Investors Group
Annual Report
For the year ended 30 June 2021
Mayfair Hotel, Adelaide, SA
3
Meeting of
Securityholders
Monday 22 November 2021
10:30am (Sydney time)
via live webcast.
Contents
04 — Highlights
06 — Making a positive impact
08 — Message from the Chairman
10 — CEO’s Message
13 — Financial Report
14 — Directors’ Report
43 — Auditor’s Independence Declaration
44 — Consolidated Financial Statements
51 — Notes to the Consolidated Financial Statements
124 — Directors’ Declaration
125 — Independent Auditor’s Report
134 — Corporate Governance
135 — Securityholder Analysis
137 — Corporate Directory
Financial Calendar
NOV
DEC
FEB
JUN
AUG
22 November 2021
Meeting of Securityholders
3
December 2021
Estimated interim distribution announcement
and securities trade ex-distribution
February 2022
Interim results announcement and
Interim distribution payment
June 2022
Estimated final distribution announcement and
securities trade ex-distribution
August 2022
Full-year results announcement and
Final distribution payment
SEP
September 2022
Annual tax statements
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).
4
Highlights
Core
Earnings
For the financial
year 2021
Distributions
per security
Funds under
Management
As at 30 June 2021
Recurring Funds
Management
Income
excl. acquisition fees
$15.15m
> 2.0%1
11.27c
> 18.5%
$2.07bn
> 23%
$21.8m
> 40.7%
Funds
Management
Income
Net Tangible
Assets
per security
Gearing
As at 30 June 2021
$29.7m
> 38.2%
$1.43
> 11%
21.0%
> from 29.7%
1) ~200% increase on FY20 Core Earnings pre transactional income
COVID-19 vaccination
clinics at Tweed Mall,
Tweed Heads NSW
and Clifford Gardens
Shopping Centre,
Toowoomba QLD
Elanor Investors Group | Annual Report 2021 5
Diversified FUM across Elanor’s investment sectors of focus
Retail
Office
Healthcare
Hotels, Tourism
and Leisure
Total
2021 $930m $511m $209m $425m $2,075m
ASX:ERF $247m
ASX:ECF $394m
EHREF $209m
Waverley: $182m
Burke: $82m
Stirling: $36m
Fairfield: $106m
Riverside: $66m
Hunters: $60m
Bluewater: $56m
Belconnen: $67m
Clifford: $145m
EMPR $180m
ELHF $179m
EWPF $65m
2020
$765m
$415m
$128m
$384m
$1,692m
2019
$769m
$300m
$Nil
$318m
$1,387m
The Group’s investments are located across Australia and New Zealand
Assets:
Hotels, Tourism & Leisure
Commercial
Retail
Healthcare
WA
Darwin
NT
SA
QLD
Brisbane
Perth
NSW
Auckland
Sydney
Canberra
Wellington
Adelaide
VIC
Melbourne
TAS
Hobart
6
Making a
positive impact
The Smith Family
Elanor’s three-year strategic partnership
with The Smith Family to initially support
112 Senior Secondary students in the
Learning for Life scholarship program.
We are pursuing a range of other exciting
initiatives with The Smith Family to leverage
Elanor’s networks, staff, and portfolio of assets
around Australia.
Building resilience
and strength within
communities
We commemorated the reopening of
Mogo Wildlife Park following the catastrophic
2020 bush fires that ravaged the NSW South
Coast. Mogo Wildlife Park holds particular
significance to the local community – its
survival and future reflects the communities
hope for their own futures.
Strategic renewable
energy initiative
Through our collaboration with Solar Bay
and Momentum Energy we will deliver a
combination of on-site and off-site renewables
that will meet 100% of the energy needs at the
Waverley Gardens Shopping Centre, making
it one of Australia’s first totally renewable-
powered shopping centres. This model will be
implemented across a number of other assets
in the Group’s retail portfolio including Tweed
Mall, Neeta City, Riverside Plaza, Gladstone
Square and Hunters Plaza.
Mogo Wildlife Park
Elanor Investors Group | Annual Report 2021 7
7
The critically endangered
Plains Wanderer
Promoting the conservation
of native species at our
Wildlife Parks
Working with the Office of Environment & Heritage,
Elanor has been instrumental in the establishment
and support of the ‘Saving our Species’ program
for the Plains Wanderer, one of the most
taxonomically significant bird species in Australia.
In partnership with the Australian Museum,
Elanor supported it’s work to map the full genome
sequence of the koala. This work is crucial for the
long term survival of the species.
Across the three Elanor Wildlife Parks there are
50 endangered species of Australian animals
which are involved in active breeding programs,
some of which are not present in any other park
worldwide.
Driving energy
efficiency across the
Group’s Commercial
Office investments
Workzone West
202 Pier Street (WA)
7
Garema Court
140-180 City Walk (ACT)
Nexus Centre
Upper Mt. Gravatt (QLD)
34 Corporate Drive
Cannon Hill (QLD)
8
8
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 2021
Despite the on-going challenging
times, the year ended 30 June
2021 has been another successful
year for the Group, both financially
and strategically. Financially, the
Group achieved Core Earnings
of $15.15 million and funds under
management grew to $2.07 billion
(up 23% since 30 June 2020).
Strategically, the 23% growth in
funds under management and
the 38% growth in our funds
management income are very much
in line with our ongoing strategy
of growing our recurring income.
Also, the post balance-date sale of
a substantial interest in the Elanor
Luxury Hotel Fund (approved
unanimously by security holders at
the September 29th Extraordinary
General Meeting) from Elanor
Investors Group to the newly
launched $346 million Elanor Hotel
and Accommodation Fund, realises
a significant step in the execution
of Elanor’s capital-lite strategy.
This entails Elanor selling down
its larger co-investment holdings,
with the key objective of holding no
more than 15% in our listed and
unlisted REITs, and recycling the
released capital to support further
growth in FUM.
Results
The results for the 2021 Financial
Year reflect the continuing
growth and reliability of our funds
management platform. Core
Earnings for the period was $15.15
million, or 12.52 cents per stapled
security. Underpinning this result
is the strong performance of the
funds management business, with
revenues from funds management
being $29.69 million, which includes
an increase of 40.7% in recurring
funds management fees. Growing
recurring management fees is
a major focus of the business.
Elanor’s conservative gearing
of 21.0% as at 30 June 2021
combined with available capital for
growth provides the Group with
capacity to continue to grow our
funds under management.
Achievements
The primary achievement in the
2021 Financial Year is Elanor’s
continuing ability to grow funds
under management, reaching
$2.07 billion, a growth rate of 23%
over the year. This growth was
supported by the good performance
of the vast majority of our funds
over the period (despite challenging
conditions), with the value of assets
increasing in all sectors. The
establishment of new managed
funds across the Group’s retail,
commercial, healthcare and hotels,
tourism and leisure sectors was the
prime driver of the Group’s FUM
growth.
Further detail and commentary of
the 2021 Financial Year results and
specific achievements can be found
in the CEO’s Message that follows.
Market Conditions
The COVID-19 pandemic has, and
continues to present, challenging
operating and market conditions.
It is difficult to predict future
market conditions with the lifting of
COVID-19 related restrictions still
ahead of us. While the Group has
been impacted by the effects of the
COVID-19 pandemic, the solid and
resilient performance of our assets
and funds is encouraging.
Governance
The Board continues to strengthen
the Group’s corporate governance
structure and processes consistent
with Elanor’s strategic intent and
operating activities. The Group’s
Environmental, Social and
Governance (ESG) Management
Committee, chaired by the CEO,
and the further development of
the Group’s Risk Management
Framework and Work, Health
and Safety regimes combine to
enable Elanor to execute on its
sustainability and governance
objectives.
Acknowledgements
The management team, led by
CEO, Glenn Willis, have never
worked harder than the past
financial year, with nearly all
staff working longer hours in
these challenging times. This is
very much acknowledged and
appreciated.
The loyal support of securityholders
and investors in our funds is much
appreciated. Elanor’s management
team work hard for you and in
the 2021 Financial Year have
demonstrated an ability to solve the
many business issues presented by
the pandemic, while, as evidenced
by this year’s results, still growing
the business.
Elanor Investors Group | Annual Report 2021 9
9
9
Funds under
Management
As at 30 June 2021
$2.07bn
> 23%
Clifford Gardens Shopping Centre,
Toowoomba,QLD
Thank you to my colleagues on
the Board for your input at the
many meetings over the past
year. Lim Kin Song, representing
major shareholder Rockworth
Capital Partners, retired in the
2021 Financial Year. We wish
him well and thank him for his
input since joining the board
in 2019. Due to Lim Kin Song’s
retirement, we welcome
Lim Su Kiat, who was recently
(1 October 2021) appointed to
the board as Rockworth’s new
nomination.
I look forward to discussing the
business further at our Annual
General Meeting in Sydney on
22 November 2021.
Yours sincerely,
Paul Bedbrook
Chairman
10
10
CEO’s
Message
I am pleased to present Elanor Investors
Group’s Annual Report for the year
ended 30 June 2021
Over the year we made significant
progress toward our mission
for the Group: to grow Elanor
into a leading real estate funds
management group known for
delivering exceptional investment
returns and making positive and
impactful social and environmental
contributions to the communities
in which we operate, and more
broadly.
The management team has
achieved strong growth in our funds
management business over the
period despite the prevailing market
conditions impacting some of our
investment sectors of focus.
We are pleased with the 23%
growth in our Funds Under
Management from $1.69 billion
to $2.07 billion over the year
and the 38% growth in our funds
management income over the
period. We are particularly pleased
with the growth in recurring funds
management income, increasing
40.7% to $21.8 million as at
30 June 2021.
We are equally pleased with the
significant sustainability outcomes
the Group has achieved over the
year, including our partnership
with The Smith Family to support
disadvantaged youth, our Solar
Bay partnership initiatives, the
improvements in energy efficiency
across the Group’s commercial
office portfolio, the sustainable
procurement initiatives for our
hotels, and our significant species
preservation initiatives across the
Group’s Wildlife Parks.
The Group’s managed funds have
performed well over the period
notwithstanding challenging market
conditions in some of our sectors
of focus. Valuations in aggregate
across all comparable assets at
30 June 2021 have increased
by 5% or $70 million. A
significant number of funds
management initiatives were
successfully completed during
the year, including the successful
repositioning and divestment of the
Auburn Central shopping centre for
securityholders in the Elanor Retail
Property Fund (ERF). The delivery
of strong investment performance
during the year has maintained
Elanor’s exceptional investment
track record with an average
Internal Rate of Return (IRR) of
19% p.a. on realised investments.
We remain confident that our funds
management platform will continue
to deliver strong investment
performance for both Elanor
securityholders and the Group’s
capital partners.
Strategically, we executed on a
range of initiatives during the year
including our capital-led growth
objectives, with a significant
expansion in our wholesale private
investor base and institutional
capital partners. Our strengthened
capital origination and asset
management teams, combined
with the Group’s growth capital
and strong pipeline of funds
management opportunities, position
Elanor for further significant growth
in funds under management and
securityholder value.
In addition to our core sectors
of focus – retail real estate,
commercial real estate, healthcare
real estate and hotels, tourism and
leisure – we continue to investigate
other real estate sectors that
present high investment quality
funds management opportunities.
Furthermore, we continue to
evaluate strategic opportunities to
achieve our growth objectives.
Investment Approach
Whilst a key strategic objective
of the Group is to grow funds
under management, it is critical
that we deliver strong investment
returns for both the Group’s funds
management capital partners
and Elanor securityholders
in a sustainable and socially
positive manner. As such, we
evaluate acquisition opportunities
through both a value-for-risk and
sustainability lens. Furthermore,
our highly active approach to
asset management is central to
us delivering strong investment
performance.
The Group will continue to execute
on its key strategic objective of
growing funds under management
in an increasingly capital efficient
manner.
Key Results
• Core Earnings for the period
of $15.2 million, 11.27 cents
per security
• Distribution for the period
of 11.27 cents per security
(90% Payout ratio)
• Growth in Funds Under
Management of $0.4 billion to
approximately $2.1 billion
• Funds management income of
$29.7 million for the year, an
increase of 38.2%
• Recurring funds management
income increased 40.7% to
$21.8 million
Elanor Investors Group | Annual Report 2021 11
111111
Funds Management
Income
Recurring Funds
Management Income
$29.7m
> 38.2%
$21.8m
> 40.7%
• The valuations of the Group’s
comparable Managed Funds
asset portfolio at 30 June 2021
reflected an increase of 5%
($70 million) from 30 June 2020
• The acquisition of the Hunter
Valley Zoo in May 2021 for
the Elanor Wildlife Park Fund,
growing the Elanor Wildlife Park
Fund to over $60 million
• Net Tangible Assets per security
grew by 11% to $1.43, reflecting
growth in the value of the
underlying properties in ENN
Managed Funds
• Gearing of 21.0%, down from
• The establishment of the Riverside
Plaza Syndicate in September
2020 which acquired the
Riverside Plaza neighbourhood
shopping centre in Queanbeyan,
NSW for $60 million
29.7% at 30 June 2020
• Elanor Retail Property Fund
Funds Management
The Group completed the following
funds management initiatives
during the year:
• Establishment of the Clifford
Gardens Fund in June 2021
which acquired the Clifford
Gardens shopping centre in
Toowoomba QLD for
$145 million
• Establishment of the Burke
Street Fund in November 2020
which acquired the commercial
office and healthcare properties
at 2 Burke Street and 163
Ipswich Road, Woolloongabba
QLD for $80.2 million
• Three acquisitions by the Elanor
Healthcare Real Estate Fund,
growing the value of the fund’s
portfolio to approximately
$209 million:
— Woolloongabba Community
Health Centre in Brisbane,
QLD for $37.3 million in
October 2020
— 2 Civic Boulevard in
Rockingham, WA for $22.9
million in December 2020
— Broadway Medical Centre
in Ellenbrook, WA for
$12 million in May 2021
completed the sale of Auburn
Central in December 2020
for $129.5 million (3.0%
premium to book value),
following its transformation to
a triple-supermarket anchored,
metropolitan neighbourhood
shopping centre.
Subsequent to 30 June 2021,
Elanor completed the following
significant funds management
initiatives:
• On 2 August 2021, the Elanor
Commercial Property Fund
(ASX: ECF) acquired the
commercial office property
located at 50 Cavill Avenue,
Surfers Paradise, QLD for
$113.5 million, growing ECF’s
portfolio to 8 commercial office
assets valued at $498 million
• On 19 August 2021, the Group
announced the establishment
of the $346 million Elanor Hotel
Accommodation Fund (EHAF)
(through the acquisition of the
Elanor Luxury Hotel Fund and
the Albany Hotel Syndicate by
the Elanor Metro and Prime
Regional Hotel Fund), thereby
releasing $25 million of growth
capital for Elanor and generating
a $10.5 million gain on sale for
ENN in 1HFY22
• On 22 August 2021, the Elanor
Retail Property Fund (ASX:
ERF) successfully executed its
strategy to divest the Fund’s
Income Assets with the sale of
the Moranbah Fair property at
its book value of $28 million
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
$211 million as at 30 June 2021.
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.
Capital Management
The Group remains conservatively
geared at 21.0%, which primarily
reflects the $60 million of unsecured
5-year Corporate Notes.
The Group holds significant growth
capital, with cash and available
facilities of $38 million at 30 June
2021. Completion of the recently
announced EHAF transaction has
released $25 million, with a further
$58 million of growth capital to be
released as we sell down to a 15%
co-investment level in the Fund.
12
CEO’s Message
200 Adelaide St, Brisbane, QLD
Furthermore, we are actively
pursuing opportunities in new real
estate sectors and continue to
explore strategic opportunities to
deliver our growth objectives.
I wish to sincerely thank my fellow
executives across the Group, our
Seniors Advisors, and my fellow
Executive Management Committee
and Board members. The progress
we have achieved over the year is
a testimony to your commitment to
growing Elanor into a leading real
estate funds management group.
Yours sincerely,
Glenn Willis
Managing Director and
Chief Executive Officer
This capital, in conjunction with
available bank facilities, will be
used to fund the Group’s short to
medium term funds management
growth objectives. We estimate that
this available growth capital will
support the growth of the Group’s
funds under management to
approximately $4.5 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.
Impact of COVID-19
The COVID-19 pandemic has
created challenging trading
conditions for some of the Group’s
managed fund assets, particularly
in the hotels, tourism and leisure
and retail real estate sectors.
The Group was well positioned
for the challenges created by
the COVID-19 pandemic with a
portfolio of high investment quality
assets and a highly capable
funds management and asset
management team. The Group
continues to respond to these
challenging and uncertain market
conditions to minimise any potential
impacts on Elanor’s managed funds.
Our Approach to Sustainability
As a funds management business
we understand the importance of
managing environmental, social
and governance factors in how we
deliver value for our investors and
other stakeholders. We are acutely
aware of our responsibility to the
communities in which we operate
and to society more generally.
Making a positive impact for the
communities we rely on is implicit
in how we undertake our funds
management business. Our recent
partnership with The Smith Family
to support disadvantaged young
Australians with their education
needs is a significant social
investment for the Group – one
where we seek to make a major
impact over the coming years.
Outlook
The Group’s key strategic
objectives remains unchanged: To
grow our funds under management
in a sustainable and socially
positive way, to deliver strong
investment returns for our capital
partners and securityholders, and
to grow Elanor in a capital lite
manner.
Elanor is committed to the
investment philosophy of acquiring
assets that have strong and
differentiated market positions.
While market conditions in some
of our sectors of focus remain
challenging and uncertain, we have
a strong and mature pipeline of
funds management opportunities.
Elanor Investors Group | Annual Report 2021
1313
13
Financial
Report
for the year ended
30 June 2021
14 — Directors’ Report
43 — Auditor’s Independence Declaration
44 — Consolidated Statements of Profit or Loss
45 — Consolidated Statements of Comprehensive Income
46 — Consolidated Statements of Financial Position
48 — Consolidated Statements of Changes in Equity
50 — Consolidated Statements of Cash Flows
51 — Notes to the Consolidated Financial Statements
124 — Directors’ Declaration to Stapled Securityholders
125 — Independent Auditor’s Report
14
Directors’
Report
Directors’ Rep
ELANOR INVESTORS GROUP
ELANOR INVESTORS GROUP
DIRECTORS’ REPORT
DIRECTORS’ REPORT
Directors’ Rep
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
The Directors of Elanor Investors Limited (Company), and the Directors of Elanor Funds Management Limited
together with the consolidated financial report of Elanor Investors Group (Group, Consolidated Group or
(Responsible Entity or Manager), as responsible entity of the Elanor Investment Fund, present their report
Elanor) and the consolidated financial report of the Elanor Investment Fund (EIF Group) for the year ended 30
together with the consolidated financial report of Elanor Investors Group (Group, Consolidated Group or
June 2021 (period).
Elanor) and the consolidated financial report of the Elanor Investment Fund (EIF Group) for the year ended 30
June 2021 (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
The annual financial report of Elanor Investors Group comprises the Company and its controlled entities,
Group comprises Elanor Investment Fund 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.
