Annual Report 2016
Elanor Investors Group
Annual Report 2016
ELANOR INVESTOR GROUP’S OWNED
AND MANAGED INVESTMENTS
Northern Territory
Western Australia
South Australia
Queensland
New South Wales
Victoria
Tasmania
Hotels, Tourism and Leisure
Special Situation Investments
Real Estate
CONTENTS
Highlights
Message from the Chairman
CEO’s Message
Directors Report
2
3
4
8
Financial Statements
Corporate Governance Statement
Security Holder Analysis
Corporate Directory
36
104
111
113
RESPONSIBLE ENTITY
Elanor Funds Management Limited ABN 39 125 903 031. ASFL 398 196. Elanor
Investors Group comprises Elanor Investors Limited (ABN 33 169 308 187) and
Elanor Investment Fund (ARSN 169 450 926).
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 1
FINANCIAL CALENDAR
10 November 2016
Meeting of security holders
December 2016
February 2017
March 2017
June 2017
August 2017
September 2017
September 2017
Estimated interim distribution announcement and securities trade ex-distribution
Interim results announcement
Interim distribution payment
Estimated final distribution announcement and securities trade ex-distribution
Full-year results announcement
Final distribution payment
Annual tax statements
MEETING OF SECURITY HOLDERS
The meeting of security holders will be held at 10.00am (Sydney time) at Computershare, Level 4, 60 Carrington Street,
Sydney NSW 2000, on 10 November 2016.
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 2
Highlights
CORE EARNINGS
for Financial Year 2016
DISTRIBUTIONS
(per security)
SECURITY PRICE
at 30 June 2016
$11.56m
23.7%
14.7c
23.1%
$1.88
10.6%
FUNDS UNDER MANAGEMENT
at 30 June 2016
NET ASSET VALUE
(per security)
$485m
40.0%
$1.37 no change
GEARING
at 30 June 2016
7.5%
60% reduction
from prior year
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 Message from the Chairman
3
On behalf of the
Board, I am pleased
to present Elanor
Investors Group’s
Annual Report,
including its
Financial Statements
for the year ended
30 June 2016.
Paul Bedbrook
Chairman
ACHIEVEMENTS
The year ended 30 June 2016 has
been a successful year. The Group has
achieved satisfactory financial results
for our security holders, significant
growth in funds under management
and other achievements central to our
stated strategy. The significant financial
outcomes and other achievements are
highlighted below.
Financial Results
– Core earnings were $11.56 million,
representing an increase of 23.7%
on the prior year.
– Distributions for the year to
30 June 2016 of 14.7 cents per
stapled security, representing a
23.1% increase on the prior year.
– Total security holder return for the
year to 30 June 2016 was 19.2%,
based on ENN’s closing price at
30 June 2016 of $1.88 together
with distributions for the year.
Funds under Management
– Funds under management increased
by $139 million to $485 million
during the year.
– New funds were established during
the year to acquire:
– 6 Australian accommodation
hotels in NSW (4), Tasmania
(1) and ACT (1) for a total of
$100 million;
– Glenorchy Plaza shopping
centre in Glenorchy, Tasmania
for $18.5 million; and
– Limestone Street Centre
located at 30 Limestone Street,
Ipswich, QLD, for $32 million.
Investment Portfolio
– In keeping with our strategy of
co-investing alongside our capital
partners, co-investments totalling
$28.2 million were made in Elanor
Hospitality and Accommodation
Fund (41.7%), Elanor Retail Property
Fund (24.4%) and Limestone Street
Centre Syndicate (8.2%).
– Peppers Cradle Mountain Lodge
and Mantra Wollongong Hotel were
sold to the Elanor Hospitality and
Accommodation Fund, representing
the inaugural seeding of a fund with
Elanor owned properties.
– Significant progress was achieved
in realising the value of our
Merrylands property following
the June 2016 NSW Department
of Planning and Environment
Gateway Determination on the
Group’s planning proposal.
Capital Management
– Subsequent to year end, ENN
undertook an equity raising of
$33 million via an institutional
placement of $30 million in July
2016 and a security purchase
plan of $3 million in August
2016. These funds will be used
to co-invest in the new funds
management initiatives announced
by the Group on 28 July 2016.
– During the year we reduced
our gearing levels to 7.5% as
at June 30, 2016.
GOVERNANCE
The Board continues to focus on
the Group’s corporate governance
structure and processes consistent
with the strategic focus, activities
and growth of the Group. Good
governance will be a fundamental
part of our processes as the Group
continues to grow and execute on
its stated strategy.
ACKNOWLEDGEMENTS
I wish to thank my fellow Board
members, our executive management
team led by the CEO and all our staff,
both at Group level and at each of
our investments, for their hard work,
dedication and enthusiasm.
Finally, thank you to all Elanor security
holders for their continued support
and confidence.
Yours sincerely,
Paul Bedbrook
Chairman, Elanor Investors Group
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 4
CEO’s Message
I am pleased to
present Elanor
Investors Group’s
annual report for
the year ended
30 June 2016.
Glenn Willis
Managing Director and
Chief Executive Officer
We have further built on our
successful first year as an ASX
listed public company. Our core
earnings of $11.56 million reflected
a 23.7% increase on the prior
year. Distributions per security
were 14.7 cents for the year, a
23.1% increase on the prior year.
Particularly pleasing has been our
ability to increase our funds under
management by 40% during the year
to $485 million, as at 30 June 2016.
STRATEGY
The key strategic objective of
the Group is to grow funds under
management by identifying and
originating investments that deliver
strong performance for both Elanor
funds management capital partners
and Elanor’s security holders. Elanor’s
investment focus is on acquiring
and unlocking value in assets that
provide attractive cash flows and
capital growth potential. We seek to
co-invest with our capital partners
in funds managed by Elanor for both
strategic and alignment purposes. We
also originate and hold investments
on balance sheet where they provide
opportunities for future co-investment
by external capital partners.
FUNDS MANAGEMENT
Our key strategic objective is to grow
funds under management. During
the year we established the Elanor
Hospitality and Accommodation
Fund with assets of $100 million.
This fund comprises a portfolio of
6 Australian accommodation assets
with strong, diversified cash flows and
significant redevelopment potential.
This represented the inaugural
seeding of a fund with Elanor owned
properties, Peppers Cradle Mountain
Lodge and Mantra Wollongong Hotel.
These properties were sold to the
fund for $38 million and $9 million
respectively, reflecting a combined
gain of $10 million from the purchase
price of the assets at the listing of
Elanor in July 2014.
In December 2015, we established
the Elanor Retail Property Fund,
comprising Manning Mall shopping
centre in Taree, NSW and
Glenorchy Plaza shopping centre
in Glenorchy, Tasmania. As part
of this transaction, investors in
the Manning Mall Syndicate were
provided the opportunity to redeem
their investment at a value reflecting
a 24% per annum total return. The
Limestone Street Centre Syndicate
was established in December 2015.
This syndicate acquired a commercial
asset located at 30 Limestone Street,
Ipswich, QLD, for $32 million.
Consistent with Elanor’s investment
philosophy, the assets acquired during
the year are strongly cash generative
and provide significant opportunities
for both operational improvement and
capital uplift. ENN has co-invested
alongside our capital partners in
each of these funds.
In September 2016, Griffin Plaza
shopping centre in Griffith, NSW, was
sold for $23.5 million. This transaction
generated a 26% per annum return for
investors in the Griffin Plaza Syndicate.
We are well positioned for
further growth. In July 2016,
Elanor announced two new funds
management initiatives, a new retail
Real Estate Investment Trust which
we are preparing to list on the ASX in
2016, and a new commercial property
fund. These two funds will significantly
increase Elanor’s funds under
management. Elanor will co-invest
in each of these new funds.
Whilst prevailing market conditions for
“value” investors are more challenging,
our pipeline is encouraging.
INVESTMENT PORTFOLIO
Elanor’s investment portfolio totalled
$107 million as at 30 June 2016.
Elanor’s investment portfolio consists
of the group’s co-investments in
funds managed by Elanor, in addition
to assets that provide opportunities
for future co-investment by external
capital partners.
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 5
Our investment portfolio includes 26,135
square metres of land located at Merrylands,
NSW, which was acquired as part of the
John Cootes Furniture acquisition. In June
2016, the NSW Department of Planning
and Environment issued its Gateway
Determination on the Group’s planning
proposal confirming the rezoning of the site to
B4 mixed use, increasing the maximum height
of building control to 31 metres (9 storeys)
and increasing the maximum floor space ratio
to 2.0:1. In July 2016, Elanor appointed joint
agents to market the property for sale under
an Expression of Interest campaign.
CAPITAL MANAGEMENT
In July and August 2016 we strengthened our
balance sheet with the successful completion
of a $30 million Institutional Placement and
a $3 million capped Security Purchase Plan
completed at an issue price of $1.85 per
new security. The equity raised will be used
to fund our co-investments in the two new
funds summarised above.
Our gearing of 7.5% at 30 June 2016 is
particularly conservative and reflects a
reduction in debt following the sale of
Peppers Cradle Mountain Lodge and Mantra
Wollongong Hotel in March 2016. Our
intention is to remain conservatively geared
while maintaining borrowing capacity to
take advantage of opportunities arising
from asset valuation cycles.
OUTLOOK
We continue to be focussed on growing
our funds under management – our key
strategic objective. Co-investing with our
capital partners in new funds management
opportunities remains a priority for the Group.
Based on the current operating performance
of our investments and the pipeline of
potential funds management opportunities, we
anticipate continued growth in core earnings
and distributions in the current financial year.
Yours sincerely,
Glenn Willis
Managing Director and Chief Executive Officer
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 6
Financial Report
For the year ended 30 June 2016
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 CONTENTS
Directors’ Report
Auditors Independence Declaration
Consolidated Statements of Profit or Loss
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Corporate Governance Statement
Security Holder Analysis
Corporate Directory
7
8
35
36
37
38
40
42
43
101
102
104
111
113
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 8
Directors’ Report
for the year ended 30 June 2016
Directors’ Report
The Directors of Elanor Funds Management Limited (Responsible Entity or Manager), as responsible
entity of the Elanor Investment Fund, and the Directors of Elanor Investors Limited (Company)
present their report together with the consolidated final financial report of Elanor Investors Group
(Group, Consolidated Group or Elanor) and the consolidated final financial report of the Elanor
Investment Fund (EIF Group) for the full year ended 30 June 2016 (period).
The annual financial report of Elanor Investors Group comprises the Company and its controlled
entities, including Elanor Investment Fund (Trust) and its controlled entities. The annual financial
report of the EIF Group comprises Elanor Investment Fund and its controlled entities.
Elanor Investors Limited is a company limited by shares, incorporated and domiciled in Australia. Its
registered office and principal place of business is Level 38, 259 George Street, Sydney NSW 2000.
The Trust was registered as a managed investment scheme on 21 May 2014 and the Company was
incorporated on 1 May 2014.
The units of the Trust and the shares of the Company are combined and issued as stapled securities
in the Group. The Group's securities are traded on the Australian Securities Exchange (ASX: ENN).
The units of the Trust and shares of the Company cannot be traded separately and can only be
traded as stapled securities. Although there is no ownership interest between the Trust and the
Company, the Company is deemed to be the parent entity of the Group under Australian Accounting
Standards.
The Directors' report is a combined Directors' report that covers both the Company and the Trust.
The financial information for the Group is taken from the consolidated financial reports and notes.
1. Directors
The following persons have held office as Directors of the Responsible Entity and Company during
the period and up to the date of this report:
Paul Bedbrook (Chair)
Glenn Willis (Managing Director and Chief Executive Officer)
Nigel Ampherlaw
William (Bill) Moss AO
2. Principal activities
The principal activities of the Group are the management of investment funds and syndicates and the
investment in, and operation of, a portfolio of investment assets and businesses.
Distributions relating to the year ended 30 June 2016 comprise:
3. Distributions
Distribution
Interim Distribution
Payment Date
Final Distribution
Payment Date
Amount payable (cents per stapled security)
Amount payable (cents per stapled security)
Year Ended 30 June 2016
7.31
4 March 2016
7.34
2 September 2016
A provision for the Final Distribution has not been recognised in the consolidated financial statements
for the year as the distribution had not been declared at the reporting date. The Final Distribution per
stapled security will bring distributions in respect of the year ended 30 June 2016 to 14.65 cents per
stapled security. The Final Distribution of 7.34 cents compares to Final Distribution for the year ended
30 June 2015 of 6.70 cents per stapled security.
4. Operating and financial review
Overview and strategy
The key strategic objective of Elanor is to grow funds under management by identifying and
originating investments that deliver strong performance for both Elanor security holders and Elanor's
funds management capital partners. Elanor seeks to co-invest with its capital partners in funds
managed by Elanor for both strategic and alignment purposes.
Investments are also originated and held on balance sheet where they provide opportunities for future
co-investment by external capital partners.
Elanor’s core focus is in hotels, tourism and leisure, and real estate. In addition, special situations
investments incorporate assets that are high yielding and exhibit strong real estate backing that may
fall outside of the sectors in which the Group currently focuses.
During the year Elanor increased assets under management from $346.4 million to $484.5 million.
Co-investments of $28.2 million were made in new managed funds, resulting in an investment
portfolio of $107.4 million as at 30 June 2016.
Elanor is well positioned for growth. Whilst prevailing market conditions for “value” investors are more
challenging, the Group's pipeline is encouraging.
3
4
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 Directors’ Report
continued
9
3. Distributions
Distributions relating to the year ended 30 June 2016 comprise:
Distribution
Interim Distribution
Amount payable (cents per stapled security)
Payment Date
Final Distribution
Amount payable (cents per stapled security)
Payment Date
Year Ended 30 June 2016
7.31
4 March 2016
7.34
2 September 2016
A provision for the Final Distribution has not been recognised in the consolidated financial statements
for the year as the distribution had not been declared at the reporting date. The Final Distribution per
stapled security will bring distributions in respect of the year ended 30 June 2016 to 14.65 cents per
stapled security. The Final Distribution of 7.34 cents compares to Final Distribution for the year ended
30 June 2015 of 6.70 cents per stapled security.
4. Operating and financial review
Overview and strategy
The key strategic objective of Elanor is to grow funds under management by identifying and
originating investments that deliver strong performance for both Elanor security holders and Elanor's
funds management capital partners. Elanor seeks to co-invest with its capital partners in funds
managed by Elanor for both strategic and alignment purposes.
Investments are also originated and held on balance sheet where they provide opportunities for future
co-investment by external capital partners.
Elanor’s core focus is in hotels, tourism and leisure, and real estate. In addition, special situations
investments incorporate assets that are high yielding and exhibit strong real estate backing that may
fall outside of the sectors in which the Group currently focuses.
During the year Elanor increased assets under management from $346.4 million to $484.5 million.
Co-investments of $28.2 million were made in new managed funds, resulting in an investment
portfolio of $107.4 million as at 30 June 2016.
Elanor is well positioned for growth. Whilst prevailing market conditions for “value” investors are more
challenging, the Group's pipeline is encouraging.
4
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 10
Directors’ Report
continued
4. Operating and financial review (continued)
Managed funds and investment portfolio
The following tables show the Group's managed funds and investment portfolio:
Managed Funds
Funds
Location
193 Clarence Hotel Syndicate
Sydney, NSW
Type
Hotel
Auburn Central Syndicate
Auburn, NSW
Bell City Syndicates (4)
Preston, VIC
Griffin Plaza Syndicate
John Cootes Diversified
Property Syndicate
Griffith, NSW
Penrith and
Tuggerah, NSW
Manning Mall Syndicate
Taree, NSW
Sub-regional shopping
centre
Hotel, budget
accommodation and
commercial complex
Neighbourhood
shopping centre
Two retail showrooms
Sub-regional shopping
centre
Super A Mart Auburn Syndicate Auburn, NSW
Retail warehouse
Disposals since 30 June 2015
Griffin Plaza Syndicate (Sep
2015)
Griffith, NSW
Neighbourhood
shopping centre
Manning Mall Syndicate (Dec
2015)
Taree, NSW
Sub-regional shopping
centre
Additions since 30 June 2015
Elanor Hospitality and
Accommodation Fund (Mar
2016)
Elanor Retail Property Fund
(Dec 2015)
NSW, TAS and
ACT
Taree, NSW and
Glenorchy, TAS
Six hotels across NSW
(4), TAS (1) and ACT (1)
Sub-regional shopping
centre
Limestone Street Centre
Syndicate (Dec 2015)
Ipswich,
QLD
Commercial office
building
Total Managed Funds
Gross Asset
Value
$'m
24.2
74.8
154.4
18.2
11.3
38.0
20.9
(18.2)
(38.0)
98.6
63.8
36.5
484.5
Type of Operating
Business
Note
Valuation
$'m
4. Operating and financial review (continued)
Managed funds and investment portfolio (continued)
Investment Portfolio
Asset
Location
Hotels Tourism and Leisure
Featherdale Wildlife Park
Sydney, NSW
Wildlife Park
Hotel Ibis Styles Albany
Hotel Ibis Styles Canberra
Eaglehawk
Mantra Wollongong Hotel
Peppers Cradle Mountain
Lodge
Special Situations
Investments
Albany, WA
Canberra, ACT
Wollongong, NSW
Cradle Mountain National
Park, TAS
Hotel
Hotel
Hotel
Hotel
Operates from 10 sites;
Merrylands, Penrith, Tuggerah,
Campbelltown, Bathurst,
Taree, Fyshwick, Warners
Bay, Wagga Wagga and
Silverwater (as of 19 August
2016) (all NSW or ACT)
Merrylands Property
Merrylands, NSW
Furniture retailer
Property associated
with John Cootes
Furniture
Wollongong, NSW
Hotel
Cradle Mountain, TAS
Hotel
John Cootes Furniture
Disposals since
30 June 2015
Mantra Wollongong Hotel
(Mar 2016)
Peppers Cradle Mountain
Lodge (Mar 2016)
Managed Fund
Co-Investments
193 Clarence Hotel Syndicate
Sydney, NSW
Auburn Central Syndicate
Auburn , NSW
Bell City Syndicates (4)
Preston, VIC
Additions since
30 June 2015
Elanor Hospitality and
Accommodation Fund (Mar
2016)
(Dec 2015)
Limestone Street Centre
Syndicate (Dec 2015)
Total Investment Portfolio
Elanor Retail Property Fund
Taree, NSW and Glenorchy,
NSW, TAS and ACT
TAS
Ipswich, QLD
Commercial office
Total Managed Funds and Investment Portfolio
Hotel
Sub-regional
shopping centre
Hotel, budget
accommodation and
commercial complex
Six hotels across
NSW (4), TAS (1)
and ACT (1)
Sub-regional
shopping centres
1
1
1
1
1
2
3
1
1
4
4
4
5
4
4
15.6
5.3
17.7
9.0
38.0
Cost
$’m
10.1
16.1
$’m
(9.0)
Valuation
(38.0)
Equity
accounted
value
$’m
1.2
0.6
12.6
19.8
7.0
1.4
107.4
$591.9
5
6
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Directors’ Report
continued
11
4. Operating and financial review (continued)
Managed funds and investment portfolio (continued)
Investment Portfolio
Asset
Location
Hotels Tourism and Leisure
Type of Operating
Business
Note
Valuation
$'m
1
1
1
1
1
2
3
1
1
4
4
4
5
4
4
15.6
5.3
17.7
9.0
38.0
Cost
$’m
10.1
16.1
Valuation
$’m
(9.0)
(38.0)
Equity
accounted
value
$’m
1.2
0.6
12.6
19.8
7.0
1.4
107.4
$591.9
Featherdale Wildlife Park
Sydney, NSW
Wildlife Park
Hotel Ibis Styles Albany
Hotel Ibis Styles Canberra
Eaglehawk
Mantra Wollongong Hotel
Peppers Cradle Mountain
Lodge
Special Situations
Investments
Albany, WA
Canberra, ACT
Wollongong, NSW
Cradle Mountain National
Park, TAS
Hotel
Hotel
Hotel
Hotel
Operates from 10 sites;
Merrylands, Penrith, Tuggerah,
Campbelltown, Bathurst,
Taree, Fyshwick, Warners
Bay, Wagga Wagga and
Silverwater (as of 19 August
2016) (all NSW or ACT)
John Cootes Furniture
Merrylands Property
Merrylands, NSW
Furniture retailer
Property associated
with John Cootes
Furniture
Disposals since
30 June 2015
Mantra Wollongong Hotel
(Mar 2016)
Peppers Cradle Mountain
Lodge (Mar 2016)
Managed Fund
Co-Investments
Wollongong, NSW
Hotel
Cradle Mountain, TAS
Hotel
193 Clarence Hotel Syndicate
Sydney, NSW
Auburn Central Syndicate
Auburn , NSW
Hotel
Sub-regional
shopping centre
Hotel, budget
accommodation and
commercial complex
Six hotels across
NSW (4), TAS (1)
and ACT (1)
Sub-regional
shopping centres
Ipswich, QLD
Commercial office
Bell City Syndicates (4)
Additions since
30 June 2015
Elanor Hospitality and
Accommodation Fund (Mar
2016)
Elanor Retail Property Fund
(Dec 2015)
Limestone Street Centre
Syndicate (Dec 2015)
Total Investment Portfolio
Preston, VIC
NSW, TAS and ACT
Taree, NSW and Glenorchy,
TAS
Total Managed Funds and Investment Portfolio
6
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
12
Directors’ Report
continued
4. Operating and financial review (continued)
Managed funds and investment portfolio (continued)
Note 1: All owner occupied properties in the Hotel, Tourism and Leisure business are held for use by the Group
for the supply of services and are classified as land and buildings and stated at fair value.
Note 2: The John Cootes Furniture business is a wholly owned subsidiary of the Company and accounted for
using the basis of consolidation.
Note 3: The Merrylands property is stated at cost.
Note 4: Managed Fund co-investments are associated and accounted for using the equity method, as this is the
basis on which Core Earnings are calculated and distributions determined.
Note 5: The co-investment in Elanor Hospitality and Accommodation Fund has been consolidated in the financial
statements. The amount shown assumes that the investment was accounted for using the equity method.
Review of financial results
The Group recorded a statutory profit after tax of $4.1 million for the year ended 30 June 2016.
Core or Distributable earnings were $11.6 million or 16.2 cents per stapled security. A Final
Distribution of 7.34 cents per stapled security has been declared for the six months ended 30 June
2016 (90% pay-out ratio on Core Earnings). Core Earnings is considered more relevant than statutory
profit as it represents an estimate of the underlying recurring cash earnings of the Group, and has
been determined in accordance with ASIC Regulatory Guide 230.
A summary of the Group and EIF Group's results for year is set out below:
Statutory financial results
Net profit / (loss) after tax ($'000)
Net profit / (loss) after tax ($'000) (EHAF equity
accounted)
Core Earnings ($'000)
Distributions payable to security holders ($'000)
Core Earnings per stapled security (cents)
Core Earnings per weighted average stapled
security (cents)
Distributions (cents per stapled security / unit)
Net tangible assets ($ per stapled security)
Net tangible assets ($ per stapled security)
(EHAF equity accounted)
Gearing (net debt / total assets less cash) (%)
Gearing (net debt / total assets less cash) (%)
(EHAF equity accounted)
Group
30 June
2016
Group
30 June
2015
EIF
Group
30 June
2016
EIF
Group
30 June
2015
4,143
2,720
3,789
15,061
6,810
11,560
10,404
16.19
16.36
14.65
1.65
1.27
28.15
2,720
9,344
8,409
13.23
14.07
11.90
1.27
1.27
18.31
5,544
8,540
7,686
11.96
12.09
10.82
1.17
0.80
36.80
7.50
18.31
27.38
15,061
7,116
6,404
10.07
10.72
9.07
0.82
0.82
33.28
33.28
4. Operating and financial review (continued)
Review of financial results (continued)
On 21 March 2016 Elanor established the Elanor Hospitality and Accommodation Fund (“EHAF” or
“Fund”). The Fund comprises a portfolio of 6 Australian hotels with strong, diversified cash flows and
significant redevelopment potential. The Fund was seeded by two Elanor owned properties, Peppers
Cradle Mountain Lodge and Mantra Wollongong Hotel, the inaugural seeding of a fund with Elanor
owned properties. As at 30 June 2016 the Fund had total assets of $98.6 million and net assets of
$47.3 million. The Fund performed in line with period forecast for the year ended 30 June 2016 with
the Fund declaring a distribution in respect of the period from 21 March 2016 to 30 June 2016
reflecting an annualised yield of over 12%.
Elanor holds a 41.7% interest in the Fund which is expected to reduce to approximately 20% to 25%
as the Fund acquires new hotel assets over time. For accounting purposes, Elanor is deemed to have
a controlling interest in the Fund given its level of ownership and role as manager of the Fund. This
means that the financial results and financial position of the Fund are consolidated into the financial
statements of the Group for the year ended 30 June 2016.
Presenting the summary consolidated financial results of the Group on the basis that the Fund was
accounted for using the equity method is important because Elanor considers that this gives the most
appropriate presentation consistent with management and reporting of the Group and to provide a
comparable basis to the presentation of the results for the year ended 30 June 2015.
The primary adjustments to the summary presentation of the Group’s statutory results shown on the
previous page for the year ended 30 June 2016 on this basis are:
(cid:120) Net profit / (loss) after tax for the Group increases from $4.1 million to $6.8 million and for the
EIF Group from $3.8 million to $5.5 million. This relates primarily to the write off of transaction
and establishment costs in the consolidated financial statements of the Fund, given fair value
accounting, to ensure that land and buildings within the Fund at acquisition were recorded at
fair value.
(cid:120) No change to Core Earnings or Distributions as Core Earnings and Distributions reflect the
distributions received and receivable by the Group from the Fund, consistent with all Group
co-investments in funds managed by Elanor.
(cid:120) Net tangible assets for the Group decreases from $1.65 to $1.27 and for the EIF Group from
$1.19 to $0.80. This is because the adjusted Group and EIF consolidated balance sheet
shows the investment in the Fund, using the equity method, rather than full consolidation of
the assets and liabilities of the Fund.
(cid:120) Gearing for the Group reduces from 28.1% to 7.5% and for the EIF Group from 36.8% to
27.4%. This relates to the interest bearing debt of the Fund being consolidated into the Group
and the EIF Group in the statutory financial statements for the year ended 30 June 2016. As
at 30 June 2016 the interest bearing debt and net debt the Group, on the basis that the Fund
was accounted for using the equity method, was $14.8 million and $8.8 million respectively.
7
8
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Directors’ Report
continued
13
4. Operating and financial review (continued)
Review of financial results (continued)
On 21 March 2016 Elanor established the Elanor Hospitality and Accommodation Fund (“EHAF” or
“Fund”). The Fund comprises a portfolio of 6 Australian hotels with strong, diversified cash flows and
significant redevelopment potential. The Fund was seeded by two Elanor owned properties, Peppers
Cradle Mountain Lodge and Mantra Wollongong Hotel, the inaugural seeding of a fund with Elanor
owned properties. As at 30 June 2016 the Fund had total assets of $98.6 million and net assets of
$47.3 million. The Fund performed in line with period forecast for the year ended 30 June 2016 with
the Fund declaring a distribution in respect of the period from 21 March 2016 to 30 June 2016
reflecting an annualised yield of over 12%.
Elanor holds a 41.7% interest in the Fund which is expected to reduce to approximately 20% to 25%
as the Fund acquires new hotel assets over time. For accounting purposes, Elanor is deemed to have
a controlling interest in the Fund given its level of ownership and role as manager of the Fund. This
means that the financial results and financial position of the Fund are consolidated into the financial
statements of the Group for the year ended 30 June 2016.
Presenting the summary consolidated financial results of the Group on the basis that the Fund was
accounted for using the equity method is important because Elanor considers that this gives the most
appropriate presentation consistent with management and reporting of the Group and to provide a
comparable basis to the presentation of the results for the year ended 30 June 2015.
The primary adjustments to the summary presentation of the Group’s statutory results shown on the
previous page for the year ended 30 June 2016 on this basis are:
(cid:120) Net profit / (loss) after tax for the Group increases from $4.1 million to $6.8 million and for the
EIF Group from $3.8 million to $5.5 million. This relates primarily to the write off of transaction
and establishment costs in the consolidated financial statements of the Fund, given fair value
accounting, to ensure that land and buildings within the Fund at acquisition were recorded at
fair value.
(cid:120) No change to Core Earnings or Distributions as Core Earnings and Distributions reflect the
distributions received and receivable by the Group from the Fund, consistent with all Group
co-investments in funds managed by Elanor.
(cid:120) Net tangible assets for the Group decreases from $1.65 to $1.27 and for the EIF Group from
$1.19 to $0.80. This is because the adjusted Group and EIF consolidated balance sheet
shows the investment in the Fund, using the equity method, rather than full consolidation of
the assets and liabilities of the Fund.
(cid:120) Gearing for the Group reduces from 28.1% to 7.5% and for the EIF Group from 36.8% to
27.4%. This relates to the interest bearing debt of the Fund being consolidated into the Group
and the EIF Group in the statutory financial statements for the year ended 30 June 2016. As
at 30 June 2016 the interest bearing debt and net debt the Group, on the basis that the Fund
was accounted for using the equity method, was $14.8 million and $8.8 million respectively.
8
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
14
Directors’ Report
continued
4. Operating and financial review (continued)
Review of financial results (continued)
The table below provides a reconciliation from statutory net profit / (loss) after tax to distributable Core
Earnings:
Net profit / (loss) after tax (statutory)
Adjustment to remove the impact of consolidation
of the Fund
Adjustment to include the impact of accounting for the
Fund using the equity method
Adjusted profit / (loss) after tax
Adjustments for items included in statutory profit/(loss)
Increase in equity accounted investments to reflect
distributions received/receivable
Building depreciation expense
John Cootes Furniture Insurance recovery adjustment
Straight lining of rental expense
Amortisation of intangibles
Gain on the sale of Peppers Cradle Mountain Lodge
and Mantra Wollongong Hotel
Net proceeds on the sale of Peppers Cradle Mountain
Lodge and Mantra Wollongong Hotel retained
Transaction, establishment costs and fair value
decrements
Fair value adjustments on investment property
2
3
4
5
5
6
Tax adjustments
Core Earnings
Group
30 June
2016
$’000
Group
30 June
2015
$’000
EIF
Group
30 June
2016
$’000
EIF
Group
30 June
2015
$’000
4,143
4,668
(2,001)
6,810
2,720
3,789
15,061
-
3,064
-
-
2,720
(1,310)
5,543
-
15,061
3,480
461
2,997
461
851
1,063
(706)
32
150
10,009
(9,056)
-
-
(10)
-
-
150
-
-
4,843
-
107
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,297
(9,703)
-
1
11,560
9,344
8,540
7,116
4. Operating and financial review (continued)
Review of financial results (continued)
Note 3: During the year the Group incurred total depreciation charges of $3.666 million, however only the
depreciation expense on buildings of $0.851 million has been added back for the purposes of calculating Core
Earnings.
Note 4: The insurance recovery in respect of the John Cootes Furniture Yennora Warehouse fire on 27 July 2015
includes an amount received in relation to the loss of plant and equipment (net of the write off of the written down
value of plant and equipment destroyed). Core Earnings has been reduced by $0.71 million because those
proceeds will be used to purchase replacement plant and equipment required by the business.
Note 5: In March 2016 the Group sold Peppers Cradle Mountain Lodge and Mantra Wollongong Hotel to Elanor
Hospitality and Accommodation Fund for $38.0 million and $9.0 million respectively.
