ENERO GROUP
LIMITED
Annual
Report
2021
Shaping
the future
Enero Group is an international group of specialist marketing and
communications businesses located in seven countries and 13
cities with over 600 employees. We are a nimble team with a global
perspective and our Group is very well positioned to take advantage
of the exciting new developments in our 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 to effectively contribute each and every day.
We are a brand-led offence, where our businesses and their teams
have the freedom to focus on what they do best: serving our clients
by delivering world-class highly effective outcomes, day-in, day-out.
Enero provides support through our global centres of excellence
across People & Culture, Finance, Legal, Information Technology,
Innovation and M&A.
As our clients’ needs have evolved, so have we. We are no longer
just a marketing services business – we are a creative and technology
collective. We accelerate high-growth businesses through two
specialist capabilities:
• Brand transformation – human generated ideas to transform
the way customers and stakeholders connect and engage
with brands
• Creative data and technology – high quality customer
experiences connected through technology and
enabled by data
Together, this powerful mix will enable us to support our
clients’ growth ambitions today and into the future.
CONTENTS
02 A collective of specialists
04 Financial highlights
05 Geographical results
06 A letter from our Chair
08 A letter from our CEO
10 Client analysis
12 Corporate social responsibility
16 Business activity 2021
26 Financial report
27 Directors’ Report (including the Remuneration Report)
42 Consolidated income statement
43 Consolidated statement of comprehensive income
44 Consolidated statement of changes in equity
45 Consolidated statement of financial position
46 Consolidated statement of cash flows
47 Notes to the consolidated financial statements
83 Directors’ Declaration
84
Independent Auditor’s Report
89 Lead Auditor’s Independence Declaration
90 ASX additional information
IBC Corporate Directory
Enero Group Limited · Annual Report 2021
01
A collective
of specialists
BRA ND TRANSFORMATION
Long ideas in a world of short-term thinking
The global tech communications consultancy
Award-winning and globally renowned creative agency specialised
in transforming brands and the companies they are part of. BMF
makes brands and their marketing teams famous through the
rigorous pursuit of effectiveness, liberated by creativity. Its proprietary
product is in future-proof ‘long ideas’ – ideas that stand the test of
time, that are built to unlock brand value, not just in the short, but
in the long term. A leader in integrated brand strategy, creative
ideation and meticulous craft and production.
Hotwire is the global communications consultancy that powers the
world’s most innovative tech brands. Founded in 2000, they operate
a worldwide network of wholly owned offices and partners, serving
a range of clients from scale-ups to established multi-nationals.
The team ignites the unreleased possibilities of innovative technology
through integrated communications that create curiosity, spark
action and fuel success. Their consultants do this using a proprietary
methodology which is underpinned by robust insight and strategy,
purposeful creative, integrated planning and a core emphasis on
measurement and evaluation.
Informed. Strategic. Connected.
Melbourne based public affairs and communications
consultancy engaging governments, managing critical
issues, and communicating with strategy to build
reputation and influence.
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Enero Group Limited · Annual Report 2021
CREATI VE DATA AND TECHNOLOGY
Connecting customer experiences
for a modern world
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.
Proprietary advertising technology platform
unlocking value for publishers and advertisers
A technology driven, proprietary performance advertising
platform that helps publishers maximise the value of their
ad inventory and provides advertisers access to untapped
sources of high quality traffic.
Unleashing the potential of data
Experts in online research and data delivery
Sydney based Strategic Data Consultants, The Leading Edge
provides insight, analytics and data strategy consulting services.
Since 1990, TLE has worked with many of Australia’s biggest
companies to develop strategies that fuel behaviour change,
identify and exploit new paths to growth, and increase opportunities
for success when going to market. Our data-driven approaches
and global partnerships with media, insight and data providers
provide unique perspectives on consumers that power true
innovation and growth.
Sydney based online research agency specialising in digital
research, online surveys and communities, access panel
services, data integration and visualisation.
Enero Group Limited · Annual Report 2021
03
Financial highlights
$160.6M
Net Revenue · Up 18%
$45.6M
Operating EBITDA · Up 87.1%
28%
Operating EBITDA margin · Up 10BPS
$22.8M
Net Profit After Tax before
significant items · Up 77%
26.4CPS
Earnings per Share before
significant items · Up 76%
14.9CPS
FY21 Dividends · Up 148%
04
Enero Group Limited · Annual Report 2021
Geographical results
GEOGRAPHICAL CONTRIBUTIONS FROM OPERATING COMPANIES*
USA
UK AND
EUROPE
AUSTRALIA
30%
Net Revenue
FY21
25%
Net Revenue
FY21
45%
Net Revenue
FY21
*Reflects 51% economic interest in OBMedia.
48%
Operating
EBITDA FY21
19%
Operating
EBITDA FY21
33%
Operating
EBITDA FY21
Enero Group Limited · Annual Report 2021
05
26%29%45%36%21%43%Net Revenue FY20Net Revenue FY20Net Revenue FY20Operating EBITDA FY20Operating EBITDA FY20Operating EBITDA FY20 A letter from
our Chair
Dear Shareholders,
FY21 has been an exciting year of change and progress for Enero.
Under the new leadership of CEO Brent Scrimshaw, the Company
has begun a transition into a forward looking, progressive global
business, with a refined operating model that responds to the
enormous changes underway in the worldwide environment. Despite
the ongoing challenges of the COVID-19 pandemic, Enero delivered
underlying organic revenue growth of 14%, and significant profit
growth for the year. The Group benefited from its unique positioning
within high growth global verticals – technology, healthcare and
consumer brands – and the hard work and commitment of our
talented global teams. The client focus and creativity of our people has
delivered world-class work, new client wins, and recognition through
numerous global awards for creativity, effectiveness
and culture.
Over the course of FY21, the Board established a new strategic
framework to guide our ambitious growth aspirations for Enero.
The business has been reorganised around two strategic pillars –
Brand transformation, and Creative data and technology – each
with clearly articulated portfolio roles and investment models to
drive future growth. Our brand transformation pillar incorporates
our Hotwire, BMF and CPR businesses which use human-generated
creative ideas to transform the way customers and stakeholders
connect and engage with brands. Our Creative data and technology
pillar incorporates our OBMedia, Orchard and The Leading Edge
and The Digital Edge businesses which provide high quality
customer experiences through technology, enabled by data.
The delivery of Enero’s strategic ambitions is underpinned
by four key priorities:
• Talent. We are committed to enhancing the skillset
of our talent to drive organic growth opportunities;
• Capability. This will involve acquisition activity to increase
the Group’s capability, and expand its global scale;
• Productivity. We are implementing technology and
processes to improve productivity and drive profitability;
• Innovation. This will involve creating an innovation engine
to fuel new business growth in the longer term.
The progress Enero has made against these priorities is outlined in
Brent’s shareholder letter.
FY21 delivered exceptionally strong financial results despite ongoing
global challenges associated with COVID-19. Year-on-year growth
highlights (excluding significant items) included:
• Revenue increasing 18.3% to $160.6 million;
• Operating EBITDA increasing 87.1% to $45.6 million;
• Net profit increasing 76.7% to $22.8 million;
• Earnings per share increasing 76% to 26.4 cents.
After taking into account non-cash significant items, Enero reported
a net loss after tax of $(0.4) million. The significant loss related to
an accounting loss on disposal of Frank PR, and Foreign Currency
Translation Reserve transferred to the income statement on liquidation
of dormant foreign subsidiaries. This resulted in a loss on disposal of
$23.2 million being recognised. The charge is non-cash in nature
and has no impact on Enero’s strong financial position.
The Board declared an FY21 final dividend of 4.4 cents per share,
fully franked, bringing the full year dividend to 14.9 cents per share.
This represents a 56% dividend payout ratio, and reflects our
commitment to ensuring that shareholders share in Enero’s success.
The highly cash generative nature of Enero’s business model is
demonstrated in FY21 cash conversion increasing to 121% from
116% in FY20. Net cash (after taking into account future contingent
consideration) increased to $30.6 million from $22.0 million in FY20.
This balance sheet flexibility, together with our client-focused cash
generative operating model, provide a strong platform for Enero
to pursue our growth agenda. During the year the Company took
its first M&A step, with the acquisition of McDonald Butler, and
its integration within the Hotwire business is already strengthening
our capability and scale in the UK.
I’d like to thank my fellow Board members for their contribution
to Enero over the past year. Their expertise and support have been
invaluable in resetting Enero’s growth strategy. On behalf of the
Board, I would like to thank our talented people for their hard work
and commitment to our clients and to each other. It is inspiring to
see our Company values of a challenger spirit, borderless thinking,
diversity and kindness being borne out in action. I would also like
to acknowledge Brent Scrimshaw and the astute leadership he has
demonstrated in his first year as CEO. Brent and his executive team
have established a sound base from which to deliver the next phase
of Enero’s growth.
Finally, I would like to thank you, our shareholders, for your support
of Enero. I look forward to speaking with you at our Annual General
Meeting to be held in October.
Ann Sherry AO
Independent Non-Executive Chair of Enero Group
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07
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Enero Group Limited · Annual Report 2021
A letter from
our CEO
Dear Shareholders,
At the end of my first year as CEO, I am very pleased to report back to
shareholders. During FY21, Enero made strong progress in reimagining
the sustainable growth opportunities available to us, and implementing
an operating structure and leadership to deliver on that vision. COVID-19
has accelerated the pace of change in consumer behaviour globally.
What our clients expect is changing, and Enero is changing with it; our
brands are delivering greater value in supporting our clients to navigate
this new environment and it’s pleasing to see these efforts translating
into the strong financial results Enero delivered in FY21: revenue growth
of 18%, EBITDA growth of 87% and net profit growth of 77%.
A creative and technology collective
As the Chair outlined in her letter, we have established a new
strategic framework to support the ambitious growth aspirations
for the Group. Our vision is to utilise the expertise of our portfolio of
specialist agency brands to accelerate businesses in the high-growth
verticals of technology, healthcare and consumer. We achieve this by
transforming brands, and deploying creative data and technology to
enrich customer experiences. Two brand-led operating segments have
been created to deliver value to our clients – Brand Transformation,
and Creative Data and Technology. These new segments will be reflected
in our FY22 financial statements. These segments are supported by
Enero’s global centre of excellence to drive efficiency: People
& Culture, Finance, Technology, Legal and M&A.
FY21 was a year of progress against the four priorities that underpin
Enero’s strategic framework. Our goal to build on our existing talent
saw a leadership refresh across the Group. Carla Webb-Sear joined
my Executive Leadership team as CFO; Cathy Hoyle, our Group Legal
Counsel assumed additional responsibility as Company Secretary; Nick
Burton joined as Head of Strategy and M&A; and Fiona Chilcott continued
in her role as Chief People Officer. At Hotwire, Heather Kernahan was
appointed as the new Global CEO, having previously led the North
American business and Wai Kwok was appointed to the role of Orchard
CEO. Barbara Bates, former Hotwire CEO, joined Enero in an Advisory
capacity to support on M&A opportunities in North America.
Our goal to strengthen our capability through M&A saw the acquisition
of UK-based McDonald Butler Associates (MBA), a strategic B2B
sales and marketing agency. Our goal to improve productivity through
technology and disciplined processes is reflected in the FY21 financial
results, with margin expansion in every geographic region.
Businesses review
Enero’s FY21 performance was underpinned by exposure to technology,
healthcare and consumer, all of which are benefiting from structural
growth drivers. Enero’s integrated portfolio provides the platform to
deliver the creativity and technology tools to transform global brands.
United States
The acceleration in technology adoption and transformation provided
a benefit to the US business which delivered a 52% increase in net
revenue and 146% growth in operating EBITDA, despite currency
headwinds due to the stronger Australian dollar.
Hotwire’s performance was supported by its strong technology client
base, and COVID-related operational savings. The business invested in
its strategy and digital skillsets to enhance its integrated solutions for
clients, finishing the year with momentum in new client wins including
Atlassian, Klarna and Secure Code Warrior. Hotwire was also named the
2021 Global Technology Agency of the year by PRovoke, as well as being
recognised as the North America Technology Agency of the year.
51% owned OBMedia substantially increased its contribution to Group
profitability. Its performance driven advertising marketplace is a
beneficiary of an accelerating shift in consumer behaviour to digital
channels and e-commerce. OB is leveraging its proprietary technology
platform which delivers rapidly growing numbers of high intent
consumers to advertisers, maximising return on advertising investment.
Australia
The business delivered a strong performance, with net revenue
increasing 10.9% and EBITDA up 13.8%. BMF was named Mumbrella’s
Creative Agency of the year, Campaign Brief’s Agency of the year and
was awarded a Grand Effie Award for its work with ALDI. New business
wins included Transport for NSW, The Sydney Morning Herald and
Petbarn. Orchard was recognised as Digital Agency of the Year for
AdNews. Client wins included Boston Scientific, GSK and Palmerbet.
UK/Europe
In a challenging economic environment, the business reported a net
revenue decline of 5.8% and Operating EBITDA growth of 33%. The
revenue decline was impacted by currency headwinds and the sale
of 75% owned Frank PR. Underlying revenue growth of 1.1% on a
constant currency basis was a solid outcome in the circumstances.
The operating EBITDA increase reflected stable expenses due to
COVID-19-related discretionary cost savings. Hotwire was also
recognised as PRovoke’s EMEA Technology Agency of the Year.
Our people
Enero’s people have received many global awards in FY21. Their creativity
and talent have shone through in an environment significantly disrupted
by COVID-19. On behalf of my Executive Leadership team, I would like
to thank each of our more than 600-strong team for their commitment
and resilience. I express my thanks to our Board, led by Ann Sherry AO,
for its support and guidance. Finally, thank you to our shareholders for
the support and confidence you have displayed in our new direction.
Enero’s strong FY21 results, and the resilience of our operating model,
are a strong platform for our globally integrated portfolio to unlock
the next phase of growth and profitability.
Brent Scrimshaw
Chief Executive Officer
Enero Group Limited · Annual Report 2021
09
Client analysis
REVENUE DIVERSIFICATION
Enero has a diversified client mix, with exposure to a wide range of
industry sectors. A large share of our revenue comes from industries
of strategic focus – Technology (26%), Online Media (21%) and
Healthcare (13%). We have seen revenue growth across all these
industries, which is a pleasing reflection of our strategy and deep
industry expertise in action.
We have made active efforts to maximise our engagements with
fewer, larger clients with more purchasing touchpoints across those
organisations. However, we also actively manage our concentration
risk, and in FY21 our Top 10 clients represented 48% of total revenue.
