Eildon Capital Group
Financial Report
For the financial year ended
30 June 2022
Consisting of the combined consolidated Financial Reports of
Eildon Capital Limited (ABN 11 059 092 198) and
Eildon Capital Trust (ARSN 635 077 753)
The financial report was authorised for issue by the Directors on 24 August 2022.
The Company has the power to amend and reissue the financial report.
1
Eildon Capital Group
Group Particulars
REGISTERED OFFICE:
RESPONSIBLE ENTITY:
Suite 4, Level 6
Eildon Funds Management Limited
330 Collins Street
ABN 72 066 092 028
MELBOURNE VIC 3000
AFSL 229 809
Tel: (03) 7003 7622
Suite 4, Level 6
330 Collins Street
MELBOURNE VIC 3000
DIRECTORS:
SECRETARY:
Eildon Capital Limited
Eildon Capital Limited
Mark A Avery
Tiffany L McLean
James R Davies
Laurence B Parisi (Appointed 15 December 2021)
Michelle E Phillips
Matthew W Reid (Appointed 26 April 2022)
Eildon Funds Management Limited
Eildon Funds Management Limited
as Responsible Entity for Eildon Capital Trust as Responsible Entity for Eildon Capital Trust
Mark A Avery
Tiffany L McLean
James R Davies
Laurence B Parisi (Appointed 15 December 2021)
Michelle E Phillips
Matthew W Reid (Appointed 26 April 2022)
BANKERS:
DOMICILE:
Westpac Banking Corporation Limited
Australia
AUDITORS:
SHARE REGISTRY:
Pitcher Partners Sydney
Computershare Investor Services Pty Limited
Level 16
Level 4, 60 Carrington Street
Tower 2 Darling Park
Sydney, NSW, 2000
201 Sussex Street
Sydney NSW 2000
STOCK EXCHANGE LISTING:
Australian Securities Exchange Limited
2
Eildon Capital Group
Directors’ Report
For the Year Ended 30 June 2022
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 2022 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:
Mark A Avery
Title:
Non-independent Director of Eildon Capital Limited
Non-independent Director of Eildon Funds Management Limited
Member of the audit committee.
Managing Director of Eildon Capital Limited and Eildon Funds
Management Limited until 30 April 2022.
Qualifications:
B.Com.Pl.Ds. (UOM)
Experience and expertise:
Mark is an experienced property executive with over 20 years of
experience
gained
across
private
and
listed
property
development and investment groups.
Mark served as Managing Director of Eildon Capital Limited and
Eildon Funds Management Limited from September 2016 to April
2022 before transitioning to a non-independent director in April
2022.
Mark holds bachelor’s degrees in commerce and Planning &
Design from the University of Melbourne and an MBA from the
University of New South Wales.
Listed company directorships:
(held within the last three years)
Managing Director and CEO of CVC Limited (Since July 2019)
Interests as at the date of this report:
-
Stapled securities:
53,402
-
Performance rights:
None
3
Eildon Capital Group
Directors’ Report
For the Year Ended 30 June 2022
Directors (Continued)
Name:
James R Davies
Title:
Non-Executive Chairman of Eildon Capital Limited
Director of Eildon Funds Management Limited
Member of the audit committee
Qualifications:
BSC (Comp) (UNE), MBA (LBS), GAICD
Experience and expertise:
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.
Listed company directorships:
(held within the last three years)
Independent non-executive director of New Energy Solar (Since
Oct-17)
Independent non-executive director of Kiland Ltd (Since July-21)
Interests as at the date of this report:
-
Stapled securities:
28,629
-
Performance rights:
None
Name:
Michelle E Phillips
Title:
Non-Executive Director of Eildon Capital Limited
Director of Eildon Funds Management Limited
Member of the audit committee
Qualifications:
B.A. (UNSW), L.L.B. (UNSW), GAICD
Experience and expertise:
Ms Phillips 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:
None
(held within the last three years)
Interests as at the date of this report:
-
Stapled securities:
19,523
-
Performance rights:
None
4
Eildon Capital Group
Directors’ Report
For the Year Ended 30 June 2022
Directors (Continued)
Name:
Matthew W Reid
Title:
Non-executive Director of Eildon Capital Limited from 26 April
2022
Non-executive Director of Eildon Funds Management Limited
from 26 April 2022
Chairman of the audit committee
Qualifications:
Bec (Monash), CA ANZ
Experience and expertise:
Mr. Reid has had a 30-year career spanning across a number of
industries both in Australia and overseas. His key fields of
specialty are corporate finance and property.
He spent many years at PwC in both Corporate Finance and as
Partner in Real Estate Advisory. His experience also includes
working on many corporate and private equity transactions for
global clients, at PwC and as a Director of Corporate Finance for
Austock and later for Becton Property Group managing end to
end equity raising, IPOs and M&A processes.
Mr. Reid has over 10 years Board of Directors experience
working with small and emerging businesses such as Grill’d
Group, Arrow Funds Management, Bayley Stuart Capital and
now Eildon Capital Group. Both Arrow and Bayley Stuart are
unlisted fund managers that manage unlisted property funds in
the agri-infrastructure and office sectors, respectively.
He is also a member of the Brighton Grammar School Council
and various sub committees including Finance, Property and the
Investment Foundation.
Listed company directorships:
(held within the last three years)
Nil
Interests as at the date of this report:
-
Stapled securities:
None
-
Performance rights:
None
5
Eildon Capital Group
Directors’ Report
For the Year Ended 30 June 2022
Company Secretaries
Name:
Tiffany L McLean
Title:
Joint Company Secretary of Eildon Capital Limited
Joint Company Secretary of Eildon Funds Management Limited
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:
25,000
Name:
Laurence B Parisi
Title:
Joint Company Secretary of Eildon Capital Limited and Eildon
Funds Management Limited from 15 December 2021.
Chief Executive Officer of Eildon Capital Limited and Eildon
Funds Management Limited from 01 May 2022.
Chief Operating Officer of Eildon Capital Limited and Eildon
Funds Management Limited until 30 April 2022.
Qualifications:
Diploma of Business Accounting, Diploma of Financial Markets
and a Graduate Diploma of Applied Finance and Investments
Experience and expertise:
Laurence has over 22 years’ experience in various senior roles
within the property investment industry, covering both direct
and listed real estate.
Laurence was previously an Executive Director at Goldman Sachs
and Fund Manager of Industria REIT (ADI.AX), an ASX listed
commercial and industrial focused AREIT. Laurence has also
worked for Credit Suisse and Citi covering the AREIT sector and
spent several years at APN as the Head of Private Funds
responsible for managing four direct retail property funds and
two wholesale direct property funds with a combined value of
more than $400 million.
Interests as at the date of this report:
-
Stapled securities:
35,110
-
Performance rights:
269,800
6
Eildon Capital Group
Directors’ Report
For the Year Ended 30 June 2022
Key management personnel
Key management personnel during the financial year includes the directors and company secretaries.
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 2022, and the numbers of meetings attended by each director were:
Full board
Audit Committee
No of
meetings
attended
No of meetings
eligible to
attend
No of
meetings
attended
No of meetings
eligible to
attend
M A Avery
7
7
2
2
J R Davies
7
7
2
2
M E Phillips
6
7
1
2
M W Reid
1
1
0
0
Share option
There were no options issued by the Company during the year or to the date of this report.
Principal activities
EDC is an ASX listed funds management business and specialist real estate investor. Eildon’s investment
activities cover both credit and equity in real estate. Eildon co-invests alongside its investor client utilising its
balance sheet capability demonstrating strong alignment of interest
Dividends and distributions
Dividends and distributions proposed or paid during the year and included within the statement of changes
in equity by EDC are:
Company
dividend
(cents)
Trust
distribution
(cents)
Total Per
Security
(cents)
Total
$
Date of
Payment
Franked
amount
per
security
2022 June quarter
-
1.500
1.500
708,042
22-Jul-22
-
2022 March quarter
-
2.000
2.000
943,135
22-Apr-22
-
2021 December quarter
-
2.000
2.000
942,250
24-Jan-22
-
2021 September quarter
-
2.000
2.000
941,502
22-Oct-21
-
2021 June quarter
-
2.023
2.023
952,329
23-Jul-21
-
7
Eildon Capital Group
Directors’ Report
For the Year Ended 30 June 2022
Review of Operations
EDC recorded an after-tax profit to securityholders of $6,082,200 (2021: $4,894,024). The profit for the year
is comprised as follows:
2022
2021
$
$
Net profit after income tax attributable to:
-
Eildon Capital Limited
2,242,252
1,006,181
-
Eildon Capital Trust
3,839,948
3,887,843
──────────
──────────
Net profit to securityholders
6,082,200
4,894,024
Non-controlling interest
121,354
33,159
──────────
──────────
Net profit after income tax
6,203,554
4,927,183
═══════
═══════
EDC’s investment portfolio totalled $44.3 million as at 30 June 2022. In addition, the group has $8.2 million
of cash reserves, representing 15% of net assets, of which $2.4 million is committed to fund new and existing
investments. The investment portfolio includes 7 debt positions and 6 equity investments diversified across
Queensland, Victoria and New South Wales. The investment portfolio remains 58% invested in debt positions
and 42% in equity by value. During the financial year, EDC generated $4.0 million (2021: $4.4 million) of
interest income from property loans and is holding loan investments totalling $29.9 million (2021: $27.8
million).
Eildon Funds Management generated $3.9 million (2021: $3.0 million) in revenue in the period. Since the
internalisation of Eildon Funds Management Limited and its controlled entities (“EFM”), Assets under
management (AUM) have increased to approximately $350million (2021: $267million).
Additionally, in FY22 two new unlisted property funds were successfully closed with total AUM of $78.8
million and EFM has increased its lending portfolio to approximately $146 million under management (2021:
$118 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 security holders.
8
Eildon Capital Group
Directors’ Report
For the Year Ended 30 June 2022
Remuneration Report (Audited) (Con’t)
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 security
holders 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.