Peppers Cradle Mountain Lodge and Mantra Wollongong Hotel were acquired by the Group at IPO in July 2014
for $28.8 million and $7.2 million respectively. After deducting purchase price and acquisition costs the net profit
on the sale of these assets was $10.0 million. This amount has not been included in consolidated profit and loss
but has been included in Core Earnings. After deducting the proportion of the after tax bonus expense specifically
related to the sale of Peppers Cradle Mountain Lodge and Mantra Wollongong Hotel forming part of the
consolidated profit and loss of the Group for the year ended 30 June 2016, the adjusted net proceeds from the
sale of these assets to be retained to assist in achieving the future growth plans of the Group is $9.1 million.
Note 6: Transaction and establishment costs incurred by the Group through consolidated profit and loss for the
year ended 30 June 2015 relate to the establishment and listing of the Group in July 2014.
Review of operational results
The Group is organised into four divisions by business type.
Funds Management manages third party owned investment funds and syndicates.
Hotel, Tourism and Leisure originates investment and fund management assets. The current
investment portfolio includes Featherdale Wildlife Park, Ibis Styles Canberra Eaglehawk Hotel, and
Ibis Styles Albany Hotel along with co-investment in 193 Clarence Hotel Syndicate, four Bell City
syndicates and Elanor Hospitality and Accommodation Fund. Hotel, Tourism and Leisure also
manages these syndicates.
Real Estate originates investment and fund management assets. The current investment portfolio
comprises investments in Auburn Central Syndicate, Elanor Retail Property Fund and Limestone
Street Centre Syndicate. Real Estate manages Auburn Central Syndicate, Elanor Retail Property
Fund, John Cootes Diversified Property Syndicate, Limestone Street Centre Syndicate and Super A
Mart Auburn Syndicate.
Special Situations Investments contains the John Cootes Furniture business and the property
associated with John Cootes Furniture business at Merrylands, NSW.
Note 1: Core Earnings has been determined in accordance with ASIC RG 230 and represents the Directors view
of underlying earnings from ongoing operating activities for the period, being net profit / (loss) after tax, adjusting
for one-off realised items (being formation or other transaction costs that occur infrequently or are outside the
course of ongoing business activities), non-cash items (being fair value movements, depreciation charges on the
buildings held by the Trust, amortisation of intangibles and straight lining of rental expense), restating share of
profit from equity accounted investments to reflect distributions received / receivable in respect of those
investments and an adjustment in relation to an element of the insurance recovery received in respect of the
John Cootes Furniture business.
Note 2: Share of profit from equity accounted investments includes depreciation and amortisation and fair value
adjustments on investment property that were added back in the determination of distributable earnings from
those managed funds. The Group’s share of those adjustments to distributable earnings in the relevant managed
funds have been added back for the purposes of calculating Core Earnings so that the Group’s Core Earnings
reflects the distribution received / receivable by the Group from those investments in Elanor managed funds.
9
10
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Directors’ Report
continued
15
4. Operating and financial review (continued)
Review of financial results (continued)
Note 3: During the year the Group incurred total depreciation charges of $3.666 million, however only the
depreciation expense on buildings of $0.851 million has been added back for the purposes of calculating Core
Earnings.
Note 4: The insurance recovery in respect of the John Cootes Furniture Yennora Warehouse fire on 27 July 2015
includes an amount received in relation to the loss of plant and equipment (net of the write off of the written down
value of plant and equipment destroyed). Core Earnings has been reduced by $0.71 million because those
proceeds will be used to purchase replacement plant and equipment required by the business.
Note 5: In March 2016 the Group sold Peppers Cradle Mountain Lodge and Mantra Wollongong Hotel to Elanor
Hospitality and Accommodation Fund for $38.0 million and $9.0 million respectively.
Peppers Cradle Mountain Lodge and Mantra Wollongong Hotel were acquired by the Group at IPO in July 2014
for $28.8 million and $7.2 million respectively. After deducting purchase price and acquisition costs the net profit
on the sale of these assets was $10.0 million. This amount has not been included in consolidated profit and loss
but has been included in Core Earnings. After deducting the proportion of the after tax bonus expense specifically
related to the sale of Peppers Cradle Mountain Lodge and Mantra Wollongong Hotel forming part of the
consolidated profit and loss of the Group for the year ended 30 June 2016, the adjusted net proceeds from the
sale of these assets to be retained to assist in achieving the future growth plans of the Group is $9.1 million.
Note 6: Transaction and establishment costs incurred by the Group through consolidated profit and loss for the
year ended 30 June 2015 relate to the establishment and listing of the Group in July 2014.
Review of operational results
The Group is organised into four divisions by business type.
Funds Management manages third party owned investment funds and syndicates.
Hotel, Tourism and Leisure originates investment and fund management assets. The current
investment portfolio includes Featherdale Wildlife Park, Ibis Styles Canberra Eaglehawk Hotel, and
Ibis Styles Albany Hotel along with co-investment in 193 Clarence Hotel Syndicate, four Bell City
syndicates and Elanor Hospitality and Accommodation Fund. Hotel, Tourism and Leisure also
manages these syndicates.
Real Estate originates investment and fund management assets. The current investment portfolio
comprises investments in Auburn Central Syndicate, Elanor Retail Property Fund and Limestone
Street Centre Syndicate. Real Estate manages Auburn Central Syndicate, Elanor Retail Property
Fund, John Cootes Diversified Property Syndicate, Limestone Street Centre Syndicate and Super A
Mart Auburn Syndicate.
Special Situations Investments contains the John Cootes Furniture business and the property
associated with John Cootes Furniture business at Merrylands, NSW.
10
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
16
Directors’ Report
continued
4. Operating and financial review (continued)
Review of operational results (continued)
Set out below is an adjusted presentation of the statutory financial results by segment, on the basis
that the Group’s interest in EHAF is accounted for using the equity method rather than on a
consolidated basis. Elanor considers that presenting the operating performance of the Group for the
year ended 30 June 2016 on this adjusted basis gives the most appropriate presentation of the Group
consistent with management and reporting of the Group and to provide a comparable basis to the
presentation of results for the year ended 30 June 2015.
Group Revenue and EBITDA adjusted
to reflect EHAF accounted for using
The equity method
Funds Management
Hotels, Tourism and Leisure
Real Estate
Special Situations Investments
Other
Total Segment Revenue and EBITDA
Unallocated corporate costs
Group EBITDA
Depreciation and amortisation
Group EBIT
Interest income
Borrowing costs
Transaction and establishment costs
Group net profit / (loss) before income tax
Income tax expense
Group net profit / (loss) after income tax
Group
Segment
Revenue
30 June
2016
$'000
Group
Segment
Revenue
30 June
2015
$'000
Group
Segment
EBITDA
30 June
2016
$'000
Group
Segment
EBITDA
30 June
2015
$'000
9,345
32,205
-
28,289
140
69,979
4,902
32,784
-
19,653
748
58,087
7,918
6,752
321
2,404
140
17,535
(6,400)
11,135
(2,727)
8,408
76
(1,062)
-
7,422
(612)
6,810
4,478
9,068
6
1,843
748
16,143
(4,153)
11,990
(2,591)
9,399
-
(1,259)
(4,843)
3,297
(577)
2,720
Group EBITDA shown above includes the equity accounted result of the Group’s co-investments in
funds managed by Elanor, including in EHAF. The Group measures the performance of its co-
investments based on distributions received / receivable from these co-investments, consistent with
the treatment within Core Earnings. Group EBITDA, adjusted to show distributions received /
receivable from co-investments rather than the equity accounted result is as follows:
Group EBITDA
Add / subtract: Equity accounted (loss) / profit on co-investments
Add: Distributions received / receivable on co-investments
Adjusted Group EBITDA
Group
Group
EBITDA EBITDA
30 June
30 June
2015
2016
$'000
$'000
11,990
11,135
(93)
1,390
553
2,297
12,450
14,822
4. Operating and financial review (continued)
Review of operational results (continued)
The primary reason for the equity accounted loss from co-investments of $1.4 million for the year
ended 30 June 2016 is the equity accounted loss of $2.0 million in relation to ENN’s share of EHAF.
This reflects the fair value decrement of $4.6 million in that fund for the year ended 30 June 2016,
relating to the write off of transaction and establishment costs.
The performance of the Funds Management business is summarised as follows:
Funds Management
Operating Performance
Total revenue
EBITDA
Operating margin
Funds under Management
Opening funds under management
Increase / (decrease) in value of funds under
Disposals in value of funds under management
management
New funds
Total
2016
$’000
9,345
7,918
84.7%
2016
$’m
346.4
(4.6)
(56.2)
198.9
484.5
2015
$’000
4,902
4,478
91.4%
2015
$’m
86.7
3.0
-
256.7
346.4
The level of growth in funds under management during the period has been positive. The Group
established three new syndicates during the year being Elanor Retail Property Fund (sub-regional
shopping centres in Taree, NSW and Glenorchy, TAS), Limestone Street Syndicate (commercial
office building in Ipswich, QLD) and the Elanor Hospitality and Accommodation Fund, a multi-asset
hotel fund comprising six hotels. Elanor Retail Property Fund is a multi-asset retail property fund that
was previously known as Manning Mall Syndicate.
During the year the Group strengthened its internal asset management and investment management
capabilities, and deepened its capital partner base to support the Group’s strategic focus to deliver
growth in funds under management and the performance of assets under management.
Hotels, Tourism and Leisure
The performance of the Hotels, Tourism and Leisure business is summarised as follows:
EBITDA (excluding equity accounted results from co-
Total revenue
investments)
Operating margin
2016
$’000
32,205
8,463
26.3%
2015
$’000
32,784
8,981
27.4%
Hotels, Tourism and Leisure EBITDA, excluding the equity accounted loss from co-investments of
$1.7 million, includes the results of Featherdale Wildlife Park, Ibis Styles Canberra Eaglehawk Hotel
and Ibis Styles Albany Hotel. The results of Peppers Cradle Mountain Lodge and Mantra Wollongong
Hotel are included in Hotels, Tourism and Leisure EBITDA until 21 March 2016 when these assets
were sold to EHAF.
11
12
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Directors’ Report
continued
17
4. Operating and financial review (continued)
Review of operational results (continued)
The primary reason for the equity accounted loss from co-investments of $1.4 million for the year
ended 30 June 2016 is the equity accounted loss of $2.0 million in relation to ENN’s share of EHAF.
This reflects the fair value decrement of $4.6 million in that fund for the year ended 30 June 2016,
relating to the write off of transaction and establishment costs.
Funds Management
The performance of the Funds Management business is summarised as follows:
Operating Performance
Total revenue
EBITDA
Operating margin
Funds under Management
Opening funds under management
Increase / (decrease) in value of funds under
management
Disposals in value of funds under management
New funds
Total
2016
$’000
9,345
7,918
84.7%
2016
$’m
346.4
(4.6)
(56.2)
198.9
484.5
2015
$’000
4,902
4,478
91.4%
2015
$’m
86.7
3.0
-
256.7
346.4
The level of growth in funds under management during the period has been positive. The Group
established three new syndicates during the year being Elanor Retail Property Fund (sub-regional
shopping centres in Taree, NSW and Glenorchy, TAS), Limestone Street Syndicate (commercial
office building in Ipswich, QLD) and the Elanor Hospitality and Accommodation Fund, a multi-asset
hotel fund comprising six hotels. Elanor Retail Property Fund is a multi-asset retail property fund that
was previously known as Manning Mall Syndicate.
During the year the Group strengthened its internal asset management and investment management
capabilities, and deepened its capital partner base to support the Group’s strategic focus to deliver
growth in funds under management and the performance of assets under management.
Hotels, Tourism and Leisure
The performance of the Hotels, Tourism and Leisure business is summarised as follows:
Total revenue
EBITDA (excluding equity accounted results from co-
investments)
Operating margin
2016
$’000
32,205
8,463
26.3%
2015
$’000
32,784
8,981
27.4%
Hotels, Tourism and Leisure EBITDA, excluding the equity accounted loss from co-investments of
$1.7 million, includes the results of Featherdale Wildlife Park, Ibis Styles Canberra Eaglehawk Hotel
and Ibis Styles Albany Hotel. The results of Peppers Cradle Mountain Lodge and Mantra Wollongong
Hotel are included in Hotels, Tourism and Leisure EBITDA until 21 March 2016 when these assets
were sold to EHAF.
12
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
18
Directors’ Report
continued
4. Operating and financial review (continued)
Hotels, Tourism and Leisure (continued)
The table below sets out the assessed value of the Groups property investment portfolio at 30 June
2016.
Valuation of Properties
Peppers Cradle Mountain Lodge
Featherdale Wildlife Park
Ibis Styles Canberra Eaglehawk Hotel
Mantra Wollongong
Ibis Styles Albany Hotel
Total
2016
$’m
-
15.6
17.7
-
5.3
38.6
The performance of the Hotel, Tourism and Leisure co-investments is summarised as follows:
Equity accounted result from co-investments
Distributions received / receivable from co-investments
2016
$’000
(1,711)
1,957
2015
$’m
37.0
15.0
17.7
8.5
5.3
83.5
2015
$’000
87
548
The Hotels, Tourism and Leisure business also includes investments reflecting the Group’s co-
investment with its capital partners in 193 Clarence Hotel Syndicate, Bell City syndicates and Elanor
Hospitality and Accommodation Fund. The carrying value of these investments as at 30 June 2016,
using the equity method, was $33.6 million. During the year the equity accounted share of profit of
these co-investments was a loss of $1.7 million with distributions received or receivable for the year
from these co-investments totalling $2.0 million. The equity accounted loss from co-investments for
the year ended 30 June 2016 includes an equity accounted loss in relation to the investment in EHAF
of $2.0 million. This relates primarily to the fair value decrement of $4.6 million in that fund for the year
ended 30 June 2016, relating to the write off of transaction and establishment costs.
Real Estate
Real Estate comprises equity accounted investments in the Auburn Central Syndicate, Elanor Retail
Property Fund and Limestone Street Centre Syndicate. The carrying value of these investments as at
30 June 2016, using the equity method, was $9.0 million. During the year the equity accounted share
of profit of these investments was $0.32 million with distributions received or receivable for the period
totalling $0.34 million.
Special Situations Investments
The performance of the Special Situations Investments business is summarised as follows:
Total revenue
EBITDA
Operating margin
2016
$’000
28,289
2,404
8.5%
2015
$’000
19,653
1,843
9.4%
Special Situations Investments contains the John Cootes Furniture business and the property
associated with John Cootes Furniture business at Merrylands.
During the year new John Cootes Furniture stores were opened in Fyshwick (ACT) in December
2015, Warners Bay (NSW) in January 2016 and Wagga Wagga (NSW) in June 2016.
4. Operating and financial review (continued)
Special Situations Investments (continued)
On 27 July 2015 the John Cootes Furniture warehouse in Orchardleigh Street, Yennora sustained
major damage as a result of a fire. The entire contents of the building, primarily stock and plant and
equipment of the John Cootes Furniture business were destroyed and the building was unable to be
recovered. The warehouse building is owned by the John Cootes Diversified Property Syndicate, a
managed investment scheme managed by the Group. The property is fully insured, and the required
business interruption insurances are also in place. In respect of the John Cootes Furniture business,
claims for loss of stock and plant and equipment have been fully settled at $2.0 million and $1.7
million respectively. Four business interruption claims have been lodged that relate to lost sales from
the date of the fire to 31 May 2016 along with claim preparation costs and additional costs of working.
To date, progress payments in relation to the business interruption claims of $2.3 million have been
received from the insurer. A further progress claim for lost sales along with claim preparation costs
and additional costs of working is expected to be lodged in September 2016.
The Group lodged a Planning Proposal in respect of its 26,135 square metre property located at 248
– 264 Woodville Road Merrylands, with Parramatta City Council (“Council”) on 12 October 2015. The
Planning Proposal was approved by Council at a meeting held on 7 December 2015. On 24 June
2016 the NSW Department of Planning and Environment issued its Gateway Determination on
Elanor’s planning proposal which confirmed:
(cid:120) Rezoning the property to B4 mixed use;
(cid:120)
(cid:120)
Increasing the maximum height of building control to 31 metres (9 storeys); and
Increasing the maximum floor space ratio to 2.0:1 (this is a reduction from the Council
endorsed floor space ratio of 2.25:1).
Elanor announced on 20 July 2016 that the property would be marketed for sale with CBRE and
Savills appointed to jointly conduct an Expression of Interest campaign under a Commercial Exclusive
Agency Agreement.
Summary and Outlook
The Group's core strategy will remain focussed on growing its managed funds and earnings from the
funds management business and actively managing its investment portfolio. The Group has a
number of funds management opportunities under consideration, with a particular focus on the real
estate and hotels, tourism and leisure sectors. The Group will look to increase income from managed
funds, seed new managed funds with Group owned investments, and continue to co-invest with
external capital partners.
Risks to the Group in the coming year primarily comprise potential earnings variability associated with
general economic and market conditions including inbound tourism and domestic retail spending, the
availability of capital for funds management opportunities and any movement in property valuations.
The Group manages these risks through its active asset management approach across its investment
portfolio, continuing to focus on broadening the Group's capital partner base and through the active
management of the Group's capital structure.
Based on the current operating performance of the investment portfolio and the pipeline of potential
funds management opportunities, the Group anticipates continued growth in Core Earnings in the
year ahead.
13
14
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Directors’ Report
continued
19
4. Operating and financial review (continued)
Special Situations Investments (continued)
On 27 July 2015 the John Cootes Furniture warehouse in Orchardleigh Street, Yennora sustained
major damage as a result of a fire. The entire contents of the building, primarily stock and plant and
equipment of the John Cootes Furniture business were destroyed and the building was unable to be
recovered. The warehouse building is owned by the John Cootes Diversified Property Syndicate, a
managed investment scheme managed by the Group. The property is fully insured, and the required
business interruption insurances are also in place. In respect of the John Cootes Furniture business,
claims for loss of stock and plant and equipment have been fully settled at $2.0 million and $1.7
million respectively. Four business interruption claims have been lodged that relate to lost sales from
the date of the fire to 31 May 2016 along with claim preparation costs and additional costs of working.
To date, progress payments in relation to the business interruption claims of $2.3 million have been
received from the insurer. A further progress claim for lost sales along with claim preparation costs
and additional costs of working is expected to be lodged in September 2016.
The Group lodged a Planning Proposal in respect of its 26,135 square metre property located at 248
– 264 Woodville Road Merrylands, with Parramatta City Council (“Council”) on 12 October 2015. The
Planning Proposal was approved by Council at a meeting held on 7 December 2015. On 24 June
2016 the NSW Department of Planning and Environment issued its Gateway Determination on
Elanor’s planning proposal which confirmed:
(cid:120) Rezoning the property to B4 mixed use;
(cid:120)
(cid:120)
Increasing the maximum height of building control to 31 metres (9 storeys); and
Increasing the maximum floor space ratio to 2.0:1 (this is a reduction from the Council
endorsed floor space ratio of 2.25:1).
Elanor announced on 20 July 2016 that the property would be marketed for sale with CBRE and
Savills appointed to jointly conduct an Expression of Interest campaign under a Commercial Exclusive
Agency Agreement.
Summary and Outlook
The Group's core strategy will remain focussed on growing its managed funds and earnings from the
funds management business and actively managing its investment portfolio. The Group has a
number of funds management opportunities under consideration, with a particular focus on the real
estate and hotels, tourism and leisure sectors. The Group will look to increase income from managed
funds, seed new managed funds with Group owned investments, and continue to co-invest with
external capital partners.
Risks to the Group in the coming year primarily comprise potential earnings variability associated with
general economic and market conditions including inbound tourism and domestic retail spending, the
availability of capital for funds management opportunities and any movement in property valuations.
The Group manages these risks through its active asset management approach across its investment
portfolio, continuing to focus on broadening the Group's capital partner base and through the active
management of the Group's capital structure.
Based on the current operating performance of the investment portfolio and the pipeline of potential
funds management opportunities, the Group anticipates continued growth in Core Earnings in the
year ahead.
14
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
20
Directors’ Report
continued
5.
Interests in the Group
On 27 June 2016 the group issued 741,453 stapled securities under the short term incentive scheme
in respect of the year ended 30 June 2016. These restricted stapled securities are held by the
Group’s employee security trust on behalf of the participants.
The movement in stapled securities of the Group during the year is set out below:
Stapled securities on issue at the beginning of the year
Stapled securities issued for business acquisitions through
Institutional Placement
Stapled securities issued for Security Purchase Plan
Stapled Securities issued under the short term incentive
scheme
Stapled securities on issue at the end of the period
Group
30 June
2016
$'000
70,645
-
-
741
Group
30 June
2015
$'000
60,800
9,120
725
-
71,386
70,645
6. Directors
The following persons have held office as Directors of the Responsible Entity and the Company
during the period and up to the date of this report:
Name
Paul Bedbrook
Particulars
Independent Non-Executive Chairman
Paul was appointed a Director of both the Company and the Manager in June 2014.
Paul has had a career of over 30 years in financial services, originally as an analyst,
fund manager and then the GM & Chief Investment Officer for Mercantile Mutual
Investment Management Ltd (ING owned) from 1987 to 1995. Paul was an executive
for 26 years with the Dutch global banking, insurance and investment group, ING,
retiring in 2010. Paul’s career included the roles of: President and CEO of ING Direct
Bank, Canada (2000 – 2003) and Regional CEO, ING Asia Pacific, Hong Kong
(2008 – 2010). Paul is currently the Chairman of Zurich Financial Services Australia
and its Life, General and Investment Companies, a non-executive director of Credit
Union Australia, and the National Blood Authority. He is also Chairman of Disability
Sports Australia.
Former listed directorships in the last three years: None
Interest in stapled securities: 254,847
Qualifications: B.Sc, F FIN, FAICD
6. Directors (continued)
Glenn Willis
Managing Director and Chief Executive Officer
Glenn was appointed a Director of both the Company and the Manager in June
2014. Glenn has extensive industry knowledge with over 25 years’ experience in
the Australian and international capital markets.
Glenn was most recently co-founder and Chief Executive Officer of Moss Capital.
Prior to Moss Capital, Glenn co-founded Grange Securities and led the team in his
role as Managing Director and CEO. Grange Securities was a pre-eminent
Australian owned investment bank with businesses in fixed income, equities,
corporate finance and funds management. Grange Securities grew to be Australia’s
major independent fixed income house.
After 12 years of growth, Grange Securities, a business with approximately 150
personnel, was acquired by Lehman Brothers International in 2007, as the platform
for Lehman’s Australian investment banking and funds management operations.
Glenn was appointed Managing Director and Country Head in March 2007. In 2008,
Glenn was appointed executive Vice Chairman of Lehman Brothers Australia.
Glenn is a board member of Big Brothers Big Sisters Australia and The FSHD
Global Research Foundation.
Glenn previously held senior positions at Fay Richwhite and Challenge Bank.
Former listed directorships in the last three years: None
Interest in stapled securities: 5,834,610
Qualifications: B.Bus (Econ & Fin)
Nigel was appointed a Director of both the Company and the Manager in June 2014.
Nigel was a Partner of PricewaterhouseCoopers for 22 years where he held a
number of leadership positions, including heading the financial services audit,
business advisory services and consulting businesses. He also held a number of
senior client Lead Partner roles. Nigel has extensive experience in risk management,
technology, consulting and auditing in Australia and the Asia-Pacific region.
Nigel’s current Directorships include a non-executive Director with Credit Union
Australia, where he is Chair of the Audit Committee and a member of the Risk and
Remuneration Committees, non-executive director of Quickstep Holdings Ltd where
he is Chair of the Audit and Risk Committee and non-executive Director of the
Australia Red Cross Blood Service, where he is a member of the Finance and Audit
Committee and a member of the Risk Committee. Nigel has also been a member of
the Grameen Foundation Australia charity board since 2012.
Former listed directorships in the last three years: None
Interest in stapled securities: 159,694
Qualifications: B.Com, FCA, MAICD
Nigel Ampherlaw
Independent Non-Executive Director
Chairman, Audit Risk and Compliance Committee
15
16
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 21
Directors’ Report
continued
6. Directors (continued)
Glenn Willis
Managing Director and Chief Executive Officer
Glenn was appointed a Director of both the Company and the Manager in June
2014. Glenn has extensive industry knowledge with over 25 years’ experience in
the Australian and international capital markets.
Glenn was most recently co-founder and Chief Executive Officer of Moss Capital.
Prior to Moss Capital, Glenn co-founded Grange Securities and led the team in his
role as Managing Director and CEO. Grange Securities was a pre-eminent
Australian owned investment bank with businesses in fixed income, equities,
corporate finance and funds management. Grange Securities grew to be Australia’s
major independent fixed income house.
After 12 years of growth, Grange Securities, a business with approximately 150
personnel, was acquired by Lehman Brothers International in 2007, as the platform
for Lehman’s Australian investment banking and funds management operations.
Glenn was appointed Managing Director and Country Head in March 2007. In 2008,
Glenn was appointed executive Vice Chairman of Lehman Brothers Australia.
Glenn is a board member of Big Brothers Big Sisters Australia and The FSHD
Global Research Foundation.
Glenn previously held senior positions at Fay Richwhite and Challenge Bank.
Former listed directorships in the last three years: None
Interest in stapled securities: 5,834,610
Qualifications: B.Bus (Econ & Fin)
Nigel Ampherlaw
Independent Non-Executive Director
Chairman, Audit Risk and Compliance Committee
Nigel was appointed a Director of both the Company and the Manager in June 2014.
Nigel was a Partner of PricewaterhouseCoopers for 22 years where he held a
number of leadership positions, including heading the financial services audit,
business advisory services and consulting businesses. He also held a number of
senior client Lead Partner roles. Nigel has extensive experience in risk management,
technology, consulting and auditing in Australia and the Asia-Pacific region.
Nigel’s current Directorships include a non-executive Director with Credit Union
Australia, where he is Chair of the Audit Committee and a member of the Risk and
Remuneration Committees, non-executive director of Quickstep Holdings Ltd where
he is Chair of the Audit and Risk Committee and non-executive Director of the
Australia Red Cross Blood Service, where he is a member of the Finance and Audit
Committee and a member of the Risk Committee. Nigel has also been a member of
the Grameen Foundation Australia charity board since 2012.
Former listed directorships in the last three years: None
Interest in stapled securities: 159,694
Qualifications: B.Com, FCA, MAICD
16
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 8. Meetings of Directors
The attendance at meetings of Directors of the Responsible Entity and the Company during the
year is set out in the following table:
Elanor Board
(Responsible Entity &
the Company)
Held
Attended
Audit, Risk &
Compliance
Committee
Remuneration and
Nominations
Committee
Held Attended
Held Attended
13
13
13
13
13
13
13
13
6
6
6
6
6
6
6
6
5
5
5
5
5
5
5
5
Paul Bedbrook
Glenn Willis
Nigel Ampherlaw
William (Bill) Moss
The remuneration report for the year ended 30 June 2016 outlines the remuneration arrangements,
philosophy and framework of the Group in accordance with the requirements of the Corporations Act
2001 (Cth) and its regulations.
The remuneration report is set out under the following main headings:
a) Remuneration Policy and Approach
b) Key Management Personnel
c) Executive Remuneration Arrangements
d) Executive Remuneration Outcomes
e) Non-Executive Director Remuneration Arrangements and Outcomes
f) Additional Disclosures Relating to Long Term Incentive Plans and Securities
g) Key Management Personnel Equity Holdings
h) Loans to Key Management Personnel
i) Other Transactions and Balances with Key Management Personnel and their Related Parties
The information provided in the remuneration report has been audited as required by section 308 (3C)
of the Corporations Act 2001 (Cth).
a) Remuneration Policy and Approach
The Elanor Investors Group aims to attract, retain and motivate highly skilled people and therefore
ensures its remuneration is competitive with prevailing employment market conditions and also
provides sufficient motivation by ensuring that remuneration is aligned to the Group’s results.
The Group’s remuneration framework seeks to align executive reward with the achievement of
strategic objectives and in particular, the creation of sustainable value and earnings growth for
investors. In addition, the Board seeks to have reference to market best practice to ensure that
executive remuneration remains competitive, fair and reasonable.
The Group has a formally constituted Remuneration and Nomination Committee which comprises
three Non-Executive Director (NED) members, Mr William Moss AO (Chair), Mr Paul Bedbrook and
Mr Nigel Ampherlaw. The Remuneration and Nomination Committee meets at least annually for the
purposes of reviewing and making recommendations to the Elanor Investors Group Board on the level
of remuneration of the senior executives and the Directors.
Specifically, the Board approves the remuneration arrangements of the Managing Director and other
executives and all aggregate and individual awards made under the short term (STI) and long-term
incentive (LTI) plans, following recommendations from the Remuneration and Nomination Committee.
The Board also sets the aggregate remuneration of NED's, which is then subject to securityholder
approval.
When the Remuneration and Nomination Committee meets, the Managing Director is not present
during any discussions related to his own remuneration arrangements.
18
22
Directors’ Report
continued
6. Directors (continued)
9. Remuneration Report (Audited)
William (Bill) Moss
AO
Non-Executive Director
Chairman, Remuneration and Nominations Committee
Bill was appointed a Director of both the Company and the Manger in June 2014. Bill
is an Australian businessman and philanthropist with expertise in real estate,
banking, funds and asset management.
Bill spent 23 years as a senior executive and Executive Director with Macquarie
Group, the pre-eminent Australian investment bank, where Bill managed the Global
Banking and Real Estate businesses. Bill founded, grew and led Macquarie Real
Estate Group to a point where it managed over $23 billion worth of investments
around the world.
Bill is Chairman of Moss Capital and Chairman and Founder of The FSHD Global
Research Foundation.
Bill is a commentator on the Australian finance and banking sectors, the global
economy and the ongoing need for Australia to do more to advance the interests of
the country’s disabled and disadvantaged.
In 2015, Bill was awarded one of Australia’s highest honours, Office of the Order of
Australia (AO), for services to the banking, charity, and finance sectors.
Former listed directorships in the last three years:
Energy Action Limited – Non Executive Director (Resigned 30 June 2012)
Exalt Resources Limited – Non Executive Director (Resigned 2 September
2013)
Interest in stapled securities: 4,620,051
Qualifications: B.Ec
7. Directors’ relevant interests
Paul Bedbrook
Glenn Willis
Nigel Ampherlaw
William (Bill) Moss
Stapled securities
At 1 July 2015
254,847
1,200,002
159,694
4,620,051
Net
Movement
0
234,608
0
0
Securities at the
date of this report
254,847
1,434,610 (1)
159,694
4,620,051
Note 1: Glenn Willis has an entitlement to an additional 4,400,000 securities under equity based executive
incentive plans.
Other than as disclosed in the Annual Financial Report, no contracts exist where a director is entitled
to a benefit.
8. Meetings of Directors
The attendance at meetings of Directors of the Responsible Entity and the Company during the
year is set out in the following table:
Elanor Board
(Responsible Entity &
the Company)
Attended
13
13
13
13
Held
13
13
13
13
Audit, Risk &
Compliance
Committee
Held Attended
6
6
6
6
6
6
6
6
Remuneration and
Nominations
Committee
Held Attended
5
5
5
5
5
5
5
5
Paul Bedbrook
Glenn Willis
Nigel Ampherlaw
William (Bill) Moss
9. Remuneration Report (Audited)
The remuneration report for the year ended 30 June 2016 outlines the remuneration arrangements,
philosophy and framework of the Group in accordance with the requirements of the Corporations Act
2001 (Cth) and its regulations.