Our relationships with clients are deep and enduring – reflected
by the fact that 60% of our clients have been working with the
Group for four years or longer. They recognise and appreciate our
continued investment in progressive capabilities, and work with us
across a mix of both project and retainer engagement.
*Revenue reflects 51% economic interest in OBMedia.
26%
Technology
14%
Retailing
21%
Online Media
13%
Healthcare
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Enero Group Limited · Annual Report 2021
8%
Services
4%
Transportation
and Automotive
6%
Financial
Services
4%
Manufacturing
Telecommunications
3%
1%
Utilities
and Energy
Enero Group Limited · Annual Report 2021
11
Corporate social
responsibility
ENVIR ONMENTAL
RESP O NSIBILITY
The Group has implemented a comprehensive general waste and
recycling management program which disposes of waste using
environmentally friendly techniques. All employees are encouraged
to dispose of waste in the appropriate and designated points,
segregated by the type of waste in our offices. Waste is then
collected and disposed of appropriately by specialist contractors.
Enero looks for every opportunity to reduce our carbon footprint
and minimise waste and we demonstrate our commitment to
recycling by partnering with environmental organisations such as:
• Simple Cups to recycle coffee cups;
• Teracycle Program to recycle items such as
pens, coffee pods, plastic for bread bags etc;
• Work Waste Challenge to reduce single use plastic;
• Bin Trim to showcase waste and recycling commitment.
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Enero Group Limited · Annual Report 2021
ENER GY AND WATER
In order to reduce energy and power consumption, the Group engages
in energy saving practices. Some of our offices are in energy efficient
buildings coupled with eco-friendly lighting features to reduce
consumption. Some of our offices are partly powered by renewable
energy sources including our Sydney headquarters which holds over
300 employees. Our Sydney headquarters retains an ‘A’ grade NABERS
energy rating. Furthermore, we encourage employees to turn off their
electronic devices, when not required, in order to economically
reduce power.
Our offices are fitted with appropriate water saving technology which
helps reduce water waste. Some of the Group offices internationally
have implemented technology which ecologically reduces the standard
amount of water used during consumption. All employees are
encouraged to actively conserve water.
Enero Group Limited · Annual Report 2021
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PHILANTHROPIC RESPONSIBILITY
In Australia, we are deeply committed to reconciliation with Australia’s
Aboriginal and Torres Strait Islander people. Enero recently received
Conditional Endorsement from Reconciliation Australia of our first
Reconciliation Action Plan (RAP). As part of the commitment outlined
in our plan to the importance and significance of Acknowledgement of
Country, BMF (Enero’s wholly owned Creative Agency) partnered with
Indigenous film production company and NGO, Blackfisch, to produce
a beautiful and respectful Acknowledgement to Country Film.
The film also doubles as Aboriginal and Torres Strait Islander cultural
training for our employees. The intention is to share the film widely
so other companies can also use the Acknowledgement film to
recognise and pay respect to Aboriginal and Torres Strait Islander
people at the beginning of important meetings and events.
Enero also supports CareerTrackers, a not-for-profit organisation
whose mission is to provide pathways and support systems for young
Indigenous adults to graduate from university. CareerTrackers also
facilitates opportunities for students to undertake paid multi-year
internships with a variety of organisations. Enero will welcome our
fourth CareerTrackers student this December and is proud to work
closely with this exceptional organisation.
Ignite Possibility
Program
Across the Atlantic, Enero Group wholly owned subsidiary,
Hotwire Group, launched the Ignite Possibility Program (HIPP).
The purpose of this program is to invest USD 1 million in pro-bono
marketing and public relations services to tech or tech enabled
organisations led by or supporting minority communities. It is
part of the broader Diversity, Equity and Inclusion (DEI) strategy
designed to create meaningful and sustainable change in our
business and our industry.
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Enero Group Limited · Annual Report 2021
Since 2013, Hotwire’s most recent acquisition, McDonald Butler,
has been actively supporting African development charity Mellon
Educate. Mellon Educate is an Irish-based African development
charity founded by developer and philanthropist Niall Mellon in
2002 and established as a charitable company in 2004.
Thanks to the enormous collective effort of volunteers, in conjunction
with the South African government, the charity has built houses for
175,000 homeless people in South Africa’s poorest townships.
In 2013, the charity redoubled its commitments to those less fortunate
in Africa, pledging a 10-year education development program to
provide better education to more than 100,000 African children.
A highly ambitious target in co-operation with local community school
collaboration, Mellon Educate has already extended educational
access and standards of education for over 50,000 primary school
children aged between four and 12 in Kenya and South Africa.
In addition to the schools building program, Mellon Educate also
provides a mentoring and coaching program through the Mellon
Educate Results Program, to help upskill teachers and help raise
and sustain school grades from below 20% to above 75%.
About Pennies – www.pennies.org.uk
McDonald Butler, now part of Hotwire Group, has also been
actively supporting the micro-donations charity, Pennies.
Pennies is an award-winning fintech charity with an important mission:
to protect and grow micro-donations. Micro-donations allows the public
to donate a few pence to charity when paying by card or mobile wallet
in a simple way. To date, Pennies has raised over £30 million in
micro-donations, with over 100 million donations from the public
supporting over 750 charities.
The Hotwire team have been instrumental in helping to grow the
micro-donations movement through relationships with technology
companies and retailers and providing pro-bono strategy, creative
and consultancy work.
In 2020, Mike Butler, Head of Hotwire Marketing, received the
award for ‘Most Outstanding Contribution in Accelerating the Pennies
Movement’ on behalf of the team.
ECONOMIC RESPONSIBILITY
Enero is a proud member of Supply Nation. Supply Nation’s purpose
is to work with procurement departments within Government and
Corporate industries to connect them with the rapidly growing
Indigenous business sector. They have a five-step verification process
to ensure that businesses registered with Supply Nation are genuinely
Indigenously owned and operated.
Supply Nation also works with businesses to develop procurement
policies to support the Indigenous business sector. Supply Nation
understand that there is economic value and long-term business
benefits to supplier diversity and the organisation unlock
opportunities to include Indigenous businesses into your
supply chain.
ETHICAL CONDUCT TRAINING AND POLICIES
Enero is committed to creating a safe and friendly workplace
free from discrimination and a place our employees can thrive
regardless of race, religion, sexual preference, gender, marital status
and/or disability. We pride ourselves on our world-class learning
and development program which brings our policies to life and ensures
our people really understand what it means to work in a respectful
and inclusive way.
We ensure we have clear and straightforward policies, backed
by bespoke training, that focus on creating a safe and respectful
workplace. They include a focus on:
• Discrimination, harassment and bullying;
• Modern Slavery;
• Anti-bribery and Corruption;
• Environmental impacts;
• Whistleblowing.
Enero Group Limited · Annual Report 2021
15
Shaping the future
though creativity
and technology
The Group’s collective of specialist agencies are the masters of creativity,
technology and data within differentiated storytelling verticals. Each
of them brings their unique combination of skills to the fore in driving
technology to extraordinary advantage. Together, they form the most
compelling and technologically capable collective in the market today;
delivering end-to-end storytelling for our clients around the globe. Over
the next few pages, delve into the detail of each Company’s specialism
in creating customer connections, one carefully crafted story at a time.
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Enero Group Limited · Annual Report 2021
BMF
Connecting emotion to effectiveness
with the Long Idea
BMF are the creative leaders in delivering effectiveness through
emotion. They turn brands into welcome intruders in between the
ears of every Australian, with long ideas that form deep relationships.
With the help of those relationships, BMF grows clients, wins more
customers, and takes home more marketing effectiveness awards
than anyone else in the market.
BMF has been named Effective Agency of the Year twice in three
years, and their client ALDI has been crowned Effective Advertiser
of the Year three years in a row. In FY21, they were also awarded:
• Mumbrella Creative Agency of the Year;
• Mumbrella Best Agency Culture Award;
• APAC Grand Effie Award;
• Australian Grand Effie Award;
• Tangrams Platinum Effectiveness Award;
• B&T Best Radio and OOH Campaign of the Year.
In FY22, BMF will go even bigger, by building on the momentum of
a year like no other. How? Their creativity has been tasked to help
defeat the global pandemic, by inspiring the nation to get vaccinated
and continue the fight against domestic violence in Australia.
CASE STUDY: ALDI
SHOWING HOW YOU’RE THE SAME CAN BE THE DIFFERENCE
• Research showed that, aside from ensuring produce ‘looked
fresh’, the key comms lever to drive quality perceptions (and
therefore consideration) was ‘Aussie Made’.
• ALDI had little brand equity when it came to Australian
sourcing, farming and food, while their competitors
were synonymous with ‘Aussie Fresh’.
The strategy
To get shoppers who thought ALDI Fresh was a compromise because
the prices were too ‘Good Different’ to be true, to realise ALDI’s almost
100% ‘Aussie sourced’ fresh quality – by proving that ALDI’s ‘Fresh’
comes from the same place as Coles and Woolies, it just costs less.
The execution
The Fresh Food Migration campaign. Highlights included capturing
the Great Banana Migration on film for the first time – as an epic flock
of Fresh Australian bananas in full flight leaves the plantations and
makes its way south in search of a better place – ALDI. A herd of
BBQs cooking porterhouse steaks travelling across the plains, and
carrots swimming upstream like salmon, ran across OOH, social
and Instagram stories showcasing Aussie produce at ALDI prices.
The channels
BMF boosted consideration by isolating the best performing
channels, then partnering with Facebook and Instagram to unlock
new ways to prove ALDI’s Freshness: Traceability – proving ALDI
Fresh comes straight from the source by showing provenance on
retail, catalogue and POS; and Mythbusting – giving Facebook and
Instagram communities a source of fresh truths with cheeky polls
and hard-hitting facts.
The results
Fresh sales grew more than twice as fast as total sales during
the campaign period, rising 17.7% on average across fresh
meat, produce and seafood sales; while there was a 41%
growth in traffic to fresh produce pages.
Enero Group Limited · Annual Report 2021
17
The challenge
Despite the gains of the brand platform Good Different, when it
came to Fresh, ALDI’s German heritage held it back. Shoppers
thought ALDI’s produce was foreign, too. So it could never be
as good as Coles or ‘The Fresh Food People’ Woolies.
The key insights
• 100% of fresh ALDI meat is sourced in Australia, 97% of
fresh fruit and vegies are grown here. ALDI even sources
much of its fresh meat, fruit and vegetables from the same
farms as the ‘big two’.
Hotwire
Igniting possibility with
human-first tech storytelling
For more than two decades, Hotwire has dominated Tech PR.
They continue to broaden and deepen this dominance at the
global intersection of creativity, technology and data. Their work
has its genesis in Silicon Valley, where they’re connected to the
newest technologies and global industry influencers, and where
they work closely with the world’s fastest growing tech brands.
The agile Hotwire team is connected to tech centres around the
world including London, Munich, Paris, Sydney, Madrid, Milan,
Frankfurt and New York, and operates as one team globally to
help tech and innovation leaders tell their stories. The team
has recently been recognised with awards including:
• Global Tech Agency of the Year;
• EMEA Tech Agency of the Year;
• US Tech Agency of the Year;
• PR Week Best Places to Work.
With a human-first mentality, Hotwire helps clients ignite the incredible
possibilities of their technology, through emotive, provocative and
unexpected creativity. With more than two decades of experience at
the forefront of tech innovation, they do so at the lightning speed of
the tech industry, which helps deliver their unique strategic advantage
– and leads to award-winning creative work, too. Hotwire was recently
recognised with three Cannes Lions; demonstrating the power,
potency and effectiveness of their creativity.
Hotwire has a laser focus on developing and implementing more
ways to mine and use data, as the basis of all planning, execution
and measurement. As they evolve to a consultancy approach, this
concentration is witnessed in the global implementation of The
Hotwire Way, a methodology that harnesses the power of data and
transforms it into the basis of integrated communications programs.
At the forefront of effective data measurement, Hotwire is a board
member of AMEC (Association for the Measurement and Evaluation
of Communications) and use their data centric measurement
framework to prove the outcomes and commercial impact of
communications activities.
Looking forward
with bold ambition
In FY22 and beyond, the entire Hotwire business strives to become recognised as the pre-eminent
global tech communications consultancy. It’s this ambition that fuels the desire for external
recognition, and the ambition that has already landed global, US and EMEA tech agency of the
year awards. It’s this ambition which drives their successes in working with the world’s most
innovative tech brands, on their most important challenges, in their most important markets.
The same ambition guides the continued deepening and broadening of core competencies,
ensuring they continue to provide inspiring, pragmatic and effective communications strategies
that deliver business results.
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Enero Group Limited · Annual Report 2021
CASE STUDY: AVAYA
REDEFINING THE NARRATIVE
The challenge
The messaging and channels
Avaya was well known as a communications hardware provider.
Yet the industry had radically changed to prioritise SaaS companies.
Avaya needed to shed its legacy image and reshape the market
narrative, showing a refreshed business model and value proposition.
The process
Hotwire interviewed experts across Avaya Marketing, Product
and Strategy; conducted a market competitor scan; and used
insight from analyst reports to create brainstorming materials.
The key insights
• Avaya’s software has a unique benefit to the end user –
it brings together several different ways for people to connect.
Avaya’s competitors were strongly associated with specific
communication technologies, such as video or chat.
• Avaya was stuck on the product announcement carousel.
• While they did appear in trade publications, these didn’t meet
the audience in the highest impact publications for sales.
The solution
Hotwire worked closely with Avaya to map out the ‘new Avaya’
story, creating an internal messaging playbook, an overview
of core customers and statistics, and impressive anecdotes
for executives to use in backing up the story.
Avaya had to be seen bringing digital collaboration to life. Hotwire
mapped out key influencer relationships, and a clear path to educate
them. Major feature stories were secured with Business Insider, Silicon
Valley Business Journal, and influential trade and channel outlets,
allowing Avaya to tell its transformation stories to new audiences.
Once the magnitude of Avaya’s impact during the WFH mandate
became apparent, Hotwire explained how Avaya was supporting
its customers with key initiatives, and set out the CEO’s POV on the
rapid changes taking place, working quickly to shape and update the
narrative around Avaya as the go-to partner for companies shifting
their communications and collaboration efforts to a remote model,
laying out key ‘wins’ for the brand and a plan to execute them.
Hotwire secured segments with Avaya’s CEO on CNBC Mad Money,
Fox News, CNN and TD Ameritrade, where he discussed Avaya’s
pivotal role in supporting the WFH era, and Avaya’s recent cloud
transformation; thereby giving investors, shareholders, brokers,
customers and partners confidence that Avaya had the right offering.
The results
As TD Ameritrade noted, “The street is really viewing you
as a cloud stock.”
