Investors Group
Annual Report
For the year ended 30 June 2019
WorkZone West, Perth WA
Contents
04 Highlights
06 Message from the Chairman
08 CEO’s Message
11 Financial Report
12 Directors’ Report
39 Auditor’s Independence Declaration
40 Financial Statements
47 Notes to the Financial Statements
114 Directors’ Declaration
115
120 Corporate Governance
121 Securityholder Analysis
123 Corporate Directory
Independent Auditor’s Report
Financial Calendar
23 October 2019
Meeting of securityholders
December 2019
Estimated interim
distribution
announcement and
securities trade
ex-distribution
February 2020
Interim results
announcement
March 2020
June 2020
Interim distribution
payment
Estimated final distribution
announcement and
securities trade
ex-distribution
August 2020
Full-year results
announcement
September 2020
Final distribution payment
September 2020
Annual tax statements
Meeting of securityholders
The meeting of securityholders will be held on:
23 October 2019
10:30am (Sydney time)
Computershare
Level 3, 60 Carrington Street
Sydney NSW 2000
Responsible Entity
Elanor Funds Management Limited (ABN 39 125 903 031).
AFSL 398196. Elanor Investors Group comprises
Elanor Investors Limited (ABN 33 169 308 187) and
Elanor Investment Fund (ARSN 169 450 926).
3
Highlights
Core Earnings
for the financial year 2019
$17.5m
> 7.9%
Net Asset Value
(per security)
as at 30 June 2019
$1.59
> 2.5%
Funds Under
Management
as at 30 June 2019
$1,387m
> 28.1%
Distributions
(per security)
for the financial year 2019
16.06c
> 1.8%
Securities On Issue
as at 30 June 2019
Gearing
as at 30 June 2019
Perth
99.8m
> 7.3%
28.4%
> from 22.1%
4 Elanor Investors Group | Annual Report 2019
Darwin
NORTHERN
TERRITORY
SOUTH
AUSTRALIA
WESTERN
AUSTRALIA
QUEENSLAND
Brisbane
NEW SOUTH
WALES
Sydney
Canberra
Auckland
Wellington
Adelaide
VICTORIA
Melbourne
TAS
Hobart
WESTERN
AUSTRALIA
Perth
Darwin
NORTHERN
TERRITORY
SOUTH
AUSTRALIA
The Group’s real estate
investments are located
in metropolitan and prime
regional locations across
Australia and New Zealand
QUEENSLAND
Brisbane
NEW SOUTH
WALES
Sydney
Canberra
Adelaide
VICTORIA
Melbourne
TAS
Hobart
Assets
Auckland
Wellington
5
Message from
the Chairman
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 2019.
As this year’s result is the fifth since
Elanor’s ASX listing on 11 July 2014,
I thought a brief look back over the
five years would be appropriate,
given many securityholders have
been invested in ENN since listing.
Results of the First Five Years
The five-years’ performance
reflects tremendous growth in
funds under management (FUM)
from a modest base of $86 million
at 11 July 2014. At 30 June 2019,
Elanor’s FUM reached $1.39 billion,
reflecting a compound growth
rate of 55% p.a. over the five years.
This growth contributed to a Core
Earnings result of $17.5 million
for the year ended 30 June 2019,
compared to Core Earnings of
$9.3 million for the year ended
30 June 2015. Furthermore,
recurring FUM fees have grown
substantially over the last five years,
reflecting the successful execution
of Elanor’s core strategy.
Elanor’s listed security price has
risen from an issue price of $1.25
at IPO to $1.83 on 30 June 2019.
Additionally, annual distributions
per stapled security have grown
to 16.06 cents. This results in a
Total Securityholder Return (TSR)
of 17.86% p.a. since IPO. This is
a pleasing outcome for Elanor
securityholders.
Importantly, the average realised
returns from our managed funds
since listing is 18.2% p.a.
Latest Year’s Result
The results for the year ended
30 June 2019 reflect the continued
growth of our funds management
platform. Our Core Earnings of
$17.5 million reflects a 7.9%
increase on the prior year.
Elanor’s conservative gearing
of 28.4% as at 30 June 2019
provides the Group with flexibility
to continue to grow FUM.
Achievements
The primary achievement over
the year has been the increase in
FUM to $1.39 billion. The growth
in Elanor’s FUM over the year
has primarily been achieved as
a result of the establishment of
the following managed funds:
the Elanor Luxury Hotel Fund
(a multi-asset accommodation
fund); the Stirling Street Syndicate;
the Waverly Gardens Fund and
the Fairfield Centre Syndicate.
Additionally, the Group acquired
the Clare Country Club and Barossa
Weintal Hotels for the Elanor
Metro and Prime Regional Hotel
Fund. During the year, the Group
successfully divested the Bell
City Hotel Fund on behalf of fund
investors.
Further detail and commentary
of the 2019 annual result and
achievements can be found in the
CEO’s Message.
6 Elanor Investors Group | Annual Report 2019
Governance
Acknowledgements
Bluewater Square, Redcliffe QLD
Nexus Centre, Brisbane QLD
I would like to thank my fellow
Board members, the executive
management team led by the
CEO and all the hard-working
staff across the Group for their
contribution during the year.
Most importantly, I would like to
thank Elanor’s securityholders
and the Group’s investors in our
managed funds for their continued
support and confidence.
I look forward to discussing the
business further at our Annual
General Meeting in Sydney on
23 October 2019.
Yours sincerely,
Paul Bedbrook
Chairman
Belconnen Markets, Belconnen ACT
The Board continues to strengthen
the Group’s corporate governance
structure and processes consistent
with Elanor’s strategic intent and
operating activities. This includes
the further development of
the Group’s Risk Management
Framework and Work, Health and
Safety regimes.
Additionally, the Board welcomed
the appointment of Mr Lim Kin
Song, representing a major investor
and Mr Anthony (Tony) Fehon, an
experienced property executive
and investor, in May and August
2019 respectively. I look forward
to both Kin Song and Tony’s
contributions to the business.
In September 2019, Mr Bill Moss AO,
resigned from the Elanor Board for
personal reasons. Bill has served
the Elanor Board since the Group’s
listing in July 2014 and has played
a valuable role in supporting the
growth of Elanor’s investment and
funds management business to
over $1.5 billion in assets under
management.
On behalf of the Board, I would like
to express our gratitude to Bill for
the significant contribution he has
made to the Group throughout his
tenure.
Peppers, Cradle Mountain, TAS
7
CEO’s
Message
I am pleased to present
Elanor Investors Group’s
Annual Report for the
year ended 30 June
2019. We continued to
successfully grow our
business during the
year. The Group’s Core
Earnings of $17.5 million
reflected a 7.9% increase
on the prior year.
Pleasingly, recurring funds
management revenue grew by
over 24% during the year as a result
of an increase in funds under
management to $1.39 billion as at
30 June 2019.
From a strategic perspective,
much was achieved over the year.
We increased our funds under
management by over 28% to $1.39
billion, and most importantly,
our managed funds continued to
deliver strong performance for our
capital partners. During the year
we executed on our capital led
strategic initiatives, with a focus
on growing our global institutional
capital partners. Our strengthened
capital origination and asset
management teams, combined
with the Group’s growth capital and
strong investment pipeline, position
Elanor for further significant growth
in funds under management. We
remain confident that our funds
management platform will continue
to deliver strong performance for
both Elanor securityholders and
the Group’s capital partners.
In addition to our core areas of
expertise in the retail real estate,
commercial real estate and hotels,
tourism and leisure sectors, we
continue to investigate other
real estate sectors that provide
quality investment opportunities.
Furthermore, we continue to
explore strategic opportunities to
achieve our growth objectives.
Strategy and Investment
Approach
The key strategic objective of
the Group is to grow funds under
management and deliver strong
investment returns for both the
Group’s funds management
capital partners and Elanor
securityholders. Elanor’s
investment focus is on acquiring
and unlocking value in real estate
assets that provide strong, stable
income and significant capital
growth potential. We evaluate
acquisition opportunities through
a value and risk management lens.
Our highly active approach to
asset management is underpinned
by an acute focus on delivering
investment performance.
The Group will continue to
co-invest with our funds
management capital partners
for both strategic and alignment
purposes. We will continue to
utilise our balance sheet to
originate and hold investments
that provide opportunities for
future co-investment by Elanor’s
capital partners. In this regard, the
Group holds two balance sheet
investments that we expect to
externalise into managed funds
during the coming year. The Group
will continue to grow funds under
management in an increasingly
capital efficient manner.
8 Elanor Investors Group | Annual Report 2019
— Fairfield Centre Syndicate,
acquiring the Neeta City
Shopping Centre in Fairfield,
NSW, with a gross asset
value of $89.6 million as at
30 June 2019
— Elanor Luxury Hotel Fund
(ELHF), acquiring Mayfair
Hotel Adelaide and the
Adabco Boutique Hotel in
Adelaide, South Australia
with settlement expected in
October 2019
• The Group successfully
completed the divestment
of the Bell City property for
$157 million, on behalf of
capital partners
• The Elanor Commercial Property
Fund (ECPF) completed the
acquisition of the Limestone
Street Centre Syndicate in
December 2018. ECPF had
a gross asset value of $135.6
million as at 30 June 2019
• The Elanor Metro and Prime
Regional Hotel Fund (EMPR)
completed the acquisition
of the Elanor Hospitality
and Accommodation Fund
hotel portfolio in a strategic
partnership with NRMA in
September 2018. EMPR also
acquired the Clare Country Club
and Barossa Weintal Hotels in
South Australia in April 2019 with
settlement expected in October
2019. EMPR has a gross asset
value of $163.7 million as at
30 June 2019
Key Results
• Core Earnings for the year
were $17.5 million, representing
an increase of 28.1% on the
prior year
• Distributions for the year were
$15.8 million or 16.06 cents
per stapled security
• Net Tangible Assets (NTA) per
security of $1.59 at 30 June 2019
Funds Management
• Elanor established new funds
under management of $455
million during the period
• The Group’s funds under
management grew by 28.1%
to $1.39 billion
• Funds management revenue for
the year increased by 9.6% on
the prior period to $15 million
• Annualised recurring
management fees increased
by 24.2% on a recurring
period basis
• Managed funds established
during the period include:
— Waverley Gardens Fund
(Waverley Gardens),
established together with
global real estate investment
firm Heitman, acquiring the
Waverley Gardens Shopping
Centre in Mulgrave, Victoria,
with a gross asset value
of $182.2 million as at
30 June 2019
— Stirling Street Syndicate
(Stirling Street), acquiring
a commercial property
located in Stirling Street,
Perth, with a gross asset
value of $24.8 million as at
30 June 2019
The Group’s strong track record
and growing investor base
continues to be evidenced by the
increasing demand from its capital
partners for newly established
funds. Furthermore, the Group
has significantly increased its
investment origination and capital
raising capability during the year,
with several key appointments to
the funds management team.
Investment Portfolio
The value of the Group’s
investment portfolio totalled
$163.1 million as at 30 June 2019.
Elanor’s investment portfolio
consists of the Group’s co-
investments in funds managed by
Elanor and wholly owned assets
that provide opportunities for
future co-investment by external
capital partners.
In keeping with our strategy
of co-investing alongside our
capital partners, co-investments
totalling $26.1 million were made
in new managed funds during
the year, including WorkZone
West Syndicate, Auburn Office
Syndicate, Waverley Gardens Fund
and Fairfield Centre Syndicate.
9
The Group has a strong pipeline
of potential funds management
opportunities. Elanor continues
to actively pursue opportunities in
new real estate sectors and explore
strategic opportunities to deliver its
growth objectives.
I wish to thank my fellow Board
members, my executive leadership
team and all our staff, both at the
Group level and at each of our
investments, for their dedication,
enthusiasm and commendable
efforts over the year.
Yours sincerely,
Glenn Willis
Managing Director and
Chief Executive Officer
CEO’s Message
Capital Management
During the year, the Group
established a new 3-year $30 million
revolving secured debt facility.
Gearing for the Group increased
to 28.4% as at 30 June 2019 from
22.1% as at 30 June 2018. The Group
remains conservatively geared,
including $60 million of unsecured
5-year Corporate Notes. The
Group’s secured debt gearing
ratio is 4.2%.
Additionally, the Group holds
significant growth capital. This
capital, in conjunction with available
bank facilities, will be used to fund
the Group’s short to medium
term funds management growth
objectives. Elanor estimates that
its available growth capital will
support the growth of the Group’s
funds under management to
approximately $2.5 billion, based on
future co-investment levels of 10%.
Our intention remains for the
Group’s balance sheet to be
conservatively geared, while
maintaining capital capacity to take
advantage of opportunities arising
from asset valuation cycles.
Community Involvement
At Elanor, we are acutely aware
of our responsibility to the
communities in which we operate,
and to society more generally.
During the year the Group
supported a number of causes
and organisations including the
Facioscapulohumeral Muscular
Dystrophy (FSHD) Foundation,
Big Brothers Big Sisters, Life
Education Australia and
The One Foundation Australia.
In addition to these organisations,
across the Group, Elanor supports
a number of community focussed
social initiatives.
Elanor, as owner of Featherdale
Wildlife Park, is committed to
animal welfare and native animal
preservation. Featherdale
is a preeminent contributor
to numerous endangered
species preservation programs
for Australian native animals.
Featherdale is a major social
contributor to the Western Sydney
community and across the State
of NSW in the areas of animal
preservation, education and animal
rescue. Featherdale is committed
to maintaining its significant social
contribution into the future.
Outlook
The Group’s core strategy will
remain focussed on growing funds
management earnings and actively
managing its investment portfolio.
The Group has a number of funds
management opportunities under
consideration across all sectors of
focus. The Group will continue to
focus on increasing income from
its managed funds, seeding new
managed funds with Group owned
investments, and co-investing with
external capital partners.
Elanor is committed to growing its
funds management business by
acquiring high investment quality
assets based on the Group’s
proven investment philosophy.
Furthermore, we anticipate that
growth in funds under management
will be achieved in an increasingly
capital efficient manner.
10 Elanor Investors Group | Annual Report 2019
Financial Report
for the year ended 30 June 2019
12 Directors’ Report
39 Auditor’s Independence Declaration
40 Consolidated Statements of Profit or Loss
41 Consolidated Statements of Comprehensive Income
42 Consolidated Statements of Financial Position
44 Consolidated Statements of Changes in Equity
46 Consolidated Statements of Cash Flows
47 Notes to the Consolidated Financial Statements
114 Directors’ Declaration to Stapled Securityholders
115
Independent Auditor’s Report
11
ELANOR INVESTORS GROUP
DIRECTORS REPORT
Directors’
Report
Directors(cid:61) (cid:31)eport
The Directors of Elanor Investors Limited (Company), and the Directors of Elanor Funds Management Limited
(Responsible Entity or Manager), as responsible entity of the Elanor Investment Fund, present their report
together with the consolidated financial report of Elanor Investors Group (Group, Consolidated Group or
Elanor) and the consolidated financial report of the Elanor Investment Fund (EIF Group) for the full year ended
30 June 2019 (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(cid:5)s securities are traded on the Australian Securities Exchange (AS(cid:47): 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(cid:5) report is a combined Directors(cid:5) report that covers both the Company and the Trust. The financial
information for the Group is taken from the consolidated financial reports and notes.
(cid:7). 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 (Chairman)
Glenn Willis (Managing Director and Chief Executive Officer)
Nigel Ampherlaw
William (Bill) Moss AO
Lim Kin Song (Appointed 30 May 2019)
(cid:8). Principal acti(cid:57)ities
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.
(cid:9). Distri(cid:39)utions
Distributions relating to the year ended 30 June 2019 comprise:
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 will bring distributions
in respect of the year ended 30 June 2019 to 16.06 cents per stapled security.
12 Elanor Investors Group | Annual Report 2019
(cid:7)
ELANOR INVESTORS GROUP
DIRECTORS REPORT
4. Operating and financial review
OVERVIEW AND STRATEGY
The key strategic objective of Elanor is to invest in real estate backed assets that deliver strong returns for
both Elanor's funds management capital partners and Elanor’s security holders. Elanor’s investment focus is
on acquiring and unlocking value in assets that provide high quality income and strong capital growth potential.
Elanor's highly active approach to asset management is underpinned with urgency and an acute focus on
delivering investment performance. The Group seeks to co-invest with its funds management capital partners
for both strategic and alignment purposes. The Group also originates and holds investments on balance sheet
to provide opportunities for future co-investment by Elanor’s capital partners.
Elanor’s key investment sector focuses are the commercial office real estate, retail real estate and the
accommodation hotels, tourism and leisure sectors.
Elanor’s total managed funds and investment portfolio was $1,550.1 million as at 30 June 2019, up from
$1,227.8 million over the year.
During the year, Elanor established new funds totalling $455.3 million and successfully divested the
commercial and hotel assets in the Bell City Fund for $159.5 million. Assets under management increased
from $1,082.6 million to $1,387 million during the year. Co-investments of $26.1 million were made in new
managed funds.
The growth in assets under management has been assisted by the introduction of a number of global and
domestic institutional capital partners, directly reflecting the Group’s increased focus in this area.
The Group completed the following funds management initiatives during the year:
• The establishment of the Waverley Gardens Fund (Waverley Gardens) with global real estate
investment firm Heitman, in December 2018 which acquired the Waverley Gardens Shopping centre
in Mulgrave, Victoria. The fund has a gross asset value of $182.2 million as at 30 June 2019.
• The acquisition of the Elanor Hospitality and Accommodation Fund hotel portfolio by Elanor Metro and
Prime Regional Hotel Fund (EMPR) in a strategic partnership with NRMA, in September 2018. EMPR
has a gross asset value of $163.7 million as at 30 June 2019.
• On 9 April 2019, EMPR acquired the Clare Country Club and Barossa Weintal Hotels in South
Australia, for $14.45 million. Settlement is expected in October 2019.
• The establishment of the Elanor Luxury Hotel Fund (ELHF) in April 2019, with the acquisition of the
Mayfair Hotel Adelaide and the Adabco Boutique Hotel in Adelaide, South Australia for $99 million.
Furthermore, ELHF acquired the Peppers Cradle Mountain Lodge from EMPR, for $55 million,
generating a material $9.8 million profit on sale for EMPR investors. Settlement of the Fund is expected
in October 2019.
• The acquisition of the Limestone Street Centre Syndicate by Elanor Commercial Property Fund
(ECPF) in December 2018. ECPF has a gross asset value of $135.6 million as at 30 June 2019.
• The Group established the Stirling Street Syndicate which acquired a commercial property located in
Stirling Street, Perth, for $24.7 million on 28 February 2019.
• On 31 May 2019, the Group established the Fairfield Centre Syndicate and acquired the Neeta City
Shopping Centre for $85.3 million.
4
13
Directors' Report
ELANOR INVESTORS GROUP
DIRECTORS REPORT
(cid:10). (cid:29)peratin(cid:44) an(cid:41) (cid:43)inancial re(cid:57)ie(cid:58) (cid:2)continue(cid:41)(cid:3)
(cid:29)(cid:35)(cid:20)(cid:31)(cid:35)I(cid:20)(cid:36) (cid:16)ND (cid:32)(cid:33)(cid:31)(cid:16)(cid:33)(cid:20)G(cid:37) (cid:2)(cid:18)(cid:29)N(cid:33)IN(cid:34)(cid:20)D(cid:3)
ENN’s strong investment track record and investor base continues to be evidenced by the demand from
wholesale and institutional investors for ENN’s funds. Elanor has a well-resourced and scalable platform with
substantial capacity for growth. Coupled with the Group’s available capital, Elanor is well positioned to grow
its funds management business.
In addition to the funds management initiatives above, in May 2019 the Group ac(cid:65)uired a 25(cid:3) interest in the
hotel operating platform business, 1834 Hospitality. This investment provides the Group with a scalable hotel
management capability to support the Group’s growth ob(cid:58)ective in the accommodation hotels, tourism and
leisure sector.
(cid:27)(cid:16)N(cid:16)G(cid:20)D (cid:21)(cid:34)ND(cid:32) (cid:16)ND IN(cid:35)(cid:20)(cid:32)(cid:33)(cid:27)(cid:20)N(cid:33) P(cid:29)(cid:31)(cid:33)(cid:21)(cid:29)(cid:26)I(cid:29)
The following tables show the Group(cid:5)s managed funds and investment portfolio:
14 Elanor Investors Group | Annual Report 2019
5
ELANOR INVESTORS GROUP
DIRECTORS REPORT
(cid:10). (cid:29)peratin(cid:44) an(cid:41) (cid:43)inancial re(cid:57)ie(cid:58) (cid:2)continue(cid:41)(cid:3)
(cid:27)(cid:16)N(cid:16)G(cid:20)D (cid:21)(cid:34)ND(cid:32) (cid:16)ND IN(cid:35)(cid:20)(cid:32)(cid:33)(cid:27)(cid:20)N(cid:33) P(cid:29)(cid:31)(cid:33)(cid:21)(cid:29)(cid:26)I(cid:29) (cid:2)(cid:18)(cid:29)N(cid:33)IN(cid:34)(cid:20)D(cid:3)
In(cid:57)estment Port(cid:43)olio
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: Managed Fund co-investments are associates and accounted for using the e(cid:65)uity method.
Note 3: The co-investments in Elanor Metro and Prime Regional Hotel Fund (EMPR), Bluewater S(cid:65)uare Syndicate (Bluewater) and the
Auburn Office Syndicate have been consolidated in the financial statements. The amount shown assumes that the investments were
accounted for using the e(cid:65)uity method.
(cid:10)
15
Directors' Report
ELANOR INVESTORS GROUP
DIRECTORS REPORT
(cid:10). (cid:29)peratin(cid:44) an(cid:41) (cid:43)inancial re(cid:57)ie(cid:58) (cid:2)continue(cid:41)(cid:3)
(cid:31)(cid:20)(cid:35)I(cid:20)(cid:36) (cid:29)(cid:21) (cid:21)IN(cid:16)N(cid:18)I(cid:16)(cid:26) (cid:31)(cid:20)(cid:32)(cid:34)(cid:26)(cid:33)(cid:32)
The Group recorded a statutory profit after tax from continuing operations of (cid:2)16.0 million for the year ended
30 June 2019.
At the balance date, Elanor held a 31.11(cid:3) interest in the Elanor Metro and Prime Regional Hotel Fund (EMPR)
and, a 42.27(cid:3) interest in the Bluewater S(cid:65)uare Syndicate (Bluewater) and 100(cid:3) interest in the Auburn Office
Syndicate (Auburn Office). For accounting purposes, Elanor is deemed to have a controlling interest in EMPR,
Bluewater and Auburn Office given its level of ownership and role as manager of the funds. This means that
the financial results and financial position of EMPR, Bluewater and Auburn Office are consolidated into the
financial statements of the Group for the year ended 30 June 2019.
All other managed fund co-investments are accounted for using the e(cid:65)uity method in the Group’s consolidated
financial statements.
Presenting the summary consolidated financial results of the Group on the basis that EMPR, Bluewater and
Auburn Office are accounted for using the e(cid:65)uity 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 prior periods.
Core or Distributable Earnings for the period were (cid:2)17.5 million or 17.58 cents per stapled security. A Final
Distribution of (cid:2)9.72 million or 9.74 cents per stapled security has been declared for the six months ended 30
June 2019 (90(cid:3) pay-out ratio on Core Earnings), resulting in a full year distribution of (cid:2)15.79 million or 16.06
cents per stapled security. 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(cid:5)s results for the period is set out below:
16 Elanor Investors Group | Annual Report 2019
(cid:11)
ELANOR INVESTORS GROUP
DIRECTORS REPORT
(cid:10). (cid:29)peratin(cid:44) an(cid:41) (cid:43)inancial re(cid:57)ie(cid:58) (cid:2)continue(cid:41)(cid:3)
(cid:31)(cid:20)(cid:35)I(cid:20)(cid:36) (cid:29)(cid:21) (cid:21)IN(cid:16)N(cid:18)I(cid:16)(cid:26) (cid:31)(cid:20)(cid:32)(cid:34)(cid:26)(cid:33)(cid:32) (cid:2)(cid:18)(cid:29)N(cid:33)IN(cid:34)(cid:20)D(cid:3)
The table below provides a reconciliation from statutory profit / (loss) after tax to distributable Core Earnings:
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, ad(cid:58)usting for one-off realised items (being formation or
other transaction costs that occur infre(cid:65)uently 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, straight lining of rental expense, and
amortisation of e(cid:65)uity settled STI and LTI amounts), and restating share of profit from e(cid:65)uity accounted investments to reflect distributions
received / receivable in respect of those investments.
Note 2: Share of profit from e(cid:65)uity accounted investments includes depreciation and amortisation and fair value ad(cid:58)ustments on investment
property that were added back in the determination of distributable earnings for those managed funds. The Group’s share of those
ad(cid:58)ustments 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.
Note 3: Net (gain) / loss on disposals of e(cid:65)uity accounted investments includes ad(cid:58)ustments for realised non-cash accounting
(gains)/losses on the sale of e(cid:65)uity accounted investments during the period, so as to only include net cash profit for the purposes of
calculating Core Earnings.
(cid:12)
17
Directors' Report
ELANOR INVESTORS GROUP
DIRECTORS REPORT
(cid:10). (cid:29)peratin(cid:44) an(cid:41) (cid:43)inancial re(cid:57)ie(cid:58) (cid:2)continue(cid:41)(cid:3)
(cid:31)(cid:20)(cid:35)I(cid:20)(cid:36) (cid:29)(cid:21) (cid:21)IN(cid:16)N(cid:18)I(cid:16)(cid:26) (cid:31)(cid:20)(cid:32)(cid:34)(cid:26)(cid:33)(cid:32) (cid:2)(cid:18)(cid:29)N(cid:33)IN(cid:34)(cid:20)D(cid:3)
Note 4: As a result of the Group’s adoption of the new Revenue accounting standard, AASB 15 Revenue from Contracts with Customers
on 1 July 2018, the net profit on sale of the Merrylands Property, that was appropriately recognised in the Group’s profit and loss for the
period ended 30 June 2018, has also been recognised in the period ended 30 June 2019. This profit on the sale of the Merrylands Property
has been removed from Core Earnings. The net profit after tax on the sale of the Merrylands profit of (cid:2)10.45 million has been included in
the statutory net profit after tax for the year as a result of the Group’s adoption of AASB 15. Further information on this transaction is
provided on page 42.
Note 5: In August 2018, ENN completed the sale of the Merrylands Property, generating a total net profit after tax of (cid:2)10.45 million. An
amount of (cid:2)4.5 million of this total net profit after tax was included in Core Earnings for the six months ended 30 June 2018. The remaining
net profit after tax of (cid:2)5.9 million has been included in Core Earnings for the six months ended 30 June 2019.
Note 6: During the period, the Group incurred total depreciation charges of (cid:2)0.92 million, however only the depreciation expense on
buildings of (cid:2)0.03 million has been added back for the purposes of calculating Core Earnings.
Note 7: During the period, the Group incurred non-cash profit and loss charges in respect of the amortisation of certain amounts including
the e(cid:65)uity component of the Group’s Short Term Incentive (STI), Long Term Incentive (LTI) amounts, intangibles and borrowing costs.
These amounts have been added back for the purposes of calculating Core Earnings.
(cid:31)(cid:20)(cid:35)I(cid:20)(cid:36) (cid:29)(cid:21) (cid:29)P(cid:20)(cid:31)(cid:16)(cid:33)I(cid:29)N(cid:16)(cid:26) (cid:31)(cid:20)(cid:32)(cid:34)(cid:26)(cid:33)(cid:32)
The Group is organised into three divisions by business type.
Funds Management manages third party owned investment funds and syndicates.
Hotels, Tourism and Leisure has extensive investment management expertise in ac(cid:65)uiring and operating real
estate backed accommodation hotel and leisure investments. The current investment portfolio includes
Featherdale Wildlife Park, Ibis Styles Albany Hotel and 1834 Hospitality, along with a co-investment in Elanor
Metro and Prime Regional Hotel Fund.
The Real Estate division has proven management expertise in the retail and commercial office sectors. The
division’s focus is to identify and originate investments that provide superior investment returns through active
asset management and the realisation of (cid:77)value-add’ operational and strategic opportunities. The current
investment portfolio comprises investments in Elanor Retail Property Fund (AS(cid:47): ERF), Elanor Commercial
Property Fund, Hunters Pla(cid:74)a Syndicate, Bluewater S(cid:65)uare Syndicate, WorkZone West Syndicate, Waverley
Gardens Fund, Belconnen Markets Syndicate, Auburn Office Syndicate and Fairfield Centre Syndicate.
Set out below is an ad(cid:58)usted presentation of the statutory financial results by segment, on the basis that the
Group’s interest in EMPR, Bluewater and Auburn Office are accounted for using the e(cid:65)uity method rather than
on a consolidated basis. Elanor considers that presenting the operating performance of the Group on this
ad(cid:58)usted 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 prior period results. The results
provided on this basis are presented as the (cid:77)ENN Group’.
