreportincorporatingtheentitiesitcontrolledduringthenancialyear,whichareoutlinedinthefollowingillustrationoftheGroupscorporatestructure.Allentitiesare100%ownedunlessotherwisestated.
Centuria Capital Limited as at 1 July 2011
Principal activites
Theprincipalactivitiesoftheconsolidatedentity(beingCenturiaastheparententity,anditscontrolledentities,togethertheGroup)duringthecourseofthenancialyearwerethemarketingandmanagementofinvestmentproducts(includingfriendlysocietyinvestmentbondsandpropertyinvestmentfunds),generalinsurancethroughagencyarrangements,mortgagelendingandmanagement,propertyinvestmentandmanagementoftheOverFiftyGuardianFriendlySocietyLimited.
Centuria Capital LimitedABN: 22 095 454 336
Over Fifty InsurancePty Ltd
ABN: 58 007 165 200
NationalLeisure Trust
Centuria StrategicProperty Limited
ABN: 67 103 003 603
Centuria Life LimitedABN: 79 087 649 054
AFSL: 230867
Over Fifty FundsManagement Pty Ltd
ABN: 42 103 265 649
Over FiftyCapital Pty Ltd
ABN: 47 007 108 509
Centuria PropertyFunds Ltd
ABN: 11 086 553 639AFSL: 231149
Centuria BulkyGoods Fund 1
Over Fifty Investments
Pty LtdABN: 84 100 169 186
OFM Direct PropertyTrust No. 3 Chisholm
Centuria DirectProperty Fund
Benefit Funds
Over Fifty Seniors Equity
Release Pty LtdABN:12 095 362 388
Senex WarehouseTrust No.1
Mortgageport ManagementPty Limited
ABN: 42 082 753 679
21.80%
6% 38.72%
24.84%
50%
Note: represents partial ownership
represents 100% ownership
-
7/31/2019 Centuria Annual Report 2011 2[1]
18/101
Centuria Annual Report 201116
Directors Report (continued)
Review of Operations
Theconsolidatednetlossfortheyearis$2.891million(2010:protof$6.318million)afterprovidingforanincometaxexpenserelatingtoshareholdersof$0.549million(2010:$3.941million).
Themainsourcesofrevenuewereprincipallyfromthe
operationsofCenturiaLifeLimited,ReverseMortgagesandCenturiaPropertyFundsLimited.
Operationalhighlightsforthenancialyearwereasfollows:
Centuria Life
Strategicstaffappointmentsweremadeduringtheyear includingtheHeadofDistributionacrossthe nancialservicesbusiness.
Centuria Property Funds
SubstantialincreaseinFUMof40%from1July2010.
AppointedasreplacementResponsibleEntityto BectonOfceFundNo.2andBectonDiversiedDirect PropertyFund(renamedtoCenturiaOfceFund2and CenturiaDiversiedDirectPropertyFund).
SuccessfullaunchofCenturia200CreekStreetFundand
Centuria8AustraliaAvenueFund.Newinvestorrightsinitiativelaunched.
Reverse Mortgages
Continuedtheactivefocusonportfoliomanagement.
AppointedanewHeadofReverseMortgageswithsignicant experienceinthemortgagesector.
Insurance
Continuedstrongcommissionincomefrombothexistingand newbusiness.
Re-focusedmarketingeffortsonareaswhicharepaying
dividends.Signicant expenses/adjustments incurred
Themostsignicantexpensesduringtheyearwhichareconsideredtobeofanon-recurringnatureinclude:
Investmentpropertieswererevalueddownwardsby$4.5 millionandarentalreceivableinconnectionwiththese propertiesof$1.158millionwaswrittenoff.
TheinvestmentinMortgageportwasimpairedby$3.5 mill ion.
Costsof$0.6millionrelatingtoeffortstoacquirethe managementrightsofOpuspropertyfunds.
Costsof$0.6millionrelatingtorebrandingtheGroupto Centuria.
Corporate governance practices
Thedirectorshave,instrivingtoachievethehighest standardsofcorporatebehaviourandaccountability, compliedwiththeprinciplesandpracticessetoutintheCorporateGovernanceStatementcontainedonpage30inthisannualreport.
Other mattersOn2February2011,Centuriacompleteditsbuy-backofan unmarketableparcelofsharesresultingin248,924shares beingboughtbackandcancelledandafurther2.3million sharesbeingboughtbackfortheCompanysPerformance RightsPlaninaccordancewiththeresolutionapprovedat the2009AnnualGeneralMeeting(AGM).
PursuanttotheAGMheldon26November2010,thename oftheCompanywaschangedfromOverFiftyGroupLimited toCenturiaCapitalLimited.Thechangewas effectiveon14March2011.
Changes in state of affairs
Therewerenosignicantchangesinthestateofaffairsoftheconsolidatedentityduringthenancialyear.
Subsequent events
On1July2011,EclipsePropertyGroupLimitedchangeditsnametoCenturiaStrategicPropertyLimited.
On18August2011,thetermofthenon-recoursenotesrelatingtothereversemortgagebusinesswasextendedto31March2013(refernote16).
Atthedateofsigningthisreport,theextensionoftheGroupsworkingcapitalfacilityhadbeenapprovedbythenancieranddocumentationfortheamendedfacilityagreementwasunderway.
On19August2011,theBoardofCenturiadeclaredanaldividendtobepaidtoshareholdersintheamountof3.5centspershare,partlyfrankedto30%.Thedividendpaymentdateisexpectedtobeonoraround30September2011.
Asat30June2011,Centuriaadministered$736million(2010:$753million)offriendlysocietybenetfundsandthishascontinuedtobeacoreactivityoftheGroupsince1980.Overthepast2yearstheCenturiaexecutiveandmanagementteamshavecontinuedtheirfocusonstrengtheningtheinvestmentandoperationalstaffstrategicallyaimedatimprovinginvestmentmanagementcapabilityandmembercommunicationandservices.
-
7/31/2019 Centuria Annual Report 2011 2[1]
19/101
17
Indemnication of ofcers and auditors
CenturiahasagreedtoindemnifyallcurrentandformerdirectorsandexecutiveofcersoftheCompanyanditscontrolledentitiesagainstallliabilitiestopersons(otherthantheCompanyorarelatedbodycorporate)whichariseoutoftheperformanceoftheirnormaldutiesasadirectororexecutiveofcerunlesstheliabilityrelatestoconductinvolvingalackof
goodfaith.
Centuriahasagreedtoindemnifythedirectorsandexecutiveofcersagainstallcostsandexpensesincurredindefendinganactionthatfallswithinthescopeoftheindemnityandanyresultingpayments.ThedirectorshavenotincludeddetailsofthenatureoftheliabilitiescoveredortheamountofpremiumpaidinrespectoftheDirectorsandOfcersLiabilityandlegalexpensesinsurancecontracts,assuchdisclosureisprohibitedunderthetermsofthosecontracts.TheCompanyhasnototherwise,duringorsincetheendofthenancialyear,excepttotheextentpermittedbylaw,indemniedoragreedtoindemnifyanofcerorauditoroftheCompanyoranyrelatedbodycorporateagainstaliabilityincurredassuchanofceror
auditor.
Directors meetings
Thefollowingtablesetsoutthenumberofdirectorsmeetings(includingmeetingsofcommitteesofdirectors)heldduringthenancialyearandthenumberofmeetingsattendedbyeachdirector(whiletheywereadirectororcommitteemember).
J.E.McBain
J.C.Huljich
R.W.Dobson
P.J.Done
D.K.Gupta
15
15
16
15
15
Board of DirectorsDirectors
Audit, RiskManagement
& ComplianceCommittee
InvestmentCommittee
16
16
16
16
16
-
-
6
6
4
-
-
6
6
6
10
-
-
11
6
12
-
-
12
12
-
-
4
4
3
-
-
4
4
4
Held Attended Held Attended Held Attended Held Attended
Note: J.EMcBainandJ.CHuljicharenotmembersoftheAudit,RiskManagement&ComplianceCommitee.
R.W.DobsonandJ.CHuljicharenotmembersoftheInvestmentCommittee.
J.EMcBainandJ.CHuljicharenotmembersoftheNomination&RemunerationCommitee.
Nomination &Remuneration
Committee
Future developments
TheGrouphasmadeconsiderableinvestmentsacrossitsdifferentbusinessestosupportthegrowthtargetswhichhavebeensetbytheBoard.TheBoardandmanagementteamarefocusedonfurtherstrengtheningthetwobusinesses,propertyfundsmanagementandnancialservices.
