Elanor Investors Group
Annual Report 2022

Plain-text annual report

Investors Group Annual Report For the year ended 30 June 2022 Peppers Cradle Mountain Lodge, (TAS) Meeting of Securityholders The meeting of Securityholders will be held on Thursday 27 October 2022 at 2:00pm (Sydney time) at Computershare, Level 3, 60 Carrington Street, Sydney NSW 2000. Acknowledgement of country Elanor is proud to work with the communities in which we operate, to manage and improve properties on land across Australia and New Zealand. We pay our respects to the traditional owners, their elders past, present and emerging and value their care and custodianship of these lands. Contents 04 — Highlights 06 — Environmental, Social and Governance – making a positive impact 08 — Message from the Chair 10 — CEO’s Message 13 — Financial Report 14 — Directors’ Report 44 — Auditor’s Independence Declaration 45 — Consolidated Financial Statements 52 — Notes to the Consolidated Financial Statements 124 — Directors’ Declaration 125 — Independent Auditor’s Report 130 — Corporate Governance 131 — Securityholder Analysis 133 — Corporate Directory Financial Calendar OCT 27 October 2022 Meeting of Securityholders DEC FEB JUN AUG December 2022 Estimated interim distribution announcement and securities trade ex-distribution February 2023 Interim results announcement and interim distribution payment June 2023 Estimated final distribution announcement and securities trade ex-distribution August 2023 Full-year results announcement and final distribution payment SEP September 2023 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). 3 Highlights Group FUM $2.72bn 31% on FY21 > Funds Management EBITDA $14.7m 38% on FY21 > Core Earnings $18.3m 21% on FY21 > Gross increase in FUM in FY22 $677m Gross increase in FUM in FY21 of $381m Recurring Funds Management Income (excl. acq fees) $32.2m 48% on FY21 > FY22 Distributions per security 13.48cps 20% on FY21 > 50 Cavill Ave, Surfers Paradise (QLD) 4 Elanor Investors GroupAnnual Report 2022 The Group’s investments are located across Australia and New Zealand Darwin Assets: Hotels, Tourism & Leisure Commercial Retail Healthcare WA NT SA QLD Brisbane Perth NSW Auckland Sydney Canberra Wellington Adelaide VIC Melbourne TAS Hobart Australian real estate funds management group delivering investment outperformance $2.72bn Funds Under Management $829m Office $304m Healthcare $1,122m Retail $466m Hotels, Tourism & Leisure $525m Elanor Commercial Property Fund ASX:ECF $304m Unlisted Real Estate Funds $304m Multi-asset Elanor Healthcare Real Estate Fund $204m Elanor Retail Property Fund ASX:ERF $918m Unlisted Real Estate Funds $395m Unlisted multi- asset Luxury and Regional Hotel Fund $72m Unlisted multi- asset Wildlife and Leisure Park Fund Note: Consistent with the basis on which ENN’s base management fees are calculated; figures reflect the Gross Asset Value of the various managed funds 5 Environmental, Social and Governance – making a positive impact The Smith Family Elanor’s collaboration with The Smith Family supports over 100 Senior Secondary School students (in the ‘Learning for Life’ program) and other disadvantaged youth through a variety of impactful activities At Elanor we strive to make positive and impaction social and environmental contributions to the communities in which we operate, and more broadly ESG Strategy Elanor’s ESG Committee is responsible for, and oversees, the Group’s ESG strategy Following a detailed stakeholder analysis, the Group has identified nine material areas of focus, with strategic priorities and initiatives underway. Elanor published its inaugural ESG Report in September 2022 Elanor Commercial Property Fund (ASX:ECF) is executing its roadmap to a Carbon Neutral Portfolio: WorkZone West 202 Pier Street, Perth, WA Garema Court 140-180 City Walk, Canberra ACT 19 Harris Street 19 Harris Street, Pyrmont, Sydney NSW 6 6 Elanor Investors GroupAnnual Report 2022Recently completed solar panel installation at Clifford Gardens Elanor’s collaboration with Solar Bay and Momentum Energy is delivering a combination of on-site and off-site renewables that meet 100% of the Waverley Gardens (Melbourne) and Clifford Gardens (Toowoomba) Shopping Centres’ energy requirements This model will be implemented at other properties in the Group’s Retail portfolio Office of Environment and Heritage Elanor partners with the Office of Environment and Heritage in the ‘Saving our Species’ program for the ‘Plains Wanderer’, a critically endangered Australian bird 7 7 FSHD Global Research Foundation Elanor’s partnership with FSHD Global Research Foundation supports the Foundation’s key objectives of finding a cure for FSHD. Elanor provides a wide level of support to the Foundation, including financial and Board participationMessage from the Chair 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 2022. Despite the on-going challenging times, the year ended 30 June 2022 has been another successful year for the Group, both financially and strategically. Financially, the Group achieved Core Earnings of $18.3 million and funds under management grew to $2.72 billion (up 31% since 30 June 2021). Strategically, the 31% growth in funds under management and the 48% increase in our recurring funds management income are very much in line with our ongoing strategy of growing Elanor into a leading real estate funds management group delivering exceptional investment returns to investors in our funds. Results The results for the 2022 Financial Year reflect the continuing strong growth of the Group’s funds management platform. Core Earnings for the period increased 21% to $18.3 million, or 14.98 cents per stapled security. The strong performance of the funds management business underpinned this result, with recurring funds management revenues of $32.2 million, an increase of 48% on the prior period. Growing recurring management fees is a major focus of the business. Elanor’s conservative gearing of 30.2%, combined with it’s available capital to support further growth, provides the Group with significant capacity for further growth in funds under management. Achievements The primary achievement in the 2022 Financial Year was Elanor’s ongoing ability to continue to grow funds under management in less than ideal times. Over the period funds under management grew by $649 million, reaching $2.72 billion, a growth rate of 31% over the year. This growth was supported by the performance of the Group’s Managed Funds over the period (despite challenging conditions), where the value of Managed Fund real estate investments increased by 7.9% ($165 million) from 30 June 2021. This was achieved across all sectors of focus. 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 2022 Financial Year results and specific achievements can be found in the CEO’s Message that follows. Market conditions The COVID-19 pandemic continued to present challenging operating and market conditions in the 2022 Financial Year, particularly for the Group’s hotels, tourism and leisure focused Managed Funds. Nonetheless, these Managed Funds have recovered strongly in the second half of the financial year, following the relaxation of COVID-19 related state border closures and government mandated operating restrictions during November and December 2021. Governance The Board continues to strengthen the Group’s corporate governance structure and processes consistent with Elanor’s growth, strategic intent and operating activities. The Group’s Environmental, Social and Governance (ESG) Management Committee, chaired by the CEO, is responsible for, and oversees, the Group’s ESG strategy. Following a detailed stakeholder analysis, the Group has identified nine material areas of focus. Strategic priorities, initiatives and targets are being assessed. Elanor has published its inaugural ESG Report in conjunction with the FY22 Annual Report. In addition, 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 2022 financial year had its challenges, yet, again Elanor’s CEO and the senior executives, as well as all staff, continued to grow the business and increase core earnings, bolstered by greater recurring funds management income. 8 Elanor Investors GroupAnnual Report 202250 Cavill Ave, Surfers Paradise (QLD) Funds under Management As at 30 June 2022 $2.72bn > 31% The loyalty and support of Securityholders and investors in our funds is much appreciated. We see Elanor’s long-term success depend on providing great investment returns to our Securityholders and investors. To my colleagues on the Elanor Board, thank you for your continuing support and insights during the year. I look forward to discussing the business further at our Annual General Meeting in Sydney on 27 October 2022. Yours sincerely, Paul Bedbrook Chair 9 CEO’s Message I am pleased to present Elanor Investors Group’s Annual Report for the year ended 30 June 2022. 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 delivered strong growth in funds under management over the year despite market conditions impacting some of our investment sectors. We are pleased with the growth in both funds under management and recurring funds management income over the period. Funds under management grew by 31% from $2.07 billion to $2.72 billion over the year and recurring funds management income increased 48% to $32.2 million. This strong increase in funds management earnings reflects not only our ongoing growth in funds under management but also the significant growth in hotel operator fees, development management fees and leasing fees over the period. These growing funds management revenue streams are a direct result of the ongoing investments we have made in our funds management platform and the exceptional investment returns that are being generated for our capital partners. This year we are pleased to publish our inaugural ESG (Environmental, Social and Governance) Report which is available on our website. This marks a major milestone for the Group as we report on our 10 sustainability achievements and our approach to ESG matters. During the year, Elanor’s ESG Committee refined the Group’s ESG strategy following a comprehensive review of ESG priorities that are the most important and impactful to our stakeholders. This strategy is now guiding our ESG ambitions and helping us to prioritise, and report on, significant sustainability initiatives going forward. Throughout the year we continued to deepen our collaboration with communities in which our assets are located, improve energy efficiency across our managed funds, implement sustainable procurement initiatives at our hotels, contribute to significant species preservation initiatives via the Group’s Wildlife Parks and support disadvantaged youth via our collaboration with The Smith Family. Core Earnings grew by 21% to $18.3 million over the year, notwithstanding the COVID-19 related impact on earnings (primarily) in the first half of the financial year. Significantly improved trading conditions in the three months ended 30 June 2022, particularly in the hotels, tourism and leisure sector, are expected to result in improved funds management fees and co-investment earnings in the year ending 30 June 2023. The Group’s managed funds 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 2022 have increased by 7.9% or $165 million. A significant number of funds management initiatives were successfully completed during the year, including the establishment of the Elanor Hotel Accommodation Fund in September 2021. The Elanor Commercial Property Fund grew strongly over the period following the completion of two high investment quality acquisitions: 50 Cavill Avenue, Gold Coast, QLD and a 49.9% interest in 19, Harris Street, Pyrmont, NSW. The announcement and implementation of the privatisation and delisting of Elanor Retail Property Fund (ERF) was a significant achievement over the period, delivering strong value to ERF Securityholders. We remain confident that our funds management platform will continue to deliver strong investment returns to both Elanor’s Securityholders and the Group’s capital partners. Elanor’s strong investment track record continues to drive demand from wholesale and institutional investors for the Group’s managed funds. Elanor has a high calibre and scalable funds management platform with substantial capacity to grow funds under management. Further investments have been made in the platform during the year, and coupled with the Group’s available balance sheet capital, Elanor is well positioned to grow its funds management business. Elanor Investors GroupAnnual Report 2022Funds Management Income $41.3m > 39% on FY21 Recurring Funds Management Income (excl. acq fees) $32.2m > 48% on FY21 In addition to our core sectors of focus – retail real estate, commercial real estate, healthcare real estate and hotels, tourism and leisure real estate – the Group anticipates launching its agriculture real estate fund strategy in the short term. We continue to evaluate strategic opportunities to achieve our growth objectives. Investment Approach Our differentiated real estate funds management capability positions us well for further growth. We believe that the prevailing environment will present an increasing number of high value investment opportunities. With a strong pipeline and a growing investor base, we are well positioned for further strong growth in both funds under management and Securityholder value. Key Results • Core Earnings for the year of $18.3 million (14.98 cents per security), a 21% increase on FY21 • Distribution for the year of 13.48 per security (90% payout ratio) • Growth in funds under management of $649 million to $2.72 billion (31% increase on FY21) • Funds management income of $41.3 million for the year (39% increase on FY21); recurring funds management income increased 48% to $32.2 million • The valuations of the Group’s comparable managed funds asset portfolio at 30 June 2022 reflected an increase of 7.9% ($165 million) from 30 June 2021 • Net Tangible Assets (NTA) per security of $1.40 at 30 June 2022 • Gearing of 30.2% at 30 June 2022 Funds Management The Group completed the following funds management initiatives during the year: • The acquisition of the commercial office property located at 50 Cavill Avenue, Gold Coast, QLD for $113.5 million by the Elanor Commercial Property Fund (ASX: ECF) in August 2021 • The divestment of the Moranbah Fair property, at book value ($28.0 million), for the Elanor Retail Property Fund (ASX: ERF) • The establishment of the Elanor Hotel Accommodation Fund (EHAF) in September 2021, creating a $346.2 million hotel fund (as at the establishment date) The acquisition of Highpoint Health Hub in Ashgrove, QLD, for $51.9 million in October 2021 for the Elanor Healthcare Real Estate Fund. The Fund’s property portfolio is valued at $289.3 million as at 30 June 2022 • The establishment of the Warrawong Plaza Fund in October 2021 to acquire the Warrawong Plaza shopping centre in Wollongong, NSW, for $136.4 million • The acquisition of the 19 Harris Street property in Pyrmont for $185.0 million by the Harris Street Fund in May 2022, with the Elanor Commercial Property Fund (ASX: ECF) acquiring a 49.9% interest in the fund alongside Elanor’s wholesale private capital partners • The acquisition of the Estate Tuscany accommodation hotel, Pokolbin, NSW for $12.8 million in June 2022 for the Elanor Hotel Accommodation Fund (EHAF), growing the value of the Fund’s portfolio to $364.6 million (as at 30 June 2022) Subsequent to 30 June 2022, ENN has completed the following significant funds management initiatives: • The acquisition of Sanctuary Inn Tamworth, NSW, for EHAF in August 2022 for $16.5 million • Securityholder approval of the privatisation and delisting of the Elanor Retail Property Fund (ASX: ERF) in August 2022. The privatisation and delisting comprises the syndication of the Fund’s Tweed Mall property to Elanor’s wholesale private capital partners, a security buy-back offer and the delisting of ERF to become the Elanor Property Income Fund (EPIF). EPIF will be an open-ended, multi-sector, property fund generating reliable income from a portfolio of high investment quality real estate assets 11 progressing funds management opportunities in new real estate sectors, in addition to pursuing strategic opportunities to deliver its 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 Australian funds management group. Yours sincerely, Glenn Willis Managing Director and Chief Executive Officer CEO’s Message Investment Portfolio The Group generated funds management income of $41.3 million (FY21: $29.7 million), a 39% increase on the prior comparative period. During the year, Elanor increased its funds under management from $2,073 million to $2,722 million. The growth in funds under management has been supported by strong growth in Elanor’s institutional and private wholesale investors base, reflecting the Group’s strong investment track record and investments in capital origination. Capital Management Elanor remains conservatively geared at 30.2% having successfully completed the refinancing of the Group’s debt in June 2022. The Group’s debt facilities have been refinanced on similar terms, with improved flexibility, for tenors of 3 and 4 years. The planned sell-down of the Group’s co-investments in FY23 is expected to release more than $50 million to support the growth of Elanor’s funds under management. 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 Group’s Managed Funds have performed strongly over the period, notwithstanding COVID-19 related border closures impacting some of the Group’s investments (particularly) in the first half of the financial year. The hotels, tourism and leisure sector was impacted heavily during the first half of the financial year. However, significantly improved trading 12 conditions during the three months ended 30 June 2022 are expected to continue in FY23, resulting in materially higher hotel operator fees and increased co-investment earnings for the period. Our Approach to Corporate Sustainability Our mission is to grow Elanor Investors Group into a leading real estate funds management business known for delivering exceptional investment returns and striving to make positive and impactful social and environmental contributions to the communities in which we operate, and more broadly. Reporting to the Board as a Management Committee, Elanor’s ESG Committee plays a significant role in assessing and overseeing the implementation of environmental, social and governance initiatives across the business. The Committee is governed by Charter and covers a range of material ESG topics while working to focus on risks and opportunities under each key theme. Outlook The Group’s key strategic objective remains unchanged: to grow funds under management and Securityholder value by delivering strong investment returns for Elanor’s capital partners. The Group is acutely focused on growing funds management earnings and recycling co- investment capital to facilitate growth in a ‘capital-lite’ manner. The Group will continue to achieve strong growth in funds under management through the acquisition of high investment quality assets based on Elanor’s investment philosophy and criteria. The Group has a strong pipeline of funds management opportunities. Furthermore, the Group is actively Elanor Investors GroupAnnual Report 2022 Financial Report for the year ended 30 June 2022 14 — Directors’ Report 44 — Auditor’s Independence Declaration 45 — Consolidated Statements of Profit or Loss 46 — Consolidated Statements of Comprehensive Income 47 — Consolidated Statements of Financial Position 49 — Consolidated Statements of Changes in Equity 51 — Consolidated Statements of Cash Flows 52 — Notes to the Consolidated Financial Statements 124 — Directors’ Declaration to Stapled Securityholders 125 — Independent Auditor’s Report 13 Directors’ Report ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP DIRECTORS’ REPORT ELANOR INVESTORS GROUP DIRECTORS’ REPORT ELANOR INVESTORS GROUP DIRECTORS’ REPORT DIRECTORS’ REPORT DIRECTORS’ REPORT DIRECTORS’ REPORT The Directors of Elanor Investors Limited (Company), and the Directors of Elanor Funds Management Limited 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 (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 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 The Directors of Elanor Investors Limited (Company), and the Directors of Elanor Funds Management Limited 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 (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 (Responsible Entity or Manager), as responsible entity of the Elanor Investment Fund, present their report June 2022 (year). 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 2022 (year). 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 2022 (year). Elanor) and the consolidated financial report of the Elanor Investment Fund (EIF Group) for the year ended 30 June 2022 (year). The annual financial report of Elanor Investors Group comprises the Company and its controlled entities, Elanor) and the consolidated financial report of the Elanor Investment Fund (EIF Group) for the year ended 30 The annual financial report of Elanor Investors Group comprises the Company and its controlled entities, June 2022 (year). including Elanor Investment Fund (Trust) and its controlled entities. The annual financial report of the EIF June 2022 (year). 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 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 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 including Elanor Investment Fund (Trust) and its controlled entities. The annual financial report of the EIF Elanor Investors Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered Group comprises Elanor Investment Fund and its controlled entities. office and principal place of business is Level 38, 259 George Street, Sydney NSW 2000. The Trust was Group comprises Elanor Investment Fund and its controlled entities. Elanor Investors Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is Level 38, 259 George Street, Sydney NSW 2000. The Trust was Elanor Investors Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered registered as a managed investment scheme on 21 May 2014 and the Company was incorporated on 1 May office and principal place of business is Level 38, 259 George Street, Sydney NSW 2000. The Trust was Elanor Investors Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered registered as a managed investment scheme on 21 May 2014 and the Company was incorporated on 1 May office and principal place of business is Level 38, 259 George Street, Sydney NSW 2000. The Trust was Elanor Investors Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered 2014. registered as a managed investment scheme on 21 May 2014 and the Company was incorporated on 1 May office and principal place of business is Level 38, 259 George Street, Sydney NSW 2000. The Trust was 2014. registered as a managed investment scheme on 21 May 2014 and the Company was incorporated on 1 May office and principal place of business is Level 38, 259 George Street, Sydney NSW 2000. The Trust was 2014. 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 registered as a managed investment scheme on 21 May 2014 and the Company was incorporated on 1 May The units of the Trust and the shares of the Company are combined and issued as stapled securities in the 2014. Group. The Group's securities are traded on the Australian Securities Exchange (ASX: ENN). The units of the 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 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 The units of the Trust and the shares of the Company are combined and issued as stapled securities in 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. 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. Group. The Group's securities are traded on the Australian Securities Exchange (ASX: ENN). The units of the 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 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 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 Although there is no ownership interest between the Trust and the Company, the Company is deemed to be The Directors' report is a combined Directors' report that covers both the Company and the Trust. The financial the parent entity of the Group under Australian Accounting Standards. information for the Group is taken from the consolidated financial reports and notes. 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. 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 1. information for the Group is taken from the consolidated financial reports and notes. 1. 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 year 1. The following persons have held office as Directors of the Responsible Entity and Company during the year 1. and up to the date of this report: The following persons have held office as Directors of the Responsible Entity and Company during the year and up to the date of this report: The following persons have held office as Directors of the Responsible Entity and Company during the year and up to the date of this report: The following persons have held office as Directors of the Responsible Entity and Company during the year and up to the date of this report: The following persons have held office as Directors of the Responsible Entity and Company during the year and up to the date of this report: and up to the date of this report: Directors Directors Directors Directors Directors Directors    Glenn Willis (Managing Director and Chief Executive Officer)   Glenn Willis (Managing Director and Chief Executive Officer)  Nigel Ampherlaw   Glenn Willis (Managing Director and Chief Executive Officer)  Nigel Ampherlaw   Glenn Willis (Managing Director and Chief Executive Officer)    Nigel Ampherlaw   Glenn Willis (Managing Director and Chief Executive Officer)  Nigel Ampherlaw   Glenn Willis (Managing Director and Chief Executive Officer)     Nigel Ampherlaw   Nigel Ampherlaw            Paul Bedbrook (Chairman) Paul Bedbrook (Chairman) Paul Bedbrook (Chairman) Paul Bedbrook (Chairman) Paul Bedbrook (Chairman) Anthony Fehon Paul Bedbrook (Chairman) Anthony Fehon Su Kiat Lim (appointed 1 October 2021) Anthony Fehon Su Kiat Lim (appointed 1 October 2021) Anthony Fehon Karyn Baylis (appointed 1 November 2021) Su Kiat Lim (appointed 1 October 2021) Karyn Baylis (appointed 1 November 2021) Anthony Fehon Su Kiat Lim (appointed 1 October 2021) Anthony Fehon Karyn Baylis (appointed 1 November 2021) Su Kiat Lim (appointed 1 October 2021) Karyn Baylis (appointed 1 November 2021) Principal activities Su Kiat Lim (appointed 1 October 2021) Karyn Baylis (appointed 1 November 2021) Principal activities Karyn Baylis (appointed 1 November 2021) Principal activities Principal activities Principal activities Principal activities 2. 2. 2. 2. The principal activities of the Group are the management of investment funds and syndicates and the 2. The principal activities of the Group are the management of investment funds and syndicates and the 2. investment in, and operation of, a portfolio of real estate assets and businesses. 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. 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. 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. The principal activities of the Group are the management of investment funds and syndicates and the 3. investment in, and operation of, a portfolio of real estate assets and businesses. 3. investment in, and operation of, a portfolio of real estate assets and businesses. 3. 3. Distributions relating to the year ended 30 June 2022 comprise: 3. Distributions relating to the year ended 30 June 2022 comprise: 3. Distributions relating to the year ended 30 June 2022 comprise: Distributions relating to the year ended 30 June 2022 comprise: Distributions relating to the year ended 30 June 2022 comprise: Distributions relating to the year ended 30 June 2022 comprise: Distributions Distributions Distributions Distributions Distributions Distributions The Final Distribution of 4.43 cents per stapled security brings distributions in respect of the year ended 30 The Final Distribution of 4.43 cents per stapled security brings distributions in respect of the year ended 30 June 2022 to 13.48 cents per stapled security. The Final Distribution of 4.43 cents per stapled security brings distributions in respect of the year ended 30 June 2022 to 13.48 cents per stapled security. The Final Distribution of 4.43 cents per stapled security brings distributions in respect of the year ended 30 14 June 2022 to 13.48 cents per stapled security. The Final Distribution of 4.43 cents per stapled security brings distributions in respect of the year ended 30 June 2022 to 13.48 cents per stapled security. 3  The Final Distribution of 4.43 cents per stapled security brings distributions in respect of the year ended 30 June 2022 to 13.48 cents per stapled security. 3  June 2022 to 13.48 cents per stapled security. 3  3  3  3  Elanor Investors GroupAnnual Report 2022ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP DIRECTORS’ REPORT DIRECTORS’ REPORT Operating and financial review Operating and financial review 4. 