In eight months, Hotwire secured 200+ pieces of earned coverage,
including six Tier One broadcast opportunities. In FY20, Avaya
consistently came top in share of voice versus its competitors,
and enjoyed a 32% YoY increase in shareholder value. Forrest
Monroy, Head of Global Corporate Communications at Avaya, said:
“It was imperative that the reimagined Avaya brand become better
understood by the market, especially new and existing customers
and partners. Hotwire partners with me to do that every day.”
Enero Group Limited · Annual Report 2021
19
Orchard
Delivering digitally
optimised experiences
Orchard represents the best in the emerging communications
channels and creative technology services through a core service
offering of digital brand, communications and social, digital products
and experiences, and data and analytics. Their unique skill is creating
truly connected brand experiences, by understanding the key
touchpoints of a customer journey and creating the best content
for each brand, within the best context for the audience, powered
by the best technology platforms.
Despite lockdowns, the shift to remote working, client cuts and
market disruption, this year has seen Orchard grow their team with
an additional 20 full-time staff; as well as revenue, with 11 new client
partners. It’s an achievement made possible by effective work, a
willingness to embrace change and a strong agency strategy, brought
to bear with a combination of Orchard’s long-held leading vertical
expertise in health and wellness; coupled with the growth and demand
in digital services over the year, as the nation’s brands immediately
looked towards digital channels during the pandemic.
Extending and excelling
in experiences
Orchard has doubled down on data capability and services,
investing in Digital Experience Optimisation (DXO), and developing
organisation-wide Business Intelligence tools for clients like Hoyts,
and customer innovation for clients like ALDI. At the same time,
they’ve expanded the depth and breadth of in-house technical
development capability, including certification and partnerships with
leading platforms such as Adobe, Optimizley, Kentico and Salesforce.
And despite the pandemic, throughout the year, we’ve managed
effectively and with a steady hand, resulting in zero COVID-related
headcount reductions.
A great recognition of the team’s expertise, and a milestone of the
agency during the year, was to be awarded the ADNews digital agency
of the year. Orchard was also a finalist in best CX agency partner; and
in the Mumbrella awards won the best use of user experience and was
a finalist for data-driven marketing and specialist agency of the year.
These are all great indicators that as an agency Orchard is advancing
well in the spheres of modern marketing and where the client need
and demand is high.
Looking forward
with bold ambition
Orchard will continue investing in their trifecta of growth. They plan to invest behind their fast-
growing NYC office to further expand capabilities and tap into the enormous North American
healthcare market. With world health literacy at an all-time high, they will continue to develop
differentiated digital health IP and evolve the health service offering. And with the proliferation
of marketing technology, Orchard will double down on technology-powered connected
experiences, helping clients navigate and optimise their MarTech investments.
20
Enero Group Limited · Annual Report 2021
CASE STUDY: HYUNDAI
TRANSFORMING DIGITAL CX
The challenge
The results
This year saw Orchard cement foundation platforms and leverage
emerging tech to continue providing Australia’s most delightful
performant automotive customer experience as part of their
ongoing relationship with Hyundai.
Strong YOY results driven by this work included a 21x increase in
homepage traffic conversion to model and pricing pages; a 30%
increase in digital leads; and a 205% increase in lead to car price
calculator conversion.
The strategy
Throughout the year, the work was guided by three objectives:
to inform customers and reduce customer friction; to increase
customer acquisition; and to reimagine how customers can
discover a Hyundai vehicle.
The solution
The key objectives came together to create a multitude
of impactful initiatives, including:
• Customer inspections of models in their own
driveways with industry-first auto AR.
• A world-class ownership member portal, centralising
all essential services within one click.
• A single source of digital truth for all retail offers and
pricing, now leveraged across the Hyundai network.
• A future-proof product management roadmap with the
development of a comprehensive Product Information
Management system.
• And, for the first time, showing pricing during online
model customisation – further closing the gap between
interest and purchase intent.
Kevin Goult, Marketing Director of Hyundai Australia, commented:
“Hyundai began its partnership with Orchard over three years ago,
where an outdated platform and basic customer data were the tools
driving our digital customer experience. In late 2018, we embarked on
a journey to define a next generation automotive customer experience
that delivered on business needs, informed by innovation and existing
customer behaviour. Throughout that process, Orchard has successfully
brought Hyundai departments together, unifying marketing, sales
and IT around a common goal: plan and deliver the most progressive
auto CX in Australia. We still have more to do, but thanks to our
partnership, we have the right foundations in place to deliver our
digital roadmap, and delight our customers at every step. With
Orchard as our key digital partner, we’re looking forward to
continued innovation as we raise the standard for Aussie
digital automotive customer experience.”
Enero Group Limited · Annual Report 2021
21
OBMedia
Maximising digital advertising
with real-time tech
OBMedia is a technology driven, proprietary advertising
technology platform. They facilitate high-intent and high-value
user traffic between publishers and search-based advertisers,
which means publishers want to work with them – because they
help to maximise the value of their ad inventory; and advertisers
recognise the value of working with them to provide high-intent
traffic from a previously untapped range of channels.
Doubling users in FY21
Over the course of FY21, OBMedia continued to focus on investing in
capabilities to accelerate the performance of their platform, whilst also
continuing to diversify and strengthen the business, as investments
in technology and process efficiency paid off in the form of a highly
competitive product. Sources of traffic continue to grow, and the
number of publishers OB serves on the platform almost doubled in FY21,
while they delivered a total of 160 million consumers to advertiser sites.
Driving sustainable growth
The OBMedia proprietary advertising technology platform
drives sustainable, and growing, competitive advantage
through a range of distinct capabilities, including:
• End-to-end advertisement conversion tracking;
• Omnichannel customer acquisition;
• Real-time ad performance optimisation;
• Real-time fraudulent traffic monitoring
(resulting in leading traffic quality scores);
• Real-time data reporting to platform users.
With these capabilities in place, the technology generates
a virtuous flywheel – the more traffic generated by the ads
placed, the better the optimisation models perform, and
the more profits generated for both partners and
advertisers – which in turn drives more traffic.
Looking forward
with bold ambition
As a business underpinned by technology, OBMedia is positioned to continue to grow at a rapid rate while
maintaining excellent profitability. The virtuous flywheel effect allows for continued margin expansion
which in turn fuels ongoing investments in new people and capabilities. A low fixed cost base ensures
the business is financially scalable, as they embrace a rapid next phase of growth.
OBMedia will continue to benefit from the long-term secular shifts towards digital and e-commerce –
the US digital advertising market is forecast to be $150 billion in 2021, and will continue to grow rapidly
(estimated at 20%+ p.a. over the next three years). In order to capitalise on this market expansion, they
will continue to invest in the OBMedia business to unlock new capabilities, and are exploring potential
acquisitions to accelerate growth.
In the second half of FY21, OBMedia completed a major platform migration from SQL to Snowflake,
which has enabled real time reporting for their partners. Our AI and automation investments are fuelling
continuous improvements to the optimisation engine, ensuring their proprietary technology continues
to drive industry leading click-through rates, with contextually relevant and programmatically efficient ads.
Despite rapidly evolving industry trends on privacy, OBMedia is well positioned for the future privacy-
conscious world of digital media with unique and valuable first-party data supplied to their advertisers
and publishers, without reliance on third-party cookies.
22
Enero Group Limited · Annual Report 2021
CASE STUDY: SUCCESS BY NUMBERS
DELIVERING HIGH-INTENT CONSUMERS TO BRANDS
130M
Consumers delivered to
advertiser websites · Up 45%
5,000+
Number of advertising
campaigns · Up 84%
PROPRIETARY ADVERTISING TECHNOLOGY PLATFORM
Programmatic platform
Data warehouse
Privacy Compliant
Uses AI and automation to
enhance advertising efficiency
in monetising web traffic
Automated customer acquisition,
real-time reporting and revenue
attribution platform
Well positioned for the future of online
privacy with first party data, not reliant
on third-party cookies
OBMEDIA’S BUSINESS DRIVERS
Accelerating
e-commerce
and digital
adoption
Consumers
Digital
Publishers
Advertisers
Uses AI to
deliver relevant
marketing content
to consumers
Maximises the
value of advertising
inventory for
publishers
Delivers high
intent customers
to advertisers,
maximising return
on adspend
Enero Group Limited · Annual Report 2021
23
The Leading Edge
Driving smart decision
making through data
The Leading Edge remains one of Australia’s longest operating and
well credentialled insight, data, analytics and strategy consultancies.
Their unique mix of experienced consultants, designers, researchers,
developers and in-house data and analytics operations solve client
problems from developing brand and customer strategies that fuel
behaviour change, to identifying and exploiting new paths to growth
and increasing opportunities for market success.
In 2021, TLE worked alongside major local and global clients to help
drive strategy and pathways to growth through the smart use of data.
TLE worked locally with sister Enero agencies, as well as completing
large-scale international work for TWE, DSM and Datorama, as they
refined their offerings to deliver value added data-driven strategic
advice to clients seeking new growth pathways post COVID.
CASE STUDY: TREASURY WINE ESTATES
UNDERSTANDING THE FUTURE OF GLOBAL LUXURY
One of Australia’s major global ASX-listed companies – Treasury Wine
Estates – needed to understand customer needs and possible futures
of global growth in luxury and luxury wine consumption.
The project was a major research and client undertaking –
researching thousands of consumers across four key global wine
markets including Australia, the UK, the US and China. The study
took on added significance given the issues with the Australia-China
wine trade experienced late in 2020.
Working across four continents, TLE talked in-depth with 100 luxury
and premium wine buyers, surveyed over 6,500 luxury and premium
wine buyers and engaged with numerous experts around the globe
on the subject of luxury, to explore in-depth what it means in today’s
dynamic and ever changing market landscape.
Working closely with the TWE global marketing team and agency,
TLE showcased the wine journey for the luxury consumer, and
demonstrated the opportunities for TWE and their portfolio of
global brands.
The TLE insights drove TWE’s global luxury strategy as they
move to target a more premium and luxury consumer. The project
demonstrated the TLE core proposition: that strategy fuelled by
data and insight is powerful in allowing clients to create pathways
to growth, and gives them confidence in changing their businesses,
both domestically and internationally.
Treasury Wine Estates recent investor rounds showcased their 2025
Global Luxury Strategy – termed ‘Boldly leading change in the world
of wine’, which referenced this major global study and how it provided
a platform for TWE’s ambitions in the coming years. Speaking about
the project, Angus Lilley, CMO of TWE, said: “We recognise we need to
stay ahead of the category and our competitors, and for that we need
bold foresight … the kind of game changing intelligence that can shape
a different kind of future as a true consumer-driven business.”
24
Enero Group Limited · Annual Report 2021
CPR
Accelerating positive health outcomes
CPR Communications & Public Relations is a leading communications
consultancy founded in 1994. They work across three core disciplines:
Media and Public Relations; Issues Management; and Government
Relations. CPR’s key strategic difference is direct experience, with
media advice coming from former journalists; political advice from
former MPs; and advisers drawn from both sides of politics.
CPR specialises in complex regulatory environments
that attract political and public scrutiny, including:
• Health and medical research;
• Aged care and childcare;
• Energy and waste;
• Infrastructure and development;
• Legal and financial services.
Leading through the pandemic
The pandemic forced Australia to make medical research and health
technology leaps, that once would take 15 years, in less than two years,
with the normalisation of telehealth and e-prescriptions, and rapid
at-home diagnostic tools to help triage viral infections that may
necessitate isolation. Against this backdrop in FY21, some of CPR’s
biggest achievements came through their exemplary work with
Australia’s leading medical research institutes, medical device
manufacturers, and health technology experts. They helped clients
attract more than $315 million in investment to support cancer research,
genomics and dementia care; to accelerate the commercialisation
of health technologies; and to support the advanced manufacturing
of medical devices that are exported globally.
CASE STUDY: MEDICAL RESEARCH AND LIFE SCIENCES
FOSTERING CRITICAL RELATIONSHIPS
CPR worked with Melbourne Genomics Health Alliance in the
lead-up to the Victorian State Budget 2020-21, resulting in a $35
million investment over the next four years. The funding will help
Melbourne Genomics continue to build Victoria’s global position as
a leader in health technology and innovation, and in the real-world
application of genomics.
For Planet Innovation, one of the world’s leading healthcare innovation
companies, CPR facilitated engagement with the highest levels of
Government. Planet Innovation recently welcomed Prime Minister
Scott Morrison and Minister Karen Andrews, and Victorian Ministers
Martin Pakula and Jaala Pulford, on separate tours of its Victorian-
based Medtech Manufacturing Facility. These face-to-face experiences,
where decision makers have a chance to see advanced manufacturing
and health technology innovation in action, support closer connections
between industry and Government, and build stronger partnerships.
CPR also worked with the Victorian Comprehensive Cancer Centre
across FY21 to secure $33.1 million from the Victorian Government
to help ensure world-class cancer outcomes for all Victorians, and
enable the delivery of strategic programs including improving data
linkages to accelerate cancer research. The VCCC’s work includes
giving cancer patients in regional Victoria access to cutting-edge
medical trials, which is crucial given data shows cancer outcomes
can almost be predicted by postcode, with five-year survival rates
falling the further the patient lives from a city centre.
CPR works with clients to drive awareness of the significant health
and economic opportunities that can be unlocked through investment
in medical research, innovative health technologies and life sciences.
It is work that creates highly skilled jobs and has the potential to
deliver positive health outcomes – not just for Australians but for
people around the globe.
Enero Group Limited · Annual Report 2021
25
Financial
Report
FOR YEAR ENDED 30 JUNE 2021
26
Enero Group Limited · Annual Report 2021
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 2021; 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 Chair
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
Infrastructure Victoria, Cape York Partnerships, Australia
and New Zealand School of Government (ANZSOG), The
Climate Ready Initiative 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 a member 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 35 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.
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 Macquarie Telecom
Limited (ASX: MAQ) as well as a member of its Audit and
Risk Committee, and Chair of the Remuneration and
Nomination Committee. Anouk is also a Board member of
Discovery Holiday Parks and is Chair of its People and
Remuneration Committee.
Anouk is currently the Chief Executive Officer for the Scape
Group. Previously Anouk held an Executive role as Chair of
Moon Communications Group, a business which she
worked in for 12 years, where she firstly held the role of
Strategy Director and then served as Chief Executive
Officer.
Anouk is Chair of the Audit and Risk Committee and a
member of the Remuneration and Nomination 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 Chair of parking technology company
Parkable; Chair of child poverty charity Share My Super;
Advisory Board member of The Spinoff, New Zealand’s
most successful online news magazine, and Co-Founder of
research start-up Stickybeak.
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
worlds 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 held
numerous senior executive roles with the 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.
