For personal use only

Transcription

1 APA FINANCIAL SERVICES LTD ACN ANNUAL REPORT

2 CONTENTS Page Corporate directory 1 Directors report 2 Auditor s independence declaration 8 Corporate governance statement 9 Consolidated statement of comprehensive income 15 Consolidated statement of financial position 16 Consolidated statement of changes in equity 17 Consolidated statement of cash flows 18 Notes to the financial statements 19 Directors declaration 38 Independent auditor s report to the members 39 Additional Information 41 APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page i

3 CORPORATE DIRECTORY Directors Share registry Michael Hackett Non-Executive Chairman Computershare Investor Services Pty Ltd Graham Anderson Non-Executive Director Level 2 Adrian Rowley Non-Executive Director 45 St Georges Terrace Perth WA 6000 Investor Enquiries: Company secretary Elizabeth Hackett Auditor Hayes Knight Audit (QLD) Pty Ltd Level Creek Street Brisbane QLD 4000 Telephone: (07) Facsimile: (07) Registered office and principal place of business Stock exchange listing Level 1 Australian Stock Exchange Limited 41 Edward Street (Home Branch - Perth) Brisbane QLD 4001 ASX Code: APP Telephone: (07) Facsimile: (07) Bankers Westpac Banking Corporation 1257 Hay Street West Perth WA 6005 Website APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 1

4 DIRECTORS REPORT Your directors present their report, together with the financial statements of APA Financial Services Limited and its controlled entities (the group) for the year ended 30 June DIRECTORS The following persons were directors of the group from the commencement of the financial year or their appointment during the year up to the date of this report: Michael Hackett Non-Executive Chairman Graham Anderson Non-Executive Director Adrian Rowley Non-Executive Director (Appointed 20 July 2011) The following person was a director from the commencement of the financial year until his resignation: Steven Rowley Non-Executive Director (Resigned 20 July 2011) PRINCIPAL ACTIVITIES During the financial year the principal activity of the group was investment. There was no significant change in the nature of the principal activity during the financial year. DIVIDENDS No dividends were paid during the year and the directors do not recommend the payment of a dividend. OPERATING RESULTS AND REVIEW OF OPERATIONS FOR THE YEAR Operating Results The consolidated loss of the group for the year after income tax was $47,256 (2011: $56,575). Revenue of $16,895 (2011: $9,874) was received by the group from investment of surplus cash, whilst operating costs of $64,151 (2011: $66,449) have been have been kept to a minimum. Review of Operations During the financial year the directors continued to evaluate other corporate opportunities, both complimentary and independent to the existing investment in OneVue Holdings Limited. On 6 June 2012 the directors announced to the ASX that the company has entered into a Heads of Agreement to acquire 100% of the issued capital of Indian Pacific Resources Limited (IPR). IPR is a public unlisted company that controls 100% of the developing Tratramarina iron ore project, located on the east coast of Madagascar. Net Financial Position The group remains debt free and net assets have increased by $46,919 from 30 June 2011 to $904,282 in This increase is largely due to the increased value of the investment in OneVue Holdings Limited, as disclosed in Note 8. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS In the opinion of the directors there were no significant changes in the state of affairs of the group that occurred during the year under review that are not disclosed elsewhere in this report or in the accompanying financial statements. EVENTS SUBSEQUENT TO REPORTING DATE Other than the matters mentioned below in Likely Developments and Expected Results of Operations, there are no matters that have arisen since 30 June 2012 that have significantly affected or may significantly affect the operations of the group, the results of those operations or the state of affairs of the group in future years. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 2

5 DIRECTORS REPORT LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS In accordance with the announcement to acquire IPR on 6 June 2012, the group is considering an in specie distribution of its investment in OneVue Holdings Limited to existing shareholders, removing the investment from the company prior to the completion of the transaction to acquire IPR. Completion of the proposed restructure of capital and acquisition is subject to a number of conditions precedent customary for a transaction of this nature and will require the approval of an extraordinary general meeting of the company s existing shareholders on a date to be confirmed. If the proposed acquisition of IPR completes, the group s future activities will focus on mining exploration. This represents a significant change in the activities of the group and it will be required to re-comply with Chapters 1 and 2 of the ASX Listing Rules. It is not possible at this stage to predict future results of these operations. Further details will be included in the material comprising the notice of meeting for the intended extraordinary general meeting. ENVIRONMENTAL ISSUES The group s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a State or Territory. INFORMATION ON DIRECTORS Michael Hackett Qualifications Experience Interest in Shares and Options Special Responsibilities Directorships held in other listed entities in the last three years Non-Executive Chairman Mr Hackett is a member of the Institute of Chartered Accountants. Mr Hackett is a Chartered Accountant who is the Managing Director of Trustees Australia Limited (ASX CODE: TAU). He has a Bachelor of Commerce degree from the University of Queensland and is a Fellow of the Institute of Chartered Accountants in Australia. Michael has had considerable experience in managing and operating a wide range of businesses and property developments. Mr Hackett has a relevant interest in 20,870,325 ordinary shares in APA Financial Services Ltd. Mr Hackett is a Member of the Audit Committee, Nominating Committee and Remuneration Committee. Mr Hackett is currently a director of Trustees Australia Limited. Graham Anderson Qualifications Experience Interest in Shares and Options Special Responsibilities Directorships held in other listed entities in the last three years Non-Executive Director Mr Anderson is a member of the Institute of Chartered Accountants. Mr Anderson is a Chartered Accountant who operates his own specialist accounting and management consultancy practice. He has extensive experience in providing a range of corporate services to ASX Listed companies. Mr Anderson has a relevant interest in 5,470,014 ordinary shares in APA Financial Services Ltd. Mr Anderson is a Member of the Audit Committee, Nominating Committee and Remuneration Committee. Mr Anderson is currently the chairman of Oakajee Corporation Limited and a director of Echo Resources Ltd, Mako Energy Ltd, Pegasus Metals Limited and Tangiers Petroleum Ltd. He is also a former director of Dynasty Metals Australia Limited and Ethan Minerals Ltd. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 3