The remuneration report is set out under the following main headings:
17
a) Remuneration Policy and Approach
b) Key Management Personnel
c) Executive Remuneration Arrangements
d) Executive Remuneration Outcomes
e) Non-Executive Director Remuneration Arrangements and Outcomes
f) Additional Disclosures Relating to Long Term Incentive Plans and Securities
g) Key Management Personnel Equity Holdings
h) Loans to Key Management Personnel
i) Other Transactions and Balances with Key Management Personnel and their Related Parties
The information provided in the remuneration report has been audited as required by section 308 (3C)
of the Corporations Act 2001 (Cth).
a) Remuneration Policy and Approach
The Elanor Investors Group aims to attract, retain and motivate highly skilled people and therefore
ensures its remuneration is competitive with prevailing employment market conditions and also
provides sufficient motivation by ensuring that remuneration is aligned to the Group’s results.
The Group’s remuneration framework seeks to align executive reward with the achievement of
strategic objectives and in particular, the creation of sustainable value and earnings growth for
investors. In addition, the Board seeks to have reference to market best practice to ensure that
executive remuneration remains competitive, fair and reasonable.
The Group has a formally constituted Remuneration and Nomination Committee which comprises
three Non-Executive Director (NED) members, Mr William Moss AO (Chair), Mr Paul Bedbrook and
Mr Nigel Ampherlaw. The Remuneration and Nomination Committee meets at least annually for the
purposes of reviewing and making recommendations to the Elanor Investors Group Board on the level
of remuneration of the senior executives and the Directors.
Specifically, the Board approves the remuneration arrangements of the Managing Director and other
executives and all aggregate and individual awards made under the short term (STI) and long-term
incentive (LTI) plans, following recommendations from the Remuneration and Nomination Committee.
The Board also sets the aggregate remuneration of NED's, which is then subject to securityholder
approval.
When the Remuneration and Nomination Committee meets, the Managing Director is not present
during any discussions related to his own remuneration arrangements.
18
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
8. Meetings of Directors
The attendance at meetings of Directors of the Responsible Entity and the Company during the
year is set out in the following table:
23
Directors’ Report
continued
Paul Bedbrook
Glenn Willis
Nigel Ampherlaw
William (Bill) Moss
Elanor Board
(Responsible Entity &
the Company)
Attended
13
13
13
13
Held
13
13
13
13
Audit, Risk &
Compliance
Committee
Held Attended
6
6
6
6
6
6
6
6
Remuneration and
Nominations
Committee
Held Attended
5
5
5
5
5
5
5
5
9. Remuneration Report (Audited)
The remuneration report for the year ended 30 June 2016 outlines the remuneration arrangements,
philosophy and framework of the Group in accordance with the requirements of the Corporations Act
2001 (Cth) and its regulations.
The remuneration report is set out under the following main headings:
a) Remuneration Policy and Approach
b) Key Management Personnel
c) Executive Remuneration Arrangements
d) Executive Remuneration Outcomes
e) Non-Executive Director Remuneration Arrangements and Outcomes
f) Additional Disclosures Relating to Long Term Incentive Plans and Securities
g) Key Management Personnel Equity Holdings
h) Loans to Key Management Personnel
i) Other Transactions and Balances with Key Management Personnel and their Related Parties
The information provided in the remuneration report has been audited as required by section 308 (3C)
of the Corporations Act 2001 (Cth).
a) Remuneration Policy and Approach
The Elanor Investors Group aims to attract, retain and motivate highly skilled people and therefore
ensures its remuneration is competitive with prevailing employment market conditions and also
provides sufficient motivation by ensuring that remuneration is aligned to the Group’s results.
The Group’s remuneration framework seeks to align executive reward with the achievement of
strategic objectives and in particular, the creation of sustainable value and earnings growth for
investors. In addition, the Board seeks to have reference to market best practice to ensure that
executive remuneration remains competitive, fair and reasonable.
The Group has a formally constituted Remuneration and Nomination Committee which comprises
three Non-Executive Director (NED) members, Mr William Moss AO (Chair), Mr Paul Bedbrook and
Mr Nigel Ampherlaw. The Remuneration and Nomination Committee meets at least annually for the
purposes of reviewing and making recommendations to the Elanor Investors Group Board on the level
of remuneration of the senior executives and the Directors.
Specifically, the Board approves the remuneration arrangements of the Managing Director and other
executives and all aggregate and individual awards made under the short term (STI) and long-term
incentive (LTI) plans, following recommendations from the Remuneration and Nomination Committee.
The Board also sets the aggregate remuneration of NED's, which is then subject to securityholder
approval.
When the Remuneration and Nomination Committee meets, the Managing Director is not present
during any discussions related to his own remuneration arrangements.
18
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
24
Directors’ Report
continued
9. Remuneration Report (Audited) (continued)
Remuneration Policy and Approach (continued)
The Remuneration and Nomination Committee endeavours to ensure that the remuneration outcomes
strike an appropriate balance between the interests of the Group’s Securityholders, and rewarding,
retaining and motivating the Group's executives and the Directors.
Further information on the Remuneration and Nomination Committee’s role and responsibilities can
be viewed at www.elanorinvestors.com
b) Key Management Personnel
The remuneration report details the remuneration arrangements for Key Management Personnel
(KMP), who are defined as those persons having authority and responsibility for planning, directing
and controlling the major activities of the Group, directly or indirectly, including the directors (whether
executive or otherwise). The KMP of the Elanor Investors Group for the year ended 30 June 2016
were:
Executive
Mr Glenn Willis
Mr Paul Siviour
Ms Marianne Ossovani
Mr Symon Simmons
Position
Managing Director and Chief Executive Officer
Chief Operating Officer
Chief Investment Officer and Head of Hotels, Tourism and Leisure
Chief Financial Officer and Company Secretary
Non Executive
Mr Paul Bedbrook
Mr Nigel Ampherlaw
Mr William (Bill) Moss AO Non-Executive Director
Position
Independent Chairman and Non-Executive Director
Independent Non-Executive Director
c) Executive Remuneration Arrangements
The Group's executive remuneration framework has three components:
(cid:120)
(cid:120)
(cid:120)
Base pay, including superannuation;
Short term incentives; and
Long term incentives.
Remuneration levels are considered annually through an assessment of each executive based on the
individual's performance and achievements during the financial year and taking into account the
overall performance of the Elanor Investors Group and prevailing remuneration rates of executives in
similar positions.
Remuneration Structure
-
Base pay, including superannuation
Base pay is determined by reference to appropriate benchmark information, taking into account an
individual's responsibilities, performance, qualifications and experience. There are no guaranteed
base pay increases in any executive's contracts.
-
Short term incentive
The Group has implemented an STI scheme (the STI Scheme), based on an annual profit share,
which is available to all staff. The STI Scheme is based on a profit share pool, to be calculated each
year based on the Group's financial performance for the relevant year.
9. Remuneration Report (Audited) (continued)
Remuneration Structure (continued)
The purpose of the STI Scheme is to provide an annual bonus arrangement that incentivises and
rewards management for achieving annual pre-tax ROE for Securityholders in excess of 10% per
annum. The profit share pool is based on 20% of ROE above 10%, 22.5% of the ROE above 15%,
25% of the ROE above 17.5% and 30% of the ROE above 20%. The STI Scheme provides that 50%
of any awards to individuals from the profit share pool be delivered in deferred securities, which vest
two years after award, provided that the employee remains with the Group and maintains minimum
performance standards.
The Elanor Investors Group Board monitors the appropriateness of the profit share scheme and any
distribution of the profit share pool will be at the Board's discretion, taking into consideration the
forecast and actual financial performance and position of the Group.
-
Long term incentive
The Group has implemented an LTI scheme (the LTI Scheme), based on an executive loan security
plan and an executive options plan.
Under the executive loan security plan, awards (comprising the loan of funds to eligible Elanor
employees to acquire Securities which are subject to vesting conditions) have been issued to certain
employees. Awards totalling 6.4 million Securities have been made.
The limited recourse loan provided by the Group under the loan security plan carries interest of an
amount equal to any cash dividend or distribution but not including any dividend or distribution of
capital, or an abnormal distribution.
In addition to the loan security plan, the Group has implemented an executive option plan comprising
rights to acquire Securities at a specified exercise price, subject to the achievement of vesting
conditions, which may be offered to certain eligible employees (including the Chief Executive Officer,
direct reports to the Chief Executive Officer and other selected key executives) as determined by the
Board. Options have been issued to the Chief Executive Officer only, over 1.6 million Securities.
The purpose of the LTI Scheme is to assist in attracting, motivating and retaining key management
and employees. The LTI Scheme operates by providing key management and employees with the
opportunity to participate in the future performance of Group Securities. The vesting conditions for the
LTI plans and related awards include both a service based hurdle and an absolute total securityholder
return (TSR) performance hurdle. The service based hurdle is 3 years in the case of both plans. The
TSR is 10% per annum in the case of the loan security plan and 15% per annum in the case of the
option plan. The option plan has an exercise price of $1.80 per security (44% premium to the $1.25
offer price at the time of the IPO).
TSR was selected as the LTI performance measure to ensure an alignment between the
securityholder return and reward for executives.
19
20
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Directors’ Report
continued
25
9. Remuneration Report (Audited) (continued)
Remuneration Structure (continued)
The purpose of the STI Scheme is to provide an annual bonus arrangement that incentivises and
rewards management for achieving annual pre-tax ROE for Securityholders in excess of 10% per
annum. The profit share pool is based on 20% of ROE above 10%, 22.5% of the ROE above 15%,
25% of the ROE above 17.5% and 30% of the ROE above 20%. The STI Scheme provides that 50%
of any awards to individuals from the profit share pool be delivered in deferred securities, which vest
two years after award, provided that the employee remains with the Group and maintains minimum
performance standards.
The Elanor Investors Group Board monitors the appropriateness of the profit share scheme and any
distribution of the profit share pool will be at the Board's discretion, taking into consideration the
forecast and actual financial performance and position of the Group.
-
Long term incentive
The Group has implemented an LTI scheme (the LTI Scheme), based on an executive loan security
plan and an executive options plan.
Under the executive loan security plan, awards (comprising the loan of funds to eligible Elanor
employees to acquire Securities which are subject to vesting conditions) have been issued to certain
employees. Awards totalling 6.4 million Securities have been made.
The limited recourse loan provided by the Group under the loan security plan carries interest of an
amount equal to any cash dividend or distribution but not including any dividend or distribution of
capital, or an abnormal distribution.
In addition to the loan security plan, the Group has implemented an executive option plan comprising
rights to acquire Securities at a specified exercise price, subject to the achievement of vesting
conditions, which may be offered to certain eligible employees (including the Chief Executive Officer,
direct reports to the Chief Executive Officer and other selected key executives) as determined by the
Board. Options have been issued to the Chief Executive Officer only, over 1.6 million Securities.
The purpose of the LTI Scheme is to assist in attracting, motivating and retaining key management
and employees. The LTI Scheme operates by providing key management and employees with the
opportunity to participate in the future performance of Group Securities. The vesting conditions for the
LTI plans and related awards include both a service based hurdle and an absolute total securityholder
return (TSR) performance hurdle. The service based hurdle is 3 years in the case of both plans. The
TSR is 10% per annum in the case of the loan security plan and 15% per annum in the case of the
option plan. The option plan has an exercise price of $1.80 per security (44% premium to the $1.25
offer price at the time of the IPO).
TSR was selected as the LTI performance measure to ensure an alignment between the
securityholder return and reward for executives.
20
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
26
Directors’ Report
continued
9. Remuneration Report (Audited) (continued)
d) Executive Remuneration Outcomes
The table below sets out summary information about the Group's earnings and movements in
securityholder wealth for the year ended 30 June 2016:
Revenue
Net profit before tax
Net profit after tax
Core earnings
Security price at start of year
Security price at end of year
Interim distribution
Final distribution
Total distributions
Basic earnings per security
Diluted earnings per security
30 June 2016
($’000)
$76,425
$5,070
$4,143
$11,560
$1.70
$1.88
7.31 cents
7.34 cents
14.65 cents
5.86 cents
5.37 cents
30 June 2015
($’000)
$58,180
$3,297
$2,720
$9,344
$1.25
$1.70
5.20 cents
6.70 cents
11.90 cents
4.10 cents
3.74 cents
Prospectus
($’000)
$56,743
$1,064
$664
$7,864
$1.25 1
11.70 cents
1.09 cents
0.99 cents
Note 1: The Group listed on 11 July 2014. This was the issue price at listing.
The financial performance measure driving STI payment outcomes is pre-tax return on equity (ROE).
Reported earnings before tax for the year were $5.1 million or $4.1 million after tax. This reflects a
5.86 cents basic earnings per security based on average equity employed for the period.
For the year ended 30 June 2016 the Group achieved Core Earnings of $11.6 million, a 24% increase
on 2015. Total distributions per security in respect of the period were 14.65 cents, reflecting a 23.1%
increase on 2015.
21
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
27
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F
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
28
Directors’ Report
continued
9. Remuneration Report (Audited) (continued)
Executive Remuneration Outcomes (continued)
9. Remuneration Report (Audited) (continued)
Executive Remuneration Outcomes (continued)
Table 2: Remuneration components as a proportion of total remuneration on an annualised basis
Benefits
Executive
Officers
G. Willis
P. Siviour
M. Ossovani
S. Simmons
2016
2015
2016
2015
2016
2015
2016
2015
Fixed
remuneration (%)
Remuneration
linked to
performance (%)
46.66
74.17
49.79
89.91
50.02
88.48
52.57
95.95
53.34
25.83
50.21
10.09
49.98
11.52
47.43
4.05
Total
(%)
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
No key management personnel appointed during the period received a payment as part of his or her
consideration for agreeing to hold the position.
Remuneration and other terms of employment for the key management personnel are formalised in
employment contracts. The key provisions of the employment contracts for key management
personal are set out below.
The Remuneration and Nomination Committee retained a leading professional services firm to
undertake an independent review of executive remuneration in June 2016, and resolved to increase
the remuneration to the amounts shown in the table below, with effect from 1 July 2016. No
remuneration recommendations as defined under Division 1, Part 1.2.98 (1) of the Corporations Act
2001, were made by the professional services firm.
Table 3: Employment contracts of key management personnel
Executive
Position
G. Willis
P. Siviour
M. Ossovani
S. Simmons
Managing
Director and
Chief Executive
Officer
Chief Operating
Officer
Chief Investment
Officer and Head
of Hotels, Tourism
and Leisure
Chief Financial
Officer and
Company
Secretary
Term
No fixed term
No fixed term
No fixed term
No fixed term
Salary
(including
Superannuation)
Incentive
remuneration
$500,000
$425,000
$425,000
$425,000
Eligible for an
award of short
term and long
term incentive
remuneration (if
any) as
described above
Eligible for an
award of short
term and long
term incentive
remuneration (if
any) as
described above
Eligible for an
award of short
term and long
term incentive
remuneration (if
any) as described
above
Eligible for an
award of short
term and long
term incentive
remuneration (if
any) as described
above
Entitled to
participate in
Entitled to
participate in
Entitled to
participate in
Entitled to
participate in
Elanor Investors
Elanor Investors
Elanor Investors
Elanor Investors
Group benefit
plans that are
Group benefit
plans that are
Group benefit
plans that are
made available
made available
made available
Group benefit
plans that are
made available
Termination
Employment
shall continue
with the Group
unless either
party gives 12
months’ notice
in writing.
the time of
Termination.
Employment
shall continue
with the Group
unless either
party gives 9
Employment shall
Employment shall
continue with the
continue with the
Group unless
Group unless
either party gives
either party gives
4 weeks’ notice in
4 weeks’ notice in
months’ notice
writing.
in writing.
writing.
N/A
Restraint
12 months from
N/A
N/A
e) Non-Executive Director Remuneration Arrangements and Outcomes
The Elanor Board determines the remuneration structure for NED's based on recommendations from
the Remuneration and Nomination Committee. The NED's individual fees are annually reviewed by
the Remuneration and Nomination Committee taking into consideration the level of fees paid to NED's
by companies of similar size and stature. The Remuneration and Nomination Committee retained a
leading professional services firm to undertake a review of the remuneration of NED’s in June 2016,
and resolved to increase the amount of fees paid by 33%, with effect from 1 July 2016. No
remuneration recommendations as defined under Division 1, Part 1.2.98 (1) of the Corporations Act
2001, were made by the professional services firm. The maximum aggregate amount of fees that can
be paid to NEDs is subject to approval by securityholders at the Annual General Meeting (currently
$500,000).
The NED's receive a fixed remuneration amount, in respect of their services provided to the
Responsible Entity and Elanor Investors Limited. They do not receive any performance based
remuneration or any retirement benefits other than statutory superannuation.
Table 4: Remuneration of Non-Executive Directors
Non-Executive
Directors
P. Bedbrook
N. Ampherlaw
W. Moss
Salary (including
Superannuation)
$
Committee
Fees
$
Total (including
Superannuation)
$
2016
2015
2016
2015
2016
2015
100,000
100,000
55,000
55,000
55,000
55,000
10,000
10,000
10,000
10,000
10,000
10,000
110,000
110,000
65,000
65,000
65,000
65,000
Remuneration and other terms of appointment of the NED's are formalised in contracts.
23
24
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Directors’ Report
continued
29
9. Remuneration Report (Audited) (continued)
Executive Remuneration Outcomes (continued)
Benefits
Termination
Restraint
Entitled to
participate in
Elanor Investors
Group benefit
plans that are
made available
Entitled to
participate in
Elanor Investors
Group benefit
plans that are
made available
Entitled to
participate in
Elanor Investors
Group benefit
plans that are
made available
Entitled to
participate in
Elanor Investors
Group benefit
plans that are
made available
Employment
shall continue
with the Group
unless either
party gives 12
months’ notice
in writing.
12 months from
the time of
Termination.
Employment
shall continue
with the Group
unless either
party gives 9
months’ notice
in writing.
N/A
Employment shall
continue with the
Group unless
either party gives
4 weeks’ notice in
writing.
Employment shall
continue with the
Group unless
either party gives
4 weeks’ notice in
writing.
N/A
N/A
e) Non-Executive Director Remuneration Arrangements and Outcomes
The Elanor Board determines the remuneration structure for NED's based on recommendations from
the Remuneration and Nomination Committee. The NED's individual fees are annually reviewed by
the Remuneration and Nomination Committee taking into consideration the level of fees paid to NED's
by companies of similar size and stature. The Remuneration and Nomination Committee retained a
leading professional services firm to undertake a review of the remuneration of NED’s in June 2016,
and resolved to increase the amount of fees paid by 33%, with effect from 1 July 2016. No
remuneration recommendations as defined under Division 1, Part 1.2.98 (1) of the Corporations Act
2001, were made by the professional services firm. The maximum aggregate amount of fees that can
be paid to NEDs is subject to approval by securityholders at the Annual General Meeting (currently
$500,000).
The NED's receive a fixed remuneration amount, in respect of their services provided to the
Responsible Entity and Elanor Investors Limited. They do not receive any performance based
remuneration or any retirement benefits other than statutory superannuation.
Table 4: Remuneration of Non-Executive Directors
Non-Executive
Directors
P. Bedbrook
N. Ampherlaw
W. Moss
Salary (including
Superannuation)
$
Committee
Fees
$
Total (including
Superannuation)
$
2016
2015
2016
2015
2016
2015
100,000
100,000
55,000
55,000
55,000
55,000
10,000
10,000
10,000
10,000
10,000
10,000
110,000
110,000
65,000
65,000
65,000
65,000
Remuneration and other terms of appointment of the NED's are formalised in contracts.
24
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
30
Directors’ Report
continued
9. Remuneration Report (Audited) (continued)
9. Remuneration Report (Audited) (continued)
Non-Executive Director Remuneration Arrangements and Outcomes (continued)
Additional Disclosures Relating to Long Term Incentive Plans and Securities (continued)
The NED's are employed on employment contracts with no fixed term. The NED's employment is
subject to the Constitutions of the Group, the Corporations Act, and the 3 year cycle of the rotation
and election of Directors.
f)
Additional Disclosures Relating to Long Term Incentive Plans and Securities
Details of Long Term Incentive Plan payments granted as Loan Security compensation to key
management personnel during the current financial year:
During the financial year
Year
2016
Number
Granted
0
Number
Vested
0
% of
Grant
Vested
0%
Number
Forfeited
0
% of
Grant
Forfeited
N/A
Name
G. Willis
P. Siviour
M. Ossovani
S. Simmons
Award
Type
Loan
Securities
2015
2,800,000
Loan
Securities
2016
0
2015
1,100,000
Loan
Securities
2016
0
2015
1,000,000
Loan
Securities
2016
2015
0
280,000
0
0
0
0
0
0
0
0%
0%
0%
0%
0%
0%
0%
0
0
0
0
0
0
0
N/A
N/A
N/A
N/A
N/A
N/A
N/A
% of the actual
compensation
for the year
consisting of
awards
0%
22%
0%
12%
0%
12%
0%
4%
The Loan Security plan has been accounted for as 'in-substance' options. The fair value at grant date
of each Loan Security option was $0.10.
Details of Long Term Incentive Plan payments granted as Option compensation to key management
personnel during the current financial year:
During the financial year
Name
G. Willis
Award
Type
Options
Year
2016
Number
Granted
0
Number
Vested
0
% of
Grant
Vested
0%
Number
Forfeited
0
% of
Grant
Forfeited
N/A
% of the
actual
compensation
for the year
consisting of
awards
0%
2015
1,600,000
0
0%
0
N/A
3%
25
The following table summarises the value of options granted and exercised during the financial year, in
relation to options granted to key management personnel as part of the remuneration:
Name
G. Willis
Year
2016
2015
Value of options
granted at the grant
Value of options
exercised at the
exercise date2
date1
$
0
52,000
$
0
0
Note 1: The value of options granted during the financial year is calculated as at the grant date using a binomial
pricing model. This grant date value is allocated to remuneration of key management personnel on a straight-line
basis over the period from grant date to vesting date.
Note 2: The value of options exercised during the financial year is calculated as at the exercise date using a
binomial pricing model. No options were exercised in the period to 30 June 2016.
g) Key Management Personnel Equity Holdings
Changes to the interests of key management personnel in the Group's Securities are set out below:
Elanor Investors Group – Stapled Securities
Acquired1
Disposed
30 June 2016
Opening
Balance
1 July 2015
254,847
159,694
4,620,051
Name
Non-Executive
Directors
P. Bedbrook
N. Ampherlaw
W. Moss AO
Executive
Officers
G. Willis
P. Siviour
M. Ossovani
S. Simmons
1,200,002
300,000
0
36,232
234,608
179,254
150,608
150,608
Note 1: The number of stapled securities acquired during the year includes issues of securities under the FY2016
STI Bonus Plan, and securities acquired on market.
Options over Elanor Investors Group – Stapled Securities
Acquired
under the
Group's
incentive
Opening
Balance
1 July
2015
Name
plans
Exercised
2016
Closing
exercisable
exercisable
the year
G. Willis
1,600,000
0
0
1,600,000
0
0
0
Closing
Balance
30 June
Balance
vested
Vested
but not
Vested
and
Options
vested
during
All options issued to key management personnel were made in accordance with the provisions of the
employee share option plan.
Closing
Balance
254,847
159,694
4,620,051
1,434,610
479,254
150,608
186,840
0
0
0
0
0
0
0
at
0
0
0
0
26
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Directors’ Report
continued
31
9. Remuneration Report (Audited) (continued)
Additional Disclosures Relating to Long Term Incentive Plans and Securities (continued)
The following table summarises the value of options granted and exercised during the financial year, in
relation to options granted to key management personnel as part of the remuneration:
Name
G. Willis
Value of options
granted at the grant
date1
$
0
Value of options
exercised at the
exercise date2
$
0
52,000
0
Year
2016
2015
Note 1: The value of options granted during the financial year is calculated as at the grant date using a binomial
pricing model. This grant date value is allocated to remuneration of key management personnel on a straight-line
basis over the period from grant date to vesting date.
Note 2: The value of options exercised during the financial year is calculated as at the exercise date using a
binomial pricing model. No options were exercised in the period to 30 June 2016.
g) Key Management Personnel Equity Holdings
Changes to the interests of key management personnel in the Group's Securities are set out below:
Elanor Investors Group – Stapled Securities
Acquired1
Disposed
Closing
Balance
30 June 2016
Name
Non-Executive
Directors
P. Bedbrook
N. Ampherlaw
W. Moss AO
Executive
Officers
G. Willis
P. Siviour
M. Ossovani
S. Simmons
Opening
Balance
1 July 2015
254,847
159,694
4,620,051
0
0
0
1,200,002
300,000
0
36,232
234,608
179,254
150,608
150,608
0
0
0
0
0
0
0
254,847
159,694
4,620,051
1,434,610
479,254
150,608
186,840
Note 1: The number of stapled securities acquired during the year includes issues of securities under the FY2016
STI Bonus Plan, and securities acquired on market.
Options over Elanor Investors Group – Stapled Securities
Opening
Balance
1 July
2015
Acquired
under the
Group's
incentive
plans
Name
Closing
Balance
30 June
2016
Balance
vested
at
Closing
Vested
but not
exercisable
Vested
and
exercisable
Options
vested
during
the year
Exercised
G. Willis
1,600,000
0
0
1,600,000
0
0
0
0
All options issued to key management personnel were made in accordance with the provisions of the
employee share option plan.
26
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
32
Directors’ Report
continued
9. Remuneration Report (Audited) (continued)
Key management personnel equity holdings (continued)
During the financial year, no options were exercised by key management personnel.
h) Loans to Key Management Personnel
No loans have been provided to Key Management Personnel of the Group.
i) Other Transactions and Balances with Key Management Personnel and their Related
Parties
There were no transactions with Key Management Personnel and their Related Parties during the
financial year, other than as disclosed elsewhere in the Annual Financial Report.
10. Company Secretary
Symon Simmons held the position of Company Secretary of the Responsible Entity and the
Company during the period. Symon is the Chief Financial Officer of the Group, and has extensive
experience as a company secretary, is a Justice of the Peace in NSW and is a Responsible
Manager on the Australian Financial Services Licence held by the Responsible Entity.
11.
Indemnification and insurance of officers and auditors
During the financial year, the Group paid a premium in respect of a contract insuring the Directors
of the Group (as named above), the company secretary, and all executive officers of the Company
and of any related body corporate against a liability incurred in their capacity as Directors and
officers of the Company to the extent permitted by the Corporations Act 2001 (Cth). The contract of
insurance prohibits disclosure of the nature of the liability and the amount of the premium.
The Company has not otherwise, during or since the end of the financial year, except to the extent
permitted by law, indemnified or agreed to indemnify an officer of the Company or of any related
body corporate against a liability incurred in their capacity as an officer.
The auditor of the Group is not indemnified out of the assets of the Group.
12. Environmental regulation
To the best of their knowledge and belief after making due enquiry, 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.
13. Significant changes in state of affairs
There was no significant change in the state of affairs of the Group during the year, other than as
disclosed elsewhere in the Annual Financial Report.
14. Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the
Corporations Act 2001 (Cth) is included on the page following the Directors' Report.
15. Non audit services
Details of amounts paid or payable to the auditor for non-audit services provided during the year by
the auditor are outlined in Note 7 to the financial statements.
The Directors are satisfied that the provision of non-audit services, during the year, by the auditor
(or by another person or firm on the auditor’s behalf) is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001 (Cth).
The Directors are of the opinion that the services as disclosed in Note 7 to the financial statements
do not compromise the external auditor’s independence, based on advice received from the Audit
Risk and Compliance Committee, for the following reasons:
(cid:120)
(cid:120)
all non-audit services have been reviewed and approved to ensure that they do not impact
the integrity 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’ issued by the
Accounting Professional & Ethical Standards Board, including reviewing or auditing the
auditor’s own work, acting in a management or decision-making capacity for the Group,
acting as advocate for the Group or jointly sharing economic risks and rewards.
16. Likely developments and expected results of operations
The financial statements have been prepared on the basis of the current known market conditions.
The extent of any potential deterioration in either the capital or physical property markets on the future
results of the Group is unknown. Such results could include property market valuations, the ability of
borrowers, including the Group, to raise or refinance debt, and the cost of such debt and the ability to
raise equity.
results of the Group.
At the date of this report and to the best of the Directors’ knowledge and belief, there are no other
anticipated changes in the operations of the Group which would have a material impact on the future
17. Fees paid to and interests held in the Trust by the Manager or its associates
The interest in the Trust held by the Manager or its related entities as at 30 June 2016 and fees paid
to and expenses reimbursed by its related entities during the financial year are disclosed in Note 30 to
the consolidated financial statements.
18. Events occurring after reporting date
On 4 August 2016 the Group completed a capital raise through an Institutional Placement
(“Placement”), raising $30 million (before costs). The proceeds from the Placement will be used to
establish and cornerstone a new commercial property fund, the Elanor Commercial Property Fund,
and cornerstone a new retail Real Estate Investment Trust which Elanor is preparing to list on the
Australian Securities Exchange. The Group issued 16.2 million stapled securities at an issue price of
$1.85. The securities issued will rank pari-passu with existing securities on issue, but will not
participate in the Group's final distribution for the six months ended 30 June 2016.
The Group has also completed a Security Purchase Plan (closed 22 August 2016), raising an
additional $3 million. The Group will issue 1.6 million stapled securities on 26 August 2016, at an
issue price of $1.85. The securities issued will rank pari-passu with existing securities on issue, but
will not participate in the Group's final distribution for the six months ended 30 June 2016.
27
28
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Directors’ Report
continued
33
15. Non audit services
Details of amounts paid or payable to the auditor for non-audit services provided during the year by
the auditor are outlined in Note 7 to the financial statements.
The Directors are satisfied that the provision of non-audit services, during the year, by the auditor
(or by another person or firm on the auditor’s behalf) is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001 (Cth).
The Directors are of the opinion that the services as disclosed in Note 7 to the financial statements
do not compromise the external auditor’s independence, based on advice received from the Audit
Risk and Compliance Committee, for the following reasons:
(cid:120)
(cid:120)
all non-audit services have been reviewed and approved to ensure that they do not impact
the integrity 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’ issued by the
Accounting Professional & Ethical Standards Board, including reviewing or auditing the
auditor’s own work, acting in a management or decision-making capacity for the Group,
acting as advocate for the Group or jointly sharing economic risks and rewards.
16. Likely developments and expected results of operations
The financial statements have been prepared on the basis of the current known market conditions.
The extent of any potential deterioration in either the capital or physical property markets on the future
results of the Group is unknown. Such results could include property market valuations, the ability of
borrowers, including the Group, to raise or refinance debt, and the cost of such debt and the ability to
raise equity.
At the date of this report and to the best of the Directors’ knowledge and belief, there are no other
anticipated changes in the operations of the Group which would have a material impact on the future
results of the Group.
17. Fees paid to and interests held in the Trust by the Manager or its associates
The interest in the Trust held by the Manager or its related entities as at 30 June 2016 and fees paid
to and expenses reimbursed by its related entities during the financial year are disclosed in Note 30 to
the consolidated financial statements.
18. Events occurring after reporting date
On 4 August 2016 the Group completed a capital raise through an Institutional Placement
(“Placement”), raising $30 million (before costs). The proceeds from the Placement will be used to
establish and cornerstone a new commercial property fund, the Elanor Commercial Property Fund,
and cornerstone a new retail Real Estate Investment Trust which Elanor is preparing to list on the
Australian Securities Exchange. The Group issued 16.2 million stapled securities at an issue price of
$1.85. The securities issued will rank pari-passu with existing securities on issue, but will not
participate in the Group's final distribution for the six months ended 30 June 2016.
