CONNECTED
TO TOMORROW
Enero Group Limited – Annual Report 2020
THE
Boutique
FORCE
IN MODERN
MARKETING
Enero Group is an international network of marketing
and communications businesses located in
seven countries and 14 cities with over 600 employees.
Spanning the marketing services landscape, the Group
is connected through three key service competencies:
• Creative and Content;
• PR and Integrated Communications; and
• Digital, Data, Analytics and Technology.
Together this is a powerful mix of capabilities centred
around areas that clients want from their marketing
services partners. As ‘marketing services’ has evolved
and changed, so have we; and our Group will continue
to grow and develop in new and exciting ways. We are
a nimble team with a global perspective and our Group
is very well positioned to take advantage of the
exciting new developments taking place in our highly
dynamic sector.
Our name means ‘January’ in Spanish, which is why
we always look forward with optimism, energy and
a zest for life. We prize diversity in thought and seek
to unlock the unique talent that lies within each one
of us, allowing our people the support, skills and
training and culture that help them make their most
effective contributions each and every day.
The Group provides support across management,
recruitment, learning and development, finance,
legal, property and IT – allowing our client facing
team members to focus on what they do best:
serving our clients by delivering world class, highly
effective outcomes, day-in, day-out.
2 FINANCIAL HIGHLIGHTS
3 GEOGRAPHICAL RESULTS
4 LETTER FROM THE CHAIR
6 FY20 YEAR IN REVIEW
8
CLIENT ANALYSIS
14 THOUGHTFUL WORKING
16 FINANCIAL REPORT
17 DIRECTORS’ REPORT
(INCLUDING THE REMUNERATION REPORT)
31 CONSOLIDATED INCOME STATEMENT
32 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
33 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
34 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
35 CONSOLIDATED STATEMENT OF CASH FLOWS
36 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
70 DIRECTORS’ DECLARATION
71 INDEPENDENT AUDITOR’S REPORT
78 LEAD AUDITOR’S INDEPENDENCE DECLARATION
79 ASX ADDITIONAL INFORMATION
80 CORPORATE DIRECTORY
Enero Group Limited – Annual Report 2020 CREATIVE AND CONTENT
Long ideas in a world of short-term thinking
Sydney based creative agency with capabilities in
brand strategy, integrated campaign development,
research, creative ideation and production, digital
and interactive marketing, short and long form
content, retail catalogues, design, CRM/direct
marketing, proprietary photographic studios and
the BMF Plus innovation suite.
PR AND INTEGRATED COMMUNICATIONS
The global tech communications consultancy
Creating Talkability®
A global technology communications consultancy
operating from Sydney to San Francisco with a
borderless mindset across 34 locations including
the UK, US, France, Germany, Spain, Italy and
Australia, together with exclusive partners Yellow
Communications in the Netherlands and Belgium,
Active DMC in the Middle East, The Hoffman Agency
in Asia and VIANEWS in Brazil, as well as other
affiliate partners.
London, Manchester and Sydney based creative
communications agency helping brands lead, drive
and own conversations. Insight-led, channel neutral,
integrated campaigns that create ideas worth talking
about – they call it Talkability®.
Informed. Strategic. Connected.
Melbourne based public affairs and communications
consultancy engaging governments, managing critical
issues, and communicating with strategy to build
reputation and influence.
DIGITAL, DATA, ANALYTICS AND TECHNOLOGY
Creating customer experiences for a modern world
Unleashing hidden potential
Sydney and New York based agency with capabilities
in digital strategy, integrated campaign development,
digital marketing, websites, content development,
social, data, content management systems,
technology integration, marketing automation
and applications – all delivered with a customer
experience focus.
Sydney based insight and analytics agency translating
multiple data sources into ‘human analytics’.
Capabilities in data synthesis and trends analysis, full
service research, brand innovation, retail consulting
and creative delivery.
Experts in online research and data delivery
Sydney based online research agency specialising
in digital research, online surveys and communities,
access panel services, data integration and
visualisation.
Helping businesses access online
advertising markets
Online programmatic media and advertising network
with advertiser and publisher monetisation solutions
to maximise the value of publisher advertising space.
1
Enero Group Limited – Annual Report 2020 FINANCIAL
HIGHLIGHTS
NET
REVENUE
Operating
ebitda
OPERATING
EBITDA
MARGIN
$135.8m
$24.4m
18%
UP 5%
UP 18%
UP 2BPS
Net profit after
tax before
significant items
Earnings Per
Share before
significant items
FY20
Dividends
$12.9m
15.0CPS
6.0CPS
UP 7%
UP 6%
UP 9%
2
Enero Group Limited – Annual Report 2020 GEOGRAPHICAL
RESULTS
GEOGRAPHICAL CONTRIBUTIONS
FROM OPERATING COMPANIES
USA
NET REVENUE
29%
FY20
UK & Europe
Australia
NET REVENUE
28%
FY20
NET REVENUE
43%
FY20
OPERATING EBITDA
OPERATING EBITDA
OPERATING EBITDA
43%
FY20
19%
FY20
38%
FY20
3
28%45%40%19%41%FY19FY19FY19FY19FY1927%FY19Enero Group Limited – Annual Report 2020 FROM OURLetter
CHAIR
4
Enero Group Limited – Annual Report 2020 FY20 WAS A YEAR WHERE THE RESILIENCE OF THE GROUP WAS
TRULY TESTED AND YET THE GROUP MOVES INTO FY21 IN A STRONGER
POSITION, WITH MORE OPPORTUNITIES THAN EVER BEFORE.
Dear Shareholders,
In what has been an unprecedented year in so many
ways, I am very pleased to present my first report as
Chair of Enero.
FY20 was a year where the resilience of the Group
was truly tested and yet the Group moves into FY21
in a stronger position, with more opportunities
than ever before. COVID-19 brought with it both
internal and external challenges. Our initial priority
and response to the pandemic was the wellbeing
of our teams, their families and our clients. We
immediately redeployed all 600 employees to work
remotely from early March and the Group moved
seamlessly into new ways of working with our
clients. While managing a remote workforce in a
‘people’ business has had its challenges, it has been
wonderful to see the flexibility and commitment
shown by our team.
Despite the impact of COVID-19 across the second
half of the year, all of our businesses increased
their efforts in retaining and even growing their
clients and achieved 5% organic revenue growth,
which is an excellent result. The Group’s strong
exposure to sectors such as technology, healthcare
and consumer staples, coupled with the incredible
efforts from our teams in continuing to deliver
world-class work, contributed to this strong
outcome. Diversity in the revenue base continues
to be a key differentiator for the Group, with no
single client making up more than 12% of Group
net revenue. The simplification of the business
portfolio has also helped to streamline our services
and build businesses with more scale. We remain
cautiously optimistic that organic revenue growth is
achievable in FY21 despite the economic and health
uncertainties that are ahead of us.
FY20 delivered strong financial metrics in all
aspects in a year where health and safety took
greater priority than profits. The highlights were:
• Operating EBITDA up 17.7% to $24.4 million;
• Net profit to equity holders pre significant items
of $12.9 million was 6.9% up on the prior year;
• Earnings per share pre significant items of
15.0 cps was 5.6% up on the prior year; and
• Cash conversion at 116% of EBITDA.
In August 2020, the Board declared an FY20
final dividend of 3.5 cents per share fully franked.
This brings total dividends paid for FY20 to 6.0
cents per share, fully franked – a 40% dividend
payout ratio – and we are committed to returning
funds to shareholders in line with our performance.
Our conservative level of debt commitments in a
business with a high degree of intangible assets was
even more important in such economic uncertainty.
As at 30 June 2020, the Group had a net cash
position of $22.1 million. The maintenance of
balance sheet flexibility at this time while we actively
seek out new opportunities to grow will put us in a
stronger position than our competitors.
The Group’s size continues to be an advantage in
a time where the ability to integrate capability is
central to client needs. Our larger businesses are
better equipped to attract and retain top talent in
the market and win bigger clients. We will continue
to focus capital deployment on the larger businesses
to either increase geographic coverage in markets or
expand capabilities. International markets have been
the area of focus in line with our intention to unlock
greater revenue opportunities. However, we are
realistic that with limited travel for the foreseeable
future, and cultural alignment being a critical factor
in any acquisition, we will need to think laterally
about how to achieve this.
I’d like to extend my thanks to Matthew Melhuish,
our former CEO, who resigned during the year after
eight years in the role. Matthew left the Group with
a legacy of positive momentum and a strong culture.
Thank you to Brendan York and Fiona Chilcott for
stepping in as joint acting CEOs for the period
through to the end of the financial year, navigating
the COVID-19 crisis and providing unwavering
leadership.
We are commencing the start of a new era for the
Group with the appointment of new CEO Brent
Scrimshaw effective 1 July 2020. Brent is a creative
and brand-led business leader in media, publishing,
technology, consumer, retail and sports. His
18 years at Nike Inc. and experience across both
agency and client sides in many of the geographies
where the Group operates will ensure the Group
is well placed for the future. The foundations of
a nimble and flexible operating model combined
with our strong financial position provide a great
opportunity for Brent and the team to create the
next phase of growth momentum.
Thank you to my fellow Board members for your
warm welcome and support across the second half
of the year.
On behalf of the Board, I would like to sincerely
thank all of our people for their incredible
contribution over the past year. The energy,
commitment and care shown for each other
is a testament to our strong culture and values.
Finally, thank you to our shareholders for your
ongoing support of the Group and I look forward
to reporting back again next year.
ANN SHERRY
Independent Non-Executive Chair
5
Enero Group Limited – Annual Report 2020 0
2
Y
F
YEAR IN
Review
THE GROUP’S EXPOSURE TO STRONG INDUSTRY SECTORS SUCH AS TECHNOLOGY,
HEALTHCARE AND CONSUMER STAPLES AND THE RESILIENCE OF OUR PEOPLE
WHO CAME TOGETHER TO SUPPORT EACH OTHER RESULTED IN AN EXCEPTIONAL
YEAR EVEN IN THE MOST DIFFICULT OF STORMS.
Dear Shareholders,
FY20 has been an unexpected year in so many
ways. The impact of the global pandemic has
demonstrated the Group’s resilience to turbulent
market conditions, largely due to our exposure
to strong industry sectors such as technology,
healthcare and consumer staples. However,
of equal importance has been the resilience
of our people – who have come together, supported
each other and proven that our strong culture
of kindness is one that can weather even the
most difficult of storms. We could not be more
proud and grateful for the strength, resilience
and empathy we have seen demonstrated by the
remarkable group of people we work with.
Financial Results
The Group’s strategy to focus on industry sectors
such as technology, healthcare and consumer
staples has meant that despite COVID-19, the
Group has had an exceptional year from a financial
perspective. While COVID-19 resulted in more
uncertainty in revenue pipeline and forecasting,
an increased focus on organic revenue opportunities
within the existing client base delivered net revenue
in the second half of the year broadly consistent
with the first half of the year. The higher revenue
mix to sectors less impacted by COVID-19 gave the
Group a stronger platform to manage the cost base.
Careful cost base management and a reduction
in operating costs – predominantly related to travel
restrictions and office related costs – resulted
in protection of margin.
The Group has delivered substantial increases
across key metrics including:
• Revenue up 5% to $135.8 million;
• Operating EBITDA up 18% to $24.4 million;
• Operating EBITDA margin up 2bps to 18%;
• EBIT up 20% to $19.2 million; and
• Net profit after tax pre significants to equity
owners up 7% to $12.9 million.
International markets represent 57% of the
Group’s Net Revenue and 62% of the Group’s
Operating EBITDA.
The Group maintained its focus on capital
efficiency and cash conversion and delivered
EBITDA to cash conversion at 116%. Net cash
(allowing for contingent consideration liabilities)
was $22.1 million at 30 June 2020.
Business Review
Australia
The Australian market performed well in FY20
despite the difficult economic conditions. While the
overall net revenue result was a 2.3% contraction
year-on-year, Operating EBITDA contribution
increased 7.5% with a simplified business portfolio.
The consolidation of Precinct, our stakeholder
communications business, into Hotwire, has given
Hotwire a broader offering in the Australian market.
The successful merger of Naked, our strategic and
creative agency, into BMF, has provided more scale
to BMF and a stronger pool of creative talent.
BMF was named ‘Australia’s most effective agency’
for the second time in three years. New business
wins included Rest Super, Coca-Cola, Blundstone
and Voyages. BMF continues to be a trusted
partner to longstanding clients including ALDI,
the Australian Federal Government and BPAY.
Orchard continued its impressive growth this year.
Wins during the year included Royal Australian
College of General Practitioners, Biogen, BPAY and
Hoyts. Orchard has a large contribution of revenue
from the healthcare sector – including relationships
with some of the world’s largest pharmaceutical
companies as well as smaller, emerging health service
clients. Orchard’s enterprise level digital capability
is opening up many Group related opportunities,
particularly between BMF and Orchard.
6
Enero Group Limited – Annual Report 2020 BRENDAN YORK
Chief Financial Officer
FIONA CHILCOTT
Chief People Officer
The smaller agencies in Australia – Hotwire, Frank,
The Leading Edge and CPR – all traded in line with
the prior year and are actively collaborating on more
client opportunities, which is providing simpler
client entry points for the Group.
OBMedia, the Group’s programmatic marketing
specialist whose platform connects publishers
with search engines, grew revenue and margin
in the current period following increased demand
for search during COVID-19.
UK and Europe
The UK and European market had a tougher year
as the impacts of COVID-19 were more pronounced
than in our other markets. Additionally, the Group
made important investments in senior hires across
the UK and Europe in the first half of the year, ahead
of the revenue curve, which ultimately impacted
the margin contribution. These investments were
necessary to ensure both Hotwire and Frank continue
to be progressive and dynamic businesses in a
changing integrated communications market; and will
ultimately lead to stronger returns in coming years.
The investment in new senior hires and Hotwire’s
focus on technology clients in the UK led to current
year wins of NTT, Zoom, Wrike, OKCupid and
Ubisoft; while across the European offices, key
wins included Group SEB, FM Global, Atlassian
and Amazon Kindle. Frank was more impacted by
COVID-19 given its greater exposure to consumer
brand clients, but it continues to provide effective
communications campaigns and has refreshed its
strategic offer during the year.
USA
The USA market continued its growth acceleration
with strong performances from both Hotwire and
OBMedia. New Hotwire clients include Avaya,
Intermedia, eBay and Pinterest along with strong
organic growth from the existing technology client
base of Adobe, Facebook, NetApp and Commvault.
The Hotwire USA market continues to provide material
global multi-office opportunities across the entire
Hotwire international network. The business has also
invested in strategy, design and insights capability.
The outstanding work we deliver to our clients is not
possible without the exceptional group of people
who work for our businesses. While we needed to
make some changes to the way we work in response
to COVID-19, our existing culture of flexibility across
the Group meant we moved into a fully remote
working environment seamlessly. Our strategic
people focus continues to be the growth, training,
development and support of our people. We remain
committed as a Group that is both passionate and
active in the area of diversity and inclusion, with
a strong focus on the wellbeing and the mental
health of our people. The complicated and difficult
external environment this year has meant our
existing wellbeing programs have been more
important than ever as we have had to adapt our
ways of working and in particular provide additional
support to our working parents and caregivers.
We will continue to look for opportunities to invest
in new talent and capabilities across the Group,
while ensuring we retain the strong culture that
currently exists.
On behalf of the Enero Executive Team, we would
like to say a heartfelt ‘thank you’ to each and every
one of our people for your commitment, passion,
dedication and resilience.
Brendan York and Fiona Chilcott
Chief Financial Officer and Chief People Officer
(Co-Acting CEOs)
7
Enero Group Limited – Annual Report 2020 CLIENT
ANALYSIS
A ROBUST
CLIENT MIX
Strong client diversification with mix
of clients across market industries and
sectors and the largest client represents
12% of Group Net Revenue.
STREAMLINED
PERFORMANCE
Top 10 clients represent 41% of total
revenue across > 500 client relationships.
Efforts across the Group to maximise
larger clients with more touchpoints have
resulted in a smaller number of overall
client relationships.
SECTOR
MIX
Higher sector exposure to areas
which were more insulated from
COVID-19 impacts.
29%
18%
14%
10%
7%
7%
5%
4%
4%
1%
1%
Information Technology
Media
Consumer Staples/Retail
Healthcare
Manufacturing
Services
Transportation, Airlines
and Automotive
Banking, Finance
and Insurance
Telecommunications
Utilities
and Energy
Property
and Construction
8
Enero Group Limited – Annual Report 2020 INFORMATION
TECHNOLOGY
HOTWIRE
The global tech communications consultancy.
With over 20 years’ tech experience, Hotwire is the
pre-eminent global tech communications consultancy
for innovative tech brands. Igniting positive actions
for clients and an understanding in all aspects of
communications, branding and digital marketing
allows Hotwire to spark audience curiosity and hero
the possibilities of technology.
Technology has been a primary driver of global
economic growth as technology and digital
transformation forces organisations to adapt business
models and shift consumers to an online world.
The fundamental shift in behaviour has protected
the tech sector from the worst of recent economic
uncertainty, as businesses continue to embrace
everything from remote working to home schooling.
Hotwire expects this need to continue and the tech
sector to maintain at a consistent velocity for the
foreseeable future.
Hotwire has pivoted its work in the past four months
to adapt to the changing environment. In all of its
offices, Hotwire’s digital-led strategy helped its
clients maintain connection with their customers
through online events, increasing social campaigns
and advising clients on content creation sensitive
to the conditions that the country was facing.
Hotwire also provided guidance to the industry
on how to best communicate and manage in a work
from home environment.
As the business expands and commences a new
three-year plan, Hotwire aims to retain its position
as one of the world’s leading technology
communications consultancies. Deep expertise
in technology, coupled with global scale, places
Hotwire at the heart of the most dynamic market
sector in the world’s economy. The broad definition
of innovation and technology, combined with the
promise to ignite the unrealised possibilities of tech
through data-driven communications solutions, will
drive continued growth.
CUTTING THROUGH THE NOISE
Client: Kiva
Kiva, a mission driven technology non-profit, wanted to cut through
the noise around International Women’s Day (IWD), which is a busy
media moment—including celebrity and big brand campaigns—
and demonstrate Kiva’s investment in women in the lead up to
IWD,generating awareness and ultimately driving Americans to loan
to women on Kiva.org.
Armed with a small budget, big expectations and less than 4 weeks
to deliver a campaign, Hotwire leveraged online communities and
influencers to help appeal to a mass audience and drive online loans
to women across the world. The team developed an idea around
the statement ‘A powerful woman is...’–helping to redefine what a
powerful woman represents in 2020 and highlight the diverse and
empowering women across the Kiva platform. The aim: celebrate the
amazing stories and qualities of powerful women on the platform
and beyond.
DELIVERING THOUGHT LEADERSHIP AND
BRAND RESURGENCE WITH PURPOSE
Client: Commvault
In 2019, Hotwire partnered with Commvault, a leader in the data
management, backup, archive and disaster recovery market, to
revamp a 30-year old brand through heroing the organisation’s new
CEO and their first ever acquisition. Campaign objectives included
driving thought leadership, increasing brand differentiation and
delivering personified brand awareness through engagement with
media, influencers, customers and prospects.
The campaign, included media outreach, social content, paid follower
campaigns, industry rapid response programs and executive thought
leadership. Before and during the CEO announcement, Hotwire was a
true partner to Commvault – and the results are proof of that.
The campaign resulted in 45 pieces of US coverage and three pieces of
analyst coverage. Social media results included 16 million impressions,
1,700 posts and 871 individuals engaged, measured through
BrandWatch. Around the CEO announcement alone, the Americas had
a 21% SOV among priority media and 30% SOV worldwide.
Hotwire and Commvault continue their international partnership
around new announcements and ongoing project work.
9
Enero Group Limited – Annual Report 2020 EXPERT ADVICE MATTERS
Client: RACGP
General Practitioners (GPs) are responsible for safeguarding
the nation’s health. They administer life-saving vaccines and
prevent, diagnose and treat numerous chronic health conditions.
They are also at the front line managing mental health concerns
and domestic violence.
The COVID-19 pandemic was accompanied by a steep decline
in GP visits. Many worried that visiting their doctor would
overload the health system or expose them to the virus. The
Royal Australian College of General Practitioners (RACGP) was
concerned that these reductions in GP consultations could lead to
increased health problems.
The RACGP turned to Orchard to reinforce the vital role played
by GPs. We developed the Expert Advice Matters campaign
to spread public awareness that seeing your GP during the
pandemic was simple and safe, both in-person or via telehealth.
The campaign used a simple but arresting creative device
of visually editing the text spoken by vulnerable people in
need of help. This showed how GPs can quickly cut through
misconceptions and misinformation to offer reliable expert
advice, treatment and support.
The campaign was successful, creating a positive shift in
awareness and attitude towards telehealth and increased
awareness for safe in-person consultations.
HEALTHCARE
ORCHARD
Creating customer experiences
for a modern world.
Founded in 2006 and joining Enero in 2018,
Orchard’s core belief has always been to
‘invent better’.
Orchard’s investment into healthcare started some
13 years ago, when the need for an agency to have
qualified medical and scientific talent was emerging
and the sector began to embrace digital. Today’s
agency offering has to be sector focused and more
niche. Clients want expert category advice, not just
core competence in discipline; and from pioneering
with pharmaceutical companies, the agency is now
recognised as one of the leading health-focused
agencies in the country.
Orchard’s capability extends to consumer sectors
with a heavy reliance on digital including automotive
and finance. This client mix along with a strategy
underpinned by a digital DNA delivers a modern
agency service proposition. With the team now in
excess of 105 employees from its Sydney base and
a thriving New York office – and a nominated finalist
for digital agency of the year – the needs of clients
are served today while ensuring that Orchard is also
part of the conversation for the future.
Orchard’s work in the healthcare sector partnering
with pharmaceutical brands has continued unabated
during COVID-19 as there is a more pressing need
to ensure that healthcare professionals are well
informed about the latest news and medications.
During a once in a lifetime pandemic it was also
rewarding for the team to do purposeful work such
as for the Royal Australian College of General
Practitioners communicating to the public about why
they needed to speak to a GP and the new options
for telemedicine that were available.
THE AGENCY IS NOW
RECOGNISED AS
ONE OF THE LEADING
HEALTH-FOCUSED
AGENCIES
IN THE COUNTRY
10
Enero Group Limited – Annual Report 2020 CPR:
Public affairs and strategic communications
delivering impact.
Over a 25-year history, CPR has established a strong
reputation in public affairs, issues management,
government relations and communications. More
recently these services have focused on medical
research, specialising in understanding how medical
institutions and governments can work together to
create the jobs and medicines for the future.
In the past six months, CPR has been instrumental
in assisting medical research institutes and alliances
communicate with State and Federal governments
around policy settings and funding to help the
sector thrive. By successful media positioning
of local researchers and leveraging government
engagement, CPR is assisting medical researchers
to work towards reviving the health economy and
mitigate disruption to global supply chains. In the
current climate, where governments are racing for
a COVID-19 vaccine, the local development and
manufacturing of drugs and devices has never been
more important.
CPR continues to work with a range of leading
institutes including the Victorian Chapter of
the Australian Association of Medical Research
Institutes, the Walter and Eliza Hall Institute, the
Hudson Institute, the National Aging Research
Institute and Melbourne Genomics. CPR has also
expanded into the fields of digital health and
medical devices.
ACCELERATING NEW MEDICINES FOR THE
WALTER AND ELIZA HALL INSTITUTE
Client: Walter and Eliza Hall Institute
In FY19/20 one of CPR’s most successful projects was working
with the Walter and Eliza Hall Institute to assist with securing
funding from the Victorian and Australian governments for the
National Drug Discovery Centre in Parkville.
The centre is a state-of-the-art facility which will use the latest
advanced robotic, high-throughput screening technologies to
fast-track medicines to Australian patients.
The $117 million centre was assisted through an $18 million
funding commitment from the Victorian Government and a
$25 million funding commitment from the Australian Government.
The centre was launched in May 2019 at an event attended by
both the Victorian and Australian Ministers for Health. The first two
recipients of government-subsidised screens will be projects to find
new medicines for cancer immunotherapy and type 2 diabetes.
CLEAN UP YOUR MOUTH
Client: Oral-B
P&G partnered with Orchard to tackle electric toothbrush adoption.
With only 20% of Aussies using an electric brush, they had to
encourage manual brushing switch. The problem was, most Aussies
don’t believe anything’s wrong with regular brushing.
As Oral-B’s manual toothbrush market share wasn’t a concern,
an opportunity emerged to tackle the problem at a category level.
With proof that electric toothbrushes remove 100% more plaque
vs. manual brushing, this led to the approach: Given a choice,
why would you only do half the job?
The campaign portrayed a number of famously foul-mouthed
architypes like builders, footie fans and truckies in compromising
situations where profanity is expected. At these moments, the
expectation was subverted with surprisingly polite, cordial responses
taking profanity’s place. Brushing with Oral-B electric, they’d
cleaned up their mouths.
Delivering a long-term comms platform, the #CleanUpYourMouth
campaign was led by two hero VOD and pre-roll 30 second
executions, alongside search, display and accompanying PR activity
seeking the Australian town most in need of cleaning up its mouth.
Breaking ground as the first local Oral-B creative in recent years,
the campaign achieved significant results, with over 7 million views
since launch.cupissunt rehenditas et lam endaesc iliquam laborem.
11
Enero Group Limited – Annual Report 2020 CONSUMER
STAPLES / RETAIL
BMF
Long ideas in a world of short-term thinking.
BMF knows retail inside out. The retail game is
a high performance sport – competitive, reactive
and ever-changing – keeping BMF fit in the world
of marketing and communications. BMF has banked
19 years of that experience so far; that’s how long
it has been ALDI’s marketing and communications
partner. From when it started in one store in
Marrickville to over 500 stores now. From when
it was an unfamiliar, foreign grocery store to being
Australia’s most trusted brand in 2018 and 2019
and realising its brand platform of ‘Good Different’,
a philosophy that defines and guides ALDI.
BMF has supported businesses and brands to stand
up and stand out during this time of uncertainty.
Simple, strong, on-point communications that
needed to read the nation’s mood and be sensitive
to that. BMF offered advice, solutions, best practice
case studies and principles to build confidence on
how to navigate a new norm.
From fast paced retail, which as an essential service
had to stand up in a time of need, BMF is the
trusted partner to deliver government behaviour
change campaigns that speak to every Australian
at both Federal and State levels. For the Department
of Social Services, BMF needed to work at pace
and with incredible sensitivity to promote the
support services for domestic violence during an
increased time of stress. BMF did this through the
‘Help is here’ campaign which let victims know
that support was there, even when they were in
lockdown. This work supports BMF’s ‘Stop it at
the Start’ inter-generational campaign to reduce
violence against women, now running over four years.
In difficult economic times, BMF continues to build
long-term communications platforms that are highly
effective at driving positive business and behaviour
change outcomes. The agency has been recognised
as being one of the most effective in Australia, with
two Most Effective agency wins in the last three
years. The strong blend of strategic rigor, creative
excellence and operational high performance is what
makes BMF unique and able to pivot in these times
and find a new normal working rhythm.
12
EVERY BIT BETTER
Client: George Weston Foods – Abbott’s Village Bakery
By positioning Abbott’s as the loaf for all occasions, BMF created
George Weston Foods’ most successful premium launch to date. Not
only staving off deletion but leaving the retailers asking for more.
BMF took a me-too bread brand at risk of being delisted, identified
an untapped need and reinvented Abbott’s Village Bakery (AVB)
in a stale category. At its core, the campaign launched a comms
idea born out of collaboration, that lived on pack and in every bite.
A sensory feast in its own right, right down to the very last crumb.
AVB managed to beat unit sales target twice over, preventing what
would’ve otherwise been a 25% decline, making Abbott’s Village
Bakery a breadwinner.
PRECEDENTED PRICES
Client: ALDI
Unprecedented Good Different
Everything was going to plan. Until it wasn’t.
Everyone was under incredible pressure to deliver
reassurance to the worried masses. And as much
as BMF didn’t want to trivialise, the agency
equally didn’t want ALDI to fall into ‘brand COVID’
conventions. Whether it was communicating ALDI’s
new safety measures or thanking the hard-working
staff, BMF used its Good Different platform to
make sure it remained authentically ALDI.
Reassuring the nation ALDI’s low prices aren’t
going anywhere
Economic uncertainty. Shrinking family budgets.
And an unprecedented spike in the use of the word
‘unprecedented’. People could do with grocery
prices that stayed low, predictable and undramatic.
So, BMF launched a new campaign for ALDI to
remind Australians that unprecedented times call
for precedented prices. And ALDI kept its humour
during COVID, when everyone else lost theirs.
Enero Group Limited – Annual Report 2020 FRANK
Creating Talkability at the heart
of everything they do.
Frank by name and Frank by nature – a straight-
talking strategic communications consultancy,
driving actionable change through insight-led and
corporate PR, social and influencer marketing
campaigns. Frank is channel neutral, leading with
great ideas at the core of its business delivered
through paid, earned, shared and owned media
channels. Most prominently recognised for consumer
campaigns, Frank’s reach also spans FMCG, finance
and the communications industries. The past
year has accelerated consumer demand for brand
transparency, authenticity and genuine action.
Frank has been able to successfully collaborate
with clients to craft ideas that will drive change and
transform brands and businesses globally.
COVID-19 has directly impacted consumers and
in turn their behaviour, rituals and spending habits.
At a time where people found comfort with their
familiar favourites and food was being stockpiled
across the UK, Frank activated the Weetabix
‘Fuelling the Nation’ campaign. Frank remotely
filmed a team during their ‘new normal’ morning
meeting – displaying the role that Weetabix plays
for consumers. The idea resonated with those
experiencing the same feeling – resulting
in 8% engagement and hundreds of thousands
of views online.
In the coming year, Frank will continue to navigate
a diverse range of sectors and constantly evolve to push
the boundaries when it comes to its service offering.
From digital content to community management and
purpose-led corporate reputation campaigns, Frank will
embrace the honest and transparent role of social and
win brand fans in the process.
WEETABIX FUELLING THE NATION
Client: Weetabix
While the world went into lockdown, Weetabix saw a happy spike
in sales as people found comfort in their ‘familiar favourites’ and
stockpiled breakfast cereal. It really was no lie that we were fulling
the nation. With the strapline ‘Have You Had Yours’ feeling a little
opportunistic at such an unsettling time, Weetabix wanted to convey
the reliability two Weetabix and milk provides every day, even
in lockdown. Frank filmed remotely a now normal morning team
meeting which subtly showed the role Weetabix consistently plays f
or consumers. The content was shared and boosted, striking a chord
with those experiencing the same thing, resulting 8% engagement
rate and hundreds of thousands of views.
BMF HAS SUPPORTED
BUSINESSES AND
BRANDS TO STAND UP
AND STAND OUT
DURING THIS TIME
OF UNCERTAINTY
13
Enero Group Limited – Annual Report 2020 Thoughtful
working
At Enero, we employ great people. An international
workforce brimming with talent, potential and
creativity. Teams of outstanding individuals who
can be relied upon to go above and beyond
in delivering exceptional results for our clients.
We are firm believers in the power of kindness.
Treating people with fairness and respect is an
important part of our culture. We want our people
to feel like they are doing their best work with
colleagues who connect on an emotional level and
take the trouble to understand the context of our
lives and the things that matter to us.
At Enero, our agencies believe that work is a thing
you produce, not a place you go each day. Our largest
agency Hotwire practice ‘Thoughtful Working’ –
which is so much more than a flexible working
or work from home policy – it is a philosophy the
organisation lives by and employees are encouraged
to work where they will be most effective for their
clients, their colleagues and themselves. It has
provided Hotwire access to a broader, more diverse
talent pool in the highly competitive markets in which
it operates. These existing work practices meant
that our agencies were well placed to quickly move
to a completely remote workforce during country
lockdowns as a result of COVID-19.
All about experience
“People will forget what you said, people will forget
what you did, but people will never forget how you
made them feel.” – Maya Angelou. This sentiment
is carried over to each business at Enero. Experience
is the foundation that influences emotion and
encourages new ideas and successes.
14
Enero Group Limited – Annual Report 2020 Regardless of working location, with the latest
technology solutions we’re able to facilitate
collaboration between locations and global teams
– making the experience as seamless as possible.
Collaboration tools like Slack, Teams and Zoom
have bridged the location gap between employees,
allowing them to work and ‘meet’ face-to-face just
as they would if they were sitting in the same room.
Diversity and inclusion
Beyond our global Diversity and Inclusion (D&I)
strategies, each business focuses on continually
doing better – driving equality to the people who
are experiencing any form of marginalisation
and discrimination; ensuring we’re treated equally
and that our differences are respected.
15
Enero Group Limited – Annual Report 2020 FINANCIAL
REPORT
for year ended 30 June 2020
16
Directors’ Report
The Directors present their report, together with the
financial statements of Enero Group Limited (the
David Brain – Independent Non-Executive Director
David was appointed as a Non-Executive Director of the
Company) and of the Group, being the Company and its
Company on 10 May 2018. David has over 25 years’
controlled entities, for the year ended 30 June 2020; and
experience in public relations and integrated
the auditor’s report thereon.
Directors
The Directors of the Company at any time during or since
the end of the financial year are:
Ann Sherry AO – Independent Non-Executive Chairman
Ann was appointed as Chair and Non-Executive Director
on 1 January 2020. Ann is a recognised business leader in
Australia who is currently a Director of ASX listed National
Australia Bank, Chair of its Customer Committee and a
member of its Remuneration Committee. Ann is also a
Director of ASX listed Sydney Airport, Chair of its
Remuneration and Nomination Committee, as well as a
member of its Safety, Security and Sustainability
Committee. Ann is Chair of UNICEF Australia and also a
Director of international advisory firm The Palladium Group,
Infrastructure Victoria, Cape York Partnerships, and the
Museum of Contemporary Art. Ann is the former Chair and
Chief Executive Officer of Carnival Australia and continues
as an adviser to Carnival. She was previously at Westpac
for 12 years and was the CEO of Bank of Melbourne and
the CEO of Westpac New Zealand and Pacific Banking. In
2015, Ann was named the overall winner of the AFR 100
Women of Influence for her corporate leadership and
achievements in promoting diversity and female
representation across a variety of sectors during her 30-
year career. Ann is Chair of the Remuneration and
Nomination Committee.
Susan McIntosh – Non-Executive Director
Susan was appointed as a Non-Executive Director of the
Company on 2 June 2000. Susan has more than 25 years’
business experience in media (international television
production and distribution and radio) and asset
management, and is the Managing Director of RG Capital
Holdings (Australia) Pty Ltd. Prior to joining RG Capital,
Susan was Chief Financial Officer of Grundy Worldwide Ltd
and played an integral role in the establishment of its
international television operations and in the eventual sale
of the company in 1995. Susan was previously a Director
of RG Capital Radio Ltd and E*TRADE Aust Ltd. Susan is
a member of the Institute of Chartered Accountants. Susan
is a member of the Audit and Risk Committee, and the
Remuneration and Nomination Committee.