Enero Group Limited Annual Report 2021 27
27
Enero Group Limited · Annual Report 2021
Directors’ Report
Ian is a Non Executive Director of Reliance World
Corporation (ASX: RWC), a member of the Investment
Advisory Board of Innovate Partners LLC – a Los Angeles
area based venture capital firm, and Chair of
BrightGuard LLC.
Ian is the Chair 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 with
specific expertise in global consumer brands, media and
publishing, technology, retail and sports. Brent built his
career at Nike Inc. including his most recent roles as Vice
President/Chief Executive Western Europe, Vice President
and Chief Marketing Officer EMEA based in Amsterdam
and GM Regional USA based in New York city. He has
also held other senior leadership roles in Europe, the USA
and Australasia in General Management and Marketing.
Brent was also part of Nike’s global commercial operations
leadership team contributing to the development of the
Nike Inc. brand and commercial strategy in Europe, the
USA, China and Japan. Brent was also the founder and
CEO of Unscriptd, a technology led sports media company,
which was acquired by Google Ventures backed
publisher The Players Tribune in New York in 2018.
Brent is a Director of the Melbourne International Arts
Festival – Rising, a Non-Executive Director of ASX-listed
Kathmandu Holdings Limited and was previously a Non-
Executive Director of Catapult Group International Limited,
Rhinomed Limited and Fox Head Inc in California, USA.
Company Secretary
Cathy Hoyle was appointed Company Secretary on
8 March 2021. She is also the Group General Counsel.
Cathy is a practising Solicitor in New South Wales Australia
and holds several degrees including a Master of Laws from
the Australian National University.
Brendan York resigned as Company Secretary on
31 March 2021.
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
Ian Rowden (Chair)
Ann Sherry
Anouk Darling
Principal activities
The principal activities of the Group during the course of
the financial year were integrated marketing and
communication services, including strategy, market
28 Enero Group Limited Annual Report 2021
research and insights, advertising, public relations,
communications planning, design, events management,
direct marketing 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 2021 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 fourth 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.
Operating and Financial Review
Information relating to the operating and financial review of
the Company and its strategy is outlined on pages 31 to 33
and forms part of this Directors’ Report.
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
7
6
7
7
7
7
B
A
B
7
7
7
7
7
7
–
4
4
4
–
–
–
4
4
4
–
–
Remuneration
and
Nomination
Committee
meetings
B
A
2
–
2
–
2
–
2
–
2
–
2
–
Ann Sherry
Susan McIntosh
Anouk Darling
David Brain
Ian Rowden
Brent Scrimshaw
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
Total
Ordinary
shares
18,750
122,223
19,607
75,000
75,000
Nil
310,580
Share
Appreciation
Rights
Nil
Nil
Nil
Nil
Nil
1,250,000
1,250,000
28
Directors’ ReportEnero Group Limited · Annual Report 2021
Events subsequent to balance date
Subsequent to the balance date, the Directors have
declared a final dividend, with respect to ordinary shares,
of 4.4 cents per share, fully franked. The final dividend will
have a record date of 23 September 2021 and a payment
date of 6 October 2021. 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
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.
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 Cathy Hoyle
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 11 September 2020, the Company issued 580,659
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). The issue price of these shares was $1.62 and
these shares rank equally with existing shareholders.
Share Appreciation Rights
Share Appreciation Rights issued
During the year ended 30 June 2021, a total of 3,900,000
Share Appreciation Rights (30 June 2020: 2,450,000) 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 2021
30 September 2021
30 September 2021
30 September 2022
30 September 2022
30 September 2023
Total
Number of
SARs
900,000
599,999
1,233,329
483,337
1,199,996
1,200,008
5,616,669
Strike price VWAP
(for the 20 business
days prior to the
grant)
$1.23
$2.13
$1.52
$2.13
$1.52
$1.52
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:
2020 Final dividend
2021 Interim dividend
Cents
per
share
Total
amount
AUD ’000
Date of
payment
3.5
10.5
3,033 2 October 2020
9,099 16 March 2021
Subsequent to the balance sheet date, the Directors have
declared a final dividend, with respect to ordinary shares,
of 4.4 cents per share – fully franked with a payment date
of 6 October 2021. The financial effect of this dividend has
not been brought to account in the financial statements for
the year ended 30 June 2021 but will be recognised in the
subsequent financial period.
For further details refer to Note 16 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 2021 29
29
Enero Group Limited · Annual Report 2021
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 89, and forms part of the Directors’ Report for the
year ended 30 June 2021.
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 34 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 2021
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 31 Auditor’s remuneration of the
notes to the financial statements.
Services other than statutory audit
Auditors of the Company
Taxation compliance services:
KPMG Australia
Overseas KPMG firms
Total services other than
statutory audit
2021
$
2020
$
26,000
286,000
–
188,000
312,000
188,000
30 Enero Group Limited Annual Report 2021
30
Directors’ ReportEnero Group Limited · Annual Report 2021
Operating and financial review
The operating and financial review forms part of the
Directors’ Report.
Strategy and operations of the Group
The boutique force in modern marketing, Enero Group is
an international network of marketing and communications
businesses located in seven countries and 13 cities, with
over 600 employees. Enero is a group of specialists who
accelerate high-growth businesses by transforming brands
and deploying creative data and technology to enrich
customer experiences. The Group includes Hotwire, BMF,
CPR, Orchard, TLE and OB Media. During the year, the
Group acquired McDonald Butler Associates, a UK based
technology public relations agency, to further build the
service offering of Hotwire Public Relations business.
Group also sold its entire shareholding in Frank PR as the
Group continues to sharpen its focus on the core agencies.
The Group’s service offering includes integrated marketing
and communication services including strategy, market
research and insights, advertising, public relations,
communications planning, design, events management,
direct marketing 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 $160.6 million, an
increase of 18.3% (2020: $135.8 million) compared to the
prior reporting period. The increased revenue was driven
by organic revenue growth in OB Media, BMF, Orchard
and Hotwire. Sale of Frank resulted in reduction of revenue
which was partially offset by contribution from two months
of McDonald Butler Associates in the Group. The impact of
COVID-19 on revenue pipeline has resulted in a greater
weighting to existing client and organic revenue
opportunities over new business opportunities. The Group
continues to have a high proportion of client revenue
exposure in the technology, healthcare and consumer
staples sectors which have generally increased or at least
held business activity levels. Net revenue growth was
achieved by continuing businesses in all key geographic
markets.
The Group achieved Operating EBITDA of $45.6 million, an
increase of 87.1% (2020: $24.4 million) compared to the
prior reporting period. The Operating EBITDA margin
increased from 18.0% in 2020 to 28.4% in 2021. This
increase in the Operating EBITDA margin was driven by an
increase in revenue and Operating EBITDA in the Group’s
programmatic media platform business, OBMedia, which
connects publishers with the world’s largest search
engines. The business functions as a platform and
therefore has achieved a higher margin than other
businesses in the Group. No material movement in global
headcount or operating costs notwithstanding the
increased revenue; and $1.2 million (2020: $0.4 million) of
Job Keeper subsidies in the Australian market received
during the financial year relating to specific agencies that
qualified for the Government support.
The underlying net profit before significant items was $22.8
million, compared to $12.9 million in the prior year as the
Operating EBITDA increased by 87.1%. However, the
statutory net loss after tax to equity owners was $0.4
million, compared to profit of $10.7 million in the prior year
as the Group recognised a non-cash accounting loss of
$23.5 million relating to disposal of Frank PR and Foreign
Currency Translation Reserve (FCTR) transferred to
income statement on disposal of dormant foreign
subsidiaries.
In the current year, the Operating Brands segment
generated approximately 59% of its net revenue and 75%
of its Operating EBITDA from international markets.
A summary of the Group’s results is below:
In thousands of AUD
2021
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 items²
Net (loss)/profit after tax attributable
to equity owners
160,634 135,825
29,230
(4,849)
24,381
(3,432)
20,949
217
(1,937)
19,229
(3,397)
15,832
(2,951)
49,904
(4,291)
45,613
(2,796)
42,817
20
(1,378)
41,459
(8,514)
32,945
(10,110)
22,835
(23,237)
12,881
(2,174)
(402)
10,707
Cents per share
Earnings per share (basic) – pre
significant items
Earnings per share (basic)
26.4
(0.5)
15.0
12.5
1. Operating EBITDA, as defined in the basis of preparation section
on page 33.
2. Significant items are explained on page 32.
Enero Group Limited Annual Report 2021 31
31
Enero Group Limited · Annual Report 2021
Directors’ Report
Reconciliation of statutory profit after tax to Operating
EBITDA
In thousands of AUD
2021
2020
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
Loss on sale of controlled entities²
Loss on disposal of dormant foreign
subsidiaries²
Incidental acquisition costs²
Contingent consideration fair value
loss²
Statutory profit before tax
Income tax expense
Statutory profit after tax
160,634
49,904
(4,291)
45,613
(1,922)
(874)
20
(1,378)
(9,878)
(13,157)
(202)
–
18,222
(8,514)
9,708
135,825
29,230
(4,849)
24,381
(2,337)
(1,095)
217
(1,937)
–
–
–
(2,174)
17,055
(3,397)
13,658
1. Operating EBITDA, as defined in the basis of preparation section
on page 33.
2. Significant items are explained below.
Significant items
2021
• On 2 March 2021, the Group entered into a sale
agreement to sell its entire shareholding in Frank PR
(75% issued capital) for a consideration of £915,000
($1,647,000). The Group recognised an accounting
loss on sale of $9,878,000 in the income statement
for the year ended 30 June 2021.
• The Group disposed of 12 dormant foreign
subsidiaries and recognised an accounting loss of
$13,157,000 as it transferred the Foreign Currency
Translation Reserve (FCTR) relating to these
subsidiaries to the income statement for the year
ended 30 June 2021.
• The Group incurred incidental costs of $202,000
relating to acquisition of McDonald Butler Associates.
2020
The Group incurred contingent consideration fair value loss
of $2,174,000 relating to revaluation of future contingent
consideration payable to the vendors of Eastwick
Communications.
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 Group
Operating EBITDA margin
Australia
UK and Europe
USA
Total Operating Brand Segment
Total Group
2021
2020
65,043
35,504
60,087
160,634
58,645
37,701
39,479
135,825
13,129
7,597
32,345
53,071
(6,466)
(992)
45,613
11,536
5,703
13,149
30,388
(5,443)
(564)
24,381
20.2%
21.4%
53.8%
33.0%
28.4%
19.7%
15.1%
33.3%
22.4%
18.0%
Acquisition
On 26 April 2021, the Group acquired 100% issued capital
of McDonald Butler Associates, a UK based technology
public relations agency. The purchase consideration was
an upfront payment of £3,500,000 ($6,272,000) in addition
to contingent consideration of 5,450,000 ($9,766,000) tied
to the net revenue target through to the period 30 June
2024. Refer to Note 22 Acquisition for details.
Disposal
On 2 March 2021, the Group entered into a sale agreement
to sell its entire shareholding in Frank PR (75% issued
capital) for a consideration of £915,000 ($1,647,000). The
Group recognised a loss on sale of $9,878,000 in the
income statement for the year ended 30 June 2021. Refer
to Note 23 Disposals for details.
The Group disposed of 12 dormant foreign subsidiaries
and recognised an accounting loss of $13,157,000 as it
transferred the Foreign Currency Translation Reserve
(FCTR) relating to these subsidiaries to the income
statement for the year ended 30 June 2021. Refer to Note
23 Disposals for details.
32 Enero Group Limited Annual Report 2021
32
Directors’ ReportEnero Group Limited · Annual Report 2021
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, loss on disposal of
controlled entities and contingent consideration fair value
loss. Operating EBITDA, reconciled in the table on
page 32, 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.
Cash and Debt
In thousands of AUD
Cash and cash equivalents
Contingent consideration liabilities
Net cash¹
2021
50,718
(20,126)
30,592
2020
47,581
(25,553)
22,028
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 $30.6 million in net cash as at
30 June 2021. Apart from contingent consideration
liabilities, the Group has no loans or borrowings.
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 $53.2 million
(2020: $31.0 million). The increase in inflows was
attributable to the increased Operating EBITDA achieved
during the year and high cash collections. The Group
converted 121% of EBITDA to cash for the year ended
30 June 2021 (2020: 116%).
Cash flow – Investing activities
Cash outflows from investing activities was $21.2 million
(2020: $13.3 million). The increase in outflows was
primarily due to the contingent consideration payments
made during the year in relation to both the Eastwick and
Orchard acquisitions, and initial payment for acquisition of
McDonald Butler Associates.
Cash flow – Financing activities
Cash outflows from financing activities was $26.7 million
(2020: $14.0 million). The increase in outflows was due to
an increase in dividends paid to the shareholders of the
parent and to minority shareholders of controlled entities.
During the current financial year, $12.1 million (2020: $4.7
million) in dividends were paid to Enero Group Limited
shareholders in addition to $8.4 million (2020: $2.3 million)
in dividends paid to minority shareholders of controlled
entities.
Contingent consideration liabilities
The Company entered into contingent consideration
arrangements in relation to its acquisitions of McDonald
Butler Associates on 26 April 2021 and Orchard Marketing
on 2 February 2018.
As at 30 June 2021, the Company’s estimated contingent
consideration liability is $20.1 million.
Reconciliation of carrying amounts of contingent
consideration payable:
In thousands of AUD
30 June 2020
Payments made
Recognised on acquisition of McDonald Butler
Associates
Present value interest/foreign exchange
30 June 2021
Maturity profile (at present value):
FY2022
FY2023
FY2024
FY2025
Total
25,553
(14,885)
8,931
527
20,126
10,886
1,771
2,487
4,982
20,126
Enero Group Limited Annual Report 2021 33
33
Enero Group Limited · Annual Report 2021
Directors’ Report
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 2021. 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
Susan McIntosh
Anouk Darling
David Brain
Ian Rowden
Role
Non-Executive Director (Chair)
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Executives
Brent Scrimshaw(i)
Chief Executive Officer
Carla Webb-Sear(ii) Chief Financial Officer
Fiona Chilcott
Chief People and Culture Officer
Former Executives
Brendan York(iii)
(i) Brent Scrimshaw was appointed as CEO and Executive Director
Chief Financial Officer
effective 1 July 2020.
(ii) Carla Webb-Sear was appointed as CFO effective 8 March 2021.
(iii) Brendan York resigned as CFO effective 31 March 2021.
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 2021.
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
–
long-term incentive: equity-based Share Appreciation
Rights Plan.
34 Enero Group Limited Annual Report 2021
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Directors’ ReportEnero Group Limited · Annual Report 2021
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(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.