The Group has also completed a Security Purchase Plan (closed 22 August 2016), raising an
additional $3 million. The Group will issue 1.6 million stapled securities on 26 August 2016, at an
issue price of $1.85. The securities issued will rank pari-passu with existing securities on issue, but
will not participate in the Group's final distribution for the six months ended 30 June 2016.
28
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
34
Directors’ Report
continued
19. Proceedings on behalf of the Group
No proceedings have been brought, or intervened in, on behalf of the Group.
20. Rounding of amounts to the nearest thousand dollars
The Group and the EIF Group are registered entities of a kind referred to in Class Order 98/100 (as
amended) issued by the Australian Securities and Investments Commission relating to the
"rounding off" of amounts in the Directors' report and financial report. Amounts in the Directors'
report and financial report have been rounded to the nearest thousand dollars in accordance with
that Class Order, unless otherwise indicated.
This report is made in accordance with a resolution of the Boards of Directors of Elanor Funds
Management Limited and Elanor Investors Limited.
Signed in accordance with a resolution of the Directors pursuant to section 298(2) of the
Corporations Act 2001 (Cth).
Paul Bedbrook
Chairman
Glenn Willis
CEO and Managing Director
Sydney, 23 August 2016
29
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Auditors Independence Declaration
35
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
The Directors
Elanor Investors Limited and
Elanor Funds Management Limited
(as responsible entity for Elanor Investment Fund)
Level 38, 259 George Street
Sydney NSW 2000
23 August 2016
Dear Directors
Elanor Investors Limited and Elanor Investment Fund
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide
the following declaration of independence to the directors of Elanor Investors Limited and
Elanor Funds Management Limited in its capacity as responsible entity for Elanor
Investment Fund.
As lead audit partner for the audit of the financial statements of Elanor Investors Limited
and Elanor Investment Fund for the year ended 30 June 2016, I declare that to the best
of my knowledge and belief, there have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit .
Yours sincerely
DELOITTE TOUCHE TOHMATSU
AG Collinson
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
30
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
36
ELANOR INVESTORS GROUP
Consolidated Statements of Profit or Loss
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
ELANOR INVESTORS GROUP
FOR THE YEAR ENDED 30 JUNE 2016
for the year ended 30 June 2016
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
FOR THE YEAR ENDED 30 JUNE 2016
Income
Revenue from operating activities
Interest income
Rental income
Income
Share of profit / (loss) from equity accounted investments
Revenue from operating activities
Fair value gain on revaluation of investment properties
Interest income
Other income
Rental income
Total income
Share of profit / (loss) from equity accounted investments
Fair value gain on revaluation of investment properties
Expenses
Other income
Changes in inventories of finished goods
Salary and employee benefits
Total income
Property expenses
Expenses
Operator management costs
Changes in inventories of finished goods
Borrowing costs
Salary and employee benefits
Depreciation
Property expenses
Amortisation
Operator management costs
Marketing and promotion
Borrowing costs
Repairs, maintenance and technology
Depreciation
Transaction, establishment costs and fair value
Amortisation
decrement
Marketing and promotion
Other expenses
Repairs, maintenance and technology
Total expenses
Transaction, establishment costs and fair value
decrement
Net profit / (loss) before income tax expense
Other expenses
Income tax expense / (benefit)
Total expenses
Net profit / (loss) for the year
Net profit / (loss) before income tax expense
Attributable to security holders of:
Income tax expense / (benefit)
- Parent Entity
Net profit / (loss) for the year
- Non-controlling interest EIF
Attributable to security holders of:
Net profit / (loss) attributable to ENN security
holders
- Parent Entity
Attributable to security holders of:
- Non-controlling interest EIF
Net profit / (loss) attributable to ENN security
- Non-controlling interest EHAF
holders
Net profit / (loss) for the year
Attributable to security holders of:
Basic earnings / (loss) per stapled security (cents)
- Non-controlling interest EHAF
Diluted earnings / (loss) per stapled security (cents)
Net profit / (loss) for the year
Basic earnings / (loss) per ENN stapled security
Basic earnings / (loss) per stapled security (cents)
(cents)
Diluted earnings / (loss) per stapled security (cents)
Diluted earnings / (loss) per ENN stapled security
(cents)
Basic earnings / (loss) per ENN stapled security
(cents)
Diluted earnings / (loss) per ENN stapled security
(cents)
Note
2
Note
2
14
4
14
4
5
5
3
3
8
8
8
8
8
8
8
8
Consolidated Consolidated
Group
30 June
2015
Consolidated Consolidated
$'000
Group
30 June
55,936
2015
165
$'000
57
93
55,936
-
165
1,929
57
58,180
93
-
1,929
12,959
20,191
58,180
4,486
1,787
12,959
1,259
20,191
2,303
4,486
289
1,787
2,859
1,259
705
2,303
289
4,843
2,859
3,202
705
54,883
Group
30 June
2016
$'000
Group
30 June
68,741
2016
81
$'000
66
611
68,741
-
81
6,926
66
76,425
611
-
6,926
15,259
26,956
76,425
6,290
1,731
15,259
1,571
26,956
3,666
6,290
358
1,731
3,713
1,571
856
3,666
358
3,796
3,713
7,159
856
71,355
3,796
5,070
7,159
927
71,355
4,143
5,070
927
(732)
4,143
5,785
5,053
(732)
5,785
(910)
5,053
4,143
5.86
(910)
5.37
4,143
5.86
7.15
5.37
6.55
7.15
6.55
4,843
3,297
3,202
577
54,883
2,720
3,297
577
(2,637)
2,720
5,357
2,720
(2,637)
5,357
-
2,720
2,720
4.10
-
3.74
2,720
4.10
4.10
3.74
3.74
4.10
3.74
EIF Group
EIF Group
30 June
2016
EIF Group
$'000
30 June
2015
EIF Group
$'000
30 June
-
2016
24
$'000
8,952
611
-
-
24
82
8,952
9,669
611
-
82
-
153
9,669
5
-
-
1,594
153
-
5
158
-
-
1,594
-
-
158
3,494
-
476
-
5,880
3,494
3,789
476
-
5,880
3,789
3,789
-
5,624
3,789
-
5,624
5,624
-
(1,835)
5,624
3,789
(1,835)
3,789
30 June
-
2015
27
$'000
8,132
93
-
9,703
27
-
8,132
17,955
93
9,703
-
-
174
17,955
-
-
-
1,144
174
-
-
113
-
-
1,144
-
-
113
1,297
-
166
-
2,894
1,297
15,061
166
-
2,894
15,061
15,061
15,061
15,061
-
-
15,061
15,061
-
-
15,061
15,061
-
15,061
The above Consolidated Statements of Profit or Loss should be read in conjunction with the accompanying notes
The above Consolidated Statements of Profit or Loss should be read in conjunction with the accompanying notes
31
31
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
ELANOR INVESTORS GROUP
37
Consolidated Statements of Comprehensive Income
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
ELANOR INVESTORS GROUP
FOR THE YEAR ENDED 30 JUNE 2016
for the year ended 30 June 2016
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2016
Note
Note
23
23
23
23
23
23
23
23
Net profit / (loss) for the year
Other comprehensive income
Items that may be reclassified subsequently to profit
and loss
Net profit / (loss) for the year
Gain / (loss) on revaluation of cash flow hedge
Other comprehensive income
Items that may be reclassified subsequently to profit
and loss
Items that may not be reclassified to profit and loss
Share of asset revaluation reserve from equity
Gain / (loss) on revaluation of cash flow hedge
accounted investments
Gain / (loss) on revaluation of property, plant and
Items that may not be reclassified to profit and loss
equipment
Share of asset revaluation reserve from equity
Income tax relating to these items
accounted investments
Gain / (loss) on revaluation of property, plant and
Other comprehensive income / (loss) for the year,
equipment
net of tax
Income tax relating to these items
Total comprehensive income / (loss) for the year,
Other comprehensive income / (loss) for the year,
net of tax
net of tax
Attributable to security holders of:
Total comprehensive income / (loss) for the year,
net of tax
- Parent Entity
- Non-controlling interest
Attributable to security holders of:
Total comprehensive income / (loss) for the year,
net of tax of ENN Security holders
- Parent Entity
- Non-controlling interest
Attributable to security holders of:
Total comprehensive income / (loss) for the year,
- Non-controlling interest EHAF
net of tax of ENN Security holders
Total comprehensive income / (loss) for the year,
Attributable to security holders of:
net of tax
- Non-controlling interest EHAF
Total comprehensive income / (loss) for the year,
net of tax
Consolidated Consolidated
Group
30 June
2015
Consolidated Consolidated
$'000
Group
2,720
30 June
2015
$'000
Group
30 June
2016
$'000
Group
4,143
30 June
2016
$'000
4,143
(613)
(613)
698
2,851
(346)
698
2,851
2,590
(346)
6,733
2,590
6,733
1,474
6,305
7,779
1,474
6,305
(1,046)
7,779
6,733
(1,046)
2,720
(172)
(172)
450
10,805
-
450
10,805
11,083
-
13,803
11,083
13,803
8,168
5,635
13,803
8,168
5,635
-
13,803
13,803
-
EIF Group
30 June
2016
EIF Group
$'000
3,789
30 June
2016
$'000
3,789
(486)
(486)
698
-
-
698
-
212
-
EIF Group
30 June
2015
EIF Group
$'000
15,061
30 June
2015
$'000
15,061
(172)
(172)
450
-
-
450
-
278
-
4,001
212
15,339
278
4,001
6,144
15,339
15,339
-
-
6,144
6,144
15,339
15,339
-
(2,143)
6,144
4,001
(2,143)
-
-
15,339
15,339
-
6,733
13,803
4,001
15,339
The above Consolidated Statements of Comprehensive Income should be read with the accompanying notes
The above Consolidated Statements of Comprehensive Income should be read with the accompanying notes
32
32
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
38
ELANOR INVESTORS GROUP
Consolidated Statements of Financial Position
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION AS AT 30 JUNE 2016
ELANOR INVESTORS GROUP
as at 30 June 2016
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION AS AT 30 JUNE 2016
Group
30 June
2016
$'000
Consolidated Consolidated
Group
30 June
2015
$'000
Consolidated Consolidated
Group
30 June
7,488
2015
3,355
$'000
3,765
439
Group
30 June
8,192
2016
3,201
$'000
5,368
1,024
Note
9
10
Note
15
9
10
15
13
14
15
16
17
13
12
14
15
16
17
12
20
11
21
18
19
20
11
21
21
18
19
11
21
21
18
12
11
21
18
12
Current assets
Cash and cash equivalents
Receivables
Inventories
Other current assets
Current assets
Total current assets
Cash and cash equivalents
Receivables
Non-current assets
Inventories
Property, plant and equipment
Other current assets
Investment properties
Total current assets
Non-current inventories
Equity accounted investments
Non-current assets
Goodwill and intangible assets
Property, plant and equipment
Deferred tax assets
Investment properties
Total non-current assets
Non-current inventories
Equity accounted investments
Total assets
Goodwill and intangible assets
Deferred tax assets
Current liabilities
Payables
Total non-current assets
Derivative financial instruments
Total assets
Interest bearing liabilities
Current provisions
Current liabilities
Other current liabilities
Payables
Income tax payable
Derivative financial instruments
Loan from the Company
Interest bearing liabilities
Total current liabilities
Current provisions
Other current liabilities
Non-current liabilities
Income tax payable
Derivative financial instruments
Loan from the Company
Interest bearing liabilities
Total current liabilities
Non-current provisions
Other non-current liabilities
Non-current liabilities
Deferred tax liabilities
Derivative financial instruments
Total non-current liabilities
Interest bearing liabilities
Non-current provisions
Total liabilities
Other non-current liabilities
Net assets
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
17,785
8,192
3,201
5,368
136,148
1,024
-
17,785
14,092
22,726
7,670
136,148
594
-
181,230
14,092
22,726
199,015
7,670
594
5,342
181,230
114
199,015
528
2,600
1,771
5,342
701
114
-
528
11,056
2,600
1,771
701
728
-
60,698
11,056
679
490
122
728
62,717
60,698
679
73,773
490
125,242
122
62,717
73,773
125,242
15,047
7,488
3,355
3,765
86,048
439
-
15,047
11,781
14,002
7,820
86,048
952
-
120,603
11,781
14,002
135,650
7,820
952
4,250
120,603
86
135,650
8,541
824
1,148
4,250
199
86
-
8,541
15,048
824
1,148
199
86
-
22,178
15,048
901
-
-
86
23,165
22,178
901
38,213
-
-
97,437
23,165
38,213
97,437
EIF Group
EIF Group
30 June
2016
$'000
EIF Group
30 June
2015
$'000
EIF Group
30 June
2,081
2016
6,176
$'000
-
69
8,326
2,081
6,176
-
-
69
106,087
8,326
-
22,726
30 June
3,437
2015
753
$'000
-
-
4,190
3,437
753
-
-
-
72,908
4,190
-
14,002
106,087
128,813
22,726
137,139
-
-
-
-
-
-
397
128,813
114
137,139
-
-
-
397
-
114
5,460
-
5,971
-
-
-
545
5,460
46,896
5,971
-
-
-
545
47,441
46,896
-
53,412
-
83,727
-
47,441
53,412
83,727
72,908
86,910
14,002
91,100
-
-
-
-
-
-
577
86,910
86
91,100
8,541
37
-
577
-
86
4,052
8,541
13,293
37
-
-
86
4,052
19,837
13,293
-
-
-
86
19,923
19,837
33,216
57,884
-
-
-
19,923
33,216
57,884
The above Consolidated Statements of Financial Position should be read in conjunction with the accompanying notes
33
The above Consolidated Statements of Financial Position should be read in conjunction with the accompanying notes
33
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
ELANOR INVESTORS GROUP
39
Consolidated Statements of Financial Position
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION AS AT 30 JUNE 2016
ELANOR INVESTORS GROUP
as at 30 June 2016
Equity
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION AS AT 30 JUNE 2016
Equity Holders of Parent Entity
Contributed equity
Treasury Shares
Equity
Reserves
Equity Holders of Parent Entity
Retained profits / (accumulated losses)
Contributed equity
Parent entity interest
Treasury Shares
22
22
23
24
22
22
23
24
22
22
23
Reserves
Equity Holders of Non Controlling Interest
Retained profits / (accumulated losses)
Contributed equity - Elanor Investment Fund
Parent entity interest
Treasury Shares
Reserves
Equity Holders of Non Controlling Interest
Retained profits / (accumulated losses)
Contributed equity - Elanor Investment Fund
Non-controlling interest
Treasury Shares
Reserves
Equity Holders of Non Controlling Interest EHAF
Retained profits / (accumulated losses)
Contributed equity - EHAF
Non-controlling interest
Reserves
Retained profits / (accumulated losses)
Equity Holders of Non Controlling Interest EHAF
External Non-controlling interest
Contributed equity - EHAF
Reserves
Total equity attributable to stapled security holders:
Retained profits / (accumulated losses)
- Parent Entity
External Non-controlling interest
- Non-controlling Interest - EIF
24
22
22
23
24
Total equity attributable to ENN security holders
Total equity attributable to stapled security holders:
Total equity attributable to stapled security holders:
- Parent Entity
- Non-controlling interest - EHAF
- Non-controlling Interest - EIF
Total equity
Total equity attributable to ENN security holders
Total equity attributable to stapled security holders:
- Non-controlling interest - EHAF
Total equity
42,280
(691)
13,411
(6,968)
42,280
48,032
(691)
13,411
(6,968)
46,209
48,032
(749)
1,088
1,169
46,209
47,717
(749)
1,088
1,169
30,540
47,717
(137)
(910)
29,493
30,540
(137)
(910)
48,032
29,493
47,717
95,749
48,032
29,493
47,717
125,242
95,749
29,493
125,242
41,589
-
10,929
(3,261)
41,589
49,257
-
10,929
(3,261)
45,460
49,257
-
414
2,306
45,460
48,180
-
414
2,306
-
48,180
-
-
-
-
-
-
-
49,257
48,180
97,437
-
49,257
48,180
97,437
97,437
-
97,437
46,209
(749)
1,088
10,712
46,209
57,260
(749)
1,088
10,712
-
57,260
-
-
-
-
-
-
-
-
28,610
-
(308)
(1,835)
26,467
28,610
(308)
(1,835)
57,260
26,467
-
57,260
57,260
26,467
83,727
57,260
-
26,467
83,727
45,460
-
414
12,010
45,460
57,884
-
414
12,010
57,884
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
57,884
57,884
-
-
57,884
57,884
57,884
-
57,884
The above Consolidated Statements of Financial Position should be read in conjunction with the accompanying notes
34
The above Consolidated Statements of Financial Position should be read in conjunction with the accompanying notes
34
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
40
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C
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
42
ELANOR INVESTORS GROUP
Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWS
ELANOR INVESTORS GROUP
FOR THE YEAR ENDED 30 JUNE 2016
for the year ended 30 June 2016
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Cash flows from operating activities
Finance costs paid
Receipts from customers
Rent receipts from the Company
Payments to suppliers and employees
Net cash flows from operating activities
Interest received
Finance costs paid
Cash flows from investing activities
Rent receipts from the Company
Payments for business and asset
acquisitions
Net cash flows from operating activities
Transaction costs for business and asset
Cash flows from investing activities
acquisitions
Payments for business and asset
Payments for long term inventory
acquisitions
Payments for property, plant and equipment
Transaction costs for business and asset
Payment for management rights
acquisitions
Loans to associates
Payments for long term inventory
Payments for equity accounted investments
Payments for property, plant and equipment
Distributions received from equity accounted
Payment for management rights
investments
Loans to associates
Loans from Company
Payments for equity accounted investments
Net cash flows from investing activities
Distributions received from equity accounted
investments
Cash flows from financing activities
Loans from Company
Net proceeds from borrowings
Proceeds from equity raisings
Net cash flows from investing activities
Costs associated with equity raisings
Cash flows from financing activities
Distributions paid to unit holders
Net proceeds from borrowings
Net cash flows from financing activities
Proceeds from equity raisings
Net increase / (decrease) in cash and cash
Costs associated with equity raisings
equivalents
Distributions paid to unit holders
Cash and cash equivalents at the beginning
Net cash flows from financing activities
of the year
Net increase / (decrease) in cash and cash
equivalents
Cash at the end of the year
Cash and cash equivalents at the beginning
of the year
Cash at the end of the year
Note Consolidated Consolidated
Group
Group
30 June
30 June
2015
2016
Note Consolidated Consolidated
$'000
$'000
Group
Group
30 June
30 June
61,931
82,882
2016
2015
(54,379)
(67,712)
$'000
$'000
160
81
(1,130)
(1,664)
61,931
82,882
-
-
(67,712)
(54,379)
6,582
13,587
160
81
(1,664)
(1,130)
-
-
34
34
(49,243)
13,587
(90,808)
6,582
(1,931)
(2,311)
(49,243)
(4,083)
-
(1,931)
(185)
(2,311)
(8,639)
(4,083)
-
1,224
(185)
-
(8,639)
(65,168)
1,224
-
30,509
31,962
(65,168)
(289)
(9,897)
30,509
52,285
31,962
(289)
704
(9,897)
52,285
7,488
704
8,192
7,488
8,192
-
-
(90,808)
(2,725)
(1,650)
-
(177)
-
(13,752)
(2,725)
(1,650)
293
(177)
-
(13,752)
(108,819)
293
-
30,581
89,586
(108,819)
(6,767)
(3,675)
30,581
109,725
89,586
(6,767)
7,488
(3,675)
109,725
-
7,488
7,488
-
7,488
EIF Group
EIF Group
30 June
2016
EIF Group
$'000
30 June
2015
EIF Group
$'000
30 June
-
2016
(1,099)
$'000
24
(1,685)
-
7,918
(1,099)
5,158
24
(1,685)
7,918
(35,233)
5,158
(35,233)
(1,687)
-
-
-
(1,687)
-
-
(8,639)
-
-
1,224
-
(2,980)
(8,639)
(47,315)
1,224
(2,980)
18,526
29,457
(47,315)
(260)
(6,922)
18,526
40,801
29,457
(260)
(1,356)
(6,922)
40,801
3,437
(1,356)
2,081
3,437
2,081
30 June
-
2015
(162)
$'000
26
(1,144)
-
8,073
(162)
6,793
26
(1,144)
8,073
(63,178)
6,793
(63,178)
-
-
-
(121)
-
(13,752)
-
-
293
(121)
4,052
(13,752)
(72,706)
293
4,052
28,265
46,955
(72,706)
(2,819)
(3,051)
28,265
69,350
46,955
(2,819)
3,437
(3,051)
69,350
-
3,437
3,437
-
3,437
The above Consolidated Statements of Cash Flows should be read in conjunction with the accompanying notes
The above Consolidated Statements of Cash Flows should be read in conjunction with the accompanying notes
37
37
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Notes to the Financial Statements
for the year ended 30 June 2016
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
43
1.
Summary of significant accounting policies
Elanor Investors Group (Group or Consolidated Group) is a 'stapled' entity comprising of Elanor Investment Fund (Trust) and
its controlled entities (EIF Group), and Elanor Investors Limited (EIL or Company) and its controlled entities (EIL Group). The
units in the Trust are stapled to shares in the Company. The stapled securities cannot be traded or dealt with separately. The
stapled securities of the Group are listed on the Australian Securities Exchange (ASX: ENN).
The significant policies which have been adopted in the preparation of these consolidated financial statements for the year
ended 30 June 2016 are set out below.
The financial statements were authorised for issue by the Directors on 23 August 2016.
(a)
Basis of preparation
As permitted by Class Order 05/642 issued by the Australian Securities and Investments Commission (ASIC), this report is a
combined report that presents the consolidated financial statements and accompanying notes of both Elanor Investors Group
and the Elanor Investment Fund (EIF Group).
The financial report of Elanor Investors Group comprises the consolidated financial report of Elanor Investors Limited and its
controlled entities, including Elanor Investment Fund and its controlled entities.
The financial report of the EIF Group comprises the consolidated financial report of Elanor Investment Fund and its controlled
entities.
These financial statements are to be read in conjunction with public announcements made by the Group during the reporting
period in accordance with the continuous disclosure requirements of the ASX Listing Rules.
Historical cost convention
The financial statements have been prepared under the historical cost convention, as modified by the revaluation of
investment properties, property, plant and equipment and derivative financial instruments held at fair value.
Statement of Compliance
The annual financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001, the
Trust Constitution and Australian Accounting Standards. Compliance with Australian Accounting Standards ensures
compliance with International Financial Reporting Standards ('IFRS').
For the purposes of preparing the financial statements, the Consolidated Group and the EIF Group are for-profit entities. The
financial report is presented in Australian dollars.
Critical accounting judgement and estimates
The preparation of financial statements in conformity with Australian Accounting Standards may require the use of certain
critical accounting estimates, and management to exercise its judgement in the process of applying the Group's accounting
policies. The critical accounting estimates made include the estimation of the fair value of the Group's assets and
assumptions related to deferred tax assets and liabilities, impairment testing of goodwill, Director valuations for some
property, plant and equipment and investment properties. Judgement was made in the determination of control with respect
to equity accounted investments and subsidiaries. No other key assumptions concerning the future, or other estimates of
uncertainty at the reporting date, have a significant risk of causing material adjustments to the financial statements in the
next reporting period.
38
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
44
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
1.
Summary of significant accounting policies (continued)
(b)
New accounting standards and interpretations not yet effective
Certain new standards and amendments and interpretations to existing standards have been published that are mandatory
for the Group and the EIF Group for accounting periods beginning on or after 30 June 2016, which the Group and the EIF
Group have not yet adopted. Based on a review of these standards, the majority of the standards yet to be adopted are not
expected to have significant impact on the financial statements of the Group or the EIF Group. The Group's and the EIF
Group's assessment of the impact of those new and amended standards and interpretations which may be relavant are set
out below:
AASB 15 Revenue from Contracts with Customers; AASB 2014-5 Amendments to Australian Accounting Standards arising
from AASB 15; AASB 9 Financial Instruments; AASB 2014-7 Amendments to Australian Accounting Standards arising from
AASB 9 (December 2014); and AASB 2014-8 Amendments to Australian Accounting Standards arising from AASB 9
(December 2014) – Application of AASB 9 (December 2009) and AASB 9 (December 2010).
AASB 15 establishes principles for reporting useful information to users of financial statements about the nature, amount,
timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. AASB 15 and AASB 2014-
5 apply to annual reporting periods beginning on or after 1 January 2017. Early application is permitted for annual reporting
periods beginning on or after 1 January 2015 but before 1 January 2017. The Group is yet to assess its full impact. The
Group does not intend to adopt AASB15 before its operative date, which means it would be first applied in the annual
reporting period ending 30 June 2019.
AASB 9 Financial Instruments addresses the classification and measurement of financial assets and may affect the Group's
accounting for its financial assets. The standard is not applicable until periods beginning on or after 1 January 2018 but is
available for early adoption. The Group is yet to assess its full impact. The Group does not intend to adopt AASB 9 before its
operative date, which means it would be first applied in the annual reporting period ending 30 June 2019.
AASB 16 provides a comprehensive model for the identification of lease arrangements and their treatment in the financial
statements of both lessees and lessors. The accounting model for lessees will require lessees to recognise all leases on
balance sheet, except for short-term leases and leases of low value assets. AASB 16 applies to annual periods beginning on
or after 1 January 2019. The directors of the Company anticipate that the application of AASB 16 in the future may have a
material impact on the amounts reported and disclosures made in the Group's consolidated financial statements. However, it
is not practicable to provide a reasonable estimate of the effect of AASB 16 until the Group performs a detailed review.
(c)
Basis of consolidation
The consolidated Financial Statements of the Group incorporate the assets and liabilities of Elanor Investors Limited (the
Parent) and all of its subsidiaries, including Elanor Investment Fund and its subsidiaries as at 30 June 2016. Elanor
Investors Limited is the parent entity in relation to the stapling. The results and equity of Elanor Investment Fund (which is
not directly owned by Elanor Investors Limited) have been treated and disclosed as a non-controlling interest. Whilst the
results and equity of Elanor Investment Fund are disclosed as a non-controlling interest, the stapled security holders of
Elanor Investment Fund are the same as the stapled security holders of Elanor Investors Limited.
These Financial Statements also include a separate column representing the Financial Statements of Elanor Investment
Fund, incorporating the assets and liabilities of Elanor Investment Fund and all of its subsidiaries, as at 30 June 2016.
39
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
45
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
1.
Summary of significant accounting policies (continued)
Subsidiaries are all entities over which the Group has control. Control is defined as having rights to variable returns from
involvement in the investee and having the ability to affect those returns through its power over the investee.
Where an entity began or ceased to be a controlled entity during the reporting period, the assets, liabilities and results are
consolidated only from the date control commenced or up to the date control ceased.
In preparing the consolidated Financial Statements, all intra-group transactions and balances, including unrealised profits
arising thereon, have been eliminated in full.
(d)
Business combination
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business
combination is measured at fair value and comprises the assets transferred, the liabilities incurred and the equity interests
issued. Acquisition-related costs are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except
that:
• deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognised and
measured in accordance with AASB 112 ‘Income Taxes’ and AASB 119 ‘Employee Benefits’ respectively;
• liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment
arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in
accordance with AASB 2 ‘Share-based Payment’ at the acquisition date; and
• assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 ‘Non-current Assets Held for
Sale and Discontinued Operations’ are measured in accordance with that Standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests
in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the
acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the
acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration
transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held
interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity's
net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests'
proportionate share of the recognised amounts of the acquiree's identifiable net assets. The choice of measurement basis is
made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when
applicable, on the basis specified in another Standard.
Where a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is
remeasured to its acquisition date fair value and the resulting gain or loss, if any, is recognised in profit or loss. Amounts
arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other
comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were
disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination
occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional
amounts are adjusted during the measurement period, or additional assets or liabilities are recognised, to reflect new
information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected
the amounts recognised as of that date.
40
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
46
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
1.
Summary of significant accounting policies (continued)
(e)
Investment in associates and joint ventures
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the
financial and operating policy decisions of the investee but is not control or joint control over those policy decisions.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net
assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists
only when decisions about the relevant activities require unanimous consent of the parties sharing control.
The results and assets and liabilities of associates or joint ventures are incorporated in these financial statements using the
equity method of accounting, except when the investment, or a portion thereof, is classified as held for sale, in which case it
is accounted for in accordance with AASB 5. Under the equity method, an investment in an associate or a joint venture is
initially recognised in the statement of financial position at cost and adjusted thereafter to recognise the Group's share of the
profit or loss and other comprehensive income of the associate or joint venture. When the Group's share of losses of an
associate or a joint venture exceeds the Group's interest in that associate or joint venture (which includes any long-term
interests that, in substance, form part of the Group's net investment in the associate or joint venture), the Group discontinues
recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or
constructive obligations or made payments on behalf of the associate or joint venture.
The requirements of AASB 139 are applied to determine whether it is necessary to recognise any impairment loss with
respect to the Group’s investment in an associate or a joint venture. When necessary, the entire carrying amount of the
investment (including goodwill) is tested for impairment in accordance with AASB 136 'Impairment of Assets' as a single
asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount.
Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is
recognised in accordance with AASB 136 to the extent that the recoverable amount of the investment subsequently
increases.
When an entity transacts with an associate or a joint venture of the Group, profits and losses resulting from the transactions
with the associate or joint venture are recognised in the Group's financial statements only to the extent of interests in the
associate or joint venture that are not related to the Group.
(f)
Revenue recognition
Revenue is recognised when the amount of revenue can be reliably measured, it is probable that future economic benefits
will flow to the entity and specific criteria have been met for each of Elanor’s activities as described below.
Hotel and wildlife park revenue
Revenue is recognised when goods and services have been provided to the customer and the outcome can be reliably
measured. Revenue from sale of food and beverage items is recognised when the risks and rewards of
ownership have passed to the buyer.
Sale of furniture and other goods
Sales are recognised as revenue only when the risks and rewards of ownership have passed to the buyer. This is when
the sale becomes unconditional and ownership of a product has passed to the customer, after delivery.
Funds management fee revenue
Funds management fee revenue is recognised on an accruals basis as the services are performed, in accordance with
the terms of the relevant contracts. Where fees are subject to meeting certain performance hurdles, they are recognised
as income at the point when those conditions have been met.
Rental income from investment properties, received by the EIF Group, is accounted for on a straight-line basis over the term
of the lease.
If not received at balance sheet date, revenue is reflected in the balance sheet as a receivable and carried at its recoverable
value.
41
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
47
1.
Summary of significant accounting policies (continued)
Where revenue is received from the sale of properties, it is recognised when the significant risks and rewards have
transferred to the buyer. This will normally take place on unconditional exchange of contracts except where payment on
completion is expected to occur significantly after exchange. For conditional exchanges, sales are recognised when the
conditions are satisfied.
(g)
Expenses
Expenses are brought to account on an accruals basis.
(h)
Finance costs
Finance costs include interest payable on bank overdrafts and short-term and long-term borrowings, payments on derivatives
and amortisation of ancillary costs incurred in connection with arrangement of borrowings.
Finance costs are expensed as incurred using the effective interest rate method, except to the extent that they are directly
attributable to the acquisition of a qualifying asset. In these circumstances, borrowing costs are capitalised to the cost of the
assets until the assets are ready for their intended use or sale.