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 Trust was registered as a managed investment scheme on 21 May 2014 and the Company was
incorporated on 1 May 2014.
The units of the Trust and the shares of the Company are combined and issued as stapled securities in the
Group. The Group's securities are traded on the Australian Securities Exchange (ASX: ENN). The units of the
The units of the Trust and the shares of the Company are combined and issued as stapled securities in the
Trust and shares of the Company cannot be traded separately and can only be traded as stapled securities.
Group. The Group's securities are traded on the Australian Securities Exchange (ASX: ENN). The units of the
Although there is no ownership interest between the Trust and the Company, the Company is deemed to be
Trust and shares of the Company cannot be traded separately and can only be traded as stapled securities.
the parent entity of the Group under Australian Accounting Standards.
Although there is no ownership interest between the Trust and the Company, the Company is deemed to be
the parent entity of the Group under Australian Accounting Standards.
The Directors' report is a combined Directors' report that covers both the Company and the Trust. The financial
information for the Group is taken from the consolidated financial reports and notes.
The Directors' report is a combined Directors' report that covers both the Company and the Trust. The financial
information for the Group is taken from the consolidated financial reports and notes.
1.
1.
The following persons have held office as Directors of the Responsible Entity and Company during the period
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:
and up to the date of this report:
Directors
Directors
• Paul Bedbrook (Chairman)
• Glenn Willis (Managing Director and Chief Executive Officer)
• Paul Bedbrook (Chairman)
• Nigel Ampherlaw
• Glenn Willis (Managing Director and Chief Executive Officer)
•
• Nigel Ampherlaw
• Anthony Fehon
•
• Anthony Fehon
Lim Kin Song (Resigned 25 January 2021)
Lim Kin Song (Resigned 25 January 2021)
Principal activities
Principal activities
2.
2.
The principal activities of the Group are the management of investment funds and syndicates and the
The principal activities of the Group are the management of investment funds and syndicates and the
investment in, and operation of, a portfolio of real estate assets and businesses.
investment in, and operation of, a portfolio of real estate assets and businesses.
3.
3.
Distributions relating to the year ended 30 June 2021 comprise:
Distributions relating to the year ended 30 June 2021 comprise:
Distributions
Distributions
The Final Distribution of 7.14 cents per stapled security brings distributions in respect of the year ended 30
June 2021 to 11.27 cents per stapled security.
The Final Distribution of 7.14 cents per stapled security brings distributions in respect of the year ended 30
June 2021 to 11.27 cents per stapled security.
3
3
Elanor Investors Group | Annual Report 2021
ELANOR INVESTORS GROUP
DIRECTORS’ REPORT
15
4.
Operating and financial review
OVERVIEW AND STRATEGY
The key strategic objective of Elanor is to invest in real estate assets that deliver strong returns for both Elanor's
funds management capital partners and Elanor’s securityholders.
Elanor’s investment focus is centred on acquiring and unlocking value in assets that provide strong income
and capital growth potential. Acquisition opportunities are evaluated through both a value for risk and
sustainability lens. Elanor's highly active approach to asset management is a critical driver to 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 sectors of focus are the commercial office, healthcare real estate, retail real estate
and accommodation hotels, tourism and leisure sectors.
During the year, Elanor increased its funds under management from $1,692.0 million to $2,073.2 million and
its co-investments and balance sheet investments from $203.2 million to $216.4 million. The growth in assets
under management has been supported by strong growth in capital sourced through institutional and wholesale
capital partners.
The significant funds management initiatives completed during the year included:
•
•
•
•
•
•
The establishment of the Riverside Plaza Syndicate in September 2020 which acquired the Riverside
Plaza neighbourhood shopping centre in Queanbeyan, NSW, for $60.0 million.
Three property acquisitions by the Elanor Healthcare Real Estate Fund, growing the value of the fund’s
portfolio to approximately $209 million:
o Woolloongabba Community Health Centre in Brisbane, QLD for $37.3 million in October 2020,
o 2 Civic Boulevard property in Rockingham, WA for $22.9 million in December 2020,
o Broadway Medical Centre in Ellenbrook, WA for $12.0 million in May 2021.
The establishment of the Burke Street Fund in November 2020 which acquired the commercial office
and healthcare properties in 2 Burke Street and 163 Ipswich Road, Woolloongabba QLD for $80.2
million.
The sale of Auburn Central from the Elanor Retail Property Fund (ASX: ERF) which completed in
December 2020 for $129.5 million (4.0% premium to book value), following its transformation into a
triple-supermarket anchored, metropolitan neighbourhood shopping centre.
The establishment of Clifford Gardens Fund in June 2021 which acquired the Clifford Gardens
shopping centre in Toowoomba QLD for $145.0 million.
The acquisition of the Hunter Valley Zoo in May 2021, for $9.0 million, into the Elanor Wildlife Park
Fund, growing the value of the fund’s portfolio to over $60 million.
Furthermore, subsequent to 30 June 2021, Elanor has completed the following significant funds management
initiatives:
• On 2 August 2021, the Elanor Commercial Property Fund (ASX: ECF) acquired the commercial office
property located at 50 Cavill Avenue, Gold Coast, QLD for $113.5 million, growing ECF’s portfolio to
8 high investment quality commercial property assets valued at $498 million.
• On 22 August 2021, the Elanor Retail Property Fund (ASX: ERF) successfully divested the Moranbah
Fair property at book value, for $28.0 million.
4
16
Directors' Report
ELANOR INVESTORS GROUP
DIRECTORS’ REPORT
4.
Operating and financial review (continued)
ENN’s strong investment track record (average realised IRR of 19%) continues to drive demand from
wholesale and institutional investors for the Group’s funds. Elanor has a high calibre and scalable funds
management platform with substantial capacity for growth. Further investment has been made in the platform
during the year. Elanor is well positioned to grow its funds management business.
MANAGED FUNDS AND INVESTMENT PORTFOLIO
The following tables show the Group's Managed Funds and investment portfolio:
Managed Funds
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4.
Operating and financial review (continued)
MANAGED FUNDS AND INVESTMENT PORTFOLIO (CONTINUED)
Investment Portfolio
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 property, plant and equipment and stated at fair value in the financial statements.
Note 2: Managed Fund co-investments are associates and accounted for using the equity method.
Note 3: The co-investments in Elanor Metro and Prime Regional Hotel Fund (EMPR), Elanor Luxury Hotel Fund (ELHF) and the Bluewater
Square Syndicate (Bluewater) have been consolidated in the financial statements. The amount shown assumes that the investments were
accounted for using the equity method.
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4.
Operating and financial review (continued)
MANAGED FUNDS AND INVESTMENT PORTFOLIO (CONTINUED)
Update on the Impact of COVID-19 on the Group’s Operations
The operating and financial conditions across the Australian economy continue to be impacted by the COVID-
19 pandemic. However, with ongoing government support packages and the improving management of
COVID-19 related health outcomes, it is apparent that the Australian economy is well placed for recovery.
Commercial Office
The performance of the Group’s commercial office managed funds continues to be strong. In particular, the
listed Elanor Commercial Property Fund (ASX: ECF) significantly exceeded PDS forecasts, with COVID-19
having a negligible impact to Funds from Operations (FFO) for the period.
The valuation of ECF’s portfolio of investment properties as at 30 June 2021 increased by 2.9% or $11.0 million
since 30 June 2020, reflecting the strength of the Fund’s high investment quality commercial office properties.
This increase in portfolio valuation was primarily driven by improved valuation assumptions relating to rental
growth, re-leasing downtime and incentives over the next twelve months. This valuation result also reflects the
strength of the Fund’s tenancy profile.
As noted earlier, the Group established the Burke Street Fund during the period, with investors continuing to
demand high investment quality commercial office real estate.
Healthcare Real Estate
The healthcare real estate assets in the Elanor Healthcare Real Estate Fund (EHREF) have continued to
perform strongly following establishment of the Fund in March 2020. The COVID-19 pandemic had a minimal
impact on the Fund’s earnings.
As noted earlier in this report, the Group added three additional properties to the EHREF portfolio during the
period, growing the Fund to over $200 million. The Fund continues to experience strong investor demand.
Retail Real Estate
The relaxation of government imposed restrictions on shopping centres nationally during the period, together
with easing of social distancing measures, facilitated improved levels of trading and customer visitation across
the Group’s shopping centre portfolio.
Any rental relief arrangements provided to tenants were consistent with the governments’ Code of Conduct,
with no material impact arising from new arrangements entered into with tenants. Debtor collections have been
strong across the Group’s non-discretionary focussed retail portfolio.
As noted earlier, the Group established the Riverside Plaza Syndicate and Clifford Gardens Fund during the
period. Investor demand for value-add neighbourhood retail real estate assets remains strong.
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4.
Operating and financial review (continued)
MANAGED FUNDS AND INVESTMENT PORTFOLIO (CONTINUED)
Hotels, Tourism and Leisure
The accommodation hotels sector and the broader tourism and leisure industry continues to experience
challenging trading conditions as a result of the COVID-19 pandemic. During the year, international borders
remain closed, and most interstate borders were closed at various times during the year.
The Elanor Luxury Hotel Fund’s (ELHF) hotels, Cradle Mountain Lodge and Mayfair Hotel, were affected by
the closure of interstate borders. As interstate borders reopened during the year, occupancy at these hotels
improved as tourism activity recovered. The Group’s hotels are benefitting from the operating efficiencies
implemented during the COVID period.
Domestic intrastate tourism increased during the period due substantially to international borders remaining
closed. The Elanor Metro and Prime Regional Hotel Fund’s (EMPR) regional hotel portfolio benefited from the
increased intrastate tourism, experiencing strong trading during the year.
The Group’s hotel portfolio experienced a valuation uplift 8.2% or $26.1 million from its value at 30 June 2020,
increasing from $320.0 million to $346.1 million. This reflects the strength of the Group’s hotel portfolio and
the recovery of the markets where the Group’s properties operate.
Elanor Wildlife Park Fund
The Mogo Wildlife Park experienced strong trading in the period, benefiting from increased domestic tourism
in the NSW South Coast region. Featherdale Wildlife Park continues to be impacted by the closure of
international borders, where historically international travellers constituted a substantial proportion of its
visitors. Following recent NSW Government restrictions, Featherdale Wildlife Park has remained closed since
July 2021.
Summary
The trading results and outlook for the Group’s Managed Funds and underlying assets improved during the
year. Notwithstanding uncertainty regarding the short term economic impacts of the evolving COVID-19
pandemic, the Group remains well positioned for strong growth as market conditions recover. While the Group
has a portfolio of high investment quality assets and highly capable funds management and asset management
teams, prolonged border closures and shutdowns will impact negatively on the operating results of the Group.
REVIEW OF FINANCIAL AND OPERATING RESULTS
The Consolidated Group recorded a statutory profit after tax from continuing operations of $7.8 million for the
year ended 30 June 2021.
At the balance date, Elanor held a 42.94% interest in the Elanor Metro and Prime Regional Hotel Fund (EMPR),
a 100% interest in the Elanor Luxury Hotel Fund (ELHF) and a 42.27% interest in the Bluewater Square
Syndicate (Bluewater). For accounting purposes, Elanor is deemed to have a controlling interest in EMPR,
ELHF and Bluewater given its level of ownership and role as manager of the funds. This means that the
financial results and financial position of EMPR, ELHF and Bluewater are consolidated into the financial
statements of the Group for the year ended 30 June 2021.
All other managed fund co-investments are accounted for using the equity method in the Group’s consolidated
financial statements.
Presenting the summary consolidated financial results of the Group on the basis that EMPR, ELHF and
Bluewater are accounted for using the equity method is important because Elanor considers that this gives the
most appropriate presentation consistent with management and reporting of the Group, and to provide a
comparable basis to the presentation of the results for prior periods.
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4.
Operating and financial review (continued)
REVIEW OF FINANCIAL AND OPERATIONAL RESULTS (CONTINUED)
Revenue from ordinary activities for the Consolidated Group for the year ended 30 June 2021 was $82.6
million, an increase of 24.3% compared to the prior year, reflecting strong growth in the Group’s funds
management income and improved trading activities at the Group’s hotels.
As a result of the growth in the Group’s Funds Under Management the Group continues to grow recurring
funds management income. The Group generated $29.7 million of fund management income during the period
(an increase of 38.2%) and had funds under management of $2,073.2 million at 30 June 2021 (an increase of
23% from 30 June 2020).
The Group’s balance sheet as at 30 June 2021 reflects Net Assets of $244.0 million and cash on hand of $20.8
million.
Statutory net profit for the year ended 30 June 2021 increased to $7.8 million, an increase of $31.2 million
compared to the prior year. This reflected the significant improvement in revenue, improved share of profit
from equity accounted investments and fair value gains on the revaluation of assets and investment properties.
Core or Distributable Earnings for the period was $15.1 million or 12.52 cents per stapled security. Core
Earnings represents an estimate of the underlying recurring cash earnings of the Group. Core Earnings is used
by the Board to make strategic decisions and as a guide to assessing appropriate distribution declarations.
A summary of the Group and EIF Group's results for the period is set out below:
The table below provides a reconciliation from the Group’s statutory net profit / (loss) after tax to the adjusted
net profit / (loss) after tax, presented on the basis that EMPR, ELHF and Bluewater are equity accounted.
Elanor considers that presenting the operating performance of the Group on this adjusted basis gives the most
appropriate presentation of the Group consistent with management and reporting of the Group, and to provide
a comparable basis to the presentation of prior period results. The results provided on this basis are presented
as the ‘ENN Group’.
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4.
Operating and financial review (continued)
REVIEW OF FINANCIAL RESULTS (CONTINUED)
Adjusted Statement of Profit or Loss
Set out below is a build up by component of the adjusted net profit / (loss) after tax, presented on the basis
that EMPR, ELHF and Bluewater are equity accounted.
Funds Management Income
The table below provides a breakdown of the Group’s funds management income.
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4.
Operating and financial review (continued)
REVIEW OF FINANCIAL RESULTS (CONTINUED)
Funds Management Income (continued)
As at 30 June 2021, the Group’s annualised recurring funds management fees and cost recoveries was $18.7
million, an increase of 20.8% from 30 June 2020.
The Group’s leasing and development management fees continue to grow, with a strong pipeline of scheduled
development and repositioning projects across the Group’s Managed Funds.
Acquisition fees for the period of $6.1 million (2020: $4.2 million) were generated from new funds management
initiatives during the period as discussed earlier in this report.
Distributions from Co-Investments
The Group measures the performance of its co-investments based on distributions received / receivable from
these co-investments, rather than the share of equity accounted profit / (loss) from these co-investments. This
is consistent with the treatment within Core Earnings.
The table below provides a breakdown of the Group’s distributions received and/or receivable from its
Managed Funds for the year ended 30 June 2021.
Total co-investment distributions received or receivable during the year amounted to $11.1 million, compared
to $5.8 million received or receivable during the FY20.
The FY21 distribution received/receivable from Elanor Retail Property Fund included an amount of $2.8 million
relating to the special distribution of 12 cents per security declared by the Fund in relation to capital gains
realised on the sale of the Auburn Central asset.
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4.
Operating and financial review (continued)
REVIEW OF OPERATIONAL RESULTS (CONTINUED)
The table below provides a reconciliation from adjusted net 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 on group level for the period, being net profit / (loss) after tax, adjusting for one-off realised items (being
formation or other transaction costs that occur infrequently or are outside the course of ongoing business activities), non-cash items (being
fair value movements, depreciation charges on the buildings held by the Trust, amortisation of intangibles, straight lining of rental expense,
and amortisation of equity settled STI and LTI amounts), and restating share of profit from equity accounted investments to reflect
distributions received / receivable in respect of those investments.
Note 2: Share of profit from equity accounted investments includes depreciation and amortisation and fair value adjustments on investment
property that were added back in the determination of distributable earnings for those managed funds. The Group’s share of those
adjustments to distributable earnings in the relevant managed funds have been added back for the purposes of calculating Core Earnings
so that the Group’s Core Earnings reflects the distribution received / receivable by the Group from those investments in Elanor managed
funds.
Note 3: Net (gain) / loss on disposals of equity accounted investments includes adjustments for realised non-cash accounting (gains) /
losses on the sale of equity accounted investments during the period, so as to only include net cash profit for the purposes of calculating
Core Earnings.
Note 4: During the period, the Group (on the basis that EMPR, ELHF and Bluewater are equity accounted) incurred total depreciation
charges of $1.4 million, however only the depreciation expense on buildings of $0.03 million has been added back for the purposes of
calculating Core Earnings.
Note 5: During the period, the Group incurred non-cash profit and loss charges in respect of the amortisation of certain amounts including
the equity 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.
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4.
Operating and financial review (continued)
REVIEW OF OPERATIONAL RESULTS (CONTINUED)
Summary and Outlook
Our mission is to grow Elanor into a leading real estate funds management group known not only for delivering
exceptional investment returns but also for making positive and impactful social and environmental
contributions to the communities in which we operate, and more broadly.
The Group's key strategic objective remains unchanged: to deliver strong investment returns for Elanor’s
capital partners and security holders, and grow funds under management. The Group will look to grow income
from managed funds, recycle co-investment capital to facilitate future growth in funds under management in a
‘capital-lite’ manner, and seed new managed funds with Group owned investments.
Risks to the Group in the coming year primarily comprise the potential earnings variability associated with
general economic and market conditions including inbound tourism (including the impact of recent global
viruses – refer to commentary earlier in the Directors’ Report), 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, climate related 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'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 acquisition of high investment quality
assets based on the Group’s investment philosophy and criteria. The Group has a strong pipeline of 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
objectives.
5.
Interests in the Group
The movement in stapled securities of the Group during the period is set out below:
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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 and ECF) 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: 306,137
Qualifications: B.Sc, F FIN, FAICD
Glenn Willis
Managing Director and Chief Executive Officer
Glenn has over 30 years' experience in the Australian and international
capital markets. Glenn was the co-founder and Chief Executive Officer of
Moss Capital, prior to its ASX listing as Elanor Investors Group in July
2014. Prior to Elanor, 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 acquired by Lehman
Brothers International in 2007 as the platform for Lehman's Australian
investment banking and funds management operations. Glenn was
appointed Managing Director and Country Head in March 2007. In 2008,
Glenn was appointed executive Vice Chairman of Lehman Brothers
Australia.
Glenn is a Director of FSHD Global Research Foundation.
Former listed directorships in the last three years: None
Interest in stapled securities: 5,351,996
Qualifications: B.Bus (Econ & Fin)
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6.
Directors (continued)
Name
Nigel Ampherlaw
Particulars
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 and ECF) 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: 200,000
Qualifications: B.Com, FCA, MAICD
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 and ECF) in May
2019. Kin Song is the CEO of Rockworth Capital Partners (which holds a
15% 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, RICS
Resigned: 25 January 2021
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6.
Directors (continued)
Name
Anthony (Tony)
Fehon
Particulars
Independent Non-Executive Director
Tony was appointed as a Director of both the Company and the
Responsible Entity (also the Responsible Entity of ERF and ECF) in
August 2019. Tony has more than 30 years’ experience working in senior
roles with some of Australia’s leading financial services and funds
management businesses. He has broad experience in operational and
leadership roles across many industries.
