FY23 ANNUAL REPORT
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+61 2 8213 3031
General - info@enero.com
Investor Relations - IR@enero.com
Level 2, 100 Harris Street
Pyrmont NSW 2009
Australia
CONTENTS
Smarter, Stronger ................................................................ 4
Financial Report ................................................................ 47
A letter from our Chair ........................................................ 6
A letter from our CEO .......................................................... 8
Board of Directors ............................................................ 10
Financial Highlights ......................................................... 12
Geographical Results ...................................................... 13
Client Analysis ................................................................... 14
Brand Transformation ..................................................... 16
Creative Technology and Data ........................................ 30
Environmental, Social and Governance ....................... 38
Directors’ Report
(including the Remuneration Report) ............................ 48
Consolidated income statement .................................... 67
Consolidated statement of comprehensive income .. 68
Consolidated statement of changes in equity ............ 69
Consolidated statement of financial position ............. 70
Consolidated statement of cash flows ......................... 71
Notes to the consolidated financial statements ......... 72
Directors’ Declaration ..................................................... 114
Independent Auditor’s Report ....................................... 115
Lead Auditor’s Independence Declaration .................. 123
ASX additional information ........................................... 124
Corporate Directory ......................................................... 125
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SMARTER,
STRONGER
Enero is a global creative and
Each business within the Enero
In addition, we support our leadership
technology company delivering
portfolio creates transformational
teams through our functional Centres
industry-leading brand marketing
customer experiences. Our results are
of Excellence in People and Culture,
capabilities for a roster of blue-chip
driven by a continued focus on our
Finance and Technology, M&A and
clients worldwide. We accelerate
operating strategy, a relentless pursuit
Legal services.
the growth of our client’s business
of excellence across our portfolio, and
through integrated and modern-
our world-class talent.
This enables our businesses to build
deep, effective, and enduring client
relationships, with almost 50% of our
marketing solutions, with specialist
expertise across technology,
healthcare, and consumer brands.
Despite recent macroeconomic
headwinds, and a challenging talent
clients working with an Enero Group
marketplace, we consistently attract
brand for six years or more.
Operating in 16 cities world-wide,
and retain the right talent to deliver
with over 700 employees, we have
innovative solutions. Our high-
the ability to deliver both integrated
performance culture remains a core
solutions at scale globally and deep
strength and reflects our ongoing
market expertise locally.
commitment to delivering a diverse,
As the market rapidly evolves, we’ll
continue to diversify our portfolio
and differentiated service offering to
deliver on changing client needs.
progressive, and creative workplace.
We make clients smarter, stronger.
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A LETTER FROM OUR CHAIR
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Dear Shareholders,
I am pleased to present Enero’s Annual Report for the
financial year ending 30 June 2023 (FY23).
Enero is a leading diversified portfolio of global
marketing and communication businesses with deep
expertise and world class capabilities. Our Group sits
at the convergence of a rapidly-evolving global market
that offers large-scale opportunities for future growth.
Ongoing transformation underpinned growth in FY23
Our portfolio strategy has continued to transform
Enero into a truly global business for the first time
in the Group’s history, with over 70% of revenue now
derived outside of Australia.
In FY23, Enero continued to evolve its portfolio,
global network, and capabilities with the acquisitions
of ROI DNA and GetIT by the Hotwire Group. These
acquisitions added scale in the United States,
and expanded our presence into Asia. They also
accelerated the transformation of Hotwire’s reputation,
relationship, and revenue service offering into a truly
global strategic proposition for clients as the pre-
eminent global tech communications consultancy.
We continued to deliver strong and sustainable
EBITDA growth, albeit dampened by the challenging
operating environment for the entire industry over the
last 12 months. Net profit after tax declined, reflecting
the reduction in earnings contribution of the agency
businesses, offset by the growth of 51% owned OB
Media along with higher amortisation and interest
expense associated with acquisitions.
•
•
•
•
Net Revenue increasing 25% with 3yr CAGR of
21% to $241.6 million
EBITDA increasing 19% with 3yr CAGR of 39%
to $78.8 million
Net profit after tax before significant items
decreasing 10% with 3yr CAGR of 24% to
$24.4 million
Earnings per share before significant items
decreasing 15% with 3yr CAGR of 21% to
26.4 cents.
Given a disappointing second half decline in Enero’s
share price, the Board continues to believe that
Enero remains undervalued relative to it’s financial
performance and potential, and has instituted a
number of key initiatives which will deliver ongoing
value to shareholders in both the short and long term.
Capital management strategy activated
The Company’s strong balance sheet, combined with
the Board’s focus on capital management, enabled
Enero to activate an on-market share buyback during
FY23. Enero’s clear capital management strategy
reflects the Board’s ongoing commitment to delivering
increasing shareholder returns, and confidence in the
Group’s value and growth opportunities.
Strong net cash position
On top of the Group’s capital management strategy,
Enero also retains financial flexibility through adequate
cash reserves with net cash of $13.0 million at 30 June
2023. This enables us to pursue Enero’s long-term
growth ambitions building on our momentum in Brand
Transformation and Creative Technology and Data.
FY23 dividend of 4.5 cents per share fully franked
Reflecting Enero’s financial performance in FY23,
strong balance sheet, and attractive growth
opportunities, the Board declared total dividends
for FY23 of 4.5 cents per share, fully franked.
This equated to a 44% dividend payout ratio.
Reinforcing management strength to deliver on
growth opportunities
Enero’s Executive Leadership team have continued to
relentlessly focus on the execution of a clear strategic
framework over FY23. This has put the Company in
a strong position to continue its growth trajectory in
FY24. The Board was delighted to extend our CEO
Brent Scrimshaw’s employment contract for another
three-year term, enabling him to continue leading the
transformation strategy that has been successfully
executed to date.
Attractive growth potential
Enero operates in attractive global marketplaces,
and given the successful transformation program
being executed on, the Board believes that Enero
has more robust and diverse capabilities than ever
before. Our portfolio of businesses remain strong, with
enormous growth potential in the markets that matter.
Enero is a distinctively positioned creative technology
company driving reputational and commercial growth
for global businesses, including many well-known
brands. This market position underpins the growth
we expect to see going forward.
In conclusion, I would like to thank my fellow Board
members for their ongoing effort and expertise.
On behalf of the Board, I would also like to thank
the talented and tireless Executive Leadership team
for their continued dedication and commitment to
our business, as well as our talented employees
for their resilience and commitment to our clients
throughout FY23.
Lastly, to our loyal shareholders, thank you for your
continued support and belief in our long-term vision
and strategy for the Group.
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Yours sincerely,
Ann Sherry AO
Chair
A LETTER FROM OUR CEO
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Dear Shareholders,
On behalf of the entire team, I am pleased to report
Enero’s continued growth in FY23.
Despite the challenging global macroeconomic
environment, FY23 continued the group’s track record
of growth, profitability, and portfolio transformation
over the past three years.
Enero’s FY23 financial results reflected the continued
focus and refinement of our operating strategy, as
well as the dedication and commitment of our global
team. I want to thank all our 700+ exceptional staff
in our 16 offices around the world for their ongoing
commitment, resilience, and determination throughout
a challenging FY23.
Our people and capability investments in OBMedia
delivered significant returns, and we continued to
progress the integration and identification of revenue
synergy opportunities for the ROI DNA and GetIT
acquisitions as a part of our global Hotwire Group.
In addition, CPR and Orchard delivered a solid full-year
performance in Australia, while BMF posted another
strong year and further extended its capabilities and
skill sets to receive global recognition for creativity,
and effectiveness.
Enero’s deep and enduring client relationships,
world-class talent, and strategic relevance of our
market-leading capabilities underpin our business
success. We will continue to capitalise on our
brand transformation agendas for forward-thinking
clients worldwide.
Delivering continued growth despite challenging
market conditions
In FY23, macroeconomic headwinds impacted
marketing spend globally. Like other marketing and
communications businesses, Enero was not immune
to these factors. These headwinds combined with
client restructuring led to a more conservative
approach to decision making which resulted in some
delayed project timelines or scope reduction.
To address this, Enero accelerated towards a leaner,
differentiated offering across each of our brands,
managing near-team margins through significant cost-
savings and head count reduction. We also continued
to focus on growth and the integration, acceleration,
and experimentation with new technology - such as AI -
to position us for future success.
Our two operating segments – Creative Technology
and Data and Brand Transformation - serve the high-
growth global verticals of technology, healthcare, and
consumer.
The Creative Technology and Data segment grew net
revenue by 31% to $113.5 million. OBMedia continued
to deliver growth through traffic diversification and
ongoing technology investments, despite proactively
reducing its traffic purchases in Q4 from select
publishers to maintain quality metrics. Orchard
experienced softening in the U.S. health segment and
delivered a solid overall performance in Australia.
The Brand Transformation segment grew net revenue
by 20% to $128.2 million. Despite a challenging
technology sector globally, the Hotwire Group benefited
from the acquisitions of ROI DNA and GetIT from 1 July
2022 as we continued to transform Hotwire’s business
through its reputation, relationship, and revenue service
offering. BMF further diversified, invested, and grew
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its customer experience, innovation, and technology
capabilities, and received three Australian Agency
of the Year accolades and two coveted Cannes
Lions awards.
Highlighting the value that our deep expertise delivers;
we have continued to win across our portfolio.
Throughout FY23 we extended our relationship with
one of our longest-standing clients, ALDI Australia,
and added new and progressive clients across our
global portfolio including Tennis Australia, Honeywell,
Afterpay, Turo, Cloudera, QBE, BeiGene, and Janssen.
The market’s rapid evolution creates growth
opportunities for Enero
As the market rapidly evolves, Enero is well placed to
further grow by anticipating changing clients’ needs
and delivering a differentiated, innovative, and market-
leading services offering. Our unique culture continued
to enable us to attract the right talent to deliver Enero’s
competitive advantage.
In FY23, we made significant progress towards
achieving a number of key milestones along our
transformational journey, such as:
•
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31% of our revenue now comes from clients who
have relationships with more than one Enero
Group brand, providing us with more opportunities
to engage with our clients and drive stickier
reoccurring revenue.
While spend slowed in the current year due to the
economic outlook, our two acquisitions contributed
to the largest share of revenue for Enero, which is
now the Technology sector at 42%, predominately
in the B2B segment. We believe this to be a
significant further growth opportunity.
Developing the right ESG framework to underpin
sustainable long term growth
During FY23, we began to create our first ESG
framework covering the critical areas most material
to our business – diversity, equity, inclusion and
belonging (DEIB); learning and development; employee
health and wellbeing; community and industry impact;
and environmental stewardship. Our first ESG audit has
established a critical baseline to inform development
of measurable goals and enabled us to build a plan to
achieve them.
Thank you.
In closing, I would like to express my appreciation
to the executive team, and my gratitude to Enero’s
Board, led by Ann Sherry AO, for its ongoing counsel
and guidance as we continue to pursue our global
growth ambitions.
Finally, and most importantly, I would like to thank
you, our shareholders, for your continued support
and confidence in Enero’s strategy and our talented
people worldwide.
