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1 Annual Report 2014

2 Contents A message from the Chair and CEO 01 Corporate Governance 06 Directors Report 09 Auditor s Independence Declaration 20 Financial Statements 21

3 01 A message from the Chair and CEO Bob Scheuber AM Chair Matthew Moore CEO It is our great privilege to report to you, on behalf of the board of directors and our executive, on the operations and results of rt health fund for the year ended 30 June This has been a significant year for our fund, in which it has achieved important results in membership growth and member services; continued its focus on maintaining strong operational and underwriting platforms; and opened its first health centres in Charlestown, Newcastle and Surry Hills, Sydney. The result for FY14 is a net surplus of $1.7 million. Even though rt is a not-for-profit fund, owned by its members, it is required to earn and retain a surplus, which ensures that the fund is financially sound, and able to continue paying benefits to members and investing in improved member services and facilities. This year s result, in terms of both net surplus and key prudential measures, places the fund s performance well within the parameters required by the industry regulator. The fund earns rental income from its buildings in Surry Hills and Brisbane, and returns on both properties have been strong this year. Share market investments, similarly, experienced strong growth during the year, however, the fund also experienced some decline in investment income with continued downward pressure on interest rates being a key feature of the economy during the last 12 months. The board and the executive understand the need for the fund to generate returns from its investments, but are conservative in investing surplus funds to ensure that the primary purpose of making benefit payments to members is not compromised.

4 02 2 A message from the Chair and CEO (cont.) Improvements in growth and member service Following three years of modest decline, the fund grew its membership base in FY14. The decline had been a consequence of previous price corrections required to ensure long-term product sustainability, and in response the fund has been investing significantly in building its product range and internal sales capability. It has been pleasing to see both an increase in new membership growth and a decrease in membership attrition during the year. The private health insurance market continues to be aggressively competitive with numerous new comparator organisations investing heavily in marketing and promotions, in addition to the usual strong media presence of the big five funds. This has encouraged increased membership churn across the industry, to the extent that a majority of growth among funds today comes from fundswitching rather than attracting new people to private health insurance. A majority of health funds, of all sizes, now relies on the services of industry brokers/comparators to provide or support their growth objectives. The previous experience of our fund has been such that the board is committed to building an internal sales capability that is able to deliver the growth required, and will continue to avoid the use of comparators as far as practicable. Future, modest levels of prudent membership growth will continue to be targeted using the fund s internal sales resources. A lower-than-average rate increase, for the second year, assisted in the fund s return to competitive pricing, and member research this year showed a significant improvement in members perceptions of the fund from the perspectives of being competitively priced and value for money. Two important developments during the year that will assist the fund with future growth include the expansion of on-the-ground resources to Far North Queensland, with an account manager based in the area and a change to the fund s eligibility criteria. The Far North Queensland region is a significant hub for industries within the fund s membership categories and there is a strong presence of organisations with which the fund has active corporate and union partnerships. The Department of Health approved the expansion of the fund s eligibility from transport and electricity to transport and energy. This change makes it possible for the fund to engage fully with organisations that offer services across the energy industry spectrum and provides for greater clarity in membership eligibility when working with industry. The fund was recognised for its performance in the delivery of service to members during the year through three significant pieces of research: In the IPSOS Health Care and Insurance in Australia study, rt health fund received top rankings on almost all member service categories. The IPSOS study is a highly regarded piece of research and has been widely used by regulators, policymakers, health funds and healthcare providers for the past 27 years. In the annual member satisfaction survey, benchmarked against 11 similar-sized funds, rt was recognised as the fund with the greatest overall improvement in member satisfaction, and we were pleased to see no decline in any measure of satisfaction this year. The fund also received the highest score of participating funds in a mystery shopping survey conducted during the year.