Tony is an Executive Director of Volt Bank Limited and has primary
responsibility for capital management. He is also director of enLighten
Australia Pty Limited, Global Bioprotect Pty Limited, Maker Films and
Team Mates Pty Limited. Previously Tony was an Executive Director of
Macquarie Bank Limited where he was involved in the formation and
listing of several of Macquarie’s listed property trusts including being a
director of the listed leisure trust.
Tony continues to be involved in developing and completing investment
structures for real estate investment and development, financial assets
and leisure assets.
Former listed directorships in the last three years: None
Interest in stapled securities: 6,666
Qualifications: B. Com, FCA
7.
Directors’ relevant interests
Note 1: Glenn Willis has an entitlement to an additional 5,000,000 securities under equity based executive incentive plans.
Note 2: Lim Kin Song resigned as director on 25 January 2021.
Other than as disclosed in the Annual Financial Report, no contracts exist where a director is entitled to a
benefit.
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8.
Meetings of Directors
The attendance at meetings of Directors of the Responsible Entity and the Company during the year is set out
in the following table:
9. Remuneration Report (Audited)
The remuneration report for the year ended 30 June 2021 outlines the remuneration arrangements, philosophy
and framework of the Elanor Investors Group (Group) in accordance with the requirements of the Corporations
Act 2001 (Cth) and its regulations.
The remuneration report is set out under the following main headings:
a)
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 required by section 308 (3C) of the
Corporations Act 2001 (Cth).
a)
Remuneration Policy and Approach
The Elanor Investors Group aims to attract, retain and motivate highly skilled people and therefore ensures its
remuneration is competitive with prevailing employment market conditions and also provides sufficient
motivation by ensuring that remuneration is aligned to the Group’s results.
The Group’s remuneration framework seeks to align executive reward with the achievement of strategic
objectives and in particular, the creation of sustainable value and earnings growth for investors. In addition,
the Board seeks to have reference to market best practice to ensure that executive remuneration remains
competitive, fair and reasonable.
The Group has a formally constituted Remuneration and Nomination Committee which comprises three Non-
Executive Director (NED) members, Mr Anthony Fehon (Chair), Mr Nigel Ampherlaw and Mr Paul Bedbrook.
The Remuneration and Nomination Committee met 6 times during the year for the purposes of reviewing and
making recommendations to the Elanor Investors Group Board on the level of remuneration of the senior
executives and the Directors.
Specifically, the Board approves the remuneration arrangements of the Managing Director and other
executives and all aggregate and individual awards made under the short term (STI) and long-term incentive
(LTI) plans, following recommendations from the Remuneration and Nomination Committee. The Board also
sets the aggregate remuneration of NED's, which is then subject to security holder approval.
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9.
Remuneration Report (Audited) (continued)
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 2021 were:
Executive
Mr Glenn Willis
Mr Paul Siviour
Mr Symon Simmons
Non-Executive
Mr Paul Bedbrook
Mr Nigel Ampherlaw
Mr Anthony Fehon
Mr Lim Kin Song
Position
Managing Director and Chief Executive Officer
Chief Operating Officer
Chief Financial Officer and Company Secretary
Position
Independent Chairman and Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Non-Executive Director (Resigned 25 January 2021)
c)
Executive Remuneration Arrangements
The Group's executive remuneration framework has three components:
• Base pay, including superannuation;
• Short term incentives; and
Long term incentives.
•
Remuneration levels are considered annually through an assessment of each executive based on the
individual's performance and achievements during the financial year and taking into account the overall
performance of the Elanor Investors Group and prevailing remuneration rates of executives in similar positions.
Remuneration Structure
-
Base pay, including superannuation
Base pay is determined by reference to appropriate benchmark information, taking into account an individual's
responsibilities, performance, qualifications and experience. There are no guaranteed base pay increases in
any executive's contracts.
-
Short term incentive
The Group has implemented an STI scheme (the STI Scheme), based on an annual profit share, which is
available to all staff. The STI Scheme is based on a profit share pool, to be calculated each year based on the
Group's financial performance for the relevant year.
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9.
c)
Remuneration Report (Audited) (continued)
Executive Remuneration Arrangements (continued)
The purpose of the STI Scheme is to provide an annual bonus arrangement that incentivises and rewards
management for achieving annual pre-tax ROE for security holders in excess of 10% per annum. The profit
share pool is based on 20% of ROE above 10%, 22.5% of the ROE above 15%, 25% of the ROE above 17.5%
and 30% of the ROE above 20%. The STI Scheme provides that 50% of any awards to individuals from the
profit share pool 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, 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.
During the year, the Board reviewed the Group’s LTIP and determined that the Loan Securities and Executive
Options remained the most appropriate equity award vehicles for the 2020 LTIP awards, encouraging a
continued focus on security price growth, distributions and strong alignment of executives to Securityholders.
On 28 August 2020, the Board assessed the performance hurdles for the 2017 Loan Securities and Executive
Options and noted that the three-year TSR hurdle for the Executive Options and Loan Securities had not been
met. As a result, the 2017 Loan Securities were cancelled on the basis the TSR performance hurdle was not
achievable by the end of the vesting period.
The Remuneration and Nomination Committee retained a leading professional services firm to undertake a
review of a proposed 2020 LTI Plan to consider the proposed design and quantum of the grant, with reference
to market practice and Elanor’s stated LTI Plan and business objectives. The Remuneration and Nomination
Committee resolved to recommend the Board approve the Plan. No remuneration recommendations as
defined under Division 1, Part 1.2.98(1) of the Corporations Act 2001, were made by the professional services
firm.
To ensure executives remain motivated to achieve security price growth on behalf of Securityholders, the
Board has determined to make new 2020 LTIP awards, utilising the surrendered 2017 award securities in
addition to new Loan Securities, to ensure that the new LTIP awards will not be outstanding at the same time
as the 2017 Loan Securities and Executive Options.
On 28 August 2020, following the surrender of the 2017 LTI Award securities by the 2017 LTI Plan participants,
the Board approved the issue of 2020 LTI Awards, under similar terms and conditions to the 2017 LTI Awards.
A total of 17 million 2020 LTI Awards were approved and issued.
On 28 August 2020 the Board approved the issue of 2 million options under the Group’s option plan to Glenn
Willis. These options have an exercise price of $1.65, being a 43% premium to the issue price. The issue of
options and 2020 LTI Awards to Glenn Willis was approved by security holders on 21 October 2020, at the
Group’s Annual General Meeting (AGM).
Under the executive loan security plan, awards (comprising the loan of funds to eligible Elanor employees to
acquire Securities which are subject to vesting conditions) have been issued to certain employees. Awards
totalling 17.0 million Securities were on issue at 30 June 2021.
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.
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9.
c)
Remuneration Report (Audited) (continued)
Executive Remuneration Arrangements (continued)
In addition to the loan security plan, the Group has implemented an executive option plan comprising rights to
acquire Securities at a specified exercise price, subject to the achievement of vesting conditions, which may
be offered to certain eligible employees (including the Chief Executive Officer, direct reports to the Chief
Executive Officer and other selected key executives) as determined by the Board. Options have been issued
to the Chief Executive Officer only, over 2.0 million Securities.
The purpose of the LTI Scheme is to assist in attracting, motivating and retaining key management and
employees. The LTI Scheme operates by providing key management and employees with the opportunity to
participate in the future performance of Group securities. The vesting conditions 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% per
annum for the first year and 8% per annum thereafter in the case of the loan security plan and 15% per annum
in the case of the options plan. The 2020 loan security plan reflects loan amounts of $1.15 per security ($1.37
per security for the Chief Executive Officer’s securities). The 2020 option plan has an exercise price of $1.65
per security (43% premium to the $1.15 offer price).
TSR was selected as the LTI performance measure to ensure an alignment between the security holder return
and reward for executives.
d)
Executive Remuneration Outcomes
The table below sets out summary information about the Group's earnings and movements in security holder
wealth for the year ended 30 June 2021:
The financial performance measure driving STI payment outcomes is pre-tax return on equity (ROE). The
required pre-tax return hurdle was not achieved for the financial year. Reported earnings before tax from
continuing operations for the year were $9.5 million or $7.8 million after tax. This reflects a basic earnings per
security of 6.73 cents based on average equity employed for the period.
For the year ended 30 June 2021 the Group achieved Core Earnings of $15.1 million. Total distributions per
security in respect of the period were 11.27 cents.
The Group’s closing trading price on 30 June 2021 was $1.89 per security, a 68.8% increase on the $1.12
price at 1 July 2020.
On 25 June 2021, the Board confirmed the vesting and removal of trading restrictions over the 2019 STI award
securities, with effect on 27 June 2021.
20
32
Directors' Report
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v
Elanor Investors Group | Annual Report 2021
33
ELANOR INVESTORS GROUP
ELANOR INVESTORS GROUP
DIRECTORS’ REPORT
DIRECTORS’ REPORT
9.
9.
Remuneration Report (Audited) (continued)
Remuneration Report (Audited) (continued)
d)
d)
Executive Remuneration Outcomes (continued)
Executive Remuneration Outcomes (continued)
Table 2: Remuneration components as a proportion of total remuneration on an annualised basis
Table 2: Remuneration components as a proportion of total remuneration on an annualised basis
Executive Officers
G. Willis
P. Siviour
S. Simmons
Fixed remuneration
(%)
Remuneration linked
to performance (%)
2021
2020
2021
2020
2021
2020
44.56
51.61
59.47
58.67
60.80
59.45
55.44
48.39
40.53
41.33
39.20
40.55
Total
(%)
100
100
100
100
100
100
No key management personnel appointed during the period received a payment as part of his or her
No key management personnel appointed during the period received a payment as part of his or her
consideration for agreeing to hold the position.
consideration for agreeing to hold the position.
Remuneration and other terms of employment for the key management personnel are formalised in
Remuneration and other terms of employment for the key management personnel are formalised in
employment contracts. The key provisions of the employment contracts for key management personal are set
employment contracts. The key provisions of the employment contracts for key management personal are set
out below.
out below.
The Remuneration and Nomination Committee undertook a review of executive remuneration in June 2021,
The Remuneration and Nomination Committee undertook a review of executive remuneration in June 2021,
including retaining a leading professional services firm to consider market remuneration practices, and
including retaining a leading professional services firm to consider market remuneration practices, and
resolved to increase the remuneration to the amounts shown in the tables below, with effect from 1 July 2021.
resolved to increase the remuneration to the amounts shown in the tables below, with effect from 1 July 2021.
Table 3: Employment contracts of key management personnel
Table 3: Employment contracts of key management personnel
Executive
Executive
G. Willis
G. Willis
P. Siviour
P. Siviour
S. Simmons
S. Simmons
Position
Position
Managing Director and
Managing Director and
Chief Executive Officer
Chief Executive Officer
Chief Operating Officer
Chief Operating Officer
Chief Financial Officer
Chief Financial Officer
and Company Secretary
and Company Secretary
Term
Term
No fixed term
No fixed term
No fixed term
No fixed term
No fixed term
No fixed term
Salary
Salary
Superannuation)
Superannuation)
(including
(including
Incentive
Incentive
remuneration
remuneration
$693,000
$693,000
$565,031
$565,031
$551,250
$551,250
Eligible for an award of
Eligible for an award of
short term and long-
short term and long-
term incentive
term incentive
remuneration (if any)
remuneration (if any)
as described above
as described above
Eligible for an award of
Eligible for an award of
short term and long-term
short term and long-term
incentive remuneration
incentive remuneration
(if any) as described
(if any) as described
above
above
Eligible for an award of
Eligible for an award of
short term and long-term
short term and long-term
incentive remuneration
incentive remuneration
(if any) as described
(if any) as described
above
above
22
22
34
Directors' Report
ELANOR INVESTORS GROUP
DIRECTORS’ REPORT
9.
d)
Remuneration Report (Audited) (continued)
Executive Remuneration Outcomes (continued)
Benefits
Entitled to participate in
Elanor Investors Group
benefit plans that are
made available
Entitled to participate in
Elanor Investors Group
benefit plans that are
made available
Entitled to participate in
Elanor Investors Group
benefit plans that are
made available
Notice period
shall
Employment
continue with
the
Group unless either
party gives 12 months’
notice in writing
shall
Employment
continue with the Group
unless either party gives
9 months’ notice
in
writing
shall
Employment
continue with the Group
unless either party gives
4 weeks’ notice in writing
Restraint
12 months from the
time of Termination
N/A
N/A
e)
Non-Executive Director Remuneration Arrangements and Outcomes
The Elanor Board determines the remuneration structure for NED's based on recommendations from the
Remuneration and Nomination Committee. The NED's individual fees are annually reviewed by the
Remuneration and Nomination Committee taking into consideration the level of fees paid to NED's by
companies of similar size and stature. The Remuneration and Nomination Committee undertook a review of
the remuneration of NEDs in June 2021, including retaining a leading professional services firm to consider
market remuneration practices, and resolved to change the amount of fees paid to increase by approximately
14% effective 1 July 2021. The maximum aggregate amount of fees that can be paid to NEDs is subject to
approval by security holders at the Annual General Meeting (currently $750,000, as approved by security
holders in October 2019).
The NEDs receive a fixed remuneration amount, in respect of their services provided to the Responsible Entity
and Elanor Investors Limited. They do not receive any performance-based remuneration or any retirement
benefits other than statutory superannuation.
Table 4: Remuneration of Non-Executive Directors
1In response to the COVID-19 pandemic, the NEDs agreed to a 20% salary reduction for the 3 months ended 30 June 2020.
2Mr Lim Kin Song resigned as director on 25 January 2021.
23
Elanor Investors Group | Annual Report 2021 35
ELANOR INVESTORS GROUP
DIRECTORS’ REPORT
9.
Remuneration Report (Audited) (continued)
e)
Non-Executive Director Remuneration Arrangements and Outcomes (continued)
During the year no options were issued to the NEDs.
The following options were issued to the NEDs under the FY17 Fee Sacrifice Offer, approved by security
holder on 10 November 2016.
The fair value at grant date of each Option was $0.04. The NED option vesting period ended on 30 June 2017.
The options issued under the FY17 Fee Sacrifice Offer have an exercise price of $3.08 per security (43%
premium to the $2.15 offer price). The NED options were available to be exercised until 10 November 2020
and have since expired.
Remuneration and other items of appointment of the NEDs are formalised in contracts.
The NEDs are employed on employment contracts with no fixed term. The NEDs employment is subject to the
Constitution of the Group, the Corporations Act, and the 3 year cycle of the rotation and election of Directors
24
36
Directors' Report
ELANOR INVESTORS GROUP
DIRECTORS’ REPORT
9.
Remuneration Report (Audited) (continued)
f)
and Securities
Additional Disclosures Relating to Short Term incentive plans, Long Term Incentive Plans
Details of Short Term Incentive Plan payments granted or vested as deferred securities compensation to Key
Management Personnel during the current financial year:
The fair value of the Short Term incentive plans is determined based on 5 day VWAP prior to grant date.
Details of Long Term Incentive Plan payments granted or vested as Loan Security compensation to Key
Management Personnel during the current financial year:
The Loan Security plan has been accounted for as 'in-substance' options. The fair value at grant date of each
Loan Security was $0.12 ($0.19 for each of the Chief Executive Officer’s Loan Securities).
25
Elanor Investors Group | Annual Report 2021
37
ELANOR INVESTORS GROUP
DIRECTORS’ REPORT
9.
Remuneration Report (Audited) (continued)
f)
and Securities
Additional Disclosures Relating to Short Term incentive plans, Long Term Incentive Plans
Details of Long Term Incentive Plan payments granted or vested as Option compensation to key management
personnel during the current financial year:
The fair value at grant date of each Option was $0.07. The vesting date of the option is 31 July 2023 and the
expiry date of the options is 28 August 2024.
The following table summarises the value of options granted during the financial year, in relation to options
granted to Key Management Personnel as part of the remuneration:
1 The value of options granted during the financial year is calculated as at the grant date using a Monte Carlo Simulation. This grant date
value is allocated to remuneration of key management personnel on a straight-line basis over the period from grant date to vesting date.
2 The value of options exercised during the financial year is calculated as at the exercise date using a Monte Carlo Simulation. No options
were exercised in the period to 30 June 2021.
Key Management Personnel equity holdings
Changes to the interests of Key Management Personnel in the Group's Securities are set out below:
Elanor Investors Group – Stapled Securities
1The number of stapled securities acquired during the year includes issues of securities under the Group’s short term and long term
incentive schemes, and securities acquired on market.
26
38
Directors' Report
ELANOR INVESTORS GROUP
DIRECTORS’ REPORT
9.
Remuneration Report (Audited) (continued)
f)
Additional Disclosures Relating to Long Term Incentive Plans and Securities (continued)
Key Management Personnel equity holdings (continued)
Options over Elanor Investors Group – Stapled Securities
All options issued to Key Management Personnel were made in accordance with the provisions of the
employee share option plan.
All options issued to NEDs were made under the FY17 Fee Sacrifice offer have expired and not been
exercised.
g)
Loans to Key Management Personnel
No loans have been provided to Key Management Personnel of the Group during the year.
h)
Other Transactions and Balances with Key Management Personnel and their Related Parties
There were no transactions with Key Management Personnel and their Related Parties during the financial
year that are not otherwise referred to in the consolidated financial statements.
27
Elanor Investors Group | Annual Report 2021
39
ELANOR INVESTORS GROUP
DIRECTORS’ REPORT
10. Company Secretary
Symon Simmons held the position of Company Secretary of the Responsible Entity during the period. Symon
is the Chief Financial Officer of the Group, and holds a Bachelor of Economics with majors in Economics and
Accounting, and has extensive experience as a company secretary, is a Justice of the Peace in NSW and is
a Responsible Manager on the Australian Financial Services Licence held by the Responsible Entity.
11.
Indemnification and insurance of officers and auditors
During the financial year, the Group paid a premium in respect of a contract insuring the Directors of the Group
(as named above), the company secretary, and all executive officers of the Company and of any related body
corporate against a liability incurred in their capacity as Directors and officers of the Company to the extent
permitted by the Corporations Act 2001 (Cth). The contract of insurance prohibits disclosure of the nature of
the liability and the amount of the premium.
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted
by law, indemnified or agreed to indemnify an officer of the Company or of any related body corporate against
a liability incurred in their capacity as an officer.
The auditor of the Group is not indemnified out of the assets of the Group.
12. Environmental regulation
To the best of their knowledge and belief after making due enquiry, the Directors have determined that the
Group has complied with all significant environmental regulations applicable to its operations in the jurisdictions
in which it operates.
13. Significant changes in state of affairs
Other than as described in this report, there was no significant change in the state of affairs of the Group during
the year.
14. Auditor's independence declaration
A copy of the auditor's independence declaration, as required under section 307C of the Corporations Act
2001 (Cth), is included on the page following the Directors' Report.
28
40
Directors' Report
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.
The Group will continue to monitor the potential impact of Government announcements and market conditions
in relation to the COVID-19 pandemic on the Group and its Managed Funds.