6 DIRECTORS REPORT INFORMATION ON DIRECTORS (cont d) Adrian Rowley Qualifications Non-Executive Director Mr Rowley is a Certified Financial Planner. Experience Mr Rowley was appointed to the board of APA Financial Services Ltd on 20 July Adrian has had a career in financial services spanning more than 16 years and is currently a director of FYM Financial Pty Ltd which he established in 2009 to provide portfolio management and financial planning services to high net worth clients. Interest in Shares and Options Special Responsibilities Directorships held in other listed entities in the last three years Mr Rowley has a relevant interest in 8,359,932 ordinary shares in APA Financial Services Ltd. Mr Rowley is a Member of the Audit Committee, Nominating Committee and Remuneration Committee. No other current or former directorships with ASX listed companies. COMPANY SECRETARY The following person held the position of company secretary at the end of the financial year: Elizabeth Hackett has worked for the Trustees Australia Limited group for the past 16 years, holding management roles within the group and as company secretary since July Elizabeth was appointed as company secretary on 30 March Richard Brennan was company secretary of the company from the commencement of the financial year until his resignation effective from 31 May MEETINGS OF DIRECTORS The number of meetings of the company s board of directors and of each board committee held during the year ended 30 June 2012, including the number of meetings attended by each director were: Directors Meetings Directors Number held while a director Number attended Graham Anderson 8 8 Michael Hackett 8 8 Adrian Rowley 8 8 Steven Rowley - - The Audit, Nominating and Remuneration Committees did not meet separately during the year. SHARES UNDER OPTION There are no unissued ordinary shares of the company under option at the date of this report (2011: nil). No options were exercised during the year (2011: nil). APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 4

7 DIRECTORS REPORT REMUNERATION REPORT (audited) This report details the nature and amount of remuneration for each director of APA Financial Services Ltd and for the executives receiving the highest remuneration. The remuneration policy has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance areas affecting the group s financial results. The board of APA Financial Services Ltd believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the group, as well as create goal congruence between directors, executives and shareholders. The remuneration report is set out under the following main headings: A B C D Principles used to determine the nature and amount of remuneration Details of remuneration Service agreements Share-based compensation The information provided includes remuneration disclosures that are required by Section 300 A (1) of the Corporations Act A Principles used to determine the nature and amount of remuneration The board assesses the appropriateness of the nature and amount of remuneration of directors and senior executives on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality board and executive team. In accordance with best practice corporate governance, the structure of non-executive director and executive remuneration is separate and distinct. For the 2011 and 2012 financial years the company did not engage remuneration consultants. Non-Executive Directors The board seeks to set aggregate remuneration at a level that provides the group with the ability to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders. Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the directors. Non-executive directors fees and payments are reviewed annually by the board. The board has received advice of independent remuneration consultants to ensure non-executive directors fees and payments are appropriate and in line with the market. The chairman s fee is determined independently to the fees of non-executive directors based on comparative roles in the external market. The constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided between the directors as agreed. The maximum currently stands at $240,000 per annum. There is no direct link between remuneration paid to any non-executive directors and corporate performance. There are no termination or retirement benefits for non-executive directors other than statutory superannuation. Short-term incentives No bonus payments were made for the year ended 30 June Long-term incentives Long term incentives are designed to reward executive directors, officers and senior management for their role in achieving corporate objectives. These incentives are provided as options issued either under the terms and conditions of the company s Employee Share Option Plan or otherwise under the terms and conditions determined at the time of issue by the board. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 5

8 DIRECTORS REPORT REMUNERATION REPORT (audited) (cont d) Other remuneration There is no other performance-linked remuneration. B Details of remuneration Directors The following persons were directors of APA Financial Services Ltd during the financial year: Michael Hackett (Non Executive Chairman) Graham Anderson (Non Executive Director) Adrian Rowley (Non Executive Director) Appointed 20 July 2011 Steven Rowley (Non Executive Director) Resigned 20 July 2011 Other key management personnel There were no other key management personnel in the 2012 financial year Non-Executive Directors Short-term benefits Share-based payment Directors fees Salary and wages Motor vehicle Super contributions Options Total $ $ $ $ $ $ Michael Hackett Graham Anderson Adrian Rowley Steven Rowley Total Non-Executive Directors Short-term benefits Postemployment Postemployment Share-based payment Directors fees Salary and wages Motor vehicle Super contributions Options Total $ $ $ $ $ $ Michael Hackett Graham Anderson Adrian Rowley Steven Rowley Total The remuneration of the directors is fixed. There is not a component linked to performance. C Service Agreements There are no employment contracts or service contracts in place at the date of this report. D Share-based compensation Shares During the year there were no shares issued as equity compensation benefits. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 6

9 DIRECTORS REPORT For the year ended 30 June 2012 REMUNERATION REPORT (audited)) (cont d) Options Options are granted by the board ass an incentive to key employees. Options are granted for no consideration n and have a term of four years. Details of options over ordinary shares in the company provided as remuneration company are set out below. to each director of the Directors Michael Hackett Graham Anderson Adrian Rowley Steven Rowley Number of options granted during the year Number r of options vested during the yearr INDEMNIFYING OFFICERS During the financial year, the company has paidd an insurance premium inn respect of a Directors and Officers Liability Insurance Contract. The insurance premium is paid to insure eachh of the directors and officers against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director of the company, other than conduct involving a wilfull breach of duty or improper use of information or position to gain personal advantage.. PROCEEDINGS ON BEHALF OF COMPANY No proceedings have been broughtt or intervened in on behalf of the company with leave of the Court under section 237 of the Corporations Act ASSURANCE SERVICES During the year, the group s auditor, Hayes Knight Audit (QLD) Pty Ltd, has h not performed any other servicess apart from their statutory duties. Details of the amounts paid to the auditor of the group are set out below. There were no non-audit servicess provided during the year by Hayes Knight Audit (QLD) Pty Ltd and its related practices for the year ended 30 June Statutory audit - audit and review of financial reports Hayes Knight Audit (QLD) Pty Ltd AUDITOR S INDEPENDENCE DECLARATION 2012 $ 11, $ 11,500 A copy of the lead auditor s independence declaration as required under section 307C of the Corporations Act set out on page 8. This Directors Report, incorporating the remuneration report is signed in accordancee with a resolution of the directors Michael Hackett Chairman of Directors Dated 6 August 20 APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 7

10 INDEPENDENT AUDITOR S DECLARATION For the year ended 30 June 2012 APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 8

11 CORPORATE GOVERNANCE STATEMENT The board of directors is responsible for corporate governance of the company. The board considers good corporate governance a matter of high importance and aims for best practice in the area of corporate governance. This section describes the main corporate governance practices of the group. In reviewing the corporate governance structure of the company, the board has reviewed and considered the ASX Corporate Governance Council s recommendations. Comment is made where key principles are not followed due to the size and nature of the group. Board responsibilities The board's key responsibilities are: overseeing the operation of the company including establishing, reviewing and changing corporate strategies; ensuring that appropriate internal control, reporting, risk management and compliance frameworks are in place; appointing, removing, reviewing and monitoring the performance of the Chief Executive Officer to whom the board have delegated the day to day management of the group; approval of the annual report (including the accounts), the budget and the business plan of the group; regular (at present at least monthly) review of the company's performance against the budget and the business plan; approving material contractual arrangements including all major investments and strategic commitments; making decisions concerning the company's capital structure, the issue of any new securities and the dividend policy; enhancing and protecting the reputation of the company; establishing and monitoring appropriate committees of the board; reporting to shareholders; and ensuring the company's compliance with all legal requirements including the ASX Listing Rules. Structure of board The company for the year under review had three (3) directors on the board. A director may be appointed by resolution passed at a general meeting or in the case of casual vacancies, by the directors. Potential additions to the board are carefully considered by the board prior to being nominated to shareholders or appointed as casual vacancies. The skills, experience, expertise and period of office of each of the directors are set out in the Directors Report. Under ASX guidelines none of the current directors are considered to be an independent director. The board is satisfied that the structure of the board is appropriate for the size of the company and the nature of its operations and is a cost effective structure for managing the company. The company facilitates and pays for directors and board committee members to obtain professional independent advice if they require it. Code of Conduct The company has a code of conduct as well as a number of internal policies and operating procedures aimed at providing guidance to directors, senior management and employees on the standards of personal and corporate behaviour required of all the group personnel. The code of conduct covers specific issues such as trading in company securities by directors, officers and employees and also provides guidance on how to deal with business issues in a manner that is consistent with the company's responsibilities to its shareholders. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 9