4. OVERVIEW AND STRATEGY OVERVIEW AND STRATEGY Elanor is a real estate funds management group with an investment focus on acquiring and unlocking value in Elanor is a real estate funds management group with an investment focus on acquiring and unlocking value in assets that provide high quality income and capital growth. Elanor's active approach to asset management is assets that provide high quality income and capital growth. Elanor's active approach to asset management is fundamental to delivering investment outperformance. fundamental to delivering investment outperformance. Elanor’s key investment sectors include the commercial office, healthcare real estate, retail real estate and the Elanor’s key investment sectors include the commercial office, healthcare real estate, retail real estate and the accommodation hotels, tourism and leisure sectors. accommodation hotels, tourism and leisure sectors. During the year, Elanor increased its funds under management from $2,073.2 million to $2,721.9 million and During the year, Elanor increased its funds under management from $2,073.2 million to $2,721.9 million and increased its co-investments and balance sheet investments from $216.4 million to $221.3 million. The growth increased its co-investments and balance sheet investments from $216.4 million to $221.3 million. The growth in funds under management has been supported by strong growth in the Group’s institutional and private in funds under management has been supported by strong growth in the Group’s institutional and private wholesale investors base (refer to page 16 for a table detailing the Group’s funds under management and co- wholesale investors base (refer to page 16 for a table detailing the Group’s funds under management and co- investments and balance sheet investments as at 30 June 2022). investments and balance sheet investments as at 30 June 2022). The significant funds management initiatives completed during the year included: The significant funds management initiatives completed during the year included: • The acquisition of the commercial office property located at 50 Cavill Avenue, Gold Coast, QLD for • The acquisition of the commercial office property located at 50 Cavill Avenue, Gold Coast, QLD for $113.5 million by the Elanor Commercial Property Fund (ASX: ECF) in August 2021; $113.5 million by the Elanor Commercial Property Fund (ASX: ECF) in August 2021; • The divestment by the Elanor Retail Property Fund (ASX: ERF) of the Moranbah Fair property, at book • The divestment by the Elanor Retail Property Fund (ASX: ERF) of the Moranbah Fair property, at book value, for $28.0 million; value, for $28.0 million; • The establishment of the Elanor Hotels Accommodation Fund (EHAF) in September 2021, creating a • The establishment of the Elanor Hotels Accommodation Fund (EHAF) in September 2021, creating a $346.2 million hotel fund (as at the establishment date); $346.2 million hotel fund (as at the establishment date); • The acquisition of Highpoint Health Hub in Ashgrove, QLD, for $51.9 million in October 2021 by the Elanor Healthcare Real Estate Fund. The fund’s property portfolio is valued at $304.3 million (as at 30 • The acquisition of Highpoint Health Hub in Ashgrove, QLD, for $51.9 million in October 2021 by the June 2022); Elanor Healthcare Real Estate Fund. The fund’s property portfolio is valued at $304.3 million (as at 30 June 2022); • The establishment of the Warrawong Plaza Fund in October 2021 to acquire the Warrawong Plaza • The establishment of the Warrawong Plaza Fund in October 2021 to acquire the Warrawong Plaza shopping centre in Wollongong, NSW, for $136.4 million; shopping centre in Wollongong, NSW, for $136.4 million; • The acquisition of the 19 Harris Street property in Pyrmont for $185.0 million by the Harris Street Fund in May 2022, with the Elanor Commercial Property Fund (ASX: ECF) acquiring a 49.9% interest in the • The acquisition of the 19 Harris Street property in Pyrmont for $185.0 million by the Harris Street Fund fund alongside Elanor’s wholesale private capital partners; and in May 2022, with the Elanor Commercial Property Fund (ASX: ECF) acquiring a 49.9% interest in the fund alongside Elanor’s wholesale private capital partners; and • The acquisition of the Estate Tuscany accommodation hotel, Pokolbin, NSW for $12.8 million in June 2022 by the Elanor Hotel Accommodation Fund (EHAF), growing the value of the fund’s portfolio to • The acquisition of the Estate Tuscany accommodation hotel, Pokolbin, NSW for $12.8 million in June $364.6 million (as at 30 June 2022). 2022 by the Elanor Hotel Accommodation Fund (EHAF), growing the value of the fund’s portfolio to $364.6 million (as at 30 June 2022). Furthermore, subsequent to 30 June 2022, Elanor has completed the following significant funds management Furthermore, subsequent to 30 June 2022, Elanor has completed the following significant funds management initiatives: initiatives: • The acquisition of Sanctuary Inn Tamworth, NSW, by EHAF in August 2022 for $16.5 million; and • The acquisition of Sanctuary Inn Tamworth, NSW, by EHAF in August 2022 for $16.5 million; and • Securityholder approval for the proposed liquidity event and privatisation of the Elanor Retail Property Fund (ASX: ERF) in August 2022. The privatisation and delisting incorporates the syndication of the • Securityholder approval for the proposed liquidity event and privatisation of the Elanor Retail Property fund’s Tweed Mall property to Elanor’s wholesale private capital partners, a security buy-back offer Fund (ASX: ERF) in August 2022. The privatisation and delisting incorporates the syndication of the and the delisting of ERF to become the Elanor Property Income Fund (EPIF). EPIF will be an open- fund’s Tweed Mall property to Elanor’s wholesale private capital partners, a security buy-back offer ended, multi-sector, property fund generating reliable income from a portfolio of high investment quality and the delisting of ERF to become the Elanor Property Income Fund (EPIF). EPIF will be an open- real estate assets. ended, multi-sector, property fund generating reliable income from a portfolio of high investment quality real estate assets. 15 4 4 ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP DIRECTORS’ REPORT ELANOR INVESTORS GROUP DIRECTORS’ REPORT Directors' Report DIRECTORS’ REPORT Operating and financial review (continued) Operating and financial review (continued) Operating and financial review (continued) 4. 4. ENN’s strong investment track record (average realised IRR of 19%) continues to drive demand from 4. 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 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 investments have been made in the ENN’s strong investment track record (average realised IRR of 19%) continues to drive demand from management platform with substantial capacity for growth. Further investments have been made in the platform during the year. Elanor is well positioned to grow its funds management business. wholesale and institutional investors for the Group’s funds. Elanor has a high calibre and scalable funds platform during the year. Elanor is well positioned to grow its funds management business. management platform with substantial capacity for growth. Further investments have been made in the platform during the year. Elanor is well positioned to grow its funds management business. MANAGED FUNDS AND INVESTMENT PORTFOLIO MANAGED FUNDS AND INVESTMENT PORTFOLIO The following tables show the Group's Managed Funds and investment portfolio: MANAGED FUNDS AND INVESTMENT PORTFOLIO The following tables show the Group's Managed Funds and investment portfolio: The following tables show the Group's Managed Funds and investment portfolio: Managed Funds Managed Funds Note 1: The funds under management balance of $2,721.9 million represents the gross asset value of the Group’s Managed Funds at 30 June 2022, including those funds that have been consolidated in the Group’s financial statements. Managed Funds Note 1: The funds under management balance of $2,721.9 million represents the gross asset value of the Group’s Managed Funds at 30 June 2022, including those funds that have been consolidated in the Group’s financial statements. Note 2: The numbers included in brackets under the ‘Location’ column represents the number of assets within each State for the Group’s Note 1: The funds under management balance of $2,721.9 million represents the gross asset value of the Group’s Managed Funds at 30 multi-asset funds. Note 2: The numbers included in brackets under the ‘Location’ column represents the number of assets within each State for the Group’s June 2022, including those funds that have been consolidated in the Group’s financial statements. multi-asset funds. 16 5  Note 2: The numbers included in brackets under the ‘Location’ column represents the number of assets within each State for the Group’s 5  multi-asset funds. 5  Elanor Investors GroupAnnual Report 2022ELANOR INVESTORS GROUP DIRECTORS’ REPORT 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 Hotel and Accommodation Fund (EHAF), Elanor Wildlife Park Fund (EWPF), Stirling Street Syndicate (Stirling) 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. 6  17 ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP DIRECTORS’ REPORT DIRECTORS’ REPORT DIRECTORS’ REPORT DIRECTORS’ REPORT Directors' Report Operating and financial review (continued) 4. Operating and financial review (continued) 4. Operating and financial review (continued) 4. 4. Operating and financial review (continued) MANAGED FUNDS AND INVESTMENT PORTFOLIO (CONTINUED) MANAGED FUNDS AND INVESTMENT PORTFOLIO (CONTINUED) MANAGED FUNDS AND INVESTMENT PORTFOLIO (CONTINUED) MANAGED FUNDS AND INVESTMENT PORTFOLIO (CONTINUED) Update on the Group’s Managed Funds Update on the Group’s Managed Funds Update on the Group’s Managed Funds Update on the Group’s Managed Funds The Group’s Managed Funds have performed strongly over the period, notwithstanding the COVID-19 related The Group’s Managed Funds have performed strongly over the period, notwithstanding the COVID-19 related impacts on the Australian economy particularly in the first half of the financial year. The hotels, tourism and The Group’s Managed Funds have performed strongly over the period, notwithstanding the COVID-19 related The Group’s Managed Funds have performed strongly over the period, notwithstanding the COVID-19 related impacts on the Australian economy particularly in the first half of the financial year. The hotels, tourism and leisure sector was impacted heavily during the first half of the financial year, however the sector has impacts on the Australian economy particularly in the first half of the financial year. The hotels, tourism and impacts on the Australian economy particularly in the first half of the financial year. The hotels, tourism and leisure sector was impacted heavily during the first half of the financial year, however the sector has experienced significantly improved trading conditions during Q4 FY22 as the demand for domestic tourism and leisure sector was impacted heavily during the first half of the financial year, however the sector has leisure sector was impacted heavily during the first half of the financial year, however the sector has experienced significantly improved trading conditions during Q4 FY22 as the demand for domestic tourism and leisure strengthens. This improvement in trading conditions is expected to benefit the Group through materially experienced significantly improved trading conditions during Q4 FY22 as the demand for domestic tourism and experienced significantly improved trading conditions during Q4 FY22 as the demand for domestic tourism and leisure strengthens. This improvement in trading conditions is expected to benefit the Group through materially higher hotel operator fees and increased co-investment earnings in FY23. leisure strengthens. This improvement in trading conditions is expected to benefit the Group through materially leisure strengthens. This improvement in trading conditions is expected to benefit the Group through materially higher hotel operator fees and increased co-investment earnings in FY23. higher hotel operator fees and increased co-investment earnings in FY23. higher hotel operator fees and increased co-investment earnings in FY23. Commercial Office Commercial Office Commercial Office Commercial Office The performance of the Group’s commercial office funds continues to be strong. The listed Elanor Commercial The performance of the Group’s commercial office funds continues to be strong. The listed Elanor Commercial Property Fund (ASX: ECF) exceeded its market guidance during the period, reflecting the strength of the The performance of the Group’s commercial office funds continues to be strong. The listed Elanor Commercial The performance of the Group’s commercial office funds continues to be strong. The listed Elanor Commercial Property Fund (ASX: ECF) exceeded its market guidance during the period, reflecting the strength of the Fund’s high investment quality commercial office properties and successful completion of strategic leasing Property Fund (ASX: ECF) exceeded its market guidance during the period, reflecting the strength of the Property Fund (ASX: ECF) exceeded its market guidance during the period, reflecting the strength of the Fund’s high investment quality commercial office properties and successful completion of strategic leasing initiatives. ECF completed two acquisitions during the period, materially increasing the scale and diversity of Fund’s high investment quality commercial office properties and successful completion of strategic leasing Fund’s high investment quality commercial office properties and successful completion of strategic leasing initiatives. ECF completed two acquisitions during the period, materially increasing the scale and diversity of the Fund’s portfolio. initiatives. ECF completed two acquisitions during the period, materially increasing the scale and diversity of initiatives. ECF completed two acquisitions during the period, materially increasing the scale and diversity of the Fund’s portfolio. the Fund’s portfolio. the Fund’s portfolio. The valuation of ECF’s portfolio, including the Harris Street Fund as an equity accounted investment, increased The valuation of ECF’s portfolio, including the Harris Street Fund as an equity accounted investment, increased to $561.1 million as at 30 June 2022 (an increase of 45.9% from 30 June 2021). This has been driven by the The valuation of ECF’s portfolio, including the Harris Street Fund as an equity accounted investment, increased The valuation of ECF’s portfolio, including the Harris Street Fund as an equity accounted investment, increased to $561.1 million as at 30 June 2022 (an increase of 45.9% from 30 June 2021). This has been driven by the acquisitions of 50 Cavill Avenue and 19 Harris Street (49.9% interest), as well as a range of strong leasing to $561.1 million as at 30 June 2022 (an increase of 45.9% from 30 June 2021). This has been driven by the to $561.1 million as at 30 June 2022 (an increase of 45.9% from 30 June 2021). This has been driven by the acquisitions of 50 Cavill Avenue and 19 Harris Street (49.9% interest), as well as a range of strong leasing outcomes at the Fund’s properties which have contributed to increased property valuations. acquisitions of 50 Cavill Avenue and 19 Harris Street (49.9% interest), as well as a range of strong leasing acquisitions of 50 Cavill Avenue and 19 Harris Street (49.9% interest), as well as a range of strong leasing outcomes at the Fund’s properties which have contributed to increased property valuations. outcomes at the Fund’s properties which have contributed to increased property valuations. outcomes at the Fund’s properties which have contributed to increased property valuations. As noted earlier, the Group established the Harris Street Fund during the period, with investors continuing to As noted earlier, the Group established the Harris Street Fund during the period, with investors continuing to demand high investment quality commercial office real estate. As noted earlier, the Group established the Harris Street Fund during the period, with investors continuing to As noted earlier, the Group established the Harris Street Fund during the period, with investors continuing to demand high investment quality commercial office real estate. demand high investment quality commercial office real estate. demand high investment quality commercial office real estate. The Group’s other managed commercial office funds – Stirling Street and Burke Street – continued to perform The Group’s other managed commercial office funds – Stirling Street and Burke Street – continued to perform strongly during the period. The Group’s other managed commercial office funds – Stirling Street and Burke Street – continued to perform The Group’s other managed commercial office funds – Stirling Street and Burke Street – continued to perform strongly during the period. strongly during the period. strongly during the period. The total funds under management for commercial office increased from $511.8 million as at 30 June 2021 to The total funds under management for commercial office increased from $511.8 million as at 30 June 2021 to $829.2 million as at 30 June 2022. The total funds under management for commercial office increased from $511.8 million as at 30 June 2021 to The total funds under management for commercial office increased from $511.8 million as at 30 June 2021 to $829.2 million as at 30 June 2022. $829.2 million as at 30 June 2022. $829.2 million as at 30 June 2022. Healthcare Real Estate Healthcare Real Estate Healthcare Real Estate Healthcare Real Estate The Elanor Healthcare Real Estate Fund (EHREF) continued to perform strongly over the period. Increased The Elanor Healthcare Real Estate Fund (EHREF) continued to perform strongly over the period. Increased investor demand for high investment quality healthcare real estate assets has resulted in capitalisation rate The Elanor Healthcare Real Estate Fund (EHREF) continued to perform strongly over the period. Increased The Elanor Healthcare Real Estate Fund (EHREF) continued to perform strongly over the period. Increased investor demand for high investment quality healthcare real estate assets has resulted in capitalisation rate compression across the sector. The successful execution of strategic leasing initiatives at the Fund’s assets, investor demand for high investment quality healthcare real estate assets has resulted in capitalisation rate investor demand for high investment quality healthcare real estate assets has resulted in capitalisation rate compression across the sector. The successful execution of strategic leasing initiatives at the Fund’s assets, in addition to the increased investor demand for healthcare real estate properties, has resulted in an increase compression across the sector. The successful execution of strategic leasing initiatives at the Fund’s assets, compression across the sector. The successful execution of strategic leasing initiatives at the Fund’s assets, in addition to the increased investor demand for healthcare real estate properties, has resulted in an increase in the value of the EHREF portfolio. As noted earlier in this report, the fund acquired the Highpoint Health Hub in addition to the increased investor demand for healthcare real estate properties, has resulted in an increase in addition to the increased investor demand for healthcare real estate properties, has resulted in an increase in the value of the EHREF portfolio. As noted earlier in this report, the fund acquired the Highpoint Health Hub during the year. in the value of the EHREF portfolio. As noted earlier in this report, the fund acquired the Highpoint Health Hub in the value of the EHREF portfolio. As noted earlier in this report, the fund acquired the Highpoint Health Hub during the year. during the year. during the year. The total funds under management for healthcare real estate increased from $209.1 million as at 30 June 2021 The total funds under management for healthcare real estate increased from $209.1 million as at 30 June 2021 to $304.3 million as at 30 June 2022 which includes the acquisition of Highpoint Health Hub, Ashgrove. The total funds under management for healthcare real estate increased from $209.1 million as at 30 June 2021 The total funds under management for healthcare real estate increased from $209.1 million as at 30 June 2021 to $304.3 million as at 30 June 2022 which includes the acquisition of Highpoint Health Hub, Ashgrove. to $304.3 million as at 30 June 2022 which includes the acquisition of Highpoint Health Hub, Ashgrove. to $304.3 million as at 30 June 2022 which includes the acquisition of Highpoint Health Hub, Ashgrove. Retail Real Estate Retail Real Estate Retail Real Estate Retail Real Estate The Group’s retail real estate managed funds continue to experience improved trading and customer visitation The Group’s retail real estate managed funds continue to experience improved trading and customer visitation following the easing of social distancing measures across the country. The Group’s retail real estate managed funds continue to experience improved trading and customer visitation The Group’s retail real estate managed funds continue to experience improved trading and customer visitation following the easing of social distancing measures across the country. following the easing of social distancing measures across the country. 18 following the easing of social distancing measures across the country. 7  7  7  7  Elanor Investors GroupAnnual Report 2022ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP DIRECTORS’ REPORT DIRECTORS’ REPORT 4. 4. Operating and financial review (continued) Operating and financial review (continued) MANAGED FUNDS AND INVESTMENT PORTFOLIO (CONTINUED) MANAGED FUNDS AND INVESTMENT PORTFOLIO (CONTINUED) Update on the Group’s Managed Funds (continued) Update on the Group’s Managed Funds (continued) Retail Real Estate (continued) Retail Real Estate (continued) There are no Code of Conduct rent relief obligations beyond 30 June 2022 across the retail portfolio. Debtor There are no Code of Conduct rent relief obligations beyond 30 June 2022 across the retail portfolio. Debtor collections have been strong and continue to improve across the Group’s non-discretionary focussed retail collections have been strong and continue to improve across the Group’s non-discretionary focussed retail portfolio. portfolio. The Group established the Warrawong Plaza Fund and announced the ERF privatisation proposal during the The Group established the Warrawong Plaza Fund and announced the ERF privatisation proposal during the period. Investor demand for unlisted retail real estate investments has improved during recent market volatility, period. Investor demand for unlisted retail real estate investments has improved during recent market volatility, particularly for defensive neighbourhood retail real estate assets anchored by strongly performing particularly for defensive neighbourhood retail real estate assets anchored by strongly performing supermarkets. supermarkets. Total retail real estate funds under management increased from $927.7 million at 30 June 2021 to $1,122.1 Total retail real estate funds under management increased from $927.7 million at 30 June 2021 to $1,122.1 million as at 30 June 2022 (including the divestment of Moranbah and the acquisition of Warrawong Plaza million as at 30 June 2022 (including the divestment of Moranbah and the acquisition of Warrawong Plaza shopping centre). shopping centre). Hotels, Tourism and Leisure Hotels, Tourism and Leisure Since the establishment of EHAF in September 2021, the Fund’s hotels have been impacted by COVID-19 Since the establishment of EHAF in September 2021, the Fund’s hotels have been impacted by COVID-19 related state border closures and government mandated operating restrictions. Following the relaxation of related state border closures and government mandated operating restrictions. Following the relaxation of these restrictions and the reopening of state borders during November and December 2021, the Fund’s hotels these restrictions and the reopening of state borders during November and December 2021, the Fund’s hotels have recovered strongly. Traveller confidence continues to improve, and resultingly, the Fund’s hotels have have recovered strongly. Traveller confidence continues to improve, and resultingly, the Fund’s hotels have seen the return of corporate, conference, group and some international business. seen the return of corporate, conference, group and some international business. Domestic travel demand continues to revert towards pre-COVID levels, driving forward bookings and Domestic travel demand continues to revert towards pre-COVID levels, driving forward bookings and occupancy. occupancy. The Group’s hotel portfolio experienced a valuation uplift of 1.4% or $5.1 million from its value at 30 June 2021, The Group’s hotel portfolio experienced a valuation uplift of 1.4% or $5.1 million from its value at 30 June 2021, increasing from $346.2 million to $351.3 million (excluding the newly acquired Estate Tuscany hotel). This increasing from $346.2 million to $351.3 million (excluding the newly acquired Estate Tuscany hotel). This increased portfolio valuation reflects the strength of the Group’s hotel portfolio and the recovery of the markets increased portfolio valuation reflects the strength of the Group’s hotel portfolio and the recovery of the markets where the Group’s properties operate. where the Group’s properties operate. As noted earlier, EHAF acquired the Estate Tuscany hotel, Hunter Valley, NSW for $ 12.75 million on 30 June As noted earlier, EHAF acquired the Estate Tuscany hotel, Hunter Valley, NSW for $ 12.75 million on 30 June 2022 and the Sanctuary Inn Tamworth, NSW, for $16.45 million, in early August 2022. These acquisitions grow 2022 and the Sanctuary Inn Tamworth, NSW, for $16.45 million, in early August 2022. These acquisitions grow EHAF’s portfolio to 16 regional and luxury accommodation hotels with a combined valuation of $381.0 million. EHAF’s portfolio to 16 regional and luxury accommodation hotels with a combined valuation of $381.0 million. Elanor Wildlife Park Fund Elanor Wildlife Park Fund In July 2021, the Elanor Wildlife Park Fund acquired the Hunter Valley Wildlife Park. The Fund’s wildlife parks In July 2021, the Elanor Wildlife Park Fund acquired the Hunter Valley Wildlife Park. The Fund’s wildlife parks have remained open since the removal of Government enforced COVID-19 related closures in October 2021. have remained open since the removal of Government enforced COVID-19 related closures in October 2021. Hunter Valley Wildlife Park and Mogo Wildlife Park have traded strongly due to their favourable regional Hunter Valley Wildlife Park and Mogo Wildlife Park have traded strongly due to their favourable regional locations and domestic tourism appeal. Featherdale Wildlife Park continues to be impacted by the slow locations and domestic tourism appeal. Featherdale Wildlife Park continues to be impacted by the slow recovery of international tourists to Sydney. recovery of international tourists to Sydney. As a result of its strong trading performance, Hunter Valley Wildlife Park has been independently valued at As a result of its strong trading performance, Hunter Valley Wildlife Park has been independently valued at $17.5 million (a 94% increase on the acquisition price of $9 million). The Fund’s portfolio is now valued at $17.5 million (a 94% increase on the acquisition price of $9 million). The Fund’s portfolio is now valued at 19 $66.2 million. $66.2 million. 