Our robust portfolio of businesses, long-term
operating strategy, and implementation of ESG
initiatives, puts Enero in a strong position to continue
our sustained success and growth trajectory as
macroeconomic pressures ease.
Yours sincerely,
Brent Scrimshaw
Chief Executive Officer
BOARD OF DIRECTORS
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ANN SHERRY AO
INDEPENDENT
NON-EXECUTIVE DIRECTOR
Ann was appointed as Chair
and Non-Executive Director on
1 January 2020 and is a member
of the Remuneration and
Nomination Committee. Ann is a
Director of National Australia Bank
(ASX: NAB), Chair of its Customer
Committee and a member of its
Remuneration Committee. Ann is the
Chancellor of Queensland University
of Technology, Chair of UNICEF
Australia, Chair of Port of
Townsville and Chair of
Queensland Airports Limited.
Ann is the former Chair and was CEO
of Carnival Australia for a decade.
Prior to that, Ann was at Westpac
for 12 years, as CEO of Bank of
Melbourne and the CEO of Westpac
New Zealand and Pacific Banking.
Ann was named the overall winner
of the AFR 100 Women of Influence
in 2015.
BRENT SCRIMSHAW
CHIEF EXECUTIVE OFFICER
Brent was appointed Chief Executive
Officer and Executive Director 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
around the world holding leadership
positions such as Vice President
and Chief Executive Western Europe;
Vice President and Chief Marketing
Officer EMEA based in Amsterdam,
The Netherlands; GM Regional
USA based in New York City and
Marketing Director Nike Pacific
in Australia.
Brent is currently a Non-Executive
Director of KMD Brands Ltd (ASX:
KMD) and Rhinomed Ltd (ASX: RNO)
and was previously a Non-Executive
Director of Catapult Group Ltd
(ASX: CAT) and Fox Head Inc in
California, USA.
ANOUK DARLING
INDEPENDENT
NON-EXECUTIVE DIRECTOR
Anouk was appointed as a Non-
Executive Director on 6 February
2017 and is a member of the
Audit and Risk Committee and the
Remuneration and Nomination
Committee. Anouk is recognised
as one of Australia’s leading brand
builders, with strategic digital,
technology and marketing capability.
Anouk is also a reputable business
leader with private equity and M&A
experience having worked with
Allegro Funds as an operating
partner over a four year period.
Anouk is currently serving as
Non-Executive Director of South
Australian based Discovery Holiday
Parks, owned by the Australian
Retirement Trust.
Previous board roles held include
ASX-listed Macquarie Telecom (ASX:
MAQ). Anouk is currently CEO of
Scape, Australia’s largest developer,
owner and operator of Purpose-
Built Student Accommodation.
Anouk’s commitment to better living
experiences is further supported
by her work as board member
of the Property Council of
Australia and Chair of the Student
Accommodation Council.
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IAN ROWDEN
INDEPENDENT
NON-EXECUTIVE DIRECTOR
DAVID BRAIN
INDEPENDENT
NON-EXECUTIVE DIRECTOR
LOUISE HIGGINS
INDEPENDENT
NON-EXECUTIVE DIRECTOR
Ian was appointed as a Non-
Executive Director on 21 November
2018 and is the Chair of the
Remuneration and Nomination
Committee.
Ian is an experienced CEO and senior
executive with extensive experience
in Australian, regional and global
roles in commercial, strategy,
M&A, marketing and operational
leadership with companies including
The Coca-Cola Company,
The Callaway Golf Company,
Wendy’s International, Saatchi &
Saatchi and The Virgin Group.
Ian is currently a Non-Executive
Director of Reliance Worldwide
Corporation (ASX: RWC), Dulux
Group International (UK), and was
a Director of QMS Media Limited
and Virgin Galactic.
Ian chairs the Murdoch Children’s
Research Institute Marketing
Council, is a partner and investment
advisory board member for Innovate
Partners (US-based private equity/
venture capital) and a senior advisor
to Bowery Capital. He is based
in the USA.
David was appointed as a Non-
Executive Director on 10 May 2018
and is a member of the Audit and
Risk Committee.
Louise was appointed as a Non-
Executive Director on 10 September
2021 and is the Chair of the Audit
and Risk Committee.
David has over 25 years’ experience
in public relations and integrated
communications. At Edelman
(world’s largest PR firm), David was
a Director of the Group Supervisory
Board and member of its global
management board. During
13 years at Edelman, he was
CEO of the EMEA region and
latterly, CEO of 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 Chair of parking technology
company Parkable; Chair of child
poverty charity Share My Super;
Advisory Board member of The
Spinoff, and Co-founder of research
start-up Stickybeak.
Louise is the Managing Director,
Suncorp Integration at ANZ.
Louise began her executive career
in London with law firm Freshfields
Brushaus Deringer, followed by seven
years at the BBC. Louise has worked
at Australia’s Macquarie Bank as an
Associate Director, COO for Nova
Entertainment with responsibility
for performance of the Nova and
Smooth radio networks and as Chief
Financial and Strategy Officer for the
Australian Broadcasting Corporation
(ABC) to oversee significant
technology transformation.
Louise has a diverse, non-executive
career from Commercial Radio
Australia, Visit Victoria, Qudos
Bank, Canteen Australia and Enero
Group Limited.
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FINANCIAL
HIGHLIGHTS
Net Revenue
up 25%
EBITDA
up 19%
$241.6m
$78.8m
GEOGRAPHICAL
RESULTS
Enero has offices around the world,
with affiliates in key markets where
we have client relationships.
London
Madrid
Paris
Milan
Munich
Frankfurt
Amsterdam
Shanghai
Seoul
Taipei
Jakarta
Singapore
Kuala Lumpur
Bangalore
Tokyo
Hong Kong
Beijing
EBITDA margin
down 2ppts
33%
Earnings per share
before significant items
down 15%
26.4cps
Net profit after tax
before significant items
down 10%
$24.4m
San Francisco
New York
Chicago
Houston
Minneapolis
Sao Paulo
Dubai
Sydney
Melbourne
FY23 dividends
Reflects 51% economic interest in OBMedia
4.5cps
USA
UK
and
Europe
Australia
and
Asia
52%
Net Revenue
FY23
16%
Net Revenue
FY23
32%
Net Revenue
FY23
36%
Net Revenue
FY22
22%
Net Revenue
FY22
42%
Net Revenue
FY22
73%
EBITDA
FY23
7%
EBITDA
FY23
20%
EBITDA
FY23
55%
EBITDA
FY22
16%
EBITDA
FY22
29%
EBITDA
FY22
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CLIENT ANALYSIS
Revenue Diversification
Technology and Telco
Digital Media
Enero revenue is diversified across both industry and
geography. Our largest share of revenue came from the
Technology and Telco sector at 42%, predominately in
the B2B segment, and has grown significantly due to
the ROI DNA and GetIT acquisitions. Other key areas of
strategic focus include Digital Media (24%), Retail (11%)
and Healthcare (8%). Over 70% of our revenue is now
delivered outside of Australia.
In FY23 our revenue growth was delivered across both
of our segments with Brand Transformation, up 20%;
and Creative Technology and Data, up 19% in net
revenue (economic interest) year on year.
Our agency revenue model is diversified with a 42:58
project and retainer split in FY23 across agencies.
Our focus on delivering relevant services across our
agency brands and cross-selling services has led to
31% of our revenues now derived from clients with
relationships across more than one Enero brand.
42%
Retail
11%
Services
7%
Finance
3%
Other
1%
24%
Health Care
8%
Transportation,
Airlines and Auto
3%
Consumer Goods
1%
Reflects 51% economic interest in OBMedia
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BRAND
TRANSFORMATION
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FY22 $106.7m
FY23 Net Revenue up 20%
$128.2m
FY22 $27.8m
FY23 EBITDA down 21%
$22.1m
FY22 26%
FY23 EBITDA margin down 9ppts
17%
AWARD-WINNING IDEAS
THAT TRANSFORM
CREATIVITY, CAPABILITY
AND RELATIONSHIPS
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Brand Transformation drives
business success by creating
thoughtful, distinctive ideas
that deliver long-term business
outcomes for our clients.
Our Brand Transformation
businesses include BMF, the
Hotwire Group (which owns
ROI DNA and GetIT), and CPR.
Each team specialises in brand
transformation that delivers
effective, market-leading business
solutions. These solutions drive
enhanced reputation, customer
and consumer relationships, and
ultimately create revenue for our
clients and meet their rapidly
changing needs.
Transformation through creativity
BMF drives Brand Transformation by creating
culturally-resonate, effective and enduring creative
ideas for some of the world’s most recognised brands.
Through its philosophy of ‘The Long Idea’, BMF curates
world-class advertising across broadcast, social,
out-of-home, radio, and digital channels, and delivers
commercial success and effective creativity at scale.
Hotwire delivers Brand Transformation for some of
the world’s most prominent technology clients through
its Reputation, Relationship and Revenue services
framework. Hotwire positions brands at the forefront
of innovation by creatively transforming business
analytics and customer data into integrated, narrative-
driven communications. From captivating, creative
media campaigns to influential thought leadership and
performance marketing capabilities, Hotwire ignites
transformational business outcomes for its global
client base. In addition, ROI DNA, as part of the Hotwire
Group, offers transformative, online B2B, demand-
generating campaigns.
CPR has a creative approach to driving transformation,
building reputation, growing brand recognition, and
raising awareness about issues that matter. Its unique
expertise and talent pool spanning media advisory,
former journalists, and political and ministerial
advisers, has seen the business work with high-
profile clients to promote, protect, and position their
organisations, people and services.
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Transformation through market-leading
capabilities and relationships
BMF and its team of 155+ thinkers, doers and
makers, use a combination of behavioural economics,
neuroscience, communications strategy, design,
high-quality production and customer experience
capabilities to create deep and trusted relationships
between brands and their customers. BMF delivers
transformational and iconic long-term brand
advertising for clients including ALDI Australia,
Tourism Tasmania, The Australian Government, Tennis
Australia, TAL, Afterpay, the Department of Social
Services, Abbott’s, Tip Top and many more.
Hotwire specialists create meaningful relationships
for blue-chip tech clients and their customers globally.
With an extensive network of relationships with media,
influencers, analysts and target accounts, Hotwire
drives engagement through performance marketing
and strategic and culturally resonant reputational
topics like diversity, equity and inclusion, ESG, AI,
technology, and the future of work. In addition, GetIT
was successfully integrated into the Hotwire brand,
bolstering its Asia-Pacific capabilities and presence,
while ROI DNA offers a revenue-accelerating suite
of services to some of the world’s most significant
technology companies, helping further extend and
transform Hotwire’s capabilities in North America.
Hotwire works with global brands such as Google
Cloud, Adobe, Amazon, Gumtree, Honeywell, Telekom
Malaysia and more.
BMF’s award-winning behaviour change campaign for the
Department of Social Services
Transformation that is globally acclaimed
BMF is consistently recognised for being one of the
world’s most effective creative agencies, having won
over 65 awards from across the globe in FY23 alone,
including B&T’s Branding, Design and CX Agency of
the Year; AdNews Overall Agency of the Year; AdNews
Creative Agency of the Year; two coveted Cannes Lions
Awards; Effie Australia’s Most Effective Retail and
FMCG Campaign of the Year; as well as awards from
D&AD, LIA Awards, Spikes Asia and more.