Anouk Darling – Independent Non-Executive Director
Anouk was appointed as a Non-Executive Director of the
Company on 6 February 2017. Anouk has over 20 years’
experience in marketing and brand strategy. Anouk is a
Director of ASX-Listed Macquarie Telecom Limited
(effective March 2012) as well as a member of its Audit and
Risk Committee and Remuneration and Nomination
Committee. Anouk is also a Board member of Discovery
Holiday Parks and is Chair of the People and
Remuneration Committee. Anouk also holds an executive
role, as CEO of Scape and Urbanest (Australia’s largest
owner and operator of purpose-built student
accommodation assets). Anouk is Chair of the Audit and
Risk Committee.
communications. David’s most recent Executive role was
as a Director of the Group supervisory board of Edelman
(the world’s largest Public Relations firm), and a member of
its global management board. During 13 years at Edelman,
he was CEO of the Europe Middle East and Africa (EMEA)
region and, latterly, CEO of Asia Pacific Middle East and
Africa (APACMEA). Prior to Edelman, David was Co-CEO
of Weber-Shandwick UK and Managing Director at Burson-
Marsteller UK. He has also worked in Corporate Affairs at
Visa International and as a planner in advertising. David is
currently an Advisory Board member of The Spinoff, New
Zealand’s most successful online news magazine; and an
investor and Advisory Board member of Parkable, a New
Zealand based new economy business. David is a member
of the Audit and Risk Committee.
Ian Rowden – Independent Non-Executive Director
Ian was appointed as a Non-Executive Director on
21 November 2018. Ian is a recognised global business
leader whose career has spanned marketing, operational
and commercial leadership roles across four continents
with some of the world’s most admired brands and in the
world’s most diverse marketplaces. Ian began his career
with The Coca-Cola Company in Sydney, Australia in 1980
and for over 20 years he held numerous senior executive
roles with that company worldwide. These included Region
President for the China Division based in Hong Kong and
Global Head of Consumer Communications based in
Atlanta, Georgia. From 2000 to 2004 he served as Chief
Marketing Officer for The Callaway Golf Company. In 2004
he joined Wendy’s International as Chief Marketing Officer,
a position he held until 2007 when he was appointed
Chairman and CEO, Asia Pacific for Saatchi & Saatchi.
From 2011 to 2015 he served as Partner at The Virgin
Group and concurrently as a Board Member of Virgin
Galactic and Virgin Produced. Ian is a Director of ASX
listed Reliance Worldwide Corporation Limited (effective
July 2020); is currently a member of the Investment
Advisory Board of Innovate Partners LLC, a Los Angeles
area based venture capital firm; and is a Board member of
private Companies Brightguard and Miami Ad School (US),
a non-profit entity. Ian is a member of the Remuneration
and Nomination Committee.
Brent Scrimshaw – CEO and Executive Director
Brent was appointed Chief Executive Officer and Executive
Director of the Company on 1 July 2020. Brent is a creative
and brand led business leader in media, publishing,
technology, consumer, retail and sports. Brent spent 18
years at Nike Inc. including three years as Vice
President/Chief Executive Western Europe based in
Amsterdam, and Vice President and Chief Marketing
Officer EMEA, along with other leadership roles in general
marketing and management in Europe, the USA and
Australia. Brent was also part of Nike’s global commercial
operations team contributing to the development of the
Nike Inc. business and brand strategy in its priority
geographies worldwide. Brent was the founder and CEO of
Unscriptd, a technology led sports media company, which
was acquired by New York publisher The Players Tribune
Enero Group Limited Annual Report 2020 17
Enero Group Limited – Annual Report 2020
Directors’ Report
DIRECTORS’
REPORT
The Directors present their report, together with the
financial statements of Enero Group Limited (the
Company) and of the Group, being the Company and its
controlled entities, for the year ended 30 June 2020; and
the auditor’s report thereon.
Directors
The Directors of the Company at any time during or since
the end of the financial year are:
Ann Sherry AO – Independent Non-Executive Chairman
Ann was appointed as Chair and Non-Executive Director
on 1 January 2020. Ann is a recognised business leader in
Australia who is currently a Director of ASX listed National
Australia Bank, Chair of its Customer Committee and a
member of its Remuneration Committee. Ann is also a
Director of ASX listed Sydney Airport, Chair of its
Remuneration and Nomination Committee, as well as a
member of its Safety, Security and Sustainability
Committee. Ann is Chair of UNICEF Australia and also a
Director of international advisory firm The Palladium Group,
Infrastructure Victoria, Cape York Partnerships, and the
Museum of Contemporary Art. Ann is the former Chair and
Chief Executive Officer of Carnival Australia and continues
as an adviser to Carnival. She was previously at Westpac
for 12 years and was the CEO of Bank of Melbourne and
the CEO of Westpac New Zealand and Pacific Banking. In
2015, Ann was named the overall winner of the AFR 100
Women of Influence for her corporate leadership and
achievements in promoting diversity and female
representation across a variety of sectors during her 30-
year career. Ann is Chair of the Remuneration and
Nomination Committee.
Susan McIntosh – Non-Executive Director
Susan was appointed as a Non-Executive Director of the
Company on 2 June 2000. Susan has more than 25 years’
business experience in media (international television
production and distribution and radio) and asset
management, and is the Managing Director of RG Capital
Holdings (Australia) Pty Ltd. Prior to joining RG Capital,
Susan was Chief Financial Officer of Grundy Worldwide Ltd
and played an integral role in the establishment of its
international television operations and in the eventual sale
of the company in 1995. Susan was previously a Director
of RG Capital Radio Ltd and E*TRADE Aust Ltd. Susan is
a member of the Institute of Chartered Accountants. Susan
is a member of the Audit and Risk Committee, and the
Remuneration and Nomination Committee.
Anouk Darling – Independent Non-Executive Director
Anouk was appointed as a Non-Executive Director of the
Company on 6 February 2017. Anouk has over 20 years’
experience in marketing and brand strategy. Anouk is a
Director of ASX-Listed Macquarie Telecom Limited
(effective March 2012) as well as a member of its Audit and
Risk Committee and Remuneration and Nomination
Committee. Anouk is also a Board member of Discovery
Holiday Parks and is Chair of the People and
Remuneration Committee. Anouk also holds an executive
role, as CEO of Scape and Urbanest (Australia’s largest
owner and operator of purpose-built student
accommodation assets). Anouk is Chair of the Audit and
Risk Committee.
David Brain – Independent Non-Executive Director
David was appointed as a Non-Executive Director of the
Company on 10 May 2018. David has over 25 years’
experience in public relations and integrated
communications. David’s most recent Executive role was
as a Director of the Group supervisory board of Edelman
(the world’s largest Public Relations firm), and a member of
its global management board. During 13 years at Edelman,
he was CEO of the Europe Middle East and Africa (EMEA)
region and, latterly, CEO of Asia Pacific Middle East and
Africa (APACMEA). Prior to Edelman, David was Co-CEO
of Weber-Shandwick UK and Managing Director at Burson-
Marsteller UK. He has also worked in Corporate Affairs at
Visa International and as a planner in advertising. David is
currently an Advisory Board member of The Spinoff, New
Zealand’s most successful online news magazine; and an
investor and Advisory Board member of Parkable, a New
Zealand based new economy business. David is a member
of the Audit and Risk Committee.
Ian Rowden – Independent Non-Executive Director
Ian was appointed as a Non-Executive Director on
21 November 2018. Ian is a recognised global business
leader whose career has spanned marketing, operational
and commercial leadership roles across four continents
with some of the world’s most admired brands and in the
world’s most diverse marketplaces. Ian began his career
with The Coca-Cola Company in Sydney, Australia in 1980
and for over 20 years he held numerous senior executive
roles with that company worldwide. These included Region
President for the China Division based in Hong Kong and
Global Head of Consumer Communications based in
Atlanta, Georgia. From 2000 to 2004 he served as Chief
Marketing Officer for The Callaway Golf Company. In 2004
he joined Wendy’s International as Chief Marketing Officer,
a position he held until 2007 when he was appointed
Chairman and CEO, Asia Pacific for Saatchi & Saatchi.
From 2011 to 2015 he served as Partner at The Virgin
Group and concurrently as a Board Member of Virgin
Galactic and Virgin Produced. Ian is a Director of ASX
listed Reliance Worldwide Corporation Limited (effective
July 2020); is currently a member of the Investment
Advisory Board of Innovate Partners LLC, a Los Angeles
area based venture capital firm; and is a Board member of
private Companies Brightguard and Miami Ad School (US),
a non-profit entity. Ian is a member of the Remuneration
and Nomination Committee.
Brent Scrimshaw – CEO and Executive Director
Brent was appointed Chief Executive Officer and Executive
Director of the Company on 1 July 2020. Brent is a creative
and brand led business leader in media, publishing,
technology, consumer, retail and sports. Brent spent 18
years at Nike Inc. including three years as Vice
President/Chief Executive Western Europe based in
Amsterdam, and Vice President and Chief Marketing
Officer EMEA, along with other leadership roles in general
marketing and management in Europe, the USA and
Australia. Brent was also part of Nike’s global commercial
operations team contributing to the development of the
Nike Inc. business and brand strategy in its priority
geographies worldwide. Brent was the founder and CEO of
Unscriptd, a technology led sports media company, which
was acquired by New York publisher The Players Tribune
Enero Group Limited Annual Report 2020 17
17
Enero Group Limited – Annual Report 2020
Directors’ Report
DIRECTORS’
REPORT
in 2018. Brent is a Non-Executive Director of ASX listed
Kathmandu Holdings Limited, a Non-Executive Director of
ASX listed Catapult Group International Limited and a Non-
Executive Director of ASX listed Rhinomed Limited.
Operating and Financial Review
Information relating to the operating and financial review of
the Company and its strategy are outlined on pages 21 to
22 and form part of this Directors report.
John Porter – Independent Non-Executive Chairman
John was appointed as Chairman and Non-Executive
Director of the Company on 24 April 2012. John resigned
as a Chairman and Director on 31 December 2019.
Matthew Melhuish – CEO and Executive Director
Matthew was appointed Chief Executive Officer and
Executive Director of the Company on 16 January 2012.
Matthew resigned as a Director effective 23 December
2019 and as CEO effective 31 March 2020.
Company Secretary
Brendan York was appointed Company Secretary on
1 July 2012. He is also the Chief Financial Officer of the
Group. Brendan is a Non-Executive Director of ASX listed
Big River Industries Limited and Chair of its Audit and Risk
Committee. Brendan is a Chartered Accountant and has a
Bachelor of Business Administration and a Bachelor of
Commerce from Macquarie University.
Committee Membership
At the date of this report, the Company had an Audit and
Risk Committee and a Remuneration and Nomination
Committee. Members of these Committees were:
Audit and Risk Committee
Anouk Darling (Chair)
David Brain
Susan McIntosh
Remuneration and Nomination Committee
Ann Sherry (Chair)
Ian Rowden
Susan McIntosh
Principal activities
The principal activities of the Group during the course of
the financial year were integrated marketing and
communication services, including strategy, market
research and insights, advertising, digital, public relations,
communications planning, design, events management,
direct marketing, corporate communications and
programmatic media.
Corporate Governance
The Directors recognise the requirement for and have
adhered to the principles of corporate governance.
A copy of the Company’s full 2020 Corporate Governance
Statement, which provides detailed information about
governance, and a copy of the Company’s Appendix 4G
which sets out the Company’s compliance with the
recommendations in the third edition of the ASX Corporate
Governance Council’s Corporate Governance Principles
and Recommendations (ASX Principles), is available on
the corporate governance section of the Company’s
website at http://www.enero.com/investor-centre/corporate-
governance. Compliance with the fourth edition of the ASX
Principles will be effective from 1 July 2020.
Directors’ meetings
The number of Directors’ meetings (including meetings of
committees of Directors) and the number of meetings
attended by each of the Directors of the Company during
the financial year were:
Board
meetings
Audit and
Risk
Committee
meetings
A
B
A
B
Remuneration
and
Nomination
Committee
meetings
B
A
Ann Sherry
Susan McIntosh
Anouk Darling
David Brain
Ian Rowden
Matthew Melhuish
John Porter
5
8
8
8
8
3
2
5
8
8
8
8
3
3
–
4
4
3
–
–
–
–
4
4
4
–
–
–
1
3
–
–
3
–
–
2
3
–
–
3
–
1
A = Number of meetings attended.
B = Number of meetings held during the time the Director held office or
was a member of the Committee during the year.
Directors’ interests
The relevant interests of each Director in the shares or
SARs issued by the Group, as notified by the Directors to
the Australian Securities Exchange in accordance with
section 205G(1) of the Corporations Act 2001, at the date
of this report, are as follows:
Director
Ann Sherry
Susan McIntosh
Anouk Darling
David Brain
Ian Rowden
Brent Scrimshaw(i)
Total
Ordinary
shares
18,750
122,223
19,607
75,000
60,000
Nil
295,580
Share
Appreciation
Rights
Nil
Nil
Nil
Nil
Nil
1,250,000
1,250,000
(i) Grant is in relation to SARs provided to the CEO, which were
issued on 1 July 2020, subject to shareholder approval.
Events subsequent to balance date
Subsequent to the balance date, the Directors have
declared a final dividend, with respect to ordinary shares,
of 3.5 cents per share, fully franked. The final dividend will
have a record date of 18 September 2020 and a payment
date of 2 October 2020. Except for this event there has not
arisen, in the interval between the end of the financial year
and the date of this report, any item, transaction or event of
a material and unusual nature likely, in the opinion of the
Directors of the Company, to significantly affect the
operations of the Group, the results of those operations, or
the state of affairs of the Group in future financial years.
Likely developments
During the year ended 30 June 2020, the Company
The Group will continue to focus on its strategy outlined in
transferred 642,726 ordinary shares (30 June 2019:
the operating and financial review. The Group will
651,575) from a trust account held by the Company to the
specifically focus on new business conversion and organic
employees of the Group on exercise of share appreciation
revenue growth to increase net revenue. Additionally,
rights under the SARP. The trust account holds no further
building scale and presence in the UK and USA markets to
ordinary shares and was vested during the financial year.
seek a more evenly weighted geographic contribution from
net revenue and Operating EBITDA is a core element of
the Group’s strategic framework. The Group will also
continue to assess acquisition and capital deployment
opportunities as they arise to complement the key
operating business brands – Hotwire, Orchard and BMF.
Indemnification and insurance of officers and auditors
Indemnification
The Company has agreed to indemnify the following
current Directors of the Company: Ann Sherry, Susan
McIntosh, Anouk Darling, David Brain, Ian Rowden,
Brent Scrimshaw and Company Secretary Brendan York
against liabilities to another person (other than the
Company or a related body corporate) that may arise from
their positions as Directors, Secretaries or Executives of
the Company and its controlled entities, subject to the
Corporations Act 2001, except where the liability arises out
of conduct involving a lack of good faith. The agreement
stipulates that the Company will meet the full amount of
any liabilities, including costs and expenses. The Company
has also agreed to indemnify the current Directors and
Secretaries of its controlled entities for all liabilities to
another person (other than the Company or a related body
corporate) that may arise from their position, except where
Total
the liability arises out of conduct involving a lack of good
faith. The agreements stipulate that the Company will meet
the full amount of any such liabilities, including costs and
expenses.
Insurance premiums
During the financial year, the Company has paid insurance
premiums in respect of Directors’ and Officers’ liabilities, for
current Directors and Officers, covering the following:
– costs and expenses incurred by the relevant officers in
defending proceedings, whether civil or criminal; and
– other liabilities that may arise from their position, with
the exception of conduct involving a willful breach of
duty or improper use of information or position to gain
a personal advantage.
The Directors have not included details of the amount of
the premium paid in respect of the Directors’ and Officers’
liability and legal expenses insurance contracts, as such
disclosure is prohibited under the terms of the contracts.
Issue of shares and Share Appreciation Rights (SARs)
Shares issued on exercise of SARs
On 13 September 2019, the Company issued 469,905
ordinary shares to employees exercising share
appreciation rights under the Company’s Share
Appreciation Rights Plan (SARP), which was approved by
shareholders at the Company’s Annual General Meeting
(AGM) in 2017. The issue price of these shares was $1.89
and these shares rank equally with existing shareholders.
Share Appreciation Rights
Share Appreciation Rights issued
During the year ended 30 June 2020, a total of 2,450,000
Share Appreciation Rights (30 June 2019: 6,500,000) were
issued to senior employees of the Group under the existing
Share Appreciation Rights Plan.
Unissued shares under Share Appreciation Rights Plan
At the date of this report, unissued shares of the Company
under the Share Appreciation Rights Plan are:
Strike price VWAP
(for the 20 business
Number of
days prior to the
Expiry date
30 September 2020
30 September 2020
30 September 2020
30 September 2021
30 September 2021
30 September 2021(i)
30 September 2022
30 September 2022(i)
30 September 2023(i)
SARs
1,016,670
900,000
699,999
900,000
699,998
416,666
700,003
416,666
416,668
6,166,670
grant)
$1.04
$1.23
$2.13
$1.23
$2.13
n/a
$2.13
n/a
n/a
(i) Grant is in relation to SARs provided to the CEO, which were
issued on 1 July 2020, subject to shareholder approval.
These SARs in the table above do not entitle the holder
to participate in any share issue of the Company.
Dividends
Dividends declared and paid by the Company to members
since the end of the previous financial year were:
Fully franked:
2019 Final dividend
2020 Interim dividend
Cents
Total
per
amount
share
AUD ’000
Date of
payment
3.0
2.5
2,582 8 October 2019
2,152 19 March 2020
Subsequent to the balance sheet date, the Directors have
declared a final dividend, with respect to ordinary shares,
of 3.5 cents per share – fully franked with a payment date
of 2 October 2020. The financial effect of this dividend has
not been brought to account in the financial statements for
the year ended 30 June 2020 but will be recognised in the
subsequent financial period.
For further details refer to Note 17 Capital and reserves in
this annual report.
Risk management
The Board has established a risk management policy for
the management and oversight of risk and has delegated
responsibility of compliance and internal control to the
Audit and Risk Committee.
18
18 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 19
Enero Group Limited – Annual Report 2020
Likely developments
The Group will continue to focus on its strategy outlined in
the operating and financial review. The Group will
specifically focus on new business conversion and organic
revenue growth to increase net revenue. Additionally,
building scale and presence in the UK and USA markets to
seek a more evenly weighted geographic contribution from
net revenue and Operating EBITDA is a core element of
the Group’s strategic framework. The Group will also
continue to assess acquisition and capital deployment
opportunities as they arise to complement the key
operating business brands – Hotwire, Orchard and BMF.
Indemnification and insurance of officers and auditors
Indemnification
The Company has agreed to indemnify the following
current Directors of the Company: Ann Sherry, Susan
McIntosh, Anouk Darling, David Brain, Ian Rowden,
Brent Scrimshaw and Company Secretary Brendan York
against liabilities to another person (other than the
Company or a related body corporate) that may arise from
their positions as Directors, Secretaries or Executives of
the Company and its controlled entities, subject to the
Corporations Act 2001, except where the liability arises out
of conduct involving a lack of good faith. The agreement
stipulates that the Company will meet the full amount of
any liabilities, including costs and expenses. The Company
has also agreed to indemnify the current Directors and
Secretaries of its controlled entities for all liabilities to
another person (other than the Company or a related body
corporate) that may arise from their position, except where
the liability arises out of conduct involving a lack of good
faith. The agreements stipulate that the Company will meet
the full amount of any such liabilities, including costs and
expenses.
Insurance premiums
During the financial year, the Company has paid insurance
premiums in respect of Directors’ and Officers’ liabilities, for
current Directors and Officers, covering the following:
– costs and expenses incurred by the relevant officers in
defending proceedings, whether civil or criminal; and
– other liabilities that may arise from their position, with
the exception of conduct involving a willful breach of
duty or improper use of information or position to gain
a personal advantage.
The Directors have not included details of the amount of
the premium paid in respect of the Directors’ and Officers’
liability and legal expenses insurance contracts, as such
disclosure is prohibited under the terms of the contracts.
Issue of shares and Share Appreciation Rights (SARs)
Shares issued on exercise of SARs
On 13 September 2019, the Company issued 469,905
ordinary shares to employees exercising share
appreciation rights under the Company’s Share
Appreciation Rights Plan (SARP), which was approved by
shareholders at the Company’s Annual General Meeting
(AGM) in 2017. The issue price of these shares was $1.89
and these shares rank equally with existing shareholders.
During the year ended 30 June 2020, the Company
transferred 642,726 ordinary shares (30 June 2019:
651,575) from a trust account held by the Company to the
employees of the Group on exercise of share appreciation
rights under the SARP. The trust account holds no further
ordinary shares and was vested during the financial year.
Share Appreciation Rights
Share Appreciation Rights issued
During the year ended 30 June 2020, a total of 2,450,000
Share Appreciation Rights (30 June 2019: 6,500,000) were
issued to senior employees of the Group under the existing
Share Appreciation Rights Plan.
Unissued shares under Share Appreciation Rights Plan
At the date of this report, unissued shares of the Company
under the Share Appreciation Rights Plan are:
Expiry date
30 September 2020
30 September 2020
30 September 2020
30 September 2021
30 September 2021
30 September 2021(i)
30 September 2022
30 September 2022(i)
30 September 2023(i)
Total
Strike price VWAP
(for the 20 business
days prior to the
grant)
$1.04
$1.23
$2.13
$1.23
$2.13
n/a
$2.13
n/a
n/a
Number of
SARs
1,016,670
900,000
699,999
900,000
699,998
416,666
700,003
416,666
416,668
6,166,670
(i) Grant is in relation to SARs provided to the CEO, which were
issued on 1 July 2020, subject to shareholder approval.
These SARs in the table above do not entitle the holder
to participate in any share issue of the Company.
Dividends
Dividends declared and paid by the Company to members
since the end of the previous financial year were:
Fully franked:
2019 Final dividend
2020 Interim dividend
Cents
per
share
Total
amount
AUD ’000
Date of
payment
3.0
2.5
2,582 8 October 2019
2,152 19 March 2020
Subsequent to the balance sheet date, the Directors have
declared a final dividend, with respect to ordinary shares,
of 3.5 cents per share – fully franked with a payment date
of 2 October 2020. The financial effect of this dividend has
not been brought to account in the financial statements for
the year ended 30 June 2020 but will be recognised in the
subsequent financial period.
For further details refer to Note 17 Capital and reserves in
this annual report.
Risk management
The Board has established a risk management policy for
the management and oversight of risk and has delegated
responsibility of compliance and internal control to the
Audit and Risk Committee.
Enero Group Limited Annual Report 2020 19
19
Enero Group Limited – Annual Report 2020
Directors’ Report
DIRECTORS’
REPORT
Environmental regulation and performance
The Board believes that the Group has adequate systems
in place for the management of its environmental
requirements and is not aware of any significant breach of
those requirements as they apply to the Group.
Auditor independence
The Lead Auditor’s independence declaration as required
under section 307C of the Corporations Act 2001 is set out
on page 78, and forms part of the Directors’ Report for the
year ended 30 June 2020.
Rounding off
The Company is of a kind referred to in ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument
2016/191, dated 24 March 2016, and, in accordance with
that Class Order, amounts in the consolidated financial
statements and Directors’ Report have been rounded off to
the nearest thousand dollars, unless otherwise stated.
Remuneration Report
The Remuneration Report on page 23 forms part of this
Directors’ Report.
Signed on behalf of the Directors in accordance with a
resolution of the Directors:
Ann Sherry AO
Chair
Sydney, 26 August 2020
Non-audit services
During the year KPMG, the Group’s auditor, has performed
certain other services in addition to the audit and review of
the financial statements.
The Board has considered the non-audit services provided
during the year by the auditor and, in accordance with
advice provided by resolution of the Audit and Risk
Committee, is satisfied that the provision of those non-audit
services during the year by the auditor is compatible with,
and did not compromise, the auditor independence
requirements of the Corporations Act 2001 for the following
reasons:
– all non-audit services were subject to the corporate
governance procedures adopted by the Company and
have been reviewed by the Audit and Risk Committee
to ensure they do not impact the integrity and
objectivity of the auditor; and
– non-audit services provided do not undermine the
general principles relating to auditor independence as
set out in APES 110 Code of Ethics for Professional
Accountants, as they did not involve reviewing or
auditing the auditor’s own work, acting in a
management or decision-making capacity for the
Group, acting as an advocate for the Group, or jointly
sharing risks and rewards.
Details of the amounts paid to the auditor of the Company,
KPMG, and its related practices, for non-audit services
provided during the year, are set out below. In addition,
amounts paid to other auditors for the statutory audit have
been disclosed in Note 30 Auditor’s remuneration of the
notes to the financial statements.
Services other than statutory audit
Auditors of the Company
Taxation compliance services:
Overseas KPMG firms
Total services other than
statutory audit
2020
$
2019
$
188,000
186,000
188,000
186,000
Operating and financial review
In the current year, the Operating Brands segment
The operating and financial review forms part of the
generated approximately 57% of its net revenue and 62%
Directors’ report.
of its Operating EBITDA from international markets.
Strategy and operations of the Group
A summary of the Group’s results is below:
The boutique force in modern marketing, Enero Group is
In thousands of AUD
an international network of eight marketing and
communications businesses located in 7 countries and 14
cities, with over 600 employees. Spanning the marketing
services landscape, the Group is connected through three
key service competencies:
• Creative and Content – BMF;
•
PR and Integrated Communications – Hotwire,
Frank and CPR; and
• Digital, Data, Analytics and Technology –
Orchard, The Leading Edge, The Digital Edge
and OBMedia.
The Group’s service offering includes integrated marketing
and communication services, including strategy, market
research and insights, advertising, digital, public relations,
communications planning, design, events management,
direct marketing, corporate communications and
programmatic media.
The Group has three key geographic locations – Australia,
UK and USA – which house the majority of the Group’s
businesses and employees. The Group also has a number
of non-owned affiliates in other geographic areas which
connect the Group into a global network. Being a nimble
team with a global perspective, the Group is well positioned
to take advantage of the new developments taking place in
this highly dynamic sector.
Financial performance for the year
The Group achieved Net Revenue of $135.8 million, an
increase of 4.9% (2019: $129.5 million) compared to the
prior reporting period. The increased revenue was driven
by organic revenue growth in Hotwire, Orchard and
OBMedia predominantly in the USA market. Increased
revenue pipeline conversion uncertainty due to COVID-19
led to a greater weighting to existing client and organic
revenue opportunities over new business opportunities.
The Group has a high sector exposure to technology,
healthcare and consumer staples clients, which were less
impacted by COVID-19, and a low sector exposure to
retail, travel and tourism clients, which were more heavily
impacted in the second half of the year.
The Group achieved Operating EBITDA of $24.4 million, an
increase of 17.7% (2019: $20.7 million) compared to the
prior reporting period as a result of the increased net
revenue, careful cost management and reduction of
operating costs during COVID-19. The Operating EBITDA
margin increased from 16.0% in 2019 to 18.0% in 2020.
The increased net revenue coupled with stronger operating
costs leverage resulted in the margin protection and
expansion. Government-related support during COVID-19
including the JobKeeper subsidy was limited to $0.4 million
in contributions to Operating EBITDA in the current year.
Net revenue
EBITDA
Depreciation of right-of-use assets
Operating EBITDA¹
Depreciation and amortisation
EBIT
Net finance income
Present value interest charge
Profit before tax
Income tax expense
Profit after tax
Non-controlling interests
Net profit after tax before significant
items
Significant items
Net profit after tax attributable to
equity owners
Earnings per share (basic) – pre
significant items
Earnings per share (basic)
2020
2019
135,825
129,535
29,230
(4,849)
24,381
(3,432)
20,949
217
(1,937)
19,229
(3,397)
15,832
(2,951)
20,722
–
20,722
(3,275)
17,447
467
(1,153)
16,761
(2,297)
14,464
(2,413)
12,881
(2,174)
12,051
(6,390)
10,707
5,661
Cents
Cents
per share
per share
15.0
12.5
14.2
6.7
Reconciliation of statutory profit after tax to Operating
EBITDA
In thousands of AUD
Net revenue
EBITDA
Depreciation of right-of-use assets
Operating EBITDA¹
Depreciation of plant and equipment
Amortisation of intangibles
Net finance income
Present value interest charge
Contingent consideration fair value
loss
Statutory profit before tax
Income tax expense
Statutory profit after tax
2020
2019
135,825
129,535
29,230
(4,849)
24,381
(2,337)
(1,095)
217
20,722
–
20,722
(2,209)
(1,066)
467
(1,937)
(1,153)
(2,174)
17,055
(3,397)
13,658
(6,390)
10,371
(2,297)
8,074
1. Operating EBTIDA, as defined in the basis of preparation section
on page 22, is used for comparability purposes between the
periods in this transition year as operating lease rental expense is
primarily replaced with depreciation of right-of-use assets.
This is the first set of the Group’s annual financial statements in
which AASB 16 Leases is applied. Under the transition method
chosen, comparative information is not restated. The
30 June 2020 results are therefore not directly comparable to
prior years. Changes to significant accounting policies and the
impact of applying the new standards are described in Note 1(g).
The net profit pre-significant items was $12.9 million,
Significant items
compared to $12.1 million in the prior reporting period. The
The Group incurred Contingent consideration fair value
net profit after tax to equity owners was $10.7 million,
compared to $5.7 million in the prior reporting period.
loss of $2,174,000 (2019: $6,390,000) relating to
revaluation of future contingent consideration payable to
the vendors of Eastwick Communications.
20
20 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 21
Enero Group Limited – Annual Report 2020
Operating and financial review
The operating and financial review forms part of the
Directors’ report.
In the current year, the Operating Brands segment
generated approximately 57% of its net revenue and 62%
of its Operating EBITDA from international markets.
Strategy and operations of the Group
The boutique force in modern marketing, Enero Group is
an international network of eight marketing and
communications businesses located in 7 countries and 14
cities, with over 600 employees. Spanning the marketing
services landscape, the Group is connected through three
key service competencies:
• Creative and Content – BMF;
•
PR and Integrated Communications – Hotwire,
Frank and CPR; and
• Digital, Data, Analytics and Technology –
Orchard, The Leading Edge, The Digital Edge
and OBMedia.
The Group’s service offering includes integrated marketing
and communication services, including strategy, market
research and insights, advertising, digital, public relations,
communications planning, design, events management,
direct marketing, corporate communications and
programmatic media.
The Group has three key geographic locations – Australia,
UK and USA – which house the majority of the Group’s
businesses and employees. The Group also has a number
of non-owned affiliates in other geographic areas which
connect the Group into a global network. Being a nimble
team with a global perspective, the Group is well positioned
to take advantage of the new developments taking place in
this highly dynamic sector.
Financial performance for the year
The Group achieved Net Revenue of $135.8 million, an
increase of 4.9% (2019: $129.5 million) compared to the
prior reporting period. The increased revenue was driven
by organic revenue growth in Hotwire, Orchard and
OBMedia predominantly in the USA market. Increased
revenue pipeline conversion uncertainty due to COVID-19
led to a greater weighting to existing client and organic
revenue opportunities over new business opportunities.
The Group has a high sector exposure to technology,
healthcare and consumer staples clients, which were less
impacted by COVID-19, and a low sector exposure to
retail, travel and tourism clients, which were more heavily
impacted in the second half of the year.
The Group achieved Operating EBITDA of $24.4 million, an
increase of 17.7% (2019: $20.7 million) compared to the
prior reporting period as a result of the increased net
revenue, careful cost management and reduction of
operating costs during COVID-19. The Operating EBITDA
margin increased from 16.0% in 2019 to 18.0% in 2020.
The increased net revenue coupled with stronger operating
costs leverage resulted in the margin protection and
expansion. Government-related support during COVID-19
including the JobKeeper subsidy was limited to $0.4 million
in contributions to Operating EBITDA in the current year.
The net profit pre-significant items was $12.9 million,
compared to $12.1 million in the prior reporting period. The
net profit after tax to equity owners was $10.7 million,
compared to $5.7 million in the prior reporting period.
A summary of the Group’s results is below:
In thousands of AUD
2020
Net revenue
EBITDA
Depreciation of right-of-use assets
Operating EBITDA¹
Depreciation and amortisation
EBIT
Net finance income
Present value interest charge
Profit before tax
Income tax expense
Profit after tax
Non-controlling interests
Net profit after tax before significant
items
Significant items
Net profit after tax attributable to
equity owners
Earnings per share (basic) – pre
significant items
Earnings per share (basic)
135,825
29,230
(4,849)
24,381
(3,432)
20,949
217
(1,937)
19,229
(3,397)
15,832
(2,951)
2019
129,535
20,722
–
20,722
(3,275)
17,447
467
(1,153)
16,761
(2,297)
14,464
(2,413)
12,881
(2,174)
12,051
(6,390)
10,707
5,661
Cents
per share
Cents
per share
15.0
12.5
14.2
6.7
Reconciliation of statutory profit after tax to Operating
EBITDA
In thousands of AUD
2020
2019
Net revenue
EBITDA
Depreciation of right-of-use assets
Operating EBITDA¹
Depreciation of plant and equipment
Amortisation of intangibles
Net finance income
Present value interest charge
Contingent consideration fair value
loss
Statutory profit before tax
Income tax expense
Statutory profit after tax
135,825
29,230
(4,849)
24,381
(2,337)
(1,095)
217
(1,937)
(2,174)
17,055
(3,397)
13,658
129,535
20,722
–
20,722
(2,209)
(1,066)
467
(1,153)
(6,390)
10,371
(2,297)
8,074
1. Operating EBTIDA, as defined in the basis of preparation section
on page 22, is used for comparability purposes between the
periods in this transition year as operating lease rental expense is
primarily replaced with depreciation of right-of-use assets.
This is the first set of the Group’s annual financial statements in
which AASB 16 Leases is applied. Under the transition method
chosen, comparative information is not restated. The
30 June 2020 results are therefore not directly comparable to
prior years. Changes to significant accounting policies and the
impact of applying the new standards are described in Note 1(g).
Significant items
The Group incurred Contingent consideration fair value
loss of $2,174,000 (2019: $6,390,000) relating to
revaluation of future contingent consideration payable to
the vendors of Eastwick Communications.