DividendsInrespectofthenancialyearended30June2011,aninterimdividendof2.5centspersharepartlyfrankedto30%waspaidtotheholdersoffullypaidordinaryshareson8April2011.
The2011naldividendof3.5centspersharewasdeclaredon19August2011.Refertothesubsequenteventssectiononpage16forfurtherdetail.
Inrespectofthenancialyearended30June2010,aninterimdividendof2.5centspersharepartlyfrankedto30%andanaldividendof2.5centspersharepartlyfrankedto30%werepaidtotheholdersoffullypaidordinaryshares.
-
7/31/2019 Centuria Annual Report 2011 2[1]
20/101
Centuria Annual Report 201118
Directors Report (continued)
Allnon-auditserviceshavebeenreviewedandapprovedtoensurethattheydonotimpacttheintegrityandobjectivityoftheauditor.
Noneoftheservicesunderminethegeneralprinciples
relatingtoauditorindependenceassetoutinCodeofConductAPES110CodeofEthicsforProfessional AccountantsissuedbytheAccountingProfessional&EthicalStandardsBoard,includingreviewingorauditingtheauditorsownwork,actinginamanagementordecision-makingcapacityfortheCompany,actingasadvocateforthe Companyorjointlysharingeconomicrisksandrewards.
Non-audit services
Detailsofamountspaidorpayabletotheauditorfornon-auditservicesprovidedduringtheyearbytheauditorareoutlinedinnote24tothenancialstatements.
Thedirectorsaresatisedthattheprovisionofnon-auditservices,duringtheyear,bytheauditor(orbyanotherperson
orrmontheauditorsbehalf)iscompatiblewiththegeneralstandardofindependenceforauditorsimposedbytheCorporationsAct2001.
Thedirectorsareoftheopinionthattheservicesasdisclosedinnote24tothenancialstatementsdonotcompromisetheexternalauditorsindependence,basedonadvicereceivedfromtheAudit,RiskManagement&ComplianceCommittee,forthefollowingreasons:
Auditors independence declaration
Theauditorsindependencedeclarationisincludedonpage29oftheannualreportandformspartoftheDirectorsReportfortheyearended30June2011.
Rounding off of amounts
ThecompanyisacompanyofthekindreferredtoinASICClassOrder98/0100,dated10July1998,andinaccordancewiththatClassOrderamountsintheDirectorsReportandthenancialstatementsareroundedofftothenearestthousanddollars,unlessotherwiseindicated.
-
7/31/2019 Centuria Annual Report 2011 2[1]
21/101
19
Remuneration Report for the year ended 30 June 2011
ThisRemunerationReport,whichformspartoftheDirectorsReport,setsoutinformationabouttheremunerationofCenturiasdirectorsanditsseniormanagementforthenancialyearended30June2011.Theprescribeddetailsforeachpersoncoveredbythisreportaredetailedbelowunderthefollowingheadings:
1Directorandseniormanagementdetails
2 Remunerationpolicy
3Relationshipbetweentheremunerationpolicyandcompany performance
4Non-executivedirectorremuneration
5Remunerationofexecutivedirectorsandseniormanagement
6Allotheremployeesremuneration
7Keytermsofemploymentcontracts.
1. Director and senior management details
ThefollowingpersonsactedasdirectorsoftheCompanyduring
orsincetheendofthenancialyear:
R.W.Dobson(IndependentChairman)
P.J.Done(IndependentDirector)
D.K.Gupta(IndependentDirector)
J.E.McBain(ChiefExecutiveOfcerandExecutiveDirector)
J.C.Huljich(ExecutiveDirector)
ThetermseniormanagementisusedinthisRemunerationReporttorefertothefollowingpersons.Exceptasnoted,thenamedpersonsheldtheircurrentpositionforthewholeofthenancialyearandsincetheendofthenancialyear:
M.J.Coy(ChiefFinancialOfcerandadditionalCompanySecretarybasedinSydney)
T.D.Reid(CompanySecretaryandGeneralManager-CenturiaLifeLimited)
D.B.Govey(HeadofAssets)
2. Remuneration policy
Centuriarecognisestheimportantrolepeopleplayintheachievementofitslong-termobjectivesandasakeysourceofcompetitiveadvantage.Togrowandbesuccessful,Centuriamustbeabletoattract,motivateandretaincapableindividuals.Centuriasremunerationpolicyfocusesonthefollowing:
Ensuringcompetitiverewardsareprovidedtoattractand retainexecutivetalent
Linkingremunerationtoperformancesothathigherlevelsof performanceattracthigherrewards
Aligningrewardsofallstaff,butparticularlyexecutives,tothe creationofvaluetoshareholders
Makingsurethecriteriausedtoassessandrewardstaff includenancialandnon-nancialmeasuresofperformance
Linkingtheoverallcostofremunerationtotheabilityofthe Companytopay
EnsuringseverancepaymentsduetotheChief ExecutiveOfceronterminationarelimitedtopre-established contractualarrangementsthatdonotcommittheGroupto makinganyunjustiedpaymentsintheeventofnon-performance.
3. Relationship between the remuneration policyand company performance
ThemainobjectiveinrewardingtheCompanyexecutivesfortheirperformancesistoensurethatshareholderswealthismaximisedthroughtheCompanyscontinuedgrowthmovingforward.Itisnecessarytostructureandstrengthenthisfocusto
drivethisstrategysothattheyarealignedwiththeCompanysobjectivesandsuccesses.
Undertheremunerationpolicy,seniormanagementsremunerationincludesaxedremunerationcomponent,short-termandlong-termincentivearrangements.Thelong-termincentivesarebasedonCenturiasperformancefortheyearinreferencetospecicEarningsPerShare(EPS)hurdlesbeingmet.Theshort-termincentivesarebasedontheindividualsperformanceinthepreceding12monthscomparedtopre-agreedgoals.
Whereseniormanagementisremuneratedwithsecurities,theRemunerationPolicyplacesnolimitationsontheirexposuretoriskinrelationtothesecurities.Targetincentiveremuneration
referstotheincentivepayprovidedformeetingperformancerequirements.Actualincentiveremunerationcanvaryforexecutivedirectorsandseniormanagementdependingontheextenttowhichtheymeetperformancerequirements.
InaccordancewiththeCompanyscorporategovernance,thestructureofnon-executivedirectorandexecutiveremunerationisseparateanddistinct.
4. Non-executive director remuneration
Objective
TheBoardseekstosetaggregateremunerationatalevelthatprovidestheCompanywiththeabilitytoattractandretain
directorsofthehighestcalibre,whilstincurringacostthatisacceptabletoshareholders.
Structure
TheConstitutionandtheASXListingRulesspecifythattheaggregateremunerationofnon-executivedirectorsshallbedeterminedfromtimetotimebyageneralmeeting.Anamountnotexceedingtheamountdeterminedisthendividedbetweenthedirectorsasagreed.Clause63.2oftheConstitutionprovidesanaggregatemaximumamountofnotmorethan$750,000peryear.
Directors Fees
EachdirectorreceivesafeeforbeingadirectorofGroupcompaniesandanadditionalfeeispaidtotheChairmanandtotheChairmanofeachBoardCommittee.ThepaymentoftheadditionalfeestoeachChairmanrecognisestheadditionaltimecommitmentandresponsibilityassociatedwiththeposition.
Non-Executive Director Share Plan
Followingapprovalatthe2009AGM,aNon-ExecutiveDirectorSharePlan(NEDSharePlan)wasimplemented.Theconceptofthenon-executivedirectorstakingacomponentoftheirremunerationasCenturiasharesisseenasfurtheraligningtheirinterestswithshareholders.
-
7/31/2019 Centuria Annual Report 2011 2[1]
22/101
Centuria Annual Report 201120
Duringthe2010year,eachofthenon-executivedirectors(MessrsDobson,Done&Gupta)wereissuedwith75,000CenturiasharesundertheNEDSharePlanfornilconsideration.ThesesharesweresubjecttotradingrestrictionsanddirectorswerenotabletosellorotherwisedealwiththeirsharesissuedunderthePlanwithin12monthsofthedateofissueunlessaChangeofControlEventoccurredasdenedsection5(b)(ii)of
thisreport.
5. Remuneration of executive directors andsenior management
Objective
TheCompanyaimstorewardexecutiveswithalevelandmixofremunerationcommensuratewiththeirpositionandresponsibilitieswithintheCompanysoasto:
Rewardexecutivesforcompany,businessunitandindividual performanceagainsttargetssetbyreferencetoappropriate benchmarks
Aligntheinterestsofexecutiveswiththoseofstakeholders
Linkrewardswiththestrategicgoalsandperformanceofthe Company
Ensuretotalremunerationiscompetitivebymarket standards.