Hotwire has been recognised with both campaign and
agency awards, including Ragan Communications and
PR Daily’s Midsize Agency of the Year and Campaign
of the Year, together with PRovoke Media’s Award for
Diversity, Equity & Inclusion initiative.
CPR drives transformation through three core
disciplines and capabilities: Issues Management,
Government Relations and Public Relations. CPR
leverages these key capabilities to create meaningful
relationships and engagement in complex regulatory
conversations that attract political and public scrutiny.
CPR attracts hundreds of millions of dollars in
investment for clients at a Federal and State level,
ranging from funding to revive the tourism economy,
investment in local rapid antigen test production,
through to air purifier procurement to support a safe
return to school and work.
CASE STUDY
TOURISM TASMANIA’S
OFF SEASON:
HOW ANTI-ORDINARY
THINKING DROVE
ANTI-ORDINARY RESULTS
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Challenge
In 2019, we were tasked with broadening the appeal of
Tasmania without diluting its character. And by 2020,
we had launched the highly successful ‘Come Down
for Air’ brand platform which positioned Tasmania as a
response to a deeply ingrained cultural need: respite from
the constraints of modern life.
The next step in our journey was to tackle Tourism
Tasmania’s biggest challenge – enticing people to come
down for air in winter.
But, just as people were feeling safe enough to travel in
Australia in a post-COVID era, a sharp drop in consumer
confidence driven by rapidly rising interest rates and
increases in the cost of living, meant financial uncertainty
became the number one barrier cited for not travelling*.
*SOURCE: Tourism Australia Domestic Travel Sentiment
Tracker – June 2022.
So, BMF needed to inspire Australians to believe that
Tasmania is the best place to refuel their soul in winter.
We had to drive an increase in visitor numbers, along
with the duration of stay and visitor spend.
Strategy
Australia is ‘the summer country’. We are culturally
hardwired to chase the sun, so winter holidays typically
mean a migration north to warmer climates or, for a
minority, to the snow fields.
The challenge was how to shift cultural attitudes to
winter. BMF needed to disrupt the consumer journey
to break people out of their default winter holiday
preferences. In line with the spirit of Come Down for Air,
we wanted people to view a winter holiday in Tasmania
as a unique opportunity to refresh one’s soul.
that Tasmanians do it properly. Log cabin cosiness,
hot alcoholic beverages by fires and frosted snowy
wonderlands.
We weren’t trying to sell a winter holiday; we’re trying to
sell a wintery holiday.
BMF positioned the ‘Air’ we’d like you to come down for
as stimulation, rather than vegetation. Tassie as the
defibrillator from the winter coma, the electric shock
therapy for ‘winter brain’. Feeling exalted, confused,
content, challenged, but always feeling something.
A winter spent wide-eyed, not half asleep.
Execution
Winter is when Tasmania lets its hair down and its
idiosyncrasies truly shine. A bit weird, wild, and woolly, it’s
especially different, a bit ‘off’.
It was time to invite mainlanders to join us and wake up
their winter with the perfect antidote. Or, as we like to put
it, The Off Season. A long-term platform for Tasmania’s
winter tourism experience and annual winter campaign.
To reflect the distinctiveness of our destination, the
integrated campaign flips expectations with relish -
embracing the cold instead of escaping it, and going
wild when everyone else is hibernating, illustrating our
anti-ordinary spirit on all levels: Out of Home, Digital Out
of Home, Video on Demand, Social, Cinema, Content
Partnerships, Display, and Audio.
Channel choice, executions, and experiences were
specifically targeted to our audience. Rather than spread
ourselves too thin over a broad channel mix, we took-
over our target’s lives by owning a channel and the
experiences we built within it. We were able to explore
more innovative uses of channels as the campaign was
brought to life in unexpected places and ways.
We know winter is when Tasmania is most different
to the mainland. It’s predictably colder but because of
The Off Season seeded the communication in culture in
ways that were impossible to overlook.
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S E A S O N
Results that occurred during the months of May – August 2022
(cannot be directly attributed to the campaign)
Visitor numbers increased by
7%
compared with the same period in 2019 (pre covid).
Visitor nights increased by
24%
compared with the same period in 2019 (pre covid).
Visitor spend increased by
102%
compared with the same period in 2019 (pre covid).
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CASE STUDY
HONEYWELL: REPUTATION,
RELATIONSHIP AND REVENUE
DELIVER GROWTH AMBITIONS
Challenge
Relationship
Results
There were many milestone
results throughout the campaign,
including increased awareness of
Honeywell with target prospects
and engagement with the
Honeywell content produced.
There were meetings booked and
presentations delivered to c-level
executives within the accounts,
as well as a revenue pipeline of
new opportunities.
Honeywell came to Hotwire with a growth challenge.
Their marketing teams needed to build relationships
with an important list of prospective leads from brands
and businesses in the retail sector. While Honeywell
was facing aggressive competition, they knew they
had the right solutions to meet the needs and address
the challenges these retail companies were facing.
To strategically grow Honeywell’s position and
opportunity pipeline, an account-based marketing
approach was developed to reach key buyer personas
in a credible, impactful way, that would ultimately build
reputation and relationships for the long term.
Reputation
With a list of strategic target accounts including
Walmart, Hotwire developed a two-part approach
that would build Honeywell’s reputation and
leadership position:
1.
Building Honeywell’s reputation within the retail
sector to target accounts and audience.
2.
Supporting commercial leads by building their
individual reputation within the sector and within
their target accounts and audience.
To do this, we created a multi-channel strategy using
thought leadership content including a partnership
with retail influencer Steve Dennis. Content that
took advantage of Steve’s deep retail experience
and included shared videos and conversations was
developed. The two-part approach ultimately led
to elevating Honeywell and their commercial leads’
reputation across multiple platforms.
In the relationship wave, Hotwire extended content that
directly spoke to the pains and challenges of the target
accounts and delivered paid media programs across
LinkedIn and content syndication. In addition, Hotwire
worked with the Honeywell sales teams to update their
LinkedIn profiles and thought leadership platforms
and aligned them to the campaign content. Regular
content updates with new insights continues to spot
emerging opportunities for commercial leads and
target strategically important accounts.
Revenue
From increasing reputation, developing relationships
within the target accounts, to reaching the target
audience, Hotwire supported Honeywell’s commercial
leads by converting them into opportunities. Hotwire
used personalised content and assets to generate
revenue growth whilst also increasing growth across
different lines of business.
EMPOWER
YOUR
RETAIL
FUTURE
5 ways Honeywell can support
you in shaping your own future.
START THE JOURNEY
We always came back to the first
challenge – growth – and by activating
a full reputation, relationship and
revenue campaign, the team achieved
281%
over the revenue target for the
program, which was a record result.
The campaign also went on to win
the ITSMA Marketing Excellence Gold
Award and The Drum B2B Award.
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CASE STUDY
TELEKOM MALAYSIA:
CLOUD ALPHA
ASIA
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Challenge
Telekom Malaysia One (TM One) is the business-to-
business (B2B) arm of Telekom Malaysia Berhad, the
largest telecommunications provider in Malaysia.
TM One engaged Hotwire Asia to design and deliver
a revenue pipeline generation campaign for its new
cloud platform, Cloud Alpha.
Due to its legacy as a traditional telco, TM One
needed to change its perception among enterprises,
and position ‘Cloud Alpha’ as a viable alternative
cloud platform with solutions and services on par
with global cloud technology providers such as Amazon
Web Services (AWS), Google Cloud and Microsoft
Azure. To accomplish this, TM One had to generate a
healthy sales pipeline through content marketing, lead
generation and nurturing relationships with customers.
While most B2B organisations rely on traditional
marketing channels such as print, radio, out-of-home
and events for brand building and lead generation,
TM One’s channel strategy had to shift from omni-
channel to omni-digital due to the pandemic and the
rise of hybrid working culture.
Strategy
To develop a data-driven B2B marketing strategy,
Hotwire Asia worked with IDC (International Data
Corporation) and data and research company Kantar,
to produce a cloud market research report. The report
helped identify the opportunities and challenges that
each of TM One’s target industries faced and their
differing needs, including the target audience’s journey
to the cloud.
The primary target audience was IT decision-makers
within large enterprises and the public sector, who were
looking to overcome the barriers to cloud adoption and
accelerate their digital transformation initiatives.
The key challenges faced when appealing to this target
audience were:
1.
Standing out as a new player in a crowded market.
2.
Competing with the brand power of global
companies such as AWS, Google Cloud
and Microsoft.
3.
Convincing IT decision-makers (ITDMs) of the
benefits of a cloud solution from a telco provider.
Execution
To stand out in a competitive and crowded enterprise
cloud market, Hotwire Asia developed a content-driven
lead generation and nurturing plan, personalised for
IT and business decision-makers in the target verticals.
The content plan profiled real decision-makers from
each vertical and plotted relevant content topics into
a touchpoint map that could be automated in the
marketing automation tool. This ensured every lead
was nurtured throughout their buyer journey. Suitable
digital channels such as Search Engine Marketing,
LinkedIn, and IT publications, were identified to ensure
that the content reached the right decision-makers in
the right companies.
Hotwire Asia implemented a data lake to aggregate
data from the campaign web analytics, CRM
(customer relationship management) tools, and
marketing automation, to give an unprecedented real-
time view of prospect profiles, lead progression, media
performance, cost per conversion and the contract
values from the generated opportunities and reporting
to a custom dashboard.
Results
Within a year, the Cloud Alpha campaign generated:
195%
growth in campaign
website traffic
22,000
marketing qualified leads
27%
increase in the
sales funnel
173%
increase in YoY marketing-
attributed revenue
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CASE STUDY
A 400% PIPELINE INCREASE
FOR A NATIONAL DATA
CENTRE PLATFORM
Challenge
Strategy
Flexential, a national data centre provider offering
hybrid IT services, approached ROI DNA after
experiencing months of underperformance with their
previous partner. They sought a strategic agency to
develop a go-to-market (GTM) strategy that could
achieve their business and pipeline goals. Flexential
looked to ROI DNA also as a collaborative partner
that could support emerging opportunities within the
hybrid IT landscape. The request was to develop a paid
media GTM strategy to differentiate and market their
solutions which included:
• colocation
• interconnection
• cloud
• data protection
ROI DNA began collaboration with Flexential to
understand its offering and service distinctions. From
there, the strategy was to enhance brand messaging,
expand tactics to new channels, increase awareness
through brand campaigns, and implement a full-funnel
approach weighted towards lead generation. They also
conducted a comprehensive overhaul of the search
engine marketing (SEM) architecture to generate
predictable qualified leads.
Execution
To kickstart predictable growth into hyperdrive, ROI
DNA crafted a scalable GTM and paid media strategy
that included:
• paid media channel, SEO and MarTech audits
• competitive analyses
• brand positioning
• content and messaging reviews
• paid media recommendations
They used paid media platforms like Google, Bing,
The TradeDesk, Linkedln and Demandbase and
yielded impressive pipeline growth.