(i)
Goods and Services Tax (GST)
Revenues, expenses and assets (with the exception of receivables) are recognised net of the amount of GST, to the extent
that the GST is recoverable from the taxation authority. Where GST is not recoverable, it is recognised as part of the cost of
acquisition, or as an expense.
Receivables and payables are stated inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation
authority is included in the statement of financial position as receivable or payable.
Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from
investing and financing activities which is recoverable from, or payable to, the taxation authority is classified within operating
cash flows.
(j)
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand, and short term deposits with an original maturity of 90 days
or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in
value.
(k)
Receivables
Trade and other receivables are initially recognised at fair value and subsequently accounted for at amortised cost.
Collectability of trade receivables is reviewed on a regular basis and bad debts are written off when identified. A specific
provision is made for any doubtful debts where objective evidence exists that the receivables will not be recoverable. The
amount of the impairment loss is the difference between the asset’s carrying amount and the present value of estimated
future cash flows.
All receivables with maturities greater than 12 months after reporting date are classified as non-current assets.
(l)
Inventories
Inventories are assets held for sale or consumables held in the ordinary course of operations and recognised at the lower of
cost or net realisable value.
The cost of the inventory comprises costs of purchase, cost of conversion and other costs incurred in bringing the inventories
to their present location and condition. A provision is raised when it is believed that the costs incurred will not be recovered
on the ultimate sale of the inventory. Cost for all inventories is determined using the first-in, first-out (FIFO) method.
The Group holds certain landholdings that are intended solely for sale, and not for long term appreciation or the derivation of
rental income. These landholdings are carried as non-current inventory.
42
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
48
continued
Notes to the Financial Statements
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
1.
Summary of significant accounting policies (continued)
(m)
Investment property
Investment property relates to the land and buildings owned by the EIF Group (being the Elanor Investment Fund and its
controlled entities) only, in which rental income is earned from entities within the EIL Group.
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction
for such purposes). Investment properties are measured initially at its cost, including transaction costs. Subsequent to initial
recognition, investment properties are measured at fair value. Gains and losses arising from changes in the fair value of
investment properties are included in profit or loss in the period in which they arise.
At each reporting date, the carrying values of the investment properties are assessed by the Director's and where the
carrying value differs materially from the Directors' assessment of fair value, an adjustment to the carrying value is recorded
as appropriate.
The Directors' assessment of fair value of each investment property takes into account latest independent valuations, with
updates taking into account any changes in estimated yield, underlying income and valuations of comparable properties. In
determining the fair value, the capitalisation of net income method and/or the discounting of future net cash flows to their
present value have been used, which are based upon assumptions and judgements in relation to future rental income,
property capitalisation rate or estimated yield and make reference to market evidence of transaction prices for similar
properties.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use
and no future economic benefits are expected from the disposal. Any gain or loss arising on de-recognition of the property
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or
loss in the period in which the property is derecognised.
(n)
Property, plant and equipment
Land and Buildings
All owner occupied properties in the Hotel, Tourism & Leisure class are held for use by the Group for the supply of services
and are classified as land and buildings and stated at their revalued amounts under the revaluation model, being the fair
value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment
losses. Fair value is the amount for which the land and buildings could be exchanged between knowledgeable, willing parties
in an arm's length transaction.
Revaluation increases arising from changes in the fair value of land and buildings are recognised in other comprehensive
income and accumulated within equity, except to the extent that it reverses a revaluation decrease for the same asset
previously recognised in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease
previously expensed. A decrease in the carrying amount arising on the revaluation of such land and buildings is recognised in
profit or loss to the extent that it exceeds the balance, if any, held in the properties revaluation reserve relating to a previous
revaluation of that asset.
The land and buildings owned by Wiltex Wholesale are classified as Inventory, other than the proportion of the property which
is classified as owner occupied as a result of being used by the John Cootes Furniture business for the supply of services.
Owner occupied land and buildings owned by Wiltex Wholesale is stated at cost less accumulated depreciation.
Furniture, fittings and equipment
Furniture, fittings and equipment are stated at cost less accumulated depreciation.
Livestock
Livestock are stated at cost, less accumulated depreciation. Historical cost includes expenditure that is directly attributable to
the acquisition of the animals. Depreciation on livestock is calculated using the straight-line method, over the useful lives of
the assets which range from 5 - 50 years.
43
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
49
1.
Summary of significant accounting policies (continued)
Depreciation
Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost or
revalued amounts, net of their residual values, over their estimated useful lives or, in the case of leasehold improvements
and certain leased plant and equipment, the shorter lease term as follows:
Buildings
Computer Equipment
Vehicles
40 years
3 - 5 years
8 years
Furniture, fittings and equipment
3 - 10 years
(o)
Intangible assets
Funds management rights
Funds management rights have a finite useful life and are carried at cost less accumulated amortisation and impairment
losses. Amortisation is calculated using the straight-line method to allocate the cost of licences over their estimated useful
lives of 10 years.
Brands
Brands acquired are carried at cost as established at the date of acquisition less accumulated impairment losses, if any.
Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of the acquisition of the business
less accumulated impairment losses, if any. For the purposes of impairment testing, goodwill is allocated to each of the
Group's cash generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the
combination. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more
frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is
less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to
the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any
impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed
in subsequent periods. On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
(p)
Impairment of assets
All assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. Where objective evidence or an indicator of impairment exists, an estimate of the asset's recoverable
amount is made. An impairment loss is recognised in the statement of profit or loss and other comprehensive income 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 cost of disposal and value in use.
(q)
Payables
Payables represent liabilities and accrued expenses owing at year end which are unpaid. The amounts are unsecured and
usually paid within 30 days of recognition. Payables are recognised at amortised cost and normal commercial terms and
conditions apply to payables.
A distribution and or dividend payable to Securityholders is recognised for the amount of any distribution and or dividend
approved on or before reporting date but not paid at reporting date.
All payables with maturities greater than 12 months after the reporting date are classified as non current liabilities.
44
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 50
continued
1.
(r)
Notes to the Financial Statements
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
Summary of significant accounting policies (continued)
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the
end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is
measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those
cash flows (where the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a
receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the
receivable can be measured reliably.
(s)
Employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and long service
leave when it is probable that settlement will be required and they are capable of being measured reliably.
Liabilities recognised in respect of short-term employee benefits, are measured at their nominal values using the
remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of long term employee benefits are measured as the present value of the estimated future
cash outflows, using a high quality Corporate Bond rate as the discount rate, to be made in respect of services provided by
employees up to reporting date.
(t)
Interest bearing liabilities
Interest bearing liabilities are recognised initially at cost, being the fair value of the consideration received net of transaction
costs associated with the borrowing. Subsequent to initial recognition, interest bearing liabilities are recognised at amortised
cost using the effective interest method. Under the effective interest method, any transaction fees, costs, discounts and
premiums directly related to the borrowings are recognised in the statement of profit or loss and other comprehensive income
over the expected life of the borrowings.
Interest bearing liabilities are classified as current liabilities where the liability has been drawn under a financing facility which
expires within 12 months. Amounts drawn under financial facilities which expire after 12 months are classified as non-current.
45
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
51
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
1.
Summary of significant accounting policies (continued)
(u)
Derivative and other financial instruments
The Group enters into derivative financial instruments to manage its exposure to interest rate risk.
Derivatives are initially recognised at fair value at the date the derivative contract is entered into and are subsequently
remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss
immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the
recognition in profit or loss depends on the nature of the hedge relationship.
Hedge accounting
The Group designates its hedging instruments, which include derivatives, as cash flow hedges.
At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and the
hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions.
Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument is
highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain or
loss relating to the ineffective portion is recognised immediately in profit or loss, and is included in the ‘other gains and
losses’ line item.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in
the periods when the hedged item affects profit or loss, in the same line as the recognised hedged item. However, when the
forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and
losses previously recognised in other comprehensive income and accumulated in equity are transferred from equity and
included in the initial measurement of the cost of the non-financial asset or non-financial liability.
Hedge accounting is discontinued when the Group revokes the hedging relationship, when the hedging instrument expires or
is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. Any gain or loss recognised in other
comprehensive income and accumulated in equity at that time remains in equity and is recognised when the forecast
transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the gain or
loss accumulated in equity is recognised immediately in profit or loss.
46
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
52
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
1.
Summary of significant accounting policies (continued)
(v)
Security based payments
Equity-settled security-based payments to employees and others providing similar services are measured at the fair value of
the equity instruments at the grant date.
The fair value determined at the grant date of the equity-settled security-based payments is expensed on a straight-line basis
over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest, with a corresponding
increase in equity. At the end of each reporting period, the Group revises its estimate of the number of equity instruments
expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the
cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits
reserve.
(w)
Income tax
Trust
Under current tax legislation, the Trust is not liable for income tax, provided the Securityholders are presently entitled to the
taxable income of the Trust including realised capital gains each financial year.
Company and other taxable entities
Income tax expense comprises current and deferred tax and is recognised in the statement of profit or loss and other
comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted
at the reporting date and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: initial recognition of goodwill, the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will
probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at
the reporting date.
EIL and its wholly-owned Australian resident entities are part of a tax-consolidated group, formed on 11 July 2014, and are
therefore taxed as a single entity, with any deferred tax assets and liabilities of these entities set off in the consolidated
financial statements. The head entity within the tax-consolidated group is Elanor Investors Limited.
EHAF Management Pty Limited and its wholly-owned Australian resident entities are part of a tax-consolidated group, formed
on 21 March 2016, and are therefore taxed as a single entity, with any deferred tax assets and liabilities of these entities set
off in the consolidated financial statements. The head entity within the tax-consolidated group is EHAF Management Pty
Limited.
(x)
Contributed equity
Ordinary units and shares are classified as equity and recognised at the fair value of the consideration received. Any
transaction costs arising on the issue of ordinary securities are recognised directly in equity as a reduction, net of tax, of the
proceeds received.
47
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 53
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
1.
Summary of significant accounting policies (continued)
(y)
Earnings per stapled security
Basic earnings per stapled security is calculated as profit after tax attributable to Security holders divided by the weighted
average number of ordinary stapled securities issued.
Diluted earnings per stapled security is calculated as profit after tax attributable to Security holders adjusted for any profit
recognised in the period in relation to dilutive potential stapled securities divided by the weighted average number of stapled
securities and dilutive stapled securities.
(z)
Segment reporting
Segment information is presented on the same basis as that used for internal reporting purposes. The segments are
reported in a manner that is consistent with internal reporting provided to the chief operating decision maker. The chief
operating decision maker has been identified as the Board of Directors of Elanor Investors Limited and the Responsible
Entity.
(aa)
Use of estimates and judgement
The preparation of consolidated financial statements requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and in any future periods affected.
The areas where a higher degree of judgement or complexity arise, or areas where assumptions and estimates are
significant to the Group's financial statements, are detailed below:
Fair value of Property, Plant and Equipment
Land and Buildings are carried at fair value with changes in fair value recognised in other comprehensive income in the
statement of comprehensive income. Fair value is defined as the price at which an asset or liability could be exchanged in an
arm's length transaction between knowledgeable, willing parties, other than in a forced or liquidation sale.
In reaching estimates of fair value, management judgment needs to be exercised. The level of management judgment
required in establishing fair value of the land and buildings for which there is no quoted price in an active market is reduced
through the use of external valuations.
48
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
54
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
1.
Summary of significant accounting policies (continued)
Fair value of Investment Properties
Land and Buildings are carried at fair value with changes in fair value recognised through profit or loss in the statement of
comprehensive income. Fair value is defined as the price at which an asset or liability could be exchanged in an arm's length
transaction between knowledgeable, willing parties, other than in a forced or liquidation sale.
In reaching estimates of fair value, management judgment needs to be exercised. The level of management judgment
required in establishing fair value of the land and buildings for which there is no quoted price in an active market is reduced
through the use of external valuations.
Goodwill
Management judgement is required in reviewing and impairment testing goodwill balances carried by the Group, which
involves estimates of key assumption including cash flow projection, growth rates and discount rates.
Control of Elanor Hospitality and Accomodation Fund (EHAF)
EHAF comprises stapled securities in Elanor Hospitality and Accommodation Fund and EHAF Management Pty Limited. The
Group holds 41.66% of the equity in EHAF. The Group's 41.66% ownership interest in EHAF gives the Group the same
percentage of the voting rights in EHAF. EHAF is an unregistered trust for which Elanor Funds Management Limited acts as
the Manager of the asset and Trustee of the trust.
The responsible entity is owned wholly by the Group and governed by the licencing and legal obligations of a professional
asset manager. The powers of the Trustee are governed by the EHAF constitution, which sets out the basis of fees that the
Trustee can receive. These fees include management fees, performance fees, and acquisition fees. Excluding any
performance fee, but including management and acquisition fees the Group is expected to receive approximately 50% of
EHAF's EBITDA.
Based on the assessment above, at the current level of equity investment in EHAF, the AASB 10 definition of control for this
associate is met, and therefore will be consolidated into Elanor Investors Group Financial Statements.
Co-investment in Associated Entities
Note 16 sets out the value of units held in associated entities. Under the equity method, investments in associates are carried
in the Statement of Financial Position at cost as adjusted for post acquisition charges in the Group's share of profit or loss
and other comprehensive income of the associate, less any impairment in the value of individual investments.
The Group holds a 24.40% interest in the Elanor Retail Property Fund (ERPF) which has been classified as a material
associated entity. Management of the Group reviewed and assessed the classification of the Group's investment in the
associated entities in accordance with AASB 128 on the basis that the Group has significant influence over the financial and
operating policy decisions of the investee.
The Group holds a 17.64% interest in the Bell City Fund (Bell City) which has been classified as a material associated entity.
Management of the Group reviewed and assessed the classification of the Group's investment in the associated entity in
accordance with AASB 128 on the basis that the Group has significant influence over the financial and operating policy
decisions of the investee.
Deferred Tax Assets
Management judgement is required in reviewing the recoverability of deferred tax assets carried by the Group, which invloves
estimates of key assumptions including cash flow projection, growth rates and discount rates.
49
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
55
2.
Revenue from operating activities
Revenue from hotels
Revenue from wildlife parks
Revenue from sale of furniture
Funds management fee income
Consolidated
Group
30 June
2016
$'000
27,761
11,733
21,437
7,810
Consolidated
Group
30 June
2015
$'000
21,955
10,166
18,927
4,888
Revenue from operating activities
68,741
55,936
EIF Group
EIF Group
30 June
2016
$'000
-
-
-
-
-
30 June
2015
$'000
-
-
-
-
-
3.
Income tax expense
Income tax expense
(a)
Current tax expense
Deferred tax expense
Consolidated
Group
30 June
2016
$'000
Consolidated
Group
30 June
2015
$'000
EIF Group
EIF Group
30 June
2016
$'000
30 June
2015
$'000
495
432
927
199
378
577
-
-
-
-
-
-
(b)
Reconciliation of income tax expense to prima facie tax expense
Profit / (loss) from continuing operations before
income tax expense:
Less: Profit / (loss) from the Trust (which is not
taxable)
Prima facie profit / (loss)
Tax at the Australian tax rate of 30%
Tax effect of amounts which are not
deductible/(taxable) in calculating taxable income:
Entertainment
Non-deductible depreciation and amortisation
Fair value adjustments to investment property in
the Trust
Non-deductible costs on acquisitions
Non-deductible expenses
Impact of EHAF consolidation
Insurance proceeds on plant and equipment
Income tax expense / (benefit)
5,070
3,297
3,789
15,061
15,061
3,789
15,061
(11,764)
(3,529)
11
364
3,242
489
-
-
-
577
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,789
1,281
384
13
300
64
-
60
497
(391)
927
50
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
56
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
4.
Other Income
Stock and equipment Insurance claim income*
Business interruption Insurance claim income*
Material damage Insurance claim income*
Other income
Total Other income
Consolidated
Consolidated
EIF Group
EIF Group
Group
30 June
2016
$'000
2,056
2,480
1,616
774
6,926
Group
30 June
2015
$'000
-
-
-
1,929
1,929
30 June
30 June
2016
$'000
-
-
-
82
82
2015
$'000
-
-
-
-
-
*Refer to Note 32, Significant events note for futher information.
5
Other expenses
Stock write-off (John Cootes fire related)*
PPE write-off (John Cootes fire related)*
Motor vehicles write-off (John Cootes fire related)*
Other fire related expenses*
Other expenses
Total Other expenses
Consolidated
Consolidated
EIF Group
EIF Group
Group
30 June
2016
$'000
1,924
34
55
1,279
3,867
7,159
Group
30 June
2015
$'000
-
-
-
-
3,202
3,202
30 June
30 June
2016
$'000
-
-
-
-
476
476
2015
$'000
-
-
-
-
166
166
*Refer to Note 32, Significant events note for futher information.
6. Distributions
(a)
Consolidated Group
The following distributions were declared by the Consolidated Group either during the year or post balance date:
Interim distribution (1)
Final distribution (2)
Distribution
cents per
stapled security
30 June
2016
Distribution
cents per
stapled security
30 June
2015
7.31
7.34
5.20
6.70
Total
amount
30 June
2016
$'000
5,163
5,241
Total
amount
30 June
2015
$'000
3,675
4,734
(1) The interim distribution of 7.31 cents per stapled security was declared on 25 February 2016 and paid on 4 March 2016.
(2) The final distribution of 7.34 cents per stapled security was not declared prior to 30 June 2016. Please refer to the Directors' Report for the calculation of Core
Earnings and the Distribution.
51
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
57
6. Distributions (continued)
(b)
EIF Group
The following distributions were declared by the EIF Group either during the year or post balance date:
Interim distribution (1)
Final distribution (2)
Distribution
cents per
stapled security
30 June
2016
Distribution
cents per
stapled security
30 June
2015
5.05
7.34
4.32
4.75
Total
amount
30 June
2016
$'000
3,569
5,241
Total
amount
30 June
2015
$'000
3,051
3,353
(1) The interim distribution of 5.05 cents per stapled security was declared on 25 February 2016 and paid on 4 March 2016.
(2) The final distribution of 7.34 cents per stapled security was not declared prior to 30 June 2016. Please refer to the Directors' Report for the calculation of Core
Earnings and the Distribution.
7.
Auditor's remuneration
Audit services:
Auditors of the Elanor Investors Group
Deloitte Touche Tohmatsu Australia:
Audit and review of financial reports
Other services:
Auditors of the Elanor Investors Group
Deloitte Touche Tohmatsu Australia:
Taxation advisory services
Taxation compliance services
Transaction services
Total - Deloitte Touche Tohmatsu Australia
Auditors of the Elanor Investors Group
Pitcher Partners:
Compliance Plan Audit
Total - Pitcher Partners
Consolidated Consolidated
Group
30 June
2015
$
Group
30 June
2016
$
190,000
190,000
110,000
110,000
61,500
98,800
17,500
177,800
367,800
27,740
35,000
248,500
311,240
421,240
8,000
8,000
-
-
52
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
58
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
8.
Earnings / (losses) per stapled security
Consolidated
Group
30 June
2016
Consolidated
Group
30 June
2015
EIF Group
EIF Group
30 June
2016
30 June
2015
The earnings / (losses) per stapled security measure shown below is based upon the profit / (loss) attributable to
Securityholders:
Basic (cents)
Diluted (cents)
5.86
5.37
4.10
3.74
5.36
4.91
22.68
20.69
Profit / (loss) attributable to Securityholders used in
calculating basic and diluted earnings per stapled
security ($'000)
Weighted average number of stapled securities used
as denominator in calculating basic earnings per
stapled security
Weighted average number of stapled securities used
as denominator in calculating diluted earnings per
stapled security 1
4,143
2,720
3,789
15,061
70,653
66,402
70,653
66,402
77,103
72,802
77,103
72,802
ENN Group
30 June
2016
ENN Group
30 June
2015
The earnings / (losses) per stapled security measure shown below is based upon the profit / (loss) attributable to
Securityholders of the ENN Group:
Basic (cents)
Diluted (cents)
Profit / (loss) attributable to Securityholders used in calculating basic
and diluted earnings per stapled security ($'000)
Weighted average number of stapled securities used as denominator
in calculating basic earnings per stapled security
Weighted average number of stapled securities used as denominator
in calculating diluted earnings per stapled security1
7.15
6.55
4.10
3.74
5,053
2,720
70,653
66,402
77,103
72,802
1. The weighted average number of stapled securities and options granted used as denominator in calculating basic and diluted earnings/(losses) per stapled
securities shown above is based on the number of stapled securities on issue and options granted during the period.
53
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
59
9.
Cash and cash equivalents
Cash at bank
Total Cash at Bank
10.
Trade and other receivables
Current
Trade Receivables
Other Receivables
Total Receivables
11.
Derivative financial instruments
Current liabilities
Interest rate swaps
Non-current liabilities
Interest rate swaps
Total Derivative financial instruments
Interest rate swaps
Consolidated
Group
30 June
2016
$'000
8,192
8,192
Consolidated
Group
30 June
2015
$'000
7,488
7,488
EIF Group
EIF Group
30 June
2016
$'000
2,081
2,081
30 June
2015
$'000
3,437
3,437
Consolidated
Group
30 June
2016
$'000
Consolidated
Group
30 June
2015
$'000
EIF Group
EIF Group
30 June
2016
$'000
30 June
2015
$'000
2,699
502
3,201
3,188
167
3,355
1,787
4,389
6,176
753
-
753
Consolidated
Group
30 June
2016
$'000
Consolidated
Group
30 June
2015
$'000
EIF Group
EIF Group
30 June
2016
$'000
30 June
2015
$'000
114
114
728
728
842
86
86
86
86
172
114
114
545
545
659
86
86
86
86
172
The Group has entered into interest rate swap agreements with a notional principal amount totalling $56.7 million that entitles it
to receive interest, at quarterly intervals, at a floating rate on the notional principal and oblige it to pay interest at a fixed rate.
The interest rate swap agreements allow the Group to raise long term borrowings at a floating rate and effectively swap them
into a fixed rate.
54
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
60
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
12.
Deferred taxes
Deferred tax assets
(a)
The balance comprises temporary differences
attributable to:
Employee entitlements
Audit accrual
Asset acquisitions and blackhole expenses
Lease incentive
Other
Total Deferred tax assets
Movements:
Opening balance at beginning of year
Business Combinations
Tax group consolidation adjustments
Debited to the Consolidated Statements of Profit or
Loss
Credited to Equity
Closing balance at the end of the year
Deferred tax expected to be recovered within 12
months
Deferred tax expected to be recovered after more
than 12 months
Deferred tax liabilities
(b)
The balance comprises temporary differences
attributable to:
Employee incentive plans
Business acquisitions
Other
Total Deferred tax liabilities
Movements:
Opening balance at beginning of year
Other non profit or loss Movement
Business Combinations
Tax group consolidation adjustments
Credited to the Consolidated Statements of Profit or
Loss
Closing balance at the end of the year
Deferred tax expected to be settled within 12 months
Deferred tax expected to be settled after more than
12 months
Net Deferred tax position
Deferred tax asset / liability per tax group
(c)
Deferred tax asset of the ENN tax group
Deferred tax liability of the EHAF tax group
Net Deferred tax position
Consolidated
Group
30 June
2016
$'000
Consolidated
Group
30 June
2015
$'000
EIF Group
EIF Group
30 June
2016
$'000
30 June
2015
$'000
495
34
835
-
73
1,437
-
1,443
-
(445)
439
1,437
574
863
-
285
200
485
-
-
552
-
(67)
485
239
246
952
952
-
952
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
501
38
944
182
414
2,079
1,437
-
(112)
697
57
2,079
645
1,434
195
671
741
1,607
485
202
-
(209)
1,129
1,607
305
1,302
472
594
(122)
472
55
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
61
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c
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
67
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
15.
Inventories
Current
Goods held for resale
Total current
Non-current
Property Inventory
Total Non-current
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
Consolidated Consolidated
Group
30 June
2015
$'000
3,765
3,765
Group
30 June
2016
$'000
5,368
5,368
EIF Group
EIF Group
30 June
2016
$'000
-
-
30 June
2015
$'000
-
-
14,092
14,092
11,781
11,781
-
-
-
-
The cost of inventories recognised as an expense during the year in respect of continuing operations was $15.3m.
Inventory is carried at the lower of cost or net realisable value. The directors have assessed the carrying value of the Property
Inventory, and have not recognised any impairment during the period. This assessment is supported by an independent
valuation performed on 30 June 2015, by Urbis of $16.3m. Please refer to Note 32 for further details on the furniture inventory.
16.
Equity accounted investments
30 June 2016
193 Clarence Hotel Fund
Bell City Fund
Auburn Central Fund
Elanor Retail Property Fund
Limestone Street Centre Syndicate
Total equity accounted investments
30 June 2015
Principal activity
Percentage
Ownership
Accommodation
Accommodation
Shopping Centre
Shopping Centre
Office Building
10.00%
17.64%
1.85%
24.40%
8.19%
Principal activity
Percentage
Ownership
193 Clarence Hotel Fund
Bell City Fund
Auburn Central Fund
Total equity accounted investments
Accommodation
Accommodation
Shopping Centre
10.00%
17.47%
1.85%
Consolidated
Group
30 June
2016
$'000
1,175
12,558
628
6,965
1,400
22,726
Consolidated
Group
30 June
2015
$'000
1,160
12,222
620
14,002
EIF Group
30 June
2016
$'000
1,175
12,558
628
6,965
1,400
22,726
EIF Group
30 June
2015
$'000
1,160
12,222
620
14,002
All of the above associates are accounted for using the equity method in these consolidated financial statements.
62
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
68
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
16.
Equity accounted investments (continued)
Details of Material Associates
Summarised financial information in respect of each of the Group's material associates is set out below. The summarised
financial information below represents amounts shown in the associate's financial statements prepared in accordance with
accounting standards, adjusted by the Group for equity accounting purposes.
Bell City Fund
The Bell City Fund comprises the aggregated investment in six entities being, Bell City Accommodation Management Pty
Limited, Bell City Accommodation Syndicate, Bell City Hotel Management Pty Limited, Bell City Hotel Syndicate, Bell City
Office Syndicate and Bell City Residential Development Syndicate.
Although the Group has less than 20% of the equity in the fund, the Group has significant influence by virtue of its role as
Trustee and Manager of the Fund and its ability to participate in the financial and operating policy decisions of the Fund.
The following information represents the aggregated financial position and financial performance of the Bell City Fund. This
summarised financial information represents amounts shown in the associate's financial statements prepared in accordance
with AASBs, adjusted by the Group for equity accounting purposes.
Financial Position
Current assets
Non - current assets
Total Assets
Current liabilities
Non - current liabilities
Total Liabilities
Contributed Equity
Reserves
Retained profits / (accumulated losses)
Total Equity
Financial performance
Profit / (loss) for the period
Other comprehensive income for the period
Total comprehensive income for the period
30 June 2016
$'000
5,734
153,880
159,614
30 June 2015
$'000
6,175
153,193
159,368
2,914
85,510
88,424
68,699
7,477
(4,986)
71,190
3,919
85,477
89,396
67,278
2,326
368
69,972
Period ended
30 June 2016
$'000
1,512
5,150
6,662
Period ended
30 June 2015
$'000
368
2,326
2,694
Distributions received from the associate during the period
994
248
Reconciliation of the above summarised financial information to the carrying amount of the interest in the Bell City Fund
recognised in the consolidated financial statements:
Net assets of the associate
Proportion of the Group's ownership interest in the Bell City Fund
Carrying amount of the Group's interest in the Bell City Fund
30 June 2016
$'000
71,190
17.64%
12,558
30 June 2015
$'000
69,972
17.47%
12,222
63
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
69
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
16.
Equity accounted investments (continued)
Elanor Retail Property Fund
As the Group has a 24.4% investment in the equity in the fund, the Group has significant influence by virtue of its role as
Trustee and Manager of the Fund and its ability to participate in the financial and operating policy decisions of the Fund.
The following information represents the aggregated financial position and financial performance of the Elanor Retail Property
Fund. This summarised financial information represents amounts shown in the associate's financial statements prepared in
accordance with AASBs, adjusted by the Group for equity accounting purposes.
Financial Position
Current assets
Non - current assets
Total Assets
Current liabilities
Non - current liabilities
Total Liabilities
Contributed Equity
Reserves
Retained profits / (accumulated losses)
Total Equity
Financial performance
Profit / (loss) for the period
Other comprehensive income for the period
Total comprehensive income for the period
Distributions received from the associate during the period
30 June 2016
$'000
1,228
62,574
63,802
886
34,371
35,257
28,676
(614)
483
28,545
Period ended
30 June 2016
$'000
1,142
(1,152)
(10)
70
Reconciliation of the above summarised financial information to the carrying amount of the interest in the Elanor Retail Property
Fund recognised in the consolidated financial statements:
Net assets of the associate
Proportion of the Group's ownership interest in the Elanor Retail Property Fund
Carrying amount of the Group's interest in the Elanor Retail Property Fund
Aggregate information of associates that are not individually material
Profit / (loss) for the period
Other comprehensive income for the period
Total comprehensive income for the period
30 June 2016
$'000
28,545
24.40%
6,965
Period ended
30 June 2016
$'000
3,715
(1,543)
2,172
Period ended
30 June 2015
$'000
554
-
554
Aggregate carrying amount of the Group's interests in these associates
3,203
1,780
64
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
70
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
17.
Goodwill and intangible assets
Management Rights
Accumulated amortisation
Total Management Rights
Brands
Accumulated impairment charge
Total Brands
Goodwill at cost
Accumulated impairment charge
Total Goodwill
Total intangible assets
Management Rights
Opening net book amount
Additions from business combinations
Amortisation
Closing net book amount
Brands
Opening net book amount
Additions from business combinations
Accumulated impairment charge
Closing net book amount
Goodwill
Opening net book amount
Additions from business combinations
Accumulated impairment charge
Closing net book amount
Total intangible assets
Consolidated Consolidated
Group
30 June
2015
$'000
1,500
(150)
1,350
Group
30 June
2016
$'000
1,500
(300)
1,200
EIF Group
EIF Group
30 June
2016
$'000
-
-
-
30 June
2015
$'000
-
-
-
1,660
-
1,660
4,810
-
4,810
7,670
1,660
-
1,660
4,810
-
4,810
7,820
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Consolidated Consolidated
Group
30 June
2015
$'000
Group
30 June
2016
$'000
EIF Group
EIF Group
30 June
2016
$'000
30 June
2015
$'000
1,350
-
(150)
1,200
1,660
-
-
1,660
4,810
-
-
4,810
7,670
-
1,500
(150)
1,350
-
1,660
-
1,660
-
4,810
-
4,810
7,820
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
65
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
71
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
17.
Goodwill and intangible assets (continued)
Management Rights
Management Rights represent the acquisition of funds management rights and associated licences from Moss Capital Pty
Limited at IPO for $1.5m. At IPO, the estimated useful life of the acquired funds management rights was 10 years.
Brands
Brands represent the acquisition of the John Cootes Furniture brand upon the acquisition of the John Cootes Furniture
business by JCF Management Pty Limited on 11 July 2014.
Impairment test for brands
Brands are allocated to the Group's cash-generating units (CGU's) identified. All of the brands carried at 30 June 2016 are
attributable to the Group's investment in the John Cootes Furniture business.
The Directors have deemed there should be no impairment to the carrying value of brand due to the calculated recoverable
amount of the brand being in excess of the carrying value.
The recoverable amount of the brand is based on value in use calculated on a net present value basis.
