Appendix 4E Preliminary Final Report
Results for announcement to the market
For the year ended 30 June 2020
(Comparative figures being the year ended 30 June 2019)
Movement | 2020 | |||||
Revenue | ||||||
Operating revenue | Down 15.0% | $120.1 million | ||||
Total investment revenue (including special dividends) | Down 19.0% | $125.9 million | ||||
Earnings | ||||||
Profit after tax attributable to shareholders: | ||||||
Including special investment revenue & acquisition costs net of tax | Down 20.8% | $116.9 million | ||||
Excluding special investment revenue & acquisition costs net of tax | Down 16.7% | $111.3 million | ||||
Earnings per share, basic and diluted: | ||||||
Including special investment revenue & acquisition costs net of tax | Down 21.4% | 17.45 cents | ||||
Excluding special investment revenue & acquisition costs net of tax | Down 17.3% | 16.60 cents | ||||
Dividend information | ||||||
8.5 cents | ||||||
Final fully franked ordinary dividend | Down 18.3% | |||||
Final dividend dates: | ||||||
Ex dividend date | 13 August 2020 | |||||
Record date | 14 August 2020 | |||||
Payment date | 2 September 2020 | |||||
The Dividend Reinvestment Plan (DRP) will be in operation for the interim dividend. | ||||||
DRP price will be equal to the volume weighted average selling price (VWAP) over the five business day | period commencing | i | ||||
on 17 August 2020. The last day for the receipt of an election notice for participation in the DRP is 17 August 2020. | ||||||
30 June 2019 | 30 June 2020 | |||||
Net tangible asset backing per share (NTA) | ||||||
Before provision for tax on unrealised capital gains | $4.92 | $4.26 | ||||
After provision for tax on unrealised capital gains | $4.30 | $3.83 | ||||
Refer to the attached media release for commentary and explanation of the results.
This report is based on financial statements which are in the process of being audited.
All documents comprise the information required by listing rule 4.3A.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
01
ASX | Media Release
24 July 2020
Milton reports net profit after tax of $116.9 million and final dividend of 8.5 cents per share.
SYDNEY, 24 July 2020
Milton Corporation Limited (ASX:MLT), in a release to the Australian Securities Exchange, reported a net profit after tax for the year ended 30 June 2020 of $116.9 million on operating revenues of $120.1 million.
Milton also announced it would pay a fully franked final dividend of 8.5 cents per share on 2 September 2020. Milton's dividend reinvestment plan will operate for the final dividend.
Full year ordinary fully franked dividends paid to shareholders in relation to 2020 earnings will be 17.5 cents per share. This represents a payout ratio of 105.5% of underlying profit.
Milton's underlying profit for the year ended 30 June 2020, which excludes special dividends, declined 16.7% to $111.3 million due to sharply lower dividend income received on Milton's $2.7 billion diversified investment portfolio. Reduced liquidity revenue was received on Milton's cash balances due to lower term deposit rates. Milton's Board uses underlying profit to determine ordinary dividends due to the volatility of special dividend income.
Milton's underlying earnings per share for the full year fell by 17.3% to 16.6 cents. Earnings per share fell 21.4% to 17.45 cents per share.
Milton's Managing Director, Mr. Brendan O'Dea said, "We anticipated that the second half of the 2020 financial year was likely to present different challenges to the first half which saw strong share price performance but evidence of declining earnings growth. We had positioned Milton accordingly through reducing our exposures to retail banks and increasing cash balances. We did not anticipate a global pandemic and the extraordinary impact that COVID19 would
have on companies, economies and individuals. Many Australian companies have suspended, delayed or eliminated dividends as the impact of government policies to lock down activity damaged company cash flows"
"Dividends are a big part of many Australians' retirement income and form the majority of Milton's revenue. Milton's income in 2020 was affected by the dividend reductions but changes to portfolio composition have allowed us to reduce the impact. Milton's investment team have worked tirelessly through this volatile time to make targeted portfolio adjustments where needed. Our long term approach, however, has kept us invested in the market allowing the portfolio to benefit from the sharp share price rebound from the lows of March 2020" Mr. O'Dea added.
Milton's total portfolio return for the 12-month period to 30 June 2020 was -9.8% and total shareholder return was -9.4%.
Milton's management expense ratio (MER) was 0.14%, and Milton charges no management or performance fees. Milton remains one of the lowest cost professionally managed vehicles available to investors.
Total assets at 30 June 2020 were $2.9 billion or $4.26 per share (before provision for tax). Cash balances were
$114.1 million increased from $110.3 million at 30 June 2019. Milton continues to have no debt.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
02
The 2020 financial year was active in terms of portfolio changes with $269.8 million added to new and existing equity investments. Investments were increased in Macquarie Group, Transurban, Sydney Airports, BHP, Cleanaway, IOOF, Origin Energy, Sonic Healthcare, Amcor, REA, Charter Hall, Altium and Qube. New investments were made in Pro Medicus, Johns Lyng and Magellan.
$276.2 million of sales were made in 2020 and included the complete disposals of Milton's investments in ANZ Bank, Bank of Queensland, Bendigo & Adelaide Bank, Auswide Bank, Janus Henderson, Flight Centre, Blackmores, New Hope, Regis, Adelaide Brighton, Boral, Dulux and Orica. Investments in Westpac and QBE were also reduced.
Mr O'Dea said, "2020 was a transformative year for Milton's investment portfolio. We have taken deliberate steps to reduce our investments in retail banks due to concerns regarding long-term earnings growth and the impact of technology. Retail banks now represent 17% of Milton's portfolio, reduced from 28% at 30 June 2019".
"We understand that this has resulted in a reduction in Milton's income in the short term, but believe this change was necessary to create a path to grow income over time from other new or increased investments" Mr O'Dea added.
Milton forecasts 2021 earnings to be lower than 2020 due to lower dividend income as companies continue to conserve cash in a highly uncertain environment. Valuations in the equity market are at all-time highs, driven by liquidity and low interest rates. We continue to remain cautious about earnings in the bank sector due to the impact of loan deferrals and declining credit quality.
Mr O'Dea said, "These are highly unusual times for investors with a clear disconnect between expensive asset prices and a difficult short term earnings environment. Much of the recent increase in asset prices is driven by the extraordinary actions of governments and central banks to support individuals affected by economic lockdowns with income support and low interest rates. Milton will continue to look through short-term factors to focus on growing our investments in companies with strong long-term prospects, but expect this next period will be one of heightened volatility. We retain considerable cash balances and have the financial flexibility to invest should the right opportunities present".
A further update on market conditions will be provided at Milton's Annual General Meeting to be held on 20 October 2020.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
03
Milton is a listed investment company that was incorporated in 1938 and listed in 1958. Milton invests for the long-term in well managed companies with a profitable history and the expectation of dividend growth, and its key objective is to pay increasing fully franked dividends per share.
OUR VALUE PROPOSITION
Milton is a long term investor in equities, interest bearing securities and real property
- Assets are not sold to increase profits for distributions
- Portfolio turnover is low
Milton pays fully franked dividends semi annually
- An ordinary dividend has been paid every year since listing in 1958
- Dividends are paid from income received from Milton's long term investment portfolio
Milton holds a diverse portfolio of Australian listed companies
- Equity Investment portfolio at 30 June 2020 was valued at $2.7 billion
- Total assets at 30 June 2020 were valued at $2.9 billion
Milton is an efficient and low cost manager of investments
- Operating costs represent 0.14% of average total assets
- Milton is internally managed and no management or performance fees are charged
CLASSIFICATION OF ASSETS
The following table shows assets at 30 June 2020 classified by Global Industry Classification Standard ("GICS") as adopted by the ASX.