18 Elanor Investors Group | Annual Report 2019
(cid:13)
ELANOR INVESTORS GROUP
DIRECTORS REPORT
(cid:10). (cid:29)peratin(cid:44) an(cid:41) (cid:43)inancial re(cid:57)ie(cid:58) (cid:2)continue(cid:41)(cid:3)
(cid:31)(cid:20)(cid:35)I(cid:20)(cid:36) (cid:29)(cid:21) (cid:29)P(cid:20)(cid:31)(cid:16)(cid:33)I(cid:29)N(cid:16)(cid:26) (cid:31)(cid:20)(cid:32)(cid:34)(cid:26)(cid:33)(cid:32) (cid:2)(cid:18)(cid:29)N(cid:33)IN(cid:34)(cid:20)D(cid:3)
The performance of the ENN Group for the period ended 30 June 2019, as represented by the aggregate
results of its operations for the period, was as follows:
Note 1: This result reflects the sale of the Merrylands property, previously recognised in the financial year ended 30 June 2018, as a result
of the Group’s adoption of AASB 15 as discussed on page 42. The comparative financial information reflects the operating results of John
Cootes Furniture which was closed during the period ended 30 June 2018.
Group EBITDA shown above includes the e(cid:65)uity accounted result of the Group’s co-investments in funds
managed by Elanor, including EMPR, Bluewater and Auburn Office. 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, ad(cid:58)usted to show distributions received / receivable from co-
investments rather than the e(cid:65)uity accounted result is as follows:
Note 1: The impact of the sale of the Merrylands property, discussed above, has been removed from the presentation of the segment
EBITDA contribution to Core Earnings.
10
19
Directors' Report
ELANOR INVESTORS GROUP
DIRECTORS REPORT
(cid:10). (cid:29)peratin(cid:44) an(cid:41) (cid:43)inancial re(cid:57)ie(cid:58) (cid:2)continue(cid:41)(cid:3)
(cid:31)(cid:20)(cid:35)I(cid:20)(cid:36) (cid:29)(cid:21) (cid:29)P(cid:20)(cid:31)(cid:16)(cid:33)I(cid:29)N(cid:16)(cid:26) (cid:31)(cid:20)(cid:32)(cid:34)(cid:26)(cid:33)(cid:32) (cid:2)(cid:18)(cid:29)N(cid:33)IN(cid:34)(cid:20)D(cid:3)
(cid:21)un(cid:41)s (cid:27)ana(cid:44)ement
The performance of the Funds Management division for the period is summarised as follows:
The Group’s funds management revenue comprises:
Based on the 30 June 2019 funds under management of (cid:2)1,387 million, annualised management fees total
(cid:2)11.3 million, an increase of 24.2(cid:3) on the 30 June 2018 annualised management fees of (cid:2)9.1 million
(excluding Bell City which was sold in August 2018).
The Group has added significant new funds under management since July 2018, with the Group establishing
five new managed funds, being Waverley Gardens Fund, Stirling Street Syndicate, Auburn Office Syndicate,
Fairfield Centre Syndicate and Elanor Luxury Hotel Fund.
During the period the Group continued to strengthen its internal asset management and investment
management capabilities, along with its asset origination resources. The Group also broadened its offshore
and domestic institutional capital partner base to support the Group’s strategic focus to deliver growth in funds
under management and the performance of assets under management.
(cid:23)otels(cid:4) (cid:33)ourism an(cid:41) (cid:26)eisure
The performance of the Hotels, Tourism and Leisure division for the period is summarised as follows:
Note 1: Revenue has been ad(cid:58)usted to show distributions received / receivable from co-investments rather than the e(cid:65)uity accounted
result.
20 Elanor Investors Group | Annual Report 2019
11
ELANOR INVESTORS GROUP
DIRECTORS REPORT
(cid:10). (cid:29)peratin(cid:44) an(cid:41) (cid:43)inancial re(cid:57)ie(cid:58) (cid:2)continue(cid:41)(cid:3)
(cid:31)(cid:20)(cid:35)I(cid:20)(cid:36) (cid:29)(cid:21) (cid:29)P(cid:20)(cid:31)(cid:16)(cid:33)I(cid:29)N(cid:16)(cid:26) (cid:31)(cid:20)(cid:32)(cid:34)(cid:26)(cid:33)(cid:32) (cid:2)(cid:18)(cid:29)N(cid:33)IN(cid:34)(cid:20)D(cid:3)
Hotels, Tourism and Leisure EBITDA contribution to Core Earnings includes the results of Featherdale Wildlife
Park, and Ibis Styles Albany Hotel. The comparative result also included the results of Ibis Styles Canberra
Eaglehawk Hotel for four months prior to its sale to EMPR on 31 October 2017.
Hotels, Tourism and Leisure EBITDA contribution to Core Earnings also includes distributions received /
receivable from the Group’s co-investment in funds managed by the Group of (cid:2)2.6 million for the period ended
30 June 2019 ((cid:2)2.9 million for the comparative period).
The table below sets out the assessed value of each investment portfolio asset as at 30 June 2019.
The carrying value of the Group’s Hotels, Tourism and Leisure co-investments as at 30 June 2019, using the
e(cid:65)uity method, is as follows:
(cid:31)eal (cid:20)state
Real Estate comprises distributions received / receivable from co-investments in funds managed by the Group
as follows:
Note 1: Revenue has been ad(cid:58)usted to show distributions received / receivable from co-investments rather than the e(cid:65)uity accounted
result.
Real Estate EBITDA contribution to Core Earnings comprises distributions received / receivable from the
Group’s co-investment in funds managed by the Group of (cid:2)4.8 million for the period ended 30 June 2019 ((cid:2)3.1
million for the comparative period).
1(cid:6)
21
Directors' Report
ELANOR INVESTORS GROUP
DIRECTORS REPORT
(cid:10). (cid:29)peratin(cid:44) an(cid:41) (cid:43)inancial re(cid:57)ie(cid:58) (cid:2)continue(cid:41)(cid:3)
(cid:31)(cid:20)(cid:35)I(cid:20)(cid:36) (cid:29)(cid:21) (cid:29)P(cid:20)(cid:31)(cid:16)(cid:33)I(cid:29)N(cid:16)(cid:26) (cid:31)(cid:20)(cid:32)(cid:34)(cid:26)(cid:33)(cid:32) (cid:2)(cid:18)(cid:29)N(cid:33)IN(cid:34)(cid:20)D(cid:3)
The carrying value of these investments as at 30 June 2019, using the e(cid:65)uity method, is as follows:
(cid:32)ummar(cid:60) an(cid:41) (cid:29)utloo(cid:47)
The Group(cid:5)s key strategic ob(cid:58)ective will remain focused on growing funds under management and delivering
strong returns for Elanor capital partners and security holders. 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 the 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, movement in property valuations, tightening debt
capital markets, the general increase in cyber security risks and possible weather related events. The Group
manages these risks through its active asset management approach across its investment portfolio, its
continued focus on broadening the Group(cid:5)s capital partner base, insurance arrangements and through the
active management of its capital structure.
The Group is committed to growing funds under management through the ac(cid:65)uisition of high investment (cid:65)uality
assets based on the Group’s investment philosophy and criteria. The Group has an active pipeline of potential
funds management opportunities across all sectors of focus. Furthermore, the Group is actively pursuing
opportunities in new real estate sectors and continues to explore strategic opportunities to deliver its growth
ob(cid:58)ectives.
22 Elanor Investors Group | Annual Report 2019
1(cid:7)
ELANOR INVESTORS GROUP
DIRECTORS REPORT
5.
Interests in the Group
The movement in stapled securities of the Group during the period is set out below:
6.
Directors
Name
Particulars
Paul Bedbrook
Independent Non-Executive Chairman
Chairman, Remuneration and Nominations Committee
Paul was appointed a Director of both the Company and the Responsible
Entity (also the Responsible Entity of ERF) 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), CEO of the ING Australia/ANZ Bank Wealth JV (2003-
2008) 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, and a non-executive
director of Credit Union Australia and the National Blood Authority.
Former listed directorships in the last three years: None
Interest in stapled securities: 282,327
Qualifications: B.Sc, F FIN, FAICD
1(cid:8)
23
Directors' Report
ELANOR INVESTORS GROUP
DIRECTORS REPORT
6.
Directors (cid:2)continue(cid:41)(cid:3)
Glenn Willis
Managing Director and Chief Executive Officer
Glenn has extensive industry knowledge with over 30 years(cid:5) experience
in the Australian and international capital markets. Glenn was the co-
founder and Chief Executive Officer of Moss Capital, prior to the
establishment and AS(cid:47) listing of Elanor Investors Group in July 2014.
Prior to Moss Capital, Glenn co-founded Grange Securities and led the
team in his role as Managing Director and CEO.
After 12 years of growth, Grange Securities, was ac(cid:65)uired by Lehman
Brothers International in 2007, as the platform for Lehman(cid:5)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 Director of Big Brothers Big Sisters Australia and FSHD Global
Research Foundation.
Former listed directorships in the last three years: None
Interest in stapled securities: 8,914,470
Qualifications: B.Bus (Econ & Fin)
Nigel Ampherlaw
Independent Non-Executive Director
Chairman, Audit and Risk Committee
Nigel was appointed a Director of both the Company and the Responsible
Entity (also the Responsible Entity of ERF) 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 as Chairman of Credit Union
Australia 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.
Former listed directorships in the last three years: Quickstep Holdings Ltd
Interest in stapled securities: 170,307
Qualifications: B.Com, FCA, MAICD
24 Elanor Investors Group | Annual Report 2019
15
ELANOR INVESTORS GROUP
DIRECTORS REPORT
6.
Directors (continued)
William (Bill) Moss
AO
Non-Executive Director
Chairman, Remuneration and Nominations Committee
Bill was appointed a Director of both the Company and the Responsible
Entity (also the Responsible Entity of ERF) 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: None
Interest in stapled securities: 2,378,159
Qualifications: B.Ec
Lim Kin Song
Non-Executive Director
Kin Song was appointed as a Director of both the Company and the
Responsible Entity (also the Responsible Entity of ERF) in May 2019. Kin
Song is the CEO of Rockworth Capital Partners (which holds an 18%
ownership interest in the Group) and is responsible for all aspects of
Rockworth’s business with a focus on strategy, transactions, business
development and investor relations.
With over 20 years of experience in the real estate sector, Kin Song
specialises in acquisitions, asset management, business development
and leasing. He has extensive experience across multi-core real estate
sectors in Australia and South East Asia.
Kin Song has been the key driver of Rockworth’s rapid growth in its assets
under management since its inception in 2011, and provided leadership
and strategic direction in transactions, corporate development, capital
allocation and asset management. Prior to founding Rockworth in 2011,
Kin Song held various positions in leading property groups in Asia,
including Frasers Centrepoint Ltd, Ascendas-MGM Funds Management
and the CapitaLand Group.
Former listed directorships in the last three years: None
Interest in stapled securities: Nil
Qualifications: MBA, B.Sci, SISV, CCPS, RICS
16
25
Directors' Report
ELANOR INVESTORS GROUP
DIRECTORS REPORT
(cid:13).
Directors(cid:61) rele(cid:57)ant interests
Note 1: Glenn Willis has an entitlement to an additional 4,250,000 securities under e(cid:65)uity based executive incentive plans.
Other than as disclosed in the Annual Financial Report, no contracts exist where a director is entitled to a
benefit.
(cid:14). (cid:27)eetin(cid:44)s o(cid:43) Directors
The attendance at meetings of Directors of the Responsible Entity and the Company during the year is set out
in the following table:
(cid:15). (cid:31)emuneration (cid:31)eport (cid:2)(cid:16)u(cid:41)ite(cid:41)(cid:3)
The remuneration report for the year ended 30 June 2019 outlines the remuneration arrangements, philosophy
and framework of the Elanor Investors Group (Group) in accordance with the re(cid:65)uirements of the Corporations
Act 2001 (Cth) and its regulations.
The remuneration report is set out under the following main headings:
a)
b)
c)
d)
e)
f)
g)
h)
Remuneration Policy and Approach
Key Management Personnel
Executive Remuneration Arrangements
Executive Remuneration Outcomes
Non-Executive Director Remuneration Arrangements and Outcomes
Additional Disclosures Relating to Long Term Incentive Plans and Securities
Loans to Key Management Personnel
Other Transactions and Balances with Key Management Personnel and their Related Parties
The information provided in the Remuneration Report has been audited as re(cid:65)uired by section 308 (3C) of the
Corporations Act 2001 (Cth).
a(cid:3)
(cid:31)emuneration Polic(cid:60) an(cid:41) (cid:16)pproach
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.
26 Elanor Investors Group | Annual Report 2019
1(cid:11)
ELANOR INVESTORS GROUP
DIRECTORS REPORT
9. Remuneration Report (Audited) (continued)
a)
Remuneration Policy and Approach (continued)
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 two Non-
Executive Director (NED) members, Mr Paul Bedbrook (Chair) and Mr Nigel Ampherlaw.
Mr William Moss AO resigned as Chair and Committee Member in May 2019. Mr Glenn Willis was appointed
a temporary member of the Committee so as to meet the requirements of the Committee’s Charter.
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. During the period the Remuneration and Nomination Committee met 3 times.
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 security holder approval.
When the Remuneration and Nomination Committee meets, the Managing Director is not present during any
discussions related to his own remuneration arrangements.
The Remuneration and Nomination Committee endeavours to ensure that the remuneration outcomes strike
an appropriate balance between the interests of the Group’s security holders 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 2019 were:
Executive
Mr Glenn Willis
Mr Paul Siviour
Mr Symon Simmons
Position
Managing Director and Chief Executive Officer
Chief Operating Officer
Chief Financial Officer and Company Secretary
Non-Executive
Mr Paul Bedbrook
Mr Nigel Ampherlaw
Mr William (Bill) Moss AO
Mr Lim Kin Song
Position
Independent Chairman and Non-Executive Director
Independent Non-Executive Director
Non-Executive Director
Non-Executive Director
18
27
Directors' Report
DIRECTORS REPORT
ELANOR INVESTORS GROUP
(cid:15). (cid:31)emuneration (cid:31)eport (cid:2)(cid:16)u(cid:41)ite(cid:41)(cid:3) (cid:2)continue(cid:41)(cid:3)
c(cid:3)
(cid:20)(cid:59)ecuti(cid:57)e (cid:31)emuneration (cid:16)rran(cid:44)ements
The Group(cid:5)s executive remuneration framework has three components:
(cid:75) Base pay, including superannuation(cid:23)
(cid:75) Short term incentives(cid:23) and
Long term incentives.
(cid:75)
Remuneration levels are considered annually through an assessment of each executive based on the
individual(cid:5)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(cid:5)s
responsibilities, performance, (cid:65)ualifications and experience. There are no guaranteed base pay increases in
any executive(cid:5)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(cid:5)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 security holders in excess of 10(cid:3) per annum. The profit
share pool is based on 20(cid:3) of ROE above 10(cid:3), 22.5(cid:3) of the ROE above 15(cid:3), 25(cid:3) of the ROE above 17.5(cid:3)
and 30(cid:3) of the ROE above 20(cid:3). The STI Scheme provides that 50(cid:3) of any awards to individuals from the
profit share pool may 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(cid:5)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
ac(cid:65)uire Securities which are sub(cid:58)ect to vesting conditions) have been issued to certain employees. Awards
totalling 11.0 million Securities were on issue at 30 June 2019.
The limited recourse loan provided by the Group under the loan security plan carries interest of an amount
e(cid:65)ual 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
ac(cid:65)uire Securities at a specified exercise price, sub(cid:58)ect 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 2.0 million Securities.
28 Elanor Investors Group | Annual Report 2019
1(cid:13)
ELANOR INVESTORS GROUP
DIRECTORS REPORT
(cid:15). (cid:31)emuneration (cid:31)eport (cid:2)(cid:16)u(cid:41)ite(cid:41)(cid:3) (cid:2)continue(cid:41)(cid:3)
c(cid:3)
(cid:20)(cid:59)ecuti(cid:57)e (cid:31)emuneration (cid:16)rran(cid:44)ements (cid:2)continue(cid:41)(cid:3)
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 of 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 2, 3 and 4 years in the case of the loan security plan. The TSR is 10(cid:3) per
annum in the case of the loan security plan and 15(cid:3) per annum in the case of the options plan. The 2017 loan
security plan reflects loan amounts of (cid:2)2.13 per security. The 2017 option plan has an exercise price of (cid:2)3.05
per security (43(cid:3) premium to the (cid:2)2.13 offer price).
TSR was selected as the LTI performance measure to ensure an alignment between the security holder return
and reward for executives.
(cid:41)(cid:3)
(cid:20)(cid:59)ecuti(cid:57)e (cid:31)emuneration (cid:29)utcomes
The table below sets out summary information about the Group(cid:5)s earnings and movements in shareholder
wealth for the year ended 30 June 2019:
The financial performance measure driving STI payment outcomes is pre-tax return on e(cid:65)uity (ROE). The
re(cid:65)uired pre-tax return hurdle was achieved for the financial year. Reported earnings before tax from
continuing operations for the year were (cid:2)19.9 million or (cid:2)16.0 million after tax. This reflects a 16.04 cents basic
earnings per security based on the average number of securities outstanding for the year.
For the year ended 30 June 2019 the Group achieved Core Earnings of (cid:2)17.5 million, a 7.9(cid:3) increase on the
prior year. Total distributions per security in respect of the period were 16.06 cents.
For the year ended 30 June 2019, the bonus pool calculated in accordance with the STI plan rules was (cid:2)1.3
million, incorporating cash and the value of the deferred securities. The 2019 STI bonus pool was approved
by the Board on 27 June 2019.
(cid:6)0
29
Directors' Report
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30 Elanor Investors Group | Annual Report 2019
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ELANO(cid:34) IN(cid:38)ESTO(cid:34)S (cid:24)(cid:34)OUP
DI(cid:34)ECTO(cid:34)S(cid:66) (cid:34)EPO(cid:34)T
9(cid:7) (cid:34)(cid:45)(cid:52)(cid:60)(cid:53)(cid:45)(cid:57)(cid:41)(cid:59)(cid:49)(cid:54)(cid:53) (cid:34)(cid:45)(cid:55)(cid:54)(cid:57)(cid:59) (cid:3)A(cid:60)(cid:44)(cid:49)(cid:59)(cid:45)(cid:44)(cid:4) (cid:3)(cid:43)(cid:54)(cid:53)(cid:59)(cid:49)(cid:53)(cid:60)(cid:45)(cid:44)(cid:4)
(cid:44)(cid:4)
E(cid:63)(cid:45)(cid:43)(cid:60)(cid:59)(cid:49)(cid:61)(cid:45) (cid:34)(cid:45)(cid:52)(cid:60)(cid:53)(cid:45)(cid:57)(cid:41)(cid:59)(cid:49)(cid:54)(cid:53) O(cid:60)(cid:59)(cid:43)(cid:54)(cid:52)(cid:45)(cid:58) (cid:3)(cid:43)(cid:54)(cid:53)(cid:59)(cid:49)(cid:53)(cid:60)(cid:45)(cid:44)(cid:4)
Table 2: Remuneration components as a proportion of total remuneration on an annualised basis
(cid:36)o (cid:54)ey management personnel appointed during the period received a payment as part of his or her
consideration for agreeing to hold the position(cid:10)
(cid:39)emuneration and other terms of employment for the (cid:54)ey management personnel are formalised in
employment contracts(cid:10) The (cid:54)ey provisions of the employment contracts for (cid:54)ey management personal are set
out below(cid:10)
The (cid:39)emuneration and (cid:36)omination Committee undertoo(cid:54) a review of e(cid:67)ecutive remuneration in (cid:32)une (cid:14)(cid:12)(cid:13)(cid:21)(cid:8)
and resolved to increase the remuneration to the amounts shown in the tables below(cid:8) with effect from (cid:13) (cid:32)uly
(cid:14)(cid:12)(cid:13)(cid:21)(cid:10)
Table 3: Employment contracts of key management personnel
E(cid:63)(cid:45)(cid:43)(cid:60)(cid:59)(cid:49)(cid:61)(cid:45)
(cid:24)(cid:7) (cid:39)(cid:49)(cid:51)(cid:51)(cid:49)(cid:58)
P(cid:7) S(cid:49)(cid:61)(cid:49)(cid:54)(cid:60)(cid:57)
S(cid:7) S(cid:49)(cid:52)(cid:52)(cid:54)(cid:53)(cid:58)
P(cid:54)(cid:58)(cid:49)(cid:59)(cid:49)(cid:54)(cid:53)
(cid:35)anaging (cid:27)irector and
Chief (cid:28)(cid:67)ecutive (cid:37)fficer
Chief (cid:37)perating (cid:37)fficer
Chief Financial (cid:37)fficer
and Company Secretary
T(cid:45)(cid:57)(cid:52)
(cid:36)o fi(cid:67)ed term
(cid:36)o fi(cid:67)ed term
(cid:36)o fi(cid:67)ed term
S(cid:41)(cid:51)(cid:41)(cid:57)(cid:64)
S(cid:60)(cid:55)(cid:45)(cid:57)(cid:41)(cid:53)(cid:53)(cid:60)(cid:41)(cid:59)(cid:49)(cid:54)(cid:53)(cid:4)
(cid:3)(cid:49)(cid:53)(cid:43)(cid:51)(cid:60)(cid:44)(cid:49)(cid:53)(cid:47)
I(cid:53)(cid:43)(cid:45)(cid:53)(cid:59)(cid:49)(cid:61)(cid:45)
(cid:57)(cid:45)(cid:52)(cid:60)(cid:53)(cid:45)(cid:57)(cid:41)(cid:59)(cid:49)(cid:54)(cid:53)
(cid:2)(cid:18)(cid:15)(cid:12)(cid:8)(cid:12)(cid:12)(cid:12)
(cid:2)(cid:17)(cid:15)(cid:20)(cid:8)(cid:13)(cid:14)(cid:17)
(cid:2)(cid:17)(cid:14)(cid:17)(cid:8)(cid:12)(cid:12)(cid:12)
(cid:28)ligible for an award of
short term and long
term incentive
remuneration (cid:6)if any(cid:7)
as described above
(cid:28)ligible for an award of
short term and long term
incentive remuneration
(cid:6)if any(cid:7) as described
above
(cid:28)ligible for an award of
short term and long term
incentive remuneration
(cid:6)if any(cid:7) as described
above
(cid:7)(cid:7)
31
Directors' Report
ELANO(cid:34) IN(cid:38)ESTO(cid:34)S (cid:24)(cid:34)OUP
DI(cid:34)ECTO(cid:34)S(cid:66) (cid:34)EPO(cid:34)T
9(cid:7) (cid:34)(cid:45)(cid:52)(cid:60)(cid:53)(cid:45)(cid:57)(cid:41)(cid:59)(cid:49)(cid:54)(cid:53) (cid:34)(cid:45)(cid:55)(cid:54)(cid:57)(cid:59) (cid:3)A(cid:60)(cid:44)(cid:49)(cid:59)(cid:45)(cid:44)(cid:4) (cid:3)(cid:43)(cid:54)(cid:53)(cid:59)(cid:49)(cid:53)(cid:60)(cid:45)(cid:44)(cid:4)
(cid:44)(cid:4)
E(cid:63)(cid:45)(cid:43)(cid:60)(cid:59)(cid:49)(cid:61)(cid:45) (cid:34)(cid:45)(cid:52)(cid:60)(cid:53)(cid:45)(cid:57)(cid:41)(cid:59)(cid:49)(cid:54)(cid:53) O(cid:60)(cid:59)(cid:43)(cid:54)(cid:52)(cid:45)(cid:58) (cid:3)(cid:43)(cid:54)(cid:53)(cid:59)(cid:49)(cid:53)(cid:60)(cid:45)(cid:44)(cid:4)
(cid:19)(cid:45)(cid:53)(cid:45)(cid:46)(cid:49)(cid:59)(cid:58)
T(cid:45)(cid:57)(cid:52)(cid:49)(cid:53)(cid:41)(cid:59)(cid:49)(cid:54)(cid:53)
(cid:28)ntitled to participate in
(cid:28)lanor (cid:31)nvestors (cid:30)roup
benefit plans that are
made available
(cid:28)ntitled to participate in
(cid:28)lanor (cid:31)nvestors (cid:30)roup
benefit plans that are
made available
(cid:28)ntitled to participate in
(cid:28)lanor (cid:31)nvestors (cid:30)roup
benefit plans that are
made available
shall
(cid:28)mployment
continue with
the
(cid:30)roup unless either
party gives (cid:13)(cid:14) months(cid:72)
notice in writing
(cid:28)mployment
shall
continue with the (cid:30)roup
unless either party gives
in
(cid:21) months(cid:72) notice
writing
(cid:28)mployment
shall
continue with the (cid:30)roup
unless either party gives
(cid:16) wee(cid:54)s(cid:72) notice in writing
(cid:34)(cid:45)(cid:58)(cid:59)(cid:57)(cid:41)(cid:49)(cid:53)(cid:59)
(cid:13)(cid:14) months from the
time of Termination
(cid:36)(cid:11)(cid:24)
(cid:36)(cid:11)(cid:24)
(cid:45)(cid:4)
N(cid:54)(cid:53)(cid:6)E(cid:63)(cid:45)(cid:43)(cid:60)(cid:59)(cid:49)(cid:61)(cid:45) D(cid:49)(cid:57)(cid:45)(cid:43)(cid:59)(cid:54)(cid:57) (cid:34)(cid:45)(cid:52)(cid:60)(cid:53)(cid:45)(cid:57)(cid:41)(cid:59)(cid:49)(cid:54)(cid:53) A(cid:57)(cid:57)(cid:41)(cid:53)(cid:47)(cid:45)(cid:52)(cid:45)(cid:53)(cid:59)(cid:58) (cid:41)(cid:53)(cid:44) O(cid:60)(cid:59)(cid:43)(cid:54)(cid:52)(cid:45)(cid:58)
