H.E.S.T. AUSTRALIA LTD A.B.N FINANCIAL STATEMENTS. FOR THE YEAR ENDED 30 June 2018

Transcription

1 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2018

2 H.E.S.T AUSTRALIA LTD FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2018 CONTENTS PAGE NO. Directors Report 1 to 9 Auditor's Independence Declaration to H.E.S.T. Australia Ltd 10 Statement of Financial Position 11 Statement of Comprehensive Income 12 Statement of Changes in Equity 13 Statement of Cash Flows 14 Notes of the Financial Statements 15 to 21 Directors Declaration 22 Independent Report by Approved Auditor 23

3 DIRECTORS REPORT The Directors present the financial statements of H.E.S.T. Australia Ltd (the Company) for the year ended 30 June 2018 and report as follows: Directors The names of the Directors in office during the financial year and up to the date of this report are: A.C. Emslie (Independent Chair) M.Burgess (Independent Director & Chair of Investment Committee) Employer Appointed Employee Appointed K. Zimmermann * (Deputy Chair) L. Williams * (Deputy Chair) C. Smith* A.Claude* D.A. Sims D.Smith (appointed 01/01/2018) D. Cole * H.M. Gibbons* G. Humphrys L. Darmanin (ceased 31/12/2017) S. Cooke (appointed 01/01/2018) M. Borowick V.J. Lyons * (ceased 31/12/2017) P. Carew * (ceased 30/06/2018) L. Sharp* (appointed 01/07/2018) *Members of Health Employees Superannuation Trust Australia (the Fund). Principal Activity H.E.S.T. Australia Ltd (the Company) was established on 1 August 1987 and is a company limited by guarantee that is incorporated and domiciled in Australia. Under the terms of the Fund's declaration of trust, H.E.S.T. Australia Ltd () is appointed Trustee of the Fund. The address of H.E.S.T. Australia Ltd's registered office is Level 20, 2 Lonsdale Street, Melbourne, Victoria, Australia. The Company did not trade in its own right during the year. The Company also holds an Australian Financial Services Licence ("AFSL") and a Registrable Superannuation Entity (RSE) Licence. No significant change in the nature of this activity occurred during the year. Results The Company does not trade and received no income during the year. Dividends No amounts have been paid or are recommended to be paid by way of dividend during the financial year. State of Affairs In the opinion of the Directors there were no significant changes in the state of affairs of the Company during the financial year under review. 1

4 DIRECTORS REPORT (Continued) Events Subsequent to Balance Date There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors, to affect significantly the operations of the Company, the result of those operations, or the state of affairs of the Company in subsequent financial years. Likely Developments The Company will continue to act solely as Trustee of the Fund and, at the date of this report, the Directors believe the Company will not carry out any business actively on its own behalf in the foreseeable future. Accordingly, no operating result is likely to arise in the future. Environmental Regulation The Company is not subject to significant environmental regulation. Indemnification and Insurance of Officers To the extent not covered by a contract of insurance, the Company indemnifies: (a) (b) its officers against liabilities to persons (other than the Company of a related body corporate), unless the liability arises out of conduct involving lack of good faith, and its officers against a liability for costs and expenses incurred in successfully defending civil or criminal proceedings. During the year premiums were paid for superannuation fund trustees liability insurance, which among others, provides insurance cover for the Directors and the Secretary of the Company in respect of any breach of trust, breach of duty or any other act, wrongfully committed in executing any of the functions of the schemes of which the Company is Trustee. The premium was paid by the Fund of which the Company is Trustee. Indemnity of auditors The auditors of the Company are in no way indemnified out of the assets of the Company. Auditor s independence declaration A copy of the auditor s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 10. 2