Results
ROI DNA’s work with Flexential
provided record results for the
national data centre platform:
200%+
increase in MQL1
250%+
increase in SQL2
400%+
increase in the pipeline
The success of the GTM strategy
and paid media execution grew ROI
DNA’s partnership with Flexential
and today includes SEO, creative
and copywriting retainers; Drift
strategy; email nurture strategy;
and a web redesign. By developing
a strategic go-to-market strategy,
enhancing brand messaging, and
implementing a full-funnel approach,
ROI DNA’s collaborative work
set Flexential back on track to hit
business goals and resulted in an
expanded partnership.
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CASE STUDY
SUPPORTING AUSTRALIAN
COMPANIES TO BUILD TRUST
WITH NEW GOVERNMENTS
AND ATTRACT INVESTMENT
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Challenge
The last 12 months have seen significant shifts
across Australian politics, with a change of
government federally and elections at a state level
in Victoria and NSW.
New governments in Canberra and in NSW, as well as a
significantly reshaped Victorian ministry, have created
challenges and opportunities to form new relationships
with key decision-makers who influence government
investment decisions and policy outcomes. These
changes have been compounded by a contracted
posture to government spending caused by the COVID-19
pandemic and international financial instability.
CPR’s non-partisan approach to government relations
has supported our clients to work productively with the
Albanese Government, as well as in Victoria and NSW, to
build profile, develop trust and ultimately to capitalise on
these challenges and deliver outcomes.
Strategy
CPR worked with clients in the lead up to the federal
and state elections to develop relationships and align
investment requests to the priorities of potential
government parties.
Understanding that both health and investment
attraction would be major election issues across
jurisdictions, CPR supported clients to strategically
present their proposals in an election context.
This work included advising Australia’s only cross-border
health service to obtain a joint $558m investment from
the Victorian and NSW governments to develop a single
site hospital. The announcement, attended by both
the Victorian and NSW Premiers, occurred one month
prior to the Victorian Election. CPR also advised one of
Australia’s largest medical research institutes to ensure
their inclusion in the $6b redevelopment of the Royal
Melbourne Hospital.
Ahead of the NSW Election, CPR worked with long-
term client, the UFC, to present a $16m proposal
to host three major UFC events in Sydney over four
years. The deal was announced by the then NSW
Opposition Leader as an election commitment and has
subsequently been funded by the Minns Government
within their first 100 days in office.
Execution
Changes in Australia’s federal government are relatively
rare, with only 14 changes of government since
federation. The election of the Albanese Government
in 2022 meant that CPR’s large, federally-focused
government relations clients had to establish
themselves, their reputations and capability with a
new group of decision-makers at the highest level of
Australian government.
CPR worked with some of Australia’s most respected
organisations to support their strategy and approach.
This occurred within a competitive environment and at
a time when many stakeholders were vying to capture
the attention of the new government and influence their
early commitments.
CPR has supported Dementia Australia for more than
a decade. Since the change of federal government,
CPR has worked with Dementia Australia to facilitate
major events online and at Parliament House to raise
awareness of the organisation and its priorities with the
new government and parliamentarians.
In 2022 CPR assisted headspace, Australia’s
National Youth Mental Health Foundation, to build
awareness of their service on headspace Day by
ensuring the participation of 109 members of federal
parliament (approximately 50 percent) to post their
support for youth mental health on social media. This
included posts from key Ministers, Opposition MPs
and Crossbenchers.
Results
CPR supported government
relations clients to engage with new
governments and ministers at a time
of significant change in Australian
politics leading to strong and
trusted relationships and more than
$1.5billion
in funding across key sectors including
health and investment attraction.
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CREATIVE
TECHNOLOGY
AND DATA
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FY22 $86.7m
FY23 Net Revenue up 31%
$113.5m
FY22 $49.5m
FY23 EBITDA up 38%
$68.4m
FY22 57%
FY23 EBITDA margin up 3ppts
60%
DELIVERING EXPERIENCES
THROUGH TECHNOLOGY
AND DATA
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Creative Technology and Data
uses technology-enabled solutions,
informed by data science, to
creatively connect brands to their
customers and deliver high-quality
experiences and lead generation
for businesses. This melding
of world-class creative ideas,
proprietary data, and technology,
enables Orchard and OBMedia to
deliver effective business results.
Connecting experiences
Orchard’s expert team of strategists, medical writers,
behavioural scientists, tech architects, learning experts
and creatives, pioneer innovative ways to experience
everything, finding ways to invent better, whether it’s
by creating new ideas or making old ones better.
As Australia’s leading healthcare agency, Orchard
curates experiences designed for every stage in the
healthcare journey, from connecting pharmaceutical
companies with clinicians, or building new technology
that helps to break down the barriers between a patient
and their clinician. Orchard’s consumer division also
delivers end-to-end digital customer experiences,
whether that is buying a IONIC5 from Hyundai,
or helping tourists discover the best that Tasmania
has to offer.
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Connecting innovative technologies and data
Connecting business outcomes and recognition
OBMedia’s media buyer network harnesses
data science in partnership with the world’s largest
search engines to acquire, qualify and monetise
high-intent customers on behalf of advertisers. Their
increasingly scaled audience procurement and their
ongoing focus on traffic optimisation and conversion,
allows them to deliver significant ROI for advertisers.
Orchard’s channel-agnostic team continues to invest
in critical business growth areas in data analytics, with
their deep specialisation encompassing key platforms
such as Salesforce, Adobe, Kentico and Optimizely.
Orchard delivers a unique business transformation
approach for brands who want a consultancy mindset
but also the delivery efficiencies that technology and
data can provide.
Orchard continued to see industry recognition
throughout FY23, taking home Optimizely’s Asia Pacific
Rising Star Solution Partner of the Year, while winning
new pharmaceutical clients BeiGene and Janssen.
OBMedia continues to be recognised by our search
engine partners as a high-quality traffic acquisition
and conversion partner. OBMedia continues to invest
in optimisation technology, experiment with artificial
intelligence and enhance its data science credentials
with a focus on delivering traffic quality.
CASE STUDY
CHANGE TO SANOFI:
CATCH THE CULPRIT
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Execution
Results
Recognising rare diseases early is critical, as often
there are treatments that can manage them and their
symptoms. However, because of their rarity, healthcare
professionals often have little to no understanding of
which symptoms to look out for in patients.
Strategy
Behavioural science tells us that the most powerful
way for people to learn something is through doing
(active learning), rather than just reading or watching
a video. We took an active learning approach to rare
diseases, with an aim to “Make the rare, un-rare” by
providing a lived, first-hand experience of making a rare
disease diagnosis to a wider clinician audience.
“Catch the Culprit” was an emotive, first-person set of
interactive case studies that gave clinicians the end-to-
end experience of managing and diagnosing a patient
living with a rare disease. It tapped into a specialist’s
natural intellectual curiosity and the satisfaction
derived from diagnosing complex cases.
Immersing the specialist in a first-person consultation
room helped to establish a personal connection with
their virtual patient, meaning the specialist would be
more likely to recall this experience in the future and,
therefore, more likely to diagnose a patient presenting
with relevant symptoms.
The specialist could decide how they interacted
with each patient, what tests they would order,
and what they would suggest in terms of diagnosis
and management. If the specialist incorrectly
diagnosed the patient, the patient returned for a
follow-up appointment. The patient had aged slightly
and their symptoms had progressed, allowing the
specialist to experience first-hand how their patient
was dealing with a difficult, painful, gradual decline
in health. As the years ticked over, the aging patients
became increasingly desperate for an answer,
a powerful indicator of the need for early diagnosis.
Initial results indicate that “Catch the Culprit” has achieved uninterrupted
engagement with our clinician audience using this innovative, unique, and
creative method. In the first two weeks of the campaign alone:
>100
specialists had already
attempted to “Catch the Culprit”.
100%
of those that completed a case
chose to continue watching medical
education about the rare diseases
provided by an expert in the field.
Involved
Feedback
On average, each specialist viewed
nine video clips and performed
25 interactions, demonstrating
heavily involvement in the
diagnosis process.
from the specialists was outstanding,
with one saying: “This is an exciting
approach to education, I hope many
of my colleagues take the opportunity
to try it out”.
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Catch the Culprit
CASE STUDY
POWERING DIGITAL
ADVERTISING GROWTH
THROUGH ADTECH
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Challenge
Execution
Search-based advertisers continue to look for new
sources of growth. They seek cost-effective, high-intent
audiences that deliver on business needs.
Strategy
OBMedia is a digital advertising technology platform
that drives high-quality and high-intent traffic to
search-based advertisers. OBMedia leverages its
proprietary technology, exclusive search partnerships
and deep data analytics expertise to fuel demand for
advertisers. OBMedia’s business is focused on:
• targeting high-value consumers from digital
publishers, ad networks and social channels
with dynamic, creative and relevant content
• qualifying the intent of those consumers
through proprietary data science techniques
• providing the most relevant search-based
advertising results that match consumers’ needs
OBMedia derives its revenue from quality audiences
delivered to advertiser websites.
OBMedia has unique and proprietary technology,
machine learning, automation and partnerships that
enable it to deliver outstanding value to advertisers
and publishers. Its key areas of differentiation are:
Leading optimisation technology
Providing the most relevant ads for target audiences
Unmatched fraud monitoring
Filtering traffic to protect value for partners
Powerful technology stack
Real-time data, system resiliency and rapid new
product development
Deep data science
Powering responsive campaign analytics, privacy
compliance and end-to-end conversion tracking
OBMedia continues to invest in capabilities that fuel
growth for partners and in turn OBMedia. In FY22
OBMedia enhanced campaign optimisation capabilities
and platform development to drive more informed
traffic acquisition. At the same time, OBMedia
continued to refine its fraud monitoring capabilities
– critical to maintaining OBMedia’s class-leading
detection rates and trusted status with key partners.
Results
OBMedia delivered
outstanding results for
advertising partners
in FY23, with a 160%
increase in consumers
delivered to advertisers:
160%
delivery increase,
compared to FY22
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ENVIRONMENTAL,
SOCIAL,
GOVERNANCE
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In FY23, we continued to see an increase in our clients’
prioritisation of Environmental, Social and Governance (ESG)
initiatives into their business strategy. This acceleration was
largely driven by new government mandates and regulations
around climate reporting and growing demand from investors,
employees and customers for greater transparency around
ESG initiatives.
At Enero, we too doubled down on our commitment and focus
on ESG in our business operations and through our network’s
client services. Within our operations, we began to set a
framework focused on the areas that deliver the most material
on our business and people, namely Diversity, Equity, Inclusion
and Belonging (DEIB); learning and development; employee
health and wellbeing, community and industry impact and
environmental stewardship. As part of the strategic planning
process, in FY23, we initiated our first ESG audit to establish a
baseline for developing measurable goals and an action plan
to achieve them. We expect to complete the audit process and
planning integration in mid-FY24 and look forward to sharing
our plan and progress over time.
In FY23, we continued to progress ESG in different ways across
each of our businesses. For example, Hotwire launched a new
set of ESG Communications Consulting Services as part of their
core advisory offering, to help more Hotwire clients effectively
communicate their ESG initiatives to key stakeholders.