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 2021 and fees paid to and
expenses reimbursed by its related entities during the financial year are disclosed in Note 24 to the
consolidated financial statements.
29
Elanor Investors Group | Annual Report 2021
41
ELANOR INVESTORS GROUP
DIRECTORS’ REPORT
18. Going concern
The Directors have determined that it is appropriate to prepare the consolidated financial statements on a
going concern basis which contemplates the continuity of normal business activities and the realisation of
assets and liabilities in the ordinary course of business.
As at 30 June 2021, the Consolidated Group and EIF Group have a net current asset deficiency of $57.9
million and $52.4 million respectively (30 June 2020: $36.8 million and $46.8 million respectively). The net
current asset deficiency is attributable to a debt facility of $59.1 million maturing on 31 October 2021, a debt
facility of $6.0 million expiring on 30 April 2022, and a current payable of $8.6 million in relation to the
Group’s Final Distribution. The $59.1 million facility relates to Elanor Metro and Prime Regional Hotel Fund
(EMPR), one of the Group’s Hotels, Tourism and Leisure Managed Funds (consolidated into the Group’s
financial statements) with the debt in that fund only having recourse to the secured assets of EMPR at 30
June 2021. Subsequent to balance date, the Group has executed a credit approved term sheet for the
maturity extension of this facility to 30 September 2022. The $6.0 million facility relates to the Group’s
revolver facility. Subsequent to balance date, the Group has extended the maturity of this facility to 31 August
2022.
Due to the Government mandated lock downs and restrictions in relation to the COVID-19 pandemic, trading
activity across the Group’s two consolidated Hotels, Tourism and Leisure Managed Funds, EMPR and Elanor
Luxury Hotel Fund (ELHF), (together the Funds) has been impacted to a level that, in the absence of the
corrective actions set out below, the Group expects will require financial covenant support from the financiers
of these facilities. These debt facilities are directly secured with recourse only to the hotel assets within
EMPR and ELHF, with a combined value of $340.6 million as at 30 June 2021.
A restructuring of the Funds to create a new merged fund, Elanor Hotel Accommodation Fund (EHAF), was
approved at a meeting of ENN Securityholders held on 29 September 2021. As part of this restructuring, the
Group has obtained credit approved terms from financiers with respect to EHAF’s debt facility arrangements
which include terms and covenants that the Group expects EHAF will be in a position to meet from inception
and over the next 12 months.
Accordingly, as of the date of this report, the Directors believe the Group will be able to successfully meet its
covenant obligations and restructure its facilities to ensure the Group’s ability to realise its assets and
discharge its liabilities in the ordinary course of business.
19. Events occurring after reporting date
Subsequent to period end, a distribution of 7.14 cents per stapled security has been declared by the Board of
Directors. The total distribution amount of $8.6 million was paid on 3 September 2021 in respect of the year
ended 30 June 2021.
On 18 August 2021, the Board of Directors approved a new funds management initiative by Elanor Funds
Management Limited as trustee for the Elanor Metro and Prime Regional Hotel Fund (EMPR), being the
acquisition by EMPR of part of the Elanor Luxury Hotel Fund (ELHF) and all of the Albany Hotel Syndicate
(AHS), to establish a single investment vehicle being the $346 million Elanor Hotel Accommodation Fund
(EHAF).
To complete the EHAF transaction, EMPR is undertaking a pro-rata entitlement offer to existing EMPR fund
investors and a capital raising from new wholesale and sophisticated investors to the extent of any shortfall in
the entitlement offer.
ELHF and AHS are currently 100% owned by Elanor. The effect of the EHAF transaction is the partial sell
down of ELHF and the sale of all of the AHS from Elanor’s balance sheet investment portfolio to EHAF. This
has been a clearly articulated strategy of Elanor since establishment of ELHF in November 2019.
30
42
Directors' Report
ELANOR INVESTORS GROUP
DIRECTORS’ REPORT
19. Events occurring after reporting date (continued)
On 29 September 2021, Elanor Securityholders voted in favour of a resolution to approve the EHAF transaction
and thereby facilitate the sell-down of Elanor’s investment in these funds. This transaction is a further step in
the execution of Elanor’s stated capital lite strategy and will provide capital growth for Elanor and the
opportunity to undertake capital management initiatives.
On 17 September 2021, the Group announced the appointment of Mr Su Kiat Lim as a Non- Executive
Directors of Elanor Investors Group, Elanor Retail Property Fund and Elanor Commercial Property Fund,
effective 1 October 2021.
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 2021.
20. Rounding of amounts to the nearest thousand dollars
In accordance with Legislative Instrument 2016/191 issued by the Australian Securities and Investments
Commission relating to the rounding off of amounts in the financial statements, amounts in the financial
statements have been rounded to the nearest thousand dollars in accordance with that Legislative Instrument,
unless otherwise indicated.
This report is made in accordance with a resolution of the Boards of Directors of Elanor Funds Management
Limited and Elanor Investors Limited.
Signed in accordance with a resolution of the Directors pursuant to section 298(2) of the Corporations Act
2001 (Cth).
Paul Bedbrook
Chairman
Glenn Willis
CEO and Managing Director
Sydney, 29 September 2021
31
Elanor Investors Group | Annual Report 2021
43
Auditor’s Independence Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Elanor Investors Limited and Elanor Investment Fund for the year
ended 30 June 2021, I declare that to the best of my knowledge and belief, there have been:
As lead auditor for the audit of Elanor Investors Limited and Elanor Investment Fund for the year
ended 30 June 2021, I declare that to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
relation to the audit; and
This declaration is in respect of Elanor Investors Limited and the entities it controlled during the
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
period.
This declaration is in respect of Elanor Investors Limited and the entities it controlled during the
period.
Bianca Buckman
Partner
Bianca Buckman
PricewaterhouseCoopers
Partner
PricewaterhouseCoopers
Sydney
29 September 2021
Sydney
29 September 2021
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
Liability limited by a scheme approved under Professional Standards Legislation.
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
44
ELANOR INVESTORS GROUP
Consolidated Statements of
Profit or Loss
For the year ended 30 June 2021
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
FOR THE YEAR ENDED 30 JUNE 2021
• Consolidated Statements of
The above Consolidated Statements of Profit or Loss should be read in conjunction with the accompanying notes
The above Consolidated Statements of Profit or Loss should be read in conjunction with the accompanying notes.
33
Elanor Investors Group | Annual Report 2021
ELANOR INVESTORS GROUP
Consolidated Statements of
Comprehensive Income
For the year ended 30 June 2021
Consolidated Statements of Comprehensive Income
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
45
The above Consolidated Statements of Comprehensive Income should be read in conjunction with the accompanying notes
The above Consolidated Statements of Comprehensive Income should be read in conjunction with the accompanying notes.
34
46
Consolidated Statements of
ELANOR INVESTORS GROUP
Financial Position
As at 30 June 2021
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT 30 JUNE 2021
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.
35
Elanor Investors Group | Annual Report 2021
Consolidated Statements of
ELANOR INVESTORS GROUP
Financial Position
As at 30 June 2021
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT 30 JUNE 2021
47
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.
36
48
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Elanor Investors Group | Annual Report 2021
49
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50
ELANOR INVESTORS GROUP
Consolidated Statements of
Cash Flows
For the year ended 30 June 2021
Consolidated Statements
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
The above Consolidated Statements of Cash Flows should be read in conjunction with the accompanying notes
The above Consolidated Statements of Cash Flows should be read in conjunction with the accompanying notes.
39
Elanor Investors Group | Annual Report 2021
51
ELANOR INVESTORS GROUP
Notes to the Consolidated
Financial Statements
For the year ended 30 June 2021
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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 ASIC Corporations Instrument 2015/838 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).
Statement of compliance
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.
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.
Compliance with international reporting standards
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.
Comparative figures have been restated where appropriate to ensure consistency of presentation throughout
the financial report.
Changes in accounting policy
New and amended standards adopted by the Group
There are no standards, interpretations or amendments to existing standards that are effective for the first time
for the financial year beginning 1 July 2020 that have a material impact on the amounts recognised in prior
periods or will affect the current or future periods.
New standards, amendments and interpretations effective after 1 July 2021 and have not been early adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods
beginning after 1 July 2021, and have not been adopted early in preparing these financial statements. None
of these are expected to have a material effect on the financial statements of the Group.
Rounding
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.
40
52
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
About this Report (continued)
Going concern
The Directors have determined that it is appropriate to prepare the consolidated financial statements on a
going concern basis which contemplates the continuity of normal business activities and the realisation of
assets and liabilities in the ordinary course of business.
As at 30 June 2021, the Consolidated Group and EIF Group have a net current asset deficiency of $57.9
million and $52.4 million respectively (30 June 2020: $36.8 million and $46.8 million respectively). The net
current asset deficiency is attributable to a debt facility of $59.1 million maturing on 31 October 2021, a debt
facility of $6.0 million expiring on 30 April 2022, and a current payable of $8.6 million in relation to the Group’s
Final Distribution. The $59.1 million facility relates to Elanor Metro Prime Regional Hotel Fund (EMPR), one of
the Group’s Hotels, Tourism and Leisure Managed Funds (consolidated into the Group’s financial statements)
with the debt in that fund only having recourse to the secured assets of EMPR at 30 June 2021. Subsequent
to balance date, the Group has executed a credit approved term sheet for the maturity extension of this facility
to 30 September 2022. The $6.0 million facility relates to the Group’s revolver facility. Subsequent to balance
date, the Group has extended the maturity of this facility to 31 August 2022.
Due to the Government mandated lock downs and restrictions in relation to the COVID-19 pandemic, trading
activity across the Group’s two consolidated Hotels, Tourism and Leisure Managed Funds, EMPR and Elanor
Luxury Hotel Fund (ELHF), (together the Funds) has been impacted to a level that, in the absence of the
corrective actions set out below, the Group expects will require financial covenant support from the financiers
of these facilities. These debt facilities are directly secured with recourse only to the hotel assets within EMPR
and ELHF, with a combined value of $340.6 million as at 30 June 2021.
A restructuring of the Funds to create a new merged fund, Elanor Hotel Accommodation Fund (EHAF), was
approved at a meeting of ENN Securityholders held on 29 September 2021. As part of this restructuring, the
Group has obtained credit approved terms from financiers with respect to EHAF’s debt facility arrangements
which include terms and covenants that the Group expects EHAF will be in a position to meet from inception
and over the next 12 months.
Accordingly, as of the date of this report, the Directors believe the Group will be able to successfully meet its
covenant obligations and restructure its facilities to ensure the Group’s ability to realise its assets and
discharge its liabilities in the ordinary course of business.
Critical accounting judgments and key sources of estimation uncertainty
The preparation of financial statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amount of assets, liabilities,
income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.
In preparing the consolidated financial statements for the year ended 30 June 2021, significant areas of
estimation, uncertainty and critical judgements in applying accounting policies that have the most significant
effect on the amount recognised in the financial statements are consistent with those disclosed in the financial
report of the previous financial year.
Where the impact of the COVID-19 pandemic has heightened uncertainty in applying these accounting
estimates and critical judgments for the year ended 30 June 2021, enhanced disclosures have been
incorporated throughout the consolidated financial statements to enable users to understand the basis for the
estimates and judgments utilised.
The ongoing COVID-19 pandemic has resulted in continued elevated levels of uncertainty in the preparation
of the financial statements.
41
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021Elanor Investors Group | Annual Report 2021
53
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
About this Report (continued)
Critical accounting judgments and key sources of estimation uncertainty (continued)
In response to the recent market volatility, the appropriateness of the inputs to the valuation of the Group’s
property, plant and equipment (including average daily rate assumptions and occupancy levels) and
investment properties (including vacancy allowances, lease renewal probabilities, levels of leasing incentives
and market rent growth assumptions), and the impact of any changes in these inputs have been considered
in detail in both independent and internal property valuations (including relevant sensitivity analysis) with
respect to the fair value hierarchies. The fair value assessments as at the balance date include the best
estimate of the impacts of the COVID-19 pandemic using information available at the time of preparation of
the financial statements and includes forward looking assumptions. In the event the COVID-19 pandemic
impacts are more severe or prolonged than anticipated, this may impact the fair value of the Group’s portfolio.
Refer to Note 7 and 8 for further information.
The recoverability of the Group’s receivables from Elanor’s Managed Funds applied the simplified approach
to provide for expected credit losses. Refer to Note 16 Financial Risk Management for further discussion on
the Group’s management of credit risk.
Enhanced disclosures have been incorporated throughout the consolidated financial statements to enable
users to understand the basis for the estimates and judgments utilised. The estimates or assumptions which
are material to the financial statements are discussed in the following notes:
• Deferred taxes - assumptions underlying recognition and recoverability - Note 5c
• Property, Plant and Equipment - assumptions underlying fair value - Note 7
•
• Derivative financial instruments - assumptions underlying fair value – Note 11
Investment Properties - assumptions underlying fair value - Note 8
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 2021. 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 2021.
42
54
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Basis of Consolidation (continued)
Control of Elanor Metro and Prime Regional Hotel Fund (EMPR), Elanor Luxury Hotel Fund
(ELHF), and Bluewater Square Syndicate (Bluewater)
EMPR
EMPR comprises stapled securities in Elanor Metro and Prime Regional Hotel Fund, EMPR Management Pty
Limited, Elanor Metro and Prime Regional Hotel Fund II (formerly known as Elanor Hospitality and
Accommodation Fund) and EMPR II Management Pty Limited (formerly known as EHAF Management Pty
Limited). The Group holds 42.94% (2020: 42.63%) of the equity in EMPR. The Group's ownership interest in
EMPR gives the Group the same percentage of the voting rights in EMPR. EMPR is an unregistered trust for
which Elanor Funds Management Limited acts as the Manager of the asset and Trustee of the trust.
ELHF
ELHF comprises stapled securities in Elanor Luxury Hotel Fund and Elanor Luxury Hotel Fund Pty Limited.
The Group holds 100% (2020: 100%) of the equity in ELHF. The Group's 100% ownership interest in ELHF
gives the Group the same percentage of the voting rights in ELHF. ELHF is an unregistered trust for which
Elanor Funds Management Limited acts as the Manager of the asset and Trustee of the trust.
Bluewater
The Group holds 42.27% (2020: 42.27%) of the equity in Bluewater Square Syndicate (Bluewater). The
Group's 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.
The responsible entity of EMPR, ELHF, and Bluewater 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 EMPR, ELHF, and Bluewater 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 EMPR, ELHF, and Bluewater and
the Group’s ability to direct the relevant activities of these entities based on the powers of the Trustee, 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.
43
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021Elanor Investors Group | Annual Report 2021
55
The notes to the consolidated Financial Statements have been organised into the following sections:
RESULTS ................................................................................................................................................................ 56
1. Segment information .......................................................................................................................................56
2. Revenue ...........................................................................................................................................................58
3. Distributions .....................................................................................................................................................60
4. Earnings / (losses) per stapled security ...........................................................................................................60
5.
Income tax .......................................................................................................................................................62
6. Cash flow information ......................................................................................................................................65
OPERATING ASSETS ........................................................................................................................................... 67
7. Property, plant and equipment ........................................................................................................................67
Investment properties ......................................................................................................................................74
8.
Equity accounted investments ........................................................................................................................77
9.
FINANCE AND CAPITAL STRUCTURE .............................................................................................................. 83
10. Interest bearing liabilities .................................................................................................................................83
11. Derivative financial instruments .......................................................................................................................86
12. Other financial assets ......................................................................................................................................88
13. Contributed equity ...........................................................................................................................................89
14. Reserves ..........................................................................................................................................................90
15. Financial risk management ..............................................................................................................................91
GROUP STRUCTURE ........................................................................................................................................... 97
16. Parent entity .....................................................................................................................................................97
17. Subsidiaries and controlled entities .................................................................................................................98
OTHER INFORMATION ...................................................................................................................................... 100
18. Receivables....................................................................................................................................................100
19. Payables and other liabilities .........................................................................................................................100
20. Intangible assets ............................................................................................................................................102
21. Government Grants – JobKeeper ..................................................................................................................103
22. Commitments ................................................................................................................................................103
23. Share-based payment ...................................................................................................................................104
24. Related parties ...............................................................................................................................................107
25. Significant events...........................................................................................................................................109
26. Other accounting policies ..............................................................................................................................110
27. Events occurring after reporting date ............................................................................................................110
28. Auditor’s remuneration ...................................................................................................................................111
29. Non-parent disclosure ...................................................................................................................................111
56
Results
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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.
The main income statement items used by management to assess each of the divisions are divisional revenue
and divisional EBITDA.
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
2021, the Funds Management division has approximately $2,073.2 million of external investments under
management, being the managed investments.
Hotels, Tourism and Leisure
Hotels, Tourism and Leisure originates and manages investment and funds management assets. The current
investment portfolio includes Ibis Styles Albany Hotel and 1834 Hospitality, along with a co-investment in
Elanor Metro and Prime Regional Fund (EMPR), Elanor Luxury Hotel Fund (ELHF) and Elanor Wildlife Park
Fund (EWPF). EMPR and ELHF are consolidated in the Financial Statements.
Retail
Retail originates and manages investment and funds management assets in the retail real estate sector. The
current investment portfolio comprises co-investments in Elanor Retail Property Fund (ASX: ERF), Bluewater
Square Syndicate, Hunters Plaza Syndicate, Waverley Gardens Fund and Belconnen Markets Syndicate. The
Bluewater Square Syndicate is consolidated in the Financial Statements.
Commercial Office
Commercial Office originates and manages investment and funds management assets in the commercial office
real estate sector. The current investment portfolio comprises co-investments in the Elanor Commercial
Property Fund (ASX: ECF) and the Stirling Street Syndicate.
Healthcare
Healthcare originates and manages investment and funds management assets in the healthcare office real
estate sector. The Healthcare segment was established in March 2020 through the establishment in the Elanor
Healthcare Real Estate Fund. The healthcare segment was included as part of the Commercial Office segment
in the FY20 consolidated financial statements.
45
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021Elanor Investors Group | Annual Report 2021
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
57
1.
Segment information (continued)
The table below shows the Groups segment results:
Consolidated Group – 30 June 2021
Consolidated Group – 30 June 2020
46
58
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
2.
Revenue
OVERVIEW
This note provides a breakdown of revenue from operating activities by activity type.
Revenue from operating activities
ACCOUNTING POLICY
Revenue recognition
The Group recognises revenue in each period for each of Elanor’s activities is based on the delivery of
performance obligations and when control has been transferred to customers in accordance with the set out
in AASB 15 Revenue from Contracts with Customers as described below.
Funds management fee revenue
Fund management fees
Fund management fees are received for performance obligations fulfilled over time with revenue recognised
accordingly. Fund management fees are determined in accordance with relevant agreements for each fund,
based on the fund’s monthly Gross Asset Value (GAV). Generally, invoicing of funds for management fees
occurs on a monthly basis and are receivable within 21 days.
