Eildon Capital Group
2021
ANNUAL REPORT
Consolidated Financial Reports of Eildon Capital Limited
(ABN 11 059 092 198) and Eildon Capital Trust (ARSN 635 077 753)
2021 Contents
01 | Group Particulars
02 | Chairman's Report
04 | The Year in Review
08 | Directors’ Report
20 | Auditor's Independence Declaration
21
| Consolidated Statement of Profit or Loss
22 | Consolidated Statement of
Comprehensive Income
23 | Consolidated Statement of Financial
Position
24 | Consolidated Statement of Changes
in Equity
26 | Consolidated Statement of Cash Flows
27 | Notes to the Financial Statements
63 | Directors' Declaration
64 | Independent Auditor's Report
67 | Corporate Governance Statement
75 | Additional Information
EILDON CAPITAL GROUP | ANNUAL REPORT 2021 Group Particulars
REGISTERED OFFICE
Suite 4, Level 6
330 Collins Street
Melbourne VIC 3000
Tel: (03) 7003 7622
RESPONSIBLE ENTITY
Eildon Funds Management Limited
ABN 72 066 092 028
AFSL 229 809
Suite 4, Level 6
330 Collins Street
Melbourne VIC 3000
DIRECTORS
Eildon Capital Limited -
Mark A Avery (Managing Director)
James R Davies
Michelle E Harpur
SECRETARY
Eildon Capital Limited -
Tiffany L McLean (Appointed 14 January 2021)
John A Hunter (Resigned 29 June 2021)
Eildon Funds Management Limited as
Responsible Entity for Eildon Capital Trust -
Tiffany L McLean (Appointed 14 January 2021)
John A Hunter (Resigned 29 June 2021)
BANKERS
Westpac Banking Corporation Limited
AUDITORS
Pitcher Partners Sydney
Level 16, Tower 2 Darling Park
201 Sussex Street
Sydney NSW 2000
Craig G Treasure (Resigned 29 June 2021)
SHARE REGISTRY
Eildon Funds Management Limited as
Responsible Entity for Eildon Capital Trust -
Mark A Avery (Managing Director)
James R Davies (Appointed 17 November 2020)
Computershare Investor Services Pty Limited
Level 4, 60 Carrington Street
Sydney NSW 2000
Michelle E Harpur (Appointed 17 November 2020)
Craig G Treasure ( Appointed 17 November 2020
DOMICILE
Australia
and resigned 29 June 2021)
John A Hunter (Resigned 17 November 2020)
Jonathan T M Sim (Resigned 17 November 2020)
STOCK EXCHANGE LISTING
ASX Limited
1
2021 ANNUAL REPORT | EILDON CAPITAL GROUP Chairman’s Report
Dear Securityholder,
I am pleased to introduce these annual accounts and report
for the year ended 30 June 2021. The year has been one of
transformation for Eildon Capital Group (EDC or Group) with
the internalisation of the investment management function
through the acquisition of Eildon Funds Management Limited
(EFM), expansion of the balance sheet via a placement in
March 2021 and growth in Assets Under Management (AUM).
HIGHLIGHTS
The Group delivered a net profit after tax of $4.9 million
(2020: $4.7 million), representing a 4.3% increase over the prior
corresponding period. Following the acquisition of EFM during
the financial year, EDC now has two primary lines of business:
balance sheet investments and the management of third party
capital through EFM.
Balance Sheet Investments
$8.5 million of co-investment into EFM funds to support
alignment of EDC with external investors.
Eildon Funds Management
The Group acquired Eildon Funds Management Limited at
a cost of $4.0 million in November 2020. EFM delivered a
pre-tax contribution of $0.6 million to the Group’s result in the 8
month period post acquisition as well as saving management fees
that were previously paid to manage the business. EFM currently
has over $265 million of Assets Under Management and is well
positioned for further growth. EFM launched two unlisted income
producing property funds with an on-completion value of $71
million in addition to funding over $90 million of real estate credit
investments, post internalisation. Post 30 June 2021, EFM has
launched the EAM Caboolture Property Fund, a $55 million new
unlisted, seven-year, fixed term direct property fund. Demand for
high quality income producing investment products remains
strong and Eildon remains well positioned to capitalise on
investor demand.
Eildon Capital Group’s investment portfolio of $39 million
includes 8 debt positions and 5 equity investments as at
30 June 2021, diversified across Victoria, Queensland and
New South Wales. Debt investments represent 77% of the
portfolio by value and equity 23%. These investments include
The Fund is raising capital from wholesale investors to invest in
a new convenience Retail Shopping Centre and Large Format
Retail Centre. The Property is strategically located in the
emerging residential suburb of Caboolture, approximately 52km
north of the Brisbane CBD. Assuming the successful completion
2
EILDON CAPITAL GROUP | ANNUAL REPORT 2021 Demand for high quality income producing investment
products remains strong and EDC is well positioned to capitalise
on investor demand for both these strategies.
of the capital raising, Eildon Funds Management Limited would
be entitled to receive fee income commencing in November
2022. EFM has an identified pipeline for a further $70 million
of convenience retail and essential service, targeting 2H22.
EFM operates two core investments strategies, the first
being income producing unlisted property funds, which
offer investor exposure to income producing real estate. The
second strategy is the Eildon Debt Fund (EDF) platform which
is a single platform that offers third party investors exposure
to real estate credit investments. These transactions
provide both fee income to the Group and co-investment
opportunities for the EDC balance sheet. EDF has funded
over $260 million across 25 debt investments since inception.
Demand for high quality income producing investment
products remains strong and EDC is well positioned to
capitalise on investor demand for both these strategies.
OUTLOOK
The Directors believe the internalisation of EFM has
increased alignment of management staff and Eildon,
simplified the corporate governance and has provided a
growth angle to the business which has the potential to
add to security value over time.
Balance Sheet investments that have driven strong returns
since listing in 2017 are anticipated to continue to support
quarterly distributions while the Group’s cash reserve
provides the ability to fund growth initiatives and new
strategies for Eildon Funds Management.
The internalisation of the funds management function
has meant the Group is able to better match investment
opportunities with investor funds, in addition to providing
product pipeline for the balance sheet. The Directors remain
confident that the Group will continue to see strong deal
flow which will assist with AUM growth across the platform
throughout FY22.
I would like to acknowledge and thank my fellow Directors,
including Craig Treasure who stepped off the Board during
the period. We acknowledge the challenging circumstances
being experienced throughout this pandemic and being
locked-down for extended periods of time and wish to thank
the management team for their efforts during the year. I
would also like to thank you, our securityholders, for your
continued support.
James Davies
Chairman
3
2021 ANNUAL REPORT | EILDON CAPITAL GROUP The year in review
INTRODUCTION
Eildon Capital Group (ASX: EDC) is pleased to report a full year net
profit after tax of $4.9 million (2020: $4.7 million), representing
a 4.3% increase over the prior corresponding period. Net
Assets per security was $1.11 as at 30 June 2021 (2020: $1.09
per security). During the year, distributions of 8.0 cents per
security were paid to securityholders.
INVESTMENT HIGHLIGHTS
Eildon Capital Group’s investment portfolio totalled $39 million
as at 30 June 2021. In addition, the Group has $11.1 million
of cash reserves, representing 21% of net assets, of which
$3.6 million is committed to portfolio investments. In addition,
subsequent to year end, Eildon Capital Group has invested
$3.5 million in a loan opportunity.
Group Assets Under Management (AUM) totalled $267
million as at 30 June 2021, which included balance sheet
and third-party assets. A strong pipeline of opportunities in
place should see the AUM of the Group increase materially
over the FY2022 period. Eildon Asset Management (EAM)
(50% owned by EFM in partnership with Strategic Property
Partners Investment Pty Limited) successfully closed two
new unlisted property funds in the period, the EAM Elara
Village Property Fund and EAM Berwick Motor Trust Funds
raised for these two products were $38.6 million and
included 150 new wholesale investors to the Group’s funds
management platform. EFM currently manages $118 million
across 13 projects which includes the Group’s balance sheet
co-investment of circa $7.0 million. Since the internalisation
in November 2020 to 30 June 2021, EFM has negotiated and
funded over $80 million of new loans.
Eildon Capital Group’s investment portfolio includes 8 debt
positions and 5 equity investments as at 30 June 2021,
diversified across Victoria, Queensland and New South Wales.
Debt investments represent 77% of the portfolio by value and
equity 23%.
Eildon Capital Group remains focused on our set objectives,
and will continue to deliver consistent distributions to
securityholders, enhance earnings in-line with funds
management business growth and grow net assets and
share price.
Net Profit after Tax
$4.9m
(2020: $4.7 million)
4.3%
over the prior
corresponding period
Net Tangible Assets
$1.11
per security
$39m
Investment Portfolio
Note: All figures as at 30 June 2021.
4
EILDON CAPITAL GROUP | ANNUAL REPORT 2021 EDC Geographic Diversification
EFM Profit Before Tax
3%
71%
26%
VIC
NSW
QLD
38%
11%
51%
Eildon Real Estate Credit
Eildon Property Income
Funds
Eildon Development
Funds
EDC Balance Sheet Investments
EDC Group Revenue
23%
77%
Property Equity
Property Debt
37%
Eildon Capital Group
63%
Eildon Funds
Management
5
2021 ANNUAL REPORT | EILDON CAPITAL GROUP The year in review
CAPITAL MANAGEMENT
A distribution of 2.0 cents per stapled security was paid on
23 July 2021. The anticipated distribution/dividend payment
calendar for the next 12 months is outlined below:
PERIOD
September 2021
December 2021
March 2022
June 2022
PAYMENT DATE
22 October 2021
24 January 2022
22 April 2022
22 July 2022
As part of the Group’s focus on building and retaining a
highly skilled management team, and their alignment to the
performance of the Group, a total of 409,300 performance
rights have been issued to certain employees under the
Long Term Incentive Plan (LTIP) that was approved by
securityholders at the meeting on 13 November 2020.
The Group also successfully undertook a placement of
6.14 million securities in March 2021 to raise an additional
$6.3 million in capital to assist in the growth of the Group.
MARKET CONDITIONS AND OUTLOOK
Eildon Capital Group is a unique ASX offering as it provides
The Distribution/Dividend Reinvestment Plan will be
exposure to a pure play property funds management platform
reactivated for the September 2021 distribution/dividend.
which covers both debt and equity investment. The aim of
Further details will be provided regarding the operation of
the Group is to provide income yield through its balance
the Plan when the distribution/dividends are announced.
sheet investments while also generating fees from its funds
zero
Balance Sheet
Gearing
$267m
Group Assets Under
Management
$218m
Third Party Assets
Under Management
2
Locations across
Australia
Note: All figures as at 30 June 2021.
6
6
EILDON CAPITAL GROUP | ANNUAL REPORT 2021
management platform, which over time has the ability to
management initiatives. The Directors and Management
scale and be valued on an earnings multiple.
continually undertake a disciplined review of new
As a result of the internalisation of EFM, the Group has
the flexibility and capacity to take advantage of attractive
opportunities when they emerge. This can be achieved
by undertaking a combination of either direct investment
utilising the Group’s balance sheet or third-party investor
capital via the Funds Management platform.
The Group is cautious but optimistic about the investment
environment leading into FY2022 as historically low
interest rates and investor appetite for income focused
risk appropriate investments underpin the Group’s growth
aspirations.
EDC offers strong asset backed income returns with
opportunity for earnings growth through scalable funds
opportunities and evaluate the allocation of capital
between new and strategic Funds Management growth
initiatives and balance sheet investment.
EDC offers strong asset
backed income returns with
opportunity for earnings
growth through scalable
funds management initiatives.
77
2021 ANNUAL REPORT | EILDON CAPITAL GROUP Directors’ Report
The Directors of Eildon Capital Limited and Eildon Funds Management Limited as Responsible Entity for Eildon Capital Trust
(collectively referred to as the Directors) present their report together with the consolidated financial statements for the year
ended 30 June 2021 for both:
– Eildon Capital Group (“EDC”) consisting of Eildon Capital Limited (the “Company”) and its controlled entities and Eildon Capital
Trust (the “Trust”) and its controlled entities; and
– the Trust and its controlled entities (“ECT”).
The shares of the Company and units of the Trust are combined and issued as stapled securities in EDC. The shares of the
Company and units of the Trust cannot be traded separately and can only be traded as stapled securities.
DIRECTORS
The Directors of the Company and Eildon Funds Management Limited as Responsible Entity in office during the whole of the
financial year and up to the date of this report, unless otherwise stated, are:
Name:
Title:
Mark A Avery
Managing Director of Eildon Capital Limited
Managing Director of Eildon Funds Management Limited
Member of the audit committee
Qualifications:
B.Com.Pl.Ds. (UOM)
Experience and expertise:
Listed company directorships:
(held within the last three years)
Interests as at the date of this report:
Mr Avery began his professional career at Macquarie Group in 2002 in the property
finance and residential development divisions. Mr Avery also worked for private and
listed property development and investment groups. Mr Avery commenced at CVC
Limited, the ultimate parent of the Company, in 2010, and has been responsible for
all of the group’s real estate investment activities. He was appointed as Managing
Director of the Company in 2015.
Managing director of CVC Limited (Since July 2019)
– Stapled securities: 53,402
– Performance rights: None
Name:
Title:
James R Davies
Non-executive Chairman of Eildon Capital Limited
Director of Eildon Funds Management Limited from 17 November 2020
Member of the audit committee
Qualifications:
BSC (Comp) (UNE), MBA (LBS), GAICD
Experience and expertise:
Listed company directorships:
(held within the last three years)
Interests as at the date of this report:
8
Mr Davies has over 30 years’ experience in investment management across real estate,
private equity, infrastructure, natural resources and distressed asset management.
Most recently he was Head of Funds Management at New Forests Asset Management.
Prior to that he held Director roles at Hastings Funds Management Limited and Royal
Bank of Scotland’s Strategic Investments Group. He has been appointed on numerous
Investment Committees and Boards including as Chairman of Timberlink Australia,
Forico and Airport Rail Link.
Independent Non-executive director of New Energy Solar (Since October 2017)
– Stapled securities: 27,016
– Performance rights: None
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Directors’ Report
DIRECTORS (CONT.)
Name:
Title:
Michelle E Harpur
Non-executive Director of Eildon Capital Limited
Director of Eildon Funds Management Limited from 17 November 2020
Chairman of the audit committee
Qualifications:
B.A. (UNSW), L.L.B. (UNSW), GAICD
Experience and expertise:
Mrs Harpur has been a partner in mid-size, large and international law firms since
1992, and is principal of Harpur Phillips. She was admitted as a solicitor in 1986. Over
many years, her clients have included listed public companies and private companies
involved in property development, in addition to governance and risk management.
She is a director of lifeline Australia, and sits on its Governance and Services
Committees.
Listed company directorships:
(held within the last three years)
None
Interests as at the date of this report:
– Stapled securities: 19,523
– Performance rights: None
Name:
Title:
Craig G Treasure
Non-executive Director of Eildon Capital Limited until 29 June 2021
Director of Eildon Funds Management Limited from 17 November 2020 to 29 June 2021
Member of the audit committee
Qualifications:
BASc (Surveying) (QUT), FDIA
Experience and expertise:
Listed company directorships:
(held within the last three years)
Craig has more than 30 years’ experience in property development, specifically in
the residential land and housing sectors along the eastern seaboard of Australia.
As a licensed surveyor and licenced property developer, Craig has previously held a
number of senior executive roles and directorships within the property industry. His
experience is both as a business proprietor and at an executive level with publicly
listed entities.
Executive Chairman of CVC Limited (Since June 21)
Director and Non-executive Chairman of TasFoods Limited (Since June 2020)
Executive Director of Villa World Limited (From February 2012 to October 2012)
Managing director of Villa World Limited (From October 2012 to October 2019)
Interests as at the date of this report:
– Stapled securities: None
– Performance rights: None
9
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
DIRECTORS (CONT.)
Name:
Title:
John A Hunter
Executive Director of Eildon Funds Management Limited until 17 November 2020
Company secretary of Eildon Capital Limited until 29 June 2021
Company secretary of Eildon Funds Management Limited until 29 June 2021
Chief Financial Officer
Qualifications:
B.Com. (ANU), MBA (MGSM), MAppFin (MAFC), CA
Experience and expertise:
Mr Hunter joined CVC in 2006 and has overseen the development and management
of a number of investment vehicles with his core responsibility being management of
financial and statutory reporting and compliance. Mr Hunter has extensive experience
in ASX listed and unlisted public reporting and accounting for property, equity trusts,
managed investment companies and schemes, due diligence and compliance.
Listed company directorships:
(held within the last three years)
None
Interests as at the date of this report: – Stapled securities: None
– Performance rights: None
Name:
Title:
Jonathan Teck Meng Sim
Executive Director of Eildon Funds Management Limited until 17 November 2020
Qualifications:
B.Com. Dip M.L. (UOM), CA
Experience and expertise:
Mr Sim has over 15 years’ banking and finance experience, primarily as a real estate
finance professional, with extensive experience in real estate debt and equity
investment. Beginning his career at KPMG, Mr Sim has since held a number of
management positions at Australian banks including ANZ, NAB and Commonwealth
Bank. Subsequently, he was involved as a principal investor and financier at a private
real estate investment group. Mr Sim is responsible for the real estate investment
activities of Eildon Funds Management Limited and the Eildon Debt Fund.
Listed company directorships:
(held within the last three years)
None
Interests as at the date of this report: – Stapled securities: None
– Performance rights: None
COMPANY SECRETARIES
Name:
Title:
Tiffany L McLean
Company Secretary of Eildon Capital Limited from 14 January 2021
Company Secretary of Eildon Funds Management Limited from 14 January 2021
Qualifications:
L.L.B (Bond University), GDLP (GU)
Experience and expertise:
Ms McLean is a corporate lawyer with 15 years’ experience in corporate governance,
compliance and capital raisings and has held roles in private practice in Australia and
in-house legal in the UK. She has provided legal services to EDC since 2018, including
investments made by EDC and the successful implementation of the internalisation of
Eildon Funds Management Limited.
Interests as at the date of this report: – Stapled securities: None
– Performance rights: None
In additional to being a Director of Eildon Funds Management Limited, John A Hunter was also a company secretary of Eildon
Capital Limited and Eildon Funds Management Limited until 29 June 2021.
10
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Directors’ Report
KEY MANAGEMENT PERSONNEL
Key management personnel during the financial year includes the Directors, Company Secretaries and Laurence Parisi who is the
Chief Operating Officer of EDC.
MEETINGS OF DIRECTORS
The numbers of meetings of EDC’s board of directors and of each board committee held during the year ended 30 June 2021, and
the numbers of meetings attended by each director were:
Full Board
No. of meetings No. of meetings
eligible to attend
attended
Audit Committee
No. of meetings No. of meetings
eligible to attend
attended
Independent Board Committee
No. of meetings No. of meetings
eligible to attend
attended
M A Avery
J R Davies
C G Treasure
M E Harpur
9
9
8
9
SHARE OPTION
9
9
9
9
2
2
2
2
2
2
2
2
0
5
5
5
0
5
5
5
There were no options issued by the Company during the year or to the date of this report.
PRINCIPAL ACTIVITIES
EDC is an active property investment group which participates in retail, industrial, residential and commercial opportunities.
Following the acquisition of Eildon Funds Management Limited on 17 November 2020, this resulted in the internalisation of the
investment function, with the Group now providing funds management services in addition to the existing investment operations.
DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions proposed or paid during the year and included within the statement of changes in equity by EDC are:
2021 June quarter
2021 March quarter
2020 December quarter
2020 September quarter
2020 June quarter
-
-
-
-
-
Company
Dividend
(cents)
Trust
Distribution
(cents)
Total Per
Security
(cents)
2.023
2.000
2.000
1.925
2.023
2.000
2.000
1.925
Total
$
Date of
Payment
952,329
23-Jul-21
941,502
23-Apr-21
818,702
22-Jan-21
788,021
23-Oct-20
1.5569
1.5569
637,298
24-Jul-20
Franked
Amount per
Security
-
-
-
-
-
11
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
REVIEW OF OPERATIONS
EDC recorded an after tax profit to securityholders of $4,894,024 (2020: $4,730,453). The profit for the year is comprised as follows:
Net profit after income tax attributable to:
- Eildon Capital Limited
- Eildon Capital Trust
Net profit to securityholders
Non-controlling interest
Net profit after income tax
2021
$
1,006,181
3,887,843
4,894,024
33,159
2020
$
4,091,672
638,781
4,730,453
-
4,927,183
4,730,453
EDC’s investment portfolio totalled $39.2 million as at 30 June 2021. In addition, the group has $11.1 million of cash reserves,
representing 21% of net assets, of which $3.6 million is committed to fund existing investments. The investment portfolio includes
5 debt positions and 7 equity investments diversified across Queensland, Victoria and New South Wales. The investment portfolio
remains 71% invested in debt positions and 29% in equity by value. During the financial year, EDC generated $4.4 million (2020:
$6.0 million) of interest income from property loans, and is holding loan investments totalling $27.8 million (2020: $30.9 million).
On 17 November 2020, the Company completed the acquisition of Eildon Funds Management Limited and its controlled entities
(“EFM”) for a consideration of $4,000,000, resulting in the internalisation its investment management function. EFM is a leading
arranger, investor and manager of real estate credit and equity investments, and currently has approximately $267 million of
Assets Under Management (“AUM”).
During the period two new unlisted property funds were successfully closed with total AUM of $71 million and EFM has increased
its lending portfolio to approximately $118 million under management. For the period from acquisition to the end of the period,
EFM contributed $0.7m after tax profit to EDC.
EDC has successfully completed a placement on 22 March 2021, which resulted in 6,140,000 stapled securities being issued,
raising approximately $6.3 million.
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for key management personnel of EDC in accordance with the
requirements of the Corporations Act 2001 and its regulations. This information has been audited as required by s. 308(3C) of the
Corporations Act 2001. Key management personnel are defined as those persons having authority and responsibility for planning,
directing and controlling the major activities of EDC.
Remuneration philosophy
The performance of EDC depends upon its ability to attract and retain quality people. EDC is committed to developing a
remuneration philosophy of paying sufficient competitive ‘base’ rewards to attract and retain high calibre personnel in order to
create value for stapled securityholders.
Remuneration structure
In accordance with best practice corporate governance, the structure of Non-executive Director and remuneration for all other key
management personnel is separate and distinct.
Non-executive Director’s remuneration is solely in the form of fees and has been set by stapled securityholders at a maximum
aggregate amount of $300,000, which was approved at the Annual General Meeting held on 13 November 2020, to be allocated
amongst the Directors.
12
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Directors’ Report
REMUNERATION REPORT (AUDITED) (CONT.)
Remuneration structure (cont.)
Other key management personnel remuneration consists of: base salary, fees, superannuation contributions, short term
discretionary performance bonuses and Long-Term Incentive Plan (LTIP). Under LTIP, performance rights were issued for a vesting
period of three years. The vesting conditions include achievement of a target growth in Total Securityholder Return (TSR) or Return
on Assets (ROA).
EDC does not have a remuneration committee with the remuneration of the Non-executive directors determined by the Board
of the Company. The remuneration of key management personnel other than the Managing Director are determined following
discussion with the Board of the Company.
Short term discretionary performance bonuses permit EDC to reward individuals for superior personal performance or
contribution towards components of EDC’s performance for which they have direct responsibility and are determined at the end
of the financial year.
Executive contractual arrangements
It is EDC’s policy that service contracts for key management personnel are unlimited in term but capable of termination as per
the relevant period of notice and that EDC retains the right to terminate the contract immediately, by making payment that is
commensurate with pay in lieu of notice.
The service contract outlines the components of remuneration paid to the key management personnel but does not prescribe
how remuneration levels are modified year to year. Remuneration levels are reviewed each year to take into account any change
in the scope of the role performed by the key management personnel and any changes to the principles of the remuneration
policy.
Standard key management personnel termination payment provisions apply to all other key management personnel. The
standard key management personnel provisions are as follows:
Details
Notice
Period
Payment in
Lieu of Notice
Treatment of STI
on Termination
Treatment of LTI
on Termination
Employer initiated termination
1 month
1 month
Termination for serious misconduct
None
None
Employee initiated termination
1 month
1 month
Unvested awards
forfeited
Unvested awards
forfeited
Unvested awards
forfeited
Unvested awards determined
by Directors’ discretion
Unvested awards
forfeited
Unvested awards determined
by Directors’ discretion
13
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
REMUNERATION REPORT (AUDITED) (CONT.)
Remuneration of key management personnel
The following table provides details of the remuneration expense of EDC’s key management personnel for the current and
previous financial year measured in accordance with the requirements of applicable accounting standards.
Short-term Employee
Benefits
Post-Employment
Benefits
Bonus
(g)
$
Superannuation
$
Share-based
Payment
(h)
$
Total
$
Base %
(i)
Base
Salary
$
-
-
64,688
45,662
53,653
38,052
53,653
6,088
-
-
-
-
-
-
Directors
Mark Avery (a)
(Managing Director)
James Davies
(Non-executive Chairman)
Michelle Harpur
(Non-executive Director)
Craig Treasure (b)
(Non-executive Director)
Jonathan Sim (c)
(Executive Director of EFM)
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Other Key Management Personnel
Tiffany McLean (d)
(Company Secretary)
2021
2020
John Hunter (e)
(Chief Financial Officer)
Laurence Parisi (f)
(Chief Operating Officer)
2021
2020
2021
2020
147,945
-
85,000
-
2021
319,939
85,000
2020
89,802
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,145
4,338
5,097
3,615
5,097
578
-
-
-
-
-
-
14,055
-
30,394
8,531
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
70,833
50,000
58,750
41,667
58,750
6,666
-
-
-
-
-
-
-
-
100
100
100
100
100
100
-
-
-
-
-
-
16,603
-
263,603
-
61
-
16,603
451,936
-
98,333
Notes:
(a) The remuneration of Mr Avery is paid by CVC Managers Pty Limited, a subsidiary of CVC Limited which is the ultimate parent of EDC.
(b) Mr Treasure resigned from the board of the Company and Eildon Funds Management Limited on 29 June 2021.
(c) Mr Sim resigned from the board of Eildon Funds Management Limited on 17 November 2020 when the internalisation of EFM was
completed. Disclosure of remuneration is not required for periods of 1 July 2020 to 17 November 2020 and the 2020 financial year
when Eildon Funds Management Limited was a Responsible Entity of the Trust but not a subsidiary of EDC.
(d) Ms McLean was appointed as company secretary on 14 January 2021. The remuneration of Ms McLean is paid by CVC Managers Pty
Limited, a subsidiary of CVC Limited which is the ultimate parent of EDC.
(e) Mr Hunter resigned as the director of Eildon Funds Management Limited on 17 November 2020 and resigned as the company
secretary of the Company and Eildon Funds Management Limited on 29 June 2021. Following the resignation of Mr Hunter as company
secretary, he is no longer considered to be a key management personnel of EDC. The remuneration of Mr Hunter is paid by CVC
Managers Pty Limited, a subsidiary of CVC Limited which is the ultimate parent of EDC.
Mr Parisi became a key management personnel of EDC on 17 November 2020 when the internalisation of EFM was finalised. The
amount paid to Mr Parisi in 2021 relates to the period of 17 November 2020 to 30 June 2021.
(f)
(g) The Short Term Incentive Bonus represents discretionary bonuses as determined by the Directors of EDC, based on their performance
during the year.
(h) Share-based payment is in relation to performance rights issued. Refer note 19.
(i) Base % reflects the amount of base level remuneration that is not dependent on individual or EDC’s performance.
14
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Directors’ Report
REMUNERATION REPORT (AUDITED) (CONT.)
Key management personnel holding of stapled securities
The relevant security holding interests of key management personnel in the capital of EDC as at 30 June 2021 is as follows:
Stapled Securities
Opening
Purchases
Sales
Mr M. A. Avery
Mr J. R. Davies
Ms M. E. Harpur
Mr C. G. Treasure (a)
Ms T. McLean (b)
Mr J. A. H. Hunter (c)
Mr L. B. Parisi (d)
Mr J. T. M. Sim (e)
Notes:
41,285
27,016
19,523
40,570
-
8,300
-
-
12,117
-
-
-
-
10,000
5,000
-
-
-
-
-
-
-
-
-
Other Changes
During the Year
-
-
-
(40,570)
-
(18,300)
Closing
53,402
27,016
19,523
-
-
-
20,810
25,810
-
-
(a) Mr Treasure resigned from the board of the Company and Eildon Funds Management Limited on 29 June 2021.
(b) Ms McLean was appointed as a company secretary of the Company and Eildon Funds Management Limited on 14 January 2021.
(c) Mr Hunter resigned as the director of Eildon Funds Management Limited on 17 November 2020 and resigned as the company
secretary of the Company and Eildon Funds Management Limited on 29 June 2021.
(d) Mr Parisi became a key management personnel of EDC on 17 November 2020 when the internalisation of EFM was finalised.
(e) Mr Sim resigned from the board of Eildon Funds Management Limited on 17 November 2020. Disclosure is not required for the
period of 1 July 2020 to 17 November 2020 when Eildon Funds Management Limited was a Responsible Entity of the Trust but not a
subsidiary of EDC.
Share option
There were no options issued by the Company during the year or to the date of this report.
15
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
REMUNERATION REPORT (AUDITED) (CONT.)
Performance rights
On 1 February 2021, EDC issued employees performance rights under the Employee Incentive Plan for a vesting period of 3 years.
The rights deliver ordinary stapled securities to employees (at no cost) where the performance hurdles in relation to those
performance rights are met. Performance rights carry no dividend or voting rights or rights to participate in any other share issue
of EDC or any other entity. When exercisable, each performance right is entitled to receive one stapled security. If an employee
is determined to be a Good leaver then unvested securities continue to be unvested until the end of vesting period with Board
discretion. If an employee is determined to be a Bad leaver, unvested securities are forfeited. A total of 409,300 performance
rights have been issued with a three year term with the terms summarised as follows:
50% Subject to a Total Security Holders
Return Hurdle
Return (p.a.)
Vesting Amount
< 8%
8% - 10%
10% - 12%
>12%
nil
50%
75%
100%
50% Subject to a Return on
Assets Hurdle
Return (p.a.)
Vesting Amount
< 12%
12%
nil
50%
12% - 13.5%
50% - 100%
>13.5%
100%
The fair value of the rights at grant date was based on the following inputs:
– Share price of $1.09 at grant date;
– Share price of $1.03 which is based on placement in March 2021;
– 2 cps distribution paid on a quarterly basis;
– Net assets of $1.11 as at 31 January 2021; and
– Vesting date of 31 January 2024.
The table below provides a reconciliation of performance rights held by Laurence Parisi. No performance rights have been issued
to other key management personnel.
Year ended 30 June 2021
Grant
Date
Vesting
Date
Exercise
Price (cents)
Balance at Start
of the Year
Granted During
the Year
Balance at End
of the Year
Value per
Right
1 Feb 2021
31 Jan 2024
-
-
139,800
139,800
$0.87
16
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Directors’ Report
REMUNERATION REPORT (AUDITED) (CONT.)
Consequences of performance on stapled securityholder wealth
In considering EDC’s performance and benefits for stapled securityholder wealth, the Directors have regard to the following
indicators in respect of the current financial year and previous financial years.
2021
$
2020
$
2019
$
2018
$
2017
$
Net profit after tax attributable to ordinary
securityholders of EDC (a)
Total comprehensive income attributable
to ordinary securityholders of EDC (a)
4,894,024
4,730,453
4,386,508
3,006,055
3,659,218
4,894,024
4,730,453
4,386,508
3,006,055
3,610,914
Dividends and distributions paid
Securities issued/(bought back) on market
Security price
3,500,555
5,984,375
1.08
9,445,158
1,124,089
1.00
3,525,499
(609,994)
1.02
3,197,311
-
1.04
2,012,822
-
1.05
Net assets per security (b)
Change in net assets per security (b)
Total KMP incentives as percentage of
profit for the year (%)
1.11
0.02
0.99
1.09
0.03
-
1.06
0.02
-
1.04
(0.01)
-
1.05
0.06
-
(a) Although net profit and total comprehensive income of Eildon Capital Trust, the stapled entity, and its subsidiaries are identified as net
profit and total comprehensive income attributable to non-controlling interest, the shareholders of Eildon Capital Limited are also the
unitholders of Eildon Capital Trust by virtue of the stapling arrangement dated 18 March 2020. As such net profit after tax and total
comprehensive income attributable to ordinary securityholders of EDC for the 30 June 2021 and 30 June 2020 financial years refer to profit
after tax and total comprehensive income attributable to owners of the Company and owners of the Trust which represents the actual
earnings for the stapled securityholders of EDC.
(b) Although a non-controlling interest has been identified the shareholders of Eildon Capital Limited are also the unitholders of Eildon Capital
Trust by virtue of the stapling arrangement dated 18 March 2020. As such net assets per security for the 30 June 2021 and 30 June 2020
financial years refers to net assets attributable to owners of the Company and owners of the Trust which represents the actual value
attributable to stapled securityholders of EDC. Refer note 17.
We aim to align executive remuneration to our business objectives and the creation of securityholder wealth. Although the
Directors have regard to the financial performance when setting remuneration, these are not necessarily consistent with
the measures used in determining the variable amounts of remuneration to be awarded to key management personnel. As
a consequence, there may not be a direct correlation between the statutory key performance measures and the variable
remuneration awarded.
This concludes the remuneration report, which has been audited.
17
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
On 17 November 2020, the Company completed the acquisition of Eildon Funds Management Limited and its controlled entities
(“EFM”) for a consideration of $4,000,000, resulting in the internalisation of its investment management function. EFM is a leading
arranger, investor and manager of real estate credit and equity investments, and currently has approximately $267 million of
Assets Under Management (“AUM”).
There were no other significant changes in the state of affairs of EDC that occurred during the year not otherwise disclosed in this
report or in the financial statements.
LIKELY DEVELOPMENTS AND FUTURE EXPECTATIONS
EDC will continue to assess Australian property investment opportunities. As an investment group, the results of EDC are
dependent on the timing of and opportunities for the realisation of investments. Accordingly, it is not possible at this stage to
predict the future results.
ENVIRONMENTAL REGULATION
EDC’s operations are not subject to environmental regulations.
EVENTS SUBSEQUENT TO REPORTING DATE
The COVID-19 pandemic is still on-going, with asset markets experiencing significant volatility, as well as creating significant
uncertainty regarding its economic impact. The increase in property prices have had a positive impact on the existing investment
portfolio. EDC is pleased to report all investments are performing as expected and are forecast to deliver returns consistent with
original investment assumptions. There are currently no investments in the loan portfolio in arrears and all covenants are being
maintained. However, we are cognisant that the overall impact of COVID-19 is still unknown at this point.
Other than as set out above, there are no matters or circumstances that have arisen since the end of the financial period which
significantly affected or may significantly affect the operations, the results of those operations or the state of affairs of EDC in
financial periods subsequent to 30 June 2021.
ECT DISCLOSURES
Units issued in ECT during the year are set out in note 17. There were 47,075,102 (2020: 40,935,102) issued units in ECT at
balance date.
Fees paid to the Responsible Entity and its associates from the Trust during the financial year are disclosed in note 22(d) to the
financial statements.
The Responsible Entity or its associates do not hold any units in the Trust as at the end of the financial year.
The total carrying value of ECT’s assets as at year end was $44,287,542 (2020: $38,181,204). Net assets attributable to unitholders
of ECT were $43,123,127 (2020: $37,287,469) equalling to $0.92 per unit (2020: $0.91)
ROUNDING OF AMOUNTS
EDC is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments
Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Corporations
Instrument to the nearest dollar unless otherwise stated.
18
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021 Directors’ Report
INDEMNITY AND INSURANCE OF OFFICERS
a) Indemnification
During and since the end of the financial period EDC and ECT have provided an indemnity and entered into an agreement to
indemnify Directors and Company Secretaries for liabilities that may arise from their position, except where the liability arises
out of conduct involving a lack of good faith.
b) Insurance Premiums
EDC and ECT have not, during the year or since the end of the financial year, paid or agreed to pay a premium for insuring any
person who is or has been an auditor of the Company or a related body corporate for the costs or expenses of defending legal
proceedings.
The Company has paid insurance premiums in respect of Directors’ and Officers’ liability and legal expense insurance for Directors
and Officers of the Company.
In accordance with s. 300(9) of the Corporations Act 2001 further details have not been disclosed due to confidentiality provisions
contained in the insurance contract.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of
the company for all or part of those proceedings.
AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES
EDC appointed Pitcher Partners Sydney as the auditors for the 2021 financial year. Details of the amounts paid or payable to the
auditor for audit and non-audit services provided during the financial year are disclosed in note 4.
The directors are satisfied that the provision of non-audit services by the auditor did not compromise the audit independence
requirements of the Corporations Act 2001 for the following reasons:
– All non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity
of the auditor; and
– Non of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics
for Professional Accountants (including Independence Standards).
A copy of the Independence Declaration is included on page 20.
Signed in accordance with a resolution of Directors.
Dated at Sydney 24 August 2021
Mark Avery
Director
James Davies
Director
19
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Auditor’s Independence Declaration
To the Directors of Eildon Capital Limited and Eildon Capital Trust, together Eildon Capital Group
In relation to the independent audit for the year ended 30 June 2021, to the best of my knowledge and belief there have been:
(i)
no contraventions of the auditor independence requirements of the Corporations Act 2001; and
(ii)
no contraventions of APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (“the Code”).
This declaration is in respect of Eildon Capital Limited and Eildon Capital Trust, together Eildon Capital Group.