Structure
Indeterminingthelevelandmake-upofexecutiveremuneration,theCEOseeksindependentadviceregardingmarketlevelsofremunerationforcomparableexecutiveroles.
Remunerationpackagesincludeamixofxedandvariableremunerationandshortandlong-termperformance-basedincentives.TheproportionofxedandvariableremunerationisestablishedforeachexecutivebytheCEOafterconsultationwiththeNomination&RemunerationCommittee.Whiletheallocationmayvaryfromperiodtoperiod,thetablebelowdetailstheapproximatexedandvariablecomponentsfortheexecutives.
(a) Fixed Remuneration
Objective
Fixedremunerationconsistsofbaseremuneration(whichiscalculatedonatotalcostbasisandincludesanyFBTchargesrelatedtoemployeebenetsincludingmotorvehicles),aswellasemployercontributionstosuperannuationfunds.Thisis
reviewedannuallybytheCEOandtheprocessconsistsofareviewofCompany,businessunitandindividualperformanceaswellasrelevantcomparativeremunerationinthemarket.ThesameprocessisusedbytheNomination&RemunerationCommitteewhenreviewingthexedremunerationoftheCEO.
TheCEOandseniorexecutivesaregiventheopportunitytoreceivetheirxed(primary)remunerationinavarietyofformsincludingcashandsalarysacriceitemssuchasmotorvehicles,motorvehicleallowancesand/oradditionalsuperannuationcontributions.ItisintendedthatthemannerofpaymentchosenwillbeoptimalwithoutcreatingunduecostfortheGroupbutalwayscontainedintheirrespectivexedtotalremuneration.
(b) Variable Remuneration
UnderCenturiasSeniorManagementRemunerationPolicy,longandshort-termperformanceincentivesmaybemadeundertheCompanysincentiveplans.Thesearediscussedfurtherbelow.
(b) (i) Short-term Incentives (STI)
TheobjectiveoftheSTIprogramistolinktheachievementoftheGroupsoperationalandnancialtargetswiththeremunerationreceivedbytheexecutiveschargedwithmeetingthosetargets.ThetotalpotentialSTIavailableissetatalevelsoastoprovidesufcientincentivetotheexecutivetoachieve
operationaltargetsandsuchthatthecosttotheGroupisreasonableinthecircumstances.
Executive Directors
J.C.Huljich
J.E.McBain
Senior Management
M.J.Coy
T.D.Reid
D.B.Govey
26%
26%
26%
23%
23%
74%
74%
74%
77%
77%
FixedRemuneration
%
DirectorsVariable
Remuneration
%
% of Total Target Annual Remuneration
Remuneration Report (continued)
-
7/31/2019 Centuria Annual Report 2011 2[1]
23/101
21
Details of the grants of Performance Rights are set out below:
Performance Rights Plan (PRP)
Atthe2003AGM,CenturiashareholdersapprovedaPerformanceRightsPlan(PRP)whichprovidestheBoard(ortheNomination&RemunerationCommitteeactingastheBoardsdelegate)discretiontograntPerformanceRightstoemployeesforaspeciednumberofordinarysharesfornoconsideration.Atthe2009AGM,shareholdersreapprovedthePRPand
approvedtheissueofupto3millionPerformanceRightsfornilconsideration.ThePRPappliestoexecutivedirectors,seniormanagementandotheremployeeswithintheGroup.
APerformanceRightrepresentstherighttosubscribefororacquireoneCenturiashareintheCompanyfornilconsideration(unlessotherwisedeterminedbytheBoardatthetimeofgrant).PerformanceRightsmaynotbetransferred,orencumberedwithouttheapprovaloftheBoardandwillnotbelistedforquotationonanystockexchange.
TheBoardmaydeterminefromtimetotimetheperformanceconditions(ifany)thatwillapplytoPerformanceRights.OnlyPerformanceRightswhichsatisfytheseconditionsorwhich
vestfollowingaChangeofControlEventwillvestandbecomeexercisable.
OnlypersonsemployedontherelevantPerformanceRightsGrantDatebytheCompanyoroneofitssubsidiarieswillbeeligibletoreceiveagrantofPerformanceRights.ThePerformanceRightsofaneligibleemployeewillbeforfeiteduponterminationoftheeligibleemployeeceasingtobeanemployeeordirectoroftheCompany(otherthanasaresultofcertaincircumstancessuchasdeath,totalandpermanentdisabilityorredundancyorthesaleofaCenturiacompanyorbusinesswhichemploystheCenturiaemployeeorasotherwisedeterminedbytheBoard).
ThePRPhastwoparts:
Compensation Performance Rights
Theseweredesignedtocompensateeligibleemployeesforsalaryreductionsmadeasof1May2009,withthenumberofPerformanceRightsissueddeterminedbyreferencetothesalaryreductionsfrom1May2009to30June2010.ThenumberofCompensationPerformanceRightsissuedinrespectofthe2011nancialyearwas685,308atapriceof$0.52.
Incentive Performance Rights
Theseprovideeligibleemployeeswithashort-termincentive,andtheBoardmayelecttoawardanemployeewitheitherPerformanceRightsoracashbonusoracombinationofboth,bearinginmindthetotalremunerationtheemployeeisawardedinaparticularyear.
ThePerformanceRightswillveston,andareexercisableafter,datesspeciedatthetimeofgrantsubject(otherthanforCompensationPerformanceRights)totheachievementofcertainperformancehurdlesbytheCompany.IfthecapitaloftheCompanyisreconstructedthenthehurdleswillbeadjustedasnecessaryfortheplan.
(i)
(ii)-
Basedonunderlyingnetprotaftertax.ThefairvalueofeachPerformanceRightissuedwas$0.57basedonthevolumeweightedaveragesharepriceofCenturiainthe10tradingdayspriorto30June2011.
EPShurdlewillbesetpriortothetimeofgrant.1.3millionperformancerightsavailableforpotentialfutureissuancebytheNominationandRemunerationCommittee.
(i)
(ii)
CompensationPerformanceRights
IncentivePerformanceRights
IncentivePerformanceRights
IncentivePerformanceRights
01July2010
30September2010
30June2011
30June2012
10February2010
30June2010
30June2011
30June2012
Performance Rights
Grant Date
0.7million
0.3million
0.7million
1.3million
Number of
Performance Rights
NoEPShurdle
8.96cents
7.50cents
EPS
Hurdle
Vesting
Date
-
7/31/2019 Centuria Annual Report 2011 2[1]
24/101
Centuria Annual Report 201122
(b) (ii) Long-term Incentives (LTI)
AnExecutiveOptionPlan(EOP)wasapprovedatthe2009AGM.TheEOPrepresentsthelong-termincentiveforseniorexecutives.TheawardofExecutiveOptionsunderthisplanaresubjecttoEPShurdlesandnoExecutiveOptionwillbecapableofbeingexerciseduntilthethirdyearafterthedateofgranting(thatis,2012).
TheExecutiveOptionsdonotvest:
UntilthelodgementorpublicationbytheCompanyofits annualnancialstatementsforthenancialyearending30 June2012(AnnouncementDate)
Achangeofcontrolevent(asdenedbelow)occursor
Iftherelevantexecutiveisnotanemployeeordirectorat30June2012unlesstheyhaveonlyceasedtobeanemployeeordirectorduetoaQualifyingReason(death,totaland permanentdisability,redundancy;thesaleofaCenturia companyorbusinesswhichemploystheCenturiaemployee orasotherwisedeterminedbytheBoard).
Achangeofcontroloccursifapersonacquires:
Arelevantinterest(withinthemeaningofsection608ofthe CorporationsAct2001)inmorethan50%oftheordinary sharesintheCompanyor
ControloftheCompanyor
OranyothereventoccurswhichtheBoarddetermines,initsabsolutediscretion,tobeaChangeofControlEvent.
IfaneventoccursaffectingthenumberortypeofsecuritiesonissueinthecapitaloftheCompany(includingasubdivision,consolidationorreduction),theExecutiveOptionswillberestructuredinamannerwhichisfairandequitabletothe
executiveswhichisconsistentwiththerelevantprovisionsoftheASXListingRulesatthattime.
TheBoardhasdeterminedthatthecombinationoftheEPSperformancehurdleandsettingtheexerciseprice(showntopright)abovetheanticipatedfairmarketvalueoftheunderlyingCenturiashareatthetimeofgrantisappropriatebecausesatisfactionofthehurdles(andthereforevesting)shouldcorrespondtoanincreaseinshareholdervalue.
TheExecutiveOptionsmaybeexercisedfromtheAnnouncementDateforaperiodofthreemonthslessoneday.