5 Director s Benefits DIRECTORS REPORT (Continued) During the year ended 30 June 2018, no Director of the Company has received or become entitled to receive a benefit (other than remuneration shown at Note 4 or reimbursement of expenses for attending meetings) by reason of a contract made by the Company with the Director or with a firm of which he or she is a member, or with a company in which he or she has a substantial financial interest. Meeting Attendance of the Directors Director Board of Directors Audit and Risk Committee Governance and Remuneration Committee Investment Committee A.C. Emslie 8/8 6/6 5/6 M.Burgess 8/8 6/6 L. Williams 8/8 6/6 K. Zimmermann 6/8 3/5 5/6 A.Claude 8/8 6/6 C. Smith 8/8 6/6 D.A. Sims 7/8 5/5 D. Cole 6/8 5/6 D.Smith (appointed 01/01/2018) 3/4 2/3 G. Humphrys 8/8 4/5 6/6 H.M. Gibbons 5/8 4/5 L. Darmanin (ceased 31/12/2017) 3/4 2/3 M. Borowick 7/8 5/5 P. Carew (ceased 30/06/2018) 6/8 5/6 S.Cooke (appointed 01/01/2018) 4/4 3/3 V.J. Lyons (ceased 31/12/2017) 4/4 1/2 3

6 DIRECTORS REPORT (Continued) Qualifications of the Directors The qualifications of the Directors of H.E.S.T. Australia Ltd (A.B.N ) as appointed Trustee of the Fund, in office at the date of this report are: Director Relevant Interests & Duties Qualifications and Training Angela Emslie Directorships Bachelor of Economics Director LIME Frontier Advisors Pty Ltd Master of Business Management Management Group Suicide Prevention Australia Ltd Company Directors Course Pty Ltd Principles for Responsible Investment PRI Association (UK limited company promoting the Principles for Responsible Investment globally) PS 146 Fellow of the Australian Institute of Superannuation Trustees (FAIST) Memberships Advisory Council, ISA Mark Burgess Director Directorships Yarra Capital Management Holdings Ltd (Chair) Jamieson Coote Bonds Advisory Board (Chair) Emerging Policy Pty Ltd (Executive director) Northern Territory Infrastructure Development Fund Non-executive Director, UK Registered Foundation, Official Monetary and Financial Institutions Forum (OMFIF) Memberships Investment Committee member, AMB Holdings Bachelor of Commerce (Honours) Lloyd Williams Branch Secretary Health Services Union (Victoria No. 2 Branch trading as Health and Community Services Union) Directorships Future Social Service Institute Memberships Health Services Union National President, National Executive Officer and Delegate to National Council Victorian Trades Hall Council (Executive Member) Shareholder Advisory Panel, Industry Funds Management Diploma of Occupational Health & Safety Diploma of Superannuation RG 146 4

7 Qualifications of the Directors (continued) H.E.S.T. AUSTRALIA LTD DIRECTORS REPORT (Continued) Director Relevant Interests & Duties Qualifications and Training Klaus Zimmermann Directorships Applied Professional Services Pty Ltd ISPT IGPT Commonage Association for the Ageing Pty Ltd (Non-Executive Director) Southern Cross Aged Care (SA & NT) Inc. Masonic Care Tasmania Inc (Independent Chair) Memberships Bachelor of Business (Accounting) Business Certificate of Accounting Diploma in Corporate Management Justice of the Peace (South Australia) Southern Cross Aged Care (SA & NT) Inc (Member of the Board Audit and Finance Committee) Anna Claude Director Campaign Strategy, Australian Nursing and Midwifery Federation (NSW Branch) Memberships: n/a Bachelor of Economics (Honours) Certificate in Superannuation Policy and Practice ASFA Trust Law Introductory Course University of Sydney Continuing Professional Education: Project Management Course Catherine Smith Principal Changesmith Consulting Directorships Australian Communities Foundation The New Daily Pty Ltd Memberships Australian Communities Foundation Grants Committee Chair, Australian Communities Foundation Philanthropy and Impact Committee Australian Communities Foundation Nominations Committee Victorian Council of Social Services (life member) President, Collingwood College School Council Master of Strategic Foresight Bachelor of Natural Environmental Science Fellow of the Institute of Public Administration Australia IPAA (Vic Branch) Graduate of the Australian Institute of Superannuation Trustees Directors Course (GAIST) 5