8  8  ELANOR INVESTORS GROUP DIRECTORS’ REPORT 8 4.Operating and financial review (continued)MANAGED FUNDS AND INVESTMENT PORTFOLIO (CONTINUED) Update on the Group’s Managed Funds (continued) Retail Real Estate (continued) There are no Code of Conduct rent relief obligations beyond 30 June 2022 across the retail portfolio. Debtor collections have been strong and continue to improve across the Group’s non-discretionary focussed retail portfolio. The Group established the Warrawong Plaza Fund and announced the ERF privatisation proposal during the period. Investor demand for unlisted retail real estate investments has improved during recent market volatility, particularly for defensive neighbourhood retail real estate assets anchored by strongly performing supermarkets. Total retail real estate funds under management increased from $927.7 million at 30 June 2021 to $1,122.1 million as at 30 June 2022 (including the divestment of Moranbah and the acquisition of Warrawong Plaza shopping centre). Hotels, Tourism and Leisure Since the establishment of EHAF in September 2021, the Fund’s hotels have been impacted by COVID-19 related state border closures and government mandated operating restrictions. Following the relaxation of these restrictions and the reopening of state borders during November and December 2021, the Fund’s hotels have recovered strongly. Traveller confidence continues to improve, and resultingly, the Fund’s hotels have seen the return of corporate, conference, group and some international business. Domestic travel demand continues to revert towards pre-COVID levels, driving forward bookings and occupancy. The Group’s hotel portfolio experienced a valuation uplift of 1.4% or $5.1 million from its value at 30 June 2021, increasing from $346.2 million to $351.3 million (excluding the newly acquired Estate Tuscany hotel). This increased portfolio valuation reflects the strength of the Group’s hotel portfolio and the recovery of the markets where the Group’s properties operate. As noted earlier, EHAF acquired the Estate Tuscany hotel, Hunter Valley, NSW for $ 12.75 million on 30 June 2022 and the Sanctuary Inn Tamworth, NSW, for $16.45 million, in early August 2022. These acquisitions grow EHAF’s portfolio to 16 regional and luxury accommodation hotels with a combined valuation of $381.0 million. Elanor Wildlife Park Fund In July 2021, the Elanor Wildlife Park Fund acquired the Hunter Valley Wildlife Park. The Fund’s wildlife parks have remained open since the removal of Government enforced COVID-19 related closures in October 2021. Hunter Valley Wildlife Park and Mogo Wildlife Park have traded strongly due to their favourable regional locations and domestic tourism appeal. Featherdale Wildlife Park continues to be impacted by the slow recovery of international tourists to Sydney. As a result of its strong trading performance, Hunter Valley Wildlife Park has been independently valued at $17.5 million (a 94% increase on the acquisition price of $9 million). The Fund’s portfolio is now valued at $66.2 million. ELANOR INVESTORS GROUP DIRECTORS’ REPORT 8 4.Operating and financial review (continued)MANAGED FUNDS AND INVESTMENT PORTFOLIO (CONTINUED) Update on the Group’s Managed Funds (continued) Retail Real Estate (continued) There are no Code of Conduct rent relief obligations beyond 30 June 2022 across the retail portfolio. Debtor collections have been strong and continue to improve across the Group’s non-discretionary focussed retail portfolio. The Group established the Warrawong Plaza Fund and announced the ERF privatisation proposal during the period. Investor demand for unlisted retail real estate investments has improved during recent market volatility, particularly for defensive neighbourhood retail real estate assets anchored by strongly performing supermarkets. Total retail real estate funds under management increased from $927.7 million at 30 June 2021 to $1,122.1 million as at 30 June 2022 (including the divestment of Moranbah and the acquisition of Warrawong Plaza shopping centre). Hotels, Tourism and Leisure Since the establishment of EHAF in September 2021, the Fund’s hotels have been impacted by COVID-19 related state border closures and government mandated operating restrictions. Following the relaxation of these restrictions and the reopening of state borders during November and December 2021, the Fund’s hotels have recovered strongly. Traveller confidence continues to improve, and resultingly, the Fund’s hotels have seen the return of corporate, conference, group and some international business. Domestic travel demand continues to revert towards pre-COVID levels, driving forward bookings and occupancy. The Group’s hotel portfolio experienced a valuation uplift of 1.4% or $5.1 million from its value at 30 June 2021, increasing from $346.2 million to $351.3 million (excluding the newly acquired Estate Tuscany hotel). This increased portfolio valuation reflects the strength of the Group’s hotel portfolio and the recovery of the markets where the Group’s properties operate. As noted earlier, EHAF acquired the Estate Tuscany hotel, Hunter Valley, NSW for $ 12.75 million on 30 June 2022 and the Sanctuary Inn Tamworth, NSW, for $16.45 million, in early August 2022. These acquisitions grow EHAF’s portfolio to 16 regional and luxury accommodation hotels with a combined valuation of $381.0 million. Elanor Wildlife Park Fund In July 2021, the Elanor Wildlife Park Fund acquired the Hunter Valley Wildlife Park. The Fund’s wildlife parks have remained open since the removal of Government enforced COVID-19 related closures in October 2021. Hunter Valley Wildlife Park and Mogo Wildlife Park have traded strongly due to their favourable regional locations and domestic tourism appeal. Featherdale Wildlife Park continues to be impacted by the slow recovery of international tourists to Sydney. As a result of its strong trading performance, Hunter Valley Wildlife Park has been independently valued at $17.5 million (a 94% increase on the acquisition price of $9 million). The Fund’s portfolio is now valued at $66.2 million. ELANOR INVESTORS GROUP Directors' Report DIRECTORS’ REPORT 4. Operating and financial review (continued) Summary Notwithstanding the prevailing economic uncertainty, the Group’s Managed Funds are well positioned to grow earnings as market conditions continue to improve. The Group is well positioned to deliver strong investment returns for Elanor’s capital partners and grow funds under management. REVIEW OF FINANCIAL AND OPERATING RESULTS The Consolidated Group recorded a net statutory loss after tax of $4.2 million for the year ended 30 June 2022. At the balance date, Elanor held a 35.07% (30 June 2021: 42.94%) interest in the Elanor Hotel Accommodation Fund (EHAF). During the year, the Group sold down part of its equity interest in EHAF totalling $35.8 million (or 7.87%). The impact of this sell down on the Group’s consolidated balance sheet is to increase its non- controlling interest in relation to EHAF. Further, Elanor held a 42.82% (30 June 2021: 26.61%) interest in Elanor Wildlife Park Fund (EWPF), a 42.27% (30 June 2021: 42.27%) interest in the Bluewater Square Syndicate (Bluewater) and 42.98% (30 June 2021: 2.03%) in Stirling Street Syndicate (Stirling). For accounting purposes, Elanor is deemed to have a controlling interest in EHAF, EWPF, Bluewater and Stirling given its level of ownership and role as manager of the funds. This requires that the financial results and financial position of EHAF, EWPF, Bluewater and Stirling are consolidated into the financial statements of the Group for the year ended 30 June 2022. EWPF and Stirling are consolidated into the financial statements of the Group for the first year. Prior to this, EWPF and Stirling were equity accounted. All other managed fund co-investments are accounted for using the equity method in the Group’s consolidated financial statements. Statutory results Revenue from operating activities for the Consolidated Group for the year ended 30 June 2022 was $92.2 million, including strong growth in the Group’s funds management income as a result of the growth in the Group’s Funds Under Management. The Group’s balance sheet as at 30 June 2022 reflects net assets of $341.3 million and cash on hand of $27.8 million. The Group recorded a statutory net loss after tax for the year ended 30 June 2022 of $4.2 million compared to statutory net profit after tax of $7.8 million in prior year. As noted above, the Consolidated Group’s results for the year ended 30 June 2022 include the consolidation of EWPF and Stirling for the first time. Revenue increased significantly from prior year, with revenue from operating activities, rental income and share of profits from associates all increasing against the prior year. Total expenses have increased with rises in borrowing costs as well as salary and employee benefit costs. 20 9  Elanor Investors GroupAnnual Report 2022ELANOR INVESTORS GROUP DIRECTORS’ REPORT 4. Operating and financial review (continued) REVIEW OF FINANCIAL AND OPERATIONAL RESULTS (CONTINUED) A summary of the Group and EIF Group's statutory results for the year is set out below: Adjusted Statement of Profit and Loss (Equity Accounted) 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 EHAF, EWPF, Bluewater and Stirling are equity accounted. Elanor considers that presenting the operating performance of the Group on this adjusted basis gives the most appropriate representation of the Group which is consistent with the management and reporting of the Group, and to provide a comparable basis for the presentation of prior year results. The results provided on this basis are presented as the ‘ENN Group’. In the prior year, EWPF and Stirling were classified as equity accounted investments and therefore were not consolidated within the Group’s financial statements 10  21 ELANOR INVESTORS GROUP Directors' Report DIRECTORS’ REPORT 4. Operating and financial review (continued) REVIEW OF FINANCIAL RESULTS (CONTINUED) Set out below is a build up by component of the adjusted net profit / (loss) after tax, presented on the basis that EHAF, EWPF, Bluewater and Stirling are equity accounted. Note 1: During the year, the Group made an $8.4 million Manager Contribution to ECF to support ECF’s acquisition of a 49.9% interest in the 19 Harris Street property. Under the Australian Accounting Standards, this contribution is required to be recognised as a contract asset upon initial recognition. $3.9 million has been subsequently released through the Statement of Profit or Loss as a non-cash expense in the period in respect of transaction related funds management fees received from ECF. The remaining balance of the contract asset will be amortised as a non-cash expense through the Profit or Loss over a 5-year period. A summary of the Group and EIF Group Core Earnings' results for the period is set out below: Core Earnings Core or Distributable Earnings for the year was $18.3 million or 14.98 cents per stapled security, an increase of 20.6% from prior year. 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. 22 11  Elanor Investors GroupAnnual Report 2022ELANOR INVESTORS GROUP DIRECTORS’ REPORT 4. Operating and financial review (continued) REVIEW OF FINANCIAL RESULTS (CONTINUED) The Group generated funds management income of $41.3 million during the year (an increase of 39.2%) and had funds under management of $2,721.9 million at 30 June 2022 (an increase of 31.3% from 30 June 2021). The table below provides a reconciliation from adjusted net profit / (loss) after tax to distributable Core Earnings: Note 1: Core Earnings represents the Directors view of underlying earnings from ongoing operating activities for the period, being net profit / (loss) after tax, adjusting for one-off realised items (being formation or other transaction costs that occur infrequently or are outside the course of ongoing business activities), non-cash items (being fair value movements, depreciation charges on the buildings held by the Trust, amortisation of intangibles, 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 (including equity accounting of EHAF, EWPF, Stirling and Bluewater) of the Group’s consolidated funds on an equity accounted basis 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 the 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 year, so as to only include net cash profit for the purposes of calculating Core Earnings. Note 4: On 30 September 2021, the Group sold its holding in Elanor Luxury Hotel Fund (ELHF) and Albany Hotel Syndicate (Albany) to Elanor Metro and Prime Regional Hotel Fund (EMPR) to establish the Elanor Hotel Accommodation Fund. The hotel assets held by ELHF and Albany were accounted for by the Group on a fair value basis whereby revaluation increases arising from changes in the fair value of land and buildings are recognised in other comprehensive income and accumulated within equity as opposed to being reflected in the consolidated profit and loss of the Group. Consequently, and consistent with the Group’s policy, the profit on divestment of ELHF and Albany ($11.0 million) has been included in Core Earnings for the year. Furthermore, an amount of $2.7 million of this profit has been retained to assist in achieving the future growth plans of the Group. Note 5: During the year, the Group (on the basis that EHAF, EWPF, Stirling and Bluewater are equity accounted) incurred total depreciation charges of $1.1 million, however only the depreciation expense on buildings of $0.1 million has been added back for the purposes of calculating Core Earnings. Note 6: During the year, 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) and Long Term Incentive (LTI) amounts, intangibles and borrowing costs. These amounts have been added back for the purposes of calculating Core Earnings. Note 7: Tax and other non-cash adjustments include non-cash interest and depreciation in respect of the Group’s leases, other non-cash profit and loss charges impacting the Group’s result for the year, and the tax effect of non-cash items during the year. 12  23 ELANOR INVESTORS GROUP Directors' Report DIRECTORS’ REPORT 4. Operating and financial review (continued) REVIEW OF FINANCIAL RESULTS (CONTINUED) Funds Management Income The table below provides a breakdown of ENN Group’s funds management income. Note: Total funds management income includes $12.6 million relating to the Group’s consolidated funds (EHAF, EWPF, Bluewater and Stirling), which is eliminated upon consolidation into the Group’s consolidated financial results. The Group’s funds management income has grown strongly during the period as a result of the growth in the Group’s funds under management. Management fees generated from the Group’s hotel operating platform are expected to grow as the demand for domestic tourism and leisure strengthens. Leasing and development management fees continue to be a sustainable and growing income stream as a result of the breadth of development and repositioning projects across the Group’s Managed Funds in the Retail, Hotels and Commercial sectors. Acquisition fees for the year of $9.1 million (2021: $6.1 million) were generated from new funds management initiatives during the year. 24 13  Elanor Investors GroupAnnual Report 2022ELANOR INVESTORS GROUP DIRECTORS’ REPORT 4. Operating and financial review (continued) REVIEW OF FINANCIAL RESULTS (CONTINUED) 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 2022. Note: As the Group consolidates EHAF, EWPF, Stirling and Bluewater into its consolidated financial results, the distribution receivable from these funds are eliminated on consolidation. The distributions receivable relating to the other funds that are equity accounted are contained within the equity accounted investments balance, and will reduce the equity accounted investments balance when the distribution is received. Total co-investment distributions received or receivable during the year amounted to $7.9 million, compared to $11.1 million received or receivable during FY21. Notably, co-investment distributions from the Elanor Retail Property Fund in FY21 included the $0.12 special distribution following the sale of the Auburn Central property. Co-investment distributions from the Elanor Hotel Accommodation Fund in FY22 were impacted by COVID-19 disruptions to hotel trading conditions, including government mandated hotel closures and border restrictions during the period. 14  25 ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP DIRECTORS’ REPORT DIRECTORS’ REPORT DIRECTORS’ REPORT Directors' Report Operating and financial review (continued) Operating and financial review (continued) Operating and financial review (continued) 4. 4. 4. REVIEW OF OPERATIONAL RESULTS (CONTINUED) REVIEW OF OPERATIONAL RESULTS (CONTINUED) REVIEW OF OPERATIONAL RESULTS (CONTINUED) Refinancing Refinancing Refinancing On 30 June 2022, the Group raised $40 million in unsecured medium-term notes in two tranches: $25 million On 30 June 2022, the Group raised $40 million in unsecured medium-term notes in two tranches: $25 million of 3.25-year fixed rate medium-term notes (7.75% p.a.), maturing in September 2025, and $15 million of 4- On 30 June 2022, the Group raised $40 million in unsecured medium-term notes in two tranches: $25 million of 3.25-year fixed rate medium-term notes (7.75% p.a.), maturing in September 2025, and $15 million of 4- year floating rate medium-term notes (4.5% p.a. margin above BBSW), maturing in June 2026. The new of 3.25-year fixed rate medium-term notes (7.75% p.a.), maturing in September 2025, and $15 million of 4- year floating rate medium-term notes (4.5% p.a. margin above BBSW), maturing in June 2026. The new unsecured note issue replaced the Group’s $60 million fixed rate medium-term notes (7.1% p.a.), maturing in year floating rate medium-term notes (4.5% p.a. margin above BBSW), maturing in June 2026. The new unsecured note issue replaced the Group’s $60 million fixed rate medium-term notes (7.1% p.a.), maturing in October 2022. These notes have been issued on similar terms with improved issuer flexibility (including early unsecured note issue replaced the Group’s $60 million fixed rate medium-term notes (7.1% p.a.), maturing in October 2022. These notes have been issued on similar terms with improved issuer flexibility (including early redemption rights). October 2022. These notes have been issued on similar terms with improved issuer flexibility (including early redemption rights). redemption rights). The Group has refinanced its $45 million senior secured debt facility (maturing in October 2022) with a new 3- The Group has refinanced its $45 million senior secured debt facility (maturing in October 2022) with a new 3- year $65 million secured revolving facility, maturing in June 2025. This refinanced facility was secured on The Group has refinanced its $45 million senior secured debt facility (maturing in October 2022) with a new 3- year $65 million secured revolving facility, maturing in June 2025. This refinanced facility was secured on similar terms to the previous facility. The new revolving secured debt facility provides the Group with improved year $65 million secured revolving facility, maturing in June 2025. This refinanced facility was secured on similar terms to the previous facility. The new revolving secured debt facility provides the Group with improved flexibility to facilitate the Group’s pipeline of funds management opportunities. similar terms to the previous facility. The new revolving secured debt facility provides the Group with improved flexibility to facilitate the Group’s pipeline of funds management opportunities. flexibility to facilitate the Group’s pipeline of funds management opportunities. The corporate notes provide efficient, medium-term, non-dilutive capital that will be used in conjunction with The corporate notes provide efficient, medium-term, non-dilutive capital that will be used in conjunction with the Group’s revolving secured debt to facilitate Elanor’s pipeline of funds management opportunities. These The corporate notes provide efficient, medium-term, non-dilutive capital that will be used in conjunction with the Group’s revolving secured debt to facilitate Elanor’s pipeline of funds management opportunities. These new funding arrangements improve the capital efficiency of the Group while maintaining a conservatively the Group’s revolving secured debt to facilitate Elanor’s pipeline of funds management opportunities. These new funding arrangements improve the capital efficiency of the Group while maintaining a conservatively geared balance sheet. new funding arrangements improve the capital efficiency of the Group while maintaining a conservatively geared balance sheet. geared balance sheet. Risk Management Risk Management Risk Management Elanor’s growth and success depends on its ability to assess and manage risk. Good risk management Elanor’s growth and success depends on its ability to assess and manage risk. Good risk management practices will not only protect established value, they will assist in identifying and capitalising on opportunities Elanor’s growth and success depends on its ability to assess and manage risk. Good risk management practices will not only protect established value, they will assist in identifying and capitalising on opportunities to create value. By assessing and managing risk, the Group provides greater certainty and confidence for all practices will not only protect established value, they will assist in identifying and capitalising on opportunities to create value. By assessing and managing risk, the Group provides greater certainty and confidence for all Elanor securityholders. to create value. By assessing and managing risk, the Group provides greater certainty and confidence for all Elanor securityholders. Elanor securityholders. Elanor regularly assesses the key business risks and opportunities that could impact performance and the Elanor regularly assesses the key business risks and opportunities that could impact performance and the ability to deliver on the Group’s strategy. Risks to the Group in the coming year primarily comprise the potential Elanor regularly assesses the key business risks and opportunities that could impact performance and the ability to deliver on the Group’s strategy. Risks to the Group in the coming year primarily comprise the potential earnings variability associated with general economic and market conditions including the impact of recent ability to deliver on the Group’s strategy. Risks to the Group in the coming year primarily comprise the potential earnings variability associated with general economic and market conditions including the impact of recent global viruses on inbound tourism, domestic retail spending, the availability of capital for funds management earnings variability associated with general economic and market conditions including the impact of recent global viruses on inbound tourism, domestic retail spending, the availability of capital for funds management opportunities, movement in property valuations, debt capital market conditions, the general increase in cyber global viruses on inbound tourism, domestic retail spending, the availability of capital for funds management opportunities, movement in property valuations, debt capital market conditions, the general increase in cyber security risks, climate related risks and possible weather related events. opportunities, movement in property valuations, debt capital market conditions, the general increase in cyber security risks, climate related risks and possible weather related events. security risks, climate related risks and possible weather related events. The Group manages these risks in accordance with its Risk Management Framework and Risk Management The Group manages these risks in accordance with its Risk Management Framework and Risk Management Policy as well as through its highly active asset management approach across its investment portfolio, its The Group manages these risks in accordance with its Risk Management Framework and Risk Management Policy as well as through its highly active asset management approach across its investment portfolio, its continued focus on broadening the Group's capital partner base, insurance arrangements and through the Policy as well as through its highly 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. continued focus on broadening the Group's capital partner base, insurance arrangements and through the active management of its capital structure. active management of its capital structure. With regards to climate related risks, the Group is progressing its alignment with the recommendations of the With regards to climate related risks, the Group is progressing its alignment with the recommendations of the Taskforce for Climate-related Financial Disclosures (TCFD). This initiative is a key focus of the Group’s ESG With regards to climate related risks, the Group is progressing its alignment with the recommendations of the Taskforce for Climate-related Financial Disclosures (TCFD). This initiative is a key focus of the Group’s ESG Committee. Taskforce for Climate-related Financial Disclosures (TCFD). This initiative is a key focus of the Group’s ESG Committee. Committee. Environmental, Social, Governance (ESG) Environmental, Social, Governance (ESG) Environmental, Social, Governance (ESG) The Group recognises and appreciates the importance of managing environmental, social and governance The Group recognises and appreciates the importance of managing environmental, social and governance factors in how it delivers value for securityholders, its managed fund capital partners and other stakeholders. The Group recognises and appreciates the importance of managing environmental, social and governance factors in how it delivers value for securityholders, its managed fund capital partners and other stakeholders. Elanor is acutely aware of its responsibility to the communities in which it operates and to society more factors in how it delivers value for securityholders, its managed fund capital partners and other stakeholders. Elanor is acutely aware of its responsibility to the communities in which it operates and to society more generally. Making a positive impact for the communities the business relies on is implicit in how the Group Elanor is acutely aware of its responsibility to the communities in which it operates and to society more generally. Making a positive impact for the communities the business relies on is implicit in how the Group undertakes its funds management business. generally. Making a positive impact for the communities the business relies on is implicit in how the Group undertakes its funds management business. undertakes its funds management business. Elanor, through the execution of its ESG Strategy, has achieved a number of significant sustainability Elanor, through the execution of its ESG Strategy, has achieved a number of significant sustainability outcomes over the year, including through the Group’s partnership with The Smith Family to support Elanor, through the execution of its ESG Strategy, has achieved a number of significant sustainability outcomes over the year, including through the Group’s partnership with The Smith Family to support disadvantaged youth, the Solar Bay partnership initiatives, the improvements in energy efficiency across the outcomes over the year, including through the Group’s partnership with The Smith Family to support disadvantaged youth, the Solar Bay partnership initiatives, the improvements in energy efficiency across the 26 disadvantaged youth, the Solar Bay partnership initiatives, the improvements in energy efficiency across the 15  15  15  Elanor Investors GroupAnnual Report 2022ELANOR INVESTORS GROUP DIRECTORS’ REPORT 4. Operating and financial review (continued) REVIEW OF OPERATIONAL RESULTS (continued) Environmental, Social, Governance (ESG) (continued) Group’s commercial office portfolio, the sustainable procurement initiatives for the hotel portfolio and the significant species preservation initiatives at the Group’s wildlife parks. Elanor’s inaugural ESG Report, which will be available on the Elanor website later this year, provides further details on the Group’s ESG achievements and plans for the future. Summary and Outlook The Group's key strategic objective remains unchanged: to grow funds under management and Securityholder value by delivering strong investment returns for Elanor’s capital partners. Furthermore, the Group is acutely focused on growing funds management earnings and recycling co-investment capital to facilitate growth in a ‘capital-lite’ manner. The Group will continue to achieve strong growth in funds under management through the acquisition of high investment quality assets based on Elanor’s investment philosophy and criteria. The Group has a strong pipeline of funds management opportunities. Furthermore, the Group is actively pursuing funds management opportunities in new real estate sectors, in addition to pursuing strategic opportunities, to deliver its growth objectives. 5. Interests in the Group The movement in stapled securities of the Group during the year is set out below: 16  27 ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP DIRECTORS’ REPORT DIRECTORS’ REPORT Directors' Report 6. 6. Directors Directors Name Particulars Name Particulars Paul Bedbrook Paul Bedbrook Independent Non-Executive Chairman Member, Audit and Risk Committee Member, Remuneration and Nomination Committee Independent Non-Executive Chairman Member, Audit and Risk Committee Member, Remuneration and Nomination Committee Paul was appointed as 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 appointed as 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 Great Southern Bank and the National Blood Authority. 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 Great Southern Bank and the National Blood Authority. Former listed directorships in the last three years: None Former listed directorships in the last three years: None Interest in stapled securities: 306,137 Interest in stapled securities: 306,137 Qualifications: B.Sc, F FIN, FAICD Qualifications: B.Sc, F FIN, FAICD Glenn Willis Glenn Willis Managing Director and Chief Executive Officer 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. 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. 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. Glenn is a Director of FSHD Global Research Foundation. Former listed directorships in the last three years: None Former listed directorships in the last three years: None Interest in stapled securities: 5,527,613 Interest in stapled securities: 5,527,613 Qualifications: B.Bus (Econ & Fin) Qualifications: B.Bus (Econ & Fin) 28 17  17  Elanor Investors GroupAnnual Report 2022ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP DIRECTORS’ REPORT DIRECTORS’ REPORT 6. 6. Directors (continued) Directors (continued) Name Name Particulars Particulars Nigel Ampherlaw Nigel Ampherlaw Independent Non-Executive Director Chairman, Audit and Risk Committee Independent Non-Executive Director Chairman, Audit and Risk Committee Nigel was appointed as 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 was appointed as 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 is the chairman and independent Non-Executive Director of Great Southern Bank. Nigel is the chairman and independent Non-Executive Director of Great Southern Bank. Former listed directorships in the last three years: None Former listed directorships in the last three years: None Interest in stapled securities: 200,000 Interest in stapled securities: 200,000 Qualifications: B.Com, FCA, MAICD Qualifications: B.Com, FCA, MAICD Anthony (Tony) Fehon Anthony (Tony) Fehon Independent Non-Executive Director Chairman, Remuneration and Nominations Committee Member, Audit and Risk Committee Independent Non-Executive Director Chairman, Remuneration and Nominations Committee Member, Audit and Risk Committee 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 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 a director of Elanor Hotel Accommodation Limited and Elanor Hotel Tony is a director of Elanor Hotel Accommodation Limited and Elanor Hotel Accommodation II Limited, enlighten Australia Pty Limited, Global Bioprotect Pty Accommodation II Limited, enlighten Australia Pty Limited, Global Bioprotect Pty Limited, Maker Films and Team Mates Pty Limited. He is an Executive Director of Limited, Maker Films and Team Mates Pty Limited. He is an Executive Director of Volt Bank Limited and was previously an Executive Director of Macquarie Bank Volt Bank Limited and was previously an Executive Director of Macquarie Bank Limited where he was involved in the formation and listing of several of Macquarie’s 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. 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. 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 Former listed directorships in the last three years: None Interest in stapled securities: 21,666 Interest in stapled securities: 21,666 Qualifications: B. Com, FCA Qualifications: B. Com, FCA 18  18  29 ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP Directors' Report DIRECTORS’ REPORT DIRECTORS’ REPORT 6. 