The (cid:28)lanor (cid:25)oard determines the remuneration structure for (cid:36)(cid:28)(cid:27)(cid:5)s based on recommendations from the
(cid:39)emuneration and (cid:36)omination Committee(cid:10) The (cid:36)(cid:28)(cid:27)(cid:5)s individual fees are annually reviewed by the
(cid:39)emuneration and (cid:36)omination Committee ta(cid:54)ing into consideration the level of fees paid to (cid:36)(cid:28)(cid:27)(cid:5)s by
companies of similar si(cid:69)e and stature(cid:10) The (cid:39)emuneration and (cid:36)omination Committee undertoo(cid:54) a review of
the remuneration of (cid:36)(cid:28)(cid:27)s in (cid:32)une (cid:14)(cid:12)(cid:13)(cid:21)(cid:8) and resolved not to change the amount of fees paid(cid:10) The ma(cid:67)imum
aggregate amount of fees that can be paid to (cid:36)(cid:28)(cid:27)s is subject to approval by security holders at the (cid:24)nnual
(cid:30)eneral (cid:35)eeting (cid:6)currently (cid:2)(cid:17)(cid:12)(cid:12)(cid:8)(cid:12)(cid:12)(cid:12)(cid:7)(cid:10)
The (cid:36)(cid:28)(cid:27)s receive a fi(cid:67)ed remuneration amount(cid:8) in respect of their services provided to the (cid:39)esponsible (cid:28)ntity
and (cid:28)lanor (cid:31)nvestors (cid:34)imited(cid:10) They do not receive any performance based remuneration or any retirement
benefits other than statutory superannuation(cid:10)
Table (cid:5): Remuneration of (cid:9)on(cid:2)E(cid:31)ecuti(cid:30)e (cid:7)irectors
32 Elanor Investors Group | Annual Report 2019
(cid:7)3
ELANO(cid:34) IN(cid:38)ESTO(cid:34)S (cid:24)(cid:34)OUP
DI(cid:34)ECTO(cid:34)S(cid:66) (cid:34)EPO(cid:34)T
9(cid:7) (cid:34)(cid:45)(cid:52)(cid:60)(cid:53)(cid:45)(cid:57)(cid:41)(cid:59)(cid:49)(cid:54)(cid:53) (cid:34)(cid:45)(cid:55)(cid:54)(cid:57)(cid:59) (cid:3)A(cid:60)(cid:44)(cid:49)(cid:59)(cid:45)(cid:44)(cid:4) (cid:3)(cid:43)(cid:54)(cid:53)(cid:59)(cid:49)(cid:53)(cid:60)(cid:45)(cid:44)(cid:4)
(cid:45)(cid:4)
N(cid:54)(cid:53)(cid:6)E(cid:63)(cid:45)(cid:43)(cid:60)(cid:59)(cid:49)(cid:61)(cid:45) D(cid:49)(cid:57)(cid:45)(cid:43)(cid:59)(cid:54)(cid:57) (cid:34)(cid:45)(cid:52)(cid:60)(cid:53)(cid:45)(cid:57)(cid:41)(cid:59)(cid:49)(cid:54)(cid:53) A(cid:57)(cid:57)(cid:41)(cid:53)(cid:47)(cid:45)(cid:52)(cid:45)(cid:53)(cid:59)(cid:58) (cid:41)(cid:53)(cid:44) O(cid:60)(cid:59)(cid:43)(cid:54)(cid:52)(cid:45)(cid:58) (cid:3)(cid:43)(cid:54)(cid:53)(cid:59)(cid:49)(cid:53)(cid:60)(cid:45)(cid:44)(cid:4)
(cid:27)uring the year no options were issued to the (cid:36)(cid:28)(cid:27)s(cid:10)
The following options were issued to the (cid:36)(cid:28)(cid:27)s under the F(cid:43)(cid:13)(cid:19) Fee Sacrifice (cid:37)ffer(cid:8) approved by security
holders on (cid:13)(cid:12) (cid:36)ovember (cid:14)(cid:12)(cid:13)(cid:18)(cid:22)
The fair value at grant date of each (cid:37)ption was (cid:2)(cid:12)(cid:10)(cid:12)(cid:16)(cid:10) The (cid:36)(cid:28)(cid:27) option vesting period ended on (cid:15)(cid:12) (cid:32)une (cid:14)(cid:12)(cid:13)(cid:19)(cid:10)
The options issued under the F(cid:43)(cid:13)(cid:19) Fee Sacrifice (cid:37)ffer have an e(cid:67)ercise price of (cid:2)(cid:15)(cid:10)(cid:12)(cid:20) per security (cid:6)(cid:16)(cid:15)(cid:3)
premium to the (cid:2)(cid:14)(cid:10)(cid:13)(cid:17) offer price(cid:7)(cid:10) The (cid:36)(cid:28)(cid:27) options are available for e(cid:67)ercise until (cid:13)(cid:12) (cid:36)ovember (cid:14)(cid:12)(cid:14)(cid:12)(cid:10)
(cid:39)emuneration and other items of appointment of the (cid:36)(cid:28)(cid:27)s are formalised in contracts(cid:10)
The (cid:36)(cid:28)(cid:27)(cid:72)s are employed on employment contracts with no fi(cid:67)ed term(cid:10) The (cid:36)(cid:28)(cid:27)s employment is subject to
the Constitution of the (cid:30)roup(cid:8) the Corporations (cid:24)ct(cid:8) and the (cid:15) year cycle of the rotation and election of
(cid:27)irectors(cid:10)
(cid:46)(cid:4)
A(cid:44)(cid:44)(cid:49)(cid:59)(cid:49)(cid:54)(cid:53)(cid:41)(cid:51) D(cid:49)(cid:58)(cid:43)(cid:51)(cid:54)(cid:58)(cid:60)(cid:57)(cid:45)(cid:58) (cid:34)(cid:45)(cid:51)(cid:41)(cid:59)(cid:49)(cid:53)(cid:47) (cid:59)(cid:54) L(cid:54)(cid:53)(cid:47) T(cid:45)(cid:57)(cid:52) I(cid:53)(cid:43)(cid:45)(cid:53)(cid:59)(cid:49)(cid:61)(cid:45) P(cid:51)(cid:41)(cid:53)(cid:58) (cid:41)(cid:53)(cid:44) S(cid:45)(cid:43)(cid:60)(cid:57)(cid:49)(cid:59)(cid:49)(cid:45)(cid:58)
(cid:27)etails of (cid:34)ong Term (cid:31)ncentive Plan payments granted or vested as (cid:34)oan Security compensation to (cid:33)ey
(cid:35)anagement Personnel during the current financial year(cid:22)
The (cid:34)oan Security plan has been accounted for as (cid:5)in(cid:9)substance(cid:5) options(cid:10) The fair value at grant date of each
(cid:34)oan Security was (cid:2)(cid:12)(cid:10)(cid:13)(cid:12)(cid:10)
(cid:7)4
33
Directors' Report
ELANO(cid:34) IN(cid:38)ESTO(cid:34)S (cid:24)(cid:34)OUP
DI(cid:34)ECTO(cid:34)S(cid:66) (cid:34)EPO(cid:34)T
9(cid:7) (cid:34)(cid:45)(cid:52)(cid:60)(cid:53)(cid:45)(cid:57)(cid:41)(cid:59)(cid:49)(cid:54)(cid:53) (cid:34)(cid:45)(cid:55)(cid:54)(cid:57)(cid:59) (cid:3)A(cid:60)(cid:44)(cid:49)(cid:59)(cid:45)(cid:44)(cid:4) (cid:3)(cid:43)(cid:54)(cid:53)(cid:59)(cid:49)(cid:53)(cid:60)(cid:45)(cid:44)(cid:4)
(cid:46)(cid:4)
A(cid:44)(cid:44)(cid:49)(cid:59)(cid:49)(cid:54)(cid:53)(cid:41)(cid:51) D(cid:49)(cid:58)(cid:43)(cid:51)(cid:54)(cid:58)(cid:60)(cid:57)(cid:45)(cid:58) (cid:34)(cid:45)(cid:51)(cid:41)(cid:59)(cid:49)(cid:53)(cid:47) (cid:59)(cid:54) L(cid:54)(cid:53)(cid:47) T(cid:45)(cid:57)(cid:52) I(cid:53)(cid:43)(cid:45)(cid:53)(cid:59)(cid:49)(cid:61)(cid:45) P(cid:51)(cid:41)(cid:53)(cid:58) (cid:41)(cid:53)(cid:44) S(cid:45)(cid:43)(cid:60)(cid:57)(cid:49)(cid:59)(cid:49)(cid:45)(cid:58) (cid:3)(cid:43)(cid:54)(cid:53)(cid:59)(cid:49)(cid:53)(cid:60)(cid:45)(cid:44)(cid:4)
(cid:27)etails of (cid:34)ong Term (cid:31)ncentive Plan payments granted or vested as (cid:37)ption compensation to (cid:54)ey management
personnel during the current financial year(cid:22)
The fair value at grant date of each (cid:37)ption was (cid:2)(cid:12)(cid:10)(cid:12)(cid:15)(cid:10)
The following table summarises the value of options granted during the financial year(cid:8) in relation to options
granted to (cid:33)ey (cid:35)anagement Personnel as part of the remuneration(cid:22)
(cid:36)ote (cid:13)(cid:22) The value of options granted during the financial year is calculated as at the grant date using a binomial pricing model(cid:10) This grant
date value is allocated to remuneration of (cid:54)ey management personnel on a straight(cid:9)line basis over the period from grant date to vesting
date(cid:10)
(cid:36)ote (cid:14)(cid:22) The value of options e(cid:67)ercised during the financial year is calculated as at the e(cid:67)ercise date using a binomial pricing model(cid:10) (cid:36)o
options were e(cid:67)ercised in the period to (cid:15)(cid:12) (cid:32)une (cid:14)(cid:12)(cid:13)(cid:21)(cid:10)
34 Elanor Investors Group | Annual Report 2019
(cid:7)(cid:10)
ELANO(cid:34) IN(cid:38)ESTO(cid:34)S (cid:24)(cid:34)OUP
DI(cid:34)ECTO(cid:34)S(cid:66) (cid:34)EPO(cid:34)T
9(cid:7) (cid:34)(cid:45)(cid:52)(cid:60)(cid:53)(cid:45)(cid:57)(cid:41)(cid:59)(cid:49)(cid:54)(cid:53) (cid:34)(cid:45)(cid:55)(cid:54)(cid:57)(cid:59) (cid:3)A(cid:60)(cid:44)(cid:49)(cid:59)(cid:45)(cid:44)(cid:4) (cid:3)(cid:43)(cid:54)(cid:53)(cid:59)(cid:49)(cid:53)(cid:60)(cid:45)(cid:44)(cid:4)
(cid:46)(cid:4)
A(cid:44)(cid:44)(cid:49)(cid:59)(cid:49)(cid:54)(cid:53)(cid:41)(cid:51) D(cid:49)(cid:58)(cid:43)(cid:51)(cid:54)(cid:58)(cid:60)(cid:57)(cid:45)(cid:58) (cid:34)(cid:45)(cid:51)(cid:41)(cid:59)(cid:49)(cid:53)(cid:47) (cid:59)(cid:54) L(cid:54)(cid:53)(cid:47) T(cid:45)(cid:57)(cid:52) I(cid:53)(cid:43)(cid:45)(cid:53)(cid:59)(cid:49)(cid:61)(cid:45) P(cid:51)(cid:41)(cid:53)(cid:58) (cid:41)(cid:53)(cid:44) S(cid:45)(cid:43)(cid:60)(cid:57)(cid:49)(cid:59)(cid:49)(cid:45)(cid:58) (cid:3)(cid:43)(cid:54)(cid:53)(cid:59)(cid:49)(cid:53)(cid:60)(cid:45)(cid:44)(cid:4)
(cid:28)(cid:45)(cid:64) M(cid:41)(cid:53)(cid:41)(cid:47)(cid:45)(cid:52)(cid:45)(cid:53)(cid:59) P(cid:45)(cid:57)(cid:58)(cid:54)(cid:53)(cid:53)(cid:45)(cid:51) (cid:45)(cid:56)(cid:60)(cid:49)(cid:59)(cid:64) (cid:48)(cid:54)(cid:51)(cid:44)(cid:49)(cid:53)(cid:47)(cid:58)
Changes to the interests of (cid:33)ey (cid:35)anagement Personnel in the (cid:30)roup(cid:5)s Securities are set out below(cid:22)
E(cid:51)(cid:41)(cid:53)(cid:54)(cid:57) I(cid:53)(cid:61)(cid:45)(cid:58)(cid:59)(cid:54)(cid:57)(cid:58) (cid:24)(cid:57)(cid:54)(cid:60)(cid:55) (cid:65) S(cid:59)(cid:41)(cid:55)(cid:51)(cid:45)(cid:44) S(cid:45)(cid:43)(cid:60)(cid:57)(cid:49)(cid:59)(cid:49)(cid:45)(cid:58)
(cid:36)ote (cid:13)(cid:22) The number of stapled securities ac(cid:60)uired during the year includes issues of securities under the (cid:30)roup(cid:72)s short term and long
term incentive schemes(cid:8) and securities ac(cid:60)uired on mar(cid:54)et(cid:10)
O(cid:55)(cid:59)(cid:49)(cid:54)(cid:53)(cid:58) (cid:54)(cid:61)(cid:45)(cid:57) E(cid:51)(cid:41)(cid:53)(cid:54)(cid:57) I(cid:53)(cid:61)(cid:45)(cid:58)(cid:59)(cid:54)(cid:57)(cid:58) (cid:24)(cid:57)(cid:54)(cid:60)(cid:55) (cid:65) S(cid:59)(cid:41)(cid:55)(cid:51)(cid:45)(cid:44) S(cid:45)(cid:43)(cid:60)(cid:57)(cid:49)(cid:59)(cid:49)(cid:45)(cid:58)
(cid:24)ll options issued to (cid:33)ey (cid:35)anagement Personnel were made in accordance with the provisions of the
employee share option plan(cid:10)
(cid:24)ll options issued to (cid:36)(cid:28)(cid:27)s were made under the F(cid:43)(cid:13)(cid:19) Fee Sacrifice offer(cid:8) approved by security holders on
(cid:13)(cid:12) (cid:36)ovember (cid:14)(cid:12)(cid:13)(cid:18)(cid:10)
(cid:7)(cid:11)
35
Directors' Report
ELANO(cid:34) IN(cid:38)ESTO(cid:34)S (cid:24)(cid:34)OUP
DI(cid:34)ECTO(cid:34)S(cid:66) (cid:34)EPO(cid:34)T
9(cid:7) (cid:34)(cid:45)(cid:52)(cid:60)(cid:53)(cid:45)(cid:57)(cid:41)(cid:59)(cid:49)(cid:54)(cid:53) (cid:34)(cid:45)(cid:55)(cid:54)(cid:57)(cid:59) (cid:3)A(cid:60)(cid:44)(cid:49)(cid:59)(cid:45)(cid:44)(cid:4) (cid:3)(cid:43)(cid:54)(cid:53)(cid:59)(cid:49)(cid:53)(cid:60)(cid:45)(cid:44)(cid:4)
(cid:47)(cid:4)
L(cid:54)(cid:41)(cid:53)(cid:58) (cid:59)(cid:54) (cid:28)(cid:45)(cid:64) M(cid:41)(cid:53)(cid:41)(cid:47)(cid:45)(cid:52)(cid:45)(cid:53)(cid:59) P(cid:45)(cid:57)(cid:58)(cid:54)(cid:53)(cid:53)(cid:45)(cid:51)
(cid:36)o loans have been provided to (cid:33)ey (cid:35)anagement Personnel of the (cid:30)roup during the year(cid:10)
(cid:48)(cid:4)
O(cid:59)(cid:48)(cid:45)(cid:57) T(cid:57)(cid:41)(cid:53)(cid:58)(cid:41)(cid:43)(cid:59)(cid:49)(cid:54)(cid:53)(cid:58) (cid:41)(cid:53)(cid:44) (cid:19)(cid:41)(cid:51)(cid:41)(cid:53)(cid:43)(cid:45)(cid:58) (cid:62)(cid:49)(cid:59)(cid:48) (cid:28)(cid:45)(cid:64) M(cid:41)(cid:53)(cid:41)(cid:47)(cid:45)(cid:52)(cid:45)(cid:53)(cid:59) P(cid:45)(cid:57)(cid:58)(cid:54)(cid:53)(cid:53)(cid:45)(cid:51) (cid:41)(cid:53)(cid:44) (cid:59)(cid:48)(cid:45)(cid:49)(cid:57) (cid:34)(cid:45)(cid:51)(cid:41)(cid:59)(cid:45)(cid:44) P(cid:41)(cid:57)(cid:59)(cid:49)(cid:45)(cid:58)
There were no transactions with (cid:33)ey (cid:35)anagement Personnel and their (cid:39)elated Parties during the financial
year that are not otherwise referred to in the consolidated financial statements(cid:10)
10(cid:7) C(cid:54)(cid:52)(cid:55)(cid:41)(cid:53)(cid:64) S(cid:45)(cid:43)(cid:57)(cid:45)(cid:59)(cid:41)(cid:57)(cid:64)
Symon Simmons held the position of Company Secretary of the (cid:39)esponsible (cid:28)ntity and the Company during
the period(cid:10) Symon is the Chief Financial (cid:37)fficer of the (cid:30)roup(cid:8) and has e(cid:67)tensive e(cid:67)perience as a company
secretary(cid:8) is a (cid:32)ustice of the Peace in (cid:36)S(cid:42) and is a (cid:39)esponsible (cid:35)anager on the (cid:24)ustralian Financial Services
(cid:34)icence held by the (cid:39)esponsible (cid:28)ntity(cid:10)
11(cid:7)
I(cid:53)(cid:44)(cid:45)(cid:52)(cid:53)(cid:49)(cid:46)(cid:49)(cid:43)(cid:41)(cid:59)(cid:49)(cid:54)(cid:53) (cid:41)(cid:53)(cid:44) (cid:49)(cid:53)(cid:58)(cid:60)(cid:57)(cid:41)(cid:53)(cid:43)(cid:45) (cid:54)(cid:46) (cid:54)(cid:46)(cid:46)(cid:49)(cid:43)(cid:45)(cid:57)(cid:58) (cid:41)(cid:53)(cid:44) (cid:41)(cid:60)(cid:44)(cid:49)(cid:59)(cid:54)(cid:57)(cid:58)
(cid:27)uring the financial year(cid:8) the (cid:30)roup paid a premium in respect of a contract insuring the (cid:27)irectors of the (cid:30)roup
(cid:6)as named above(cid:7)(cid:8) the company secretary(cid:8) and all e(cid:67)ecutive officers of the Company and of any related body
corporate against a liability incurred in their capacity as (cid:27)irectors and officers of the Company to the e(cid:67)tent
permitted by the Corporations (cid:24)ct (cid:14)(cid:12)(cid:12)(cid:13) (cid:6)Cth(cid:7)(cid:10) The contract of insurance prohibits disclosure of the nature of
the liability and the amount of the premium(cid:10)
The Company has not otherwise(cid:8) during or since the end of the financial year(cid:8) e(cid:67)cept to the e(cid:67)tent permitted
by law(cid:8) 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(cid:10)
The auditor of the (cid:30)roup is not indemnified out of the assets of the (cid:30)roup(cid:10)
12(cid:7) E(cid:53)(cid:61)(cid:49)(cid:57)(cid:54)(cid:53)(cid:52)(cid:45)(cid:53)(cid:59)(cid:41)(cid:51) (cid:57)(cid:45)(cid:47)(cid:60)(cid:51)(cid:41)(cid:59)(cid:49)(cid:54)(cid:53)
To the best of their (cid:54)nowledge and belief after ma(cid:54)ing due en(cid:60)uiry(cid:8) the (cid:27)irectors have determined that the
(cid:30)roup has complied with all significant environmental regulations applicable to its operations in the jurisdictions
in which it operates(cid:10)
13(cid:7) S(cid:49)(cid:47)(cid:53)(cid:49)(cid:46)(cid:49)(cid:43)(cid:41)(cid:53)(cid:59) (cid:43)(cid:48)(cid:41)(cid:53)(cid:47)(cid:45)(cid:58) (cid:49)(cid:53) (cid:58)(cid:59)(cid:41)(cid:59)(cid:45) (cid:54)(cid:46) (cid:41)(cid:46)(cid:46)(cid:41)(cid:49)(cid:57)(cid:58)
There was no significant change in the state of affairs of the (cid:30)roup during the year(cid:10)
1(cid:12)(cid:7) A(cid:60)(cid:44)(cid:49)(cid:59)(cid:54)(cid:57)(cid:2)(cid:58) (cid:49)(cid:53)(cid:44)(cid:45)(cid:55)(cid:45)(cid:53)(cid:44)(cid:45)(cid:53)(cid:43)(cid:45) (cid:44)(cid:45)(cid:43)(cid:51)(cid:41)(cid:57)(cid:41)(cid:59)(cid:49)(cid:54)(cid:53)
(cid:24) copy of the auditor(cid:5)s independence declaration(cid:8) as re(cid:60)uired under section (cid:15)(cid:12)(cid:19)C of the Corporations (cid:24)ct
(cid:14)(cid:12)(cid:12)(cid:13) (cid:6)Cth(cid:7)(cid:8) is included on the page following the (cid:27)irectors(cid:5) (cid:39)eport(cid:10)
36 Elanor Investors Group | Annual Report 2019
(cid:7)(cid:12)
ELANOR INVESTORS GROUP
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 28 to the consolidated 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 28 to the consolidated financial
statements do not compromise the external auditor’s independence, based on advice received from the Audit
and Risk Committee, for the following reasons:
• 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 2019 and fees paid to and
expenses reimbursed by its related entities during the financial year are disclosed in Note 25 to the
consolidated financial statements.
18. Events occurring after reporting date
Subsequent to the period end, a distribution of 9.74 cents per stapled security has been declared by the Board
of Directors. The total distribution amount of $9.7 million will be paid on or before 30 August 2019 in respect
of the six months ended 30 June 2019.
The Board approved the appointment of Mr Anthony Fehon as a director of the Group and the Responsible
Entity, with an effective date of 20 August 2019.
Other than the events 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 the financial period subsequent to the year ended 30 June 2019.
28
37
Directors' Report
ELANO(cid:34) IN(cid:38)ESTO(cid:34)S (cid:24)(cid:34)OUP
DI(cid:34)ECTO(cid:34)S(cid:66) (cid:34)EPO(cid:34)T
19(cid:7) (cid:34)(cid:54)(cid:60)(cid:53)(cid:44)(cid:49)(cid:53)(cid:47) (cid:54)(cid:46) (cid:41)(cid:52)(cid:54)(cid:60)(cid:53)(cid:59)(cid:58) (cid:59)(cid:54) (cid:59)(cid:48)(cid:45) (cid:53)(cid:45)(cid:41)(cid:57)(cid:45)(cid:58)(cid:59) (cid:59)(cid:48)(cid:54)(cid:60)(cid:58)(cid:41)(cid:53)(cid:44) (cid:44)(cid:54)(cid:51)(cid:51)(cid:41)(cid:57)(cid:58)
(cid:31)n accordance with (cid:34)egislative (cid:31)nstrument (cid:14)(cid:12)(cid:13)(cid:18)(cid:11)(cid:13)(cid:21)(cid:13) issued by the (cid:24)ustralian Securities and (cid:31)nvestments
Commission relating to the rounding off of amounts in the financial statements(cid:8) amounts in the financial
statements have been rounded to the nearest thousand dollars in accordance with that (cid:34)egislative (cid:31)nstrument(cid:8)
unless otherwise indicated(cid:10)
This report is made in accordance with a resolution of the (cid:25)oards of (cid:27)irectors of (cid:28)lanor Funds (cid:35)anagement
(cid:34)imited and (cid:28)lanor (cid:31)nvestors (cid:34)imited(cid:10)
Signed in accordance with a resolution of the (cid:27)irectors pursuant to section (cid:14)(cid:21)(cid:20)(cid:6)(cid:14)(cid:7) of the Corporations (cid:24)ct
(cid:14)(cid:12)(cid:12)(cid:13) (cid:6)Cth(cid:7)(cid:10)
Paul (cid:25)edbroo(cid:54)
Chairman
Sydney(cid:8) (cid:13)(cid:18) (cid:24)ugust (cid:14)(cid:12)(cid:13)(cid:21)
(cid:30)lenn (cid:42)illis
C(cid:28)(cid:37) and (cid:35)anaging (cid:27)irector
38 Elanor Investors Group | Annual Report 2019
(cid:7)(cid:14)
Auditor’s Independence Declaration
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
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
16 August 2019
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
Dear Directors
Deloitte Touche Tohmatsu
DX 10307SSE
A.B.N. 74 490 121 060
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
Grosvenor Place
www.deloitte.com.au
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
16 August 2019
Auditor’s Independence Declaration to
Elanor Investors Limited and Elanor Investment Fund
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
Dear Directors
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.
Auditor’s Independence Declaration to
Elanor Investors Limited and Elanor Investment Fund
As lead audit partner for the audit of the consolidated financial statements of Elanor Investors Limited and
Elanor Investment Fund for the year ended 30 June 2019, I declare that to the best of my knowledge and
belief, there have been no contraventions of:
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
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.
and
(ii) any applicable code of professional conduct in relation to the audit.
As lead audit partner for the audit of the consolidated financial statements of Elanor Investors Limited and
Elanor Investment Fund for the year ended 30 June 2019, 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;
Yours faithfully
and
(ii) any applicable code of professional conduct in relation to the audit.
DELOITTE TOUCHE TOHMATSU
Yours faithfully
AG Collinson
Partner
DELOITTE TOUCHE TOHMATSU
Chartered Accountants
AG Collinson
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
30
39
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
30
ELANO(cid:34) IN(cid:38)ESTO(cid:34)S (cid:24)(cid:34)OUP
Consolidated Statements of
Profit or Loss
For the year ended 30 June 2019
C(cid:54)(cid:53)(cid:58)(cid:54)(cid:51)(cid:49)(cid:44)(cid:41)(cid:59)(cid:45)(cid:44) S(cid:59)(cid:41)(cid:59)(cid:45)(cid:52)(cid:45)(cid:53)(cid:59)(cid:58) (cid:54)(cid:46) P(cid:57)(cid:54)(cid:46)(cid:49)(cid:59) (cid:54)(cid:57) L(cid:54)(cid:58)(cid:58)
CONSOLIDATED STATEMENTS OF P(cid:34)OFIT O(cid:34) LOSS
FO(cid:34) T(cid:25)E (cid:40)EA(cid:34) ENDED 30 JUNE 2019
(cid:2)
The above Consolidated Statements of Profit or (cid:34)oss should be read in conjunction with the accompanying notes
40 Elanor Investors Group | Annual Report 2019
3(cid:6)
ELANOR INVESTORS GROUP
ELANOR INVESTORS GROUP
CONSOLIDATED STATEMENTS OF COMP(cid:34)E(cid:25)ENSI(cid:38)E INCOME
FO(cid:34) T(cid:25)E (cid:40)EA(cid:34) ENDED 30 JUNE 2019
CONSOLIDATED STATEMENTS OF COMP(cid:34)E(cid:25)ENSI(cid:38)E INCOME
FO(cid:34) T(cid:25)E (cid:40)EA(cid:34) ENDED 30 JUNE 2019
Consolidated Statements of
Comprehensive Income
For the year ended 30 June 2019
C(cid:54)(cid:53)(cid:58)(cid:54)(cid:51)(cid:49)(cid:44)(cid:41)(cid:59)(cid:45)(cid:44) S(cid:59)(cid:41)(cid:59)(cid:45)(cid:52)(cid:45)(cid:53)(cid:59)(cid:58) (cid:54)(cid:46) C(cid:54)
C(cid:54)(cid:53)(cid:58)(cid:54)(cid:51)(cid:49)(cid:44)(cid:41)(cid:59)(cid:45)(cid:44) S(cid:59)(cid:41)(cid:59)(cid:45)(cid:52)(cid:45)(cid:53)(cid:59)(cid:58) (cid:54)(cid:46) C(cid:54)
C(cid:54)(cid:53)(cid:58)(cid:54)(cid:51)(cid:49)(cid:44)(cid:41)(cid:59)(cid:45)(cid:44) S(cid:59)(cid:41)(cid:59)(cid:45)(cid:52)(cid:45)(cid:53)(cid:59)(cid:58) (cid:54)(cid:46) C(cid:54)
(cid:52)(cid:55)(cid:57)(cid:45)(cid:48)(cid:45)(cid:53)(cid:58)(cid:49)(cid:61)(cid:45) I(cid:53)(cid:43)(cid:54)(cid:52)(cid:45)
(cid:52)(cid:55)(cid:57)(cid:45)(cid:48)(cid:45)(cid:53)(cid:58)(cid:49)(cid:61)(cid:45) I(cid:53)(cid:43)(cid:54)(cid:52)(cid:45)
The above Consolidated Statements of Comprehensive (cid:31)ncome should be read in conjunction with the accompanying notes
The above Consolidated Statements of Comprehensive (cid:31)ncome should be read in conjunction with the accompanying notes
3(cid:7)
3(cid:7)
41
ELANOR INVESTORS GROUP
Consolidated Statements of
Financial Position
As at 30 June 2019
C(cid:54)(cid:53)(cid:58)(cid:54)(cid:51)(cid:49)(cid:44)(cid:41)(cid:59)(cid:45)(cid:44) S(cid:59)(cid:41)(cid:59)(cid:45)(cid:52)(cid:45)(cid:53)(cid:59)(cid:58) (cid:54)(cid:46) F(cid:49)(cid:53)(cid:41)(cid:53)(cid:43)(cid:49)(cid:41)(cid:51) P(cid:54)(cid:58)(cid:49)(cid:59)(cid:49)(cid:54)(cid:53)
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT 30 JUNE 2019
The above Consolidated Statements of Financial Position should be read in conjunction with the accompanying notes
42 Elanor Investors Group | Annual Report 2019
33
ELANOR INVESTORS GROUP
ELANOR INVESTORS GROUP
Consolidated Statements of
Financial Position
As at 30 June 2019
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT 30 JUNE 2019
AS AT 30 JUNE 2019
The above Consolidated Statements of Financial Position should be read in conjunction with the accompanying notes
The above Consolidated Statements of Financial Position should be read in conjunction with the accompanying notes
34
34
43
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44 Elanor Investors Group | Annual Report 2019
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45
ELANOR INVESTORS GROUP
Consolidated Statements of
Cash Flows
For the year ended 30 June 2019
C(cid:57)(cid:56)(cid:61)(cid:57)(cid:54)(cid:51)(cid:46)(cid:43)(cid:62)(cid:47)(cid:46) S(cid:62)(cid:43)(cid:62)(cid:47)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61) (cid:57)(cid:48) C(cid:43)(cid:61)(cid:50) (cid:25)(cid:54)(cid:57)(cid:65)(cid:61)
CONSOLIDATED STATE(cid:31)ENTS O(cid:25) CASH (cid:25)LO(cid:40)S
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:37)ote 1: The receipt for business and asset disposals amount includes the net cash proceeds received from the sale of the Merrylands property during the
period. The gross amount of (cid:2)34.2 million relating to the sale of the Merrylands property is offset against the vendor finance amount of (cid:2)2(cid:20).(cid:20) million, that was
provided to the purchaser as part of the settlement and is classified as a financial asset in the financial statements.