Total | |||
Assets | |||
Classification | % | ||
Banks | 17.0 | ||
Other Financials | 12.0 | ||
Materials | 11.5 | ||
Industrials | 8.9 | ||
Energy | 8.0 | ||
Health Care | 7.8 | ||
Consumer Discretionary | 7.8 | ||
Consumer Staples | 6.3 | ||
Communication Services | 4.1 | ||
Real Estate | 3.9 | ||
Insurance | 3.3 | ||
Utilities | 2.9 | ||
Information Technology | 0.9 | ||
Total Shares | 94.4 | ||
Cash | 4.0 | ||
Other Assets | 1.6 | ||
Total | 100.0 | ||
MILTON'S INVESTMENT PROFILE
The 25 largest investments at 30 June 2020 are set out below.
Market | |||
Value | |||
Company | $m | ||
Commonwealth Bank | 218.0 | ||
Macquarie Group Limited | 192.8 | ||
Westpac Banking Corporation | 179.2 | ||
W H Soul Pattinson & Company | 179.2 | ||
BHP Group Limited | 173.9 | ||
CSL Limited | 172.5 | ||
Wesfarmers Limited | 129.0 | ||
Woolworths Group Limited | 109.5 | ||
National Australia Bank Limited | 88.7 | ||
Transurban Group Limited | 82.2 | ||
RIO Tinto Limited | 65.5 | ||
AGL Energy Limited | 60.9 | ||
Brickworks Limited | 51.2 | ||
Coles Group Limited | 49.4 | ||
Telstra Corporation Limited | 47.7 | ||
ASX Limited | 46.9 | ||
A P Eagers Limited | 45.9 | ||
ALS Limited | 39.9 | ||
Perpetual Limited | 36.6 | ||
Amcor PLC | 35.2 | ||
Insurance Australia Group Limited | 34.8 | ||
Suncorp Group Limited | 29.7 | ||
Sonic Healthcare Limited | 28.6 | ||
TPG Telecom Limited | 28.1 | ||
Woodside Petroleum Limited | 27.9 | ||
Total market value of Top 25 | 2,153.3 | ||
Total Assets | 2,866.1 | ||
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
04
PERFORMANCE CHARTS
Dividend and Investment Growth over 20 years
70,000 | 25 | |||||||||||||||||||||
60,000 | Ordinary dividend | |||||||||||||||||||||
Special dividend | 20 | Dividend (Cents per Share) | ||||||||||||||||||||
Investment Value ($) | 50,000 | Investment value with | ||||||||||||||||||||
dividends re-invested | ||||||||||||||||||||||
40,000 | 15 | |||||||||||||||||||||
30,000 | 10 | |||||||||||||||||||||
20,000 | ||||||||||||||||||||||
10,000 | 5 | |||||||||||||||||||||
0 | 2014 | 0 | ||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
If $10,000 invested in MLT in June 2000, and if dividends were re-invested over the 20 years, the value of the investment in June 2020 would be worth $54,670. Ordinary dividends increased from 8.60cps in FY2000 (adjusted for 5:1 split in Oct 2013) to 17.5cps in FY2020.
Total Returns over 20 years
MLT TPR | MLT TSR | |||||||||
10% | ||||||||||
7.5% | 8.66 | 8.91 | ||||||||
7.10 | 7.16 | 6.10 | 6.09 | |||||||
5% | ||||||||||
annum | 2.5% | 3.76 | ||||||||
2.35 | 2.47 | |||||||||
per | 0% | 1.11 | ||||||||
Percent | -2.5% | |||||||||
-5% | ||||||||||
-7.5% | ||||||||||
-9.84 | -9.40 | |||||||||
-10% | ||||||||||
1 Year | 3 Years (pa) | 5 Years (pa) | 10 Years (pa) | 15 Years (pa) | 20 Years (pa) |
Total portfolio return (TPR) is the percentage change in Milton's NTA per share plus dividends received by shareholders. Total shareholder return (TSR) is the percentage change in Milton's share price plus dividends received by shareholders. TPR and TSR above do not take into account franking credits which may be of benefit to certain shareholders.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
05
Financial Statements
Contents
Financial Statements
Consolidated Income Statement
Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash flows
Notes to the consolidated financial statements Key Numbers
- Revenue
- Tax
- Earnings Per Share
- Dividends Paid
- Dividend Franking Account
- Listed Investment Company capital gains account
Assets
- Investment in equity instruments
- Investment in joint venture entities
- Cash
- Receivables
Capital Management:
- Share Capital
- Reserves
06
07
08
09
10
Risk | |||
11 | 13. | Critical accounting estimates, | |
12 | judgements and assumptions | 20 | |
14 | 14. | Management of financial risk | 20 |
14 | 15. | Capital risk management | 21 |
15 Group Structure
15 | 16. | Subsidiaries | 22 |
Other Information | |||
16 | 17. | Related party transactions | 23 |
18. | Share based payments | 24 | |
17 | |||
19. | Auditor's Remuneration | 25 | |
18 | |||
20. | Parent entity disclosures | 26 | |
18 | |||
21. | Summary of other accounting policies | 26 | |
22. | Cash flow information | 28 | |
19 | 23. | Contingent liabilities | 28 |
19 | 24. | Events subsequent to reporting date | 28 |
Holdings
25. | Holdings at Fair Value through Other | |
Comprehensive Income at 30 June 2020 | 29 |
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Consolidated Income Statement for the year ended 30 June 2020
06
2020 | 2019 | |
Note | $'000 | $'000 |
Ordinary dividends and distributions | 1a | 117,210 | 138,070 |
Interest | 1c | 1,478 | 2,629 |
Net gains on trading portfolio | 1d | 789 | 169 |
Other revenue | 661 | 551 | |
Operating Revenue | 120,138 | 141,419 | |
Share of net profits of joint ventures - equity accounted | 8a | 888 | 1,504 |
Special dividends and distributions | 1b | 5,761 | 14,115 |
Income from operating activities | 126,787 | 157,038 | |
Administration expenses | (4,528) | (4,220) | |
Acquisition related costs of subsidiaries | - | (124) | |
Profit before income tax expense | 122,259 | 152,694 | |
Income tax expense thereon | 2a | (5,302) | (5,042) |
Profit attributable to shareholders of Milton | 116,957 | 147,652 | |
2020 | 2019 | ||||
Note | Cents | Cents | |||
Basic and diluted earnings per share | 3 | 17.45 | 22.19 | ||
The Consolidated Income Statement is to be read in conjunction with the Notes to the Consolidated Financial Statements.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Consolidated Statement of Comprehensive Income for the year ended 30 June 2020
07
2020 | 2019 | ||||
$'000 | $'000 | ||||
Profit | 116,957 | 147,652 | |||
Other comprehensive income | |||||
Items that will not be reclassified to | profit and loss | ||||
Revaluation of investments | (427,178) | 123,000 | |||
Provision for tax benefit (expense) | on revaluation of investments | 127,171 | (37,458) | ||
Other comprehensive income, net of tax | (300,007) | 85,542 | |||
Total comprehensive income for the year attributable | |||||
to the shareholders of Milton | (183,050) | 233,194 | |||
The Consolidated Statement of Comprehensive Income is to be read in conjunction with the Notes to the Consolidated Financial Statements.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Consolidated Statement of Financial Position
as at 30 June 2020
08
2020 | 2019 | ||||
Note | $'000 | $'000 | |||
Current assets | |||||
Cash | 9 | 114,069 | 110,306 | ||
Receivables | 10a | 10,938 | 15,187 | ||
Prepayments | 410 | 275 | |||
Total current assets | 125,417 | 125,768 | |||
Non-current assets | |||||
Investments | 7 | 2,706,159 | 3,141,236 | ||
Joint ventures - equity accounted | 8b | 24,709 | 23,125 | ||
Receivables | 4,117 | 3,431 | |||
Property, plant and equipment | 5,376 | 37 | |||