John Gavljak
Partner
24 August 2021
Pitch Partners
Sydney
20
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Consolidated Statement of Profit or Loss
INCOME
Interest income
Fee income
Distribution income
Total income
EDC
ECT
Notes
2021
$
2020
$
2021
$
2020
$
4,358,780
3,422,941
212,097
4,530,468
95,976
1,513,573
4,503,580
13,967 -
212,097
755,159
25,717
7,993,818
6,140,017
4,729,644
780,876
Share of net profit of associate accounted for
using the equity method
12
2,633,008
1,653,058
- -
EXPENSES
Accountancy
Employee and director costs
Insurance
Interest expenses
Net loss on financial assets at fair value through profit or loss
Legal fees
Management and consultancy fees
Restructure cost
Share registry
Other expenses
6
340,147
1,508,025
79,126
42,119
49,218
1,311,401
138,354
64,950
354,931
10,411
98,333
47,046
-
1,351,145
10,329
797,416
136,031
62,876
146,605
11,509 -
40,373 -
- -
1,559 -
-
15,694
610,537
- -
55,062
102,067
5,000 -
7,500
102,516
3,403
28,676
Total expenses
5,239,416
1,309,047
841,801
142,095
Profit before income tax
Income tax expense
Net profit after tax
Net profit after tax attributable to:
Owners of the Company
Owners of the Trust
Non-controlling interests
5,387,410
6,484,028
3,887,843
638,781
5
460,227
1,753,575
- -
4,927,183
4,730,453
3,887,843
638,781
1,006,181
3,887,843
33,159
4,091,672
638,781
-
- -
3,887,843
- -
638,781
Net profit after tax
4,927,183
4,730,453
3,887,843
638,781
Basic earnings per company share/
trust unit (cents)
Diluted earnings per company share/
trust unit (cents)
Basic earnings per stapled security (cents)
Diluted earnings per stapled security (cents)
7(a)
7(a)
7(b)
7(b)
2.36
2.35
11.49
11.45
9.09
9.09
10.50
10.50
9.13
9.10
8.11
8.11
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
21
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Consolidated Statement of
Other Comprehensive Income
EDC
ECT
Notes
2021
$
2020
$
2021
$
2020
$
Profit for the year
Other comprehensive income
4,927,183
4,730,453
3,887,843
638,781
-
-
- -
Total comprehensive income for the year
4,927,183
4,730,453
3,887,843
638,781
Total comprehensive income attributable to:
Owners of the Company
Owners of the Trust
Non-controlling interests
1,006,181
3,887,843
33,159
4,091,672
638,781
-
- -
3,887,843
- -
638,781
Total comprehensive income for the year
4,927,183
4,730,453
3,887,843
638,781
The above consolidated statement of other comprehensive income should be read in conjunction with the accompanying notes.
22
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Consolidated Statement of Financial Position
AS AT 30 JUNE 2021
CURRENT ASSETS
Cash and cash equivalents
Financial assets at amortised cost
Financial assets at fair value through profit or loss
Other assets
Notes
9
10
11
EDC
ECT
2021
$
2020
$
2021
$
2020
$
11,100,354
27,659,310
1,133,708
65,540
8,486,029
19,967,106
-
-
8,527,689
26,929,545
1,133,7081 -
- -
7,308,276
19,923,488
Total current assets
39,958,912
28,453,135
36,590,942
27,231,764
NON-CURRENT ASSETS
10
Financial assets at amortised cost
Financial assets at fair value through profit or loss
11
Investments accounted for using the equity method 12
13
Intangible assets
14
Right-of-use asses
Plant and equipment
Deferred tax assets
5
911,096
3,559,954
6,669,865
3,460,077
281,857
14,070
763,656
10,949,440
2,144,638
4,338,592
-
-
-
284,282
5,112,638
2,583,962 -
- -
- -
- -
- -
- -
10,949,440
Total non-current assets
15,660,575
17,716,952
7,696,600
10,949,440
TOTAL ASSETS
55,619,487
46,170,087
44,287,542
38,181,204
CURRENT LIABILITIES
Trade and other payables
Lease liabilities
Provisions
Current tax liabilities
Total current liabilities
NON-CURRENT LIABILITIES
Other liabilities
Lease liabilities
Deferred tax liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Retained earnings/(Accumulated losses)
Other reserves
Equity attributable to shareholders/unitholders
Non-controlling interests
Trust unitholders
Other non-controlling interests
16
14
5
15
14
5
17
18
1,764,215
82,686
84,099
111,000
1,066,817
-
-
31,667
1,027,369
- -
- -
- -
893,735
2,042,000
1,098,484
1,027,369
893,735
137,046
201,595
1,217,535
-
-
476,649
1,556,176
476,649
137,046 -
- -
- -
137,046 -
3,598,176
1,575,133
1,164,415
893,735
52,021,311
44,594,954
43,123,127
37,287,469
8,210,699
679,345
8,237
8,898,281
7,634,321
(326,836)
-
7,307,485
42,693,983
388,771
40,373 -
43,123,127
37,285,986
1,483
37,287,469
43,123,127
(97)
37,287,469
-
43,123,030
37,287,469
- -
- -
- -
TOTAL EQUITY
52,021,311
44,594,954
43,123,127
37,287,469
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
23
2021 ANNUAL REPORT | EILDON CAPITAL GROUP
Consolidated Statement of Changes in Equity
EDC
Contributed
Equity
$
Retained
Earnings
$
Other
Reserves
$
Owners of
the Parent
$
Non-
controlling
Interest
$
Total
$
At 1 July 2020
7,634,321
(326,836)
-
7,307,485
37,287,469
44,594,954
Profit for the year
Total comprehensive income for the year
-
-
1,006,181
1,006,181
Transactions with stapled securityholders:
Stapled securities issued
Transaction costs on stapled securities issued
Tax on stapled securities issued
transaction costs
Transaction costs on stapled securities
buyback
Tax on stapled securities buyback
transaction costs
Acquisition of non-controlling interests
Dividends provided or paid
Share-based payment expenses
600,166
(33,807)
10,142
(176)
53
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,006,181
3,921,002
4,927,183
1,006,181
3,921,002
4,927,183
600,166
(33,807)
5,724,033
(315,136)
6,324,199
(348,943)
10,142
-
10,142
(176)
(900)
(1,076)
-
-
-
8,237
53
-
-
8,237
-
(7,992)
(3,525,819)
40,373
53
(7,992)
(3,525,819)
48,610
At 30 June 2021
8,210,699
679,345
8,237
8,898,281
43,123,030
52,021,311
At 1 July 2019
43,796,218
(5,483,508)
9,872,860
48,185,570
-
48,185,570
-
-
-
-
-
-
4,091,672
638,781
4,730,453
4,091,672
638,781
4,730,453
-
-
(804,593)
41,530,887
(35,943)
(4,153,043)
41,530,887
(35,943)
(4,957,636)
(10,873)
(55,915)
(66,788)
Profit for the year
Total comprehensive income for the year
-
-
4,091,672
4,091,672
Transactions with stapled securityholders:
Units issued
Transaction costs on units issued
Stapled securities bought back
Transaction costs on stapled securities
buyback
Tax on stapled securities buyback
transaction costs
Return of capital
Dividends/distributions provided or paid
Transfers (to)/from reserve
-
-
(804,593)
(10,873)
-
-
-
-
3,262
(35,349,693)
-
-
-
-
-
1,065,000
-
-
(8,807,860)
(1,065,000)
3,262
(35,349,693)
(8,807,860)
-
-
-
(637,298)
-
3,262
(35,349,693)
(9,445,158)
-
At 30 June 2020
7,634,321
(326,836)
-
7,307,485
37,287,469
44,594,954
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
24
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Consolidated Statement of Changes in Equity
ECT
Contributed
Equity
$
Retained
Earnings
$
Other
Reserves
$
At 1 July 2020
37,285,986
1,483
Profit for the year
Total comprehensive income for the year
-
-
3,887,843
3,887,843
Transactions with unitholders:
Units issued
Transaction costs on units issued
Transaction costs on units buyback
Distributions provided or paid
Share-based payment expenses
5,724,033
(315,136)
(900)
-
-
-
-
-
(3,500,555)
-
At 30 June 2021
42,693,983
388,771
At 1 July 2019
Profit for the year
Total comprehensive income for the year
Transactions with unitholders:
Units issued
Transaction costs on units issued
Units bought back
Transaction costs on units buyback
Distributions provided or paid
-
-
-
41,530,887
(35,943)
(4,153,043)
(55,915)
-
-
638,781
638,781
-
-
-
-
(637,298)
At 30 June 2020
37,285,986
1,483
-
-
-
-
-
-
-
40,373
40,373
-
-
-
-
-
-
-
-
-
The above consolidated statement of changes in equity should be read in conjunction with accompanying notes.
Total
$
37,287,469
3,887,843
3,887,843
5,724,033
(315,136)
(900)
(3,500,555)
40,373
43,123,127
-
638,781
638,781
41,530,887
(35,943)
(4,153,043)
(55,915)
(637,298)
37,287,469
25
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Consolidated Statement of Cash Flows
EDC
ECT
Notes
2021
$
2020
$
2021
$
2020
$
Cash flows from operating activities
Cash receipts in the course of operations
Cash payments in the course of operations
Distribution received
Loans repaid
Loans provided
Interest and fee income received
Interest paid
Income tax paid
4,033,187
(4,251,478)
311,612
8,402,908
(2,511,034)
2,951,099
(108,361)
(70,119)
104,251
(1,125,639)
520,994
5,841,865
(6,341,524)
2,138,002
-
(1,663,322)
116,514 -
(1,083,265)
148,223 -
7,080,408
(6,511,034)
2,793,872
- -
- -
91,652
120,000
(37,500)
27,391
Net cash provided by/(used in) operating activities 9(b)
8,757,814
(525,373)
2,544,718
201,543
Cash flows from investing activities
Payments for financial assets at fair value through
profit or loss
Proceeds from financial assets at fair value through
profit or loss
Payments for plant and equipment
Payments for acquisition of subsidiary, net of
cash acquired
(6,042,500)
(6,210,147)
(5,865,000)
(33,148,381)
2,320,171
(14,787)
16,842,355
-
2,181,735
- -
2,969,128
2
(3,877,681)
-
- -
Net cash (used in)/provided by investing activities
(7,614,797)
10,632,208
(3,683,265)
(30,179,253)
Cash flows from financing activities
Dividends paid
Proceeds for stapled security/unit issued
Payment for stapled security/unit issue transaction costs
Payment for stapled security/unit buyback
Payment for stapled security/unit buyback transaction costs
Proceeds from borrowings
Payment of borrowings
(3,187,117)
6,324,199
(348,943)
-
(1,076)
135,487
(1,451,242)
(3,497,284)
-
(35,943)
(4,957,636)
(66,788)
-
-
(3,185,524) -
5,724,033
(315,136)
-
(900)
135,487 -
- -
41,530,887
(35,943)
(4,153,043)
(55,915)
Net cash provided by/(used in) financing activities
1,471,308
(8,557,651)
2,357,960
37,285,986
Net increase in cash and cash equivalents
2,614,325
1,549,184
1,219,413
7,308,276
Cash and cash equivalents at the beginning of the
financial year
8,486,029
6,936,845
7,308,276 -
Cash and cash equivalents at the end of
the financial year
9(a)
11,100,354
8,486,029
8,527,689
7,308,276
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
26
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Notes to the Financial Statements
CONTENTS
Note
1 | Statement of Accounting Policies ................................. 27
2 | Controlled Entities ..................................................................... 34
3 | Parent Entity Disclosure ........................................................ 36
4 | Auditor’s Remuneration ........................................................ 36
5 |
Income Tax ...................................................................................... 37
6 | Employee and Director Costs ........................................... 38
7 | Earnings Per Share/Unit/Stapled Security ............. 38
8 | Dividends and Distributions .............................................. 39
9 | Notes to the Statement of Cash Flows ..................... 40
10 | Financial Assets at Amortised Cost .............................. 41
11 |
Financial Assets at Fair Value through
Profit or Loss .................................................................................. 42
12 |
Investments Accounted for Using the
Equity Method ............................................................................... 43
13 |
Intangible Assets ......................................................................... 45
14 | Leases .................................................................................................. 45
15 | Other Liabilities ............................................................................ 46
16 | Trade and Other Payables .................................................. 46
17 | Contributed Equity .................................................................... 47
18 | Other Reserves ............................................................................. 49
19 | Share-based Payments .......................................................... 49
20 | Financial Risk Management ............................................... 50
21 | Segment Information .............................................................. 56
22 | Related Party Information ................................................... 60
23 | Commitments and Contingent Liabilities ............... 62
24 | Subsequent Events ................................................................... 62
NOTE 1: STATEMENT OF ACCOUNTING
POLICIES
The significant policies which have been adopted in the
preparation of this financial report are:
1.1 Basis of Preparation
Eildon Capital Group (EDC) was formed by the stapling of
Eildon Capital Limited (the “Company”) and its controlled
entities, and Eildon Capital Trust (the “Trust”) and its controlled
entities.
The financial reports are general-purpose financial
reports, which have been prepared in accordance with the
requirements of the Corporations Act 2001 and Australian
Accounting Standards (including Australian Accounting
Interpretations). The financial reports of Eildon Capital Group
(“EDC”) and the Trust and its controlled entities (“ECT”) have
been presented jointly in accordance with ASIC Corporations
(Stapled Group Reports) instrument 2015/838 relating to
combining accounts under stapling and for the purpose
of fulfilling the requirements of the Australian Securities
Exchange. The financial report has been prepared on a
historical cost basis, except for the measurement at fair value
of selected financial assets.
EDC and ECT are for-profit entities for the purpose of
preparing the financial report. These accounting policies
have been consistently applied by each entity in EDC and are
consistent with those of the previous year.
1.2 Current and Non-current Classification
EDC and ECT present assets and liabilities in the statement of
financial position as current or non-current.
– Current assets include assets held primarily for trading
purposes, cash and cash equivalents, and assets expected
to be realised in, or intended for sale or use in, the course
of EDC’s and ECT’s operating cycle and within one year
from the reporting date. All other assets are classified as
non-current.
– Current liabilities include liabilities held primarily for trading
purposes, liabilities expected to be settled in the course
of EDC’s and ECT’s operating cycle and those liabilities due
within one year from the reporting date. All other liabilities
are classified as non-current liabilities.
The financial report is presented in Australian dollars.
1.3 Critical Accounting Estimates and Judgements
The preparation of financial statements in conformity with
Australian Accounting Standards requires the use of certain
critical accounting estimates. It also requires management to
exercise its judgement in the process of applying EDC’s and
ECT’s accounting policies.
27
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021 Notes to the Financial Statements
NOTE 1: STATEMENT OF ACCOUNTING
POLICIES (CONT.)
1.3 Critical Accounting Estimates and Judgements
(Cont.)
The key estimates and judgements that have a significant risk
of causing a material adjustment to the carrying amount of
certain assets and liabilities are:
– Valuation of investments accounted for using the equity
method (refer below);
– Impairment of intangible assets (refer note 13);
– Fair value of financial assets at amortised cost (refer note 10);
– Fair value of financial assets at fair value through profit or
loss (refer note 11); and
– Fair value of performance rights (refer note 19).
Valuation of investments accounted for using the
equity method
The carrying value of investments have been valued based
on the net asset backing methodology, using the most recent
reports provided by the entity.
Net asset backing methodology
The net asset backing methodology considers that the net
assets of an entity reflects the future value of the business.
This is because:
– the underlying value of the business operations may be
focused specifically on increasing the value of its assets
base; or
– there is insufficient repetitive income or profits to
justify the use of different valuation techniques such as
discounted cash flows or multiple of earnings.
1.4 Statement of Compliance
The financial report complies with Australian Accounting
Standards, which include Australian equivalents to
International Financial Reporting Standards (AIFRS). The
financial report also complies with International Financial
Reporting Standards (IFRS).
EDC and ECT have adopted all of the applicable new or
amended Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board ('AASB') that
are mandatory for the current reporting period. Adoption of
the applicable new or amended standards does not have a
material impact on EDC and ECT.
Certain new accounting standards and interpretations have
been published that are not mandatory for 30 June 2021
reporting periods and have not been early adopted by EDC
and ECT. These standards are not expected to have a material
impact on the entity in the current or future reporting periods
and on foreseeable future transactions.
1.5 Coronavirus (COVID-19) Impact
The World Health Organisation declared a global pandemic in
March 2020 as a result of COVID-19. The impact of the crisis
has had a significant economic impact. The critical accounting
estimates and judgements of EDC and ECT have required
additional consideration and analysis due to the impact of
COVID-19. Given the uncertainty of the extent of the impact
of the pandemic, changes to the estimates and outcomes
that have been applied in the measurement of EDC’s and
ECT’s assets and liabilities may arise in the future. Other than
adjusting events that provide evidence of conditions that
existed at the end of the financial year, the impact of events
that arise after the reporting period will be accounted for in
future reporting periods.
The effect on the operations of EDC and ECT will be dependent
on the severity and duration of the pandemic, as well as any
further economic support provided by the government. The
processes applied in the preparation of this Financial Report
included a review of:
– all financial assets at amortised cost and associated
underlying security to determine if there has been a
significant increase in credit risk and determined the
expected credit loss on each financial asset. Refer note 10;
– unlisted financial assets at fair value through profit or loss
to determine if the investments’ carrying value included
a consideration of the impact of COVID-19. Refer note 11;
and
– impairment of the carrying amount of associates, by
comparing the investment’s recoverable amount with its
carrying value. Refer note 12.
1.6 Principles of Consolidation
Controlled entities
The consolidated financial statements comprise the financial
statements for the year ended 30 June 2021 for both:
– Eildon Capital Limited (the “Company”) and its controlled
entities, Eildon Capital Trust (the “Trust”) and its controlled
entities, together being the stapled entity, Eildon Capital
Group (“EDC”); and
– The Trust and its controlled entities (“ECT”).
The financial statements of controlled entities are included in
the results only from the date control commences until the
date control ceases.
Control is achieved when EDC/ECT is exposed, or has rights,
to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over
the investee. Specifically, EDC/ECT controls an investee if and
only if EDC/ECT has:
– Power over the investee (i.e. existing rights that give it
the current ability to direct the relevant activities of the
investee);
28
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021 Notes to the Financial Statements
NOTE 1: STATEMENT OF ACCOUNTING
POLICIES (CONT.)
1.6 Principles of Consolidation (Cont.)
Controlled entities (cont.)
– Exposure, or rights, to variable returns from its involvement
with the investee; and
– The ability to use its power over the investee to affect its
returns.
When EDC/ECT has less than a majority of the voting or similar
rights of an investee, EDC/ECT considers all relevant facts
and circumstances in assessing whether it has power over an
investee, including:
– The contractual arrangement with the other vote holders of
the investee;
– Rights arising from other contractual arrangements; and
– EDC’s and ECT’s voting rights and potential voting rights.
EDC and ECT re-assess whether or not it controls an investee if
facts and circumstances indicate that there are changes to one
or more of the three elements of control.
In preparing the consolidated financial statements, all
intercompany balances and transactions, income and
expenses and profits and losses resulting from intra-group
transactions have been eliminated in full and the reporting
period and accounting policies of subsidiaries are consistent
with those of the parent entity.
The acquisition of subsidiaries is accounted for using the
purchase method of accounting which allocates the cost of the
business combination to the fair value of the assets acquired
and the liabilities assumed at the date of acquisition.
Non-controlling interests not held by EDC/ECT are allocated
their share of net profit after tax in the statement of
comprehensive income and are presented within equity in
the consolidated statement of financial position, separately
from parent shareholders’ equity. Increases in investments in
existing controlled entities are recognised by EDC/ECT in equity
with no impact on goodwill and the statement of financial
performance. The difference between the consideration
paid by EDC/ECT and the carrying amount of non-controlling
interest has been included in asset revaluation reserve.
The reporting date of the Company, the Trust and their
subsidiaries is 30 June. The accounting policies have been
consistently applied by each entity in EDC and ECT.
Stapled entities
An agreement was signed on 18 March 2020 that has the
effect of stapling the shares of the Company to the units
of Eildon Capital Trust, and although the two entities are
separate legal entities, their shares/units are not able to
be separately traded. Although Eildon Capital Limited does
not have an ownership interest in Eildon Capital Trust, in
accordance with AASB 3 Business Combinations, Eildon
Capital Limited has been identified as the acquirer and the
parent entity for the purpose of preparing the consolidated
financial statements and Eildon Capital Trust is deemed to be
the acquiree.