12 CORPORATE GOVERNANCE STATEMENT Audit and Risk Committee The board has an audit and risk committee. Given the current size of the board all board members are responsible for ensuring: the system of internal control which management has established effectively safeguards the assets of the economic entity; accounting records are properly maintained in accordance with statutory requirements; financial information provided to shareholders is accurate and reliable; and the external audit function is effective. The board is responsible for the appointment of the external auditor and ensures that the incumbent firm (and the responsible service team) has suitable qualifications and experience to conduct an effective audit. The external audit partner will be required to rotate every five years in accordance with Clerp 9 requirements. The board meets to review the half-year and annual results of the company, and to review the audit process, and those representations made by management in support of monitoring the group s commitment to integrity in financial reporting. Disclosure The company's policy is that shareholders are informed of all major developments that impact on the group. The group treats its continuous disclosure obligations seriously and has a number of internal operating policies and principles (including the Code of Conduct referred to above) that are designed to promote responsible decision-making and timely and balanced disclosure. The board is ultimately responsible for ensuring compliance by senior management and employees of the group with the company policies and therefore requires that senior management and employees have an upto-date understanding of ASX listing requirements. The company also ensures that the directors and senior management obtain timely and appropriate external advice where necessary. Additionally, the company ensures that its external auditor is represented at the annual general meeting to answer shareholder questions about the conduct of the audit and the preparation of the Auditor's Report. Business risk management The company endeavours at all times to minimise and effectively manage risk. The board reviews the control systems and policies of the company in relation to risk management on an ongoing basis and maintains a diagrammatic representation of the key operating and control systems of the group. The board reviews key matters of business risk management and ensures appropriate measures are in place to protect the assets of the company including the security of its software, the security of its premises and the appropriate provisioning of insurance policies. In addition, the audit and risk committee provides specific advice or recommendations to the board regarding the existence and status of business risks that the group faces. Performance and remuneration The board monitors and reviews the performance of the Chief Executive Officer as well as the performance of management. The board receives regular updates of the performance of the group as a whole. The board also has responsibility for ensuring that the group: has coherent remuneration policies and practices to attract and retain executives and directors who will create value for shareholders; observes those remuneration policies and practices; and fairly and responsibly rewards executives having regard to the performance of the group, the performance of the executives and the general pay environment. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 10

13 CORPORATE GOVERNANCE STATEMENT The board receives external assistance and advice to assist it in determining appropriate levels of remuneration for the directors of the company. Remuneration details of each of the directors and senior management are set out in the Remuneration Report section of the Directors Report. In March 2003, the Australian Stock Exchange (ASX) Corporate Governance Council released a document entitled Principles of Good Corporate Governance and Best Practice recommendations. These Principles and Recommendations were updated in June These were to be adopted for financial years commencing on or after 1 January Since that time, APA Financial Services Ltd has ensured adoption of those recommendations where possible. The table below summarises those recommendations and APA Financial Services Ltd s current practice, including explanations in the rare instance where the company does not comply. Recommendation APA Financial Services Ltd s current practice Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions. 1.2 Companies should disclose the process for evaluating the performance of senior executives. 1.3 Companies should provide the information indicated in the Guide to reporting to Principle 1. The board is comprised of a Non-Executive Chairman and two Non-Executive Directors. Management of the group is carried out by the board. The full board meets on a regular basis for both management and board meetings. Due to the size and structure of the board a formal evaluation process is not conducted. The company uses consultants for geological and company secretarial functions and pays market rates for experienced professionals. Refer comments above A majority of board should be independent directors. None of the three directors are independent according to the ASX definition of independence due to all directors being either substantial or significant shareholders in the company. In view of the size of the company and the nature of its activities the board considers that the current board is a cost effective and practical method of directing and managing the company. 2.2 The chair should be an independent director. As stated above the Chairman is a Non-Executive Director and is not considered independent under the ASX definition. The company is mindful of the costs and availability of an experienced Non-Executive Independent Chairman and is satisfied the current board structure is appropriate for the size of the company and the nature of its activities. 2.3 The roles of chair and chief executive officer should not be exercised by the same individual. 2.4 The board should establish a nomination committee. 2.5 Companies should disclose the process for evaluating the performance of the board, its committees and individual directors. 2.6 Companies should provide the information in the guide to reporting on Principle 2. As stated above the company operates with a Non- Executive Chairman and management of the company is carried out by the board. The board has established a nomination committee which comprises the full board. Due to the size and structure of the board a formal evaluation process is not conducted. Refer comments above. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 11

14 CORPORATE GOVERNANCE STATEMENT Recommendation APA Financial Services Ltd s current practice Companies should establish a code of conduct and disclose the code or a summary of the code as to: - the practices necessary to maintain confidence in the company s integrity. - the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders. - the responsibility and accountability of individuals for reporting and investigating reports of unethical practices. 3.2 Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the board to establish measurable objectives for achieving gender diversity for the board to assess annually both the objectives and progress in achieving them. 3.3 Companies should disclose in each annual report the measurable objectives for achieving gender diversity set by the board in accordance with the diversity policy and progress towards achieving them. 3.4 Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the board. 3.5 Companies should provide the information in the guide to reporting on Principle 3. In view of the size of the company and the nature of its activities, the board has considered that an informal code of conduct is appropriate to guide executives, management and employees in carrying out their duties and responsibilities. In view of the size of the company and the nature of its activities, the board has not established a policy. Refer comments above. Refer comments above. Refer comments above The board should establish an audit committee. The board has established an Audit Committee that comprises the full board. 4.2 The audit committee should be structured so that it: - consists only of non-executive directors. - consists of a majority of independent directors. - is chaired by an independent chair, who is not chair of the board. - has at least three members. 4.3 The audit committee should have a formal charter. 4.4 Companies should provide the information indicated in the Guide to reporting on Principle 4. Refer comments above. Refer comments above. Refer comments above. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 12