The period over which management has projected the CGU cash flows is based upon a 10 year operating forecast. The
average growth rates used (6%) and royalty rates (1.65%) are consistent with forecasts included in industry reports. The
discount rates used (18.25%) are pre-tax and reflect specific risks relating to the relevant CGU.
The recoverable amount of a CGU is determined based on value in use calculations. These calculations use cash flow
projections based on the 2017 financial year budget. Cash flows beyond the budget period are extrapolated using the growth
rates stated above. The growth rate does not exceed the long term average growth rate for the business in which the CGU
operates.
Goodwill
Goodwill represents goodwill acquired by the Group upon the acquisition of the John Cootes Furniture business by JCF
Management Pty Limited on 11 July 2014.
Impairment test for goodwill
Goodwill is allocated to the CGU's identified. All of the goodwill carried at 30 June 2016 is attributable to the Group's
investment in the John Cootes Furniture business.
The Directors have deemed there should be no impairment to the carrying value of goodwill due to the calculated recoverable
amount of the goodwill being in excess of the carrying value.
The recoverable amount of the goodwill is based on value in use calculated on a net present value basis.
The period over which management has projected the CGU cash flows is based upon a 5 year operating forecast. The average
growth rates used (6%) are consistent with forecasts included in industry reports. The discount rates used (18.25%) are pre-tax
and reflect specific risks relating to the relevant CGU.
The recoverable amount of a CGU is determined based on value in use calculations. These calculations use cash flow
projections based on the 2017 financial year budget. Cash flows beyond the budget period are extrapolated using the growth
rates stated above. The growth rate does not exceed the long term average growth rate for the business in which the CGU
operates.
Sensitivity
Management recognises that the calculation of recoverable amounts can vary based on the assumptions used to project or
discount cash flows and that changes to key assumptions can result in recoverable amounts falling below carrying amounts. In
relation to the CGUs above, the recoverable amounts are well in excess of the carrying amount associated with each segment.
The Directors consider that the growth rates are appropriate, and that there is sufficient headroom such that a change in any of
the other key assumptions would not cause the CGUs’ carrying amount to exceed their recoverable amount.
66
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Notes to the Financial Statements
ELANOR INVESTORS GROUP
72
continued
18.
Provisions
Current
Provision for annual leave
Provision for long service leave
Provision for FY16 STI
Total current
Non-current
Provision for annual leave
Provision for long service leave
Total non-current
Total provisions
19.
Other current liabilities
Advance deposits
Lease incentive liability
Total Other current liabilities
20.
Payables
Trade Creditors
Related party payables
Accrued Expenses
GST Payable
Tax payable
Total payables
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
Consolidated Consolidated
Group
30 June
2015
$'000
Group
30 June
2016
$'000
EIF Group
EIF Group
30 June
2016
$'000
30 June
2015
$'000
940
50
1,610
2,600
158
521
679
3,279
615
138
71
824
248
653
901
1,725
-
-
-
-
-
-
-
-
-
-
37
37
-
-
-
37
Consolidated Consolidated
Group
30 June
2015
$'000
1,148
-
1,148
Group
30 June
2016
$'000
1,622
149
1,771
EIF Group
EIF Group
30 June
2016
$'000
-
-
-
30 June
2015
$'000
-
-
-
Consolidated Consolidated
Group
30 June
2015
$'000
1,265
-
2,148
570
267
4,250
Group
30 June
2016
$'000
2,140
-
2,750
452
-
5,342
EIF Group
EIF Group
30 June
2016
$'000
189
-
122
86
-
397
30 June
2015
$'000
-
171
236
170
-
577
67
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
73
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
21.
Interest bearing liabilities
Current
Bank loan - term debt
Borrowing Costs less amortisation
Loan from the Company
Total current
Non-current
Bank loan - term debt
Borrowing Costs less amortisation
Total non-current
Total interest bearing liabilities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
Consolidated Consolidated
Group
30 June
2015
$'000
Group
30 June
2016
$'000
528
-
-
528
61,352
(654)
60,698
61,226
8,559
(18)
-
8,541
22,396
(218)
22,178
30,719
EIF Group
EIF Group
30 June
2016
$'000
-
-
5,460
5,460
47,394
(498)
46,896
52,356
30 June
2015
$'000
8,559
(18)
4,052
12,593
20,000
(163)
19,837
32,430
The term debt is secured by registered mortgages over all freehold property and registered security interests over all present
and after Financial Year end acquired property of key Group companies. The terms of the debt also impose certain covenants
on the Group including Loan to Value ratio and Interest Cover covenants. The Group is currently meeting all its covenants.
Credit facilities
As at 30 June 2016, the Group had unrestricted access to the following credit facilities:
A$ trade credit facility
Amount used
Amount unused
Working Capital facility
Amount used
Amount unused
Term debt facility
Amount used
Amount unused
Total facility
Total amount used
Total amount unused
Consolidated Group
Consolidated Consolidated
Group
30 June
2015
$'000
500
(396)
104
5,000
(2,000)
3,000
28,559
(28,559)
Group
30 June
2016
$'000
500
(473)
27
8,500
(1,622)
6,878
64,725
(59,784)
4,941
73,725
(61,879)
11,846
-
34,059
(30,955)
3,104
EIF Group
EIF Group
30 June
2016
$'000
-
-
-
8,500
(1,622)
6,878
64,725
(59,784)
4,941
73,225
(61,406)
11,819
30 June
2015
$'000
-
-
-
5,000
(2,000)
3,000
28,559
(28,559)
-
33,559
(30,559)
3,000
Included in the above numbers, the ENN Group has access to a $27.0m facility, upon which both the Company and the Trust
can draw. The drawn amount at 30 June 2016 is $14.8m which will mature on 11 July 2017. At 30 June 2016 the amount of
drawn facilities is hedged to 66%.
Included in the above numbers, the EHAF Group has access to a $46.7 facility, upon which both the Company and Trust can
draw. The drawn amount at 30 June 2016 is $46.7m which will mature on 21 March 2019. At 30 June 2016, the amount of
drawn facilities is hedged to 100%.
All of the facilities have a variable interest rate. As detailed in Note 25, the interest rates on the loans are partially fixed using
interest rate swaps. The weighted average annual interest rates payable of the loans at 30 June 2016, including the impact of
the interest rate swaps, is 3.75% per annum.
68
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
74
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
21.
Interest bearing liabilities (continued)
EIF Group
Included in the above numbers, the EIF Group has access to a $26.5m facility, upon which both the Company and the Trust
can draw. The drawn amount at 30 June 2016 is $12.7m which will mature on 11 July 2017, At 30 June 2016 the amount of
drawn facilities is hedged to 79%.
Included in the above numbers, the EHAF Group has access to a $46.7 facility, upon which both the Company and Trust can
draw. The drawn amount at 30 June 2016 is $34.7m which will mature on 21 March 2019. At 30 June 2016, the amount of
drawn facilities is hedged to 100%.
All of the facilities have a variable interest rate. As detailed in Note 25, the interest rates on the loans are partially fixed using
interest rate swaps. The weighted average annual interest rates payable of the loans at 30 June 2016, including the impact of
the interest rate swaps, is 3.75% per annum.
22.
Contributed equity for the period to 30 June 2016
Details
No. of
securities/
shares
70,644,752
741,453
71,386,205
Opening balance
Issue of Treasury
securities
Securities on issue
Note
Date of
income
entitlement
1 Jul 2015
Total
Equity
2016
$'000
Parent
Entity
30 June
2016
$'000
EIF Group
30 June
2016
$'000
87,049
41,589
45,460
27 Jun 2016
30 Jun 2016
(i)
1,440
88,489
691
42,280
749
46,209
(i) On 27 June 2016 the Group issued stapled securities under the FY2016 employee short term incentive scheme. These
restricted stapled securities are held by the Group's employee security trust on behalf of the participants. See Note 31 for
further details.
A reconciliation of treasury securities on issue at the beginning and end of the current period is set out below:
Note
Details
No. of
securities/
shares
-
741,453
741,453
Opening balance
Issue of Treasury
securities
Treasury securities
on issue
Date of
income
entitlement
1 Jul 2015
27 Jun 2016
30 Jun 2016
Total
Equity
2016
$'000
-
1,440
1,440
Parent
Entity
30 June
2016
$'000
-
691
691
EIF Group
30 June
2016
$'000
-
749
749
69
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
75
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
22.
Contributed equity (continued)
Contributed equity for the period 30 June 2015
No. of
securities/
shares
60,800,000
9,120,000
724,752
70,644,752
Details
Initial Public Offering
(IPO)
Issue costs paid (net
of tax)
Placement
Issue costs paid (net
of tax)
Security Purchase
Plan
Issue costs paid (net
of tax)
Securities/shares on
issue
(i)
Initial Public Offering (IPO)
Date of
income
entitlement
Note
10 Jul 2014
(i)
9 Dec 2014
(ii)
30 Dec 2014
(ii)
Total
Equity
30 June
2015
$'000
Parent
Entity
30 June
2015
$'000
EIF Group
30 June
2015
$'000
76,000
36,489
39,511
(2,146)
12,586
(346)
1,000
(45)
(888)
5,690
(127)
452
(27)
(1,258)
6,896
(219)
548
(18)
30 Jun 2015
87,049
41,589
45,460
On 10 July 2014, the Group completed an Initial Public Offering (IPO) of securities on the Australian Securities Exchange,
whereby all of the share capital of Elanor Investors Limited and all of the units in the Elanor Investment Fund were stapled
together and commenced trading. At allotment, 60,800,000 stapled securities were issued to the public, at a price of $1.25 per
stapled security, raising $76m, before issue costs.
(ii)
Placement and Security Purchase Plan
On 9 December 2014 and 30 December 2014 the Group issued stapled securities under a Placement and a Security Purchase
Plan respectively to fund the acquisition of a co-investment in the Bell City Fund.
Securities issued under the Placement and the Share Purchase Plan rank equally with existing securities.
70
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Notes to the Financial Statements
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
76
continued
23.
Reserves
Asset revaluation reserve
Opening balance
Revaluation
Transfer to retained profits - realised items
Equity Accounted Investment Revaluation Reserve
Closing balance
Cash flow hedge reserve
Opening balance
Revaluation
Transfer to retained profits - realised items
Closing balance
Stapled security-based payment reserve
Opening balance
Loan Securities and Option expense
Short term incentive scheme expense
Closing balance
Consolidated Consolidated
Group
30 June
2015
$'000
Group
30 June
2016
$'000
11,255
2,505
-
698
14,458
(172)
(613)
-
(785)
260
236
193
689
-
10,805
-
450
11,255
-
(172)
-
(172)
-
260
-
260
Total reserves
14,362
11,343
EIF Group
EIF Group
30 June
2016
$'000
450
-
-
698
1,148
(172)
(486)
-
(658)
136
124
30
290
780
30 June
2015
$'000
-
-
-
450
450
-
(172)
-
(172)
-
136
-
136
414
The asset revaluation reserve is used to record increments and decrements on the revaluation of property, plant and
equipment.
The cash flow hedge reserve is used to recognise increments and decrements in the fair value of cash flow hedges.
The stapled security-based payment reserve is used to recognise the fair value of loan, restricted securities and options issued
to employees but not yet exercised under the Group's DSTI and LTIP.
24.
Retained profits / (Accumulated losses)
Opening balance
Profit / (loss) for the period
Available for distribution
Transfer from reserves
Distributions paid
Closing balance
Consolidated Consolidated
Group
30 June
2015
$'000
-
2,720
2,720
-
(3,675)
(955)
Group
30 June
2016
$'000
(955)
4,143
3,188
-
(9,897)
(6,709)
EIF Group
EIF Group
30 June
2016
$'000
12,010
3,789
15,799
-
(6,922)
8,877
30 June
2015
$'000
-
15,061
15,061
-
(3,051)
12,010
The distribution of ENN Group 7.34 cents per stapled security for the year ended 30 June 2016 totalling $5.2m had not been
declared at year end. This will be paid on or before 2 September 2016.
The distribution of EIF Group 7.34 cents per stapled security for the year ended 30 June 2016 totalling $5.2m had not been
declared at year end. This will be paid on or before 2 September 2016.
71
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
77
25.
Financial risk management
The Group's principal financial instruments comprise cash, receivables, financial assets carried at fair value through profit
and loss, interest bearing loans, derivatives, payables and distributions payable.
The Group's activities are exposed to a variety of financial risks: market risk (including interest rate risk and equity price
risk), credit risk and liquidity risk.
This note presents information about the Group's exposure to each of the above risks, the Group's objectives, policies and
processes for measuring and managing risk and the Group's management of capital. Further quantitative disclosures are
included through these consolidated financial statements.
The Group's Board of Directors (Board) has overall responsilibility for the establishment and oversight of the Group's risk
management framework. The Board has established an Audit & Risk Committee (ARC), which is responsible for
monitoring the identification and management of key risks to the business. The ARC meets regularly and reports to the
Board on its activities.
The Board has established Treasury Guidelines outlining principles for overall risk management and policies covering
specific areas, such as mitigating foreign exchange, interest rate and liquidity risks.
The Group's Treasury Guidelines provide a framework for managing the financial risks of the Group with a key philosophy
of risk mitigation. Derivatives are exclusively used for hedging purposes, not as trading or other speculative instruments.
The Group uses derivative financial instruments such as interest rate swaps where possible to hedge certain risk
exposures.
The Group uses 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, ageing analysis for credit risk and cash flow forecasting for liquidity
risk.
There have been no other significant changes in the types of financial risks or the Group's risk management program
(including methods used to measure the risks).
a)
Market risk
Market risk refers to the potential for changes in the value of the Group's financial instruments or revenue streams from
changes in market prices. There are various types of market risks to which the Group is exposed incuding those
associated with interest rates, currency rates and equity market price.
Interest rate risk
(i)
Interest rate risk refers to the potential fluctuations in the fair value or future cash flows of a financial instrument because
of changes in market interest rates.
As at reporting date, the Consolidated Group had the following interest bearing assets and liabilities:
Consolidated Group
30 June 2016
Assets
Cash and cash equivalents
Total Assets
Weighted average interest rate
Liabilities
Interest bearing loans
Derivative financial instruments
Total Liabilities
Weighted average interest rate
Total
$'000
8,192
8,192
3.75%
61,880
842
62,722
3.75%
interest rate
Floating Fixed interest
Maturity
< 1 yr
$'000
$'000
Fixed interest Fixed interest
Maturity
> 5 yrs
$'000
Maturity
1 - 5 yrs
$'000
8,192
8,192
5,155
842
5,997
-
-
-
-
-
-
-
56,725
-
56,725
-
-
-
-
-
72
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
78
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
25.
Financial risk management (continued)
As at 30 June 2015, the Consolidated Group had the following interest bearing assets and liabilities:
Consolidated Group
30 June 2015
Assets
Cash and cash equivalents
Total Assets
Weighted average interest rate
Liabilities
Interest bearing loans
Derivative financial instruments
Total Liabilities
Weighted average interest rate
interest rate
Floating Fixed interest
Maturity
< 1 yr
$'000
$'000
Fixed interest Fixed interest
Maturity
> 5 yrs
$'000
Maturity
1 - 5 yrs
$'000
7,488
7,488
20,955
172
21,127
-
-
-
-
-
-
-
10,000
-
10,000
-
-
-
-
-
As at reporting date, the EIF Group had the following interest bearing assets and liabilities:
EIF Group
30 June 2016
Assets
Cash and cash equivalents
Total Assets
Weighted average interest rate
Liabilities
Interest bearing loans
Derivative financial instruments
Total Liabilities
Weighted average interest rate
interest rate
Floating Fixed interest
Maturity
< 1 yr
$'000
$'000
Fixed interest Fixed interest
Maturity
> 5 yrs
$'000
Maturity
1 - 5 yrs
$'000
2,081
2,081
-
659
659
-
-
-
-
-
-
-
52,854
-
52,854
-
-
-
-
-
As at 30 June 2015, the EIF Group had the following interest bearing assets and liabilities:
EIF Group
30 June 2015
Assets
Cash and cash equivalents
Total Assets
Weighted average interest rate
Liabilities
Interest bearing loans
Derivative financial instruments
Total Liabilities
Weighted average interest rate
interest rate
Floating Fixed interest
Maturity
< 1 yr
$'000
$'000
Fixed interest Fixed interest
Maturity
> 5 yrs
$'000
Maturity
1 - 5 yrs
$'000
3,437
3,437
22,611
172
22,783
-
-
-
-
-
-
-
10,000
-
10,000
-
-
-
-
-
73
Total
$'000
7,488
7,488
4.12%
30,955
172
31,127
4.12%
Total
$'000
2,081
2,081
3.75%
52,854
659
53,513
3.75%
Total
$'000
3,437
3,437
4.12%
32,611
172
32,783
4.12%
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
79
25.
Financial risk management (continued)
Interest Rate Sensitivity
At reporting date if Australian interest rates had been 1% higher/lower and all other variables were held constant, the
impact on the Group in relation to cash and cash equivalents, derivatives, interest bearing loans and the Group's profit
and equity would be:
Consolidated Group
30 June 2016
Carrying
Amount
Increase by 1%
Profit
Decrease by 1%
Equity
Profit
Equity
$'000
$'000
$'000
$'000
$'000
Cash and cash equivalents
Derivative financial instruments
Interest bearing loans
Total increase / (decrease)
8,192
842
61,880
70,914
82
-
(52)
30
-
(8)
-
(8)
(82)
-
52
(30)
-
-
8
8
Consolidated Group
30 June 2015
Carrying
Amount
Increase by 1%
Profit
Decrease by 1%
Equity
Profit
Equity
$'000
$'000
$'000
$'000
$'000
Cash and cash equivalents
Derivative financial instruments
Interest bearing loans
Total increase / (decrease)
7,488
172
30,955
38,615
75
-
(210)
(135)
-
10
-
10
(75)
-
210
135
-
(10)
-
(10)
EIF Group
30 June 2016
Cash and cash equivalents
Derivative financial instruments
Interest bearing loans
Total increase / (decrease)
EIF Group
30 June 2015
Cash and cash equivalents
Derivative financial instruments
Interest bearing loans
Total increase / (decrease)
Carrying
Amount
Increase by 1%
Profit
Decrease by 1%
Equity
Profit
Equity
$'000
$'000
$'000
$'000
$'000
2,081
659
52,854
55,594
Carrying
Amount
$'000
3,437
172
32,611
36,220
21
-
(55)
(34)
-
(7)
-
(7)
(21)
-
55
34
-
-
7
7
Increase by 1%
Decrease by 1%
Profit
Equity
Profit
Equity
$'000
34
-
(226)
(192)
$'000
$'000
$'000
-
10
-
10
(34)
-
226
192
-
(10)
-
(10)
74
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
80
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
25.
Financial risk management (continued)
Credit risk
b)
Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.
The Group manages credit risk on receivables by performing credit reviews of prospective debtors, obtaining collateral
where appropriate and performing detailed reviews on any debtor arrears. Credit risk on derivatives is managed through
limiting transactions to investment grade counterparties.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at
the reporting date was:
Cash and other cash equivalents
Trade and other receivables
Total
Consolidated
Group
30 June
2016
$'000
8,192
3,201
Consolidated
Group
30 June
2015
$'000
7,488
3,355
11,393
10,843
EIF Group
EIF Group
30 June
2016
$'000
2,081
6,176
8,257
30 June
2015
$'000
3,437
753
4,190
Where entities have a right of set-off and intend to settle on a net basis under netting arrangements, this set-off has been
recognised in the consolidated financial statements on a net basis. Details of the Group's contingent liabilities are
disclosed in Note 29.
Trade and other receivables consist of GST, distributions and other receivables. At balance date 38% of the Group's
receivables were due from Australian tax authories in respect of GST.
The EIF Group is exposed to credit risk with respect to the letter of loan subordination from the Company (see Note 1(a)),
in respect of the Company's non-requirement of the repayment of the loan.
At balance date there were no other significant concentrations of credit risk.
No allowance has been recognised for the GST and distribution receivable from the taxation authorities and related parties
respectively. Based on historical experience, there is no evidence of default from these counterparties which would
indicate that an allowance was necessary.
Impairment losses
The ageing of trade and other receivables at reporting date is detailed below:
Current
Past due 31-60 days
Past due 61+ days
Total
Consolidated
Group
30 June
2016
$'000
Consolidated
Group
30 June
2015
$'000
1,245
1,792
164
3,201
431
2,167
758
3,356
EIF Group
EIF Group
30 June
2016
$'000
1,787
4,389
-
6,176
30 June
2015
$'000
753
-
-
753
75
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
81
25.
Financial risk management (continued)
Liquidity risk
c)
The Group manages liquidity risk by maintaining sufficient cash including working capital and other reserves, as well as
through securing appropriate committed credit facilities.
The following are the undiscounted contractual cash flows of derivatives and non derivative financial liabilities shown at
their nominal amount.
Consolidated Group
30 June 2016
Derivative financial
liabilities
Derivatives
Non derivative financial
Payables
Interest bearing loans
Current tax liabilities
Total
Consolidated Group
30 June 2015
Derivative financial
liabilities
Derivatives
Non derivative financial
liabilities
Payables
Interest bearing loans
Current tax liabilities
Total
EIF Group
30 June 2016
Derivative financial
liabilities
Derivatives
Non derivative financial
Payables
Interest bearing loans
Current tax liabilities
Total
Less than
1 year
$'000
1 to 2
years
$'000
2 to 5
years
$'000
More than
5 years
$'000
Contractual
cash flows
$'000
Carrying
amount
$'000
114
728
9,261
2,849
452
12,676
679
16,662
1,607
19,676
-
-
48,752
-
48,752
-
-
-
-
-
-
-
-
-
-
842
9,940
68,263
2,059
81,104
Less than
1 year
$'000
1 to 2
years
$'000
2 to 5
years
$'000
More than
5 years
$'000
Contractual
cash flows
$'000
Carrying
amount
$'000
86
86
5,385
9,835
837
16,143
901
923
485
2,395
-
-
23,319
-
23,319
-
-
-
-
-
-
-
-
-
-
172
6,286
34,077
1,322
41,857
Less than
1 year
$'000
1 to 2
years
$'000
2 to 5
years
$'000
More than
5 years
$'000
Contractual
cash flows
$'000
Carrying
amount
$'000
114
545
311
7,442
86
7,953
-
14,459
-
15,004
-
-
36,014
-
36,014
-
-
-
-
-
-
-
-
-
-
659
311
57,915
86
58,971
76
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
82
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
25.
Financial risk management (continued)
EIF Group
30 June 2015
Derivative financial
liabilities
Derivatives
Non derivative financial
liabilities
Payables
Interest bearing loans
Current tax liabilities
Total
Less than
1 year
$'000
1 to 2
years
$'000
2 to 5
years
$'000
More than
5 years
$'000
Contractual
cash flows
$'000
Carrying
amount
$'000
86
86
236
13,955
170
14,447
-
824
-
910
-
-
20,824
-
20,824
-
-
-
-
-
-
-
-
-
-
172
236
35,603
170
36,181
Capital risk management
d)
The Group maintains its capital structure with the objective to safeguard its ability to continue as a going concern, to
increase the returns for Securityholders and to maintain an optimal capital structure. The capital structure of the Group
consists of equity as listed in Note 22.
The Group assesses its capital management approach as a key part of the Group's overall strategy and it is continuously
reviewed by management and the Directors.
To achieve the optimal capital structure, the Board may use the following strategies: amend the distribution policy of the
Group; issue new securities through a private or public placement; activate the Distribution Reinvestment Plan (DRP);
issue securities under a Security Purchase Plan (SPP); conduct an on-market buyback of securities; acquire debt; or
dispose of investment properties.
Australian Financial Services License
The Responsible Entity is licensed as an Australian Financial Services Licensee.
Under licence condition 9. the Responsible Entity must:
(a)
(b)
(c)
be able to pay its debts as and when they become due and payable; and
show in its most recent statement of financial position lodged with ASIC that its total (adjusted) assets exceed total
(adjusted) liabilities; and
have no reason to suspect that its total (adjusted) assets would not exceed total (adjusted) liabilities on a current
statement of financial position; and
(d)
meet the cash needs requirements by complying with Option 1
77
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
83
25.
Financial risk management (continued)
Under licence condition 10, the Responsible Entity must maintain net tangible assets (NTA) of not less than the greater of:
(a)
(b)
(c)
$150,000; or
0.5% of the value of Scheme Assets; or
10% of Average Responsible Entity revenue.
The Responsible Entity must also maintain Cash or Cash Equivalents of the greater of $150,000 or 50% of the required
NTA as well as Liquid Assets of greater than the required NTA.
The Responsible Entity had at all times a cash flow projection of at least 12 months, with assumptions, showing its ability
to meet debts as and when they fall due.
The Responsible Entity has not reported to ASIC any breaches of its financial requirements under its Australian Financial
Services Licence.
26.
Fair value measurement
The Group recognises the following assets and liabillities at fair value on a recurring basis:
* Investment Properties
* Property, plant and equipment
* Financial assets and liabilities carried at fair value through profit and loss or reserves
(a)
Fair value hierarchy
AASB 13 Fair Value Measurement requires disclosure of fair value measurements by level of the following fair value
measurement hierarchy.
a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
b)
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly (Level 2); and
Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
c)
78
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
84
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
26.
Fair value measurement (continued)
The following table presents the Consolidated Group's assets and liabilities measured and recognised at fair value at 30
June 2016 on a recurring basis:
Consolidated Group
June 2016
Assets measured at fair value
Property, plant and equipment
Total assets
Liabilities measured at fair value
Derivatives
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
-
-
-
-
-
136,148
136,148
136,148
136,148
(842)
(842)
-
-
(842)
(842)
The following table presents the Consolidated Group's assets and liabilities measured and recognised at fair value at 30
June 2015 on a recurring basis:
Consolidated Group
June 2015
Assets measured at fair value
Property, plant and equipment
Total assets
Liabilities measured at fair value
Derivatives
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
-
-
-
-
-
86,048
86,048
86,048
86,048
(172)
(172)
-
-
(172)
(172)
The following table presents the EIF Group's assets and liabilities measured and recognised at fair value at 30 June 2016
EIF Group
June 2016
Assets measured at fair value
Investment properties
Total assets
Liabilities measured at fair value
Derivatives
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
-
-
-
-
-
106,087
106,087
106,087
106,087
(659)
(659)
-
-
(659)
(659)
The following table presents the EIF Group's assets and liabilities measured and recognised at fair value at 30 June 2015
on a recurring basis:
EIF Group
June 2015
Assets measured at fair value
Investment properties
Total assets
Liabilities measured at fair value
Derivatives
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
-
72,908
72,908
72,908
72,908
(172)
(172)
-
-
(172)
(172)
-
-
-
-
79
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
85
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
26.
Fair value measurement (continued)
(b)
Reconciliation of movements in fair value of level 3 assets and liabilities for the period to 30 June 2016
Consolidated Group
Opening balance
Additions
Depreciation
Fair value gains / (losses)
Revaluation Gains / (losses)
Disposals
Closing balance
Property, plant and
equipment
(Level 3)
$'000
86,048
52,956
(3,666)
(2,041)
2,851
-
Total
$'000
86,048
52,956
(3,666)
(2,041)
2,851
-
136,148
136,148
Reconciliation of movements in fair value of level 3 assets and liabilities for the period to 30 June 2015
Consolidated Group
Opening balance
Additions
Depreciation
Fair value gains / (losses)
Disposals
Closing balance
EIF Group
30 June 2016
Opening balance
Additions
Fair value gains / (losses)
Closing balance
EIF Group
30 June 2015
Opening balance
Additions
Fair value gains / (losses)
Closing balance
Property, plant and
equipment
(Level 3)
$'000
79,865
(2,303)
8,486
-
86,048
Investment
properties
(Level 3)
$'000
72,908
35,232
(2,053)
106,087
Investment
properties
(Level 3)
$'000
-
63,205
9,703
72,908
Total
$'000
-
79,865
(2,303)
8,486
-
86,048
Total
$'000
72,908
35,232
(2,053)
106,087
Total
$'000
-
63,205
9,703
72,908
The Group did not measure any financial assets or financial liabilities at fair value on a non-recurring basis as at 30 June
2016.
80
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
86
Notes to the Financial Statements
ELANOR INVESTORS GROUP
ELANOR INVESTORS GROUP
continued
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
FOR THE YEAR ENDED 30 JUNE 2016
26.
26.
(c)
(c)
Fair value measurement (continued)
Fair value measurement (continued)
Valuation techniques used to derive Level 2 and Level 3 fair values
Valuation techniques used to derive Level 2 and Level 3 fair values
Financial Instruments
Financial Instruments
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
determined using valuation techniques. These valuation techniques maximise the use of observable market data where it
determined using valuation techniques. These valuation techniques maximise the use of observable market data where it
is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an
is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an
instrument are observable, the instrument is included in level 2.
instrument are observable, the instrument is included in level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This
is not applicable for the Group or the EIF Group.
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This
is not applicable for the Group or the EIF Group.
Specific valuation techniques used to value financial instruments include:
-
-
Specific valuation techniques used to value financial instruments include:
-
-
The use of quoted market prices or dealer quotes for similar instruments;
The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on
observable yield curves; and
The use of quoted market prices or dealer quotes for similar instruments;
The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on
observable yield curves; and
All of the resulting fair value estimates of financial instruments are included in level 2. There are no level 3 financial
instruments in either the Group or the EIF Group.
All of the resulting fair value estimates of financial instruments are included in level 2. There are no level 3 financial
instruments in either the Group or the EIF Group.
Property Assets
Property Assets
The aim of the valuation process is to ensure that assets are held at fair value and that the Group is compliant with
applicable Australian Accounting Standards, regulations, and the Trust's Constitution and Compliance Plan.
The aim of the valuation process is to ensure that assets are held at fair value and that the Group is compliant with
applicable Australian Accounting Standards, regulations, and the Trust's Constitution and Compliance Plan.
All properties are required to be internally valued every six months with the exception of those independently valued
All properties are required to be internally valued every six months with the exception of those independently valued
during that six month period. The internal valuations are performed by utilising the information from a combination of
during that six month period. The internal valuations are performed by utilising the information from a combination of
asset plans and forecasting tools perpared by the asset management team. Appropriate capitalisation rate, terminal yield
asset plans and forecasting tools perpared by the asset management team. Appropriate capitalisation rate, terminal yield
and discount rates based on comparable market evidence and recent external valuation parameters are used to produce
and discount rates based on comparable market evidence and recent external valuation parameters are used to produce
a capitalisation based valuation and a discounted cash flow valuation.
a capitalisation based valuation and a discounted cash flow valuation.
The internal valuations are reviewed by the Chief Operating Officer who recommends each property's valuation to the
Audit, Risk & Compliance Committee and the Board in accordance with the Group's internal valuation protocol.
The internal valuations are reviewed by the Chief Operating Officer who recommends each property's valuation to the
Audit, Risk & Compliance Committee and the Board in accordance with the Group's internal valuation protocol.
The Group's valuation policy requires that each property in the portfolio is valued by an independent valuer at least every
three years. In practice, properties may be valued more frequently than every three years primarily where there may have
been a material movement in the market and where there is a significant variation betwen the carrying value and the
internal valuation.
The Group's valuation policy requires that each property in the portfolio is valued by an independent valuer at least every
three years. In practice, properties may be valued more frequently than every three years primarily where there may have
been a material movement in the market and where there is a significant variation betwen the carrying value and the
internal valuation.
Independent valuations are performed by independent and external valuers who hold a recognised relevant professional
qualification and have specialised expertise in the types of investment properties valued.