On the following pages you’ll find a summary of other ESG
highlights for this past fiscal year.
ENVIRONMENTAL,
SOCIAL,
GOVERNANCE
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Environmental
In January 2020, Enero set an Environmental
Policy which outlined our commitment to being an
environmentally responsible company in support
of programs and business practices that minimise
negative impacts on the environment. The policy also
established an overall set of objectives for improved
environmental performance. Three years later, we saw
an opportunity to elevate our commitments.
To this end, in late FY23, we engaged a sustainability
consultant to work with us to collect data around our
Scope 1, 2 and 3 emissions and measure our global
footprint across carbon emissions, energy use, waste
and water across the Group. With this information
we will be able to set measurable goals to reduce our
environmental impacts and align those with the ESG
strategy in FY24.
In addition to our environmental audit, we continued
to identify ways to increase our environmental
responsibility as a business. One example is the
decision by Hotwire to remove all servers from every
office in the US and 80% of the servers in Europe,
moving to SaaS-based services and data centres. In
addition to cost savings reasons, Hotwire’s decision to
centralise server infrastructure in data centres allows
them to take advantage of economies of scale, which
will greatly reduce the energy consumption and carbon
emissions associated with in-house servers.
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Diversity, Equity, Inclusion and Belonging
Through our network, we prioritise DEIB in our
recruiting and talent development, employee programs,
training, benefits, partnerships and pro-bono work.
Among the DEIB highlights for FY23, Enero proudly
received official accreditation from Reconciliation
Australia (RA) for our Reflect Reconciliation Action
Plan (RAP). As an organisation deeply committed to
reconciliation with Australia’s Aboriginal and Torres
Strait Islander people, Enero’s RAP aims to nurture,
develop, and encourage the inclusion of Aboriginal
and Torres Strait Islander creative talent, partners, and
advisors in our own agencies, but more importantly
to improve inclusion across our whole industry. Led
by the Enero Chief People & Culture Officer, and an
internal RAP committee, the RAP takes existing
strategies, such as our CareerTrackers partnership
and other important initiatives such as NAIDOC
Week and National Reconciliation Week and furthers
our commitment to understanding and recognising
Aboriginal and Torres Strait Islander cultures.
As part of the Enero partnership with CareerTrackers,
in the past year we took on four interns that rotated
across BMF and Orchard, leading to one being hired
full time.
Additionally, in FY23 members of the BMF team led
a thought leadership session on “Brandsplaining,
Bias & Blindspots” at Mumbrella360, Australia and
New Zealand’s largest media and marketing
conference, as part of the agency’s ongoing
commitment to reducing and acting on harmful
bias and sexism in the workplace.
BMF was also recognised globally this past year for its
pro-bono refugee awareness campaign, “The Reluctant
Shanty”, for Australians for UNHCR. In FY23, BMF
won a coveted Silver and Bronze Cannes Lions for
the campaign which gave the 400-year-old genre of
traditional folk songs – sea shanties – a new, powerful,
modern relevance, by creating the first sea shanty
based on real refugee survivor stories. The campaign
was launched on TikTok by the fresh, global face of
sea shanty music, UK #1 artist and TikTok megastar,
Nathan Evans, on World Refugee Day.
As well as raising much-needed funds and awareness
for refugees, the campaign also received numerous
awards in addition to the two Cannes Lions, including
two Gold SMARTIE Awards for Social Impact
Marketing and Social Activism.
Hotwire issued their second annual DEIB Progress
Report in late FY23, highlighting the work being
done to create a more diverse workforce, advance
a culture of inclusion and drive positive, lasting change
in the industry.
Among the highlights of this year’s report was the
launch of Hotwire’s Empowered Societies. These
eight employee-driven communities aim to reinforce
their DEIB mission and goals internally by engaging
U.S. team members to steer the agenda and ensure
progress is made against the individual goals of
each Society.
Another FY23 highlight was the award-winning
Hotwire Ignite Possibility Program (HIPP). Hotwire’s
commitment to provide $1 million USD globally in
pro-bono brand marketing and public relations
services to tech and tech-enabled organisations led
by or supporting underserved communities. The
goal of HIPP is to help ensure organisations who are
advancing diversity, equity, and inclusion through
leadership and technology innovation, have the support
they need to scale and succeed in today’s competitive
tech sector. In FY23, HIPP ran campaigns throughout
the US, UK, Spain, France, Australia and Germany. In
the US HIPP was the winner of the PRovoke Innovation
SABRE North America “Diversity, Equity & Inclusion
Initiative” Award.
Social
The social pillar of our ESG initiatives is core to our
business success. As a service business, our success
is delivered by the people that make up our diverse
and global workforce, working in partnership with
our clients, communities and industries. We have a
long-standing and deep commitment to supporting
the development and wellbeing of our employees by
creating a culture of belonging and inclusivity which
celebrates diversity and empowers every individual
to thrive. Our hiring managers undertake interview
training to ensure that candidates are being assessed
fairly and that our hiring practices are free from
discrimination. This also includes the importance of
diverse and inclusive hiring and how unconscious bias
can impact hiring decisions.
For this section, we’ve divided our social efforts into
four categories to showcase some FY23 highlights:
Diversity, Equity, Inclusion, and Belonging (DEIB);
learning and development; health and wellbeing;
community and industry impact.
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Learning and Development (L&D)
Health and Wellbeing
In FY23, we remained committed to developing
our leaders and their teams through continued
investment in capability and skills.
This past year, Enero saw a remarkable 61% increase
in training touchpoints, totaling 2,969 and amounting
to over 3,201 hours of learning, with 1,200 hours
dedicated to compliance training.
Our ADVANCE Leadership Program played a pivotal
role in enhancing inclusive leadership capabilities,
equipping 66 leaders from across the Group globally
with human-centred skills and the confidence to lead
their teams effectively and in line with best practice.
We also prioritised supporting leaders to build
self-confidence, extending our investment across
the Group through the Leadership Circle executive
coaching program. These efforts underscore our
commitment to cultivating strong and capable
leaders who are dedicated to empowering their teams
to be high performing.
Other L&D updates from our network include the new
e-learning module at Hotwire called “Beat the Bias”
which is now a required learning track for employees
at every level. “Beat the Bias” explains how bias
works in the brain and addresses how employees can
recognise and overcome our biases by making the
unconscious conscious.
Read more about FY23 L&D highlights related to
health and wellbeing in the following section.
At Enero, and through our network, we also use
our core business expertise to raise visibility for
the importance of health and wellness in all facets
of society.
Internally, our in-house L&D team implemented several
programs focused on resilience, thriving at work and
fostering a growth mindset. Notably, this year, we
took a significant step by implementing mandatory
Mental Health Training across the Group. The training
comprehensively covered essential aspects of Mental
Wellbeing, including understanding, and preventing
psychosocial hazards, creating psychologically
safe environments, building confidence in initiating
conversations about mental health and providing
guidance on how to respond when you observe
someone is not coping.
In addition, during FY23, Enero’s Global Head of L&D/
Head of People and Culture Australia successfully
obtained her Mental Health First Aider accreditation.
Within our Respect at Work change to framework
policy, Enero is committed to fostering a safe working
environment for all employees. To ensure clarity and
confidence in dealing with issues related to bullying,
discrimination, and harassment, we mandate that all
employees undergo Respect at Work training annually.
This training equips them with a comprehensive
understanding of relevant legislation and empowers
them to create a workplace free from any form of
bullying, discrimination or harassment.
One example of leveraging the Group’s marketing
and communications expertise to grow visibility
for mental health globally was the BMF pro-bono
campaign for Australians for Mental Health. In FY23,
BMF launched the campaign, “Holding out for Help”, to
raise awareness of the long wait times individuals with
mental ill health experience when seeking treatment.
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Members of the Orchard team
As part of the campaign, BMF partnered with ARIA
Award-winning musician Reuben Styles of Peking
Duk, to create a bespoke, first-of-its-kind library of free
hold music, with tracks embedded with messages
from Styles highlighting the fact that while customers
wait on hold, millions suffering from mental ill health
are waiting, too. The campaign went on to win media,
innovation and not-for-profit awards across the globe.
Community and Industry Impact
At Enero and across our network of businesses, we aim
to be an engaged community member in the locations
where we work and operate and seek ways to advance
social and environmental justice and responsibility in
our industry.
In FY23, Enero partnered with the Australian Red Cross
and actively championed their lifeblood campaign to
promote blood donations across Enero.
Additionally, we hosted Australia’s Biggest Morning
Tea, an event where people generously donated their
time and cooking skills to drive donations, raising
awareness and funds for the Cancer Council.
We also take pride in championing and investing in
a family-inclusive workplace through our Kid’s Club
program which continued in FY23. During school
holidays, parents can bring their children to work,
providing a day of care, whilst the kids are cared for
and immersed in organised activities.
At Orchard, the company hosted a ‘no guts no glory’
event where team members came together to support
various causes using their digital creativity as a
pro-bono service. In FY23, teams created content
prototypes for endometriosis.
At Hotwire, different offices led volunteer initiatives
in their local communities through FY23. In the US,
the team did a park clean up in Minneapolis, quarterly
volunteer days at the Alameda County Food Bank and
Meals on Wheels volunteering in New York. In Spain
the team cooked meals and raised money for families
in need through Manos Ayuda Social, and in the UK,
six employees flew to Khayelitsha, South Africa and
helped to build two schools with Mellon Educate.
ENVIRONMENTAL,
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Governance
The Enero Group is committed to responsible and ethical
corporate governance that extends to all areas of ESG.
You can read our policies related to Environmental
Responsibility, Diversity, Modern Slavery, Workplace
Gender Equality and other areas of ESG here:
https://www.enero.com/investor-centre/governance
This past year, we made strides in our oversight of
data security and privacy in a few ways, starting with
a Security & Data Privacy Summit held with all Enero
Board Members in FY23. In addition, Enero along with
Hotwire completed annual training and testing of new
security and data protection policies and all Enero
holdings completed penetration tests, which included
controlled simulations of a cyber attack on our systems,
to uncover weaknesses needing to be addressed and
protect ourselves against potential cyber threats.
Hotwire also obtained an ISO-27001 certification in
FY23. This certification is known as the standard
for information security management systems that
recognises Hotwire has a system in place to manage
risks related to the security of data owned or handled
by the company and respects best practices and
principles. Additionally, Hotwire implemented a
change management and review board that now
meets quarterly to evaluate the company’s security
management policies.
Also, in FY23, Enero launched the Enero AI Council
to develop innovative strategies and processes in
artificial intelligence (AI). The Council will serve as
a hub for exploring the latest advancements in AI
technology to leverage its potential for our clients and
to enhance internal processes to increase efficiency,
streamline workflows, and optimise decision-making,
contributing to a more agile and effective Group. This
Council is an important part of our commitment to
upholding strong governance practices by ensuring
ethical considerations, data privacy and responsible
AI usage are embedded into our operations and
decision-making processes.
Looking ahead
This past year was a time of significant progress in
our ESG journey; however it is just the beginning of
our commitment to scale the impact we can make
together throughout our business.