The net assets held by Eildon Capital Trust and its controlled
entities are identified as non-controlling interests and
presented in EDC’s consolidated statement of financial position
within equity, separately from the Company’s equity holders’
equity. The profit of Eildon Capital Trust and its controlled
entities is also separately disclosed as a non-controlling
interest in the profit of EDC. Although a non-controlling
interest has been identified the shareholders of Eildon Capital
Limited are also the unitholders of Eildon Capital Trust by
virtue of the stapling arrangement dated 18 March 2020.
Associates
Associates are those entities, other than partnerships, over
which EDC exercises significant influence but not control.
In the consolidated financial statements investments in
associates are accounted for using equity accounting
principles. Under the equity method, the share of the profits
or losses of the associate is recognised in profit or loss
and the share of the movements in equity is recognised in
other comprehensive income. Investments in associates are
carried in the statement of financial position at cost plus post
acquisition changes in the consolidated entity's share of net
assets of the associate. Goodwill relating to the associate
is included in the carrying amount of the investment and is
neither amortised nor individually tested for impairment.
Dividends received or receivable from associates reduce the
carrying amount of the investment. Investments in associates
are carried at the lower of the equity accounted amount and
recoverable amount. EDC’s equity accounted share of the
associates' net profit or loss is recognised in the consolidated
statement of profit or loss and other comprehensive income
from the date significant influence commences until the date
significant influence ceases.
Parent entity information
The financial information of the Company and the Trust is
disclosed in note 3 and has been prepared on the same basis
as the consolidated financial statements with the exception
of investments in associates and controlled entities which are
accounted for as “fair value through profit or loss” investments.
Goodwill
Goodwill on acquisition of businesses is included in intangible
assets. Goodwill is considered to have an indefinite life and
represents the excess of the purchase consideration over
the fair value of identifiable net assets acquired at the time
of acquisition of a business or shares in a controlled entity.
Following initial recognition goodwill is measured at cost less
any accumulated impairment losses. Impairment losses on
goodwill are taken to the statement of financial performance
and are not subsequently reversed.
29
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021 Notes to the Financial Statements
NOTE 1: STATEMENT OF ACCOUNTING
POLICIES (CONT.)
1.7 Impairment
Goodwill and intangible assets that have an indefinite useful
life are not subject to amortisation and are tested annually
for impairment or more frequently if events or changes in
circumstances indicate that they might be impaired. Other
assets are tested for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount
by which the asset’s carrying amount exceeds its recoverable
amount. Recoverable amount is the higher of an asset's fair
value less costs of disposal and value-in-use. The value-in-
use is the present value of the estimated future cash flows
relating to the asset using a pre-tax discount rate specific to
the asset or cash-generating unit to which the asset belongs.
Assets that do not have independent cash flows are grouped
together to form a cash-generating unit. Non-financial assets
other than goodwill that suffered impairment are tested
for possible reversal of the impairment whenever events or
changes in circumstances indicate that the impairment may
have reversed.
1.8 Income Tax and Other Taxes
Current tax assets and liabilities for the current and prior
periods are measured at the amount expected to be
recovered from or paid to the taxation authorities on the
current period’s taxable income at the tax rates enacted by
the reporting date. Deferred income tax assets and liabilities
are measured at the tax rates that are expected to apply to
the year when the asset is realised or the liability is settled,
based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Deferred income tax is provided on all temporary differences
at the reporting date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes. Deferred income tax assets are recognised for all
deductible temporary differences, carry-forward of unused tax
credits and unused tax losses, to the extent that it is probable
that taxable profits will be available against which deductible
temporary differences and the carry-forward of unused tax
credits and tax losses can be utilised. Unrecognised deferred
income tax assets are reassessed at each reporting date and
are recognised to the extent that it has become probable that
future taxable profit will allow the deferred tax asset to be
recovered.
The carrying amount of deferred income tax assets is
reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will
be available to allow all or part of the deferred income tax
asset to be utilised.
Deferred tax assets and deferred tax liabilities are offset only
if a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred tax assets
and liabilities relate to the same taxable entity and the same
taxation authority.
Income taxes relating to items recognised directly in equity are
recognised in equity and not in comprehensive income.
Under current Australian income tax legislation, the Trust and
its subsidiaries are not liable for income tax on their taxable
income (including assessable realised capital gains) provided
that the unitholders are presently entitled to the income of
the Trust.
Tax consolidation legislation
The 100% owned subsidiaries of the Company formed a tax
consolidation group on 17 November 2020. The entities in
the tax consolidated group continue to account for their own
current and deferred tax amounts. The entities in the tax
consolidated group have applied the “stand-alone taxpayer”
approach in determining the appropriate amount of current
taxes and deferred taxes to be allocated to members of the
tax consolidated group. The Company recognises the current
tax liabilities (or assets) from controlled entities in the tax
consolidated group. To the extent that it is probable that
sufficient taxable profit will be available to allow all or part
of the deferred income tax asset to be utilised the Company
recognises the deferred tax assets from unused tax losses and
unused tax credits assumed from controlled entities in the tax
consolidated group.
Members of the tax consolidated group have entered into
a tax funding agreement. Under the funding agreement the
allocation of tax within the group is calculated as if each entity
was an individual entity for tax purposes. Unless agreed
between the members the tax funding agreement requires
payment as a result of the transfer of tax amounts.
Goods and Services Tax
Revenues, expenses and assets are recognised net of the
amount of Goods and Services Tax (GST), except:
– when the GST incurred on a purchase of goods and
services is not recoverable from the taxation authority,
in which case the GST is recognised as part of the cost of
acquisition of the asset or as part of an item of the expense
item as applicable; and
– receivables and payables, which are stated with the
amount of GST included.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables or
payables in the statement of financial position.
Cash flows are included in the statement of cash flows on a
gross basis and the GST component of cash flows arising from
investing and financing activities which are recoverable from,
or payable to, the taxation authority are classified as operating
cash flows.
30
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021 Notes to the Financial Statements
NOTE 1: STATEMENT OF ACCOUNTING
POLICIES (CONT.)
1.9 Business Combination
The acquisition method of accounting is used to account
for all business combinations, regardless of whether equity
instruments or other assets are acquired. The consideration
transferred for the acquisition of a subsidiary comprises the:
– fair values of the assets transferred;
– liabilities incurred to the former owners of the acquired
business;
– equity interests issued by EDC;
– fair value of any asset or liability resulting from a
contingent consideration arrangement; and
– fair value of any pre-existing equity interest in the
subsidiary.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are, with
limited exceptions, measured initially at their fair values at
the acquisition date. EDC recognises any non-controlling
interest in the acquired entity on an acquisition-by-acquisition
basis either at fair value or at the non-controlling interest’s
proportionate share of the acquired entity’s net identifiable
assets. Acquisition-related costs are expensed as incurred.
The excess of the:
– consideration transferred,
– amount of any non-controlling interest in the acquired
entity, and
– acquisition-date fair value of any previous equity interest in
the acquired entity
over the fair value of the net identifiable assets acquired is
recorded as goodwill. If those amounts are less than the fair
value of the net identifiable assets of the business acquired,
the difference is recognised directly in profit or loss as a
bargain purchase.
1.10 Cash and Cash Equivalents
Cash includes cash on hand and short-term deposits with an
original maturity of three months or less.
1.11 Trade and Other Receivables
Trade and other receivables are stated at their amortised
cost less any allowance for expected credit losses. Individual
debts that are known to be uncollectible are written off when
identified. EDC and ECT apply the AASB 9 simplified approach
to measuring expected credit losses using a lifetime expected
credit loss provision for trade and other receivables. The
measurement of expected loss is based on EDC’s and ECT’s
historical credit losses experienced and then adjusted for
current and forward-looking information affecting EDC’s
debtors.
1.12 Plant and Equipment
Items of plant and equipment are recorded at cost less
depreciation and impairment.
Depreciation
Plant and equipment are depreciated using the straight line
method over the estimated useful lives. Depreciation rates
and methods are reviewed annually for appropriateness.
When changes are made, adjustments are reflected
prospectively in current and future periods only.
The current depreciation rates are as follows:
Plant and equipment 33%
Impairment
The carrying values of plant and equipment are reviewed for
impairment at each reporting date, with recoverable amounts
being estimated when events or changes in circumstances
indicate that the carrying value may be impaired.
1.13 Leases
Leases are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased asset
is available for use by EDC.
Assets and liabilities arising from a lease are initially measured
on a present value basis. Lease liabilities include the net
present value of the following lease payments:
– fixed payments (including in-substance fixed payments),
less any lease incentives receivable;
– variable lease payment that are based on an index or a
rate, initially measured using the index or rate as at the
commencement date;
– amounts expected to be payable by EDC under residual
value guarantees; and
– payments of penalties for terminating the lease, if the lease
term reflects EDC exercising that option.
Lease payments to be made under reasonably certain
extension options are also included in the measurement of
the liability.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily determined,
which is generally the case for leases in EDC, the lessee’s
incremental borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value to the right-of-
use asset in a similar economic environment with similar
terms, security and conditions.
Lease payments are allocated between principal and finance
cost. The finance cost is charged to the statement of financial
performance over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of
the liability for each period.
31
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021 Notes to the Financial Statements
NOTE 1: STATEMENT OF ACCOUNTING
POLICIES (CONT.)
1.13 Leases (Cont.)
fair value through other comprehensive income are measured
at FVPL. Changes in the fair value of financial assets at FVPL
are recognised in other gains/(losses) in the statement of
profit or loss and other comprehensive income as applicable.
Right-of-use assets are measured at cost comprising the
following:
– the amount of the initial measurement of lease liability;
– any lease payments made at or before the commencement
date less any lease incentives received;
– any initial direct costs; and
– restoration costs.
Right-of-use assets are generally depreciated over the shorter
of the asset's useful life and the lease term on a straight-line
basis.
1.14 Financial Assets
(i) Classification
Financial assets in the scope of AASB 9 Financial Instruments
are classified in the following measurement categories:
– those to be measured subsequently at fair value (either
through other comprehensive income (OCI), or through
profit or loss), and
– those to be measured at amortised cost.
The classification depends on EDC’s and ECT’s business model
for managing the financial assets and the contractual terms
of the cash flows. For assets measured at fair value, gains and
losses will either be recorded in financial performance or OCI.
EDC and ECT reclassify debt investments when and only when
its business model for managing those assets changes.
(ii) Measurement
Initial measurement
At initial recognition, EDC and ECT measure a financial asset
at its fair value plus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are
directly attributable to the acquisition of the financial asset.
Subsequent measurement
Financial assets at amortised cost
Financial assets at amortised cost are held for collection of
contractual cash flows where those cash flows represent
solely payments of principal and interest. Interest income
from these financial assets is included in finance income using
the effective interest rate method. Any gain or loss arising on
derecognition is recognised directly in financial performance
and presented in other gains/(losses), together with foreign
exchange gains and losses. Impairment losses are presented
as separate line item in the statement of profit or loss and
other comprehensive income.
Financial asset at fair value through profit or loss (FVPL)
Equity investments that do not meet the criteria for amortised
cost or have not been elected to present as financial assets at
(iii) Impairment
EDC and ECT assess on a forward looking basis the expected
credit losses associated with its debt instruments carried at
amortised cost. The expected credit loss is determined based
on changes in the financial asset’s underlying credit risk and
includes forward-looking information. Where there has been
a significant increase in credit risk since initial recognition,
the expected credit loss is determined with reference to the
probability of default. EDC and ECT apply its judgement in
determining whether there has been a significant increase
in credit risk since initial recognition based on qualitative,
quantitative, and reasonable and supportable information
that includes forward-looking information.
Expected credit loss is generally determined based on the
contractual maturity of the financial asset and an assessment
of the underlying security provided by the counterparty. The
expected credit loss is measured as the product of probability
of default, loss given default and exposure at default,
with increases and decreases in the measured expected
credit loss from the date of origination being recognised
in the consolidated statement of profit or loss and other
comprehensive income as either an impairment loss or gain.
Outcomes within the next financial period that are different
from assumptions and estimates could result in changes
to the timing and amount of expected credit losses to be
recognised.
The loss allowances for expected credit loss are presented in
the statement of financial position as a deduction to the gross
carrying amount.
1.15 Trade and Other Payables
Trade and other payables are carried at amortised cost and
represent liabilities for goods and services provided to EDC/
ECT prior to the end of the financial year that are unpaid. The
amounts are unsecured and are usually paid within 30 days of
recognition.
1.16 Other Liabilities
Other liabilities relate to non-controlling interests in
contributory investment trusts that EDC/ECT has assessed
that it controls and the units issued by these funds meet the
definition of a liability in accordance with AASB 132 Financial
Instruments: Presentation rather than classified as equity.
1.17 Revenue and Revenue Recognition
Interest income
Revenue is recognised as interest accrues using the effective
interest method. This is a method of calculating the amortised
cost of a financial asset and allocating the interest income
32
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021 Notes to the Financial Statements
NOTE 1: STATEMENT OF ACCOUNTING
POLICIES (CONT.)
1.17 Revenue and Revenue Recognition (Cont.)
Interest income (cont.)
over the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to the
net carrying amount as at the end of the financial year.
Fee income
Fee income is recognised in respect to the following types of
service contracts with customer:
– Loan administration, fund administration and development
administration services: these services are provided to
customers as a series of distinct goods or services that are
substantially the same and transferred over time, either
separately or in combination as an integrated offering, and
are treated as a single performance obligation.
– Equity raising, loan establishment, acquisition and project
management services: due to the specialised nature of
these services, the customer does not benefit from the
process undertaken, but rather the outcome. EDC is only
entitled to payment for services upon the successful
completion of the contract. Hence, revenue is recognised at
a point in time, upon completion of the service.
Dividends and distribution income
Revenue from dividends and distributions is recognised when
the right to receive payment is established. Dividends received
out of pre-acquisition reserves are recognised in revenue and
the investment is also assessed for impairment.
1.18 Employee Entitlements
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary
benefits and annual leave expected to be wholly settled within
12 months of the reporting date are recognised in other
payables in respect of employees’ services up to the reporting
date. They are measured at the amounts expected to be paid
when the liabilities are settled including “on-costs”.
Share-based payments
EDC provides benefits to employees in the form of share-
based payments, whereby employees render services
in exchange for rights over securities (equity-settled
transactions).
The fair value of the equity to which employees become
entitled is measured at grant date and recognised as an
expense over the vesting period, with a corresponding
increase to an equity account. In respect of share-based
payments that are dependent on the satisfaction of
performance conditions, the number of shares expected to
vest is reviewed and adjusted at each reporting date. The
amount recognised for services received as consideration
for these equity instruments granted is adjusted to reflect
the best estimate of the number of equity instruments that
eventually vest.
1.19 Contributed Equity
Issued capital is recognised at the fair value of the
consideration received by the Company. Incremental costs
directly attributable to the issue or cancellation of shares are
shown in equity as a deduction, net of tax, from proceeds.
1.20 Dividends and Distributions
Provision is made for the amount of any dividend and
distribution declared, being appropriately authorised and no
longer at the discretion of the entity, on or before the end
of the reporting period but not distributed at the end of the
reporting period.
1.21 Earnings Per Share/Unit
Basic earnings per share/unit is calculated as net profit/
(loss) attributable to members of the parent, adjusted to
exclude any costs of servicing equity (other than dividends
and distributions) and preference share dividends and
distributions, divided by the weighted average number of
ordinary shares/units, adjusted for any bonus element.
1.22 Comparative Figures
Where necessary, comparative figures have been reclassified
to conform with changes in presentation in the current year.
1.23 Segment Reporting
A business segment is a distinguishable component of the
entity that is engaged in providing differentiated products
or services. Operating segments are presented using the
'management approach', where the information presented is
on the same basis as the internal reports provided to the Chief
Operating Decision Makers ('CODM'). The CODM is responsible
for the allocation of resources to operating segments and
assessing their performance.
1.24 Profit Distribution Reserve
Profits transferred to the profit distribution reserve are
segregated to facilitate potential future dividend payments
that may be declared by the directors.
1.25 Rounding of Amount
EDC and ECT of a kind referred to in Corporations Instrument
2016/191, issued by the Australian Securities and Investments
Commission, relating to ‘rounding-off’. Amounts in this report
have been rounded off in accordance with that Corporations
Instrument to the nearest dollar unless otherwise stated.
33
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021 Notes to the Financial Statements
NOTE 2: CONTROLLED ENTITIES
2.1 Composition of Consolidated Group
The consolidated financial statements include the following controlled entities, the stapled entity, Eildon Capital Trust and its
controlled entities. The financial years of all controlled entities, stapled entity and its controlled entities are the same as that of
the parent entity.
Companies incorporated in Australia:
Interest Held by
Consolidated Entity
Jun 2020
%
Jun 2021
%
Interest Held by
Non-controlling Interests
Jun 2021
%
Jun 2020
%
Eildon Capital Limited
Direct Controlled Entities:
Eildon Funds Management Limited (a)
100
(a) Eildon Funds Management Limited is the Responsible Entity of Eildon Capital Trust.
Controlled Entities owned by Eildon Funds Management Limited:
Eildon Investments Services Pty Limited
Eildon Asset Management Pty Limited
Eildon Asset Management Trust
EFM Nominee Services Pty Limited
Controlled Entities owned by stapled entity, Eildon Capital Trust:
Eildon Debt Fund (b)
- P Class
- U Class
100
50
50
100
85
100
-
-
-
-
-
-
-
-
-
50
50
-
15
-
-
-
-
-
-
-
-
(b) Units issued in the fund meet the definition of a liability under AASB 132 Financial Instruments: Presentation rather than
equity. As such, the units in the funds not eliminated on consolidation are recognised as Other Liabilities in the statement of
financial position. Refer note 15.
Although the net assets and profit of Eildon Capital Trust and its controlled entities have been identified as non-controlling
interest, the shareholders of Eildon Capital Limited are also the unitholders of Eildon Capital Trust by virtue of the stapling
arrangement dated 18 March 2020.
34
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Notes to the Financial Statements
NOTE 2: CONTROLLED ENTITIES (CONT.)
2.2 Business Combination
On 17 November 2020, the Company acquired 100% of Eildon Funds Management Limited and its controlled entities (“EFM”)
for a consideration of $4,000,000 at which time it became a 100% subsidiary of EDC. EFM is a fund manager and the holder of a
financial services licence which provides management services to a range of funds.
A summary of the acquisition is as follows:
Purchase consideration:
Cash paid
Total purchase consideration
Fair value of Assets and Liabilities of EFM at Acquisition:
Cash
Trade and other receivables (a)
Other assets
Plant and equipment
Financial assets at amortised cost
Deferred tax asset
Trade and other payables
Employee benefits
Borrowings
Current tax liability
Total identifiable net assets at fair value
Less: non-controlling interests
Add: goodwill (b)
Consideration for acquisition
Cash outflow:
Cash consideration
Less: balances acquired
Cash
Net outflow of cash – investing activities
$
4,000,000
4,000,000
122,319
851,550
1,708
2,287
1,422,985
35,782
(345,125)
(34,199)
(1,507,605)
(17,771)
531,931
7,992
3,460,077
4,000,000
4,000,000
(122,319)
3,877,681
(a) The fair value of acquired trade and other receivables is the gross contractual amount.
(b) The goodwill is attributable to the value of EFM’s funds management business. It will not be deductible for tax purpose.
For the period from acquisition to the end of the period, EFM recorded revenues of $3,869,910 and profit after tax of $691,436.