The above Consolidated Statements of Cash Flows should be read in con(cid:57)unction with the accompanying notes
46 Elanor Investors Group | Annual Report 2019
(cid:7)(cid:11)
Notes to the Consolidated
Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
ELANOR INVESTORS GROUP
Notes to the Consolidated Financial Statements
About this Report
Elanor Investors Group (Group, Consolidated Group or Elanor) is a ‘stapled’ entity comprising Elanor Investors
Limited (EIL or Company) and its controlled entities (EIL Group) and Elanor Investment Fund (Trust) and its
controlled entities (EIF 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). 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 is a general purpose financial report that has been prepared in accordance with Australian
Accounting Standards, Australian Interpretations, other authoritative pronouncements of the Australian
Accounting Standards Board (the Board or AASB) and the Corporations Act 2001.
The financial report complies with Australian Accounting Standards as issued by the Australian Accounting
Standards Board and International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board.
For the purposes of preparing the financial statements, the Group is a for-profit entity. The financial report has
been presented in Australian dollars unless otherwise stated.
The amounts in the consolidated financial statements have been rounded off to the nearest one thousand
dollars, unless otherwise indicated, in accordance with ASIC Corporations (Rounding in Financial/Director’s
Reports) Instrument 2016/191.
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 2019. 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 consolidated Financial Statements also include a separate column representing the consolidated
Financial Statements of EIF Group, incorporating the assets and liabilities of Elanor Investment Fund and all
of its subsidiaries, as at 30 June 2019.
38
47
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
C(cid:57)(cid:56)(cid:62)(cid:60)(cid:57)(cid:54) (cid:57)(cid:48) E(cid:54)(cid:43)(cid:56)(cid:57)(cid:60) (cid:31)(cid:47)(cid:62)(cid:60)(cid:57) (cid:43)(cid:56)(cid:46) P(cid:60)(cid:51)(cid:55)(cid:47) R(cid:47)(cid:49)(cid:51)(cid:57)(cid:56)(cid:43)(cid:54) H(cid:57)(cid:62)(cid:47)(cid:54) (cid:25)(cid:63)(cid:56)(cid:46) (cid:3)E(cid:31)PR(cid:4) (cid:21)(cid:54)(cid:63)(cid:47)(cid:65)(cid:43)(cid:62)(cid:47)(cid:60) S(cid:59)(cid:63)(cid:43)(cid:60)(cid:47)
S(cid:67)(cid:56)(cid:46)(cid:51)(cid:45)(cid:43)(cid:62)(cid:47) (cid:3)(cid:21)(cid:54)(cid:63)(cid:47)(cid:65)(cid:43)(cid:62)(cid:47)(cid:60)(cid:4) (cid:43)(cid:56)(cid:46) A(cid:63)(cid:44)(cid:63)(cid:60)(cid:56) O(cid:48)(cid:48)(cid:51)(cid:45)(cid:47) S(cid:67)(cid:56)(cid:46)(cid:51)(cid:45)(cid:43)(cid:62)(cid:47) (cid:3)A(cid:63)(cid:44)(cid:63)(cid:60)(cid:56) O(cid:48)(cid:48)(cid:51)(cid:45)(cid:47)(cid:4)
E(cid:31)PR
EM(cid:39)R comprises stapled securities in Elanor Metro and (cid:39)rime Regional (cid:31)otel Fund, EM(cid:39)R Management (cid:39)ty
Limited, Elanor Metro and (cid:39)rime Regional (cid:31)otel Fund II (formerly (cid:58)nown as Elanor (cid:31)ospitality and
Accommodation Fund) and EM(cid:39)R II Management (cid:39)ty Limited (formerly (cid:58)nown as E(cid:31)AF Management (cid:39)ty
Limited). The Group holds 31.11(cid:3) of the equity in EM(cid:39)R. The Group's 31.11(cid:3) ownership interest in EM(cid:39)R
gives the Group the same percentage of the voting rights in EM(cid:39)R. EM(cid:39)R is an unregistered trust for which
Elanor Funds Management Limited acts as the Manager of the asset and Trustee of the trust.
(cid:21)(cid:54)(cid:63)(cid:47)(cid:65)(cid:43)(cid:62)(cid:47)(cid:60)
The Group holds 42.2(cid:19)(cid:3) of the equity in Bluewater Square Syndicate (Bluewater). The Group's 42.2(cid:19)(cid:3)
ownership interest in Bluewater gives the Group the same percentage of the voting rights in Bluewater.
Bluewater is an unregistered trust for which Elanor Funds Management Limited acts as the Manager of the
asset and Trustee of the trust.
A(cid:63)(cid:44)(cid:63)(cid:60)(cid:56) O(cid:48)(cid:48)(cid:51)(cid:45)(cid:47)
The Group holds 100(cid:3) of the equity in Auburn Office Syndicate. The Group's 100(cid:3) ownership interest in the
Auburn Office Syndicate gives the Group the same percentage of the voting rights in the Auburn Office
Syndicate. The Auburn Office Syndicate 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 of EM(cid:39)R, Bluewater and the Auburn Office Syndicate 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 constitution of EM(cid:39)R, Bluewater and the Auburn Office Syndicate respectively
which sets out the basis of fees that the relevant Trustee can receive. These fees include management fees,
performance fees, and acquisition fees.
Based on the assessment above, at the current level of equity investment in EM(cid:39)R, Bluewater and the Auburn
Office Syndicate the AASB 10 definition of control for these investments is met, and therefore each of these
investments are consolidated into Elanor Investors Group Financial Statements.
48 Elanor Investors Group | Annual Report 2019
(cid:7)(cid:13)
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
New accounting standards and interpretations
Certain new Accounting Standards and Interpretations have been published that are mandatory for the
financial year ended 30 June 2019. The Group’s assessment of the impact of these new standards and
interpretation are set out below.
Reference
Description
AASB 9 Financial
Instruments (Applicable 1
January 2018)
AASB 15 Revenue from
Contracts with Customers
(Applicable 1 January 2018)
9
addresses
AASB
the
classification, measurement and
de-recognition of financial assets
and liabilities and introduces new
rules for hedge accounting and
impairment of financial assets.
111
the principle
AASB 15 introduces a five-step
model for recognising revenue
earned from a contract with a
customer and will replace the
existing AASB 118 Revenue and
AASB
Construction
Contracts. The new standard is
based on
that
recognised when
revenue
control of a good or service
transfers to a customer – so the
notion of control replaces the
risks and
existing notion of
rewards. It applies to all contracts
with customers except leases,
financial
and
insurance contracts.
instruments
is
Impact on the Group’s
financial statements
Adoption of the new standard did
the
not have an
measurement and recognition of
amounts of the Group’s financial
statements.
impact on
The Group adopted the standard
in the financial year beginning 1
July 2018.
The Group’s main sources of
income are funds management
fees, rental income and revenue
from hotels and wildlife parks.
These sources of income are
within the scope of the new
revenue standard.
assessment
An
performed
existing revenue streams.
been
the Group’s
has
on
estimated
The
non-lease
component in the year ending 30
June 2019 was $0.5 million.
tax
after
profit
recognition and
Based upon
the assessment,
AASB 15 impacts the timing of the
revenue
the
disclosure of the sale of the
Merrylands Property. The sale
price of $36 million, generating a
net
of
approximately $10.5 million, has
been
the
consolidated financial statements
for the year ended 30 June 2019.
This transaction was recognised
in
financial
statements for the year ended 30
June 2018 under the previous
accounting standard, AASB 118.
the consolidated
recognised
in
Group
retrospectively
The
adopted
the
the standard
financial year beginning 1 July
2018.
in
40
49
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
N(cid:47)(cid:65) (cid:43)(cid:45)(cid:45)(cid:57)(cid:63)(cid:56)(cid:62)(cid:51)(cid:56)(cid:49) (cid:61)(cid:62)(cid:43)(cid:56)(cid:46)(cid:43)(cid:60)(cid:46)(cid:61) (cid:43)(cid:56)(cid:46) (cid:51)(cid:56)(cid:62)(cid:47)(cid:60)(cid:58)(cid:60)(cid:47)(cid:62)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
Certain new Accounting Standards and Interpretations have been published that are not mandatory for the
financial year ended 30 June 2019 but are available for early adoption. They have not been applied in preparing
this financial report. The Group(cid:79)s assessment of the impact of these new standards and interpretation are set
out below.
R(cid:47)(cid:48)(cid:47)(cid:60)(cid:47)(cid:56)(cid:45)(cid:47)
D(cid:47)(cid:61)(cid:45)(cid:60)(cid:51)(cid:58)(cid:62)(cid:51)(cid:57)(cid:56)
(cid:39)roposed standard
Conceptual Framewor(cid:58) for
Financial Reporting and
relevant amending
standards
AASB 16 (cid:15)eases (Applicable
1 January 2019 (cid:75) early
adoption allowed if AASB 15
is adopted at the same time)
The IASB ma(cid:58)es amendments to
various IFRS Standards to reflect
the issue of the IASB(cid:79)s revised
Conceptual Framewor(cid:58).
The IASB(cid:79)s revised Conceptual
Framewor(cid:58) provides updated
definition and recognition criteria
for asset and
liabilities and
introduces new guidance on a
number of topics including the
reporting entity and presentation
and disclosure and clarifies a
number of other matters.
AASB has not yet issued the
equivalent pronouncement.
16
leases
introduces
AASB
new
requirements in relation to lease
recognition,
classification and
measurement and presentation
and disclosure of
for
lessees and lessors. For lessees
a (right-of-use) asset and a lease
liability will be recognised on the
balance sheet in respect of all
limited
leases
exceptions. The accounting for
lessors will not significantly
change.
sub(cid:57)ect
to
I(cid:55)(cid:58)(cid:43)(cid:45)(cid:62) (cid:57)(cid:56) (cid:62)(cid:50)(cid:47) (cid:26)(cid:60)(cid:57)(cid:63)(cid:58)’(cid:61)
(cid:48)(cid:51)(cid:56)(cid:43)(cid:56)(cid:45)(cid:51)(cid:43)(cid:54) (cid:61)(cid:62)(cid:43)(cid:62)(cid:47)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61)
The Group does not anticipate
that
the
the application of
amendments will have a material
impact on the Group(cid:79)s financial
statement.
The Group is party to long-term
non-cancellable property leases
which are not expected to have a
material impact when recognised
in
financial
position.
the statement of
impact on
The expected
the
Group as at the date of adoption
of 1 July 2019 is to record lease
liabilities and right of use assets of
(cid:2)0.99 million.
The Group will adopt the standard
in the financial year beginning 1
July 2019.
AASB 201(cid:20)-1 Amendments
to Australian Accounting
Standards (cid:75) Annual
Improvements 2015-201(cid:19)
Cycle (Effective for reporting
periods after 1 January
2019).
Amendments made
the
following accounting standards:
to
AASB 3 (cid:10)usiness Co(cid:27)(cid:19)ination;
AASB 11 (cid:14)oint Arrange(cid:27)ents;
The Group does not anticipate
the
the application of
that
amendments will have a material
impact on the Group(cid:79)s financial
statement.
AASB 112 (cid:13)nco(cid:27)e (cid:17)a(cid:37); and
AASB 13 (cid:10)orro(cid:36)ing costs.
50 Elanor Investors Group | Annual Report 2019
(cid:8)1
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
I(cid:55)(cid:58)(cid:43)(cid:45)(cid:62) (cid:57)(cid:48) (cid:62)(cid:50)(cid:47) (cid:43)(cid:58)(cid:58)(cid:54)(cid:51)(cid:45)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56) (cid:57)(cid:48) AAS(cid:21) (cid:10)(cid:14) (cid:57)(cid:56) C(cid:57)(cid:55)(cid:58)(cid:43)(cid:60)(cid:43)(cid:62)(cid:51)(cid:64)(cid:47)(cid:61) (cid:57)(cid:48) C(cid:57)(cid:56)(cid:61)(cid:57)(cid:54)(cid:51)(cid:46)(cid:43)(cid:62)(cid:47)(cid:46) S(cid:62)(cid:43)(cid:62)(cid:47)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61)
(cid:57)(cid:48) (cid:25)(cid:51)(cid:56)(cid:43)(cid:56)(cid:45)(cid:51)(cid:43)(cid:54) P(cid:57)(cid:61)(cid:51)(cid:62)(cid:51)(cid:57)(cid:56) (cid:48)(cid:57)(cid:60) C(cid:57)(cid:56)(cid:61)(cid:57)(cid:54)(cid:51)(cid:46)(cid:43)(cid:62)(cid:47)(cid:46) (cid:26)(cid:60)(cid:57)(cid:63)(cid:58)
The Group has adopted AASB 15 from 1 July 201(cid:20), which has resulted in changes in accounting policy and
ad(cid:57)ustments to the amounts recognised in the consolidated financial statements. In accordance with
transitional provisions in AASB 15, the Group has adopted the new rules using fully retrospective transitional
approach and has restated comparatives for the sale of the Merrylands (cid:39)roperty, recognised under AASB 11(cid:20),
in the year ended 30 June 201(cid:20).
A reconciliation of the ad(cid:57)ustment to the consolidated statements of Financial (cid:39)osition due to the application
of AASB 15 is presented below:
(cid:37)ote 1: Financial line items not impacted by the adoption of AASB15 are aggregated.
(cid:37)ote 2: There is no impact on July 201(cid:19) opening retained earnings due to application of AASB 15.
(cid:8)(cid:6)
51
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
The notes to the consolidated Financial Statements have been organised into the following sections for
reduced complexity and ease of navigation:
RESULTS ....................................................................................................................................................... 53
1. Segment information ..........................................................................................................................53
2. Revenue .............................................................................................................................................55
3. Distributions .......................................................................................................................................56
4. Discontinued operations ....................................................................................................................56
5. Earnings / (losses) per stapled security .............................................................................................58
6.
Income tax .........................................................................................................................................61
7. Cash flow information ........................................................................................................................64
OPERATING ASSETS .................................................................................................................................. 65
8. Property, plant and equipment ...........................................................................................................65
Investment properties ........................................................................................................................70
9.
10. Equity accounted investments ...........................................................................................................73
FINANCE AND CAPITAL STRUCTURE ..................................................................................................... 77
11. Interest bearing liabilities ...................................................................................................................77
12. Derivative financial instruments .........................................................................................................79
13. Financial assets .................................................................................................................................81
14. Contributed equity .............................................................................................................................82
15. Reserves ............................................................................................................................................83
16. Financial risk management ................................................................................................................84
GROUP STRUCTURE .................................................................................................................................. 89
17. Parent entity .......................................................................................................................................89
18. Subsidiaries and controlled entities ...................................................................................................90
OTHER ITEMS .............................................................................................................................................. 92
19. Receivables........................................................................................................................................92
20. Payables ............................................................................................................................................92
21. Intangible assets ................................................................................................................................94
22. Net tangible assets ............................................................................................................................95
23. Commitments ....................................................................................................................................95
24. Share-based payment ........................................................................................................................96
25. Related parties ...................................................................................................................................98
26. Significant events .............................................................................................................................100
27. Events occurring after reporting date...............................................................................................100
28. Auditor’s remuneration .....................................................................................................................101
29. Non-parent disclosure .....................................................................................................................102
52 Elanor Investors Group | Annual Report 2019
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Results
This section focuses on the operating results and financial performance of the Group. It includes
disclosures of segmental information, revenue, distributions and cash flow including the relevant
accounting policies adopted in each area.
1.
Segment information
OVERVIEW
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.
As a result of the sale of the Merrylands property and the John Cootes Furniture business being treated as a
discontinued operation, the Group has determined that the Special Situations Investment segment is no longer
required for internal reporting purposes and is therefore not reported as a segment in these financial
statements.
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 reviewed after adjusting for transaction and establishment costs, amortisation of
intangible assets and impairment of goodwill.
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
2019, the Funds Management division has approximately $1,387 million of external investments under
management, being the managed investments.
Hotels, Tourism and Leisure
Hotels, Tourism and Leisure originates and manages investment and fund management assets. The current
investment portfolio includes Featherdale Wildlife Park, Ibis Styles Albany Hotel and 1834 Hospitality, along
with a co-investment in Elanor Metro and Prime Regional Fund (Peppers Cradle Mountain Lodge, Mantra
Wollongong Hotel, Mantra Pavilion Wagga Wagga, Ibis Styles Port Macquarie, Ibis Styles Tall Trees,
Parklands Resort Mudgee, Eaglehawk Hotel, Byron Bay Hotel and Narrabundah Hotel). EMPR is consolidated
in the Financial Statements.
Real Estate
Real Estate originates and manages investment and fund management assets. The current investment
portfolio comprises co-investments in Elanor Commercial Property Fund, Elanor Retail Property Fund, Hunters
Plaza Syndicate, Work Zone West Syndicate, Waverley Gardens Fund and the Belconnen Markets Syndicate.
The Bluewater Square Syndicate and Auburn Office Syndicate are consolidated in the Financial Statements.
44
53
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:10)(cid:7)
S(cid:47)(cid:49)(cid:55)(cid:47)(cid:56)(cid:62) (cid:51)(cid:56)(cid:48)(cid:57)(cid:60)(cid:55)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
The table below shows segment results from continuing operations:
C(cid:57)(cid:56)(cid:61)(cid:57)(cid:54)(cid:51)(cid:46)(cid:43)(cid:62)(cid:47)(cid:46) (cid:26)(cid:60)(cid:57)(cid:63)(cid:58) (cid:68) (cid:12)(cid:9) (cid:29)(cid:63)(cid:56)(cid:47) (cid:11)(cid:9)(cid:10)(cid:18)
(cid:37)ote 1: (cid:39)erformance included as a result of adopting the AASB 15 Revenue from Contracts with Customers is included in the
(cid:43)nallocated Corporate segment.
R(cid:47)(cid:61)(cid:62)(cid:43)(cid:62)(cid:47)(cid:46) C(cid:57)(cid:56)(cid:61)(cid:57)(cid:54)(cid:51)(cid:46)(cid:43)(cid:62)(cid:47)(cid:46) (cid:26)(cid:60)(cid:57)(cid:63)(cid:58) (cid:68) (cid:12)(cid:9) (cid:29)(cid:63)(cid:56)(cid:47) (cid:11)(cid:9)(cid:10)(cid:17)
54 Elanor Investors Group | Annual Report 2019
(cid:8)5
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:11)(cid:7)
R(cid:47)(cid:64)(cid:47)(cid:56)(cid:63)(cid:47)
O(cid:39)ER(cid:39)IE(cid:40)
This note provides a brea(cid:58)down of revenue from operating activities by activity type.
R(cid:47)(cid:64)(cid:47)(cid:56)(cid:63)(cid:47) (cid:48)(cid:60)(cid:57)(cid:55) (cid:57)(cid:58)(cid:47)(cid:60)(cid:43)(cid:62)(cid:51)(cid:56)(cid:49) (cid:43)(cid:45)(cid:62)(cid:51)(cid:64)(cid:51)(cid:62)(cid:51)(cid:47)(cid:61)
ACCOUNTIN(cid:26) POLICY
R(cid:47)(cid:64)(cid:47)(cid:56)(cid:63)(cid:47) (cid:60)(cid:47)(cid:45)(cid:57)(cid:49)(cid:56)(cid:51)(cid:62)(cid:51)(cid:57)(cid:56)
In accordance with the new accounting standard AASB 15 Revenue from Contracts with Customers, revenue
is measured based on the consideration specified in a contract with a customer. The Group recognises
revenue when it can be readily measured and when it transfers control over a product or services for each of
Elanor(cid:79)s activities as described below.
(cid:25)(cid:63)(cid:56)(cid:46)(cid:61) (cid:55)(cid:43)(cid:56)(cid:43)(cid:49)(cid:47)(cid:55)(cid:47)(cid:56)(cid:62) (cid:48)(cid:47)(cid:47) (cid:60)(cid:47)(cid:64)(cid:47)(cid:56)(cid:63)(cid:47)
Funds management fee revenue is recognised when the performance obligation is completed, in accordance
with the Fund(cid:79)s constitution. The funds management and transaction related services are utilised when the
Group has provided the services, and revenue is calculated and recognised in accordance with the Fund(cid:79)s
constitution over time. Where fees are sub(cid:57)ect to meeting certain performance hurdles, they are recognised as
income at the point in time when those conditions have been met.
H(cid:57)(cid:62)(cid:47)(cid:54) (cid:43)(cid:56)(cid:46) (cid:65)(cid:51)(cid:54)(cid:46)(cid:54)(cid:51)(cid:48)(cid:47) (cid:58)(cid:43)(cid:60)(cid:53) (cid:60)(cid:47)(cid:64)(cid:47)(cid:56)(cid:63)(cid:47)
Revenue from contracts with customers is recognised when control of the good or service is transferred to the
customer.
If not received at balance date, revenue is reflected in the balance sheet as a receivable and carried at its
recoverable value.
R(cid:47)(cid:56)(cid:62)(cid:43)(cid:54) (cid:51)(cid:56)(cid:45)(cid:57)(cid:55)(cid:47)
The Group is the lessor in a number of operating leases. Rental income arising from operating leases is
recognised as revenue on a straight-line basis over the lease term.
Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount
of the lease asset and recognised as an expense over the term of the lease on the same basis as the lease
income.
(cid:8)(cid:10)
55
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:12)(cid:7)
D(cid:51)(cid:61)(cid:62)(cid:60)(cid:51)(cid:44)(cid:63)(cid:62)(cid:51)(cid:57)(cid:56)(cid:61)
O(cid:39)ER(cid:39)IE(cid:40)
The Group(cid:79)s aim is to provide investors with superior ris(cid:58) ad(cid:57)usted returns.
When determining distributions, the Group(cid:79)s board considers a number of factors, including forecast earnings
and expected economic conditions. Elanor Investors Group aims to distribute 90(cid:3) of Core Earnings, reflecting
the Director(cid:79)s view of underlying earnings from ongoing operating activities for the period.
The following distribution was declared by the E(cid:37)(cid:37) Group either during the period or post balance date:
ENN (cid:26)(cid:60)(cid:57)(cid:63)(cid:58)
1. The interim distribution of 6.32 cents per stapled security was declared on 1(cid:20) February 2019 and paid on 1 March 2019.
2. The final distribution of 9.(cid:19)4 cents per stapled security for the period ended 30 June 2019 was not declared prior to 30 June 2019. The
Distribution will be paid on 30 August 2019. (cid:39)lease refer to the Director's Report for the calculation of Core Earnings and the Distribution.
(cid:13)(cid:7)
D(cid:51)(cid:61)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46) (cid:57)(cid:58)(cid:47)(cid:60)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56)(cid:61)
On 26 June 201(cid:20), following a strategic review of the deteriorating trading and financial performance of the
John Cootes Furniture business, the Directors resolved to exit the business, either through a sale or a closure
of the business. Following this decision, the John Cootes Furniture business has continued to be classified
under accounting standards as a Discontinued Operation within these financial statements.
On 13 of August 201(cid:20) E(cid:37)(cid:37) Group announced that following a sale campaign where no firm proposals were
received at that stage, Elanor decided to commence an orderly closure of the business. The JCF stores were
all closed during the 12-month period ended 30 June 2019.
The remaining Ashley branded Furniture (cid:31)omestores (Ashley stores) owned by the business were sold on 4
February 2019. Settlement occurred in August 2019.
A(cid:56)(cid:43)(cid:54)(cid:67)(cid:61)(cid:51)(cid:61) (cid:57)(cid:48) P(cid:60)(cid:57)(cid:48)(cid:51)(cid:62) (cid:57)(cid:60) L(cid:57)(cid:61)(cid:61) (cid:48)(cid:57)(cid:60) (cid:62)(cid:50)(cid:47) (cid:67)(cid:47)(cid:43)(cid:60) (cid:48)(cid:60)(cid:57)(cid:55) D(cid:51)(cid:61)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46) O(cid:58)(cid:47)(cid:60)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56)(cid:61)
The combined results of the discontinued operations included in the profit and loss for the period ended 30
June 2019 are set out below. The comparative profit and cash flows from discontinued operations have been
presented to include those operations classified as discontinued in the current year.
56 Elanor Investors Group | Annual Report 2019
(cid:8)(cid:11)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:13)(cid:7)
D(cid:51)(cid:61)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46) (cid:57)(cid:58)(cid:47)(cid:60)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
P(cid:60)(cid:57)(cid:48)(cid:51)(cid:62) (cid:57)(cid:60) L(cid:57)(cid:61)(cid:61) (cid:48)(cid:57)(cid:60) (cid:62)(cid:50)(cid:47) (cid:58)(cid:47)(cid:60)(cid:51)(cid:57)(cid:46) (cid:48)(cid:60)(cid:57)(cid:55) D(cid:51)(cid:61)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46) O(cid:58)(cid:47)(cid:60)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56)(cid:61)
(cid:37)ote 1: Includes the updated provision assumptions relating to the discontinued operations.
C(cid:43)(cid:61)(cid:50) (cid:48)(cid:54)(cid:57)(cid:65)(cid:61) (cid:48)(cid:60)(cid:57)(cid:55) (cid:8) (cid:3)(cid:63)(cid:61)(cid:47)(cid:46) (cid:51)(cid:56)(cid:4) (cid:46)(cid:51)(cid:61)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46) (cid:57)(cid:58)(cid:47)(cid:60)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56)(cid:61)
A(cid:61)(cid:61)(cid:47)(cid:62)(cid:61) (cid:50)(cid:47)(cid:54)(cid:46) (cid:48)(cid:57)(cid:60) (cid:61)(cid:43)(cid:54)(cid:47)
Assets relating to the Ashley stores held for sale are included in the following table:
T(cid:57)(cid:62)(cid:43)(cid:54) (cid:54)(cid:51)(cid:43)(cid:44)(cid:51)(cid:54)(cid:51)(cid:62)(cid:51)(cid:47)(cid:61) (cid:46)(cid:51)(cid:60)(cid:47)(cid:45)(cid:62)(cid:54)(cid:67) (cid:43)(cid:61)(cid:61)(cid:57)(cid:45)(cid:51)(cid:43)(cid:62)(cid:47)(cid:46) (cid:65)(cid:51)(cid:62)(cid:50) (cid:46)(cid:51)(cid:61)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46) (cid:57)(cid:58)(cid:47)(cid:60)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56)(cid:61)
(cid:8)(cid:12)
57
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:13)(cid:7)
D(cid:51)(cid:61)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46) (cid:57)(cid:58)(cid:47)(cid:60)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
ACCOUNTIN(cid:26) POLICY
D(cid:51)(cid:61)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46) O(cid:58)(cid:47)(cid:60)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56)(cid:61)
A discontinued operation is a component of the Group that represents a separate ma(cid:57)or line of business that
is part of a disposal plan. The results of discontinued operations are presented separately in the Consolidated
Statement of (cid:39)rofit or Loss.
C(cid:60)(cid:51)(cid:62)(cid:51)(cid:45)(cid:43)(cid:54) A(cid:45)(cid:45)(cid:57)(cid:63)(cid:56)(cid:62)(cid:51)(cid:56)(cid:49) E(cid:61)(cid:62)(cid:51)(cid:55)(cid:43)(cid:62)(cid:47)(cid:61)
The estimates and (cid:57)udgements of impairment of the John Cootes Furniture business assets and associated
costs, that involve a high degree of complexity and have a ris(cid:58) of causing a material ad(cid:57)ustment to the carrying
amounts of assets and liabilities within subsequent periods, are incorporated above. Any changes to carrying
values in subsequent periods due to revisions to estimates or assumptions or as a result of the final realisation
of the business assets and liabilities upon exit of the business will be recognised in the Group(cid:79)s profit or loss
as part of discontinued operations up to the cessation of the John Cootes Furniture business.
(cid:14)(cid:7)
E(cid:43)(cid:60)(cid:56)(cid:51)(cid:56)(cid:49)(cid:61) (cid:8) (cid:3)(cid:54)(cid:57)(cid:61)(cid:61)(cid:47)(cid:61)(cid:4) (cid:58)(cid:47)(cid:60) (cid:61)(cid:62)(cid:43)(cid:58)(cid:54)(cid:47)(cid:46) (cid:61)(cid:47)(cid:45)(cid:63)(cid:60)(cid:51)(cid:62)(cid:67)
O(cid:39)ER(cid:39)IE(cid:40)
This note provides information about Elanor Investor Group(cid:79)s earnings on a per security basis. Earnings per
security (E(cid:39)S) is a measure that ma(cid:58)es it easier for users of Elanor(cid:79)s financial report to compare Elanor(cid:79)s
performance between different reporting periods. Accounting standards require the disclosure of two E(cid:39)S
measures, basic E(cid:39)S and diluted E(cid:39)S. E(cid:39)S information provides a measure of interests of each ordinary
issued security of the parent entity in the performance of the entity over the reporting period while diluted E(cid:39)S
information provides the same information but ta(cid:58)es into account the effect of all potential dilutive, ordinary
securities outstanding during the period, such as Elanor(cid:79)s options.
The tables below show the earnings per share of the Company, the parent entity of the Group and its controlled
entities as required by accounting standards.