ThemaximumnumberofExecutiveOptionsissuedundertheEOP,andofCenturiasharesissueduponexerciseof
theExecutiveOptions,willbe2.1million.OftheseExecutiveOptions,1.6millionhavebeenissuedasat30June2011.OneExecutiveOptiononitsvalidexerciseentitlestheholdertobeissuedwithoneCenturiaordinaryshare.TheExecutiveOptionswillbeissuedtoexecutivesfornilconsideration.
(i)OfthetotalnumberofExecutiveOptionsofanexecutivedirectorthatbecomeexercisable,onethirdhaveanexercisepriceof$0.66,onethirdanexercisepriceof$0.73andonethirdanexercisepriceof$0.80perExecutiveOption.
AlloftheExecutiveOptionsbecomeexercisableif:
TheCompanymeetsorexceedsallofthefollowingEPS targetsfornancialyearsshown:
Or:
ThesimpleaverageoftheCompanysEPSforthe3nancialyearsis10.07cents.
PartonlyoftheExecutiveOptionswillbecomeexercisableif:
AChangeofControlEventoccurs(thenumberofExecutiveOptionsvestingwillbepro-ratatotheproportionofthe vestingperiodthathaselapsedatthetimeoftheChangeofControlEvent),or
BasedontheEPSachievedandonthefollowingsliding scale,assumingthattheEPSforthepurposesofthegrowth chartwas8centsforthenancialyearending30June2009:
J.E.McBain
J.C.Huljich
M.J.Coy
T.D.Reid
D.B.Govey
600,000
400,000
325,000
100,000
100,000
Executive OptionsGranted on 29October 2009
Name of Executive Director /Senior Management
2010
2011
2012
8.96cents
10.04cents
11.23cents
EPS HurdleFinancial Year (FY)
Lessthan8%
8-8.99%
9-9.99%
10-10.99%
11-11.99%
12-12.99%
0%
20%
40%
60%
80%
100%
% ExecutiveOptions Vesting
Average EPS Growth Rate from2010 to 2012
Details of grants of Executive Options to ExecutiveDirectors and Senior Management are set out below:
Remuneration Report (continued)
-
7/31/2019 Centuria Annual Report 2011 2[1]
25/101
23
6. All other employees remuneration
Objective
TheCompanyaimstorewardallotheremployeeswithalevelofremunerationcommensuratewiththeirpositionandresponsibilitieswithintheCompanyandensuringthatitiscompetitivebymarketstandards.
Structure
Indeterminingthelevelofallotheremployeesremuneration,theCEOmayseekindependentadviceregardingmarketlevelsofremunerationforcomparableroles.Remunerationpackagesarexedandinclusiveofstatutorysuperannuationcontributions.Aftercompletionofaqualifyingperiod,employeesmaybeeligibletoparticipateintheCompanysincentiveprogramswhichwillvaryfromtimetotimedependingoncompanypoliciesandthechangingneedsofthebusiness.BonuspaymentsaredeterminedattheabsolutediscretionoftheCompany.Eligibleemployeeswillbeadvisedannuallyoftheirparticipationinanybonusprogram.
CenturiasoverallobjectiveistorewardseniormanagementbasedontheCompanysperformanceandbuildonshareholderswealthbutthisissubjecttomarketconditionsfortheyear.ThetablebelowsetsoutsummaryinformationabouttheGroupsearningsfortheveyearstoJune2011:
Totalincome
Netprot/(loss)beforetaxNetprot/(loss)aftertax
73,447
(19,527)(12,413)
114,019
11,3786,514
30 June 2007$000
30 June 2008$000
30 June 2009$000
30 June 2010$000
30 June 2011$000
Summaryof Earnings
55,344
(1,065)(2,707)
51,583
12,8806,318
51,804
1,347(2,981)
Sharepriceatstartofyear
Sharepriceatendofyear
Interimdividend(i)
Finaldividend(i)
BasicearningspershareDilutedearningspershare
$0.91
$0.42
0.0cps
0.0cps
(21.4)cps(21.4)cps
$2.26
$2.22
5.0cps
6.0cps
11.0cps11.0cps
30 June 200730 June 200830 June 200930 June 201030 June 2011
$2.22
$0.91
5.0cps
3.0cps
(4.6)cps(4.6)cps
$0.42
$0.52
2.5cps
2.5cps
9.3cps8.4cps
$0.52
$0.57
2.5cps
3.5cps
(3.7)cps(3.7)cps
(i)30June2011:partlyfrankedto30%.
-
7/31/2019 Centuria Annual Report 2011 2[1]
26/101
Centuria Annual Report 201124
Valuation of performance rights for directors and senior management
ThevalueofthePerformanceRightsgrantedatthegrantdatein2011was$136,064.
Valuation of options for directors and senior management
Thevalueofoptionsgrantedatthegrantdatein2010inrespectofthe2011yearwas$67,623.Non-executive directors remuneration
Theaggregatenon-executivedirectorsremunerationpaidin2011was$332,450.
Remuneration of directors and senior management
Remuneration for the year ended 30 June 2011:
R.W.Dobson
J.E.McBain
J.C.Huljich
P.J.Done
D.K.Gupta
Sub-total
Senior Management
M.J.Coy
T.D.Reid
D.B.Govey
Sub-total
Grand Total
Directors
Salaries $
-
354,243
253,008
-
-
607,251
256,881
200,279
219,450
676,610
1,283,861
Fees $
130,000
-
-
100,000
75,000
305,000
-
-
-
-
305,000
Bonus $
-
100,000
71,000
-
-
171,000
-
-
-
-
171,000
Car Allowance $
-
20,000
20,000
-
-
40,000
-
-
-
-
40,000
11,700
33,682
24,571
9,000
6,750
85,703
23,119
17,070
19,750
59,939
145,642
Superannuation $
Short-term Employee Benets Post Employment Benets
Remuneration Report (continued)
Nodirectorsorseniormanagementpersonappointedduringtheperiodreceivedapaymentaspartofhisorherconsiderationforagreeingtoholdtheposition.
-
7/31/2019 Centuria Annual Report 2011 2[1]
27/101
25
Performance Rights $
-
-
-
-
-
-
69,609
6,986
59,469
136,064
136,064
Options $
-
26,606
17,737
-
-
44,343
14,412
4,434
4,434
23,280
67,623
Participating Rights $
-
-
-
-
-
-
-
-
-
-
-
141,700
534,531
386,316
109,000
81,750
1,253,297
364,021
228,769
303,103
895,893
2,149,190
Total $
-
-
-
-
-
-
-
-
-
-
-
Termination Payments $
Share-based Payment Termination Benets
-
7/31/2019 Centuria Annual Report 2011 2[1]
28/101
Centuria Annual Report 201126
R.W.Dobson
J.E.McBain
J.C.Huljich
P.J.Done
D.K.Gupta
Sub-total
Senior Management
M.J.Coy
T.D.Reid
D.B.Govey
Sub-total
Grand Total
Directors
Salaries $
-
316,819
225,711
-
-
542,530
231,192
180,233179,546
590,971
1,133,501
Fees $
95,000
-
-
67,125
49,000
211,125
-
--
-
211,125
Bonus $
-
-
-
-
-
-
-
--
-
-
Car Allowance $
-
20,000
20,000
-
-
40,000
-
--
-
40,000
8,550
30,314
22,114
3,690
-
64,668
20,807
15,38316,159
52,349
117,017
Superannuation $
Short-term Employee Benets Post Employment Benets
Nodirectorsorseniormanagementpersonappointedduringtheperiodreceivedapaymentaspartofhisorherconsiderationforagreeingtoholdtheposition.
Remuneration Report (continued)
Bonus
Nocashbonusesweregrantedduringthe30June2010nancialyeartotheaboveseniormanagementoranyotherstaffofCenturia.
Performance rights
AsaresultofallCenturiastaffreceivingeithera7.5%or10%reductiontotheirremunerationduringthecurrentperiod,inaccordancewiththeresolutionsattheOctober2009AGM,staffweregrantedPerformanceRightsascompensationforthedecreasedremuneration(98%weregranted),theconditionbeingemploymentfrom1May2009to1July2010.
AlsoinaccordancewiththeOctober2009AGM,performancerightswerealsograntedtostaffinsteadofcashbonuses.
Valuation of options and performance rights for directors and senior management
Thevalueofoptionsgrantedatthegrantdatein2010inrespectofthe2010yearwas$67,623.
ThevalueofthePerformanceRightsgrantedatthegrantdatein2010was$360,843.
Theaggregatenon-executivedirectorsremunerationpaidin2010was$388,200.