If the acquisition had occurred on 1 July 2020, consolidated pro-forma revenue would have been $5,175,958 and profit after tax
would have been $935,885.
35
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
NOTE 3: PARENT ENTITY DISCLOSURE
3.1 Summary Financial Information
The financial information for the Company and the Trust has been prepared on the same basis as the consolidated financial
statements.
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Issued capital
Retained earnings
Other reserve
Total equity
Company
2021
$
2020
$
Trust
2021
$
2020
$
1,187,522
13,957,808
299,448
5,718,525
1,325,284
8,092,796
308,663
785,311
36,550,638
44,109,452
986,325
986,325
27,231,764
38,181,204
893,735
893,735
8,210,699
20,347
8,237
7,634,321
(326,836)
-
42,693,983
388,771
40,373 -
37,285,986
1,483
8,239,283
7,307,485
43,123,127
37,287,469
Profit for the period
347,183
4,091,672
3,887,843
638,781
Total comprehensive income
347,183
4,091,672
3,887,843
638,781
3.2 Commitments and Financial Guarantees
Amounts available to be called by investees for partially paid shares and units:
Unrelated entity
1,235,654
-
1,983,487 -
Refer note 23(b) for information about guarantees given by the Company.
NOTE 4: AUDITOR’S REMUNERATION
The auditor of EDC is Pitcher Partners Sydney (2020: HLB Mann Judd).
Amounts received or due and receivable by the auditors for:
EDC
ECT
2021
$
2020
$
2021
$
2020
$
Audit and review of financial report
Pitcher Partners Sydney
HLB Mann Judd
Other assurance services
Pitcher Partners Sydney
74,624
9,931
84,557
-
51,894
51,894
29,312 -
1,940
31,252
10,000
10,000
1,000
-
- -
36
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Notes to the Financial Statements
NOTE 5: INCOME TAX
Under current Australian income tax legislation, the Trust and its subsidiaries are not liable for income tax on their taxable income
(including assessable realised capital gains) provided that the unitholders are presently entitled to the income of the Trust.
Details of income tax of EDC have disclosed below:
(a) Income tax expense
Accounting profit before income tax
Income tax expense at the statutory income tax rate of 30%
Trust profit not assessable
Sundry items
Adjustment recognised for prior year
Income tax expense
The major components of income tax expense are:
– Current income tax charge
– Deferred income tax
– Prior year provision
EDC
2021
$
2020
$
5,387,410
6,484,028
1,616,223
(1,147,689)
3,338 -
(11,645)
1,945,208
(191,633)
460,227
1,753,575
166,152
305,720
(11,645) -
1,216,625
536,950
Income tax expense reported in the statement of profit or loss and other comprehensive income
460,227
1,753,575
Deferred tax benefit relating to items credited directly to equity
10,195
3,262
(b) Deferred income tax
Deferred income tax balances at 30 June relates to the following:
EDC
Deferred tax assets
Provisions and accrued expenses
Financial assets
Tax losses
Other
2021
Included in
Income
$
Included in
Equity
$
Total
$
Included in
Income
$
2020
Included in
Equity
$
Total
$
119,865
445,350
89,354
44,325
-
-
-
64,762
119,865
445,350
89,354
109,087
12,150
-
106,001
69,291
-
-
-
96,840
12,150
-
106,001
166,131
698,894
64,762
763,656
187,442
96,840
284,282
Deferred tax liabilities
Equity accounting income
1,217,535
-
1,217,535
476,649
-
476,649
37
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
NOTE 5: INCOME TAX (CONT.)
(c) Current tax liabilities
Income tax payable
Balance at the end of the year
EDC
2021
$
2020
$
111,000
31,667
EDC
ECT
2021
$
2020
$
2021
$
2020
$
NOTE 6: EMPLOYEE AND DIRECTOR COSTS
Superannuation
Share-based payments
Non-executive director costs
Other employee costs
55,513
48,610
188,333
1,215,569 -
-
-
98,333
1,508,025
98,333
- -
40,373 -
- -
- -
40,373 -
Company
2021
$
2020
$
Trust
2021
$
2020
$
NOTE 7: EARNINGS PER SHARE/UNIT/STAPLED SECURITY
(a) Earnings per share/unit
Basic earnings per share/unit (cents)
Diluted earnings per share/unit (cents)
2.36
2.35
9.09
9.09
9.13
9.10
8.11
8.11
Net profit attributable to ordinary equity holders of
the Company/Trust
1,006,181
4,091,672
3,887,843
638,781
Weighted average number of shares/units
Weighted average number of shares/units used in calculating
basic earnings per company share/trust unit (number)
Adjustment for calculation of diluted earnings per company
share/trust unit:
Performance rights (number)
Weighted average number of ordinary shares/units and
potential ordinary shares/units used in calculating earnings
per company share/trust unit (number)
42,592,902
45,036,019
42,592,902
7,878,822
134,250
-
134,250 -
42,727,152
45,036,019
42,727,152
7,878,822
38
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Notes to the Financial Statements
NOTE 7: EARNINGS PER SHARE/UNIT/STAPLED SECURITY (CONT.)
(b) Earnings per stapled security
The total earning per stapled security for EDC is as follows:
Basic earnings per stapled security (cents)
Diluted earnings per stapled security (cents)
EDC
2021
$
11.49
11.45
2020
$
10.50
10.50
Net profit attributable to securityholders of EDC
4,894,024
4,730,453
Weighted average number of securities
Weighted average number of securities used in calculating basic earnings per
stapled security (number)
Adjustment for calculation of diluted earnings per stapled security:
Performance rights (number)
Weighted average number of ordinary securities and potential ordinary securities
used in calculating earnings per stapled security (number)
42,592,902
45,036,019
134,250 -
42,727,152
45,036,019
Although net profit of Eildon Capital Trust, the stapled entity, and its controlled entities is identified as net profit attributable to
non-controlling interests, the shareholders of Eildon Capital Limited are also the unitholders of Eildon Capital Trust by virtue of
the stapling arrangement dated 18 March 2020. As such earnings per stapled security refers to net profit after tax attributable to
owners of both the Company and the Trust which represents the actual earnings for the stapled securityholders of EDC.
NOTE 8: DIVIDENDS AND DISTRIBUTIONS
(a) Dividends and distributions
Dividends and distributions proposed or paid in current and previous year and included within the statement of changes in equity
by EDC and ECT are:
Company
Dividend
Paid (cents)
Trust
Distribution
Paid (cents)
Total
Per Security
(cents)
Total
$
Date of
Payment
Tax Rate
for Franking
Credits
Percentage
Franked
2021 June quarter
2021 March quarter
2020 December quarter
2020 September quarter
2020 June quarter
Special dividend
2020 March quarter
2019 December quarter
2019 September quarter
-
-
-
-
-
13.59
1.925
1.925
1.925
2.023
2.000
2.000
1.925
2.023
952,329
23-Jul-21
2.000
941,502
23-Apr-21
2.000
818,702
22-Jan-21
1.925
788,021
23-Oct-20
1.5569
1.5569
637,298
24-Jul-20
-
-
-
-
13.59
6,181,195
24-Apr-20
1.925
875,555
24-Apr-20
1.925
875,555
24-Jan-20
1.925
875,555
24-Oct-19
0%
0%
0%
0%
0%
30%
30%
30%
30%
0
0
0
0
0
100
100
100
100
39
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
NOTE 8: DIVIDENDS AND DISTRIBUTIONS (CONT.)
(b) Franking credits
Distributions paid by ECT do not attract franking credits. Franking credits are only available for future dividends paid by the
Company. The Company’s franking account balance as at 30 Jun 2021 is $191,998 (2020: $37,879).
The franking account is stated on a tax paid basis. The balance comprises the franking account at year end adjusted for:
(a) franking credits that will arise from the payment of the amount of the provision for income tax;
(b) franking debits that will arise from the refund of overpaid tax instalments paid;
(c)
(d) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date; and
(e) franking credits that the entity may be prevented from distributing in subsequent years.
franking debits that will arise from the payment of dividends recognised as a liability at year end;
The ability to utilise the franking credits is dependent upon there being sufficient available equity to declare dividends.
NOTE 9: NOTES TO THE STATEMENT OF CASH FLOWS
(a) Reconciliation of cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents comprise the following at the end of the financial year:
EDC
ECT
2021
$
2020
$
2021
$
2020
$
Cash at bank
11,100,354
8,486,029
8,527,689
7,308,276
Cash at bank earns interest at floating rates based on daily bank deposit rates. The carrying amount of cash and cash
equivalents represents fair value.
(b) Reconciliation of profit after income tax to net cash from operations
Net profit after tax
Adjustments for:
Share of equity accounted profit
Depreciation and amortisation
Performance rights
Impairment of financial assets
Facility fee
Change in operating assets and liabilities:
Decrease/(Increase) in financial assets at amortised cost
Increase in other assets
Increase in leave provisions
Increase/(decrease) in payables
Increase in deferred tax assets and liabilities
Increase/(decrease) in tax payable
4,927,183
4,730,453
3,887,843
638,781
(2,633,008)
16,864
48,610
1,351,145
(831,952)
4,571,708
(28,223)
49,900
916,536
307,489
61,562
(1,653,058)
-
-
-
-
(3,884,704)
(7,900)
-
199,583
552,347
(462,094)
- -
- -
40,373 -
5,000 -
(13,967) -
(1,204,208)
- -
- -
(170,323)
- -
- -
(670,986)
233,748
Net cash provided by/(used in) operating activities
8,757,814
(525,373)
2,544,718
201,543
40
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Notes to the Financial Statements
NOTE 9: NOTES TO THE STATEMENT OF CASH FLOWS (CONT.)
(c) Changes in liabilities arising from financing activities
Other Liabilities
2020
2021
$
$
Borrowings
2021
$
2020
$
Leases
2021
$
2020
$
Total
2021
$
2020
$
EDC
At the beginning of the year
Acquisition of subsidiary
Cash flows
Other changes
At the end of the year
ECT
At the beginning of the year
Cash flows
Other changes
At the end of the year
-
-
135,487
1,559
137,046
-
135,487
1,559
137,046
-
-
-
-
-
-
-
-
-
-
1,439,804
(1,439,804) -
-
-
-
-
-
-
-
297,941
(11,438)
(2,222)
284,281
-
-
-
-
-
-
-
-
-
-
-
-
EDC
-
-
-
-
-
-
-
-
-
-
1,737,745
(1,315,755)
(663)
421,327
-
135,487
1,559
137,046
ECT
-
-
-
-
-
-
-
-
-
2021
$
2020
$
2021
$
2020
$
NOTE 10: FINANCIAL ASSETS AT AMORTISED COST
Current:
Trade and other receivables
Secured loans to other entities
Non-current:
Secured loans to other entities
Secured loan to stapled entity
Trade and other receivables
766,376
26,892,934
51,307
19,915,799
36,611
26,892,934
7,689
19,915,799
27,659,310
19,967,106
26,929,545
19,923,488
911,096
-
10,949,440
-
911,096
4,201,542 -
10,949,440
911,096
10,949,440
5,112,638
10,949,440
Trade receivables are mainly related to management of relevant loans to various entities. EDC/ECT applies the AASB 9 simplified
approach to measure expected credit losses using a lifetime expected credit loss provision for trade and other receivables. The
measurement of expected loss is based on EDC’s and ECT’s historical credit losses experienced and then adjusted for current and
forward-looking information affecting the customers.
41
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
NOTE 10: FINANCIAL ASSETS AT AMORTISED COST (CONT.)
Secured loans
In the event that a counterparty defaults on a loan, EDC and ECT may take possession of security provided. EDC and ECT have not
repossessed any assets that have been provided as security.
Expected credit loss on loans are disclosed as a deduction against the gross carrying amount. EDC and ECT regularly review loans
to determine if there is a significant increase in credit risk, which may be evidenced by either qualitative or quantitative factors.
These factors include if a counterparty does not pay a scheduled payment of principal and interest, requests a variation to the
repayment terms, or management consider that there has been an adverse change in the underlying value of assets securing the
loan. The significant increase in credit risk methodology is based on an actual credit risk review approach which considers changes
in a counterparty’s credit risk since origination. The outcome of the review identifies the probability of default and the loss given
default of the loan, which are used to determine the impairment required to be made in relation to a loan.
A loss allowance is identified at the time that there is a significant increase in credit risk of the borrower, and the loan is impaired
once it is determined that an amount is not recoverable.
EDC and ECT regularly review their loans for a significant increase in credit risk and expected credit loss. The review considers
the counterparty credit quality, the security held, exposure at default and the effect of repayment terms as at reporting date. The
directors are of the opinion that securities provided are sufficient to cover relevant outstanding loans. As such no expected loss
allowance on loan assets has been provided as at 30 June 2021 and 30 June 2020.
For the majority of the non-current financial assets at amortised cost, the fair values are not significantly different from their
carrying amounts as interest charged are at market rates.
EDC
ECT
2021
$
2020
$
2021
$
2020
$
NOTE 11: FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Current:
Investments in unlisted entities
Non-current:
Investments in unlisted entities
1,133,708
-
1,133,708 -
3,559,954
2,144,638
2,583,962 -
The carrying value of investments in unlisted entities has been determined by using valuation techniques. Such techniques include
using recent arm’s length market transactions; net asset backing; reference to the current market value of another instrument
that is substantially the same and discounted cash flow analysis.
Unlisted investments for the current financial year comprise holdings in entities that hold property assets or hold property assets
as security. A review has been undertaken of the underlying property assets held by the entities and the directors are of the
opinion that the carrying value of the investment is reflective of the current underlying value of the property held.
42
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Notes to the Financial Statements
EDC
Ownership Interest
2020
2021
%
%
Investment Carrying Amount
2020
$
2021
$
NOTE 12: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Associates of the Company have been disclosed below:
Interest in ordinary shares of associate
79 Logan Road Trust (a)
79 Logan Road Pty Limited (b)
35
35
35
35
6,669,865
-
4,338,557
35
6,669,865
4,338,592
(a) 79 Logan Road Trust is a commercial property in Woolloongabba, Queensland with a long term lease to an ASX listed entity,
with residential development approval. The carrying value of 79 Logan Road Trust has been calculated as $6,669,865 based on
the net asset backing methodology, using the most recent financial reports provided by the company.
(b) 79 Logan Road Pty Limited is the trustee of 79 Logan Road Trust.
43
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
NOTE 12: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONT.)
Summarised financial information
The following table illustrates summarised financial information relating to EDC’s associate:
Summarised balance sheet
Current assets
Current liabilities
Current net assets
Non-current assets
Non-current liabilities
Non-current net assets
Net assets
Reconciliation to carrying amounts:
Opening net assets 1 July
Profit for the period
Return of capital
Dividend paid
Closing net assets
EDC’s share – percentage (a)
EDC’s share - dollars
Carrying amount
Summarised statement of comprehensive income
Revenue
Net profit
Total comprehensive income
Dividends received
79 Logan Road Trust
2021
$
2020
$
138,578
159,227
(20,649)
123,356
85,122
38,234
32,500,000
11,490,000
23,847,641
11,490,000
21,010,000
12,357,641
20,989,351
12,395,875
12,395,875
9,455,476
(395,174)
(466,826)
8,266,854
4,723,021
(410,490)
(183,510)
20,989,351
12,395,875
32%
6,669,865
35%
4,338,557
6,669,865
4,338,557
10,372,206
9,455,476
5,676,177
4,723,021
9,455,476
4,723,021
163,389
64,229
(a) EDC has a unitholding of 35% in 79 Logan Road Trust. The unitholding entitles EDC to share 35% of lease income and
30% of the increase in value of the property. As such, EDC had a holding equivalent to 32% of the net assets of the trust
as at 30 June 2021.
44
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Notes to the Financial Statements
NOTE 13: INTANGIBLE ASSETS
Goodwill
Reconciliations:
Carrying amount at the beginning of the year
Acquisition of subsidiary
Carrying amount at the end of the year
EDC
2021
$
2020
$
3,460,077 -
- -
3,460,077 -
3,460,077 -
The goodwill is attributable to the acquisition of the funds management business of Eildon Funds Management Limited on
17 November 2020. The acquisition price was based on an independent valuation prepared by Grant Thornton Australia Ltd on
8 October 2020. The recoverable amount of goodwill has been determined using the same metrics as the valuation report as
following:
– Discount cash flow model: growth rate 2.5% and discount rate 9.5% – 10.5%;
– Earnings before interest and taxes multiple: 4.3 – 4.7x; and
– Asset under management multiple: 1.7% – 2.3%.
Directors are of the opinion that the relevant metrics are prudent and justified, given there was no significant change since the
date of the valuation report.
Goodwill is not deductible for tax purpose.
NOTE 14: LEASES
EDC currently leases the office it occupies. The lease agreement is for a fixed period of three and a half years, without any
extension options. The lease agreement does not impose any covenants other than the security interest in the leased asset that is
held by the lessor and the bank guarantee of $73,914 provided by EDC to the lender. Lease assets may not be used as security for
borrowing purposes.
Right-of-use assets
Office lease
Lease liabilities
Current
Non-current
281,857 -
82,686 -
201,595 -
284,281 -
Additions to the right-of-use assets during the year ended 30 June 2021 were $295,719 and the total cash outflow for leases
was $14,473.
Depreciation charge of right-of-use assets
Office lease
13,862 -
No modification has been made to the lease for financial year 2021.
45
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
EDC
ECT
2021
$
2020
$
2021
$
2020
$
NOTE 15: OTHER LIABILITIES
Non-current
137,046
-
137,046 -
The above liabilities relate to non-controlling interests in contributory investment trusts that EDC/ECT has assessed that
they control and that the units issued in these funds meet the definition of a liability under AASB 132 Financial Instruments:
Presentation rather than equity.
NOTE 16: TRADE AND OTHER PAYABLES
Current:
Trade payables
Sundry creditors and accruals
Distribution payable
21,086
609,558
1,133,571
161,233
110,717
794,867
793
74,247
952,329
216,937
39,500
637,298
1,764,215
1,066,817
1,027,369
893,735
Trade and other payables are non-interest bearing and are generally on 30 day terms.
46
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Notes to the Financial Statements
NOTE 17: CONTRIBUTED EQUITY
An agreement was signed on 18 March 2020 with the effect of stapling the shares of the Company to the units of Eildon
Capital Trust, and although the two entities are separate legal entities, their shares/units are not able to be separately traded.
Although Eildon Capital Limited does not have an ownership interest in Eildon Capital Trust, in accordance with AASB 3 Business
Combinations, Eildon Capital Limited has been identified as the acquirer and the parent entity for the purpose of preparing the
consolidated financial statements and Eildon Capital Trust is deemed to be the acquiree.
Company
Issued and paid up share capital:
Ordinary shares fully paid
Reconciliation:
Balance at the beginning of the year
Return of capital
Issue of shares
Transaction costs on share issued
Shares bought back
Transaction costs on share buyback
Income tax on share transaction costs
2021
2020
Number
of shares
$
Number
of shares
$
47,075,102
8,210,699
40,935,102
7,634,321
40,935,102
-
6,140,000
-
-
-
-
7,634,321
-
600,166
(33,807)
-
(176)
10,195
45,483,392
-
-
-
(4,548,290)
-
-
43,796,218
(35,349,693)
-
-
(804,593)
(10,873)
3,262
Balance at the end of the year
47,075,102
8,210,699
40,935,102
7,634,321
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up the company in proportion to the
number of shares held.