Enero Group Limited Annual Report 2020 21
21
Enero Group Limited – Annual Report 2020
Directors’ Report
DIRECTORS’
REPORT
Geographical performance
In thousands of AUD
Net Revenue
Australia
UK and Europe
USA
Total Operating Brand Segment
Operating EBITDA
Australia
UK and Europe
USA
Total Operating Brand Segment
Support office
Share-based payments charge
Total
Operating EBITDA margin
Australia
UK and Europe
USA
Total Operating Brand Segment
Total Group
2020
2019
58,645
37,701
39,479
135,825
59,975
38,611
30,949
129,535
11,536
5,703
13,149
30,388
(5,443)
(564)
24,381
19.7%
15.1%
33.3%
22.4%
18.0%
10,695
6,512
10,067
27,274
(5,822)
(730)
20,722
17.8%
16.9%
32.5%
21.1%
16.0%
Capital management
The Group’s capital management strategy aims to balance
returns to shareholders through dividends, funding
acquisition and investment opportunities as well as
maintaining adequate cash reserves for existing
businesses. The Group continues to seek acquisition
opportunities that are aligned with Group strategy from a
geographical or expansion of services perspective.
Cash flow – Operating activities
Cash inflows from operating activities was $31.0 million
(2019: $18.1 million). The increase in inflows was partially
due to the exclusion of operating lease payments in the
current financial year. The Group converted 116% of
EBITDA to cash for the year ended 30 June 2020 (2019:
103%). The Group targets a cash conversion of 85% each
financial year.
Cash flow – Investing activities
Cash outflows from investing activities was $13.3 million
(2019: $1.7 million). The increase in outflows was due to
the contingent consideration payments made during the
current financial year with no payments made in the prior
financial year.
Cash flow – Financing activities
Cash outflows from financing activities was $14.0 million
(2019: $7.3 million). The increase in outflows was due to
$6.5 million in lease liabilities recognised in financing
activities in the current financial year. During the year,
$4.7 million in dividends were paid to Enero Group Limited
shareholders in addition to $2.3 million in dividends paid to
minority shareholders of controlled subsidiaries.
22
22 Enero Group Limited Annual Report 2020
Contingent consideration liabilities
The Company entered into contingent consideration
arrangements in relation to its acquisitions of Orchard
Marketing on 2 February 2018 and Eastwick
Communications on 29 September 2016.
The Company structures its acquisitions using contingent
consideration as it incentivises the sellers to drive future
performance of the acquired business by linking the total
purchase price to agreed future financial targets of that
business.
As at 30 June 2020, the Company’s estimated contingent
consideration liability is $25.5 million.
Reconciliation of carrying amounts of contingent
consideration payable:
In thousands of AUD
30 June 2019
Payments made
Net revisions to estimates
Present value interest/foreign exchange
30 June 2020
33,801
(11,923)
2,174
1,501
25,553
15,119
10,434
25,553
2020
47,581
–
(25,553)
22,028
2019
43,831
(493)
(33,801)
9,537
Maturity profile (at present value):
FY2021
FY2022
Total
Cash and Debt
In thousands of AUD
Cash and cash equivalents
Hire purchase liabilities
Contingent consideration liabilities
Net cash¹
1. Net cash excludes lease liabilities recognised as a result of the
adoption of AASB16 Leases as they are considered operational
liabilities.
The Group has $22.0 million in net cash as at
30 June 2020. Apart from contingent consideration
liabilities, the Group has no loans or borrowings.
Basis of preparation
The Directors’ Report includes Operating EBITDA, a
measure used by the Directors and management in
assessing the ongoing performance of the Group.
Operating EBITDA is a non-IFRS measure and has not
been audited or reviewed.
Operating EBITDA is calculated as profit before interest,
taxes, depreciation of plant and equipment, amortisation of
intangibles, impairment of intangibles, and contingent
consideration fair value loss. Operating EBITDA, reconciled
in the table on page 21, is the primary measure used by
management and the Directors in assessing the
performance of the Group. It provides information on the
Group’s cash flow generation excluding significant
transactions and non-cash items which are not
representative of the Group’s ongoing operations.
9 Directors’ and Executive Officers’ holdings of shares
Subsidiary Executives;
Company’s financial performance has driven remuneration
directly with remuneration advisers.
Remuneration Report – Audited
Contents
1 Introduction
report
2 Key Management Personnel (KMP) disclosed in this
3 Remuneration Governance
4 Executive Remuneration policy and framework
5 Executive service agreements
6 Non-Executive Directors
7 Directors’ and Executive Officers’ remuneration
8 Share-based payments
10 Loans to Key Management Personnel
11 Remuneration and Group performance
1 Introduction
The Directors of Enero Group Limited present this
Remuneration Report for the Group for the year ended
30 June 2020. The information provided in the
Remuneration Report has been audited as required by
section 308(3C) of the Corporations Act 2001 and forms
part of the Directors’ Report.
The Remuneration Report outlines practices and specific
remuneration arrangements that apply to Key Management
Personnel (KMP) in accordance with the requirements of
the Corporations Act 2001 and explains how the
outcomes.
report
2 Key Management Personnel (KMP) disclosed in this
KMP comprise the Directors of the Company and
Executives. The KMP covered in this Remuneration Report
are those people having authority and responsibility for
planning, directing and controlling the activities of the
Group, directly or indirectly. The table below outlines the
KMP at any time during the financial year; and unless
otherwise indicated, they were KMP for the entire year.
Name
Non-Executive
Directors
Ann Sherry(i)
Susan McIntosh
Anouk Darling
David Brain
Ian Rowden
John Porter (ii)
Executives
Brendan York
Fiona Chilcott
Role
Non-Executive Director (Chair)
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Chief Financial Officer
Chief People and Culture Officer
Former Executives
Matthew Melhuish(iii) Chief Executive Officer and
Executive Director
(ii) John Porter resigned as Chairman and Director on
1 January 2020.
31 December 2019.
(iii) Matthew Melhuish resigned as Director effective
23 December 2019 and as CEO effective 31 March 2020.
3 Remuneration Governance
The Board has established the Remuneration and
Nominations Committee (‘Committee’). It is responsible for
making recommendations on remuneration matters to the
Board on:
–
the over-arching executive remuneration framework;
– operation of the incentive plans which apply to
Executives including key performance indicators and
performance hurdles;
–
remuneration levels of Company Executives and
– appointment of the Chief Executive Officer, senior
Executives and Directors themselves; and
– Non-Executive Director fees.
The Committee’s objective is to ensure that remuneration
policies and structures are fair, competitive to attract
suitably qualified candidates, reward the achievement of
strategic short-term and long-term objectives and achieve
long-term value creation for shareholders.
The Corporate Governance Statement (available in the
Corporate Governance section of the Company’s website)
provides further information on the role of the Committee.
The Remuneration and Nomination Committee operates
independently of the Enero Executive team and engages
There were no services used from remuneration
consultants during the year ended 30 June 2020.
4 Executive Remuneration policy and framework
The objective of the Group’s executive reward framework is
to attract, motivate and retain employees with the required
capabilities and experience to ensure the delivery of
business strategy aligning with the interests of
shareholders.
The Executive Remuneration framework includes the
Company Executives and the subsidiary Executives to
ensure alignment across all levels of the Group.
The framework aligns executive reward with the
achievement of strategic objectives resulting in
remuneration structures taking into account:
the responsibility, performance and experience of key
management personnel;
the key management personnel’s ability to control the
the Group’s performance, including:
–
–
–
the Group’s earnings with profit a core component
of remuneration design;
the growth in share price and delivering constant
returns on shareholder wealth; and
the Group’s achievement of strategic objectives.
For Company Executives, the remuneration framework
–
fixed remuneration: comprising base pay, benefits and
– short-term incentive: comprising an annual cash bonus;
superannuation;
and
–
–
–
Enero Group Limited Annual Report 2020 23
(i) Ann Sherry was appointed as Chair and Director on
currently has the following components:
Non-Executive Director (Chairman)
relevant Company’s performance; and
Enero Group Limited – Annual Report 2020
Remuneration Report – Audited
Contents
1 Introduction
2 Key Management Personnel (KMP) disclosed in this
report
3 Remuneration Governance
4 Executive Remuneration policy and framework
5 Executive service agreements
6 Non-Executive Directors
7 Directors’ and Executive Officers’ remuneration
8 Share-based payments
9 Directors’ and Executive Officers’ holdings of shares
10 Loans to Key Management Personnel
11 Remuneration and Group performance
1 Introduction
The Directors of Enero Group Limited present this
Remuneration Report for the Group for the year ended
30 June 2020. The information provided in the
Remuneration Report has been audited as required by
section 308(3C) of the Corporations Act 2001 and forms
part of the Directors’ Report.
The Remuneration Report outlines practices and specific
remuneration arrangements that apply to Key Management
Personnel (KMP) in accordance with the requirements of
the Corporations Act 2001 and explains how the
Company’s financial performance has driven remuneration
outcomes.
2 Key Management Personnel (KMP) disclosed in this
report
KMP comprise the Directors of the Company and
Executives. The KMP covered in this Remuneration Report
are those people having authority and responsibility for
planning, directing and controlling the activities of the
Group, directly or indirectly. The table below outlines the
KMP at any time during the financial year; and unless
otherwise indicated, they were KMP for the entire year.
Name
Non-Executive
Directors
Ann Sherry(i)
Susan McIntosh
Anouk Darling
David Brain
Ian Rowden
John Porter (ii)
Executives
Brendan York
Fiona Chilcott
Role
Non-Executive Director (Chair)
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director (Chairman)
Chief Financial Officer
Chief People and Culture Officer
Former Executives
Matthew Melhuish(iii) Chief Executive Officer and
Executive Director
(i) Ann Sherry was appointed as Chair and Director on
1 January 2020.
(ii) John Porter resigned as Chairman and Director on
31 December 2019.
(iii) Matthew Melhuish resigned as Director effective
23 December 2019 and as CEO effective 31 March 2020.
3 Remuneration Governance
The Board has established the Remuneration and
Nominations Committee (‘Committee’). It is responsible for
making recommendations on remuneration matters to the
Board on:
–
– operation of the incentive plans which apply to
the over-arching executive remuneration framework;
Executives including key performance indicators and
performance hurdles;
–
remuneration levels of Company Executives and
Subsidiary Executives;
– appointment of the Chief Executive Officer, senior
Executives and Directors themselves; and
– Non-Executive Director fees.
The Committee’s objective is to ensure that remuneration
policies and structures are fair, competitive to attract
suitably qualified candidates, reward the achievement of
strategic short-term and long-term objectives and achieve
long-term value creation for shareholders.
The Corporate Governance Statement (available in the
Corporate Governance section of the Company’s website)
provides further information on the role of the Committee.
The Remuneration and Nomination Committee operates
independently of the Enero Executive team and engages
directly with remuneration advisers.
There were no services used from remuneration
consultants during the year ended 30 June 2020.
4 Executive Remuneration policy and framework
The objective of the Group’s executive reward framework is
to attract, motivate and retain employees with the required
capabilities and experience to ensure the delivery of
business strategy aligning with the interests of
shareholders.
The Executive Remuneration framework includes the
Company Executives and the subsidiary Executives to
ensure alignment across all levels of the Group.
The framework aligns executive reward with the
achievement of strategic objectives resulting in
remuneration structures taking into account:
–
the responsibility, performance and experience of key
management personnel;
–
–
the key management personnel’s ability to control the
relevant Company’s performance; and
the Group’s performance, including:
–
the Group’s earnings with profit a core component
of remuneration design;
–
–
the growth in share price and delivering constant
returns on shareholder wealth; and
the Group’s achievement of strategic objectives.
For Company Executives, the remuneration framework
currently has the following components:
–
fixed remuneration: comprising base pay, benefits and
superannuation;
– short-term incentive: comprising an annual cash bonus;
and
Enero Group Limited Annual Report 2020 23
23
Enero Group Limited – Annual Report 2020
Directors’ Report
DIRECTORS’
REPORT
–
long-term incentive: equity-based Share Appreciation
Rights Plan.
as well as employer contributions to superannuation and
pension funds.
For Subsidiary Executives, the remuneration framework
currently has the following components:
–
fixed remuneration: comprising base pay, benefits and
superannuation;
– short-term incentive: comprising either an annual cash
bonus and/or a retained equity interest in the subsidiary
entitling a dividend stream linked to profitability; and
Remuneration levels are reviewed annually by the
Remuneration and Nomination Committee through a
process that considers the responsibility, performance and
experience of the individual and the overall performance of
the Group and ensures competitive market salaries are
provided. An Executive’s remuneration may also be
reviewed on promotion.
–
long-term incentive: equity-based Share Appreciation
Rights Plan.
There are no guaranteed fixed remuneration increases
included in any Executive contracts.
The remuneration framework for Subsidiary Executives has
been disclosed in this report despite such Executives not
meeting the definition of KMP.
In structuring the remuneration mix for each role, the Board
aims to balance fixed and variable remuneration to best
achieve short-term and long-term performance outcomes.
4(a) Fixed remuneration
Fixed remuneration consists of base remuneration (which
is calculated on a total cost-to-Company basis and includes
fringe benefits tax charges related to employee benefits),
4(b) Performance-linked remuneration
Performance-linked remuneration includes both short-term
incentives (STI) and long-term incentives (LTI) and is
designed to reward KMPs, Executives, Subsidiary
Executives and key leadership for meeting or exceeding
financial, strategic and personal targets.
The STI for the CEO and Company Executives align
Executives with the creation of shareholder value through
driving top-line revenue growth along with Operating
EBITDA margin improvements.
Short-term incentives (STI):
The purpose of STI is to motivate and reward Executives for contributing to the delivery of annual business performance
as assessed against financial and non-financial measures.
Participant
CEO
Company Executives
Subsidiary Executives
Performance measures and rationale
The STI for the CEO is an annual cash-based maximum short-term incentive payment of
70% of the CEO’s fixed remuneration determined by the achievement of Operating
EBITDA hurdles and Earning Per Share (EPS) growth hurdles set by the Remuneration
and Nomination Committee. The hurdles are set each financial year determined by
reference to business priorities. A component of the STI is also subject to the achievement
of pre-determined KPI’s for the individual.
The STI for Company Executives is an annual cash-based maximum short-term incentive
payment of 70% of the Executive’s fixed remuneration determined by the achievement of
Operating EBITDA hurdles and Earnings Per Share (EPS) growth hurdles set by the
Remuneration and Nomination Committee. The hurdles are set each financial year
determined by reference to business priorities. A component of the STI is also subject to
the achievement of pre-determined strategic objectives for the individual.
The STI for Subsidiary Executives is linked to the financial performance and direct
profitability of their relevant subsidiary.
For each subsidiary of the Company (or group of subsidiaries known as an Operating
Business Unit) the STI has either one or a combination of the following structures:
– an Operating EBITDA sharing arrangement such that the CEO and key senior
leadership of that subsidiary are entitled to a share of Operating EBITDA agreed by the
Remuneration and Nomination Committee each year. A component of the share of
Operating EBITDA is also subject to the achievement of pre-determined KPIs for both
the individual and Operating Brand. The share of EBITDA is set each financial year by
the Remuneration and Nomination Committee. This incentive is paid annually in cash
after the end of the financial year; or
– an annual cash-based maximum short-term incentive payment of 70% of the
Executive’s fixed remuneration determined by the achievement of net revenue hurdles.
The incentive is paid annually in cash after the end of the financial year; or
– a direct equity interest in the subsidiary, entitling the holder to a dividend stream linked
to financial performance of that subsidiary. Dividend payments are made to
shareholders in accordance with that Subsidiary’s constitution, generally on a quarterly
basis.
The STIs (excluding dividends from direct equity interests in subsidiaries) are paid in cash following the end of the financial
year and approval from the Remuneration and Nomination Committee. The Company Executives and Subsidiary
Executives are not contractually entitled to the STI in their respective employment agreements and the Remuneration and
Nomination Committee retains discretion to withdraw or amend the STI at any time.
The Remuneration and Nomination Committee has the discretion to take into account any significant items in determining
whether the financial KPIs have been achieved, where it is considered appropriate for linking remuneration reward to
Company performance.
Long-term incentives (LTI):
Plan (SARP) (see Note 29).
The purpose of the LTI is to align Executive remuneration with long-term shareholder value and the performance of the
Group. The LTI is provided as an equity-based incentive in the Company under the terms of the Share Appreciation Rights
Description
The SAR Plan grants rights to shares in the Company on the achievement of appreciation
in the Company’s share price over the vesting period.
Enero’s Board may determine whether or not the grant of rights is conditional on the
achievement of performance hurdles (including service conditions), and if so the nature of
those hurdles.
No dividends or voting rights are attached to the SARs.
Eligibility
The plan allows for the Board to determine who is entitled to participate in the SARP and it
Performance period
The performance period for the LTI is generally three years.
may grant rights accordingly.
Rights
The exercise of each right will entitle the rights holder to receive a fraction of an ordinary
share based on a conversion formula of E = (A – B) / A, where:
– E is the share right entitlement;
– A is the volume weighted average price (VWAP) for the Company’s shares for the 20
business days prior to the vesting date of the rights; and
– B is the VWAP for the Company’s shares for the 20 business days before the rights
were granted.
on the applicable vesting date.
If A – B is less than or equal to zero, the share right will not vest and will immediately lapse
Other conditions
Cessation of employment will result in the lapsing of any unvested SARs.
Rights expire at 15 business days after the relevant vesting date or the termination of the
individual’s employment.
One share right shall never convert into more than one share in the capital of the Company.
The Board may exercise discretion on early vesting of rights in the event of a change of
control of the Group.
Refer to the table below for a summary of SARs on issue.
Refer to Section 8 (Share-based payments) of the Remuneration Report for further information regarding the SARs.
Summary of Share Appreciation Rights on issue:
VWAP for the 20 business days prior to the
20 business days after the release of the
Group financial report for the year ended:
Issue date
SARs issued
Participants
grant (B)
Vesting dates:
Tranche 1 (1/3rd)
Tranche 2 (1/3rd)
Tranche 3 (1/3rd)
Last expiry date
30 June 2020.
19 October 2017
18 October 2018
24 October 2019
5,000,000
4,500,000
2,450,000
Senior Executives
Senior Executives
Senior Executives
$1.04
$1.23
$2.13
30 June 2018
30 June 2019
30 June 2020
30 June 2019
30 June 2020
30 June 2021
30 June 2020
30 June 2021
30 June 2022
30 September 2020
30 September 2021
30 September 2022
Outstanding SARs as at 30 June 2020
1,016,670
1,800,000
2,100,000
Note: 2,000,000 SARs issued to the former CEO on 28 June 2019 were forfeited during the year, and are not on issue at
24
24 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 25
Enero Group Limited – Annual Report 2020
Executives are not contractually entitled to the STI in their respective employment agreements and the Remuneration and
Nomination Committee retains discretion to withdraw or amend the STI at any time.
The Remuneration and Nomination Committee has the discretion to take into account any significant items in determining
whether the financial KPIs have been achieved, where it is considered appropriate for linking remuneration reward to
Company performance.
Long-term incentives (LTI):
The purpose of the LTI is to align Executive remuneration with long-term shareholder value and the performance of the
Group. The LTI is provided as an equity-based incentive in the Company under the terms of the Share Appreciation Rights
Plan (SARP) (see Note 29).
Description
The SAR Plan grants rights to shares in the Company on the achievement of appreciation
in the Company’s share price over the vesting period.
Eligibility
Performance period
Rights
Enero’s Board may determine whether or not the grant of rights is conditional on the
achievement of performance hurdles (including service conditions), and if so the nature of
those hurdles.
No dividends or voting rights are attached to the SARs.
The plan allows for the Board to determine who is entitled to participate in the SARP and it
may grant rights accordingly.
The performance period for the LTI is generally three years.
The exercise of each right will entitle the rights holder to receive a fraction of an ordinary
share based on a conversion formula of E = (A – B) / A, where:
– E is the share right entitlement;
– A is the volume weighted average price (VWAP) for the Company’s shares for the 20
business days prior to the vesting date of the rights; and
– B is the VWAP for the Company’s shares for the 20 business days before the rights
were granted.
If A – B is less than or equal to zero, the share right will not vest and will immediately lapse
on the applicable vesting date.
Other conditions
Rights expire at 15 business days after the relevant vesting date or the termination of the
individual’s employment.
Cessation of employment will result in the lapsing of any unvested SARs.
One share right shall never convert into more than one share in the capital of the Company.
The Board may exercise discretion on early vesting of rights in the event of a change of
control of the Group.
Refer to the table below for a summary of SARs on issue.
Refer to Section 8 (Share-based payments) of the Remuneration Report for further information regarding the SARs.
Summary of Share Appreciation Rights on issue:
Issue date
SARs issued
Participants
VWAP for the 20 business days prior to the
grant (B)
Vesting dates:
20 business days after the release of the
Group financial report for the year ended:
Tranche 1 (1/3rd)
Tranche 2 (1/3rd)
Tranche 3 (1/3rd)
Last expiry date
Outstanding SARs as at 30 June 2020
19 October 2017
5,000,000
Senior Executives
18 October 2018
4,500,000
Senior Executives
24 October 2019
2,450,000
Senior Executives
$1.04
$1.23
$2.13
30 June 2018
30 June 2019
30 June 2020
30 September 2020
1,016,670
30 June 2019
30 June 2020
30 June 2021
30 September 2021
1,800,000
30 June 2020
30 June 2021
30 June 2022
30 September 2022
2,100,000
Note: 2,000,000 SARs issued to the former CEO on 28 June 2019 were forfeited during the year, and are not on issue at
30 June 2020.
Enero Group Limited Annual Report 2020 25
25
Enero Group Limited – Annual Report 2020
Directors’ Report
DIRECTORS’
REPORT
5 Executive service agreements
It is the Group’s policy that service contracts for Key Management Personnel are in force either for a fixed period, with an
extension period negotiable after completion of the initial term, or on a rolling basis. The agreements are capable of
termination, acknowledging appropriate notice periods, and the Group retains the right to terminate the contract
immediately for contractual breach by the Executive or by making payment in lieu of notice.
The service agreements outline the components of remuneration paid to the Key Management Personnel. Remuneration
levels are reviewed annually by the Remuneration and Nomination Committee or in accordance with the terms of the
service agreements.
Summary terms for current service agreements for Key Management Personnel:
Duration of contract
30 June 2023
Notice period on
termination by
Group
6 months
Notice period
on resignation by
Key Management
Personnel
Termination payment on
Termination payment
resignation by Key
on termination by
Management Personnel
Group
(i) (ii) (iv)
(i) (ii) (iii) (iv)
6 months 6 months base salary 6 months base salary
Rolling
6 months
3 months 6 months base salary 3 months base salary
Rolling
3 months
3 months 3 months base salary 3 months base salary
Key Management Personnel
Chief Executive
Officer (v)
Chief Financial
Officer
Chief People and
Culture Officer
(i)
In addition to termination payments, Key Management Personnel are also entitled to receive, on termination of their employment, their statutory
entitlements of accrued annual and long service leave, together with any superannuation benefits.
(ii)
Includes any payment in lieu of notice.
(iii) No termination payment is due if termination is for serious misconduct.
(iv) Executives are entitled to a pro-rata STI payment on termination, except for termination for serious misconduct.
(v) Brent Scrimshaw was appointed as CEO on 1 July 2020.
Remuneration details of Executives are set out in Section 7 Directors’ and Executive Officers’ remuneration.
6 Non-Executive Directors
The Company’s Constitution provides that the Non-Executive Directors are each entitled to be paid such remuneration
from the Company as the Directors decide for their services as Director, but the total amount provided to all Non-Executive
Directors for their services must not exceed in aggregate in any financial year the amount fixed by the Company in a
general meeting. This amount has been fixed by the Company at $750,000 for the financial year ended 30 June 2020.
The remuneration of Non-Executive Directors does not include any performance-based pay and they do not participate in
any equity-based incentive plans. Directors may be reimbursed for travelling and other expenses incurred in attending to
the Company’s affairs. Directors may be paid such additional or special remuneration as the Directors decide is
appropriate where a Director performs extra services or makes special exertions for the benefit of the Company.
The following Non-Executive Director fees (inclusive of superannuation) have been applied in the years ended
30 June 2020 and 30 June 2019:
Base fees – annual
Chairman
Other Non-Executive Directors
Committee fees – annual
Audit and Risk Committee – Chair
Remuneration and Nomination Committee – Chair
2020
$
120,000
75,000
2019
S
120,000
75,000
10,000
10,000
10,000
10,000
Total remuneration paid to Non-Executive Directors for the year ending 30 June 2020 amounted to $435,000
(30 June 2019: $426,936), which is 58.0% of the annual aggregate cap.
Remuneration details of Non-Executive Directors are set out in Section 7 Directors’ and Executive Officers’ remuneration.
7 Directors’ and Executive Officers’ remuneration
7(a) Directors’ and Executive Officers’ short-term cash benefits, post-employment benefits, other long-term remuneration
and equity-based remuneration
Details of the nature and amount of each element of the remuneration of each Director of the Company, and each of the
Executives of the Company who are KMPs, are shown in the table below:
Short-term benefits
employment
benefits
Post-
Long-term
Salary
and fees
Cash
STI(i)
Annual
Long service
Termination
leave(ii) Superannuation
leave(ii)
benefit
Share-based
payments
Value of
Share
Appreciation
Rights (LTI)(iii)
Proportion of
total
remuneration
performance
related(iv)
%
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
$
65,000
–
75,000
75,000
85,000
82,013
75,000
75,000
75,000
46,058
60,000
120,000
–
28,865
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
14.52
48.32
45.76
49.00
40.17
43.96
$
–
65,000
68,493
68,493
77,626
74,898
75,000
75,000
75,000
46,058
60,000
120,000
–
26,361
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,507
6,507
7,374
7,115
$
–
–
–
–
–
–
–
–
–
2,504
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Non-Executive Directors
Ann Sherry(v)
Susan McIntosh
Anouk Darling
David Brain
Ian Rowden(vi)
John Porter(vii)
Roger Amos(viii)
Executive Director
Matthew Melhuish(ix)
Director and CEO
Executives
Brendan York(xi)
Chief Financial Officer
Fiona Chilcott(x) (xi)
Chief People and
Culture Officer
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
618,750
95,635
(19,048)
800,000
492,319
(30,744)
21,003
20,531
(9,191)
14,971
188,269
40,272
935,690
260,149
1,557,226
375,000
181,791
350,000
222,319
1,682
1,609
2020
488,372
181,791
(2,981)
2019
437,601
222,319
(1,101)
21,003
20,531
21,003
20,531
6,829
6,795
1,759
821
159,437
745,742
141,690
742,944
159,437
849,381
136,902
817,073
(i) The short-term incentive bonus is for performance during the 30 June 2020 financial year using the criteria set out on page 24. The table above
includes the expense incurred during the financial year for the bonuses awarded. Refer to the table on page 28 for the bonuses awarded.
(ii) Amounts represent movements in employee leave entitlements, with a negative balance representing an overall reduction in the employee leave
provision compared with the prior year.
(iii) Share Appreciation Rights are calculated at the date of grant using the Monte Carlo simulation model. The fair value is allocated to each
reporting period on a straight-line basis over the period from the grant date (or service commencement date) to vesting date.
(iv) Percentages are based on total remuneration, including equity, cash, post-employment benefits and other compensation.
(v) Ann Sherry was appointed as Chair and Director on 1 January 2020.
(vi) Ian Rowden was appointed as Director on 21 November 2018.
(vii) John Porter resigned as Chairman and Director on 31 December 2019.
(viii) Roger Amos resigned as Director on 18 October 2018.
(ix) Mathew Melhuish resigned as Director on 23 December 2019 and as CEO on 31 March 2020.
(x) Fiona Chilcott was seconded to the USA from 6 August 2018 to 14 January 2020; the remuneration disclosures for this period represent the
USD compensation components converted to AUD at average exchange rates for the relevant year.
(xi) Brendan York and Fiona Chilcott were appointed Acting Co-CEOs for the period 1 April 2020 to 30 June 2020 and were paid an allowance of
$25,000 each for the acting period.
(xii) Executives receive salary continuance insurance cover. There are no other benefits offered by the Company.
7(b) Performance-related remuneration
on page 24.
Details of the Company’s policy in relation to the proportion of remuneration that is performance-based are discussed
26
26 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 27
Enero Group Limited – Annual Report 2020
7 Directors’ and Executive Officers’ remuneration
7(a) Directors’ and Executive Officers’ short-term cash benefits, post-employment benefits, other long-term remuneration
and equity-based remuneration
Details of the nature and amount of each element of the remuneration of each Director of the Company, and each of the
Executives of the Company who are KMPs, are shown in the table below:
Short-term benefits
Post-
employment
Long-term
benefits
Share-based
payments
Salary
and fees
$
Cash
STI(i)
$
Annual
leave(ii) Superannuation
$
$
Long service
leave(ii)
$
Termination
benefit
$
Value of
Share
Appreciation
Rights (LTI)(iii)
$
Non-Executive Directors
Ann Sherry(v)
Susan McIntosh
Anouk Darling
David Brain
Ian Rowden(vi)
John Porter(vii)
Roger Amos(viii)
Executive Director
Matthew Melhuish(ix)
Director and CEO
Executives
Brendan York(xi)
Chief Financial Officer
Fiona Chilcott(x) (xi)
Chief People and
Culture Officer
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
65,000
–
68,493
68,493
77,626
74,898
75,000
75,000
75,000
46,058
60,000
120,000
–
26,361
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,507
6,507
7,374
7,115
–
–
–
–
–
–
–
2,504
–
–
–
–
–
–
–
–
–
–
–
–
–
–
618,750
95,635
(19,048)
800,000
492,319
(30,744)
21,003
20,531
(9,191)
14,971
375,000
181,791
350,000
222,319
1,682
1,609
2020
488,372
181,791
(2,981)
2019
437,601
222,319
(1,101)
21,003
20,531
21,003
20,531
6,829
6,795
1,759
821
Proportion of
total
remuneration
performance
related(iv)
%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
$
65,000
–
75,000
75,000
85,000
82,013
75,000
75,000
75,000
46,058
60,000
120,000
–
28,865
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
188,269
40,272
935,690
–
–
–
–
–
260,149
1,557,226
159,437
745,742
141,690
742,944
159,437
849,381
136,902
817,073
14.52
48.32
45.76
49.00
40.17
43.96
(i) The short-term incentive bonus is for performance during the 30 June 2020 financial year using the criteria set out on page 24. The table above
includes the expense incurred during the financial year for the bonuses awarded. Refer to the table on page 28 for the bonuses awarded.
(ii) Amounts represent movements in employee leave entitlements, with a negative balance representing an overall reduction in the employee leave
provision compared with the prior year.
(iii) Share Appreciation Rights are calculated at the date of grant using the Monte Carlo simulation model. The fair value is allocated to each
reporting period on a straight-line basis over the period from the grant date (or service commencement date) to vesting date.
(iv) Percentages are based on total remuneration, including equity, cash, post-employment benefits and other compensation.
(v) Ann Sherry was appointed as Chair and Director on 1 January 2020.
(vi) Ian Rowden was appointed as Director on 21 November 2018.
(vii) John Porter resigned as Chairman and Director on 31 December 2019.
(viii) Roger Amos resigned as Director on 18 October 2018.
(ix) Mathew Melhuish resigned as Director on 23 December 2019 and as CEO on 31 March 2020.
(x) Fiona Chilcott was seconded to the USA from 6 August 2018 to 14 January 2020; the remuneration disclosures for this period represent the
USD compensation components converted to AUD at average exchange rates for the relevant year.
(xi) Brendan York and Fiona Chilcott were appointed Acting Co-CEOs for the period 1 April 2020 to 30 June 2020 and were paid an allowance of
$25,000 each for the acting period.
(xii) Executives receive salary continuance insurance cover. There are no other benefits offered by the Company.
7(b) Performance-related remuneration
Details of the Company’s policy in relation to the proportion of remuneration that is performance-based are discussed
on page 24.
Enero Group Limited Annual Report 2020 27
27
Enero Group Limited – Annual Report 2020
Directors’ Report
DIRECTORS’
REPORT
7(c) STI included in remuneration
Details of the vesting profile of the short-term incentive bonuses awarded as remuneration to each Executive of the
Company and the Group, who are classified Key Management Personnel, are discussed below.
In the reporting period, the Operating EBITDA hurdles and EPS growth hurdles performance measures are equally
weighted in determining the percentage of fixed remuneration payable as a cash STI. The agreed strategic objectives are
assessed using the average percentage of fixed remuneration of the Operating EBITDA hurdles and EPS growth hurdles
and then applied against individual categories.
Short-term incentive bonus(i) Metric
Maximum
STI
$
Actual STI
included in
remuneration
$(iii)
Actual STI as
% of
maximum STI
STI forfeited
as % of
maximum STI
Actual STI as a
% of fixed
remuneration(ii)
%
vested
in year
Company Executives
Matthew Melhuish(iv)
Brendan York
Fiona Chilcott
Operating EBITDA hurdles and
EPS growth hurdles.
Operating EBITDA hurdles and
EPS growth hurdles.
Operating EBITDA hurdles and
EPS growth hurdles.
412,426 100,886
241,152 181,791
241,152 181,791
24%
75%
75%
76%
25%
25%
16%
100
49%
100
49%
100
(i) Amounts included in remuneration for the financial year represent the amount that vested in the financial year based on the achievement of
specified performance criteria as discussed in Section 4(b) Performance-linked remuneration and are approved following the completion of the
reporting period audit.
(ii) Fixed remuneration is salary plus superannuation.
(iii) Actual STI included in remuneration includes any superannuation contribution amounts.
(iv) Represents pro rata STI for period through to 31 March 2020.
8 Share-based payments
8(a) Share-based payment arrangements granted as remuneration
Details of SARs that were granted as compensation to each Key Management Personnel during the reporting period are
as follows:
Type of rights
granted during
2020
Number of rights
granted during
2020
Fair value per right at
grant date
$
Grant date
VWAP (for the 20
business days prior to
the grant)
$
Expiry date (ii)
Company Executives
Brendan York
Fiona Chilcott
SAR
SAR
350,000
350,000
24 Oct 2019
24 Oct 2019
0.26 – 0.46
0.26 – 0.46
2.13
2.13
30 Sept 2022
30 Sept 2022
(i) The dates reflected in the table above represent the last vesting date for the SAR grant. The vesting date of the SARs is 20 business days after
the release of the Group’s preliminary financial report for the relevant financial year. This is estimated to be around, but no later than,
30 September each year.
8(b) Analysis of share-based payments granted as remuneration
Details of the vesting profiles of the rights granted as remuneration to a Director of the Company, and each of the KMPs,
are shown below:
Number of
rights granted
Type of
rights
granted
Grant date
% vested
in year
% exercised
in year
% remaining
to vest
Company Executives
Brendan York
600,000
SAR
19 Oct 2017
900,000
SAR
18 Oct 2018
350,000
SAR
24 Oct 2019
Fiona Chilcott
600,000
SAR
19 Oct 2017
900,000
SAR
18 Oct 2018
350,000
SAR
24 Oct 2019
33
33
–
33
33
–
33
33
–
33
33
–
33
67
100
33
67
100
Vesting date(i)
30 Sep 2020
30 Sep 2020
and 30 Sep 2021
30 Sep 2020, 30 Sep 2021
and 30 Sep 2022
30 Sep 2020
30 Sep 2020
and 30 Sep 2021
30 Sep 2020, 30 Sep 2021
and 30 Sep 2022
(i) The dates reflected in the table above represent all of the vesting dates for each remaining tranche of rights. The vesting date of the SARs is 20
business days after the release of the Group’s preliminary financial report for the relevant financial year. This is estimated to be around 30
September each year.