Deferred tax assets | 2c | 292 | 294 | ||
Total non-current assets | 2,740,653 | 3,168,123 | |||
Total assets | 2,866,070 | 3,293,891 | |||
Current liabilities | |||||
Payables | 1,456 | 1,182 | |||
Current tax liabilities | 782 | 280 | |||
Provisions | 66 | 68 | |||
Total current liabilities | 2,304 | 1,530 | |||
Non-current liabilities | |||||
Deferred tax liabilities | 2d | 289,725 | 416,657 | ||
Provisions | 274 | 258 | |||
Total non-current liabilities | 289,999 | 416,915 | |||
Total liabilities | 292,303 | 418,445 | |||
Net assets | 2,573,767 | 2,875,446 | |||
Shareholders' equity | |||||
Issued capital | 11 | 1,644,321 | 1,633,055 | ||
Capital profits reserve | 12b | 74,263 | 66,148 | ||
Asset revaluation reserve | 12a | 661,034 | 969,156 | ||
Retained profits | 194,149 | 207,087 | |||
Total equity attributable to shareholders of Milton | 2,573,767 | 2,875,446 | |||
The Consolidated Statement of Financial Position is to be read in conjunction with the Notes to the Consolidated Financial Statements.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Consolidated Statement of Changes in Equity for the year ended 30 June 2020
09
Capital | Asset | ||||||
Issued | profits | revaluation | Retained | Total | |||
capital | reserve | reserve | profits | equity | |||
$'000 | $'000 | $'000 | $'000 | $'000 | |||
Balance at 1 July 2019 | 1,633,055 | 66,148 | 969,156 | 207,087 | 2,875,446 | ||
Profit | - | - | - | 116,957 | 116,957 | ||
Other comprehensive income | - | - | (300,007) | - | (300,007) | ||
Total comprehensive income | - | - | (300,007) | 116,957 | (183,050) | ||
Net realised gains | - | 8,115 | (8,115) | - | - | ||
Transactions with shareholders: | |||||||
Share issues | 11,266 | - | - | - | 11,266 | ||
Dividends paid | - | - | - | (129,895) | (129,895) | ||
Balance at 30 June 2020 | 1,644,321 | 74,263 | 661,034 | 194,149 | 2,573,767 | ||
Capital | Asset | ||||||
Issued | profits | revaluation | Retained | Total | |||
capital | reserve | reserve | profits | equity | |||
$'000 | $'000 | $'000 | $'000 | $'000 | |||
Balance at 1 July 2018 | 1,582,431 | 51,651 | 898,111 | 203,137 | 2,735,330 | ||
Profit | - | - | - | 147,652 | 147,652 | ||
Other comprehensive income | - | - | 85,542 | - | 85,542 | ||
Total comprehensive income | - | - | 85,542 | 147,652 | 233,194 | ||
Net realised gains | - | 14,497 | (14,497) | - | - | ||
Transactions with shareholders: | |||||||
Share issues | 50,624 | - | - | - | 50,624 | ||
Dividends paid | - | - | - | (143,702) | (143,702) | ||
Balance at 30 June 2019 | 1,633,055 | 66,148 | 969,156 | 207,087 | 2,875,446 | ||
The Consolidated Statement of Changes in Equity is to be read in conjunction with the Notes to the Consolidated Financial Statements.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Consolidated Statement of Cash Flows for the year ended 30 June 2020
10
2020 | 2019 | |
Note | $'000 | $'000 |
Cash flows from operating activities | |||
Dividends and distributions received | 126,106 | 162,171 | |
Interest received | 1,564 | 2,818 | |
Distributions received from joint venture entities | 967 | 2,500 | |
Other receipts in the course of operations | 959 | 465 | |
Proceeds from sales of trading securities | 7,317 | 169 | |
Payments for trading securities | (6,528) | - | |
Other payments in the course of operations | (4,740) | (4,557) | |
Income taxes paid | (4,549) | (4,637) | |
Net cash provided by operating activities | 22a | 121,096 | 158,929 |
Cash flows from investing activities | |||
Proceeds from disposal of investments | 7c | 276,270 | 44,168 |
Proceeds from redemption of other financial assets | 1,465 | 1,153 | |
Payments for investments in equities and trusts | (268,670) | (96,674) | |
Payments for investments in joint ventures | (1,663) | (2,731) | |
Payments for acquisition related costs of subsidiaries | - | (124) | |
Cash on acquisition of subsidiaries | - | 5,016 | |
Payments for property, plant and equipment | (5,377) | (2) | |
Loans repaid by other entities | 324 | 3,177 | |
Loans advanced to other entities | (1,043) | (1,258) | |
Net cash provided by (used in) investing activities | 1,306 | (47,275) | |
Cash flows from financing activities | |||
Payments for share issue costs | (32) | (90) | |
Ordinary dividends paid | 4a | (118,607) | (133,073) |
Net cash used in financing activities | (118,639) | (133,163) | |
Net increase (decrease) in cash assets held | 3,763 | (21,509) | |
Cash assets at the beginning of the year | 110,306 | 131,815 | |
Cash assets at the end of the year | 9 | 114,069 | 110,306 |
The Consolidated Statement of Cash Flows is to be read in conjunction with the Notes to the Consolidated Financial Statements.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
Key Numbers
1. Revenue
11
Milton's revenue is derived from dividends, distributions, interest income, profit from joint ventures and net gains arising from the trading portfolio.
2020 2019
$'000 $'000
-
Ordinary dividends and distributions
Milton receives ordinary dividend income and trust distributions from its long term investments in companies and trusts listed on the Australian Securities Exchange.
Investments held in portfolio at 30 June | 106,797 | 137,059 |
Investments sold during the year | 10,413 | 1,011 |
117,210 | 138,070 | |
- Special dividends and distributions
This special investment revenue is received on an ad hoc basis and cannot be relied upon each year.
Investments held in portfolio at 30 June | 5,761 | 14,111 |
Investments sold during the year | - | 4 |
5,761 | 14,115 | |
Dividends and distributions are brought to account on the dates that the securities trade ex-dividend.
Demerger dividends arising from company de-consolidations are treated as a return of capital and not as a dividend.
-
Interest
Milton earns interest on its cash, term deposits and other liquid assets.
Interest from deposits and cash | 1,478 | 2,629 |
1,478 | 2,629 | |
Interest on cash and term deposits is brought to account on an accruals basis. Interest on other liquid securities is recognised on the date these securities trade ex-dividend.
- Net gains from trading portfolio
Net gains from trading portfolio | 789 | 169 |
Trading securities are recognised initially at cost and subsequently measured at fair value. Changes in fair value are taken directly through the income statement.
Dividends from trading securities are brought to account on the dates the securities trade ex-dividend.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Notes to the Consolidated Financial Statements continued
Key Numbers
2. Tax
12
This note provides analysis of Milton's income tax expense, shows amounts that are recognised directly in equity and how the tax expense is affected by non-assessable and non-deductible items. The note also details the deferred tax assets and liability balances and their movements.