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),
as well as employer contributions to superannuation and
pension funds.
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 Earnings Per Share pre significant items (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 KPIs 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 pre significant items (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 Operating 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 100% 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.
Enero Group Limited Annual Report 2021 35
35
Enero Group Limited · Annual Report 2021
Directors’ Report
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 30).
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 (1/3)
Tranche 2 (1/3)
Tranche 3 (1/3)
Last expiry date
Outstanding SARs as at 30 June 2021
18 October 2018
4,500,000
Senior Executives
24 October 2019
2,450,000
Senior Executives
21 October 2020
3,900,000
Senior Executives
$1.23
$2.13
$1.52
30 June 2019
30 June 2020
30 June 2021
30 September 2021
900,000
30 June 2020
30 June 2021
30 June 2022
30 September 2022
1,083,336
30 June 2021
30 June 2022
30 June 2023
30 September 2023
3,633,333
36 Enero Group Limited Annual Report 2021
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Directors’ ReportEnero Group Limited · Annual Report 2021
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
6 months 6 months base salary 6 months base salary
Rolling
3 months
3 months 3 months base salary 3 months base salary
Key Management Personnel
Chief Executive
Officer
Chief Financial
Officer(v)
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) Carla Webb-Sear was appointed as CFO on 8 March 2021.
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 2021.
Total remuneration paid to Non-Executive Directors for the year ending 30 June 2021 amounted to $440,000
(30 June 2020: $435,000), which is 58.7% of the annual aggregate cap.
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 2021 and 30 June 2020:
Base fees – annual
Chairman
Other Non-Executive Directors
Committee fees – annual
Audit and Risk Committee – Chair
Remuneration and Nomination Committee – Chair
2021
$
120,000
75,000
2020
S
120,000
75,000
10,000
10,000
10,000
10,000
Remuneration details of Non-Executive Directors are set out in Section 7 Directors’ and Executive Officers’ remuneration.
Enero Group Limited Annual Report 2021 37
37
Enero Group Limited · Annual Report 2021
Directors’ Report
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
Cash
STI(i)
$
Annual
leave(ii) Superannuation
$
$
Long service
leave(ii)
$
Termination
benefit
$
Value of
Share
Appreciation
Rights (LTI)(iii)
$
Salary
and fees
$
130,000
65,000
68,493
68,493
77,626
77,626
75,000
75,000
75,000
75,000
–
60,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,507
6,507
7,374
7,374
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Proportion of
total
remuneration
performance
related(iv)
%
–
–
–
–
–
–
–
–
–
–
–
–
Total
$
130,000
65,000
75,000
75,000
85,000
85,000
75,000
75,000
75,000
75,000
–
60,000
–
–
–
–
–
–
–
–
–
–
–
–
778,306
560,000
39,822
21,694
–
–
–
–
–
–
–
–
618
–
–
236,982
1,637,422
48.67
–
–
–
–
–
–
618,750
95,635
(19,048)
21,003
(9,191)
188,269
40,272
935,690
14.52
127,151
94,067
11,123
–
–
–
350,000
260,186
9,219
488,372
181,791
(2,981)
265,192
195,139
375,000
181,791
3,626
1,682
7,231
–
21,694
21,003
16,271
21,003
102
–
1,848
1,759
–
–
–
–
–
–
239,674
–
111,013
753,960
159,437
849,381
(7,513)
255,769
89,577
818,061
6,829
–
159,437
745,742
39.25
–
49.23
40.17
34.80
45.76
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Non-Executive Directors
Ann Sherry(v) (xiii)
Susan McIntosh
Anouk Darling (xiii)
David Brain
Ian Rowden
John Porter(vi)
Executive Director
Brent Scrimshaw(vii)
Director and CEO
Matthew Melhuish(viii)
Director and CEO
Executives
Carla Webb-Sear(ix)
Chief Financial Officer
Fiona Chilcott(x) (xii)
Chief People and
Culture Officer
Brendan York(xi) (xii)
Chief Financial Officer
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
(i) The short-term incentive bonus is for performance during the 30 June 2021 financial year using the criteria set out on page 35. The table above includes
the expense incurred during the financial year for the bonuses awarded. Refer to the table on page 39 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 the 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) John Porter resigned as Chairman and Director on 31 December 2019.
(vii) Brent Scrimshaw was appointed as CEO and Executive Director on 1 July 2020.
(viii) Mathew Melhuish resigned as Executive Director on 23 December 2019 and as CEO on 31 March 2020.
(ix) Carla Webb-Sear was appointed as CFO on 8 March 2021.
(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 resigned as CFO effective 31 March 2021.
(xii) 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.
(xiii) Ann Sherry and Anouk Darling were chair of the Remuneration and Nomination Committee and Audit and Risk Committee respectively, during the current
and prior reporting period.
(xiv) 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 35.
38 Enero Group Limited Annual Report 2021
38
Directors’ ReportEnero Group Limited · Annual Report 2021
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, EPS growth hurdles and strategic objective performance measures
are weighted 48%, 32% and 20% respectively in determining the percentage of fixed remuneration payable as a cash STI.
Short-term incentive
bonus(i)
Metric
Company Executives
Brent Scrimshaw
Carla Webb-Sear(iv)
Fiona Chilcott
Brendan York(v)
Operating EBITDA hurdles
and EPS growth hurdles.
Operating EBITDA hurdles
and EPS growth hurdles.
Operating EBITDA hurdles
and EPS growth hurdles.
Operating EBITDA hurdles
and EPS growth hurdles.
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
560,000
560,000
100%
94,067
94,067
100%
260,186
260,186
100%
197,024
195,139
99%
–
–
–
–
70% 100%
70% 100%
70% 100%
69% 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 from 8 March 2021 to 30 June 2021.
(v) Represents pro rata STI for period through to 31 March 2021.
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 2021
Number of
rights granted
during 2021
Fair value per
right at grant date
$
Grant date
VWAP (for the 20
business days prior
to the grant)
$
Expiry date (i)
SAR
SAR
SAR
1,250,000
100,000
100,000
21 Oct 2020
21 Oct 2020
21 Oct 2020
0.35 – 0.39
0.35 – 0.39
0.35 – 0.39
1.52 30 Sept 2023
1.52 30 Sept 2023
1.52 30 Sept 2023
Company Executives
Brent Scrimshaw
Fiona Chilcott
Brendan York(ii)
(i) The expiry 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.
(ii) Brendan York resigned as CFO effective on 31 March 2021.
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
%
forfeited
in year
%
exercised
in year
%
remaining
to vest
Vesting date(i)
Company Executives
Brent Scrimshaw
1,250,000 SAR
21 Oct 2020
–
Fiona Chilcott
900,000 SAR
18 Oct 2018
33
350,000 SAR
24 Oct 2019
100,000 SAR
24 Oct 2020
–
–
–
–
33
–
–
33
–
–
100 30 Sep 2021, 30 Sep 2022 and
30 Sep 2023
30 Sep 2021
33
66
30 Sep 2021 and
30 Sep 2022
100 30 Sep 2021, 30 Sep 2022 and
30 Sep 2023
(i) The expiry 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.
Enero Group Limited Annual Report 2021 39
39
Enero Group Limited · Annual Report 2021
Directors’ Report
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 2020
Granted as
remuneration
in year
Expired
Cancelled Exercised
Granted
held at
30 Jun 2021
Vested
during
the year
Vested and
exercisable at
30 Jun 2021
Value of
rights
granted
during
the year
$
Value of
rights
exercised
during the
year
$
–
1,250,000
–
–
–
1,250,000
–
– 466,667
–
1,150,000
1,150,000
100,000
100,000
(116,667)
(116,667)
–
(183,333)
(500,000)
(500,000)
633,333 500,000
450,000 500,000
–
–
37,333
37,333
127,600
127,600
Director
Brent Scrimshaw
Executives
Fiona Chilcott
Brendan York(i)
(i) Closing balance represents rights held at the date of ceasing to be KMP.
No share-based payments held by KMP are vested but not exercisable at 30 June 2021.
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
Susan McIntosh
Anouk Darling
David Brain
Ian Rowden
Executives
Fiona Chilcott
Brendan York(i)
Held at
1 July 2020
Purchases
Issued as
remuneration
Received on
exercise of
rights
Sales
Held at
30 June 2021
18,750
122,223
19,607
75,000
60,000
97,709
363,648
–
–
–
–
15,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
18,750
122,223
19,607
75,000
75,000
143,827
143,827
(200,000)
(90,000)
41,536
417,475
(i) Closing balance represents shares held at the date of ceasing to be KMP.
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.
40 Enero Group Limited Annual Report 2021
40
Directors’ ReportEnero Group Limited · Annual Report 2021
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 ($’000)
Earnings Per Share pre significant items
(cps)
Earnings Per Share pre significant items
growth (%)
Earnings Per Share basic (cps)
Total Dividends Per Share (cps)(i)
Opening share price (1 July) ($)
Closing share price (30 June) ($)
30 June
2021
30 June
2020
30 June
2019
30 June
2018
30 June
2017
160,634
45,613
28.4%
135,825
24,381
18.0%
129,535
20,722
16.0%
103,685
13,513
13.0%
100,172
10,364
10.4%
22,835
12,881
12,051
7,846
4,893
26.4
76%
(0.5)
14.9
1.36
2.51
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
(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 76% 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.
Enero Group Limited Annual Report 2021 41
41
Enero Group Limited · Annual Report 2021
Consolidated income statement
for the year ended 30 June 2021
Consolidated income statement
for the year ended 30 June 2021
In thousands of AUD
Note
2021
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
Loss on disposal of controlled entities
Incidental acquisition costs
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 notes on pages 47 to 82 are an integral part of these consolidated financial statements.
3
3
3
23
22
13
4
5
17
17
402,478
(241,844)
268,741
(132,916)
160,634
1,631
(98,360)
(1,658)
(201)
(1,965)
(2,588)
(7,087)
(7,589)
(23,035)
(202)
–
46
(1,404)
18,222
(8,514)
9,708
(402)
10,110
9,708
(0.5)
(0.5)
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
42 Enero Group Limited Annual Report 2021
42
Enero Group Limited · Annual Report 2021
Consolidated statement of comprehensive income
for the year ended 30 June 2021
Consolidated statement
of comprehensive income
for the year ended 30 June 2021
In thousands of AUD
Profit for the year
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss:
Foreign currency translation differences for disposed foreign operations
Reserve change in ownership interest – partially owned subsidiary
disposed during the year
Total items that will not be reclassified subsequently to profit or loss
Note
23
23
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
The notes on pages 47 to 82 are an integral part of these consolidated financial statements.
2021
9,708
2020
13,658
16,331
1,417
17,748
(585)
(585)
17,163
26,871
16,840
10,031
26,871
–
–
–
(476)
(476)
(476)
13,182
10,218
2,964
13,182
Enero Group Limited Annual Report 2021 43
43
Enero Group Limited · Annual Report 2021
Consolidated statement of changes in equity
for the year ended 30 June 2021
Consolidated statement
of changes in equity
for the year ended 30 June 2021
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
6,955
20,955
12,080
(1,417)
(18,354) 117,631
1,731 119,362
Share
capital
97,412
–
–
–
–
(1,057)
10,707
–
10,707
–
–
–
–
–
–
–
–
16
2,103
–
–
(2,103)
16
–
–
–
(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
In thousands of AUD
Note
Opening balance at 1 July 2019
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
Closing balance at 30 June 2020
99,515
(383)
33,209
10,541
(1,417)
(18,843) 122,622
2,355 124,977
Opening balance at 1 July 2020
99,515
(383)
(402)
–
(402)
33,209
10,541
(1,417)
(18,843) 122,622
2,355 124,977
–
–
–
–
–
–
–
–
(402)
10,110
9,708
1,417
15,825
17,242
(79)
17,163
1,417
15,825
16,840
10,031
26,871
–
–
–
16
941
–
–
(941)
16
23
–
–
–
–
(15,770)
–
15,770
(12,132)
–
–
–
–
–
–
–
992
–
–
–
–
–
–
–
–
–
–
–
–
– (12,132)
–
–
(8,359) (20,491)
–
–
–
992
(266)
–
(266)
992
(3,018) 128,322
3,761 132,083
(Loss)/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
Disposal of controlling interest in
partially owned subsidiaries
Share-based payment expense
Closing balance at 30 June 2021
100,456
(16,555)
36,847
10,592
The notes on pages 47 to 82 are an integral part of these consolidated financial statements.
44 Enero Group Limited Annual Report 2021
44
Enero Group Limited · Annual Report 2021
Consolidated statement of financial position
as at 30 June 2021
Consolidated statement
of financial position
as at 30 June 2021
In thousands of AUD
Note
2021
2020
Assets
Cash and cash equivalents
Trade and other receivables
Other assets
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
Total current liabilities
Contingent consideration payable
Lease liabilities
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Other reserves
Profit appropriation reserve
Accumulated losses
Total equity attributable to equity holders of the parent
Non-controlling interests
Total equity
The notes on pages 47 to 82 are an integral part of these consolidated financial statements.
6
7
8
5
9
10
8
11
2
12
13
14
15
5
13
14
15
2
16
50,718
46,941
4,925
102,584
2,038
3,796
7,979
164
118,156
132,133
234,717
63,161
10,886
5,589
4,586
2,155
86,377
9,240
6,262
755
16,257
102,634
132,083
100,456
7,574
36,847
(16,555)
128,322
3,761
132,083
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
Enero Group Limited Annual Report 2021 45
45
Enero Group Limited · Annual Report 2021
Consolidated statement of cash flows
for the year ended 30 June 2021
Consolidated statement
of cash flows
for the year ended 30 June 2021
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
Acquisition of a business, net of cash acquired
Sale of controlled entities, net of cash disposed
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
2021
2020
408,956
(348,666)
285,864
(251,828)
60,290
46
(7,108)
(26)
53,202
–
(995)
(4,556)
(740)
(14,885)
(21,176)
(6,162)
–
(12,132)
(8,359)
(26,653)
5,373
(2,236)
47,581
50,718
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
6
9
22
23
13
14
14
16
6
The notes on pages 47 to 82 are an integral part of these consolidated financial statements.