Director
Executives
Brendan York
Fiona Chilcott
8(c) Analysis of movements in rights and value of rights exercised
The movement during the reporting period in the number of rights over ordinary shares in Enero Group Limited held,
directly, indirectly or beneficially, by each KMP, including their related entities, and value of rights exercised during the
year, is as follows:
Granted
Granted as
held at
remuneration
Granted
held at
Vested
during
1 Jul 2019
in year
Cancelled Exercised
30 Jun 2020
the year
30 Jun 2020
$
Value of
Value of
rights
rights
Vested and
granted
exercised
exercisable
during
during the
at
the year
year
$
Matthew Melhuish 4,466,667
–
(3,533,334)
(933,333)
– 933,333
–
–
183,467
1,300,000
1,300,000
350,000
350,000
–
–
(500,000)
(500,000)
1,150,000 500,000
1,150,000 500,000
– 126,817
– 126,817
97,900
97,900
No share-based payments held by KMP are vested but not exercisable at 30 June 2020.
No share-based payments were held by KMP related parties.
No terms of equity-settled share-based payment transactions (including rights granted as compensation to Key
Management Personnel) have been altered or modified by the issuing entity during the reporting period or the prior period.
9 Directors’ and Executive Officers’ holdings of shares
The movement during the reporting period in the number of ordinary shares in Enero Group Limited, held directly, indirectly
or beneficially, by each KMP, including their related parties, is as follows:
1 July 2019
Purchases
remuneration
rights
Sales
30 June 2020
Issued as
Received on
exercise of
Directors
Ann Sherry(i)
Susan McIntosh
Anouk Darling
David Brain
Ian Rowden
John Porter(ii)
Matthew Melhuish(ii)
Executives
Brendan York
Fiona Chilcott
Held at
18,750
122,223
19,607
75,000
–
270,833
1,712,747
287,892
–
60,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
359,436
–
–
–
–
–
–
–
–
–
Held at
18,750
122,223
19,607
75,000
60,000
270,833
2,072,183
–
–
–
–
–
–
–
194,709
194,709
(118,953)
(97,000)
363,648
97,709
(i) Opening balance represents shares held at the date of appointment.
(ii) Closing balance represents shares held at the date of resignation.
10 Loans to Key Management Personnel
reporting date.
No loans to Key Management Personnel and their related parties were made during the year or were outstanding at the
28
28 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 29
Enero Group Limited – Annual Report 2020
8(c) Analysis of movements in rights and value of rights exercised
The movement during the reporting period in the number of rights over ordinary shares in Enero Group Limited held,
directly, indirectly or beneficially, by each KMP, including their related entities, and value of rights exercised during the
year, is as follows:
Granted
held at
1 Jul 2019
Granted as
remuneration
in year
Cancelled Exercised
Granted
held at
30 Jun 2020
Vested
during
the year
Vested and
exercisable
at
30 Jun 2020
Value of
rights
granted
during
the year
$
Value of
rights
exercised
during the
year
$
Director
Matthew Melhuish 4,466,667
–
(3,533,334)
(933,333)
– 933,333
–
–
183,467
Executives
Brendan York
Fiona Chilcott
1,300,000
1,300,000
350,000
350,000
–
–
(500,000)
(500,000)
1,150,000 500,000
1,150,000 500,000
– 126,817
– 126,817
97,900
97,900
No share-based payments held by KMP are vested but not exercisable at 30 June 2020.
No share-based payments were held by KMP related parties.
No terms of equity-settled share-based payment transactions (including rights granted as compensation to Key
Management Personnel) have been altered or modified by the issuing entity during the reporting period or the prior period.
9 Directors’ and Executive Officers’ holdings of shares
The movement during the reporting period in the number of ordinary shares in Enero Group Limited, held directly, indirectly
or beneficially, by each KMP, including their related parties, is as follows:
Directors
Ann Sherry(i)
Susan McIntosh
Anouk Darling
David Brain
Ian Rowden
John Porter(ii)
Matthew Melhuish(ii)
Executives
Brendan York
Fiona Chilcott
Held at
1 July 2019
Purchases
Issued as
remuneration
Received on
exercise of
rights
Sales
Held at
30 June 2020
18,750
122,223
19,607
75,000
–
270,833
1,712,747
287,892
–
–
–
–
–
60,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
359,436
–
–
–
–
–
–
–
18,750
122,223
19,607
75,000
60,000
270,833
2,072,183
194,709
194,709
(118,953)
(97,000)
363,648
97,709
(i) Opening balance represents shares held at the date of appointment.
(ii) Closing balance represents shares held at the date of resignation.
10 Loans to Key Management Personnel
No loans to Key Management Personnel and their related parties were made during the year or were outstanding at the
reporting date.
Enero Group Limited Annual Report 2020 29
29
Enero Group Limited – Annual Report 2020
Directors’ Report
DIRECTORS’
REPORT
11 Remuneration and Group performance
The Remuneration and Nomination Committee has given consideration to the Group’s performance and consequences on
shareholder wealth in the current financial year and the four previous financial years. Financial performance from
operations of the current and last four financial years is indicated in the following table:
Metric
Net Revenue ($’000)
Operating EBITDA ($’000)
Operating EBITDA margin (%)
Net Profit to equity holders pre significant
items ($’000)
30 June
2020
30 June
2019
30 June
2018
30 June
2017
30 June
2016
135,825
24,381
17.95%
129,535
20,722
16.00%
103,685
13,513
13.03%
100,172
10,364
10.35%
113,488
13,220
11.65%
12,881
12,051
7,846
4,893
6,584
Earnings Per Share pre significant items (cps)
Earnings Per Share pre significant items
growth (%)
Earnings Per Share basic (cps)
Total Dividends Per Share (cps)(i)
Opening share price (1 July) ($)
Closing share price (30 June) ($)
15.0
6%
12.5
6.0
1.49
1.40
14.2
53%
6.7
5.5
1.06
1.42
9.3
58%
10.1
4.0
1.03
1.06
5.9
(26%)
2.2
5.0
1.25
1.04
8.0
321%
8.0
–
0.71
1.25
(i) In relation to 30 June 2017, Total Dividends Per Share related to a special dividend of 5 cps on the release of Group capital restrictions that had
been in place from 2010.
The Remuneration and Nomination Committee has determined appropriate remuneration structures which correlate
remuneration of KMPs with future shareholder wealth.
The Remuneration and Nomination Committee considers the achievement of financial targets (Operating EBITDA hurdles
and EPS growth hurdles) as well as non-financial measures (strategic objectives) in setting the short-term incentives.
Short-term incentives have been set by the Remuneration and Nomination Committee based on achievement of certain
Operating EBITDA and EPS targets, which align remuneration with increases in profitability. The non-financial measures of
the short-term incentives require achievement of financial targets before being assessed for payment.
Longer-term profitability, changes in share price and return of capital are factors the Remuneration and Nomination
Committee takes into account in assessing the LTI. The SAR plan aligns remuneration with share price performance
because it only rewards KMPs for increases in the share price over the vesting period in addition to completing a service
period.
The Remuneration and Nomination Committee has reviewed both the financial performance in the current financial year as
well as the achievement of strategic activities which took place during the current financial year. The Remuneration and
Nomination Committee believes the current year achievements of:
• Net Revenue, Operating EBITDA and Operating EBITDA margin increases;
•
•
•
a 6% increase in EPS (pre significant items) year on year;
increase in USA market presence, which was identified as a key strategic objective; and
the improvements to the integration of the network across the Operating Brands through increased sharing of
clients,
are aligned with the achievement of future shareholder wealth and therefore confirm the Executive Remuneration policy
and framework.
End of Remuneration Report.
30
30 Enero Group Limited Annual Report 2020
In thousands of AUD
Note
2020
2019
Consolidated income statement
for the year ended 30 June 2020
Gross revenue
Directly attributable costs of sales
Net revenue
Other income
Employee expenses
Occupancy costs
Travel expenses
Communication expenses
Compliance expenses
Depreciation and amortisation expenses
Administration expenses
Contingent consideration fair value loss
Finance income
Finance costs
Profit before income tax
Income tax expense
Profit for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
Basic earnings per share (AUD cents)
Diluted earnings per share (AUD cents)
* The Group has initially applied AASB 16 at 1 July 2019, using the modified retrospective approach. Under this approach, comparative information is
not restated and the cumulative effect of initially applying AASB 16 is recognised in retained earnings at the date of initial application.
The notes on pages 36 to 69 are an integral part of these consolidated financial statements.
3
3
3
13
4
5
18
18
268,741
(132,916)
135,825
1,157
(93,622)
(2,001)
(1,480)
(2,083)
(1,618)
(8,281)
(6,948)
(2,174)
269
(1,989)
17,055
(3,397)
13,658
10,707
2,951
13,658
12.5
12.3
230,032
(100,497)
129,535
124
(88,173)
(7,202)
(2,060)
(2,413)
(2,057)
(3,275)
(7,032)
(6,390)
574
(1,260)
10,371
(2,297)
8,074
5,661
2,413
8,074
6.7
6.6
Enero Group Limited Annual Report 2020 31
Enero Group Limited – Annual Report 2020
Consolidated income statement
for the year ended 30 June 2020
CONSOLIDATED
INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2020
In thousands of AUD
Note
2020
2019
Gross revenue
Directly attributable costs of sales
Net revenue
Other income
Employee expenses
Occupancy costs
Travel expenses
Communication expenses
Compliance expenses
Depreciation and amortisation expenses
Administration expenses
Contingent consideration fair value loss
Finance income
Finance costs
Profit before income tax
Income tax expense
Profit for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
Basic earnings per share (AUD cents)
Diluted earnings per share (AUD cents)
3
3
3
13
4
5
18
18
268,741
(132,916)
135,825
1,157
(93,622)
(2,001)
(1,480)
(2,083)
(1,618)
(8,281)
(6,948)
(2,174)
269
(1,989)
17,055
(3,397)
13,658
10,707
2,951
13,658
12.5
12.3
230,032
(100,497)
129,535
124
(88,173)
(7,202)
(2,060)
(2,413)
(2,057)
(3,275)
(7,032)
(6,390)
574
(1,260)
10,371
(2,297)
8,074
5,661
2,413
8,074
6.7
6.6
* The Group has initially applied AASB 16 at 1 July 2019, using the modified retrospective approach. Under this approach, comparative information is
not restated and the cumulative effect of initially applying AASB 16 is recognised in retained earnings at the date of initial application.
The notes on pages 36 to 69 are an integral part of these consolidated financial statements.
Enero Group Limited Annual Report 2020 31
31
Enero Group Limited – Annual Report 2020
Consolidated statement of comprehensive income
for the year ended 30 June 2020
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
Consolidated statement of changes in equity
for the year ended 30 June 2020
In thousands of AUD
Note
capital
reserve
reserve
subsidiary
reserve
Total
interests
Share
(Accumulated
appropriation
payment
interest in
translation
Opening balance at 1 July 2018
96,656
25,235
12,106
(1,417)
(19,767) 114,240
832 115,072
Non-
controlling
Total
equity
Attributable to owners of the Company
Share-
based
Reserve
change in
ownership
Foreign
currency
Profit
17
17
756
–
–
(4,280)
(756)
–
730
–
–
–
–
730
(4,280)
(1,562)
(5,842)
–
–
–
730
Closing balance at 30 June 2019
97,412
6,955
20,955
12,080
(1,417)
(18,354) 117,631
1,731 119,362
Opening balance at 1 July 2019
97,412
6,955
20,955
12,080
(1,417)
(18,354) 117,631
1,731 119,362
Adjustment on initial application
of AASB 9 (net of tax)
Profit for the year
Other comprehensive income
for the year, net of tax
Total comprehensive income for
the year
Transactions with owners
recorded directly in equity:
Shares issued to employees on
exercise of Share Appreciation
Rights
Dividends paid to equity holders
Share-based payment expense
Adjustment on initial application
of AASB 16 (net of tax)
1(g)
Profit for the year
Other comprehensive income for
the year, net of tax
Total comprehensive income for
the year
Transactions with owners
recorded directly in equity:
Shares issued to employees on
exercise of Share Appreciation
Rights
reserve
Transfer to profit appropriation
Dividends paid to equity holders
17
Share-based payment expense
Retained
profits/
losses)
1,427
(133)
5,661
–
5,661
(1,057)
10,707
10,707
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(133)
5,661
–
2,413
(133)
8,074
1,413
1,413
48
1,461
1,413
7,074
2,461
9,535
–
–
(1,057)
10,707
(28)
2,951
(1,085)
13,658
(489)
(489)
13
(476)
(489)
10,218
2,964
13,182
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
17
2,103
–
(2,103)
(16,988)
16,988
(4,734)
–
564
–
–
–
–
–
–
564
–
–
–
–
–
564
(4,734)
(2,312)
(7,046)
Closing balance at 30 June 2020
99,515
(383)
33,209
10,541
(1,417)
(18,843) 122,622
2,355 124,977
* The Group has initially applied AASB 16 at 1 July 2019, using the modified retrospective approach. Under this approach, comparative information is
not restated and the cumulative effect of initially applying AASB 16 is recognised in retained earnings at the date of initial application.
The notes on pages 36 to 69 are an integral part of these consolidated financial statements.
Note
In thousands of AUD
Profit for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences for foreign operations
Total items that may be reclassified subsequently to profit or loss
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
2020
13,658
(476)
(476)
(476)
13,182
10,218
2,964
13,182
2019
8,074
1,461
1,461
1,461
9,535
7,074
2,461
9,535
* The Group has initially applied AASB 16 at 1 July 2019, using the modified retrospective approach. Under this approach, comparative information is
not restated and the cumulative effect of initially applying AASB 16 is recognised in retained earnings at the date of initial application.
The notes on pages 36 to 69 are an integral part of these consolidated financial statements.
32 Enero Group Limited Annual Report 2020
32
Enero Group Limited Annual Report 2020 33
Enero Group Limited – Annual Report 2020
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
Consolidated statement of changes in equity
for the year ended 30 June 2020
FOR THE YEAR ENDED 30 JUNE 2020
Attributable to owners of the Company
Retained
profits/
(Accumulated
losses)
Profit
appropriation
reserve
Share-
based
payment
reserve
Reserve
change in
ownership
interest in
subsidiary
Foreign
currency
translation
reserve
Non-
controlling
interests
Total
Total
equity
1,427
25,235
12,106
(1,417)
(19,767) 114,240
832 115,072
Share
capital
96,656
–
–
–
–
In thousands of AUD
Note
Opening balance at 1 July 2018
Adjustment on initial application
of AASB 9 (net of tax)
Profit for the year
Other comprehensive income
for the year, net of tax
Total comprehensive income for
the year
Transactions with owners
recorded directly in equity:
Shares issued to employees on
exercise of Share Appreciation
Rights
Dividends paid to equity holders
Share-based payment expense
(133)
5,661
–
5,661
–
–
–
–
–
–
–
–
17
17
756
–
–
–
–
–
–
(4,280)
–
(756)
–
730
–
–
–
–
–
–
–
–
–
(133)
5,661
–
2,413
(133)
8,074
1,413
1,413
48
1,461
1,413
7,074
2,461
9,535
–
–
–
–
(4,280)
730
–
(1,562)
–
–
(5,842)
730
Closing balance at 30 June 2019
97,412
6,955
20,955
12,080
(1,417)
(18,354) 117,631
1,731 119,362
Opening balance at 1 July 2019
97,412
6,955
20,955
12,080
(1,417)
(18,354) 117,631
1,731 119,362
Adjustment on initial application
of AASB 16 (net of tax)
Profit for the year
Other comprehensive income for
the year, net of tax
Total comprehensive income for
the year
Transactions with owners
recorded directly in equity:
Shares issued to employees on
exercise of Share Appreciation
Rights
Transfer to profit appropriation
reserve
Dividends paid to equity holders
Share-based payment expense
1(g)
–
–
–
–
(1,057)
10,707
–
10,707
–
–
–
–
–
–
–
–
17
2,103
–
–
(2,103)
17
–
–
–
(16,988)
–
–
16,988
(4,734)
–
–
–
564
–
–
–
–
–
–
–
–
–
–
(1,057)
10,707
(28)
2,951
(1,085)
13,658
(489)
(489)
13
(476)
(489)
10,218
2,964
13,182
–
–
–
–
–
–
–
–
(4,734)
564
–
(2,312)
–
–
(7,046)
564
Closing balance at 30 June 2020
99,515
(383)
33,209
10,541
(1,417)
(18,843) 122,622
2,355 124,977
* The Group has initially applied AASB 16 at 1 July 2019, using the modified retrospective approach. Under this approach, comparative information is
not restated and the cumulative effect of initially applying AASB 16 is recognised in retained earnings at the date of initial application.
The notes on pages 36 to 69 are an integral part of these consolidated financial statements.
Enero Group Limited Annual Report 2020 33
33
Enero Group Limited – Annual Report 2020
Consolidated statement of financial position
as at 30 June 2020
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
AS AT 30 JUNE 2020
In thousands of AUD
Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Income tax receivable
Total current assets
Deferred tax assets
Plant and equipment
Right-of-use assets
Other assets
Intangible assets
Total non-current assets
Total assets
Liabilities
Trade and other payables
Contingent consideration payable
Lease liabilities
Employee benefits
Income tax payable
Provisions
Total current liabilities
Contingent consideration payable
Lease liabilities
Employee benefits
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Other reserves
Profit appropriation reserve
Retained profits/(Accumulated losses)
Total equity attributable to equity holders of the parent
Non-controlling interests
Total equity
Consolidated statement of cash flows
for the year ended 30 June 2020
In thousands of AUD
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Cash generated from operations
Interest received
Income taxes paid
Interest paid
Net cash from operating activities
Cash flows from investing activities
Proceeds from sale of plant and equipment
Acquisition of plant and equipment
Contingent consideration paid
Net cash used in investing activities
Cash flows from financing activities
Payment of lease liabilities
Payment of hire purchase liabilities
Dividends paid to equity holders of the parent
Dividends paid to non-controlling interests in controlled entities
Net cash used in financing activities
Net increase in cash and cash equivalents
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
285,864
(251,828)
241,791
(220,458)
34,036
269
(3,258)
(52)
30,995
10
(1,406)
(11,923)
(13,319)
(6,486)
(493)
(4,734)
(2,312)
(14,025)
3,651
99
43,831
47,581
21,333
574
(3,665)
(107)
18,135
22
(1,700)
(1,678)
–
–
(1,423)
(4,280)
(1,562)
(7,265)
9,192
260
34,379
43,831
6
13
14
14
17
6
* The Group has initially applied AASB 16 at 1 July 2019, using the modified retrospective approach. Under this approach, comparative information
is not restated and the cumulative effect of initially applying AASB 16 is recognised in retained earnings at the date of initial application.
** The application of AASB 16 has led to operating lease payments previously included in cash from operating activities being now included as
payments of lease liabilities within financing activities. The net cash from operating activities and net cash used in financing activities for the
current period have each increased by $6,486,000.
The notes on pages 36 to 69 are an integral part of these consolidated financial statements.
Note
2020
2019
Note
2020
2019
6
7
8
5
5
9
10
8
11
2
12
13
14
15
5
16
13
14
15
16
2
17
47,581
34,611
3,761
–
85,953
2,636
4,951
11,759
188
109,102
128,636
214,589
42,242
15,119
6,384
3,732
358
–
67,835
10,434
10,523
820
–
21,777
89,612
124,977
99,515
(9,719)
33,209
(383)
122,622
2,355
124,977
43,831
33,791
5,297
54
82,973
2,459
5,877
–
197
110,384
118,917
201,890
38,380
11,519
493
4,173
507
646
55,718
22,282
–
659
3,869
26,810
82,528
119,362
97,412
(7,691)
20,955
6,955
117,631
1,731
119,362
* The Group has initially applied AASB 16 at 1 July 2019, using the modified retrospective approach. Under this approach, comparative information is
not restated and the cumulative effect of initially applying AASB 16 is recognised in retained earnings at the date of initial application.
The notes on pages 36 to 69 are an integral part of these consolidated financial statements.
34 Enero Group Limited Annual Report 2020
34
Enero Group Limited Annual Report 2020 35
Enero Group Limited – Annual Report 2020
Consolidated statement of cash flows
for the year ended 30 June 2020
CONSOLIDATED STATEMENT
OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
In thousands of AUD
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Cash generated from operations
Interest received
Income taxes paid
Interest paid
Net cash from operating activities
Cash flows from investing activities
Proceeds from sale of plant and equipment
Acquisition of plant and equipment
Contingent consideration paid
Net cash used in investing activities
Cash flows from financing activities
Payment of lease liabilities
Payment of hire purchase liabilities
Dividends paid to equity holders of the parent
Dividends paid to non-controlling interests in controlled entities
Net cash used in financing activities
Net increase in cash and cash equivalents
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
Note
2020
2019
285,864
(251,828)
241,791
(220,458)
34,036
269
(3,258)
(52)
30,995
10
(1,406)
(11,923)
(13,319)
(6,486)
(493)
(4,734)
(2,312)
(14,025)
3,651
99
43,831
47,581
21,333
574
(3,665)
(107)
18,135
22
(1,700)
–
(1,678)
–
(1,423)
(4,280)
(1,562)
(7,265)
9,192
260
34,379
43,831
6
13
14
14
17
6
* The Group has initially applied AASB 16 at 1 July 2019, using the modified retrospective approach. Under this approach, comparative information
is not restated and the cumulative effect of initially applying AASB 16 is recognised in retained earnings at the date of initial application.
** The application of AASB 16 has led to operating lease payments previously included in cash from operating activities being now included as
payments of lease liabilities within financing activities. The net cash from operating activities and net cash used in financing activities for the
current period have each increased by $6,486,000.
The notes on pages 36 to 69 are an integral part of these consolidated financial statements.
Enero Group Limited Annual Report 2020 35
35
Enero Group Limited – Annual Report 2020
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Notes to the consolidated financial statements
for the year ended 30 June 2020
FOR THE YEAR ENDED 30 JUNE 2020
Basis of preparation
1. Basis of preparation
Key numbers
2. Operating segments
3. Revenue
4. Finance costs
5. Income tax expense and deferred tax
6. Cash and cash equivalents
7. Trade and other receivables
8. Other assets
9. Plant and equipment
10. Right-of-use assets
11. Intangible assets
12. Trade and other payables
13. Contingent consideration payable
14. Lease liabilities
15. Employee benefits
16. Provisions
Capital
17. Capital and reserves
18. Earnings per share
Risk
19. Financial risk management/financial instruments
20. Financing arrangements
21. Impairment of non-financial assets
Group structure
22. Controlled entities
23. Parent entity disclosures
24. Deed of Cross Guarantee
Unrecognised items
25. Commitments
26. Contingencies
Other items
27. Subsequent events
28. Key Management Personnel and other related party disclosures
29. Share-based payments
30. Auditor’s remuneration
Page
1. Basis of preparation
37
39
42
43
44
46
47
47
48
49
50
51
51
52
52
53
54
55
56
60
61
62
64
65
66
66
66
66
67
69
together with any key judgements and estimates used.
Further information about critical accounting estimates and
judgements made is included in the following notes:
In preparing these financial statements, the notes have
been grouped into sections under certain key headings.
Each section sets out the accounting policies applied
(a) Reporting entity
Enero Group Limited (the Company) is a for-profit
Company domiciled in Australia. The consolidated financial
statements of the Company as at and for the year ended
30 June 2020 comprise the Company and its subsidiaries
(together referred to as the ‘Group’).
The financial statements for the year ended 30 June 2020
were authorised for issue in accordance with a resolution
of the Directors on 26 August 2020.
(b) Statement of compliance
The consolidated financial statements are a general
purpose financial report which has been prepared in
accordance with Australian Accounting Standards
the Australian Accounting Standards Board (‘AASB’) and
the Corporations Act 2001. The consolidated financial
statements comply with International Financial Reporting
Standards (IFRS) and interpretations (IFRICs) adopted by
the International Accounting Standards Board (IASB).
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is
revised and in any future periods if affected.
3. Revenue
•
•
5. Income tax expense and deferred tax
• 10. Right-of-use assets
• 13. Contingent consideration payables
• 14. Lease liabilities
• 19. Financial risk management/financial
instruments (Trade receivables)
• 21. Impairment of non-financial assets
• 29. Share-based payments
(iv) Measurement of fair values
A number of the Group’s accounting policies and
both financial and non-financial assets and liabilities.
When measuring the fair value of an asset or liability, the
Group uses market observable data as far as possible. Fair
values are categorised into different levels in a fair value
hierarchy based on the inputs used in the valuation
techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for
Level 2: inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a
liability might be categorised in different levels of the fair
value hierarchy, then the fair value measurement is
categorised in its entirety in the same level of the fair value
hierarchy as the lowest level of input that is significant to
(‘AASBs’) (including Australian Interpretations) adopted by
disclosures require the measurement of fair values, for
(c) Basis of preparation
(i) Basis of measurement
Note 1(c)(iv).
The consolidated financial statements are prepared on the
identical assets or liabilities;
historical cost basis except for the items as described in
The Company is of a kind referred to in ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument
2016/191 and, in accordance with that Class Order,
amounts in the consolidated financial statements and
Directors’ Report have been rounded off to the nearest
thousand dollars, unless otherwise stated.
(ii) Going concern
The consolidated financial statements have been prepared
on a going concern basis which assumes the Group will
the entire measurement.
continue its operations and be able to meet its obligations
The Group recognises transfers between levels of the fair
as and when they become due and payable. This
value hierarchy at the end of the reporting period during
assumption is based on an analysis of the Group’s ability to
which the change has occurred.
meet its future cash flow requirements using its projected
cash flows from operations and existing cash reserves held
Further information about the assumptions made in
measuring fair values is included in the following notes:
as at 30 June 2020.
(iii) Use of estimates and judgements
The preparation of financial statements in conformity
with AASBs requires management to make judgements,
estimates and assumptions that affect the application of
policies and reported amounts of assets and liabilities,
• 13. Contingent consideration payables
• 19. Financial instruments (cash flow hedges)
• 29. Share-based payments
(d) Foreign currency
(i) Functional and presentation currency
income and expenses. Actual results may differ from these
estimates. The estimates and associated assumptions are
The consolidated financial statements are presented in
Australian dollars, which is the Company’s functional
based on historical experience and various other
factors that are believed to be reasonable under the
circumstances, the results of which form the basis of
making the judgements about carrying values of assets
and liabilities that are not readily apparent from other
sources.
currency.
36
36 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 37
Enero Group Limited – Annual Report 2020
1. Basis of preparation
In preparing these financial statements, the notes have
been grouped into sections under certain key headings.
Each section sets out the accounting policies applied
together with any key judgements and estimates used.
(a) Reporting entity
Enero Group Limited (the Company) is a for-profit
Company domiciled in Australia. The consolidated financial
statements of the Company as at and for the year ended
30 June 2020 comprise the Company and its subsidiaries
(together referred to as the ‘Group’).
The financial statements for the year ended 30 June 2020
were authorised for issue in accordance with a resolution
of the Directors on 26 August 2020.
(b) Statement of compliance
The consolidated financial statements are a general
purpose financial report which has been prepared in
accordance with Australian Accounting Standards
(‘AASBs’) (including Australian Interpretations) adopted by
the Australian Accounting Standards Board (‘AASB’) and
the Corporations Act 2001. The consolidated financial
statements comply with International Financial Reporting
Standards (IFRS) and interpretations (IFRICs) adopted by
the International Accounting Standards Board (IASB).
(c) Basis of preparation
(i) Basis of measurement
The consolidated financial statements are prepared on the
historical cost basis except for the items as described in
Note 1(c)(iv).
The Company is of a kind referred to in ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument
2016/191 and, in accordance with that Class Order,
amounts in the consolidated financial statements and
Directors’ Report have been rounded off to the nearest
thousand dollars, unless otherwise stated.
(ii) Going concern
The consolidated financial statements have been prepared
on a going concern basis which assumes the Group will
continue its operations and be able to meet its obligations
as and when they become due and payable. This
assumption is based on an analysis of the Group’s ability to
meet its future cash flow requirements using its projected
cash flows from operations and existing cash reserves held
as at 30 June 2020.
(iii) Use of estimates and judgements
The preparation of financial statements in conformity
with AASBs requires management to make judgements,
estimates and assumptions that affect the application of
policies and reported amounts of assets and liabilities,
income and expenses. Actual results may differ from these
estimates. The estimates and associated assumptions are
based on historical experience and various other
factors that are believed to be reasonable under the
circumstances, the results of which form the basis of
making the judgements about carrying values of assets
and liabilities that are not readily apparent from other
sources.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is
revised and in any future periods if affected.
Further information about critical accounting estimates and
judgements made is included in the following notes:
3. Revenue
5. Income tax expense and deferred tax
•
•
• 10. Right-of-use assets
• 13. Contingent consideration payables
• 14. Lease liabilities
• 19. Financial risk management/financial
instruments (Trade receivables)
• 21. Impairment of non-financial assets
• 29. Share-based payments
(iv) Measurement of fair values
A number of the Group’s accounting policies and
disclosures require the measurement of fair values, for
both financial and non-financial assets and liabilities.
When measuring the fair value of an asset or liability, the
Group uses market observable data as far as possible. Fair
values are categorised into different levels in a fair value
hierarchy based on the inputs used in the valuation
techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities;
Level 2: inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a
liability might be categorised in different levels of the fair
value hierarchy, then the fair value measurement is
categorised in its entirety in the same level of the fair value
hierarchy as the lowest level of input that is significant to
the entire measurement.
The Group recognises transfers between levels of the fair
value hierarchy at the end of the reporting period during
which the change has occurred.
Further information about the assumptions made in
measuring fair values is included in the following notes:
• 13. Contingent consideration payables
• 19. Financial instruments (cash flow hedges)
• 29. Share-based payments
(d) Foreign currency
(i) Functional and presentation currency
The consolidated financial statements are presented in
Australian dollars, which is the Company’s functional
currency.
Enero Group Limited Annual Report 2020 37
37
Enero Group Limited – Annual Report 2020
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Notes to the consolidated financial statements
for the year ended 30 June 2020
FOR THE YEAR ENDED 30 JUNE 2020
1. Basis of preparation (continued)
(ii) Foreign currency transactions
Transactions in foreign currencies are translated to the
respective functional currencies of Group at the foreign
exchange rates ruling at the dates of the transactions.
Monetary assets and liabilities denominated in foreign
currencies at the reporting date are translated to the
respective functional currencies of the Group at the foreign
exchange rate ruling at that date. Foreign exchange
differences arising on retranslation are recognised in the
income statement. Non-monetary assets and liabilities that
are measured in terms of historical cost in a foreign
currency are translated using the exchange rate at the date
of the transaction. Non-monetary assets and liabilities
denominated in foreign currencies that are stated at fair
value are translated to the functional currency at foreign
exchange rates ruling at the dates the fair value was
determined.
(iii) Foreign operations
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on
consolidation, are translated to Australian dollars at foreign
exchange rates prevailing at the reporting date. The
income and expenses of foreign operations are translated
to Australian dollars at rates approximating the foreign
exchange rates ruling at the dates of the transactions.
Foreign currency differences are recognised in other
comprehensive income, and presented in the foreign
currency translation reserve (FCTR) in equity. When a
foreign operation is disposed of, in part or in full, the
relevant amount in the FCTR is transferred to the income
statement as part of the profit or loss on disposal.
Foreign exchange gains and losses arising from a
monetary item receivable from or payable to a foreign
operation, the settlement of which is neither planned nor
likely in the foreseeable future, are considered to form
part of a net investment in a foreign operation and are
recognised in other comprehensive income, and are
presented within equity in the FCTR.
(e) Goods and services tax (GST)
Revenue, expenses and assets are recognised net of the
amount of GST, unless GST incurred is not recoverable
from the taxation authority. In this case it is recognised as
part of the cost of acquisition of the asset or as part of the
expense.
Receivables and payables are stated with the amount of
GST included. The net amount of GST recoverable from,
or payable to, the taxation authority, is included as a
current asset or liability in the statement of financial
position.
Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing or
financing activities, which are recoverable from or payable
to the taxation authority, are presented as operating cash
flows.
(f) Changes in accounting policies
Except for the impact of new accounting standards adopted
this year as described below, the accounting policies
provided throughout Notes 1 to 30 of this report have been
applied consistently to all periods presented in the
consolidated financial statements.
(g) New standards and interpretations
(i) New Standards Adopted
AASB 16 Leases (‘AASB 16’) introduced a single, on-
balance sheet accounting model for lessees. As a result,
the Group, as a lessee, has recognised right-of-use assets
representing its right to use the underlying assets and
lease liabilities representing its obligation to make lease
payments. AASB 16 requires the Group to recognise
substantially all of its operating leases on the statement of
financial position.
The Group has applied AASB 16 using the modified
retrospective approach, under which the cumulative effect
of initial application is recognised in retained earnings at
1 July 2019. Accordingly, the comparative information
presented for the period 1 July 2018 to 30 June 2019 has
not been restated – it is presented, as previously reported,
under AASB 117 and related interpretations.
The following table summarises the impact, net of tax, on
transition to AASB 16 on the opening balance of retained
earnings at 1 July 2019:
In thousands of AUD
Retained earnings
Lease liabilities recognised
Right-of-use assets recognised
Reduction in provisions relating to property leases
Deferred tax asset recognised
Impact, net of tax
Equity holders of the parent
Non-controlling interests
Impact, net of tax
(22,498)
16,481
4,512
420
(1,085)
(1,057)
(28)
(1,085)
At transition, the lease liabilities were measured at the
present value of remaining lease payments using the
Group’s incremental borrowing rates of 3.8% to 5.1% as at
1 July 2019. The right-of-use assets were measured at
their carrying amount as if AASB 16 has been applied
since the lease commencement date and discounted using
Group’s incremental borrowing rate as at 1 July 2019.
The Group used following practical expedients on transition
to AASB 16:
•
the Group elected to grandfather the assessment
of which transactions are leases. It applied AASB
16 only to transactions that were previously
defined as leases. Contracts that were not
identified as leases under AASB 117 and
Interpretation 4 were not reassessed. Therefore,
the definition of a lease under AASB 16 has been
applied only to contracts entered into or changed
from 1 July 2019; and
•
the Group applied the exemption not to recognise
right-of-use assets and lease liabilities for leases
of low value or with lease terms with less than
12 months remaining at 1 July 2019.