58 Elanor Investors Group | Annual Report 2019
(cid:8)(cid:13)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:14)(cid:7)
E(cid:43)(cid:60)(cid:56)(cid:51)(cid:56)(cid:49)(cid:61) (cid:8) (cid:3)(cid:54)(cid:57)(cid:61)(cid:61)(cid:47)(cid:61)(cid:4) (cid:58)(cid:47)(cid:60) (cid:61)(cid:62)(cid:43)(cid:58)(cid:54)(cid:47)(cid:46) (cid:61)(cid:47)(cid:45)(cid:63)(cid:60)(cid:51)(cid:62)(cid:67) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
T(cid:50)(cid:47) (cid:47)(cid:43)(cid:60)(cid:56)(cid:51)(cid:56)(cid:49) (cid:8) (cid:3)(cid:54)(cid:57)(cid:61)(cid:61)(cid:47)(cid:61)(cid:4) (cid:58)(cid:47)(cid:60) (cid:61)(cid:62)(cid:43)(cid:58)(cid:54)(cid:47)(cid:46) (cid:61)(cid:47)(cid:45)(cid:63)(cid:60)(cid:51)(cid:62)(cid:67) (cid:55)(cid:47)(cid:43)(cid:61)(cid:63)(cid:60)(cid:47) (cid:61)(cid:50)(cid:57)(cid:65)(cid:56) (cid:44)(cid:47)(cid:54)(cid:57)(cid:65) (cid:51)(cid:61) (cid:44)(cid:43)(cid:61)(cid:47)(cid:46) (cid:63)(cid:58)(cid:57)(cid:56) (cid:62)(cid:50)(cid:47) (cid:58)(cid:60)(cid:57)(cid:48)(cid:51)(cid:62) (cid:8) (cid:3)(cid:54)(cid:57)(cid:61)(cid:61)(cid:4)
(cid:43)(cid:62)(cid:62)(cid:60)(cid:51)(cid:44)(cid:63)(cid:62)(cid:43)(cid:44)(cid:54)(cid:47) (cid:62)(cid:57) (cid:61)(cid:47)(cid:45)(cid:63)(cid:60)(cid:51)(cid:62)(cid:67) (cid:50)(cid:57)(cid:54)(cid:46)(cid:47)(cid:60)(cid:61)(cid:19)
The weighted average number of stapled securities and options granted used as the denominator in calculating basic and diluted
earnings (cid:11) (losses) per stapled securities shown above is based on the number of stapled security on issue and options granted during
the period.
50
59
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:14)(cid:7)
E(cid:43)(cid:60)(cid:56)(cid:51)(cid:56)(cid:49)(cid:61) (cid:8) (cid:3)(cid:54)(cid:57)(cid:61)(cid:61)(cid:47)(cid:61)(cid:4) (cid:58)(cid:47)(cid:60) (cid:61)(cid:62)(cid:43)(cid:58)(cid:54)(cid:47)(cid:46) (cid:61)(cid:47)(cid:45)(cid:63)(cid:60)(cid:51)(cid:62)(cid:67) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
T(cid:50)(cid:47) (cid:47)(cid:43)(cid:60)(cid:56)(cid:51)(cid:56)(cid:49)(cid:61) (cid:8) (cid:3)(cid:54)(cid:57)(cid:61)(cid:61)(cid:47)(cid:61)(cid:4) (cid:58)(cid:47)(cid:60) (cid:61)(cid:62)(cid:43)(cid:58)(cid:54)(cid:47)(cid:46) (cid:61)(cid:47)(cid:45)(cid:63)(cid:60)(cid:51)(cid:62)(cid:67) (cid:55)(cid:47)(cid:43)(cid:61)(cid:63)(cid:60)(cid:47)(cid:61) (cid:61)(cid:50)(cid:57)(cid:65)(cid:56) (cid:44)(cid:47)(cid:54)(cid:57)(cid:65) (cid:43)(cid:60)(cid:47) (cid:44)(cid:43)(cid:61)(cid:47)(cid:46) (cid:63)(cid:58)(cid:57)(cid:56) (cid:62)(cid:50)(cid:47) (cid:58)(cid:60)(cid:57)(cid:48)(cid:51)(cid:62) (cid:8) (cid:3)(cid:54)(cid:57)(cid:61)(cid:61)(cid:4)
(cid:43)(cid:62)(cid:62)(cid:60)(cid:51)(cid:44)(cid:63)(cid:62)(cid:43)(cid:44)(cid:54)(cid:47) (cid:62)(cid:57) (cid:61)(cid:47)(cid:45)(cid:63)(cid:60)(cid:51)(cid:62)(cid:67) (cid:50)(cid:57)(cid:54)(cid:46)(cid:47)(cid:60)(cid:61) (cid:57)(cid:48) (cid:62)(cid:50)(cid:47) ENN (cid:26)(cid:60)(cid:57)(cid:63)(cid:58)(cid:19)
The weighted average number of stapled securities and options granted used as the denominator in calculating basic and diluted
earnings (cid:11) (losses) per stapled securities shown above is based on the number of stapled securities on issue and options granted during
the period.
ACCOUNTIN(cid:26) POLICY
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 ad(cid:57)usted
for any profit recognised in the period in relation to potential dilutive, stapled securities divided by the weighted
average number of stapled securities and dilutive stapled securities.
60 Elanor Investors Group | Annual Report 2019
51
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:15)(cid:7)
I(cid:56)(cid:45)(cid:57)(cid:55)(cid:47) (cid:62)(cid:43)(cid:66)
O(cid:39)ER(cid:39)IE(cid:40)
This note provides detailed information about the Group(cid:79)s income tax items including a reconciliation of income
tax expense if Australia(cid:79)s company income tax rate of 30(cid:3) was applied to the Group(cid:79)s profit before income tax
as shown in the income statement to the actual income tax expense (cid:11) benefit.
(cid:3)(cid:43)(cid:4) I(cid:56)(cid:45)(cid:57)(cid:55)(cid:47) T(cid:43)(cid:66) E(cid:66)(cid:58)(cid:47)(cid:56)(cid:61)(cid:47)
(cid:3)(cid:44)(cid:4) R(cid:47)(cid:45)(cid:57)(cid:56)(cid:45)(cid:51)(cid:54)(cid:51)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56) (cid:57)(cid:48) (cid:51)(cid:56)(cid:45)(cid:57)(cid:55)(cid:47) (cid:62)(cid:43)(cid:66) (cid:47)(cid:66)(cid:58)(cid:47)(cid:56)(cid:61)(cid:47) (cid:62)(cid:57) (cid:58)(cid:60)(cid:51)(cid:55)(cid:43) (cid:48)(cid:43)(cid:45)(cid:51)(cid:47) (cid:62)(cid:43)(cid:66) (cid:47)(cid:66)(cid:58)(cid:47)(cid:56)(cid:61)(cid:47)
ACCOUNTIN(cid:26) POLICY
Accounting standards require the application of the (cid:76)balance sheet method(cid:77) to account for Elanor(cid:79)s income
tax. Accounting profit does not always equal taxable income. There are a number of timing differences between
the recognition of accounting expenses and the availability of tax deductions or when revenue is recognised
for accounting purpose and tax purposes. These timing differences reverse over time but they are recognised
as deferred tax assets and deferred tax liabilities in the balance sheet until they are fully reversed. This is
referred to as the (cid:76)balance sheet method(cid:77).
5(cid:6)
61
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:15)(cid:7)
I(cid:56)(cid:45)(cid:57)(cid:55)(cid:47) (cid:62)(cid:43)(cid:66) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
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 ad(cid:57)ustment to tax payable in respect of previous years.
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.
EM(cid:39)R II Management (cid:39)ty 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 EM(cid:39)R II Management (cid:39)ty Limited.
EM(cid:39)R Management (cid:39)ty Limited and its wholly-owned Australian resident entities are part of a tax-consolidated
group, formed on 6 (cid:37)ovember 201(cid:19), 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 EM(cid:39)R Management (cid:39)ty Limited.
(cid:3)(cid:45)(cid:4)
D(cid:47)(cid:48)(cid:47)(cid:60)(cid:60)(cid:47)(cid:46) (cid:62)(cid:43)(cid:66)(cid:47)(cid:61)
O(cid:39)ER(cid:39)IE(cid:40)
Management (cid:57)udgement is required in reviewing the recoverability of deferred tax assets carried by the Group,
which involves estimates of (cid:58)ey assumptions including cash flow pro(cid:57)ection, growth rates and discount rates.
62 Elanor Investors Group | Annual Report 2019
5(cid:7)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
I(cid:56)(cid:45)(cid:57)(cid:55)(cid:47) (cid:62)(cid:43)(cid:66) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
I(cid:56)(cid:45)(cid:57)(cid:55)(cid:47) (cid:62)(cid:43)(cid:66) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
(cid:15)(cid:7)
(cid:15)(cid:7)
ACCOUNTIN(cid:26) POLICY
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the
ACCOUNTIN(cid:26) POLICY
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the
purposes. The following differences are not provided for initial recognition of goodwill, the initial recognition of
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation
assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in
purposes. The following differences are not provided for initial recognition of goodwill, the initial recognition of
subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred
assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in
tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets
subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred
and liabilities, using tax rates enacted or substantively enacted at the reporting date.
tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets
5(cid:8)
63
and liabilities, using tax rates enacted or substantively enacted at the reporting date.
5(cid:8)
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:16)(cid:7)
C(cid:43)(cid:61)(cid:50) (cid:48)(cid:54)(cid:57)(cid:65) (cid:51)(cid:56)(cid:48)(cid:57)(cid:60)(cid:55)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56)
O(cid:39)ER(cid:39)IE(cid:40)
This note provides further information on the consolidated cash flow statements of the Group. It reconciles profit
for the year to cash flows from operating activities, reconciles liabilities arising from financing activities and
provides information about non-cash transactions.
(cid:3)(cid:43)(cid:4)
R(cid:47)(cid:45)(cid:57)(cid:56)(cid:45)(cid:51)(cid:54)(cid:51)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56) (cid:57)(cid:48) (cid:58)(cid:60)(cid:57)(cid:48)(cid:51)(cid:62) (cid:43)(cid:48)(cid:62)(cid:47)(cid:60) (cid:51)(cid:56)(cid:45)(cid:57)(cid:55)(cid:47) (cid:62)(cid:43)(cid:66) (cid:62)(cid:57) (cid:56)(cid:47)(cid:62) (cid:45)(cid:43)(cid:61)(cid:50) (cid:48)(cid:54)(cid:57)(cid:65)(cid:61) (cid:48)(cid:60)(cid:57)(cid:55) (cid:57)(cid:58)(cid:47)(cid:60)(cid:43)(cid:62)(cid:51)(cid:56)(cid:49) (cid:43)(cid:45)(cid:62)(cid:51)(cid:64)(cid:51)(cid:62)(cid:51)(cid:47)(cid:61)
(cid:3)(cid:44)(cid:4)
R(cid:47)(cid:45)(cid:57)(cid:56)(cid:45)(cid:51)(cid:54)(cid:51)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56) (cid:57)(cid:48) (cid:54)(cid:51)(cid:43)(cid:44)(cid:51)(cid:54)(cid:51)(cid:62)(cid:51)(cid:47)(cid:61) (cid:43)(cid:60)(cid:51)(cid:61)(cid:51)(cid:56)(cid:49) (cid:48)(cid:60)(cid:57)(cid:55) (cid:48)(cid:51)(cid:56)(cid:43)(cid:56)(cid:45)(cid:51)(cid:43)(cid:54) (cid:43)(cid:45)(cid:62)(cid:51)(cid:64)(cid:51)(cid:62)(cid:51)(cid:47)(cid:61)
64 Elanor Investors Group | Annual Report 2019
55
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
O(cid:58)(cid:47)(cid:60)(cid:43)(cid:62)(cid:51)(cid:56)(cid:49) A(cid:61)(cid:61)(cid:47)(cid:62)(cid:61)
This section includes information about the assets used by the Group to generate revenue and profits,
specifically relating to its property, plant and equipment, and investments.
(cid:17)(cid:7)
P(cid:60)(cid:57)(cid:58)(cid:47)(cid:60)(cid:62)(cid:67)(cid:5) (cid:58)(cid:54)(cid:43)(cid:56)(cid:62) (cid:43)(cid:56)(cid:46) (cid:47)(cid:59)(cid:63)(cid:51)(cid:58)(cid:55)(cid:47)(cid:56)(cid:62)
O(cid:39)ER(cid:39)IE(cid:40)
All owner-occupied investment properties held by the Group are deemed to be held for use by the Group for
the supply of services, and are therefore classified as property, plant and equipment under Australian
Accounting Standards.
(cid:3)(cid:43)(cid:4)
(cid:31)(cid:57)(cid:64)(cid:47)(cid:55)(cid:47)(cid:56)(cid:62) (cid:51)(cid:56) (cid:58)(cid:60)(cid:57)(cid:58)(cid:47)(cid:60)(cid:62)(cid:67)(cid:5) (cid:58)(cid:54)(cid:43)(cid:56)(cid:62) (cid:43)(cid:56)(cid:46) (cid:47)(cid:59)(cid:63)(cid:51)(cid:58)(cid:55)(cid:47)(cid:56)(cid:62)
The carrying amount of property, plant and equipment at the beginning and end of the current period is set out
below:
5(cid:10)
65
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:17)(cid:7)
P(cid:60)(cid:57)(cid:58)(cid:47)(cid:60)(cid:62)(cid:67)(cid:5) (cid:58)(cid:54)(cid:43)(cid:56)(cid:62) (cid:43)(cid:56)(cid:46) (cid:47)(cid:59)(cid:63)(cid:51)(cid:58)(cid:55)(cid:47)(cid:56)(cid:62) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
A reconciliation of the carrying amount of property, plant and equipment at the beginning and end of the 30
June 201(cid:20) year is set out below:
(cid:3)(cid:44)(cid:4)
C(cid:43)(cid:60)(cid:60)(cid:67)(cid:51)(cid:56)(cid:49) (cid:64)(cid:43)(cid:54)(cid:63)(cid:47) (cid:57)(cid:48) (cid:58)(cid:60)(cid:57)(cid:58)(cid:47)(cid:60)(cid:62)(cid:67)(cid:5) (cid:58)(cid:54)(cid:43)(cid:56)(cid:62) (cid:43)(cid:56)(cid:46) (cid:47)(cid:59)(cid:63)(cid:51)(cid:58)(cid:55)(cid:47)(cid:56)(cid:62)
The following table represents the total fair value of property, plant and equipment at 30 June 2019:
As at 30 June 2019, the Directors assessed the fair value of the properties above, supported by independent
or internal valuation reports.
66 Elanor Investors Group | Annual Report 2019
5(cid:11)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:17)(cid:7)
P(cid:60)(cid:57)(cid:58)(cid:47)(cid:60)(cid:62)(cid:67)(cid:5) (cid:58)(cid:54)(cid:43)(cid:56)(cid:62) (cid:43)(cid:56)(cid:46) (cid:47)(cid:59)(cid:63)(cid:51)(cid:58)(cid:55)(cid:47)(cid:56)(cid:62) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
(cid:31)ad the Consolidated Group(cid:79)s property, plant and equipment been measured on a historical cost less
accumulated depreciation basis, their carrying amount would have been as follows:
ACCOUNTIN(cid:26) POLICY
(cid:25)(cid:43)(cid:51)(cid:60) (cid:64)(cid:43)(cid:54)(cid:63)(cid:47) (cid:57)(cid:48) P(cid:60)(cid:57)(cid:58)(cid:47)(cid:60)(cid:62)(cid:67)(cid:5) P(cid:54)(cid:43)(cid:56)(cid:62) (cid:43)(cid:56)(cid:46) E(cid:59)(cid:63)(cid:51)(cid:58)(cid:55)(cid:47)(cid:56)(cid:62)
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 (cid:58)nowledgeable, willing parties, other than
in a forced or liquidation sale.
In reaching estimates of fair value, management (cid:57)udgement needs to be exercised. The level of management
(cid:57)udgement required in establishing fair value of the land and buildings for which there is no quoted price in an
active mar(cid:58)et is reduced through the use of external valuations.
L(cid:43)(cid:56)(cid:46) (cid:43)(cid:56)(cid:46) (cid:21)(cid:63)(cid:51)(cid:54)(cid:46)(cid:51)(cid:56)(cid:49)(cid:61)
All owner occupied properties in the (cid:31)otel, Tourism and 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 (cid:58)nowledgeable, 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.
(cid:25)(cid:63)(cid:60)(cid:56)(cid:51)(cid:62)(cid:63)(cid:60)(cid:47)(cid:5) (cid:48)(cid:51)(cid:62)(cid:62)(cid:51)(cid:56)(cid:49)(cid:61) (cid:43)(cid:56)(cid:46) (cid:47)(cid:59)(cid:63)(cid:51)(cid:58)(cid:55)(cid:47)(cid:56)(cid:62)
Furniture, fittings and equipment are stated at cost less accumulated depreciation.
L(cid:51)(cid:64)(cid:47)(cid:61)(cid:62)(cid:57)(cid:45)(cid:53)
Livestoc(cid:58) are stated at cost, less accumulated depreciation. (cid:31)istorical cost includes expenditure that is directly
attributable to the acquisition of the animals. Depreciation on livestoc(cid:58) is calculated using the straight-line
method, over the useful lives of the assets which range from 5 - 50 years.
5(cid:12)
67
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:17)(cid:7)
P(cid:60)(cid:57)(cid:58)(cid:47)(cid:60)(cid:62)(cid:67)(cid:5) (cid:58)(cid:54)(cid:43)(cid:56)(cid:62) (cid:43)(cid:56)(cid:46) (cid:47)(cid:59)(cid:63)(cid:51)(cid:58)(cid:55)(cid:47)(cid:56)(cid:62) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
D(cid:47)(cid:58)(cid:60)(cid:47)(cid:45)(cid:51)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56)
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
(cid:44)ehicles
Furniture, fittings and equipment
40 years
3 - 5 years
(cid:20) years
3 - 10 years
(cid:3)(cid:45)(cid:4)
(cid:39)(cid:43)(cid:54)(cid:63)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56) (cid:62)(cid:47)(cid:45)(cid:50)(cid:56)(cid:51)(cid:59)(cid:63)(cid:47) (cid:43)(cid:56)(cid:46) (cid:51)(cid:56)(cid:58)(cid:63)(cid:62)(cid:61)
The (cid:58)ey inputs used to measure fair values of investment properties are disclosed below along with their
sensitivity to an increase or decrease.
The investment property fair values presented are based on mar(cid:58)et values, which are derived using the
capitalisation and the discounted cash flow methods. The Group's preferred or primary method is the
capitalisation method.
P(cid:60)(cid:57)(cid:58)(cid:47)(cid:60)(cid:62)(cid:67) A(cid:61)(cid:61)(cid:47)(cid:62)(cid:61)
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(cid:79)s Constitution and Compliance
(cid:39)lan.
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 asset plans and forecasting tools prepared by the asset management team. Appropriate
capitalisation rate, terminal yield and discount rates based on comparable mar(cid:58)et evidence and recent external
valuation parameters are used to produce 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, Ris(cid:58) (cid:4) 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 mar(cid:58)et and where there is a significant variation
between 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.
C(cid:43)(cid:58)(cid:51)(cid:62)(cid:43)(cid:54)(cid:51)(cid:61)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56) (cid:55)(cid:47)(cid:62)(cid:50)(cid:57)(cid:46)
Capitalisation 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 and includes consideration of the property type,
location, comparable sales and whether the property is sub(cid:57)ect to vacant possession (in the case of hotel
properties).
68 Elanor Investors Group | Annual Report 2019
5(cid:13)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:17)(cid:7)
P(cid:60)(cid:57)(cid:58)(cid:47)(cid:60)(cid:62)(cid:67)(cid:5) (cid:58)(cid:54)(cid:43)(cid:56)(cid:62) (cid:43)(cid:56)(cid:46) (cid:47)(cid:59)(cid:63)(cid:51)(cid:58)(cid:55)(cid:47)(cid:56)(cid:62) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
(cid:3)(cid:45)(cid:4)
(cid:39)(cid:43)(cid:54)(cid:63)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56) (cid:62)(cid:47)(cid:45)(cid:50)(cid:56)(cid:51)(cid:59)(cid:63)(cid:47) (cid:43)(cid:56)(cid:46) (cid:51)(cid:56)(cid:58)(cid:63)(cid:62)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
D(cid:51)(cid:61)(cid:45)(cid:57)(cid:63)(cid:56)(cid:62)(cid:47)(cid:46) (cid:45)(cid:43)(cid:61)(cid:50) (cid:48)(cid:54)(cid:57)(cid:65)(cid:61) (cid:3)DC(cid:25)(cid:4)
(cid:43)nder 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 pro(cid:57)ection of a series of cash flows on a real property interest. To this pro(cid:57)ected 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 regard to mar(cid:58)et evidence and 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.
A(cid:61)(cid:61)(cid:47)(cid:62)(cid:61) (cid:55)(cid:47)(cid:43)(cid:61)(cid:63)(cid:60)(cid:47)(cid:46) (cid:43)(cid:62) (cid:48)(cid:43)(cid:51)(cid:60) (cid:64)(cid:43)(cid:54)(cid:63)(cid:47)
The significant unobservable inputs associated with the valuation of the Group's property, plant and equipment
are as follows:
S(cid:47)(cid:56)(cid:61)(cid:51)(cid:62)(cid:51)(cid:64)(cid:51)(cid:62)(cid:67) I(cid:56)(cid:48)(cid:57)(cid:60)(cid:55)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56)
The (cid:58)ey unobservable inputs to measure the fair value of investment properties are disclosed below along
with sensitivity to a significant increase or decrease set out in the following table:
(cid:10)0
69
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:17)(cid:7)
P(cid:60)(cid:57)(cid:58)(cid:47)(cid:60)(cid:62)(cid:67)(cid:5) (cid:58)(cid:54)(cid:43)(cid:56)(cid:62) (cid:43)(cid:56)(cid:46) (cid:47)(cid:59)(cid:63)(cid:51)(cid:58)(cid:55)(cid:47)(cid:56)(cid:62) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
(cid:3)(cid:45)(cid:4)
(cid:39)(cid:43)(cid:54)(cid:63)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56) (cid:62)(cid:47)(cid:45)(cid:50)(cid:56)(cid:51)(cid:59)(cid:63)(cid:47) (cid:43)(cid:56)(cid:46) (cid:51)(cid:56)(cid:58)(cid:63)(cid:62)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
S(cid:47)(cid:56)(cid:61)(cid:51)(cid:62)(cid:51)(cid:64)(cid:51)(cid:62)(cid:67) A(cid:56)(cid:43)(cid:54)(cid:67)(cid:61)(cid:51)(cid:61)
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.
(cid:18)(cid:7)
I(cid:56)(cid:64)(cid:47)(cid:61)(cid:62)(cid:55)(cid:47)(cid:56)(cid:62) (cid:58)(cid:60)(cid:57)(cid:58)(cid:47)(cid:60)(cid:62)(cid:51)(cid:47)(cid:61)
The carrying amount of investment properties at the beginning and end of the current period is set out below:
The following table represents the total fair value of investment properties at 30 June 2019.
As at 30 June 2019, the Directors assessed the fair value of the property above, supported by an independent
or internal valuation report.
70 Elanor Investors Group | Annual Report 2019
(cid:10)1
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
9.
Investment properties (continued)
ACCOUNTING POLICY
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
judgement 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.
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 derecognized.
Investment properties are categorised as level 3 in the fair value hierarchy. There were no transfers between
hierarchies during the period.
62
71
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:18)(cid:7)
I(cid:56)(cid:64)(cid:47)(cid:61)(cid:62)(cid:55)(cid:47)(cid:56)(cid:62) (cid:58)(cid:60)(cid:57)(cid:58)(cid:47)(cid:60)(cid:62)(cid:51)(cid:47)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
ACCOUNTIN(cid:26) POLICY (cid:3)CONTINUED(cid:4)
(cid:25)(cid:43)(cid:51)(cid:60) (cid:64)(cid:43)(cid:54)(cid:63)(cid:47) (cid:55)(cid:47)(cid:43)(cid:61)(cid:63)(cid:60)(cid:47)(cid:55)(cid:47)(cid:56)(cid:62)
The significant unobservable inputs associated with the valuation of the Group's investment properties are as
follows:
72 Elanor Investors Group | Annual Report 2019
(cid:10)(cid:7)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:10)(cid:9)(cid:7) E(cid:59)(cid:63)(cid:51)(cid:62)(cid:67) (cid:43)(cid:45)(cid:45)(cid:57)(cid:63)(cid:56)(cid:62)(cid:47)(cid:46) (cid:51)(cid:56)(cid:64)(cid:47)(cid:61)(cid:62)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61)
O(cid:39)ER(cid:39)IE(cid:40)
This note provides an overview and detailed financial information of the Group(cid:79)s investments that are
accounted for using the equity method of accounting. These include (cid:57)oint ventures where the Group has (cid:57)oint
control over an investee together with one or more (cid:57)oint venture partners and investments in associates, which
are entities over which the Group is presumed to have significant influence but not control or (cid:57)oint control.
The Group(cid:79)s equity accounted investments are as follows:
(cid:12)(cid:9) (cid:29)(cid:63)(cid:56)(cid:47) (cid:11)(cid:9)(cid:10)(cid:18)
(cid:12)(cid:9) (cid:29)(cid:63)(cid:56)(cid:47) (cid:11)(cid:9)(cid:10)(cid:17)
D(cid:47)(cid:62)(cid:43)(cid:51)(cid:54)(cid:61) (cid:57)(cid:48) (cid:31)(cid:43)(cid:62)(cid:47)(cid:60)(cid:51)(cid:43)(cid:54) A(cid:61)(cid:61)(cid:57)(cid:45)(cid:51)(cid:43)(cid:62)(cid:47)(cid:61)
Summarised financial information in respect of each of the Group's material associates is set out below.
Materiality is assessed on the investments(cid:79) contribution to Group income and net assets. The summarised
financial information below represents amounts shown in the associate's financial statements prepared in
accordance with accounting standards, ad(cid:57)usted by the Group for equity accounting purposes.
(cid:10)(cid:8)
73
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:10)(cid:9)(cid:7) E(cid:59)(cid:63)(cid:51)(cid:62)(cid:67) (cid:43)(cid:45)(cid:45)(cid:57)(cid:63)(cid:56)(cid:62)(cid:47)(cid:46) (cid:51)(cid:56)(cid:64)(cid:47)(cid:61)(cid:62)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
D(cid:47)(cid:62)(cid:43)(cid:51)(cid:54)(cid:61) (cid:57)(cid:48) (cid:31)(cid:43)(cid:62)(cid:47)(cid:60)(cid:51)(cid:43)(cid:54) A(cid:61)(cid:61)(cid:57)(cid:45)(cid:51)(cid:43)(cid:62)(cid:47)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
The following information represents the aggregated financial position and financial performance of the Elanor
Retail (cid:39)roperty Fund, Elanor Commercial (cid:39)roperty Fund and the Waverley Gardens Fund. This summarised
financial information represents amounts shown in the associate's financial statements prepared in accordance
with AASBs, ad(cid:57)usted by the Group for equity accounting purposes.
Reconciliation of the above summarised financial information to the carrying amount of the interest in each of
the material associates recognised in the consolidated financial statements:
74 Elanor Investors Group | Annual Report 2019
(cid:10)5
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:10)(cid:9)(cid:7) E(cid:59)(cid:63)(cid:51)(cid:62)(cid:67) (cid:43)(cid:45)(cid:45)(cid:57)(cid:63)(cid:56)(cid:62)(cid:47)(cid:46) (cid:51)(cid:56)(cid:64)(cid:47)(cid:61)(cid:62)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
D(cid:47)(cid:62)(cid:43)(cid:51)(cid:54)(cid:61) (cid:57)(cid:48) (cid:31)(cid:43)(cid:62)(cid:47)(cid:60)(cid:51)(cid:43)(cid:54) A(cid:61)(cid:61)(cid:57)(cid:45)(cid:51)(cid:43)(cid:62)(cid:47)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
(cid:12)(cid:9) (cid:29)(cid:63)(cid:56)(cid:47) (cid:11)(cid:9)(cid:10)(cid:17)
Reconciliation of the above summarised financial information to the carrying amount of the interest in the
Elanor Retail (cid:39)roperty Fund and Bell City Fund recognised in the consolidated financial statements:
(cid:10)(cid:10)
75
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:10)(cid:9)(cid:7)
E(cid:59)(cid:63)(cid:51)(cid:62)(cid:67) (cid:43)(cid:45)(cid:45)(cid:57)(cid:63)(cid:56)(cid:62)(cid:47)(cid:46) (cid:51)(cid:56)(cid:64)(cid:47)(cid:61)(cid:62)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
A(cid:49)(cid:49)(cid:60)(cid:47)(cid:49)(cid:43)(cid:62)(cid:47) (cid:51)(cid:56)(cid:48)(cid:57)(cid:60)(cid:55)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56) (cid:57)(cid:48) (cid:43)(cid:61)(cid:61)(cid:57)(cid:45)(cid:51)(cid:43)(cid:62)(cid:47)(cid:61) (cid:62)(cid:50)(cid:43)(cid:62) (cid:43)(cid:60)(cid:47) (cid:56)(cid:57)(cid:62) (cid:51)(cid:56)(cid:46)(cid:51)(cid:64)(cid:51)(cid:46)(cid:63)(cid:43)(cid:54)(cid:54)(cid:67) (cid:55)(cid:43)(cid:62)(cid:47)(cid:60)(cid:51)(cid:43)(cid:54)
ACCOUNTIN(cid:26) POLICY
I(cid:56)(cid:64)(cid:47)(cid:61)(cid:62)(cid:55)(cid:47)(cid:56)(cid:62) (cid:51)(cid:56) (cid:43)(cid:61)(cid:61)(cid:57)(cid:45)(cid:51)(cid:43)(cid:62)(cid:47)(cid:61) (cid:43)(cid:56)(cid:46) (cid:52)(cid:57)(cid:51)(cid:56)(cid:62) (cid:64)(cid:47)(cid:56)(cid:62)(cid:63)(cid:60)(cid:47)(cid:61)
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 (cid:57)oint control over
those policy decisions.