5 03 It has been pleasing to see both an increase in new membership growth and a decrease in membership attrition during the year. New health centres and new insurance services Some members will recall that plans to open dental and optical centres have been under consideration for a number of years. This year, our fund opened its first optical centre in Charlestown, Newcastle, and dental and optical centre in Surry Hills, Sydney. A third centre, comprising dental and optical services, is scheduled to open in Brisbane during the 2015 financial year. The optical centres provide full optometric consultations and a range of glasses and contact lenses at favourable member pricing, including nogap products, and the dental centres offer no-gap preventative dental and favourable pricing on dental services. A skilled team of healthcare practitioners, operating under the direction of the fund s Chief Medical Officer, has been recruited to staff the centres, which are equipped with the newest, stateof-the-art technology and equipment to ensure optimum service to members. Dental and optical services are by far the most commonly used by health fund members, which means the fund s claims costs in these areas are substantial. The fund is able to more efficiently provide many of these services through its own facilities, and can operate under a cost structure that, unlike commercial dental and optical practices, is focused on delivering member value rather than profit maximisation. This means a win for the fund in lower costs and a win for our members in terms of comparable or improved services at no gap and preferential pricing. Additionally, this year the fund entered into an agreement with QBE to provide preferentially priced travel insurance to rt health fund members. Travel insurance is a natural extension of cover for a health fund as it provides comprehensive medical cover for people travelling overseas, when their Australian health insurance cannot be used. A new Brisbane office and vision for the future In readiness to bring dental and optical services to members in Brisbane, the fund purchased a new building at 97 Edward Street, Brisbane, which will serve as the both the operational base and clinic location. The previous Brisbane branch and office at 59 Melbourne Street, South Brisbane was sold immediately following the end of the financial year. The Edward street location is far more accessible for members and large enough to accommodate the current branch and back office staff as well as the new clinical services. It is planned that the move to the new office and opening of the health centre will be complete within the 2015 financial year. This represents a very strong move by our fund to ensure that our large member bases in Sydney and Brisbane are provided with new choices of services and value for money. The board and management undertook a significant strategic planning process throughout the year, resulting in a ten-year plan for our fund, which details the key pillars of the future and streams of business to achieve its goals. The opening of member health centres is a key component of our fund s future plans to enhance services to members, assist in reducing claims costs and diversify the business activities of the company away from the highly regulated and increasingly competitive health insurance business. Supporting our primary business of private health insurance, is the plan is to diversify our fund s revenue streams into areas that support the health insurance business while enabling it to provide additional valuable services to members outside of the health insurance regulatory environment.

6 04 A message from the Chair and CEO (cont.) Legislative changes and the privatisation of Medibank Private On 1 April 2014, the government implemented a further change to the rebate program, which was introduced by the previous Labor government. The change ties the rebate to CPI each year rather than actual health insurance rate increases. This is the third in a series of changes to the rebate, which over the past two years have seen it become income tested and removed from any Lifetime Health Cover portion of a person s contributions. The result of this third change is to effectively abolish the notion of a 30% rebate. It is widely acknowledged that healthcare costs increase more rapidly than CPI, and the effect of this latest change will be to diminish the rebate over time to become a smaller proportion of an individual s health cover costs. The impact for people previously entitled to a 30% rebate in this first year has been to reduce the amount of their rebate to 29.04%. In the 2014 Commonwealth budget the government confirmed its intention to sell Medibank Private by way of an initial public offering. Its intention is to sell the entire company and it will not hold any shares following listing. The sale presents a number of challenges to the private health insurance sector, but will also potentially enable government to free up a number of restrictions on how funds operate once the conflict of being the both the regulator and the owner of the largest health fund in the market is removed. The board and management have considered the potential impact of the sale on the industry, and rt in particular, and have been involved in communication with government through a number of channels on significant issues of concern, in particular, ensuring that Medibank Private is not given any unfair market advantage during the IPO process. The board and management believe our fund has the necessary plans in place to manage its performance throughout this process. A number of other significant changes have impacted the regulatory environment over the past year, including changes to the capital requirements and the planned transition of key industry organisations. Under new capital standards set by PHIAC, funds are enabled to exercise greater control over decisions relating to the amount of prudential capital held. The board has been through a comprehensive process to define the risk tolerances of the fund and to set capital levels that will ensure the stability of the fund under a variety of business-as-usual and extraordinary circumstances. Changes announced as part of the 2014 Commonwealth budget will significantly impact the key regulatory bodies the fund works with in the coming financial year. The Private Health Insurance Administration Council (PHIAC), the current industry regulator, will be abolished and funds will come under the jurisdiction of APRA by 1 July While the details of this transition are still being determined, it is anticipated that the move to APRA will add to the regulatory burden already imposed on health funds, with additional resources likely to be required to comply with APRA standards. In addition, the Private Health Insurance Ombudsman (PHIO) will be subsumed into the office of the Commonwealth Ombudsman, also by 1 July It is not expected that there will be any change to the services or relationship with the ombudsman and that it will be a change of office only.