15 CORPORATE GOVERNANCE STATEMENT Recommendation APA Financial Services Ltd s current practice Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies. Due to its size and structure the board is able to meet on a regular basis for both management and board meetings to ensure compliance with ASX Listing Rule disclosure requirements. The full board is accountable for ASX compliance. 5.2 Companies should provide the information indicated in the Guide to reporting on Principle 5. See comments above Companies should design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy. The company keeps shareholders and the market regularly informed through the annual, half-year and quarterly reports. The company discloses material developments to the ASX and the media as required. All announcements are also available from the company s website. The board encourages full participation of shareholders at the AGM to ensure a high level of accountability and identification of the company s strategies and goals. 6.2 Companies should provide the information in the guide to reporting on Principle 6. Refer comments above Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies. In view of the size of the company and the nature of its activities, the board has considered that establishing a formally constituted risk oversight and management committee would contribute little to its effective management. Accordingly risk oversight and management issues and policies are reviewed by the board as a whole and approved by resolution of the board (with abstentions from relevant directors where there is a conflict of interest). 7.2 The board should require management to design and implement the risk management and internal control system to manage the company s material business risks and report to it on whether those risks are being managed effectively. The board should disclose that management has reported to it as to the effectiveness of the company s management of its material business risks. Refer comments above. 7.3 The board should disclose whether it has received assurance from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks. The Managing Directors and Company Secretary are required to sign a declaration addressing the integrity of the financial statements and maintenance of financial records in accordance with s286 of the Corporations Act and any other matters that are prescribed by the Regulations for the purpose of Section 295S(2) in relation to the financial statements and notes for the financial year. 7.4 Companies should provide the information indicated in the Guide to reporting on Principle 7. Refer comments above. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 13

16 CORPORATE GOVERNANCE STATEMENT Recommendation The board should establish a remuneration committee. 8.2 The remuneration committee should be structured so that it: APA Financial Services Ltd s current practice The board has established a remuneration committee which comprises the full board. See comments above consists of a majority independent directors. - is chaired by an independent chair. - has at least three members. Companies should clearly distinguish the structure of non-executive directors remuneration from that of executive directors and senior executives. Companies should provide the information indicated in the guide to reporting on Principle 8. Executive Directors are paid consulting fees to entities which they control. Directors fees are paid separately to all directors. The different types of remuneration including fringe benefits, superannuation, consulting fees and directors fees are all clearly outlined in the Annual Report. See comments above and refer to the Remuneration Report included in the Directors Report in the Annual Report. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 14

17 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Notes $ $ Revenue 3 16,895 9,874 Finance costs (559) - Other expenses (63,592) (66,449) Profit/(loss) before income tax (47,256) (56,575) Income tax expense Net Profit/(loss) for the year (47,256) (56,575) Other comprehensive income: Net gain on revaluation of financial assets 8 94,175 - Other comprehensive income for the year, net of tax 94,175 - Total comprehensive income for the year 46,919 (56,575) Net loss attributable to: Members of the parent entity (47,256) (56,575) Total comprehensive income/(loss) attributable to: Members of the parent entity 46,919 (56,575) Earnings per share: Basic and diluted earnings/(loss) per share (cents) 16 (0.08) (0.09) The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 15

18 CONSOLIDATED STATEMENT OF FINANCIAL POSITION Notes $ $ Current assets Cash and cash equivalents 6 307, ,402 Other current assets 7 6,381 6,225 Total current assets 313, ,627 Non-current assets Available for sale financial assets 8 621, ,875 Total non-current assets 621, ,875 Total assets 935, ,502 Current liabilities Trade and other payables 9 31,202 29,139 Total current liabilities 31,202 29,139 Total liabilities 31,202 29,139 Net assets 904, ,363 Equity Issued capital 10 7,866,059 7,866,059 Reserves 12 94,175 - Retained earnings 11 (7,055,952) (7,008,696) Total equity 904, ,363 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 16

19 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Share capital ordinary Reserves Retained earnings Total 2012 Notes $ $ $ $ Balance 1 July , 11, 12 7,866,059 - (7,008,696) 857,363 Comprehensive income: Profit / (loss) for the year - - (47,256) (47,256) Other comprehensive income for the year - 94,175-94,175 Total comprehensive income for the year - 94,175 (47,256) 46,919 Balance at 30 June ,866,059 94,175 (7,055,952) 904, Balance 1 July , 11, 12 7,866, ,188 (7,134,309) 913,938 Comprehensive income: Profit / (loss) for the year - - (56,575) (56,575) Other comprehensive income for the year Total comprehensive income for the year - - (56,575) (56,575) Other: Transfer from reserves to accumulated losses - (182,188) 182,188 - Total other - (182,188) 182,188 - Balance at 30 June ,866,059 - (7,008,696) 857,363 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 17

20 CONSOLIDATED STATEMENT OF CASH FLOWS Notes $ $ Cash flows from operating activities Payments to suppliers and employees (62,244) (95,028) Interest received 16,895 9,874 R&D grants - 206,363 Net cash provided by operating activities 5 (45,349) 121,209 Cash flows from investing activities Payment for financial assets (56,505) - Net cash used in investing activities (56,505) - Cash flows from financing activities Proceeds from borrowings 45,000 - Repayment of borrowings (45,000) - Net cash provided by (used in) financing activities - - Net increase (decrease) in cash held (101,854) 121,209 Cash and cash equivalents at beginning of the financial year 409, ,193 Cash and cash equivalents at end of the financial year 6 307, ,402 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 18

21 NOTES TO FINANCIAL STATEMENTS NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES These consolidated financial statements and notes represent those of APA Financial Services Ltd and its controlled entities (the group). The separate financial statements of the parent entity, APA Financial Services Limited, have not been presented within this financial report as permitted by the Corporations Act The financial statements were authorised for issue on 6 August 2012 by the directors of the company. Basis of preparation The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and the Corporations Act The group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in financial statements containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards as issued by the IASB. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless otherwise stated. Except for the cash flow information, the financial statements have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected noncurrent assets, financial assets and financial liabilities. (a) Principles of consolidation The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by APA Financial Services Limited at the end of the reporting period. A controlled entity is any entity over which APA Financial Services Limited has the ability and right to govern the financial and operating policies so as to obtain benefits from the entity s activities. Where controlled entities have entered or left the group during the year, the financial performance of those entities is included only for the period of the year that they were controlled. A list of controlled entities is contained in Note 24 to the financial statements. In preparing the consolidated financial statements, all intragroup balances and transactions between entities in the consolidated group have been eliminated in full on consolidation. Non-controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to a parent, are reported separately within the equity section of the consolidated statement of financial position and statement of comprehensive income. The non-controlling interests in the net assets comprise their interests at the date of the original business combination and their share of changes in equity since that date. (b) Business combinations Business combinations occur where an acquirer obtains control over one or more businesses. A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exemptions). When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is remeasured each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 19