46 Enero Group Limited Annual Report 2021
46
Enero Group Limited · Annual Report 2021
Notes to the consolidated financial statements
for the year ended 30 June 2021
Notes to the consolidated
financial statements
for the year ended 30 June 2021
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
Capital
16. Capital and reserves
17. Earnings per share
Risk
18. Financial risk management/financial instruments
19. Financing arrangements
20. Impairment of non-financial assets
Group structure
21. Controlled entities
22. Acquisition
23. Disposals
24. Parent entity disclosures
25. Deed of Cross Guarantee
Unrecognised items
26. Commitments
27. Contingencies
Other items
28. Subsequent events
29. Key Management Personnel and other related party disclosures
30. Share-based payments
31. Auditor’s remuneration
Page
48
50
53
54
55
57
58
58
59
60
61
62
62
63
64
65
66
67
71
72
73
75
76
77
78
79
79
79
79
80
82
Enero Group Limited Annual Report 2021 47
47
Enero Group Limited · Annual Report 2021
Notes to the consolidated financial statements
for the year ended 30 June 2021
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 2021 comprise the Company and its subsidiaries
(together referred to as the ‘Group’).
The financial statements for the year ended 30 June 2021
were authorised for issue in accordance with a resolution
of the Directors on 26 August 2021.
(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 2021.
(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.
48 Enero Group Limited Annual Report 2021
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 payable
• 14. Lease liabilities
• 18. Financial risk management/financial
instruments (Trade receivables)
• 20. Impairment of non-financial assets
• 30. 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
• 18. Financial instruments (cash flow hedges)
• 30. 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.
48
Notes to the consolidated financial statementsfor the year ended 30 June 2021Enero Group Limited · Annual Report 2021
(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
The accounting policies provided throughout Notes 1 to 31
of this report have been applied consistently to all periods
presented in the consolidated financial statements.
(g) 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 2021, 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.
Enero Group Limited Annual Report 2021 49
49
Enero Group Limited · Annual Report 2021
Notes to the consolidated financial statements
for the year ended 30 June 2021
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).
Revenues are all derived from services which are similar in
the nature of services and outputs, operate in similar
economic environments and have a comparable customer
mix. The Group’s service offering includes integrated
marketing and communication services, including strategy,
market research and insights, advertising, public relations,
communications planning, design, events management,
direct marketing and programmatic media. The Group
includes Hotwire, BMF, CPR, Orchard, TLE and OB Media.
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
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, impairment of intangibles, loss on disposal of
controlled entities and contingent consideration fair value
loss.
50 Enero Group Limited Annual Report 2021
50
Notes to the consolidated financial statementsfor the year ended 30 June 2021Enero Group Limited · Annual Report 2021
2021
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
Loss on disposal of controlled entities
Incidental acquisition costs
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
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
* All segments are continuing operations.
Operating
Brands
402,478
(241,844)
160,634
1,631
(104,498)
57,767
Total
segment Unallocated
–
402,478
–
(241,844)
–
160,634
1,631
–
(7,863)
(104,498)
(7,863)
57,767
Eliminations Consolidated
402,478
(241,844)
160,634
1,631
(112,361)
49,904
(4,291)
45,613
–
–
–
–
–
–
(9,878)
(202)
(9,878)
(202)
(13,157)
–
–
–
114,506
3,650
80,979
199,135
98,860
98,860
874
5,803
865
Operating
Brands
268,741
(132,916)
135,825
1,157
(101,274)
35,708
114,506
3,650
80,979
199,135
98,860
98,860
874
5,803
865
Total
–
–
44,254
44,254
12,446
12,446
–
410
130
–
–
(8,672)
(8,672)
(8,672)
(8,672)
–
–
–
segment Unallocated
–
268,741
–
(132,916)
–
135,825
–
1,157
(6,478)
(101,274)
(6,478)
35,708
Eliminations Consolidated
268,741
(132,916)
135,825
1,157
(107,752)
29,230
(4,849)
24,381
–
–
–
–
–
–
(2,796)
(23,035)
(202)
(1,358)
18,222
(8,514)
9,708
114,506
3,650
116,561
234,717
102,634
102,634
874
6,213
995
(2,174)
(2,174)
–
–
107,997
1,105
60,424
169,526
81,333
81,333
1,095
6,792
1,177
107,997
1,105
60,424
169,526
81,333
81,333
1,095
6,792
1,177
–
–
49,444
49,444
12,660
12,660
–
394
229
–
–
(4,381)
(4,381)
(4,381)
(4,381)
–
–
–
(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
Enero Group Limited Annual Report 2021 51
51
Enero Group Limited · Annual Report 2021
Notes to the consolidated financial statements
for the year ended 30 June 2021
2. Operating segments (continued)
Geographical segments
The operating segments are managed on a world-wide basis. However, there are three geographic areas of operation.
Geographical information
In thousands of AUD
2021
Net Revenue
Operating EBITDA
Operating EBITDA margin
Australia
65,043
13,129
20.2%
UK and
Europe
35,504
7,597
21.4%
USA
60,087
32,345
53.8%
Support
Office(i)
Unallocated
intangibles(ii)
–
(7,458)
–
–
–
–
Total
160,634
45,613
28.4%
Non-current assets
9,106
3,184
1,687
–
118,156
132,133
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
18.0%
Non-current assets
11,934
4,927
2,673
–
109,102
128,636
(i) Support office includes the share-based payment charge in the income statement.
(ii) 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.
Major Customer
Net revenue from two customers of the Operating Brands segment represented approximately 30.0% (2020: 19.8%) of the
Group’s total net revenue.
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.
52 Enero Group Limited Annual Report 2021
52
Notes to the consolidated financial statementsfor the year ended 30 June 2021Enero Group Limited · Annual Report 2021
3. Revenue
In thousands of AUD
Gross revenue from the rendering of services
Directly attributable cost of sales
Net revenue
2021
402,478
(241,844)
160,634
2020
268,741
(132,916)
135,825
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
2021
65,043
35,504
60,087
160,634
2020
58,645
37,701
39,479
135,825
Contract balances
The following table provides information about receivables, contract assets and contract liabilities from contracts with
customers.
In thousands of AUD
Trade receivables
Contract assets – Work in progress
Contract liabilities – Unearned revenue
Note
7
8
12
2021
47,154
2,758
(16,507)
33,405
2020
34,834
1,513
(13,496)
22,851
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.
Enero Group Limited Annual Report 2021 53
53
Enero Group Limited · Annual Report 2021
Notes to the consolidated financial statements
for the year ended 30 June 2021
3. Revenue (continued)
The Group incurs a number of third party out-of-pocket costs in connection with services provided to customers. 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
2021
26
–
642
736
1,404
2020
47
5
1,181
756
1,989
Foreign exchange loss of $418,000 (2020: gain of $187,000) 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
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.
54 Enero Group Limited Annual Report 2021
54
Notes to the consolidated financial statementsfor the year ended 30 June 2021Enero Group Limited · Annual Report 2021
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% (2020: 30%)
Increase in income tax expense due to:
Loss on disposal of controlled entities
Share-based payment expense
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
Under/(over) provision for tax in previous years
Other (subtraction)/non-deductible items
Income tax expense on pre-tax net profit
Current taxes
The Group has a current tax payable of $2,155,000 at 30 June 2021 (2020: $358,000).
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
2021
8,738
237
8,975
(461)
(461)
8,514
9,708
8,514
18,222
5,467
6,910
298
193
–
(1,863)
(2,423)
237
(305)
8,514
2021
3,653
1,303
1,000
1,032
21
62
7,071
3,653
1,095
214
71
5,033
2,038
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
2020
3,653
1,143
497
1,325
13
80
6,711
3,653
297
116
9
4,075
2,636
Movement in deferred tax balances
The movement in deferred tax balances during the year, except deferred tax liability relating to customer relation acquired
through business combination, was all recognised in the income statement. Deferred tax liability relating to customer
relation acquired through business combination is recognised in Goodwill (see Note 22 Acquisition for details).
Enero Group Limited Annual Report 2021 55
55
Enero Group Limited · Annual Report 2021
Notes to the consolidated financial statements
for the year ended 30 June 2021
5. Income tax expense and deferred tax (continued)
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
2021
2,996
207,486
210,482
2020
9,443
207,514
216,957
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.
56 Enero Group Limited Annual Report 2021
56
Notes to the consolidated financial statementsfor the year ended 30 June 2021Enero Group Limited · Annual Report 2021
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
2021
33,630
17,088
50,718
2020
34,447
13,134
47,581
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 19 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 18 Financial risk management/financial instruments.
Reconciliation of cash flows from operating activities
(i) Reconciliation of cash
For the purpose of the statement 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
2021
2020
Cash assets
(ii) Reconciliation of profit after income tax to net cash provided by
operating activities
Profit after income tax
50,718
47,581
9,708
13,658
Add/(less) non-cash items:
Loss on disposal of controlled entities
Loss 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
Increase/(decrease) in income taxes payable (net)
(Increase)/decrease 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
(Increase)/decrease in work in progress
(Increase)/decrease in prepayments
Decrease/(increase) in other assets
Increase in payables and accruals
Increase in unearned income
Increase/(decrease) in employee benefits
Net cash from operating activities
23,035
52
992
1,922
4,291
874
–
642
736
2,033
(440)
43,845
(13,533)
(1,276)
(177)
199
18,366
4,915
863
53,202
–
2
564
2,337
4,849
1,095
2,174
1,181
756
(95)
243
26,764
(820)
962
857
(273)
3,055
730
(280)
30,995
Enero Group Limited Annual Report 2021 57
57
Enero Group Limited · Annual Report 2021
Notes to the consolidated financial statements
for the year ended 30 June 2021
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
2021
2020
18
47,154
(232)
46,922
19
46,941
34,834
(261)
34,573
38
34,611
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 18 Financial risk management/financial instruments.
8. Other assets
In thousands of AUD
Current
Work in progress
Prepayments
Other current assets
Non-current
Deposits
2021
2,758
2,138
29
4,925
164
164
2020
1,513
1,961
287
3,761
188
188
58 Enero Group Limited Annual Report 2021
58
Notes to the consolidated financial statementsfor the year ended 30 June 2021Enero Group Limited · Annual Report 2021
9. Plant and equipment
In thousands of AUD
2021
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
Acquired through business combination
Disposal of controlled entities
Depreciation
Effect of movements in exchange rates
Disposals
Carrying amount at the end of the year
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
Computer
equipment
Office
furniture
and
equipment
Plant and
equipment
Leasehold
improvements
Total
4,001
(2,747)
1,254
2,009
(1,564)
445
229
(220)
9
6,308
(4,220)
2,088
12,547
(8,751)
3,796
1,476
734
31
(139)
(828)
(20)
–
1,254
605
123
–
(3)
(266)
(12)
(2)
445
16
–
–
–
(7)
–
–
9
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
25
–
(9)
–
–
16
2,854
138
–
(13)
(821)
(20)
(50)
2,088
7,150
(4,296)
2,854
3,413
456
(1,022)
7
–
2,854
4,951
995
31
(155)
(1,922)
(52)
(52)
3,796
14,015
(9,064)
4,951
5,877
1,406
(2,337)
17
(12)
4,951
Accounting policy
(i) Recognition and measurement
Plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses (see Note 20
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.
Enero Group Limited Annual Report 2021 59
59
Enero Group Limited · Annual Report 2021
Notes to the consolidated financial statements
for the year ended 30 June 2021
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
Additions
Recognised on transition to AASB 16
Disposal of controlled entities
Re-measurement of lease liabilities
Disposals
Depreciation
Effect of movements in exchange rates
Carrying amount at the end of the year
2021
2020
15,279
(7,300)
7,979
11,759
839
–
(108)
–
(55)
(4,291)
(165)
7,979
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.
Accounting policy
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 20 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 terms 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.
60 Enero Group Limited Annual Report 2021
60
Notes to the consolidated financial statementsfor the year ended 30 June 2021Enero Group Limited · Annual Report 2021
11. Intangible assets
In thousands of AUD
2021
Cost
Accumulated amortisation
Impairment
Net carrying amount
Reconciliations of the carrying amounts of intangibles:
Carrying amount at the beginning of the year
Acquired through business combination
Disposal of controlled entities
Amortisation
Effect of movements in exchange rates
Carrying amount at the end of the year
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
Goodwill Contracts and
customer
relationships
208,979
–
(94,473)
114,506
107,997
12,316
(6,136)
–
329
114,506
295,297
–
(187,300)
107,997
108,208
–
(211)
107,997
7,609
(3,959)
–
3,650
1,105
3,428
–
(874)
(9)
3,650
4,334
(3,229)
–
1,105
2,176
(1,095)
24
1,105
Total
216,588
(3,959)
(94,473)
118,156
109,102
15,744
(6,136)
(874)
320
118,156
299,631
(3,229)
(187,300)
109,102
110,384
(1,095)
(187)
109,102
Amortisation charge
The amortisation charge of $874,000 (2020: $1,095,000) 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 $114,506,000 (2020: $107,997,000) relates to the Operating Brands CGU group.
The increase in the goodwill carrying value as compared to the prior reporting period is primarily in relation acquisition of
McDonald Butler Associates (refer to Note 22 Acquisition) partially offset by relative value of goodwill relating to disposal of
Frank PR (refer to Note 23 Disposals).
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.
Enero Group Limited Annual Report 2021 61
61
Enero Group Limited · Annual Report 2021
Notes to the consolidated financial statements
for the year ended 30 June 2021
11. Intangible assets (continued)
(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 20 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
2021
29,543
17,111
16,507
63,161
2020
16,820
11,926
13,496
42,242
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 18 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
Recognised in business combination
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
2021
2020
10,886
15,119
9,240
10,434
25,553
8,931
–
642
(115)
(14,885)
20,126
33,801
–
2,174
1,181
320
(11,923)
25,553
During the prior year, the Group recognised a fair value loss of $2,174,000 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
McDonald Butler Associates subsequent to the reporting date. Factors which could vary the amount of contingent
consideration payable due include a net revenue threshold for future payments, the basis of the average net revenue over
the contingent consideration period and purchase price cap. Actual future payments may differ from the estimated liability.
A sensitivity analysis for Contingent consideration payable is disclosed in Note 18 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.
62 Enero Group Limited Annual Report 2021
62
Notes to the consolidated financial statementsfor the year ended 30 June 2021Enero Group Limited · Annual Report 2021
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 18 Financial risk management/financial
instruments.
In thousands of AUD
Current
Lease 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
Additions
Disposal of controlled entities
Other disposals
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 period
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 to Note 10.
2021
5,589
6,262
11,851
16,907
–
839
(225)
(61)
–
(6,162)
736
(183)
11,851
5,589
6,262
11,851
2020
6,384
10,523
16,907
493
22,498
–
–
–
(10)
(6,979)
756
149
16,907
6,384
10,523
16,907
Enero Group Limited Annual Report 2021 63
63
Enero Group Limited · Annual Report 2021
Notes to the consolidated financial statements
for the year ended 30 June 2021
15. Employee benefits
In thousands of AUD
Aggregate liability for employee benefits, including on-costs
Current
Employee benefits provision
Non-current
Employee benefits provision
2021
2020
4,586
755
3,732
820
The Group has recognised $2,140,000 (2020: $2,228,000) 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.