Remuneration of directors and senior management (continued)
Remuneration for the year ended 30 June 2010:
-
7/31/2019 Centuria Annual Report 2011 2[1]
29/101
27
Performance Rights $
54,945
57,347
42,156
54,945
54,945
264,338
40,843
23,83631,826
96,505
360,843
Options $
-
26,606
17,737
-
-
44,343
14,412
4,4344,434
23,280
67,623
Participating rights $
-
-
-
-
-
-
-
--
-
-
158,495
451,086
327,718
125,760
103,945
1,167,004
307,254
223,886231,965
763,105
1,930,109
Total $
-
-
-
-
-
-
-
--
-
-
Termination Payments $
Share-based Payment Termination Benets
-
7/31/2019 Centuria Annual Report 2011 2[1]
30/101
Centuria Annual Report 201128
7. Key terms of employment contracts
Current CEO
MrJohnMcBain,wasappointedasCEOofCenturiainApril2008.HeisalsoanexecutivedirectorofCenturia.MrMcBainisemployedundercontract.ThesummaryofthemajortermsandconditionsofMrMcBainsemploymentcontractareasfollows:
Remuneration Report (continued)
Redundancyorretrenchment
Special
Circumstances(Deathordisablity)
Dismissalforseriousmisconduct(e.g.Fraud)
Terminationinanyotherinstance
(e.g.Resignation)
VestedRights
Type ofTermination
Lapseafter12monthsfrom
dateofterminationofemployment.
Lapse.
Lapse.
Lapse.
Lapseafter60days
fromthedateoftermination.
Lapseafter180
daysfromthedateoftermination.
Lapsefromthedateoftermination.
Lapsefromthedateoftermination.
UnvestedRights
OnbehalfoftheBoard
J.E. McBain
Executive Director & Chief Executive Ofcer
P.J. Done
Director
Chairman - Audit, Risk Management & ComplianceCommittee
Other executives (standard contracts)
Allexecutivesareemployedundercontract.TheCompanymayterminatetheexecutivesemploymentagreementbyproviding1-6monthswrittennoticeorprovidingpaymentinlieuofthenoticeperiod(basedontheTotalFixedCompensationPackage).
UponaparticipantsterminationofemploymentwithCenturia,the
unvestedandvestedperformancerightsoftheparticipantwillbedealtwithasspeciedinthetablebelow.MrMcBainreceivesFixedCompensationplus superannuation.
MrMcBainisentitledtoamotorvehicleallowanceandcanelecttoapplyaportionofhissalaryasamotorvehicleallowance.Fortheyearended30June2011,MrMcBainelectedtoallocatefromhistotalsalaryamount$20,000(2010:$20,000)tohismotorvehicleallowance.
MrMcBainisentitledtocarparkingwithincloseproximitytoCenturiasofce.
MrMcBainiseligibletoparticipateinthebonusprogramwhichwillbedeterminedatthediscretionoftheBoard.
Centuriamayterminatethisemploymentcontractbyproviding6monthswrittennoticeorprovidepaymentinlieuofthenoticeperiod.AnypaymentinlieuofnoticewillbebasedontheTotalFixedCompensationPackage.
Centuriamayterminatetheemploymentcontractatanytimewithoutnoticeifseriousmisconducthasoccurred.WhenterminationwithcauseoccurstheCEOisonlyentitledtoremunerationuptothedateoftermination.
-
7/31/2019 Centuria Annual Report 2011 2[1]
31/101
29
Auditors Independence Declaration
Lead Auditors Independence Declaration under Section 307C of the Corporations Act 2001
To: the directors of Centuria Capital Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the nancial year
ended 30 June 2011 there have been:
(i) no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to theaudit.
KPMG
Steven Gatt
Partner
Sydney
19 August 2011
KPMG, an Australian partnership and a member rm of the KPMG network
of independent member rms afliated with KPMG International Cooperative(KPMG International), a swiss entity.
-
7/31/2019 Centuria Annual Report 2011 2[1]
32/101
Centuria Annual Report 201130
ThisstatementsetsouttheeightcoreprinciplesidentiedbytheASXCorporateGovernanceCouncil(theCouncil)asunderlyinggoodcorporategovernanceandoutlinestheapproachofCenturiaCapitalLimited(Centuria)toeachoftheprinciples.
AsrecognisedbytheCouncil,corporategovernanceisthesystembywhichcompaniesaredirectedandmanaged.Itinuenceshowtheobjectivesofthecompanyaresetand
achieved,howriskismonitoredandassessedandhowperformanceisoptimised.Thereisnosinglemodelofgoodcorporategovernance.AtCenturia,corporategovernancewillevolvewithourchangingcircumstancesandwillbetailoredtomeetthosecircumstances.
DetailsofthemaincorporategovernancerelatedpoliciesadoptedbytheCompanyareavailableintheCorporateGovernancesectionofCenturiaswebsitewww.centuria.com.au.
Principle 1: Lay solid foundations for managementand oversight
The role of the Board
TheBoardofDirectorsisresponsibleforsettingthestrategicdirectionandestablishingthepoliciesofCenturia.Itisresponsibleforoverseeingthenancialposition,andformonitoringthebusinessandaffairsofCenturiaonbehalfoftheshareholders,bywhomthedirectorsareelectedandtowhomtheyareaccountable.Italsoaddressesissuesrelatingtointernalcontrolsandapproachestoriskmanagement.Itensuresthatthereareprocessesinplacetoconformtolegalrequirementsandcorporategovernancestandardsandthatriskexposuresareadequatelymanaged.
ForfulldetailsoftheroleoftheBoardpleaserefertoourBoardCharter,alinktowhichiscontainedundertheCorporateGovernancepageofourwebsite.
Delegation to Senior Executives
TheroleoftheChiefExecutiveOfcer(CEO)andSeniorExecutivesistomanageCenturiainaccordancewiththedirectiongivenbytheBoard.
TheCEOsresponsibilitiesinclude:
Performance Review of Senior Executives
TheperformanceoftheCEOisreviewedperiodicallybytheNominationandRemunerationCommitteeandtheBoard.Thisassessmentismadeagainstpre-determinedcriteriaincludingKeyPerformanceIndicatorsrelatingtoCenturiasperformanceasdeterminedinCenturiasStrategicPlan.
PerformancereviewsofSeniorExecutivesarecarriedoutbytheCEOwhoreportsthendingstotheNominationandRemunerationCommittee.TheCEOconductsthereviewseach
yearbycomparingperformanceagainstagreedmeasures,evaluatinganyefcienciesorimprovementsduringthecourseoftheyearanddecidingupontargetsfornextyear.
2011 Corporate Governance Statement
Principle 2: Structure the Board to add value
Directors
TheDirectorsReportintheAnnualReportcontainsdetailsofthedirectorsskills,experienceandqualications.Italsostatesthedatetheindividualdirectorwasappointedtotheboard,theirstatusasnon-executiveorexecutivedirectorsandthe
committeesonwhichtheysit.ThedirectorsseektoensuretheBoardconsistsofdirectorswithanappropriaterangeofexperience,skills,knowledgeandvisiontoenableittooperateCenturiasbusinesswithexcellence.ThenumberofdirectorsislimitedbyCenturiasconstitutiontoaminimumof5andamaximumof13.TheBoardconsidersthattheidealsizeis5to8directors.TherehavebeennonewappointmentstotheBoardsince2007.AnyfuturenewappointmentsshallcontinuetoadheretoCenturiasdesiretomaintaintheappropriateskills,experienceandqualicationmix,keepinginmindacommitmenttodiversityofgenderandbackground.
CurrentlytheBoardconsistsof5directors.Threeofthevedirectors,namelyRogerDobson,PeterDoneandDeepak
GuptaareconsideredtobeindependentasperindependencecriteriasetoutintheBoardCharter.ThethreeindependentdirectorsdonothaverelationshipswithCenturiawhichaffecttheirindependentstatus,suchassubstantialshareholdingsordirectemployment.Theydonotprovidematerialprofessionalconsultancyservices,theyarenotamaterialsupplierorcustomerandtheydonothaveamaterialcontractualrelationshipwithCenturiaorothergroupmemberexceptasadirector.OurCEOs,JohnMcBainandJasonHuljicharealsoexecutivedirectors.DirectorsarerequiredtodiscloseateachBoardmeetinganyintereststhatmayaffecttheirindependence.IndependentdirectorsreconrmtheirindependentstatustotheBoardbywayofawrittenconrmationonanannualbasis.
Directorsareselectedandappointedinaccordancewithdocumentedprocedures.Forfulldetailsontheproceduresfortheselectionandappointmentofdirectorspleaseseeourpolicy,alinktowhichiscontainedundertheCorporateGovernancepageofourwebsite.