(ii) New Standards and interpretations not yet adopted
2. Operating segments
A number of new standards, amendments to standards and
interpretations are effective for annual periods beginning
after 1 July 2020, and have not been applied in preparing
these consolidated financial statements. None of these are
expected to have a significant effect on the Group’s
The Group defines its operating segments based on the
manner in which services are provided in the operational
geographies and on internal reporting regularly reviewed by
the Enero Executive team on a monthly basis, who are the
Group’s chief operating decision makers (CODM).
the amount in question is significant because of its
Frank and CPR; and
financial statements.
(h) The notes to the financial statements
The notes include information which is required to
understand the financial statements and is material and
relevant to the operations, financial position and
performance of the Group. Information is considered
material and relevant if, for example:
size or nature;
Group;
it is important for understanding the results of the
it helps to explain the impact of significant changes
in the Group’s business – for example, acquisitions
and impairment write-downs; or
it relates to an aspect of the Group’s operations that
is important to its future performance.
resources.
The notes are organised into the following sections:
Revenues
are
all
derived
from marketing
and
communication services centered on three key service
competencies, which are similar in the nature of services
and outputs, operate in similar economic environments and
have a comparable customer mix:
• Creative and Content – BMF;
•
PR and Integrated Communications – Hotwire,
• Digital, Data, Analytics and Technology – Orchard,
The Leading Edge, The Digital Edge and
OBMedia.
The CODM have determined that the service competencies
are one operating segment (Operating Brands segment)
based on
internal reporting used by the CODM for
performance assessment and determining the allocation of
The measure of reporting to the Enero Executive team is on
an Operating EBITDA basis (defined below), which excludes
significant and non-operating items which are separately
presented because of their nature, size and expected
infrequent occurrence and does not reflect the underlying
trading of the operations.
In relation to segment reporting, the following definitions
apply to operating segments:
Operating EBITDA: is calculated as profit before interest,
taxes, depreciation of plant and equipment, amortisation of
intangibles,
impairment of
intangibles, and contingent
consideration fair value loss.
Key numbers: provides a breakdown of individual
line items in the financial statements that the
Directors consider most relevant and summarises
the accounting policies, judgements and estimates
relevant to understanding these line items;
Capital: provides information about the capital
management practices of the Group and
shareholder returns for the year;
Risk: discusses the Group’s exposure to various
financial risks, explains how these affect the
Group’s financial position and performance and
outlines what the Group does to manage these
risks;
Group structure: explains aspects of the Group
structure and changes during the year;
Unrecognised items: provides information about
items that are not recognised in the financial
statements but could potentially have a significant
impact on the Group’s financial position and
performance; and
•
Other items: provides information on items which
require disclosure to comply with Australian
Accounting Standards and other regulatory
pronouncements, however are not considered
critical in understanding the financial performance
or position of the Group.
•
•
•
•
•
•
•
•
•
38
38 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 39
Enero Group Limited – Annual Report 2020
(ii) New Standards and interpretations not yet adopted
A number of new standards, amendments to standards and
interpretations are effective for annual periods beginning
after 1 July 2020, and have not been applied in preparing
these consolidated financial statements. None of these are
expected to have a significant effect on the Group’s
financial statements.
(h) The notes to the financial statements
The notes include information which is required to
understand the financial statements and is material and
relevant to the operations, financial position and
performance of the Group. Information is considered
material and relevant if, for example:
•
•
•
•
the amount in question is significant because of its
size or nature;
it is important for understanding the results of the
Group;
it helps to explain the impact of significant changes
in the Group’s business – for example, acquisitions
and impairment write-downs; or
it relates to an aspect of the Group’s operations that
is important to its future performance.
The notes are organised into the following sections:
•
•
•
•
•
•
Key numbers: provides a breakdown of individual
line items in the financial statements that the
Directors consider most relevant and summarises
the accounting policies, judgements and estimates
relevant to understanding these line items;
Capital: provides information about the capital
management practices of the Group and
shareholder returns for the year;
Risk: discusses the Group’s exposure to various
financial risks, explains how these affect the
Group’s financial position and performance and
outlines what the Group does to manage these
risks;
Group structure: explains aspects of the Group
structure and changes during the year;
Unrecognised items: provides information about
items that are not recognised in the financial
statements but could potentially have a significant
impact on the Group’s financial position and
performance; and
Other items: provides information on items which
require disclosure to comply with Australian
Accounting Standards and other regulatory
pronouncements, however are not considered
critical in understanding the financial performance
or position of the Group.
2. Operating segments
The Group defines its operating segments based on the
manner in which services are provided in the operational
geographies and on internal reporting regularly reviewed by
the Enero Executive team on a monthly basis, who are the
Group’s chief operating decision makers (CODM).
all
are
derived
Revenues
and
communication services centered on three key service
competencies, which are similar in the nature of services
and outputs, operate in similar economic environments and
have a comparable customer mix:
from marketing
• Creative and Content – BMF;
•
PR and Integrated Communications – Hotwire,
Frank and CPR; and
• Digital, Data, Analytics and Technology – Orchard,
The Leading Edge, The Digital Edge and
OBMedia.
The CODM have determined that the service competencies
are one operating segment (Operating Brands segment)
internal reporting used by the CODM for
based on
performance assessment and determining the allocation of
resources.
The measure of reporting to the Enero Executive team is on
an Operating EBITDA basis (defined below), which excludes
significant and non-operating items which are separately
presented because of their nature, size and expected
infrequent occurrence and does not reflect the underlying
trading of the operations.
In relation to segment reporting, the following definitions
apply to operating segments:
Operating EBITDA: is calculated as profit before interest,
taxes, depreciation of plant and equipment, amortisation of
intangibles, and contingent
impairment of
intangibles,
consideration fair value loss.
Enero Group Limited Annual Report 2020 39
39
Enero Group Limited – Annual Report 2020
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Notes to the consolidated financial statements
for the year ended 30 June 2020
FOR THE YEAR ENDED 30 JUNE 2020
2. Operating segments (continued)
2020
In thousands of AUD
Gross revenue
Directly attributable cost of sales
Net revenue
Other income
Operating expenses
EBITDA
Depreciation of right-of-use assets
Operating EBITDA
Depreciation of plant and equipment and
amortisation of intangibles
Contingent consideration fair value loss
Net finance costs
Profit before income tax
Income tax expense
Profit for the year
Goodwill
Other intangibles
Assets excluding intangibles
Total assets
Liabilities
Total liabilities
Amortisation of intangibles
Depreciation
Capital expenditure
2019
In thousands of AUD
Gross revenue
Directly attributable cost of sales
Net revenue
Other income
Operating expenses
Operating EBITDA
Depreciation of plant and equipment and
amortisation of intangibles
Contingent consideration fair value loss
Net finance costs
Profit before income tax
Income tax expense
Profit for the year
Goodwill
Other intangibles
Assets excluding intangibles
Total assets
Liabilities
Total liabilities
Amortisation of intangibles
Depreciation
Capital expenditure
* All segments are continuing operations.
Operating
Brands
268,741
(132,916)
135,825
1,157
(101,274)
35,708
Total
segment
268,741
(132,916)
135,825
1,157
(101,274)
35,708
Unallocated
–
–
–
–
(6,478)
(6,478)
Eliminations Consolidated
268,741
(132,916)
135,825
1,157
(107,752)
29,230
(4,849)
24,381
–
–
–
–
–
–
–
(2,174)
(2,174)
–
–
(3,432)
(2,174)
(1,720)
17,055
(3,397)
13,658
107,997
1,105
105,487
214,589
89,612
89,612
1,095
7,186
1,406
–
–
49,444
49,444
12,660
12,660
–
394
229
–
–
(4,381)
(4,381)
(4,381)
(4,381)
–
–
–
107,997
1,105
60,424
169,526
81,333
81,333
1,095
6,792
1,177
Operating
Brands
230,032
(100,497)
129,535
107
(102,368)
27,274
107,997
1,105
60,424
169,526
81,333
81,333
1,095
6,792
1,177
Total
segment
230,032
(100,497)
129,535
107
(102,368)
27,274
Unallocated
–
–
–
17
(6,569)
(6,552)
Eliminations Consolidated
230,032
(100,497)
129,535
124
(108,937)
20,722
–
–
–
–
–
–
(6,390)
(6,390)
–
–
108,208
2,176
56,368
166,752
74,500
74,500
1,066
1,379
1,380
108,208
2,176
56,368
166,752
74,500
74,500
1,066
1,379
1,380
–
–
42,699
42,699
15,589
15,589
–
830
320
–
–
(7,561)
(7,561)
(7,561)
(7,561)
–
–
–
(3,275)
(6,390)
(686)
10,371
(2,297)
8,074
108,208
2,176
91,506
201,890
82,528
82,528
1,066
2,209
1,700
The operating segments are managed on a worldwide basis. However, there are three geographic areas of operation.
Geographical segments
Geographical information
In thousands of AUD
Australia
2020
Net Revenue
Operating EBITDA
Operating EBITDA margin
58,645
11,536
19.7%
In thousands of AUD
Australia
2019
Net Revenue
Operating EBITDA
Operating EBITDA margin
59,975
10,695
17.8%
UK and
Europe
37,701
5,703
15.1%
UK and
Europe
38,611
6,512
16.8%
USA
39,479
13,149
33.3%
USA
30,949
10,067
32.5%
Support
Office(ii)
Unallocated
intangibles(i)
Support
Office(ii)
Unallocated
intangibles(i)
(6,007)
(6,552)
–
–
–
–
–
–
Total
135,825
24,381
17.9%
Total
129,535
20,722
16.0%
–
–
–
–
–
–
Non-current assets
11,934
4,927
2,673
109,102
128,636
Non-current assets
6,220
1,169
1,144
110,384
118,917
(i) Goodwill and other intangibles are allocated to the Operating Brands segment. However, as the Operating Brands are managed at a global
level they cannot be allocated across geographical segments.
(ii) Support office includes the share-based payment charge in the income statement.
Major Customer
Accounting policy
Net revenue from a customer of the Operating Brands segment represented approximately 11.6% of the Group’s total net
revenue for the year ended 30 June 2020 (2019: 11.6%).
The Group determines and presents operating segments based on the information that is provided internally to the Enero
Executive team, who are the Group’s chief operating decision makers (CODM).
An operating segment is a component of the Group that engages in business activities from which it may earn revenues
and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other
components. All operating segments’ results are regularly reviewed by the Group’s CODM to make decisions about
resources to be allocated to the segment and assess its performance, and for which discrete financial information is
available.
be allocated on a reasonable basis.
Segment results that are reported to the CODM include items directly attributable to a segment, as well as those that can
Unallocated items comprise corporate overheads: costs associated with the centralised management and governance of
Enero Group Limited, such as share-based payments charge, interest-bearing loans, costs of borrowings and related
expenses, and corporate head office assets and expenses.
Segment capital expenditure is the total cost incurred during the period to acquire assets that are expected to be used for
more than one period.
40
40 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 41
Enero Group Limited – Annual Report 2020
Geographical segments
The operating segments are managed on a worldwide basis. However, there are three geographic areas of operation.
Geographical information
In thousands of AUD
2020
Net Revenue
Operating EBITDA
Operating EBITDA margin
Australia
58,645
11,536
19.7%
UK and
Europe
37,701
5,703
15.1%
USA
39,479
13,149
33.3%
Support
Office(ii)
Unallocated
intangibles(i)
–
(6,007)
–
–
–
–
Total
135,825
24,381
17.9%
Non-current assets
11,934
4,927
2,673
–
109,102
128,636
In thousands of AUD
2019
Net Revenue
Operating EBITDA
Operating EBITDA margin
Australia
59,975
10,695
17.8%
UK and
Europe
38,611
6,512
16.8%
USA
30,949
10,067
32.5%
Support
Office(ii)
Unallocated
intangibles(i)
–
(6,552)
–
–
–
–
Total
129,535
20,722
16.0%
Non-current assets
6,220
1,169
1,144
–
110,384
118,917
(i) Goodwill and other intangibles are allocated to the Operating Brands segment. However, as the Operating Brands are managed at a global
level they cannot be allocated across geographical segments.
(ii) Support office includes the share-based payment charge in the income statement.
Major Customer
Net revenue from a customer of the Operating Brands segment represented approximately 11.6% of the Group’s total net
revenue for the year ended 30 June 2020 (2019: 11.6%).
Accounting policy
The Group determines and presents operating segments based on the information that is provided internally to the Enero
Executive team, who are the Group’s chief operating decision makers (CODM).
An operating segment is a component of the Group that engages in business activities from which it may earn revenues
and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other
components. All operating segments’ results are regularly reviewed by the Group’s CODM to make decisions about
resources to be allocated to the segment and assess its performance, and for which discrete financial information is
available.
Segment results that are reported to the CODM include items directly attributable to a segment, as well as those that can
be allocated on a reasonable basis.
Unallocated items comprise corporate overheads: costs associated with the centralised management and governance of
Enero Group Limited, such as share-based payments charge, interest-bearing loans, costs of borrowings and related
expenses, and corporate head office assets and expenses.
Segment capital expenditure is the total cost incurred during the period to acquire assets that are expected to be used for
more than one period.
Enero Group Limited Annual Report 2020 41
41
Enero Group Limited – Annual Report 2020
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Notes to the consolidated financial statements
for the year ended 30 June 2020
FOR THE YEAR ENDED 30 JUNE 2020
3. Revenue
In thousands of AUD
Gross revenue from the rendering of services
Directly attributable cost of sales
Net revenue
2020
268,741
(132,916)
135,825
2019
230,032
(100,497)
129,535
The disclosure of such revenue as either gross revenue or net revenue is dependent on whether the Group is primarily
responsible for and controls the specific goods or services before they are ultimately transferred to the customer under the
contract. In cases where the Group is primarily responsible for and controls those goods or services before they are
passed on to the customer, the Group is determined to be a in a principal relationship and revenue is recognised on a
gross basis (to gross revenue) with a corresponding amount in directly attributable cost of sales representing the third
party out-of-pocket costs. Alternatively, under the revenue agency relationship, revenue is recognised on a net basis.
Disaggregation of revenue
In the following table, net revenue is disaggregated by primary geographical markets, which reconciles to the net revenue
of the Group’s Operating Brands segment (see Note 2). No further disaggregation is required as substantially all revenue
is recognised over time and all revenue is generated from fees for services.
In thousands of AUD
Australia
UK and Europe
USA
Total Operating Brands segment
2020
58,645
37,701
39,479
135,825
2019
59,975
38,611
30,949
129,535
Contract balances
The following table provides information about receivables, contract assets and contract liabilities from contracts with
customers.
Accounting policy
(i) Interest income
In thousands of AUD
Trade receivables
Contract assets – Work in progress
Contract liabilities – Unearned revenue
Note
7
8
12
2020
34,834
1,513
(13,496)
22,851
2019
34,081
2,475
(12,767)
23,789
Contract Assets:
The contract assets relate to the Group’s work in progress for accrued revenue recognised upon satisfaction of
performance obligations and rechargeable disbursements at the period end which are not invoiced. The contract assets
are transferred to receivables upon invoicing to the customer.
Contract Liabilities:
The contract liabilities relate to the Group’s unearned revenue for consideration received from customers prior to
satisfaction of performance obligations of the contract.
Given the short-term nature of customer contracts in the Group, it is expected that both contract assets will be recovered
and contract liabilities utilised within the next 12 months from the reporting date. This applies for both the current year and
the prior year.
Accounting policy
The Group provides marketing and communication services to a broad range of customers across three key geographic
locations – Australia, UK and USA. The Group is a fee for service business where each operating business generates
revenue from time spent on a particular project or delivering to agreed outcomes. The Group’s customer contracts are
generally short-term and may be cancelled with notice periods in accordance with respective contracts.
AASB 15 Revenue from Contracts with Customers requires identification of discrete performance obligations within a
transaction and an associated transaction price allocation to these obligations. Revenue is recognised upon satisfaction of
these performance obligations, which occur when control of the services is transferred to the customer. Principally,
revenue is recognised depicting the transfer of promised services to customers with amounts reflecting consideration to
which the Group expects to be entitled in exchange for those services at any point in time.
The Group’s customers typically receive the benefit of services as they are performed and substantially all customer
contracts provide that the Group will be compensated for services performed to date. Accordingly, substantially all revenue
is recognised over time as the services are performed. For fixed fee projects, key estimates and judgements for when
revenue is recognised are using inputs or outputs (time and deliverables) measuring progress on the project. For retainer
contracts, where a fixed fee is paid to provide a series of distinct performance obligations that are substantially the same,
key estimates and judgements for when revenue is recognised use a time-based measure resulting in a straight-line
revenue recognition. For customer contracts that include any variable consideration, such as performance incentives,
revenue is estimated at the beginning of the contract based on the most likely outcome and recognised accordingly.
The Group incurs a number of third party out-of-pocket costs in connection with services provided to customers.
4. Finance costs
In thousands of AUD
Interest and finance costs
Hire purchase interest
Lease present value interest
Finance costs
Contingent consideration present value interest
2020
47
5
1,181
756
1,989
2019
36
71
1,153
–
1,260
Foreign exchange gain of $187,000 (2019: gain of $141,000) has been recognised in the consolidated income statement
and has been included in administration expenses.
Interest income is recognised as it accrues to the related financial asset using the effective interest method.
(ii) Interest and finance costs/Hire purchase interest
Finance costs are recognised in the income statement using the effective interest method. They include interest on
financial guarantees, amortisation of ancillary costs incurred in connection with financing arrangements and finance lease
interest.
(iii) Contingent consideration present value interest
Present value interest is recognised in the income statement using the effective interest method and includes the effective
interest cost relating to contingent consideration liabilities recognised in business combinations.
(iv) Lease present value interest
Present value interest is recognised in the income statement using the effective interest method and includes the effective
interest cost relating to lease liabilities recognised for contracts that contain leases.
42
42 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 43
Enero Group Limited – Annual Report 2020
The disclosure of such revenue as either gross revenue or net revenue is dependent on whether the Group is primarily
responsible for and controls the specific goods or services before they are ultimately transferred to the customer under the
contract. In cases where the Group is primarily responsible for and controls those goods or services before they are
passed on to the customer, the Group is determined to be a in a principal relationship and revenue is recognised on a
gross basis (to gross revenue) with a corresponding amount in directly attributable cost of sales representing the third
party out-of-pocket costs. Alternatively, under the revenue agency relationship, revenue is recognised on a net basis.
4. Finance costs
In thousands of AUD
Interest and finance costs
Hire purchase interest
Contingent consideration present value interest
Lease present value interest
Finance costs
2020
47
5
1,181
756
1,989
2019
36
71
1,153
–
1,260
Foreign exchange gain of $187,000 (2019: gain of $141,000) has been recognised in the consolidated income statement
and has been included in administration expenses.
Accounting policy
(i) Interest income
Interest income is recognised as it accrues to the related financial asset using the effective interest method.
(ii) Interest and finance costs/Hire purchase interest
Finance costs are recognised in the income statement using the effective interest method. They include interest on
financial guarantees, amortisation of ancillary costs incurred in connection with financing arrangements and finance lease
interest.
(iii) Contingent consideration present value interest
Present value interest is recognised in the income statement using the effective interest method and includes the effective
interest cost relating to contingent consideration liabilities recognised in business combinations.
(iv) Lease present value interest
Present value interest is recognised in the income statement using the effective interest method and includes the effective
interest cost relating to lease liabilities recognised for contracts that contain leases.
Enero Group Limited Annual Report 2020 43
43
Enero Group Limited – Annual Report 2020
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Notes to the consolidated financial statements
for the year ended 30 June 2020
FOR THE YEAR ENDED 30 JUNE 2020
5. Income tax expense and deferred tax
Income tax expense
Recognised in the income statement
In thousands of AUD
Current tax expense
Current year
Adjustments for prior years
Deferred tax expense
Origination and reversal of temporary differences
Income tax expense in income statement
Numerical reconciliation between tax expense and pre-tax accounting profit
Profit for the year
Income tax expense
Profit excluding income tax
Income tax expense using the Company’s domestic tax rate of 30% (2019: 30%)
Increase in income tax expense due to:
Share-based payment expense
Tax losses not brought to account
Unwind of present value interest
Contingent consideration fair value loss
Decrease in income tax expense due to:
Effect of losses not previously recognised
Effect of lower tax rate on overseas incomes
Over-provision for tax in previous years
Other (subtraction)/non-deductible items
Income tax expense on pre-tax net profit
2020
3,292
(136)
3,156
241
241
3,397
13,658
3,397
17,055
5,117
169
_
354
652
(1,751)
(914)
(136)
(94)
3,397
2019
3,194
(237)
2,957
(660)
(660)
2,297
8,074
2,297
10,371
3,111
219
4
346
1,917
(2,264)
(781)
(237)
(18)
2,297
Current taxes
The Group has a net current tax payable of $358,000 (2019: $453,000). The net current tax payable is comprised of
current tax payables of $358,000 (2019: $507,000) and current tax receivables of $Nil (2019: $54,000).
Deferred taxes
Recognised deferred tax assets and liabilities are attributable to the following:
In thousands of AUD
Deferred tax assets
Tax losses carried forward
Employee benefits
Accruals and income in advance
Leases
Plant and equipment
Others
Gross deferred tax assets
Deferred tax liabilities
Fair value gain
Identifiable intangibles
Plant and equipment
Work in progress
Gross deferred tax liabilities
Net deferred tax asset
2020
3,653
1,143
497
1,325
13
80
6,711
3,653
297
116
9
4,075
2,636
2019
3,653
1,169
601
1,155
47
104
6,729
3,653
485
88
44
4,270
2,459
Movement in deferred tax balances
Except for the AASB16 opening transition adjustment of $420,000 recognised as a deferred tax asset, the movement in deferred
tax balances during the year was recognised in the income statement.
Deferred tax assets not recognised
Deferred tax assets have not been recognised in respect of the following items because it is not probable that future taxable profit
will be available against which the Group can utilise the benefits:
2020
9,443
207,514
216,957
2019
15,184
207,513
222,697
In thousands of AUD
Revenue losses
Capital losses
Gross tax losses carried forward
Accounting policy
in other comprehensive income.
Income tax on the profit or loss for the year comprises current and deferred tax. Current and deferred tax is recognised in
the income statement except to the extent that it relates to a business combination, or items recognised directly in equity or
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not
provided for: goodwill, the initial recognition of assets or liabilities that affect neither the accounting nor the taxable profit,
and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable
future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount
of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets,
and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different taxable entities,
but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available, against
which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related
simultaneously.
tax benefit will be realised.
Key assumption
The Group has recognised a deferred tax liability of $3,653,000 arising from the recognition of contingent consideration fair
value gains in 2011 resulting in a potential future taxable capital gain. A deferred tax asset of $3,653,000 has been
recognised on tax capital losses in the same jurisdiction arising from disposed subsidiaries.
44
44 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 45
Enero Group Limited – Annual Report 2020
Deferred tax assets not recognised
Deferred tax assets have not been recognised in respect of the following items because it is not probable that future taxable profit
will be available against which the Group can utilise the benefits:
In thousands of AUD
Revenue losses
Capital losses
Gross tax losses carried forward
2020
9,443
207,514
216,957
2019
15,184
207,513
222,697
Accounting policy
Income tax on the profit or loss for the year comprises current and deferred tax. Current and deferred tax is recognised in
the income statement except to the extent that it relates to a business combination, or items recognised directly in equity or
in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not
provided for: goodwill, the initial recognition of assets or liabilities that affect neither the accounting nor the taxable profit,
and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable
future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount
of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets,
and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different taxable entities,
but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised
simultaneously.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available, against
which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related
tax benefit will be realised.
Key assumption
The Group has recognised a deferred tax liability of $3,653,000 arising from the recognition of contingent consideration fair
value gains in 2011 resulting in a potential future taxable capital gain. A deferred tax asset of $3,653,000 has been
recognised on tax capital losses in the same jurisdiction arising from disposed subsidiaries.
Enero Group Limited Annual Report 2020 45
45
Enero Group Limited – Annual Report 2020
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Notes to the consolidated financial statements
for the year ended 30 June 2020
FOR THE YEAR ENDED 30 JUNE 2020
6. Cash and cash equivalents
In thousands of AUD
Cash at bank and on hand
Bank short-term deposits
Cash and cash equivalents in the statement of financial position
and the statement of cash flows
2020
34,447
13,134
47,581
2019
24,610
19,221
43,831
For statement of cash flow presentation purposes, cash and cash equivalents include cash on hand, and short-term
deposits 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 change in value. The Group has pledged short-term deposits amounting to
$2,128,000 for indemnity guarantee facilities (see Note 20 Financing arrangements). The remaining bank short-term
deposits are unrestricted.
The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in
Note 19 Financial risk management/financial instruments.
Reconciliation of cash flows from operating activities
(i) Reconciliation of cash
For the purpose of the statements of cash flows, cash includes cash on hand and at bank and short-term deposits at call, net of
outstanding bank overdrafts. Cash at the end of the financial year as shown in the statement of cash flows is reconciled to the
related items in the statement of financial position as follows:
In thousands of AUD
Cash assets
(ii) Reconciliation of profit after income tax to net cash provided by
operating activities
Profit after income tax
Add/(less) non-cash items:
Profit on sale of plant and equipment
Share-based payments expense
Depreciation of plant and equipment
Depreciation of right-of-use assets
Amortisation of identifiable intangibles
Contingent consideration fair value loss
Contingent consideration present value interest
Lease present value interest
Decrease in income taxes payable (net)
Decrease/(increase) in deferred tax (net)
Net cash provided by operating activities before changes in
assets and liabilities
Changes in assets and liabilities:
Increase in trade and other receivables
Decrease/(increase) in work in progress
Decrease/(increase) in prepayments
Increase in other assets
Increase in payables and accruals
Increase in unearned income
Increase in provisions
(Decrease)/increase in employee benefits
Net cash from operating activities
2020
47,581
2019
43,831
13,658
8,074
2
564
2,337
4,849
1,095
2,174
1,181
756
(95)
243
(19)
730
2,209
–
1,066
6,390
1,153
–
(685)
(724)
26,764
18,194
(820)
962
857
(273)
3,055
730
_
(280)
30,995
(6,593)
(930)
(205)
(51)
6,283
321
557
559
18,135
Less: provision for impairment loss
19
Note
2020
2019
No interest is charged on trade debtors. The Group’s exposure to credit and currency risk and impairment losses related to
trade and other receivables is disclosed in Note 19 Financial risk management/financial instruments.
7. Trade and other receivables
In thousands of AUD
Current
Trade receivables
Other receivables
Total trade and other receivables
8. Other assets
In thousands of AUD
Current
Work in progress
Prepayments
Other current assets
Non-current
Deposits
34,834
(261)
34,573
38
34,611
2020
1,513
1,961
287
3,761
188
188
34,081
(329)
33,752
39
33,791
2019
2,475
2,818
4
5,297
197
197
46
46 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 47
Enero Group Limited – Annual Report 2020
7. Trade and other receivables
In thousands of AUD
Current
Trade receivables
Less: provision for impairment loss
Other receivables
Total trade and other receivables
Note
2020
2019
19
34,834
(261)
34,573
38
34,611
34,081
(329)
33,752
39
33,791
No interest is charged on trade debtors. The Group’s exposure to credit and currency risk and impairment losses related to
trade and other receivables is disclosed in Note 19 Financial risk management/financial instruments.
8. Other assets
In thousands of AUD
Current
Work in progress
Prepayments
Other current assets
Non-current
Deposits
2020
1,513
1,961
287
3,761
188
188
2019
2,475
2,818
4
5,297
197
197
Enero Group Limited Annual Report 2020 47
47
Enero Group Limited – Annual Report 2020
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Notes to the consolidated financial statements
for the year ended 30 June 2020
FOR THE YEAR ENDED 30 JUNE 2020
9. Plant and equipment
In thousands of AUD
2020
Cost
Accumulated depreciation
Net carrying amount
Reconciliations of the carrying amounts of
each class of plant and equipment:
Carrying amount at the beginning of the year
Additions
Depreciation
Effect of movements in exchange rates
Disposals
Carrying amount at the end of the year
2019
Cost
Accumulated depreciation
Net carrying amount
Reconciliations of the carrying amounts of
each class of plant and equipment:
Carrying amount at the beginning of the year
Additions
Depreciation
Effect of movements in exchange rates
Disposals
Carrying amount at the end of the year
Computer
equipment
Office
furniture
and
equipment
Plant and
equipment
Leasehold
improvements
Total
4,512
(3,036)
1,476
2,028
(1,423)
605
325
(309)
16
1,589
845
(949)
3
(12)
1,476
850
105
(357)
7
–
605
4,722
(3,133)
1,589
2,296
(1,446)
850
1,444
1,035
(915)
25
–
1,589
854
314
(328)
13
(3)
850
25
–
(9)
–
–
16
338
(313)
25
45
–
(19)
–
(1)
25
7,150
(4,296)
2,854
3,413
456
(1,022)
7
–
2,854
7,068
(3,655)
3,413
3,980
351
(947)
29
–
3,413
14,015
(9,064)
4,951
5,877
1,406
(2,337)
17
(12)
4,951
14,424
(8,547)
5,877
6,323
1,700
(2,209)
67
(4)
5,877
Accounting policy
(i) Recognition and measurement
Plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses (see Note 21
Impairment of non-financial assets). The cost of the asset also includes the cost of replacing parts on an item of plant and
equipment when it is probable that the future economic benefits embodied within the item will flow to the Group and the
cost of the item can be measured reliably. All other costs are charged to the income statement as incurred.
Cost includes expenditure that is directly attributable to the acquisition of the asset. Purchased software that is integral to
the functionality of the related equipment is capitalised as part of that equipment.
Where parts of an item of plant and equipment have different useful lives, they are accounted for as separate items of
plant and equipment.
(ii) Derecognition
An item of property, plant and equipment is derecognised when it is sold or otherwise disposed of, or when its use is
expected to bring no future economic benefits.
Gains and losses on derecognition are determined by comparing the proceeds with the carrying amount and recognised
within ‘Administration expenses’ in the income statement.
(iii) Depreciation
Depreciation is charged to the income statement on a straight-line basis over the assets’ estimated useful lives. The major
categories of plant and equipment were depreciated in the current and, where applicable, comparative period as follows:
Computer equipment
Office furniture and equipment
Plant and equipment
Leasehold improvements
25% to 40%
10% to 25%
10% to 25%
Life of lease
Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.
10. Right-of-use assets
In thousands of AUD
Property leases
Cost
Accumulated depreciation
Net carrying amount
Reconciliations of the carrying amounts of right-of-use assets:
Carrying amount at the beginning of the year
Recognised on transition to AASB 16
Re-measurement of lease liabilities
Depreciation
Effect of movements in exchange rates
Carrying amount at the end of the year
Transition to AASB 16
2020
2019
16,344
(4,585)
11,759
–
16,481
(10)
(4,849)
137
11,759
–
–
–
–
–
–
–
–
The Group has applied AASB 16 Leases using the modified retrospective approach, under which the cumulative effect of
initial application is recognised in retained earnings at 1 July 2019. Refer to Note 1(g).
Accounting policy (applicable from 1 July 2019)
The Group leases many assets, including properties and office equipment. At the inception of a contract, the Group assesses
whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration. The Group assesses if a contract conveys the right to control the use
of an identified asset if:
the contract involves the use of an identified asset;
period of use; and
the Group has the right to direct the use of the asset.
•
•
•
the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is
initially measured at cost, which comprises the initial amount of lease liability adjusted for any lease payments made at or
before the commencement date, plus any initial direct costs incurred and an estimate of cost to dismantle and remove the
underlying asset less any lease incentive received. The right-of-use asset is subsequently measured at cost less any
accumulated depreciation and impairment losses (see Note 21 Impairment of non-financial assets), and adjusted for
certain re-measurements of lease liability. The assets are depreciated over the term of the lease on a straight-line basis.
The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that include
renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease
term, which significantly affects the amount of lease liability and right-of-use asset recognised.
The lease liability is initially measured at the present value of the lease payments (fixed payments less any lease
incentives receivable and variable lease payments) that are not paid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate for the
same term as the underlying lease. Generally, the Group uses its incremental borrowing rate as the discount rate. Lease
liability is re-measured when there is a change in future lease payments arising from change in an index rate, changes in
the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is
reasonably certain not to be exercised. When the lease liability is re-measured in this way, a corresponding adjustment is
made to the carrying amount of the right-of-use asset, or is recorded in the income statement if the carrying amount of the
right-of-use asset has been reduced to zero.
The Group has elected to use the exemption not to recognise right-of-use assets and lease liabilities for short-term leases
that have a lease term of 12 months or less and leases of low-value assets. The payments associated with these leases
are recognised as occupancy costs on a straight-line basis over the lease term.
48
48 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 49
Enero Group Limited – Annual Report 2020
10. Right-of-use assets
In thousands of AUD
Property leases
Cost
Accumulated depreciation
Net carrying amount
Reconciliations of the carrying amounts of right-of-use assets:
Carrying amount at the beginning of the year
Recognised on transition to AASB 16
Re-measurement of lease liabilities
Depreciation
Effect of movements in exchange rates
Carrying amount at the end of the year
2020
2019
16,344
(4,585)
11,759
–
16,481
(10)
(4,849)
137
11,759
–
–
–
–
–
–
–
–
Transition to AASB 16
The Group has applied AASB 16 Leases using the modified retrospective approach, under which the cumulative effect of
initial application is recognised in retained earnings at 1 July 2019. Refer to Note 1(g).
Accounting policy (applicable from 1 July 2019)
The Group leases many assets, including properties and office equipment. At the inception of a contract, the Group assesses
whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration. The Group assesses if a contract conveys the right to control the use
of an identified asset if:
•
•
•
the contract involves the use of an identified asset;
the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the
period of use; and
the Group has the right to direct the use of the asset.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is
initially measured at cost, which comprises the initial amount of lease liability adjusted for any lease payments made at or
before the commencement date, plus any initial direct costs incurred and an estimate of cost to dismantle and remove the
underlying asset less any lease incentive received. The right-of-use asset is subsequently measured at cost less any
accumulated depreciation and impairment losses (see Note 21 Impairment of non-financial assets), and adjusted for
certain re-measurements of lease liability. The assets are depreciated over the term of the lease on a straight-line basis.
The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that include
renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease
term, which significantly affects the amount of lease liability and right-of-use asset recognised.
The lease liability is initially measured at the present value of the lease payments (fixed payments less any lease
incentives receivable and variable lease payments) that are not paid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate for the
same term as the underlying lease. Generally, the Group uses its incremental borrowing rate as the discount rate. Lease
liability is re-measured when there is a change in future lease payments arising from change in an index rate, changes in
the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is
reasonably certain not to be exercised. When the lease liability is re-measured in this way, a corresponding adjustment is
made to the carrying amount of the right-of-use asset, or is recorded in the income statement if the carrying amount of the
right-of-use asset has been reduced to zero.