A (cid:57)oint venture is a (cid:57)oint arrangement whereby the parties that have (cid:57)oint control of the arrangement have rights
to the net assets of the (cid:57)oint 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.
(cid:43)nder the equity method, investments in associates are carried in the statement of financial position at cost
as ad(cid:57)usted 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.
Management of the Group reviewed and assessed the classification of the Group's investment in the
associated entities in accordance with AASB 12(cid:20) on the basis that the Group has significant influence over
the financial and operating policy decisions of the investee.
The results and assets and liabilities of associates or (cid:57)oint 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. (cid:43)nder the equity
method, an investment in an associate or a (cid:57)oint venture is initially recognised in the statement of financial
position at cost and ad(cid:57)usted thereafter to recognise the Group's share of the profit or loss and other
comprehensive income of the associate or (cid:57)oint venture. When the Group's share of losses of an associate or
a (cid:57)oint venture exceeds the Group's interest in that associate or (cid:57)oint venture (which includes any long-term
interests that, in substance, form part of the Group's net investment in the associate or (cid:57)oint venture), the Group
discontinues recogni(cid:73)ing 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 (cid:57)oint
venture.
The requirements of AASB 139 are applied to determine whether it is necessary to recognise any impairment
loss with respect to the Group(cid:79)s investment in an associate or a (cid:57)oint 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 (cid:57)oint venture of the Group, profits and losses resulting from
the transactions with the associate or (cid:57)oint venture are recognised in the Group's financial statements only to
the extent of interests in the associate or (cid:57)oint venture that are not related to the Group.
76 Elanor Investors Group | Annual Report 2019
(cid:10)(cid:11)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ance and Capital Structure
(cid:25)(cid:51)(cid:56)(cid:43)(cid:56)(cid:45)(cid:47) (cid:43)(cid:56)(cid:46) C(cid:43)(cid:58)(cid:51)(cid:62)(cid:43)(cid:54) S(cid:62)(cid:60)(cid:63)(cid:45)(cid:62)(cid:63)(cid:60)(cid:47)
This section provides further information on the Group(cid:79)s debt finance, financial assets and contributed
equity.
(cid:10)(cid:10)(cid:7)
I(cid:56)(cid:62)(cid:47)(cid:60)(cid:47)(cid:61)(cid:62) (cid:44)(cid:47)(cid:43)(cid:60)(cid:51)(cid:56)(cid:49) (cid:54)(cid:51)(cid:43)(cid:44)(cid:51)(cid:54)(cid:51)(cid:62)(cid:51)(cid:47)(cid:61)
O(cid:39)ER(cid:39)IE(cid:40)
The Group borrows funds from financial institutions to partly fund the acquisition of income producing assets,
such as investment properties, securities or the acquisition of businesses. The Group(cid:79)s borrowings are
generally fixed, either directly or through the use of interest rate swaps, and have a fixed term. This note
provides information about the Group(cid:79)s debt facilities, including the facilities of EM(cid:39)R, Bluewater Square
Syndicate and Auburn Office Syndicate.
The term debt is secured by registered mortgages over all freehold property and registered security interests
over all present and after acquired property of (cid:58)ey Group entities and companies. The terms of the debt also
impose certain covenants on the Group including Loan to (cid:44)alue ratio and Interest Cover covenants. The Group
is currently meeting all its covenants.
U(cid:56)(cid:61)(cid:47)(cid:45)(cid:63)(cid:60)(cid:47)(cid:46) (cid:25)(cid:51)(cid:66)(cid:47)(cid:46) R(cid:43)(cid:62)(cid:47) N(cid:57)(cid:62)(cid:47)(cid:61)
On 1(cid:19) October 201(cid:19) and 1(cid:20) December 201(cid:19), the Group issued (cid:2)40 million and (cid:2)20 million (cid:19).1(cid:3) unsecured
5-year fixed rate notes respectively. The total (cid:2)60 million unsecured fixed rate notes are due for repayment on
1(cid:19) October 2022.
The unsecured notes include Loan to (cid:44)alue Ratio and Interest Cover Covenants. The Group is currently
meeting all of its covenants.
(cid:10)(cid:12)
77
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:10)(cid:10)(cid:7)
I(cid:56)(cid:62)(cid:47)(cid:60)(cid:47)(cid:61)(cid:62) (cid:44)(cid:47)(cid:43)(cid:60)(cid:51)(cid:56)(cid:49) (cid:54)(cid:51)(cid:43)(cid:44)(cid:51)(cid:54)(cid:51)(cid:62)(cid:51)(cid:47)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
CREDIT (cid:25)ACILITIES
As at 30 June 2019, the Group had unrestricted access to the following credit facilities:
During the year, the E(cid:37)(cid:37) Group refinanced its debt facilities with a new (cid:2)30.0 million revolver facility, with a
maturity date of 29 April 2022. The drawn amount at 30 June 2019 is (cid:2)25.5 million. At 30 June 2019 the amount
of drawn facilities was not hedged.
The EM(cid:39)R Group also refinanced its (cid:2)46.(cid:19) million debt facility during the year, and obtained an additional (cid:2)4.1
million capital expenditure debt capacity in the new facility. As a result, the EM(cid:39)R Group has access to a
(cid:2)(cid:20)(cid:19).43 million facility, upon which both the company and trust can draw. The drawn amount at 30 June 2019
is (cid:2)(cid:20)3.3 million. Of the EM(cid:39)R Group facility, (cid:2)36.6 million will mature on 31 October 2020, with the remaining
(cid:2)46.(cid:19) million maturing on 31 October 2020. At 30 June 2019, the amount of drawn facilities is hedged to 100(cid:3).
The Bluewater Square Syndicate has access to a (cid:2)30.2 million facility. The drawn amount at 30 June 2019 is
(cid:2)29.(cid:19) million which will mature on 30 October 2020. At 30 June 2019, the amount of drawn facilities is hedged
to 100(cid:3).
All of the facilities have a variable interest rate. 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 2019, including the
impact of the interest rate swaps, is 4.96(cid:3) per annum.
78 Elanor Investors Group | Annual Report 2019
(cid:10)(cid:13)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:10)(cid:10)(cid:7)
I(cid:56)(cid:62)(cid:47)(cid:60)(cid:47)(cid:61)(cid:62) (cid:44)(cid:47)(cid:43)(cid:60)(cid:51)(cid:56)(cid:49) (cid:54)(cid:51)(cid:43)(cid:44)(cid:51)(cid:54)(cid:51)(cid:62)(cid:51)(cid:47)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
ACCOUNTIN(cid:26) POLICY
I(cid:56)(cid:62)(cid:47)(cid:60)(cid:47)(cid:61)(cid:62) (cid:44)(cid:47)(cid:43)(cid:60)(cid:51)(cid:56)(cid:49) (cid:54)(cid:51)(cid:43)(cid:44)(cid:51)(cid:54)(cid:51)(cid:62)(cid:51)(cid:47)(cid:61)
Interest bearing liabilities are recognised initially at fair value, being the consideration received net of
transaction costs associated with the borrowing. After initial recognition, interest bearing liabilities are stated
at amortised cost using the effective interest method. (cid:43)nder 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.
(cid:21)(cid:57)(cid:60)(cid:60)(cid:57)(cid:65)(cid:51)(cid:56)(cid:49) (cid:45)(cid:57)(cid:61)(cid:62)(cid:61)
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which
are assets that necessarily ta(cid:58)e a substantial period of time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as the assets are substantially ready for their intended use
or sale.
To the extent that variable rate borrowings are used to finance a qualifying asset and are hedged in an effective
cash flow hedge of interest rate ris(cid:58), the effective portion of the derivative is recognised in other comprehensive
income and reclassified to profit or loss when the qualifying asset impacts profit or loss. To the extent that fixed
rate borrowings are used to finance a qualifying asset and are hedged in an effective fair value hedge of
interest rate ris(cid:58), the capitalised borrowing costs reflect the hedged interest rate.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
(cid:10)(cid:11)(cid:7) D(cid:47)(cid:60)(cid:51)(cid:64)(cid:43)(cid:62)(cid:51)(cid:64)(cid:47) (cid:48)(cid:51)(cid:56)(cid:43)(cid:56)(cid:45)(cid:51)(cid:43)(cid:54) (cid:51)(cid:56)(cid:61)(cid:62)(cid:60)(cid:63)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61)
O(cid:39)ER(cid:39)IE(cid:40)
The Group(cid:79)s derivative financial instruments consist of interest rate swap contracts to hedge its exposure to
movements in variable interest rates. 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.
(cid:11)0
79
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:10)(cid:11)(cid:7) D(cid:47)(cid:60)(cid:51)(cid:64)(cid:43)(cid:62)(cid:51)(cid:64)(cid:47) (cid:48)(cid:51)(cid:56)(cid:43)(cid:56)(cid:45)(cid:51)(cid:43)(cid:54) (cid:51)(cid:56)(cid:61)(cid:62)(cid:60)(cid:63)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
ACCOUNTIN(cid:26) POLICY
During the year, the Group entered into a put and call option with a third party to acquire their 11.5(cid:3)
investment in EM(cid:39)R at fair value. The call option is held by Elanor and the put option is held by the third
party. As at balance date, the value of the put and call option was nil.
I(cid:56)(cid:62)(cid:47)(cid:60)(cid:47)(cid:61)(cid:62) (cid:60)(cid:43)(cid:62)(cid:47) (cid:61)(cid:65)(cid:43)(cid:58)(cid:61)
EM(cid:39)R and Bluewater have entered into interest rate swap agreements with a notional principal amount
totaling (cid:2)114.6 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 raising of long term borrowings at a floating rate and effectively
swap them into a fixed rate.
D(cid:47)(cid:60)(cid:51)(cid:64)(cid:43)(cid:62)(cid:51)(cid:64)(cid:47)(cid:61)
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.
H(cid:47)(cid:46)(cid:49)(cid:47) (cid:43)(cid:45)(cid:45)(cid:57)(cid:63)(cid:56)(cid:62)(cid:51)(cid:56)(cid:49)
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 ris(cid:58) management ob(cid:57)ectives and its strategy for underta(cid:58)ing
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 ris(cid:58).
C(cid:43)(cid:61)(cid:50) (cid:48)(cid:54)(cid:57)(cid:65) (cid:50)(cid:47)(cid:46)(cid:49)(cid:47)(cid:61)
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 (cid:78)other gains and losses(cid:79) 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. (cid:31)owever, 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.
(cid:31)edge accounting is discontinued when the Group revo(cid:58)es 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.
80 Elanor Investors Group | Annual Report 2019
(cid:11)1
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:10)(cid:11)(cid:7) D(cid:47)(cid:60)(cid:51)(cid:64)(cid:43)(cid:62)(cid:51)(cid:64)(cid:47) (cid:48)(cid:51)(cid:56)(cid:43)(cid:56)(cid:45)(cid:51)(cid:43)(cid:54) (cid:51)(cid:56)(cid:61)(cid:62)(cid:60)(cid:63)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
ACCOUNTIN(cid:26) POLICY (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
(cid:39)(cid:43)(cid:54)(cid:63)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56)(cid:5) (cid:62)(cid:47)(cid:45)(cid:50)(cid:56)(cid:51)(cid:59)(cid:63)(cid:47)(cid:61) (cid:43)(cid:56)(cid:46) (cid:51)(cid:56)(cid:58)(cid:63)(cid:62)(cid:61)
(cid:25)(cid:51)(cid:56)(cid:43)(cid:56)(cid:45)(cid:51)(cid:43)(cid:54) I(cid:56)(cid:61)(cid:62)(cid:60)(cid:63)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61)
The fair value of financial instruments that are not traded in an active mar(cid:58)et (for example, over-the-counter
derivatives) is determined using valuation techniques. These valuation techniques maximise the use of
observable mar(cid:58)et data where it 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.
If one or more of the significant inputs is not based on observable mar(cid:58)et 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:
(cid:74) The use of quoted mar(cid:58)et prices or dealer quotes for similar instruments; and
(cid:74) The fair value of interest rate swaps is calculated as the present value of the estimated future cash
flows based on observable yield curves;
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.
(cid:10)(cid:12)(cid:7) (cid:25)(cid:51)(cid:56)(cid:43)(cid:56)(cid:45)(cid:51)(cid:43)(cid:54) (cid:43)(cid:61)(cid:61)(cid:47)(cid:62)(cid:61)
O(cid:39)ER(cid:39)IE(cid:40)
The Group(cid:79)s financial assets consist of short term financing provided by the Group. The Group(cid:79)s financial
assets as at 30 June 2019 are detailed below:
ACCOUNTIN(cid:26) POLICY
The Group measures its financial assets at amortised cost.
At initial recognition, the Group measures its financial assets at fair value and subsequently at amortised cost.
The Group assessed that the credit ris(cid:58) of its financial asset has not significantly increased since initial
recognition. (cid:31)ence, the Group applies the simplified approach permitted by AASB 9 which requires expected
lifetime losses to be recognised from initial recognition of receivables.
The expected credit losses in these financial assets are estimated using a provision matrix based on the
Group(cid:79)s historical credit loss experience, ad(cid:57)usted for factors that are specific to the debtors and general
economic conditions where appropriate at reporting date.
(cid:11)(cid:6)
81
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:10)(cid:13)(cid:7) C(cid:57)(cid:56)(cid:62)(cid:60)(cid:51)(cid:44)(cid:63)(cid:62)(cid:47)(cid:46) (cid:47)(cid:59)(cid:63)(cid:51)(cid:62)(cid:67)
O(cid:39)ER(cid:39)IE(cid:40)
The shares of Elanor Investors Limited (Company) and the units of Elanor Investment Fund (EIF) are combined
and issued as stapled securities. The shares of the Company and units of EIF cannot be traded separately
and can only be traded as stapled securities.
Below is a summary of contributed equity of the Company and EIF separately and for Elanor(cid:79)s combined
stapled securities. The basis of allocation of the issue price of stapled securities to Company shares and EIF
units post stapling is determined by agreement between the Company and EIF as set out in the Stapling Deed.
C(cid:57)(cid:56)(cid:62)(cid:60)(cid:51)(cid:44)(cid:63)(cid:62)(cid:47)(cid:46) (cid:47)(cid:59)(cid:63)(cid:51)(cid:62)(cid:67) (cid:48)(cid:57)(cid:60) (cid:62)(cid:50)(cid:47) (cid:58)(cid:47)(cid:60)(cid:51)(cid:57)(cid:46) (cid:47)(cid:56)(cid:46)(cid:47)(cid:46) (cid:12)(cid:9) (cid:29)(cid:63)(cid:56)(cid:47) (cid:11)(cid:9)(cid:10)(cid:18)
A reconciliation of treasury securities on issue at the beginning and end of the period is set out below:
C(cid:57)(cid:56)(cid:62)(cid:60)(cid:51)(cid:44)(cid:63)(cid:62)(cid:47)(cid:46) (cid:47)(cid:59)(cid:63)(cid:51)(cid:62)(cid:67) (cid:48)(cid:57)(cid:60) (cid:62)(cid:50)(cid:47) (cid:58)(cid:47)(cid:60)(cid:51)(cid:57)(cid:46) (cid:47)(cid:56)(cid:46)(cid:47)(cid:46) (cid:12)(cid:9) (cid:29)(cid:63)(cid:56)(cid:47) (cid:11)(cid:9)(cid:10)(cid:17)
82 Elanor Investors Group | Annual Report 2019
(cid:11)(cid:7)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:10)(cid:13)(cid:7) C(cid:57)(cid:56)(cid:62)(cid:60)(cid:51)(cid:44)(cid:63)(cid:62)(cid:47)(cid:46) (cid:47)(cid:59)(cid:63)(cid:51)(cid:62)(cid:67) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
A reconciliation of treasury securities on issue at the beginning and end of the prior period is set out below:
ACCOUNTIN(cid:26) POLICY
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(cid:79)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 ad(cid:57)ustment to the equity-settled employee benefits reserve.
(cid:10)(cid:14)(cid:7) R(cid:47)(cid:61)(cid:47)(cid:60)(cid:64)(cid:47)(cid:61)
O(cid:39)ER(cid:39)IE(cid:40)
Reserves are balances that form part of equity that record other comprehensive income amounts that are
retained in the business and not distributed until such time the underlying balance sheet item is realised. This
note provides information about movements in the other reserves line item of the balance sheet and a
description of the nature and purpose of each reserve.
(cid:11)(cid:8)
83
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:10)(cid:14)(cid:7) R(cid:47)(cid:61)(cid:47)(cid:60)(cid:64)(cid:47)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
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 LTI(cid:39).
(cid:10)(cid:15)(cid:7) (cid:25)(cid:51)(cid:56)(cid:43)(cid:56)(cid:45)(cid:51)(cid:43)(cid:54) (cid:60)(cid:51)(cid:61)(cid:53) (cid:55)(cid:43)(cid:56)(cid:43)(cid:49)(cid:47)(cid:55)(cid:47)(cid:56)(cid:62)
O(cid:39)ER(cid:39)IE(cid:40)
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 ris(cid:58)s: mar(cid:58)et ris(cid:58) (including interest rate ris(cid:58) and
equity price ris(cid:58)), credit ris(cid:58) and liquidity ris(cid:58).
This note presents information about the Group's exposure to each of the above ris(cid:58)s, the Group's ob(cid:57)ectives,
policies and processes for measuring and managing ris(cid:58) 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 responsibility for the establishment and oversight of the
Group's ris(cid:58) management framewor(cid:58). The Board has established an Audit (cid:4) Ris(cid:58) Committee (ARC), which is
responsible for monitoring the identification and management of (cid:58)ey ris(cid:58)s 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 ris(cid:58) management and policies
covering specific areas, such as mitigating foreign exchange, interest rate and liquidity ris(cid:58)s.
The Group's Treasury Guidelines provide a framewor(cid:58) for managing the financial ris(cid:58)s of the Group with a (cid:58)ey
philosophy of ris(cid:58) 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 ris(cid:58) exposures.
The Group uses different methods to measure different types of ris(cid:58) to which it is exposed. These methods
include sensitivity analysis in the case of interest rate ris(cid:58), ageing analysis for credit ris(cid:58) and cash flow
forecasting for liquidity ris(cid:58).
There have been no other significant changes in the types of financial ris(cid:58)s or the Group's ris(cid:58) management
program (including methods used to measure the ris(cid:58)s).
84 Elanor Investors Group | Annual Report 2019
(cid:11)5
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:10)(cid:15)(cid:7) (cid:25)(cid:51)(cid:56)(cid:43)(cid:56)(cid:45)(cid:51)(cid:43)(cid:54) (cid:60)(cid:51)(cid:61)(cid:53) (cid:55)(cid:43)(cid:56)(cid:43)(cid:49)(cid:47)(cid:55)(cid:47)(cid:56)(cid:62) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
(cid:43)(cid:4)
(cid:31)(cid:43)(cid:60)(cid:53)(cid:47)(cid:62) (cid:60)(cid:51)(cid:61)(cid:53)
Mar(cid:58)et ris(cid:58) refers to the potential for changes in the value of the Group's financial instruments or revenue
streams from changes in mar(cid:58)et prices. There are various types of mar(cid:58)et ris(cid:58)s to which the Group is exposed
including those associated with interest rates, currency rates and equity mar(cid:58)et price.
(i)
Interest rate ris(cid:58)
Interest rate ris(cid:58) refers to the potential fluctuations in the fair value or future cash flows of a financial instrument
because of changes in mar(cid:58)et interest rates
As at reporting date, the Consolidated Group had the following interest bearing assets and liabilities:
(cid:11)(cid:10)
85
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
Interest Rate Sensitivity
Interest Rate Sensitivity
(cid:10)(cid:15)(cid:7) (cid:25)(cid:51)(cid:56)(cid:43)(cid:56)(cid:45)(cid:51)(cid:43)(cid:54) (cid:60)(cid:51)(cid:61)(cid:53) (cid:55)(cid:43)(cid:56)(cid:43)(cid:49)(cid:47)(cid:55)(cid:47)(cid:56)(cid:62) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
(cid:10)(cid:15)(cid:7) (cid:25)(cid:51)(cid:56)(cid:43)(cid:56)(cid:45)(cid:51)(cid:43)(cid:54) (cid:60)(cid:51)(cid:61)(cid:53) (cid:55)(cid:43)(cid:56)(cid:43)(cid:49)(cid:47)(cid:55)(cid:47)(cid:56)(cid:62) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
(ii)
(ii)
At reporting date if Australian interest rates had been 1(cid:3) higher (cid:11) lower and all other variables were held
constant, the impact on the Group in relation to cash and cash equivalents, derivatives, interest bearing loans
At reporting date if Australian interest rates had been 1(cid:3) higher (cid:11) lower and all other variables were held
and the Group's profit and equity would be:
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:
C(cid:60)(cid:47)(cid:46)(cid:51)(cid:62) (cid:60)(cid:51)(cid:61)(cid:53)
C(cid:60)(cid:47)(cid:46)(cid:51)(cid:62) (cid:60)(cid:51)(cid:61)(cid:53)
(cid:44)(cid:4)
(cid:44)(cid:4)
Credit ris(cid:58) represents the loss that would be recognised if counterparties failed to perform as contracted.
Credit ris(cid:58) represents the loss that would be recognised if counterparties failed to perform as contracted.
The Group manages credit ris(cid:58) on receivables by performing credit reviews of prospective debtors, obtaining
collateral where appropriate and performing detailed reviews on any debtor arrears. Credit ris(cid:58) on derivatives
The Group manages credit ris(cid:58) on receivables by performing credit reviews of prospective debtors, obtaining
is managed through limiting transactions to investment grade counterparties.
collateral where appropriate and performing detailed reviews on any debtor arrears. Credit ris(cid:58) on derivatives
is managed through limiting transactions to investment grade counterparties.
Exposure to credit ris(cid:58)
Exposure to credit ris(cid:58)
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to
credit ris(cid:58) at the reporting date was as detailed below:
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to
credit ris(cid:58) at the reporting date was as detailed below:
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
Where entities have a right of set-off and intend to settle on a net basis under netting arrangements, this set-
contingent liabilities are disclosed in (cid:37)ote 23.
off has been recognised in the consolidated financial statements on a net basis. Details of the Group's
contingent liabilities are disclosed in (cid:37)ote 23.
Trade and other receivables consist of GST, trade debtors and other receivables. At balance date 4(cid:3) of the
Group's receivables were due from Australian tax authorities in respect of GST.
Trade and other receivables consist of GST, trade debtors and other receivables. At balance date 4(cid:3) of the
Group's receivables were due from Australian tax authorities in respect of GST.
At balance date there were no other significant concentrations of credit ris(cid:58).
At balance date there were no other significant concentrations of credit ris(cid:58).
(cid:37)o allowance has been recognised for the GST and trade debtors from the taxation authorities and related
parties respectively. Based on historical experience, there is no evidence of default from these counterparties
(cid:37)o allowance has been recognised for the GST and trade debtors from the taxation authorities and related
which would indicate that an allowance was necessary.
parties respectively. Based on historical experience, there is no evidence of default from these counterparties
which would indicate that an allowance was necessary.
(cid:11)(cid:11)
86 Elanor Investors Group | Annual Report 2019
(cid:11)(cid:11)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:10)(cid:15)(cid:7) (cid:25)(cid:51)(cid:56)(cid:43)(cid:56)(cid:45)(cid:51)(cid:43)(cid:54) (cid:60)(cid:51)(cid:61)(cid:53) (cid:55)(cid:43)(cid:56)(cid:43)(cid:49)(cid:47)(cid:55)(cid:47)(cid:56)(cid:62) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
(cid:44)(cid:4)
C(cid:60)(cid:47)(cid:46)(cid:51)(cid:62) (cid:60)(cid:51)(cid:61)(cid:53) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
Impairment losses
The ageing of trade and other receivables at reporting date is detailed below:
(cid:45)(cid:4)
L(cid:51)(cid:59)(cid:63)(cid:51)(cid:46)(cid:51)(cid:62)(cid:67) (cid:60)(cid:51)(cid:61)(cid:53)
The Group manages liquidity ris(cid:58) by maintaining sufficient cash including wor(cid:58)ing 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.
(cid:11)(cid:12)
87
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:10)(cid:15)(cid:7) (cid:25)(cid:51)(cid:56)(cid:43)(cid:56)(cid:45)(cid:51)(cid:43)(cid:54) (cid:60)(cid:51)(cid:61)(cid:53) (cid:55)(cid:43)(cid:56)(cid:43)(cid:49)(cid:47)(cid:55)(cid:47)(cid:56)(cid:62) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
(cid:46)(cid:4)
C(cid:43)(cid:58)(cid:51)(cid:62)(cid:43)(cid:54) (cid:60)(cid:51)(cid:61)(cid:53) (cid:55)(cid:43)(cid:56)(cid:43)(cid:49)(cid:47)(cid:55)(cid:47)(cid:56)(cid:62)
The Group maintains its capital structure with the ob(cid:57)ective to safeguard its ability to continue as a going
concern, to increase the returns for security holders and to maintain an optimal capital structure. The capital
structure of the Group consists of equity as listed in (cid:37)ote 14.
The Group assesses its capital management approach as a (cid:58)ey 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 (cid:39)lan (DR(cid:39)); issue securities under a Security (cid:39)urchase (cid:39)lan (S(cid:39)(cid:39)); conduct an on-mar(cid:58)et
buybac(cid:58) of securities; acquire debt; or dispose of investment properties.
Australian Financial Services License
The Responsible Entity is licensed as an Australian Financial Services Licensee.
(cid:43)nder 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 (ad(cid:57)usted)
assets exceed total (ad(cid:57)usted) liabilities; and
have no reason to suspect that its total (ad(cid:57)usted) assets would not exceed total (ad(cid:57)usted)
liabilities on a current statement of financial position; and
(d)
meet the cash needs requirements by complying with Option 1.
(cid:43)nder licence condition 10, the Responsible Entity must maintain net tangible assets ((cid:37)TA) of not less than
the greater of:
(a)
(b)
(c)
(cid:2)150,000; or
0.5(cid:3) of the value of Scheme Assets; or
10(cid:3) of Average Responsible Entity revenue.
The Responsible Entity must also maintain Cash or Cash Equivalents of the greater of (cid:2)150,000 or 50(cid:3) of the
required (cid:37)TA as well as Liquid Assets of greater than the required (cid:37)TA.
The Responsible Entity had at all times a cash flow pro(cid:57)ection of at least 15 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 License.
88 Elanor Investors Group | Annual Report 2019
(cid:11)(cid:13)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:26)(cid:60)(cid:57)(cid:63)(cid:58) S(cid:62)(cid:60)(cid:63)(cid:45)(cid:62)(cid:63)(cid:60)(cid:47)
This section provides information about the Group(cid:79)s structure including parent entity information,
information about controlled entities (subsidiaries) and business combination information relating to the
acquisition of controlled entities.
(cid:10)(cid:16)(cid:7) P(cid:43)(cid:60)(cid:47)(cid:56)(cid:62) (cid:47)(cid:56)(cid:62)(cid:51)(cid:62)(cid:67)
O(cid:39)ER(cid:39)IE(cid:40)
The financial information below on Elanor Investor Group(cid:79)s parent entity Elanor Investors Limited (the
(cid:76)Company(cid:77)) and the Trust(cid:79)s parent entity Elanor Investment Fund ((cid:76)EIF(cid:77)) as stand-alone entities has been
provided in accordance with the requirements of the Corporations Act 2001.