6. Directors (continued) Directors (continued) Name Name Su Kiat Nigel Lim Ampherlaw Anthony (Tony) Fehon Karyn Baylis Particulars Particulars Non-Executive Director Independent Non-Executive Director Chairman, Audit and Risk Committee Su Kiat was appointed as a Director of both Elanor Investors Limited and the Responsible Entity in October 2021. Su Kiat is currently CEO of Firmus Capital Pte Ltd, a Singapore based private equity real estate investment management firm founded in 2017. Nigel was appointed as 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. Su Kiat has been in the property industry for over 20 years with extensive direct real investment experience, executing strategies across direct real estate portfolios in Asia Pacific including Australia. In 2011 Su Kiat co-founded Rockworth Capital Partners, with direct real estate AUM of circa $1bn by 2017. Prior to that, Su Kiat held key roles in investments management and investment origination at Frasers Commercial Trust and ALLCO REIT. Su Kiat started his career in real estate as a Consultant in Retail Economics at Urbis. Nigel is the chairman and independent Non-Executive Director of Great Southern Bank. Su Kiat is a current non-executive Director of Aspen Group Holdings Ltd a diversified group listed on the SGX. Former listed directorships in the last three years: None Former listed directorships in the last three years: None Interest in stapled securities: 200,000 Interest in stapled securities: Nil Qualifications: B.Com, FCA, MAICD Independent Non-Executive Director Chairman, Remuneration and Nominations Committee Member, Audit and Risk Committee Qualifications: B.Bus, PhD (Econ) Independent Non-Executive Director Member, Remuneration and Nominations Committee Member, Environmental, Social & Governance Management Committee Member, Work, Health & Safety Committee 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. Karyn was appointed a Director of both the Company and the Responsible Entity (also the Responsible Entity of ERF and ECF) in November 2021. Karyn was most recently CEO of Jawun, a position she has held since 2009, and joined the Jawun Board in 2017. She retired from Jawun in January 2022. In 2015, Karyn was awarded The Australian Financial Review and Westpac 100 Women of Influence Award in Diversity. In the 2018 Queen's Birthday Honours, Karyn was awarded a Member in the General Division of the Order of Australia (AM) for significant service to the Indigenous community. Karyn is a current member of Chief Executive Woman (CEW) and the Australian Institute of Company Directors (AICD). Tony is a director of Elanor Hotel Accommodation Limited and Elanor Hotel Accommodation II Limited, enlighten Australia Pty Limited, Global Bioprotect Pty Limited, Maker Films and Team Mates Pty Limited. He is an Executive Director of Volt Bank Limited and was previously 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. Previous Board positions include CARE Australia, Cure Cancer, Grocon Holdings Pty Ltd and NRMA Financial Management and Life Nominees. Karyn has also held senior roles for multinational businesses such as Group Executive Sales and Marketing (CEO Retail) at Insurance Australia Group (IAG), Director of Organisational Renewal at Optus, and Senior Vice President and Regional General Manager, The Americas at Qantas Airways. Former listed directorships in the last three years: None Interest in stapled securities: 21,666 Former listed directorships in the last three years: None 30 Qualifications: B. Com, FCA Interest in stapled securities: 25,000 19  18  Elanor Investors GroupAnnual Report 2022ELANOR INVESTORS GROUP DIRECTORS’ REPORT 7. Directors’ relevant interests Note 1: Glenn Willis has an entitlement to an additional 5,000,000 securities under equity based executive incentive plans. Post 30 June 2022 an additional 90,537 staple securities have been granted. 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: Note 1: On 12 November 2021 Anthony (Tony) Fehon was appointed to the ARC to replace Glenn Willis. Note 2: On 26 November 2021 Karyn Baylis was appointed to the Remuneration and Nominations Committee. Note 3: On 24 March 2022 Nigel Ampherlaw resigned as a member of the Remuneration and Nominations Committee. During the year, the Board met 22 times including special purpose meetings in relation to various funds management related initiatives. 9. Remuneration Report The remuneration report for the year ended 30 June 2022 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). 31 20  Directors' Report ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP DIRECTORS’ REPORT DIRECTORS’ REPORT 9. 9. a) a) Remuneration Report (continued) Remuneration Report (continued) Remuneration Policy and Approach Remuneration Policy and Approach The Elanor Investors Group aims to attract, retain and motivate highly skilled people and therefore ensures its 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 remuneration is competitive with prevailing employment market conditions and also provides sufficient motivation by ensuring that remuneration is aligned to the Group’s results. 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 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, 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 the Board seeks to have reference to market best practice to ensure that executive remuneration remains competitive, fair and reasonable. competitive, fair and reasonable. The Group has a formally constituted Remuneration and Nomination Committee which comprises three Non- The Group has a formally constituted Remuneration and Nomination Committee which comprises three Non- Executive Director (NED) members, Mr Anthony Fehon (Chair), Mr Paul Bedbrook and Mrs Karyn Baylis. Executive Director (NED) members, Mr Anthony Fehon (Chair), Mr Paul Bedbrook and Mrs Karyn Baylis. The Remuneration and Nomination Committee met 6 times during the year for the purposes of reviewing and 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 making recommendations to the Elanor Investors Group Board on the level of remuneration of the senior executives and the Directors. executives and the Directors. Specifically, the Board approves the remuneration arrangements of the Managing Director and other 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 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 (LTI) plans, following recommendations from the Remuneration and Nomination Committee. The Board also sets the aggregate remuneration of NED's, which is then subject to securityholder approval. sets the aggregate remuneration of NED's, which is then subject to securityholder approval. The Remuneration and Nomination Committee endeavours to ensure that the remuneration outcomes strike The Remuneration and Nomination Committee endeavours to ensure that the remuneration outcomes strike an appropriate balance between the interests of the Group’s securityholders and rewarding, retaining and an appropriate balance between the interests of the Group’s securityholders and rewarding, retaining and motivating the Group's executives and the Directors. motivating the Group's executives and the Directors. Further information on the Remuneration and Nomination Committee’s role and responsibilities can be viewed Further information on the Remuneration and Nomination Committee’s role and responsibilities can be viewed at www.elanorinvestors.com. at www.elanorinvestors.com. b) b) Key Management Personnel Key Management Personnel The remuneration report details the remuneration arrangements for Key Management Personnel (KMP), who 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 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). 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 2022 were: The KMP of the Elanor Investors Group for the year ended 30 June 2022 were: Executive Executive Mr Glenn Willis Mr Glenn Willis Mr Paul Siviour Mr Paul Siviour Mr Symon Simmons Mr Symon Simmons Non-Executive Non-Executive Mr Paul Bedbrook Mr Paul Bedbrook Mr Nigel Ampherlaw Mr Nigel Ampherlaw Mr Anthony Fehon Mr Anthony Fehon Mr Su Kiat Lim Mr Su Kiat Lim Mrs Karyn Baylis Mrs Karyn Baylis 32 Position Position Managing Director and Chief Executive Officer Managing Director and Chief Executive Officer Chief Operating Officer Chief Operating Officer Chief Financial Officer and Company Secretary Chief Financial Officer and Company Secretary Position Position Independent Chairman and Non-Executive Director Independent Chairman and Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Non-Executive Director (appointed 1 October 2021) Non-Executive Director (appointed 1 October 2021) Independent Non-Executive Director (appointed 1 November 2021) Independent Non-Executive Director (appointed 1 November 2021) 21  21  Elanor Investors GroupAnnual Report 2022ELANOR INVESTORS GROUP DIRECTORS’ REPORT 9. c) Remuneration Report (continued) 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 an STI scheme (the STI Scheme), based on an annual profit share, which is available to all staff. The STI Scheme is based on a profit share pool, to be calculated each year based on the Group's financial performance for the relevant year. The purpose of the STI Scheme is to provide an annual bonus arrangement that incentivises and rewards management for achieving annual pre-tax ROE (Return on Equity) for securityholders in excess of 10% per annum. The profit share pool is based on 20% of ROE above 10%, 22.5% of the ROE above 15%, 25% of the ROE above 17.5% and 30% of the ROE above 20%. The STI Scheme provides that 50% of any awards to individuals from the profit share pool 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 holder of the securities is entitled to dividends in the two-year deferral period. 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 absolute discretion, taking into consideration the forecast and actual financial performance and position of the Group. Long term incentive - The Group has 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 LTI scheme and determined that the Loan Securities and Executive Options remained the most appropriate equity award vehicles for the 2022 LTIP awards, encouraging a continued focus on security price growth, distributions and strong alignment of executives to Securityholders. No LTI Awards were granted to KMP’s in FY22. 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 17.5 million Securities were on issue at 30 June 2022 (2021: 17.0 million). 33 22  ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP DIRECTORS’ REPORT DIRECTORS’ REPORT DIRECTORS’ REPORT DIRECTORS’ REPORT Directors' Report Remuneration Report (continued) Remuneration Report (continued) Remuneration Report (continued) Remuneration Report (continued) Executive Remuneration Arrangements (continued) Executive Remuneration Arrangements (continued) Executive Remuneration Arrangements (continued) Executive Remuneration Arrangements (continued) 9. 9. 9. 9. c) c) c) c) The limited recourse loan provided by the Group under the loan security plan carries interest of an amount 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 The limited recourse loan provided by the Group under the loan security plan carries interest of an amount 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. equal to any cash dividend or distribution but not including any dividend or distribution of capital, or an abnormal equal to any cash dividend or distribution but not including any dividend or distribution of capital, or an abnormal distribution. distribution. distribution. In addition to the loan security plan, the Group has an executive option plan comprising rights to acquire In addition to the loan security plan, the Group has 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 In addition to the loan security plan, the Group has an executive option plan comprising rights to acquire In addition to the loan security plan, the Group has 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 Securities at a specified exercise price, subject to the achievement of vesting conditions, which may be offered 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. No options were issued or exercised under to certain eligible employees (including the Chief Executive Officer, direct reports to the Chief Executive Officer 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. No options were issued or exercised under the plan in 2022 (2021: 2.0 million). and other selected key executives) as determined by the Board. No options were issued or exercised under and other selected key executives) as determined by the Board. No options were issued or exercised under the plan in 2022 (2021: 2.0 million). the plan in 2022 (2021: 2.0 million). the plan in 2022 (2021: 2.0 million). The purpose of the LTI Scheme is to assist in attracting, motivating and retaining key management and 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 The purpose of the LTI Scheme is to assist in attracting, motivating and retaining key management and 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 employees. The LTI Scheme operates by providing key management and employees with the opportunity to 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 securityholder return (TSR) performance participate in the future performance of Group securities. The vesting conditions of LTI plans and related 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 securityholder 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 awards include both a service-based hurdle and an absolute total securityholder return (TSR) performance awards include both a service-based hurdle and an absolute total securityholder 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 hurdle. The service-based hurdle is 2, 3 and 4 years in the case of the loan security plan. The TSR is 10% per 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. annum for the first year and 8% per annum thereafter in the case of the loan security plan and 15% per annum 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. in the case of the options plan. in the case of the options plan. TSR was selected as the LTI performance measure to ensure an alignment between the securityholder return TSR was selected as the LTI performance measure to ensure an alignment between the securityholder return and reward for executives. TSR was selected as the LTI performance measure to ensure an alignment between the securityholder return TSR was selected as the LTI performance measure to ensure an alignment between the securityholder return and reward for executives. and reward for executives. and reward for executives. d) d) d) d) The table below sets out summary information about the Group's earnings and movements in securityholder The table below sets out summary information about the Group's earnings and movements in securityholder wealth for the year ended 30 June 2022: The table below sets out summary information about the Group's earnings and movements in securityholder The table below sets out summary information about the Group's earnings and movements in securityholder wealth for the year ended 30 June 2022: wealth for the year ended 30 June 2022: wealth for the year ended 30 June 2022: Executive Remuneration Outcomes Executive Remuneration Outcomes Executive Remuneration Outcomes Executive Remuneration Outcomes The financial performance measure driving STI payment outcomes is pre-tax return on equity (ROE). The 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 for the year were The financial performance measure driving STI payment outcomes is pre-tax return on equity (ROE). The 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 for the year were ($7.4) million before tax or ($4.2) million after tax. This reflects a basic earnings per security of 0.82 cents required pre-tax return hurdle was not achieved for the financial year. Reported earnings for the year were required pre-tax return hurdle was not achieved for the financial year. Reported earnings for the year were ($7.4) million before tax or ($4.2) million after tax. This reflects a basic earnings per security of 0.82 cents based on average equity employed for the year. ($7.4) million before tax or ($4.2) million after tax. This reflects a basic earnings per security of 0.82 cents ($7.4) million before tax or ($4.2) million after tax. This reflects a basic earnings per security of 0.82 cents based on average equity employed for the year. based on average equity employed for the year. based on average equity employed for the year. For the year ended 30 June 2022 the Group achieved Core Earnings of $18.3 million. Total distributions per For the year ended 30 June 2022 the Group achieved Core Earnings of $18.3 million. Total distributions per security during the year were 13.48 cents. The Group’s closing trading price on 30 June 2022 was $1.65 per For the year ended 30 June 2022 the Group achieved Core Earnings of $18.3 million. Total distributions per For the year ended 30 June 2022 the Group achieved Core Earnings of $18.3 million. Total distributions per security during the year were 13.48 cents. The Group’s closing trading price on 30 June 2022 was $1.65 per security, a 12.7% decrease on the $1.89 price at 1 July 2021. security during the year were 13.48 cents. The Group’s closing trading price on 30 June 2022 was $1.65 per security during the year were 13.48 cents. The Group’s closing trading price on 30 June 2022 was $1.65 per security, a 12.7% decrease on the $1.89 price at 1 July 2021. security, a 12.7% decrease on the $1.89 price at 1 July 2021. security, a 12.7% decrease on the $1.89 price at 1 July 2021. On 1 July 2022, the Board confirmed the vesting and removal of trading restrictions over the 2020 STI award On 1 July 2022, the Board confirmed the vesting and removal of trading restrictions over the 2020 STI award securities, with effect on 1 July 2022. On 1 July 2022, the Board confirmed the vesting and removal of trading restrictions over the 2020 STI award On 1 July 2022, the Board confirmed the vesting and removal of trading restrictions over the 2020 STI award securities, with effect on 1 July 2022. 34 securities, with effect on 1 July 2022. 23  securities, with effect on 1 July 2022. 23  23  23  Elanor Investors GroupAnnual Report 2022e v a e l s s e l l e n n o s r e p t n e m e g a n a m y e k e h t f o t n e m e l t i t n e e v a e l s ’ r a e y t n e r r u c e h t g n e b i , r a e y e h t r o f s e c n a a b l e v a e l d e u r c c a e h t n i t n e m e v o m e h t s t n e s e r p e r e v a e l i e c v r e s g n o l d n a e v a e l l a u n n A 1 P U O R G S R O T S E V N I R O N A L E T R O P E R ’ S R O T C E R D I ) d e u n i t n o c ( s e m o c t u O n o i t a r e n u m e R e v i t u c e x E ) d e u n i t n o c ( t r o p e R n o i t a r e n u m e R . 9 ) d l e n n o s r e P t n e m e g a n a M y e K f o n o i t a r e n u m e R : l 1 e b a T s t n u o m a e h T l i . n o i t a u m S o l r a C e t n o M a g n s u i e t a d t n a r g e h t t a s a d e t l a u c a c l s i n o i t a r e n u m e r r i e h t f o t r a p s a l e n n o s r e p t n e m e g a n a m y e k o t d e t n a r g s n o i t p o d n a s e i t i r u c e s n a o l e h t f o e u a v l e h T 2 . r a e y e h t g n i r u d n e k a t d o i r e p e c n a m r o f r e p f o g n n n g e b i i e h t m o r f d o i r e p e h t i r e v o s s a b e n i i l - t h g a r t s a n o e u a v l e t a d t n a r g e h t g n i t a c o l l a y b d e n m r e i t e d n e e b e v a h r a e y l i a c n a n i f e h t r o f n o i t a r e n u m e r e h t f o t r a p s a d e s o c s d l i 4 2 . e t a d g n i t s e v o t 35   Directors' Report DIRECTORS’ REPORT ELANOR INVESTORS GROUP 9. d) Remuneration Report (continued) Executive Remuneration Outcomes (continued) Table 2: Remuneration components as a proportion of total remuneration on an annualised basis No key management personnel appointed during the year received a payment as part of their consideration for agreeing to hold the position. Remuneration and other terms of employment for the key management personnel are formalised in their employment contracts. The key provisions of the employment contracts for key management personnel are set out below. Table 3: Employment contracts of key management personnel Executive G. Willis P. Siviour S. Simmons Position Managing Director and Chief Executive Officer Chief Operating Officer Chief Financial Officer and Company Secretary Term No fixed term No fixed term No fixed term Salary Superannuation) (including Incentive remuneration $693,000 $565,031 $551,250 Eligible for an award of short term and long- term incentive remuneration (if any) as described above Eligible for an award of short term and long-term incentive remuneration (if any) as described above Eligible for an award of short term and long-term incentive remuneration (if any) as described above 36 25  Elanor Investors GroupAnnual Report 2022ELANOR INVESTORS GROUP DIRECTORS’ REPORT 9. d) Remuneration Report (continued) Executive Remuneration Outcomes (continued) Executive G. Willis P. Siviour S. Simmons 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 the continue with Group unless either party gives 12 months’ notice in writing Employment shall continue with the Group unless either party gives 9 months’ notice in writing Employment shall 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 maximum aggregate amount of fees that can be paid to NEDs is subject to approval by securityholders at the Annual General Meeting (currently $750,000, as approved by securityholders 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 1Mr S. K. Lim and Mrs K. Baylis were appointed in FY22. 26  37 Directors' Report DIRECTORS’ REPORT ELANOR INVESTORS GROUP 9. e) Remuneration Report (continued) Non-Executive Director Remuneration Arrangements and Outcomes (continued) During the year no options were issued to the NEDs. 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. 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: 1The maximum value of the grants yet to vest is the fair value amount at the grant date yet to be reflected in the Group's consolidated income statement. The minimum future value is $nil as the future performance and service conditions may not be met. The fair value of the Short Term incentive plans is the closing share price on 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 expected vesting date of the Loan Securities are in line with the financial statement approval date of the relevant performance 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). 38 27  Elanor Investors GroupAnnual Report 2022ELANOR INVESTORS GROUP DIRECTORS’ REPORT 9. Remuneration Report (continued) f) and Securities (continued) Additional Disclosures Relating to Short Term incentive plans, Long Term Incentive Plans Details of Long Term Incentive Plan payments granted or vested as option security compensation to Key Management Personnel during the current financial year: No options were granted in FY22. The fair value at grant date of each option was $0.07. The vesting date of the options 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 the remuneration of key management personnel on a straight-line basis over the period from commencement of the performance period 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 year to 30 June 2022. 28  39 Directors' Report DIRECTORS’ REPORT ELANOR INVESTORS GROUP 9. Remuneration Report (continued) 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. No securities were issued to Non-Executive Directors in FY22. 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. No options were issued to Non-Executive Directors in FY22 (FY21: nil) 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. 40 29  Elanor Investors GroupAnnual Report 2022ELANOR INVESTORS GROUP DIRECTORS’ REPORT 10. Company Secretary Symon Simmons held the position of Company Secretary of the Responsible Entity during the year. 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 Group and the EIF Group indemnifies the auditor (PricewaterhouseCoopers Australia) against any liability (including legal costs) for third party claims arising from a breach by Group or EIF Group of the auditor’s engagement terms, except where prohibited by the Corporations Act 2001. 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. 30  41 ELANOR INVESTORS GROUP Directors' Report 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 29 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 29 to the consolidated financial statements do not compromise the external auditor’s independence, based on advice received from the Audit and Risk Committee, for the following reasons: • • All non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and None of the services undermine the general principles relating to auditor independence as set out in APES 110 ‘Code of Ethics for Professional Accountants’ issued by the Accounting Professional & Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Group, acting as advocate for the group or jointly sharing economic risks and rewards. 16. Likely developments and expected results of operations The financial statements have been prepared on the basis of the current known market conditions. The extent of any potential deterioration in either the capital or physical property markets on the future results of the Group is unknown. Such results could include property market valuations, the ability of borrowers, including the Group, to raise or refinance debt, and the cost of such debt and the ability to raise equity. At the date of this report and to the best of the Directors’ knowledge and belief, there are no other anticipated changes in the operations of the Group which would have a material impact on the future results of the Group. 17. Fees paid to the Responsible Entity or its associates The fees paid to the responsible entity of EIF, Elanor Funds Management Limited, and its related entities during the financial year are disclosed in Note 25 to the consolidated financial statements. 42 31  Elanor Investors GroupAnnual Report 2022ELANOR INVESTORS GROUP DIRECTORS’ REPORT 18. Events occurring after reporting date Subsequent to year end, a distribution of 4.43 cents per stapled security has been declared by the Board of Directors. The total distribution amount of $5.4 million will be paid on 31 August 2022 in respect of the year ended 30 June 2022. In addition, Elanor has completed the following significant funds management initiatives: On 19 August 2022, at an Extraordinary General Meeting, Elanor Retail Property Fund (ASX: ERF) securityholders approved the privatisation and delisting of ERF including the syndication of ERF’s Tweed Mall property to Elanor’s wholesale private capital partners. As a result, ERF is expected to delist from the ASX in November 2022. Following delisting, ERF will become the Elanor Property Income Fund (EPIF), an open-ended, unlisted, multi sector reliable income real estate fund. Other than the events disclosed above, the directors are not aware of any other matters or circumstances 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 year subsequent to the year ended 30 June 2022. 19. 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. The Director’s report is made in accordance with a resolution of the Boards of Directors of Elanor Funds Management Limited and Elanor Investors Limited. The Financial Statements were authorised for issue by the Directors on 23 August 2022. Signed in accordance with a resolution of the Directors pursuant to section 298(2) of the Corporations Act 2001 (Cth). The Directors have the power to amend and re-issue the Financial Statements. Paul Bedbrook Chairman Sydney, 23 August 2022 Glenn Willis CEO and Managing Director 32  43 Auditor’s Independence Declaration As lead auditor for the audit of Elanor Investors Limited and Elanor Investment Fund for the year ended 30 June 2022, 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 (b) no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Elanor Investors Limited and the entities it controlled during the period. N R McConnell Partner PricewaterhouseCoopers Sydney 23 August 2022 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. 44 33  Elanor Investors GroupAnnual Report 2022Consolidated Statements of Profit or Loss For the year ended 30 June 2022 CONSOLIDATED STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 30 JUNE 2022 ELANOR INVESTORS GROUP of Comprehensive Income The above Consolidated Statements of Profit or Loss should be read in conjunction with the accompanying notes. 45 The above Consolidated Statements of Comprehensive Income should be read in conjunction with the accompanying notes 34  Consolidated Statements of Comprehensive Income For the year ended 30 June 2022 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2022 ELANOR INVESTORS GROUP The above Consolidated Statements of Comprehensive Income should be read in conjunction with the accompanying notes. 46 The above Consolidated Statements of Profit or Loss should be read in conjunction with the accompanying notes 35  Elanor Investors GroupAnnual Report 2022    Consolidated Statements of Financial Position For the year ended 30 June 2022 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2022 ELANOR INVESTORS GROUP 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 47 36        ELANOR INVESTORS GROUP Consolidated Statements of Financial Position For the year ended 30 June 2022 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2022 The above Consolidated Statements of Financial Position should be read in conjunction with the accompanying notes. 48 The above Consolidated Statements of Financial Position should be read in conjunction with the accompanying notes 37  Elanor Investors GroupAnnual Report 2022    2 2 0 2 E N U J 0 3 D E D N E R A E Y E H T R O F I y t i u q P E U O n R G i s S R e O g T n S a E V h N C R f O o N A s L t E n e m e t a t S d e t a d i l o s n o C I Y T U Q E N I S E G N A H C F O S T N E M E T A T S D E T A D L O S N O C I 2 2 0 2 e n u J 0 3 d e d n e r a e y e h t r o F t s e o n i g n y n a p m o c c a e h t h t i w n o i t c n u n o c n j i d a e r l e b d u o h s y t i u q E n i s e g n a h C f o s t n e m e t a t S d e t a d i l o s n o C e v o b a e h T . s e t o n i g n y n a p m o c c a e h t h t i w 8 3 n o i t c n u n o c j n i d a e r e b l d u o h s y t i u q E n i s e g n a h C f o s t n e m e t t a S d e a d t i l o s n o C e v o b a e h T 49 2 2 0 2 E N U J 0 3 D E D N E R A E Y E H T R O F s e t o n i g n y n a p m o c c a e h t h t i w n o i t c n u n o c j n i d a e r e b l d u o h s y t i u q E n i s e g n a h C f o s t n e m e t t a S d e t a d i l o s n o C e v o b a e h T . s e t o n i g n y n a p m o c c a e h t h t i w 9 3 n o i t c n u n o c j n i d a e r e b l d u o h s y t i u q E n i s e g n a h C f o s t n e m e t t a S d e a d t i l o s n o C e v o b a e h T I Y T U Q E N I S E G N A H C F O S T N E M E T A T S D E T A D L O S N O C I 2 2 0 2 e n u J 0 3 d e d n e r a e y e h t r o F I y t i u q P E U O n R G i s S R e O g T n S a E V h N C R f O o N A s L t E n e m e t a t S d e t a d i l o s n o C 50 Elanor Investors GroupAnnual Report 2022       ELANOR INVESTORS GROUP Consolidated Statements of Cash Flows For the year ended 30 June 2022 Consolidated Statement CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2022 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 51 40      Notes to the Consolidated Financial Statements For the year ended 30 June 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 ELANOR INVESTORS GROUP About this Report The notes to the consolidated Financial Statements have been organised into the following sections for reduced complexity and ease of navigation: RESULTS ......................................................................................................................................................................... 