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
Unvested awards
forfeited
Unvested awards determined by
Directors’ discretion
Termination for
serious misconduct
None
None
Unvested awards
forfeited
Unvested awards forfeited
Employee initiated
termination
1 month
1 month
Unvested awards
forfeited
Unvested awards determined by
Directors’ discretion
9
Eildon Capital Group
Directors’ Report
For the Year Ended 30 June 2022
Remuneration Report (Audited) (Con’t)
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-Employ’t
Benefits
Share-
based
Base Salary
Bonus
(g)
Super’n
Payment (h)
Total
Base %
$
$
$
$
$
(i)
Directors
Mark Avery (a)
2022
14,132
-
1,413
15,545
100%
(Non-independent Director)
2021
-
-
-
-
-
-
James Davies
2022
91,324
-
9,132
-
100,456
100%
(Non-Executive Chairman)
2021
64,688
-
6,145
-
70,833
100%
Michelle Phillips
2022
77,625
7,763
85,388
100%
(Non-Executive Director)
2021
53,653
-
5,097
-
58,750
100%
Matthew Reid (b)
2022
14,132
1,413
15,545
100%
(Non-Executive Director)
2021
-
-
-
-
-
-
Craig Treasure (c)
2022
-
-
-
-
-
-
(Non-Executive Director)
2021
53,653
-
5097
-
58,750
100%
Other Key Management Personnel
Laurence Parisi (d)
2022
267,941
78,000
26,892
17,376
390,209
76%
(Joint Company Secretary
/Chief Executive Officer)
2021
147,945
85,000
14,055
16,603
263,603
61%
Varun Sachdev (e)
2022
129,743
60,000
12,998
1,104
203,845
70%
(Chief Financial Officer)
2021
-
-
-
-
-
Tiffany McLean (f)
2022
151,021
50,000
20,102
920
222,043
77%
(Joint Company
Secretary/General Counsel)
2021
-
-
-
-
-
-
─────────
─────────
─────────
─────────
─────────
2022
745,918
188,000
79,713
19,400
1,033,031
2021
319,939
85,000
30,394
16,603
451,936
─────────
─────────
─────────
─────────
─────────
Notes:
(a) Mr Avery became a Non-independent Director on 01 May 2022.He was previously the Managing Director of the Group.
(b) Mr Reid was appointed as director on 26 April 2022.
(c) Mr Treasure resigned from the Board of the Company and Eildon Funds Management Limited on 29 June 2021.
(d) Mr Parisi was appointed as joint company secretary on 15 December 2021 and as chief executive director on 1 May 2022.
(e) Mr Sachdev was appointed as Chief Financial Officer on 08 November 2021.
(f)
Ms McLean is employed on a permanent part-time basis working 3 days a week. Ms McLean was on maternity leave for the
period 20 December 2021 to 30 June 2022.
(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.
10
Eildon Capital Group
Directors’ Report
For the Year Ended 30 June 2022
Remuneration Report (Audited) (Con’t)
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 2022
is as follows:
Stapled securities
Opening
Purchases
Sales
Other changes
during the year
Closing
Mr M. A. Avery (a)
53,402
-
-
-
53,402
Mr J. R. Davies
27,016
1,613
-
-
28,629
Ms M. E. Phillips
19,523
-
-
-
19,523
Mr M. W. Reid (b)
-
-
-
-
-
Mr L. B. Parisi (c)
25,810
9,300
-
-
35,110
Mr V. Sachdev (d)
-
-
-
-
-
Ms T. McLean
-
-
-
-
-
Notes:
(a) Mr Avery became a Non-independent Director on 01 May 2022. He was previously the Managing
Director of the Group.
(b) Mr Reid was appointed as a non-executive director on 26 April 2022.
(c) Mr Parisi was appointed as joint company secretary on 15 December 2021 and as chief executive officer
on 1 May 2022.
(d) Mr Sachdev was appointed as Chief Financial Officer on 08 November 2021
Share option
There were no options issued by the Company during the year or to the date of this report.
Performance rights
On 16 March 2022, 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 387,00
(2021:409,300) performance rights have been issued with a three-year term with the terms summarised as
follows:
Total Security Holders Return hurdle (50%)
Return on Assets hurdle (50%)
Return (p.a.)
Vesting Amount
Return
Vesting Amount
< 8%
nil
< 12%
nil
8% - 10%
50%
12%
50%
10% - 12%
75%
12% - 13.5%
50% - 100%
>12%
100%
>13.5%
100%
11
Eildon Capital Group
Directors’ Report
For the Year Ended 30 June 2022
Remuneration Report (Audited) (Con’t)
The fair value of the performance rights at grant date was $243,559 (FY21: $356,910). Fair value was
determined using the Black Scholes Option pricing model. The following inputs were utilised:
2022
2021
Issue price
$1.04
$1.03
Grant date
16/03/2022
01/02/2021
Expiry date
15/03/2022
31/01/2024
Security price at grant date
$1.01
$1.09
Expected volatility of shares
27.93%
23.57%
Expected dividend yield
8%
8%
Risk free interest rate
2.75%
0.11%
The following table illustrates movements in the number of performance rights on issue during the year.
Grant Date
Vesting Date
Balance
at start of
the year
Granted
during the
year
Cancelled
during the
year
Balance at end
of the year
Value
per right
1 Feb 2021
31 Jan 2024
409,300
-
53,400
355,900
$0.27
16 Mar 2022
15 Mar 2025
-
387,000
-
387,000
$0.38
The table below provides a reconciliation of performance rights held by the Key Management personnel.
KMP
Year
Securities
awarded
Award date
Issue price per
security at
award date
Vesting date
Laurence Parisi
2022
130,000
16/03/2022
$1.04
15/3/2025
2021
139,800
01/02/2021
$1.03
31/1/2024
Varun Sachdev
2022
30,000
16/03/2022
$1.04
15/3/2025
2021
-
-
-
-
Tiffany McLean
2022
25,000
16/03/2022
$1.04
15/3/2025
2021
-
-
-
-
12
Eildon Capital Group
Directors’ Report
For the Year Ended 30 June 2022
Remuneration Report (Audited) (Con’t)
Consequences of performance on stapled security holder wealth
In considering EDC’s performance and benefits for stapled security holder wealth, the Directors have regard
to the following indicators in respect of the current financial year and previous financial years.
2022
$
2021
$
2020
$
2019
$
2018
$
Net profit after tax attributable to
ordinary securityholders of EDC (a)
6,082,200
4,894,024
4,730,453
4,386,508
3,006,055
─────────
─────────
─────────
─────────
─────────
Total comprehensive income attributable
to ordinary securityholders of EDC (a)
6,082,200
4,894,024
4,730,453
4,386,508
3,006,055
─────────
─────────
─────────
─────────
─────────
Dividends and distributions paid
3,534,930
3,500,555
9,445,158
3,525,499
3,197,311
Securities issued/ (bought back) on
market
127,725
5,984,375
1,124,089
(609,994)
-
Security price
1.00
1.08
1.00
1.02
1.04
Net assets per security (b)
1.16
1.11
1.09
1.06
1.04
Change in net assets per security (b)
0.05
0.02
0.03
0.02
(0.01)
(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 2022
and 30 June 2021 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 security holders 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 2022 and 30 June 2021 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 security holders of EDC. Refer note 17.
We aim to align executive remuneration to our business objectives and the creation of security holder 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.
13
Eildon Capital Group
Directors’ Report
For the Year Ended 30 June 2022
Significant changes in the state of affairs
There were no 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
To the best of their knowledge and belief, the Directors have determined that the Group has complied with
all significant environmental regulations applicable to its operations in the jurisdictions in which it operates.
Events subsequent to reporting date
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 2022.
ECT disclosures
Units issued in ECT during the year are set out in note 17. There were 47,202,827 (2021: 47,075,102) 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 $44,888,628 (2021: $44,287,542). Net assets
attributable to unitholders of ECT were $43,551,224 (2021: $43,123,127) equalling to $0.92 per unit (2021:
$0.92)
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.
14
Eildon Capital Group
Directors’ Report
For the Year Ended 30 June 2022
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 2022 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
• None 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 67.
Signed in accordance with a resolution of Directors.
Dated at Melbourne 24 August 2022
__________________
____________________
Matt Reid
James Davies
Director
Director
15
Eildon Capital Group
Consolidated Statement of Profit or Loss
For the Year Ended 30 June 2022
EDC
ECT
────────────────────────
────────────────────────
Notes
2022
2021
2022
2021
$
$
$
$
INCOME
Interest income
3,950,835
4,358,780
4,298,256
4,503,580
Fee income
4,729,304
3,422,941
101,033
13,967
Distribution income
518,968
212,097
518,969
212,097
Revaluation of financial assets at fair value
through profit or loss
907,712
-
304,673
-
──────────
──────────
──────────
──────────
Total income
10,106,819
7,993,818
5,222,931
4,729,644
──────────
──────────
──────────
──────────
Share of net profit of associate accounted for
using the equity method
12
2,067,568
2,633,008
-
-
EXPENSES
Accountancy
350,323
340,147
3,747
11,509
Employee and director costs
6
3,002,093
1,508,025
18,684
40,373
Insurance
179,274
79,126
-
-
Interest expenses
439,633
42,119
432,774
1,559
Net loss on financial assets at fair value through
profit or loss
-
1,351,145
-
5,000
Legal fees
56,747
49,218
13,235
15,694
Publications and subscriptions
86,480
26,015
-
-
Management and consultancy fees
609,660
1,311,401
721,142
610,537
Restructure cost
-
138,354
-
-
Share registry
85,018
64,950
70,621
55,062
Other expenses
498,380
328,916
122,780
102,067
──────────
──────────
──────────
──────────
Total expenses
5,307,608
5,239,416
1,382,983
841,801
──────────
──────────
──────────
──────────
Profit before income tax
6,866,779
5,387,410
3,839,948
3,887,843
Income tax expense
5
663,225
460,227
-
-
──────────
──────────
──────────
──────────
Net profit after tax
6,203,554
4,927,183
3,839,948
3,887,843
═══════
═══════
═══════
═══════
Net profit after tax attributable to:
Owners of the Company
2,242,252
1,006,181
-
-
Owners of the Trust
3,839,948
3,887,843
3,839,948
3,887,843
Non-controlling interests
121,354
33,159
-
-
──────────
──────────
──────────
──────────
Net profit after tax
6,203,554
4,927,183
3,839,948
3,887,843
═══════
═══════
═══════
═══════
Basic earnings per company share/ trust
unit (cents)
7(a)
4.76
2.36
8.15
9.13
Diluted earnings per company share/
trust unit (cents)
7(a)
4.74
2.35
8.13
9.10
═══════
═══════
═══════
═══════
Basic earnings per stapled security
(cents)
7(b)
12.91
11.49
Diluted earnings per stapled security
(cents)
7(b)
12.87
11.45
═══════
═══════
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
16
Eildon Capital Group
Consolidated Statement of Other Comprehensive Income
For the Year Ended 30 June 2022
EDC
ECT
────────────────────────
────────────────────────
2022
2021
2022
2021
$
$
$
$
Profit for the year
6,203,554
4,927,183
3,839,948
3,887,843
Other comprehensive income
-
-
-
-
──────────
──────────
──────────
──────────
Total comprehensive income for the year
6,203,554
4,927,183
3,839,948
3,887,843
═══════
═══════
═══════
═══════
Total comprehensive income attributable to:
Owners of the Company
2,242,252
1,006,181
-
-
Owners of the Trust
3,839,948
3,887,843
3,839,948
3,887,843
Non-controlling interests
121,354
33,159
-
-
──────────
──────────
──────────
──────────
Total comprehensive income for the year
6,203,554
4,927,183
3,839,948
3,887,843
═══════
═══════
═══════
═══════
The above consolidated statement of other comprehensive income should be read in conjunction with the accompanying notes.