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BMF’s award-winning Reluctant Shanty campaign
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FINANCIAL
REPORT
YEAR ENDED
30 JUNE 2023
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Directors’ Report
Directors’ Report
Directors’ Report
DIRECTORS’
REPORT
The Directors present their report, together with the consolidated 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 2023; and the
independent auditor’s report thereon.
8
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Directors
The Directors in office as at the date of this report are:
The Directors present their report, together with the consolidated financial statements of Enero Group Limited (the
The Directors present their report, together with the consolidated 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 2023; and the
Company) and of the Group, being the Company and its controlled entities, for the year ended 30 June 2023; and the
Role
independent auditor’s report thereon.
independent auditor’s report thereon.
Directors
Directors
The Directors in office as at the date of this report are:
The Directors in office as at the date of this report are:
Independent
Name
Appointed
Ann Sherry
Anouk Darling
Ian Rowden
David Brain
Louise Higgins
Brent Scrimshaw
Independent
Independent
Non-Executive Chair
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Executive Director
Name
Name
Role
Role
Ann Sherry
Ann Sherry
Anouk Darling
Anouk Darling
Ian Rowden
Ian Rowden
David Brain
David Brain
Louise Higgins
Louise Higgins
Brent Scrimshaw
Brent Scrimshaw
Non-Executive Chair
Non-Executive Chair
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Executive Director
Executive Director
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
Appointed
Appointed
Yes
Yes
Yes
Yes
Yes
1 January 2020
1 January 2020
No
6 February 2017
6 February 2017
21 November 2018
21 November 2018
10 May 2018
10 May 2018
10 September 2021
10 September 2021
1 July 2020
1 July 2020
1 January 2020
6 February 2017
21 November 2018
Length of service
Length of service
10 May 2018
(at 30 June 2023)
(at 30 June 2023)
10 September 2021
3 years and 6 months
3 years and 6 months
1 July 2020
6 years and 4 months
6 years and 4 months
4 years and 7 months
4 years and 7 months
4 5 years and 1 month
4 5 years and 1 month
1 year and 9 months
1 year and 9 months
2 3 years
2 3 years
The biographical details of the current Directors included on pages 10 and 11 set out information about the Directors’
qualifications, experience, responsibilities and other directorships.
Length of service
(at 30 June 2023)
3 years and 6 months
6 years and 4 months
4 years and 7 months
Principal activities
The principal activities of the Group during the course of
the financial year were integrated marketing and
communication services, including strategy, market
research and insights, advertising, public relations,
communications planning, design, events management,
direct marketing and programmatic media.
4 5 years and 1 month
1 year and 9 months
2 3 years
Corporate Governance
The Directors recognise the requirement for, and have
adhered to the principles of corporate governance.
The biographical details of the current Directors included on pages 10 and 11 set out information about the Directors’
The biographical details of the current Directors included on pages 10 and 11 set out information about the Directors’
qualifications, experience, responsibilities and other directorships.
qualifications, experience, responsibilities and other directorships.
Company Secretary
Cathy Hoyle is the Group General Counsel and was appointed Company Secretary on 8 March 2021. Cathy is a practising
Solicitor in New South Wales Australia, a Graduate of the Australian Institute of Company Directors, and holds several
degrees including a Master of Laws from the Australian National University.
Committee Membership
At the date of this report, the Company has an Audit and Risk Committee and a Remuneration and Nomination Committee.
Company Secretary
Company Secretary
Cathy Hoyle is the Group General Counsel and was appointed Company Secretary on 8 March 2021. Cathy is a practising
Cathy Hoyle is the Group General Counsel and was appointed Company Secretary on 8 March 2021. Cathy is a practising
Solicitor in New South Wales Australia, a Graduate of the Australian Institute of Company Directors, and holds several
Solicitor in New South Wales Australia, a Graduate of the Australian Institute of Company Directors, and holds several
degrees including a Master of Laws from the Australian National University.
degrees including a Master of Laws from the Australian National University.
Committee Membership
Committee Membership
At the date of this report, the Company has an Audit and Risk Committee and a Remuneration and Nomination Committee.
At the date of this report, the Company has an Audit and Risk Committee and a Remuneration and Nomination Committee.
Members of these Committees were:
Audit and Risk Committee
Louise Higgins (Chair)
Anouk Darling
David Brain
[DESIGNERS PLEASE DROP IN THIS COPY AND THE BOARD MATRIX GRAPHIC
Remuneration and Nomination Committee
Ian Rowden (Chair)
Ann Sherry
Anouk Darling
Members of these Committees were:
Members of these Committees were:
Audit and Risk Committee
Audit and Risk Committee
Louise Higgins (Chair)
Louise Higgins (Chair)
Anouk Darling
Anouk Darling
David Brain
David Brain
Remuneration and Nomination Committee
Board Matrix
Remuneration and Nomination Committee
Ian Rowden (Chair)
Ian Rowden (Chair)
In determining the composition of the Board, the Remuneration and Nomination Committee ensures that the Board has
Ann Sherry
Ann Sherry
an optimal size and mix of skills to facilitate efficient and appropriate decision-making. The Board reviewed its board skills
Anouk Darling
Anouk Darling
matrix during FY2023. The objective of the review was to clearly outline the skillset required at Board level to determine the
Company’s ongoing strategy.
[DESIGNERS PLEASE DROP IN THIS COPY AND THE BOARD MATRIX GRAPHIC
[DESIGNERS PLEASE DROP IN THIS COPY AND THE BOARD MATRIX GRAPHIC
Skills & Experience
Board Matrix
Board Matrix
In determining the composition of the Board, the Remuneration and Nomination Committee ensures that the Board has an
In determining the composition of the Board, the Remuneration and Nomination Committee ensures that the Board has an
Governance
optimal size and mix of skills to facilitate efficient and appropriate decision-making. The Board reviewed its board skills
optimal size and mix of skills to facilitate efficient and appropriate decision-making. The Board reviewed its board skills
matrix during FY2023. The objective of the review was to clearly outline the skillset required at Board level to determine
matrix during FY2023. The objective of the review was to clearly outline the skillset required at Board level to determine
Risk Management
the Company’s ongoing strategy.
the Company’s ongoing strategy.
]
]
Expertise in identifying, managing, and overseeing
material risks, along with the capability to monitor risk
and ensure compliance.
Knowledge and experience in establishing and overseeing
governance frameworks, policies, and processes.
Board Matrix
In determining the composition of the Board, the Remuneration and Nomination Committee ensures that the Board has an
optimal size and mix of skills to facilitate efficient and appropriate decision-making. The Board reviewed its board skills
matrix during FY2023. The objective of the review was to clearly outline the skillset required at Board level to determine
the Company’s ongoing strategy.
]
Moderate Experienced Expert
Collective Experience
Ann Sherry
Brent Scrimshaw
Anouk Darling
Ian Rowden
David Brain
Louise Higgins
A copy of the Company’s full 2023 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), are
available on the corporate governance section of the
Company’s website at http://www.enero.com/investor-
centre/governance.
Operating and Financial Review
Information relating to the operating and financial review of
the Company and its strategy is outlined on pages 52 to 57
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
6
6
5
6
6
6
B
6
6
6
6
6
6
A
–
–
3
–
4
4
B
–
–
4
–
4
4
Remuneration
and
Nomination
Committee
meetings
B
A
2
2
–
–
2
2
2
2
–
–
–
–
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.
Financial and
Capital Management
Experience
Expertise in financial accounting and reporting, capital
allocation, and debt and equity capital management,
including investor relations.
Industry Experience Understanding of the market sectors relevant to
the Group.
Leadership
Executive and business leadership experience at
a senior level.
Strategic Vision
and Direction
Expertise in the development, establishment,
and execution of strategic vision and direction.
People and
Remuneration
Experience in managing people, including incentive
arrangements, corporate culture, leadership assessment
and workforce and succession planning.
48 Enero Group Limited Annual Report 2023
Technology
and Innovation
48 Enero Group Limited Annual Report 2023
48 Enero Group Limited Annual Report 2023
Expertise in technological strategies, innovation,
and prioritising digital technology, data, and analytics.
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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
Brent Scrimshaw
Anouk Darling
Ian Rowden
David Brain
Louise Higgins
Total
Ordinary
shares
50,000
474,804
34,991
80,000
120,500
12,699
772,994
Share
Appreciation
Rights
Nil
2,558,335
Nil
Nil
Nil
Nil
2,558,335
Events subsequent to balance date
Transactions or events subsequent to the balance date,
were:
•
the Directors have declared a final dividend, with
respect to ordinary shares, of 4.5 cents per share,
fully franked. The final dividend will have a record
date of 19 September 2023 and a payment date
of 3 October 2023.
Except for these events 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.
Enero Group Limited Annual Report 2023 49
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Directors’ Report
DIRECTORS’
REPORT
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. The Group will
also continue to assess acquisition, divestment 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, Brent
Scrimshaw, Anouk Darling, Ian Rowden, David Brain,
Louise Higgins 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 16 September 2022, the Company issued 820,120
(2022: 1,389,589) 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 $2.85 and
these shares rank equally with existing shareholders.
Share Appreciation Rights
Share Appreciation Rights issued
During the year ended 30 June 2023, a total of 4,425,000
Share Appreciation Rights (30 June 2022: 4,525,000) 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 2023
30 September 2023
30 September 2023
30 September 2024
30 September 2024
30 September 2025
Total
Number of
SARs
908,340
1,508,332
1,475,000
1,508,338
1,475,000
1,475,000
8,350,010
Strike price VWAP
(for the 20 business
days prior to the
grant)
$1.52
$3.02
$2.85
$3.02
$2,85
$2.85
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:
2023 Interim dividend
2022 Final dividend
Cents
per
share
Total
amount
AUD ’000
Date of
payment
6.5
6.5
6,027 15 March 2023
6,027 4 October 2022
Subsequent to the balance sheet date, the Directors have
declared a final dividend, with respect to ordinary shares,
of 4.5 cents per share – fully franked with a payment date
of 3 October 2023. The financial effect of this dividend has
not been brought to account in the consolidated financial
statements for the year ended 30 June 2023 but will be
recognised in the subsequent financial period.
For further details refer to Note 17 Capital and reserves in
this annual report.
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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 123, and forms part of the Directors’ Report for the
year ended 30 June 2023.
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 pages 58 to 66 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, 18 August 2023
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 consolidated 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 consolidated 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
2023
$
2022
$
–
144,000
-
295,000
144,000
295,000
50 Enero Group Limited Annual Report 2023
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Operating and financial review
The operating and financial review forms part of the Directors’ Report.
Strategy and operations of the Group
Enero Group is a global and diversified creative technology company, focused on delivering modern marketing services to
businesses around the world. The Group achieves this through an international network of marketing, communications and
advertising technology companies with over 750 employees (at the date of this report) in 11 countries.
Enero’s vision is to be a leading group of specialist marketing services businesses, famous for our progressive capabilities.
We achieve this through deep knowledge and experience in key industries, which delivers growth for our clients,
transforming their brands with creative, technology and data solutions. Our industries of focus are Technology, Healthcare
and Growth Consumer, all of which are supported by long-term positive macroeconomic growth trends. We differentiate
against our competitors through our integrated offering combined with our deep industry specialism, and our agility to
capitalise on new developments in our dynamic sector.