Independent valuations are performed by independent and external valuers who hold a recognised relevant professional
qualification and have specialised expertise in the types of investment properties valued.
Valuation technique and inputs
Valuation technique and inputs
The key inputs used to measure fair values of investment properties are disclosed below along with their sensitivity to an
increase or decrease.
The key inputs used to measure fair values of investment properties are disclosed below along with their sensitivity to an
increase or decrease.
The investment properties fair values presented are based on market values, which are derived using the capitalisation
and the discounted cashflow methods. The Group's preferred or primary method is the capitalisation method.
The investment properties fair values presented are based on market values, which are derived using the capitalisation
and the discounted cashflow methods. The Group's preferred or primary method is the capitalisation method.
Capitalisation method
Capitalisation method
Capitalisation rate (or cap rate) is an approximation of the ratio between the net operating income produced by an
investment property and its fair value. This excludes consideration of costs of acquisition or disposal. The net income is
capitalised in perpetuity from the valuation date at an appropriate investment yield. The adopted percentage rate
investment yield reflects the capitalisation rate (cap rate) and includes consideration of the property type, location,
comparable sales and whether the property is subject to vacant possession (in the case of hotel properties).
Capitalisation rate (or cap rate) is an approximation of the ratio between the net operating income produced by an
investment property and its fair value. This excludes consideration of costs of acquisition or disposal. The net income is
capitalised in perpetuity from the valuation date at an appropriate investment yield. The adopted percentage rate
investment yield reflects the capitalisation rate (cap rate) and includes consideration of the property type, location,
comparable sales and whether the property is subject to vacant possession (in the case of hotel properties).
81
81
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
87
26.
Fair value measurement (continued)
Discounted cash flows (DCF)
Under the DCF method, a property's fair value is estimated using explicit assumptions regarding the benefits and liabilities
of ownership over the asset's life including an exit or terminal value. The DCF method involves the projection of a series of
cash flows on a real property interest. To this projected cash flow series, an appropriate discount rate is applied to
establish the present value of the income stream associated with the property. The discount rate is the rate of return used
to convert a monetary sum, payable or receivable in the future, into present value. The rate is determined with regards to
market evidence and the prior independent valuation.
All property investments are categorised as level 3 in the fair value hierarchy. There were no transfers between the
hierarchies during the period.
The significant unobservable inputs associated with the valuation of the Group's property, plant and equipment are as
follows:
Consolidated Group
Assets measured at fair value
Property, plant and equipment
Total assets
Consolidated Group
Book Value
30 June
2016
$'000
136,148
136,148
Book Value
30 June
2015
$'000
Assets measured at fair value
Property, plant and equipment
Total assets
86,048
86,048
Capitalisation Rate
%
Discount Rate
%
9.00% -23.00%
9.00% -13.00%
Capitalisation Rate
%
Discount Rate
%
9.00% - 23.00%
9.00% - 13.00%
The significant unobservable inputs associated with the valuation of the Group's investment properties are as follows:
EIF Group
Assets measured at fair value
Investment properties
Total assets
Assets measured at fair value
Investment properties
Total assets
Book Value
30 June
2016
$'000
106,087
106,087
Book Value
30 June
2015
$'000
72,908
72,908
Capitalisation Rate
%
Discount Rate
%
9.00% - 23.00%
9.00% - 13.00%
Capitalisation Rate
%
Discount Rate
%
9.00% - 23.00%
9.00% - 13.00%
82
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
88
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
26.
Fair value measurement (continued)
Sensitivity Information
The key unobservable inputs to measure fair value of investment properties are disclosed below along with sensitivity to a
significant increase or decrease set out in the following table:
Fair value measurement sensitivity to significant increase in input
Fair value measurement sensitivity to significant decrease in input
Decrease
Increase
Capitalisation Rate
%
Discount Rate
%
Decrease
Increase
Sensitivity Analysis
When calculating the income capitalisation approach, the net property income has a strong inter-relationship with the
adopted capitalisation rate given the methodology involves assessing the total income receivable from the property and
capitalising this in perpetuity to derive a capital value. In theory, an increase in the income and an increase (softening) in
the adopted capitalisation rate could potentially offset the impact to the fair value. The same can be said for a decrease in
the income and a decrease (tightening) in the adopted capitalisation rate. A directionally opposite change in the income
and the adopted capitalisation rate could potentially magnify the impact to the fair value.
When assessing a discounted cash flow, the adopted discount rate and adopted terminal yield have a strong
interrelationship in deriving a fair value given the discount rate will determine the rate at which the terminal value is
discounted to the present value. The impact on the fair value of an increase (softening) in the adopted discount rate could
potentially offset the impact of a decrease (tightening) in the adopted terminal yield. The same can be said for a decrease
(tightening) in the adopted discount rate and an increase (softening) in the adopted terminal yield. A directionally similar
change in the adopted discount rate and adopted terminal yield could potentially magnify the impact to the fair value.
83
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
89
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
27.
Net tangible assets
Net tangible assets are calculated as follows:
Total assets
Less: Intangible assets
Less: Total liabilities
Net tangible assets
Total number of stapled securities on issue
Net tangible asset backing per stapled security / unit
Consolidated Consolidated
Group
30 June
2015
$'000
Group
30 June
2016
$'000
EIF Group EIF Group
30 June
2016
$'000
30 June
2015
$'000
199,015
(7,670)
(73,773)
117,572
71,386
1.65
135,650
(7,820)
(38,213)
137,139
91,100
-
-
(53,412)
(33,216)
89,617
83,727
57,884
70,645
1.27
71,386
1.17
70,645
0.82
28.
Segment information
Business segments
The Group is organised into the following divisions by business type:
Funds Management
The Funds Management division manages third party owned investment funds and syndicates. As at 30 June 2016,
the Funds Management division has approximately $484.5m of external investments under management, being the
Managed Investments;
Hotels, Tourism and Leisure
Hotel, Tourism and Leisure originates investment and fund management assets. The current investment portfolio
includes Featherdale Wildlife Park, Ibis Styles Canberra Eaglehawk Hotel and Ibis Styles Albany Hotel along with co-
investments in 193 Clarence Hotel syndicate, Bell City Fund and the Elanor Hospitality and Accommodation Fund
(Peppers Cradle Mountain Lodge, Mantra Wollongong Hotel, Mantra Pavilion Wagga Wagga, Best Western Port
Macquarie, Best Western Tall Trees and Parklands Resort Mudgee). Hotel, Tourism and Leisure also manages these
syndicates;
Real Estate
Real Estate originates investment and fund management assets. The current investment portfolio comprises an
investment in Auburn Central syndicate, Elanor Retail Property Fund and Limestone Street Centre syndicate. Real
Estate manages Elanor Retail Property Fund, Limestone Street Centre, Super A Mart, John Cootes Diversified
Property and Auburn Central syndicates; and
Special Situation Investments
Special Situations Investments contains the John Cootes Furniture business and the property associated with John
Cootes Furniture business at Merrylands, NSW.
The main income statement items used by management to assess each of the divisions are divisional revenue and
divisional EBITDA. In addition, depreciation and amortisation are analysed by division. Each of these income statement
items is looked at after adjusting for transaction and establishment costs, amortisation of intangible assets and
impairment of goodwill.
84
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
90
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
Special Unallocated
Total
Real
Estate
$'000
-
-
321
-
321
-
321
-
Situation
Investments
$'000
28,289
-
-
(25,885)
2,404
(125)
2,279
22
2,301
30,279
4,009
Corporate
$'000
140
-
-
(6,223)
(6,083)
(234)
(6,317)
(3,796)
15
(209)
(1,571)
(927)
(12,805)
3,377
18,483
Special Unallocated
Corporate
Real
Estate
$'000
-
-
Situation
Investments
$'000
19,653
$'000
748
-
-
(4,153)
(3,405)
(34)
(3,439)
(4,843)
-
(138)
(1,259)
(577)
(10,256)
-
-
(17,810)
1,843
(58)
1,785
1,785
24,685
2,699
-
-
6
6
6
6
620
-
$'000
64,000
11,733
611
(61,963)
14,381
(3,816)
10,565
(3,796)
81
(209)
(1,571)
(927)
4,143
199,015
73,773
Total
$'000
47,917
10,170
93
(46,190)
(11,990)
(2,453)
9,537
(4,843)
-
(138)
(1,259)
(577)
2,720
2,325
135,650
31,426
38,213
28.
Segment information (continued)
Consolidated Group - 30 June 2016
Funds
Hotels,
Management
$'000
7,810
-
-
(1,427)
6,383
(150)
6,233
Tourism
& Leisure
$'000
27,761
11,733
290
(28,428)
11,356
(3,307)
8,049
Revenue from trading activities
Revenue from wildlife parks
Share of profit of equity
accounted investments
Operating expense
Divisional EBITDA
Depreciation and amortisation
Divisional EBIT
Transaction and establishment costs not included in divisional EBIT
Interest income
Amortisation of Borrowing Costs
Borrowing costs
Net tax benefit / (expense)
Profit / (loss) for the year
Total assets
Total liabilities
8,073
138,386
51,247
6,253
4,094
34
20
24
321
22,879
-
Consolidated Group - 30 June 2015
Revenue from trading activities
Revenue from wildlife parks
Share of profit of equity
accounted investments
Operating expense
Divisional EBITDA
Depreciation and amortisation
Divisional EBIT
Funds
Management
$'000
4,902
-
-
(424)
4,478
(150)
4,328
Hotels,
Tourism
& Leisure
$'000
22,614
10,170
87
(23,803)
9,068
(2,211)
6,857
Transaction and establishment costs not included in divisional EBIT
Interest income
Amortisation of Borrowing Costs
Borrowing costs
Net tax benefit / (expense)
Profit / (loss) for the year
6,857
4,328
Total assets
Total liabilities
4,565
103,455
326
3,762
85
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
91
28.
Segment information (continued)
EIF Group - 30 June 2016
Revenue from trading activities
Share of profit of equity
accounted investments
Operating expense
Divisional EBITDA
Depreciation and amortisation
Divisional EBIT
Funds
Management
$'000
-
-
-
-
-
-
Hotels,
Tourism
& Leisure
$'000
9,012
290
-
9,302
-
9,302
Real
Estate
$'000
-
321
-
321
-
321
Transaction and establishment costs not included in divisional EBIT
Fair value adjustment on revaluation of investment property
18
Interest income
Responsible Entity management fee expense
Amortisation of Borrowing Costs
Borrowing costs
Profit / (loss) for the year
Total assets
Total liabilities
9,320
114,014
20,809
-
-
-
321
22,879
4,272
EIF Group - 30 June 2015
Revenue from trading activities
Share of profit of equity
accounted investments
Operating expense
Divisional EBITDA
Depreciation and amortisation
Divisional EBIT
Funds
Management
$'000
-
Hotels,
Tourism
& Leisure
$'000
8,132
-
-
-
-
-
87
(10)
8,209
-
8,209
Real
Estate
$'000
-
-
-
6
6
6
Transaction and establishment costs not included in divisional EBIT
Fair value adjustment on revaluation of investment property
Interest income
Responsible Entity management fee expense
Amortisation of Borrowing Costs
Borrowing costs
Profit / (loss) for the year
Total assets
Total liabilities
-
-
-
8,209
76,616
222
6
620
-
29.
Contingent liabilities and commitments
Special Unallocated
Corporate
Situation
Investment
$'000
-
Total
$'000
9,034
611
(229)
9,416
-
9,416
(1,440)
(2,054)
24
(405)
(158)
(1,594)
3,789
137,139
53,412
Total
$'000
8,159
93
(210)
8,042
-
8,042
(1,297)
9,703
(130)
(113)
(1,144)
15,061
91,100
33,216
$'000
22
-
(229)
(207)
-
(207)
(1,440)
(2,054)
6
(405)
(158)
(1,594)
(5,852)
246
28,331
$'000
27
(200)
(173)
-
(173)
(1,297)
9,703
(130)
(113)
(1,144)
6,846
13,864
32,994
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Special Unallocated
Corporate
Situation
Investment
$'000
-
Unless otherwise disclosed in the financial statements, there are no material contingent liabilities and commitments.
86
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
92
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
30.
Related party disclosures
Elanor Investors Group
Responsible Entity fees
In accordance with the Constitution of Elanor Investment Fund (EIF), EFML is entitled to receive a management fee
equal to its reasonable costs in providing its services as Responsible Entity for which it is not otherwise reimbursed.
For the year ending 30 June 2016, this amount is $130,000.
Elanor Funds Management Limited (EFML) is the Responsible Entity of the Elanor Investment Fund (EIF) (and a
wholly owned subsidiary of Elanor Investors Limited).
EFML makes payments for EIF from time to time. These payments are incurred by EFML in properly performing or
exercising its powers or duties in relation to EIF. EFML has a right of indemnity from EIF for any liability incurred by
EFML in properly performing or exercising any of its powers or duties in relation to EIF. The amount reimbursed for the
year ending 30 June 2016 was nil.
EFML acted as Trustee and Manager and/or Custodian of a number of unregistered managed investment schemes,
including schemes where the Group also held an investment. EFML is entitled to fee income, as set out in the
Constitution of each scheme, including management fees, acquisition fees, equity raise fees and peformance fees.
EFML is also entitled to be reimbursed from each Scheme for costs incurred in properly performing or exercising any of
its powers or duties in relation to each Scheme.
A summary of the income earned during the year from these managed investment schemes is provided below:
Elanor Retail Property Fund (formerly Manning Mall
Syndicate)
Griffin Plaza Syndicate
Super A Mart Auburn Syndicate
John Cootes Diversified Property Syndicate
193 Clarence Hotel Syndicate
Bell City Syndicates
Auburn Central Syndicate
Dee Why Syndicate
Marsden Park Syndicate
Limestone Syndicate
Total
Consolidated Consolidated
Group
30 June
2015
$'000
Group
30 June
2016
$'000
EIF Group EIF Group
30 June
2016
$'000
30 June
2015
$'000
2,199
1,055
184
678
468
1,728
716
-
-
782
7,810
966
512
13
132
500
1,989
990
4
10
-
5,116
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Establishment of the Elanor Hospitality and Accommodation Fund (EHAF)
During the year Cradle Mountain Lodge and Wollongong Hotel was sold from ENN to EHAF. Please refer to Note 32
for further details.
Merrylands Property
On the sale of the Merrylands Property, Moss Capital of which Glenn Willis and William Moss (Bill) Moss AO are
directors and shareholders, will be entitled to a performance fee of 20% of the amount by which the IRR on the
Merrylands Property exceeds 15%, plus GST.
87
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
93
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
30.
Related party disclosures (continued)
Key Management Personnel (KMP)
Executive
Mr Glenn Willis
Mr Paul Siviour
Ms Marianne Ossovani
Mr Symon Simmons
Position
Managing Director and Chief Executive Officer
Chief Operating Officer
Chief Investment Officer and Head of Hotels, Tourism and Leisure
Chief Financial Officer and Company Secretary
Non Executive
Mr Paul Bedbrook
Mr Nigel Ampherlaw
Mr William (Bill) Moss AO
Position
Independent Chairman and Non-Executive Director
Independent Non-Executive Director
Non-Executive Director
The agggregate compensation made to the Key Management Personnel of the Group is set out below:
Short term benefits
Post employment benefits
Share-based payment
Total
Details of the remuneration of the KMP's is provided in the Remuneration Report.
30 June
2016
$
2,525,939
103,877
285,930
2,915,746
30 June
2015
$
1,166,786
105,645
252,896
1,525,327
88
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
94
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
31.
Share-based payments
The Group has short term and long term ownership-based compensation schemes for executives and senior
employees.
The Group has implemented an STI scheme (the STI Scheme), based on an annual profit share, which is available to
all staff. The STI Scheme is based on a profit share pool, to be calculated each year based on the Group's financial
performance for the relevant year.
The purpose of the STI Scheme is to provide an annual bonus arrangement that incentivises and rewards
management for achieving annual pre-tax ROE for Securityholders in excess of 10% per annum. The profit share pool
is based on 20% of ROE above 10%, 22.5% of the ROE above 15%, 25% of the ROE above 17.5% and 30% of the
ROE above 20%. The Scheme provides that 50% of any awards to individuals from the profit share pool be delivered in
deferred securities, which vest two years after award, provided that the employee remains with the Group and
maintains minimum performance standards.
The Elanor Investors Group Board monitors the appropriateness of the profit share scheme and any distribution of the
profit share pool will be at the Board's discretion, taking into consideration the forecast and actual financial
performance and position of the Group
The Group has implemented an LTI scheme (the LTI Scheme), based on an executive loan security plan and an
executive options plan.
Under the executive loan security plan awards (comprising the loan of funds to eligible Elanor employees to acquire
securities which are subject to vesting conditions) have been issued to certain employees. Awards totalling 6.2 million
securities have been made.
The limited recourse loan provided by the Group under the loan security plan carries interest of an amount equal to any
cash dividend or distribution but not including any dividend or distribution of capital, or an abnormal distribution.
In addition to the loan security plan, the Group has implemented an executive option plan comprising rights to acquire
securities at a specified exercise price, subject to the achievement of vesting conditions, which may be offered to
certain eligible employees (including the Chief Executive Officer, direct reports to the Chief Executive Officer and other
selected key executives) as determined by the Board. Options have been issued to the Chief Executive Officer only,
over 1.6 million securities.
The purpose of the LTI Scheme is to assist in attracting, motivating and retaining key management and employees.
The LTI Scheme operates by providing key management and employees with the opportunity to participate in the
future performance of Group securities. The vesting conditions for the LTI plans and related awards include both a
service based hurdle and an absolute total security holder return (TSR) performance hurdle. The service based hurdle
is 3 years in the case of both plans. The TSR is 10% per annum in the case of the loan security plan and 15% per
annum in the case of the options plan. The option plan has an exercise price of $1.80 per security (44% premium to
the $1.25 offer price at the time of the IPO).
TSR was selected as the LTI performance measure to ensure an alignment between the Securityholder return and
reward for executives.
89
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
95
Share-based payments (continued)
31.
The following share-based payment arrangements were in existence during the current reporting period:
Employee Loan Securities
Award Type
Number
Granted Grant Date
Vesting
Date
Loan Securities
6,240,000
11/07/2014 10/07/2017
Vesting
Conditions1
Service & non-
market
Security
Price at
Grant Date
Fair Value
at Grant
Date
$1.25
$0.10
1. Service and non-market conditions include financial and non-financial targets along with a deferred vesting period
At the time of the IPO, 6.4m Loan Securities were issued. In June 2016, 160,000 lapsed loan securities were converted
to meet the requirements of the 2016 STI scheme issue.
Employee Options
Award Type
Number
Granted Grant Date
Vesting
Date
Options
1,600,000
11/07/2014 10/07/2017
Vesting
Conditions1
Exercise
Price
Fair Value
at Grant
Date
Service and
non-market
$1.80
$0.03
1. Service and non-market conditions include financial and non-financial targets along with a deferred vesting period
2. Fair Value of Options granted is calculated at the grant date using a binomial pricing model
The Group recognises the fair value at the grant date of equity settled securities above as an employee benefit
expense proportionally over the vesting period with a corresponding increase in equity. Fair value of options is
measured at grant date using a Monte-Carlo Simulation and Binomial option pricing model, performed by an
independent valuer, and models the future price of the Group's stapled securities.
Securities issued under STI Plan
Award Type
Number
Granted Grant Date
Vesting
Date
Vesting
Conditions1
Exercise
Price
Fair Value
at Grant
Date
FY16 STI
741,453
24/06/2016 24/06/2016
Service
$1.94
$1.90
1. Service conditions include a deferred vesting period
The total expense recognised during the year in relation to the Group's equity settled share-based payments was
$292,350.
Key inputs to the pricing models include:
Volatility
Dividend Yield
Risk-free Interest Rate
25%
9%
3%
90
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
96
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
32.
Significant Events
John Cootes Furniture – Yennora Warehouse Fire
As noted in the Group’s 30 June 2015 Financial Report, on 27 July 2015, the John Cootes Furniture warehouse in
Orchardleigh Street, Yennora sustained major damage as a result of a fire. The entire contents of the building,
primarily stock and plant and equipment of the John Cootes Furniture business was destroyed and the building was
unable to be recovered.
The Group has been actively working with the Company’s insurer and the status of the relevant insurance claims are
set out below.
Loss of stock: $2.0 million. This claim has now been fully settled. This amount has been included in other income in
the profit and loss for the year.
Loss of plant and equipment (including other non-stock contents): $1.7 million. This claim has now been fully settled.
This amount has been included in other income in the profit and loss for the year.
Business interruption: Four claims have been lodged that relate to lost sales from the date of the fire on 27 July 2015 to
31 May 2016 along with claim preparation costs and additional costs of working. To date, progress payments of $2.3
million have been received from the insurer.
A further Business Interruption progress claim for lost sales along with claim preparation costs and additional costs of
working is expected to be lodged in September 2016.
The summary of insurance claims included in the Group’s results to 30 June 2016 is as follows:
Plant & Equipment:
Stock:
Business Interruption:
Total Insurance Recoveries:
$1.7 million
$2.0 million
$2.3 million
$6.0 million
The Group’s profit result to 30 June 2016 incorporates all costs (including lost stock and plant and equipment) as a
result of the fire, totalling $2.9 million.
An adjustment has been made to reduce Core Earnings by $0.7 million, reflecting the insurance recovery received for
the loss of plant and equipment less those proceeds that will be used to purchase replacement plant and equipment
required by the business.
Establishment of the Elanor Hospitality and Accommodation Fund (EHAF)
On 21 March 2016 the Group established a new multi asset managed fund, the Elanor Hospitality and Accommodation
Fund (Fund). The Fund comprises a $95 million portfolio of 6 Australian Hotels (including Peppers Cradle Mountain
Lodge, Mantra Wollongong Hotel, Mantra Pavilion Wagga Wagga, Best Western Tall Trees, Best Western Port
Macquarie and Parklands Resort Mudgee) with strong, diversified cash flows and significant redevelopment potential.
Consistent with its strategy of aligning interests with investors, at 30 June 2016 the Group holds a co-investment of
approximately 42% of the Fund’s equity.
The Group applied the majority of the net proceeds it received from the sale of Cradle Mountain Lodge and
Wollongong Hotel into the Fund, to reduce debt.
91
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
97
33.
Events occurring after reporting date
Subsequent to the period end, a distribution of 7.34 cents per stapled security has been declared by the Board of
Directors. The total distribution amount of $5.2m will be paid on or before 2 September 2016 in respect of the six
months ended 30 June 2016.
On 4 August 2016 the Group completed a capital raise through an Institutional Placement (“Placement”), raising $30
million (before costs). The proceeds from the Placement will be used to establish and cornerstone a new commercial
property fund, the Elanor Commercial Property Fund, and cornerstone a new retail Real Estate Investment Trust which
ENN is preparing to list on the ASX. The Group issued 16.2 million stapled securities at an issue price of $1.85. The
securities issued will rank pari-passu with existing securities on issue, but will not participate in the Group's final
distribution for the six months ending 30 June 2016.
The Group has also completed a Security Purchase Plan (closed 22 August 2016), raising an additional $3 million.
The Group will issue 1.6 million stapled securities, at an issue price of $1.85. The securities issued will rank pari-passu
with existing securities on issue, but will not participate in the Group's final distribution for the six months ending 30
June 2016.
Other than the event disclosed above, the directors are not aware of any other matter or circumstance not otherwise
dealt with in the financial reports or the Directors' Report that has significantly affected or may significantly affect the
operations of the Group, the results of those operations or the state of affairs of the Group in financial period
subsequent to the year ended 30 June 2016.
34.
Notes to the consolidated statements of cash flows
Reconciliation of profit after income tax to net cash flows from operating activities
Profit / (Loss) for the period
Depreciation and amortisation of non-current assets
Amortisation of borrowing costs
Fair value adjustment on revaluation of investment property
Net unrealised revenue from Equity Investments
Other non cash items
Transaction and IPO costs through P&L
Straight line lease expense and lease incentive income
Employee costs funded directly through equity
Net cash provided by operating activities before
changes in asset and liabilities
Movement in working capital
Decrease / (increase) in trade and other receivables
Decrease / (increase) in stock
Increase / (decrease) in other current assets
Decrease / (increase) in deferred tax
Increase / (decrease) in current tax liability
Increase / (decrease) in trade and other payables
Increase / (decrease) in other liabilities
Increase / (decrease) in other provision
Net cash from operating activities after changes in
assets and liabilities
Consolidated Consolidated
Group
30 June
2015
$'000
2,720
Group
30 June
2016
$'000
4,143
3,816
208
2,041
(611)
292
1,755
33
(1,129)
2,453
139
-
(93)
331
4,980
-
-
EIF Group EIF Group
30 June
2016
$'000
3,789
-
158
2,054
(611)
153
1,440
-
(587)
30 June
2015
$'000
15,061
-
113
(10,805)
(93)
174
2,398
-
-
10,548
10,530
6,396
6,848
154
(1,604)
(585)
495
432
1,477
1,116
1,554
(2,712)
(1,347)
(387)
378
198
(640)
226
336
(1,034)
-
(69)
-
-
(98)
-
(37)
(97)
-
(24)
-
-
29
-
37
13,587
6,582
5,158
6,793
92
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
98
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
35.
Commitments
Lease commitments: Elanor Group as lessee
The Elanor Group has non-cancellable leases in respect of premises. The lease is for a duration of between 1 to 5
years and is classified as an operating lease. The minimum lease payments are as follows:
Within one year
Later than one year but not later than 5 years
Total lease commitments
Consolidated Consolidated
Group
30 June
2015
$'000
1,987
13,195
15,182
Group
30 June
2016
$'000
3,192
14,504
17,696
EIF Group EIF Group
30 June
2016
$'000
-
-
-
30 June
2015
$'000
-
-
-
In the opinion of the Directors, there were no other commitments at the end of the reporting period.
36.
Parent entity
Financial Position
Current assets
Non - current assets
Total Assets
Current liabilities
Non - current liabilities
Total Liabilities
Contributed Equity
Reserves
Retained profits / (accumulated losses)
Total Equity
Financial performance
Profit / (loss) for the period
Other comprehensive income for the period
Total comprehensive income for the period
Elanor
Investors
Limited 1
30 June
2016
$'000
9,258
40,648
49,906
Elanor
Investors
Limited 1
30 June
2015
$'000
9,138
35,508
44,646
Elanor
Investment
Fund 2
30 June
2016
$'000
4,523
74,633
79,156
Elanor
Investment
Fund 2
30 June
2015
$'000
796
76,173
76,969
10,264
154
10,418
42,280
(639)
(2,153)
39,488
2,262
-
2,262
4,427
(55)
4,372
41,589
124
(1,439)
40,274
15,825
12,509
28,334
46,209
(798)
5,411
50,822
6,564
28,464
35,028
45,460
(36)
(3,484)
41,940
(816)
-
(816)
15,816
42
15,858
(432)
(172)
(604)
Elanor Investors Limited has a net current asset deficiency of $1.0m. The deficiency arises as a result of differences in
the accounting treatment of intercompany balances with subsidiaries which see the investment in subsidiaries being
classified as non-current while the related intercompany balances are classified as current. The directors believe that
the Company will be able to pay its debts as and when they become due.
Elanor Investment Fund has a net current asset deficiency of $11.3m. The deficiency arises as a result of differences
in the accounting treatment of intercompany balances with subsidiaries which see the investment in subsidiaries being
classified as non-current while the related intercompany balances are classified as current. The directors believe that
the Fund will be able to pay its debts as and when they become due.
1. Elanor Investors Limited is the parent entity of the Consolidated Group.
2. Elanor Investment Fund is the parent entity of the EIF Group
93
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
99
Notes to the Financial Statements
ELANOR INVESTORS GROUP
continued
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
37.
Subsidiaries and Controlled entities
Details of the Group's material subsidiaries at the end of the reporting period are as follows:
Elanor Investors Limited
Name of
Subsidiary
Principal activity
Place of
incorporation
and operation
Proportion of
ownership interest
and voting power
by the Group
30 June
2016
30 June
2015
Elanor Funds Management
Limited1
Responsible entity
Australia
100%
100%
Elanor Operations Pty Limited1
Operational services
Australia
100%
100%
Trustee services
Australia
100%
100%
Elanor Management Pty Limited1 Holding company
Australia
Holding company
Australia
100%
100%
100%
100%
Wildlife park operator
Australia
100%
100%
Hotel operator
Australia
JCF Management Pty Limited1
Furniture retailer
Australia
Wiltex Wholesale Pty Limited1
Landholder
Australia
100%
100%
100%
100%
100%
100%
Hotel operator
Australia
100%
100%
Hotel operator
Australia
42%
100%
Hotel operator
Australia
42%
100%
Elanor Investment Nominees Pty
Limited1
Elanor Investment Holdings Pty
Limited1
Featherdale Management Pty
Limited1
Eaglehawk Hotel Management
Pty Limited1
Albany Hotel Management Pty
Limited1
Cradle Mountain Lodge Pty
Limited 2
Wollongong Hotel Management
Pty Limited 2
Port Macquarie Hotel
Management Pty Limited 2
Hotel operator
Australia
Tall Trees Hotel Management Pty
Limited 2
Hotel operator
Australia
Pavilion Wagga Wagga Hotel
Management Pty Limited 2
Parklands Resort Hotel
Management Pty Limited 2
Hotel operator
Australia
Hotel operator
Australia
EHAF Management Pty Limited 2
Holding company
Australia
42%
42%
42%
42%
42%
-
-
-
-
-
(1) Elanor Investors Limited ("EIL") is the head entity within the EIL tax-consolidated group. The companies in which
EIL has 100% ownership are members of the EIL tax-consolidated group.
(2) EHAF Management Pty Limited is the head entity of the EHAF tax-consolidated group.
94
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
100
Notes to the Financial Statements
continued
ELANOR INVESTORS GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
37.
Subsidiaries and Controlled entities (continued)
Elanor Investment Fund
Name of
Subsidiary
Principal activity
Place of
incorporation
and operation
Proportion of
ownership interest
and voting power
by the Group
30 June
2016
30 June
2015
Elanor Investment Trust
Co-investment in Managed Funds
Australia
100%
100%
Featherdale Wildlife Park
Syndicate
Wildlife Park landholder
Eaglehawk Syndicate
Hotel landholder
Albany Hotel Syndicate
Hotel landholder
Wollongong Hotel Syndicate
Hotel landholder
Elanor Hospitality
Accommodation and Fund
(formerly known as Cradle
Mountain Lodge Syndicate)
Hotel landholder
Wollongong Hotel Property Trust
Hotel landholder
Port Macquarie Property Trust
Hotel landholder
Tall Trees Property Trust
Hotel landholder
Pavilion Wagga Wagga Property
Trust
Hotel landholder
Parklands Resort Property Trust
Hotel landholder
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
42%
42%
42%
42%
42%
42%
100%
100%
100%
100%
100%
-
-
-
-
-
95
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Directors’ Declaration
to Stapled Security Holders
ELANOR INVESTORS GROUP
DIRECTORS' DECLARATION TO STAPLED SECURITY HOLDERS
101
In the opinion of the Directors of Elanor Investors Limited and Elanor Funds Management Limited as responsible entity
for the Elanor Investment Fund:
(a)
the financial statements and notes set out on pages 31 to 95 are in accordance with the Corporations Act 2001
(Cth) including:
(i)
(ii)
complying with Australian Accounting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting requirements; and
giving a true and fair view of the Group's and EIF's financial position as at 30 June 2016 and of their
performance, for the financial year ended on that date; and
(b)
(c)
(d)
there are reasonable grounds to believe that the Group and EIF will be able to pay their debts as and when they
become due and payable.