Performance fees
Performance fee revenue is recognised to the extent that it is highly probable that the amount of variable
consideration recognised will not be significantly reversed when the uncertainty is resolved. Detailed
calculations are completed to inform the assessment of the appropriate revenue to recognise. Invoicing of
funds for performance fees occurs in accordance with the contractual performance fee payment date.
Cost recoveries
Accounting, marketing and administrative services provided to managed funds are charged as an expense
recovery. Revenue is recognised over time as the performance obligations are fulfilled. Invoicing of funds for
expense recoveries occurs on a monthly or quarterly basis depending on the recovery type and are receivable
within 21 days.
Asset management fees
Asset management services provided to managed funds are charged as an asset management fee. Revenue
is recognised over time as the performance obligations are fulfilled. Invoicing of funds for asset management
fees occurs on a monthly basis and are receivable within 21 days.
48
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021Elanor Investors Group | Annual Report 2021
59
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
2.
Revenue (continued)
ACCOUNTING POLICY (continued)
Leasing and development management fees
Leasing and development management services provided to managed funds are charged as leasing and
development management fees. Revenue is recognised over time as the performance obligations are fulfilled.
Invoicing of funds for leasing and development management fees occurs on a monthly basis and are receivable
within 21 days.
Acquisition fees
Acquisition fee revenue is recognised at a point in time of the fulfilment of the performance obligation in
accordance with the constitutions of the managed funds. Invoicing of funds for acquisition fees occurs in
accordance with the contractual acquisition fee payment date.
Hotel and wildlife park revenue
The revenue of operations from the hotels primarily consists of room rentals, food and beverages sales and
other ancillary goods and services from hotel properties. Room revenue is recognised over time when rooms
are occupied, and food and beverage revenue is recognised at a point in time when goods and services have
been delivered or rendered.
The revenue of operations from the wildlife parks primarily consists of the sale of tickets, food and beverage
sales and other ancillary goods and services from the wild parks. Ticket revenue is recognised at a point in
time when tickets are sold to the customers and food and beverage revenue is recognised at a point in time
when goods and services have been delivered or rendered.
Rental income
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.
When an agreement is made with tenants impacted by the COVID-19 pandemic to waive rent, any rent waived
that relates to future occupancy is spread over the remaining lease term and recognised on a straight-line
basis. Rent waived that relates to past occupancy is expensed immediately in Other Expenses, except to the
extent of a pre-existing provision for expected credit losses then the rent waived is expenses to the provision.
Rental deferrals as part of COVID-19 rent concessions subsequently waived in consideration for extension of
the lease term will be treated as Lease modification on straight-line basis over the new lease term.
49
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
3.
Distributions
OVERVIEW
When determining distributions, the Group’s Board considers a number of factors, including forecast earnings
and expected economic conditions. Elanor Investors Group aims to distribute 90% of Core Earning. Core
Earnings are reflecting the Director’s view of underlying earnings from ongoing operating activities for the
period.
The following distributions were declared by the ENN Group either during the period or post balance date:
ENN Group
1. The interim distribution of 4.13 cents per stapled security was declared on 31 December 2020 and paid on 5 March 2021.
2. The final distribution of 7.14 cents per stapled security was declared after 30 June 2021, but is recognised in the accounts at balance
date. The final distribution was paid on 3 September 2021.
ACCOUNTING POLICY
Distributions are recognised as a liability when declared or at the record date (if earlier). Distributions paid and
payable are recognised as distributions within equity. Distributions paid are included in cash flows from
financing activities in the consolidated statement of cash flows.
A review was performed on the accounting policy for the recognition of distributions in the current year. In prior
periods, a distribution was recognised when declared. It is deemed appropriate, given the track record of the
Group paying a distribution, to record a liability at balance date as the record date has passed and it is probable
the distribution in respect of the year ended 30 June 2021 will be paid (even if not yet declared at balance
date). This policy change has been applied retrospectively, resulting in a restatement in the opening retained
earnings balance as at 1 July 2019 in the Consolidated Statement of Changes in Equity.
4.
Earnings per stapled security
OVERVIEW
This note provides information about Elanor Investor Group’s earnings on a per security basis. Earnings per
security (EPS) is a measure that makes it easier for users of Elanor’s financial report to compare Elanor’s
performance between different reporting periods. Accounting standards require the disclosure of two EPS
measures, basic EPS and diluted EPS. EPS 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 EPS
information provides the same information but takes into account the effect of all potential dilutive, ordinary
securities outstanding during the period, such as Elanor’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.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
61
4.
Earnings / (losses) per stapled security (continued)
The earning / (losses) per stapled security measure shown below is based upon the profit / (loss)
attributable to security holders:
The weighted average number of stapled securities and options granted used as the denominator in calculating basic and diluted earnings
/ (losses) per stapled securities shown above is based on the number of stapled securities on issue and options outstanding during the
period. The comparative period basic and diluted earnings per stapled security has been adjusted by an immaterial amount as a result of
a change in the calculation of the weighted average number of stapled securities used.
The earnings / (losses) per stapled security measures shown below are based upon the profit / (loss)
attributable to security holders of the ENN Group:
The weighted average number of stapled securities and options granted used as the denominator in calculating basic and diluted earnings/
(losses) per stapled securities shown above is based on the number of stapled securities on issue and options granted during the period.
The comparative period basic and diluted earnings per stapled security has been adjusted by an immaterial amount as a result of a change
in the calculation of the weighted average number of stapled securities used.
ACCOUNTING 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 adjusted
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.
51
62
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
5.
Income tax
OVERVIEW
This note provides detailed information about the Group’s income tax items including a reconciliation of income
tax expense if Australia’s company income tax rate of 30% was applied to the Group’s (loss) / profit before
income tax as shown in the income statement to the actual income tax expense / benefit.
(a) Income Tax Expense
(b) Reconciliation of income tax expense to prima facie tax expense
ACCOUNTING POLICY
Accounting standards require the application of the “balance sheet method” to account for Elanor’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 “balance sheet method”.
The Trust is not subject to Australian income tax provided their taxable income is fully distributed to the
unitholders each year.
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63
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
5.
Income tax (continued)
Income tax expense comprises current and deferred tax and is recognised in the statement of profit or loss
and other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the reporting date and any adjustment to tax payable in respect of previous years.
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.
EMPR II Management Pty Limited and its wholly-owned Australian resident entities are part of a tax-
consolidated group, formed on 21 March 2016, and are therefore taxed as a single entity, with any deferred
tax assets and liabilities of these entities set off in the consolidated financial statements. The head entity within
the tax-consolidated group is EMPR II Management Pty Limited.
EMPR Management Pty Limited and its wholly-owned Australian resident entities are part of a tax-consolidated
group, formed on 6 November 2017, 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 EMPR Management Pty Limited.
Elanor Luxury Hotel Fund Pty Limited and its wholly-owned Australian resident entities are part of a tax-
consolidated group, formed on 2 December 2019, 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 Luxury Hotel Fund Pty Limited.
(c)
Deferred taxes
OVERVIEW
Management judgement is required in reviewing the recoverability of deferred tax assets carried by the Group,
which involves estimates of key assumptions including cash flow projection, growth rates and discount rates.
53
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
5.
Income tax (continued)
The current tax asset and deferred tax asset balances has been restated in the Consolidated Statement of
Financial Position, as deferred tax assets recognised in relation to carried forward losses were incorrectly
classified as current tax assets. The impact of the restatement on the balance sheet at 1 July 2019 and 30
June 2020 has been detailed in the table below.
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Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021Elanor Investors Group | Annual Report 2021
65
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
5.
Income tax (continued)
ACCOUNTING POLICY
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes. The following differences are not provided for: initial recognition of goodwill; the initial recognition of
assets or liabilities that affect neither accounting nor taxable profit; and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred
tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets
and liabilities within the tax groups, using tax rates enacted or substantively enacted at the reporting date.
6.
Cash flow information
OVERVIEW
This note provides further information on the consolidated cash flow statements of the Group. It reconciles
(loss) / profit for the year to cash flows from operating activities, reconciles liabilities arising from financing
activities and provides information about non-cash transactions.
(a)
Reconciliation of profit after income tax to net cash flows from operating activities
55
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
6.
Cash flow information (continued)
(b)
Reconciliation of liabilities arising from financing activities
(c)
Net debt reconciliation
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Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021Elanor Investors Group | Annual Report 2021
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
67
Operating Assets
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.
7.
Property, plant and equipment
OVERVIEW
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. At balance date, the Group’s owner-occupied investment property portfolio comprised
14 accommodation hotels in Australia. All 14 accommodation hotels independent have been independently
valued as at 30 June 2021.
(a)
Carrying value and movement in property, plant and equipment (including right-of-use asset)
The carrying amount of property, plant and equipment (including the right-of-use asset) at the beginning and
end of the current period is set out below:
57
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
7.
Property, plant and equipment (continued)
A reconciliation of the carrying amount of property, plant and equipment (including the right-of-use asset) at
the beginning and end of the 30 June 2020 year is set out below:
(b)
Carrying value of property, plant and equipment
The following table represents the total fair value of property, plant and equipment at 30 June 2021:
As at 30 June 2021, the Directors assessed the fair value of the properties above, supported by independent
valuation reports.
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Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021Elanor Investors Group | Annual Report 2021
69
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
7.
Property, plant and equipment (continued)
Had the Consolidated Group’s property, plant and equipment been measured on a historical cost less
accumulated depreciation basis, their carrying amount would have been as follows:
(c)
Leases / right of use assets
This note provides information for leases where the group is a lessee.
Amounts recognised in the balance sheet
The balance sheet shows the following amounts relating to leases:
During the year the Group has renewed the office space lease, which resulted in the recognition of a new lease
liability and right of use asset.
59
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
7.
Property, plant and equipment (continued)
Amounts recognised in the statement of profit or loss
The statement of profit or loss shows the following amounts relating to leases:
The total cash outflow for leases during the year ended 30 June 2021 was $0.8 million (2020: $0.9 million).
ACCOUNTING POLICY
Fair value of Property, Plant and Equipment
Land and Buildings are carried at fair value with changes in fair value recognised in other comprehensive
income in the statement of comprehensive income. Fair value is defined as the price at which an asset or
liability could be exchanged in an arm's length transaction between knowledgeable, willing parties, other than
in a forced or liquidation sale.
In reaching estimates of fair value, management judgement 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.
Land and Buildings
All owner-occupied properties in the Hotel, 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 knowledgeable, willing parties in an arm's length transaction.
Revaluation increases arising from changes in the fair value of land and buildings are recognised in other
comprehensive income and accumulated within equity, except to the extent that it reverses a revaluation
decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to
profit or loss to the extent of the decrease previously expensed. A decrease in the carrying amount arising on
the revaluation of such land and buildings is recognised in profit or loss to the extent that it exceeds the
balance, if any, held in the properties revaluation reserve relating to a previous revaluation of that asset.
Furniture, fittings and equipment
Furniture, fittings and equipment are stated at cost less accumulated depreciation.
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Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021Elanor Investors Group | Annual Report 2021
71
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
7.
Property, plant and equipment (continued)
Right-of-use assets
The Group recognises right-of-use assets at commencement of a lease which is considered to be the date at
which the underlying asset is available for use. The initial measurement of right-of-use asset includes the
amount of lease liabilities recognised, initial direct cost incurred, lease payments made at or before the
commencement date, less any lease incentives received.
Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses
and is adjusted for any remeasurement of lease liabilities. The right-of-use assets are depreciated on a
straight-line basis over the shorter of its estimated useful life and the lease term unless the Group is reasonably
certain that they will obtain ownership of the asset at the end of the lease term.
Depreciation
Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate
their cost or revalued amounts, net of their residual values, over their estimated useful lives or, in the case of
leasehold improvements and certain leased plant and equipment, the shorter lease term as follows:
Buildings
Plant and equipment:
• Vehicles
• Furniture, fittings and equipment
40 years
8 years
3 - 10 years
(c)
Valuation technique and inputs
The key inputs used to measure fair values of property, plant and equipment are disclosed below along with
the fair value sensitivity to an increase or decrease of these key inputs.
The property assets fair values presented are based on market values, which are derived using the
capitalisation and the discounted cash flow methods. The Group's preferred or primary method is the
capitalisation method.
Property Assets
The aim of the valuation process is to ensure that assets are held at fair value and the Group is compliant with
applicable Australian Accounting Standards, regulations, and the Trust’s Constitution and Compliance Plan.
All properties are required to be internally valued every six months with the exception of those independently
valued 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 market evidence and recent external
valuation parameters are used to produce a capitalisation-based valuation and a discounted cash flow
valuation. Both valuations are considered to determine the final valuation
The internal valuations are reviewed by the Fund Manager, Chief Operating Officer and Chief Financial Officer
who recommends each property's valuation to the Audit, Risk & Compliance Committee. The Audit and Risk
Committee recommends the property valuations to the Board in accordance with the Group's Property
Valuation Policy.
61
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
7.
Property, plant and equipment (continued)
(c)
Valuation technique and inputs (continued)
Property Assets (continued)
The Group's valuation policy requires that each property in the portfolio is valued by an independent valuer at
least every three years. In practice, properties may be valued more frequently than every three years primarily
where there may have been a material movement in the market and where there is a significant variation
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 property assets valued.
Independent valuers of the Group’s properties have included a statement within their valuation reports noting
that in their view, significant valuation uncertainty exists in the current market environment. The significant
uncertainty declaration is to serve as a precaution and does not invalidate the valuation. Rather, the statement
is to ensure transparency of the fact that in the current extraordinary market circumstances as a result of the
COVID-19 pandemic, less certainty can be attached to the valuations and continued periodic assessment
should be performed subsequent to the date of the valuation assessment. The Group will manage this
increased uncertainty through active management of the investment portfolio.
Internal valuations use the Group’s best estimate of the economic and financial impacts of the COVID-19
pandemic using information available, at the time of preparation of the consolidated financial statements, in
respect of existing conditions at reporting date and in relation to forward looking assumptions. In the event the
COVID-19 pandemic impacts are more severe or prolonged than anticipated, this may have a further adverse
impact on the fair value of the Group’s property, plant and equipment portfolio.
Capitalisation method
Capitalisation rate is an approximation of the ratio between the net operating income produced by a property
asset 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 subject to vacant possession (in the case of hotel properties).
Discounted cash flows (DCF)
Under the DCF method, a property's fair value is estimated using explicit assumptions regarding the benefits
and liabilities of ownership over the asset's life including an exit or terminal value. The DCF method involves
the projection of a series of cash flows on a real property interest. To this projected cash flow series, an
appropriate discount rate is applied to establish the present value of the income stream associated with the
property. The discount rate is the rate of return used to convert a monetary sum, payable or receivable in the
future, into present value. The rate is determined with regard to market 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.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
7.
Property, plant and equipment (continued)
(c)
Valuation technique and inputs (continued)
Assets measured at fair value
The significant unobservable inputs associated with the valuation of the Group's property, plant and equipment
are as follows:
Sensitivity Information
The key unobservable inputs to measure the fair value of property, plant and equipment are disclosed below
along with sensitivity to a significant increase or decrease set out in the following table:
Sensitivity Analysis
When calculating the capitalisation method, 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.
63
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
7.
Property, plant and equipment (continued)
Sensitivity Analysis (continued)
The average daily rate and occupancy percentage assumptions drive the forecast hotel revenue for the
accommodation hotel assets. The average daily rate reflects the average rate for a room sold over a period of
time, while the occupancy percentage reflects the number of rooms occupied by guests over a period of time.
An increase in these assumptions will increase the forecast hotel revenue and valuation of the hotels, whilst a
decrease in these assumptions will have the opposite effect on forecast hotel revenue and valuations.
8.
Investment properties
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 2021.
As at 30 June 2021, the Directors assessed the fair value of the investment property above, supported by an
independent external valuation report. The investment property is categorised as level 3 in the fair value
hierarchy. There were no transfers between hierarchies during the period.
The external valuation was completed with reference to both a discounted cash flow and capitalisation
valuation methods. The property valuations were completed using detailed forecasts prepared by the Group’s
asset management team. Key valuation assumptions including capitalisation rates, terminal yields and
discount rates were determined based on comparable market evidence and valuation parameters determined
in external valuations completed for comparable properties.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
75
8.
Investment properties (continued)
The value of Bluewater Square increased by 9% from $50.9 million as at 30 June 2021 to $55.5 million as at
30 June 2021. This increase is mainly attributable to the success of the asset management team’s focus on
leasing activity at the property. The strong leasing performance in the year has supported the investment
metrics used in the independent valuation performed for Bluewater Square at 22 April 2021, which has been
held and adopted as the valuation at 30 June 2021.
The independent valuation used the Group’s best estimate of the economic and financial impacts of the
COVID-19 pandemic using information available, at the time of preparation of the consolidated financial
statements, in respect of existing conditions at reporting date and in relation to forward looking assumptions.
In the event the COVID-19 pandemic impacts are more severe or prolonged than anticipated, this may have a
further adverse impact on the fair value of the Bluewater Square asset.
ACCOUNTING POLICY
Fair value of Investment Properties
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. In reaching estimates of fair value, management judgment needs to be exercised.
At each reporting date, the carrying values of the investment properties are assessed by the Directors 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 asset. Any gain or loss arising on
de-recognition of the property (calculated as the difference between the net disposal proceeds and the carrying
amount of the asset) is included in profit or loss in the period in which the property is derecognised.
Fair value measurement
The fair value measurement for investment properties has been categorised as Level 3 fair value based on
the key inputs to the valuation techniques used below:
Valuation Techniques
Discounted cash flows – involves the projection of a series of inflows
and outflows to which a market-derived discount rate is applied to
establish an indication of the present value of the income stream
associated with the property.
Capitalisation method – involves determining the net market income of
the investment property. This net market income is then capitalised at
the adopted capitalisation rate to derive a core value.
Significant unobservable
inputs
30 June
2021
30 June
2020
Adopted discount rate
7.25%
7.25%
Adopted terminal yield
6.50%
7.25%
Net property income (per sqm)
$336
$368
Adopted capitalisation rate
6.25%
7.00%
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
8.
Investment properties (continued)
Valuation technique
Capitalisation method
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 and comparable sales.
Discounted cash flows (DCF)
Under the DCF method, a property's fair value is estimated using explicit assumptions regarding the benefits
and liabilities of ownership over the asset's life including an exit or terminal value. The DCF method involves
the projection of a series of cash flows on a real property interest. The cash flow projections reflect tenants
currently in occupation or are contracted to meet lease commitments or are likely to be in occupation based
on market’s general perception and relevant available market evidence. To this projected cash flow series, an
appropriate discount rate is applied to establish the present value of the income stream associated with the
property. The discount rate is the rate of return used to convert a monetary sum, payable or receivable in the
future, into present value. The rate is determined with regard to market evidence and prior independent
valuation.
Sensitivity information
The key 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:
Sensitivity Analysis
When calculating the 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.
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77
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
8.
Investment properties (continued)
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.
9.
Equity accounted investments
OVERVIEW
This note provides an overview and detailed financial information of the Group’s investments that are
accounted for using the equity method of accounting.
The Group’s equity accounted investments are as follows:
30 June 2021
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
9.