Our growth strategy is focused on the continued evolution of the Group’s existing portfolio businesses supported by
Enero’s Centres of Excellence. We continue to invest to add transformational capabilities and geographies such as the
acquisitions of ROI DNA and GetIT Communications on 1 July 2022. We also continue to reshape the portfolio through
selective divestments, including the sale of The Leading Edge and The Digital Edge in FY22.
The Group is well positioned to continue to invest in growth opportunities in the current economic environment, and to
remain resilient to risks that face our business.
• COVID-19 has changed the nature of work, and despite wage inflation pressure and talent shortages across our
industry, Enero continues to benefit from our progressive workplace practices. For example, prior to the pandemic,
Hotwire built a reputation for ‘thoughtful working’, which allowed for flexible working arrangements. This enabled
Hotwire to proactively recruit high-performing staff during the pandemic, without the need to be located in major
metropolitan areas. We continue to evolve our employee value proposition to ensure we can attract and retain the
best talent across the Group.
• Economic uncertainty is impacting all industries, and although Enero is not immune to industry-wide pressures, our
diversified portfolio provides resiliency and allows us to continue to outperform competitors:
§ OBMedia benefits from the correlation in the movement of advertising rates and the subsequent impact on
costs of traffic acquisition – we can benefit from depressed advertising spend. Search advertising rates
have also proven more resilient than other advertising channels, allowing us to continue to receive strong
rates from our search engine partners.
In Technology, we primarily work with the world’s leading B2B Technology clients who are less volatile in
their allocation of marketing spend versus B2C Technology clients.
§
§ Healthcare is typically more resilient to macroeconomic volatility.
§
In Growth Consumer, we have exposure to Discount Retail (which is taking share in the current
environment) and Government which also remains resilient and driven by major events (e.g., referendum
advertising)
Enero Group remains optimistic about the growth potential of our business across all regions. We are also responding
rapidly to changes in our business, reducing cost to match revenues and maintain margins. We remain responsive to
changing macroeconomic conditions, and our long-term perspective will ensure that we capitalise on opportunities to
evolve and transform the Group as conditions improve.
Enero Group considers the following to be the most relevant risks to the business achieving its strategic, operational and
financial targets:
Potential risk
Evolving needs
of clients
Risk description
Changing requirements of clients’
marketing needs may render our
services redundant or unsuitable.
Group’s mitigating actions
Enero Group continues to invest in the evolution of our
capabilities, both through internal investment as well as
strategic acquisitions. The Enero Board and management
team monitor the evolution of the markets in which we
operate, dynamically adjusting the Group’s strategy as
required. We also work to limit customer concentration,
such that the loss of any single customer would not
significantly impact the Group’s financial performance.
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Potential risk
Uncertain
economic
conditions
Risk description
Global macroeconomic conditions
may impact demand for marketing
services and therefore reduce the
Group’s revenue performance.
Supply chain
Suppliers no longer provide critical
services/products to the Group, for
commercial, financial (bankruptcy
etc.) or geopolitical reasons.
Employee
attraction and
retention
The Group finds it difficult to
attract and/or retain key talent. As
a talent-based business, a
significant loss of key talent over a
short period could impact the
Group’s financial performance.
Group’s mitigating actions
Enero Group is a diversified portfolio of businesses, both
geographically and in terms of the types of marketing
services offered. This helps us to remain resilient to
economic volatility. The Group also owns businesses that
have relatively low fixed costs, allowing us to manage the
cost base of the business in accordance with our revenue
performance. We are constantly monitoring and managing
our business to key internal cost ratios to ensure we can
deliver strong shareholder returns even in the face of
volatile market conditions. We also continue to develop
capabilities that differentiate us versus our competitors,
ensuring we are preferred suppliers, and enabling us to
augment and enhance client teams that may have been
impacted by cost reduction initiatives. Certain businesses
in the Group, such as OBMedia, may also have
countercyclical elements, where decreasing revenues may
be mitigated by decreasing costs of sales.
Enero has a diversified portfolio of supplier relationships
with different contract maturity dates to mitigate the impact
of losing individual suppliers. Most of our suppliers are
service providers with commoditised offerings, which
ensures we are minimally exposed to market price
fluctuations and can find new suppliers with relative ease.
We can source suppliers globally (particularly in the
pandemic era of virtual working), limiting our geopolitical
risk. Our global scale makes us a valuable customer for
our suppliers, which also mitigates commercial risk to
these relationships. We regularly review our supplier
relationships to identify risks and ensure they remain
commercially attractive relationships.
OBMedia’s supply chain includes a diversified group of
publishers, agencies, social media platforms, ad networks,
media buyers and other traffic sources. We use processes
and technology to assess traffic quality from these sources.
We proactively manage our publisher traffic and
relationships to ensure quality traffic is sourced.
As a talent-based business, Enero believes employee
attraction and retention is a key source of competitive
differentiation. As such, we actively invest in talent and
culture, both through Enero’s global People and Culture
Centre of Excellence, as well as within the individual
businesses of the Group. We empower each business in
the Group to develop a unique culture that suits the talent
market they operate in, ensuring each business is best
situated to achieve its People and Culture strategy and
goals. Enero invests heavily in in-house and external
recruitment capabilities, a global Learning and
Development platform, progressive and dynamic workplace
practices and a strong focus on Diversity, Equity and
Inclusion initiatives that are tailored to each market we
operate in. We conduct short-term and long-term
succession and organisational planning for key roles. We
also regularly measure the satisfaction of the Group’s
employees and seek feedback on areas of improvement.
The Nomination and Remuneration Committee of the
Board works closely with the CEO and Chief People and
Culture Officer on the development and execution of the
Group’s People and Culture strategy.
52 Enero Group Limited Annual Report 2023
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Potential risk
Business
continuity
Risk description
The Group may be exposed to a
range of different risks that may
adversely affect the day-to-day
operations of the business.
Acquisition
success
Acquisitions may not deliver
expected value to shareholders,
either through commercial
underperformance, integration
difficulty or operational issues.
Regulatory risk
The Group may be exposed to
certain regulatory risks where
policy or legal developments
impact our success.
Governance
processes
Legal risk
Insufficient governance and
oversight of the Group’s systems
and processes could create an
environment where we act or
perform in a way that does not
meet shareholder expectations.
The Group may be subjected to a
lawsuit that impacts business
operations or financial
performance.
IT and
Cybersecurity
risk
The Group may be subject to
cybersecurity breaches, or may
not operate in the way required by
certain IT regulations or business
practices, leading to financial, data
or business continuity impacts.
Group’s mitigating actions
Enero regularly reviews potential business continuity risks
such as Work, Health and Safety risks (WHS), IT and
Cybersecurity risks, and Regulatory and Governance risks.
We have developed plans to mitigate and minimise the
impact of all of these risks, as well as others. The Audit
and Risk Committee of the Board periodically reviews the
Group’s Business Continuity, Disaster Recovery and Crisis
Management plans.
As a portfolio business, Enero has extensive experience
acquiring and integrating new businesses into the Group.
We conduct extensive due diligence to minimise
commercial and operational risk, as well as developing
integration plans prior to closing M&A transactions, to
ensure we capitalise on the benefits of our acquisitions.
Where appropriate, we may appoint dedicated project
managers to assist with integration efforts. Enero reports
on the performance of acquired businesses and integration
progress to the Board.
We support our acquired businesses on an ongoing basis
through the Enero Centres of Excellence, enabling them to
continually enhance their business and deliver results for
clients.
Enero Group operates in a relatively low regulation industry
(marketing services), noting that we do not own or sell
media assets (at the time of this report). We regularly
monitor for regulatory changes in our operating markets,
and we engage with relevant regulators and industry
bodies as necessary.
As a publicly listed company, Enero Group has dedicated
resources that regularly review our systems and processes
to ensure we operate at the standard expected by
shareholders. We regularly conduct compliance training for
employees to ensure adherence to Group policies.
Enero Group has experienced and dedicated internal Legal
resources to ensure that all our businesses are operating
within the correct legal framework for their respective
jurisdictions. The Group’s Legal Centre of Excellence
provides both leadership and support in legal issues,
including dispute management, contracting, employment
matters and M&A.
Enero regularly reviews data and privacy regulations to
ensure our systems and processes are up to date with best
practice. We invest in modern cloud infrastructure and
backup systems to deliver consistently high levels of
service. Enero’s IT Centre of Excellence operates as a
central resource for the Group to provide thought
leadership, support and ensure best-practice operations.
The Group regularly conducts cybersecurity risk
assessments and training, and tracks progress against
outstanding issues until they are mitigated.
A summary of the Group’s results is below:
A summary of the Group’s results is below:
In thousands of AUD
In thousands of AUD
Net Revenue1
Net Revenue1
EBITDA2
EBITDA2
Depreciation and amortisation
Depreciation and amortisation
EBIT
EBIT
Net finance costs
Net finance costs
Present value interest charge
Present value interest charge
Profit before tax
Profit before tax
Income tax expense
Income tax expense
Profit after tax
Profit after tax
Non-controlling interests
Non-controlling interests
Net profit after tax before
Net profit after tax before
significant items
significant items
Significant items (net of tax)3
Significant items (net of tax)3
Net profit after tax attributable to
Net profit after tax attributable to
equity owners
equity owners
2023
2023
241,643
241,643
78,841
78,841
(10,069)
(10,069)
68,772
68,772
(1,582)
(1,582)
(2,543)
(2,543)
64,647
64,647
(15,243)
(15,243)
49,404
49,404
(25,002)
(25,002)
24,402
24,402
32,072
32,072
56,474
56,474
2022
2022
193,426
193,426
66,196
66,196
(6,940)
(6,940)
59,256
59,256
(9)
(9)
(961)
(961)
58,286
58,286
(14,340)
(14,340)
43,946
43,946
(16,834)
(16,834)
27,112
27,112
(1,725)
(1,725)
25,387
25,387
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P
A
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E
5
5
30.9
30.9
28.9
28.9
26.4
26.4
61.1
61.1
2023
2023
241,643
241,643
78,841
78,841
(4,253)
(4,253)
(2,077)
(2,077)
directly attributable cost of sales.
directly attributable cost of sales.
56.
56.