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.
64 Enero Group Limited Annual Report 2021
64
Notes to the consolidated financial statementsfor the year ended 30 June 2021Enero Group Limited · Annual Report 2021
16. Capital and reserves
In thousands of AUD
Share capital
Ordinary shares, fully paid
2021
2020
100,456
99,515
The Company does not have authorised capital or par value in respect of its shares.
Movement in ordinary shares
Balance at beginning of year
642,726 shares transferred from a trust account held by
the Company to the employees of the Group on exercise
of Share Appreciation Rights(i)
Shares issued to the employees of the Group on
exercise of Share Appreciation Rights(i)
Balance at end of year
2021
Shares
86,074,859
2021
In thousands
of AUD
99,515
2020
Shares
85,604,954
2020
In thousands
of AUD
97,412
–
–
–
1,215
580,659
86,655,518
941
100,456
469,905
86,074,859
888
99,515
(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
the vesting date of the rights of $1.62 (2020: $1.89).
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
share capital on exercise of options, rights and equity plans.
Dividends
Dividend declared and/(or) paid by the Company to its members:
During the year ended 30 June 2021
Fully franked final dividend – 2020
Fully franked interim dividend – 2021
Subsequent to the balance sheet date, at the date of this report
Fully franked final dividend – 2021
During the year ended 30 June 2020
Fully franked final dividend – 2019
Fully franked interim dividend – 2020
Cents per
share
3.5
10.5
4.4
3.0
2.5
Total amount
in thousands of
AUD Date of payment
3,033
9,099
2 October 2020
16 March 2021
3,813
6 October 2021
2,582
2,152
8 October 2019
19 March 2020
Dividend franking account
In thousands of AUD
Franking credits available for future years at 30% to shareholders of Enero Group Limited
2021
11,732
2020
16,257
The above amounts represent the balance of the franking account at the 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.
Enero Group Limited Annual Report 2021 65
65
Enero Group Limited · Annual Report 2021
Notes to the consolidated financial statements
for the year ended 30 June 2021
16. Capital and reserves (continued)
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.
17. 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
2021
9,708
(10,110)
(402)
2021
86,541
1,738
88,279
2021
(0.5)
(0.5)
2020
13,658
(2,951)
10,707
2020
85,850
1,469
87,319
2020
12.5
12.3
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.
66 Enero Group Limited Annual Report 2021
66
Notes to the consolidated financial statementsfor the year ended 30 June 2021Enero Group Limited · Annual Report 2021
18. 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:
•
•
•
credit risk;
liquidity risk; and
market 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 2021, the Group entered
into transactions with approximately 400 unique customers.
The 10 largest customers accounted for 48% of net
revenue for the year ended 30 June 2021, with no one
customer accounting for more than 20% 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
Carrying amount
2020
2021
6
50,718
47,581
7
8
8
46,941
2,758
164
100,581
34,611
1,513
188
83,893
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
2020
34,573
2021
46,922
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
Provision used during year
Balance at 30 June
Average credit loss for year(i)
Credit loss provision at balance
date(ii)
2021
261
11
(40)
232
–
0.5%
2020
329
191
(259)
261
0.5%
0.7%
(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.
The average credit loss was assessed at 30 June 2021
and despite uncertainty in trade receivables collections
during COVID-19, the average credit loss reduced during
the current year. 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
2021
44,311
2,588
23
232
47,154
(232)
46,922
2020
30,425
4,061
87
261
34,834
(261)
34,573
(i) Impairment includes trade receivables specifically impaired of $42,000 (2020:
$71,000) plus expected credit losses of $190,000 (2020: $190,000).
Enero Group Limited Annual Report 2021 67
67
Enero Group Limited · Annual Report 2021
Notes to the consolidated financial statements
for the year ended 30 June 2021
18. Financial risk management/financial instruments (continued)
Currency risk
Currency risk is the risk that the fair value of future cash
flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. The source and nature
of this risk arises from operations and translation risks.
The Operating Brands segment generated approximately
59% of its net revenue and 75% of its Operating EBITDA
during the year ended 30 June 2021 from outside Australia.
The Group’s reporting currency is Australian dollars.
However, the international operations give rise to an
exposure to changes in foreign exchange rates, as the
majority of its revenues from outside Australia are
denominated in currencies other than Australian dollars,
most significantly Great British pound (GBP) and US dollar
(USD).
The Group’s currency risk exposure is limited
predominantly to consolidated Australian dollar translation
risk as the majority of transactions denominated in foreign
currencies are transacted by entities within the Group with
the same functional currency of the relevant transaction.
Market risk
Market risk is the risk relating to changes in market prices,
such as foreign exchange rates, interest rates and equity
prices, which will affect the Group’s income or the value of
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 return.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they become due. The
Group’s approach to managing liquidity is to ensure, as far
as possible, that it will always have sufficient liquidity to
meet its liabilities when due.
The Group manages liquidity risk by monitoring forecast
operating cash flows, and committed unutilised facilities;
and re-estimating the value of contingent consideration
liabilities semi-annually.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the
impact of netting agreements.
2021
In thousands of AUD
Non-derivative financial liabilities
Lease liabilities
Trade and other payables
(excluding unearned revenue)
Contingent consideration payable
2020
In thousands of AUD
Non-derivative financial liabilities
Lease 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
11,851
46,654
20,126
78,631
12,654
46,654
21,045
80,353
5,600
46,654
11,000
63,254
7,054
–
10,045
17,099
–
–
–
–
Carrying
amount
Contractual
cash flows
Less than
1 year
1 to 5 years Over 5 years
16,907
28,746
25,553
71,206
18,431
28,746
26,263
73,440
6,421
28,746
15,263
50,430
12,010
–
11,000
23,010
–
–
–
–
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 payable for further details.
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 2021.
Capital management
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 payable as described in Note 13 Contingent
consideration payable.
68 Enero Group Limited Annual Report 2021
68
Notes to the consolidated financial statementsfor the year ended 30 June 2021Enero Group Limited · Annual Report 2021
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
Carrying
amount
33,630
17,088
46,922
2,758
(46,654)
(20,126)
(11,851)
2021
Fair value
33,630
17,088
46,922
2,758
(46,654)
(20,126)
(11,851)
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)
Fair value measurement:
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
capped payment (payable over three
years), discounted using a risk-adjusted
discount rate. The expected payment is
determined by considering the possible
scenarios of forecast average net revenue,
the amount to be paid under each scenario
and the probability of each scenario.
Reconciliation of Level 3 fair values
In thousands of AUD
Carrying amount at the beginning of the year
Recognised in business combination
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
Significant unobservable
inputs
– Forecast average net
revenue.
– Risk-adjusted
discount rate: 3.26%
to 4.55%.
Inter-relationship between
significant unobservable
inputs and fair value
measurement
The estimated fair value
would increase (decrease) if:
–
the net revenue is higher
(lower); or
–
the risk-adjusted discount
rate were lower (higher).
2021
25,553
8,931
–
642
(115)
(14,885)
20,126
2020
33,801
–
2,174
1,181
320
(11,923)
25,553
Sensitivity analysis
Orchard Marketing: the contingent consideration period ended on 30 June 2021 and the amount payable is not subject
to the future performance of Orchard.
McDonald Butler Associates: reasonably possible changes after 30 June 2021 to one of the significant unobservable
inputs, holding other inputs constant, would have the following effects on the fair values of contingent consideration:
In thousands of AUD
Movement of 5% in average net revenue
Movement of 0.5% in risk-adjusted discount rate
Increase
2,294
(122)
Decrease
(2,615)
125
Enero Group Limited Annual Report 2021 69
69
Enero Group Limited · Annual Report 2021
Notes to the consolidated financial statements
for the year ended 30 June 2021
18. Financial risk management/financial instruments (continued)
Other items
The carrying amounts 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 the Group’s incremental borrowing rate on 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: lease liabilities, 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).
70 Enero Group Limited Annual Report 2021
70
Notes to the consolidated financial statementsfor the year ended 30 June 2021Enero Group Limited · Annual Report 2021
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.
19. Financing arrangements
The Group has access to the following lines of credit:
In thousands of AUD
2021
Total facilities available
Facilities utilised at
reporting date
Facilities not utilised at
reporting date
2020
Total facilities available
Facilities utilised at
reporting date
Facilities not utilised at
reporting date
Indemnity
guarantee
facility
Credit
card
facility
Total
3,582
1,565
5,147
2,067
216
2,283
1,515
1,349
2,864
3,628
1,670
5,298
2,105
149
2,254
1,523
1,521
3,044
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.
Indemnity guarantee facility
The indemnity guarantee facility is in place to support
financial guarantees outstanding at any one time. Specific
guarantee amounts are $2,067,000 (2020: $2,105,000)
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.
Enero Group Limited Annual Report 2021 71
71
Enero Group Limited · Annual Report 2021
Notes to the consolidated financial statements
for the year ended 30 June 2021
20. 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 2021 including the period impacted by
COVID-19;
the Group’s 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 2020: 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 2020: 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 %
2021
2020
8.73 – 9.75 8.33 – 10.16
10.52 – 13.06 9.99 – 13.67
2.50
2.50
Sensitivity range for impairment testing assumptions
As at 30 June 2021, management has identified that for
the carrying amount to exceed the recoverable amount
the discount rate would need to increase by 4.3% to
5.3% 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’).
72 Enero Group Limited Annual Report 2021
72
Notes to the consolidated financial statementsfor the year ended 30 June 2021Enero Group Limited · Annual Report 2021
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.
21. Controlled entities
Particulars in relation to controlled entities:
Name
Parent entity
Enero Group Limited
Group interest
2020
%
2021
%
Country of
incorporation
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 (Trustee of The BMF Unit Trust)
The BMF Unit Trust
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 Limited³
– 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
– McDonald Butler Associates Limited¹
– Skywrite Communications Limited³
– 33 Digital Limited³
Naked Communications Limited³
– Naked Numbers Limited³
– Naked Communications Holdings Inc.³
– Naked New York LLC³
Lorica Group Limited³
– Corporate Edge Group Limited³
Frank Public Relations Limited²
– Frank Public Relations Pty Limited²
– Frank Public Reactions Inc.²
OB Media LLC
Domain Active LLC⁴
SiteMath LLC
– Clicksciences.com LLC
The Leading Edge Research & Strategy Consultants LLC³
Orchard Creative Technology Inc.
Hotwire Public Relations Group LLC
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
–
–
–
–
–
–
–
–
–
–
–
51
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
75
75
75
51
–
51
51
100
100
100
Australia
UK
Australia
USA
Australia
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
UK
USA
USA
UK
UK
UK
Australia
USA
USA
USA
USA
USA
USA
USA
USA
Enero Group Limited Annual Report 2021 73
73
Enero Group Limited · Annual Report 2021
Notes to the consolidated financial statements
for the year ended 30 June 2021
21. Controlled entities (continued)
Name
Hotwire New Zealand Limited³
Enero Group NZ Ltd³
1. Acquired on 26 April 2021.
2. Sold on 2 March 2021.
3. Disposed of during the year ended 30 June 2021.
Incorporated during the year ended 30 June 2021.
4.
Group interest
2020
%
2021
%
Country of
incorporation
–
–
100
100
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.
(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.
.
74 Enero Group Limited Annual Report 2021
74
Notes to the consolidated financial statementsfor the year ended 30 June 2021Enero Group Limited · Annual Report 2021
22. Acquisition
On 26 April 2021 the Group, via its subsidiary Hotwire Public Relations Limited, acquired 100% issued capital of McDonald
Butler Associates, a UK based technology public relations agency. The purchase consideration was an upfront payment of
£3,500,000 ($6,272,000) in addition to contingent consideration tied to the net revenue target through to the period
30 June 2024. Future payments are subject to a minimum net revenue threshold and are capped based on the average net
revenue. The fair value of the future contingent consideration liability is estimated based on the achievement of net revenue
targets.
Following completion, the business operations of McDonald Butler Associates and Hotwire Public Relations Limited
merged together to operate under the Hotwire Public Relations brand, strengthening the offering and capabilities of
Hotwire Public Relations in the UK market.
This acquisition contributed $1,060,000 to net revenue and $214,000 to net profit after tax of the Group for the year ended
30 June 2021.
The net revenue and net profit after tax of the Group for the year ended 30 June 2021 would have been $166,119,000 and
$10,698,000 respectively, had the Group acquired McDonald Butler Associates at the beginning of the financial year.
Effect of acquisition for the year ended 30 June 2021 on the Group’s assets and liabilities.
The fair values of the net identifiable assets and liabilities acquired at the date of acquisition were:
In thousands of AUD
Cash and cash equivalents
Trade and other receivables
Other assets
Property, plant and equipment
Intangible assets
Trade and other payables
Unearned revenue
Employee benefits
Deferred tax liability
Other liabilities
Net identifiable assets/(liabilities)
Goodwill on acquisition
In thousands of AUD
Total consideration
Less: Fair value of identifiable net assets
Goodwill
Fair value
3,308
1,497
818
30
3,428
(778)
(2,623)
(163)
(1,028)
(10)
4,479
16,795
(4,479)
12,316
Goodwill has arisen on the acquisition of entities during the year as some intangibles, such as key management and
technical employee relationships and certain customer relationships, did not meet the criteria for recognition as an
intangible asset at the date of acquisition. Considering the characteristics of marketing and communication services
companies, acquisitions do not usually have significant amounts of tangible assets as the principal asset typically acquired
is creative talent and know-how of people. As a result, a substantial proportion of the purchase price is allocated to
goodwill.
Total acquisition cash outflow for year ended 30 June 2021
In thousands of AUD
Total consideration
Less: Contingent consideration
Less: Cash acquired
Net cash paid
16,795
(8,931)
(3,308)
4,556
Incidental acquisition costs of $202,000 relating to acquisition of McDonald Butler Associates were charged to the income
statement for the year ended 30 June 2021.
Enero Group Limited Annual Report 2021 75
75
Enero Group Limited · Annual Report 2021
Notes to the consolidated financial statements
for the year ended 30 June 2021
23. Disposals
On 2 March 2021, the Group entered into a sale agreement to sell its entire shareholding in Frank PR (75% issued capital)
for a consideration of £915,000 ($1,647,000). On 2 March 2021, the Group’s control over these businesses passed to the
acquirer. The proceeds from the disposal were received in March 2021. The Group recognised an accounting loss on sale
of $9,878,000 in the income statement for the year ended 30 June 2021.