57 SEGMENT INFORMATION ........................................................................................................................................ 57 1. REVENUE ............................................................................................................................................................. 59 2. DISTRIBUTIONS ..................................................................................................................................................... 61 3. EARNINGS PER STAPLED SECURITY ............................................................................................................................. 61 4. INCOME TAX ......................................................................................................................................................... 63 5. CASH FLOW INFORMATION ...................................................................................................................................... 66 6. OPERATING ASSETS ............................................................................................................................................................ 68 PROPERTY, PLANT AND EQUIPMENT .......................................................................................................................... 68 7. INVESTMENT PROPERTIES ........................................................................................................................................ 75 8. 9. EQUITY ACCOUNTED INVESTMENTS ........................................................................................................................... 78 FINANCE AND CAPITAL STRUCTURE ....................................................................................................................................... 84 INTEREST BEARING LIABILITIES .................................................................................................................................. 84 10. DERIVATIVE FINANCIAL INSTRUMENTS ....................................................................................................................... 87 11. OTHER FINANCIAL ASSETS ....................................................................................................................................... 88 12. CONTRIBUTED EQUITY ............................................................................................................................................ 89 13. 14. RESERVES ............................................................................................................................................................ 90 FINANCIAL RISK MANAGEMENT ................................................................................................................................ 91 15. GROUP STRUCTURE ............................................................................................................................................................ 96 BUSINESS COMBINATION ........................................................................................................................................ 96 16. PARENT ENTITY ..................................................................................................................................................... 97 17. 18. SUBSIDIARIES AND CONTROLLED ENTITIES .................................................................................................................. 98 OTHER INFORMATION ...................................................................................................................................................... 100 RECEIVABLES ...................................................................................................................................................... 100 19. PAYABLES AND OTHER LIABILITIES ........................................................................................................................... 100 20. INTANGIBLE ASSETS .............................................................................................................................................. 102 21. GOVERNMENT GRANTS ......................................................................................................................................... 103 22. COMMITMENTS .................................................................................................................................................. 103 23. SHARE-BASED PAYMENTS ...................................................................................................................................... 104 24. RELATED PARTIES ................................................................................................................................................ 106 25. SIGNIFICANT EVENTS ............................................................................................................................................ 108 26. OTHER ACCOUNTING POLICIES ............................................................................................................................... 109 27. EVENTS OCCURRING AFTER REPORTING DATE ............................................................................................................ 110 28. AUDITOR'S REMUNERATION .................................................................................................................................. 110 29. 30. NON-PARENT DISCLOSURE .................................................................................................................................... 111 DIRECTORS’ DECLARATION TO STAPLED SECURITYHOLDERS...................................................................................................... 124 DEPENDENT AUDITOR’S REPORT ......................................................................................................................................... 125 52 41 Elanor Investors GroupAnnual Report 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 About this Report (continued) 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. The Consolidated Financial Statements have been prepared on a going concern basis using historical cost conventions, except for investment properties, investment properties within the equity accounted investments, derivative financial instruments, and other financial assets or liabilities which are stated at their fair value. 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. New accounting standards and interpretations 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 2021 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 2022 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 2022, 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. 53 42      Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 About this Report (continued) Critical accounting judgements 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 2022, 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. Changing market conditions (high inflation pressure and expected further cash rate increases by the Reserve Bank of Australia) can result in continued elevated levels of uncertainty in the preparation of the financial statements. Where changing market conditions have heightened uncertainty in applying these accounting estimates and critical judgements for the year ended 30 June 2022, enhanced disclosures have been incorporated throughout the consolidated financial statements to enable users to understand the basis for the estimates and judgements utilised. 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 changing market conditions using information available at the time of preparation of the financial statements and includes forward looking assumptions. 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 15 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 judgements 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 54 43  Elanor Investors GroupAnnual Report 2022    ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 About this Report (continued) 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 2022. 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 securityholders of Elanor Investment Fund are the same as the stapled securityholders 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 2022. Control of Elanor Hotel Accommodation Fund (EHAF), Elanor Wildlife Park Fund (EWPF), Bluewater Square Syndicate (Bluewater) and Stirling Street Syndicate (Stirling) Elanor Hotel Accommodation Fund (EHAF) EHAF comprises stapled securities in Elanor Hotel Accommodation Fund (formerly known as Elanor Metro and Prime Regional Hotel Fund), Elanor Metro and Prime Regional Hotel Fund II (formerly known as Elanor Metro and Prime Regional Hotel Fund), Elanor Hotel Accommodation Fund III (formerly known as Elanor Hospitality and Accommodation Fund II), Elanor Hotel Accommodation Fund Limited (formerly known as Elanor Luxury Hotel Fund), Elanor Metro and Prime Regional Hotel Fund II (formerly known as EMPR II Management Pty Limited). The Group holds 35.07% (2021: 42.94%) of the equity in EHAF. The Group's ownership interest in EHAF gives the Group the same percentage of voting rights in EHAF. EHAF is an unregistered trust for which Elanor Funds Management Limited acts as the Manager of the asset and Trustee of the trust. As disclosed in the Annual Financial Report for the year ended 30 June 2021, EHAF was established on 30 September 2021 through the acquisition of the previous Elanor Luxury Hotel Fund (ELHF) and Albany Hotel by the previous Elanor Metro and Prime Regional Hotel Fund (EMPR), together forming the new combined fund. The Group had previously held a controlling interest in both ELHF and EMPR as at 30 June 2021, and as a result of the Group’s continued controlling interest in EHAF as at 30 June 2022, the Group continues to consolidate the underlying assets and liabilities of EHAF in the current year. During the year, the Group sold down part of its equity interest in EHAF totalling $35.8 million (or 7.87%). The impact of this sell down to the Group’s consolidated balance sheet is to increase non-controlling interest in relation to EHAF. Elanor Wildlife Park Fund (EWPF) EWPF comprises stapled securities in Elanor Wildlife Park Fund and Elanor Wildlife Park Pty Limited. The Group holds 42.82% (2021: 26.61%) of the equity in EWPF. The Group's 42.82% ownership interest in EWPF gives the Group the same percentage of voting rights in EWPF. EWPF is an unregistered trust for which Elanor Funds Management Limited acts as the Manager and Trustee of the trust. As the Group’s ownership interest increased in EWPF on 31 August 2021 it is deemed that the Group has control over EWPF since this date and EWPF has been consolidated in the Group’s consolidated Financial Statements. Refer to Note 16 Business Combinations for further details. 55 44      Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 About this Report (continued) Control of Elanor Hotel Accommodation Fund (EHAF), Elanor Wildlife Park Fund (EWPF), Bluewater Square Syndicate (Bluewater) and Stirling Street Syndicate (Stirling) (continued) Stirling Street Syndicate (Stirling) The Group holds 42.98% (2021: 2.03%) of the equity in Stirling. The Group's ownership interest in Stirling gives the Group the same percentage of the voting rights in Stirling. Stirling is an unregistered trust for which Elanor Funds Management Limited acts as the Manager of the asset and Trustee of the trust. As the Group’s ownership interest increased in Stirling on 30 November 2021 it is deemed that the Group has control over Stirling since this date and Stirling has been consolidated in the Group’s consolidated Financial Statements. Refer to Note 16 Business Combinations for further details. Bluewater Square Syndicate (Bluewater) The Group holds 42.27% (2021: 42.27%) of the equity in Bluewater. The Group's ownership interest in Bluewater gives the Group the same percentage of 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 EHAF, EWPF, Stirling and Bluewater is wholly owned 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 EHAF, EWPF, Stirling 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 EHAF, EWPF, Stirling 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. 56 45  Elanor Investors GroupAnnual Report 2022    ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 Results This section focuses on the operating results and financial performance of the Group. It includes disclosures of segmental information, revenue, distributions and cash flow including the relevant accounting policies adopted in each area. 1. Segment information OVERVIEW Segment information is presented on the same basis as that used for internal reporting purposes. The segments are reported in a manner that is consistent with internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Board of Directors of Elanor Investors Limited and the Responsible Entity. 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 2022, the Funds Management division has approximately $2,721.9 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 1834 Hospitality, along with a co-investment in EHAF and EWPF. EHAF and EWPF 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), the Stirling Street Syndicate and Harris Street Fund. The Stirling Street Syndicate is consolidated in the Financial Statements. Healthcare Healthcare originates and manages investment and funds management assets in the healthcare real estate sector. No co-investments are held in this sector by the Group. 57 46      Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 1. Segment information (continued) The table below shows the Group’s segment results: Consolidated Group – 30 June 2022 Consolidated Group – 30 June 2021 58 47  Elanor Investors GroupAnnual Report 2022    ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 2. Revenue from operating activities 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 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 occur 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 occur on a monthly basis and are receivable within 21 days. 48  59     Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 2. Revenue from operating activities (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 occur on a monthly basis and are receivable within 21 days. Acquisition fees Acquisition fee revenue is recognised over time depending on the fulfilment of the performance obligation in accordance with the constitutions of the managed funds. Invoicing of funds for acquisition fees occur in accordance with the contractual acquisition fee payment date. Equity raising fee Equity raising fee revenue is recognised over time depending on the fulfilment of the performance obligation in accordance with the constitutions of the managed funds. Invoicing of funds for acquisition fees occur 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 beverage 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 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 to 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 to waive rent 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 expensed 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 a lease modification on a straight-line basis over the new lease term. 60 49  Elanor Investors GroupAnnual Report 2022      ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 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 Earnings to its securityholders. Core Earnings reflects the Director’s view of the underlying earnings from ongoing operating activities for the year. The following distributions were declared by the ENN Group either during the year or post balance sheet date: ENN Group 1. The interim distribution of 9.05 cents per stapled security was declared on 31 December 2021 and paid on 28 February 2022. 2. The final distribution of 4.43 cents per stapled security was declared after 30 June 2022, but is recognised in the accounts at balance date. The final distribution will be paid on 31 August 2022. 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. 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 interest of each issued ordinary 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 impact 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. 50  61     ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 FOR THE YEAR ENDED 30 JUNE 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 FOR THE YEAR ENDED 30 JUNE 2022 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 4. 4. 4. 4. The earning / (losses) per stapled security measure shown below is based on the profit / (loss) 4. The earning / (losses) per stapled security measure shown below is based on the profit / (loss) The earning / (losses) per stapled security measure shown below is based on the profit / (loss) 4. attributable to securityholders: The earning / (losses) per stapled security measure shown below is based on the profit / (loss) attributable to securityholders: attributable to securityholders: The earning / (losses) per stapled security measure shown below is based on the profit / (loss) attributable to securityholders: The earning / (losses) per stapled security measure shown below is based on the profit / (loss) attributable to securityholders: attributable to securityholders: Earnings per stapled security (continued) Earnings per stapled security (continued) Earnings per stapled security (continued) Earnings per stapled security (continued) Earnings per stapled security (continued) Earnings per stapled security (continued) The weighted average number of stapled securities and options granted used as the denominator in calculating basic and diluted earnings The weighted average number of stapled securities and options granted used as the denominator in calculating basic and diluted earnings The weighted average number of stapled securities and options granted used as the denominator in calculating basic and diluted earnings per stapled securities shown above is based on the number of stapled securities on issue and options outstanding during the period. The The weighted average number of stapled securities and options granted used as the denominator in calculating basic and diluted earnings per stapled securities shown above is based on the number of stapled securities on issue and options outstanding during the period. The per stapled securities shown above is based on the number of stapled securities on issue and options outstanding during the period. The comparative period’s basic and diluted earnings per stapled security has been adjusted by an immaterial amount as a result of a change per stapled securities shown above is based on the number of stapled securities on issue and options outstanding during the period. The comparative period’s basic and diluted earnings per stapled security has been adjusted by an immaterial amount as a result of a change The weighted average number of stapled securities and options granted used as the denominator in calculating basic and diluted earnings comparative period’s 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 weighted average number of stapled securities and options granted used as the denominator in calculating basic and diluted earnings comparative period’s 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. per stapled securities shown above is based on the number of stapled securities on issue and options outstanding during the period. The in the calculation of the weighted average number of stapled securities used. per stapled securities shown above is based on the number of stapled securities on issue and options outstanding during the period. The in the calculation of the weighted average number of stapled securities used. comparative period’s basic and diluted earnings per stapled security has been adjusted by an immaterial amount as a result of a change The earnings / (losses) per stapled security measures shown below are based upon the profit / (loss) comparative period’s 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) The earnings / (losses) per stapled security measures shown below are based upon the profit / (loss) attributable to securityholders of the ENN Group: 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 securityholders of the ENN Group: attributable to securityholders of the ENN Group: The earnings / (losses) per stapled security measures shown below are based upon the profit / (loss) attributable to securityholders of the ENN Group: The earnings / (losses) per stapled security measures shown below are based upon the profit / (loss) attributable to securityholders of the ENN Group: attributable to securityholders of the ENN Group: The weighted average number of stapled securities and options granted used as the denominator in calculating basic and diluted The weighted average number of stapled securities and options granted used as the denominator in calculating basic and diluted 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 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 earnings/ (losses) per stapled securities shown above is based on the number of stapled securities on issue and options granted during the year. The comparative period basic and diluted earnings per stapled security has been adjusted by an immaterial amount as a result earnings/ (losses) per stapled securities shown above is based on the number of stapled securities on issue and options granted during The weighted average number of stapled securities and options granted used as the denominator in calculating basic and diluted the year. The comparative period basic and diluted earnings per stapled security has been adjusted by an immaterial amount as a result the year. 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 weighted average number of stapled securities and options granted used as the denominator in calculating basic and diluted the year. 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. earnings/ (losses) per stapled securities shown above is based on the number of stapled securities on issue and options granted during of a change in the calculation of the weighted average number of stapled securities used. earnings/ (losses) per stapled securities shown above is based on the number of stapled securities on issue and options granted during of a change in the calculation of the weighted average number of stapled securities used. the year. The comparative period basic and diluted earnings per stapled security has been adjusted by an immaterial amount as a result ACCOUNTING POLICY the year. 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 ACCOUNTING POLICY 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 securityholders divided by ACCOUNTING POLICY Basic earnings per stapled security is calculated as profit after tax attributable to securityholders divided by Basic earnings per stapled security is calculated as profit after tax attributable to securityholders divided by ACCOUNTING POLICY the weighted average number of ordinary stapled securities issued. Basic earnings per stapled security is calculated as profit after tax attributable to securityholders divided by the weighted average number of ordinary stapled securities issued. the weighted average number of ordinary stapled securities issued. Basic earnings per stapled security is calculated as profit after tax attributable to securityholders divided by the weighted average number of ordinary stapled securities issued. Basic earnings per stapled security is calculated as profit after tax attributable to securityholders divided by Diluted earnings per stapled security is calculated as profit after tax attributable to securityholders adjusted for the weighted average number of ordinary stapled securities issued. Diluted earnings per stapled security is calculated as profit after tax attributable to securityholders adjusted for Diluted earnings per stapled security is calculated as profit after tax attributable to securityholders adjusted for the weighted average number of ordinary stapled securities issued. any profit recognised in the period in relation to potential dilutive stapled securities divided by the weighted Diluted earnings per stapled security is calculated as profit after tax attributable to securityholders adjusted for any profit recognised in the period in relation to potential dilutive stapled securities divided by the weighted 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. Diluted earnings per stapled security is calculated as profit after tax attributable to securityholders 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. average number of stapled securities and dilutive stapled securities. Diluted earnings per stapled security is calculated as profit after tax attributable to securityholders adjusted for any profit recognised in the period in relation to potential dilutive stapled securities divided by the weighted 62 average number of stapled securities and dilutive stapled securities. any profit recognised in the period in relation to potential dilutive stapled securities divided by the weighted 51  average number of stapled securities and dilutive stapled securities. 51  51  average number of stapled securities and dilutive stapled securities. 51  51  51  Elanor Investors GroupAnnual Report 2022                        ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 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 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 method 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. 63 52      Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 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. Elanor Hotel Accommodation Fund Limited (EHAF Company I; previously named ‘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 EHAF Company I. 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. Elanor Hotel Accommodation Fund II Limited (EHAF Company II; previously named ‘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 EHAF Company II. Elanor Wildlife Park management Pty Limited and its wholly-owned Australian resident entities are part of a tax-consolidated group, formed on 20 September 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 Wildlife Park Fund management 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. 64 53  Elanor Investors GroupAnnual Report 2022    ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 5. Income tax (continued) 54  65     Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 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 66 55  Elanor Investors GroupAnnual Report 2022    ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 6. Cash flow information (continued) (b) Reconciliation of liabilities arising from financing activities (c) Net debt reconciliation 56  67     ELANOR INVESTORS GROUP Notes to the Consolidated Financial Statements For the year ended 30 June 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 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 15 accommodation hotels and 3 wildlife parks in Australia. All 15 individual accommodation hotels and one wildlife park have been independently valued as at 30 June 2022. (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 year is set out below: 68 57  Elanor Investors GroupAnnual Report 2022    ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 Property, plant and equipment (continued) 7. Property, plant and equipment (continued) 7. A reconciliation of the carrying amount of property, plant and equipment (including right-of-use assets) at the beginning and end of the 30 June 2021 year is set out below: A reconciliation of the carrying amount of property, plant and equipment (including right-of-use assets) at the beginning and end of the 30 June 2021 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 2022: (b) Carrying value of property, plant and equipment The following table represents the total fair value of property, plant and equipment at 30 June 2022: As at 30 June 2022, the Directors assessed the fair value of the properties above, supported by independent valuation reports. As at 30 June 2022, the Directors assessed the fair value of the properties above, supported by independent valuation reports. 69 58  58          Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 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, a right of use asset and lease liability was recognised, and lease accounting adopted in relation to a property lease obligation of the Group. Subsequent to recognition, an impairment of $1.5 million was recognised against the right of use asset in accordance with AASB 136 Impairment of Assets as the Group had entered into a third party sub-lease of the space as at 1 February 2022, and the recoverable amount of the sub-lease is lower than the future lease expense of the head lease. 70 59  Elanor Investors GroupAnnual Report 2022    ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 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 2022 was $2.1 million (2021: $0.8 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. 71 60      Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 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  Computer equipment  Furniture, fittings and equipment 40 years 8 years 3-5 years 3-25 years (d) 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. 72 61  Elanor Investors GroupAnnual Report 2022    ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 7. Property, plant and equipment (continued) (d) 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. 