2020 2019
$'000 $'000
- Reconciliation of Income Tax Expense to prima facie tax payable
Profit before income tax | 122,259 | 152,694 |
Prima facie income tax expense calculated at 30% on the profit | ||
before income tax expense | 36,678 | 45,808 |
Increase (decrease) in income tax expense due to: | ||
Tax offset for franked dividends | (30,823) | (40,392) |
(Over) provision in prior year | (792) | (804) |
Other differences | 239 | 430 |
Income tax expense on profit | 5,302 | 5,042 |
b. Tax expense composition | ||
5,857 | ||
Current tax on profits for the year | 5,358 | |
(Over) provision in prior year | (792) | (804) |
Decrease in deferred tax assets (note 2c) | (2) | 58 |
Increase in deferred tax liabilities (note 2d) | 239 | 430 |
5,302 | 5,042 | |
- Deferred tax assets
The balance comprises temporary differences attributable to:
Provisions | 279 | 274 |
Share issue expenses | - | 4 |
Other | 13 | 16 |
Total deferred tax assets | 292 | 294 |
Movements: | ||
Balance at 1 July | 294 | 360 |
Credited (charged) to the income statement | 2 | (58) |
(Charged) to equity | (4) | (8) |
Balance at 30 June | 292 | 294 |
To be recovered within 12 months | 39 | 42 |
To be recovered after more than 12 months | 253 | 252 |
292 | 294 | |
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Notes to the Consolidated Financial Statements continued
Key Numbers
13
2. | Tax (continued) | |||
2020 | 2019 | |||
$'000 | $'000 | |||
d. Deferred tax liabilities | ||||
The balance comprises temporary differences attributable to: | ||||
Amounts recognised directly in equity: | ||||
Revaluation of investments | 289,876 | 423,999 | ||
Realised capital losses | (16,529) | (23,800) | ||
Amounts recognised in profit: | ||||
Gains on scrip for scrip rollovers | 16,045 | 16,043 | ||
Income receivable which is not assessable for tax until receipt | 333 | 415 | ||
289,725 | 416,657 | |||
Movements: | ||||
Balance at 1 July | 416,657 | 378,769 | ||
Charged to income statement | 239 | 430 | ||
(Credited) charged to other comprehensive income | (127,171) | 37,458 | ||
Balance at 30 June | 289,725 | 416,657 | ||
To be settled beyond 12 months | 289,725 | 416,657 | ||
The income tax expense for the year is the tax payable on the current year's taxable income based on the current income tax rate applicable for the year adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and any unused tax losses.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability.
Milton Corporation Limited (the parent entity) and its wholly-owned subsidiaries have formed an income tax consolidated group. Each entity in the group recognises its own current and deferred tax, except for any deferred tax assets arising from unused tax losses from subsidiaries, which are immediately assumed by the parent entity. The current tax liability of each group entity is subsequently assumed by the parent entity. There is no tax funding agreement between Milton Corporation Limited and its subsidiaries.
Deferred tax balances attributable to revaluation amounts are recognised directly in equity through the asset revaluation reserve.
- Offsetting deferred tax balances:
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities. Deferred tax assets from realised capital losses are offset against deferred tax liabilities from unrealised capital gains.
Deferred tax liabilities have been recognised for capital gains tax on the unrealised gains in the investment portfolio at current tax rates. As Milton does not intend to dispose of the investment portfolio this tax may not be payable at the amount disclosed in Note 2d above. Any tax liability that may arise on disposal of investments is subject to tax legislation relating to the treatment of capital gains and the applicable tax rate at the time of disposal.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Notes to the Consolidated Financial Statements continued
Key Numbers
2. Tax (continued)
14
Deferred tax assets relating to carried forward capital losses have been recognised based on current tax rates. Utilisation of the tax losses requires the realisation of capital gains in subsequent years and the ability to satisfy certain tests at the time the losses are recouped. The deferred tax assets related to carried forward capital losses have been offset against the related deferred tax liabilities as disclosed in Note 2d.
3. | Earnings Per Share | |||
2020 | 2019 | |||
Cents | Cents | |||
Basic earnings per share | 17.45 | 22.19 | ||
$'000 | $'000 | |||
Profit attributable to shareholders of the parent entity | 116,957 | 147,652 | ||
No. of Shares | No. of Shares | |||
Weighted average number of ordinary shares used in the calculation | ||||
of basic earnings per share | 670,366,099 | 665,320,270 | ||
Diluted earnings per share and basic earnings per share are the same because there are no potential dilutive ordinary shares.
4. Dividends Paid
2020 2019
$'000 $'000
-
Recognised in the current year
An ordinary final dividend of 10.4 cents per share in respect of the 2019
financial year paid on 3 September 2019 (2019: Ordinary final dividend | of | |
10.2 cents per share paid on 4 September 2018) | 69,572 | 67,133 |
An ordinary interim dividend of 9.0 cents per share paid on 5 March 2020 | ||
(2019: 9.0 cents per share paid on 5 March 2019) | 60,323 | 59,844 |
No special dividend was paid (2019: Special dividend of 2.5 cents per share | ||
paid on 30 April 2019) | - | 16,725 |
129,895 | 143,702 | |
Dividends paid in cash | 118,607 | 133,073 |
Dividends reinvested in shares | 11,288 | 10,629 |
129,895 | 143,702 | |
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Notes to the Consolidated Financial Statements continued
Key Numbers
15
4. | Dividends Paid (continued) | |||
2020 | 2019 | |||
$'000 | $'000 | |||
b. Not recognised in the current year | ||||
Since the end of the financial year, the directors declared an ordinary final | ||||
dividend in respect of the 2020 year of 8.5 cents per share payable on | ||||
2 September 2020 (2019: ordinary final dividend | of 10.4 cents per share | |||
paid on 3 September 2019) | 57,063 | 69,572 | ||
5. Dividend Franking Account
2020 | 2019 | ||
$'000 | $'000 | ||
The amount of franking credits available to shareholders for the subsequent | |||
financial year, adjusted for franking credits that will arise from the payment of | |||
the current tax liability | 122,864 | 128,692 | |
Subsequent to year end, the franking account will be reduced by the | |||
proposed final dividend to be paid | on 2 September 2020 (2019: final dividend | ||
paid on 3 September 2019) | (24,455) | (29,817) | |
98,409 | 98,875 | ||
The franking account balance would allow Milton to frank additional dividend payments up to an amount of $229,621,193 (2019: $230,709,861) which represents 34 cents per share (2019: 34 cents per share).
6. | Listed Investment Company capital gains account | |||
2020 | 2019 | |||
$'000 | $'000 | |||
Balance of the Listed Investment Company (LIC) capital gain account | ||||
available to shareholders for the subsequent financial year | 1,655 | 1,481 | ||
Distributed LIC capital gains may entitle certain shareholders to a special deduction in their income tax return. LIC capital gains available for distribution are dependent upon the disposal of investment portfolio holdings, which qualify for LIC capital gains and the receipt of LIC capital gain distributions.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Notes to the Consolidated Financial Statements continued
Assets
7. Investment in equity instruments
16
Milton is predominantly a long term investor in companies and trusts listed on the Australian Securities Exchange.
2020 | 2019 | |
$'000 | $'000 | |
Investments - non-current | ||
Quoted investments - at fair value | 2,705,785 | 3,140,850 |
Unquoted investments - at fair value | 374 | 386 |
2,706,159 | 3,141,236 | |
a. Included in quoted investments are: | ||
Shares in other corporations | 2,476,375 | 2,927,525 |
Stapled securities in other corporations | 229,410 | 213,325 |
2,705,785 | 3,140,850 | |
- Included in unquoted investments are:
Units in trusts | 374 | 386 |
Investments are recognised initially at cost and Milton has made an irrevocable election to present subsequent changes in fair value of equity instruments in other comprehensive income through the asset revaluation reserve after deducting a provision for the potential deferred capital gains tax liability as these investments are long term holdings of equity instruments.
Listed investments are valued continuously at fair value, which is determined by the unadjusted last-sale price quoted on the Australian Securities Exchange at the measurement date. Use of unadjusted last sale price in an active market such as the Australian Securities Exchange falls within the Level 1 fair value hierarchy of measuring fair value under AASB 13.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, its carrying value is written off.
2020 | 2019 |
$'000 | $'000 |
- Investments disposed of during the year
The disposals occurred in the normal course of Milton's operations as a listed investment company or as a result of takeovers or mergers.
Fair value at disposal date | ||
Equity investments | 276,270 | 44,168 |
Gains on disposal after tax | ||
Equity investments | 8,115 | 14,497 |
When an investment is disposed, the cumulative gain or loss, net of tax thereon, is transferred from the asset revaluation reserve to the capital profits reserve as disclosed in Note 12.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Notes to the Consolidated Financial Statements continued
Assets
8. Investment in joint venture entities
17
Milton has a long history of investing in property development joint ventures. Wholly owned subsidiaries of Milton have investments in separate joint venture entities that have non-controlling interests in three property development joint venture partnerships.