7 05 This year, our fund opened its first optical and dental centres in Charlestown and Sydney, with a third scheduled to open in Brisbane in Managing the cost of healthcare services CEO, Matthew Moore, was appointed deputy chair of the Australian Health Services Alliance (AHSA) during the year, significantly assisting the fund in its processes for managing healthcare costs. The AHSA is an organisation that negotiates hospital contracts with private hospitals and day surgeries on behalf of a consortium of funds. It is the third largest purchaser of healthcare services in Australia, giving member funds the ability to leverage vastly increased negotiating power. Governance At the 2013 AGM members passed a range of changes to the company s constitution that enable the board to improve its composition and renewal to better meet the needs of the organisation as the complexity of the business, operating environment and regulatory environment continue to grow. Also following the 2013 AGM, Bob Scheuber was re-elected to the board and Andy Taylor was appointed to the board by member election, filling a vacancy left by Robert Ledger, who left the board after serving for nine years and contributing significantly to governance during that time. At the upcoming 2014 AGM Dennis Ellis has announced his intention to retire as a director after nine years, having also made a significant contribution to the board in numerous areas during that time. This continues a process by the board of renewal in a considered and measured way and allows for a process of new directors being appointed to replace directors who have made valuable contributions to our fund. The board is conscious of achieving this renewal while maintaining a core group of skilled directors with strong knowledge of our fund. We would like to extend the sincere thanks of the board and management to the members of rt health fund for your ongoing commitment to the fund. It is indeed a unique privilege to participate in an organisation now in its 126th year of continuous operations, and it is the members that continue to make our fund relevant today. We would like to acknowledge the efforts of the board, management and staff, who all demonstrate an unwavering commitment to the goals of the fund and to constantly improving the service it provides to members. We look forward to the year ahead, to continually improving the experience of all members as they interact with the fund, and to welcoming new members to the fund. Bob Scheuber AM Chair Matthew Moore CEO

8 06 Corporate Governance Role of the board The board is responsible for the overall corporate governance of the fund, including determining its strategic direction and financial wellbeing, as well as guiding and monitoring its business and affairs on behalf of the members to whom it is accountable. In summary, the board s accountabilities and responsibilities include: contributing to the development of, approving, and monitoring the implementation of strategy, including identifying and mitigating any risks that may harm the fund setting the overall direction, financial objectives and operational goals for the fund reviewing and approving the annual budget and business plan delegating clear responsibility and authority to the committees of the board and the CEO, and monitoring and regularly reviewing the performance of those who hold delegated powers ensuring that the fund has effective processes and systems in place to enable the board to monitor its performance and capabilities overseeing the fund s corporate governance framework and ensuring effective communication with members and stakeholders monitoring the financial state and performance of the fund approving the fund s financial reporting, including its annual report promoting and maintaining organisational values and a culture where transparent and timely information is shared between management and the board ensuring effective systems of internal control and internal audit reviewing the performance of, and mentoring, the CEO. The board delegates responsibility for the dayto-day management of the fund to the CEO, and to executive management through the CEO, but remains responsible for overseeing the performance of the management team. To ensure that responsibility is clearly defined, the board has delegated a range of authorities to management through formal delegations. These include limited expenditure authority, and the authority to enter into certain contracts and to engage staff. Board charter The board has continued in FY2014 to undertake key activities which will ensure all of its policies, practices and procedures reflect good governance and current corporate practice. In line with current best practice, the board s charter outlines the fund s approach to such issues as: corporate culture workplace health and safety code of conduct risk management audit policies and procedures ethical standards and values board agenda meeting procedures directors induction and training board and directors evaluation and remuneration CEO s evaluation and remuneration capital management. The directors recognise that adherence to the charter is fundamental in demonstrating that they are accountable to members and stakeholders, and that they are appropriately overseeing the strategic direction of the fund and managing its business risks.