17
Eildon Capital Group
Consolidated Statement of Financial Position
As at 30 June 2022
EDC
ECT
─────────────────────────
─────────────────────────
Notes
2022
2021
2022
2021
$
$
$
$
CURRENT ASSETS
Cash and cash equivalents
9
8,180,442
11,100,354
5,781,661
8,527,689
Financial assets at amortised cost
10
21,820,695
27,659,310
20,664,651
26,929,545
Financial assets at fair value through profit or loss
11
5,526,424
1,133,708
5,526,424
1,133,708
Other assets
87,601
65,540
-
-
Current tax assets
5
672,983
-
-
-
Total current assets
36,288,145
39,958,912
31,972,736
36,590,942
NON-CURRENT ASSETS
Financial assets at amortised cost
10
4,364,322
911,096
8,887,207
5,112,638
Financial assets at fair value through profit or loss
11
5,829,315
3,559,954
4,028,685
2,583,962
Investments accounted for using the equity method
12
8,471,783
6,669,865
-
-
Intangible assets
13
3,460,077
3,460,077
-
-
Right-of-use asses
14
198,686
281,857
-
-
Plant & Equipment
20,239
14,070
-
-
Deferred tax assets
5
352,709
763,656
-
-
Total non-current assets
22,697,131
15,660,575
12,915,892
7,696,600
TOTAL ASSETS
58,985,276
55,619,487
44,888,628
44,287,542
CURRENT LIABILITIES
Trade and other payables
16
1,895,542
1,764,215
782,322
1,027,369
Lease liabilities
14
83,794
82,686
-
-
Provisions
112,562
84,099
-
-
Other liabilities
15
555,082
-
555,082
Current tax liabilities
5
-
111,000
-
-
Total current liabilities
2,646,980
2,042,000
1,337,404
1,027,369
NON-CURRENT LIABILITIES
Other liabilities
15
-
137,046
-
137,046
Lease liabilities
14
117,802
201,595
-
-
Provisions
25,225
-
-
-
Deferred tax liabilities
5
1,473,294
1,217,535
-
-
Total non-current liabilities
1,616,321
1,556,176
-
137,046
TOTAL LIABILITIES
4,263,301
3,598,176
1,337,404
1,164,415
NET ASSETS
54,721,975
52,021,311
43,551,224
43,123,127
EQUITY
Contributed equity
17
8,237,201
8,210,699
42,798,378
42,693,983
Retained earnings
2,921,597
679,345
693,789
388,771
Other reserves
18
12,050
8,237
59,057
40,373
Equity attributable to shareholders/unitholders
11,170,848
8,898,281
43,551,224
43,123,127
Non-controlling interests
Trust unitholders
43,551,224
43,123,127
-
-
Other non-controlling interests
(97)
(97)
-
-
43,551,127
43,123,030
-
-
TOTAL EQUITY
54,721,975
52,021,311
43,551,224
43,123,127
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
18
Eildon Capital Group
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2022
Contributed
equity
Retained
earnings
Share based
payments
reserve
Owners of the
parent
Non-
controlling
interest
Total equity
EDC
$
$
$
$
$
$
At 1 July 2021
8,210,699
679,345
8,237
8,898,281
43,123,030
52,021,311
═══════
═══════
═══════
═══════
═══════
═══════
Profit for the year
-
2,242,252
-
2,242,252
3,961,302
6,203,554
──────────
──────────
──────────
──────────
──────────
──────────
Total comprehensive income
for the year
-
2,242,252
-
2,242,252
3,961,302
6,203,554
──────────
──────────
──────────
──────────
──────────
──────────
Transactions with stapled
security holders:
Stapled securities issued
26,502
-
-
26,502
104,395
130,897
Dividends provided or paid
-
-
-
-
(3,656,284)
(3,656,284)
Share-based payment
expenses
-
-
3,813
3,813
18,684
22,497
──────────
──────────
──────────
──────────
──────────
──────────
At 30 June 2022
8,237,201
2,921,597
12,050
11,170,848
43,551,127
54,721,975
═══════
═══════
═══════
═══════
═══════
═══════
At 1 July 2020
7,634,321
(326,836)
-
7,307,485
37,287,469
44,594,954
═══════
═══════
═══════
═══════
═══════
═══════
Profit for the year
-
1,006,181
-
1,006,181
3,921,002
4,927,183
──────────
──────────
──────────
──────────
──────────
──────────
Total comprehensive income
for the year
-
1,006,181
-
1,006,181
3,921,002
4,927,183
──────────
──────────
──────────
──────────
──────────
──────────
Transactions with stapled
security holders:
Stapled securities issued
600,166
-
-
600,166
5,724,033
6,324,199
Transaction costs on stapled
securities issued
(33,807)
-
-
(33,807)
(315,136)
(348,943)
Tax on stapled securities
issued transaction costs
10,142
-
-
10,142
-
10,142
Transaction costs on stapled
securities buyback
(176)
-
-
(176)
(900)
(1,076)
Tax on stapled securities
buyback transaction costs
53
-
-
53
-
53
Acquisition of non-controlling
interests
-
-
-
-
(7,992)
(7,992)
Dividends provided or paid
-
-
-
-
(3,525,819)
(3,525,819)
Share-based payment
expenses
-
-
8,237
8,237
40,373
48,610
──────────
──────────
───────────
──────────
──────────
──────────
At 30 June 2021
8,210,699
679,345
8,237
8,898,281
43,123,030
52,021,311
═══════
═══════
════════
═══════
═══════
═══════
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
19
Eildon Capital Group
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2022
Contributed
equity
Retained
earnings
Share based
payments
reserve
Total equity
ECT
$
$
$
$
At 1 July 2021
42,693,983
388,771
40,373
43,123,127
═══════
═══════
═══════
═══════
Profit for the year
-
3,839,948
-
3,839,948
──────────
──────────
──────────
──────────
Total comprehensive income for the year
-
3,839,948
-
3,839,948
──────────
──────────
──────────
──────────
Transactions with unitholders:
Units issued
104,395
-
-
104,395
Distributions provided or paid
-
(3,534,930)
-
(3,534,930)
Share-based payment expenses
-
-
18,684
18,684
──────────
──────────
──────────
──────────
At 30 June 2022
42,798,378
693,789
59,057
43,551,224
═══════
═══════
═══════
═══════
At 1 July 2020
37,285,986
1,483
-
37,287,469
═══════
═══════
═══════
═══════
Profit for the year
-
3,887,843
-
3,887,843
──────────
──────────
──────────
──────────
Total comprehensive income for the year
-
3,887,843
-
3,887,843
──────────
──────────
──────────
──────────
Transactions with unitholders:
Units issued
5,724,033
-
-
5,724,033
Transaction costs on units issued
(315,136)
-
-
(315,136)
Transaction costs on units buyback
(900)
-
-
(900)
Distributions provided or paid
(3,500,555)
-
(3,500,555)
Share-based payment expenses
-
-
40,373
40,373
──────────
──────────
──────────
──────────
At 30 June 2021
42,693,983
388,771
40,373
43,123,127
═══════
═══════
═══════
═══════
The above consolidated statement of changes in equity should be read in conjunction with accompanying notes.
20
Eildon Capital Group
Consolidated Statement of Cash Flows
For the Year Ended 30 June 2022
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
EDC
ECT
───────────────────────
───────────────────────
Notes
2022
2021
2022
2021
$
$
$
$
Cash flows from operating activities
Cash receipts in the course of operations
4,975,348
4,033,187
150,240
116,514
Cash payments in the course of operations
(5,005,978)
(4,251,478)
(981,719)
(1,083,265)
Distribution received
438,177
311,612
-
148,223
Loans repaid
9,892,580
8,402,908
9,892,580
7,080,408
Loans provided
(9,077,770)
(2,511,034)
(9,055,913)
(6,511,034)
Interest and fee income received
5,938,150
2,951,099
5,964,228
2,793,872
Interest paid
(373,110)
(108,361)
(366,250)
-
Income tax paid
(780,503)
(70,119)
438,177
-
──────────
──────────
──────────
──────────
Net cash provided by operating activities
9(b)
6,006,894
8,757,814
6,041,343
2,544,718
──────────
──────────
──────────
──────────
Cash flows from investing activities
Payments for financial assets at fair value through profit or loss
(10,057,544)
(6,042,500)
(9,835,944)
(5,865,000)
Proceeds from financial assets at fair value through profit or loss
4,637,532
2,320,171
4,371,882
2,181,735
Payments for plant and equipment
(13,880)
(14,787)
-
-
Payments for acquisition of subsidiary, net of cash acquired
2
-
(3,877,681)
-
-
──────────
──────────
──────────
──────────
Net cash (used in) investing activities
(5,433,892)
(7,614,797)
(5,464,062)
(3,683,265)
──────────
──────────
──────────
──────────
Cash flows from financing activities
Dividends paid
(3,892,639)
(3,187,117)
(3,779,217)
(3,185,524)
Proceeds for stapled security/unit issued
130,897
6,324,199
104,395
5,724,033
Payment for stapled security/unit issue transaction costs
-
(348,943)
(315,136)
Payment for stapled security/unit buyback transaction costs
-
(1,076)
(900)
Proceeds from borrowings
351,513
135,487
351,513
135,487
Payment of borrowings
(82,685)
(1,451,242)
-
-
──────────
──────────
──────────
──────────
Net cash (used in)/provided by financing activities
(3,492,914)
1,471,308
(3,323,309)
2,357,960
──────────
──────────
──────────
──────────
Net (decrease)/increase in cash and cash equivalents
(2,919,912)
2,614,325
(2,746,028)
1,219,413
Cash and cash equivalents at the beginning of the financial year
11,100,354
8,486,029
8,527,689
7,308,276
──────────
──────────
──────────
──────────
Cash and cash equivalents at the end of the financial year
9(a)
8,180,442
11,100,354
5,781,661
8,527,689
═══════
═══════
═══════
═══════
21
Eildon Capital Group
Notes to the Financial Statements
For the Year Ended 30 June 2022
Note
Contents
═══════
═══════════════════════════════════
1.