8 Qualifications of the Directors (continued) H.E.S.T. AUSTRALIA LTD DIRECTORS REPORT (Continued) Director Relevant Interests & Duties Qualifications and Training Daniel Sims Directorships Bachelor of Science (Accounting) CEO Ramsay Australian Private Hospitals Association Senior Executive Program (London HealthCare Australia (President) Business School, UK) Memberships Risk Management Committee (Chair), Ramsay Health Care Australia Executive Committee (Treasurer), Zenith Garden Neighbourhood Association David Smith National Secretary of ASU Directorships National Secretary, ASU Director AIST to AGM 2019 Memberships Member ACTU Executive Diploma of Financial Services (Superannuation) ASFA Investment Fiduciary (Accredited) AIST Trustee Director Course (Enhance your Excellence) Deborah Cole CEO Dental Health Services Victoria Directorships Australian Healthcare and Hospitals Association (Chair) Hessel Care Foundation Bachelor of Dental Surgery Master of Business Administration Graduate Diploma of Health Administration Graduate Certificate in Leadership and Catholic Culture Fellow of the Australian Institute of Company Directors (FAICD) Fellow of the Australian Institute of Management (FAIM) Graduate of the Australian Institute of Superannuation Trustees Directors Course (GAIST) Gary Humphrys Director Mary Aikenhead Ministries Helen Gibbons Assistant National Secretary - United Voice Memberships Brisbane South Bank Corporation (Independent Chair of Audit and Risk Committee) Memberships National Executive, United Voice National Council, United Voice Chair, United Voice Governance and Remuneration Committee Chartered Accountant Member and Graduate of Australian Institute of Company Directors (GAICD) Graduate of the Australian Institute of Superannuation Trustees Directors Course (GAIST, Adv) Post Graduate Diploma of Business Administration Diploma of Teaching Graduate of the Australian Institute of Superannuation Trustees Directors Course (GAIST) 6

9 Qualifications of the Directors (continued) H.E.S.T. AUSTRALIA LTD DIRECTORS REPORT (Continued) Director Relevant Interests & Duties Qualifications and Training Lori-Anne Sharp Memberships Bachelor of Nursing Assistant Federal Board of Management member ANMF Secretary Australian Nursing and Midwifery Executive Member- Australian Council of Trade Unions Federation Women s Committee member- Australian Council of Trade Unions Executive member of Finance and Risk Management Committee ANMF Trade Unions for Energy Democracy (TUED) Committee member Michael Borowick Directorships Assistant Secretary Australian Council of A.C.T.U. Building (Canberra) Pty Ltd Director & Company Secretary Trade Unions A.C.T.U-A.C.S.P.A Child Care Centre Limited Director & Company Secretary ACN Pty Ltd Director & Company Secretary ACN Pty Ltd Director & Company Secretary ACN Pty Ltd Director & Company Secretary ACN Pty Ltd Director & Company Secretary ACN Pty Ltd Director & Company Secretary ACTU Member Connect Pty Ltd ACTU Property Pty Ltd ACTU-JCH Pty Ltd Director & Company Secretary LNB Projects Pty Ltd Director & Company Secretary Australia Israel Labor Dialogue Ltd Director & Company Secretary Union Membership Australia Pty Ltd Director & Company Secretary Memberships Asbestos Safety and Eradication Council Defence Reserves Support Council National Workplace Relations Consultative Council Safe Work Australia Safety, Rehabilitation and Compensation Commission Graduate Diploma in Labour Relations Law 7