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 year. Assets measured at fair value The significant unobservable inputs associated with the valuation of the Group's property, plant and equipment are as follows: 62  73     Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 FOR THE YEAR ENDED 30 JUNE 2022 Property, plant and equipment (continued) Property, plant and equipment (continued) Property, plant and equipment (continued) Valuation technique and inputs (continued) Valuation technique and inputs (continued) Valuation technique and inputs (continued) 7. 7. 7. (c) (c) (c) Sensitivity Information Sensitivity Information Sensitivity Information The key unobservable inputs to measure the fair value of property, plant and equipment are disclosed below 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: 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: along with sensitivity to a significant increase or decrease set out in the following table: Sensitivity Analysis Sensitivity Analysis Sensitivity Analysis When calculating the capitalisation method, the net property income has a strong inter-relationship with the 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 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 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. 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 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 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. rate. A directionally opposite change in the income and the adopted capitalisation rate could potentially magnify the impact to the fair value. the impact to the fair value. When assessing a discounted cash flow, the adopted discount rate and adopted terminal yield have a strong 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 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 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 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 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 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. 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. could potentially magnify the impact to the fair value. The average daily rate and occupancy percentage assumptions drive the forecast hotel revenue for the 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 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. 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 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. 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. decrease in these assumptions will have the opposite effect on forecast hotel revenue and valuations. 74 63  63  63  Elanor Investors GroupAnnual Report 2022ELANOR INVESTORS GROUP  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 63  7. Property, plant and equipment (continued) (c) Valuation technique and inputs (continued) 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. 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.             ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 7. Property, plant and equipment (continued) Sensitivity Analysis (continued) 8. Investment properties The carrying amount of investment properties at the beginning and end of the current year is set out below: The following table represents the total fair value of investment properties at 30 June 2022: As at 30 June 2022, the Directors assessed the fair value of the investment property above, supported by internal and an independent external valuation report. The investment properties are categorised as level 3 in the fair value hierarchy. There were no transfers between hierarchies during the year. 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. 64 75 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 8. Investment properties (continued) 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 value of Bluewater Square increased by 4.5% from $55.5 million as at 30 June 2021 to $58.0 million as at 30 June 2022. This increase is mainly attributable to the success of the asset management team’s focus on leasing activity at the property. 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 judgement 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. 76 Significant unobservable inputs 30 June 2022 30 June 2021 Adopted discount rate 5.75% -6.75% 7.25% Adopted terminal yield 5.50% - 6.50% 6.50% Adopted capitalisation rate 5.25% - 6.50% 6.25% 65  Elanor Investors GroupAnnual Report 2022    ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 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. 66  77     Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 8. Investment properties (continued) Sensitivity Analysis 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 2022 78 67  Elanor Investors GroupAnnual Report 2022      ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 9. Equity accounted investments Investment properties (continued) 8. OVERVIEW Sensitivity Analysis 30 June 2021 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. The carrying amount of equity accounted investments at the beginning and end of the current year is set out below: 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 2022 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, Waverley Gardens Fund and Harris Street 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. 79 68  67            Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 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. 80 69  Elanor Investors GroupAnnual Report 2022    ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 9. Equity accounted investments (continued) Details of Material Associates (continued) 30 June 2021 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. 70  81     Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 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. 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, 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. 82 71  Elanor Investors GroupAnnual Report 2022    ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 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. In previous year, due to ongoing and uncertain economic impacts of COVID-19, the recoverable amount of the Group’s investment in 1834 Hospitality was impaired by $0.8 million. As the trading activity of 1834 Hospitality structurally increased during the year, at balance sheet date the recoverable amount has been 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 2022, less estimated costs to sell of 1% of the calculated fair value. As a result, the prior year impairment has been reversed for the Group’s investment in 1834 Hospitality. 72  83     Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 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 EHAF, EWPF, Stirling and Bluewater. The EHAF, EWPF, Stirling and Bluewater facilities are secured by the assets of these entities. The term debt is secured by registered mortgages over all freehold property and registered security interests over all present and 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 Notes On 30 June 2022, the Group has raised $40 million in unsecured medium-term notes in two tranches: a $25 million issue of 3.25-year fixed rate medium-term notes (7.75% p.a.), maturing 30 September 2025; a $15 million issue of 4-year floating rate medium-term notes (4.5% p.a. margin above BBSW), maturing 30 June 2026. The fair value of the unsecured notes is $24.3 million and $13.9 million respectively. The fair values of the unsecured notes are based on discounted cash flows using a current borrowing rate. Of the $40 million (2021: $60 million) corporate notes the Group has bought $1 million (2021: $1 million) as an investment in the Group’s unsecured notes on issues. This has been deducted from the corporate notes balances to present the net position. The unsecured notes include Loan to Value Ratio and Interest Cover Covenants. The Group is currently meeting all of its covenants. 84 73  Elanor Investors GroupAnnual Report 2022    ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 10. Interest bearing liabilities (continued) On 24 November 2019, the EWPF issued $25.0 million 7.2% secured 5-year fixed rate notes. The $25.0 million secured fix rate notes are due for repayment on 29 November 2024. The fair value of the secured notes is $24.3 million. The fair value of the secured notes are based on discounted cash flows using a current borrowing rate. The unsecured notes include Loan to Value Ratio and Interest Cover Covenants. The EWPF is currently meeting all of its covenants. CREDIT FACILITIES As at 30 June 2022, the Group had unrestricted access to the following credit facilities: Note: The debt facilities of EMPR and ELHF from 30 June 2021 have been included in EHAF at establishment of the fund and have been refinanced by EHAF in the year. Refer below for further information on the EHAF debt facility. The ENN Group has access to a $65.0 million secured debt facility, with a maturity date of 31 July 2025. The drawn amount at 30 June 2022 is $59.9 million and this facility is not hedged. The fair value of this debt facility is $57.4 million. The fair value of the debt facility is based on discounted cash flows using a current borrowing rate. The debt facility includes Loan to Value Ratio and Interest Cover Covenants. The ENN Group is currently meeting all of its covenants. 74  85     Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 FOR THE YEAR ENDED 30 JUNE 2022 10. 10. Interest bearing liabilities (continued) Interest bearing liabilities (continued) The EHAF Group has access to two secured debt facilities of $82.5 million each, from which both the EHAF The EHAF Group has access to two secured debt facilities of $82.5 million each, from which both the EHAF hotel management companies and property trusts can draw. The drawn amount as at 30 June 2022 is $82.5 hotel management companies and property trusts can draw. The drawn amount as at 30 June 2022 is $82.5 million each and both will mature on 23 December 2024. The amount of drawn facility was hedged to 51% as million each and both will mature on 23 December 2024. The amount of drawn facility was hedged to 51% as at 30 June 2022. The fair value of each debt facility is $75.8 million. The fair value of the debt facilities is based at 30 June 2022. The fair value of each debt facility is $75.8 million. The fair value of the debt facilities is based on discounted cash flows using a current borrowing rate. The debt facilities include Loan to Value Ratio and on discounted cash flows using a current borrowing rate. The debt facilities include Loan to Value Ratio and Interest Cover Covenants. The EHAF Group is currently meeting all of its covenants. Interest Cover Covenants. The EHAF Group is currently meeting all of its covenants. The Stirling has access to a $19.8 million facility. The drawn amount as at 30 June 2022 is $19.8 million which The Stirling has access to a $19.8 million facility. The drawn amount as at 30 June 2022 is $19.8 million which will mature on 26 August 2023. As at 30 June 2022, the drawn amount was not hedged. The fair value of this will mature on 26 August 2023. As at 30 June 2022, the drawn amount was not hedged. The fair value of this debt facility is $19.5 million. The fair value of the debt facility is based on discounted cash flows using a current debt facility is $19.5 million. The fair value of the debt facility is based on discounted cash flows using a current borrowing rate. The debt facility includes Loan to Value Ratio and Interest Cover Covenants. The Stirling is borrowing rate. The debt facility includes Loan to Value Ratio and Interest Cover Covenants. The Stirling is currently meeting all of its covenants. currently meeting all of its covenants. The Bluewater has access to a $30.5 million facility. The drawn amount as at 30 June 2022 is $30.5 million The Bluewater has access to a $30.5 million facility. The drawn amount as at 30 June 2022 is $30.5 million which will mature on 31 December 2023. As at 30 June 2022, the drawn amount was not hedged. The fair which will mature on 31 December 2023. As at 30 June 2022, the drawn amount was not hedged. The fair value of this debt facility is $29.0 million. The fair value of the debt facility is based on discounted cash flows value of this debt facility is $29.0 million. The fair value of the debt facility is based on discounted cash flows using a current borrowing rate. The debt facility includes Loan to Value Ratio and Interest Cover Covenants. using a current borrowing rate. The debt facility includes Loan to Value Ratio and Interest Cover Covenants. The Bluewater is currently meeting all of its covenants. The Bluewater is currently meeting all of its covenants. All of the facilities have variable interest rates. The interest rates on the loans are partially fixed using interest All of the facilities have variable interest rates. The interest rates on the loans are partially fixed using interest rate swaps. rate swaps. The weighted average annual interest rates payable of all the loans at 30 June 2022, including the impact The weighted average annual interest rates payable of all the loans at 30 June 2022, including the impact of the interest rate swaps, is 3.87% per annum (2021: 3.85%). of the interest rate swaps, is 3.87% per annum (2021: 3.85%). BORROWING COST BORROWING COST A breakdown of the borrowing costs included in the Group’s Consolidated Statement of Profit or Loss is A breakdown of the borrowing costs included in the Group’s Consolidated Statement of Profit or Loss is provided below: provided below: ACCOUNTING POLICY ACCOUNTING POLICY Interest bearing liabilities Interest bearing liabilities Interest bearing liabilities are recognised initially at fair value, being the consideration received net of 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 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, 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 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. 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 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 facility which expires within 12 months. Amounts drawn under financial facilities which expire after 12 months 86 are classified as non-current. are classified as non-current. 75  75  Elanor Investors GroupAnnual Report 202275 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 10. Interest bearing liabilities (continued)The EHAF Group has access to two secured debt facilities of $82.5 million each, from which both the EHAF hotel management companies and property trusts can draw. The drawn amount as at 30 June 2022 is $82.5 million each and both will mature on 23 December 2024. The amount of drawn facility was hedged to 51% as at 30 June 2022. The fair value of each debt facility is $75.8 million. The fair value of the debt facilities is based on discounted cash flows using a current borrowing rate. The debt facilities include Loan to Value Ratio and Interest Cover Covenants. The EHAF Group is currently meeting all of its covenants. The Stirling has access to a $19.8 million facility. The drawn amount as at 30 June 2022 is $19.8 million which will mature on 26 August 2023. As at 30 June 2022, the drawn amount was not hedged. The fair value of this debt facility is $19.5 million. The fair value of the debt facility is based on discounted cash flows using a current borrowing rate. The debt facility includes Loan to Value Ratio and Interest Cover Covenants. The Stirling is currently meeting all of its covenants. The Bluewater has access to a $30.5 million facility. The drawn amount as at 30 June 2022 is $30.5 million which will mature on 31 December 2023. As at 30 June 2022, the drawn amount was not hedged. The fair value of this debt facility is $29.0 million. The fair value of the debt facility is based on discounted cash flows using a current borrowing rate. The debt facility includes Loan to Value Ratio and Interest Cover Covenants. The Bluewater is currently meeting all of its covenants. All of the facilities have 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 2022, including the impact of the interest rate swaps, is 3.87% per annum (2021: 3.85%). BORROWING COST A breakdown of the borrowing costs included in the Group’s Consolidated Statement of Profit or Loss is provided below: 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. ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 FOR THE YEAR ENDED 30 JUNE 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 Interest bearing liabilities (continued) Interest bearing liabilities (continued) Interest bearing liabilities (continued) 10. 10. Borrowing costs 10. Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which 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 are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which added to the cost of those assets, until such time as the assets are substantially ready for their intended use added to the cost of those assets, until such time as the assets are substantially ready for their intended use are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are or sale. or sale. added to the cost of those assets, until such time as the assets are substantially ready for their intended use Investment income earned on the temporary investment of specific borrowings pending their expenditure on or sale. 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. qualifying assets is deducted from the borrowing costs eligible for capitalisation. Investment income earned on the temporary investment of specific borrowings pending their expenditure on All other borrowing costs are recognised in profit or loss in the period in which they are incurred. 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. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. 11. Derivative financial instruments 11. Derivative financial instruments OVERVIEW 11. Derivative financial instruments OVERVIEW The Group’s derivative financial instruments consist of interest rate swap contracts to hedge its exposure to 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 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. The Group’s derivative financial instruments consist of interest rate swap contracts to hedge its exposure to borrowings at a floating rate and effectively swap them into a fixed rate. 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. EHAF have entered into interest rate swap agreements with a notional principal amount totalling $83.8 million EHAF have entered into interest rate swap agreements with a notional principal amount totalling $83.8 million that entitles it to receive interest, at quarterly intervals, at a floating rate on the notional principal and oblige that entitles it to receive interest, at quarterly intervals, at a floating rate on the notional principal and oblige EHAF have entered into interest rate swap agreements with a notional principal amount totalling $83.8 million it to pay interest at a fixed rate. it to pay interest at a fixed rate. that entitles it to receive interest, at quarterly intervals, at a floating rate on the notional principal and oblige The interest rate swap agreements allow the raising of long-term borrowings at a floating rate and effectively 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. swap them into a fixed rate. The interest rate swap agreements allow the raising of long-term borrowings at a floating rate and effectively ACCOUNTING POLICY swap them into a fixed rate. ACCOUNTING POLICY ACCOUNTING POLICY Derivatives Derivatives Derivatives are initially recognised at fair value at the date the derivative contract is entered into and are Derivatives are initially recognised at fair value at the date the derivative contract is entered into and are Derivatives subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is Derivatives are initially recognised at fair value at the date the derivative contract is entered into and are recognised in profit or loss immediately. recognised in profit or loss immediately. subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is Valuation, techniques and inputs recognised in profit or loss immediately. Valuation, techniques and inputs Financial Instruments 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 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 Financial Instruments derivatives) is determined using valuation techniques. These valuation techniques maximise the use of The fair value of financial instruments that are not traded in an active market (for example, over-the-counter observable market data where it is available and rely as little as possible on entity specific estimates. If all observable market data where it is available and rely as little as possible on entity specific estimates. If all derivatives) is determined using valuation techniques. These valuation techniques maximise the use of significant inputs required to fair value an instrument are observable, the instrument is included in level 2. significant inputs required to fair value an instrument are observable, the instrument is included in level 2. observable market data where it is available and rely as little as possible on entity specific estimates. If all 76  significant inputs required to fair value an instrument are observable, the instrument is included in level 2. 76  87 76              Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 11. Derivative financial instruments (continued) Financial Instruments (continued) 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. 12. Other financial assets OVERVIEW The Group’s other financial assets consist of short-term financing provided by the Group to certain managed funds. The Group’s other financial assets as at 30 June 2022 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 AASB 9 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, 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. 88 77  Elanor Investors GroupAnnual Report 2022    ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 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 year ended 30 June 2022 A reconciliation of treasury securities on issue at the beginning and end of the year is set out below: Contributed equity for the year ended 30 June 2021 78  89     Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 13. Contributed equity (continued) A reconciliation of treasury securities on issue at the beginning and end of the prior year is set out below: ACCOUNTING POLICY Equity-settled security-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value determined at the grant date of the equity-settled security-based payments is expensed on a straight-line basis over the vesting period, based on the Group’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 estimate, 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. 14. Reserves OVERVIEW 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. 90 79  Elanor Investors GroupAnnual Report 2022    ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 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. 80  91     Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 15. Financial risk management (continued) (a) (i) Market risk (continued) 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. As at 30 June 2022 $83.8 million (2021: $134.9 million) of the $335.8 million (2021: $209.2 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. 92 81  Elanor Investors GroupAnnual Report 2022    ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 15. Financial risk management (continued) (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 trade receivables and contract assets 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 debtor’s 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. 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, 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 $0.9 million (2021: $0.2 million) in respect to the rent receivables of Bluewater Square Syndicate. 82  93     Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 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 $0.3 million has been recognised in respect of the consolidated HTL Funds’ trade debtors (2021: $0.7 million). (i) 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 is detailed below: Where entities have the right to off-set and intend to settle on a net basis under netting arrangements, this off- set has been recognised in the consolidated financial statements on a net basis. Details of the Group's commitments are disclosed in Note 23. 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. (ii) Impairment losses The ageing of trade and other receivables at reporting date is detailed below: 94 83  Elanor Investors GroupAnnual Report 2022      ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 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. The following are the undiscounted contractual cash flows of derivatives and non-derivative financial liabilities shown at their nominal amount (including future interest payable). (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 securityholders 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. 84  95     Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 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. Business Combination During the year, the Group increased its ownership interests in Stirling Street Syndicate (Stirling) and Elanor Wildlife Park Fund (EWPF), to 42.98% and 42.82% respectively. As a result, the Group obtained a controlling interest in these funds. Refer to the Basis of Consolidation for further discussion.   The consolidation of these investments, which are previously equity accounted, are considered business combinations under AASB 3 Business Combinations. Details of the purchase consideration and the net assets acquired are as follows: Revenue and net profit contribution The contribution to the Group’s revenue for the period from the consolidation of Stirling and EWPF was $1.8 million and $10.8 million respectively, while their contribution to the Group’s net profit or (loss) for the period was $0.3 million and ($3.2) million respectively. If the acquisition had occurred on 1 July 2021, the contribution to the Group’s revenue and net profit/(loss) for the year would have been $3.1 million and $0.6 million for Stirling, and $11.3 million and ($4.7) million for EWPF respectively. 96 85  Elanor Investors GroupAnnual Report 2022    ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 17. 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 have 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 (2021: nil) 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 (2021: nil). (d) Contingent liabilities At balance date Elanor Investors Limited and Elanor Investment Fund had no contingent liabilities (2021: nil). 86  97       ELANOR INVESTORS GROUP Notes to the Consolidated Financial Statements For the year ended 30 June 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 FOR THE YEAR ENDED 30 JUNE 2022 FOR THE YEAR ENDED 30 JUNE 2022 18. Subsidiaries and Controlled entities OVERVIEW 18. Subsidiaries and Controlled entities 18. Subsidiaries and Controlled entities 18. Subsidiaries and Controlled entities OVERVIEW OVERVIEW OVERVIEW This note provides information about the Group’s subsidiaries and controlled entities. This note provides information about the Group’s subsidiaries and controlled entities. 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 year are as follows: Details of the Group's material subsidiaries at the end of the reporting year are as follows: Details of the Group's material subsidiaries at the end of the reporting year are as follows: 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 year 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 old EMPR II tax-consolidated group. 3 Elanor Hotel Accommodation Fund Limited (EHAF Company I/ previously named ‘EMPR Management Pty Limited’) is the head entity of the EHAF tax- consolidated group. 4 Elanor Hotel Accommodation Fund II Limited (EHAF Company II/ previously named ‘Elanor Luxury Hotel Fund Pty Limited’) is the head entity of the EHAF Company II tax-consolidated group. EIL does not have a 100% ownership in EHAF Company II (only rounded up to 100% in the above table), and hence this entity is not part of the EIL tax-consolidated group.  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 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. 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 old EMPR II tax-consolidated group. 2 EMPR II Management Pty Limited is the head entity of the old EMPR II tax-consolidated group. of the EIL tax-consolidated group. 3 Elanor Hotel Accommodation Fund Limited (EHAF Company I/ previously named ‘EMPR Management Pty Limited’) is the head entity of the EHAF tax- 3 Elanor Hotel Accommodation Fund Limited (EHAF Company I/ previously named ‘EMPR Management Pty Limited’) is the head entity of the EHAF tax- 2 EMPR II Management Pty Limited is the head entity of the old EMPR II tax-consolidated group. 98 consolidated group. 3 Elanor Hotel Accommodation Fund Limited (EHAF Company I/ previously named ‘EMPR Management Pty Limited’) is the head entity of the EHAF tax- consolidated group. 4 Elanor Hotel Accommodation Fund II Limited (EHAF Company II/ previously named ‘Elanor Luxury Hotel Fund Pty Limited’) is the head entity of the EHAF 4 Elanor Hotel Accommodation Fund II Limited (EHAF Company II/ previously named ‘Elanor Luxury Hotel Fund Pty Limited’) is the head entity of the EHAF consolidated group. Company II tax-consolidated group. EIL does not have a 100% ownership in EHAF Company II (only rounded up to 100% in the above table), and hence 4 Elanor Hotel Accommodation Fund II Limited (EHAF Company II/ previously named ‘Elanor Luxury Hotel Fund Pty Limited’) is the head entity of the EHAF Company II tax-consolidated group. EIL does not have a 100% ownership in EHAF Company II (only rounded up to 100% in the above table), and hence this entity is not part of the EIL tax-consolidated group.  this entity is not part of the EIL tax-consolidated group.  Company II tax-consolidated group. EIL does not have a 100% ownership in EHAF Company II (only rounded up to 100% in the above table), and hence this entity is not part of the EIL tax-consolidated group.  