Equity accounted investments (continued)
30 June 2020
The carrying amount of equity accounted investments at the beginning and end of the current period is set
out below:
Details of Material Associates
Summarised financial information in respect of each of the Group's material associates is set out below.
Materiality is assessed on the investments’ 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, adjusted by the Group for equity accounting purposes.
The following information represents the aggregated financial position and financial performance of the Elanor
Retail Property Fund, Elanor Commercial Property Fund and the Waverley Gardens Fund. This summarised
financial information represents amounts shown in the associate's financial statements prepared in accordance
with AASBs, adjusted by the Group for equity accounting purposes.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
9.
Equity accounted investments (continued)
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:
¹ Other movements are primarily due to the Funds issuing new units to external investors at a price above or below the underlying net
assets of the fund, or where the Group has acquired units on-market at a price different to the fund’s NTA.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
9.
Equity accounted investments (continued)
Details of Material Associates (continued)
30 June 2020
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:
¹ Other movements are primarily due to the Funds issuing new units to external investors at a price above or below the underlying net
assets of the fund, or where the Group has acquired units on-market at a price different to the fund’s NTA.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
9.
Equity accounted investments (continued)
Aggregate information of associates that are not individually material
ACCOUNTING POLICY
Investment in associates and joint ventures
An associate is an entity over which the Group has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee but is not control or joint control over
those policy decisions.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights
to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities require unanimous consent of the
parties sharing control.
Under the equity method, investments in associates are carried in the statement of financial position at cost
as adjusted for post-acquisition charges in the Group's share of profit or loss and other comprehensive income
of the associate, less any impairment in the value of individual investments.
Management of the Group reviewed and assessed the classification of the Group's investment in the
associated entities in accordance with AASB 128 on the basis that the Group has significant influence over
the financial and operating policy decisions of the investee.
The results, and assets and liabilities of associates or joint ventures are incorporated in these financial
statements using the equity method of accounting, except when the investment, or a portion thereof, is
classified as held for sale, in which case it is accounted for in accordance with AASB 5. Under the equity
method, an investment in an associate or a joint venture is initially recognised in the statement of financial
position at cost and adjusted thereafter to recognise the Group's share of the profit or loss and other
comprehensive income of the associate or joint venture. When the Group's share of losses of an associate or
a joint venture exceeds the Group's interest in that associate or joint venture (which includes any long-term
interests that, in substance, form part of the Group's net investment in the associate or joint venture), the Group
discontinues recognising its share of further losses. Additional losses are recognised only to the extent that
the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint
venture.
When an entity transacts with an associate or a joint venture of the Group, profits and losses resulting from
the transactions with the associate or joint venture are recognised in the Group's financial statements only to
the extent of interests in the associate or joint venture that are not related to the Group.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
9.
Equity accounted investments (continued)
ACCOUNTING POLICY (continued)
Investment in associates and joint ventures (continued)
Investments in associates and joint ventures are assessed for impairment when indicators of impairment are
present. 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.
An assessment has been performed for each of the Managed Funds to ensure the underlying property assets
of these Funds have been recognised at fair value, in accordance with the Group’s accounting policy and
methodology for fair value measurement of Property, Plant and Equipment and Investment Properties as
described in Note 7 and 8 above.
Furthermore, the forecast cash flows of the underlying assets of the Group’s Managed Funds have been
assessed. For the Group’s retail and commercial office Managed Funds, recoverability risks have been
assessed through detailed tenant specific reviews of the financial position of certain tenants in addition to
maintaining active tenant engagement and observation of relevant market conditions and factored into the
cash flow forecast of these funds.
Due to ongoing and potential uncertain economic impacts of COVID-19 at balance date, the recoverable
amount for the Group’s investment in 1834 Hospitality was estimated through a fair value less costs to sell
calculation. The calculation was based on a revenue multiple of 6 times applied on total revenue for the year
ended 30 June 2021, less estimated costs to sell of 1% of the calculated fair value. As a result of these
estimates, an impairment of $0.8 million was recorded for the Group’s investment in 1834 Hospitality. If the
multiplier assumption was to increase/decrease by 0.5 times, fair value less costs to sell would
increase/decrease by approximately 8%.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
83
acne and Capital Structure
Finance and Capital Structure
This section provides further information on the Group’s debt finance, financial assets and contributed
equity.
10.
Interest bearing liabilities
OVERVIEW
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’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’s debt facilities, including the facilities of EMPR, ELHF and Bluewater
Square Syndicate. The EMPR, ELHF and Bluewater Square Syndicate facilities are non-recourse.
The term debt is secured by registered mortgages over all freehold property and registered security interests
over all present and after acquired property of key Group entities and companies. The terms of the debt also
impose certain covenants on the Group including Loan to Value ratio and Interest Cover covenants. The Group
is currently meeting all its covenants.
Unsecured Fixed Rate Notes
On 17 October 2017 and 18 December 2017, the Group issued $40 million and $20 million 7.1% unsecured
5-year fixed rate notes respectively. The total $60 million unsecured fixed rate notes are due for repayment on
17 October 2022. The fair value of this debt facility is $61.2 million.
The unsecured notes include Loan to Value Ratio and Interest Cover Covenants. The Group is currently
meeting all of its covenants.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
10.
Interest bearing liabilities (continued)
CREDIT FACILITIES
As at 30 June 2021, the Group had unrestricted access to the following credit facilities:
The ENN Group has access to a $30.0 million debt facility, with a maturity date of 30 April 2022. The drawn
amount at 30 June 2021 is $6.0 million and this facility is not hedged. The facility is classified as current liability
as the facility’s maturity is less than 12 months. Subsequent to balance date, the Group has extended the
maturity of this facility to 31 August 2022. The fair value of this debt facility is $6.2 million.
The EMPR Group has access to a $64.9 million debt facilities, upon which both the company and trust can
draw. The drawn amount at 30 June 2021 is $64.9 million. Of the EMPR Group facility, $59.1 million will mature
on 31 October 2021 and classified as current liability as the facility’s maturity is less than 12 months.
Subsequent to balance date, the Group has executed a credit approved term sheet for the maturity extension
of the facility to 30 September 2022. The remaining $5.8 million is maturing on 31 October 2022. As at 30 June
2021, the amount of drawn facility was hedged to 100% (2020: 94%). The fair value of this debt facility is $65.9
million.
The Bluewater Square Syndicate has access to a $30.5 million facility. The drawn amount at 30 June 2021
was $30.5 million which will mature on 31 December 2023. As at 30 June 2021, the drawn amount was not
hedged. The fair value of this debt facility is $30.3 million.
The ELHF Group has access to a $107.8 million facility. The drawn amount at 30 June 2021 was $107.8
million. Of the ELHF Group facility, $77.0 million will mature on 2 December 2022, with the remaining $30.8
million maturing on 2 June 2023. As at 30 June 2021, the amount of drawn facility was hedged to 98% (2020:
100%). The fair value of this debt facility is $109.9 million.
All of the facilities have a variable interest rates. The interest rates on the loans are partially fixed using interest
rate swaps. The weighted average annual interest rates payable of all the loans at 30 June 2021, including the
impact of the interest rate swaps, is 3.85% per annum (2020: 4.57%).
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
85
10.
Interest bearing liabilities (continued)
ACCOUNTING POLICY
Interest bearing liabilities
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. Under the effective interest method, any transaction fees,
costs, discounts, and premiums directly related to the borrowings are recognised in the statement of profit or
loss and other comprehensive income over the expected life of the borrowings.
Interest bearing liabilities are classified as current liabilities where the liability has been drawn under a financing
facility which expires within 12 months. Amounts drawn under financial facilities which expire after 12 months
are classified as non-current.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which
are assets that necessarily take 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 risk, 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 risk, 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.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
11. Derivative financial instruments
OVERVIEW
The Group’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.
EMPR and ELHF have entered into interest rate swap agreements with a notional principal amount totalling
$134.9 million (2020: $173.5million) 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.
ACCOUNTING POLICY
Derivatives
Derivatives are initially recognised at fair value at the date the derivative contract is entered into and are
subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is
recognised in profit or loss immediately unless the derivative is designated and effective as a hedging
instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge
relationship.
Hedge accounting
The Group designates its hedging instruments, which include derivatives, as cash flow hedges.
At the inception of the hedge relationship, the entity documents the relationship between the hedging
instrument and the hedged item, along with its risk management objectives and its strategy for undertaking
various hedge transactions.
Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging
instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable
to the hedged risk.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
11. Derivative financial instruments (continued)
ACCOUNTING POLICY (continued)
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow
hedges is recognised in other comprehensive income and accumulated under the heading of cash flow
hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss
and is included in the ‘other gains and losses’ line item.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified
to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognised
hedged item. However, when the forecast transaction that is hedged results in the recognition of a non-
financial asset or a non-financial liability, the gains and losses previously recognised in other comprehensive
income and accumulated in equity are transferred from equity and included in the initial measurement of the
cost of the non-financial asset or non-financial liability.
Hedge accounting is discontinued when the Group revokes the hedging relationship, when the hedging
instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting.
Any gain or loss recognised in other comprehensive income and accumulated in equity at that time remains
in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a
forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised
immediately in profit or loss.
Valuation, techniques and inputs
Financial Instruments
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter
derivatives) is determined using valuation techniques. These valuation techniques maximise the use of
observable market data where it 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 market data, the instrument is included in
level 3. This is not applicable for the Group or the EIF Group.
Specific valuation techniques used to value financial instruments include:
• The use of quoted market prices or dealer quotes for similar instruments; and
• 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.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
12. Other financial assets
OVERVIEW
The Group’s other financial assets consist of short-term financing provided by the Group to certain managed
funds and the Group’s corporate bonds. The corporate bonds represent an investment in the Group’s
unsecured notes on issue (refer to Note 10 for further information on the Group’s unsecured notes). The
investment in the Group’s unsecured notes has not been netted off against interest bearing liabilities to ensure
the interest bearing liabilities represents the total unsecured notes on issue at balance date.
The Group’s other financial assets as at 30 June 2021 are detailed below:
ACCOUNTING POLICY
The Group measures its other financial assets at amortised cost.
At initial recognition, the Group measures its other financial assets at fair value and subsequently at amortised
cost. The Group assessed that the credit risk of its financial asset has not significantly increased since initial
recognition. Hence, the Group applies the 3-stage expected credit loss impairment model under AASB9
measuring the expected credit loss allowance (ECL) for the other financial assets.
The loss allowances are based on assumptions about the risk of default and expected loss rates. The Group
uses judgement in making these assumptions based on the Group’s historical credit loss experience, adjusted
for factors that are specific to the debtors and general economic conditions, including the impacts of the
COVID-19 pandemic, where appropriate at reporting date.
Refer to Note 15(b) for further discussion on the Group’s management of credit risk, including that for its
financial assets.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
13. Contributed equity
OVERVIEW
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’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.
Contributed equity for the period ended 30 June 2021
A reconciliation of treasury securities on issue at the beginning and end of the period is set out below:
Contributed equity for the period ended 30 June 2020
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ELANOR INVESTORS GROUP
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
FOR THE YEAR ENDED 30 JUNE 2021
13. Contributed equity (continued)
13. Contributed equity (continued)
A reconciliation of treasury securities on issue at the beginning and end of the prior period is set out below:
A reconciliation of treasury securities on issue at the beginning and end of the prior period is set out below:
ACCOUNTING POLICY
ACCOUNTING POLICY
Equity-settled security-based payments to employees and others providing similar services are measured at the
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.
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
The fair value determined at the grant date of the equity-settled security-based payments is expensed on a
straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will
straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will
eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group revises
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
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,
estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate,
with a corresponding adjustment to the equity-settled employee benefits reserve.
with a corresponding adjustment to the equity-settled employee benefits reserve.
14. Reserves
14. Reserves
OVERVIEW
OVERVIEW
Reserves are balances that form part of equity that record other comprehensive income amounts that are
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
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
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.
description of the nature and purpose of each reserve.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
14. Reserves (continued)
The asset revaluation reserve is used to record increments and decrements on the revaluation of property,
plant and equipment.
The cash flow hedge reserve is used to recognise increments and decrements in the fair value of cash flow
hedges.
The stapled security-based payment reserve is used to recognise the fair value of loan, restricted securities
and options issued to employees but not yet exercised under the Group's DSTI and LTIP.
15. Financial risk management
OVERVIEW
The Group's principal financial instruments comprise cash, receivables, financial assets carried at fair value
through profit and loss, interest bearing loans, derivatives, payables and distributions payable.
The Group's activities are exposed to a variety of financial risks: market risk (including interest rate risk and
equity price risk), credit risk and liquidity risk.
This note presents information about the Group's exposure to each of the above risks, the Group's objectives,
policies and processes for measuring and managing risk and the Group's management of capital. Further
quantitative disclosures are included through these consolidated financial statements.
The Group's Board of Directors (Board) has overall responsibility for the establishment and oversight of the
Group's risk management framework. The Board has established an Audit & Risk Committee (ARC), which is
responsible for monitoring the identification and management of key risks to the business. The ARC meets
regularly and reports to the Board on its activities.
The Board has established Treasury Guidelines outlining principles for overall risk management and policies
covering specific areas, such as mitigating foreign exchange, interest rate and liquidity risks.
The Group's Treasury Guidelines provide a framework for managing the financial risks of the Group with a key
philosophy of risk mitigation. Derivatives are exclusively used for hedging purposes, not as trading or other
speculative instruments. The Group uses derivative financial instruments such as interest rate swaps where
possible to hedge certain risk exposures.
The Group uses different methods to measure different types of risk to which it is exposed. These methods
include sensitivity analysis in the case of interest rate risk, ageing analysis for credit risk and cash flow
forecasting for liquidity risk.
There have been no other significant changes in the types of financial risks or the Group's risk management
program (including methods used to measure the risks).
(a)
Market risk
Market risk refers to the potential for changes in the value of the Group's financial instruments or revenue
streams from changes in market prices. There are various types of market risks to which the Group is exposed
including those associated with interest rates, currency rates and equity market price.
(i)
Interest rate risk
Interest rate risk refers to the potential fluctuations in the fair value or future cash flows of a financial instrument
because of changes in market interest rates. The Group’s main interest rate risk arises from long-term
borrowings with variable rates, which expose the Group to cash flow interest rate risk.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
15. Financial risk management (continued)
(a)
Market risk (continued)
(i)
Interest rate risk(continued)
As at reporting date, the Consolidated Group had the following interest-bearing assets and liabilities:
The Group’s main interest rate risk arises from long-term borrowings with variable rates, which expose the
Group to cash flow interest rate risk.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
15. Financial risk management (continued)
As at 30 June 2021 $134.9 million (2020: $173.5 million) of the $209.2 million (2020: $235.1 million) of floating
interest-bearing loans have been hedged using interest rate swap agreements. These agreements are in place
to swap the variable / floating interest payable to a fixed rate to minimise the interest rate risk.
(ii)
Interest Rate Sensitivity
At reporting date if Australian interest rates had been 1% higher / lower and all other variables were held
constant, the impact on the Group in relation to cash and cash equivalents, derivatives, interest bearing loans
and the Group's profit and equity would be:
(b)
Credit risk
Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.
The Group manages credit risk on receivables by performing credit reviews of prospective debtors, obtaining
collateral where appropriate and performing detailed reviews on any debtor arrears. Credit risk on derivatives
is managed through limiting transactions to investment grade counterparties.
At balance date, the Group’s outstanding debtors consists primarily of loans to Elanor’s Managed Funds and
accrued funds management fees payable by these Managed Funds, rent receivables from its investment
property Bluewater Square, and outstanding payments receivable from hotel guests across its hotel portfolio.
In respect of outstanding loans and trade debtors receivable from its Managed Funds, the Group has
performed a detailed analysis of the recoverability of these amounts with reference to the cash flow forecasts
of each of these funds. For each of the Group’s Managed Funds, the Group’s management teams have
performed a detailed asset level analysis of the recoverability of the outstanding arrears at balance date for
these assets, and future expected impacts of the COVID-19 pandemic on the funds’ cash flows.
For the Group’s retail investment property Bluewater Square, the group applied the AASB 9 simplified
approach using the provision matrix for measuring the expected credit losses (ECL) which uses a lifetime
expected loss allowance. The ECL calculation is based on assumptions about risk of default and expected
loss rates. The group has considered the following in assessing the expected credit loss: ageing of the debtor’s
balances, tenant payment history, ongoing negotiations relating to COVID-19 rent relief arrangements,
assessment of the tenant’s financial position, existing market conditions and forward-looking estimates.
At balance date, the Group has recognised an expected credit loss provision of $0.2 million (2020: $0.2 million)
in respect to the rent receivables of Bluewater Square Syndicate.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
15. Financial risk management (continued)
(b)
Credit risk (continued)
For the Group’s Hotels, Tourism and Leisure Managed Funds (HTL Funds), the group applied the AASB 9
simplified approach using the provision matrix for measuring the expected credit losses which uses a lifetime
expected loss allowance (ECL). The lifetime ECL calculation is based on the ageing of the debtors and forward-
looking estimates.
At balance date, no provisions have been recognised in respect of loans and funds management fees
receivable from the Group’s HTL Funds and a provision of $0.7 million has been recognised in respect of the
consolidated HTL Funds’ trade debtors (2020: nil).
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to
credit risk at the reporting date was 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
commitments are disclosed in Note 22.
Trade and other receivables consist of GST, trade debtors and other receivables.
At balance date there were no other significant concentrations of credit risk.
No 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
which would indicate that an allowance was necessary.
Impairment losses
The ageing of trade and other receivables at reporting date is detailed below:
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
15. Financial risk management (continued)
(c)
Liquidity risk
The Group manages liquidity risk by maintaining sufficient cash including working capital and other reserves,
as well as through securing appropriate committed credit facilities.
As a result of the uncertain economic environment created by the COVID-19 pandemic, Group cashflow
management and Managed Funds related cash flows have been subject to heightened levels of review and
focus to ensure the Group maintains strong balance sheet liquidity.
The following are the undiscounted contractual cash flows of derivatives and non-derivative financial liabilities
shown at their nominal amount (including future interest payable).
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
15. Financial risk management (continued)
(d)
Capital risk management
The Group maintains its capital structure with the objective 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 Note 13.
The Group assesses its capital management approach as a key part of the Group's overall strategy and it is
continuously reviewed by management and the Directors.
To achieve the optimal capital structure, the Board may use the following strategies: amend the distribution
policy of the Group; issue new securities through a private or public placement; activate the Distribution
Reinvestment Plan (DRP); issue securities under a Security Purchase Plan (SPP); conduct an on-market
buyback of securities; acquire debt; or dispose of investment properties.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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Group Structure
This section provides information about the Group’s structure including parent entity information,
information about controlled entities (subsidiaries) and business combination information relating to the
acquisition of controlled entities.
16. Parent entity
OVERVIEW
The financial information below on Elanor Investor Group’s parent entity Elanor Investors Limited (the
Company) and the Trust’s parent entity Elanor Investment Fund (EIF) as stand-alone entities has been provided
in accordance with the requirements of the Corporations Act 2001. 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.