22 NOTES TO FINANCIAL STATEMENTS NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) All transaction costs incurred in relation to the business combination are expensed to the statement of comprehensive income. The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase. (c) Income tax The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income). Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses. Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates to items that are recognised outside profit or loss. Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability where there is no effect on accounting or taxable profit or loss. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled and their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. Where temporary differences exist in relation to investments in subsidiaries, branches, associates and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. (d) Financial instruments Initial recognition and measurement Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the group commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted). Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified at fair value through profit or loss, in which case transaction costs are expensed to profit or loss immediately. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 20

23 NOTES TO FINANCIAL STATEMENTS NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) Classification and subsequent measurement Finance instruments are subsequently measured at fair value, amortised cost using the effective interest method, or cost. Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between that initial amount and the maturity amount calculated using the effective interest method. Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm s length transactions, reference to similar instruments and option pricing models. The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense item in profit or loss. The group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of Accounting Standards specifically applicable to financial instruments. i. Financial assets at fair value through profit or loss Financial assets are classified at fair value through profit or loss when they are held for trading for the purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss. ii. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the financial asset is derecognised. iii. Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the group s intention to hold these to maturity. They are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the financial asset is derecognised. Held-to-maturity investments are included in non-current assets where they are expected to mature within 12 months after the end of the reporting period. All other investments are classified as current assets. iv. Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are either not suitable to be classified into other categories of financial assets due to their nature, or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. They are subsequently measured at fair value with changes in such fair value (i.e. gains or losses) recognised in other comprehensive income (except for impairment losses and foreign APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 21

24 NOTES TO FINANCIAL STATEMENTS NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) exchange gains and losses). When the financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit or loss. Available-for-sale financial assets are included in non-current assets where they are expected to be sold within 12 months after the end of the reporting period. All other financial assets are classified as current assets. v. Financial liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the financial asset is derecognised. Derivative instruments The group designates certain derivatives as either: i. hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or ii. hedges of highly probable forecast transactions (cash flow hedges). At the inception of the transaction the relationship between hedging instruments and hedged items, as well as the group s risk management objective and strategy for undertaking various hedge transactions, is documented. Assessments, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged items, are also documented. i. Fair value hedge Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the statement of comprehensive income, together with any changes in the fair value of hedged assets or liabilities that are attributable to the hedged risk. ii. Cash flow hedge The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is deferred to a hedge reserve in equity. The gain or loss relating to the ineffective portion is recognised immediately in the statement of comprehensive income. Amounts accumulated in the hedge reserve in equity are transferred to the statement of comprehensive income in the periods when the hedged item will affect profit or loss. Impairment At the end of each reporting period, the group assesses whether there is objective evidence that a financial asset has been impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events (a loss event ) having occurred, which has an impact on the estimated future cash flows of the financial asset(s). In the case of available-for-sale financial assets, a significant or prolonged decline in the market value of the instrument is considered to constitute a loss event. Impairment losses are recognised in profit or loss immediately. Also, any cumulative decline in fair value previously recognised in other comprehensive income is reclassified to profit or loss at this point. In the case of financial assets carried at amortised cost, loss events may include: indications that the debtors or a group of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments; indications that they will enter bankruptcy or other financial reorganisation; and changes in arrears or economic conditions that correlate with defaults. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 22

25 NOTES TO FINANCIAL STATEMENTS NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) For financial assets carried at amortised cost (including loans and receivables), a separate allowance account is used to reduce the carrying amount of financial assets impaired by credit losses. After having taken all possible measures of recovery, if management establishes that the carrying amount cannot be recovered by any means, at that point the written-off amounts are charged to the allowance account or the carrying amount of impaired financial assets is reduced directly if no impairment amount was previously recognised in the allowance account. When the terms of financial assets that would otherwise have been past due or impaired have been renegotiated, the group recognises the impairment for such financial assets by taking into account the original terms as if the terms have not been renegotiated so that the loss events that have occurred are duly considered. Financial guarantees Where material, financial guarantees issued that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due are recognised as a financial liability at fair value on initial recognition. The fair value of financial guarantee contracts has been assessed using a probability-weighted discounted cash flow approach. The probability has been based on: - the likelihood of the guaranteed party defaulting in a year period; - the proportion of the exposure that is not expected to be recovered due to the guaranteed party defaulting; and - the maximum loss exposed if the guaranteed party were to default. Derecognition Financial assets are derecognised where the contractual rights to receipt of cash flows expire or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss. (e) Impairment of assets At the end of each reporting period, the group assesses whether there is any indication that an asset may be impaired. The assessment will include the consideration of external and internal sources of information, including dividends received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset s fair value less costs to sell and value in use, to the asset s carrying amount. Any excess of the asset s carrying amount over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in accordance with another Standard (e.g. in accordance with the revaluation model in AASB 116). Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that other Standard. Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. (f) Employee benefits Provision is made for the group s liability for employee benefits arising from services rendered by employees to the end of the reporting period. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wage increases and the probability that the employee may satisfy vesting requirements. Those cash flows are discounted using APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 23

26 NOTES TO FINANCIAL STATEMENTS NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) market yields on national government bonds with terms to maturity that match the expected timing of cash flows. Equity-settled compensation The company operates an employee share ownership plan. Share-based payments to employees are measured at the fair value of the instruments issued and amortised over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to the option reserve. The fair value of options is determined using the Black-Scholes pricing model. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised for services received as consideration for the equity instruments granted is based on the number of equity instruments that eventually vest. (g) Provisions Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period. (h) Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits available on demand with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are reported within short-term borrowings in current liabilities in the statement of financial position. (i) Revenue and other income Interest revenue is recognised using the effective interest method. All revenue is stated net of the amount of goods and services tax (GST). (j) Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to, the ATO are presented as operating cash flows included in receipts from customers or payments to suppliers. (k) Comparative figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. Where the group has retrospectively applied an accounting policy, made a retrospective restatement of items in the financial statements or reclassified items in its financial statements, an additional statement of financial position as at the beginning of the earliest comparative period will be disclosed. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 24

27 NOTES TO FINANCIAL STATEMENTS NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) (l) Segment reporting Management has determined the operating segments based on the reports reviewed by the board of directors that are used to make strategic decisions. The group does not have any operating segments with discrete financial information. The group does not have any customers, and all the group s assets and liabilities are located within Australia. The board of directors review internal management reports on a monthly basis that is consistent with the information provided in the statement of comprehensive income, statement of financial position and statement of cash flows. As a result no reconciliation is required because the information as presented is what is used by the board to make strategic decisions. (m) Critical accounting estimates and judgments The directors evaluate estimates and judgments incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group. See Note 19. (n) New Standards and interpretations not yet adopted A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2012 and have not been applied in preparing these financial statements. None of these is expected to have a significant impact on the financial statements of the group except for AASB9 Financial Instruments, which becomes mandatory for the company s 2014 financial statements and could change the classification and measurement of financial assets. The group does not plan to adopt this standard early and the extent of the impact has not been determined. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 25