10 DIRECTORS REPORT (Continued) Qualifications of the Directors (continued) Director Relevant Interests & Duties Qualifications and Training Saranne Cooke Directorships Doctor of Philosophy, School of Law, Director Director, Western Health Alliance University of New England (in progress) (Western NSW Primary Health Network) Master of Commercial Law, Deakin Director, Leading Age Services Australia University Chair, Western Region NSW Committee- Master of Business (Marketing), Charles Australian Institute of Company Sturt University Directors Bachelor of Commerce, Australian Finance Council Member & Catholic National University Development Fund/Audit & Investment Committee member- Catholic Diocese of Bathurst Fellow Certified Practicing Accountant (FCPA) Graduate, Australian Institute of Board Member, Racing NSW Company Directors (GAICD) Council Member, Charles Sturt University Memberships n/a 8

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13 STATEMENT OF FINANCIAL POSITION AS AT 30 June 2018 NOTE $ $ ASSETS - - LIABILITIES - - NET ASSETS - - EQUITY Contributed Equity TOTAL EQUITY - - The Statement of Financial Position is to be read in conjunction with the notes to the financial statements set out on pages 15 to

14 STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 June $ $ Profit for the period - - Other comprehensive income - - Total comprehensive income - - The Statement of Comprehensive Income is to be read in conjunction with the notes to the financial statements set out on pages 15 to

15 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 June $ $ Total equity at the beginning of the financial year - - Profit/(loss) for the year - - Other comprehensive income - - Total comprehensive income - - Transactions with equity holders in their capacity as equity holders - - Total equity at the end of the financial year - - The Statement of Changes in Equity is to be read in conjunction with the notes to the financial statements set out on pages 15 to

16 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 June $ $ Cash flow from operating activities - - Cash flow from investing activities - - Cash flow from financing activities - - Net increase in cash and cash equivalents - - Cash and cash equivalents at the beginning of the year - - Cash and cash equivalents at the end of the year - - The Statement of Cash Flows is to be read in conjunction with the notes to the financial statements set out on pages 15 to

17 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following explains the significant accounting policies which have been adopted in the preparation of these financial statements. These policies have been consistently applied unless otherwise indicated. (a) (i) Basis of Preparation General purpose financial statements These general purpose financial statements have been prepared in accordance with the recognition and measurement principles of all applicable Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) and the Corporations Act They contain disclosures that are mandatory under the Accounting Standards and those considered necessary by the Directors to meet the needs of members. The financial statements comply with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). (ii) Historical cost convention These financial statements have been prepared under the historical cost convention. (iii) New accounting standards and interpretations There are no new standards or amendments to standards that are mandatory for the first time in the financial year beginning 1 July 2017 that affect the Company's financial statements and are not likely to affect future periods. The Company has not elected to apply any pronouncements before their operative date in the annual reporting period beginning 1 July TRUSTEE LIABILITIES AND RIGHT OF INDEMNITY The Company acts solely as Trustee of the Fund. These financial statements have been prepared for the Trustee Company (H.E.S.T. Australia Ltd) and as such do not record assets and liabilities of the Fund as the Trustee will only be liable for obligations of the Fund if it has committed a breach of its fiduciary duties or to the extent that the Fund has insufficient assets to settle its obligations. At balance date, the assets of the Fund are sufficient to meet its liabilities, and there has been no breach of fiduciary duties of the Company in its capacity as Trustee. The Net Asset position of The Health Employees Superannuation Trust (the Fund) at the end of the financial year was $355,056,000 (2017:$244,126,000). 15

18 3. MEMBERS GUARANTEE NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2018 H.E.S.T. Australia Ltd was incorporated as a company limited by guarantee. In accordance with the Company s Memorandum of Association each member of the Company undertakes to contribute to the property of the Company in the event of it being wound up while that member is a member or within one year after that member ceases to be a member for payment of the debts and liabilities of the Company contracted before that member ceases to be a member and the costs, charges and expenses of winding up and for adjustment of the rights of the contributories among themselves such amount as may be required not exceeding one dollar. 3. KEY MANAGEMENT PERSONNEL (a) Key Management Personnel The Directors of the Company during the year were: A.C. Emslie (Independent Chair) M.Burgess (Independent Director & Chair of Investment Committee) Employer Appointed Employee Appointed K. Zimmermann * (Deputy Chair) L. Williams * (Deputy Chair) C. Smith* A. Claude* D.A. Sims D.Smith (appointed 01/01/2018) D. Cole * H.M. Gibbons* G. Humphrys L. Darmanin (ceased 31/12/2017) S.Cooke (appointed 01/01/2018) M. Borowick V.J. Lyons *(ceased 31/12/2017) P. Carew * (ceased 30/06/2018) 16