9 07 Election to the board The board has adopted a Fit and Proper Person policy including minimum qualifying standards and criteria to be met for nominees wishing to be elected to the board. The policy is compliant with APRA regulations and consistent with the ASX guidelines encouraging attributes necessary to be a director of a public company. Conflicts of interest Directors are required to disclose on an ongoing basis any interests that could potentially conflict with those of the fund or its members. In accordance with the Corporations Act 2001, the board ensures that any director with a material personal interest in a matter being considered by the board must not be present when it is under discussion and may not vote on the matter. Processes have also been implemented to ensure any breaches of compliance, regulations or code of conduct by board members are identified. Board committees In line with best practice corporate governance, the board has established standing committees as an efficient mechanism for considering detailed issues and making recommendations for consideration by the entire board. These committees adopt charters setting out the matters relevant to the composition, responsibilities and administration of each committee. Current committees of the board are: Audit and Risk The audit and risk committee is responsible for: facilitating the independence of the external audit process and addressing issues arising from the external audit process ensuring the fund meets its obligations to regulatory agencies directing the internal audit function, ensuring maximum value to the fund ensuring the quality and accuracy of published financial reports so they present a true and fair view of the fund s financial position and comply with relevant statutory and regulatory requirements ensuring the fund adopts, maintains and applies appropriate accounting and business policies and procedures overseeing the fund s investments ensuring the correct balance between liquidity, term of investments and interest rates overseeing the capital management plan ensuring the fund maintains effective internal control and risk management systems in order to safeguard its financial, physical and intellectual resources. Remuneration, Nominations and Constitution The remuneration, nominations and constitution committee is responsible for: assisting the board to achieve its objectives of ensuring that rt has a board of effective composition, size and commitment to adequately discharge its responsibilities and duties establishing policies and procedures for the annual performance evaluation of the board, each director and management, and recommending performance and salary reviews for the CEO reviewing and planning professional development and succession with the board and executive management annual education programs for directors managing the Fit and Proper Person policy and procedures for board appointees.

10 08 Corporate Governance (cont.) Business Development The business development committee is responsible for: reviewing the development and implementation of strategic business development initiatives, and ensuring initiatives are consistent with the fund s strategic plan reviewing, and where appropriate, making recommendations to the board on business growth and diversification opportunities responding to emerging issues related to business development reviewing general market conditions and how these may present or limit new business development opportunities reviewing and assessing appropriate business cases and plans prepared by management monitoring the outcomes of business development initiatives. Board performance A performance evaluation process has been established for the board, individual directors and key executives. Directors continue to undertake formal training through the Australian Institute of Company Directors (AICD) and Chartered Secretaries Australia (CSA), as required. All directors have attended training during the year and participated in PHIAC (Private Health Insurance Administration Council) and HIRMAA (Health Insurance Restricted Membership Association of Australia) industry and director education forums.

11 09 Directors Report For the year ended 30 June 2014 Your directors present their report on the company for the financial year ended 30 June Company objectives Short term and long term To operate as a private health insurer and to conduct a health benefits fund, or funds, for the purposes of carrying on health insurance and health related business for the benefit of members and their dependants. Company strategy Short term To consolidate and enhance the efficient operations of the fund to improve the level of capital for longterm sustainability. Establish dental and optical clinics to enhance member services. Long term To achieve a sustainable level of capital to enable the fund to meet current and future members and their dependants needs for private health insurance. Principal activities The principal activity of the company during the financial year was the provision of private health insurance. Additionally the company commenced optical and dental clinic services to members and customers from two locations during the year. Measuring performance The key measures of performances are: gross margin and loss ratio by product, state and channel; benefits paid by member; management expense ratio; net margin; membership; capital adequacy and solvency ratios. Clinic services net margins are monitored. Directors The names of the directors in office at any time during or since the end of the year are: B Scheuber AM V Reynolds D Ellis R Ledger (retired 20 November 2013) J Pascoe M Prior M Scanlan A Taylor Directors have been in office since the start of the financial year to the date of this report, unless otherwise stated. Their qualifications, experience and special responsibilities are as follows:

12 10 Bob Scheuber AM, B Ec., B Bus., FCPA, FAIM, MAICD Chair Age 59 Term Independent member elected director First appointed 24/10/2007, last re-elected 20/11/2013 Committees Member, Audit and Risk Committee Directorships QSuper; QSL Board of Trustees; Chair, CRC Rail Ltd Experience Chair of the board since December Former CEO of Queensland Rail. Awarded Member of the Order of Australia (AM) in January 2008, for service to the rail sector in Queensland, particularly through contributions to regulatory and operational reforms. Member of rt health fund since Victoria Reynolds Dip HR Mgt., MAHRI, MWOB, GAICD Deputy Chair Age 62 Term Independent appointed director First appointed 21/09/2005, last re-appointed 19/08/2012 Committees Chair, Remuneration, Nominations and Constitution Committee Directorships Chair Port Stephens chamber of commerce & industry Experience Operation Site Manager Joblinkplus a not-for-profit registered charity organisation providing employment and welfare services to the community. Consultant, human resources and industrial relations. Former General Manager, Human Resources, Rail Infrastructure Corporation, concluding 22 years with NSW Rail. Awarded Premier s Silver Award for Excellence in service delivery. Former Chair of the board from 2005 to Member of rt health fund since 1991.