The Group has elected to use the exemption not to recognise right-of-use assets and lease liabilities for short-term leases
that have a lease term of 12 months or less and leases of low-value assets. The payments associated with these leases
are recognised as occupancy costs on a straight-line basis over the lease term.
Enero Group Limited Annual Report 2020 49
49
Enero Group Limited – Annual Report 2020
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Notes to the consolidated financial statements
for the year ended 30 June 2020
FOR THE YEAR ENDED 30 JUNE 2020
11. Intangible assets
In thousands of AUD
2020
Cost
Accumulated amortisation
Impairment
Net carrying amount
Reconciliations of the carrying amounts of intangibles:
Carrying amount at the beginning of the year
Amortisation
Effect of movements in exchange rates
Carrying amount at the end of the year
2019
Cost
Accumulated amortisation
Impairment
Net carrying amount
Reconciliations of the carrying amounts of intangibles:
Carrying amount at the beginning of the year
Amortisation
Effect of movements in exchange rates
Carrying amount at the end of the year
Goodwill
Contracts and
customer
relationships
295,297
–
(187,300)
107,997
108,208
–
(211)
107,997
296,110
–
(187,902)
108,208
106,858
–
1,350
108,208
4,334
(3,229)
–
1,105
2,176
(1,095)
24
1,105
4,296
(2,120)
–
2,176
3,198
(1,066)
44
2,176
Total
299,631
(3,229)
(187,300)
109,102
110,384
(1,095)
(187)
109,102
300,406
(2,120)
(187,902)
110,384
110,056
(1,066)
1,394
110,384
Amortisation charge
The amortisation charge of $1,095,000 (2019: $1,066,000) is recognised in the depreciation and amortisation expense in
the income statement.
Goodwill CGU group allocation
The Group has two CGU groups – the Operating Brands CGU group and the Search Marketing CGU group. The entire
goodwill balance of $107,997,000 (2019: $108,208,000) relates to the Operating Brands CGU group.
The decrease in the goodwill carrying value as compared to the prior reporting period is due to decrease in Australian
dollar translation of foreign currency denominated goodwill.
Accounting policy
(i) Goodwill
Goodwill acquired in a business combination is initially measured at cost. Cost is measured as the cost of the business
combination minus the net fair value of the acquired and identifiable assets, liabilities and contingent liabilities.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
Goodwill is allocated to cash generating units expected to benefit from synergies created by the business combination.
Goodwill is not amortised, but instead is reviewed for impairment annually or more frequently if events or changes in
circumstances indicate that the carrying value may be impaired.
(ii) Research and development
Expenditure on research activities is charged to the income statement as incurred.
Expenditure on development activities (including internally developed software) is capitalised only if development costs
can be reliably measured, the product or process is technically and commercially feasible, future economic benefits are
probable, and the Group intends to, and has sufficient resources to, complete development and to use or sell the asset.
The capitalised development expenditure includes the cost of materials, direct labour and an appropriate proportion of
overhead costs that are directly attributable to preparing the asset for its intended use. Capitalised development
expenditure is measured at cost, less accumulated amortisation and impairment losses.
(iii) Other intangible assets
Other intangible assets acquired separately are measured on initial recognition at cost. The other intangible assets
acquired in business combinations are mainly customer relationships and customer contracts. The cost of these assets is
their fair value at date of acquisition based on valuation techniques generally using the excess earnings method. Following
initial recognition, intangible assets are carried at cost less amortisation and any impairment losses.
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits
embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.
Subsequent expenditure
(iv) Amortisation
Intangible assets other than goodwill are amortised on a straight-line basis over their estimated useful lives from the date
they are available for use. Customer contracts and relationships are amortised over a four-year period.
Amortisation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.
(v) Impairment
Refer to Note 21 Impairment of non-financial assets for further details on impairment.
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 19 Financial
12. Trade and other payables
In thousands of AUD
Current
Trade payables
Other payables and accrued expenses
Unearned revenue
risk management/financial instruments.
13. Contingent consideration payable
In thousands of AUD
Current
Contingent consideration payable
Non-current
Contingent consideration payable
Reconciliations of the carrying amounts of
contingent consideration payable:
Carrying amount at the beginning of the year
Re-assessment of contingent consideration
Unwind of present value interest
Effect of movements in exchange rates
Contingent consideration paid
Carrying amount at the end of the year
2020
16,820
11,926
13,496
42,242
2019
14,267
11,346
12,767
38,380
2020
2019
15,119
11,519
10,434
22,282
33,801
2,174
1,181
320
(11,923)
25,553
25,802
6,390
1,153
456
–
33,801
During the current year, the Group recognised a fair value loss of $2,174,000 (2019: $6,390,000) relating to revaluation of
future contingent consideration payable to the vendors of Eastwick Communications.
There is uncertainty around the actual payments that will be made as the payments are subject to the performance of
Orchard Marketing subsequent to the reporting date. Factors which could vary the amount of contingent consideration
payable due include a minimum EBIT threshold for future payments, the basis of the average EBIT over the contingent
consideration period and total purchase price cap. Actual future payments may differ from the estimated liability. A
sensitivity analysis for Contingent consideration payable is disclosed in Note 19 Financial risk management/financial
instruments.
Accounting policy
Contingent consideration payable is initially recognised at fair value in connection with a business combination. The liability
is discounted using a market interest rate for the liability and a present value interest charge is recognised in the income
statement as the discount unwinds. Any change in estimate of contingent consideration payable is recognised in the
income statement as a fair value gain or loss during the period when the estimate is revised.
50
50 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 51
Enero Group Limited – Annual Report 2020
(iii) Other intangible assets
Other intangible assets acquired separately are measured on initial recognition at cost. The other intangible assets
acquired in business combinations are mainly customer relationships and customer contracts. The cost of these assets is
their fair value at date of acquisition based on valuation techniques generally using the excess earnings method. Following
initial recognition, intangible assets are carried at cost less amortisation and any impairment losses.
Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits
embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.
(iv) Amortisation
Intangible assets other than goodwill are amortised on a straight-line basis over their estimated useful lives from the date
they are available for use. Customer contracts and relationships are amortised over a four-year period.
Amortisation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.
(v) Impairment
Refer to Note 21 Impairment of non-financial assets for further details on impairment.
12. Trade and other payables
In thousands of AUD
Current
Trade payables
Other payables and accrued expenses
Unearned revenue
2020
16,820
11,926
13,496
42,242
2019
14,267
11,346
12,767
38,380
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 19 Financial
risk management/financial instruments.
13. Contingent consideration payable
In thousands of AUD
Current
Contingent consideration payable
Non-current
Contingent consideration payable
Reconciliations of the carrying amounts of
contingent consideration payable:
Carrying amount at the beginning of the year
Re-assessment of contingent consideration
Unwind of present value interest
Effect of movements in exchange rates
Contingent consideration paid
Carrying amount at the end of the year
2020
2019
15,119
11,519
10,434
22,282
33,801
2,174
1,181
320
(11,923)
25,553
25,802
6,390
1,153
456
–
33,801
During the current year, the Group recognised a fair value loss of $2,174,000 (2019: $6,390,000) relating to revaluation of
future contingent consideration payable to the vendors of Eastwick Communications.
There is uncertainty around the actual payments that will be made as the payments are subject to the performance of
Orchard Marketing subsequent to the reporting date. Factors which could vary the amount of contingent consideration
payable due include a minimum EBIT threshold for future payments, the basis of the average EBIT over the contingent
consideration period and total purchase price cap. Actual future payments may differ from the estimated liability. A
sensitivity analysis for Contingent consideration payable is disclosed in Note 19 Financial risk management/financial
instruments.
Accounting policy
Contingent consideration payable is initially recognised at fair value in connection with a business combination. The liability
is discounted using a market interest rate for the liability and a present value interest charge is recognised in the income
statement as the discount unwinds. Any change in estimate of contingent consideration payable is recognised in the
income statement as a fair value gain or loss during the period when the estimate is revised.
Enero Group Limited Annual Report 2020 51
51
Enero Group Limited – Annual Report 2020
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Notes to the consolidated financial statements
for the year ended 30 June 2020
FOR THE YEAR ENDED 30 JUNE 2020
14. Lease liabilities
This note provides information about the contractual terms of the Group’s leases. For more information about the Group’s
exposure to interest rate risk, liquidity risk and foreign currency risk, see Note 19 Financial risk management/financial
instruments.
employee and the obligation can be reliably estimated.
(iii) Termination benefits
A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the
Group has a present legal or constructive obligation to pay this amount as a result of past services provided by the
In thousands of AUD
Current
Lease liabilities
Hire purchase liabilities
Non-current
Lease liabilities
Total
Reconciliations of the carrying amounts of lease
and hire purchase liabilities:
Carrying amount at the beginning of the year
Recognised on transition to AASB 16
Re-measurement of lease liabilities
Repayments
Present value interest relating to lease liabilities
Effect of movements in exchange rates
Carrying amount at the end of the year
Lease liabilities and hire purchase payable commitments
(at carrying amounts)
Within one year
One year or later and no later than five years
Accounting policy
Refer Note 10.
15. Employee benefits
In thousands of AUD
Aggregate liability for employee benefits, including on-costs
Current
Employee benefits provision
Non-current
Employee benefits provision
2020
6,384
–
6,384
10,523
10,523
16,907
493
22,498
(10)
(6,979)
756
149
16,907
6,384
10,523
16,907
2019
–
493
493
–
–
493
1,916
–
–
(1,423)
–
–
493
493
–
493
2020
2019
3,732
820
4,173
659
The Group has recognised $2,228,000 (2019: $2,405,000) as an expense in the income statement for defined contribution
plans during the reporting period.
Accounting policy
Provision is made for employee benefits including annual leave and long service leave for employees.
(i) Long-term employee benefits
The Group’s net obligation in respect of long-term service benefits, other than superannuation and pension plans, is the
amount of future benefit that employees have earned in return for their service provided up to the reporting date. The
obligation is calculated using expected future increases in wage and salary rates, including related on-costs and expected
settlement dates, and is discounted using the rates attached to the Corporate bonds which have maturity dates
approximating to the terms of the Group’s obligations.
(ii) Wages, salaries, annual leave and non-monetary benefits
Liabilities for employee benefits for wages, salaries and annual leave, that are due to be settled within 12 months of the
reporting date, represent present obligations resulting from employees’ services provided to reporting date and are
calculated at undiscounted amounts based on remuneration wage and salary rates that the Group expects to pay as at
reporting date, including related on-costs.
Termination benefits are charged to the income statement when the Group is demonstrably committed, without realistic
possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to
provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for
voluntary redundancies are charged to the income statement if the Group has made an offer encouraging voluntary
redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.
16. Provisions
In thousands of AUD
2020
Current
Non-current
Total provisions current and non-current
Reconciliations of the carrying amounts of each class of
provision, except for employee benefits:
Carrying amount at the beginning of the year
De-recognised on transition to AASB 16
Released/used during the year
Carrying amount at the end of the year
2019
Current
Non-current
Total provisions current and non-current
Reconciliations of the carrying amounts of each class of
provision, except for employee benefits:
Carrying amount at the beginning of the year
Increase due to new provision
Effect of movement in exchange rates
Released/used during the year
Carrying amount at the end of the year
Transition to AASB 16
Lease
Lease
Rent
Total
make good
incentive
straight-line
464
(464)
3,788
(3,788)
–
–
–
–
–
10
454
464
438
39
7
(20)
464
–
–
–
–
–
633
3,155
3,788
3,250
617
2
(81)
3,788
–
–
–
263
(260)
(3)
–
3
260
263
270
9
13
(29)
263
–
–
–
4,515
(4,512)
(3)
–
646
3,869
4,515
3,958
665
22
(130)
4,515
Accounting policy
obligation.
(i) Make good provision
obligation.
period.
The Group has applied AASB 16 Leases using the modified retrospective approach, under which the cumulative effect of
initial application is recognised in retained earnings at 1 July 2019. At transition date, substantially all the provisions were
de-recognised as the provisions are now embedded in the lease liability recognised. Refer to Note 1(g).
A provision is recognised in the statement of financial position when the Group has a present legal or constructive
obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the
The Group recognises provision for make good on all operating leases for premises which require make good expenditure
at completion of the lease. The provision is the best estimate of the expenditure required to settle the make good
Future make good costs are reviewed annually and any changes are reflected in the provision at the end of the reporting
(ii) Lease incentive provision (applicable prior to 1 July 2019)
The Group has made provision for lease incentives received. Lease incentives received are recognised in the income
statement as an integral part of the total lease expense spread over the lease term.
(iii) Rent (applicable prior to 1 July 2019)
The Group has made provision for increase in rent for operating leases for premises. Rent is recognised in the income
statement on a straight-line basis over the lease term.
52
52 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 53
Enero Group Limited – Annual Report 2020
A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the
Group has a present legal or constructive obligation to pay this amount as a result of past services provided by the
employee and the obligation can be reliably estimated.
(iii) Termination benefits
Termination benefits are charged to the income statement when the Group is demonstrably committed, without realistic
possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to
provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for
voluntary redundancies are charged to the income statement if the Group has made an offer encouraging voluntary
redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.
16. Provisions
In thousands of AUD
2020
Current
Non-current
Total provisions current and non-current
Reconciliations of the carrying amounts of each class of
provision, except for employee benefits:
Carrying amount at the beginning of the year
De-recognised on transition to AASB 16
Released/used during the year
Carrying amount at the end of the year
2019
Current
Non-current
Total provisions current and non-current
Reconciliations of the carrying amounts of each class of
provision, except for employee benefits:
Carrying amount at the beginning of the year
Increase due to new provision
Effect of movement in exchange rates
Released/used during the year
Carrying amount at the end of the year
Lease
make good
Lease
incentive
Rent
straight-line
Total
–
–
–
464
(464)
–
–
10
454
464
438
39
7
(20)
464
–
–
–
3,788
(3,788)
–
–
633
3,155
3,788
3,250
617
2
(81)
3,788
–
–
–
263
(260)
(3)
–
3
260
263
270
9
13
(29)
263
–
–
–
4,515
(4,512)
(3)
–
646
3,869
4,515
3,958
665
22
(130)
4,515
Transition to AASB 16
The Group has applied AASB 16 Leases using the modified retrospective approach, under which the cumulative effect of
initial application is recognised in retained earnings at 1 July 2019. At transition date, substantially all the provisions were
de-recognised as the provisions are now embedded in the lease liability recognised. Refer to Note 1(g).
Accounting policy
A provision is recognised in the statement of financial position when the Group has a present legal or constructive
obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the
obligation.
(i) Make good provision
The Group recognises provision for make good on all operating leases for premises which require make good expenditure
at completion of the lease. The provision is the best estimate of the expenditure required to settle the make good
obligation.
Future make good costs are reviewed annually and any changes are reflected in the provision at the end of the reporting
period.
(ii) Lease incentive provision (applicable prior to 1 July 2019)
The Group has made provision for lease incentives received. Lease incentives received are recognised in the income
statement as an integral part of the total lease expense spread over the lease term.
(iii) Rent (applicable prior to 1 July 2019)
The Group has made provision for increase in rent for operating leases for premises. Rent is recognised in the income
statement on a straight-line basis over the lease term.
Enero Group Limited Annual Report 2020 53
53
Enero Group Limited – Annual Report 2020
888
–
–
–
1,215
99,515
85,604,954
756
–
97,412
Shares issued to the employees of the Group on exercise of
Share Appreciation Rights(i)
Balance at end of year
469,905
86,074,859
2020
Shares
85,604,954
2020
In thousands
of AUD
97,412
2019
Shares
85,604,954
2019
In thousands
of AUD
96,656
Balance at beginning of year
642,726 shares (2019: 651,575 shares) transferred from a
trust account held by the Company to the employees of the
Group on exercise of Share Appreciation Rights(i)
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Notes to the consolidated financial statements
for the year ended 30 June 2020
FOR THE YEAR ENDED 30 JUNE 2020
17. Capital and reserves
In thousands of AUD
Share capital
Ordinary shares, fully paid
The Company does not have authorised capital or par value in respect of its shares.
Movement in ordinary shares
2020
2019
99,515
97,412
any restrictions to paying dividends.
Accounting policy
(i) Ordinary shares
The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends and
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share
options are recognised as a deduction from equity, net of tax effects.
Dividends are recognised as a liability in the period in which they are declared.
Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income tax
(ii) Dividends
(iii) Transaction costs
benefit.
18. Earnings per share
In thousands of AUD
Profit for the year
Non-controlling interests
Earnings per share
In AUD cents
Basic
Diluted
Accounting policy
Profit attributable to equity holders of the parent
Weighted average number of ordinary shares
In thousands of shares
Weighted average number of ordinary shares – basic
Shares issuable under equity-based compensation plans
Weighted average number of ordinary shares – diluted
2020
13,658
(2,951)
10,707
2020
85,850
1,469
87,319
2020
12.5
12.3
2019
8,074
(2,413)
5,661
2019
84,819
710
85,529
2019
6.7
6.6
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by
dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary
shares outstanding during the period. Diluted EPS is determined by adjusting the profit and loss attributable to ordinary
shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential
ordinary shares, which comprise share rights granted to employees.
(i) Share capital recognised during the year on the exercise of Share Appreciation Rights is based on the VWAP of the Company’s shares for the 20 business days prior to
Profit for the year attributable to equity holders of the parent
the vesting date of the rights of $1.89 (2019: $1.16).
Ordinary shares
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per
share at shareholder meetings.
Profit appropriation reserve
The profit appropriation reserve comprises profits appropriated by the parent entity.
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of
foreign operations.
Share-based payment reserve
The share-based payment reserve comprises the cumulative expense relating to the fair value of options, rights and equity
plans on issue to Key Management Personnel, senior Executives and employees of the Group less amounts transferred to
other reserves or to share capital on exercise of options, rights and equity plans.
Reserve change in ownership interest in subsidiary
The reserve change in ownership interest in subsidiary relates to a subsidiary equity plan.
Dividends
Dividend declared and/(or) paid by the Company to its members:
During the year ended 30 June 2020
Fully franked final dividend – 2019
Fully franked interim dividend – 2020
Subsequent to the balance sheet date, at the date of this report
Fully franked final dividend – 2020
During the year ended 30 June 2019
Fully franked final dividend – 2018
Fully franked interim dividend – 2019
Cents per share
in thousands of AUD Date of payment
Total amount
3.0
2.5
3.5
2.5
2.5
2,582
2,152
8 October 2019
19 March 2020
3,013
2 October 2020
2,140
2,140
8 October 2018
18 March 2019
Dividend franking account
In thousands of AUD
Franking credits available for future years at 30% to shareholders of Enero Group Limited
2020
16,257
2019
18,286
The above amounts represent the balance of the franking account at end of the financial year adjusted for:
•
•
•
•
franking credits that will arise from the payment of the current tax liability;
franking debits that will arise from the payment of dividends recognised as a liability at year end;
franking credits that will arise from the receipt of dividends recognised as receivables at year end; and
franking credits that may be prevented from being distributed in subsequent years.
54
54 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 55
Enero Group Limited – Annual Report 2020
The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends and
any restrictions to paying dividends.
Accounting policy
(i) Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share
options are recognised as a deduction from equity, net of tax effects.
(ii) Dividends
Dividends are recognised as a liability in the period in which they are declared.
(iii) Transaction costs
Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income tax
benefit.
18. Earnings per share
Profit attributable to equity holders of the parent
In thousands of AUD
Profit for the year
Non-controlling interests
Profit for the year attributable to equity holders of the parent
Weighted average number of ordinary shares
In thousands of shares
Weighted average number of ordinary shares – basic
Shares issuable under equity-based compensation plans
Weighted average number of ordinary shares – diluted
Earnings per share
In AUD cents
Basic
Diluted
2020
13,658
(2,951)
10,707
2020
85,850
1,469
87,319
2020
12.5
12.3
2019
8,074
(2,413)
5,661
2019
84,819
710
85,529
2019
6.7
6.6
Accounting policy
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by
dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary
shares outstanding during the period. Diluted EPS is determined by adjusting the profit and loss attributable to ordinary
shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential
ordinary shares, which comprise share rights granted to employees.
Enero Group Limited Annual Report 2020 55
55
Enero Group Limited – Annual Report 2020
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Notes to the consolidated financial statements
for the year ended 30 June 2020
FOR THE YEAR ENDED 30 JUNE 2020
19. Financial risk management/financial instruments
The Group’s exposure to financial risks, objectives, policies
and processes for managing the risks including methods
used to measure the risks, and the management of capital,
are presented below.
The Group’s activities expose it to the following financial
risks:
•
•
•
liquidity risk; and
market risk.
credit risk;
The Group’s principal financial instruments comprise cash,
receivables, payables, interest-bearing liabilities,
contingent consideration payable and other financial
liabilities.
The Board has overall responsibility for the oversight of the
risk management framework. Risk management policies
are established to identify and analyse the risks faced by
the Group, to set appropriate risk limits and controls, and to
monitor risks and adherence to limits. Risk management
policies and systems are reviewed regularly and modified
as appropriate to reflect changes in market conditions and
the Group’s activities.
The Group considers that there are no changes to the
objectives, policies and processes to managing risk and
the exposure to risks from the prior reporting period.
Credit risk
Exposure to credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to
meet its contractual obligation, and arises principally from
the Group’s receivables from customers.
Each subsidiary performs credit analysis of a new
customer and standard payment terms are offered only to
creditworthy customers.
During the year ended 30 June 2020, the Group entered
into transactions with more than 500 unique customers.
The 10 largest customers accounted for 41% of net
revenue for the year ended 30 June 2020, with no one
customer accounting for more than 12% of net revenue.
There are no material credit exposures relating to a single
receivable or groups of receivables.
The maximum exposure to credit risk is net of any
provisions for impairment of those assets, as disclosed in
the statement of financial position.
The carrying amount of financial assets represents the
maximum credit exposure. The maximum credit exposure
to credit risk at the reporting date was:
In thousands of AUD
Cash and cash equivalents
Trade and other
receivables
Work in progress
Deposits
Note
6
7
8
8
Carrying amount
2019
43,831
2020
47,581
34,611
1,513
188
83,893
33,791
2,475
197
80,294
The Group’s maximum exposure to trade receivables credit
risk at the reporting date was:
In thousands of AUD
Trade receivables
Note
7
Carrying amount
2019
33,752
2020
34,573
The Group’s credit risk exposure is consistent across the
geographic and business segments in which the Group
operates.
The movement in the allowance for impairment in respect
of trade receivables during the year was as follows:
In thousands of AUD
Balance at 1 July
Impairment loss recognised in:
– income statement
– opening retained earnings
Provision used during year
Balance at 30 June
Average credit loss for year(i)
Credit loss provision at balance
date(ii)
2020
329
191
–
(259)
261
0.5%
0.7%
2019
100
259
190
(220)
329
0.8%
1.0%
(i) Average credit loss for year is calculated by dividing impairment loss recognised
for the year by the gross trade receivables balance.
(ii) Credit loss provision at balance date is calculated by dividing the provision by
the gross trade receivable balance.
Impairment recognised to opening retained earnings at
1 July 2018 was determined with reference to the average
credit loss over the preceding three financial years. The
average credit loss was 0.7% of trade receivables.
Applying this percentage against the trade receivable
balance at 1 July 2018 of $27,083,000, an additional
$190,000 impairment was required on adoption on forward-
looking ‘expected loss’ impairment model required under
AASB 9 Financial Instruments.
The average credit loss was assessed at 30 June 2020
and despite uncertainty in trade receivables collections
during COVID-19, the average credit loss reduced from
0.8% to 0.5%. The Group continues to provision expected
credit losses higher than the average credit loss for each
financial year.
Impairment losses
The ageing of the Group’s trade receivables at the
reporting date was:
In thousands of AUD
Not past due
Past due and less than 90 days
Past due and more than 90 days
Past due, more than 90 days and
impaired
Gross trade receivables
Less: Impairment(i)
Net trade receivables
2020
30,425
4,061
87
261
34,834
(261)
34,573
2019
27,920
5,202
820
139
34,081
(329)
33,752
(i) Impairment includes trade receivables specifically impaired of $71,000 (2019:
$139,000) plus expected credit losses of $190,000 (2019: $190,000).
Currency risk
Market risk
Currency risk is the risk that the fair value of future cash
Market risk is the risk relating to changes in market prices,
flows of a financial instrument will fluctuate because of
such as foreign exchange rates, interest rates and equity
changes in foreign exchange rates. The source and nature
prices, which will affect the Group’s income or the value of
of this risk arises from operations and translation risks.
its holding of financial instruments. The objective of market
risk management is to manage and control market risk
exposure within acceptable parameters, while optimising
The Operating Brands segment generated approximately
57% of its net revenue and 62% of its Operating EBITDA
during the year ended 30 June 2020 from outside Australia.
The Group’s reporting currency is Australian dollars.
However, the international operations give rise to an
the return.
Liquidity risk
exposure to changes in foreign exchange rates, as the
meet its financial obligations as they become due. The
majority of its revenues from outside Australia are
Group’s approach to managing liquidity is to ensure, as far
denominated in currencies other than Australian dollars,
as possible, that it will always have sufficient liquidity to
most significantly Great British pound (GBP) and US dollar
meet its liabilities when due.
Liquidity risk is the risk that the Group will not be able to
(USD).
The Group’s currency risk exposure is limited
The Group manages liquidity risk by monitoring forecast
operating cash flows, and committed unutilised facilities;
predominantly to consolidated Australian dollar translation
and re-estimating the value of contingent consideration
risk as the majority of transactions denominated in foreign
liabilities semi-annually.
currencies are transacted by entities within the Group with
the same functional currency of the relevant transaction.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the
impact of netting agreements.
2020
In thousands of AUD
Non-derivative financial liabilities
Lease liabilities
Trade and other payables
(excluding unearned revenue)
Contingent consideration payable
2019
In thousands of AUD
Non-derivative financial liabilities
Hire purchase liabilities
Trade and other payables
(excluding unearned revenue)
Contingent consideration payable
Carrying
amount
Contractual
cash flows
Less than
1 year
1 to 5 years Over 5 years
16,907
28,746
25,553
71,206
493
25,613
33,801
59,907
18,431
28,746
26,263
73,440
498
25,613
35,620
61,731
6,421
28,746
15,263
50,430
498
25,613
11,696
37,807
12,010
–
11,000
23,010
–
–
23,924
23,924
Carrying
amount
Contractual
cash flows
Less than
1 year
1 to 5 years Over 5 years
–
–
–
–
–
–
–
–
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at significantly
different amounts.
Liquidity risk in relation to contingent consideration liabilities
There are critical accounting estimates and judgements in relation to contingent consideration liabilities. Refer to Note 13
Contingent consideration payables for further details.
There are no other significant uncertainties in the timing or amounts of contractual liabilities.
Interest rate risk refers to the risk that the fair value of the future cash flows of financial instruments will fluctuate because
of changes in market interest rates. The Group has no significant variable interest-bearing assets or liabilities at
The Group’s key sources of capital are available committed facilities and share capital. The Board seeks to maintain a
balance between higher returns that might be possible with higher levels of gearing and the advantages afforded by a
prudent capital position. The Group also has contingent consideration payables as described in Note 13 Contingent
Interest rate risk
30 June 2020.
Capital management
consideration payables.
56
56 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 57
Enero Group Limited – Annual Report 2020
Currency risk
Currency risk
Currency risk is the risk that the fair value of future cash
Currency risk is the risk that the fair value of future cash
flows of a financial instrument will fluctuate because of
flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. The source and nature
changes in foreign exchange rates. The source and nature
of this risk arises from operations and translation risks.
of this risk arises from operations and translation risks.
The Operating Brands segment generated approximately
The Operating Brands segment generated approximately
57% of its net revenue and 62% of its Operating EBITDA
57% of its net revenue and 62% of its Operating EBITDA
during the year ended 30 June 2020 from outside Australia.
during the year ended 30 June 2020 from outside Australia.
The Group’s reporting currency is Australian dollars.
The Group’s reporting currency is Australian dollars.
However, the international operations give rise to an
However, the international operations give rise to an
exposure to changes in foreign exchange rates, as the
exposure to changes in foreign exchange rates, as the
majority of its revenues from outside Australia are
majority of its revenues from outside Australia are
denominated in currencies other than Australian dollars,
denominated in currencies other than Australian dollars,
most significantly Great British pound (GBP) and US dollar
most significantly Great British pound (GBP) and US dollar
(USD).
(USD).
The Group’s currency risk exposure is limited
The Group’s currency risk exposure is limited
predominantly to consolidated Australian dollar translation
predominantly to consolidated Australian dollar translation
risk as the majority of transactions denominated in foreign
risk as the majority of transactions denominated in foreign
currencies are transacted by entities within the Group with
currencies are transacted by entities within the Group with
the same functional currency of the relevant transaction.
the same functional currency of the relevant transaction.
Market risk
Market risk
Market risk is the risk relating to changes in market prices,
Market risk is the risk relating to changes in market prices,
such as foreign exchange rates, interest rates and equity
such as foreign exchange rates, interest rates and equity
prices, which will affect the Group’s income or the value of
prices, which will affect the Group’s income or the value of
its holding of financial instruments. The objective of market
its holding of financial instruments. The objective of market
risk management is to manage and control market risk
risk management is to manage and control market risk
exposure within acceptable parameters, while optimising
exposure within acceptable parameters, while optimising
the return.
the return.
Liquidity risk
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they become due. The
meet its financial obligations as they become due. The
Group’s approach to managing liquidity is to ensure, as far
Group’s approach to managing liquidity is to ensure, as far
as possible, that it will always have sufficient liquidity to
as possible, that it will always have sufficient liquidity to
meet its liabilities when due.
meet its liabilities when due.
The Group manages liquidity risk by monitoring forecast
The Group manages liquidity risk by monitoring forecast
operating cash flows, and committed unutilised facilities;
operating cash flows, and committed unutilised facilities;
and re-estimating the value of contingent consideration
and re-estimating the value of contingent consideration
liabilities semi-annually.
liabilities semi-annually.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the
impact of netting agreements.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the
impact of netting agreements.
2020
2020
In thousands of AUD
In thousands of AUD
Non-derivative financial liabilities
Non-derivative financial liabilities
Lease liabilities
Lease liabilities
Trade and other payables
Trade and other payables
(excluding unearned revenue)
(excluding unearned revenue)
Contingent consideration payable
Contingent consideration payable
2019
2019
In thousands of AUD
In thousands of AUD
Non-derivative financial liabilities
Non-derivative financial liabilities
Hire purchase liabilities
Hire purchase liabilities
Trade and other payables
Trade and other payables
(excluding unearned revenue)
(excluding unearned revenue)
Contingent consideration payable
Contingent consideration payable
Carrying
Carrying
amount
amount
Contractual
cash flows
Contractual
cash flows
Less than
Less than
1 year
1 year
1 to 5 years Over 5 years
1 to 5 years Over 5 years
16,907
16,907
18,431
18,431
6,421
6,421
12,010
12,010
28,746
25,553
28,746
25,553
71,206
71,206
28,746
26,263
28,746
26,263
73,440
73,440
28,746
15,263
28,746
15,263
50,430
50,430
–
–
11,000
11,000
23,010
23,010
–
–
–
–
–
–
–
–
Carrying
Carrying
amount
amount
Contractual
cash flows
Contractual
cash flows
Less than
Less than
1 year
1 year
1 to 5 years Over 5 years
1 to 5 years Over 5 years
493
493
498
498
498
498
–
–
25,613
33,801
59,907
25,613
33,801
59,907
25,613
35,620
61,731
25,613
35,620
61,731
25,613
11,696
37,807
25,613
11,696
37,807
–
–
23,924
23,924
23,924
23,924
–
–
–
–
–
–
–
–
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at significantly
different amounts.
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at significantly
different amounts.
Liquidity risk in relation to contingent consideration liabilities
There are critical accounting estimates and judgements in relation to contingent consideration liabilities. Refer to Note 13
Contingent consideration payables for further details.
Liquidity risk in relation to contingent consideration liabilities
There are critical accounting estimates and judgements in relation to contingent consideration liabilities. Refer to Note 13
Contingent consideration payables for further details.
There are no other significant uncertainties in the timing or amounts of contractual liabilities.
There are no other significant uncertainties in the timing or amounts of contractual liabilities.
Interest rate risk
Interest rate risk refers to the risk that the fair value of the future cash flows of financial instruments will fluctuate because
of changes in market interest rates. The Group has no significant variable interest-bearing assets or liabilities at
30 June 2020.
Interest rate risk
Interest rate risk refers to the risk that the fair value of the future cash flows of financial instruments will fluctuate because
of changes in market interest rates. The Group has no significant variable interest-bearing assets or liabilities at
30 June 2020.
Capital management
Capital management
The Group’s key sources of capital are available committed facilities and share capital. The Board seeks to maintain a
The Group’s key sources of capital are available committed facilities and share capital. The Board seeks to maintain a
balance between higher returns that might be possible with higher levels of gearing and the advantages afforded by a
balance between higher returns that might be possible with higher levels of gearing and the advantages afforded by a
prudent capital position. The Group also has contingent consideration payables as described in Note 13 Contingent
prudent capital position. The Group also has contingent consideration payables as described in Note 13 Contingent
consideration payables.
consideration payables.
Enero Group Limited Annual Report 2020 57
Enero Group Limited Annual Report 2020 57
57
Enero Group Limited – Annual Report 2020
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Notes to the consolidated financial statements
for the year ended 30 June 2020
FOR THE YEAR ENDED 30 JUNE 2020
19. Financial risk management/financial instruments (continued)
Fair values
Fair values versus carrying amounts
The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial
position, are as follows:
Consolidated
In thousands of AUD
Cash at bank and on hand
Bank short-term deposits
Trade receivables
Work in progress
Trade and other payables
Contingent consideration payable
Lease liabilities
Hire purchase lease liabilities
Fair value measurement:
Carrying
amount
34,447
13,134
34,573
1,513
(28,746)
(25,553)
(16,907)
–
2020
Fair value
34,447
13,134
34,573
1,513
(28,746)
(25,553)
(16,907)
–
Carrying
amount
24,610
19,221
33,752
2,475
(25,613)
(33,801)
–
(493)
2019
Fair value
24,610
19,221
33,752
2,475
(25,613)
(33,801)
–
(493)
Level 3 fair values
The following tables show the valuation techniques used in measuring Level 3 fair values for financial instruments
measured at fair value in the statement of financial position, as well as the significant unobservable inputs used.
Type
Contingent
consideration
payable
Valuation technique
Discounted cash flows: The valuation model
considers the present value of expected
payment, discounted using a risk-adjusted
discount rate. The expected payment is
determined by considering the possible
scenarios of forecast average EBIT, the
amount to be paid under each scenario and
the probability of each scenario.