(a) Summarised financial information
1Elanor Investors Limited is the parent entity of the Consolidated Group.
2Elanor Investment Fund is the parent entity of the EIF Group.
(b) Commitments
At balance date Elanor Investors Limited and Elanor Investment Fund had no commitments (2020: none) in
relation to capital expenditure contracted for but not recognised as liabilities.
(c) Guarantees provided
At balance date Elanor Investors Limited and Elanor Investment Fund had no outstanding guarantees (2020:
none).
(d) Contingent liabilities
At balance date Elanor Investors Limited and Elanor Investment Fund had no contingent liabilities (2020:
none).
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
17. Subsidiaries and Controlled entities
OVERVIEW
This note provides information about the Group’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 (“EIL”) is the head entity within the EIL tax-consolidated group. The companies in which EIL has 100% ownership are members
of the EIL tax-consolidated group.
2 EMPR II Management Pty Limited is the head entity of the EMPR II tax-consolidated group.
3 EMPR Management Pty Limited is the head entity of the EMPR tax-consolidated group.
4 Elanor Luxury Hotel Fund Pty Limited is the head entity of the ELHF tax-consolidated group. EIL does not have a 100% ownership in Elanor Luxury Hotel
Fund Pty Limited (only rounded up to 100% in the above table), and hence this entity is not part of the EIL tax-consolidated group.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
17. Subsidiaries and Controlled entities (continued)
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Other Information
This section includes other information that must be disclosed to comply with the Accounting Standards,
the Corporations Act 2001 or the Corporations Regulations, but which are not considered critical in
understanding the financial performance or position of the Group, including information about related
parties, events after the end of the reporting period and certain EIF Group disclosures.
18. Receivables
OVERVIEW
This note provides further information about assets that are incidental to the Group’s trading activities, being
trade and other receivables. Refer to Note 15(b) for discussion on the Group’s management of credit risk,
including that of the Group’s trade and other receivables.
Receivables
19. Payables and other liabilities
OVERVIEW
This note provides further information about liabilities that are incidental to the Group’s trading activities, being
payables, other liabilities and provisions.
Payables
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
19. Payables (continued)
Other liabilities
1The distribution payable is related to the special distribution declared by the consolidated EMPR Fund at 30 June 2021.
Provisions
ACCOUNTING POLICY
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made
of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the
obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its
carrying amount is the present value of those cash flows (where the effect of the time value of money is
material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a
third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received,
and the amount of the receivable can be measured reliably.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
19. Payables (continued)
Employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and
long service leave when it is probable that settlement will be required, and they are capable of being measured
reliably.
Liabilities recognised in respect of short-term employee benefits, are measured at their nominal values using
the remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of long term employee benefits are measured as the present value of the
estimated future cash outflows, using a high quality Corporate Bond rate as the discount rate, to be made in
respect of services provided by employees up to reporting date.
20.
Intangible assets
OVERVIEW
This note sets out the Intangible assets of the Group.
Management Rights represent the acquisition of funds management rights and associated licences at IPO for
$1.5 million. At IPO, the estimated acquired funds management rights was 10 years.
ACCOUNTING POLICY
Funds management rights
Funds management rights have a finite useful life and are carried at cost less accumulated amortisation and
impairment losses. Amortisation is calculated using the straight-line method to allocate the cost of licenses
over their estimated useful lives of 10 years.
Software
Software expenditure is capitalised and recognised as finite life intangibles and are amortised using the
straight-line method over its estimated lifetime of 5 years.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
21. Government grants - JobKeeper
During the year, the Group received a total of $1.1 million from the JobKeeper scheme in the financial year
and the Group’s Hotels, Tourism and Leisure Managed Funds (consolidated in the Group financial statements)
received a total of $5.4 million. The JobKeeper payments are deducted from the related salary expenses.
ACCOUNTING POLICY
Government grants are recognised when there is reasonable assurance the group will comply with the
conditions attaching to them and the grant will be received. Government grants are presented as part of profit
and loss.
22. Commitments
OVERVIEW
This note sets out the material commitments of the Group.
Contingent liabilities and commitments
The Group has no contingent liabilities as at 30 June 2021 (30 June 2020: nil)
Lease commitments: the Group as lessor
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.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
23. Share-based payments
OVERVIEW
The Group has short term and long-term ownership-based compensation schemes for executives and senior
employees.
STI scheme
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% per annum. The profit
share pool is based on 20% of ROE above 10%, 22.5% of the ROE above 15%, 25% of the ROE above 17.5%
and 30% of the ROE above 20%. The Scheme provides that 50% of any awards to individuals from the profit
share pool 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, taking into consideration the forecast and
actual financial performance and position of the Group.
LTI scheme
The Group has implemented an LTI scheme (the LTI Scheme), based on an executive loan security plan and
an executive options plan.
Under the executive loan security plan awards (comprising the loan of funds to eligible Elanor employees to
acquire securities which are subject to vesting conditions) have been issued to certain employees.
The limited recourse loan provided by the Group under the loan security plan carries interest of an amount
equal to any cash dividend or distribution but not including any dividend or distribution of capital, or an
abnormal distribution.
In addition to the loan security plan, the Group has implemented an executive option plan comprising rights to
acquire securities at a specified exercise price, subject to the achievement of vesting conditions, which may
be offered to certain eligible employees (including the Chief Executive Officer, direct reports to the Chief
Executive Officer and other selected key executives) as determined by the Board. 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 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 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% per annum
in the first year, and 8% per annum thereafter in the case of the loan security plan and 15% per annum in the
case of the options plan. TSR was selected as the LTI performance measure to ensure an alignment between
the security holder return and reward for executives.
During the year, the Board reviewed the Group’s LTI Scheme and determined that the Loan Securities and
Executive Options remained the most appropriate equity award vehicles for the 2020 LTI Scheme awards,
encouraging a continued focus on security price growth, distributions and strong alignment of executives to
Securityholders.
On 28 August 2020, the Board assessed the performance hurdles for the 2017 and 2019 Loan Securities and
Executive Options and noted that the three-year TSR hurdle for the Executive Options and Loan Securities
had not been met. As a result, the 2017 Loan Securities were surrendered on the basis the TSR performance
hurdle was not achievable by the end of the vesting period.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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23. Share-based payments (continued)
The Remuneration and Nomination Committee retained a leading professional services firm to undertake a
review of a proposed 2020 LTI Plan to consider the proposed design and quantum of the grant, with reference
to market practice and Elanor’s stated LTI Plan and business objectives. The Remuneration and Nomination
Committee resolved to recommend the Board approve the Plan. No remuneration recommendations as
defined under Division 1, Part 1.2.98(1) of the Corporations Act 2001, were made by the professional services
firm.
To ensure executives remain motivated to achieve security price growth on behalf of Securityholders, the
Board has determined to make new 2020 LTI Scheme awards, utilising the surrendered 2017 and 2019 award
securities, and new Loan Securities, to ensure that the new LTI Scheme awards will not be outstanding at the
same time as the 2017 and 2019 Loan Securities and Executive Options.
On 28 August 2020, following the surrender of the 2017 and 2019 LTI Award securities by the LTI Plan
participants, the Board approved the issue of 2020 LTI Scheme Awards, under similar terms and conditions to
the previous LTI Scheme Awards. A total of 17 million 2020 LTI Awards were approved and issued.
On 28 August 2020 the Board approved the issue of 2 million options under the Group’s option plan to Glenn
Willis. These options have an exercise price of $1.65, being a 43% premium to the issue price. The issue of
options and 2020 LTI Awards to Glenn Willis was approved by security holders on 21 October 2020, at the
Group’s Annual General Meeting (AGM).
The following share-based payment arrangements were in existence during the current reporting period:
Employee Loan Securities
1 Service and market conditions include financial and non-financial targets along with a deferred vesting period.
Options
1Service and market conditions include financial and non-financial targets along with a deferred vesting period
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
23. Share-based payments (continued)
The Group recognises the fair value at the grant date of equity settled securities above as an employee benefit
expense proportionally over the vesting period with a corresponding increase in equity. Fair value of options
is measured at grant date using a Monte-Carlo Simulation and Binomial option pricing model, performed by
an independent valuer, and models the future price of the Group's stapled securities.
Securities issued under STI plan
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 $3,302,395.
ACCOUNTING POLICY
Share-Based Payments
Equity-settled share-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 share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will
eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group revises
its estimate of the number of equity instruments expected to vest. The impact of the revision of the original
estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate,
with a corresponding adjustment to the equity-settled employee benefits reserve.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
24. Related parties
OVERVIEW
Related parties are persons or entities that are related to the Group as defined by AASB 124 Related Party
Disclosures. This note provides information about transactions with related parties during the period.
Elanor Investors Group
Controlled entities
Controlled entities Interests in controlled entities are set out in Note 17
Responsible Entity fees
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 2021, this amount is $129,996 (2020: $129,996).
EFML makes payments for EIF from time to time. These payments are incurred by EFML in properly performing
or exercising its powers or duties in relation to EIF. EFML has a right of indemnity from EIF for any liability
incurred by EFML in properly performing or exercising any of its powers or duties in relation to EIF. The amount
reimbursed for the year ended 30 June 2021 was nil (2020: nil).
EFML acted as Trustee and Manager and/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.
A summary of the income earned during the period from these managed investment schemes is provided
below:
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
24. Related parties (continued)
Outstanding receivables balances with related parties
The following balances arising through the normal course of business were due from related parties at
balance date:
Key Management Personnel (KMP)
Executive
Mr. Glenn Willis
Mr. Paul Siviour
Mr. Symon Simmons
Non-Executive
Mr. Paul Bedbrook
Mr. Nigel Ampherlaw
Mr. Lim Kin Song
Mr Anthony Fehon
Position
Managing Director and Chief Executive Officer
Chief Operating Officer
Chief Financial Officer and Company Secretary
Position
Independent Chairman and Non-Executive Director
Independent Non-Executive Director
Non-Executive Director (Resigned 25 January 2021)
Independent Non-Executive Director
The aggregate compensation made to the Key Management Personnel of the Group is set out below:
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
25. Significant events
Establishment of Riverside Plaza Syndicate
The Group established the Riverside Plaza Syndicate in September 2020 which acquired the Riverside Plaza
neighbourhood shopping centre in Queanbeyan, NSW for $60.0 million.
Establishment of Burke Street Fund
The Group established the Burke Street Fund in November 2020 which acquired the commercial office and
healthcare properties in 2 Burke Street and 163 Ipswich Road, Woolloongabba QLD for $80.2 million.
Elanor Healthcare Real Estate Fund
The Elanor Health Care Real Estate Fund completed three property acquisitions, growing the Fund to
approximately $209 million:
• Woolloongabba Community Health Centre in Brisbane, QLD for $37.3 million in October 2020,
•
2 Civic Boulevard property in Rockingham, WA for $22.9 million in December 2020,
• Broadway Medical Centre in Ellenbrook, WA for $12.0 million in May 2021.
Clifford Gardens Fund
The Group established Clifford Gardens Fund in June 2021 which acquired the Clifford Gardens shopping
centre in Toowoomba QLD for $145.0 million.
Elanor Wildlife Park Fund
Elanor Wildlife Park Fund acquired Hunter Valley Zoo in May 2021, for $9.0 million, growing the fund’s portfolio
to over $60.0 million.
Elanor Retail Property Fund
Elanor Retail Property Fund completed the sale of Auburn Central in December 2020 for $129.5 million (4.0%
premium to book value), following its transformation into a triple-supermarket anchored, metropolitan
neighbourhood shopping centre.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
26. Other accounting policies
Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on
hand, deposits held at call with financial institutions, cash held by property managers in trust, other short-term,
highly liquid investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank
overdrafts are shown within borrowings in current liabilities in the balance sheet.
Inventories
Inventories, which principally comprise beverage and consumables of the hotel business, are stated at the
lower of cost and net realisable value.
27. Events occurring after reporting date
Subsequent to period end, a distribution of 7.14 cents per stapled security has been declared by the Board of
Directors. The total distribution amount of $8.6 million was paid on 3 September 2021 in respect of the year
ended 30 June 2021.
On 18 August 2021, the Board of Directors approved a new funds management initiative by Elanor Funds
Management Limited as trustee for the Elanor Metro and Prime Regional Hotel Fund (EMPR), being the
acquisition by EMPR of part of the Elanor Luxury Hotel Fund (ELHF) and all of the Albany Hotel Syndicate
(AHS), to establish a single investment vehicle being the $346 million Elanor Hotel Accommodation Fund
(EHAF).
To complete the EHAF transaction, EMPR is undertaking a pro-rata entitlement offer to existing EMPR fund
investors and a capital raising from new wholesale and sophisticated investors to the extent of any shortfall in
the entitlement offer.
ELHF and AHS are currently 100% owned by Elanor. The effect of the EHAF transaction is the partial sell
down of ELHF and the sale of all of the AHS from Elanor’s balance sheet investment portfolio to EHAF. This
has been a clearly articulated strategy of Elanor since establishment of ELHF in November 2019.
On 29 September 2021, Elanor Securityholders voted in favour of a resolution to approve the EHAF transaction
and thereby facilitate the sell-down of Elanor’s investment in these funds. This transaction is a further step in
the execution of Elanor’s stated capital lite strategy and will provide capital growth for Elanor and the
opportunity to undertake capital management initiatives.
On 17 September, the Group announced the appointment of Mr Su Kiat Lim as a Non- Executive Directors of
Elanor Investors Group, Elanor Retail Property Fund and Elanor Commercial Property Fund, effective 1
October 2021.
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 2021.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
28. Auditor's remuneration
OVERVIEW
PricewaterhouseCoopers are the independent auditors of Elanor Investors Group (2020: Deloitte Touche
Tohmatsu) and 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. Pitcher Partners provided
audit services in respect of the Trust’s Compliance Plan.
Below is a summary of fees paid for various services to PricewaterhouseCoopers (2020: Deloitte Touche
Tohmatsu) and Pitcher Partners during the year.
29. Non-Parent disclosure
OVERVIEW
This note provides information relating to the non-parent EIF Group only. The accounting policies are
consistent with the Group, except as otherwise disclosed. Refer to the corresponding notes in the Group
section of the financials for further discussion on the Group’s response to COVID-19, which covers EIF Group
as its subsidiary.
Segment information
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.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
29. Non-Parent disclosure (continued)
Distributions
The following distributions were declared by the EIF Group in respect of the period:
1The interim distribution of 4.13 cents per stapled security was paid on 5 March 2021.
2The final distribution of 7.14 cents per stapled security was declared after 30 June 2021, but is recognised in the accounts at balance
date. The final distribution was paid on 3 September 2021.
Taxation of the Trust
Under 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.
Earnings / (losses) per stapled security
The earnings / (losses) per stapled security measure shown below is based upon the profit / (loss) attributable
to security holders:
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
29. Non-Parent disclosure (continued)
Investment Properties
Movement in investment properties
The carrying value of investment properties at the beginning and end of the current period is set out below:
Refer to Note 7 Property, plant and equipment and Note 8 Investment properties for further details of the
valuations of the underlying property assets.
ACCOUNTING POLICY
Fair value of Investment Properties
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.
Valuation, technique and inputs
Investment properties are categorised as level 3 in the fair value hierarchy. There were no transfers between
hierarchies during the period.
Fair value measurement
The significant unobservable inputs associated with the valuation of the Group's investment properties are as
follows
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
29. Non-Parent disclosure (continued)
Equity accounted investments
The Trust’s equity accounted investments are as follows:
30 June 2021
30 June 2020
The following information represents the aggregated financial position and financial performance of the Elanor
Retail Property Fund, Elanor Commercial Property Fund and the Waverley Gardens Fund. This summarised
financial information represents amounts shown in the associate's financial statements prepared in accordance
with AASBs, adjusted by the Trust for equity accounting purposes.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
29. Non-Parent disclosure (continued)
Equity accounted investments (continued)
30 June 2021
Reconciliation of the above summarised financial information to the carrying amount of the interest in Elanor
Retail Property Fund, Elanor Commercial Property Fund and the Waverley Gardens Fund recognised in the
consolidated financial statements:
¹ Other movements are primarily due to the Funds issuing new units to external investors at a price above or below the underlying net
assets of the fund, or where the Group has acquired units on-market at a price different to the fund’s NTA.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
29. Non-Parent disclosure (continued)
Equity accounted investments (continued)
30 June 2020
Reconciliation of the above summarised financial information to the carrying amount of the interest in Elanor
Retail Property Fund recognised in the consolidated financial statements:
¹ Other movements are primarily due to the Funds issuing new units to external investors at a price above or below the underlying net
assets of the fund, or where the Group has acquired units on-market at a price different to the fund’s NTA.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
29. Non-Parent disclosure (continued)
Aggregate information of associates that are not individually material
Interest bearing liabilities
As part of the internal funding of the Fund, EIF entered into a long-term interest-bearing loan with EIL at arm’s
length terms, maturing in July 2024. As at 30 June 2021, the outstanding payable to the Company was $74.5
million (2020: $60.7 million).
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
29. Non-Parent disclosure (continued)
Credit facilities
As at 30 June 2021, the EIF Group had unrestricted access to the following credit facilities:
The ENN Group has access to a $30.0 million revolver facility, with a maturity date of 30 April 2022. The drawn
amount at 30 June 2021 is $6.0 million. The facility is classified as current liability as the facility’s maturity is
less than 12 months. Subsequent to balance date, the Group has extended the maturity of this facility to 31
August 2022. At 30 June 2021 the amount of drawn facilities was not hedged. The fair value of this debt facility
is $6.2 million.
The EMPR Group has access to a $64.9 million (2020: $68.1 million) facility. The drawn amount at 30 June
2021 is $64.9 million (2020: $68.1 million). Of the EMPR Group facility, $59.1 million will mature on 31 October
2021, with the remaining $5.8 million maturing on 30 November 2022. Subsequent to balance date, the Group
has executed a credit approved term sheet for the maturity extension of the $59.1 million facility to 30
September 2022. At 30 June 2021, the amount of drawn facility was hedged to 100%. The fair value of this
debt facility is $64.7 million.
The ELHF Group has access to a $107.8 million facility (2020: $68.1 million). The drawn amount at 30 June
2021 was $107.8 million. Of the ELHF Group facility, $77.0 million will mature on 2 December 2022, with the
remaining $30.8 million maturing on 2 June 2023. At 30 June 2021, the amount of drawn facility was hedged
to 69%. The fair value of this debt facility is $109.9 million.
The Bluewater Square Syndicate has access to a $30.6 million (2020: $26.7 million) facility. The drawn amount
at 30 June 2021 was $30.6 million which will mature on 31 December 2023. At 31 December 2020, the drawn
amount was not hedged. The fair value of this debt facility is $30.3 million.
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 2021, including the
impact of the interest rate swaps, is 3.88% per annum (2020: 3.99%).
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
119
29. Non-Parent disclosure (continued)
Derivative Financial instruments
The EIF Group enters into derivative financial instruments to manage its exposure to interest rate risk.
Reserves
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.
The asset revaluation reserve is used to record increments and decrements on the revaluation of property,
plant and equipment.