13 11 Dennis Ellis MAICD Age 68 Term Independent member elected director First appointed 21/09/2005, last re-elected 23/11/2011 Committees Member, Remuneration, Nominations and Constitution Committee Directorships None Experience Former Senior Vice President RTBU Queensland. Retired after 34 years with QR National and Queensland Rail. Member of rt health fund since Robert Ledger B Elec., Grad Dip Sys Eng., GAICD Age 66 Term Independent member elected director First appointed 21/09/2005, last re-elected 17/11/2010, retired 20/11/2013 Committees Member, Remuneration, Nominations and Constitution Committee Directorships None Experience Former Fleet Engineer, Passenger Fleet Maintenance, NSW Railways. Retired after 40 years with NSW Rail. Member of rt health fund since 1965.

14 12 Julie Pascoe BA, Grad Dip (Mktg), GAICD, QPMR (AMSRS), GIA (CERT) Age 53 Term Independent appointed director First appointed 24/08/2011; last re-appointed 23/08/2014 Committees Member, Business Development Committee Directorships Corporate Property Group; Barnardos Australia; Stuart Alexander & Co Pty Ltd Experience Director of marketing, marketing strategist and business manager. Former member and Chair of People and Culture Committee, Church Resources Charitable Trust Foundation. Over 20 years in senior management covering a portfolio of industries with emphasis on building strong brands and ensuring high levels of organisational performance and competence. Member of rt health fund since Michael Prior M Comm., Grad Dip Applied Finance, Cert Applied Tax, CPA, CTA, MAICD Age 55 Term Independent appointed director First appointed 25/05/2006, last re-appointed 15/04/2012 Committees Chair, Audit & Risk Committee Member, Business Development Committee Directorships Woods Cottage Foundation Ltd; PB Advisory Group Pty Ltd Former independent member of Finance and Investment Committee, Board of Grain Growers Association of Australia Experience Public accountant and private consultant. Over 30 years in finance including as former CFO CMC Markets Asia Pacific, and GM Operational Risk and Compliance, CBA. Member of rt health fund since 2009.

15 13 Michael Scanlan BEng, Grad Dip Mgt., MBA, FAICD, FAIM, FCILT, FAMI, MIE, MAMI Age 59 Term Independent member elected director First appointed 18/11/2009, last re-elected 21/11/2012 Committees Chair, Business Development Committee Former Member, Audit and Risk Committee, and Remuneration, Nominations and Constitution Committee Directorships Chair, Railways Credit Union; Chair Westwood Superannuation Fund Company Trustee; Director, Wicet Services, Wicet Holdings, Wiggins Island Coal Export Terminal; former Director of Heritage Train Company; Queensland Tourism Industry Council Board; Translink Advisory Board; City Trans Management Committee; and International Public Transport Association (Aust & NZ) Experience Part-time rail specialist consultant since Over 34 years with Queensland Rail including a variety of business unit executive positions. Member of rt health fund since Andy Taylor BSC (Hons), CEng, MBA, GAICDI Age 56 Term Independent member elected director Elected 20/11/2013 Committees Member, Audit and Risk Committee Directorships Workplace Resource Centre Experience Principal and Partner in Headway Consulting Group. Formerly held senior roles in Queensland Rail until departing as head of the passenger business in Leader of the integration team bringing Australian RailRoad Group (ARG) into QR. Member of rt health fund since 2004.