Significant unobservable
inputs
– Forecast average
EBIT.
– Risk-adjusted
discount rate: 3.75%
to 4.55%.
Inter-relationship between
significant unobservable
inputs and fair value
measurement
The estimated fair value
would increase (decrease) if:
–
the EBIT is higher
(lower); or
–
the risk-adjusted discount
rate were lower (higher).
Reconciliation of Level 3 fair values
In thousands of AUD
Carrying amount at the beginning of the year
Re-assessment of contingent consideration
Unwind of present value interest
Effect of movements in exchange rates
Contingent consideration paid
Carrying amount at the end of the year
2020
33,801
2,174
1,181
320
(11,923)
25,553
2019
25,802
6,390
1,153
456
–
33,801
Sensitivity analysis
Reasonably possible changes at 30 June 2020 to one of the significant unobservable inputs, holding other inputs
constant, would have the following effects on the fair values of contingent consideration:
Average EBIT
•
Eastwick: the contingent consideration period ended on 30 June 2020 and the amount payable is not subject
to the future performance of Eastwick.
• Orchard Marketing: consideration payable to vendors of Orchard Marketing is recognised at a total purchase
price cap. It would require greater than a 19.7% decrease in the average EBIT estimate over the contingent
consideration period to reduce the contingent consideration payable from its recognised amount.
Risk-adjusted discount rate
In thousands of AUD
Movement of 0.5%
Increase
(195)
Decrease
195
Other items
•
•
reporting date.
The carrying amount of cash and cash equivalents, trade and other receivables, trade and other payables and lease
liabilities approximates their fair value. The fair value which is determined for disclosure purposes only is calculated as:
Trade receivables: is the present value of future cash flows, discounted at the market rate of interest at the
Trade and other payables and lease liabilities: is the present value of future principal and interest cash flows,
discounted at the market rate of interest at the reporting date. For leases, the market rate of interest is determined
by reference to Group’s incremental borrowing rate of the same term as the underlying lease.
Accounting policy
Non-derivative financial assets
Non-derivative financial liabilities
Non-derivative financial assets are recognised on the
Non-derivative financial liabilities are recognised on the
date that they are originated. All other financial assets
date they are originated. All other financial liabilities
(including assets designated as fair value through the
(including liabilities designated at fair value through profit
profit and loss) are recognised initially on the trade date
or loss) are recognised initially on the trade date at which
at which the Group becomes a party to the contractual
the Group becomes a party to the contractual provisions of
provisions of the instrument.
the instrument.
Non-derivative financial assets are derecognised when the
rights to receive cash flows from the financial assets have
expired or have been transferred and the Group has
transferred substantially all the risks and rewards of
ownership.
Financial assets and liabilities are offset and the net
amount presented in the statement of financial position
when, and only when, the Group has a legal right to offset
the amounts and intends either to settle on a net basis or
to realise the asset and settle the liability simultaneously.
The Group has the following non-derivative financial
assets:
(i) Trade and other receivables
Trade and other receivables are financial assets with fixed
or determinable payments that are not quoted in an active
market. They arise when the Group provides money or
services directly to a debtor with no intention of selling the
receivable.
Trade and other receivables are recognised initially at fair
value, plus any directly attributable transaction costs.
Subsequent to initial recognition, trade and other
receivables are measured at amortised cost using the
effective interest method, less a loss allowance equal to
the expected credit loss determined under the expected
credit loss assessment for receivables.
Non-derivative financial liabilities are derecognised when
the Group’s contractual obligations are discharged or
cancelled, or expire.
The Group has the following non-derivative financial
liabilities: loans and borrowings, trade, other payables and
contingent consideration payable.
Non-derivative financial liabilities, other than contingent
consideration payable, are recognised initially at fair value,
plus any directly attributable transaction costs. Subsequent
to initial recognition, these financial liabilities are measured
at amortised cost using the effective interest rate method.
Contingent consideration payable is classified as a
financial liability and is measured at fair value through
profit or loss. Contingent consideration relating to
acquisition of subsidiaries is recognised based on
management’s best estimate of the liability (up to any
relevant cap) at the reporting date. The liability is
discounted using a market interest rate for the liability and
a present value interest charge is recognised in the income
statement as the discount unwinds. Any change in
estimate of contingent consideration payable is recognised
in the income statement as a fair value gain or loss during
the period when the estimate is revised.
Derivative financial instruments including hedging
accounting
The Group may use derivative financial instruments to
hedge its exposure to interest rate risks and foreign
(ii) Work in progress
Work in progress represents accrued revenue recognised
upon satisfaction of performance obligations and
currency risks.
rechargeable disbursements at the period end which are
Derivatives are initially recognised at fair value on the date
not invoiced, and is stated at the lower of cost and net
a derivative contract is entered into and are subsequently
realisable value.
(iii) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and
call deposits with original maturities of three months or
remeasured to their fair value. The method of recognising
the resulting gain or loss depends on whether the
derivative is designated as a hedging instrument, and if so,
the nature of the item being hedged.
less. Bank overdrafts that are repayable on demand and
The Group designates certain derivatives as either hedges
form an integral part of the Group’s cash management are
of the fair value of recognised assets or liabilities or a firm
included as a component of cash and cash equivalents for
commitment (fair value hedges), or hedges of probable
the purpose of the statement of cash flows.
forecast transactions (cash flow hedges).
58
58 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 59
Enero Group Limited – Annual Report 2020
Other items
The carrying amount of cash and cash equivalents, trade and other receivables, trade and other payables and lease
liabilities approximates their fair value. The fair value which is determined for disclosure purposes only is calculated as:
•
Trade receivables: is the present value of future cash flows, discounted at the market rate of interest at the
reporting date.
•
Trade and other payables and lease liabilities: is the present value of future principal and interest cash flows,
discounted at the market rate of interest at the reporting date. For leases, the market rate of interest is determined
by reference to Group’s incremental borrowing rate of the same term as the underlying lease.
Accounting policy
Non-derivative financial assets
Non-derivative financial assets are recognised on the
date that they are originated. All other financial assets
(including assets designated as fair value through the
profit and loss) are recognised initially on the trade date
at which the Group becomes a party to the contractual
provisions of the instrument.
Non-derivative financial assets are derecognised when the
rights to receive cash flows from the financial assets have
expired or have been transferred and the Group has
transferred substantially all the risks and rewards of
ownership.
Financial assets and liabilities are offset and the net
amount presented in the statement of financial position
when, and only when, the Group has a legal right to offset
the amounts and intends either to settle on a net basis or
to realise the asset and settle the liability simultaneously.
The Group has the following non-derivative financial
assets:
(i) Trade and other receivables
Trade and other receivables are financial assets with fixed
or determinable payments that are not quoted in an active
market. They arise when the Group provides money or
services directly to a debtor with no intention of selling the
receivable.
Trade and other receivables are recognised initially at fair
value, plus any directly attributable transaction costs.
Subsequent to initial recognition, trade and other
receivables are measured at amortised cost using the
effective interest method, less a loss allowance equal to
the expected credit loss determined under the expected
credit loss assessment for receivables.
(ii) Work in progress
Work in progress represents accrued revenue recognised
upon satisfaction of performance obligations and
rechargeable disbursements at the period end which are
not invoiced, and is stated at the lower of cost and net
realisable value.
(iii) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and
call deposits with original maturities of three months or
less. Bank overdrafts that are repayable on demand and
form an integral part of the Group’s cash management are
included as a component of cash and cash equivalents for
the purpose of the statement of cash flows.
Non-derivative financial liabilities
Non-derivative financial liabilities are recognised on the
date they are originated. All other financial liabilities
(including liabilities designated at fair value through profit
or loss) are recognised initially on the trade date at which
the Group becomes a party to the contractual provisions of
the instrument.
Non-derivative financial liabilities are derecognised when
the Group’s contractual obligations are discharged or
cancelled, or expire.
The Group has the following non-derivative financial
liabilities: loans and borrowings, trade, other payables and
contingent consideration payable.
Non-derivative financial liabilities, other than contingent
consideration payable, are recognised initially at fair value,
plus any directly attributable transaction costs. Subsequent
to initial recognition, these financial liabilities are measured
at amortised cost using the effective interest rate method.
Contingent consideration payable is classified as a
financial liability and is measured at fair value through
profit or loss. Contingent consideration relating to
acquisition of subsidiaries is recognised based on
management’s best estimate of the liability (up to any
relevant cap) at the reporting date. The liability is
discounted using a market interest rate for the liability and
a present value interest charge is recognised in the income
statement as the discount unwinds. Any change in
estimate of contingent consideration payable is recognised
in the income statement as a fair value gain or loss during
the period when the estimate is revised.
Derivative financial instruments including hedging
accounting
The Group may use derivative financial instruments to
hedge its exposure to interest rate risks and foreign
currency risks.
Derivatives are initially recognised at fair value on the date
a derivative contract is entered into and are subsequently
remeasured to their fair value. The method of recognising
the resulting gain or loss depends on whether the
derivative is designated as a hedging instrument, and if so,
the nature of the item being hedged.
The Group designates certain derivatives as either hedges
of the fair value of recognised assets or liabilities or a firm
commitment (fair value hedges), or hedges of probable
forecast transactions (cash flow hedges).
Enero Group Limited Annual Report 2020 59
59
Enero Group Limited – Annual Report 2020
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Notes to the consolidated financial statements
for the year ended 30 June 2020
FOR THE YEAR ENDED 30 JUNE 2020
19. Financial risk management/financial instruments (continued)
The Group documents at the inception of the transaction
the relationship between hedging instruments and hedged
items, as well as its risk management objective and
strategy for undertaking various hedge transactions. The
Group also documents its assessment, both at hedge
inception and on an on-going basis, of whether the
derivatives that are used in hedging transactions have
been and will continue to be effective in offsetting changes
in fair values or cash flows of hedged items.
Cash flow hedges
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash flow
hedges is recognised in other comprehensive income. The
gain or loss relating to the ineffective portion is recognised
immediately in the income statement.
When a hedging instrument expires or is sold or
terminated, or when a hedge no longer meets the criteria
for hedge accounting, any cumulative gain or loss existing
in equity at that time remains in equity and is recognised
when the forecast transaction is ultimately recognised in
the income statement.
When the hedged item is a non-financial asset, the amount
recognised in other comprehensive income is transferred
to the carrying amount of the asset when it is recognised.
When a forecast transaction is no longer expected to
occur, the cumulative gain or loss that was reported in
equity is immediately transferred to the income statement.
Impairment of Financial assets (including receivables)
A financial asset not carried at fair value through profit or
loss is assessed on a monthly basis to determine whether
there is any objective evidence that it is impaired. A
financial asset is considered to be impaired if objective
evidence indicates that one or more events have had a
negative effect on the estimated future cash flows of that
asset that can be estimated reliably.
Objective evidence that financial assets are impaired can
include default or delinquency by a debtor, restructuring of
an amount due to the Group on terms that the Group would
not consider otherwise, and/or indications that a debtor or
issuer will enter bankruptcy.
Expected credit loss assessment for receivables and
contract assets
In addition to identifying impairment for specific financial
assets, at each reporting date the Group also predicts the
expected credit loss based on actual credit loss experience
of the past three years. Expected credit losses are
recognised in the income statement and reflected in an
allowance account against receivables. An impairment loss
in respect of a financial asset measured at amortised cost
is calculated as the difference between its carrying amount
and the present value of the estimated future cash flows
discounted at the original effective interest rate.
Key estimates
Trade receivables are carried at amortised cost less
impairment. The impairment of these receivables is an
estimate based on:
•
•
evidence suggesting that an event has occurred
leading to a negative effect on the estimated
future cash inflow; and
prediction of expected credit loss based on actual
credit loss experience of the past three years.
Events subsequent to the reporting date but prior to the
signing of the financial statements which indicate a
negative effect are taken into account in the calculation of
impairment. Future events may occur which change these
estimates of the future cash inflows related to impaired
trade receivables.
20. Financing arrangements
The Group has access to the following lines of credit:
In thousands of AUD
2020
Total facilities
available
Facilities utilised at
reporting date
Facilities not utilised at
reporting date
2019
Total facilities
available
Facilities utilised at
reporting date
Facilities not utilised at
reporting date
Hire
purchase
facility
Indemnity
guarantee
facility
Credit
card
facility
Total
–
–
–
3,628
1,670
5,298
2,105
149
2,254
1,523
1,521
3,044
493
3,489 1,972 5,954
493
2,057
317 2,867
–
1,432 1,655 3,087
All finance facilities are negotiated by the Company on
behalf of the Group. The carrying amount of amounts
drawn down on facilities as at the reporting date equates to
face value. The indemnity guarantee facility is secured by
cash deposits held with the bank.
Hire purchase facility
The hire purchase facility is subject to annual review and is
in place to assist with capital expenditure requirements.
The Group leases plant, equipment and leasehold
improvements under hire purchase expiring from one to
five years (2019: one to five years). At the end of the hire
purchase term, the Group has the option to purchase the
equipment at a substantial discount to market value. The
terms of the hire purchase require that additional debts are
not undertaken without prior approval of the lender.
Indemnity guarantee facility
The indemnity guarantee facility is in place to support
financial guarantees outstanding at any one time. Specific
guarantee amounts are $1,976,000 (2019: $2,057,000)
supporting property rental and other obligations.
Credit card facility
The credit card facility is subject to annual review and is
subject to application approval and the bank or financial
services company’s standard terms and conditions.
21. Impairment of non-financial assets
The process of impairment testing is to estimate the
recoverable amount of the assets concerned, and
recognise an impairment loss in the Income Statement
whenever the carrying amount of those assets exceeds
the recoverable amount.
Impairment tests for cash-generating unit (CGU) groups
containing goodwill
All the operating businesses are managed as one
collective group which forms the Operating Brands
segment.
For the purpose of impairment testing, goodwill is
allocated to the Group’s operating business units that
represent the lowest level within the Group at which
goodwill is monitored for internal management purposes
and synergies obtained by the business unit.
The aggregation of assets in the CGU group continues
to be determined using a service offering. The Search
Marketing businesses do not form part of the Operating
Brands CGU group as they do not obtain synergies with
the businesses in that CGU group; however they are
included in the Operating Brands segment. They have
no carrying value.
The recoverable amount of the CGU group was based
on value in use in both the current and prior year. The
methodologies and assumptions used for calculating
value in use for all of the CGU groups have remained
materially consistent with those applied in prior years.
Key assumptions
Key assumptions used in the value in use approach to
test for impairment relate to the discount rate and the
medium-term and long-term growth rates applied to
projected cash flows.
Projected cash flows
The projected first year of cash flows is derived from the
current financial year cash flows adjusted in some cases
for next financial year’s Board and management
approved budgets. This reflects the best estimate of the
CGU group’s cash flows at the time of this report.
Projected cash flows can differ from future actual cash
flows and results of operations.
Consideration was given to the impact of COVID-19 on the
projected cash flows. Projected cash flow assumption
methodologies were unchanged from the prior period based
impaired.
on:
•
•
•
the actual cash flows achieved for the year ended
30 June 2020 including the period impacted by
COVID-19;
the Groups high sector exposure to technology,
healthcare and consumer staples clients and low
sector exposure to travel and tourism clients; and
further operating cost reduction strategies available
if cash flows reduce.
Discount rates
Discount rates are based on the Group’s pre-tax
weighted average cost of capital (WACC) adjusted if
necessary to reflect the specific characteristics of each
CGU group and to obtain a post-tax discount rate.
Discount rates used are appropriate for the currency in
which cash flows are generated and are adjusted to
reflect the current view on the appropriate debt equity
ratio and risks inherent in assessing future cash flows.
Growth rate
A compound average growth rate (CAGR) of 2.4%
(30 June 2019: 2.4%) has been applied to the cash
flows of the first five years of cash flows. The five years
of cash flows are discounted to present value. The
growth rate is based on analysis of organic growth
expectations, historical growth rates and industry growth
rates. The growth rate also takes into account weighting
of international operations of the Group.
Long-term growth rate into perpetuity
Long-term growth rate of 2.5% (30 June 2019: 2.5%) is
used into perpetuity, based on the expected long-range
growth rate for the industry.
Impairment testing key assumptions for Operating
Brands CGU group
In thousands of AUD
Post-tax discount rate %
Pre-tax discount rate %
Long-term perpetuity
growth rate %
2020
2019
8.33 – 10.16
8.75 – 10.59
9.99 – 13.67 10.63 – 13.98
2.50
2.50
Sensitivity range for impairment testing assumptions
As at 30 June 2020, management has identified that for
the carrying amount to exceed the recoverable amount
the discount rate would need to increase by 1.7% to
3.5% depending on the currency. A nil growth rate in the
cash flows of the first five years would continue to
generate an estimated recoverable amount above the
carrying amount.
Accounting policy
The carrying amounts of the Group’s non-financial
assets, other than deferred tax assets, are reviewed at
each reporting date to determine whether there is any
indication of impairment. If any such indication exists,
then the asset’s recoverable amount is estimated.
Goodwill and intangible assets that have an indefinite
useful life are not subject to amortisation and are tested
annually for impairment or more frequently if events or
changes in circumstances indicate that they might be
An impairment loss is recognised if the carrying amount
of an asset exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s value in
use and fair value less costs to sell. In assessing value
in use, the estimated future post-tax cash flows are
discounted to their present value using a post-tax
discount rate that reflects current market assessments
of the time value of money and the risks specific to the
asset.
For the purpose of assessing impairment, assets are
grouped together into the smallest group of assets that
generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets
or groups of assets (the ‘cash-generating unit’).
60
60 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 61
Enero Group Limited – Annual Report 2020
21. Impairment of non-financial assets
The process of impairment testing is to estimate the
recoverable amount of the assets concerned, and
recognise an impairment loss in the Income Statement
whenever the carrying amount of those assets exceeds
the recoverable amount.
Impairment tests for cash-generating unit (CGU) groups
containing goodwill
All the operating businesses are managed as one
collective group which forms the Operating Brands
segment.
For the purpose of impairment testing, goodwill is
allocated to the Group’s operating business units that
represent the lowest level within the Group at which
goodwill is monitored for internal management purposes
and synergies obtained by the business unit.
The aggregation of assets in the CGU group continues
to be determined using a service offering. The Search
Marketing businesses do not form part of the Operating
Brands CGU group as they do not obtain synergies with
the businesses in that CGU group; however they are
included in the Operating Brands segment. They have
no carrying value.
The recoverable amount of the CGU group was based
on value in use in both the current and prior year. The
methodologies and assumptions used for calculating
value in use for all of the CGU groups have remained
materially consistent with those applied in prior years.
Key assumptions
Key assumptions used in the value in use approach to
test for impairment relate to the discount rate and the
medium-term and long-term growth rates applied to
projected cash flows.
Projected cash flows
The projected first year of cash flows is derived from the
current financial year cash flows adjusted in some cases
for next financial year’s Board and management
approved budgets. This reflects the best estimate of the
CGU group’s cash flows at the time of this report.
Projected cash flows can differ from future actual cash
flows and results of operations.
Consideration was given to the impact of COVID-19 on the
projected cash flows. Projected cash flow assumption
methodologies were unchanged from the prior period based
on:
•
•
•
the actual cash flows achieved for the year ended
30 June 2020 including the period impacted by
COVID-19;
the Groups high sector exposure to technology,
healthcare and consumer staples clients and low
sector exposure to travel and tourism clients; and
further operating cost reduction strategies available
if cash flows reduce.
Discount rates
Discount rates are based on the Group’s pre-tax
weighted average cost of capital (WACC) adjusted if
necessary to reflect the specific characteristics of each
CGU group and to obtain a post-tax discount rate.
Discount rates used are appropriate for the currency in
which cash flows are generated and are adjusted to
reflect the current view on the appropriate debt equity
ratio and risks inherent in assessing future cash flows.
Growth rate
A compound average growth rate (CAGR) of 2.4%
(30 June 2019: 2.4%) has been applied to the cash
flows of the first five years of cash flows. The five years
of cash flows are discounted to present value. The
growth rate is based on analysis of organic growth
expectations, historical growth rates and industry growth
rates. The growth rate also takes into account weighting
of international operations of the Group.
Long-term growth rate into perpetuity
Long-term growth rate of 2.5% (30 June 2019: 2.5%) is
used into perpetuity, based on the expected long-range
growth rate for the industry.
Impairment testing key assumptions for Operating
Brands CGU group
In thousands of AUD
Post-tax discount rate %
Pre-tax discount rate %
Long-term perpetuity
growth rate %
2019
2020
8.33 – 10.16
8.75 – 10.59
9.99 – 13.67 10.63 – 13.98
2.50
2.50
Sensitivity range for impairment testing assumptions
As at 30 June 2020, management has identified that for
the carrying amount to exceed the recoverable amount
the discount rate would need to increase by 1.7% to
3.5% depending on the currency. A nil growth rate in the
cash flows of the first five years would continue to
generate an estimated recoverable amount above the
carrying amount.
Accounting policy
The carrying amounts of the Group’s non-financial
assets, other than deferred tax assets, are reviewed at
each reporting date to determine whether there is any
indication of impairment. If any such indication exists,
then the asset’s recoverable amount is estimated.
Goodwill and intangible assets that have an indefinite
useful life are not subject to amortisation and are tested
annually for impairment or more frequently if events or
changes in circumstances indicate that they might be
impaired.
An impairment loss is recognised if the carrying amount
of an asset exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s value in
use and fair value less costs to sell. In assessing value
in use, the estimated future post-tax cash flows are
discounted to their present value using a post-tax
discount rate that reflects current market assessments
of the time value of money and the risks specific to the
asset.
For the purpose of assessing impairment, assets are
grouped together into the smallest group of assets that
generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets
or groups of assets (the ‘cash-generating unit’).
Enero Group Limited Annual Report 2020 61
61
Enero Group Limited – Annual Report 2020
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Notes to the consolidated financial statements
for the year ended 30 June 2020
FOR THE YEAR ENDED 30 JUNE 2020
21. Impairment of non-financial assets (continued)
For the purposes of goodwill impairment testing, cash-generating units (CGUs) to which goodwill has been allocated are
aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored for
internal reporting purposes.
Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of goodwill and then to
reduce the carrying amount of the other assets on a pro-rata basis.
At each reporting date, the Group reviews non-financial assets other than goodwill that have been previously impaired for
indications that the conditions that resulted in the impairment have reversed.
22. Controlled entities
Particulars in relation to controlled entities:
Name
Parent entity
Enero Group Limited
Controlled entities
Enero Group UK Holdings Pty Limited
– Enero Group UK Limited
Enero Group (US) Pty Limited
– Enero Group (US) Inc.
BMF Holdco Pty Limited
BMF Advertising Pty Limited
Hotwire Integrated Communications Pty Limited
Naked Communications Australia Pty Limited
Hotwire Australia Pty Limited
Orchard Marketing Pty Ltd
Alfie Agency Pty Ltd
CPR Communications and Public Relations Pty Limited
Love Pty Limited
Domain Active Holdco Pty Limited
– Domain Active Pty Limited
The Leading Edge Market Research Consultants Pty Limited
– The Leading Edge Market Research Consultants Limited
– Enero Group Singapore Pte Limited
The Digital Edge Online Consultants Pty Limited
Brigade Pty Limited
The Hotwire Public Relations Group Limited
– Hotwire Public Relations GMBH
– Hotwire Public Relations SARL
– Hotwire Public Relations SL
– Hotwire Public Relations SRL
– Hotwire Public Relations Limited
– Skywrite Communications Limited
– 33 Digital Limited
Naked Communications Limited
– Naked Numbers Limited
– Naked Communications Holdings Inc.
– Naked New York LLC
Lorica Group Limited
– Corporate Edge Group Limited
Frank Public Relations Limited
– Frank Public Relations Pty Limited
– Frank Public Reactions Inc.
OB Media LLC
SiteMath LLC
– Clicksciences.com LLC
The Leading Edge Research & Strategy Consultants LLC
Orchard Creative Technology Inc.
Hotwire Public Relations Group LLC
Hotwire New Zealand Limited
Enero Group NZ Ltd
Group interest
2019
%
2020
%
Country of
incorporation
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
75
75
75
51
51
51
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
75
75
75
51
51
51
100
100
100
100
100
Australia
UK
Australia
USA
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
UK
Singapore
Australia
Australia
UK
Germany
France
Spain
Italy
UK
UK
UK
UK
UK
USA
USA
UK
UK
UK
Australia
USA
USA
USA
USA
USA
USA
USA
New Zealand
New Zealand
Accounting policy
Basis of consolidation
(i) Business combinations
Business combinations are accounted for using the acquisition method. For every business combination, the Group
identifies the acquirer, which is the combining entity that obtains control of other combining entities or businesses. The
acquisition date is the date on which control is transferred to the acquirer. Judgement is applied in determining the
acquisition date and determining whether control is transferred from one party to another.
Goodwill arising from the business combination is measured at fair value of the consideration transferred including the
recognised amount of any non-controlling interests in the acquiree, less the net recognised amount (generally fair value) of
the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. Non-controlling interest is
measured at its proportionate interest in the identifiable net assets of the acquiree.
Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Group to the previous
owners of the acquiree, and equity interests issued by the Group. Consideration transferred also includes the fair value of
any contingent consideration and share-based payment awards of the acquiree that are replaced mandatorily in the
business combination.
A contingent liability of the acquiree assumed in a business combination is recognised only if such a liability represents a
present obligation and arises from a past event, and its fair value can be measured reliably.
Transaction costs incurred in connection with a business combination are expensed as incurred.
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the
The financial statements of subsidiaries are included in the consolidated financial statements from the date on which
control commences until the date on which control ceases.
Intra-group balances, and any unrealised gains and losses or income and expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial statement.
(ii) Subsidiaries
activities of the entity.
.
62
62 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 63
Enero Group Limited – Annual Report 2020
Accounting policy
Basis of consolidation
(i) Business combinations
Business combinations are accounted for using the acquisition method. For every business combination, the Group
identifies the acquirer, which is the combining entity that obtains control of other combining entities or businesses. The
acquisition date is the date on which control is transferred to the acquirer. Judgement is applied in determining the
acquisition date and determining whether control is transferred from one party to another.
Goodwill arising from the business combination is measured at fair value of the consideration transferred including the
recognised amount of any non-controlling interests in the acquiree, less the net recognised amount (generally fair value) of
the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. Non-controlling interest is
measured at its proportionate interest in the identifiable net assets of the acquiree.
Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Group to the previous
owners of the acquiree, and equity interests issued by the Group. Consideration transferred also includes the fair value of
any contingent consideration and share-based payment awards of the acquiree that are replaced mandatorily in the
business combination.
A contingent liability of the acquiree assumed in a business combination is recognised only if such a liability represents a
present obligation and arises from a past event, and its fair value can be measured reliably.
Transaction costs incurred in connection with a business combination are expensed as incurred.
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the
activities of the entity.
The financial statements of subsidiaries are included in the consolidated financial statements from the date on which
control commences until the date on which control ceases.
Intra-group balances, and any unrealised gains and losses or income and expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial statement.
.
Enero Group Limited Annual Report 2020 63
63
Enero Group Limited – Annual Report 2020
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Notes to the consolidated financial statements
for the year ended 30 June 2020
FOR THE YEAR ENDED 30 JUNE 2020
23. Parent entity disclosures
As at, and throughout, the financial year ended 30 June 2020, the parent Company of the Group was Enero Group
Limited.
In thousands of AUD
Result of the parent entity
Profit/(loss) for the year
Other comprehensive income
Total comprehensive income for the year
Financial position of the parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Total equity of the parent entity comprising:
Share capital
Share-based payment reserve
Profit appropriation reserve
Accumulated losses
Total equity
2020
16,988
–
16,988
21,929
155,885
16,309
37,155
118,730
99,515
10,541
33,209
(24,535)
118,730
The Company
2019
(2,100)
–
(2,100)
27,061
152,513
24,629
46,108
106,405
97,412
12,080
20,955
(24,042)
106,405
(i) For dividends declared and paid by the Company to members since the end of the previous financial year, refer to Note 17 Capital and reserves.
Parent entity guarantees in respect of debts of its subsidiaries
The parent entity has entered into a Deed of Cross Guarantee with the effect that the Company guarantees debts in
respect of its subsidiaries.
Further details of the Deed of Cross Guarantee, and the subsidiaries subject to the deed, are disclosed in
Note 24 Deed of Cross Guarantee.
Contingent liabilities
Indemnities
Indemnities have been provided to Directors and certain Executive Officers of the Company in respect to third parties
arising from their positions, except where the liability arises out of conduct involving lack of good faith. No monetary limit
applied to these agreements and there are no known obligations outstanding at 30 June 2020.
The subsidiaries subject to the Deed are:
Trade and other payables
10,251
11,036
– The Leading Edge Market Research Consultants Pty
Contingent consideration payable
Statement of financial position
In thousands of AUD
Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total current assets
Receivables
Other financial assets
Deferred tax assets
Plant and equipment
Right-of-use assets
Intangible assets
Total non-current assets
Total assets
Liabilities
Lease liabilities
Employee benefits
Provisions
Total current liabilities
Contingent consideration payable
Lease liabilities
Employee benefits
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share-based payment reserve
Profit appropriation reserve
Accumulated losses
Total equity
2020
2019
19,331
24,565
5,779
1,072
26,182
62,693
30,558
1,967
2,909
6,178
6,154
1,004
31,723
53,620
30,558
2,124
3,619
–
16,387
16,387
120,692 106,308
146,874 138,031
4,946
3,113
1,545
–
19,855
10,434
6,646
423
–
17,503
37,358
109,516
5,934
493
1,874
640
19,977
14,718
–
352
3,040
18,110
38,087
99,944
99,515
10,541
33,209
97,412
12,080
20,955
(33,749)
(30,503)
109,516
99,944
24. Deed of Cross Guarantee
Pursuant to ASIC Class Order 98/1418 (as amended)
dated 13 August 1998, the wholly owned subsidiaries
listed below are relieved from the Corporations Act 2001
requirements for the preparation, audit and lodgement of
financial statements and a Directors’ Report.
It is a condition of the Class Order that the Company
and each of the subsidiaries enter into a Deed of Cross
Guarantee. The effect of the Deed is that the Company
guarantees to each creditor payment in full of any debt
in the event of winding up of any of the subsidiaries
under certain provisions of the Corporations Act 2001. If
a winding up occurs under other provisions of the Act,
the Company will only be liable in the event that after six
months any creditor has not been paid in full. The
subsidiaries have also given similar guarantees in
the event that the Company is wound up.
Limited; and
– BMF Holdco Pty Limited.
A consolidated income statement and consolidated
statement of financial position, comprising the Company
and controlled entities which are party to the Deed, after
eliminating all transactions between parties to the Deed
of Cross Guarantee, at 30 June 2020, is set out as
Summarised income statement and retained profits
follows:
In thousands of AUD
Net revenue
Dividends received from subsidiaries
Employee expenses
Operating and other expenses
Profit/(loss) before income tax
2020
26,252
13,571
2019
25,746
–
(23,076)
(22,704)
(4,290)
(4,563)
12,457
(1,521)
1,792
14,249
3,071
1,550
Equity holders of the Company
14,249
1,550
Accumulated losses at beginning of year
(30,503)
(32,053)
Income tax benefit
Profit for the year
Attributable to:
Accumulated losses
Adjustment on initial application of
AASB 16
Profit for the year
Transfer to profit appropriation reserve
(16,988)
Accumulated losses at end of year
(33,749)
(30,503)
Profit appropriation reserve
Profit appropriation reserve at beginning
of year
Dividend paid during the year
Profit for the year
Profit appropriation reserve at end of
year
(507)
14,249
1,550
–
–
20,955
25,235
(4,734)
(4,280)
16,988
–
33,209
20,955
64
64 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 65
Enero Group Limited – Annual Report 2020
24. Deed of Cross Guarantee
Pursuant to ASIC Class Order 98/1418 (as amended)
dated 13 August 1998, the wholly owned subsidiaries
listed below are relieved from the Corporations Act 2001
requirements for the preparation, audit and lodgement of
financial statements and a Directors’ Report.
It is a condition of the Class Order that the Company
and each of the subsidiaries enter into a Deed of Cross
Guarantee. The effect of the Deed is that the Company
guarantees to each creditor payment in full of any debt
in the event of winding up of any of the subsidiaries
under certain provisions of the Corporations Act 2001. If
a winding up occurs under other provisions of the Act,
the Company will only be liable in the event that after six
months any creditor has not been paid in full. The
subsidiaries have also given similar guarantees in
the event that the Company is wound up.
The subsidiaries subject to the Deed are:
– The Leading Edge Market Research Consultants Pty
Limited; and
– BMF Holdco Pty Limited.
A consolidated income statement and consolidated
statement of financial position, comprising the Company
and controlled entities which are party to the Deed, after
eliminating all transactions between parties to the Deed
of Cross Guarantee, at 30 June 2020, is set out as
follows:
Summarised income statement and retained profits
In thousands of AUD
Net revenue
Dividends received from subsidiaries
Employee expenses
Operating and other expenses
Profit/(loss) before income tax
Income tax benefit
Profit for the year
Attributable to:
Equity holders of the Company
Accumulated losses
Accumulated losses at beginning of year
2020
26,252
13,571
(23,076)
(4,290)
12,457
1,792
14,249
(30,503)
14,249
2019
25,746
–
(22,704)
(4,563)
(1,521)
3,071
1,550
1,550
(32,053)
Statement of financial position
In thousands of AUD
Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total current assets
Receivables
Other financial assets
Deferred tax assets
Plant and equipment
Right-of-use assets
Intangible assets
Total non-current assets
Total assets
Liabilities
Trade and other payables
Contingent consideration payable
Lease liabilities
Employee benefits
Provisions
Total current liabilities
Contingent consideration payable
Lease liabilities
Employee benefits
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share-based payment reserve
Profit appropriation reserve
Accumulated losses
Total equity
2020
2019
19,331
5,779
1,072
26,182
62,693
30,558
1,967
2,909
6,178
16,387
24,565
6,154
1,004
31,723
53,620
30,558
2,124
3,619
–
16,387
120,692 106,308
146,874 138,031
10,251
4,946
3,113
1,545
–
19,855
10,434
6,646
423
–
17,503
37,358
109,516
11,036
5,934
493
1,874
640
19,977
14,718
–
352
3,040
18,110
38,087
99,944
99,515
10,541
33,209
(33,749)
109,516
97,412
12,080
20,955
(30,503)
99,944
Adjustment on initial application of
AASB 16
Profit for the year
Transfer to profit appropriation reserve
Accumulated losses at end of year
Profit appropriation reserve
Profit appropriation reserve at beginning
of year
Dividend paid during the year
Profit for the year
Profit appropriation reserve at end of
year
(507)
14,249
(16,988)
(33,749)
–
1,550
–
(30,503)
20,955
25,235
(4,734)
16,988
(4,280)
–
33,209
20,955
Enero Group Limited Annual Report 2020 65
65
Enero Group Limited – Annual Report 2020
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Notes to the consolidated financial statements
for the year ended 30 June 2020
FOR THE YEAR ENDED 30 JUNE 2020
25. Commitments
Leases
Leases as lessee
Commitments for minimum lease payments
(undiscounted) in relation to non-cancellable operating
leases are payable as follows:
In thousands of AUD
Less than one year
Between one and five years
Over five years
2020
183
2019
6,440
29 17,461
–
–
212 23,901
The Group leases many assets, including properties and
office equipment, under non-cancellable operating
leases generally expiring in two to 10 years. Amounts
disclosed for 2020 include only leases exempt from
AASB 16 recognition.