The cash flow hedge reserve is used to recognise increments and decrements in the fair value of cash flow
hedges.
The stapled security-based payment reserve is used to recognise the fair value of loan, restricted securities
and options issued to employees but not yet exercised under the Group's DSTI and LTIP.
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ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
29. Non-Parent disclosure (continued)
Financial Risk Management
(1)
Market Risk
Interest rate risk
As at reporting date, the EIF Group had the following interest-bearing assets and liabilities:
Of the $172.7 million floating interest-bearing loans as at 30 June 2021, $134.9 million have been hedged
using interest rate swap agreements. These agreements are in place to swap the variable / floating interest
payable to a fixed rate to minimise the interest rate risk.
110
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021Elanor Investors Group | Annual Report 2021
121
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
29. Non-Parent disclosure (continued)
Interest Rate Sensitivity
(2)
Credit Risk
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to
credit risk at the reporting date was as detailed below:
Impairment losses
The ageing of trade and other receivables at reporting date is detailed below:
111
122
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
29. Non-Parent disclosure (continued)
(3)
Liquidity risk
Other financial assets and liabilities
This note provides further information about material financial assets and liabilities that are incidental to the
EIF and the Trust’s trading activities, being receivables and trade and other payables.
Trade and Other Receivables
The comparative period trade debtors and trade creditors balances have been adjusted for an increase of $2.6 million as result of a
reclassification of a trade creditors balance that was included in trade debtors. This is consistent with the classifications in the current
year.
112
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2021Elanor Investors Group | Annual Report 2021
123
ELANOR INVESTORS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
29. Non-Parent disclosure (continued)
Payables
The comparative period trade debtors and trade creditors balances have been adjusted for an increase of $2.6 million as result of a
reclassification of a trade creditors balance that was included in trade debtors. This is consistent with the classifications in the current
year.
Cash flow information
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.
Reconciliation of profit after income tax to net cash flows from operating activities
Directors’ Declaration to Stapled Security Holders
113
124
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 44-123 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 2021 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, 29 September 2021
114
Elanor Investors Group | Annual Report 2021 125
Independent auditor’s report
To the stapled security holders of Elanor Investors Limited and Elanor Investment Fund
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial reports of:
● Elanor Investors Limited (the Company) and its controlled entities (together the Group or
Elanor), and
● Elanor Investment Fund (the Registered Scheme) and its controlled entities (the EIF Group)
is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the financial positions of Elanor and the EIF Group as at 30 June
2021 and of their financial performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The financial reports of Elanor and the EIF Group (the financial report) comprise:
●
●
●
●
●
●
●
the consolidated statements of financial position as at 30 June 2021
the consolidated statements of comprehensive income for the year then ended
the consolidated statements of profit or loss for the year then ended
the consolidated statements of changes in equity for the year then ended
the consolidated statements of cash flows for the year then ended
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
the directors’ declaration to stapled security holders.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Elanor and the EIF Group in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
126
Independent Auditor’s Report
(including Independence Standards) (the Code) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of Elanor and the EIF Group, their accounting processes and controls and the industry in
which they operate.
Materiality
Audit scope
Key audit matters
● For the purpose of our audit
of Elanor and EIF Group, we
used overall materiality of
$0.9 million and $0.7 million,
respectively, which represents
approximately 5% of a
weighted average of statutory
profit before tax for the
current and two previous
years.
● We applied this threshold,
together with qualitative
considerations, to determine
the scope of our audit and the
nature, timing and extent of
our audit procedures and to
evaluate the effect of
misstatements on the
financial report as a whole.
● We chose a weighted average
profit before tax because, in
our view, it is the benchmark
against which the
● Our audit focused on where
● Amongst other relevant
Elanor and the EIF Group
made subjective judgements;
for example, significant
accounting estimates involving
assumptions and inherently
uncertain future events.
● The audit team consisted of
individuals with the
appropriate skills and
competencies needed for the
audits, and this included
industry expertise in real
estate, as well as valuation, tax
and treasury experts.
topics, we communicated the
following key audit matters to
the Audit and Risk
Committee:
− Valuation of property,
plant and equipment,
and investment
properties
− Carrying value of equity
accounted investments
− Hotel revenue
−
Funding and liquidity
● These are further described in
the Key audit matters section
of our report.
Elanor Investors Group | Annual Report 2021
127
performance of Elanor and
EIF Group are most
commonly measured in the
industry. Due to fluctuations
in profit and loss from year to
year, we chose a three year
weighted average.
● We utilised a 5% threshold
based on our professional
judgement, noting it is within
the range of commonly
acceptable thresholds.
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 for the current period and were determined separately for Elanor and
the EIF Group. Relevant amounts listed for each part of the stapled group represent balances as they
are presented in the financial report and should not be aggregated. The key audit 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. Further, any commentary on the
outcomes of a particular audit procedure is made in that context.
Key audit matter
How our audit addressed the key audit
matter
Valuation of Property, plant and equipment, and Investment properties
(Refer to notes 7, 8 and 29)
Elanor:
● Property, Plant and Equipment: $347.4m
● Investment Properties: $55.5m
EIF Group:
Investment Properties: $384.8 million
Elanor’s property portfolio mainly consists of
hotel properties classified as property, plant and
equipment (PPE) and a retail investment
property at 30 June 2021. EIF Group’s property
portfolio mainly consists of hotel properties and
a retail property classified as investment
property at 30 June 2021.
The fair value of PPE and investment properties
was determined using the valuation
methodologies outlined in notes 7 and 8.
Our procedures included, amongst others:
• Obtaining an understanding of Elanor
and EIF Group’s process for determining
the valuation of PPE and investment
properties;
• Assistance from PwC’s real estate
valuation experts where relevant;
• Assessing the scope, competence and
objectivity of the external valuation
firms engaged by Elanor and EIF Group
to provide external valuations at
reporting date.
128
Independent Auditor’s Report
This was a key audit matter because of the:
●
●
relative size of the PPE and investment
properties to net assets and the related
valuation movements, and
inherent subjectivity of the key
assumptions that underpin the
valuations and the general market
uncertainty as a result of the COVID-19
pandemic.
• Assessing the appropriateness of the
valuation methodologies utilised, and
reconciling the fair value recorded in the
accounting records to the external
valuation reports for all the properties
externally valued;
• Selecting a risk-based sample of
properties to assess the appropriateness
of significant assumptions with
reference to market data where possible.
We agreed the underlying lease terms to
the tenancy schedule and traced the
rental income used in the external
valuation to the tenancy schedule. We
assessed the appropriateness of income
related assumptions including
adjustments made in response to the
impacts of COVID-19;
• Testing the mathematical accuracy of a
sample of the valuations;
• Considering the reasonableness of the
disclosures made in relation to the
significant assumptions, including the
sources of estimation uncertainty in
notes 7 and 8 in light of the
requirements of Australian Accounting
Standards.
Carrying value of equity accounted investments
(Refer to notes 9 and 29)
Elanor: $92.6m
EIF Group: $88.6m
Elanor and EIF Group’s Equity Accounted
Investments (EAI) mainly consist of investments
in the funds Elanor manages. EAI are accounted
for in accordance with the accounting policy
included in note 9.
The carrying value of the EAI is dependent on
the results of the investee, which mainly invests
in real estate assets. The fair value of the
As it relates to assessing the recoverable amount
of EAI, our procedures included, amongst
others:
• Obtaining an understanding of Elanor
and EIF Group’s process over the
determination of the carrying value of its
EAI, and whether or not an impairment
loss is required to be recorded;
investment properties is determined in
accordance with the policy outlined in note 8
and the recoverable amount of the EAI is
determined in accordance with the policy
outlined in note 9.
This was a key audit matter because of the:
●
relative size of the EAI to net assets and
the related profit from EAI for the year,
and
●
inherent subjectivity of the key
• Assessing, together with our internal
valuation experts, the appropriateness of
the methodology and significant
assumptions in Elanor and EIF Group’s
determination of the recoverable
amount of the EAI; and
• Testing the mathematical accuracy of a
sample of the recoverable amount
calculations.
As it relates to the investment properties held
through EAI, our procedures included, amongst
assumptions that underpin the valuation
of the investment properties and
others:
recoverable amounts of the EAI, and the
general market uncertainty as a result of
the COVID-19 pandemic.
• Assistance from PwC’s real estate
valuation experts where relevant;
• Assessing the scope, competence and
objectivity of the external valuation
firms engaged by Elanor and EIF Group
to provide external valuations at
reporting date.
• Assessing the appropriateness of the
valuation methodologies utilised, and
reconciling the fair value recorded in the
accounting records to the valuation
reports for all the properties;
• Selecting a risk-based sample of
properties to assess the appropriateness
of significant assumptions with
reference to market data where possible.
We agreed the underlying lease terms to
the tenancy schedule and traced the
rental income used in the external
valuation to the tenancy schedule. We
assessed the appropriateness of income
related assumptions including
adjustments made in response to the
impacts of COVID-19;
• Testing the mathematical accuracy of a
sample of the valuations;
• Considering the appropriateness of the
disclosures made in relation to
determining the carrying value of equity
accounted investments disclosed in note
Elanor Investors Group | Annual Report 2021
investment properties is determined in
accordance with the policy outlined in note 8
and the recoverable amount of the EAI is
determined in accordance with the policy
outlined in note 9.
This was a key audit matter because of the:
●
●
relative size of the EAI to net assets and
the related profit from EAI for the year,
and
inherent subjectivity of the key
assumptions that underpin the valuation
of the investment properties and
recoverable amounts of the EAI, and the
general market uncertainty as a result of
the COVID-19 pandemic.
129
• Assessing, together with our internal
valuation experts, the appropriateness of
the methodology and significant
assumptions in Elanor and EIF Group’s
determination of the recoverable
amount of the EAI; and
• Testing the mathematical accuracy of a
sample of the recoverable amount
calculations.
As it relates to the investment properties held
through EAI, our procedures included, amongst
others:
• Assistance from PwC’s real estate
valuation experts where relevant;
• Assessing the scope, competence and
objectivity of the external valuation
firms engaged by Elanor and EIF Group
to provide external valuations at
reporting date.
• Assessing the appropriateness of the
valuation methodologies utilised, and
reconciling the fair value recorded in the
accounting records to the valuation
reports for all the properties;
• Selecting a risk-based sample of
properties to assess the appropriateness
of significant assumptions with
reference to market data where possible.
We agreed the underlying lease terms to
the tenancy schedule and traced the
rental income used in the external
valuation to the tenancy schedule. We
assessed the appropriateness of income
related assumptions including
adjustments made in response to the
impacts of COVID-19;
• Testing the mathematical accuracy of a
sample of the valuations;
• Considering the appropriateness of the
disclosures made in relation to
determining the carrying value of equity
accounted investments disclosed in note
130
Independent Auditor’s Report
9 in light of the requirements of
Australian Accounting Standards.
Hotel revenue
(Refer to note 2)
Elanor: $58.2m
EIF Group: This Key Audit Matter does not apply to the Fund as the EIF Group does not have any
hotel operations.
The revenue from hotels primarily consists of
room rentals and other revenue such as food and
beverage sales and ancillary goods and services
from the hotel properties. Room revenue is
recognised at the point in time the services have
been rendered as disclosed in the accounting
policy included in note 2.
This was a key audit matter because of the
significance of the hotel revenue to the overall
revenue from operating activities line item in the
statement of profit or loss.
Our procedures included, amongst others:
• Obtaining an understanding of Elanor’s
process and controls implemented at the
hotels;
• Selecting a sample of hotel revenue
during the year and agreeing the
transaction to supporting information
and receipt of cash;
• For a sample of significant unsettled
revenue transactions close to year-end,
agreeing the transaction to supporting
information; and
• Considering the appropriateness of the
disclosures made in relation to the
revenue recognition policy disclosed in
note 2 in light of the requirements of
Australian Accounting Standards.
Liquidity and funding
(Refer to the “About this Report – Going Concern” section)
As described in the “About this Report – Going
Concern” section of the financial report, the
financial statements have been prepared by
Elanor and EIF Group on a going concern basis,
which contemplates that Elanor and EIF Group
will continue to meet their commitments, realise
their assets and settle their liabilities in the
normal course of business.
In assessing the appropriateness of Elanor and
EIF Group’s going concern basis of preparation
for the financial report, we performed the
following procedures, amongst others:
• Evaluated the appropriateness of Elanor
and EIF Group's assessment of their
ability to continue as a going concern
based on relevant information of which
we are aware of as a result of the audit;
Elanor Investors Group | Annual Report 2021
Due to the Government mandated lock downs
and restrictions in relation to the COVID-19
pandemic, trading activity across the Group’s
two consolidated Hotels, Tourism and Leisure
Managed Funds, EMPR and Elanor Luxury
Hotel Fund (ELHF), (together the Funds) has
been impacted to a level that, in the absence of
corrective actions, the Group expects will require
financial covenant support from the financiers of
these facilities. Management expects to refinance
the existing debt facilities as disclosed in the
“About this Report – Going concern'' section of
the financial statements.
Elanor and EIF Group’s assessment of the
appropriateness of the going concern basis of
preparation requires judgement with respect to
financing facilities and forecast cash flows
of Elanor for at least 12 months from the date of
approval of the financial report by the directors.
This includes judgement as to Elanor and EIF
Group’s ability to access borrowings and
compliance with debt covenants.
This was a key audit matter due to its
importance to the financial report and the level
of judgement required.
131
• Enquired of management and the board
of directors as to their knowledge of
events or conditions that may cast
significant doubt on Elanor and EIF
Group's ability to continue as going
concerns;
• Read the terms of the debt agreements
to obtain an understanding of the
existing debt covenants;
• Evaluated Elanor and EIF Group’s plans
for future actions (including assessing
the likelihood of the restructure and
confirmation of continued support from
lenders, where applicable), whether the
outcome is likely to improve the
situation and whether they are feasible
in the circumstances;
• Evaluated selected data and
assumptions used in the cash flow
forecasts for at least 12 months from the
date of approval of the financial report
by the directors;
• Obtained an understanding of the terms
of the proposed new debt facilities as
part of Elanor and EIF Group’s
refinancing plans;
• Obtained written representations from
management and the board of directors
regarding their plans for future action
and the feasibility of these plans; and
• Evaluated whether, in view of the
requirements of Australian Accounting
Standards, the financial report provides
adequate disclosures about these events
or conditions.
Other information
The directors of Elanor Investors Limited and the directors of Elanor Funds Management Limited,
Responsible Entity of the Registered Scheme (collectively referred to as the directors), are responsible
for the other information. The other information comprises the information included in the annual
report for the year ended 30 June 2021, but does not include the financial report and our auditor’s
report thereon.
132
Independent Auditor’s Report
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
Responsibilities
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed 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.
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.
In preparing the financial report, the directors are responsible for assessing the ability of Elanor and
the EIF Group to continue as going concerns, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate
Elanor and the EIF Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with 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 the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of
our auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 28 to 38 of the directors’ report for the
year ended 30 June 2021.
In our opinion, the remuneration report of Elanor Investors Limited for the year ended 30 June 2021
complies with section 300A of the Corporations Act 2001.
The directors 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.
PricewaterhouseCoopers
Bianca Buckman
Partner
Sydney
29 September 2021
Elanor Investors Group | Annual Report 2021
133
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
Responsibilities
The directors 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.
PricewaterhouseCoopers
Bianca Buckman
Partner
Sydney
29 September 2021
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed 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.
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.
In preparing the financial report, the directors are responsible for assessing the ability of Elanor and
the EIF Group to continue as going concerns, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate
Elanor and the EIF Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with 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 the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of
our auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 28 to 38 of the directors’ report for the
year ended 30 June 2021.
In our opinion, the remuneration report of Elanor Investors Limited for the year ended 30 June 2021
complies with section 300A of the Corporations Act 2001.
134
Corporate Governance
The Board of Directors of Elanor Investors Group (Group) have approved the Group’s Corporate Governance
Statement as at 30 June 2021. 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.
Elanor Investors Group | Annual Report 2021 Securityholder Analysis
As at 1 October 2021
135
Stapled Securities
The units of the Trust and the shares of the Company are combined and issued as stapled securities in the Group.
The Group’s securities are traded on the Australian Securities Exchange (ASX: ENN), having listed on 11 July
2014. The units of the Trust and shares of the Company cannot be traded separately and can only be traded as
stapled securities. In accordance with the ASX’s requirements for stapled securities, the ASX reserves the right
(but without limiting its absolute discretion) to remove the Company or the Trust or both from the ASX Official List if
any of the units and the shares cease to be stapled together or any equity securities issued by the Company or the
Trust which are not stapled to equivalent securities in the other entity.
Top 20 Securityholders
Number Securityholder
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC Custody Nominees (Australia) Limited
Rockworth Investment Holdings Pte Ltd
J P Morgan Nominees Australia Pty Limited
CPU Share Plans Pty Ltd
Perpetual Corporate Trust Ltd
BNP Paribas Nominees Pty Ltd
H & G Limited
Mr Glenn Willis
National Nominees Limited
Armada Investments Pty Ltd
Citicorp Nominees Pty Limited
BNP Paribas Noms Pty Ltd
Danissa Pty Ltd
Crownace Pty Ltd
Citano Pty Ltd
Citano Pty Ltd
BNP Paribas Nominees Pty Ltd HUB24 Custodial Serv Ltd
Danissa Pty Ltd
Colovine Pty Ltd
J B Holdings Pty Ltd
Total
Balance of Register
Grand Total
No. of
Securities
%
18,532,429
15.32
17,932,967
14.82
8,200,197
4,270,632
3,533,573
3,237,760
6.78
3.53
2.92
2.68
3,225,000
2.67
2,800,000
2,573,968
2,295,605
2.31
2.13
1.90
1,589,501
1.31
1,090,469
880,705
787,195
545,795
533,839
526,684
474,993
462,514
450,000
0.90
0.73
0.65
0.45
0.44
0.44
0.39
0.38
0.37
73,943,826
61.12
47,030,689
38.88
120,974,515
100.00
136
Securityholder Analysis
As at 1 October 2021
Range Report
Range
No. of Securities
%
No. of Holders
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
85,988,570
28,785,619
4,190,376
1,855,212
154,738
71.08
23.79
3.46
1.53
0.13
91
1,053
526
606
337
%
3.48
40.30
20.13
23.19
12.90
120,974,515
100.00
2,613
100.00
The total number of security holders with an unmarketable parcel of securities was 92.
Substantial Securityholders
Securityholder
Rockworth Investment Holdings Pte Ltd
Perpetual Limited
No. of Securities
17,932,967
14,877,096
%
14.82
12.30
Voting rights
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.
Elanor Investors Group | Annual Report 2021 137
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
Anthony (Tony) Fehon
Lim Su Kiat (Appointed 1 October 2021)
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
PricewaterhouseCoopers
One International Towers
Watermans Quay
Barangaroo NSW 2000
Custodian
The Trust Company (Australia) Limited
Level 18
123 Pitt Street
Sydney NSW 2000
Website
www.elanorinvestors.com
Level 38, 259 George Street
Sydney NSW 2000
T: +61 2 9239 8400
elanorinvestors.com