28 NOTES TO FINANCIAL STATEMENTS NOTE 2: PARENT INFORMATION The following information has been extracted from the books and records of the parent and has been prepared in accordance with Accounting Standards. Statement of Financial Position $ $ Assets Current assets 313, ,627 Total assets 313, ,627 Liabilities Current liabilities 31,202 29,139 Total liabilities 31,202 29,139 Equity Issued capital 7,866,059 7,866,059 Retained earnings (7,583,332) (7,479,571) Total equity 282, ,488 Statement of Comprehensive Income Total profit / (loss) (47,256) (56,575) Total comprehensive income / (loss) (47,256) (56,575) Contingent liabilities and guarantees At 30 June 2012, the company does not have any contingent liabilities or guarantees (2011: $nil). Contractual commitments At 30 June 2012, the company had not entered into any contractual commitments (2011: $nil). NOTE 3: REVENUE $ $ Revenue Interest received other persons/corporations 16,895 9,874 Total revenue 16,895 9,874 APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 26

29 NOTES TO FINANCIAL STATEMENTS NOTE 4: INCOME TAX EXPENSE $ $ (a) The components of tax comprise: Current Tax - - (b) The prima facie tax on profit from ordinary activities before income tax is reconciled to income tax as follows: Prima facie tax payable on profit from ordinary activities before income tax at 30% (2011: 30%) (14,177) (16,973) Tax effect of: Non-deductible expenses (165) (881) Other deductible expenses (1,725) (1,725) Movement in deferred tax assets not recognised 16,067 19,579 Income tax attributable to entity - - Weighted average effective consolidated tax rate - % -% (c) Tax losses Unused tax losses for which no deferred tax asset has been recognised 5,533,462 5,479,904 Potential tax 30% 1,660,038 1,643,971 (d) Tax effect of each component of comprehensive income Financial asset revaluation 94,175 - Tax expense - - Net gain on revaluation of financial assets 94,175 - APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 27

30 NOTES TO FINANCIAL STATEMENTS NOTE 5: CASH FLOW INFORMATION $ $ Reconciliation of cash flow from operations with loss after income tax Profit/(loss) after income tax (47,256) (56,575) Changes in assets and liabilities: - (increase)/decrease in trade receivables - 206,363 - (increase)/decrease in other receivables (156) (1,394) - increase/(decrease) in trade creditors 2,063 (27,185) Cash flow from operations (45,349) 121,209 NOTE 6: CASH AND CASH EQUIVALENTS Cash at the end of the financial year as shown in the statement of cash flows is reconciled to items in the statement of financial position as follows: $ $ Cash at bank 307, ,402 Total cash and cash equivalents 307, ,402 The group s exposure to interest rate risk is discussed in Note 20. NOTE 7: OTHER ASSETS $ $ Current Prepayments 6,381 6,225 Total other current assets 6,381 6,225 NOTE 8: AVAILABLE FOR SALE FINANCIAL ASSETS Notes $ $ Non-current Unlisted investment at fair value 621, ,875 Total available for sale financial assets 621, ,875 Movements during the year Opening balance 470, ,875 Acquisition through rights issue (a) 56,505 - Financial asset revaluation reserve (b) 94,175 - Total available for sale financial assets as at 30 June 621, ,875 APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 28

31 NOTES TO FINANCIAL STATEMENTS NOTE 8: AVAILABLE FOR SALE FINANCIAL ASSETS (cont d) (a) The group held 1,883,500 fully paid ordinary shares in OneVue Holdings Pty Ltd (OHPL) as at 30 June 2011 and acquired an additional 188,350 fully paid ordinary shares as part of a 1 for 10 rights issue by OHPL on 24 November (b) The board has assessed the value of the 2,071,850 fully paid shares for the year ended 30 June 2012 and has increased the carrying value by $94,175 to $621,555 based on the value of the fully subscribed rights issue in OHPL which closed on 24 November Please refer Note 19. NOTE 9: TRADE AND OTHER PAYABLES $ $ Trade creditors 31,202 29,139 Total trade and other payables 31,202 29,139 Details of the group s exposure to risks arising from current trade and other payables are set out in Note 19. NOTE 10: ISSUED CAPITAL $ $ Share capital Fully paid ordinary shares 7,866,059 7,866,059 (a) Movements in ordinary share capital Number of Number of Shares $ Shares $ Beginning of the financial year 60,986,733 7,866,059 60,986,733 7,866,059 Issued during the year Pursuant to rights issue prospectus End of the financial year 60,986,733 7,866,059 60,986,733 7,866,059 Ordinary shares entitle the holder to participate in dividends and a share of the proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. (b) Share options For information relating to the company employee option plan, including details of options issued, exercised and lapsed during the financial year and the options outstanding at year-end, refer to Note 22. For information relating to share options issued to key management personnel during the financial year, refer to Note 13. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 29

32 NOTES TO FINANCIAL STATEMENTS NOTE 10: ISSUED CAPITAL (cont d) (c) Capital risk management The group s objectives when managing capital are to safeguard their ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or adjust the capital structure, the company may issue new shares or reduce its capital, subject to the provisions of the constitution and any relevant regulatory requirements. There are no externally imposed capital requirements. The capital structure of the group consists of equity attributable to equity holders comprising issued capital, reserves and retained earnings as disclosed in Notes 10, 11 and 12. NOTE 11: RETAINED EARNINGS $ $ Opening Balance (7,008,696) (7,134,309) Total comprehensive income / (loss) for the period (47,256) (56,575) Transfer of share-based payment reserve to accumulated losses - 182,188 Closing Balance (7,055,952) (7,008,696) NOTE 12: RESERVES a. Financial Assets Reserve The financial assets reserve records revaluation of financial assets. b. Option Reserve The option reserve records items recognised as expenses on valuation of employee share options. Notes $ $ Financial assets reserve 94,175 - Total reserves 94, $ $ Opening Balance - 182,188 Transfer option reserve to retained earnings (182,188) Movement in financial assets reserve 7 94,175 - Closing Balance 94,175 - APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 30