Statement of Accounting Policies
2.
Controlled Entities
3.
Parent Entity Disclosure
4.
Auditor’s Remuneration
5.
Income Tax
6.
Employee and Director Costs
7.
Earnings Per Share/Unit/Stapled Security
8.
Dividends and Distributions
9.
Notes to the Statement of Cash Flows
10.
Financial Assets at Amortised Cost
11.
Financial Assets at Fair Value through Profit or Loss
12.
Investments Accounted for Using the Equity Method
13.
Intangible Assets
14.
Leases
15.
Other Liabilities
16.
Trade and Other Payables
17.
Contributed Equity
18.
Other Reserves
19.
Share-based Payments
20.
Financial Risk Management
21.
Segment Information
22.
Related Party Information
23.
Commitments and Contingent Liabilities
24.
Subsequent Events
22
Eildon Capital Group
Notes to the Financial Statements
For the Year Ended 30 June 2022
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 Presentation format
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.
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:
•
Assessment of recoverable amount of investments accounted for using the equity method (refer
below);
•
Impairment of intangible assets (refer note 13);
•
Assessment of recoverable amount 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).
23
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 1: Statement of Accounting Policies (Cont.)
1.3 Critical accounting estimates and judgements (Cont.)
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 reflect 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 cashflows 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 2022 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 Principles of consolidation
Controlled entities
The consolidated financial statements comprise the financial statements for the year ended 30 June 2022 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.
24
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 1: Statement of Accounting Policies (Cont.)
1.5 Principles of consolidation (Cont.)
Controlled entities (Cont.)
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);
•
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.
25
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 1: Statement of Accounting Policies (Cont.)
1.5 Principles of consolidation (Cont.)
Stapled Entities (Cont.)
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.
26
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 1: Statement of Accounting Policies (Cont.)
1.6 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.
1.7 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.
27
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 1: Statement of Accounting Policies (Cont.)
1.7 Income Tax and Other Taxes (Cont.)
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.
1.8 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.
28
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 1: Statement of Accounting Policies (Cont.)
1.8 Business Combination (Cont.)
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.
1.9 Cash and Cash Equivalents
Cash includes cash on hand and short-term deposits with an original maturity of three months or less.
1.10
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.
1.11
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.
29
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 1: Statement of Accounting Policies (Cont.)
1.12
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.
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.
1.13
Financial Assets
(i) Classification
Financial assets in the scope of AASB 9 Financial Instruments are classified into the measurement categories
at ether amortised cost or fair value, subject to their classification criteria.
The classification depends on EDC’s and ECT’s business model for managing the financial assets and the
contractual terms of the cash flows.
30
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 1: Statement of Accounting Policies (Cont.)
1.13 Financial Assets (Cont.)
(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 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.
(iii) Impairment
EDC and ECT assess on a forward-looking basis the expected credit losses associated with secured loans are
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.
1.14
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.
31
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 1: Statement of Accounting Policies (Cont.)
1.15
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.
1.16
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 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.
1.17
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.
32
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 1: Statement of Accounting Policies (Cont.)
1.18
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.
1.19
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.
1.20
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.
1.21
Comparative Figures
Where necessary, comparative figures have been reclassified to conform with changes in presentation in the
current year.
1.22
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.
1.23
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
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
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
Interest held by non-
controlling interests
Jun 2022
Jun 2021
Jun 2022
Jun 2021
%
%
%
%
Eildon Capital Limited
Direct Controlled Entities:
Eildon Funds Management Limited (a)
100
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
100
100
-
-
Eildon Asset Management Pty Limited
50
50
50
50
Eildon Asset Management Trust
50
50
50
50
EFM Nominee Services Pty Limited
100
100
-
-
Controlled Entities owned by stapled
entity, Eildon Capital Trust:
Eildon Debt Fund (b)
-
P Class
85
85
15
15
-
U Class
-
100
-
-
-
AC Class
100
-
-
-
-
AD Class
100
-
-
-
(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
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 2: Controlled Entities (Cont.)
2.2 Business Combination
In the prior year, 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
4,000,000
──────────
Total purchase consideration
4,000,000
═══════
Fair value of Assets and Liabilities of EFM at Acquisition:
Cash
122,319
Trade and other receivables (a)
851,550
Other assets
1,708
Plant and equipment
2,287
Financial assets at amortised cost
1,422,985
Deferred tax asset
35,782
Trade and other payables
(345,125)
Employee benefits
(34,199)
Borrowings
(1,507,605)
Current tax liability
(17,771)
──────────
Total identifiable net assets at fair value
531,931
Less: non-controlling interests
7,992
Add: goodwill (b)
3,460,077
──────────
Consideration for acquisition
4,000,000
═══════
Cash outflow:
Cash consideration
4,000,000
Less: balances acquired
Cash
(122,319)
──────────
Net outflow of cash – investing activities
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 purposes.
35
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 3: Parent Entity Disclosure
3.1 Summary financial information
Company
Trust
──────────────────────
──────────────────────
2022
2021
2022
2021
$
$
$
$
Balance Sheet
Current assets
1,107,218
1,187,522
31,377,245
36,550,638
Total assets
16,178,381
13,957,808
44,293,137
44,109,452
Current liabilities
407,188
299,448
741,913
986,325
Total liabilities
6,403,367
5,718,525
741,913
986,325
Shareholders’ equity
Issued capital
8,237,202
8,210,699
42,798,378
42,693,983
Retained earnings
1,525,762
20,347
693,789
388,771
Other reserve
12,050
8,237
59,057
40,373
──────────
──────────
──────────
──────────
Total Equity
9,775,014
8,239,283
43,551,224
43,123,127
═════════
═════════
═════════
═════════
Profit for the period
1,505,416
347,183
3,839,948
3,887,843
──────────
──────────
──────────
──────────
Total comprehensive income
1,505,416
347,183
3,839,948
3,887,843
═════════
═════════
═════════
═════════
3.2 Commitments and financial guarantees
Amounts available to be called by investees for partially paid shares and units:
Unrelated entity
1,139,055
1,235,654
100,587
1,983,487
═════════
═════════
═════════
═════════
Refer note 23(b) for information about guarantees given by the Company.
36
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 4: Auditor’s Remuneration
The auditor of EDC is Pitcher Partners Sydney
Amounts received or due and receivable by the auditors for:
EDC
ECT
──────────────────────
──────────────────────
2022
2021
2022
2021
$
$
$
$
Audit and review of financial report
Pitcher Partners Sydney
75,590
74,624
47,676
29,312
HLB Mann Judd
-
9,931
-
1,940
──────────
──────────
──────────
──────────
75,590
84,555
47,676
31,252
═════════
═════════
═════════
═════════
Other assurance services
Pitcher Partners Sydney
-
1,000
-
-
═════════
═════════
═════════
═════════
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
EDC
────────────────────────
2022
2021
$
$
Accounting profit before income tax
6,866,779
5,387,410
═══════
═══════
Income tax expense at the statutory income tax rate (FY22: 25%;
FY21:30%)
1,716,695
1,616,223
Trust profit not assessable
(978,880)
(1,147,689)
Sundry items
1,637
3,338
Adjustment recognised for prior year
-
(11,645)
Adjustment to reflect change in tax rate
(76,227)
-
──────────
──────────
Income tax expense
663,225
460,227
═══════
═══════
37
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 5: Income Tax (Cont.)
(a) Income tax expense (Cont.)
EDC
─────────────────────────
The major components of income tax expense are:
2022
2021
- Current income tax charge
-
166,152
- Deferred income tax
663,225
305,720
- Prior year provision
-
(11,645)
─────────
─────────
Income tax expense reported in the statement of profit or loss and other
comprehensive income
663,225
460,227
══════
══════
Deferred tax benefit relating to items credited directly to equity
-
10,195
══════
══════
(b) Deferred income tax
Deferred income tax balances at 30 June relates to the following:
2022
2021
Included in
income
Included in
equity
Total
Included in
income
Included in
equity
Total
EDC
$
$
$
$
$
$
─────────────────────────────────────────────────────────────────────────────
Deferred tax assets
Provisions and accrued
expenses
40,199
-
40,199
119,865
-
119,865
Financial assets
(150,760)
-
(150,760)
445,350
-
445,350
Tax losses
419,452
-
419,452
89,354
-
89,354
Other
18,544
25,274
43,818
44,325
64,762
109,087
─────── ───────
───────
──────
─────── ───────
327,435
25,274
352,709
698,894
64,762
763,656
═══════ ═══════
═══════
═══════
═══════ ═══════
Deferred tax liabilities
Equity accounting income
1,473,294
-
1,473,294
1,217,535
-
1,217,535
═══════ ═══════
═══════
═══════
═══════ ═══════
(c) Current Tax Liabilities
EDC
─────────────────────
2022
2021
$
$
Income tax (receivable) payable
Balance at the end of the year
(672,983)
111,000
═══════ ═══════
38
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 6: Employee and Director Costs
EDC
ECT
──────────────────────
──────────────────────
2022
2021
2022
2021
$
$
$
$
Superannuation
222,355
55,513
-
-
Share-based payments
22,496
48,610
18,684
40,373
Non-executive director costs
216,934
188,333
-
-
Other employee costs
2,540,308
1,215,569
-
-
────────── ──────────
────────── ──────────
3,002,093
1,508,025
18,684
40,373
═══════ ═══════
═══════ ═══════
Note 7: Earnings Per Share/Unit/Stapled Security
(a) Earnings per share/unit
Company
Trust
──────────────────────
──────────────────────
2022
2021
2022
2021
Basic earnings per share/unit (cents)
4.76
2.36
8.15
9.13
═══════
═══════
═══════
═══════
Diluted earnings per share/unit (cents)
4.74
2.35
8.13
9.10
═══════
═══════
═══════
═══════
Net profit attributable to ordinary equity
holders of the Company/Trust ($)
2,242,252
1,006,181
3,839,948
3,887,843
═══════
═══════
═══════
═══════
Weighted average number of shares/units
Weighted average number of shares/units
used in calculating basic earnings per
company share/trust unit (number)
47,128,691
42,592,902
47,128,691
42,592,902
Adjustment for calculation of diluted
earnings per company share/trust unit:
Performance rights (number)
131,061
134,250
131,061
134,250
═══════
═══════
═══════
═══════
Weighted average number of ordinary
shares/units and potential ordinary
shares/units used in calculating earnings
per company share/trust unit (number)
47,259,752
42,727,152
47,259,752
42,727,152
═══════
══════
══════
══════
39
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 7: Earnings Per Share/Unit/Stapled Security (Cont.)