Note 1 confirms that the financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer
required by Section 295A of the Corporations Act 2001 (Cth) .
This declaration is made in accordance with a resolution of the Boards of Directors in accordance with Section 295(5)
of the Corporations Act 2001 (Cth).
Glenn Willis
CEO and Managing Director
Sydney
23 August 2016
96
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
102
Independent Auditor’s Report
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
Independent Auditor’s Report to the Stapled Security Holders of
Elanor Investors Group and the Unitholders of EIF Group
Report on the Financial Report
We have audited the accompanying financial report which comprises:
·
·
The consolidated balance sheet as at 30 June 2016, the consolidated statement of profit or loss and
other comprehensive income, the consolidated statement of cash flows and the consolidated
statement of changes in equity for the year ended on that date, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors’ declaration of
Elanor Investors Group, being the consolidated stapled entity (“Elanor Investors Group”). The
consolidated stapled entity, as disclosed in Note 1 to the financial report, comprises Elanor Investors
Limited and the entities it controlled at the year’s end or from time to time during the year, including
Elanor Investment Fund and the entities it controlled at year’s end or from time to time during the
financial year end; and
The consolidated balance sheet as at 30 June 2016, the consolidated statement of profit or loss and
other comprehensive income, the consolidated statement of cash flows and the consolidated
statement of changes in equity for the year ended on that date, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors’ declaration of the
consolidated entity Elanor Investors Fund, being the consolidated entity (“EIF Group”). The
consolidated entity comprises Elanor Investment Fund and the entities it controlled at the year’s end
or from time to time during the year.
Directors’ Responsibility for the Financial Report
The directors of Elanor Investors Limited and Elanor Funds Management Limited, as responsible entity of
Elanor Investment Fund, 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.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor’s judgement, including the assessment of
the risks of material misstatement of the financial report, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control, relevant to the entity’s preparation of the financial
report that gives a true and fair view, 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 entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
97
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
Independent Auditor’s Report
continued
103
reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Auditor’s Independence Declaration
In conducting our audit, we have complied with the independence requirements of the Corporations Act
2001. We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the directors of Elanor Investors Limited and Elanor Funds Management Limited, as
responsible entity of Elanor Investment Fund, would be in the same terms if given to the directors as at
the time of this auditor’s report.
Opinion
In our opinion, the financial report of Elanor Investors Group and EIF Group is in accordance with the
Corporations Act 2001, including:
(a) Elanor Investors Group and EIF Groups’ financial positions as at 30 June 2016 and of their
performance for the year ended on that date; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001 .
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 18 to 27 of the directors’ report for the year
ended 30 June 2016. The directors of Elanor Investors Limited and Elanor Funds Management Limited, as
responsible entity of Elanor Investment Fund 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.
Opinion
In our opinion the Remuneration Report of Elanor Investors Group for the year ended 30 June 2016,
complies with section 300A of the Corporations Act 2001.
DELOITTE TOUCHE TOHMATSU
AG Collinson
Partner
Chartered Accountants
Sydney, 23 August 2016
98
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016
104
Corporate Governance Statement
This statement has been approved by the Board of Directors
of Elanor Funds Management Limited (Responsible Entity
or Manager), as responsible entity of the Elanor Investment
Fund and Elanor Investors Limited (Company) and prepared
as at 30 June 2016.
Elanor Investors Group (Group) comprises the Company
and its controlled entities, including Elanor Investment Fund
(Trust) and its controlled entities. The units of the Trust
and the shares of the Company are combined and issued
as stapled securities in the Group.
PRINCIPLE 1 – LAY SOLID FOUNDATIONS
FOR MANAGEMENT AND OVERSIGHT
Board Charter
The Directors of the Group have adopted a Board Charter
that sets out the respective roles and responsibilities of the
Board and senior executives. The Board is accountable to
security holders for the performance of the Group. A copy of
the Board Charter is available at www.elanorinvestors.com.
Specifically, the Board is responsible for:
– Developing and approving the corporate strategy and
monitoring implementation of strategy,
– Evaluating, approving and monitoring the strategic and
financial plans of the Group,
– Evaluating, approving and monitoring the annual budgets
(including financial and other reporting) and business
plans,
– Evaluating, approving and monitoring the progress of
major capital expenditure, capital management and all
major corporate transactions, including the issue of
securities of the Group,
– Appointing, monitoring and managing the performance
of the Chief Executive Officer and Senior Executives as
decided from time to time,
– Reviewing, ratifying and monitoring the Group’s risk and
audit framework, (including but not limited to) systems
of risk management and internal control, and
– Reviewing, ratifying and monitoring the Group’s
operations in relation to, and compliance with, relevant
regulatory and legal requirements.
The Board Charter separately sets out the responsibilities
of the Chair.
The Board Charter also sets out the role and responsibilities
of the Chief Executive Officer and the roles and
responsibilities of management more broadly.
The Chief Executive Officer has primary responsibility
to the Board for the affairs of the Group including:
– Developing with the Board, implementing and monitoring
the strategic and financial plans for the Group, its
policies, the annual budgets and business plans, major
capital expenditure, capital management and all major
corporate transactions, including the issue of any
securities of the Group.
– Managing the appointment of senior executive positions.
– Developing, implementing and monitoring the Group’s
risk and audit management framework.
– Providing strong leadership to, and effective
management of, the Group.
The Board schedules to meet 11 times each year in the
ordinary course of business, with additional meetings held
as required. The Board met 13 times during the financial year
to 30 June 2016 and each Director’s attendance at those
meetings is set out in the Director’s Report included in this
Annual Report.
Director’s Information
In considering any selection, appointment or re-appointment
to the Board, the Board considers the necessary and
desirable competencies of any Directors or proposed
Directors.
The Board ensures that the Group undertakes appropriate
checks before appointing a person, or putting forward to
security holders a candidate for election, as a Director. The
Board will ensure that the Group provides security holders
all material information in its possession relevant to a
decision on whether or not to elect or re-elect a Director.
Agreements with Directors and Key Management
Personnel
Each Director enters into an agreement with the Company
setting out the Terms and Conditions of their appointment
including their roles and responsibilities.
Each of the Key Management Personnel enters into a
Service Agreement which sets out their position description,
duties and responsibilities, reporting lines, remuneration
entitlements, ongoing confidentiality, obligation to comply
with all corporate policies, the circumstances in which their
service may be terminated (with or without notice) and any
entitlements on termination.
Details on the remuneration of Directors and Key
Management Personnel are set out in the Remuneration
Report for the period ended 30 June 2016 included in
this Annual Report.
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 Corporate Governance Statement
continued
105
PRINCIPLE 2 – STRUCTURE THE BOARD
TO ADD VALUE
Remuneration and Nomination Committee
The Directors have established a Remuneration and
Nomination Committee. A copy of the Remuneration
and Nomination Committee Charter is available at www.
elanorinvestors.com.
The Remuneration and Nomination Committee has three
members. Two members are independent non-executive
directors (Paul Bedbrook (Chairman of the Board) and Nigel
Ampherlaw) and one member is a non-independent non-
executive director (William (Bill) Moss AO). The Committee
is chaired by William (Bill) Moss AO.
The Remuneration and Nomination Committee is not chaired
by an independent director. The Board, having regard to
the Group’s stage of development as a listed entity and the
collective experience and expertise of the members of the
Remuneration and Nomination Committee, considers the
current composition of the Remuneration and Nomination
Committee is appropriate.
During the financial year to 30 June 2016 the Remuneration
and Nomination Committee formally met five times with all
members attending.
The Remuneration and Nomination Committee is
responsible for:
– Supporting and advising the Board in fulfilling its
responsibilities to security holders and employees of the
Group, by endeavouring to ensure that the directors and
senior executives of the Group are remunerated fairly
and appropriately,
– Reviewing and advising the Board on the composition
of the Board and its Committees and the necessary
and desirable competencies of Board members,
– Developing a process for the evaluation of the
performance of the Board, its Committees and individual
executive and non-executive directors,
– Ensuring that proper succession plans are in place
for consideration by the Board,
– Advising the Board on governance standards and
appropriate corporate governance policies for the
Group, and
– Critically reviewing the Group’s performance against
its corporate governance policies.
Company Secretary
In accordance with the Board Charter, the Company
Secretary is appointed and if necessary removed by
the Board and is therefore accountable directly to the
board on all matters to do with the proper functioning
of the Board. Each Director also has direct access to the
Company Secretary.
The Company Secretary’s role includes:
– Advising the Board and its committees on governance
matters.
– Monitoring that board and committee policy and
procedures are followed.
– Co-ordinating the timely completion and despatch
of Board and committee papers.
– Ensuring that the business at Board and committee
meetings is accurately captured in the minutes.
– Helping to organise and facilitate the induction and
professional development of Directors.
Diversity Policy
The Board has adopted a Diversity Policy that aims to
promote diversity across the Group through a number
of strategies and initiatives.
A copy of the Diversity Policy is available at
www.elanorinvestors.com.
At this stage of the Group’s development, specific
measurable objectives for achieving gender diversity have
not been established. Set out below is a summary of female
participation rates across the Group as at 30 June 2016.
Board of Directors
Key Management Personnel
All Employees
2016
Female
0%
25%
176
Male
100%
75%
173
Director, Board and Committee Evaluation
The Board Charter requires that the Board undertake an
ongoing self-assessment and review of the performance
of the Board, Committees and individual Directors
annually. The process for conducting Board and Director
evaluations is similar to that adopted for the review of the
Chief Executive Officer and is conducted in a confidential
manner by the Chair of the Board.
Key Management Personnel Performance Evaluation
The Group’s goals are used as the basis for evaluating
performance of Key Management Personnel. Performance
evaluations are undertaken annually, in June, by the Chief
Executive Officer. The Chief Executive Officer’s performance
evaluation is also undertaken annually, in June, by the Board.
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 106
Corporate Governance Statement
continued
Board Skills and Competencies
The skills, experience and expertise relevant to the position
of each Director are set out in the Directors’ Report included
in this Annual Report. The Remuneration and Nomination
Committee considers the matrix of skills of the Directors
standing on the Board at least annually to identify gaps
in their skills that may be addressed through professional
development or by the appointment of additional directors.
The Board comprises a diverse range of skills and
understanding gained by Directors from their decades of
experience in the financial services, asset management,
investment banking and property sectors. This expertise
is supported by appropriate accounting, banking & finance
and risk management skills.
Director Independence
The Board recognises that independent directors are
important in assuring investors that the Board is properly
fulfilling its role and is diligent in holding management
accountable for its performance.
As at 30 June 2016, the Board comprises four directors,
two of whom are independent. The Chair of the Board is
an independent director and does not occupy a joint position
as Chief Executive Officer. Importantly, the Chair has the
casting vote. Each Independent Director was appointed
in June 2014.
The Independent Directors are:
Paul Bedbrook
Independent Chair
Nigel Ampherlaw
Independent Director
As at 30 June 2016, Glenn Willis was the sole executive
director on the Board having been formally appointed as
Managing Director and Chief Executive Officer in June 2014.
Mr William (Bill) Moss AO is a non-executive director of
the Board.
The Board, having regard to the Group’s stage of
development as a listed entity and the collective experience
and expertise of the Directors, considers that the current
composition of the Board is appropriate.
The Board considers an independent director to be:
– A director who is not a substantial security holder of the
Group, being a security holder who holds 5% or more of
the issued voting securities of the Group, or an officer
of or otherwise associated directly with a substantial
security holder of the Group.
– A non-executive director who is not a member of
management and who has not been employed in an
executive capacity by Elanor Investors Group in the last
three years.
– A director who has not within the last three years been
a principal of a material professional adviser or consultant
to the Group.
– A director who is not a material supplier, customer
or other contractor of the Group nor has a material
contractual relationship with the Group other than
as a director.
– A director who should not otherwise be considered
by the Board to not be independent.
Details of the tenure, current position and previous offices
held by each Director, which are relevant to the assessment
of their independence, are disclosed in their respective
profiles, along with their interests in securities, and set out
in the Directors’ Report included in this Annual Report.
Induction and Training
The Group has induction procedures in place to allow
new Directors to gain an understanding of the Group
(including its culture and values) and their rights, duties
and responsibilities, the roles and responsibilities of senior
executives, the role of Board Committees, and meeting
arrangements and Director interaction.
Directors are required to keep themselves adequately
informed in respect of relevant industry and regulatory
issues and changes.
The Group will provide appropriate professional development
opportunities for Directors to develop and maintain the skills
and knowledge needed to perform their role as a Director
effectively.
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 Corporate Governance Statement
continued
107
PRINCIPLE 3 – PROMOTE ETHICAL
AND RESPONSIBLE DECISION-MAKING
Code of Conduct
The Group has adopted a written Code of Conduct which
applies to the Board, officers, senior executives and
employees of Elanor Investors Group. The objectives of
this Code of Conduct are to ensure that high standards of
corporate and individual behaviour are observed by all those
parties, including acting ethically and responsibly, in the
context of their employment.
Employees, on joining, are required to confirm that they
will comply with all Group policies including the Code
of Conduct.
A copy of the Code of Conduct is available at
www.elanorinvestors.com.
All Directors, officers, senior executives and employees of
Elanor Investors Group are required to meet the following
standards of ethical behaviour.
– To conduct themselves with openness, honesty, fairness
and integrity in business transactions and in dealings with
others.
– To treat everyone else with whom they interact in their
work with courtesy and respect.
– To act ethically in their approach to business decisions.
– To observe appropriate principles of behaviour when
conducting Group business and interacting with others.
– To comply with all laws and regulations that govern the
Group’s business and the policies that the Group adopts
from time to time.
– To act in compliance with all laws and regulations that
apply to the Group’s business.
The Group aims to increase security holder value within
an appropriate framework which safeguards the rights and
interests of the Group’s security holders and the community
and complies with the systems of control and accountability
which the Group has in place as part of its corporate
governance.
The Code of Conduct also requires that the Board, officers,
senior executives and employees should request all key
contractors acting on behalf of Elanor Investors Group
adhere to a similar set of ethical standards as set out in the
Code of Conduct and cease using any contractor who they
consider is not adhering to an ethical standard at least as
rigorous as the standard set out above.
Confidentiality
Employees are required to safeguard confidential information
of the Group by not transferring, publishing, using or
disclosing it other than when necessary in the ordinary
course of business, or as specifically directed or authorised.
All confidential or proprietary information that has been
entrusted to the Group by a third party is to be treated as if
it was the Group’s confidential information.
Conflicts of Interest
Employees have an obligation to seek to avoid financial,
business or other relationships which might be opposed to
the interests of the Group or which may conflict with the
performance of their duties.
Whistle-Blowing
Elanor Investors Group has adopted a “Whistle-blower”
procedure whereby employees are encouraged to report to
either their manager, a Director or the Company Secretary
where they observe a serious matter not in security holders
or the public’s interest including:
– financial malpractice, impropriety or fraud;
– unlawful activity;
– improper conduct or unethical behaviour; and
– any breach of compliance of the Code of Conduct.
Securities Trading Policy
The Board has adopted a Securities Trading Policy.
A copy of the Securities Trading Policy is available at
www.elanorinvestors.com.
PRINCIPLE 4 – SAFEGUARD INTEGRITY
IN FINANCIAL REPORTING
Audit and Risk Committee
The Board has established an Audit and Risk Committee
(the Committee) consisting of a minimum of two members
with the majority of members required to be independent
directors. All members must be able to read and understand
financial statements, and at least one member, being the
chairperson, must have financial expertise, that is the person
must be either a qualified accountant or other financial
professional with experience of financial and accounting
matters. A copy of the Audit and Risk Committee Charter is
available at www.elanorinvestors.com.
The Chair will be a non-executive independent director
appointed by the Board who is not the Chair of the Board.
Any Director may attend a meeting of the Committee at any
time. The Committee will meet at least twice per annum
and more often if deemed necessary. Meetings may be held
by electronic means as allowed under the provisions of the
Corporations Act 2001.
The following Directors are members of the Committee.
Nigel
Ampherlaw
Paul
Bedbrook
Chair Non-executive Independent
Director
Member Non-executive Independent
Director
Glenn
Willis
Member Managing Director and Chief
Executive Officer
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 108
Corporate Governance Statement
continued
The qualifications and experience of each of the members of
the Committee are set out in the Directors Report included in
this Annual Report.
– Maintenance of an effective and efficient audit
– Recommending to the Board the appointment of the
external auditors.
The Committee met six times during the financial year to
30 June 2016 and all members attended all meetings.
The Committee does not consist only of non-executive
directors. The Board, having regard to the Group’s stage of
development as a listed entity and the collective experience
and expertise of the members of the Committee, considers
the current composition of the Committee is appropriate.
The primary role of the Committee is to:
– Satisfy itself that the Group has an adequate control
framework for the oversight of the external audit and the
internal audit arrangements.
– Make recommendations to the Board in relation to:
– The adequacy of the Group’s processes for
identifying, measuring, monitoring and managing the
material business risks it faces.
– Any incident involving fraud or other break down of
the Group’s internal control policies and practices.
– The Group’s insurance program.
Specifically, the Committee is responsible for:
– Reliable management and financial reporting.
– Assessing the adequacy of management reporting on
the Group’s risks, operations, and financial condition
to the Board.
– Scrutinising the Group’s accounting policies and
practices in the light of the Corporations Act and
Australian Accounting Standards.
– Reviewing the half yearly and annual financial
statements of the Group and recommending to the
Board the signing of the directors declaration.
– Reviewing and discussing with the external auditor the
quality and acceptability of the Group’s accounting
principles as applied in its financial reporting.
– Supervising the implementation of the Australian
Accounting Standards and other changes in regulatory
requirements.
– Compliance with laws and regulations
– Considering the plans and processes for the Group’s
compliance activities.
– Ensuring that the Group’s financial statements
and reporting complies with the Corporations Act,
accounting standards, ASX Listing Rules and other
relevant regulatory requirements.
– Monitoring the laws and the regulations that relate
generally to the entity’s business operations and,
review the Group’s compliance with such laws.
– Seeking advice of the Group’s legal advisers on any
legal matters that could have significant impact on the
Group’s financial statements.
– Reviewing the plans of the external auditors,
including any significant changes to the plans.
– Reviewing the efficiency and effectiveness of the
external auditors in relation to their responsibilities.
– Reviewing and discussing with the external auditor
professional and other significant relationships to
determine their independence.
– Reviewing the external auditor’s fees.
– Reviewing and approving any non-audit engagement
of the external auditor where the engagement fees
exceed $100,000.
– Ensuring there are no unjustified limitations placed
on the auditors and review any serious disputes with
management during the audits.
– Ensuring the scopes of the audits are adequate,
with emphasis on matters where the Committee,
management or the auditors believe special attention
is necessary.
– Meeting with and assessing the findings of the
external auditors as well as management’s response
to their recommendations.
– Ensuring compliance with the ASX principles of good
corporate governance related to external auditors.
– Risk management and internal control
– In consultation with management, preparing and
regularly reviewing a risk profile which describes the
material business risks facing the Group.
– Reviewing and reporting to the Board (at least
annually) on the effectiveness of the Group’s internal
controls.
– Reviewing and reporting to the Board (at least
annually) on the effectiveness of internal systems and
processes for identifying, managing and monitoring
material business risks, including breaches of contract
or internal controls, litigation and claims, fraud and
theft and the Group’s insurance program.
– Obtaining regular reports from management on the
occurrence and/or status of any material breaches
of internal controls or other material risk exposures.
– Reviewing the scope of the internal and external
auditors’ review of internal control and risk
management, reviewing reports on significant findings
and recommendations, together with management’s
responses.
– Recommending to the Board any changes to the
Group’s internal control and risk management
framework from time to time as appropriate.
– Supporting and advising the Board to fulfil its obligations
in relation to safety and sustainability.
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 Corporate Governance Statement
continued
109
Chief Executive Officer and Chief Financial Officer
Declarations
The Board has received confirmation from both the Chief
Executive Officer and Chief Financial Officer that their
declaration for both the interim and full year financial
reporting periods made in accordance with section 295A of
the Corporations Act 2001, were based upon sound system
of risk management and internal control and further that
the system is operating effectively in all material respects
in relation to financial reporting risk.
External Auditors
The external auditor is requested by the Board to attend
each AGM to answer questions about the conduct of the
audit and the preparation and contents of the Auditors
Report.
PRINCIPLE 5 – MAKE TIMELY AND BALANCED
DISCLOSURE
Continuous Disclosure Policy
In order to regulate the continuous disclosure regime across
the Group in relation to any securities issued by the Group
the Board has adopted a Continuous Disclosure Policy. A
copy of the Continuous Disclosure Policy is available at
www.elanorinvestors.com.
The Continuous Disclosure Policy aims to ensure that the
Group complies with the continuous disclosure requirements
contained in the Australian Securities Exchange (ASX) Listing
Rules (the Rules). The successful operation of the Group’s
continuous disclosure regime promotes investor confidence
by providing full, timely, accurate and relevant information
to the market about the activities of the Group and serves
to educate all relevant Group personnel on what continuous
disclosure is, and how they can ensure they meet their
individual responsibilities.
Subject to the exceptions contained in the Listing Rules, the
Group will immediately notify the market of any information
or matter related to the businesses or financial condition of
the Group which a reasonable person would expect to have
a material effect on the price or value of those securities.
Such notifications will be made by way of an announcement
to the ASX.
Reporting of Disclosable Information
The Company Secretary plays an important role in the
Group’s Continuous Disclosure Policy. The Company
Secretary is the person principally responsible for operating,
overseeing and maintaining this Policy. The Company
Secretary is the liaison between the Group’s employees and
officers, its Board of Directors, Responsible Managers and
the ASX. The Company Secretary is also responsible for co-
ordinating education within the Group about its disclosure
obligations.
The Company Secretary will work with the Chief Executive
Officer, and the members from time to time of any
Continuous Disclosure Committee, to determine whether any
reported information needs to be disclosed in accordance
with the Continuous Disclosure Policy.
Training and Development
Key employees are trained in the Group’s Continuous
Disclosure Policy to ensure all market sensitive information
is provided to senior executives.
PRINCIPLE 6 – RESPECT THE RIGHTS
OF SECURITY HOLDERS
Corporate Governance
The Group’s website at www.elanorinvestors.com has
a corporate governance section from where all relevant
corporate governance information can be accessed,
including Board and Committee Charters and various
corporate governance policies.
Details on the Board of Directors, management team and
the Group’s operating divisions can be found in the “About”
section of the Group’s website.
The Group has adopted a Security Holder Communications
Policy aimed at ensuring that trading in its securities takes
place in an efficient, competitive and informed market.
The website also contains a feed from the ASX for the
Group’s security price information and a link to ASX
announcements released by the Group.
Investors Reports
The Group prepares annual reports for investors for each
financial year ending 30 June and a half year report for the
period ending 31 December. These reports are posted on
the website. Investors may elect to receive a hard-copy of
the annual report or an email notification once they become
available.
General Meetings
The Group holds an annual general meeting (AGM) in
October or November each year. The date, time and venue
of the AGM are notified to the ASX when the annual report
is lodged with the ASX, generally in September each year.
The Board of Directors aim to choose a date, venue and
time considered convenient to the greatest number of
our investors.
All notices of meetings will be accompanied by clear
explanatory notes on the items of business. A copy of
any such Notice of Meeting will be placed on the Group’s
website. Should an investor not be able to attend a general
meeting they are able to vote on the resolutions by
appointing a proxy. The proxy form included with the notice
of meeting will clearly explain how the proxy form is to be
completed and submitted.
As previously stated, the external auditor attends each AGM
to answer questions about the conduct of the audit and the
preparation and contents of the Auditor’s Report.
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 110
Corporate Governance Statement
continued
PRINCIPLE 7 – RECOGNISE AND MANAGE RISK
The Audit and Risk Committee has responsibility for
overseeing risk management. Under the Committee Charter,
the Committee is responsible for the following functions to
assist the Board in overseeing the Group’s system of risk
management and internal control:
Internal Audit
The Board has determined, having regard to the Group’s
current stage of development not to establish a separate
internal audit function.
As set out above, the Committee has specific responsibilities
in relation to risk management and internal control.
– In consultation with management:
– Preparing and regularly reviewing a risk profile which
describes the material business risks facing the
Group.
– Regularly reviewing and updating the risk profile and
providing copies to the Board.
– Reviewing the risk profile at least annually to satisfy
itself that it continues to be sound and disclose that
such a review has taken place in the Group’s annual
report.
– Reviewing and reporting to the Board (at least annually)
on the effectiveness of the Group’s internal controls
regarding:
– Due diligence for acquisitions and other new projects.
– Compliance with confidentiality obligations.
– Information technology security.
– Reviewing and reporting to the Board (at least annually)
on the effectiveness of internal systems and processes
for identifying, managing and monitoring material
business risks, including breaches of contract or internal
controls, litigation and claims, fraud and theft and the
Group’s insurance program.
– Obtaining regular reports from management on the
occurrence and/or status of any material breaches of
internal controls or other material risk exposures.
– Reviewing the scope of the internal and external auditors’
review of internal control and risk management, reviewing
reports on significant findings and recommendations,
together with management’s responses.
– Recommending to the Board any changes to the Group’s
internal control and risk management framework from
time to time as appropriate.
Risk Management Framework
The Group has prepared a Risk Management Framework
which has been reviewed by management and the Board.
In the context of the Group’s strategy and activities, the
Risk Management Framework identifies and assesses the
key categories of risk for the Group and summarises and
evaluates the effectiveness of the risk control environment
for each category of risk identified for the Group.
Safety and Sustainability
The Board has established a workplace health and safety
committee for the Group as a whole. This committee
monitors the effectiveness of workplace health and safety
management systems and monitors the extent to which a
safety culture exists within the Group. The workplace health
and safety committee formally reports to the Board.
PRINCIPLE 8 – REMUNERATE FAIRLY
AND RESPONSIBLY
Remuneration and Nomination Committee
The Directors have established a Remuneration and
Nomination Committee. Please refer to Principle 2
for commentary on the structure and Charter of the
Remuneration and Nomination Committee.
The role and objectives of the Remuneration and Nomination
Committee include ensuring that the remuneration policies
and outcomes of the Group strike an appropriate balance
between the interests of the Group’s security holders, and
rewarding and motivating the executives and employees in
order to secure the long term benefits of their performance
and loyalty.
The Remuneration and Nomination Committee is responsible
for reviewing and making recommendations to the Board
on the specific remuneration for the Managing Director
and Chief Executive Officer and each senior executive of
the Group (including base pay, incentive payments, equity
awards, termination payments and service contracts). The
Remuneration and Nomination Committee is also responsible
for reviewing and establishing the level of remuneration,
including superannuation, for non-executive directors and
the approval of any report on executive remuneration,
which is required pursuant to any Listing Rule or legislative
requirement or which is proposed for inclusion in the
Annual Report.
Further details of the Group’s remuneration policies are set
out in the Remuneration Report for the financial year to
30 June 2016 included in this Annual Report.
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 Security Holder Analysis
(as at 15 September 2016)
111
STAPLED SECURITIES
The units of the Trust and the shares of the Company are combined and issued as stapled securities in the Group. The Group’s
securities are traded on the Australian Securities Exchange (ASX: ENN), having listed on 11 July 2014. The units of the Trust
and shares of the Company cannot be traded separately and can only be traded as stapled securities. In accordance with the
ASX’s requirements for stapled securities, the ASX reserves the right (but without limiting its absolute discretion) to remove the
Company or the Trust or both from the ASX Official List if any of the units and the shares cease to be stapled together or any
equity securities issued by the Company or the Trust which are not stapled to equivalent securities in the other entity.
TOP 20 SECURITY HOLDERS
Number Shareholder
1
2
3
4
5
6
7
8
9
10
11
RBC Investor Services Australia Nominees Pty Limited
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
RBC Investor Services Australia Nominees Pty Ltd
RBC Investor Services Australia Pty Limited
J P Morgan Nominees Australia Limited
National Nominees Limited
Armada Investments Pty Ltd
BNP Paribas Nominees Pty Ltd
Top 4 Pty Ltd
BNP Paribas Noms Pty Ltd
12 National Nominees Limited
13
14
15
16
17
18
19
20
Aust Executor Trustees Ltd
Citicorp Nominees Pty Limited
Boliber Pty Limited
CPU Share Plans Pty Ltd
Richjac Pty Ltd
Citano Pty Ltd
Farallon Capital Pty Ltd
Citano Pty Ltd
Total
Balance of Register
Grand Total
No. of
Securities
9,455,996
9,103,594
6,872,336
5,072,411
4,191,798
3,985,186
3,975,139
3,295,605
3,039,929
2,126,553
1,784,933
1,298,209
948,396
925,322
794,980
741,453
600,000
533,839
502,480
498,511
%
10.60
10.20
7.70
5.69
4.70
4.47
4.46
3.69
3.41
2.38
2.00
1.45
1.06
1.04
0.89
0.83
0.67
0.60
0.56
0.56
59,746,670
29,477,672
66.96
33.04
89,224,342
100.00
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 112
Security Holder Analysis
(as at 15 September 2016) continued
RANGE REPORT
Range
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
No. of
Securities
71,004,820
16,890,356
900,749
405,246
23,171
%
79.58
18.93
1.01
0.45
0.03
89,224,342
100.00
No. of
Holders
78
566
116
129
60
949
The total number of security holders with an unmarketable parcel of securities was 23.
SUBSTANTIAL SECURITY HOLDER NOTICES RECEIVED
Security Holder
Airlie Funds Management Pty Ltd
Auscap Asset Management Limited (Citicorp Nominees)
Perpetual Limited
No. of
Securities
8,186,742
8,675,000
4,462,411
%
8.22
59.64
12.22
13.59
6.32
100.00
%
9.35
9.90
5.09
VOTING RIGHTS
On a poll, each security holder has, in relation to resolutions of the Trust, one vote for each dollar value of their total units held in
the Trust and in relation to resolutions of the Company, one vote for each share held in the Company.
ON-MARKET BUY-BACK
There is no current on-market buy-back program in place.
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 113
Corporate Directory
ELANOR INVESTORS GROUP (ASX CODE: ENN)
Elanor Investors Limited (ACN 169 308 187) and Elanor
Investment Fund (ARSN 169 450 926)
(Elanor Funds Management Limited (ACN 125 903 031)
is the Responsible Entity)
Level 38,
259 George Street
Sydney NSW 2000
T: +61 2 9239 8400
DIRECTORS OF THE RESPONSIBLE ENTITY
AND ELANOR INVESTORS LIMITED
Paul Bedbrook (Chair)
Glenn Willis (Managing Director and CEO)
Nigel Ampherlaw
William (Bill) Moss AO
COMPANY SECRETARY OF THE RESPONSIBLE
ENTITY AND ELANOR INVESTORS LIMITED
Symon Simmons
SECURITY REGISTRY
Computershare Investor Services Pty Limited
Level 4, 60 Carrington Street
Sydney NSW 2000
AUDITORS
Deloitte Touche Tohmatsu
Grosvenor Place
225 George Street
Sydney NSW 2000
CUSTODIAN
The Trust Company (Australia) Limitedæ
Level 13,
123 Pitt Street
Sydney NSW 2000
WEBSITE
www.elanorinvestors.com
ELANOR INVESTORS GROUP | ANNUAL REPORT 2016 Head Office:
Level 38, 259 George Street
Sydney NSW 2000
T: +61 2 9239 8400