19 4. KEY MANAGEMENT PERSONNEL (continued) H.E.S.T. AUSTRALIA LTD NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2018 In addition to the above named Directors of the Fund Trustee, the following individuals were also key Management personnel of the Fund during the year: Executive Team Position Held D.J. Blakey * Chief Executive Officer J. K Watkins Executive People Strategy ( 16/10/ /06/2018) J. McMinn * Executive Advice Strategy (position ceased 02/04/2018) L. Samuels* Executive Marketing & People M.Bolton* N.C. Saxton * R.G. Fowler * S.Sawtell-Rickson* Executive Finance & Corporate Services Executive Partnership Engagement Executive Investment Execution Chief Investment Officer S. Sigalas * Executive People Strategy (position ceased 25/10/2017 leave of absence) S. Reilly* Chief Operating Officer Subsequent to 30 June 2018 Matthew Halpin* has been appointed as Executive-Member Engagement effective 02/07/2018. *Certain Directors and Executives are members of the Fund. Their membership terms and conditions are the same as those available to other members of the Fund. During the year the Board of Directors agreed to pay fees or remuneration to: (a) (b) (c) Individual Directors; or Where requested by the Director, the organisation employing the relevant Director (such payments recognise that the organisation has allowed their employee paid time to contribute to the operation of the Fund); and Executive Personnel. 17

20 4. KEY MANAGEMENT PERSONNEL (continued) H.E.S.T. AUSTRALIA LTD NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2018 Total remuneration received and receivable by Directors and Executives during the year was: $ $ Short-term employee benefits 4,509,124 3,475,112 Post-employment benefits 299, ,032 Other long term benefits - 58,888 Termination benefits 4,351 76,107 Total Remuneration 4,813,327 3,897,139 Total remuneration received and receivable by Directors and/or relevant organisations during the year was: Director Remuneration Paid/Payable To $ $ A.C. Emslie 184, ,571 Self M.Burgess 151,077 39,862 Self L. Williams 69,828 66,012 Health & Community Services Union K. Zimmermann 75,851 69,845 Self A.Claude 50,035 23,515 Australian Nursing and Midwifery Federation (NSW Branch) B.H. Holmes (ceased 31/12/2016) - 26,975 NSW Nurses and Midwives' Association C. Smith 52,772 52,549 Self D.Smith (appointed 01/01/2018) 26,623 - Australian Services Union D.A. Sims 51,130 49,264 Self D. Cole 51,130 49,264 Dental Health Services Victoria G. Humphrys 61,532 52,002 Self H.M. Gibbons 51,634 50,907 United Voice L. Darmanin (ceased 31/12/2017) 25,368 49,264 Australian Services Union M. Borowick 50,035 49,264 Australian Council of Trade Unions P. Carew (ceased 30/06/2018) 51,458 51,454 Australian Nursing and Midwifery Federation (Victorian Branch) S.Cooke (appointed 01/01/2018) 24,608 - Self V.J. Lyons (ceased 31/12/2017) 26,638 54,191 Self Total 1,004, ,939 The above remuneration received/receivable by Directors and/or relevant organisations during the year includes superannuation. The remuneration paid to an organisation is after relevant superannuation is deducted and paid/payable to the relevant superannuation fund. Directors remuneration is paid by the Fund, on behalf of the Company. 18