(cid:3)(cid:43)(cid:4) S(cid:63)(cid:55)(cid:55)(cid:43)(cid:60)(cid:51)(cid:61)(cid:47)(cid:46) (cid:48)(cid:51)(cid:56)(cid:43)(cid:56)(cid:45)(cid:51)(cid:43)(cid:54) (cid:51)(cid:56)(cid:48)(cid:57)(cid:60)(cid:55)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56)
1. Elanor Investors Limited is the parent entity of the Consolidated Group.
2. Elanor Investment Fund is the parent entity of the EIF Group.
(cid:3)(cid:44)(cid:4) C(cid:57)(cid:55)(cid:55)(cid:51)(cid:62)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61)
At balance date Elanor Investors Limited and Elanor Investment Fund had no commitments (201(cid:20): none) in
relation to capital expenditure contracted for but not recognised as liabilities.
(cid:3)(cid:45)(cid:4) (cid:26)(cid:63)(cid:43)(cid:60)(cid:43)(cid:56)(cid:62)(cid:47)(cid:47)(cid:61) (cid:58)(cid:60)(cid:57)(cid:64)(cid:51)(cid:46)(cid:47)(cid:46)
At balance date Elanor Investors Limited and Elanor Investment Fund had no outstanding guarantees (201(cid:20):
none).
(cid:3)(cid:46)(cid:4) C(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:49)(cid:47)(cid:56)(cid:62) (cid:54)(cid:51)(cid:43)(cid:44)(cid:51)(cid:54)(cid:51)(cid:62)(cid:51)(cid:47)(cid:61)
At balance date Elanor Investors Limited and Elanor Investment Fund had no contingent liabilities (201(cid:20):
none).
(cid:12)0
89
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:10)(cid:16)(cid:7) P(cid:43)(cid:60)(cid:47)(cid:56)(cid:62) (cid:47)(cid:56)(cid:62)(cid:51)(cid:62)(cid:67) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
ACCOUNTIN(cid:26) POLICY
The financial information of the parent entities of the Group and the EIF Group have been prepared on the same
basis as the consolidated financial statements.
(cid:10)(cid:17)(cid:7) S(cid:63)(cid:44)(cid:61)(cid:51)(cid:46)(cid:51)(cid:43)(cid:60)(cid:51)(cid:47)(cid:61) (cid:43)(cid:56)(cid:46) C(cid:57)(cid:56)(cid:62)(cid:60)(cid:57)(cid:54)(cid:54)(cid:47)(cid:46) (cid:47)(cid:56)(cid:62)(cid:51)(cid:62)(cid:51)(cid:47)(cid:61)
O(cid:39)ER(cid:39)IE(cid:40)
This note provides information about the Group(cid:79)s subsidiaries and controlled entities.
Details of the Group's material subsidiaries at the end of the reporting period are as follows:
1. Elanor Investors Limited ((cid:76)EIL(cid:77)) is the head entity within the EIL tax-consolidated group. The companies in which EIL has 100(cid:3)
ownership are members of the EIL tax-consolidated group.
2. EM(cid:39)R II Management (cid:39)ty Limited is the head entity of the EM(cid:39)R II tax-consolidated group.
3. EM(cid:39)R Management (cid:39)ty Limited is the head entity of the EM(cid:39)R tax-consolidated group.
90 Elanor Investors Group | Annual Report 2019
(cid:12)1
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:10)(cid:17)(cid:7) S(cid:63)(cid:44)(cid:61)(cid:51)(cid:46)(cid:51)(cid:43)(cid:60)(cid:51)(cid:47)(cid:61) (cid:43)(cid:56)(cid:46) C(cid:57)(cid:56)(cid:62)(cid:60)(cid:57)(cid:54)(cid:54)(cid:47)(cid:46) (cid:47)(cid:56)(cid:62)(cid:51)(cid:62)(cid:51)(cid:47)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
(cid:12)(cid:6)
91
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
O(cid:62)(cid:50)(cid:47)(cid:60) I(cid:62)(cid:47)(cid:55)(cid:61)
This section includes information that is not directly related to the specific line items in the consolidated
financial statements, including information about related parties, events after the end of the reporting
period and certain EIF Group disclosures.
(cid:10)(cid:18)(cid:7) R(cid:47)(cid:45)(cid:47)(cid:51)(cid:64)(cid:43)(cid:44)(cid:54)(cid:47)(cid:61)
O(cid:39)ER(cid:39)IE(cid:40)
This note provides further information about assets that are incidental to the Group(cid:79)s trading activities, being
trade and other receivables.
R(cid:47)(cid:45)(cid:47)(cid:51)(cid:64)(cid:43)(cid:44)(cid:54)(cid:47)(cid:61)
(cid:11)(cid:9)(cid:7) P(cid:43)(cid:67)(cid:43)(cid:44)(cid:54)(cid:47)(cid:61)
O(cid:39)ER(cid:39)IE(cid:40)
This note provides further information about liabilities that are incidental to the Group(cid:79)s trading activities, being
trade and other payables.
P(cid:43)(cid:67)(cid:43)(cid:44)(cid:54)(cid:47)(cid:61)
92 Elanor Investors Group | Annual Report 2019
(cid:12)(cid:7)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:11)(cid:9)(cid:7) P(cid:43)(cid:67)(cid:43)(cid:44)(cid:54)(cid:47)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
P(cid:60)(cid:57)(cid:64)(cid:51)(cid:61)(cid:51)(cid:57)(cid:56)(cid:61)
ACCOUNTIN(cid:26) POLICY
(cid:39)rovisions 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, ta(cid:58)ing into account the ris(cid:58)s 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(cid:7)
E(cid:55)(cid:58)(cid:54)(cid:57)(cid:67)(cid:47)(cid:47) (cid:44)(cid:47)(cid:56)(cid:47)(cid:48)(cid:51)(cid:62)(cid:61)
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.
(cid:12)(cid:8)
93
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:11)(cid:9)(cid:7) P(cid:43)(cid:67)(cid:43)(cid:44)(cid:54)(cid:47)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
O(cid:62)(cid:50)(cid:47)(cid:60) (cid:54)(cid:51)(cid:43)(cid:44)(cid:51)(cid:54)(cid:51)(cid:62)(cid:51)(cid:47)(cid:61)
(cid:11)(cid:10)(cid:7)
I(cid:56)(cid:62)(cid:43)(cid:56)(cid:49)(cid:51)(cid:44)(cid:54)(cid:47) (cid:43)(cid:61)(cid:61)(cid:47)(cid:62)(cid:61)
O(cid:39)ER(cid:39)IE(cid:40)
(cid:31)(cid:43)(cid:56)(cid:43)(cid:49)(cid:47)(cid:55)(cid:47)(cid:56)(cid:62) R(cid:51)(cid:49)(cid:50)(cid:62)(cid:61)
Management Rights represent the acquisition of funds management rights and associated licences from Moss
Capital (cid:39)ty Limited at I(cid:39)O for (cid:2)1.5 million. At I(cid:39)O, the estimated useful life of the acquired funds management
rights was 10 years.
ACCOUNTIN(cid:26) POLICY
(cid:25)(cid:63)(cid:56)(cid:46)(cid:61) (cid:55)(cid:43)(cid:56)(cid:43)(cid:49)(cid:47)(cid:55)(cid:47)(cid:56)(cid:62) (cid:60)(cid:51)(cid:49)(cid:50)(cid:62)(cid:61)
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 licenses
over their estimated useful lives of 10 years.
94 Elanor Investors Group | Annual Report 2019
(cid:12)5
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:11)(cid:11)(cid:7) N(cid:47)(cid:62) (cid:62)(cid:43)(cid:56)(cid:49)(cid:51)(cid:44)(cid:54)(cid:47) (cid:43)(cid:61)(cid:61)(cid:47)(cid:62)(cid:61)
O(cid:39)ER(cid:39)IE(cid:40)
This note sets out the net tangible assets of the Group.
(cid:11)(cid:12)(cid:7) C(cid:57)(cid:55)(cid:55)(cid:51)(cid:62)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61)
O(cid:39)ER(cid:39)IE(cid:40)
This note sets out the material commitments of the Group.
C(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:49)(cid:47)(cid:56)(cid:62) (cid:54)(cid:51)(cid:43)(cid:44)(cid:51)(cid:54)(cid:51)(cid:62)(cid:51)(cid:47)(cid:61) (cid:43)(cid:56)(cid:46) (cid:45)(cid:57)(cid:55)(cid:55)(cid:51)(cid:62)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61)
(cid:43)nless otherwise disclosed in the financial statements, there are no material contingent liabilities and
commitments.
L(cid:47)(cid:43)(cid:61)(cid:47) (cid:45)(cid:57)(cid:55)(cid:55)(cid:51)(cid:62)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61)(cid:19) (cid:62)(cid:50)(cid:47) (cid:26)(cid:60)(cid:57)(cid:63)(cid:58) (cid:43)(cid:61) (cid:54)(cid:47)(cid:61)(cid:61)(cid:47)(cid:47)
The Group has non-cancellable leases in respect of premises. The leases are for a duration of between 1 to 5
years and are classified as operating leases. The minimum lease payments are as follows:
L(cid:47)(cid:43)(cid:61)(cid:47) (cid:45)(cid:57)(cid:55)(cid:55)(cid:51)(cid:62)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61)(cid:19) (cid:62)(cid:50)(cid:47) (cid:26)(cid:60)(cid:57)(cid:63)(cid:58) (cid:43)(cid:61) (cid:54)(cid:47)(cid:61)(cid:61)(cid:57)(cid:60)
The Group has non-cancellable leases in respect of premises. The leases are for a duration of between 1 to
10 years and are classified as operating leases. The minimum lease commitments receivable are as follows:
In the opinion of the Directors, there were no other commitments at the end of the reporting period.
95
(cid:12)(cid:10)
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:11)(cid:13)(cid:7) S(cid:50)(cid:43)(cid:60)(cid:47)(cid:6)(cid:44)(cid:43)(cid:61)(cid:47)(cid:46) (cid:58)(cid:43)(cid:67)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61)
O(cid:39)ER(cid:39)IE(cid:40)
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. 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 security holders in excess of 10(cid:3) per annum. The profit
share pool is based on 20(cid:3) of ROE above 10(cid:3), 22.5(cid:3) of the ROE above 15(cid:3), 25(cid:3) of the ROE above 1(cid:19).5(cid:3)
and 30(cid:3) of the ROE above 20(cid:3). The Scheme provides that 50(cid:3) of any awards to individuals from the profit
share pool may 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, ta(cid:58)ing 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.
(cid:43)nder the executive loan security plan awards (comprising the loan of funds to eligible Elanor employees to
acquire securities which are sub(cid:57)ect to vesting conditions) have been issued to certain employees.
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, sub(cid:57)ect 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 (cid:58)ey executives) as determined by the Board. Executive Options currently
on issue are to the Chief Executive Officer only, over 2.0 million securities.
The purpose of the LTI Scheme is to assist in attracting, motivating and retaining (cid:58)ey management and
employees. The LTI Scheme operates by providing (cid:58)ey management and employees with the opportunity to
participate in the future performance of Group securities. The vesting conditions 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 2, 3 and 4 years in the case of the loan security plan. The TSR is 10(cid:3) per annum
in the case of the loan security plan and 15(cid:3) per annum in the case of the options plan. The 201(cid:19) option plan
has an exercise price of (cid:2)3.05 per security (40(cid:3) premium to the (cid:2)2.1(cid:20) offer price)
TSR was selected as the LTI performance measure to ensure an alignment between the security holder return
and reward for executives.
96 Elanor Investors Group | Annual Report 2019
(cid:12)(cid:11)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:11)(cid:13)(cid:7) S(cid:50)(cid:43)(cid:60)(cid:47)(cid:6)(cid:44)(cid:43)(cid:61)(cid:47)(cid:46) (cid:58)(cid:43)(cid:67)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
The following share-based payment arrangements were in existence during the current reporting period:
E(cid:55)(cid:58)(cid:54)(cid:57)(cid:67)(cid:47)(cid:47) L(cid:57)(cid:43)(cid:56) S(cid:47)(cid:45)(cid:63)(cid:60)(cid:51)(cid:62)(cid:51)(cid:47)(cid:61)
1. Service and non-mar(cid:58)et conditions include financial and non-financial targets along with a deferred vesting period.
O(cid:58)(cid:62)(cid:51)(cid:57)(cid:56)(cid:61)
1. Service and non-mar(cid:58)et conditions include financial and non-financial targets along with a deferred vesting period
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.
S(cid:47)(cid:45)(cid:63)(cid:60)(cid:51)(cid:62)(cid:51)(cid:47)(cid:61) (cid:51)(cid:61)(cid:61)(cid:63)(cid:47)(cid:46) (cid:63)(cid:56)(cid:46)(cid:47)(cid:60) STI (cid:58)(cid:54)(cid:43)(cid:56)
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 (cid:2)1,093,0(cid:19)(cid:20).
(cid:12)(cid:12)
97
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:11)(cid:13)(cid:7) S(cid:50)(cid:43)(cid:60)(cid:47)(cid:6)(cid:44)(cid:43)(cid:61)(cid:47)(cid:46) (cid:58)(cid:43)(cid:67)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
ACCOUNTIN(cid:26) POLICY
S(cid:47)(cid:45)(cid:63)(cid:60)(cid:51)(cid:62)(cid:67)(cid:6)(cid:21)(cid:43)(cid:61)(cid:47)(cid:46) P(cid:43)(cid:67)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61)
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(cid:79)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 ad(cid:57)ustment to the equity-settled employee benefits reserve.
(cid:11)(cid:14)(cid:7) R(cid:47)(cid:54)(cid:43)(cid:62)(cid:47)(cid:46) (cid:58)(cid:43)(cid:60)(cid:62)(cid:51)(cid:47)(cid:61)
O(cid:39)ER(cid:39)IE(cid:40)
Related parties are persons or entities that are related to the Group as defined by AASB 124 Related (cid:39)arty
Disclosures. This note provides information about transactions with related parties during the period.
E(cid:54)(cid:43)(cid:56)(cid:57)(cid:60) I(cid:56)(cid:64)(cid:47)(cid:61)(cid:62)(cid:57)(cid:60)(cid:61) (cid:26)(cid:60)(cid:57)(cid:63)(cid:58)
R(cid:47)(cid:61)(cid:58)(cid:57)(cid:56)(cid:61)(cid:51)(cid:44)(cid:54)(cid:47) E(cid:56)(cid:62)(cid:51)(cid:62)(cid:67) (cid:48)(cid:47)(cid:47)(cid:61)
Elanor Funds Management Limited (EFML) is the Responsible Entity of the Elanor Investment Fund (EIF) (a
wholly owned subsidiary of Elanor Investors Limited).
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 ended 30 June 2019, this amount is (cid:2)65,000.
EFML ma(cid:58)es 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 ended 30 June 2019 was nil.
EFML acted as Trustee and Manager and(cid:11)or Custodian of a number of registered and 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 performance 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.
98 Elanor Investors Group | Annual Report 2019
(cid:12)(cid:13)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:11)(cid:14)(cid:7) R(cid:47)(cid:54)(cid:43)(cid:62)(cid:47)(cid:46) (cid:58)(cid:43)(cid:60)(cid:62)(cid:51)(cid:47)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
A summary of the income earned during the period from these managed investment schemes is provided
below:
(cid:37)ote 1: During the period, the Limestone Street Centre was acquired by the Elanor Commercial (cid:39)roperty Fund
(cid:34)ey Management (cid:39)ersonnel ((cid:34)M(cid:39))
E(cid:66)(cid:47)(cid:45)(cid:63)(cid:62)(cid:51)(cid:64)(cid:47)
Mr. Glenn Willis
Mr. (cid:39)aul Siviour
Mr. Symon Simmons
P(cid:57)(cid:61)(cid:51)(cid:62)(cid:51)(cid:57)(cid:56)
Managing Director and Chief Executive Officer
Chief Operating Officer
Chief Financial Officer and Company Secretary
N(cid:57)(cid:56)(cid:6)E(cid:66)(cid:47)(cid:45)(cid:63)(cid:62)(cid:51)(cid:64)(cid:47)
Mr. (cid:39)aul Bedbroo(cid:58)
Mr. (cid:37)igel Ampherlaw
Mr. William (Bill) Moss AO
Mr. Lim (cid:34)in Song
P(cid:57)(cid:61)(cid:51)(cid:62)(cid:51)(cid:57)(cid:56)
Independent Chairman and (cid:37)on-Executive Director
Independent (cid:37)on-Executive Director
(cid:37)on-Executive Director
(cid:37)on-Executive Director
The aggregate compensation made to the (cid:34)ey Management (cid:39)ersonnel of the Group is set out below:
(cid:13)0
99
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:11)(cid:15)(cid:7) S(cid:51)(cid:49)(cid:56)(cid:51)(cid:48)(cid:51)(cid:45)(cid:43)(cid:56)(cid:62) (cid:47)(cid:64)(cid:47)(cid:56)(cid:62)(cid:61)
E(cid:61)(cid:62)(cid:43)(cid:44)(cid:54)(cid:51)(cid:61)(cid:50)(cid:55)(cid:47)(cid:56)(cid:62) (cid:57)(cid:48) (cid:40)(cid:57)(cid:60)(cid:53)(cid:42)(cid:57)(cid:56)(cid:47) (cid:40)(cid:47)(cid:61)(cid:62) S(cid:67)(cid:56)(cid:46)(cid:51)(cid:45)(cid:43)(cid:62)(cid:47)
On 15 August 201(cid:20), the Group established Wor(cid:58)(cid:47)one West Syndicate (Wor(cid:58)(cid:47)one) which acquired the
Wor(cid:58)(cid:73)one West office building in (cid:39)erth, for (cid:2)125 million.
A(cid:45)(cid:59)(cid:63)(cid:51)(cid:61)(cid:51)(cid:62)(cid:51)(cid:57)(cid:56) (cid:57)(cid:48) H(cid:57)(cid:62)(cid:47)(cid:54) (cid:58)(cid:57)(cid:60)(cid:62)(cid:48)(cid:57)(cid:54)(cid:51)(cid:57) (cid:44)(cid:67) E(cid:54)(cid:43)(cid:56)(cid:57)(cid:60) (cid:31)(cid:47)(cid:62)(cid:60)(cid:57) (cid:43)(cid:56)(cid:46) P(cid:60)(cid:51)(cid:55)(cid:47) R(cid:47)(cid:49)(cid:51)(cid:57)(cid:56)(cid:43)(cid:54) H(cid:57)(cid:62)(cid:47)(cid:54) (cid:25)(cid:63)(cid:56)(cid:46)
On 2(cid:20) September 201(cid:20), the EM(cid:39)R Fund acquired a portfolio of 6 Australian (cid:31)otels independently valued at
(cid:2)103.9 million. The new portfolio was acquired from the Elanor (cid:31)ospitality and Accommodation Fund (E(cid:31)AF)
which was established in March 2016 and was managed by Elanor.
A(cid:45)(cid:59)(cid:63)(cid:51)(cid:61)(cid:51)(cid:62)(cid:51)(cid:57)(cid:56) (cid:57)(cid:48) L(cid:51)(cid:55)(cid:47)(cid:61)(cid:62)(cid:57)(cid:56)(cid:47) S(cid:62)(cid:60)(cid:47)(cid:47)(cid:62) C(cid:47)(cid:56)(cid:62)(cid:60)(cid:47) (cid:44)(cid:67) E(cid:54)(cid:43)(cid:56)(cid:57)(cid:60) C(cid:57)(cid:55)(cid:55)(cid:47)(cid:60)(cid:45)(cid:51)(cid:43)(cid:54) P(cid:60)(cid:57)(cid:58)(cid:47)(cid:60)(cid:62)(cid:67) (cid:25)(cid:63)(cid:56)(cid:46)
On 19 December 201(cid:20), the Elanor Commercial (cid:39)roperty Fund acquired Limestone Street Centre for (cid:2)36.0
million. The Group holds a 13.2(cid:19)(cid:3) interest in the Elanor Commercial (cid:39)roperty Fund alongside Elanor
management fund investors.
E(cid:61)(cid:62)(cid:43)(cid:44)(cid:54)(cid:51)(cid:61)(cid:50)(cid:55)(cid:47)(cid:56)(cid:62) (cid:57)(cid:48) (cid:62)(cid:50)(cid:47) (cid:40)(cid:43)(cid:64)(cid:47)(cid:60)(cid:54)(cid:47)(cid:67) (cid:26)(cid:43)(cid:60)(cid:46)(cid:47)(cid:56)(cid:61) (cid:25)(cid:63)(cid:56)(cid:46)
On 21 December 201(cid:20), the Group established the Waverley Gardens Fund (Waverley Gardens), which was
established to acquire the Waverley Gardens shopping centre, for (cid:2)1(cid:19)(cid:20) million. The Group holds a 20.2(cid:19)(cid:3)
interest in the Waverley Gardens Fund alongside institutional capital partner, (cid:31)eitman, and Elanor managed
fund investors.
E(cid:61)(cid:62)(cid:43)(cid:44)(cid:54)(cid:51)(cid:61)(cid:50)(cid:55)(cid:47)(cid:56)(cid:62) (cid:57)(cid:48) (cid:62)(cid:50)(cid:47) (cid:25)(cid:43)(cid:51)(cid:60)(cid:48)(cid:51)(cid:47)(cid:54)(cid:46) C(cid:47)(cid:56)(cid:62)(cid:60)(cid:47) S(cid:67)(cid:56)(cid:46)(cid:51)(cid:45)(cid:43)(cid:62)(cid:47)
On 31 May 2019, the Group established the Fairfield Centre Syndicate, which acquired the (cid:37)eeta City
Shopping Centre, for (cid:2)(cid:20)5.3 million. The Group holds a 22.30(cid:3) interest in the Fairfield Centre Syndicate
alongside Elanor management fund investors.
(cid:11)(cid:16)(cid:7) E(cid:64)(cid:47)(cid:56)(cid:62)(cid:61) (cid:57)(cid:45)(cid:45)(cid:63)(cid:60)(cid:60)(cid:51)(cid:56)(cid:49) (cid:43)(cid:48)(cid:62)(cid:47)(cid:60) (cid:60)(cid:47)(cid:58)(cid:57)(cid:60)(cid:62)(cid:51)(cid:56)(cid:49) (cid:46)(cid:43)(cid:62)(cid:47)
Subsequent to the period end, a distribution of 9.(cid:19)4 cents per stapled security has been declared by the Board
of Directors. The total distribution amount of (cid:2)9.(cid:19) million will be paid on or before 30 August 2019 in respect
of the six months ended 30 June 2019.
The Board approved the appointment of Mr Anthony Fehon as a director of the Group and the Responsible
Entity, with an effective date of 20 August 2019.
Other than the events 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 the financial period subsequent to the year ended 30 June 2019.
100 Elanor Investors Group | Annual Report 2019
(cid:13)1
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:11)(cid:17)(cid:7) A(cid:63)(cid:46)(cid:51)(cid:62)(cid:57)(cid:60)(cid:2)(cid:61) (cid:60)(cid:47)(cid:55)(cid:63)(cid:56)(cid:47)(cid:60)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56)
O(cid:39)ER(cid:39)IE(cid:40)
The independent auditors of Elanor Investors Group (Deloitte Touche Tohmatsu) have provided a number of
audit and other assurance related services as well as other non-assurance related services to Elanor Investors
Group and the Trust during the year. (cid:39)itcher (cid:39)artners provided audit services in respect of the Trust(cid:79)s
Compliance (cid:39)lan.
Below is a summary of fees paid for various services to Deloitte Touche Tohmatsu and (cid:39)itcher (cid:39)artners during
the year.
(cid:13)(cid:6)
101
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:11)(cid:18)(cid:7) N(cid:57)(cid:56)(cid:6)P(cid:43)(cid:60)(cid:47)(cid:56)(cid:62) (cid:46)(cid:51)(cid:61)(cid:45)(cid:54)(cid:57)(cid:61)(cid:63)(cid:60)(cid:47)
O(cid:39)ER(cid:39)IE(cid:40)
This note provides information relating to the non-parent EIF Group only. The accounting policies are
consistent with the Group, except as otherwise disclosed.
S(cid:47)(cid:49)(cid:55)(cid:47)(cid:56)(cid:62) (cid:51)(cid:56)(cid:48)(cid:57)(cid:60)(cid:55)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56)
Chief operating decisions are based on the segment information as reported by the consolidated Group and
therefore EIF is deemed to have only one segment.
D(cid:51)(cid:61)(cid:62)(cid:60)(cid:51)(cid:44)(cid:63)(cid:62)(cid:51)(cid:57)(cid:56)(cid:61)
The following distributions were declared by the EIF Group in respect of the period:
1. The interim distribution of 5.(cid:20)1 cents per stapled security was declared on 1(cid:20) February 2019 and paid on 1 March 2019.
2. The final distribution of 4.(cid:20)2 cents per stapled security for the period ended 30 June 2019 was not declared prior to 30 June 2019. The
Distribution will be paid on 30 August 2019. (cid:39)lease refer to the Director's Report for the calculation of Core Earnings and the Distribution.
T(cid:43)(cid:66)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56) (cid:57)(cid:48) (cid:62)(cid:50)(cid:47) T(cid:60)(cid:63)(cid:61)(cid:62)
(cid:43)nder current Australian income tax legislation, the Trust and its sub-trusts are not liable for income tax on
their taxable income (including assessable realised capital gains) provided that the unitholders are presently
entitled to the income of the Trust. Accordingly, the Group only pays tax on Company taxable earnings and
there is no separate tax disclosure for the Trust.
E(cid:43)(cid:60)(cid:56)(cid:51)(cid:56)(cid:49)(cid:61) (cid:8) (cid:3)(cid:54)(cid:57)(cid:61)(cid:61)(cid:47)(cid:61)(cid:4) (cid:58)(cid:47)(cid:60) (cid:61)(cid:62)(cid:43)(cid:58)(cid:54)(cid:47)(cid:46) (cid:61)(cid:47)(cid:45)(cid:63)(cid:60)(cid:51)(cid:62)(cid:67)
The earnings (cid:11) (losses) per stapled security measure shown below is based upon the profit (cid:11) (loss) attributable
to security holders:
102 Elanor Investors Group | Annual Report 2019
(cid:13)(cid:7)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:11)(cid:18)(cid:7) N(cid:57)(cid:56)(cid:6)P(cid:43)(cid:60)(cid:47)(cid:56)(cid:62) (cid:46)(cid:51)(cid:61)(cid:45)(cid:54)(cid:57)(cid:61)(cid:63)(cid:60)(cid:47) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
I(cid:56)(cid:64)(cid:47)(cid:61)(cid:62)(cid:55)(cid:47)(cid:56)(cid:62) P(cid:60)(cid:57)(cid:58)(cid:47)(cid:60)(cid:62)(cid:51)(cid:47)(cid:61)
(cid:31)(cid:57)(cid:64)(cid:47)(cid:55)(cid:47)(cid:56)(cid:62) (cid:51)(cid:56) (cid:51)(cid:56)(cid:64)(cid:47)(cid:61)(cid:62)(cid:55)(cid:47)(cid:56)(cid:62) (cid:58)(cid:60)(cid:57)(cid:58)(cid:47)(cid:60)(cid:62)(cid:51)(cid:47)(cid:61)
The carrying value of investment properties at the beginning and end of the current period is set out below:
Refer to (cid:37)ote 5 (cid:39)roperty, plant and equipment and (cid:37)ote 6 Investment properties for further details.
The following table represents the total fair value of Investment (cid:39)roperties at 30 June 2019:
(cid:13)(cid:8)
103
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:11)(cid:18)(cid:7) N(cid:57)(cid:56)(cid:6)P(cid:43)(cid:60)(cid:47)(cid:56)(cid:62) (cid:46)(cid:51)(cid:61)(cid:45)(cid:54)(cid:57)(cid:61)(cid:63)(cid:60)(cid:47) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
A(cid:3)(cid:3)OUNTING POLI(cid:3)(cid:16)
(cid:25)(cid:43)(cid:51)(cid:60) (cid:64)(cid:43)(cid:54)(cid:63)(cid:47) (cid:57)(cid:48) I(cid:56)(cid:64)(cid:47)(cid:61)(cid:62)(cid:55)(cid:47)(cid:56)(cid:62) P(cid:60)(cid:57)(cid:58)(cid:47)(cid:60)(cid:62)(cid:51)(cid:47)(cid:61)
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.
(cid:44)aluation, technique and inputs
Investment properties are categorised as level 3 in the fair value hierarchy. There were no transfers between
hierarchies during the period.