Chairman
Centuriaschairman,RogerDobsonisconsideredtobeanindependentdirectorforthereasonsgivenabove.ThereisacleardivisionofresponsibilityattheheadofthecompanyastherolesofchairmanandtheCEOarenotperformedbythesameperson.TheBoardCharteralsoprovidesthatthechairmanshallbeanindependentnon-executivedirector.AStatementofPositionAuthorityisinplacefortheCEOwhichdetailsthe
responsibilitiesandauthoritiesforthatposition.
Nomination and Remuneration Committee
TheNominationandRemunerationCommitteeformulatescriteriaforappointmentofdirectorstotheBoard,identiespotentialcandidatesandrecommendsremunerationofdirectorsandseniormanagement.AppointmentstotheBoardaremadeontheunderstandingthataminimumofonetermofthreeyearsandamaximumofthreeterms(9years)willbeserved.AlinktothecharteroftheNominationandRemunerationCommitteecanbefoundontheCorporateGovernancepageofourwebsite.
Formulatingandreviewing,withtheBoard,thevisionandstrategyforCenturia
DevelopingactionsandplanstoachievethevisionandimplementthestrategyandtoreporttotheBoardontheprogressagainstthoseplans
Appointingamanagementteamandnegotiatingtermsandconditionsoftheiremployment
Approvingtheremunerationlevelsofallstaff.
-
7/31/2019 Centuria Annual Report 2011 2[1]
33/101
31
Specic activities include:
Assessmentoftheef fectivenessandcompositionofBoardcommittees
RegularevaluationoftheperformanceoftheCEORecommendingremunerationfornon-executivedirectors
RecommendingacompetitiveremunerationandrewardprogramfortheCEOandotherseniormanagement
Ensuringthatotherhumanresourcemanagementprograms,includingperformanceassessmentprograms,arein place.
TheNominationandRemunerationCommitteeconsistsofthreedirectors,allofwhomareindependentandischairedbyanindependentdirector.DetailofmembershipoftheNominationandRemunerationCommitteeincludingmeetingattendanceissetoutinattheendoftheCorporateGovernanceStatement.
Eachdirectorsskills,experienceandexpertiseiscontainedintheDirectorsReport.
Board Performance
TheBoardreviewedandassesseditsperformanceforthe2010/11nancialyear.Detailedconsiderationwasgiventothefollowingareas:
TheBoardscomposition
TheoperationsandeffectivenessoftheBoardandits Committees
Decisionmakingprocesses,includingagendas,frequencyofmeetingsandcontentofpapers
CommunicationsbetweentheBoardandexecutives
Determinationofcompanystrategy
TheBoardspoliciesforBoardrenewal.
Continuingeducationtoupdateandenhancedirectorknowledgeisseenasanimportantfactorinensuringoptimumperformancebyeachdirector.
Clause5oftheBoardChartergivesdirectorstheauthoritytoseekprofessionaladviceasconsiderednecessaryintheperformanceofitsdutiesatCenturiasexpense.Thedirectorsalsohavefullaccesstothecompanysecretarytoassistthemtocarryouttheirrole.
Re-election of Directors
TheCompanysconstitutionstipulatesthatanumberofdirectorsnotexceedingone-thirdoftheirnumbershouldretirebyrotationateachannualgeneralmeeting(AGM).Adirectormustofferthemselfforre-electionatthethirdAGMsincetheirelectionorre-election,unlesstheyhaveservedthreetermsatwhichtimethedirectormustretirefromtheBoard.TheCEO,ifalsoadirector,isnotsubjecttotheretirementbyrotationprocess,andisnotincludedwhencalculatingthenumberofdirectorsrequiredtoretirebyrotation.
PRINCIPLE 3: Promote ethical and responsibledecision-making
Code of Conduct
TheBoardhasestablishedaDirectorsandEmployeeCodeofConductthatsetsthestandardbywhichallofcersand
employeesofthecompanyaretoconductthemselvesinthecourseoftheirduties.PotentialbreachesoftheCodeofConductcanbereportedtomanagement,theAudit,RiskManagement&ComplianceCommitteeoranexternalauditorusingtheguideoutlinedinCenturiasWhistleblowerPolicy.AlinktotheCodeofConductcanbefoundundertheCorporateGovernancepageofourwebsite.
Trading in Centurias Securities
TheBoardhasestablishedapolicyconcerningtradinginCenturiassecuritiesbydirectors,ofcersandemployees.ThepolicyprohibitsDirectorsandemployeestradinginCenturiassecuritiesiftheyareawareofanypricesensitiveinformationandalso,atnominatedtimeswhenablack-outperiodisimposed.AlinktoCenturiasDirectors&EmployeesSecuritiesTradingPolicycanbefoundundertheCorporateGovernancepageofourwebsite.
Diversity at Centuria
RecentamendmentstotheASXCorporateGovernancePrinciplesandRecommendationshavefocussedtheBoards
attentiononformalisingintopolicytheCompanysbeliefthatadiverseworkforcewithequalityofopportunitywillachievestrongbusinessresults.MeasurabletargetstoachieveCenturiasdiversityobjectivesarecurrentlyunderconsiderationbytheBoard.Onceadopted,progresstowardrealisingthetargetswillbereportedonanannualbasis.Whilstultimatelyallnewappointments,whetherofadirectororanemployeewillbemadeonthebasisofmerit,meetingthetargetswillprovideevidenceoftheeffectivenessofthepolicy.
Principle 4: Safeguard integrity in nancial reporting
Audit, Risk Management and Compliance Committee
OurAudit,RiskManagement&ComplianceCommitteeconsists
ofthreenon-executivedirectors,hasamajorityofindependentdirectorsandischairedbyanindependentchairwhoisnotthechairofCenturiasBoard.Allmembersarenanciallyliterateeitherholdingnancialoraccountingqualicationsand/orhavingprofessionalexperienceinanancialoraccountingrelatedeld.TheCommitteechairman,PeterDoneisacharteredaccountantwithover40yearsofexperience.DeepakGuptahas20yearsexperienceinthenancialservicesandinvestmentmanagementindustry.Thethirdmemberofthecommittee,RogerDobsonisaseniorpartnerinthebankingandnancepracticeatthelegalrminwhichheisapartner.TheCommitteemeetsatleastsixtimesperyear.TheexternalandinternalauditorsoftheGroupattendonaregularbasis.DetailoftheAudit,RiskManagement
&ComplianceCommitteemembersnames,appointmentdate,status,qualicationsandmeetingattendanceissetoutatheendofthisCorporateGovernanceStatement.
Charter
TheBoardhasformulatedanAudit,RiskManagement&ComplianceCommitteeCharter,alinktowhichiscontainedundertheCorporateGovernancepageofourwebsite.
External Auditor
Procedureshavebeenestablishedinrelationtotheexternalauditorselection,appointmentandleadpartnerrotation.Alinktotheproceduresrelatingtotheexternalauditorselection,appointmentandleadpartnerrotationcanbefoundunderthe
CorporateGovernancepageofourwebsite.
AnnualreviewofBoardcompositiontoensurethatthenecessaryskillsarerepresented,togetherwiththeappropriatecontinuityandbalance
-
7/31/2019 Centuria Annual Report 2011 2[1]
34/101
Centuria Annual Report 201132
Principle 5: Make timely and balanced disclosure
TheBoardhasestablishedwrittenpoliciesandproceduresoninformationdisclosure.ThefocusofthesepoliciesandproceduresistoeffectCenturiascommitmentto:
Complywiththegeneralandcontinuousdisclosure principlescontainedintheASXListingRulesandthe
CorporationsActPreventtheselectiveorinadvertentdisclosureofprice sensitiveinformation
Ensurethatshareholdersandthemarketareprovided withfullandtimelyinformationaboutitsactivities
Ensurethatallmarketparticipantshaveequalopportunity toreceiveexternallyavailableinformationissuedby Centuria.
AsummaryofourContinuousDisclosurePolicycanbefoundundertheCorporateGovernancepageofourwebsite.
ResponsibilityforcompliancewithCenturiascontinuous
disclosureobligationsrestswiththeCompanySecretary.PricesensitiveinformationispubliclyreleasedthroughtheASXbeforedisclosingittoanalystsorothersoutsidethecompany.InformationispostedonCenturiaswebsiteassoonasreasonablypracticableafterthestockexchangeconrmsanannouncementhasbeenmade,withtheaimofmakingtheinformationaccessibletothewidestaudience.withtheaimofmakingtheinformationaccessibletothewidestaudience.