Transition to AASB 16
The Group has applied AASB 16 Leases using the
modified retrospective approach, under which the
cumulative effect of initial application is recognised in
retained earnings at 1 July 2019. Refer to Note 1(g).
At transition, the lease liabilities relating to substantially
all property leases were recognised on the balance
sheet. The Group has elected to use the exemption not
to recognise right-of-use assets and lease liabilities for
short-term leases that have a lease term of 12 months
or less and leases of low-value assets.
Under the modified retrospective transition approach,
comparative information is not restated. A reconciliation
of lease commitments at 30 June 2019 to lease liability
recognised at transition to AASB 16 is included in the
table below:
In thousands of AUD
Lease commitment at 30 June 2019
Present value interest discount
Exempt short-term leases
Provisions embedded in lease liabilities
Re-assessment of lease term
Lease liability at 1 July 2019
23,901
(2,194)
(92)
478
405
22,498
26. Contingencies
Contingent liabilities
Indemnities
Indemnities have been provided to Directors and certain
Executive Officers of the Company in respect to third
parties arising from their positions, except where the
liability arises out of conduct involving lack of good faith.
No monetary limit has been applied to these
agreements and there are no known obligations
outstanding at 30 June 2020.
27. Subsequent events
Subsequent to the balance date, the Directors have
declared a final dividend, with respect to ordinary
shares, of 3.5 cents per share, fully franked. The final
dividend will have a record date of 18 September 2020
and a payment date of 2 October 2020. The financial
effect of this dividend has not been brought to account
in the financial statements for the year ended
30 June 2020 but will be recognised in the subsequent
financial period.
Except for the events listed above there has not arisen,
in the interval between the end of the financial year and
the date of this report, any item, transaction or event of
a material and unusual nature likely, in the opinion of the
Directors of the Company, to significantly affect the
operations of the Group, the results of those operations,
or the state of affairs of the Group in future financial
years.
28. Key Management Personnel and other related
party disclosures
In addition to Executive and Non-Executive Directors,
the following were Key Management Personnel of the
Group at any time during the reporting period:
Name
Position
Brendan York
Chief Financial Officer
Fiona Chilcott
Chief People and Culture Officer
Other transactions with the Company or its controlled
entities
A number of the Key Management Personnel, or their
related entities, hold positions in other entities that result
in them having control or significant influence over the
financial or operating policies of those entities.
There were no transactions with the Company or its
subsidiaries and Key Management Personnel in the
current or prior reporting period.
Director related party transactions
There were no transactions with the Director related
party during the current or prior reporting period.
The Key Management Personnel compensation
(including all Directors) is as follows:
In AUD
Short-term employee benefits
Other long-term benefits
Post-employment benefits
Termination benefits
2019
2,342,111 2,905,132
22,587
77,719
–
(603)
76,890
188,269
2020
Share-based payments – Share
Appreciation Rights
359,146
538,741
Total share-based payments
359,146
538,741
Total Key Management Personnel
compensation
2,965,813 3,544,179
29. Share-based payments
Equity-based plans
Long-term incentives (LTI) were provided as equity-
based incentives in the Company under the Share
Appreciation Rights plan (SAR) in the current and prior
financial years; which remain outstanding at
30 June 2020.
Share Appreciation Rights (SARs)
The Share Appreciation Rights Plan is designed to
incentivise the Company’s Senior Executives and other
senior management of the Group.
The fair value of the SARs is measured using the Monte
Carlo simulation model. Measurement inputs include
share price on measurement date, exercise price of the
instruments, expected volatility (based on weighted
average historical volatility), weighted average expected
life of the instruments (based on historical experience
and general rights holder behaviour), expected
dividends, and the risk-free interest rate (based on
government bonds). Service conditions attached to the
transactions are not taken into account in determining
fair value.
The plan allows for the Board to determine who is
entitled to participate in the SAR Plan, and it may grant
rights accordingly. Enero’s Board may determine
whether or not the grant of rights is conditional on the
achievement of performance hurdles; and if so, the
nature of those hurdles.
The exercise of each right will entitle the rights holder to
receive a fraction of an ordinary share based on a
conversion formula of E = (A – B) / A, where:
– E is the share right entitlement;
– A is the volume weighted average price (VWAP) for
the Company’s shares for the 20 business days prior
to the vesting date of the rights; and
– B is the VWAP for the Company’s shares for the 20
business days before the rights were granted.
If A – B is less than or equal to zero, the share right will
not vest and will immediately lapse on the applicable
vesting date.
One share right shall never convert into more than one
share in the capital of the Company. Rights expire at
15 business days after the relevant vesting date or the
termination of the individual’s employment. The Board
may exercise discretion on early vesting of rights in the
event of a change of control of the Group. Refer to the
table below for a summary of SARs on issue.
Summary of Share Appreciation Rights on issue:
VWAP for the 20 business days prior to the
20 business days after the release of the
Group financial report for the year ended:
Issue date
SARs issued
Participants
grant (B)
Vesting dates:
Tranche 1 (1/3rd)
Tranche 2 (1/3rd)
Tranche 3 (1/3rd)
Last expiry date
30 June 2020.
19 October 2017
18 October 2018
24 October 2019
5,000,000
4,500,000
2,450,000
Senior Executives
Senior Executives
Senior Executives
$1.04
$1.23
$2.13
30 June 2018
30 June 2019
30 June 2020
30 June 2019
30 June 2020
30 June 2021
30 June 2020
30 June 2021
30 June 2022
30 September 2020
30 September 2021
30 September 2022
Outstanding SARs as at 30 June 2020
1,016,670
1,800,000
2,100,000
Note: 2,000,000 SARs issued to the former CEO on 28 June 2019 were forfeited during the year, and are not on issue at
66
66 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 67
Enero Group Limited – Annual Report 2020
29. Share-based payments
Equity-based plans
Long-term incentives (LTI) were provided as equity-
based incentives in the Company under the Share
Appreciation Rights plan (SAR) in the current and prior
financial years; which remain outstanding at
30 June 2020.
Share Appreciation Rights (SARs)
The Share Appreciation Rights Plan is designed to
incentivise the Company’s Senior Executives and other
senior management of the Group.
The fair value of the SARs is measured using the Monte
Carlo simulation model. Measurement inputs include
share price on measurement date, exercise price of the
instruments, expected volatility (based on weighted
average historical volatility), weighted average expected
life of the instruments (based on historical experience
and general rights holder behaviour), expected
dividends, and the risk-free interest rate (based on
government bonds). Service conditions attached to the
transactions are not taken into account in determining
fair value.
The plan allows for the Board to determine who is
entitled to participate in the SAR Plan, and it may grant
rights accordingly. Enero’s Board may determine
whether or not the grant of rights is conditional on the
achievement of performance hurdles; and if so, the
nature of those hurdles.
The exercise of each right will entitle the rights holder to
receive a fraction of an ordinary share based on a
conversion formula of E = (A – B) / A, where:
– E is the share right entitlement;
– A is the volume weighted average price (VWAP) for
the Company’s shares for the 20 business days prior
to the vesting date of the rights; and
– B is the VWAP for the Company’s shares for the 20
business days before the rights were granted.
If A – B is less than or equal to zero, the share right will
not vest and will immediately lapse on the applicable
vesting date.
One share right shall never convert into more than one
share in the capital of the Company. Rights expire at
15 business days after the relevant vesting date or the
termination of the individual’s employment. The Board
may exercise discretion on early vesting of rights in the
event of a change of control of the Group. Refer to the
table below for a summary of SARs on issue.
Summary of Share Appreciation Rights on issue:
Issue date
SARs issued
Participants
VWAP for the 20 business days prior to the
grant (B)
Vesting dates:
20 business days after the release of the
Group financial report for the year ended:
Tranche 1 (1/3rd)
Tranche 2 (1/3rd)
Tranche 3 (1/3rd)
Last expiry date
Outstanding SARs as at 30 June 2020
19 October 2017
5,000,000
Senior Executives
18 October 2018
4,500,000
Senior Executives
24 October 2019
2,450,000
Senior Executives
$1.04
$1.23
$2.13
30 June 2018
30 June 2019
30 June 2020
30 September 2020
1,016,670
30 June 2019
30 June 2020
30 June 2021
30 September 2021
1,800,000
30 June 2020
30 June 2021
30 June 2022
30 September 2022
2,100,000
Note: 2,000,000 SARs issued to the former CEO on 28 June 2019 were forfeited during the year, and are not on issue at
30 June 2020.
Enero Group Limited Annual Report 2020 67
67
Enero Group Limited – Annual Report 2020
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Notes to the consolidated financial statements
for the year ended 30 June 2020
FOR THE YEAR ENDED 30 JUNE 2020
29. Share-based payments (continued)
Share Appreciation Rights (SARs)
Summary of rights over unissued ordinary shares
Grant date
2020
19 Oct 2017
18 Oct 2018
28 Jun 2019
24 Oct 2019
VWAP (for the
20 business
days prior to
the grant)
Expiry
date
Weighte
d
average
exercise
price
Number of
Rights
outstanding
at beginning
of year
Rights
granted
during
year
Rights
exercised
during year
Rights
expired
during year
Rights
forfeited
during year
Number of
Rights at
year end
outstanding
Number
of Rights
at year
end
vested
Proceeds
received
Date
issued
Number of
shares
issued
Expected
life
(years)
30 Sep
2020
30 Sep
2021
30 Sep
2022
30 Sep
2022
$1.04
$1.23
$2.13
$2.13
–
–
–
–
2,700,002
– 1,349,998
–
333,334
1,016,670
4,500,000
– 1,500,000
– 1,200,000
1,800,000
2,000,000
–
– 2,450,000
–
–
– 2,000,000
–
–
350,000
2,100,000
9,200,002 2,450,000 2,849,998
– 3,883,334
4,916,670
–
–
–
–
–
–
–
–
–
–
–
–
–
–
588,821
0.9–2.9
523,810
0.9–2.9
–
–
1.3–3.3
0.9–2.9
1,112,631
Grant date
Expiry
date
2019
16 June 2015
20 Oct 2015
19 Oct 2017
18 Oct 2018
28 Jun
2019(i)
30 Sep
2018
30 Sep
2018
30 Sep
2020
30 Sep
2021
30 Sep
2022
VWAP (for the
20 business
days prior to
the grant)
Weighted
average
exercise
price
Number of
Rights
outstanding
at beginning
of year
Rights
granted
during
year
Rights
exercised
during year
Rights
expired
during year
Rights
forfeited
during year
Number of
Rights at
year end
outstanding
Number
of Rights
at year
end
vested
Proceeds
received
Date
issued
Number
of shares
issued
Expected
life
(years)
$0.70
$0.70
$1.04
$1.23
$2.13
–
–
–
–
–
333,334
1,066,664
–
–
333,334
983,330
5,000,000
– 1,666,664
– 4,500,000
– 2,000,000
–
–
6,399,998 6,500,000 2,983,328
–
–
–
–
–
–
–
83,334
–
–
633,334
2,700,002
–
–
4,500,000
2,000,000
716,668
9,200,002
–
–
–
–
–
–
–
–
–
–
–
–
– 132,184
1.3–3.3
– 519,391
0.9–2.9
–
–
–
–
–
–
0.9–2.9
0.9–2.9
1.3–3.3
651,575
The number and weighted average exercise price of share rights is as follows:
VWAP (for the
20 business
days prior to
the grant) 2020
$
1.37
Weighted
average
exercise price
2020
–
Number of
options/rights
2020
9,200,002
VWAP (for the
20 business
days prior to
the grant) 2019
$
0.97
Weighted
average
exercise price
2019
–
1.76
–
1.14
2.13
1.58
–
–
–
–
–
–
–
(3,883,334)
–
(2,849,998)
2,450,000
4,916,670
–
1.00
–
0.89
1.23
1.37
–
–
–
–
–
–
–
Number of
options/rights
2019
6,399,998
(716,668)
–
(2,983,328)
6,500,000
9,200,002
–
Outstanding at 1 July
Forfeited during the
period
Expired during the period
Exercised during the
period
Granted during the
period
Outstanding at 30 June
Exercisable at 30 June
The SARs outstanding at 30 June 2020 have a VWAP (for the 20 business days prior to the grant) range of $1.04 to $2.13
(30 June 2019: $1.04 to $2.13).
The SARs outstanding at 30 June 2020 have a weighted average contractual life of 0.86 years (30 June 2019: 1.32 years).
The fair value of services received in return for SARs granted is based on the fair value of SARs, measured using the
Monte Carlo simulation model.
The total net expenses recognised by the Group for the year ended 30 June 2020 for share-based payment transactions
were $564,000 (2019: $730,000).
The VWAP for the 20 business days prior the date of exercise of SARs on 12 September 2019 was $1.89.
Inputs for measurement of grant date fair value
The following factors and assumptions were used in determining the fair value of the SARs on the grant date:
Value per SAR
prior to the grant)
VWAP (for the 20
business days
Price of
shares on
grant date
Expected
volatility
Grant date
19 Oct 2017(i)
18 Oct 2018(ii)
24 Oct 2019(iii)
Expiry date
$
30 Sept 2020 0.12 – 0.23
30 Sept 2021 0.20 – 0.31
30 Sept 2022 0.26 – 0.46
$
1.04
1.23
2.13
$
0.98
1.23
2.04
Risk-free
Dividend
Expected
interest rate
%
1.78–2.08
1.99–2.07
0.73-0.76
%
40
40
40
yield
%
0.0
2.0
2.0
life
(years)
0.9–2.9
0.9–2.9
0.9–2.9
(i) Grant is in relation to SARs provided to senior employees of the Group which were issued on 19 October 2017. The last expiry date of the rights
is 20 business days after the release of the Group’s financial report for the year ended 30 June 2020, which is estimated to be around
(ii) Grant is in relation to SARs provided to senior employees of the Group which were issued on 18 October 2018. The last expiry date of the rights
is 20 business days after the release of the Group’s financial report for the year ended 30 June 2021, which is estimated to be around
(iii) Grant is in relation to SARs provided to senior employees of the Group which were issued on 24 October 2019. The last expiry date of the rights
is 20 business days after the release of the Group’s financial report for the year ended 30 June 2022, which is estimated to be around
30 September 2020.
30 September 2021.
30 September 2022.
Accounting policy
The grant date fair value of share-based payment awards granted to employees is recognised as an employee expense,
with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards.
The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-
market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on
the number of awards that meet the related services and non-market performance conditions at the vesting date. For
share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is
measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
Fair value measurement and key estimates
The grant date fair value of employee share rights is measured using the Monte Carlo simulation model. This value is
determined by an appropriately qualified independent expert commissioned by the Directors. Inputs to the determination of
fair value are subjective and include the market value of the Company share price on the grant date, expected volatility
(based on weighted average historic volatility adjusted for changes expected due to publicly available information) of the
Company’s share price, the risk-free interest rate, the dividend yield, the expected life of the share rights, the probability of
occurrence of certain events and the exercise price. Service and non-market performance conditions attached to the
transactions are not taken into account in determining fair value. Certain of these inputs are estimates.
The Directors review the methodologies used by the expert and make enquiries with management to assure themselves
that the factual information used by the expert is correct prior to relying on the expert’s opinion.
30. Auditor’s remuneration
In AUD
Audit services – auditors of the Company
KPMG Australia
Overseas KPMG firm
Other services – auditors of the Company
Taxation compliance services:
Overseas KPMG firm
2020
2019
321,000
113,000
434,000
315,000
141,000
456,000
188,000
188,000
186,000
186,000
68
68 Enero Group Limited Annual Report 2020
Enero Group Limited Annual Report 2020 69
Enero Group Limited – Annual Report 2020
Inputs for measurement of grant date fair value
The following factors and assumptions were used in determining the fair value of the SARs on the grant date:
Grant date
19 Oct 2017(i)
18 Oct 2018(ii)
24 Oct 2019(iii)
Expiry date
Value per SAR
$
30 Sept 2020 0.12 – 0.23
30 Sept 2021 0.20 – 0.31
30 Sept 2022 0.26 – 0.46
VWAP (for the 20
business days
prior to the grant)
$
1.04
1.23
2.13
Price of
shares on
grant date
$
0.98
1.23
2.04
Expected
volatility
%
40
40
40
Risk-free
interest rate
%
1.78–2.08
1.99–2.07
0.73-0.76
Dividend
yield
%
0.0
2.0
2.0
Expected
life
(years)
0.9–2.9
0.9–2.9
0.9–2.9
(i) Grant is in relation to SARs provided to senior employees of the Group which were issued on 19 October 2017. The last expiry date of the rights
is 20 business days after the release of the Group’s financial report for the year ended 30 June 2020, which is estimated to be around
30 September 2020.
(ii) Grant is in relation to SARs provided to senior employees of the Group which were issued on 18 October 2018. The last expiry date of the rights
is 20 business days after the release of the Group’s financial report for the year ended 30 June 2021, which is estimated to be around
30 September 2021.
(iii) Grant is in relation to SARs provided to senior employees of the Group which were issued on 24 October 2019. The last expiry date of the rights
is 20 business days after the release of the Group’s financial report for the year ended 30 June 2022, which is estimated to be around
30 September 2022.
Accounting policy
The grant date fair value of share-based payment awards granted to employees is recognised as an employee expense,
with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards.
The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-
market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on
the number of awards that meet the related services and non-market performance conditions at the vesting date. For
share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is
measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
Fair value measurement and key estimates
The grant date fair value of employee share rights is measured using the Monte Carlo simulation model. This value is
determined by an appropriately qualified independent expert commissioned by the Directors. Inputs to the determination of
fair value are subjective and include the market value of the Company share price on the grant date, expected volatility
(based on weighted average historic volatility adjusted for changes expected due to publicly available information) of the
Company’s share price, the risk-free interest rate, the dividend yield, the expected life of the share rights, the probability of
occurrence of certain events and the exercise price. Service and non-market performance conditions attached to the
transactions are not taken into account in determining fair value. Certain of these inputs are estimates.
The Directors review the methodologies used by the expert and make enquiries with management to assure themselves
that the factual information used by the expert is correct prior to relying on the expert’s opinion.
30. Auditor’s remuneration
In AUD
Audit services – auditors of the Company
KPMG Australia
Overseas KPMG firm
Other services – auditors of the Company
Taxation compliance services:
Overseas KPMG firm
2020
2019
321,000
113,000
434,000
315,000
141,000
456,000
188,000
188,000
186,000
186,000
Enero Group Limited Annual Report 2020 69
69
Enero Group Limited – Annual Report 2020
DIRECTORS’
DECLARATION
Directors’ Declaration
1. In the opinion of the Directors of Enero Group Limited (the Company):
(a) the consolidated financial statements and notes, set out on pages 31 to 69 and the Remuneration Report in the
Directors’ Report, set out on pages 17 to 30 are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance for the
financial year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
2. There are reasonable grounds to believe the Company and entities identified in Note 24 will be able to meet any
obligations or liabilities to which they are or may become subject by virtue of the Deed of Cross Guarantee between
the Company and those entities pursuant to ASIC Class Order 98/1418.
3. The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer for the
financial year ended 30 June 2020 pursuant to section 295A of the Corporations Act 2001.
4. The Directors draw attention to Note 1(b) to the consolidated financial statements, which includes a statement of
compliance with International Financial Reporting Standards.
Dated at Sydney this 26th day of August 2020.
Signed in accordance with a resolution of the Directors:
Ann Sherry AO
Chair
70
70 Enero Group Limited Annual Report 2020
Enero Group Limited – Annual Report 2020
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ENERO GROUP LIMITED
Independent Auditor’s Report
To the shareholders of Enero Group Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Enero Group Limited (the Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance
with the Corporations Act 2001, including:
giving a true and fair view of the
Group's financial position as at 30 June
2020 and of its financial performance for
the year ended on that date; and
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
The Financial Report comprises:
Consolidated statement of financial position as at 30
June 2020
Consolidated income statement , consolidated
statement of comprehensive income, consolidated
statement of changes in equity, and consolidated
statement of cash flows for the year then ended;
Notes including a summary of significant accounting
policies;
Directors' Declaration.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during the
financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We
have fulfilled our other ethical responsibilities in accordance with the Code.
71
KPMG, an Australian partnership and a member
firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Liability limited by a scheme approved
under Professional Standards
Legislation.
71
Enero Group Limited – Annual Report 2020 INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ENERO GROUP LIMITED
Key Audit Matters
The Key Audit Matters we identified are:
Revenue recognition;
Annual impairment testing of goodwill
and intangible assets; and
Fair value of contingent consideration.
Key Audit Matters are those matters that, in our
professional judgement, were of most significance in
our audit of the Financial Report of the current period.
These matters were addressed in the context of our
audit of the Financial Report as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters.
Revenue recognition ($268.7 million)
Refer to Note 3 to the financial report
The key audit matter
How the matter was addressed in our audit
The recognition of revenue is a key audit matter due
to the:
Our procedures included:
We selected a sample of significant
Significance of revenue to the financial
statements.
Group’s policy to recognise revenue over time
based on a measure of progress estimation for
each specific contract. These estimations are
based on the relative value of services
completed (work in progress) to the total
expected contracted value of the service for
each specific contract. This is a manual
process, which involves judgement, increasing
the risk of error and therefore requiring
substantial audit effort.
contracts entered into during the year and
considered the relevant features of the
underlying contracts, including what the
group identified as performance obligations,
in assessing the revenue recognition against
the accounting standard and the Group’s
policy.
We selected a statistical sample from total
revenue recognised and performed the
following procedures:
-
-
For services completed, we compared
details to customer invoices issued,
customer estimate approvals, evidence
of service completion and subsequent
cash receipt.
For services in progress we compared
the total revenue from the expected
contracted value of the service to signed
customer contracts, and applied the
estimated measure of progress to the
expected contract value to recalculate
revenue recognised. We obtained
supporting evidence such as job cost
report to test the occurrence and
measurement of the stage of delivery.
72
72
Enero Group Limited – Annual Report 2020 For contracts that are open at period end, we
assessed the amount of revenue recognised and
work in progress by:
-
-
Checking the work in progress to signed
customer approvals for the services
performed and internal time costs
incurred.
Recalculating the measure of progress,
considering the contract terms and work
in progress.
We assessed the disclosures in the financial
report in accordance with the requirements
of AASB 15 and evidence obtained from our
procedures above.
Annual impairment testing of goodwill and intangible assets ($109.1 million)
Refer to Note 11 to the financial report
The key audit matter
How the matter was addressed in our audit
The Group’s annual testing of goodwill and
intangible assets for impairment is a key audit
matter, given the size of the balance and the degree
of judgement involved in the significant forward-
looking assumptions the Group applied in their value
in use model, including:
Forecast operating cash flows – there is
uncertainty around future cash flows due to the
short term, non-recurring nature of customer
contracts. There is also a heightened
uncertainty caused by disruptive effects of
COVID-19 pandemic increasing the risk of
inaccurate forecasts or a significantly wider
range of possible outcomes for us to consider.
Forecast growth rates and terminal growth
rates – in addition to the uncertainties
described above, the Group’s model is
sensitive to small changes in these
assumptions, reducing available headroom.
This drives additional audit effort specific to
their feasibility and consistency of application to
the Group’s strategy.
Our procedures included:
We considered the appropriateness of the
value in use method applied by the Group to
perform the annual test of goodwill for
impairment against the requirements of the
accounting standards.
We assessed the integrity of the value in use
model used, including the accuracy of
underlying calculation formulas.
We assessed the basis of preparing cash
flow forecasts, considering the accuracy of
previous forecast and budgets and current
trading performance in a COVID-19
economic environment.
We compared the base forecast cash flows
to current year actual results including the
period impacted by COVID-19 or Board
approved budget, as appropriate.
We checked the consistency of the growth
rates to the Group’s latest forecasts
approved by the Board, past performance of
the Group, and growth rates achieved in the
industry in which they operate.
73
73
Enero Group Limited – Annual Report 2020 INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ENERO GROUP LIMITED
Discount rates – these are complicated in
Working with our valuation specialists, we
nature and vary according to the conditions and
environment the specific Cash Generating Unit
(CGU) is subject to from time to time. The
Group’s modelling is sensitive to small changes
in the discount rate. We involve our valuations
specialists and senior team members with the
assessment.
The Group uses a complex model to perform
their annual testing of goodwill for impairment.
The model is largely manually developed, and
uses adjusted historical performance and a
range of internal and external sources as inputs
to the assumptions. Complex modelling using
forward-looking assumptions tend to be prone
to greater risk for potential bias, error and
inconsistent application. These conditions
necessitate additional scrutiny by us, in
particular to address the objectivity of sources
used for assumptions, and their consistent
application.
independently developed a discount rate
range considered comparable using publicly
available market data for comparable
entities, adjusted by risk factors specific to
the Group and the industry it operates in.
We performed sensitivity analysis by varying
key assumptions, such as forecast growth
rates, terminal growth rates and discount
rates, within a reasonably possible range, to
identify those assumptions at a higher risk of
bias or inconsistency in application.
We assessed the disclosures in the financial
report using our understanding of the matter
obtained from our testing and against the
requirements of the accounting standards.
Fair value of contingent consideration ($25.5 million)
Refer to Note 13 to the financial report
The key audit matter
How the matter was addressed in our audit
Contingent consideration payable by the Group in
connection with a business combination is initially
recognised at fair value, and subsequently assessed
at each period end. The Group has two contingent
consideration amounts payable relating to the
acquisition of Eastwick Communications (Eastwick)
and Orchard Marketing (Orchard). There is
uncertainty around the actual contingent
consideration payments that will be made by the
Group, as it is subject to the performance of
Orchard Marketing subsequent to the reporting date
and due to the short term, non-recurring nature of
customer contracts in the contingent period. The
contingent consideration period ended on 30 June
2020 for Eastwick and the amount payable is not
subject to the future performance of Eastwick..
Our procedures included:
We assessed the Group’s determination of
the contingent consideration against the
contractual terms of the underlying sale and
purchase agreement and the criteria in the
accounting standards.
We checked the integrity of the Group’s fair
value of contingent consideration model
including accuracy of the underlying
calculation formula.
We assessed the accuracy of previous EBIT
forecasts to inform our evaluation of
forecasts incorporated in the model.
We compared the Orchard EBIT forecast to
current year actual results or Board approved
budget, as appropriate.
74
74
Enero Group Limited – Annual Report 2020
The fair value of contingent consideration is a key
audit matter due to the judgement required by us in
assessing the feasibility of forward looking
assumptions in relation to the expected
performance of Orchard. We focused on EBIT
forecasts of Orchard as the key assumption the
Group applied in their fair value estimate of
contingent consideration.
We inquired with management of Orchard
about expected future performance of the
business.
We compared the Orchard EBIT forecasts
for consistency to those used, and tested by
us, in the impairment testing of goodwill and
intangible assets key audit matter.
We compared the Eastwick EBIT inputs in
the model to actual EBIT achieved for
consistency and compared the liability to
correspondence with the vendors of
Eastwick Communications for consistency.
We tested the Group’s reconciliation of
carrying amounts of contingent consideration
to the financial statements, including
comparing payments made to bank
statements.
We assessed the disclosures in the financial
report, including sensitivity analysis, using
our understanding obtained from our testing
and against the requirements of the
accounting standards.
Other Information
Other Information is financial and non-financial information in Enero Group Limited’s annual reporting
which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are
responsible for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we 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.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date of
this Auditor’s Report we have nothing to report.
75
75
Enero Group Limited – Annual Report 2020
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ENERO GROUP LIMITED
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001
implementing necessary internal control to enable the preparation of a Financial Report that gives a
true and fair view and is free from material misstatement, whether due to fraud or error
assessing the Group and Company's ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless they either intend to
liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf.
This description forms part of our Auditor’s Report.
76
76
Enero Group Limited – Annual Report 2020
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of
Enero Group Limited for the year ended 30
June 2020, complies with Section 300A of
the Corporations Act 2001.
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 responsibilities
We have audited the Remuneration Report included in pages
23 to 30 of the Directors’ report for the year ended 30 June
2020.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
Caoimhe Toouli
Partner
Sydney
26 August 2020
77
77
Enero Group Limited – Annual Report 2020
LEAD AUDITOR’S INDEPENDENCE
DECLARATION
UNDER SECTION 307 OF THE CORPORATIONS ACT 2001
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Enero Group Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Enero Group Limited
for the financial year ended 30 June 2020 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Caoimhe Toouli
Partner
Sydney
26 August 2020
ASX additional information
Substantial shareholders
Shareholder
RG Capital Multimedia Limited
NAOS Asset Management Limited
Perpetual Limited
Regal Funds Management Pty Limited
Wilson Asset Management
Forager Funds Management Limited
Bank of America Corporation
Unquoted equity securities
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in
this report is set out below. The shareholder information set out below was applicable at 31 July 2020.
The number of ordinary shares held by substantial shareholders and their associates is set out below:
Number
15,223,268
13,274,636
12,684,755
7,800,760
7,553,907
5,450,474
4,549,401
124,456
712,828
770,088
3,593,525
80,873,962
86,074,859
% of issued
capital
26.76
15.22
8.16
5.77
5.24
5.16
4.30
3.80
2.96
2.12
1.94
1.89
1.37
1.35
1.32
0.92
0.81
0.73
0.49
0.42
250
277
101
117
34
779
Units
23,036,347
13,097,877
7,025,156
4,964,893
4,511,945
4,439,060
3,703,272
3,269,079
2,548,301
1,826,255
1,667,025
1,630,102
1,178,742
1,159,020
1,133,176
788,637
698,166
632,629
420,000
363,648
As at 31 July 2020 there were no options granted over unissued ordinary shares in the Company.
Voting rights
Ordinary shares – refer to Note 17 Capital and reserves.
Distribution of equity security holders:
Number of equity
security holders
Ordinary shares
The number of shareholders holding less than a marketable parcel of ordinary shares is 77.
Twenty largest shareholders
Rank Name
1 HSBC Custody Nominees (Australia) Limited
2 National Nominees Limited
3 JP Morgan Nominees Australia Pty Limited
4 UBS Nominees Pty Ltd
5 RG Capital Multimedia Limited
6 Citicorp Nominees Pty Limited
7 Irish Global Equity Limited
8 RG Capital Multimedia Limited
9 CH Global Pty Ltd
10 Brispot Nominees Pty Ltd
11 Irish Global Equity Limited
12 Mr Felice Testini
13 Merrill Lynch (Australia) Nominees Pty Limited
14 RG Capital Multimedia Limited
15 CS Third Nominees Pty Limited
16 Mrs Antonia Caroline Collopy
17 CS Fourth Nominees Pty Limited
18 Irish Global Equity Limited
19 Hawkdun Pty Ltd
20 Mr Brendan York
Total
78,093,330
90.73
78
78
Enero Group Limited Annual Report 2020 79
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
Enero Group Limited – Annual Report 2020
ASX ADDITIONAL INFORMATION
ASX additional information
Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in
this report is set out below. The shareholder information set out below was applicable at 31 July 2020.
Substantial shareholders
The number of ordinary shares held by substantial shareholders and their associates is set out below:
Shareholder
RG Capital Multimedia Limited
NAOS Asset Management Limited
Perpetual Limited
Regal Funds Management Pty Limited
Wilson Asset Management
Forager Funds Management Limited
Bank of America Corporation
Unquoted equity securities
Number
15,223,268
13,274,636
12,684,755
7,800,760
7,553,907
5,450,474
4,549,401
As at 31 July 2020 there were no options granted over unissued ordinary shares in the Company.
Voting rights
Ordinary shares – refer to Note 17 Capital and reserves.
Distribution of equity security holders:
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Number of equity
security holders
250
277
101
117
34
779
Ordinary shares
124,456
712,828
770,088
3,593,525
80,873,962
86,074,859
The number of shareholders holding less than a marketable parcel of ordinary shares is 77.
Twenty largest shareholders
Rank Name
1 HSBC Custody Nominees (Australia) Limited
2 National Nominees Limited
3 JP Morgan Nominees Australia Pty Limited
4 UBS Nominees Pty Ltd
5 RG Capital Multimedia Limited
6 Citicorp Nominees Pty Limited
7 Irish Global Equity Limited
8 RG Capital Multimedia Limited
9 CH Global Pty Ltd
10 Brispot Nominees Pty Ltd
11 Irish Global Equity Limited
12 Mr Felice Testini
13 Merrill Lynch (Australia) Nominees Pty Limited
14 RG Capital Multimedia Limited
15 CS Third Nominees Pty Limited
16 Mrs Antonia Caroline Collopy
17 CS Fourth Nominees Pty Limited
18 Irish Global Equity Limited
19 Hawkdun Pty Ltd
20 Mr Brendan York
Total
Units
23,036,347
13,097,877
7,025,156
4,964,893
4,511,945
4,439,060
3,703,272
3,269,079
2,548,301
1,826,255
1,667,025
1,630,102
1,178,742
1,159,020
1,133,176
788,637
698,166
632,629
420,000
363,648
78,093,330
% of issued
capital
26.76
15.22
8.16
5.77
5.24
5.16
4.30
3.80
2.96
2.12
1.94
1.89
1.37
1.35
1.32
0.92
0.81
0.73
0.49
0.42
90.73
Enero Group Limited Annual Report 2020 79
79
Enero Group Limited – Annual Report 2020
CORPORATE DIRECTORY
Corporate Directory
Company Secretary
Brendan York
Principal Registered Office
Enero Group Limited
Level 2, 100 Harris Street
Pyrmont NSW 2009 Australia
Telephone: +61 2 8213 3031
Email: companysecretary@enero.com
Share Registry
Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235 Australia
Telephone: 1300 554 474
Outside Australia: +61 2 8280 7111
Facsimile: +61 2 9287 0303
Securities Exchange
The Company is listed on the Australian Securities Exchange (ASX Code: EGG).
The home exchange is Sydney.
Other Information
Enero Group Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shares.
Solicitors
Gilbert + Tobin
International Towers Sydney 2
200 Barangaroo Avenue
Sydney NSW 2000 Australia
Auditors
KPMG
International Towers Sydney 3
300 Barangaroo Avenue
Sydney NSW 2000 Australia
80
80 Enero Group Limited Annual Report 2020
Enero Group Limited – Annual Report 2020