21 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June KEY MANAGEMENT PERSONNEL (continued) (b) Key Management Personnel Compensation (continued) Total remuneration received and receivable by Executives during the year was: Compensation Band Number of Executives in Band $100,001 - $200,000 1 $200,001 - $300,000 2 $300,001 - $400,000 4 $400,001 - $500,000 0 $500,001 - $600,000 2 $600,001 - $700, RELATED PARTIES (a) Related Party Investments and Transactions The Company, as Trustee of the Fund, has disclosed below the related parties of the Fund. A 31% (2017: 31%) shareholding of ordinary shares valued at $1,710,775 (2017: $1,676,328) in Frontier Advisors Pty Ltd. Frontier receives fees from the Fund for investment consulting services. These fees were $3,721,731 (2017: $3,012,407). Ms A.C. Emslie (as nominee of H.E.S.T. Australia Ltd) is a Director of Frontier Advisors Pty Ltd and received fees of $14,442 (2017: $14,160). All transactions were made on normal commercial terms, under normal conditions and at market rates. Transactions relating to dividends, investment income and subscription for new ordinary shares were on the same terms and conditions that applied to other shareholders. There were no transactions between the Company and the Fund during the year (2017: $nil). 19

22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June RELATED PARTIES cont d (b) Other Shareholdings and Transactions As at 30 June 2018 the Fund had: A 17.7% (2017: 15.9%) shareholding in Industry Super Holdings Pty Ltd (ISH) valued at $147,657,984 (2017: $102,915,486). Industry Funds Management Pty Ltd (IFM) is a subsidiary of ISH and manages investments totalling $10,232,508,108 (2017: $8,758,773,999) on behalf of the Fund. ISH has other subsidiaries with which the Fund transacts. Industry Fund Services Pty Ltd provides financial planning and debt collection services to the Fund. IFS Insurance Solutions Pty Ltd provides insurance services to the Fund. Industry Super Australia Pty Ltd (ISA) provides marketing, advocacy, policy development and research services to the Fund. The New Daily Pty Ltd is also a subsidiary of ISH and provides online news. Ms C.Smith and Ms A.C. Emslie's partner, Mr G Weaven are directors of The New Daily Pty Ltd. Mr G Weaven, is a Director of ISA and Chair of ISH and IFM. Ms D.J. Blakey, as a nominee of H.E.S.T. Australia Ltd, is a Director of ISA. A 18.7% (2017: 16.7%) shareholding in ME Bank valued at $223,257,306 (2017: $183,353,976). ME Bank is the manager of the Super Members Home Loan program and the Super Loans Trust. The investment in the Super Loans Trust was valued at $13,507,408 (2017: $23,454,091). The Fund also had $193,788,705 (2017: $447,341,159) invested in cash and term deposits with ME Bank at year end and investments in subordinated notes totalling $nil (2017: $15,112,950). A 3.8% (2017: 3.8%) shareholding in ISPT Pty Ltd valued at $1 (2017: $1). ISPT is the trustee and manager of four unlisted direct investment property trusts which the Fund invests in. In addition, ISPT Pty Ltd provides management services to IGPT Pty Ltd in its capacity as trustee of the ISPT Grosvenor International Property Trust on a cost recovery basis. ISPT Pty Ltd in its capacity as trustee and manager, managed investments totalling $2,224,104,756 (2017: $1,988,578,592) on behalf of the Fund. Mr K Zimmermann, as a nominee of H.E.S.T. Australia Ltd, is a Director of ISPT Pty Ltd and IGPT Pty Ltd. All transactions were made on normal commercial terms, under normal conditions and at market rates. Transactions relating to dividends, investment income and subscription for new ordinary shares were on the same terms and conditions that applied to other shareholders. 20

23 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June AUDITORS REMUNERATION The Company's auditor is PricewaterhouseCoopers. The following remuneration was paid or is payable to the auditor firm in relation to the Company: $ $ Audit of Financial Statements 2,404 2,356 Other Assurance Services 6,065 5, ,98,88,469 88,303 Auditors remuneration is paid by the Fund, on behalf of the Company. 21

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