Principle 6: Respect the rights of shareholders
Centuriaaimstoprovideprompt,accurateandaccessibleinformationtoitsshareholders.IthasestablishedaCommunicationsPolicydetailingstepstobetakentoachievethisobjective,acopyofwhichcanbeviewedundertheCorporateGovernancepageofourwebsite.ThemainmechanismsthroughwhichCenturiacommunicateswithitsshareholdersare:
TheAnnualReportandHalf-yearFinancialReports
AnnouncementsmadetotheAustralianSecuritiesExchange
Noticesandexplanatorymemorandaofannualgeneral meetings
TheAnnualGeneralMeeting
Centuriaswebsitewww.centuria.com.au
Centuriaswebsiteformsanimportantpartofthestrategyfor
communicatingwithshareholders.Centuriaswebsitehasashareholderspagewhichincludessharedetails,companyreports,companyannouncementsandpressreleases(includingcopiesofanysignicantpresentationsmadetoanalysts),anditemsrelatingtoAGMs.
Indesigningnoticesandexplanatorystatements/memorandaofAGMs,CenturiagivesconsiderationtotheguidelinesgivenbytheASXCorporateGovernanceCouncilinitsCorporateGovernancePrinciplesandRecommendations.
AtthetimeofprovidinganoticeofmeetingandexplanatorymemorandafortheAGMaformisprovidedforshareholderstomailbacktoCenturiaiftheywishtoraiseanyissues.AttheAGM,theCompanywill,whereappropriate,endeavourtoaddressissuesraisedbyshareholdersintheseforms.DuringthecourseoftheAGMtheoorisopenedforquestions.
Principle 7: Recognise and manage risk
TheCenturiaBoardhasestablishedaRiskManagementFrameworkfortheGroup,asummaryofwhichcanbeviewedundertheCorporateGovernancepageofourwebsite.RiskmanagementisanintegralpartofthegovernanceofCenturiaandisoneofthemainresponsibilitiesoftheBoardandSeniorManagement.TheBoardisultimatelyresponsibleforapproving
andreviewingCenturiasRiskManagementFramework.ThemonitoringandmanagementofriskonanongoingbasisistheresponsibilityofmanagementasrepresentedbytheheadsoftherespectivebusinessunitsofCenturia.
AtCenturia,managingriskisacontinuousprocessforbothManagementandtheBoard.Centuriascomprehensiveriskmanagementframeworkrequiresadetailedannualbusinessriskreview,whichseekstodeneallthemajorrisksthatcouldpreventorimpacttheCompanyfromachievingitsobjectives.ThisreviewhasbeencompletedforthisnancialyearandtheBoardhasacceptedmanagementsreportthatmaterialbusinessriskshavebeenmanagedeffectively.
Themanagementofriskisthencontinuallyaddressedduringtheyearatthebusinessunitlevel.Periodically,anexternalauditrmisengagedtoreviewtheeffectivenessofCenturiasriskmanagementframework.Combinedwiththis,isanembeddedcomplianceculturetoensureCenturiameetstherequirementsoftheAustralianSecuritiesandInvestmentsCommissionforconductinganancialservicesbusinessandoperatingmanagedinvestmentschemes.Arobustcomplianceframeworkhasbeenimplementedwhichrequiresthebusinesstomonitoritsactivitiesandthoseofitsoutsourcedserviceproviders.ThecompliancefunctionatCenturiareportsdirectlytotheAudit,RiskManagement&ComplianceCommitteeandtheBoard.
AninternalauditfunctionhasalsobeenestablishedwithafocusonCenturiascontrolenvironment.Theannualinternalauditplanisdeterminedhavingregardtotheriskproleofthebusinessarisingfromtheannualbusinessriskreview.
TheAudit,RiskManagement&ComplianceCommitteehasthebelowriskmanagementresponsibilities:
AssessingrisksarisingfromtheGroupsoperationsand ensuringtheadequacyofmeasurestakentomoderate thoserisks
ReviewingandassessingtheeffectivenessoftheGroups RiskManagementFrameworkandinternalcontrol practicesandensurethereisacontinuousprocessfor
themanagementofsignicantrisksthroughouttheGroupMonitoringcompliancewiththeCompanysRisk ManagementFramework.
QuarterlyriskmanagementreportingisprovidedtotheAudit,RiskManagementandComplianceCommitteebymanagement.
TheCEOandCFOhavedeclaredinwritingtotheBoardforboththehalf-yearandfull-yearnancialstatementsthatthedeclarationprovidedinaccordancewithsection295AoftheCorporationsActisfoundedonasoundsystemofriskmanagementandinternalcontrolandthatthesystemisoperatingeffectivelyinallmaterialrespectsinrelationtonancial
reportingrisks.
2011 Corporate Governance Statement (continued)
-
7/31/2019 Centuria Annual Report 2011 2[1]
35/101
33
Principle 8: Remunerate fairly and responsibly
Nomination and Remuneration Committee
TheNominationandRemunerationCommitteeconsistsofthreedirectors,allofwhomareindependentandischairedbyanindependentdirector.DetailofmembershipoftheNominationandRemunerationCommitteeincludingmeetingattendanceis
setoutattheendofthisCorporateGovernanceStatement.RemunerationrelatedresponsibilitiesoftheNominationandRemunerationCommitteeinclude:
Recommendingfeesfordirectors
Recommendingacompetitiveremunerationandreward programfortheCEOandotherseniormanagement
Ensuringthatotherhumanresourcemanagement programs,includingperformanceassessmentprograms andincentiveschemes,areinplace.
Centuriarecognisestheimportantrolepeopleplayintheachievementofitslong-termobjectivesandasakey
determinantofcompetitiveadvantage.Togrowandbesuccessful,Centuriamustbeabletoattract,motivateandretaincapableindividuals.
Senior executive remuneration structure
ThekeyprinciplesthatunderpinCenturiasSeniorExecutiveRemunerationPolicyare:
Competitiverewardsareprovidedtoattractandretain executivetalent
Remunerationislinkedtoperformancesothathigher levelsofperformanceattracthigherrewards
Rewardstoallstaffbutparticularlyexecutivesarelinked
tothecreationofvaluetoshareholders
Thecriteriausedtoassessandrewardstaffinclude nancialandnon-nancialmeasuresofperformance
Theoverallcostofremunerationismanagedandlinked totheabilityofthecompanytopay
severancepaymentsduetotheCEOonterminationare limitedtopre-establishedcontractualarrangements
whichdonotcommittheGrouptomakinganyunjustied paymentsintheeventofnon-performance.
TheremunerationpolicyassistsCenturiatoachieveitsbusinessstrategyandobjectives.Centuriarecognisesthat,whileremunerationisakeyfactorinrecruitingtherightpeople,itisnottheonlyfactor.Centuriasvaluesanditsabilitytoprovideinterestingandchallengingcareeropportunities,alsoplayanimportantrole.
Non-executive director remuneration structure
TheBoardhasestablishedapolicyrelatingtotheremunerationofnon-executivedirectors.Centuriapaysnon-executivedirectorsfeesatalevelwhichissufcienttoattractindividuals
withtheappropriateskills,andtofairlyreimbursethosedirectorsforservicesprovided.
Non-executivedirectorsremunerationdoesnotincludeincentiveschemesorperformancerelatedpayments.
Executivedirectorsarepaidasalarycommensuratewiththeirpositionandresponsibilitiesandatalevelwhichattractshighcalibreexecutiveswithappropriateskillsandexperience.ExecutivedirectorsalsoparticipateinCenturiaslong-termandshort-termincentiveplans.
FurtherinformationregardingdirectorandseniorexecutiveremunerationcanbefoundintheRemunerationReport.
LLB(Hons)LLM
B.Comm
(Accounting)FCA
BCA,MBA
4
4
3
MeetingsAttended
MeetingsHeld
QualicationsStatusAppointmentDate
MemberNomination
4
4
4
IndependentChair
Independent
Independent
RogerDobson
PeterDone
DeepakGupta
22Jan2008
22Jan2008
25Nov2008
B.Comm
(Accounting)FCA
LLB(Hons)LLM
BCA,MBA
6
6
4
MeetingsAttended
MeetingsHeld
QualicationsStatusAppointmentDate
MemberNomination
6
6
6
IndependentChair
Independent
Independent
PeterDone
RogerDobson
DeepakGupta
17Dec2007
17Dec2007
17Dec2007
Addendum: Board Committee detail
Nomination and Remuneration Committee
Audit, Risk Management & Compliance Committee
July2010-June2011
July2010-June2011
-
7/31/2019 Centuria Annual Report 2011 2[1]
36/101
Centuria Annual Report 201134
Inthedirectorsopinion,therearereasonablegroundstobelievethattheCompanywillbeabletopayitsdebtsasandwhentheybecomedueandpayable
Inthedirectorsopinion,theattachednancialstatementsandnotestheretoareinaccordancewiththeCorporations
Act2001,includingcompliancewithaccountingstandardsandgivingatrueandfairviewofthenancialpositionandperformanceoftheconsolidatedentity
Inthedirectorsopinion,thenancialstatementsandnotestheretoareinaccordancewithInternationalFinancialReportingStandardsissuedbytheInternationalAccountingStandardsBoardasstatedinNote2tothenancialstatements
Thedirectorshavebeengiventhedeclarationsrequiredbys.295AoftheCorporationsAct2001.