(b) Earnings per stapled security
EDC
────────────────────
The total earning per stapled security for EDC is as follows:
2022
2021
Basic earnings per stapled security
(cents)
12.91
11.49
══════
══════
Diluted earnings per stapled security
(cents)
12.87
11.45
══════
══════
Net profit attributable to
securityholders of EDC ($)
6,082,200
4,894,024
══════
══════
Weighted average number of securities
Weighted average number of securities used in calculating basic earnings
per stapled security (number)
47,128,691
42,592,902
Adjustment for calculation of diluted earnings per stapled security:
Performance rights (number)
131,061
134,250
══════
══════
Weighted average number of ordinary securities and potential ordinary
securities used in calculating earnings per stapled security (number)
47,259,752
42,727,152
══════
══════
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 security holders of EDC.
40
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
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 Credit
Percentage
Franked
2022
2022 June quarter
-
1.500
1.500
708,043
22-Jul-22
0%
0%
2022 March quarter
-
2.000
2.000
943,135
22-Apr-22
0%
0%
2021 December quarter
-
2.000
2.000
942,250
24-Jan-22
0%
0%
2021 September quarter
-
2.000
2.000
941,502
22-Oct-21
0%
0%
──────────
──────────
──────────
──────────
──────────
──────────
──────────
-
7.500
7.500
3,534,930
-
-
-
2021
2021 June quarter
-
2.023
2.023
952,330
23-Jul-21
0%
0%
2021 March quarter
-
2.000
2.000
941,502
23-Apr-21
0%
0%
2020 December quarter
-
2.000
2.000
818,702
22-Jan-21
0%
0%
2020 September quarter
-
1.925
1.925
788,021
23-Oct-20
0%
0%
──────────
──────────
──────────
──────────
──────────
──────────
──────────
-
7.948
7.948
3,500,555
-
-
-
(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 2022 is $861,501 (2021: $191,998).
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) franking debits that will arise from the payment of dividends recognised as a liability at year end;
(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.
The ability to utilise the franking credits is dependent upon there being sufficient available equity to declare
dividends.
41
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
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
────────────────────────
─────────────────────────
2022
2021
2022
2021
$
$
$
$
Cash at bank
8,180,442
11,100,354
5,781,661
8,527,689
═══════ ═══════
═══════ ═══════
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
EDC
ECT
────────────────────────
────────────────────────
2022
2021
2022
2021
$
$
$
$
Net profit after tax
6,203,554
4,927,183
3,839,948
3,887,843
Adjustments for:
Share of equity accounted profit
(2,067,568)
(2,633,008)
-
-
Depreciation and amortisation
90,882
16,864
-
-
Performance rights
22,496
48,610
18,684
40,373
Revaluation of financial assets
(906,279)
-
(303,240)
-
Realised profit on sale of financial assets
(1,433)
-
(1,433)
-
Impairment of financial assets
-
1,351,145
-
5,000
Facility fee
(1,516,427)
(831,952)
(101,033)
(13,967)
Change in operating assets and liabilities:
Decrease in financial assets at amortised
cost
2,369,543
4,571,708
2,421,847
(1,204,208)
Increase in other assets
(22,060)
(28,223)
-
-
Increase in leave provisions
36,524
49,900
-
-
Increase in payables
1,914,939
916,536
166,570
(170,323)
Increase in deferred tax assets and liabilities
1,011,696
307,489
-
-
(Decrease)/Increase in tax payable
(1,128,973)
61,562
-
-
─────────
─────────
─────────
─────────
Net cash provided by operating activities
6,006,894
8,757,814
6,041,343
2,544,718
═══════ ═══════ ═══════ ═══════
42
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 9: Notes to the Statement of Cash Flows (Cont.)
(c) Changes in liabilities arising from financing activities
Other Liabilities
Borrowings
Leases
Total
2022
2021
2022
2021
2022
2021
2022
2021
$
$
$
$
$
$
$
$
EDC
─────────────────────────────────────────────────────────────────────────────────────────────────────────────────
At the
beginning of the
year
137,046
-
-
-
284,281
-
421,327
-
Acquisition of
subsidiary
-
-
1,439,804
-
297,941
-
1,737,745
Cash flows
351,513
135,487
-
(1,439,804)
(82,685)
(11,438)
268,828
(1,315,755)
Other changes
66,523
1,559
-
-
-
(2,222)
66,523
(663)
───────── ─────────
─────────
────────
────────
────────
────────
─────────
At the end of
the year
555,082
137,046
-
-
201,596
284,281
756,678
421,327
══════
══════
══════
══════
══════
══════
══════
══════
ECT
─────────────────────────────────────────────────────────────────────────────────────────────────────────────────
At the
beginning of the
year
137,046
-
-
-
-
-
137,046
-
Cash flows
351,513
135,487
-
-
-
-
351,513
135,487
Other changes
66,523
1,559
-
-
-
-
66,523
1,559
────────
────────
─────────
────────
────────
────────
─────────
────────
At the end of
the year
555,082
137,046
-
-
-
-
555,082
137,046
══════
══════
═══════
══════
══════
══════
═══════
══════
43
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 10: Financial Assets at Amortised Cost
EDC
ECT
─────────────────────────
────────────────────────
2022
2021
2022
2021
$
$
$
$
Current:
Trade and other receivables
1,183,112
766,376
48,925
36,611
Secured loans to other entities
20,637,583
26,892,934
20,615,726
26,892,934
─────────
─────────
─────────
─────────
21,820,695
27,659,310
20,664,651
26,929,545
═══════
═══════
═══════
══════
Non-Current:
Secured loans to other entities
4,364,322
911,096
4,364,322
911,096
Secured loan to stapled entity
-
-
4,522,885
4,201,542
─────────
─────────
─────────
─────────
4,364,322
911,096
8,887,207
5,112,638
═══════
═══════
═══════
══════
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 2022 and 30 June 2021.
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.
44
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 11: Financial Assets at Fair Value through Profit or Loss
EDC
ECT
──────────────────────────
───────────────────────────
2022
2021
2022
2021
$
$
$
$
Current:
Investments in unlisted entities
5,526,424
1,133,708
5,526,424
1,133,708
═══════
═══════
═══════
═══════
Non-Current:
Investments in unlisted entities
5,829,315
3,559,954
4,028,685
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.
Note 12: Investments Accounted for Using the Equity Method
Associates of the Company have been disclosed below:
EDC
───────────────────────────────────────────────
Ownership Interest
Investment Carrying Amount
2022
2021
2022
2021
%
%
$
$
Interest in ordinary shares of associate
79 Logan Road Trust (a)
35
35
8,471,783
6,669,865
79 Logan Road Pty Limited (b)
35
35
-
-
──────────
──────────
8,471,783
6,669,865
══════
══════
(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.
(b) 79 Logan Road Pty Limited is the trustee of 79 Logan Road Trust.
45
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
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:
79 Logan Road Trust
2022
2021
$
$
Summarised balance sheet
Current assets
251,285
138,578
Current liabilities
149,950
159,227
─────────────
─────────────
Current net assets
101,335
(20,649)
─────────────
─────────────
Non-current assets
38,400,000
32,500,000
Non-current liabilities
11,490,000
11,490,000
─────────────
─────────────
Non-current net assets
26,910,000
21,010,000
─────────────
─────────────
Net assets
27,011,335
20,989,351
─────────────
─────────────
Reconciliation:
Opening net assets 1 July
20,989,351
12,395,875
Profit for the period
6,780,984
9,455,476
Return of capital
(93,534)
(395,174)
Distributions paid
(665,466)
(466,826)
─────────────
─────────────
Closing net assets
27,011,335
20,989,351
─────────────
─────────────
EDC’s share – percentage (a)
31%
32%
EDC’s share - dollars
8,471,783
6,669,865
─────────────
─────────────
Opening EDC carrying amounts 1 July
6,669,865
4,338,557
Capital return
(32,737)
(138,311)
Share of profit and revaluation
2,067,568
2,633,008
Distributions received
(232,913)
(163,389)
─────────────
─────────────
Closing EDC Carrying amount
8,471,783
6,669,865
─────────────
─────────────
Summarised statement of comprehensive income
Revenue
7,432,720
10,372,206
Net profit
6,780,984
9,455,476
─────────────
─────────────
Total comprehensive income
6,780,984
9,455,476
─────────────
─────────────
Distributions received
232,913
163,389
─────────────
─────────────
(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 31% of the net
assets of the trust as at 30 June 2022 (2021: 32%).
46
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 13: Intangible Assets
EDC
────────────────────────────────
2022
2021
$
$
Goodwill
3,460,077
3,460,077
═══════
═══════
Reconciliations:
Carrying amount at the beginning of the year
-
-
Acquisition of subsidiary
-
3,460,077
──────────
──────────
Carrying amount at the end of the year
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 on a value-in-use bases, using cash flow forecasts from budgets covering a 5-year period, and
extrapolated cash flow projections beyond a 5-year period. The following assumptions were used:
-
Discount rates applied to future cash flows using rates that are relevant to the Group: 9.5% - 10.5%
(2021: 9.5% - 10.5%)
-
Growth rate: 2.5% (2021: 2.5%)
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. There was no impairment recognised on goodwill
during the year
Goodwill is not deductible for tax purposes.
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 lessor Lease assets may not be used as security for borrowing purposes.
47
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 14: Leases (Cont.)
EDC
────────────────────────────────
2022
2021
Right-of-use assets
Office lease
198,686
281,857
══════
══════
Lease liabilities
Current
83,794
82,686
Non-current
117,802
201,595
─────────
─────────
201,596
284,281
══════
══════
There were no additions to the right-of-use assets during the year ended 30 June 2022 (2021: $295,719)
and the total cash outflow for leases was $89,545 (2021: $14,473).
Depreciation charge of right-of-use assets
Office lease
83,171
13,862
═══════
═══════
No modification has been made to the lease for financial year 2022.
Note 15: Other Liabilities
EDC
ECT
──────────────────────────
──────────────────────────
2022
2021
2022
2021
$
$
$
$
Current
555,082
-
555,082
-
═══════
═══════
═══════
═══════
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
46,588
21,086
41,472
793
Sundry creditors and accruals
951,738
609,558
32,808
74,247
Distribution payable
897,216
1,133,571
708,042
952,329
──────────
──────────
──────────
──────────
1,895,542
1,764,215
782,322
1,027,369
═══════
═══════
═══════
═══════
Trade and other payables are non-interest bearing and are generally on 30-day terms.