33 NOTES TO FINANCIAL STATEMENTS NOTE 13: KEY MANAGEMENT COMPENSATION Refer to the Remuneration Report contained in the Directors Report for details of the remuneration paid or payable to each member of key management personnel (KMP) for the year ended 30 June The totals of remuneration paid to KMP of the group during the year are as follows: $ $ Short term employee benefits - - Post-employment benefits - - Other long-term benefits - - Share based payments - - Total KMP compensation - - KMP Shareholdings The numbers of shares in the company held during the financial year by each director of APA Financial Services Ltd and other key management personnel of the group, including their personally related parties, are set out as follows. Directors 2012 Balance at 01/07/11 Granted as remuneration Net change other Purchased on market Balance at 30 06/12 Michael Hackett 20,855, ,000 20,870,325 Graham Anderson 5,470, ,470,014 Adrian Rowley - - 8,359,932-8,359,932 Steven Rowley 8,349,932 - (8,349,932) - - Directors 2011 Balance at 01/07/10 Granted as remuneration Net change other Purchased on market Balance at 30 06/11 Michael Hackett 20,725, ,000 20,855,325 Graham Anderson 5,470, ,470,014 Steven Rowley 8,349, ,349,932 KMP Option holdings The numbers of options in the company held during the financial year by each director of APA Financial Services Ltd and other key management personnel of the group is set out in the table below: Name Directors Number of options granted during the year Number of options vested during the year Michael Hackett Graham Anderson Adrian Rowley Steven Rowley Refer to Note 21 for other Key Management Personnel disclosures. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 31

34 NOTES TO FINANCIAL STATEMENTS NOTE 14: REMUNERATION OF AUDITORS $ $ Hayes Knight Audit (QLD) Pty Ltd Statutory audit - Audit and review of financial reports 11,780 11,500 No other services were provided by the auditor or its related entities. NOTE 15: CONTINGENT LIABILITIES, CAPITAL AND LEASING COMMITMENTS The group does not have any contingent liabilities or capital and leasing commitments. NOTE 16: EARNINGS / (LOSS) PER SHARE Cents Cents (a) Basic earnings/(loss) per share Basic profit / (loss) per share (0.08) (0.09) Diluted profit / (loss) per share (0.08) (0.09) (b) Reconciliation of earnings used in calculating earnings/(loss) per share $ $ Profit/(loss) attributable to the ordinary equity holders of the company used in calculating basic earnings per share: (47,256) (56,575) (c) Weighted average number of shares used as the denominator Number Number Weighted average number of ordinary shares used as the denominator in calculating basic earnings/(loss) per share 60,986,733 60,986,733 Weighted average number of options outstanding Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings/(loss) per share ,986,733 60,986,733 NOTE 17: EVENTS AFTER THE BALANCE DATE In accordance with the announcement to acquire IPR on 6 June 2012, the group is considering an in specie distribution of its investment in OneVue Holdings Limited to existing shareholders, removing the investment from the group prior to the completion of the transaction to acquire IPR. Completion of the proposed restructure of capital and acquisition is subject to a number of conditions precedent customary for a transaction of this nature and will require the approval of an extraordinary general meeting of the company s existing shareholders on a date to be confirmed. If the proposed acquisition of IPR completes, the group s future activities will focus on mining exploration. This represents a significant change in the activities of the group and it will be required to re-comply with Chapters 1 and 2 of the ASX Listing Rules. It is not possible at this stage to predict future results of these operations. Further details on the transaction will be included in the material comprising the notice of meeting for the intended extraordinary general meeting. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 32

35 NOTES TO FINANCIAL STATEMENTS NOTE 17: EVENTS AFTER THE BALANCE DATE (cont d) Other than the above matters, the directors are not aware of any other matter since 30 June 2012 that has significantly affected or may significantly affect the operations of the group, the results of those operations or the state of affairs of the group in future years. NOTE 18: SEGMENT INFORMATION Management has determined that the group operates in one reportable segment, being the financial services industry in Australia. NOTE 19: CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances. The directors make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. Deferred tax The group expects to have carried forward tax losses which have not been recognised as deferred tax assets as it is not considered sufficiently probable that these losses will be recouped by means of future profits taxable in the relevant jurisdictions. Impairment general The group assesses impairment at the end of each reporting period by evaluating conditions and events specific to the company that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions. Financial investments The group has assessed the fair value of the available-for-sale investment in OneVue Holdings Pty Ltd (OHPL) at $0.30 per share based on the value of the fully subscribed rights issue in OHPL which closed on 24 November In the absence of readily and regularly quoted prices the group is satisfied this is the most appropriate measure of the fair value of the shares held. The directors do not consider that any of the estimates and assumptions adopted present a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the 30 June 2012 financial year. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 33

36 NOTES TO FINANCIAL STATEMENTS NOTE 20: FINANCIAL RISK MANAGEMENT The group s financial instruments consist mainly of deposits with banks, short-term investments, accounts receivable and payable, and loans to and from subsidiaries. The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements, are as follows: Financial assets Notes $ $ Cash and cash equivalents 6 307, ,402 Available-for-sale financial assets: - Unlisted investment at fair value 8 621, ,875 Total financial assets 929, ,277 Financial liabilities Financial liabilities at amortised cost: - Trade and other payables 9 31,202 29,139 Total financial liabilities 31,202 29,139 The group s activities expose it to a variety of financial risks in the following areas: Market Risk Credit Risk Interest rate Risk Liquidity Risk The group s overall risk management program takes consideration of the unpredictability of the financial markets and seeks to minimise potential adverse impacts on the financial performance of the group. Risk management is carried out by the board of directors. (i) Market risk price risk The group is exposed to equity securities price risk. This arises from investments held by the group in the statement of financial position as available-for-sale. The group is not exposed to commodity price risk. The table below summarises the impact of increases/decreases of these securities on the group s post-tax profit for the year and on equity. The analysis is based on the assumption that the equity indexes had increased by 10% decreased by 10% (2011 had increased by 10% decreased by 10%) with all other variables held constant and all the group s instruments moved according to the historical correlation with the index. Index Impact on post-tax profit 2012 $ 2011 $ Impact on other components of equity $ $ Increase 10% (2011: Increase 10%) ,156 47,087 Decrease 10% (2011: Decrease 10%) 62,156 47, Total non-derivatives 62,156 47,087 62,156 47,087 Post-tax profit for the year would decrease as a result of losses on equity securities classified as available-forsale as the fair value of the assets would be below cost and therefore an impairment loss would be recognised in profit or loss. Other components of equity would increase as a result of gains on equity securities classified as available-for-sale. (ii) Credit risk The group has no significant concentrations of credit risk in relation to trade receivables, other receivables and cash at bank. The group s trade receivables are monitored on an ongoing basis with the result that the group s exposure to bad debts is not significant. APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 34