Directors Declaration for the year ended 30 June 2011
(a)
(b)
(c)
(d)
Signedinaccordancewitharesolutionofthedirectorsmadepursuanttos.295(5)oftheCorporationsAct2001.
On behalf of the Directors
J.E. McBain
Executive Director & Chief Executive Ofcer
Sydney
19 August 2011
P.J. Done
Director
Chairman - Audit, Risk Management & Compliance
The directors declare that:
-
7/31/2019 Centuria Annual Report 2011 2[1]
37/101
35
Financial Commentary for the year ended 30 June 2011
Forthenancialyearended30June2011,theGroupmadeanunderlyingnetprotbeforetaxof$10.5million.Whilstthisresultrepresentsaslightdeclineonthepreviousnancialyear($11.2million),theGrouphasinvestedinbusinesssystemsandemployedkeypersonneltofacilitatetheGroupsstrategyofgrowingfundsundermanagementinthesecurrentmarketconditions.
Inthe2011nancialyearourcorporatenanceteamhascontinueditsfocus
onmaintainingminimalcorporategearing(below10%excludingconvertiblenotesandnon-recoursedebt),obtainingsubstantialdebtrenancingperiodsforcorporateborrowingsandreversemortgagefacilities(February2013andMarch2013respectively)andimprovingthequalityofitsnancialreportingallowingshareholderstomoreeasilyunderstandthestandaloneCenturiaCapitalcorporateperformance.
30%
25%
20%
15%
10%
5%
0%
2008 2009 2010 2011
Debt / Equity at 30 June 2008 - 2011
Corporate Debt / Equity Ratio
ObtaininglengthoftenureofCenturiastwomaindebtfacilities,inthiscurrentmarket,isfundamentaltoprovidingstabilityfortheGroupsnancialplatform,whilstallowingnecessaryheadroomtofacilitatetheGroupsgrowthplans.Centuriahasbeenabletoachievethisbyalwaysremainingcompliantwithitsnancialcovenantsrequirements,aswellasdevelopingacloserelationshipoverthepastfouryearswithitsmajornanciers.
Centuriahasmadesubstantialheadwayinreducingthecomplexityofitsnancialreporting.WhilstAccountingStandardsrequiretheBenetsFundstobeincludedintheconsolidatedresults,theonelinedisclosuresmadeinthecurrentyearsnancialreportshouldgiveshareholdersclearertransparencyoftheGroupsresults.
Matthew Coy
Chief Financial Ofcer
Julian Blackley
Group Head of FinanceB.Bus.FCA,Grad.Dip.Accounting
Matthew Coy
Chief Financial OfcerB.Bus.Accounting,CPA
*Continuedlowlevelofcorporategearing(excludingnon-recoursedebtandconvertiblenotes).
*
-
7/31/2019 Centuria Annual Report 2011 2[1]
38/101
Centuria Annual Report 201136
Statement of Comprehensive Income for the nancial year ended 30 June 2011
Revenue
CenturiaLifeRevenue
NetrevenuefromBenetFunds
Otherincome
Total income
Financecosts
Employeebenetsexpense
Administrativeandotherexpenses
CenturiaLifeexpenses
Shareoflossofassociates
Impairmentofinvestmentsinassociates
Revaluationofinvestmentpropertyassets
Prot before tax
Incometaxexpenserelatingtoshareholders
Incometaxexpenserelatingtobenetfunds
Totalincometaxexpense
(Loss)/prot for the year
Other comprehensive income:
Gainoncashowhedgestakentoequity
Shareofothercomprehensiveincomeofassociates
Incometaxrelatingtocomponentsofothercomprehensiveincome
Othercomprehensiveincomefortheyear(netoftax)
Total comprehensive (loss)/income for the year
Earnings per share
Basic(centspershare)
Diluted(centspershare)
3(i)3(iii)
3(iii)
3(ii)
4
5(a)
5(b)
3(iii)
12
12
5(b)
6
6
7
7
32,25114,030
2,621
2,681
51,583
(17,180)
(6,394)
(8,781)
(5,106)
(1,921)
691
(13)
12,880
(3,941)
(2,621)
(6,562)
6,318
1,223
323
(464)
1,082
7,400
9.3
8.4
2010$000
2011$000
Note
32,69613,453
3,689
1,966
51,804
(16,768)
(7,187)
(12,904)
(4,316)
(840)
(3,933)
(4,510)
1,347
(549)
(3,689)
(4,238)
(2,891)
1,033
1,204
(671)
1,565
(1,326)
(3.7)
(3.7)
TheConsolidatedresultaggregatesthenancialresultsoftheCenturiaCapitalLimitedcorporateentitiesandthebenetfunds(refertoNote2(a)).
Consolidated
-
7/31/2019 Centuria Annual Report 2011 2[1]
39/101
37
Statement of Financial Position as at 30 June 2011
Assets
Cashandcashequivalents
Tradeandotherreceivables
Financialassetsatfairvaluethroughprotandloss
Othernancialassets
Otherassets
Investmentproperty
Investmentinassociates
Plantandequipment
AssetsinrespectofBenetFunds
Deferredtaxassets
Intangibleassets
Total assets
Liabilities
Tradeandotherpayables
Borrowings
Incometaxpayable
Otherliabilities
Derivativenancialliabilities
LiabilitiesinrespectofBenetFunds
Deferredtaxliabilities
Provisions
Total liabilities
Net assets
Equity
Contributedequity
Reserves
Accumulatedlosses
Total equity
26
8
9
9
10
11
12
13
20
6(d)
14
15
16
6(c)
18
19
20
6(d)
17
21
21
21
13,966
13,052
152
208,947
2,115
27,000
11,886
1,198
548,259
13,063
52,812
892,449
5,279
204,451
(1,688)
14,054
15,951
548,259
3,413
711
796,806
95,643
100,018
(2,172)
(2,203)
95,643
11,625
10,854
2,331
198,194
1,816
22,500
7,453
1,349
508,964
11,751
53,809
830,646
5,492
196,889
5,663
6,654
13,531
508,964
2,256
705
740,165
90,481
100,235
(868)
(8,886)
90,481
TheConsolidatedresultaggregatesthenancialresultsoftheCenturiaCapitalLimitedcorporateentitiesandthebenetfunds(refertoNote2(a)).
2010$000
2011$000
Note
Consolidated
-
7/31/2019 Centuria Annual Report 2011 2[1]
40/101
-
7/31/2019 Centuria Annual Report 2011 2[1]
41/101
39
$000
8
-
-
-
213
517
-
-
-
-
738
738
-
-
-
(229)
(32)
-
-
-
-
-
-
477
Share-basedIncentive Reserve
$000
78,438
6,318
1,082
7,400
213
517
10,349
459
165
(1,898)
95,643
95,643
(2,891)
1,565
(1,326)
(229)
526
1,030
359
(3,792)
(169)
-
(1,561)
90,481
Attributable to EquityHolders of the Parent
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Non-ControllingInterests
$000
78,348
6,318
1,082
7,400
213
517
10,349
459
165
(1,898)
95,643
95,643
(2,891)
1,565
1,326
(229)
526
1,030
359
(3,792)
(169)
-
(1,561)
90,481
Total
-
7/31/2019 Centuria Annual Report 2011 2[1]
42/101
Centuria Annual Report 201140
Interestreceived
Dividendsreceived
ManagementfeesreceivedRent,trustdistributionsandotherincomereceived
Benetfunds
Paymentstosuppliersandemployees
Incometaxreceived
Net cash used in operating activities
Cash ows from investing activities
Interestreceived/(paid)onmortgageloansnetofmortgagereceipt/drawdown
Benetfunds
Receipts/(payments)forinvestmentproperty
Paymentsforplantandequipment
Proceedsfromdisposalofplantandequipment
Proceedsfromsaleofinvestments
Acquisitionofsubsidiariesnetofcashacquired
Proceedsfrominvestmentinothernancialassets
Paymen