48
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 17: Contributed Equity
2022
2021
Company
Number
of shares
$
Number
of shares
$
Issued and paid-up share capital:
Ordinary shares fully paid
47,202,827
8,237,201
47,075,102
8,210,699
═══════ ═══════
═══════ ═══════
Reconciliation:
Balance at the beginning of the year
47,075,102
8,210,699
40,935,102
7,634,321
Return of capital
-
-
-
-
Issue of shares
127,725
26,502
6,140,000
600,166
Transaction costs on share issued
-
-
-
(33,807)
Shares bought back
-
-
-
-
Transaction costs on share buyback
-
-
-
(176)
Income tax on share transaction costs
-
-
-
10,195
────────── ──────────
────────── ──────────
Balance at the end of the year
47,202,827
8,237,201
47,075,102
8,210,699
═══════ ═══════
═══════ ═══════
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.
2022
2021
Trust
Number
of units
$
Number
of units
$
Issued and paid-up capital:
Ordinary units fully paid
47,202,827
42,798,378
47,075,102
42,693,983
═══════ ═══════
═══════
═══════
Reconciliation:
Balance at the beginning of the year
47,075,102
42,693,983
40,935,102
37,285,986
Issue of units
127,725
104,395
6,140,000
5,724,033
Transaction costs on units issued
-
-
-
(315,136)
Units bought back
-
-
-
-
Transaction costs on unit buyback
-
-
-
(900)
────────── ──────────
──────────
──────────
Balance at the end of the year
47,202,827
42,798,378
47,075,102
42,693,983
═══════ ═══════
═══════
═══════
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.
49
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 17: Contributed Equity (Cont.)
Company
Trust
───────────────────────
───────────────────────
2022
2021
2022
2021
$
$
$
$
Net assets attributed to ordinary equity
holder of the Company/Trust
11,170,848
8,898,281
43,551,224
43,123,127
════════ ═══════ ════════ ═══════
Net assets per share attributed to
ordinary equity holder of the
Company/Trust
0.24
0.19
0.92
0.92
════════ ═══════ ════════ ═══════
EDC
───────────────────────
2022
2021
$
$
Net assets attributed to stapled
securityholders of EDC
54,722,072
52,021,408
════════ ═══════
Net assets per stapled security
attributed to stapled securityholders of
EDC (a)
1.16
1.11
════════ ═══════
(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 2022 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 security holders of EDC.
EDC and ECT are not subject to any externally imposed capital requirements. Management’s objective is to
achieve returns for stapled security holders 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.
50
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 18: Other Reserves
Share-based Payment Reserve
Company
Trust
$
$
Balance as at 1 July 2020
-
-
──────────
──────────
Share-based payment expenses
8,237
40,373
──────────
──────────
Balance at 30 June 2021
8,237
40,373
═══════
═══════
Share-based payment expenses
3,813
18,684
──────────
──────────
Balance at 30 June 2022
12,050
59,057
═══════
═══════
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 the first tranche of employee’s 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. On 16 March 2022, EDC issued a second tranche of the performance rights using the
same set of performance metrics as applied in the first tranche. The performance rights were issued to
selected employees who are critical to the success of the business.
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.
50% subject to a Total Security Holders Return hurdle
Return (p.a.)
Vesting Amount
< 8%
nil
8% - 10%
50%
10% - 12%
75%
>12%
100%
51
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 19: Share-based Payments (Cont.)
-
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 Return on Assets hurdle
Return
Vesting Amount
< 12%
nil
12%
50%
12% - 13.5%
50% - 100%
>13.5%
100%
The following table illustrates movements in the number of performance rights on issue during the year.
Grant Date
Vesting Date
Balance
at start of
the year
Granted
during the
year
Cancelled
during the
year
Balance at end
of the year
Value
per right
1 Feb 2021
31 Jan 2024
409,300
-
53,400
355,900
$0.27
16 Mar 2022
15 Mar 2025
-
387,000
-
387,000
$0.38
Fair Value of Rights granted
The fair value of the performance rights at grant date was $243,559 (FY21: $356,910). Fair value was
determined using the Black Scholes Option pricing model. The following inputs were utilised:
2022
2021
Issue price
$1.04
$1.03
Grant date
16/03/2022
01/02/2021
Expiry date
15/03/2022
31/01/2024
Share price at grant date
$1.01
$1.09
Expected volatility of shares
27.93%
23.57%
Expected dividend yield
8%
8%
Risk free interest rate
2.75%
0.11%
52
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
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.
(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:
Note
Weighted
average
interest rate
Floating
interest rate
Fixed interest rate
Non-interest
rate
Total
1 year or less
1 to 5 years
EDC
$
$
$
$
$
──────────────────────────────────────────────────────────────────────────────────────────────────────────────────
2022
Financial assets
Cash and cash
equivalents
9
0.1%
8,180,442
-
-
-
8,180,442
Financial assets at
amortised cost
10
13.7%
2,541,500
18,168,140
4,364,322
1,111,055
26,185,017
──────────
──────────
──────────
──────────
──────────
10,721,942
18,168,140
4,364,322
1,111,055
34,365,459
══════
══════
══════
══════
══════
Financial liabilities
Trade and other payables
16
-
-
-
-
1,895,542
1,895,542
Other liabilities
15
14%
-
555,082
-
-
555,082
──────────
──────────
──────────
──────────
──────────
-
555,082
-
1,895,542
2,450,624
══════
══════
══════
══════
══════
2021
Financial assets
Cash and cash
equivalents
9
0.1%
11,100,354
-
-
-
11,100,354
Financial assets at
amortised cost
10
14.4%
-
26,966,848
911,096
692,462
28,570,406
──────────
──────────
──────────
──────────
──────────
11,100,354
26,966,848
911,096
692,462
39,670,760
══════
══════
══════
══════
══════
Financial liabilities
Trade and other payables
16
-
-
-
-
1,764,215
1,764,215
Other liabilities
15
14%
-
-
137,046
-
137,046
══════
══════
══════
══════
══════
-
-
137,046
1,764,215
1,901,261
══════
══════
══════
══════
══════
53
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 20: Financial Risk Management (Cont.)
(a) Interest Rate Risk (Cont.)
Weighted
average
interest rate
Floating
interest rate
Fixed interest rate
Non-
Total
Note
1 year or less
1 to 5 years
interest
bearing
ECT
$
$
$
$
$
───────────────────────────────────────────────────────────────────────────────────────────────────────────────
2022
Financial assets
Cash and cash equivalents
9
0.1%
5,781,661
-
-
-
5,781,661
Financial assets at amortised
cost
10
12.9%
2,541,500
18,074,226
8,887,207
48,925
29,551,858
──────────
──────────
──────────
──────────
──────────
8,323,161
18,074,226
8,887,207
48,925
35,333,519
══════
══════ ══════ ══════
══════
Financial liabilities
Trade and other payables
16
-
-
-
-
782,322
782,322
Other liabilities
15
14%
-
555,082
-
-
555,082
──────────
───────────
──────────
──────────
──────────
-
555,082
-
782,322
1,337,404
══════ ═══════ ══════ ══════
══════
2021
Financial assets
Cash and cash equivalents
9
0.1%
8,527,689
-
-
-
8,527,689
Financial assets at amortised
cost
10
13.6%
-
26,892,934
5,112,638
36,611
32,042,183
──────────
───────────
──────────
──────────
──────────
8,527,689
26,892,934
5,112,638
36,611
40,569,872
══════ ═══════ ══════ ══════
══════
Financial liabilities
Trade and other payables
16
-
-
-
-
1,027,369
1,027,369
Other liabilities
15
14%
-
-
137,046
-
137,046
──────────
──────────
──────────
──────────
─────────
-
-
137,046
1,027,369
1,164,415
══════ ═══════ ══════ ══════
══════
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.
54
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 20: Financial Risk Management (Cont.)
(a) Interest Rate Risk (Cont.)
Sensitivity
EDC and ECT expect that the Bank Bill Swap Rates (BBSW) to increase during the 2023 financial year by 2%.
The impact at reporting date if interest rates increase by 2% (2022: interest rates stayed the same), whilst
all other variables are held constant, is as follows:
EDC
ECT
Increase of 200 bp
Increase of 200 bp
$
$
2022
Net profit
149,469
122,336
Equity movement
149,469
122,336
(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 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.
55
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 20: Financial Risk Management (Cont.)
(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.
(a) Payments to unitholders of Eildon Debt Fund are matched with the cashflows of the repayment of specific
loans classified as “Financial assets classified at amortised cost”.
(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.
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
$
$
$
$
$
$
$
$
2022
Trade and other
payables
1,895,542
-
-
1,895,542
782,322
-
-
782,322
Lease liabilities
41,466
42,328
117,802
201,596
-
-
-
-
Other liabilities (a)
555,082
-
-
555,082
555,082
-
-
555,082
══════ ══════ ══════ ══════ ══════ ══════ ══════ ══════
2021
Trade and other
payables
1,764,215
-
-
1,764,215
1,027,369
-
-
1,027,369
Lease liabilities
40,926
41,760
201,595
284,281
-
-
-
-
Other liabilities (a)
-
-
137,046
137,046
-
-
137,046
137,046
══════ ══════ ══════ ══════ ══════ ══════ ══════ ══════
56
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
(d) Fair Value of Financial Assets and Liabilities (Cont.)
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.
EDC
ECT
──────────────────────
──────────────────────
Valuation technique –
non-market observable
inputs (Level 3)
Valuation technique –
non-market observable
inputs (Level 3)
$
$
Year ending 30 June 2022
Financial assets
Financial assets at fair value through profit or loss
Investments in unlisted entities
11,355,739
9,555,109
═════════════
═════════════
Year ending 30 June 2021
Financial assets
Financial assets at fair value through profit or loss
Investments in unlisted entities
4,693,662
3,717,670
═════════════
═════════════
Reconciliation of Level 3 fair value movements:
EDC
ECT
─────────────────────────
────────────────────────
2022
2021
2022
2021
$
$
$
$
Balance at the beginning of the year
4,693,662
2,144,638
3,717,670
-
Purchases
7,317,544
6,042,500
7,095,945
5,865,000
Sales
(1,630,449)
(2,181,736)
(1,630,449)
(2,181,735)
Fair value movement
974,982
(1,311,740)
371,943
34,405
──────────
──────────
──────────
─────────
Balance at the end of the year
11,355,739
4,693,662
9,555,109
3,717,670
═══════
═══════
═══════
═══════
Fair value movement attributable to assets
held at the end of reporting period
974,982
(1,311,740)
371,943
34,405
═══════
═══════
═══════
═══════
57
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 20: Financial Risk Management (Cont.)