Trust
Issued and paid up capital:
Ordinary units fully paid
Reconciliation:
Balance at the beginning of the year
Issue of units
Transaction costs on units issued
Units bought back
Transaction costs on unit buyback
2021
2020
Number
of units
$
Number
of units
$
47,075,102
42,693,983
40,935,102
37,285,986
40,935,102
6,140,000
-
-
-
37,285,986
5,724,033
(315,136)
-
(900)
-
45,483,392
-
(4,548,290)
-
-
41,530,887
(35,943)
(4,153,043)
(55,915)
Balance at the end of the year
47,075,102
42,693,983
40,935,102
37,285,986
The Trust was incorporated on 6 May 2019. Foundation units were issued to Eildon Capital Limited for the purpose of settling
the Trust, and were redeemed on 24 April 2020 as part of the restructure of the Trust.
Ordinary units entitle the holder to participate in distributions and the proceeds on winding up the trust in proportion to the
number of units held.
47
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
Company
2021
$
2020
$
Trust
2021
$
2020
$
NOTE 17: CONTRIBUTED EQUITY (CONT.)
Net assets attributed to ordinary equity holder of
the Company/Trust
8,898,281
7,307,485
43,123,127
37,287,469
Net assets per share attributed to ordinary equity
holder of the Company/Trust
0.19
0.18
0.92
0.91
EDC
2021
$
2020
$
Net assets attributed to stapled securityholders of EDC
52,021,408
44,594,954
Net assets per stapled security attributed to stapled securityholders of EDC (a)
1.11
1.09
(a) Although a non-controlling interest has been identified, the shareholders of Eildon Capital Limited are also the unitholders of
Eildon Capital Trust by virtue of the stapling arrangement dated 18 March 2020. As such net assets per stapled security for the
2021 financial year refers to net assets attributable to owners of the Company and owners of the Trust which represents the
actual value attributable to stapled securityholders of EDC.
EDC and ECT are not subject to any externally imposed capital requirements. Management’s objective is to achieve returns for
stapled securityholders commensurate with the risks associated with making investments in Australia.
Capital Risk Management
EDC’s and ECT’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide
returns for securityholders/unitholders and benefits for other stakeholders and to maintain an optimum capital structure to
reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total
borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, EDC and ECT may adjust the amount of dividends/distributions paid to
securityholders/unitholders, return capital to securityholders/unitholders, issue new stapled securities/units or sell assets to
reduce debt.
The capital risk management policy remains unchanged from the 30 June 2020 Annual Report.
48
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Notes to the Financial Statements
Profit Distribution
Reserve
Company
$
Trust
$
Share-based Payment
Reserve
Company
$
Trust
$
Total
Company
$
Trust
$
NOTE 18: OTHER RESERVES
Balance as at 1 July 2019
9,872,860
Transfers (to)/from retained earnings
Dividends/distributions paid
(1,065,000)
(8,807,860)
Balance at 30 June 2020
Share-based payment expenses
Balance at 30 June 2021
Profit Distribution Reserve
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,872,860
(1,065,000)
(8,807,860)
-
-
-
-
-
8,237
40,373
8,237
40,373
8,237
40,373
8,237
40,373
Profits transferred to the profit distribution reserve are segregated to facilitate potential future dividend payments that may be
declared by the directors.
Share-based Payment Reserve
Share-based payment reserve is used to recognise the value of equity settled share-based payments.
NOTE 19: SHARE-BASED PAYMENTS
On 1 February 2021, EDC issued employees performance rights under the EDC Employee Incentive Plan. The Employee Incentive
Plan was approved by shareholders at the 2020 annual general meeting, and is designed to provide long-term incentives for
senior managers and above to deliver long-term securityholder returns. Under the plan, participants are granted rights that
deliver ordinary stapled securities to employees (at no cost) which only vest if certain performance hurdles are met. Participation
in the plan is at the board’s discretion and no individual has a contractual right to participate in the plan or to receive any
guaranteed benefits.
Performance rights carry no dividend or voting rights or rights to participate in any other share/unit issue of EDC or any other
entity. When exercisable, each performance right is entitled to receive one stapled security.
The number of rights that vest depends on achieving certain performance hurdles in relation to:
– Total Shareholder Return (TSR)
TSR is calculated based on a combination of share price growth, dividends and distributions to securityholders. The percentage
of Performance Rights subject to the TSR Hurdle that vest, if any, will be determined by the Director’s with reference to the
below table.
– Return on Assets (ROA)
ROA is calculated on an annual basis, as earnings before interest and tax generated on average assets deployed. The
percentage of Performance Rights subject to the TSR Hurdle that vest, if any, will be determined by the Director’s with
reference to the below table.
50% Subject to a Total Security Holders
Return Hurdle
Return (p.a.)
Vesting Amount
< 8%
8% - 10%
10% - 12%
>12%
nil
50%
75%
100%
50% Subject to a Return on
Assets Hurdle
Return (p.a.)
Vesting Amount
< 12%
12%
nil
50%
12% - 13.5%
50% - 100%
>13.5%
100%
49
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
NOTE 19: SHARE-BASED PAYMENTS (CONT.)
The following table illustrates movements in the number of performance rights on issue during the year.
Year ended 30 June 2021
Grant
Date
Vesting
Date
Exercise
Price
Balance at Start
of the Year
Granted During
the Year
Balance at End
of the Year
Value Per
Right
1 Feb 2021
31 Jan 2024
-
-
409,300
409,300
$0.87
The fair value of the rights at grant date was based on the following inputs:
– Share price of $1.09 at grant date;
– Share price of $1.03 which is based on placement in March 2021;
– 2 cps distribution paid on a quarterly basis;
– Net assets of $1.11 as at 31 January 2021; and
– Vesting date of 31 January 2024.
NOTE 20: FINANCIAL RISK MANAGEMENT
EDC’s and ECT’s activities expose it to a variety of financial risks: interest rate risk, credit risk and liquidity risk. EDC’s and ECT’s
overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse
effects on financial performance.
EDC and ECT use different methods to measure different types of risk to which it is exposed. These methods include sensitivity
analysis in the case of interest rate risk.
The responsibility for operational risk management resides with the Board of Directors who seeks to manage the exposure of
EDC and ECT. There have been no significant changes in the types of financial risks or EDC’s and ECT’s risk Management program
(including methods used to measure the risks) since the prior year.
50
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Notes to the Financial Statements
NOTE 20: FINANCIAL RISK MANAGEMENT (CONT.)
a) Interest rate risk
EDC's and ECT’s exposure to interest rate risks and the effective interest rates of financial assets and liabilities at the reporting
date are as follows:
EDC
2021
Financial assets
Cash and cash equivalents
Financial assets at amortised cost
Financial liabilities
Trade and other payables
Other liabilities
2020
Financial assets
Cash and cash equivalents
Financial assets at amortised cost
Financial liabilities
Trade and other payables
Weighted
Average
Interest Rate
Note
Floating
Interest
Rate
$
Fixed Interest Rate
1 to 5
1 Year
Years
or Less
$
$
Non-
interest
Bearing
$
Total
$
9
10
16
15
9
10
16
0.1% 11,100,354
-
14.4%
-
26,966,848
-
911,096
-
692,462
11,100,354
28,570,406
11,100,354
26,966,848
911,096
692,462
39,670,760
-
14%
-
-
-
-
-
-
-
137,046
1,764,215
-
1,764,215
137,046
137,046
1,764,215
1,901,261
0.3%
14.4%
8,486,029
-
-
19,915,799
-
10,949,440
-
51,307
8,486,029
30,916,546
8,486,029
19,915,799
10,949,440
51,307
39,402,575
-
-
-
-
1,066,817
1,066,817
51
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
NOTE 20: FINANCIAL RISK MANAGEMENT (CONT.)
a) Interest rate risk (cont.)
ECT
2021
Financial assets
Cash and cash equivalents
Financial assets at amortised cost
Financial liabilities
Trade and other payables
Other liabilities
2020
Financial assets
Cash and cash equivalents
Financial assets at amortised cost
Financial liabilities
Trade and other payables
Weighted
Average
Interest Rate
Note
Floating
Interest
Rate
$
Fixed Interest Rate
1 to 5
1 Year
Years
or Less
$
$
Non-
interest
Bearing
$
Total
$
9
10
16
15
9
10
16
0.1%
13.6%
8,527,689
-
-
26,892,934
-
5,112,638
-
36,611
8,527,689
32,042,183
8,527,689
26,892,934
5,112,638
36,611
40,569,872
-
14%
-
-
-
-
-
-
-
137,046
1,027,369
-
1,027,369
137,046
137,046
1,027,369
1,164,415
0.3%
14.4%
7,308,276
-
-
19,915,799
-
10,949,440
-
7,689
7,308,276
30,872,928
7,308,276
19,915,799
10,949,440
7,689
38,181,204
-
-
-
-
893,735
893,735
EDC and ECT hold a significant amount of cash balances which are exposed to movements in interest rates. Given the low interest
rate environment and the short-term funding requirements for investment opportunities, EDC/ECT accepts lower rates of interest
in exchange for liquidity in relation to cash deposits. EDC/ECT typically deposits uncommitted cash with financial institutions with
an “investment grade” credit rating of BBB or higher to maintain liquidity for any investment opportunity arises.
EDC and ECT are not charged interest on outstanding trade and other payable balances.
Sensitivity
EDC and ECT expect that the Bank Bill Swap Rates (BBSW) to increase during the 2022 financial year by 0.5%. The impact at
reporting date if interest rates increase by 0.5% (2021: interest rates stayed the same), whilst all other variables are held constant,
is as follows:
EDC
Increase of 50 bp
$
ECT
Increase of 50 bp
$
34,296
34,296
29,523
29,523
2021
Net profit
Equity movement
52
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Notes to the Financial Statements
NOTE 20: FINANCIAL RISK MANAGEMENT (CONT.)
(b) Credit risk exposure
Credit risk refers to the loss that EDC and ECT would incur if a debtor or counterparty fails to perform under its obligations.
EDC and ECT are exposed to credit risk from financial assets including cash and cash equivalents held at banks, trade and other
receivables and loans to various entities. The carrying amounts of financial assets recognised in the statement of financial
position best represent EDC’s and ECT’s maximum exposure to credit risk at reporting date.
EDC and ECT have a material credit risk exposure to the borrowers of funds, that represent the counterparties to financial
instruments entered into by EDC and ECT. EDC and ECT manage the credit risk as follows:
i) Cash deposits:
This is mitigated by the requirement that deposits are only held with institutions with an “investment grade” credit rating of BBB
or above.
ii) Loans made to various entities:
This is mitigated by collateral held with a value in excess of the counterparty’s obligations to EDC and ECT, providing a “margin of
safety” against loss. In addition to mortgages being held, collateral includes guarantees, security deeds and undertakings which
can be called if the counterparty is in default under the terms of the agreement.
iii) Trade receivables:
Trade receivables are mainly related to management of relevant loans to various entities. This is mitigated by collateral held with
a value in excess of the counterparty’s obligations to EDC and ECT, providing a “margin of safety” against loss.
(c) Liquidity risk
Liquidity risk is the risk that EDC and ECT might be unable to meet its obligations. EDC and ECT manage liquidity risk by
maintaining sufficient cash balances and holding liquid investments that could be realised to meet commitments. EDC and ECT
continuously monitor actual and forecast cash flows and matches the maturity profiles of financial assets and liabilities.
The following table details maturity profiles of EDC’s and ECT’s contractual liabilities.
EDC
ECT
Less than
6 Months
$
6 Months
to 1 Year
$
1 Year to
5 Years
$
Total
$
Less than
6 Months
$
6 Months
to 1 Year
$
1 Year to
5 Years
$
Total
$
2021
Trade and other payables 1,764,215
Lease liabilities
40,926
-
41,760
- 1,764,215
284,281
201,595
1,027,369
-
Other liabilities (a)
-
-
137,046
137,046
-
2020
Trade and other payables 1,066,817
-
- 1,066,817
893,735
-
-
-
-
- 1,027,369
-
-
137,046
137,046
-
893,735
(a) Payments to unitholders of Eildon Debt Fund are matched with the cash flows of the repayment of specific loans classified as
“Financial assets classified at amortised cost”.
53
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
NOTE 20: FINANCIAL RISK MANAGEMENT (CONT.)
(d) Fair value of financial assets and liabilities
Fair value reflects the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. When an active market does not exist, fair values are estimated using
valuation techniques, based on market conditions prevailing at the measurement date. Such techniques include using recent
arm’s length market transactions; net asset backing and reference to current market value of another instrument that is
substantially the same.
The fair value of liquid assets maturing within three months are approximate to their carrying amounts. This assumption is
applied to liquid assets and the short-term portion of all other financial assets and financial liabilities.
Judgements and estimates were made in determining the fair values of certain financial instruments and non-financial assets that
are recognised and measured at fair value in the financial statements. To provide an indication about the reliability of the inputs
used in determining fair value, EDC and ECT have classified its financial instruments and non-financial assets into three levels
prescribed under the accounting standards.
Level 1 – the fair value is calculated using quoted prices in active markets.
Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset,
either directly (as prices) or indirectly (derived from prices).
Level 3 – the fair value is estimated using inputs for the asset that are not based on observable market data.
The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised in the table
below.
Year ending 30 June 2021
Financial assets
Financial assets at fair value through profit or loss
Investments in unlisted entities
Year ending 30 June 2020
Financial assets
Financial assets at fair value through profit or loss
Investments in unlisted entities
EDC
ECT
Valuation Technique –
Non Market Observable
Inputs (Level 3)
$
Valuation Technique –
Non Market Observable
Inputs (Level 3)
$
4,693,662
3,717,670
2,144,638
-
54
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Notes to the Financial Statements
EDC
ECT
2021
$
2020
$
2021
$
2020
$
NOTE 20: FINANCIAL RISK MANAGEMENT (CONT.)
(d) Fair value of financial assets and liabilities (Cont.)
Reconciliation of Level 3 fair value movements:
Balance at the beginning of the year
Purchases
Sales
Fair value movement
2,144,638
6,042,500
(2,181,736)
(1,311,740)
12,487,808
6,201,397
(16,626,055)
81,488
- -
5,865,000
(2,181,735)
34,405
2,969,128
(2,994,845)
25,717
Balance at the end of the year
4,693,662
2,144,638
3,717,670 -
Fair value movement attributable to assets held at the
end of reporting period
(1,311,740)
81,488
34,405 -
The fair value of Level 3 Financial assets at fair value through profit or loss has been determined with reference to valuation
techniques being net asset backing and recent arm’s length market transactions. Refer note 11.
Sensitivity analysis
The table below shows the pre-tax sensitivity to reasonable possible alternative assumptions for Level 3 assets whose fair values
are determined in whole or in part using unobservable inputs.
Investments in unlisted entities
EDC
Favourable changes
Unfavourable changes
ECT
Favourable changes
Unfavourable changes
Significant unobservable inputs
Net Profit/(loss)
2020
$
2021
$
Equity Increase/(Decrease)
2020
$
2021
$
469,366
(469,366)
214,464
(214,464)
469,366
(469,366)
214,464
(214,464)
371,767
(371,767) -
-
371,767 -
(371,767) -
The following table contains information about the significant unobservable inputs used in Level 3 valuations, and the valuation
techniques used to measure fair value. The range of values represent the highest and lowest input used in the valuation
techniques. Therefore, the range does not reflect the level of uncertainty regarding a particular input, but rather the different
underlying characteristics of the relevant assets.
Valuation Techniques
Significant
Unobservable Inputs
Range of Inputs
Minimum
Maximum
Investments in unlisted entities
Investments in unlisted entities
Net asset backing
Recent transactions
Value per security
Value per security
Down 10%
Down 10%
Up 10%
Up 10%
55
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
NOTE 21: SEGMENTAL INFORMATION
Information for each business segment of EDC and ECT is shown in the following tables. These operating segments are based
on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision
Makers ('CODM')) in assessing performance and in determining the allocation of resources.
Description of each business segment is as follows:
– Direct Property Investment involves direct exposure, including ordinary equity, preference equity, options to acquire an interest
in direct property subject to planning outcomes;
– Property backed lending comprises loans backed by underlying property assets; and
– Funds Management includes activities that relate to the management of property investments, debt and unlisted funds.
EDC and ECT operates predominantly in Australia.
EDC
30 June 2021
Revenue
Segment revenue
Inter-segment revenue
Corporate interest income
Direct Property
Investment
$
Funds
Management
$
Property
Backed Lending
$
Eliminations
$
Total
$
41,918
-
3,438,642
431,268
4,504,720
-
-
(431,268)
7,985,280
-
41,918
3,869,910
4,504,720
(431,268)
7,985,280
8,538
7,993,818
Share of profit of equity accounted associate
2,633,008
-
-
-
2,633,008
Results
Segment profit
Inter-segment profit
Corporate expenses
Income tax expenses
Consolidated profit after tax
Disaggregation of revenue
Timing of revenue recognition
At a point in time
Over time
Revenue from contracts with customers
Other revenues
1,323,781
-
568,037
431,268
4,503,161
-
-
(431,268)
6,394,979
-
1,323,781
999,305
4,503,161
(431,268)
6,394,979
(1,007,569)
(460,227)
4,927,183
-
-
-
41,918
2,548,393
833,556
3,381,949
56,693
-
40,992
40,992
4,463,728
-
-
-
-
-
2,548,393
874,548
3,422,941
4,562,339
7,985,280
Segment revenue
41,918
3,438,642
4,504,720
56
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Notes to the Financial Statements
Direct Property
Funds
Investment Management
$
$
Property
Backed Lending
$
Total
$
EDC
NOTE 21: SEGMENTAL INFORMATION (CONT.)
30 June 2020
Revenue
Segment revenue
Corporate interest income
520,994
Share of profit of equity accounted associate
1,653,058
Results
Segment profit
Corporate expenses
Income tax expenses
Profit after tax
2,174,052
-
-
-
5,546,525
6,067,519
72,498
6,140,017
-
1,653,058
5,546,525
7,720,577
(1,236,549)
(1,753,575)
4,730,453
Revenue from contracts with customers was $95,976 for 2020 financial year and all of them were recognized over time.
57
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
Direct Property
Funds
Investment Management
$
$
Property
Backed Lending
$
Total
$
9,145,857
3,460,077
30,021,700
42,627,634
11,100,354
1,891,499
55,619,487
-
-
137,046
137,046
3,461,130
3,598,176
6,483,229
-
30,865,238
37,348,467
8,486,029
335,591
46,170,087
1,575,133
1,575,133
EDC
NOTE 21: SEGMENTAL INFORMATION (CONT.)
30 June 2021
Assets
Segment assets
Unallocated amounts:
Cash and cash equivalents
Other assets
Total assets
Liabilities
Segment liabilities
Unallocated amounts:
Other liabilities
Total liabilities
30 June 2020
Assets
Segment assets
Unallocated amounts:
Cash and cash equivalents
Other assets
Liabilities
Unallocated amounts:
Other liabilities
Total liabilities
58
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Notes to the Financial Statements
ECT
NOTE 21: SEGMENTAL INFORMATION (CONT.)