Assets and liabilities and cash flow of disposed entities
The major classes of assets and liabilities of the disposed group are as follows:
In thousands of AUD
Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Plant and equipment
Right-of-use asset
Deferred tax assets
Total assets disposed
Liabilities
Trade and other payables
Lease liability
Employee benefits
Income tax payable
Total liabilities disposed
Net assets disposed
Less: net assets attributable to non-controlling interest
Net assets attributable to equity holder of parent
Net cash disposed
In thousands of AUD
Total consideration
Less: cash and cash equivalents balance disposed
Reflected in the consolidated statement of cash flows
Loss on sale of Frank PR
In thousands of AUD
Consideration received
Less: relative value of goodwill
Less: net assets disposed
Less: reserve change in ownership interest transferred to income statement
Less: foreign currency translation reserve transferred to income statement
Loss on sale of Frank PR in the income statement
Carrying amounts
2,387
1,203
112
155
108
10
3,975
(2,377)
(225)
(73)
(236)
(2,911)
1,064
(266)
798
1,647
(2,387)
(740)
1,647
(6,136)
(798)
(1,417)
(3,174)
(9,878)
Disposal of dormant foreign subsidiaries
The Group disposed of 12 dormant foreign subsidiaries and recognised an accounting loss of $13,157,000 as it transferred
the Foreign Currency Translation Reserve (FCTR) relating to these subsidiaries to the income statement for the year
ended 30 June 2021.
Loss on disposal
In thousands of AUD
Loss on sale of Frank PR
Loss on disposal of dormant foreign subsidiaries
Total loss on disposal in the income statement
76 Enero Group Limited Annual Report 2021
76
(9,878)
(13,157)
(23,035)
Notes to the consolidated financial statementsfor the year ended 30 June 2021Enero Group Limited · Annual Report 2021
24. Parent entity disclosures
As at, and throughout, the financial year ended 30 June 2021, the parent Company of the Group was Enero Group
Limited.
In thousands of AUD
Result of the parent entity
Profit 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
2021
15,770
–
15,770
25,349
156,486
25,298
33,126
123,360
100,456
10,592
36,847
(24,535)
123,360
The Company
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
For dividends declared and paid by the Company to members since the end of the previous financial year, refer to Note 16 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 25 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 2021.
Enero Group Limited Annual Report 2021 77
77
Enero Group Limited · Annual Report 2021
Notes to the consolidated financial statements
for the year ended 30 June 2021
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
Total current liabilities
Contingent consideration payable
Lease liabilities
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share-based payment reserve
Profit appropriation reserve
Accumulated losses
Total equity
2021
2020
26,200
8,923
858
35,981
60,763
30,558
2,078
2,300
4,780
16,387
19,331
5,779
1,072
26,182
62,693
30,558
1,967
2,909
6,178
16,387
116,866 120,692
152,847 146,874
17,093
10,886
3,240
2,154
33,373
–
4,392
371
4,763
38,136
10,251
4,946
3,113
1,545
19,855
10,434
6,646
423
17,503
37,358
114,711 109,516
100,456
10,592
36,847
99,515
10,541
33,209
(33,184) (33,749)
114,711 109,516
25. 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 2021, is set out as
follows:
2021
29,686
15,112
2020
26,252
13,571
(27,580) (23,076)
(4,290)
12,457
1,792
14,249
16,335
(2,420)
14,798
1,537
16,335
Summarised income statement and retained profits
In thousands of AUD
Net revenue
Dividends received from subsidiaries
Employee expenses
Operating and other expenses
Profit 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
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
33,209
(12,132)
15,770
–
16,335
36,847
(33,749) (30,503)
(15,770) (16,988)
(33,184) (33,749)
14,249
(507)
14,249
20,955
(4,734)
16,988
33,209
78 Enero Group Limited Annual Report 2021
78
Notes to the consolidated financial statementsfor the year ended 30 June 2021Enero Group Limited · Annual Report 2021
26. 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
2021
42
9
–
2020
183
29
–
51
212
The Group leases many assets, including properties and
office equipment, under non-cancellable operating
leases generally expiring in two to 10 years. Amounts
disclosed in above table relate only to leases exempt
from AASB 16 recognition.
27. 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 2021.
28. Subsequent events
Subsequent to the balance date, the Directors have
declared a final dividend, with respect to ordinary
shares, of 4.4 cents per share, fully franked. The final
dividend will have a record date of 23 September 2021
and a payment date of 6 October 2020. The financial
effect of this dividend has not been brought to account
in the financial statements for the year ended
30 June 2021 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.
The Company continues to monitor developments in the
COVID-19 pandemic and the measures being
implemented to control and slow the outbreak. The
Company has considered whether events subsequent to
the reporting date have confirmed conditions existing as
at reporting date and has not identified any COVID-19
related development which would require adjustments to
the amounts or disclosures contained in the
consolidated financial statements. Future economic
conditions may differ to the assumptions and scenarios
used in the consolidated financial statements, the
impact of which will be reflected in future reporting
periods.
29. 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:
Position
Name
Carla Webb-Sear Chief Financial Officer
Fiona Chilcott
Brendan York
Chief People and Culture Officer
Chief Financial 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
2020
3,119,950 2,342,111
(603)
76,890
255,769 188,269
(4,945)
80,771
2021
Share-based payments – Share
Appreciation Rights
437,572 359,146
Total share-based payments
437,572 359,146
Total Key Management
Personnel compensation
3,889,117 2,965,813
Enero Group Limited Annual Report 2021 79
79
Enero Group Limited · Annual Report 2021
Notes to the consolidated financial statements
for the year ended 30 June 2021
30. 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 2021.
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 (1/3)
Tranche 2 (1/3)
Tranche 3 (1/3)
Last expiry date
Outstanding SARs as at 30 June 2021
18 October 2018
4,500,000
Senior Executives
24 October 2019
2,450,000
Senior Executives
21 October 2020
3,900,000
Senior Executives
$1.23
$2.13
$1.52
30 June 2019
30 June 2020
30 June 2021
30 September 2021
900,000
30 June 2020
30 June 2021
30 June 2022
30 September 2022
1,083,336
30 June 2021
30 June 2022
30 June 2023
30 September 2023
3,633,333
80 Enero Group Limited Annual Report 2021
80
Notes to the consolidated financial statementsfor the year ended 30 June 2021Enero Group Limited · Annual Report 2021
Share Appreciation Rights (SARs)
Summary of rights over unissued ordinary shares
VWAP (for the
20 business
days prior to
the grant)
Weighted
average
exercise
price
Expiry
date
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 Sept
2023
$1.04
$1.23
$2.13
$1.52
– 1,016,670
– 1,016,670
– 1,800,000
– 2,100,000
–
–
–
– 3,900,000
900,000
–
–
–
–
–
–
–
900,000
699,998
316,666
1,083,336
–
266,667
3,633,333
4,916,670 3,900,000 1,916,670
699,998
583,333
5,616,669
–
–
–
–
–
–
–
–
–
–
–
–
–
–
363,993 0.9–2.9
216,666 0.9–2.9
– 0.9–2.9
– 0.9–2.9
580,659
VWAP (for the
20 business
days prior to
the grant)
Weighted
average
exercise
price
Expiry
date
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)
Grant date
2021
19 Oct 2017
18 Oct 2018
24 Oct 2019
21 Oct 2020
Grant date
2020
19 Oct 2017
18 Oct 2018
28 Jun 2019
24 Oct 2019
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
The number and weighted average exercise price of share rights is as follows:
VWAP (for the
20 business
days prior to
the grant) 2021
$
1.58
Weighted
average
exercise
price 2021
–
1.85
2.13
1.13
1.52
1.59
–
–
–
–
–
–
–
Number of
rights
2021
4,916,670
(583,333)
(699,998)
(1,916,670)
3,900,000
5,616,669
–
VWAP (for the
20 business
days prior to
the grant) 2020
$
1.37
Weighted
average
exercise
price 2020
–
1.76
–
1.14
2.13
1.58
–
–
–
–
–
–
–
Number of
rights
2020
9,200,002
(3,883,334)
–
(2,849,998)
2,450,000
4,916,670
–
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 2021 have a VWAP (for the 20 business days prior to the grant) range of $1.23 to $2.13
(30 June 2020: $1.04 to $2.13).
The SARs outstanding at 30 June 2021 have a weighted average contractual life of 0.98 years (30 June 2020: 0.86 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 2021 for share-based payment transactions
were $992,000 (2020: $564,000).
The VWAP for the 20 business days prior the date of exercise of SARs on 11 September 2020 was $1.62.
Enero Group Limited Annual Report 2021 81
81
Enero Group Limited · Annual Report 2021
Notes to the consolidated financial statements
for the year ended 30 June 2021
30. Share-based payments (continued)
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:
Expiry date
Value per
SAR
$
30 Sept 2021 0.20 – 0.31
30 Sept 2022 0.26 – 0.46
30 Sept 2022 0.35 – 0.40
VWAP (for the
20 business
days prior to
the grant)
$
1.23
2.13
1.52
Price of
shares on
grant date
$
1.23
2.04
1.70
Expecte
Risk-free
d
interest rate
volatility
%
%
40 1.99–2.07
40 0.73-0.76
35-55 0.07-0.25
Dividend
yield
%
Expected
life
(years)
2.0 0.9–2.9
2.0 0.9–2.9
4.7 0.9–2.9
Grant date
18 Oct 2018(i)
24 Oct 2019(ii)
21 Oct 2020(iii)
(i) 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.
(ii) 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.
(iii) Grant is in relation to SARs provided to senior employees of the Group which were issued on 21 October 2020. 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 2023, which is estimated to be around
30 September 2023.
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.
31. 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:
KPMG Australia
Overseas KPMG firm
82 Enero Group Limited Annual Report 2021
82
2021
2020
356,000
119,000
475,000
26,000
286,000
312,000
321,000
113,000
434,000
–
188,000
188,000
Notes to the consolidated financial statementsfor the year ended 30 June 2021Enero Group Limited · Annual Report 2021
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 42 to 82 and the Remuneration Report in the
Directors’ Report, set out on pages 27 to 41 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 2021 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 25 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 2021 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 2021.
Signed in accordance with a resolution of the Directors:
Ann Sherry AO
Chair
Enero Group Limited Annual Report 2021 83
83
Enero Group Limited · Annual Report 2021
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 2021 and of its financial
performance for the year ended on
that date; and
The Financial Report comprises:
• Consolidated statement of financial position as at
30 June 2021
• 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.
•
complying with Australian
Accounting Standards and the
Corporations Regulations 2001.
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 (including Independence Standards) (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.
Key Audit Matters
The Key Audit Matters we identified
are:
• Revenue recognition; and
• Annual impairment testing of
goodwill and intangible assets;
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.
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights
reserved. The KPMG name and logo are trademarks used under license by the independent member firms of
the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.
84
Enero Group Limited · Annual Report 2021
Revenue recognition ($402.5 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:
•
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.
Our procedures included:
• We selected a sample of significant 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.
•
•
For the search marketing entity, we compared
total revenue to reports provided by the
customer and subsequent cash receipt.
For contracts that were 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.
85
Enero Group Limited · Annual Report 2021 Independent Auditor’s Report
to the members of Enero Group Limited
Annual impairment testing of goodwill and intangible assets ($118.2 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.
• Discount rates – these are complicated in
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.
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.
• Working with our valuation specialists,
we 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.
86
Enero Group Limited · Annual Report 2021 The key audit matter (contd.)
These conditions necessitate additional
scrutiny by us, in particular to address the
objectivity of sources used for assumptions,
and their consistent application.
How the matter was addressed in our
audit (contd.)
• 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.
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.
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.
87
Enero Group Limited · Annual Report 2021 Independent Auditor’s Report
to the members of Enero Group Limited
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.
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report
of Enero Group Limited for the year
ended 30 June 2021, 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 34 to 41 of the Directors’ report for the year
ended 30 June 2021.
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 2021
88
Enero Group Limited · Annual Report 2021 Lead Auditor’s
Independence Declaration
under section 307C 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 2021 there have been:
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.
i.
ii.
KPM_INI_01
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
KPMG
Caoimhe Toouli
Partner
Sydney
26 August 2021
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights
reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the
KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.
89
Enero Group Limited · Annual Report 2021
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 30 July 2021.
Substantial shareholders
The number of ordinary shares held by substantial shareholders and their associates is set out below:
Shareholder
RG Capital Multimedia Limited
Regal Funds Management Pty Limited
Perpetual Limited
Wilson Asset Management
UBS Group AG
Perennial Value Management
Forager Funds Management Limited
Unquoted equity securities
Number
15,223,268
13,021,949
11,564,842
10,073,953
4,526,148
3,587,319
2,894,245
As at 30 July 2021 there were no options granted over unissued ordinary shares in the Company.
Voting rights
Ordinary shares – refer to Note 16 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
388
465
166
176
34
1,229
Ordinary shares
190,441
1,231,247
1,266,068
5,496,622
78,471,140
86,655,518
The number of shareholders holding less than a marketable parcel of ordinary shares is 63.
Twenty largest shareholders
Rank Name
1 CITICORP NOMINEES PTY LIMITED
2 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
3 UBS NOMINEES PTY LTD
4 BRISPOT NOMINEES PTY LTD
5 RG CAPITAL MULTIMEDIA LIMITED
6 IRISH GLOBAL EQUITY LIMITED
7 NATIONAL NOMINEES LIMITED
8 RG CAPITAL MULTIMEDIA LIMITED
9 J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
10 CH GLOBAL PTY LTD
11 MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
12 IRISH GLOBAL EQUITY LIMITED
13 MR FELICE TESTINI
14 CS THIRD NOMINEES PTY LIMITED
15 CS FOURTH NOMINEES PTY LIMITED
16 RG CAPITAL MULTIMEDIA LIMITED
17 BNP PARIBAS NOMS PTY LTD
18 BETA GAMMA PTY LTD
19 MRS ANTONIA CAROLINE COLLOPY
20 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2
Total
90 Enero Group Limited Annual Report 2021
90
Units
14,589,656
13,577,410
8,294,351
4,646,356
4,511,945
4,335,901
4,049,253
3,269,079
3,104,765
2,548,301
1,960,631
1,667,025
1,630,102
1,497,094
1,429,509
1,159,020
884,890
830,000
788,637
725,741
75,499,666
% of issued
capital
16.84
15.67
9.57
5.36
5.21
5.00
4.67
3.77
3.58
2.94
2.26
1.92
1.88
1.73
1.65
1.34
1.02
0.96
0.91
0.84
87.12
Enero Group Limited · Annual Report 2021
Corporate Directory
Company Secretary
Catherine Hoyle
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
Enero Group Limited · Annual Report 2021