(d) Fair Value of Financial Assets and Liabilities (Cont.)
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.
Net profit/(loss)
Equity increase/(decrease)
2022
2021
2022
2021
Investments in unlisted entities
$
$
$
$
EDC
Favourable changes
1,135,575
469,366
1,135,575
469,366
Unfavourable changes
(1,135,575)
(469,366)
(1,135,575)
(469,366)
ECT
Favourable changes
955,512
371,767
955,512
371,767
Unfavourable changes
(955,512)
(371,767)
(955,512)
(371,767)
Significant unobservable inputs
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
Net asset backing
Value per security
Down 10%
Up 10%
Investments in unlisted entities
Recent transactions
Value per security
Down 10%
Up 10%
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.
58
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 21: Segmental Information (Cont.)
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 activities relate to management of property investments, debt and unlisted funds.
EDC and ECT operate predominantly in Australia.
Direct
Property
Investment
Funds
Management
Property
Backed
Lending
Eliminations
Total
EDC
$
$
$
$
$
───────────────────────────────────────────────────────────────────────────────────────────────────────────────────────
30 June 2022
Revenue
Segment revenue
1,138,371
4,628,271
4,455,299
-
10,221,941
Inter-Segment revenue
-
825,406
-
(825,406)
-
─────────
──────────
─────────
──────────
─────────
Corporate interest income
9,878
─────────
10,231,819
─────────
Share of profit of equity accounted
associate
2,067,568
-
-
-
2,067,568
═════════════
═════════════
════════════
═════════════
════════════
Results
Segment profit
3,080,939
3,974,802
4,022,526
-
11,078,267
Inter-Segment profit
-
825,406
-
(825,406)
-
─────────
──────────
─────────
──────────
─────────
Corporate expenses
(4,211,488)
Income tax expenses
(663,225)
─────────
Consolidated profit after tax
6,203,554
─────────
Disaggregation of revenue
Timing of revenue recognition
At a point in time
-
2,734,858
51,033
-
2,785,891
Over time
-
1,893,413
50,000
-
1,943,413
─────────
──────────
─────────
──────────
─────────
Revenue from contracts with customers
-
4,628,271
101,033
-
4,729,304
Other revenues
1,138,371
-
4,354,266
-
5,492,637
─────────
──────────
─────────
──────────
─────────
Segment revenue
1,138,371
4,628,271
4,455,299
-
10,221,941
─────────
──────────
─────────
──────────
─────────
59
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 21: Segmental Information (Cont.)
Direct
Property
Investment
Funds
Management
Property
Backed
Lending
Eliminations
Total
EDC
$
$
$
$
$
───────────────────────────────────────────────────────────────────────────────────────────────────────────────────────
30 June 2021
Revenue
Segment revenue
41,918
3,438,642
4,504,720
-
7,985,280
Inter-Segment revenue
-
431,268
-
(431,268)
-
─────────
──────────
─────────
──────────
─────────
41,918
3,869,910
4,504,720
(431,268)
7,985,280
Corporate interest income
8,538
─────────
7,993,818
─────────
Share of profit of equity accounted
associate
2,633,008
-
-
-
2,633,008
═════════════
═════════════
════════════
═════════════
════════════
Results
Segment profit
1,323,781
568,037
4,503,161
-
6,394,979
Inter-Segment profit
-
431,268
-
(431,268)
-
─────────
──────────
─────────
──────────
─────────
1,323,781
999,305
4,503,161
(431,268)
6,394,979
Corporate expenses
(1,007,569)
Income tax expenses
(460,227)
─────────
Consolidated profit after tax
4,927,183
─────────
Disaggregation of revenue
Timing of revenue recognition
At a point in time
-
2,548,393
-
-
2,548,393
Over time
-
833,556
40,992
-
874,548
─────────
──────────
─────────
──────────
─────────
Revenue from contracts with customers
-
3,381,949
40,992
-
3,422,941
Other revenues
41,918
56,693
4,463,728
-
4,562,339
─────────
──────────
─────────
──────────
─────────
Segment revenue
41,918
3,438,642
4,504,720
-
7,985,280
─────────
──────────
─────────
──────────
─────────
60
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 21: Segmental Information (Cont.)
Direct
Property
Investment
Funds
Management
Property
Backed
Lending
Total
EDC
$
$
$
$
──────────────────────────────────────────────────────────────────────────────────────────────
30 June 2022
Assets
Segment assets
14,301,098
3,460,077
30,528,329
48,289,504
─────────
─────────
─────────
──────────
Unallocated amounts:
Cash and cash equivalents
8,180,442
Other assets
2,515,330
──────────
Total assets
58,985,276
──────────
Liabilities
Segment liabilities
-
-
555,082
555,082
─────────
──────────
─────────
──────────
Unallocated amounts:
Other liabilities
3,708,219
──────────
Total liabilities
4,263,301
──────────
30 June 2021
Assets
Segment assets
9,145,857
3,460,077
30,021,700
42,627,634
─────────
─────────
─────────
──────────
Unallocated amounts:
Cash and cash equivalents
11,100,354
Other assets
1,891,499
──────────
Total assets
55,619,487
──────────
Liabilities
Segment liabilities
-
-
137,046
137,046
─────────
──────────
─────────
──────────
Unallocated amounts:
Other liabilities
3,461,130
──────────
Total liabilities
3,598,176
──────────
61
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 21: Segmental Information (Cont.)
Direct
Property
Investment
Property
Backed
Lending
Total
ECT
$
$
$
───────────────────────────────────────────────────────────────────────────────────────
30 June 2022
Revenue
Segment revenue
410,332
4,455,300
4,865,632
─────────
─────────
─────────
Corporate interest income
357,299
─────────
5,222,931
─────────
Results
Segment profit
410,332
4,455,300
4,865,632
Corporate expenses
(1,025,684)
─────────
Profit after tax
3,839,948
─────────
Disaggregation of revenue
Timing of revenue recognition
Over time
-
101,033
101,033
─────────
─────────
─────────
Revenue from contracts with customers
-
101,033
101,033
Other revenues
410,332
4,354,267
4,764,599
─────────
─────────
─────────
Segment revenue
410,332
4,455,300
4,865,632
─────────
─────────
─────────
30 June 2021
Revenue
Segment revenue
41,918
4,477,695
4,519,613
─────────
─────────
─────────
Corporate interest income
210,031
─────────
4,729,644
─────────
Results
Segment profit
36,918
4,476,136
4,513,054
Corporate expenses
(625,211)
─────────
Profit after tax
3,887,843
─────────
62
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 21: Segmental Information (Cont.)
Direct
Property
Investment
Property
Backed
Lending
Total
ECT
$
$
$
──────────────────────────────────────────────────────────────────────────────────────
30 June 2022
Assets
Segment assets
4,028,685
30,506,472
34,535,157
───────────
───────────
───────────
Unallocated amounts:
Cash and cash equivalents
5,781,661
Other assets
4,571,810
─────────
Total assets
44,888,628
─────────
Liabilities
Segment liabilities
-
555,082
555,082
─────────
─────────
─────────
Unallocated amounts:
Other liabilities
782,322
─────────
Total liabilities
1,337,404
─────────
30 June 2021
Assets
Segment assets
1,500,000
30,021,700
31,521,700
─────────
─────────
─────────
Unallocated amounts:
Cash and cash equivalents
8,527,689
Other assets
4,238,153
─────────
Total assets
44,287,542
─────────
Liabilities
Segment liabilities
-
137,046
137,046
─────────
─────────
─────────
Unallocated amounts:
Other liabilities
1,027,369
─────────
Total liabilities
1,164,415
─────────
Revenue from contracts with customers was $101,033 (2021: $13,967) for 2022 financial year and all of them
were recognized over time.
ECT operates in one business segment being property backed lending and in one geographical location being
Australia during 2022 financial year.
63
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 22: Related Party Information
Parent entity
Eildon Capital Group is the head entity as at 30 June 2022. For the prior periods and the current year to 30
April 2022, CVC Limited (CVC) was the ultimate parent entity. CVC Limited continues to be the largest
shareholder of Eildon Capital Group as at the date of this report however both the companies operate
independent to each other.
Subsidiaries
Interest in subsidiaries is set out in note 2.
Associates
Interest in associates is set out in note 12.
(a) Key management personnel
EDC
───────────────────────
2022
2021
$
$
Short-term employee benefits
933,918
496,994
Post-employment benefits
79,713
39,139
Share-based payments
19,400
16,603
────────
────────
1,033,031
552,736
══════
══════
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) Unsecured loan from/to stapled entity
Company
Trust
─────────────────────
─────────────────────
2022
2021
2022
2021
$
$
$
$
Loan from/(to) stapled entity
Beginning of the year
4,201,542
-
(4,201,542)
-
Loans advanced
-
4,000,000
-
(4,000,000)
Interest charged
321,342
201,542
(321,342)
(201,542)
────────
────────
────────
────────
End of the year
4,522,884
4,201,542
(4,522,884)
(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.
64
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 22: Related Party Information (Cont.)
(c) Transactions with related parties
The following transactions occurred with related parties:
EDC
ECT
─────────────────
────────────────
2022
2021
2022
2021
$
$
$
$
Payment for management services provided by
investment manager (a)
-
301,578
721,585
610,537
Payment for services provided by subsidiary of the
ultimate parent/related party (b)
- Accounting fees
326,316
310,597
-
-
- Key management personnel management fees (c)
186,667
201,771
-
-
Received for services provided to subsidiaries of the
ultimate parent/related party
- Loan management services
598,169
478,398
-
-
- Project management services
240,000
140,000
-
-
Distribution/Dividend paid to ultimate parent/related
party
1,327,073
1,481,425
1,327,073
1,481,425
(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) From 1 May 2022, CVC is no longer the ultimate parent of EDC.
(c) This relates to key management personnel services provided by Messer Avery and Hunter.
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/related party
447,744
248,108
-
-
Current payables:
Distribution/dividend payables to ultimate parent
/related party
263,535
377,066
263,535
377,066
(d) Performance fee
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. The performance fee is eliminated on
consolidation.
No performance fee is payable for 2022 and 2021 financial years.
65
Eildon Capital Group
Notes to the Financial Statements (Continued)
For the Year Ended 30 June 2022
Note 23: Commitments and Contingent Liabilities
(a) Loans and other investments
EDC
ECT
──────────────────────────
─────────────────────────
2022
2021
2022
2021
Amounts available to be drawn by borrowers under existing loan facility agreements:
Unrelated entities
100,587
2,335,000
100,587
2,335,000
═══════
══════
═══════
══════
Amounts available to be called by investees for partially paid shares and units:
Unrelated entities
1,139,055
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.