Direct Property
Investment
$
Property
Backed Lending
$
Total
$
30 June 2021
Revenue
Segment revenue
Corporate interest income
Results
Segment profit
Corporate expenses
Profit after tax
Assets
Segment assets
Unallocated amounts:
Cash and cash equivalents
Other assets
Total assets
Liabilities
Segment liabilities
Unallocated amounts:
Other liabilities
Total liabilities
41,918
4,477,695
4,519,613
36,918
4,476,136
210,031
4,729,644
4,513,054
(625,211)
3,887,843
1,500,000
30,021,700
31,521,700
8,527,689
4,238,153
44,287,542
-
137,046
137,046
1,027,369
1,164,415
Revenue from contracts with customers was $13,967 for 2021 financial year and all of them were recognised over time.
ECT operates in one business segment being property backed lending and in one geographical location being Australia during
2020 financial year. There was no revenue from contracts with customers during 2020 financial year.
59
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
NOTE 22: RELATED PARTY INFORMATION
Parent entity
CVC Limited is the ultimate parent entity.
Subsidiaries
Interest in subsidiaries are set out in note 2.
Associates
Interest in associates are set out in note 12.
(a) Key management personnel
Short-term employee benefits
Post-employment benefits
Share-based payments
EDC
2021
$
2020
$
496,994
39,139
16,603 -
89,802
8,531
552,736
98,333
Details of remuneration disclosures are provided in the remuneration report.
Key management personnel of ECT includes persons who were directors of Eildon Funds Management Limited at any time during
the financial year. No remuneration was paid by ECT directly to key management personnel.
(b) Performance rights
On 1 February 2021, EDC issued employees performance rights under the Employee Incentive Plan. Refer note 19. The table below
provides a reconciliation of performance rights held by Laurence Parisi. No performance rights have been issued to other key
management personnel.
Year ended 30 June 2021
Grant
Date
Vesting
Date
Exercise
Price (cents)
Balance at start
of the year
Granted during
the year
Balance at end
of the year
Value per
right
1 Feb 2021
31 Jan 2024
-
-
139,800
139,800
$0.87
Company
2021
$
2020
$
Trust
2021
$
2020
$
(c) Unsecured loan from/to stapled entity
Loan from/(to) stapled entity
Beginning of the year
Loans advanced
Interest charged
End of the year
-
4,000,000
201,542
4,201,542
-
-
-
-
- -
(4,000,000) -
(201,542) -
(4,201,542) -
The loan from/to stapled entity is for a period of 4 years. The loan attracts an interest rate of 8% per annum and is secured by all
assets in the Company.
60
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Notes to the Financial Statements
EDC
ECT
2021
$
2020
$
2021
$
2020
$
NOTE 22: RELATED PARTY INFORMATION (CONT.)
(d) Transactions with related parties
The following transactions occurred with related parties:
Payment for management services provided by
investment manager (a)
Payment for services provided by subsidiary of the ultimate parent
- Accounting fees
- Key management personnel management fees (b)
Received for services provided to subsidiaries of the ultimate parent
- Loan management services
- Project management services
Distribution/Dividend paid to parent entity
301,578
783,116
610,537
102,516
310,597
201,771
-
-
478,398
140,000
1,481,425
-
-
4,252,098
- -
- -
- -
- -
1,481,425
290,190
(a) On 17 November 2020, the Company acquired 100% of Eildon Funds Management Limited, the investment manager, and its
controlled entities at which time it became a 100% subsidiary of EDC. Amounts disclosed for EDC 2021 financial year relates to
the period of 1 July 2020 to 17 November 2020.
(b) This relates to key management personnel services provided by Messer Avery, Hunter and Ms McLean.
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current receivables:
Trade receivables from subsidiaries of the ultimate parent
248,108
-
- -
Current payables:
Trade payables to investment manager (a)
Distribution/dividend payables to parent entity
(e) Performance fee
-
377,066
135,128
290,190
-
377,066
102,516
290,190
Commencing 1 January 2016, a performance fee is payable to Eildon Funds Management Limited where EDC achieves an annual
return during the calculation period of greater than the hurdle rate of 9% per annum. The performance fee payable is calculated
as 20% of the total return to securityholders of EDC in excess of the 9% hurdle rate, after factoring in dividends and other
distributions. Following the internalisation of Eildon Funds Management Limited on 17 November 2020, the performance fee (if
any) is eliminated on consolidation.
No performance fee is payable for 2021 and 2020 financial years.
61
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
EDC
ECT
2021
$
2020
$
2021
$
2020
$
NOTE 23: COMMITMENTS AND CONTINGENT LIABILITIES
(a) Loans and other investments
Amounts available to be drawn by borrowers under existing loan facility agreements:
Unrelated entities
2,335,000
107,500
2,335,000
107,500
Amounts available to be called by investees for partially paid shares and units:
Unrelated entities
1,235,654
1,235,654
- -
(b) Financial guarantees
Guarantees
The Directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future
sacrifice of economic benefits will be required or the amount is not capable of reliable measurement.
Guarantee (i)
Bank Guarantee (ii)
EDC
2021
$
869,400
73,914 -
2020
$
869,400
(i) Guarantee provided by the Company to Australia and New Zealand Banking Group Limited as security for a loan facility in
relation to a property held by one of the Company’s investment.
(ii) Bank guarantee provided by a subsidiary of EDC to landlord for office lease.
NOTE 24: SUBSEQUENT EVENTS
The COVID-19 pandemic is still on-going, with asset markets experiencing significant volatility, as well as creating significant
uncertainty regarding its economic impact. The increase in property prices have had a positive impact on the existing investment
portfolio. EDC is pleased to report all investments are performing as expected and are forecast to deliver returns consistent with
original investment assumptions. There are currently no investments in the loan portfolio in arrears and all covenants are being
maintained. However, we are cognisant that the overall impact of Covid-19 is still unknown at this point.
Other than as set out above, there are no matters or circumstances that have arisen since the end of the financial period which
significantly affected or may significantly affect the operations of EDC, the results of those operations or the state of affairs of EDC
in financial periods subsequent to 30 June 2021.
62
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Directors’ Declaration
In accordance with a resolution of the directors of Eildon Capital Limited and Eildon Funds Management Limited as Responsible
Entity for Eildon Capital Trust (collectively referred to as the Directors), we state that:
In the opinion of the Directors:
(a)
the financial statements and notes are in accordance with Corporations Act 2001, including:
(i)
giving a true and fair view of EDC’s and ECT’s financial position as at 30 June 2021 and of their performance for
the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporation Regulations 2001.
(b)
the financial statements and notes also comply with International Financial Reporting Standards as disclosed in
Note 1; and
(c)
there are reasonable grounds to believe that EDC and ECT will be able to pay its debts as and when they become
due and payable.
This declaration has been made after receiving the declarations required to be made to the Directors in accordance with
s. 295A of the Corporations Act 2001 for the financial period ended 30 June 2021.
Signed in accordance with a resolution of the Board of Directors.
Dated at Sydney 24 August 2021.
Mark Avery
Director
James Davies
Director
63
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Independent Auditor’s Report
To the Stapled Security holders of Eildon Capital
Limited and Eildon Capital Trust, together Eildon
Capital Group
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of the stapled entity
Eildon Capital Group (“EDC” or the “Group”), comprised of
Eildon Capital Limited “the Company” and Eildon Capital Trust
“the Trust” and the entities they controlled, which comprises
the consolidated statement of financial position as at 30
June 2021, the consolidated statement of profit or loss and
other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash
flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting
policies and other explanatory information, and the director’s
declaration on behalf of the Group.
In our opinion, the accompanying financial report of the Group
is in accordance with the Corporations Act 2001, including:
a) giving a true and fair view of the Group’s financial position
as at 30 June 2021 and of its financial performance for the
year ended; and
b) complying with Australian Accounting Standards and the
Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing
Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the
Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001
and the ethical requirements of Accounting Professional
and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (including Independence Standards)
“the Code” that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical
responsibilities in accordance with the Code.
We confirm that the independence declaration required by the
Corporations Act 2001, which has been given to the directors
of the Company, would be in the same terms if given to the
directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those that, in our professional
judgement, were of more significance in our audit of the
financial report of the current period. These matters were
addressed in the context of our audit of the financial report
as a whole, and in forming our opinion thereon, we do not
provide a separate opinion on these matters.
Key Audit Matter
How our audit addressed the key audit matter
Valuation of Financial Assets at Amortised Cost (Refer to Note 10 Financial Assets at Amortised Cost)
Our procedures included, amongst others:
– Obtaining and reviewing loan agreements and other
supporting documentation to gain an understanding of the
loans provided and any related secured assets provided as
collateral;
– Assessing compliance of management’s methodology for
determining the provision for the allowance for expected
credit losses with AASB 9;
– Reviewing and challenging the key assumptions and
significant estimates and judgements used by management
in determining the recoverability of financial assets; and
– Assessing the adequacy of disclosures in the financial
statements.
We focused our audit effort on the valuation of the Group’s
Financial Assets at Amortised Cost as it is the largest asset
of the Group and the assessment of recoverability requires
significant judgement.
As at 30 June 2021, the Group had Financial Assets at
Amortised Cost of $28.6 million, including an allowance for
expected credit losses of $nil.
A significant portion of the balance relates to loans receivable
provided to corporate entities associated with property
development activities and asset backed finance lending.
The Group applies the Expected Credit Loss (“ECL”) model
under AASB 9 Financial Instruments.
The assessment to determine the ECL for impairment of
Financial Assets at Amortised Cost involves significant
estimates and judgements by management, including both
qualitative and quantitative assumptions. These include
an assessment of the credit worthiness of the relevant
counterparties, expected future collections, historical
impairments and consideration of the estimated value of any
secured assets provided as collateral.
64
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021 Valuation of Financial Assets at Amortised Cost (Refer to Note 10 Financial Assets at Amortised Cost)
Independent Auditor’s Report
Key Audit Matter
How our audit addressed the key audit matter
Acquisition of Eildon Funds Management (Refer to Note 2.2 Business Combination)
During the year the Group acquired Eildon Funds
Management (EFM) for an aggregate consideration of $4.0m.
This was considered a significant transaction for the Group.
Accounting for this transaction is a complex and judgemental
exercise, requiring management to determine the fair value
of acquired assets and liabilities, in particular determining
the allocation of purchase consideration to goodwill and
separately identifiable intangible assets.
It is due to the relative size of the acquisition and the
estimation process involved in accounting for it that this is a
key audit matter.
Our procedures included, amongst others:
– Obtaining and reading the sale and purchase agreement to
understand the key terms and conditions;
– Assessing the scope, competence and objectivity of
external valuation experts and management’s valuation
assessments;
– Assessing the accounting treatment of the transactions for
compliance with AASB 3 Business Combinations;
– Evaluating the appropriateness of assumptions and
methodology in management’s calculations, including
expert reports, used to determine the value of EFM’s
identifiable intangible assets; and
– Assessing the adequacy of disclosures in the financial
statements.
Other Information
The directors are responsible for the other information. The
other information comprises the information in the Group’s
annual report for the year ended 30 June 2021 but does not
include the financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other
information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our
responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial report or our knowledge obtained
in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in
this regard.
Responsibilities of Directors' for the Financial
Report
The directors of the Company are responsible for the
preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and
the Corporations Act 2001 and for such internal control as the
directors determine is necessary to enable the preparation of
the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible
for assessing the ability of the Group to continue as a going
concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group or to
cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the
Financial Report
Our objectives are to obtain reasonable assurance about
whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue
an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with Australian
Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of this
financial report.
As part of an audit in accordance with Australian Auditing
Standards, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
– Identify and assess the risks of material misstatement of the
financial report, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the
override of internal control.
65
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021 Independent Auditor’s Report
Independent Auditor’s Report
REPORT ON THE REMUNERATION REPORT
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages
12 to 17 of the Directors’ Report for the year ended 30 June
2021. In our opinion, the Remuneration Report of Eildon
Capital Group, for the year ended 30 June 2021, complies with
section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the
preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
John Gavljak
Partner
Pitch Partners
Sydney
24 August 2021
Auditor’s Responsibilities for the Audit of the
Financial Report (Cont.)
– Obtain an understanding of internal control relevant to
the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Group’s
internal control.
– Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and
related disclosures made by the directors.
– Conclude on the appropriateness of the directors’ use of the
going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt
on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related
disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the
Group to cease to continue as a going concern.
– Evaluate the overall presentation, structure and content of
the financial report, including the disclosures, and whether
the financial report represents the underlying transactions
and events in a manner that achieves fair presentation.
– Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group to express an opinion on the financial
report. We are responsible for the direction, supervision
and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other
matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide the directors with a statement that
we have complied with relevant ethical requirements
regarding independence, and to communicate with them
all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the directors, we
determine those matters that were of most significance in
the audit of the financial report of the current period and are
therefore the key audit matters. We describe these matters
in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should
not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
66
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021 Corporate Governance Statement
This Corporate Governance Statement, which has been
approved by the Board, describes the corporate governance
policies, framework and practices of Eildon Capital Group
(ASX: EDC) (Group), which consists of Eildon Capital Limited
(Company) and Eildon Capital Trust (Trust). Eildon Funds
Management Limited (Manager) is a wholly-owned subsidiary
of the Company and the responsible entity for the Trust.
This Corporate Governance Statement is current as at
30 June 2021.
Principle 1 – Lay solid foundations for management
and oversight
A listed entity should establish and disclose the respective
roles and responsibilities of board and management and
how their performance is monitored and evaluated.
Recommendation 1.1 - A listed entity should disclose
the respective roles and responsibilities of its board and
management, and those matters expressly reserved to the
board and those delegated to management.
The business of the Group is managed under the direction of
the boards of the Company and the Manager (Board) which are
responsible for its corporate governance. The Board comprises
Mr Mark Avery, Mr James Davies and Ms Michelle Harpur. Mr
Craig Treasure resigned from the Board on 29 June 2021.
The Board meets on a regular basis and is required to discuss
pertinent business developments, investment decisions and
issues, and review the operations and performance of the
Group. The Board will seek to ensure that the investment
strategy is aligned with the expectations of Securityholders
and the Group is effectively managed in a manner that
is properly focused on its investment strategy as well as
conforming to regulatory and ethical requirements.
Provision is made at each regular meeting of the Board for
the consideration of critical compliance and risk management
issues as they arise.
The primary objectives of the Board will be to:
The Board has delegated responsibility for day-to-day
management of the Group to the Managing Director and the
Manager.
Recommendation 1.2 - A listed entity should:
(a)
(b)
undertake appropriate checks before appointing
a person, or putting forward to securityholders a
candidate for election as a director; and
provide securityholders with all material information
in its possession relevant to a decision on whether or
not to elect or re-elect a director.
Prior to appointing a director or putting forward a new
candidate for election, screening checks are undertaken as
to the person’s experience, education, criminal history and
bankruptcy history.
When presenting a director for re-election, the Group
provides Securityholders with details of the directors skills
and experience, independence and current term served by
the director in office and whether the Board supports the re-
election.
Recommendation 1.3 - A listed entity should have a written
agreement with each director and senior executive setting
out the terms of their appointment.
The Group’s Non-executive Directors have been engaged
according to Letters of Appointment.
Recommendation 1.4 - The company secretary of a listed
entity should be accountable directly to the board, through
the chair, on all matters to do with the proper functioning
of the board.
The Company Secretary is accountable to the Board, through
the Chairperson, for all governance matters.
Each Director has access to the Company Secretary.
The appointment and removal of the Company Secretary must
be determined by the Board as a whole.
– Set and review the strategic direction of the Group;
Recommendation 1.5 - A listed entity should:
– Approve all material transactions;
(a) have and disclose a diversity policy;
– Approve and monitor financial policies and financial
(b)
statements;
– Establish, promote and maintain proper processes and
controls to maintain the integrity of financial accounting,
financial records and reporting;
– Develop and implement key corporate policies, procedures
and controls as necessary to ensure appropriate standards
of accountability, risk management and corporate
governance and responsibility; and
through its board or a committee of the board set
measurable objectives for achieving gender diversity
in the composition of its board, senior executives and
workforce generally;
(c)
disclose in relation to each reporting period:
(i)
the measurable objectives set for that period to
achieve gender diversity;
(ii) the entity’s progress towards achieving those
objectives; and
– Ensure Securityholders receive high quality, relevant and
(iii) either:
accurate information on a timely manner.
67
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Corporate Governance Statement
Principle 1 – Lay solid foundations for management
and oversight (Cont.)
– the Board to undertake a formal annual review of its overall
effectiveness.
Recommendation 1.5 (cont.):
(A) the respective proportions of men and women
on the board, in senior executive positions
and across the whole workforce (including
how the entity has defined “senior executive”
for these purposes); or
(B) if the entity is a “relevant employer” under the
Workplace Gender Equality Act, the entity’s
most recent “Gender Equality Indicators”, as
defined in and published under that Act.
The Group’s approach to business promotes a culture of
equal opportunity and has the core principles of meritocracy
based on ability, fairness and equality. The Group does not
discriminate on gender, race, religion or cultural grounds.
The Board has adopted a diversity policy. The Board aims to:
– promote the principles of merit and fairness when
considering Board member appointments; and
– recruit from a diverse pool of qualified candidates, seeking
a diversity of skills and qualifications.
The Board’s composition is reviewed on an annual basis. In the
event a vacancy exists, the Board will include diversity in its
selection process.
The Board intends to set measurable objectives annually
for achieving gender diversity, and will each year report the
Group’s progress toward achieving them.
Currently, 33% of the Board of EDC is represented by women.
Further, EDC does not have any women appointed in senior
management roles, and currently represent 14% of employees
of the company.
Recommendation 1.6 - A listed entity should:
(a)
(b)
have and disclose a process for periodically evaluating
the performance of the board, its committees and
individual directors; and
disclose for each reporting period whether a
performance evaluation has been undertaken period
in accordance with that process during or in respect of
that period.
The Board of Directors’ Charter requires:
– the Board to review its performance (at least annually)
against previously agreed measurable and qualitative
indicators;
– the Chairperson of the Board to review each Director’s
performance;
– a nominated Director to review the Chairperson’s
performance; and
The Board reviews its performance in terms of the Group’s
objectives, results and achievements. The Board ensures each
Director has the necessary skills, experience and expertise,
and the mix remains appropriate for the Board to function
effectively.
As a result of these performance reviews, the Board may
implement changes to improve the effectiveness of the Board
and corporate governance structures.
Independent professional advice may be sought as part of this
process.
The Board undertook a review of its performance, skills,
experience and expertise during the year, including as a
result of the internalisation of the Manager and the additional
responsibilities of the Board.
Recommendation 1.7 - A listed entity should:
(a)
(b)
have and disclose a process for periodically evaluating
the performance of its senior executives; and
disclose, in relation to each reporting period, whether
a performance evaluation was undertaken in
accordance with that process during or in respect of
that period.
Performance reviews for senior executives will take place at
least annually. The Board intends to ensure the appropriate
disclosures in the remuneration report are made in relation to
each reporting period as to the performance evaluations that
were undertaken and the process that was followed.
Principle 2 – Structure the board to add value.
The board of a listed entity should be of an appropriate
size and collectively have the skills, commitment and
knowledge of the entity and the industry in which it
operates, to enable it to discharge its duties effectively and
to add value
Recommendation 2.1 - The board of a listed entity should:
(a) have a nomination committee which:
(i)
has at least three members, a majority of whom
are independent directors; and
(ii) is chaired by an independent director, and
disclose:
(A) the charter of the committee;
(B) the members of the committee; and
(C) as at the end of each reporting period,
the number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
68
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021
Corporate Governance Statement
Principle 2 – Structure the board to add value (Cont.)