2020 | 2019 | |
$'000 | $'000 | |
a. Contribution from joint venture entities | ||
Milton has interests in the following joint venture entities: | ||
33.33% interest in the Ellenbrook Syndicate Joint Venture contribution | ||
to operating profit before tax (2019: 33.33%) | 1,213 | 1,561 |
23.33% interest in The Mews Joint Venture contribution to operating | ||
profit before tax (2019: 23.33%) | 85 | 74 |
50% interest in the LWP Huntlee Syndicate No 2 Joint Venture (2019: 50%) | (410) | (131) |
Share of net profits of joint ventures | 888 | 1,504 |
- Consolidated interest in the assets and liabilities of the joint venture entities
Current assets | 12,612 | 14,741 |
Non-current assets | 19,310 | 19,968 |
Current liabilities | (2,696) | (3,333) |
Non-current liabilities | (3,974) | (7,708) |
25,252 | 23,668 | |
Provision for diminution in value | (543) | (543) |
Net assets | 24,709 | 23,125 |
Under AASB 11 Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint ventures based on rights and obligations arising from the joint arrangement rather than the legal structure of the joint arrangement.
Each joint venture partnership agreement provides that partners have rights to the net assets of the partnership. Accordingly, Milton has assessed the nature of its joint arrangements and determined that all current interests are joint ventures and thus accounted for using the 'Equity Method'.
Under the 'Equity Method', Milton's investments in joint ventures are valued initially at cost and periodically adjusted for changes in value due to Milton's share in the joint ventures' income or losses, distributions and any call payments.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Notes to the Consolidated Financial Statements continued
Assets
18
- Investment in joint venture entities (continued)
-
Contingencies and capital commitments Guarantee facility by parent company
Milton agreed to provide a guarantee subject to a maximum of $10 million to Bankwest to support a repayment of a principal amount on a loan payable on 30 June 2022 (or on a later agreed date) by a joint venture in which LWP Huntlee Syndicate No 2 has a 23.75% interest. This guarantee facility replaced Milton's previous interest servicing guarantee facility of $10 million to the joint venture, which was cancelled on 8 April 2020.
This facility, which is on commercial terms, is secured by a second ranking mortgage over the real property of the joint venture as well as guarantees provided by other related entities of the joint venture. As at 30 June 2020 Milton's contingent liability amounted to $10 million (30 June 2019: $10 million on the previous interest servicing guarantee facility).
Other than the above, the directors are not aware of any material contingent liabilities, contingent assets or capital commitments as at 30 June 2020.
-
Contingencies and capital commitments Guarantee facility by parent company
- Cash
2020 | 2019 | |
$'000 | $'000 | |
Cash at bank | 6,034 | 3,612 |
Deposits at call | 38,035 | 24,694 |
Term deposits | 70,000 | 82,000 |
114,069 | 110,306 | |
The weighted average interest rate for cash and deposits at call as at 30 June 2020 is 0.2% p.a. (2019: 1.4% p.a.).
The weighted average interest rate of term deposits as at 30 June 2020 is 1.4% (2019: 2.1%) with an average term
of 4.5 months (2019: 4.5 months).
10. Receivables
2020 2019
$'000 $'000
- Receivables - current
Dividends receivable | 10,523 | 14,822 |
Interest receivable | 258 | 344 |
Sundry debtors | 157 | 21 |
10,938 | 15,187 | |
- Terms and conditions
Sundry debtors are due within 30 days and no interest is charged.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Notes to the Consolidated Financial Statements continued
Capital Management
11. Share capital
19
Milton may offer shareholders the opportunity to increase their holdings by participation in the Share Purchase Plan and in the Dividend Reinvestment Plan. Milton may also increase its capital through renounceable rights issues and acquisition of investment companies with the consideration being the issue of Milton shares.
All capital consists of fully paid ordinary shares which are listed on the ASX and carry one vote per share and equal rights to receive dividends.
2020 | 2020 | 2019 | 2019 | |
Movement in share capital | No. of Shares | $'000 | No. of Shares | $'000 |
Opening balance | 668,963,092 | 1,633,055 | 658,170,815 | 1,582,431 |
Acquisition of unlisted investment companies | - | - | 8,444,554 | 40,060 |
Dividend Reinvestment Plan(1) | 2,363,305 | 11,288 | 2,347,723 | 10,627 |
Less: Transaction costs (net of tax) | - | (22) | - | (63) |
Closing balance | 671,326,397 | 1,644,321 | 668,963,092 | 1,633,055 |
1 Milton's Dividend Reinvestment Plan (DRP) offers shareholders the option to reinvest all or part of their dividend in new ordinary shares. In the 2020 financial year, Milton issued 1,288,011 new shares in September 2019 and 1,075,294 new shares in March 2020 under the DRP (2019:1,188,729 issued in September 2018 and 1,158,994 issued in March 2019).
12. Reserves
Nature and purpose of reserves
Changes in fair value of investments are presented in other comprehensive income through the asset revaluation reserve as referred to in Note 7. Upon disposal of long-term investments, the realised gain or loss, net of any tax expense or benefit, is transferred from the asset revaluation reserve and recorded in the capital profits reserve.
2020 | 2019 | |
$'000 | $'000 | |
a. Asset revaluation reserve | ||
Opening balance | 969,156 | 898,111 |
Revaluation of investments net of provision for tax | (300,007) | 85,542 |
Net realised gains | (8,115) | (14,497) |
661,034 | 969,156 | |
- Capital profits reserve
Opening balance | 66,148 | 51,651 |
Net realised gains | 8,115 | 14,497 |
74,263 | 66,148 | |
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Notes to the Consolidated Financial Statements continued
Risk
20
This section of the notes discusses Milton's exposure to various risks and shows how these could affect Milton's financial position and performance.
13. Critical accounting estimates, judgements and assumptions
Judgements, estimates and assumptions are required to prepare financial statements.
Apart from the items mentioned below, there are no key assumptions or sources of estimation uncertainty that have a risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
- Deferred tax liabilities from unrealised capital gains are offset against deferred tax assets from realised capital losses as disclosed in Note 2e.
- Classification of joint arrangements as joint ventures as disclosed in Note 8.
14. Management of financial risk
The risks associated with the financial instruments, such as investments and cash, include credit, market and liquidity risks which could affect Milton's future financial performance.
The Board has approved policies and procedures to manage these risks. The effectiveness of these policies and procedures is continually reviewed by management and annually by the Audit & Risk Committee.
-
Credit risk exposures
Milton's principal credit risk exposures arise from the investment in liquid assets, such as cash, bank term deposits and income receivable.
The risk that financial loss will occur because a counterparty to a financial instrument fails to discharge an obligation is known as credit risk. The credit risk on Milton's financial assets, excluding investments, is the carrying amount of those assets.
Individual bank limits have been approved by the board for the investment of cash.
Income receivable comprises accrued interest and dividends and distributions which were brought to account on the date the shares or units traded ex-dividend.
There are no financial instruments overdue.
All financial assets and their recoverability are continuously monitored by management and reviewed by the board on a quarterly basis.
-
Market risk
Market risk is the risk that changes in market prices will affect the fair value of the financial instrument. The fair value of the quoted investments is determined by the unadjusted last sale price quoted on the Australian Securities Exchange at the measurement date.
Milton is exposed to market risk through the movement of the security prices of the companies and trusts in which it is invested.
The market value of individual companies fluctuates daily and the fair value of the portfolio changes continuously, with this change in the fair value recognised through the asset revaluation reserve.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Notes to the Consolidated Financial Statements continued
Risk
14. Management of financial risk (continued)
21
Investments represent 94% (2019: 95%) of total assets. A 5% movement in the market value of investments in each
of the companies and trusts within the portfolio would result in a 4.7% (2019: 4.8%) movement in the net assets before provision for tax on unrealised capital gains at 30 June 2020. The net asset backing before provision for tax on unrealised capital gains would move by 20 cents per share at 30 June 2020 (2019: 23 cents at 30 June 2019).