EDC
───────────────────────────
2022
2021
$
$
Guarantee (i)
869,400
869,400
Bank Guarantee (ii)
93,914
73,914
═══════
═══════
(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 investments.
(ii) Bank guarantee provided by a subsidiary of EDC to landlord for office lease as well as for a corporate
credit card facility.
Note 24: Subsequent Events
A distribution of 1.5 cents per unit amounting to $708,042 was declared on 27 June 2022 and paid on 22 July
2022.
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 2022.
66
Eildon Capital Group
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 2022 and
of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations 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 year ended 30 June 2022.
Signed in accordance with a resolution of the Board of Directors.
Dated at Melbourne 24 August 2022.
________________
__________________
Matt Reid
James Davies
Director
Director
Level 16, Tower 2 Darling Park
201 Sussex Street
Sydney NSW 2000
Postal Address
GPO Box 1615
Sydney NSW 2001
p. +61 2 9221 2099
e. sydneypartners@pitcher.com.au
Adelaide Brisbane Melbourne Newcastle Perth Sydney
- 67 -
Pitcher Partners is an association of independent firms.
An independent New South Wales Partnership. ABN 17 795 780 962. Liability limited by a scheme approved under
Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International
Limited, the members of which are separate and independent legal entities.
pitcher.com.au
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 2022, 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
Pitcher Partners
Sydney
24 August 2022
Level 16, Tower 2 Darling Park
201 Sussex Street
Sydney NSW 2000
Postal Address
GPO Box 1615
Sydney NSW 2001
p. +61 2 9221 2099
e. sydneypartners@pitcher.com.au
Adelaide Brisbane Melbourne Newcastle Perth Sydney
- 68 -
Pitcher Partners is an association of independent firms.
An independent New South Wales Partnership. ABN 17 795 780 962. Liability limited by a scheme approved under
Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International
Limited, the members of which are separate and independent legal entities.
pitcher.com.au
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 (“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 2022, 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 2022 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 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.
Eildon Capital Group
Independent Auditor's Report
To the stapled security holders of Eildon Capital Limited and Eildon Capital Trust,
together Eildon Capital Group
- 69 -
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
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 2022 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.
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)
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 2022, the Group had Financial
Assets at Amortised Cost of $26.2 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 made by management. 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.
Our procedures included, amongst others:
•
Obtaining an understanding of and
evaluating the design and
implementation of controls
surrounding asset backed finance
lending;
•
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;
•
Evaluating compliance of
management’s methodology for
determining the provision for the
allowance for expected credit losses
with AASB 9;
•
Reviewing and challenging
significant estimates and judgements
made by management in determining
the recoverability of financial assets;
and
•
Assessing the adequacy of
disclosures in the financial
statements.
Eildon Capital Group
Independent Auditor's Report
To the stapled security holders of Eildon Capital Limited and Eildon Capital Trust,
together Eildon Capital Group
- 70 -
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
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.
Responsibility 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.
•
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
Eildon Capital Group
Independent Auditor's Report
To the stapled security holders of Eildon Capital Limited and Eildon Capital Trust,
together Eildon Capital Group
- 71 -
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
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.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 7 to 12 of the Directors’ Report
for the year ended 30 June 2022. In our opinion, the Remuneration Report of Eildon Capital
Group, for the year ended 30 June 2022, 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
Pitcher Partners
Partner
Sydney
24 August 2022
Corporate Governance Statement
Eildon Capital Group
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 2022.
ASX CG Principles
Compliance by Group
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,
Ms Michelle Phillips and Mr Matthew Reid.
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:
•
Set and review the strategic direction of the
Group;
•
Approve all material transactions;
•
Approve and monitor financial policies and
financial 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;
•
Ensure Securityholders receive high quality,
relevant and accurate information in a timely
manner;
The Board has delegated responsibility for day-to-day
management of the Group to the Chief Executive Officer
and the Manager.
Recommendation 1.2
A listed entity should:
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
72
ASX CG Principles
Compliance by Group
8
undertake appropriate checks before appointing
a person, or putting forward to securityholders a
candidate for election as a director; and
9
provide
securityholders
with
all
material
information in its possession relevant to a
decision on whether to elect or re-elect a director.
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 Joint Company Secretaries are accountable to the
Board, through the Chairperson, for all governance
matters.
Each Director has access to the Joint Company
Secretaries.
The appointment and removal of each Joint Company
Secretary must be determined by the Board as a whole.
Recommendation 1.5
A listed entity should:
(a) have and disclose a diversity policy;
(b) 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;
10 disclose in relation to each reporting period:
11 the measurable objectives set for that period to
achieve gender diversity;
12 the entity’s progress towards achieving those
objectives; and
13 either:
14 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
15 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. However,
given the size, nature and scale of the Group, it has not
yet set out measurable objectives to achieve specific
diversity targets. Instead, 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.
Going forward, the Board intends to set measurable
objectives for achieving gender diversity, and will each
year report the Group’s progress toward achieving them.
Currently, 25% of the Board of EDC is represented by
women. Further, women represent 30% of employees of
the company.
Recommendation 1.6
A listed entity should:
(a) have and disclose a process for periodically
evaluating the performance of the board, its
committees and individual directors; and
(b) 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 to undertake a formal annual review of
its overall effectiveness.
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.
73
ASX CG Principles
Compliance by Group
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.
Recommendation 1.7
A listed entity should:
(a)
have and disclose a process for periodically
evaluating the performance of its senior executives;
and
(b)
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. Going forward, 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;
16 the members of the committee; and
17 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 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;
•
the candidate’s independence status, including
the term of 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
74
ASX CG Principles
Compliance by Group
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.
The board skills matrix for the Board is set out below:
ASX CG Principles
Compliance by Group
Recommendation 2.3
A listed entity should disclose:
(a) the
names
of
the
directors
considered by the board to be
independent directors;
(b) 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 three Independent Directors:
•
James Davies;
•
Michelle Phillips; and
•
Matthew Reid.
James Davies and Michelle Phillips were appointed to the Board on 18
October 2016. Matthew Reid was appointed to the Board on 26 April 2022.
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.
The Group undertakes annual searches of Directors’ officeholder
positions. 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:
•
Mr James Davies – Independent Director;
•
Ms Michelle Phillips – Independent Director;
•
Mr Mark Avery – Non-Independent Director; and
•
Mr Matthew Reid – Independent Director.
The Board appointed Mr Matthew Reid as a Director on 26 April 2022 to
complement the skill set of the existing directors. Mr Reid is a highly
75
ASX CG Principles
Compliance by Group
experienced finance and real estate executive and a qualified Chartered
Accountant and member of the Australian Institute of Directors. The Board
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. Mr James Davies
acts 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.
Periodically, the directors are offered professional development training
provided by internal and external presenters.
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) have and disclose a code of
conduct for its directors, senior
executives and employees; and
(b) 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 whistle-blower
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 whistle-blower policy which is disclosed on the
Group’s website.
Recommendation 3.4
A listed entity should:
(a) have and disclose an anti-bribery
and corruption policy; and
(b) 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 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 has established an Audit and Risk Committee.
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ASX CG Principles
Compliance by Group
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;
18 the
relevant
qualifications
and
experience
of
the
members
of
the
committee; and
19 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 Audit and Risk Committee has four members: Mr Matthew Reid
(Chairperson), Ms Michelle Phillips, 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 an 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.
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 matters are
dealt with expeditiously.
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 Chief Executive Officer and the Chief Financial Officer of
the Company 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.
77
ASX CG Principles
Compliance by Group
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 Joint Company Secretaries are 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 security holders
A listed entity should provide its security holders with appropriate information and facilities to allow them to
exercise their rights as security holders 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 Joint Company Secretaries, 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.
78
ASX CG Principles
Compliance by Group
Recommendation 6.3
A listed entity should disclose how it
facilitates and encourages participation
at meetings of security holders.
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
security holders 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 security
holders
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.
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;
20 the members of the
committee;
21 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, 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.
79
ASX CG Principles
Compliance by 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 periodically.
Recommendation 7.3
A listed entity should disclose:
(a) if it has an internal audit function,
how the function is structured and
what role it performs; or
(b) 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.
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 security holders.
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
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 Board also regularly considers the level and composition of
remuneration of the Group’s employees.
80
ASX CG Principles
Compliance by Group
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.
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.
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.
81
Eildon Capital Group
Additional Information
The following information was current as at 16 August 2022.
Distribution schedule
The distribution of stapled security holders and their security holdings was as follows:
Category
(Size of holding)
Number of ordinary stapled
security holders
1 - 1,000
54
1,001 - 5,000
120
5,001 - 10,000
97
10,001 - 100,000
226
100,001 - over
45
────────
Total
542
════════
Unmarketable parcels
Minimum
parcel size
Number of stapled
security holders
Minimum $500.00 parcel at $0.9600 per
stapled security
521
41
Substantial holders
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
17,568,972
First Samuel Limited
3,154,516
Chemical Overseas Limited
3,069,377
82
Eildon Capital Limited
Additional Information (Continued)
20 largest stapled security holders - ordinary stapled securities
As at 16 August 2022, the top 20 stapled security holders and their holdings were as follows:
Stapled security holder
Stapled
securities
held
% of issued
capital
held
CVC Limited
17,568,972
37.19
First Samuel Limited
3,154,516
6.68
Chemical Overseas Limited
3,069,377
6.50
JKM Securities Pty Ltd
2,350,000
4.97
Rubi Holdings Pty Ltd
2,000,000
4.23
Miss Kate Imogen Leaver
662,026
1.40
The Yanko Super Pty Ltd
600,000
1.27
David Lyall Holdings Limited
500,000
1.06
Fordholm Consultants Pty Ltd
500,000
1.06
Buduva Pty Ltd
490,000
1.04
Buduva Pty Ltd
450,000
0.95
Geat Incorporated
400,000
0.85
Mr Robert Velletri + Mrs Francine Velletri
337,676
0.71
Tyroc Pty Ltd
324,570
0.69
JPR Holdings Pty Ltd
308,144
0.65
Delta Asset Management Pty Ltd < Super Fund A/C>
300,000
0.64
Wilbow Group Pty Ltd
300,000
0.64
Tully Superannuation Pty Ltd
297,753
0.63
Miss Kate Imogen Leaver
292,028
0.62
T & M Properties Pty Limited
288,144
0.61
──────────
────────
34,193,206
72.38
═══════
══════
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
83