(cid:25)(cid:43)(cid:51)(cid:60) (cid:64)(cid:43)(cid:54)(cid:63)(cid:47) (cid:55)(cid:47)(cid:43)(cid:61)(cid:63)(cid:60)(cid:47)(cid:55)(cid:47)(cid:56)(cid:62)
The significant unobservable inputs associated with the valuation of the Group's investment properties are as
follows
104 Elanor Investors Group | Annual Report 2019
(cid:13)5
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:11)(cid:18)(cid:7) N(cid:57)(cid:56)(cid:6)P(cid:43)(cid:60)(cid:47)(cid:56)(cid:62) (cid:46)(cid:51)(cid:61)(cid:45)(cid:54)(cid:57)(cid:61)(cid:63)(cid:60)(cid:47) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
E(cid:59)(cid:63)(cid:51)(cid:62)(cid:67) (cid:43)(cid:45)(cid:45)(cid:57)(cid:63)(cid:56)(cid:62)(cid:47)(cid:46) (cid:51)(cid:56)(cid:64)(cid:47)(cid:61)(cid:62)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61)
The Trust(cid:79)s equity accounted investments are as follows:
(cid:12)(cid:9) (cid:29)(cid:63)(cid:56)(cid:47) (cid:11)(cid:9)(cid:10)(cid:18)
(cid:12)(cid:9) (cid:29)(cid:63)(cid:56)(cid:47) (cid:11)(cid:9)(cid:10)(cid:17)
The following information represents the aggregated financial position and financial performance of the Elanor
Retail (cid:39)roperty Fund, Elanor Commercial (cid:39)roperty Fund and the Waverley Gardens Fund. This summarised
financial information represents amounts shown in the associate's financial statements prepared in accordance
with AASBs, ad(cid:57)usted by the Trust for equity accounting purposes.
(cid:13)(cid:10)
105
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
(cid:11)(cid:18)(cid:7) N(cid:57)(cid:56)(cid:6)P(cid:43)(cid:60)(cid:47)(cid:56)(cid:62) (cid:46)(cid:51)(cid:61)(cid:45)(cid:54)(cid:57)(cid:61)(cid:63)(cid:60)(cid:47) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
E(cid:59)(cid:63)(cid:51)(cid:62)(cid:67) (cid:43)(cid:45)(cid:45)(cid:57)(cid:63)(cid:56)(cid:62)(cid:47)(cid:46) (cid:51)(cid:56)(cid:64)(cid:47)(cid:61)(cid:62)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
(cid:12)(cid:9) (cid:29)(cid:63)(cid:56)(cid:47) (cid:11)(cid:9)(cid:10)(cid:18)
Reconciliation of the above summarised financial information to the carrying amount of the interest in Elanor
Retail (cid:39)roperty Fund recognised in the consolidated financial statements:
106 Elanor Investors Group | Annual Report 2019
(cid:13)(cid:11)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:11)(cid:18)(cid:7) N(cid:57)(cid:56)(cid:6)P(cid:43)(cid:60)(cid:47)(cid:56)(cid:62) (cid:46)(cid:51)(cid:61)(cid:45)(cid:54)(cid:57)(cid:61)(cid:63)(cid:60)(cid:47) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
E(cid:59)(cid:63)(cid:51)(cid:62)(cid:67) (cid:43)(cid:45)(cid:45)(cid:57)(cid:63)(cid:56)(cid:62)(cid:47)(cid:46) (cid:51)(cid:56)(cid:64)(cid:47)(cid:61)(cid:62)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
(cid:12)(cid:9) (cid:29)(cid:63)(cid:56)(cid:47) (cid:11)(cid:9)(cid:10)(cid:17)
Reconciliation of the above summarised financial information to the carrying amount of the interest in the Bell
City Fund and the Elanor Retail (cid:39)roperty Fund recognised in the consolidated financial statements:
A(cid:49)(cid:49)(cid:60)(cid:47)(cid:49)(cid:43)(cid:62)(cid:47) (cid:51)(cid:56)(cid:48)(cid:57)(cid:60)(cid:55)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56) (cid:57)(cid:48) (cid:43)(cid:61)(cid:61)(cid:57)(cid:45)(cid:51)(cid:43)(cid:62)(cid:47)(cid:61) (cid:62)(cid:50)(cid:43)(cid:62) (cid:43)(cid:60)(cid:47) (cid:56)(cid:57)(cid:62) (cid:51)(cid:56)(cid:46)(cid:51)(cid:64)(cid:51)(cid:46)(cid:63)(cid:43)(cid:54)(cid:54)(cid:67) (cid:55)(cid:43)(cid:62)(cid:47)(cid:60)(cid:51)(cid:43)(cid:54)
(cid:13)(cid:12)
107
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:11)(cid:18)(cid:7) N(cid:57)(cid:56)(cid:6)P(cid:43)(cid:60)(cid:47)(cid:56)(cid:62) (cid:46)(cid:51)(cid:61)(cid:45)(cid:54)(cid:57)(cid:61)(cid:63)(cid:60)(cid:47) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
I(cid:56)(cid:62)(cid:47)(cid:60)(cid:47)(cid:61)(cid:62) (cid:44)(cid:47)(cid:43)(cid:60)(cid:51)(cid:56)(cid:49) (cid:54)(cid:51)(cid:43)(cid:44)(cid:51)(cid:54)(cid:51)(cid:62)(cid:51)(cid:47)(cid:61)
As part of the internal funding of the Fund, EIF entered into a long term interest-bearing loan with EIL at arm(cid:79)s
length terms, maturing in July 2024. As at 30 June 2019, the outstanding payable to the Company was (cid:2)29.5
million.
C(cid:60)(cid:47)(cid:46)(cid:51)(cid:62) (cid:48)(cid:43)(cid:45)(cid:51)(cid:54)(cid:51)(cid:62)(cid:51)(cid:47)(cid:61)
As at 30 June 2019, the EIF Group had unrestricted access to the following credit facilities:
During the year, the E(cid:37)(cid:37) Group refinanced its debt facilities with a new (cid:2)30.0 million revolver facility, upon
which both the Company and the Trust can draw, with a maturity date on 29 April 2022. The drawn amount at
30 June 2019 is (cid:2)1(cid:19).0 million. At 30 June 2019 the amount of drawn facilities was not hedged.
108 Elanor Investors Group | Annual Report 2019
(cid:13)(cid:13)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:11)(cid:18)(cid:7) N(cid:57)(cid:56)(cid:6)P(cid:43)(cid:60)(cid:47)(cid:56)(cid:62) (cid:46)(cid:51)(cid:61)(cid:45)(cid:54)(cid:57)(cid:61)(cid:63)(cid:60)(cid:47) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
The EM(cid:39)R Group also refinanced its (cid:2)46.(cid:19) million debt facility during the year, and obtained an additional (cid:2)4.1
million debt capacity in the new facility. As a result, the EM(cid:39)R Group has access to a (cid:2)(cid:20)(cid:19).43 million facility,
upon which both the Company and Trust can draw. The drawn amount at 30 June 2019 is (cid:2)(cid:20)3.3 million out of
which (cid:2)36.6 million will mature on 31 October 2020, with the remaining (cid:2)46.(cid:19) million maturing on 31 October
2021. At 30 June 2019, the amount of drawn facilities is hedged to 100(cid:3).
Included in the above numbers, Bluewater has access to a (cid:2)30.2 million facility. The drawn amount at 30 June
2019 is (cid:2)29.(cid:19) million which will mature on 30 October 2020. At 30 June 2019, the amount of drawn facilities is
hedged to 100(cid:3).
D(cid:47)(cid:60)(cid:51)(cid:64)(cid:43)(cid:62)(cid:51)(cid:64)(cid:47) (cid:25)(cid:51)(cid:56)(cid:43)(cid:56)(cid:45)(cid:51)(cid:43)(cid:54) (cid:51)(cid:56)(cid:61)(cid:62)(cid:60)(cid:63)(cid:55)(cid:47)(cid:56)(cid:62)(cid:61)
The EIF Group enters into derivative financial instruments to manage its exposure to interest rate ris(cid:58).
R(cid:47)(cid:61)(cid:47)(cid:60)(cid:64)(cid:47)(cid:61)
Reserves are balances that form part of equity that record other comprehensive income amounts that are
retained in the business and not distributed until such time the underlying balance sheet item is realised. This
note provides information about movements in the other reserves line item of the balance sheet and a
description of the nature and purpose of each reserve.
100
109
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
ELANOR INVESTORS GROUP
(cid:11)(cid:18)(cid:7) N(cid:57)(cid:56)(cid:6)P(cid:43)(cid:60)(cid:47)(cid:56)(cid:62) (cid:46)(cid:51)(cid:61)(cid:45)(cid:54)(cid:57)(cid:61)(cid:63)(cid:60)(cid:47) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
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 LTI(cid:39).
(cid:25)(cid:51)(cid:56)(cid:43)(cid:56)(cid:45)(cid:51)(cid:43)(cid:54) R(cid:51)(cid:61)(cid:53) (cid:31)(cid:43)(cid:56)(cid:43)(cid:49)(cid:47)(cid:55)(cid:47)(cid:56)(cid:62)
(cid:3)(cid:10)(cid:4)
(cid:31)(cid:43)(cid:60)(cid:53)(cid:47)(cid:62) R(cid:51)(cid:61)(cid:53)
I(cid:56)(cid:62)(cid:47)(cid:60)(cid:47)(cid:61)(cid:62) (cid:60)(cid:43)(cid:62)(cid:47) (cid:60)(cid:51)(cid:61)(cid:53)
As at reporting date, the EIF Group had the following interest-bearing assets and liabilities:
110 Elanor Investors Group | Annual Report 2019
101
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:11)(cid:18)(cid:7) N(cid:57)(cid:56)(cid:6)P(cid:43)(cid:60)(cid:47)(cid:56)(cid:62) (cid:46)(cid:51)(cid:61)(cid:45)(cid:54)(cid:57)(cid:61)(cid:63)(cid:60)(cid:47) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
I(cid:56)(cid:62)(cid:47)(cid:60)(cid:47)(cid:61)(cid:62) R(cid:43)(cid:62)(cid:47) S(cid:47)(cid:56)(cid:61)(cid:51)(cid:62)(cid:51)(cid:64)(cid:51)(cid:62)(cid:67)
C(cid:60)(cid:47)(cid:46)(cid:51)(cid:62) R(cid:51)(cid:61)(cid:53)
Exposure to credit ris(cid:58)
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to
credit ris(cid:58) at the reporting date was as detailed below:
Impairment losses
The ageing of trade and other receivables at reporting date is detailed below:
10(cid:6)
111
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:11)(cid:18)(cid:7) N(cid:57)(cid:56)(cid:6)P(cid:43)(cid:60)(cid:47)(cid:56)(cid:62) (cid:46)(cid:51)(cid:61)(cid:45)(cid:54)(cid:57)(cid:61)(cid:63)(cid:60)(cid:47) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
L(cid:51)(cid:59)(cid:63)(cid:51)(cid:46)(cid:51)(cid:62)(cid:67) (cid:60)(cid:51)(cid:61)(cid:53)
O(cid:62)(cid:50)(cid:47)(cid:60) (cid:48)(cid:51)(cid:56)(cid:43)(cid:56)(cid:45)(cid:51)(cid:43)(cid:54) (cid:43)(cid:61)(cid:61)(cid:47)(cid:62)(cid:61) (cid:43)(cid:56)(cid:46) (cid:54)(cid:51)(cid:43)(cid:44)(cid:51)(cid:54)(cid:51)(cid:62)(cid:51)(cid:47)(cid:61)
This note provides further information about material financial assets and liabilities that are incidental to the
EIF and the Trust(cid:79)s trading activities, being receivables and trade and other payables.
T(cid:60)(cid:43)(cid:46)(cid:47) (cid:43)(cid:56)(cid:46) O(cid:62)(cid:50)(cid:47)(cid:60) R(cid:47)(cid:45)(cid:47)(cid:51)(cid:64)(cid:43)(cid:44)(cid:54)(cid:47)(cid:61)
112 Elanor Investors Group | Annual Report 2019
10(cid:7)
ELANOR IN(cid:39)ESTORS (cid:26)ROUP
NOTES TO THE CONSOLIDATED (cid:25)INANCIAL STATE(cid:31)ENTS
(cid:25)OR THE YEAR ENDED (cid:12)(cid:9) (cid:29)UNE (cid:11)(cid:9)(cid:10)(cid:18)
(cid:11)(cid:18)(cid:7) N(cid:57)(cid:56)(cid:6)P(cid:43)(cid:60)(cid:47)(cid:56)(cid:62) (cid:46)(cid:51)(cid:61)(cid:45)(cid:54)(cid:57)(cid:61)(cid:63)(cid:60)(cid:47) (cid:3)(cid:45)(cid:57)(cid:56)(cid:62)(cid:51)(cid:56)(cid:63)(cid:47)(cid:46)(cid:4)
P(cid:43)(cid:67)(cid:43)(cid:44)(cid:54)(cid:47)(cid:61)
C(cid:43)(cid:61)(cid:50) (cid:48)(cid:54)(cid:57)(cid:65) (cid:51)(cid:56)(cid:48)(cid:57)(cid:60)(cid:55)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56)
This note provides further information on the consolidated cash flow statements of the Trust. It reconciles profit
for the year to cash flows from operating activities and information about non-cash transactions
R(cid:47)(cid:45)(cid:57)(cid:56)(cid:45)(cid:51)(cid:54)(cid:51)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56) (cid:57)(cid:48) (cid:58)(cid:60)(cid:57)(cid:48)(cid:51)(cid:62) (cid:43)(cid:48)(cid:62)(cid:47)(cid:60) (cid:51)(cid:56)(cid:45)(cid:57)(cid:55)(cid:47) (cid:62)(cid:43)(cid:66) (cid:62)(cid:57) (cid:56)(cid:47)(cid:62) (cid:45)(cid:43)(cid:61)(cid:50) (cid:48)(cid:54)(cid:57)(cid:65)(cid:61) (cid:48)(cid:60)(cid:57)(cid:55) (cid:57)(cid:58)(cid:47)(cid:60)(cid:43)(cid:62)(cid:51)(cid:56)(cid:49) (cid:43)(cid:45)(cid:62)(cid:51)(cid:64)(cid:51)(cid:62)(cid:51)(cid:47)(cid:61)
D(cid:51)(cid:60)(cid:47)(cid:45)(cid:62)(cid:57)(cid:60)(cid:61)’ D(cid:47)(cid:45)(cid:54)(cid:43)(cid:60)(cid:43)(cid:62)(cid:51)(cid:57)(cid:56) (cid:62)(cid:57) S(cid:62)(cid:43)(cid:58)(cid:54)(cid:47)(cid:46) S(cid:47)(cid:45)(cid:63)(cid:60)(cid:51)(cid:62)(cid:67) H(cid:57)(cid:54)(cid:46)(cid:47)(cid:60)(cid:61)
10(cid:8)
113
ELANOR INVESTORS GROUP
Directors’ Declaration to
Stapled Securityholders
DIRECTORS’ DECLARATION TO STAPLED SECURITY HOLDERS
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 40-113 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 2019 and
of their performance, for the financial year ended on that date; and
b)
c)
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.
the financial statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
d) 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
16 August 2019
114 Elanor Investors Group | Annual Report 2019
105
Independent Auditor’s Report
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Deloitte Touche Tohmatsu
Grosvenor Place
A.B.N. 74 490 121 060
225 George Street
Sydney NSW 2000
Grosvenor Place
PO Box N250 Grosvenor Place
225 George Street
Sydney NSW 1220 Australia
Sydney NSW 2000
PO Box N250 Grosvenor Place
DX 10307SSE
Sydney NSW 1220 Australia
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
DX 10307SSE
www.deloitte.com.au
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
Independent Auditor’s Report to the Stapled Security Holders of
Elanor Investors Group and the Unitholders of EIF Group
Report on the Audit of the Financial Report
Opinion
Report on the Audit of the Financial Report
We have audited the financial report of:
Opinion
We have audited the financial report of:
Elanor Investors Group (the “Group” or “Elanor”) which comprises the consolidated balance
sheet as at 30 June 2019, the consolidated statement of profit or loss, the consolidated
statement of comprehensive income, the consolidated statement of cash flows and the
Elanor Investors Group (the “Group” or “Elanor”) which comprises the consolidated balance
consolidated statement of changes in equity for the year then ended, notes comprising a
sheet as at 30 June 2019, the consolidated statement of profit or loss, the consolidated
summary of significant accounting policies and other explanatory information, and the
statement of comprehensive income, the consolidated statement of cash flows and the
directors’ declaration of the consolidated entity Elanor Investors Group, being the
consolidated statement of changes in equity for the year then ended, notes comprising a
consolidated stapled entity (“Elanor Investors Group”). The consolidated stapled entity
summary of significant accounting policies and other explanatory information, and the
comprises Elanor Investors Limited and the entities it controlled at the year’s end or from
directors’ declaration of the consolidated entity Elanor Investors Group, being the
time to time during the year, including Elanor Investment Fund and the entities it controlled
consolidated stapled entity (“Elanor Investors Group”). The consolidated stapled entity
at year’s end or from time to time during the financial year end;
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
Elanor Investment Fund which comprises the consolidated balance sheet as at 30 June 2019,
at year’s end or from time to time during the financial year end;
the consolidated statement of profit or loss, the consolidated statement of comprehensive
income, the consolidated statement of cash flows and the consolidated statement of changes
Elanor Investment Fund which comprises the consolidated balance sheet as at 30 June 2019,
in equity for the year then ended, notes comprising a summary of significant accounting
the consolidated statement of profit or loss, the consolidated statement of comprehensive
policies and other explanatory information, and the directors’ declaration of the consolidated
income, the consolidated statement of cash flows and the consolidated statement of changes
entity Elanor Investment Fund, being the consolidated entity (“EIF Group”). The consolidated
in equity for the year then ended, notes comprising a summary of significant accounting
entity comprises Elanor Investment Fund and the entities it controlled at the year’s end or
policies and other explanatory information, and the directors’ declaration of the consolidated
from time to time during the year;
entity Elanor Investment 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
Audit the Remuneration Report of Elanor Investors Limited included in the Director’s Report
from time to time during the year;
of Elanor Investors Group for the year ended 30 June 2019;
of Elanor Investors Group for the year ended 30 June 2019;
Audit the Remuneration Report of Elanor Investors Limited included in the Director’s Report
In our opinion, the accompanying financial report of Elanor Investors Group and EIF Group is in
accordance with the Corporations Act 2001, including:
In our opinion, the accompanying financial report of Elanor Investors Group and EIF Group is in
giving a true and fair view of the Elanor Investors Group and EIF Group’s financial position
(i)
accordance with the Corporations Act 2001, including:
as at 30 June 2019 and of their financial performance for the year then ended; and
giving a true and fair view of the Elanor Investors Group and EIF Group’s financial position
complying with Australian Accounting Standards and the Corporations Regulations 2001.
as at 30 June 2019 and of their financial performance for the year then ended; and
(i)
(ii)
Basis for Opinion
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
Basis for Opinion
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Elanor Investors Group and EIF Group in
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics
Report section of our report. We are independent of the Elanor Investors Group and EIF Group in
for Professional Accountants (the Code) that are relevant to our audit of the financial report in
accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (the Code) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
106
106
115
Independent Auditor’s Report
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 (the
“Responsible Entity”), 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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report in respect of Elanor Investors Group for the current period. These
matters were addressed in the context of our audit of the financial report as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
Property, plant, and equipment and investment
property valuation
As at 30 June 2019, Elanor Investors Group
recognised property plant and equipment valued at
$237.3 million as disclosed in Note 8 and investment
property valued at $58.9 million as disclosed in Note
9.
Note 8 and 9 outline two valuation methodologies
used by Elanor Investors Group. The capitalisation of
net income method applies a capitalisation rate to
normalised market net operating
income. The
discounted cash flow method uses a cash flow
forecast and terminal value calculation discounted to
present value.
The valuation process requires significant judgment
in the following key areas:
Discount rate,
Capitalisation rate,
Terminal value,
NOI,
Capital expenditures
Revenue per Available Room (“RevPAR”),
Average Daily Room Rate
(“ADR”),
Occupancy % (hotel specific)
Accordingly, internal and external valuers apply
professional judgement concerning market conditions
and factors impacting individual properties.
The internal and external valuations are reviewed by
management who recommend each property’s
valuation to the Audit and Risk Committee and the
Board in accordance with Elanor Investors Group’s
valuation protocol.
How the scope of our audit responded to
the Key Audit Matter
Our procedures included but, were not limited to:
Assessing management’s process over property
valuations and the oversight applied by the
directors;
Assessing the independence, competence and
objectivity of the external and internal valuers;
Performing an analytical
risk
assessment of the portfolio, analysing the key
inputs and assumptions;
review and
Assessing the assumptions used in the portfolio,
with particular focus on the capitalisation rate
and discount rate with reference to external
market trends and transactions and challenging
those assumptions where appropriate;
Holding discussions with management to obtain
an understanding of valuation movements and
their identification of any additional property
specific matters; and
Testing on a sample basis of properties, both
externally and internally valued, the following:
o
o
Testing management methodology;
The integrity of the information in the
valuation by agreeing key inputs such as net
operating income to underlying records and
source evidence;
o Assessing
the
reference
forecasts used
in
the
to current
valuations with
financial results such as revenues and
expenses,
expenditure
capital
requirements, vacancy rates and lease
renewals, (as appropriate); and
o
The mathematical accuracy of the models.
We also assessed the appropriateness of the
disclosures included in Note 8 and 9 to the
consolidated financial statements.
116 Elanor Investors Group | Annual Report 2019
107
Key Audit Matter
Accounting treatment for new investments and
changes to existing investments
Elanor
Investors Group’s capital management
strategy involves the holding of a number of
investments in funds which are managed by Elanor
Funds Management Limited, a subsidiary of Elanor
Investors Group.
The accounting treatment for each type of investment
is dependent on the Group’s relationship with these
investments. The determination for an individual
investment is the result of a critical accounting
judgement applied to many factors, principally
including consideration of the extent of its voting
stake, the relationship with other stakeholders, the
constitutional arrangements for the trust or fund, its
manager and responsible entity or trustee, and the
extent to which Elanor Investors Group’s economic
exposure increases when management fees are paid.
As disclosed in Note 10, investments that are
treated as
determined
to be controlled are
subsidiaries and are consolidated
into Elanor
Investors Group. Investments over which it is
determined that Elanor Investors Group is deemed to
have significant influence are classified as associates
and are equity accounted.
How the scope of our audit responded to
the Key Audit Matter
Our procedures included, but were not limited to:
Assessing management’s processes for their
review and determination of the accounting for
its investments and evaluating management’s
position papers;
Assessing legal documentation and business
arrangements relating to the constitution of the
funds and trusts, decision-making over their
activities and operations of the manager;
Assessing the impact of accounting on the
existence of preferential voting rights held by
Elanor Investors Group and the rights to remove
the manager; and
Assessing the exposure of Elanor Investors
Group to variable return via ownership interests
fee
in
arrangements such as ongoing management
fees, service fees and performance fees.
the management
investments,
the
We also assessed the appropriateness of the
disclosures included in Note 10 to the consolidated
financial statements.
Other Information
The directors of the Responsible Entity (the “Directors”) are responsible for the other information.
The other information comprises the Directors’ Report, which we obtained prior to the date of this
auditor’s report, and also includes the following information which will be included in the Group’s
annual report (but does not include the financial report and our auditor’s report thereon):
Distributions Summary, Overview and Strategy, Operating and Financial Review, Interest in the
Group, Directors Summary, and additional ASX disclosures, which are expected to be made available
to us after that date.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. If, based on the work we have performed on the other information that we obtained prior
to the date of this auditor’s report, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
When we read the Distributions Summary, Overview and Strategy, Operating and Financial Review,
Interest in the Group, Directors Summary, and additional ASX disclosures, if we conclude that there
is a material misstatement therein, we are required to communicate the matter to the directors and
use our professional judgement to determine the appropriate action.
Responsibilities of the Directors for the Financial Report
The directors 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.
108
117
Independent Auditor’s Report
In preparing the financial report, the directors are responsible for assessing Elanor Investors Group
and EIF Group’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the directors either intend to
liquidate the Company and/or the Fund or to cease operations, or has no realistic alternative but to
do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as
intentional omissions,
involve collusion,
fraud may
misrepresentations, or the override of internal control.
forgery,
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company and Fund’s
ability to continue as a going concern. If we conclude that a material uncertainty exists, we
are required to draw attention in our auditor’s report to the related disclosures in the financial
report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Company or the Fund to cease to continue as a going
concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
118 Elanor Investors Group | Annual Report 2019
109
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 26 to 36 of the Directors’ Report for
the year ended 30 June 2019.
In our opinion, the Remuneration Report of Elanor Investors Limited, for the year ended 30 June
2019, complies with section 300A of the Corporations Act 2001.
Responsibilities
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.
DELOITTE TOUCHE TOHMATSU
AG Collinson
Partner
Chartered Accountants
Sydney, 16 August 2019
110
119
Corporate Governance
The Board of Directors of Elanor Investors Group (Group) have approved the Group’s Corporate Governance
Statement as at 30 June 2019. In accordance with ASX Listing Rule 4.10.3, the Group’s Corporate Governance
Statement can be found on its website at: www.elanorinvestors.com
The Board of Directors is responsible for the overall corporate governance of the Group, including establishing and
monitoring key strategy and performance goals. The Board monitors the operational and financial position and
performance of the Group, and oversees its business strategy, including approving the Group’s strategic goals.
The Board seeks to ensure that the Group is properly managed to protect and enhance securityholder interests,
and that the Group, its Directors, officers and personnel operate in an appropriate environment of corporate
governance.
Accordingly, the Board has created a framework for managing the Group, including Board and Committee Charters
and various corporate governance policies designed to promote the responsible management and conduct of the
Group.
120 Elanor Investors Group | Annual Report 2019
Securityholder Analysis
As at 19 August 2019
Stapled Securities
The units of the Trusts are combined and issued as stapled securities in the Fund. The Fund’s securities are traded
on the Australian Securities Exchange (ASX: ERF), having listed on 9 November 2016. The units of the Trusts 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 a Trust from
the ASX Official List if any of the units cease to be stapled together or any equity securities issued by the Trusts
which are not stapled to equivalent securities in the other entity.
Top 20 Securityholders
Number Securityholder
No. of Securities
%
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
HSBC Custody Nominees (Australia) Limited
Rockworth Investment Holdings Pte Ltd
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Pty Limited
Mr Glenn Willis
BNP Paribas Nominees Pty Ltd
Armada Investments Pty Ltd
BNP Paribas Noms Pty Ltd
Citicorp Nominees Pty Limited
Mr Paul Siviour
National Nominees Limited
Citano Pty Ltd
Danissa Pty Ltd
Mr Symon Simmons
CPU Share Plans Pty Ltd
Citano Pty Limited
J B Holdings (Victoria) Pty Ltd
BF & JT Nominees Pty Ltd
Chivan Investments Pty Ltd
20
Citega Pty Limited
Total
Balance of Register
Grand Total
18,793,011
17,932,967
7,690,258
7,271,336
3,198,495
2,616,313
2,295,605
1,607,277
978,166
850,000
835,191
533,839
463,088
430,608
633,161
292,500
271,000
270,000
270,000
259,092
18.83
17.96
7.70
7.28
3.20
2.62
2.30
1.61
0.98
0.85
0.84
0.53
0.46
0.43
0.63
0.29
0.27
0.27
0.27
0.26
67,491,907
67.61
32,330,313
32.39
99,822,220 100.00
121
Securityholder Analysis
As at 19 August 2019
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
%
No. of Holders
73,818,637
21,901,923
2,926,120
1,098,440
77,100
73.95
21.94
2.93
1.10
0.08
64
821
364
322
178
%
3.66
46.94
20.81
18.41
10.18
99,822,220
100.00
1,687
100.00
The total number of securityholders with an unmarketable parcel of securities was 62.
Substantial Securityholders
Securityholder
Rockworth Investment Holdings Pte Ltd
Perpetual Limited
Auscap Asset Management Limited
Voting rights
No. of Securities
17,932,967
11,969,118
6,080,000
%
17.96
11.99
6.09
On a poll, each securityholder 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.
122 Elanor Investors Group | Annual Report 2019
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 (Chairman)
Glenn Willis (Managing Director and CEO)
Nigel Ampherlaw
Kin Song Lim
Anthony (Tony) Fehon
Company Secretary of the Responsible Entity
and Elanor Investors Limited
Symon Simmons
Security Registry
Computershare Investor Services Pty Limited
Level 3
60 Carrington Street
Sydney NSW 2000
Auditors
Deloitte Touche Tohmatsu
Grosvenor Place
225 George Street
Sydney NSW 2000
Custodian
The Trust Company (Australia) Limited
Level 18
123 Pitt Street
Sydney NSW 2000
Website
www.elanorinvestors.com
123
Level 38, 259 George Street
Sydney NSW 2000
T: +61 2 9239 8400
elanorinvestors.com