Milton's management continuously monitors the performance of the companies within its portfolio and makes portfolio recommendations which are considered by the Investment Committee. The Milton board reviews the portfolio on a quarterly basis.
Milton is not directly exposed to foreign currency risk as all its investments are quoted in Australian dollars.
The fair value of Milton's other financial instruments are unlikely to be materially affected by a movement in interest rates as they generally have short dated maturities and variable interest rates.
-
Liquidity risk
Liquidity risk is the risk that Milton is unable to meet its financial obligations as they fall due.
Milton manages liquidity risk by monitoring forecast and actual cashflows. All accounts payable are due and payable within 12 months.
15. Capital risk management
The parent entity invests its equity in a diversified portfolio of assets with the objective of generating a growing income stream for distribution to shareholders in the form of fully franked dividends.
The capital base is managed to ensure there are funds available for investment as opportunities arise. Capital may be increased through the issue of shares under the Share Purchase Plan and the Dividend Reinvestment Plan. Shares may also be issued through renounceable rights issues and as consideration for acquisition of other investment companies.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Notes to the Consolidated Financial Statements continued
Group Structure
16. Subsidiaries
22
Investments in subsidiaries are carried at net asset value which approximates fair value of the controlled entities.
Income from dividends is brought to account when they are declared.
The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies.
-
Basis of Consolidation
The consolidated financial statements include the financial statements of Milton being the parent entity and its subsidiaries. The balances and effects of transactions between subsidiaries included in the consolidated financial statements have been eliminated in full.
Where entities have come under the control of the parent entity during the year, their operating results have been included in the group from the date control was obtained. Entities cease to be consolidated from the date on which control is transferred out of the group and the consolidated financial statements include the result for the part of the reporting period during which the parent entity had control. - Milton Corporation Limited's subsidiaries
The following subsidiaries have been included in the consolidated accounts. The parent entity and all subsidiaries are incorporated in Australia:
2020 | 2019 | |
Percentage of Interest held | % | % |
85 Spring Street Properties Pty Ltd | 100 | 100 |
Chatham Investment Co. Pty Limited | 100 | 100 |
Incorporated Nominees Pty Limited | 100 | 100 |
Milhunt Pty Limited | 100 | 100 |
ACN007531240 Pty Limited | 100 | 100 |
Kembar Pty Limited | - | 100 |
- Acquisition and disposal of subsidiaries
No acquisitions during the year. Unlisted investment company Kembar Pty Limited acquired in February 2019 was placed into voluntary liquidation during the year and deregistered in April 2020.
(2019: Milton acquired 100% of the shares of two unlisted investment companies for a total consideration of 8,444,554 new Milton shares with a fair value of $40,059,629). - Business Combinations
The acquisition method of accounting has been used to account for all business combinations. The business combinations have been accounted from the date Milton attained control of the subsidiaries. The considerations transferred for the acquisitions comprise the fair values of the identifiable assets transferred and the liabilities assumed.
Costs related to the acquisitions, other than those associated with the issue of equity securities, are expensed to the consolidated income statement as incurred.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Notes to the Consolidated Financial Statements continued
Other Information
17. Related party transactions
23
2020 2019
$'000 $'000
- Directors and Key Management Personnel compensation
Short-term benefits | 1,414 | 1,436 |
Other long-term benefits | 4 | 227 |
Post-employment benefits | 101 | 118 |
Share-based payments | 107 | 88 |
1,626 | 1,869 | |
- Shareholdings of non-executive directors and their related parties - number of shares held
Non-executive directors and their related parties held 5.6% (2019: 5.6%) of the voting power of Milton as at year end. All shares acquired by non-executive directors and their related parties during the year were purchased on an arm's length basis. Movements in the number of shares held are given below. There were no amounts outstanding from or due to any non-executive director or their related parties as at 30 June 2020.
2020 | 2019 | |
No of shares | No of shares | |
Number of shares at beginning of the year | 37,397,579 | 40,387,579 |
Acquired during the year | 444,516 | 10,000 |
Disposed of during the year | - | (3,000,000) |
Number of shares held at end of year | 37,842,095 | 37,397,579 |
- Loans to key management personnel and their related parties
Details regarding loans outstanding at the reporting date to key management are as shown below. No loans were granted to related parties of any key management personnel.
2020 | 2019 | |
$ | $ | |
Balance at beginning of the year | 1,567,499 | 3,119,563 |
Loans advanced | 602,009 | 1,049,175 |
Loans repaid | (73,810) | (2,601,239) |
Balance at end of the year | 2,095,698 | 1,567,499 |
Notional interest | 107,196 | 87,961 |
Notional interest is based on the applicable FBT benchmark interest rate for the year which averaged 5.20% (2019: 5.24%).
The loans are advanced to key management personnel in accordance with the Senior Staff Share Plan (SSSP) as disclosed in Note 18b.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Notes to the Consolidated Financial Statements continued
Other Information
17. Related party transactions (continued)
d. Other related party transactions
24
All directors have entered into the Deed of Indemnity, Insurance and Access that was approved at the Annual General Meeting held on 10 October 2000. Milton has a Remuneration and Retirement Benefits Deed with
Mr R.D. Millner and Dr I.A. Pollard. During the 30 June 2004 year, Milton and the directors varied the Remuneration and Retirement Benefits Deed, whereby the maximum retirement benefit payable to a non-executive director on retirement will be the provision for the director as at 30 June 2003. Apart from the details disclosed in this note no director has entered into a material contract with the parent entity or Milton since the end of the previous financial year and there were no material contracts involving directors' interests subsisting at the end of the year.
-
Loans to and from subsidiaries
Loans have been made between the parent entity and wholly owned subsidiaries for capital transactions. The loans between the parent and its subsidiaries have no fixed date of repayment and are non-interest bearing.
2020 | 2019 | |
$ | $ | |
Amounts owed (to) by subsidiaries at beginning of the year | (12,959,503) | 27,034,039 |
Loans advanced from subsidiaries | (967,649) | (43,002,055) |
Loans advanced to subsidiaries | 15,666,212 | 3,008,513 |
Amounts owed by (to) subsidiaries at end of the year | 1,739,060 | (12,959,503) |
18. Share based payments
Under the Employee Share Plan, shares are acquired for employees as part of their remuneration and the cost of the shares is recorded under employment costs.
Under the Senior Staff Share Plan, shares are acquired for eligible employees as part of their remuneration and held on their behalf by the trustee of the Plan. The purchase of the Plan Shares is financed by a loan from Milton.
-
Employee Share Plan
The Employee Share Plan ("ESP") is available to all eligible employees to acquire ordinary shares in Milton in lieu of a cash bonus of up to $1,000 per year as part of the employee's remuneration. The transaction and administration costs of acquiring the shares and administering the plan are paid by Milton.
During the year 414 shares (2019:422 shares) were acquired by Milton on behalf of eligible employees under the ESP at a cost of $2,088 (2019: $2,084) with a total market value at 30 June 2020 of $1,693. Any shares acquired cannot be disposed of or transferred until the earlier of 3 years from the date of issue or acquisition or on the date that the employee's employment ceases with Milton. - Senior Staff Share Plan
The Senior Staff Share Plan ("SSSP") was approved by shareholders at Milton's Annual General Meeting on
9 October 2001. Eligible employees are given the opportunity to apply for Plan Shares in Milton which are subscribed for or acquired and held on their behalf by the trustee of the plan. The purchase of these Plan Shares is financed by an interest-free limited recourse loan from Milton with recourse only to Plan Shares. The loan will be repaid partially from any dividends received. Milton administers the SSSP and meets the transactional and administration costs.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Notes to the Consolidated Financial Statements continued
Other Information
18. Share based payments (continued)
25
During the year 210,000 shares (2019: 310,000 shares) were acquired by the trustee of the plan on behalf of
eligible employees under the SSSP at a cost of $1,011,375 (2019: $1,445,530). The shares acquired by the trustee during the year had a market value of $858,900 at $4.09 per share as at 30 June 2020. The SSSP loan receivable balance from eligible employees as at 30 June 2020 was $4,117,515 (2019: $3,430,474).