87  87  87  87  Elanor Investors GroupAnnual Report 2022                ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 18. Subsidiaries and Controlled entities (continued)  88  99     Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 FOR THE YEAR ENDED 30 JUNE 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 FOR THE YEAR ENDED 30 JUNE 2022 Other Information Other Information This section includes other information that must be disclosed to comply with the Accounting Standards, 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 Other Information 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 This section includes other information that must be disclosed to comply with the Accounting Standards, This section includes other information that must be disclosed to comply with the Accounting Standards, 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. the Corporations Act 2001 or the Corporations Regulations, but which are not considered critical in the Corporations Act 2001 or the Corporations Regulations, but which are not considered critical in parties, events after the end of the reporting period and certain EIF Group disclosures. understanding the financial performance or position of the Group, including information about related 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. parties, events after the end of the reporting period and certain EIF Group disclosures. 19. Trade and other receivables 19. Trade and other receivables 19. Trade and other receivables OVERVIEW 19. Trade and other receivables OVERVIEW This note provides further information about assets that are incidental to the Group’s trading activities, being 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, OVERVIEW 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. This note provides further information about assets that are incidental to the Group’s trading activities, being This note provides further information about assets that are incidental to the Group’s trading activities, being including that of the Group’s trade and other receivables. trade and other receivables. Refer to Note 15(b) for discussion on the Group’s management of credit risk, 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. including that of the Group’s trade and other receivables. During the year, the Group made an $8.4 million Manager Contribution to ECF to support ECF’s acquisition of During the year, the Group made an $8.4 million Manager Contribution to ECF to support ECF’s acquisition of a 49.9% interest in the 19 Harris Street property. Under the Australian Accounting Standards, this contribution a 49.9% interest in the 19 Harris Street property. Under the Australian Accounting Standards, this contribution During the year, the Group made an $8.4 million Manager Contribution to ECF to support ECF’s acquisition of is required to be recognised as a contract asset upon initial recognition. $3.9 million has been subsequently During the year, the Group made an $8.4 million Manager Contribution to ECF to support ECF’s acquisition of is required to be recognised as a contract asset upon initial recognition. $3.9 million has been subsequently a 49.9% interest in the 19 Harris Street property. Under the Australian Accounting Standards, this contribution released through the Statement of Profit or Loss as a non-cash expense in the period in respect of transaction a 49.9% interest in the 19 Harris Street property. Under the Australian Accounting Standards, this contribution released through the Statement of Profit or Loss as a non-cash expense in the period in respect of transaction is required to be recognised as a contract asset upon initial recognition. $3.9 million has been subsequently related funds management fees received from ECF. The remaining balance of the contract asset will be is required to be recognised as a contract asset upon initial recognition. $3.9 million has been subsequently related funds management fees received from ECF. The remaining balance of the contract asset will be released through the Statement of Profit or Loss as a non-cash expense in the period in respect of transaction amortised as a non-cash expense through the Profit or Loss over a 5-year period. released through the Statement of Profit or Loss as a non-cash expense in the period in respect of transaction amortised as a non-cash expense through the Profit or Loss over a 5-year period. related funds management fees received from ECF. The remaining balance of the contract asset will be related funds management fees received from ECF. The remaining balance of the contract asset will be amortised as a non-cash expense through the Profit or Loss over a 5-year period. 20. Payables and other liabilities amortised as a non-cash expense through the Profit or Loss over a 5-year period. 20. Payables and other liabilities 20. Payables and other liabilities OVERVIEW 20. Payables and other liabilities OVERVIEW This note provides further information about liabilities that are incidental to the Group’s trading activities, being OVERVIEW This note provides further information about liabilities that are incidental to the Group’s trading activities, being payables, other liabilities and provisions. OVERVIEW payables, other liabilities and provisions. This note provides further information about liabilities that are incidental to the Group’s trading activities, being This note provides further information about liabilities that are incidental to the Group’s trading activities, being payables, other liabilities and provisions. payables, other liabilities and provisions. Payables Payables Payables Payables 100 89  89  89  89  Elanor Investors GroupAnnual Report 2022                ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 20. Payables and other liabilities (continued) Other liabilities 1The distribution payable is related to distributions declared by the consolidated Funds including the guaranteed distribution payable by EHAF to the fund’s investors for the financial year ending 30 June 2022 (2021: only EMPR Fund). 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. 90  101     Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 20. Payables and other liabilities (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. 21. 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 life of the 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 life of 5 years. 102 91  Elanor Investors GroupAnnual Report 2022      ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 22. Government grants During the year, the Group’s Hotels, Tourism and Leisure Managed Funds (consolidated in the Group financial statements) received a total of $0.6 million (2021: $5.4 million) of government grants. 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. 23. Commitments OVERVIEW This note sets out the material commitments of the Group. Contingent liabilities and commitments The Group has capital expenditure commitments related to EHAF, but not recognised as liabilities, as at 30 June 2022 of $5.9 million (30 June 2021: 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. 92  103       ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ELANOR INVESTORS GROUP FOR THE YEAR ENDED 30 JUNE 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 FOR THE YEAR ENDED 30 JUNE 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 FOR THE YEAR ENDED 30 JUNE 2022 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 24. Share-based payments 24. Share-based payments 24. Share-based payments OVERVIEW 24. Share-based payments OVERVIEW 24. Share-based payments 24. Share-based payments OVERVIEW 24. Share-based payments OVERVIEW The Group has short term and long-term ownership-based compensation schemes for executives and senior OVERVIEW The Group has short term and long-term ownership-based compensation schemes for executives and senior OVERVIEW employees. The Group has short term and long-term ownership-based compensation schemes for executives and senior OVERVIEW employees. The Group has short term and long-term ownership-based compensation schemes for executives and senior employees. The Group has short term and long-term ownership-based compensation schemes for executives and senior The Group has short term and long-term ownership-based compensation schemes for executives and senior STI scheme employees. employees. STI scheme 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 employees. STI scheme The Group has implemented an STI scheme (the STI Scheme), based on an annual profit share. The STI STI scheme Scheme is based on a profit share pool, to be calculated each year based on the Group's financial performance 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 The Group has implemented an STI scheme (the STI Scheme), based on an annual profit share. The STI STI scheme for the relevant year. 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 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 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 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 for the relevant year. The purpose of the STI Scheme is to provide an annual bonus arrangement that incentivises and rewards Scheme is based on a profit share pool, to be calculated each year based on the Group's financial performance for the relevant year. management for achieving annual pre-tax ROE (Return on Equity) for securityholders in excess of 10% per The purpose of the STI Scheme is to provide an annual bonus arrangement that incentivises and rewards management for achieving annual pre-tax ROE (Return on Equity) for securityholders in excess of 10% per for the relevant year. The purpose of the STI Scheme is to provide an annual bonus arrangement that incentivises and rewards annum. The profit share pool is based on 20% of ROE above 10%, 22.5% of the ROE above 15%, 25% of the The purpose of the STI Scheme is to provide an annual bonus arrangement that incentivises and rewards management for achieving annual pre-tax ROE (Return on Equity) for securityholders in excess of 10% per annum. The profit share pool is based on 20% of ROE above 10%, 22.5% of the ROE above 15%, 25% of the The purpose of the STI Scheme is to provide an annual bonus arrangement that incentivises and rewards management for achieving annual pre-tax ROE (Return on Equity) for securityholders in excess of 10% per ROE above 17.5% and 30% of the ROE above 20%. The STI Scheme provides that 50% of any awards to management for achieving annual pre-tax ROE (Return on Equity) for securityholders in excess of 10% per annum. The profit share pool is based on 20% of ROE above 10%, 22.5% of the ROE above 15%, 25% of the The purpose of the STI Scheme is to provide an annual bonus arrangement that incentivises and rewards ROE above 17.5% and 30% of the ROE above 20%. The STI Scheme provides that 50% of any awards to management for achieving annual pre-tax ROE (Return on Equity) for securityholders in excess of 10% per annum. The profit share pool is based on 20% of ROE above 10%, 22.5% of the ROE above 15%, 25% of the individuals from the profit share pool may be delivered in deferred securities, which vest two years after award, 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 management for achieving annual pre-tax ROE (Return on Equity) for securityholders in excess of 10% per individuals from the profit share pool may be delivered in deferred securities, which vest two years after award, 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 provided that the employee remains with the Group and maintains minimum performance standards. 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, annum. The profit share pool is based on 20% of ROE above 10%, 22.5% of the ROE above 15%, 25% of the provided that the employee remains with the Group and maintains minimum performance standards. 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, holder of the securities is entitled to dividends in the two-year deferral period. 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 ROE above 17.5% and 30% of the ROE above 20%. The STI Scheme provides that 50% of any awards to holder of the securities is entitled to dividends in the two-year deferral period. 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 provided that the employee remains with the Group and maintains minimum performance standards. The holder of the securities is entitled to dividends in the two-year deferral period. 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 holder of the securities is entitled to dividends in the two-year deferral period. The Elanor Investors Group Board monitors the appropriateness of the profit share scheme and any holder of the securities is entitled to dividends in the two-year deferral period. provided that the employee remains with the Group and maintains minimum performance standards. The The Elanor Investors Group Board monitors the appropriateness of the profit share scheme and any holder of the securities is entitled to dividends in the two-year deferral period. distribution of the profit share pool will be at the Board's discretion, taking into consideration the forecast and The Elanor Investors Group Board monitors the appropriateness of the profit share scheme and any holder of the securities is entitled to dividends in the two-year deferral period. distribution of the profit share pool will be at the Board's discretion, taking into consideration the forecast and The Elanor Investors Group Board monitors the appropriateness of the profit share scheme and any actual financial performance and position of the Group. The Elanor Investors Group Board monitors the appropriateness of the profit share scheme and any distribution of the profit share pool will be at the Board's discretion, taking into consideration the forecast and actual financial performance and position of the Group. The 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 distribution of the profit share pool will be at the Board's discretion, taking into consideration the forecast and actual financial performance and position of the Group. The 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 actual financial performance and position of the Group. distribution of the profit share pool will be at the Board's discretion, taking into consideration the forecast and LTI scheme actual financial performance and position of the Group. LTI scheme actual financial performance and position of the Group. The Group has an LTI scheme (the LTI Scheme), based on an executive loan security plan and an executive LTI scheme The Group has an LTI scheme (the LTI Scheme), based on an executive loan security plan and an executive LTI scheme options plan. LTI scheme The Group has an LTI scheme (the LTI Scheme), based on an executive loan security plan and an executive options plan. The Group has an LTI scheme (the LTI Scheme), based on an executive loan security plan and an executive LTI scheme The Group has an LTI scheme (the LTI Scheme), based on an executive loan security plan and an executive options plan. The Group has 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 options plan. Under the executive loan security plan awards (comprising the loan of funds to eligible Elanor employees to The Group has an LTI scheme (the LTI Scheme), based on an executive loan security plan and an executive options plan. acquire securities which are subject to vesting conditions) have been issued to certain employees. 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. options plan. Under the executive loan security plan awards (comprising the loan of funds to eligible Elanor employees to 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. 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 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 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. equal to any cash dividend or distribution but not including any dividend or distribution of capital, or an 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 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 abnormal distribution. 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. 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 equal to any cash dividend or distribution but not including any dividend or distribution of capital, or an abnormal distribution. 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 abnormal distribution. In addition to the loan security plan, the Group has implemented an executive option plan comprising rights to equal to any cash dividend or distribution but not including any dividend or distribution of capital, or an abnormal distribution. acquire securities at a specified exercise price, subject to the achievement of vesting conditions, which may 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 abnormal distribution. In addition to the loan security plan, the Group has implemented an executive option plan comprising rights to be offered to certain eligible employees (including the Chief Executive Officer, direct reports to the Chief 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 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 Executive Officer and other selected key executives) as determined by the Board. Executive Options currently 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 In addition to the loan security plan, the Group has implemented an executive option plan comprising rights to Executive Officer and other selected key executives) as determined by the Board. Executive Options currently 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 on issue are to the Chief Executive Officer only and equate to over 2.0 million securities. 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 acquire securities at a specified exercise price, subject to the achievement of vesting conditions, which may on issue are to the Chief Executive Officer only and equate to over 2.0 million securities. 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 Executive Officer and other selected key executives) as determined by the Board. Executive Options currently on issue are to the Chief Executive Officer only and equate to over 2.0 million securities. 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 and equate to over 2.0 million securities. The purpose of the LTI Scheme is to assist in attracting, motivating and retaining key management and on issue are to the Chief Executive Officer only and equate to over 2.0 million securities. The purpose of the LTI Scheme is to assist in attracting, motivating and retaining key management and Executive Officer and other selected key executives) as determined by the Board. Executive Options currently on issue are to the Chief Executive Officer only and equate to over 2.0 million securities. employees. The LTI Scheme operates by providing key management and employees with the opportunity to 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 on issue are to the Chief Executive Officer only and equate to over 2.0 million securities. The purpose of the LTI Scheme is to assist in attracting, motivating and retaining key management and participate in the future performance of Group securities. The vesting conditions of LTI plans and related 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 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 awards include both a service-based hurdle and an absolute total securityholder return (TSR) performance 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 The purpose of the LTI Scheme is to assist in attracting, motivating and retaining key management and awards include both a service-based hurdle and an absolute total securityholder return (TSR) performance 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 hurdle. The service-based hurdle is 2, 3 and 4 years in the case of the loan security plan. The TSR is 10% per 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 securityholder return (TSR) performance employees. The LTI Scheme operates by providing key management and employees with the opportunity to hurdle. The service-based hurdle is 2, 3 and 4 years in the case of the loan security plan. The TSR is 10% per 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 securityholder return (TSR) performance annum for the first year and 8% per annum thereafter in the case of the loan security plan and 15% per annum awards include both a service-based hurdle and an absolute total securityholder 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 participate in the future performance of Group securities. The vesting conditions of LTI plans and related annum for the first year and 8% per annum thereafter in the case of the loan security plan and 15% per annum awards include both a service-based hurdle and an absolute total securityholder 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 in the case of the options plan. 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 awards include both a service-based hurdle and an absolute total securityholder return (TSR) performance in the case of the options plan. 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 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. 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. No LTI’s were issued to KMP’s in FY22 (2021: 8.5 million). in the case of the options plan. annum for the first year and 8% per annum thereafter in the case of the loan security plan and 15% per annum No LTI’s were issued to KMP’s in FY22 (2021: 8.5 million). in the case of the options plan. No LTI’s were issued to KMP’s in FY22 (2021: 8.5 million). in the case of the options plan. No LTI’s were issued to KMP’s in FY22 (2021: 8.5 million). TSR was selected as the LTI performance measure to ensure an alignment between the securityholder return No LTI’s were issued to KMP’s in FY22 (2021: 8.5 million). TSR was selected as the LTI performance measure to ensure an alignment between the securityholder return No LTI’s were issued to KMP’s in FY22 (2021: 8.5 million). and reward for executives. TSR was selected as the LTI performance measure to ensure an alignment between the securityholder return No LTI’s were issued to KMP’s in FY22 (2021: 8.5 million). and reward for executives. TSR was selected as the LTI performance measure to ensure an alignment between the securityholder return TSR was selected as the LTI performance measure to ensure an alignment between the securityholder return and reward for executives. 104 TSR was selected as the LTI performance measure to ensure an alignment between the securityholder return 93  and reward for executives. 93  and reward for executives. TSR was selected as the LTI performance measure to ensure an alignment between the securityholder return and reward for executives. 93  93  and reward for executives. 93  93  93  Elanor Investors GroupAnnual Report 2022                            ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 24. Share-based payments (continued) LTI scheme (continued) 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 No options were granted in FY22. 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 $3,770,702 (2021: $3,302,395). 94  105       Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 24. Share-based payments (continued) ACCOUNTING POLICY Share-Based Payments In accordance with AASB 2 Share-based Payment, 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 the profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve. 25. 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 year. Elanor Investors Group Controlled entities Interests in controlled entities are set out in Note 18. 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 2022, this amount is $129,996 (2021: $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 2022 was nil (2021: 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. 106 95  Elanor Investors GroupAnnual Report 2022    ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 25. Related parties (continued) A summary of the income earned during the year from these managed investment schemes is provided below: 1The ERF income earned includes $1.82 million of Syndication fees recognised for the proposed syndication of ERF’s Tweed Mall property. Outstanding receivables balances with related parties The following balances arising through the normal course of business were due from related parties at balance date:  96  107         Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 25. Related parties (continued) Key Management Personnel (KMP) Executive Mr. Glenn Willis Mr. Paul Siviour Mr. Symon Simmons Non-Executive Mr. Paul Bedbrook Mr. Nigel Ampherlaw Mr. Anthony Fehon Mr. Su Kiat Lim Mrs. Karyn Baylis 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 Independent Non-Executive Director The aggregate compensation made to the Key Management Personnel of the Group is set out below: 26. Significant events Harris Street Fund The Group established the Harris Street Fund in May 2021 which acquired the commercial property asset, 19 Harris Street in Pyrmont, NSW for $185.0 million, with the Elanor Commercial Property Fund (ASX: ECF) acquiring a 49.9% interest alongside Elanor’s wholesale private capital partners. Elanor Hotel Accommodation Fund On 30 September 2021, the Elanor Hotels and Accommodation Fund (EHAF) was successfully established by the Elanor Metro and Prime Regional Hotel Fund (EMPR) acquiring the Elanor Luxury Hotel Fund (ELHF) and the Albany Hotel, creating a $346.2 million hotel fund. On 30 June 2022 EHAF acquired Estate Tuscany from the ENN Group (which acquired Estate Tuscany in March 2022) and Sanctuary Inn Tamworth accommodation hotels for approximately $29 million. The acquisition of Sanctuary Inn Tamworth settled early August 2022. Elanor Healthcare Real Estate Fund The Elanor Health Care Real Estate Fund completed one property acquisition Highpoint Health Hub in Ashgrove, QLD, for $51.9 million in October 2021. 108 97  Elanor Investors GroupAnnual Report 2022    ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 FOR THE YEAR ENDED 30 JUNE 2022 26. Significant events (continued) 26. Significant events (continued) Warrawong Plaza Fund Warrawong Plaza Fund The Group establishment the Warrawong Plaza Fund in October 2021 which acquired the Warrawong Plaza The Group establishment the Warrawong Plaza Fund in October 2021 which acquired the Warrawong Plaza shopping centre in Wollongong, NSW, for $136.4 million. shopping centre in Wollongong, NSW, for $136.4 million. Elanor Commercial Property Fund Elanor Commercial Property Fund As noted above, on 25 May 2022, ECF acquired a 49.9% interest in Harris Street Fund alongside Elanor’s As noted above, on 25 May 2022, ECF acquired a 49.9% interest in Harris Street Fund alongside Elanor’s wholesale private capital partners. wholesale private capital partners. Elanor Retail Property Fund Elanor Retail Property Fund Securityholder approval of the proposed liquidity event and privatisation of the Elanor Retail Property Fund Securityholder approval of the proposed liquidity event and privatisation of the Elanor Retail Property Fund (ASX: ERF) occurred in August 2022. The privatisation and delisting incorporates the syndication of the fund’s (ASX: ERF) occurred in August 2022. The privatisation and delisting incorporates the syndication of the fund’s Tweed Mall property to Elanor’s wholesale private capital partners, a security buy-back offer and the delisting Tweed Mall property to Elanor’s wholesale private capital partners, a security buy-back offer and the delisting of ERF to become the Elanor Property Income Fund (EPIF). EPIF will be an open-ended, multi-sector, property of ERF to become the Elanor Property Income Fund (EPIF). EPIF will be an open-ended, multi-sector, property fund generating secure income from a portfolio of high investment quality real estate assets. fund generating secure income from a portfolio of high investment quality real estate assets. 27. Other accounting policies 27. Other accounting policies Rental income Rental income The Group is the lessor in a number of operating leases. Rental income arising from operating leases is 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. 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 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 of the lease asset and recognised as an expense over the term of the lease on the same basis as the lease income. income. When an agreement to waive rent is made with tenants impacted by the COVID-19 pandemic to waive rent, When an agreement to waive rent 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 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, 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 expensed to except to the extent of a pre-existing provision for expected credit losses then the rent waived is expensed to the provision. the provision. Rental deferrals as part of COVID-19 rent concessions subsequently waived in consideration for extension of 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. the lease term will be treated as lease modification on straight-line basis over the new lease term. Cash and cash equivalents Cash and cash equivalents For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on 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, 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 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 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. overdrafts are shown within borrowings in current liabilities in the balance sheet. Inventories  Inventories  Inventories, which principally comprise beverage and consumables of the hotel and wildlife park businesses, Inventories, which principally comprise beverage and consumables of the hotel and wildlife park businesses, are stated at the lower of cost and net realisable value. 109 are stated at the lower of cost and net realisable value. 98  98          Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 28. Events occurring after reporting date Subsequent to year end, a distribution of 4.43 cents per stapled security has been declared by the Board of Directors. The total distribution amount of $5.4 million will be paid on 31 August 2022 in respect of the year ended 30 June 2022. On 19 August 2022, at an Extraordinary General Meeting, Elanor Retail Property Fund (ASX: ERF) securityholders approved the privatisation and delisting of ERF including the syndication of ERF’s Tweed Mall property to Elanor’s wholesale private capital partners. As a result, ERF is expected to delist from the ASX in November 2022. Following delisting, ERF will become the Elanor Property Income Fund (EPIF), an open-ended, unlisted, multi sector reliable income real estate fund. Other than the events disclosed above, the directors are not aware of any other matter or circumstance not otherwise dealt with in the financial report 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 year subsequent to the year ended 30 June 2022. 