37 NOTES TO FINANCIAL STATEMENTS NOTE 20: FINANCIAL RISK MANAGEMENT (cont d) (iii) Interest rate risk Interest rate risk is where the value of a financial instrument may fluctuate as a result of changes in market interest rates. The group is exposed to interest rate risks through the cash and cash equivalents that it holds. The cash and cash equivalents are held by Westpac Bank. The objective of managing interest rate risk is to minimise the group s exposure to fluctuations in interest rates that might impact its interest revenue and cash flow. Interest rate risk in respect of interest received is not anticipated to be material. (iv) Liquidity risk Liquidity risk is where the group may encounter difficulty in raising funds to meet its financial liabilities. The group is exposed to liquidity risk through its trade and other payables obligations. Responsibility for liquidity risk rests with the board who regularly review liquidity risk by monitoring undiscounted cash flow forecasts and actual cash flows provided to them by the group s management at board meetings to ensure that the group continues to be able to meet its debts as and when they fall due. Contracts are not entered into unless the board is satisfied that there is sufficient cash flow to fund the additional commitment. The board determines when reviewing the undiscounted cash flow forecasts whether the company needs to raise additional working capital from its existing shareholders, the equity capital markets or any other available sources. Within 1 year 1 to 5 Years Over 5 years Total $ $ $ $ $ $ $ $ Financial liabilities due for payment Trade and other payables 31,202 29, ,202 29,139 Total expected outflows 31,202 29, ,202 29,139 Financial assets cash flows realisable Cash and cash equivalents 12,375 16, ,375 31,202 Total anticipated inflows 12,375 16, ,375 31,202 Total (outflow) /inflow on financial instruments Cash at bank and short-term bank deposits (18,827) (12,244) (18,827) (12,244) $ $ AA Rated 307, ,487 A Rated - 31, , ,402 (v) Fair value estimations The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The carrying value less impairment provision of trade receivables and payables approximate their fair values due to their short-term nature. The fair value of financial assets and financial liabilities have been analysed and classified using the fair value hierarchy reflecting the significance of inputs used in making the measurements. The fair value measurement hierarchy consists of the following levels: (a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1) (b) Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2), and (c) Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3). APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 35

38 NOTES TO FINANCIAL STATEMENTS NOTE 20: FINANCIAL RISK MANAGEMENT (cont d) The following table present the group s financial assets and liabilities measured and recognised at fair value. Contractual maturities of financial Level 1 Level 2 Level 3 Total assets 30 June 2012 $ $ $ $ Available-for-sale financial assets Equity securities - 621, ,555 Total assets - 621, ,555 Contractual maturities of financial Level 1 Level 2 Level 3 Total assets 30 June 2011 $ $ $ $ Available-for-sale financial assets Equity securities - 470, ,875 Total assets - 470, ,875 The fair value of financial assets and liabilities equal their carrying values for the 2011 and 2012 financial years. NOTE 21: RELATED PARTY TRANSACTIONS (a) The group s main related parties are as follows: (i) Key management personnel: Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity, are considered key management personnel. For details of disclosures relating to key management personnel, refer to Note 13: Key Management Compensation. (ii) Entities subject to significant influence by the group: An entity that has the power to participate in the financial and operating policy decisions of an entity, but does not have control of those policies, is an entity which holds significant influence. Significant influence may be gained by share ownership, statue or agreement. APA Equities Pty Ltd is a 100% owned subsidiary of the company. This subsidiary is dormant and had no related party transactions with the parent entity for the year ended 30 June (iii) Other related parties: Other related parties include entities over which key management personnel exercise significant influence. (b) Transactions with related parties Key management personnel Trustees Australia Limited During the year ended 30 June 2012, Trustees Australia Limited provided Chief Financial Officer, Company Secretarial Services, accounting and administration services to APA Financial Services Limited. The total cost of the provision of these services was $18,000 (2011: $9,000). Michael Hackett is a director of Trustees Australia Limited. No amounts were due at 30 June APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 36

39 NOTES TO FINANCIAL STATEMENTS NOTE 21: RELATED PARTY TRANSACTIONS (cont d) Fiduciary Nominees Pty Ltd On 24 November 2011, Fiduciary Nominees Pty Ltd, a company in which Michael Hackett is a director, made a short-term unsecured loan of $45,000 to the group in order for it to acquire 188,350 shares in the OneVue Holdings Pty Ltd rights issue without having to redeem a Westpac term deposit prior to maturity date. The loan interest was calculated on the same terms as the Westpac term deposit and the loan amount of $45,559 including interest was repaid in full on 27 February Graham Anderson Pty Ltd During the year ended 30 June 2012 there were no transactions with Graham Anderson Pty Ltd. In the comparative year ended 30 June 2011 Graham Anderson Pty Ltd provided Chief Financial Officer, Company Secretarial Services, accounting and administration services to APA Financial Services Limited. The total cost of the provision of these services was $11,000. Graham Anderson is a director of Graham Anderson Pty Ltd. NOTE 22: SHARE BASED PAYMENTS Employee Share Option Plan The Employee Share Option Plan (ESOP) was adopted by the company in a general meeting on 13 April The ESOP provides for the issue of options to persons engaged in full or part-time work for the company, and includes directors, secretary, and any contractor or consultant engaged by the company. Options issued under the ESOP are subject to certain terms and conditions including: (i) (ii) (iii) (iv) (v) (vi) (vii) each option will be issued for no consideration; each option will entitle the holder to subscribe for one ordinary share; each option may only be exercised after two years of continuous service following issue of the option; each option must be exercised before the expiry date (see details above); options issued under ESOP carry no dividend or voting rights; all shares issued upon exercise of the options will rank equally with all other shares on issue, and the company will apply for quotation of the shares issued on exercise of an option within ten business days of issue; and the ESOP rules may not be amended without the prior approval of both shareholders of the company in general meeting and the ASX, if required. There were no options issued to directors and employees during the year (2011: $nil) and no options are outstanding as at 30 June 2012 (2011: $nil). NOTE 23: DIVIDENDS The company has not declared or paid any dividends during the year (2011: $nil). NOTE 24: CONTROLLED ENTITIES Subsidiary of APA Financial Services Ltd: Percentage Owned Country of Incorporation % % APA Equities Pty Ltd Aust APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 37

40 DIRECTOR S DECLARATION For the year ended 30 June 2012 In the opinion of the directors: 1) The financial statements and notes of the company are in accordance with thee Corporations Act 2001, including: a) give a true and fair view of the company s financial position as at 300 June and of its performance for the year ended on thatt date; and b) comply with Australian Accounting Standards, which, as stated in accountiing policy Note 1 to the financial statements, constitutes compliance with International Financial Reporting Standards (IFRS); and 2) There are reasonable grounds to believe that the company will be able to pay its debts as and when they becomee due and payable. This declaration has been made after receiving the declaration required to be made to the directors in accordance with sections 295A of the Corporations Act 2001 for the financial period ended 30 June This declaration is made in accordance with a resolution of the board of directors d andd signed at Brisbane on 6 August Michael Hackett Director Dated 6 August 2012 APA Financial Services Ltd and Controlled Entity Annual Report Page 38

41 INDEPENDENT AUDITOR S REPORT For the year ended 30 June 2012 APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 39

42 INDEPENDENT AUDITOR S REPORT For the year ended 30 June 2012 APA Financial Services Ltd and Controlled Entity Annual Report 2012 Page 40