Any shares acquired are held in the name of the trustee and classified as Restricted Shares which cannot become Unrestricted Shares until the earlier of 3 years from the date of issue to the trustee or acquisition by the trustee or on the date that the employee's employment ceases with Milton. The trustee may transfer Unrestricted Shares to the participant provided that any outstanding loan has been repaid in full.
19. Auditors Remuneration
2020 | 2019 | |
$'000 | $'000 | |
Auditors of the company | ||
Audit and review services | 119 | 115 |
Related practice of the auditor | ||
Agreed upon procedures | - | 43 |
Other services | 7 | 9 |
126 | 167 | |
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Notes to the Consolidated Financial Statements continued
Other Information
20. Parent entity disclosures
26
In accordance with the Corporations Amendment (Corporate Reporting Reform) Act 2010 and the Corporations Act 2001 the following summarised parent entity information is set out below.
As at 30 June 2020, and throughout, the financial year ended 30 June 2020 the parent entity was Milton Corporation Limited.
2020 | 2019 | |
$'000 | $'000 | |
Profit of the parent entity | ||
Profit for the year | 116,252 | 146,560 |
Total comprehensive income for the year | (183,050) | 232,741 |
Financial position of the parent entity as at 30 June | ||
Current assets | 125,394 | 126,015 |
Non-current assets | 2,743,474 | 3,183,538 |
Total assets | 2,868,868 | 3,309,553 |
Current liabilities | (2,580) | (1,251) |
Non-current liabilities | (292,521) | (432,856) |
Total liabilities | (295,101) | (434,107) |
Net assets | 2,573,767 | 2,875,446 |
Total equity of the parent entity comprising | ||
Issued capital | 1,644,321 | 1,633,055 |
Capital profits reserves | 82,848 | 74,733 |
Asset revaluation reserve | 716,713 | 1,024,131 |
Retained profits | 129,885 | 143,527 |
Total equity attributable to shareholders of the parent entity | 2,573,767 | 2,875,446 |
21. Summary of other accounting policies
-
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, Australian accounting interpretations, other authoritative pronouncements of the Australian Accounting Standards Board, the Corporations Act 2001 and complies with International Financial Reporting Standards (IFRS).
Accounting policies adopted in the preparation of these financial statements have been consistently applied to all the years presented, unless otherwise stated. The financial statements include the consolidated entity ("Milton") consisting of Milton Corporation Limited and its subsidiaries. Milton is a 'for-profit' entity.
These financial statements have been prepared on an accruals basis and are based on the historical cost basis except as modified by the revaluation of certain financial assets and liabilities measured at fair value.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Notes to the Consolidated Financial Statements continued
Other Information
21. Summary of other accounting policies (continued)
New and amended standards adopted:
27
AASB 16 Leases is applicable to annual reporting periods beginning on or after 1 January 2019 and replaces AASB 117 Leases. For lessees it will eliminate the classifications of operating leases and finance leases. This does not have a material impact on the financial statements of Milton.
There are no other new standards, interpretations or amendments to existing standards that are effective for the first time for the financial year beginning 1 July 2019 that have a material impact on the amounts recognised in the prior periods or will affect the current or future periods.
New and amended standards not adopted:
New standards, amendments to standards and interpretations that are effective for annual periods beginning on or after 1 Jan 2020 have not been early adopted in preparing these financial statements. None of these are expected to have a material effect on the financial statements of Milton.
-
Rounding of amounts
Unless otherwise stated under the option available in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191, the financial statements are presented in Australian dollars and all values are rounded to the nearest thousand dollars ($'000). - Operating segments
The consolidated entity operates in Australia and engages in investment as its principal activity. As such Milton considers the business to have a single operating segment. - Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the assets.
Subsequent costs are included in the asset's carrying value or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Milton consolidated group, and that the cost of the item can be measured reliably.
All other repairs and maintenance costs are charged to the income statement during the reporting period in which they are incurred.
The depreciable amount of all fixed assets including building, but excluding freehold land, is depreciated commencing from the time the asset is held ready for use. Depreciating is calculated on straight line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows:
Building | 40 years |
Plant and equipment | 2-15 years |
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each financial year-end.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its recoverable amount.
Gains and losses on disposals determined by comparing proceeds with carrying amounts are included in the income statement.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Notes to the Consolidated Financial Statements continued
Other Information
22. Cash flow information
2020
$'000
28
2019
$'000
a. Reconciliation of net profit to net cash provided
by operating activities | ||
Net profit | 116,957 | 147,652 |
Share of net profits of joint ventures - equity accounted | (888) | (1,504) |
Distributions received from joint venture entities | 967 | 2,500 |
Acquisition related costs of subsidiaries | - | 124 |
Depreciation of non-current assets | 37 | 35 |
Decrease (Increase) in receivables | 3,522 | 10,176 |
(Decrease) increase in payables and provisions | (274) | (287) |
Increase in income taxes payable | 753 | 405 |
Increase (decrease) in provisions | 22 | (172) |
Net cash provided by operating activities | 121,096 | 158,929 |
- Non-cashfinancing and investing activities
No material non-cash investing activities were carried out during the year ended 30 June 2020 (2019: Milton acquired two unlisted investment companies through the issue of 8,444,554 new Milton shares with a total fair value of $40,059,629).
23. Contingent liabilities
Apart from the contingent liability relating to the interest servicing guarantee facility of $10 million provided on behalf of LWP Huntlee Syndicate No.2 joint venture as disclosed in Note 8c, the directors are not aware of any other material contingent liabilities.
24. Events subsequent to reporting date
Since the end of the financial year, the directors declared a fully franked ordinary final dividend of 8.5 cents per share payable on 2 September 2020.
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Notes to the Consolidated Financial Statements continued
Holdings
29
25. Holdings at Fair Value through Other Comprehensive Income at 30 June 2020
The following holdings are valued at fair value through Other Comprehensive Income.