29. Auditor's remuneration OVERVIEW PricewaterhouseCoopers are (2021: PricewaterhouseCoopers) 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. independent auditors of Elanor Investors Group the is a summary of Below fees paid PricewaterhouseCoopers) during the year. for various services to PricewaterhouseCoopers (2021: 110 99  Elanor Investors GroupAnnual Report 2022      ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 FOR THE YEAR ENDED 30 JUNE 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 30. Non-Parent disclosure 30. Non-Parent disclosure OVERVIEW 30. Non-Parent disclosure OVERVIEW This note provides information relating to the non-parent EIF Group only. The accounting policies are 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. consistent with the Group, except as otherwise disclosed. This note provides information relating to the non-parent EIF Group only. The accounting policies are Segment information consistent with the Group, except as otherwise disclosed. Segment information Chief operating decisions are based on the segment information as reported by the consolidated Group and Segment information Chief operating decisions are based on the segment information as reported by the consolidated Group and therefore EIF is deemed to only have one segment. therefore EIF is deemed to only have one segment. Chief operating decisions are based on the segment information as reported by the consolidated Group and therefore EIF is deemed to only have one segment. Distributions Distributions The following distributions were declared by the EIF Group either during the year or post balance date: Distributions The following distributions were declared by the EIF Group either during the year or post balance date: The following distributions were declared by the EIF Group either during the year or post balance date: 1The interim distribution of 9.05 cents per stapled security was paid on 28 February 2022. 1The interim distribution of 9.05 cents per stapled security was paid on 28 February 2022. 2The final distribution of 4.43 cents per stapled security was declared after 30 June 2022, but is recognised in the accounts at balance 2The final distribution of 4.43 cents per stapled security was declared after 30 June 2022, but is recognised in the accounts at balance date. The final distribution will be paid on 31 August 2022. 1The interim distribution of 9.05 cents per stapled security was paid on 28 February 2022. date. The final distribution will be paid on 31 August 2022. 2The final distribution of 4.43 cents per stapled security was declared after 30 June 2022, but is recognised in the accounts at balance Taxation of the Trust date. The final distribution will be paid on 31 August 2022. Taxation of the Trust Under current Australian income tax legislation, the Trust and its sub-trusts are not liable for income tax on 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 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 Under current Australian income tax legislation, the Trust and its sub-trusts are not liable for income tax on 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. their taxable income (including assessable realised capital gains) provided that the unitholders are presently there is no separate tax disclosure for the Trust. entitled to the income of the Trust. Accordingly, the Group only pays tax on Company taxable earnings and Earnings / (losses) per stapled security 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 on the profit / (loss) attributable Earnings / (losses) per stapled security The earnings / (losses) per stapled security measure shown below is based on the profit / (loss) attributable to securityholders: to securityholders: The earnings / (losses) per stapled security measure shown below is based on the profit / (loss) attributable to securityholders: 100  100  100  111                   ELANOR INVESTORS GROUP Notes to the Consolidated Financial Statements For the year ended 30 June 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 30. Non-Parent disclosure (continued) Investment Properties Movement in investment properties The carrying value of investment properties at the beginning and end of the current year 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 year. Fair value measurement The significant unobservable inputs associated with the valuation of the Group's investment properties are as follows: 112 101  Elanor Investors GroupAnnual Report 2022      ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 30. Non-Parent disclosure (continued) Equity accounted investments The Trust’s equity accounted investments are as follows: 30 June 2022 30 June 2021 The following information represents the aggregated financial position and financial performance of the Elanor Retail Property Fund, Elanor Commercial Property Fund, Waverley Gardens Fund and the Harris Street Fund. This summarised financial information represents amounts shown in the associate's financial statements prepared in accordance with Australian Accounting Standards, adjusted by the Trust for equity accounting purposes. 102  113     Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 30. Non-Parent disclosure (continued) Equity accounted investments (continued) 30 June 2022 A reconciliation of the above summarised financial information to the carrying amount of the interest in Elanor Retail Property Fund, Elanor Commercial Property Fund, Waverley Gardens Fund and the Harris Street Fund recognised in the consolidated financial statements is provided below: ¹ Other movements are primarily due to the issue of 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. 114 103  Elanor Investors GroupAnnual Report 2022          ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 30. Non-Parent disclosure (continued) Equity accounted investments (continued) 30 June 2021 A 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 is provided below: 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. 104  115                             Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 30. 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 2022, the outstanding payable to the Company was $43.9 million (2021: $74.5 million). 116 105  Elanor Investors GroupAnnual Report 2022      ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 30. Non-Parent disclosure (continued) Credit facilities As at 30 June 2022, the EIF Group had unrestricted access to the following credit facilities: The ENN Group has access to a $65 million secured debt facility, with a maturity date of 31 July 2025. The drawn amount at 30 June 2022 is $59.9 million and this facility is not hedged. The fair value of this debt facility $57.4 million. The fair value of the debt facility is based on discounted cash flows using a current borrowing rate. The EHAF Group has access to two secured debt facilities of $82.5 million each, on which both the EHAF hotel management companies and property trusts can draw. The drawn amount at 30 June 2022 is $82.5 million each and both will mature on 23 December 2024. The amount of drawn facility was hedged to 51% as at 30 June 2022. The fair value of each debt facility is $75.8 million. The fair value of the debt facilities is based on discounted cash flows using a current borrowing rate. The Stirling Street Syndicate has access to a $19.8 million facility. The drawn amount at 30 June 2022 is $19.8 million which will mature on 23 August 2023. As at 30 June 2022, the drawn amount was not hedged. The fair value of this debt facility is $19.5 million. The fair value of the debt facility is based on discounted cash flows using a current borrowing rate. 117 106      ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ELANOR INVESTORS GROUP ELANOR INVESTORS GROUP FOR THE YEAR ENDED 30 JUNE 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 FOR THE YEAR ENDED 30 JUNE 2022 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 30. Non-Parent disclosure (continued) 30. Non-Parent disclosure (continued) Credit facilities (continued) 30. Non-Parent disclosure (continued) 30. Non-Parent disclosure (continued) Credit facilities (continued) The Bluewater Square Syndicate has access to a $30.5 million (2021: $30.5 million) facility. The drawn amount Credit facilities (continued) at 30 June 2022 was $30.5 million (2021: $30.5 million) which will mature on 31 December 2023. At 30 June Credit facilities (continued) The Bluewater Square Syndicate has access to a $30.5 million (2021: $30.5 million) facility. The drawn amount 2022, the drawn amount was not hedged. The fair value of this debt facility is $29.0 million. The fair value of The Bluewater Square Syndicate has access to a $30.5 million (2021: $30.5 million) facility. The drawn amount at 30 June 2022 was $30.5 million (2021: $30.5 million) which will mature on 31 December 2023. At 30 June The Bluewater Square Syndicate has access to a $30.5 million (2021: $30.5 million) facility. The drawn amount the debt facility is based on discounted cash flows using a current borrowing rate. at 30 June 2022 was $30.5 million (2021: $30.5 million) which will mature on 31 December 2023. At 30 June 2022, the drawn amount was not hedged. The fair value of this debt facility is $29.0 million. The fair value of at 30 June 2022 was $30.5 million (2021: $30.5 million) which will mature on 31 December 2023. At 30 June 2022, the drawn amount was not hedged. The fair value of this debt facility is $29.0 million. The fair value of the debt facility is based on discounted cash flows using a current borrowing rate. All of the facilities have a variable interest rate. The interest rates on the loans are partially fixed using interest 2022, the drawn amount was not hedged. The fair value of this debt facility is $29.0 million. The fair value of the debt facility is based on discounted cash flows using a current borrowing rate. rate swaps. The weighted average annual interest rates payable of the loans at 30 June 2022, including the debt facility is based on discounted cash flows using a current borrowing rate. All of the facilities have a variable interest rate. The interest rates on the loans are partially fixed using interest the impact of the interest rate swaps, is 3.78% per annum (2021: 3.88%). 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 2022, including 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 2022, including the impact of the interest rate swaps, is 3.78% per annum (2021: 3.88%). rate swaps. The weighted average annual interest rates payable of the loans at 30 June 2022, including Derivative Financial instruments the impact of the interest rate swaps, is 3.78% per annum (2021: 3.88%). the impact of the interest rate swaps, is 3.78% per annum (2021: 3.88%). Derivative Financial instruments The EIF Group enters into derivative financial instruments to manage its exposure to interest rate risk. Derivative Financial instruments Derivative Financial instruments The EIF Group enters into derivative financial instruments to manage its exposure to interest rate risk. The EIF Group enters into derivative financial instruments to manage its exposure to interest rate risk. The EIF Group enters into derivative financial instruments to manage its exposure to interest rate risk. Reserves Reserves Reserves are balances that form part of equity that record other comprehensive income amounts that are Reserves retained in the business and not distributed until such time the underlying balance sheet item is realised. This Reserves Reserves are balances that form part of equity that record other comprehensive income amounts that are note provides information about movements in the other reserves line item of the balance sheet and a 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 Reserves are balances that form part of equity that record other comprehensive income amounts that are description of the nature and purpose of each reserve. 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 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. 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. The asset revaluation reserve is used to record increments and decrements on the revaluation of property, plant and equipment. The asset revaluation reserve is used to record increments and decrements on the revaluation of property, 118 The asset revaluation reserve is used to record increments and decrements on the revaluation of property, plant and equipment. 107  The asset revaluation reserve is used to record increments and decrements on the revaluation of property, plant and equipment. plant and equipment. 107  107  107  Elanor Investors GroupAnnual Report 2022ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 30. Non-Parent disclosure (continued) Reserves (continued) The cash flow reserve presented in the comparatives was used to recognise increments and decrements in the fair value of cash flow hedges. In FY22 all cash flow hedges are discontinued, and no new hedge relationships are recognised. 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. (1) Market Risk Interest rate risk As at reporting date, the EIF Group had the following interest-bearing assets and liabilities:   Of the $217.7 million floating interest-bearing loans as at 30 June 2022 (2021: $172.7 million), $83.8 million (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. 108  119     Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 30. 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 is detailed below: Impairment losses The ageing of trade and other receivables at reporting date is detailed below: 120 109  Elanor Investors GroupAnnual Report 2022    ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 30. 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 trade and other receivables and trade and other payables. Trade and Other Receivables 110  121         Notes to the Consolidated Financial Statements For the year ended 30 June 2022 ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 30. Non-Parent disclosure (continued) Payables 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 122 111  Elanor Investors GroupAnnual Report 2022        ELANOR INVESTORS GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 30. Non-Parent disclosure (continued) Other expenses A breakdown of other expenses included in the EIF Group’s Consolidated Statement of Profit or Loss is provided below: 112  123     Directors’ Declaration to Stapled Securityholders ELANOR INVESTORS GROUP DIRECTORS’ DECLARATION TO STAPLED SECURITYHOLDERS 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 45-123 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 2022 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 23 August 2022 dependent Auditor’s Report 124 113 Elanor Investors GroupAnnual Report 2022 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 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 Liability limited by a scheme approved under Professional Standards Legislation. Independent auditor’s report To the stapled securityholders of Elanor Investors Limited and Elanor Investment Fund Report on the audit of the financial reports 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) are 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 2022 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 reports) comprise: ● the consolidated statements of financial position as at 30 June 2022 ● 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 securityholders. 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 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 (including Independence Standards) (the Code) that are relevant to our audit of the financial reports in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. 125 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 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 Liability limited by a scheme approved under Professional Standards Legislation. Independent auditor’s report To the stapled securityholders of Elanor Investors Limited and Elanor Investment Fund Report on the audit of the financial reports 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) are 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 2022 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 reports) comprise: ● the consolidated statements of financial position as at 30 June 2022 ● 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 securityholders. 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 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 (including Independence Standards) (the Code) that are relevant to our audit of the financial reports in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. Independent auditor’s reportTo the stapled securityholders of Elanor Commercial Property Fund (comprising Elanor CommercialProperty Fund I and Elanor Commercial Property Fund II)Report on the audit of the financial reportOur opinionIn our opinion:The accompanying financial reports of:●Elanor Commercial Property Fund I (the Registered Scheme) and its controlled entities(together the Group), and●Elanor Commercial Property Fund II (ECPF II)are in accordance with theCorporations Act 2001,including:(a)giving a true and fair view of the financial positions of the Group and ECPF II as at 30 June2022 and of their financial performance for the year then ended(b)complying with Australian Accounting Standards and theCorporations Regulations 2001.What we have auditedThe financial reports of the Group and ECPF II (the financial report) comprise:●the consolidated statements of financial position as at 30 June 2022●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 policiesand other explanatory information●the directors’ declaration to stapled securityholders.Basis for opinionWe conducted our audit in accordance with Australian Auditing Standards. Our responsibilities underthose standards are further described in theAuditor’sresponsibilities for the audit of the financialreportsection of our report.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.PricewaterhouseCoopers, ABN 52 780 433 757One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001T: +61 2 8266 0000, F: +61 2 8266 9999Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124T: +61 2 9659 2476, F: +61 2 8266 9999Liability limited by a scheme approved under Professional Standards Legislation.126 Elanor Investors GroupAnnual Report 2022 Our audit approach An audit is designed to provide reasonable assurance about whether the financial reports are 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 reports. We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial reports 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 approximately $683,000 and $474,000, respectively, using earnings before interest, tax, depreciation and amortisation (EBITDA) as the benchmark in setting materiality. ● 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 EBITDA because, in our view, it is the benchmark against which the performance of Elanor and EIF Group are most commonly measured. ● Our audit focused on where 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 and tax professionals. ● Amongst other relevant topics, we communicated the following key audit matters to the Audit and Risk Committee: ○ Valuation of Property, plant and equipment and investment property ○ Carrying value of equity accounted investments ● These are further described in the Key audit matters section of our report. 127 Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial reports for the current period and were determined separately for Elanor and the EIF Group. The key audit matters were addressed in the context of our audit of the financial reports 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 property (Refer to notes 7, 8 and 30) Elanor’s property portfolio consists primarily of hotel and wildlife park properties classified as property, plant and equipment (PPE) and retail and commercial investment property as at 30 June 2022. EIF Group’s property portfolio comprises the same assets, however all are classified as investment property in its financial report. The fair value of PPE and investment property was determined using the valuation methodologies outlined in notes 7 and 8. This was a key audit matter because of the: ● relative size of the PPE and investment property to net assets and the related valuation movements, ● inherent subjectivity in the determination of fair value estimates; and ● the sensitivity of fair values to changes in key assumptions. Our procedures included, amongst others: ● Obtaining an understanding of Elanor and EIF Group’s processes and controls for determining the valuation of PPE and investment property. ● Considering the design and implementation of controls relevant to the valuation of PPE and investment property. ● Agreeing the adopted fair values of all properties to external valuation reports or internal valuation models and assessing the scope, competency and capability of the relevant external or internal valuer. ● For hotel and wildlife park properties engaging PwC Valuation experts to assess the appropriateness of the valuation methodologies utilised and the reasonableness of the significant assumptions adopted in the valuations, and testing selected inputs. ● For investment property held by Elanor, assessing the appropriateness of significant assumptions with reference to market data where possible and testing a sample of inputs. ● Testing the mathematical accuracy of a sample of the valuations. ● Considering the reasonableness of the disclosures made in light of the requirements of Australian Accounting Standards. 128 Elanor Investors GroupAnnual Report 2022 Key audit matter How our audit addressed the key audit matter Carrying value of equity accounted investments (Refer to notes 9 and 30) 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 assessed for impairment when indicators of impairment are identified. The assets are tested for impairment by comparing their recoverable amount (higher of value in use and fair value less costs to sell) with their carrying amount. The determination of the recoverable amount involves the use of estimates. 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 recoverable amount of EAI. 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 indicators of impairment exist for which the recoverable amount is required to be assessed; ● 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 EAI where indicators of impairment have been identified; and ● Testing the mathematical accuracy of the recoverable amount calculations. 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 2022, but does not include the financial reports and our auditor’s report thereon. Prior to the date of this auditor's report, the other information we obtained included the Directors' Report. We expect the remaining other information to be made available to us after the date of this 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. 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. When we read the other information not yet received, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and use our professional judgement to determine the appropriate action to take. Responsibilities of the directors for the financial report The directors are responsible for the preparation of the financial reports that give 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 reports that give a true and fair view and are free from material misstatement, whether due to fraud or error. In preparing the financial reports, the directors are responsible for assessing the ability of Elanor and the EIF Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate 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 reports as a whole are 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 reports. A further description of our responsibilities for the audit of the financial reports 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 20 to 29 of the directors’ report for the year ended 30 June 2022. In our opinion, the remuneration report of Elanor Investors Limited for the year ended 30 June 2022 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. PricewaterhouseCoopers N R McConnell Partner Sydney 23 August 2022 Responsibilities of the directors for the financial report The directors are responsible for the preparation of the financial reports that give 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 reports that give a true and fair view and are free from material misstatement, whether due to fraud or error. In preparing the financial reports, the directors are responsible for assessing the ability of Elanor and the EIF Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate 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 reports as a whole are 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 reports. A further description of our responsibilities for the audit of the financial reports 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 inpages31 to 40of the directors’report for the year ended 30 June 2022. In our opinion, the remuneration report ofElanor Investors Limited for the year ended 30 June 2022complieswithsection 300A of the Corporations Act 2001.ResponsibilitiesThe directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. PricewaterhouseCoopers N R McConnell PartnerSydney 23 August 2022 129 Responsibilities of the directors for the financial report The directors are responsible for the preparation of the financial reports that give 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 reports that give a true and fair view and are free from material misstatement, whether due to fraud or error. In preparing the financial reports, the directors are responsible for assessing the ability of Elanor and the EIF Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate 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 reports as a whole are 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 reports. A further description of our responsibilities for the audit of the financial reports 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 20 to 29 of the directors’ report for the year ended 30 June 2022. In our opinion, the remuneration report of Elanor Investors Limited for the year ended 30 June 2022 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. PricewaterhouseCoopers N R McConnell Partner Sydney 23 August 2022 Responsibilities of the directors for the financial report The directors are responsible for the preparation of the financial reports that give 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 reports that give a true and fair view and are free from material misstatement, whether due to fraud or error. In preparing the financial reports, the directors are responsible for assessing the ability of Elanor and the EIF Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate 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 reports as a whole are 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 reports. A further description of our responsibilities for the audit of the financial reports 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 inpages31 to 40of the directors’report for the year ended 30 June 2022. In our opinion, the remuneration report ofElanor Investors Limited for the year ended 30 June 2022complieswithsection 300A of the Corporations Act 2001.ResponsibilitiesThe directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. PricewaterhouseCoopers N R McConnell PartnerSydney 23 August 2022 Corporate Governance The Board of Directors of Elanor Investors Group (Group) have approved the Group’s Corporate Governance Statement as at 30 June 2022. 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/sustainability/governance 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. 130 Elanor Investors GroupAnnual Report 2022Securityholder Analysis As at 16 August 2022 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 H & G Limited BNP Paribas Nominees Pty Ltd Mr Glenn Willis Citicorp Nominees Pty Limited Armada Investments Pty Ltd CPU Share Plans Pty Ltd BNP Paribas Noms Pty Ltd Danissa Pty Ltd

National Nominees Limited Scanlon Capital Investments Pty Ltd BNP Paribas Noms Pty Ltd HUB24 Custodial Serv Ltd Danissa Pty Ltd Alady Super Pty Ltd Citano Pty Ltd Citano Pty Ltd Total Balance of Register Grand Total No. of Securities % 18,845,568 15.29 17,932,967 14.55 7,831,625 4,385,431 4,159,930 3,550,122 3,237,760 2,858,244 2,430,528 2,295,605 1,336,940 1,161,136 880,705 824,591 722,500 589,727 568,091 550,000 545,795 533,839 6.35 3.56 3.38 2.88 2.63 2.32 1.97 1.86 1.08 0.94 0.71 0.67 0.59 0.48 0.46 0.45 0.44 0.43 75,241,104 61.05 48,011,660 38.95 123,252,764 100.00 131 Securityholder Analysis 16 August 2022 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 88,942,328 28,255,462 3,939,863 1,952,579 162,532 72.16 22.92 3.20 1.58 0.13 96 1,030 502 619 361 % 3.68 39.49 19.25 23.73 13.84 123,252,764 100.00 2,608 100.00 The total number of Securityholders with an unmarketable parcel of securities was 130. Substantial Securityholders Securityholder Rockworth Investment Holdings Pte Ltd Perpetual Limited No. of Securities 17,932,967 14,877,096 % 14.71 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. 132 Elanor Investors GroupAnnual Report 2022Corporate Directory Elanor Investors Group (ASX Code: ENN) Elanor Investors Limited (ACN 169 308 187) and Elanor Investment Fund (ARSN 169 450 926) (Elanor Funds Management Limited (ACN 125 903 031) is the Responsible Entity) Level 38 259 George Street Sydney NSW 2000 T: +61 2 9239 8400 Directors of the Responsible Entity and Elanor Investors Limited Paul Bedbrook (Chair) Glenn Willis (Managing Director and CEO) Nigel Ampherlaw Anthony (Tony) Fehon Su Kiat Lim Karyn Baylis 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 133 Level 38, 259 George Street Sydney NSW 2000 T: +61 2 9239 8400 elanorinvestors.com 

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