– the candidate’s independence status, including the term of
Recommendation 2.1 (cont.):
(b)
if it does not have a nomination committee, disclose
that fact and the processes it employs to address
board succession issues and to ensure that the board
has the appropriate balance of skills, knowledge,
experience, independence and diversity to enable it to
discharge its duties and responsibilities effectively.
Given the size, scale and nature of the Group, there is not a
separate nomination committee. The full Board considers
the issues that would otherwise be a function of a separate
nomination committee.
The Group’s policy is that the Board considers an appropriate
mix of skills, experience, expertise and diversity (including
gender diversity).
When evaluating, selecting and appointing Directors, the
Board considers:
– the candidate’s competencies, qualifications and expertise,
addition to diversity of the Board and his/her fit with the
current membership of the Board;
– the candidate’s knowledge of the industry in which the
Group operates;
– directorships previously held by the candidate and his/her
current commitments to other boards and companies;
– existing and previous relationships with the Group and
Directors;
Board of Directors’ Matrix
office currently served by the director;
– criminal record and bankruptcy history (for new candidates);
– the need for a majority or equal balance on the Board; and
– requirements of the Corporations Act 2001, ASX Listing
Rules, the Constitutions of the Company and the Trust and
Board Charter.
The Board seeks to ensure that:
– its membership represents an appropriate balance between
Directors with investment management and real estate
industry experience and Directors with an alternative
strategic perspective; and
– the size of the Board is conducive to effective discussion
and efficient decision-making.
Under the terms of the Company’s Constitution:
– an election of Directors must be held at each Annual
General Meeting and at least one Director must retire from
office; and
– each Director must retire from office at the third Annual
General Meeting following his/her last election.
Where eligible, a Director may stand for re-election.
Recommendation 2.2 - A listed entity should have and
disclose a board skills matrix setting out the mix of skills
and diversity that the board currently has or is looking to
achieve in its membership.
Directors
Finance
Industry Knowledge
Skill, Experience and Expertise
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Recommendation 2.3 - A listed entity should disclose:
(a)
(b)
the names of the directors considered by the board to
be independent directors;
if a director has an interest, position, association or
relationship of the type described in Box 2.3 but the
board is of the opinion that it does not compromise
the independence of the director, the nature of the
interest, position, association or relationship in
question and an explanation of why the board is of
that opinion; and
(c)
the length of service of each director.
The Board currently comprises two Independent Directors:
– James Davies; and
– Michelle Harpur.
69
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Corporate Governance Statement
Principle 3 – Instil a culture of acting lawfully,
ethically and responsibly
A listed entity should instil and continually reinforce a
culture across the organisation of acting lawfully, ethically
and responsibly.
Recommendation 3.1 - A listed entity should articulate and
disclose its values.
The Group’s values are:
– integrity;
– respect;
– safe and non-discriminatory work environment; and
– acting in a manner consistent with community standards.
These values are set out in the Group’s Code of Conduct.
Recommendation 3.2 - A listed entity should:
(a)
(b)
have and disclose a code of conduct for its directors,
senior executives and employees; and
ensure that the board or a committee of the board is
informed of any material breaches of that code.
The Board has adopted a Code of Conduct which is disclosed
on the Group’s website. It requires officers, employees,
contractors, representatives, consultants and associates, and
other persons that act on behalf of the Group to act honestly,
in good faith, and in the best interests of the Group as a whole,
whilst in accordance with the letter (and spirit) of the law.
Recommendation 3.3 - A listed entity should:
(a) have and disclose a whistleblower policy; and
(b)
ensure that the board or a committee of the board
is informed of any material incidents reported under
that policy.
The Board has adopted a whistleblower policy which is
disclosed on the Group’s website.
Recommendation 3.4 - A listed entity should:
(a)
(b)
have and disclose an anti-bribery and corruption
policy; and
ensure that the board or a committee of the board is
informed of any material breaches of that policy
The Board has adopted an anti-bribery and corruption policy
which is disclosed on the Group’s website.
Principle 2 – Structure the board to add value (Cont.)
Recommendation 2.3 (cont.):
James Davies and Michelle Harpur were appointed to the
Board on 18 October 2016. Until his resignation on 29 June
2021, the Board had a third Independent Director, Mr Craig
Treasure, who was appointed to the Board on 1 May 2020.
Directors must disclose any material personal or family
contract or relationship in accordance with the Corporations
Act 2001. Directors also adhere to constraints on their
participation and voting in relation to matters in which they
may have an interest in accordance with the Corporations Act
2001 and the Group’s policies.
Details of offices held by Directors with other organisations
are set out in the Directors' Report. Full details of related
party dealings are set out in notes to the Group’s accounts as
required by law.
If a Director’s independence status changes, this will be
disclosed and explained to the market in a timely manner.
Recommendation 2.4 - A majority of the board of a listed
entity should be independent directors.
The composition of the Board is as follows:
– James Davies – Independent Director;
– Michelle Harpur – Independent Director; and
– Mark Avery – Managing Director.
The Board is currently considering future board composition
and further recruitment in the short term, in light of the recent
resignation of Independent Director, Mr Craig Treasure, on 29
June 2021. However, the Board continues to function with the
current members, which comprises a majority of independent
directors.
Recommendation 2.5 - The chair of the board of a
listed entity should be an independent director and, in
particular, should not be the same person as the CEO of
the entity.
The Chairperson of the Board is an Independent Director.
James Davies has been appointed as Chairperson of the
Group.
Recommendation 2.6 - A listed entity should have
a program for inducting new directors and provide
appropriate professional development opportunities for
directors to develop and maintain the skills and knowledge
needed to perform their role as directors effectively.
The annual performance assessment provides an opportunity
for all directors to identify required training although directors
can request professional development opportunities at any
time.
70
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021 Corporate Governance Statement
Principle 4 – Safeguard the integrity of corporate
reports
A listed entity should have appropriate processes to verify
the integrity of its corporate reports.
Recommendation 4.1 - The board of a listed entity should:
(a) have an audit committee which:
(i)
has at least three members, all of whom are non-
executive directors and a majority of whom are
independent directors; and
(ii) is chaired by an independent director, who is not
the chair of the board, and disclose:
(A) the charter of the committee;
Its key responsibilities are to:
– review and recommend to the Board the financial
statements (including key financial and accounting
principles adopted by the Group);
– review and monitor risks and the implementation of
mitigation measures for those risks as appropriate;
– assess and recommend to the Board the appointment of
external auditors and monitor the conduct of audits;
– monitor the Group’s compliance with its statutory
obligations;
– review and monitor the adequacy of management
information and internal control systems; and
– ensure that any shareholder queries relating to such
(B) the relevant qualifications and experience of
matters are dealt with expeditiously.
the members of the committee; and
(C) in relation to each reporting period, the
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
(b)
if it does not have an audit committee, disclose
that fact and the processes it employs that
independently verify and safeguard the integrity of its
corporate reporting, including the processes for the
appointment and removal of the external auditor and
the rotation of the audit engagement partner.
The Board has established an Audit and Risk Committee.
The Audit and Risk Committee has three members: Ms Michelle
Harpur (Chairperson), Mr James Davies and Mr Mark Avery.
The majority of the Audit and Risk Committee are Non-
executive Independent Directors, as is the Chairperson.
The Audit and Risk Committee operates under an approved
charter.
The Audit and Risk Committee has authority (within the scope
of its responsibilities) to seek any information it requires from
Group employees or external party. Members may also meet
with auditors (internal and/or external) without management
present and consult independent experts, where the Audit and
Risk Committee considers it necessary to carry out its duties.
All matters determined by the Audit and Risk Committee
are submitted to the full Board as recommendations for
Board decisions. Minutes of an Audit and Risk Committee
meeting are tabled at a subsequent Board meeting. Additional
requirements for specific reporting by the Audit and Risk
Committee to the Board are addressed in the Charter.
The purpose of the Audit and Risk Committee is to assist the
Board in fulfilling its responsibilities relating to the financial
reporting and accounting practices of the Group.
Attendance is recorded at Audit and Risk Committee meetings
and the experience of the members is provided in the
Directors’ Report.
Recommendation 4.2 - The board of a listed entity should,
before it approves the entity’s financial statements
for a financial period, receive from its CEO and CFO a
declaration that, in their opinion, the financial records
of the entity have been properly maintained and that
the financial statements comply with the appropriate
accounting standards and give a true and fair view of
the financial position and performance of the entity and
that the opinion has been formed on the basis of a sound
system of risk management and internal control which is
operating effectively.
Before the Board approves the Group’s financial statements, it
receives declarations of the Managing Director and the CFO of
the Manager that, in their opinion, the financial records of the
Group have been properly maintained and that the financial
statements comply with the appropriate accounting standards
and give a true and fair view of the financial position and
performance of the company, and that their opinion has been
formed on the basis of a sound risk management system and
internal controls which are operating effectively.
Recommendation 4.3 - A listed entity should disclose its
process to verify the integrity of any periodic corporate
report it releases to the market that is not audited or
reviewed by an external auditor.
The Group will disclose its process to verify the integrity of any
periodic corporate report it releases to the market that is not
audited or reviewed by an external auditor.
71
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Corporate Governance Statement
Principle 5 – Make timely and balanced disclosure
A listed entity should make timely and balanced disclosure
of all matters concerning it that a reasonable person
would expect to have a material effect on the price or
value of its securities.
Recommendation 5.1 - A listed entity should have and
disclose a written policy for complying with its continuous
disclosure obligations under listing rule 3.1.
The Board has adopted a Disclosure and Communications
Policy which is disclosed on the Group’s website.
The Board is committed to:
– the promotion of investor confidence by ensuring that
trading in the Group’s securities takes place in an efficient,
competitive and informed market;
– complying with the Group’s disclosure obligations under the
ASX Listing Rules and the Corporations Act 2001; and
– ensuring the stakeholders have the opportunity to access
externally available information issued by the Group.
The Company Secretary is responsible for coordinating the
disclosure of information to Regulators and securityholders
and ensuring that any notifications/reports to the ASX are
promptly posted on the Group’s website.
Recommendation 5.2 - A listed entity should ensure
that its board receives copies of all material market
announcements promptly after they have been made.
The Group ensures that all Directors receive copies of all
material market announcements promptly after they have
been made.
Recommendation 5.3 - A listed entity that gives a new
and substantive investor or analyst presentation should
release a copy of the presentation materials on the
ASX Market Announcements Platform ahead of the
presentation.
The Group will ensure that if it gives a new and substantive
investor or analyst presentation it will release a copy of the
presentation materials on the ASX Market Announcements
Platform ahead of the presentation.
Principle 6 – Respect the rights of securityholders
A listed entity should provide its securityholders with
appropriate information and facilities to allow them to
exercise their rights as securityholders effectively.
Recommendation 6.1 - A listed entity should provide
information about itself and its governance to investors
via its website.
Information about the Group and its corporate governance
items are posted on its website at www.eildoncapital.com
Recommendation 6.2 - A listed entity should have an
investor relations program to facilitate effective two-way
communication with investors.
The Board has adopted a Disclosure and Communication
Policy that describes the Board’s policy for ensuring
shareholders and potential investors of the Group receive or
obtain access to information publicly released.
The Group’s primary portals are its website, Annual Report,
Annual General Meeting, Half-Yearly Report, and notices to
the ASX.
The Board, with the assistance of the Company Secretary,
oversees and coordinates the distribution of all information by
the Group to the ASX, shareholders, the media and the public.
All securityholders have the opportunity to attend the Annual
General Meeting and ask questions of the Board.
Recommendation 6.3 - A listed entity should disclose how
it facilitates and encourages participation at meetings of
securityholders.
The Company holds an Annual General Meeting (“AGM”) of
securityholders in November each year. The date, time and
venue of the AGM are notified to the ASX when the notice of
the AGM is circulated to securityholders and lodged with the
ASX each year.
The Board will choose a date, venue and time considered
convenient to the greatest number of its shareholders.
A notice of meeting will be accompanied by explanatory notes
on the items of business and together they will seek to clearly
and accurately explain the nature of the business of the
meeting.
Securityholders are encouraged to attend the meeting, or
if unable to attend, to vote on the motions proposed by
appointing a proxy. The proxy form included with the Notice of
Meeting will seek to explain clearly how the proxy form is to be
completed and submitted.
Recommendation 6.4 - A listed entity should ensure that all
substantive resolutions at a meeting of securityholders are
decided by a poll rather than by a show of hands.
The Group will ensure that all substantive securityholder
resolutions are decided by poll.
Recommendation 6.5 - A listed entity should give
securityholders the option to receive communications
from, and send communications to, the entity and its
security registry electronically.
The Group provides its securityholders with an electronic
communication option.
72
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021 Corporate Governance Statement
Principle 7 – Recognise and manage risk
A listed entity should establish a sound risk management
framework and periodically review the effectiveness of
that framework.
Recommendation 7.1 - The board of a listed entity should:
(a)
have a committee or committees to oversee risk, each
of which:
(i)
has at least three members, all of whom are
independent directors; and
(ii) is chaired by an independent director, and
disclose:
(A) the charter of the committee;
(B) the members of the committee;
(C) as at the end of each reporting period,
the number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
(b)
if it does not have a risk committee or committees
that satisfy (a) above, disclose that fact and the
processes it employs for overseeing the entity’s risk
management framework.
The Board of the Group, through the Audit and Risk
Committee, is responsible for ensuring that:
– there are adequate policies for the oversight and
management of material business risks;
– there are effective systems in place to identify, assess,
monitor and manage the risks and to identify material
changes to the risk profile; and
– arrangements are adequate for monitoring compliance with
laws and regulations applicable to the Group.
Recommendation 7.2 - The board or a committee of the
board should:
(a)
review the entity’s risk management framework at
least annually to satisfy itself that it continues to be
sound and that the entity is operating with due regard
to the risk appetite set by the board; and
(b)
disclose, in relation to each reporting period, whether
such a review has taken place.
The Audit and Risk Committee reviews the Group’s risk
management framework at least annually.
Recommendation 7.3 - A listed entity should disclose:
(a)
(b)
if it has an internal audit function, how the function is
structured and what role it performs; or
if it does not have an internal audit function, that
fact and the processes it employs for evaluating and
continually improving the effectiveness of its risk
management and internal control processes.
Given the size, scale and nature of the Group, it does not have
an internal audit function. The Group has an Audit and Risk
Committee which considers material business risks.
Recommendation 7.4 - A listed entity should disclose
whether it has any material exposure to environmental
or social risks and, if it does, how it manages or intends to
manage those risks.
The Board has adopted a Risk Management Statement which
outlines the process for identifying, monitoring and mitigating
risks as well as generic sources of risk. This is reviewed on an
annual basis.
Principle 8 – Remunerate fairly and responsibly
A listed entity should pay director remuneration sufficient
to attract and retain high quality directors and design its
executive remuneration to attract, retain and motivate
high quality senior executives to align their interests with
the creation of value for securityholders.
Recommendation 8.1 - The board of a listed entity should:
(a) have a remuneration committee which:
(i)
has at least three members, a majority of whom
are independent directors; and
(ii) is chaired by an independent director, and
disclose:
(A) the charter of the committee;
(B) the members of the committee; and
(C) as at the end of each reporting period,
the number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
(b)
if it does not have a remuneration committee,
disclose that fact and the processes it employs for
setting the level and composition of remuneration
for directors and senior executives and ensuring that
such remuneration is appropriate and not excessive.
Given the size, scale and nature of the Group, there is not a
separate remuneration committee. The full Board considers
the issues that would otherwise be a function of a separate
remuneration committee.
Remuneration for the Independent Directors is set at market
rates commensurate with the responsibilities borne by the
Independent Directors. Independent professional advice may be
sought. The Managing Director is not remunerated by the Group.
The Board also regularly considers the level and composition
of remuneration of the Group’s employees.
73
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
Corporate Governance Statement
Principle 8 – Remunerate fairly and responsibly
(Cont.)
Recommendation 8.2 - A listed entity should separately
disclose its policies and practices regarding the
remuneration of non-executive directors and the
remuneration of executive directors and other senior
executives.
Remuneration for the Independent Directors is set at market
rates commensurate with the responsibilities borne by the
Independent Directors. Independent professional advice may
be sought. The Managing Director is not remunerated by the
Group.
Further information is provided in the Remuneration Report
set out in the Directors’ Report.
Recommendation 8.3 - A listed entity which has an equity-
based remuneration scheme should:
(a)
have a policy on whether participants are permitted
to enter into transactions (whether through the use
of derivatives or otherwise) which limit the economic
risk of participating in the scheme; and
(b) disclose that policy or a summary of it.
The Group adopted an employee incentive plan at its 2020
annual general meeting.
The Board has adopted a securities trading policy which
restricts all directors, officers and employees of the Group
from entering into hedging arrangements.
74
FOR THE YEAR ENDED 30 JUNE 2021EILDON CAPITAL GROUP | ANNUAL REPORT 2021 Additional Information
The following information was current as at 18 August 2021.
Distribution schedule
The distribution of stapled securityholders and their security
holdings was as follows:
Minimum Number of Stapled
Security Holders
Parcel Size
Unmarketable parcels
Minimum $500.00 parcel
at $1.040 per stapled security
481
32
Category
(Size of Holding)
Number of Ordinary
Stapled Security Shareholders
Substantial holders
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – over
Total
53
121
89
230
41
534
The names of the Company’s substantial holders and the
number of ordinary stapled securities in which each has a
relevant interest as disclosed in substantial holder notices
given to the Company are as follows:
Stapled Security
Holder
Number of Ordinary Stapled
Securities in which Interest Held
CVC Limited
First Samuel Limited
Chemical Overseas Limited
18,638,972
3,199,499
3,069,377
20 largest stapled securityholders - ordinary stapled securities
As at 18 August 2021, the top 20 stapled securityholders and their holdings were as follows:
Stapled Security Holder
Stapled Securities Held
% of Issued Capital Held
CVC Limited
First Samuel Limited
Chemical Overseas Limited
JKM Securities Pty Ltd
Rubi Holdings Pty Ltd
Miss Kate Imogen Leaver
Fordholm Consultants Pty Ltd
Buduva Pty Ltd
Mr Hugh John Cameron + Mrs Heather Margaret Cameron
Fifty-second Celebration Pty Ltd
Geat Incorporated
Buduva Pty Ltd
Mr Robert Velletri + Mrs Francine Velletri
Tyroc Pty Ltd
JPR Holdings Pty Ltd
Wilbow Group Pty Ltd
Equitas Nominees Pty Limited
Thirty-Fifth Celebration Pty Ltd
T & M Properties Pty Limited
Delta Asset Management Pty Ltd < Super Fund A/C>
18,638,972
3,199,499
3,069,377
2,046,500
2,000,000
662,026
500,000
490,000
484,861
450,000
400,000
350,000
337,676
324,570
308,144
300,000
297,753
295,395
288,144
260,000
34,702,917
39.59
6.80
6.52
4.35
4.25
1.41
1.06
1.04
1.03
0.96
0.85
0.74
0.72
0.69
0.65
0.64
0.63
0.63
0.61
0.55
73.72
Voting Rights
The Company’s constitution details the voting rights of members and states that every member, present in person or by proxy,
shall have one vote for every ordinary stapled security registered in his or her name.
Registered Office
The Company is registered and domiciled in Australia. Its registered office and principal place of business are at
Suite 4, Level 6, 330 Collins Street, Melbourne VIC 3000.
75
2021 ANNUAL REPORT | EILDON CAPITAL GROUPFOR THE YEAR ENDED 30 JUNE 2021
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MELBOURNE OFFICE
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P +61 3 7003 7622
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