2020 | 2019 | |||
Market | Market | |||
Holding | value | Holding | value | |
Investments in equity instruments | Shares | $'000 | Shares | $'000 |
Adelaide Brighton Ltd. | - | - | 2,978,554 | 12,033 |
AGL Energy Ltd. | 3,570,141 | 60,871 | 3,570,141 | 71,439 |
ALS Ltd. | 6,079,431 | 39,881 | 6,079,431 | 44,623 |
Altium Ltd. | 318,500 | 10,345 | 178,500 | 6,105 |
Amcor PLC | 2,433,512 | 35,237 | 1,566,512 | 25,362 |
Ampol Ltd. | 394,000 | 11,552 | 394,000 | 9,752 |
A.P. Eagers Ltd. | 6,795,986 | 45,873 | 5,833,107 | 57,164 |
APA Group | 2,077,766 | 23,126 | 2,077,766 | 22,440 |
ARB Corporation Ltd. | 911,065 | 16,354 | 911,065 | 16,581 |
Argo Investments Ltd. | 1,880,841 | 13,523 | 1,880,841 | 15,272 |
ASX Ltd. | 548,965 | 46,871 | 548,965 | 45,218 |
AUB Group Ltd. | 1,292,991 | 19,007 | 1,292,991 | 13,499 |
Australia & New Zealand Banking Group Ltd. | - | - | 3,452,751 | 97,402 |
Australian Foundation Investment Company Ltd. | 470,513 | 2,865 | 922,398 | 5,765 |
Auswide Bank Ltd. | - | - | 228,557 | 1,172 |
Automotive Holdings Group Ltd. | - | - | 3,466,366 | 9,706 |
Bank of Queensland Ltd. | - | - | 7,306,078 | 69,627 |
Bendigo & Adelaide Bank Ltd. | - | - | 5,709,708 | 66,118 |
BHP Group Ltd. | 4,854,921 | 173,903 | 4,098,921 | 168,712 |
BKI Investment Company Ltd. | 1,223,866 | 1,695 | 1,223,866 | 1,921 |
Blackmores Ltd. | - | - | 368,664 | 33,147 |
Boral Ltd. | - | - | 2,089,293 | 10,697 |
Brambles Ltd. | 1,431,966 | 15,565 | 1,431,966 | 18,444 |
Brickworks Ltd. | 3,234,567 | 51,203 | 3,234,567 | 52,691 |
Carlton Investments Ltd. | 356,778 | 8,195 | 356,778 | 11,274 |
Carsales.com Ltd. | 1,197,000 | 21,235 | 1,042,000 | 14,098 |
Charter Hall Group | 2,556,000 | 24,768 | 2,126,000 | 23,025 |
Charter Hall Long WALE REIT | 5,082,095 | 21,751 | 3,364,212 | 16,855 |
CIMIC Group Ltd. | 845,739 | 20,399 | 791,239 | 35,424 |
Cleanaway Waste Management | 11,250,000 | 24,750 | 5,500,000 | 12,815 |
Coca-Cola Amatil Ltd. | 1,061,584 | 9,193 | 1,061,584 | 10,849 |
Cochlear Ltd. | 33,800 | 6,386 | 33,800 | 6,991 |
Coles Group Ltd. | 2,877,375 | 49,405 | 2,877,375 | 38,413 |
Commonwealth Bank of Australia | 3,140,470 | 218,011 | 3,140,470 | 259,968 |
Computershare Ltd. | - | - | 23,000 | 373 |
CSL Ltd. | 601,198 | 172,544 | 601,198 | 129,258 |
Diversified United Investment Ltd. | 130,607 | 552,468 | 130,607 | 569 |
Dulux Group Ltd. | - | - | 1,655,184 | 15,426 |
EQT Holdings Ltd. | 593,954 | 14,700 | 500,697 | 14,821 |
Event Hospitality & Entertainment Ltd. | 1,010,921 | 8,502 | 1,010,921 | 12,637 |
Finbar Group Ltd. | 3,642,464 | 2,550 | 3,642,464 | 3,060 |
Flight Centre Travel Group Ltd. | - | - | 80,300 | 3,336 |
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
Notes to the Consolidated Financial Statements | 30 | ||||||
continued | 2020 | 2019 | |||||
Key Numbers | Market | Market | |||||
Holding | value | Holding | value | ||||
Investments in equity instruments | Shares | $'000 | Shares | $'000 | |||
Goodman Group | 1,690,376 | 25,102 | 1,475,376 | 22,175 | |||
Gresham Private Equity Co-Investment Fund | - | - | 100,000 | 23 | |||
Insurance Australia Group Ltd. | 6,026,948 | 34,775 | 5,896,948 | 48,709 | |||
Incitec Pivot Ltd. | - | - | 1,663,689 | 5,673 | |||
InvoCare Ltd. | 2,050,914 | 21,494 | 1,950,914 | 31,195 | |||
IOOF Holdings Ltd. | 2,575,014 | 12,669 | 2,009,086 | 10,387 | |||
Janus Henderson Group PLC | - | - | 229,500 | 6,952 | |||
Johns Lyng Group Ltd. | 1,950,000 | 4,583 | - | - | |||
Lendlease Group | 972,539 | 12,030 | 972,539 | 12,643 | |||
Lindsay Australia Ltd. | 13,341,599 | 4,670 | 13,341,599 | 4,603 | |||
Link Administration Holdings Ltd. | - | - | 27,907 | 140 | |||
Macquarie Group Ltd. | 1,625,990 | 192,842 | 744,490 | 93,352 | |||
McMillan Shakespeare Ltd. | 803,532 | 7,296 | 662,538 | 8,090 | |||
Magellan Financial Group Ltd. | 25,000 | 1,450 | - | - | |||
National Australia Bank Ltd. | 4,868,831 | 88,710 | 4,868,831 | 130,095 | |||
New Hope Corporation Ltd. | - | - | 1,290,107 | 3,496 | |||
Orica Ltd. | - | - | 188,987 | 3,831 | |||
Origin Energy Ltd. | 1,580,301 | 9,229 | 190,301 | 1,391 | |||
Pendal Group Ltd. | 2,116,643 | 12,636 | 1,546,643 | 11,058 | |||
Perpetual Ltd. | 1,231,982 | 36,553 | 1,231,982 | 52,039 | |||
Premier Investments Ltd. | 590,321 | 10,183 | 590,321 | 8,955 | |||
Pro Medicus Limited | 75,000 | 1,985 | - | - | |||
QBE Insurance Group Ltd. | 789,375 | 6,994 | 1,949,375 | 23,061 | |||
Qube Holdings Ltd. | 7,538,951 | 21,938 | 6,113,243 | 18,585 | |||
Ramsay Health Care Ltd. | 225,283 | 14,986 | 225,283 | 16,274 | |||
REA Group Ltd. | 92,309 | 9,958 | 8,769 | 842 | |||
Reece Ltd. | 1,231,657 | 11,319 | 1,167,950 | 11,399 | |||
Regis Healthcare Ltd. | - | - | 1,856,076 | 4,881 | |||
Rio Tinto Ltd. | 669,120 | 65,547 | 669,120 | 69,428 | |||
Scentre Group | 5,589,474 | 12,129 | 5,079,474 | 19,505 | |||
Schaffer Corporation Ltd. | 68,999 | 911 | 68,999 | 941 | |||
Sims Ltd. | 452,368 | 3,587 | 452,368 | 4,913 | |||
Sonic Healthcare Ltd. | 940,707 | 28,626 | 710,707 | 19,260 | |||
Stockland Group | 3,844,940 | 12,727 | 3,844,940 | 16,033 | |||
Suncorp Group Ltd. | 3,218,120 | 29,703 | 3,314,232 | 44,643 | |||
Sydney Airport | 4,874,629 | 27,639 | 3,184,629 | 25,605 | |||
Tank Stream Ventures | 50,341 | 375 | 50,341 | 363 | |||
Technology One Ltd. | 1,855,000 | 16,305 | 1,515,000 | 11,938 | |||
Telstra Corporation Ltd. | 15,236,961 | 47,692 | 15,236,961 | 58,662 | |||
TPG Telecom Ltd. | 3,148,725 | 28,024 | 3,148,725 | 20,278 | |||
Transurban Group Ltd. | 5,815,153 | 82,168 | 4,592,153 | 67,688 | |||
Treasury Wine Estates Ltd. | 1,206,363 | 12,643 | 1,206,363 | 17,999 | |||
Tuas Limited | 1,574,363 | 1,063 | - | - | |||
Washington H. Soul Pattinson & Company Ltd. | 9,174,640 | 179,181 | 9,174,640 | 201,750 | |||
Wesfarmers Ltd. | 2,877,375 | 128,993 | 2,877,375 | 104,046 | |||
Westpac Banking Corporation | 9,985,458 | 179,239 | 10,545,458 | 299,069 | |||
Whitefield Ltd. | - | - | 149,373 | 726 | |||
Woodside Petroleum Ltd. | 1,288,838 | 27,903 | 1,288,838 | 46,862 | |||
Woolworths Group Ltd. | 2,936,973 | 109,490 | 2,936,973 | 97,596 | |||
2,706,159 | 3,141,236 | ||||||
Milton Corporation Limited | ABN: 18 000 041 421 | Appendix 4E Preliminary Final Report 2020 |
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Milton Corporation Limited published this content on 23 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 July 2020 23:15:07 UTC