16 14 Directors Report (cont.) Meetings of directors During the financial year, a total of 19 meetings of directors (including committees of directors) were held. Attendances by each director during the year were as follows: Director Meetings Audit & Risk Committee Committee Meetings Remuneration, Nominations & Constitution Committee Business Development Committee Name E A E A E A E A B Scheuber V Reynolds D Ellis R Ledger J Pascoe M Prior M Scanlan A Taylor Table Key: E Number of meetings eligible to attend A Number of meetings attended

17 15 Executive officers Matthew W Moore BA, MAICD Chief Executive Officer Matthew was appointed CEO on 25 October 2010, having joined the rt team as operations manager in 2007, moving to the new role of General Manager Strategy in He has been a director of the Australian Health Service Alliance Ltd (AHSA) since November 2012 and is a member of its Audit and Risk Committee and Remuneration and Nomination committee. He was appointed Deputy Chair of AHSA in February He has worked in senior executive positions within the private health insurance industry for nearly 25 years. These included head of strategy at Medibank Private, then at MBF where he established and implemented fraud and risk analysis systems. As CEO of an innovative business services organisation, he provided outsourced administration and IT&T services to small and medium-sized health funds, both in Australia and overseas. Simone Tregeagle BA (Comm), Grad Cert (Mktg), CPM, MAICD Chief Operating Officer Simone was appointed Deputy CEO in December 2010 after joining rt in 2006 as a marketing consultant, and being appointed permanently to the position of Manager Sales, Service & Marketing in 2009, a role she continues to fulfil as Chief Operating Officer. Simone holds the position of Acting CEO in any absence of the CEO. She has held executive positions within the private health industry, including Medibank Private and Grand United, as well as marketing agencies and not-for-profit organisations for more than 22 years.

18 16 Mark Dayhew BBus, CPA, AAII, CIP Chief Financial Officer Mark was appointed Chief Financial Officer in August He brings a depth of experience from over 30 years in the insurance industry, including more than 20 in senior executive roles. Mark s specialisation covers financial systems, risk management, corporate governance and financial reporting. John Hartigan BComm, CA, FCIS, GAICD, FCSA Company Secretary John was appointed Company Secretary in May He is a Fellow of Chartered Secretaries Australia, a Chartered Accountant and Graduate Member of the Institute of Company Directors. He has 20 years experience in corporate governance and secretariat practice in listed and unlisted public companies.

19 17 Jui Tham MBBS (USYD), MCom (UNSW) Chief Medical Officer Jui was appointed Chief Medical Officer and Executive Manager Health Services and Strategy in October He is a former surgical registrar, spending four years in the NSW hospital system before joining Bain & Company where he worked for over four years in Australia and the USA across a range of projects and industry sectors. Jui is responsible for monitoring the fund s underwriting performance and providing oversight of the fund s clinical services and valuable input into medical issues.

20 18 Directors Report (cont.) Operating results The surplus attributable to members of the company for the financial year ended 30 June 2014 amounted to $1,700,000 (2013: $7,518,000). Review of operations A gross margin of 13.3% generated during the year is a decline from 2013, at 18.8%. This result reflected members making additional hospital benefit claims over the year. Membership increased by 0.73% over the 12 months to 30 June Management expenses were similar to prior years as a percentage of premium income, being 13.4% (2013: 13.1%). Development of internal processes and operational capacity continued throughout the year against a lower than planned revenue that contributed to the increase in this percentage. Investment income was lower than in the prior year, due to a reduction in term deposits interest rates during the period. The managed fund returns performed well in a buoyed equity market. Significant changes in state of affairs During the year the company commenced optical and dental clinics in two locations. The fund also undertook negotiations to sell the existing office in Melbourne Street, South Brisbane and purchase a new building in Edward Street Brisbane (CBD). No other significant changes in the company s state of affairs occurred during the financial year. After balance date events No matters or circumstances have arisen since the end of the financial year which significantly affected, or may significantly affect, the operations of the company, the results of those operations, or the state of affairs of the company in future financial years. Future development, prospects and business strategies The company will continue to pursue business activities as a registered health benefits organisation and in health related businesses. Environmental issues The company s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a state or territory. Dividends paid or recommended As the company is a company limited by guarantee and a not-for-profit organisation, no dividends have been paid, declared or recorded. Options As the company is limited by guarantee, no options over issued shares or interests in the company were granted during or since the end of the financial year and accordingly there were no options outstanding at the date of this report. Indemnifying officers or auditor During or since the end of the financial year, the company has paid insurance premiums to insure all directors and officers of the company against liabilities for costs and expenses incurred by them to the extent permitted by the Corporations Act 2001 in defending legal proceedings arising from their conduct while acting in the capacity of director or officer of the company, other than conduct involving a wilful breach of duty in relation to the company. The contract of insurance prohibits disclosure of the nature of the liabilities and the amount of the premium. No indemnities have been given or insurance premiums paid during or since the end of the financial year for any person who is, or has been, an auditor of the company.