Cents per share
Cents per share
Earnings per share (basic) – pre
Earnings per share (basic) – pre
significant items
significant items
Earnings per share (basic)
Earnings per share (basic)
1. Gross revenue recognised in accordance with AASB 15 less
1. Gross revenue recognised in accordance with AASB 15 less
2. EBITDA, as defined in the basis of preparation section on page
2. EBITDA, as defined in the basis of preparation section on page
3. Significant items are explained on page 56.
3. Significant items are explained on page 56.
Reconciliation of EBITDA2 to statutory profit after tax
Reconciliation of EBITDA2 to statutory profit after tax
In thousands of AUD
In thousands of AUD
Net Revenue1
Net Revenue1
EBITDA2
EBITDA2
Depreciation of right-of-use assets
Depreciation of right-of-use assets
Depreciation of plant and
Depreciation of plant and
equipment
equipment
Amortisation of intangibles
Amortisation of intangibles
Net finance costs
Net finance costs
Present value interest charge
Present value interest charge
Gain on sale of controlled entities3
Gain on sale of controlled entities3
Incidental acquisition costs3
Incidental acquisition costs3
Restructuring costs3
Restructuring costs3
Contingent consideration fair
Contingent consideration fair
value gain/(loss) 3
value gain/(loss) 3
Statutory profit before tax
Statutory profit before tax
Income tax expense
Income tax expense
Statutory profit after tax
Statutory profit after tax
1. Gross revenue recognised in accordance with AASB 15 less
1. Gross revenue recognised in accordance with AASB 15 less
2. EBITDA, as defined in the basis of preparation section on page
2. EBITDA, as defined in the basis of preparation section on page
3. Significant items are explained on page 56.
3. Significant items are explained on page 56.
directly attributable cost of sales.
directly attributable cost of sales.
56.
56.
(3,739)
(3,739)
(1,582)
(1,582)
(2,543)
(2,543)
–
–
(216)
(216)
(3,135)
(3,135)
34,648
34,648
95,944
95,944
(14,468)
(14,468)
81,476
81,476
2022
2022
193,426
193,426
66,196
66,196
(3,996)
(3,996)
(1,722)
(1,722)
(1,222)
(1,222)
(9)
(9)
(961)
(961)
600
600
(1,324)
(1,324)
-
-
(1,001)
(1,001)
56,561
56,561
(14,340)
(14,340)
42,221
42,221
Financial performance for the year
Financial performance for the year
The Group achieved Net Revenue of $241.6 million, an
The Group achieved Net Revenue of $241.6 million, an
increase of 24.9% (2022: $193.4 million) compared to the
increase of 24.9% (2022: $193.4 million) compared to the
prior reporting period. Net Revenue growth benefited from
prior reporting period. Net Revenue growth benefited from
a full year contribution of acquired businesses ROI DNA
a full year contribution of acquired businesses ROI DNA
and GetIT and strong growth in OBMedia. The Group
and GetIT and strong growth in OBMedia. The Group
continues to have a high proportion of client revenue
continues to have a high proportion of client revenue
exposure to its priority verticals of Technology, Healthcare
exposure to its priority verticals of Technology, Healthcare
and Growth Consumer sectors with an increased exposure
and Growth Consumer sectors with an increased exposure
to Technology due to the acquisitions. Net Revenue on a
to Technology due to the acquisitions. Net Revenue on a
constant currency basis was up 20.7% compared with the
constant currency basis was up 20.7% compared with the
prior year.
prior year.
The Group achieved EBITDA2 of $78.8 million, an increase
The Group achieved EBITDA2 of $78.8 million, an increase
of 19.1% (2022: $66.2 million) compared to the prior
of 19.1% (2022: $66.2 million) compared to the prior
reporting period. The EBITDA2 margin decreased from
reporting period. The EBITDA2 margin decreased from
34.2% in 2022 to 32.6% in 2023. This decrease in the
34.2% in 2022 to 32.6% in 2023. This decrease in the
EBITDA2 margin was driven by:
EBITDA2 margin was driven by:
•
•
lower EBITDA margins in the Group’s agency
lower EBITDA margins in the Group’s agency
businesses (Hotwire Group, BMF, Orchard and
businesses (Hotwire Group, BMF, Orchard and
CPR) due to weak macroeconomic conditions
CPR) due to weak macroeconomic conditions
with cost savings implemented during the year
with cost savings implemented during the year
improving margins in Q4;
improving margins in Q4;
• partly offset by an increase in revenue and
• partly offset by an increase in revenue and
EBITDA2 in the Group’s programmatic media
EBITDA2 in the Group’s programmatic media
platform business, OBMedia, which connects
platform business, OBMedia, which connects
publishers with the world’s largest search
publishers with the world’s largest search
engines. The business functions as a platform
engines. The business functions as a platform
and therefore has achieved a higher margin than
and therefore has achieved a higher margin than
other businesses in the Group;
other businesses in the Group;
• while staff costs rose 26.8% in the current year,
• while staff costs rose 26.8% in the current year,
the staff cost ratio increased marginally from
the staff cost ratio increased marginally from
57.8% in 2022 to 58.6% in 2023 with increase in
57.8% in 2022 to 58.6% in 2023 with increase in
headcount due to acquisitions offset by
headcount due to acquisitions offset by
reductions due to restructures; and
reductions due to restructures; and
• operating costs have increased due to the ROI
• operating costs have increased due to the ROI
DNA and GetIT acquisitions and growth in
DNA and GetIT acquisitions and growth in
OBMedia.
OBMedia.
The net profit after tax before significant items was $24.4
The net profit after tax before significant items was $24.4
million, compared to $27.1 million in the prior year,
million, compared to $27.1 million in the prior year,
impacted by growth in non-controlling interest and higher
impacted by growth in non-controlling interest and higher
amortisation and interest expense associated with
amortisation and interest expense associated with
acquisitions.
acquisitions.
The statutory net profit after tax to equity owners was $56.5
The statutory net profit after tax to equity owners was $56.5
million, compared to a net profit of $25.4 million in the prior
million, compared to a net profit of $25.4 million in the prior
year. In the current year, the Group incurred a fair value
year. In the current year, the Group incurred a fair value
gain of $34.6 million relating to revaluation of future
gain of $34.6 million relating to revaluation of future
contingent consideration partially offset by restructuring
contingent consideration partially offset by restructuring
costs of $3.1 million and incidental acquisition costs of $0.2
costs of $3.1 million and incidental acquisition costs of $0.2
million (2022: the Group incurred incidental acquisition
million (2022: the Group incurred incidental acquisition
costs of $1.3 million and recognised a fair value loss of
costs of $1.3 million and recognised a fair value loss of
$1.0 million relating to revaluation of future contingent
$1.0 million relating to revaluation of future contingent
consideration, which were partially offset by a gain of $0.6
consideration, which were partially offset by a gain of $0.6
million recognised on sale of TLE).
million recognised on sale of TLE).
In the current year, the operating businesses generated
In the current year, the operating businesses generated
approximately 74% of their Net Revenue and 87% of their
approximately 74% of their Net Revenue and 87% of their
EBITDA2 from international markets.
EBITDA2 from international markets.
54 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 55
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Significant items
2023
• The Group recognised a contingent consideration fair
value gain of $34,648,000 relating to a change in the
best estimate of future contingent consideration
payable to the vendors of McDonald Butler
Associates, ROI DNA and GetIT.
• The Group incurred $3,135,000 of restructuring costs
relating to a restructuring process to mitigate costs
across the Group. The majority of the costs related to
redundancy costs in the agencies across the group,
which continued to further integrate its
communication and marketing services businesses
into a single account management team.
• The Group incurred incidental costs of $216,000
relating to acquisition of ROI DNA Inc. and GetIT Pte
Ltd.
2022
• On 6 May 2022, the Group entered into a sale
agreement to sell the business assets of its strategic
data consultancy businesses, The Leading Edge
(TLE) and The Digital Edge (TDE), for consideration
of $1,350,000. The Group recognised an accounting
gain on sale of $600,000 in the consolidated income
statement for the year ended 30 June 2022.
• The Group recognised a contingent consideration fair
value loss of $1,001,000 relating to a change in the
best estimate of future contingent consideration
payable to the vendors of McDonald Butler
Associates.
• The Group incurred incidental costs of $1,324,000
relating to acquisition of ROI DNA Inc. and GetIT Pte
Ltd.
Geographical performance
In thousands of AUD
2023
2022
Net Revenue1
Australia and Asia
UK and Europe
USA
Total Operating units
EBITDA2
Australia and Asia
UK and Europe
USA
Total Operating units
Support office
Share-based payments
charge
Total Group
EBITDA2 margin
Australia and Asia
UK and Europe
USA
Total Operating units
Total Group
64,462
31,265
145,916
241,643
68,776
36,622
88,028
193,426
11,856
4,145
74,505
90,506
(9,164)
(2,501)
78,841
18.4%
13.3%
51.1%
37.5%
32.6%
15,893
9,108
52,287
77,288
(9,190)
(1,902)
66,196
23.1%
24.9%
59.4%
40.0%
34.2%
1. Gross revenue recognised in accordance with AASB 15 less
directly attributable cost of sales.
2. EBITDA, as defined in the basis of preparation section on page
56.
Acquisitions
2023
The Group completed the acquisition of ROI DNA Inc. and
GetIT Pte Ltd on 1 July 2022. Refer to Note 22 Acquisitions
for details.
2022
No acquisitions were completed in the prior year.
Disposals
2023
There were no disposals by the Group for the year ended
30 June 2023.
2022
On 6 May 2022, the Group entered into a sale agreement
to sell the business assets of its strategic data consultancy
businesses, The Leading Edge (TLE) and The Digital Edge
(TDE), for consideration of $1,350,000. The Group
recognised an accounting gain on sale of $600,000 in the
consolidated income statement for the year ended 30 June
2022. Refer to Note 23 Disposals for details.
Basis of preparation
The Directors’ Report includes Net Revenue and EBITDA,
which are measures used by the Directors and
management in assessing the ongoing performance of the
Group. Net Revenue is a non-IFRS measure and is equal
to statutory Gross Profit. EBITDA is a non-IFRS measure
and has not been audited or reviewed.
Following management review, the Group has moved to
EBITDA for internal management purposes from Operating
EBITDA (EBITDA including right-of-use assets
depreciation) as the preferred measure of Group and
segment performance and to simplify reporting to the
market.
EBITDA is calculated as profit before interest, taxes,
depreciation, amortisation, and any significant items.
EBITDA is reconciled in the table on page 55.
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
R
T
F
Y
2
0
2
3
P
A
G
E
5
7
Cash and Debt
In thousands of AUD
Cash and cash equivalents
Interest bearing liabilities
Contingent consideration
liabilities
Net cash¹
2023
52,432
(8,735)
2022
98,742
(36,275)
(30,740)
(10,113)
12,957
52,354
1. Net cash excludes lease liabilities recognised as a result of the
adoption of AASB16 Leases as they are considered operational
liabilities.
The Group had $13.0 million in net cash as at
30 June 2023.
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 $61.5 million
(2022: $48.8 million). The increase in inflows is primarily
attributable to EBITDA growth. The Group converted 102%
of EBITDA to cash for the year ended
30 June 2023 (2022: 96%).
Cash flow – Investing activities
Cash outflows from investing activities was $35.7 million
(2022: $11.1 million). The increase in outflows was
primarily due to acquisitions completed during the current
year.
Cash flow – Financing activities
Net cash outflows from financing activities was $73.9
million, primarily due to $28.9 million in loans repayments
and dividend paid. During the current year, $12.1 million
(2022: $9.2 million) in dividends were paid to Enero Group
Limited shareholders in addition to $26.3 million (2022:
$13.0 million) in dividends paid to minority shareholders of
controlled entities.
Contingent consideration liabilities
The Company entered into contingent consideration
arrangements in relation to its acquisition of McDonald
Butler Associates, ROI DNA and GetIT.
As at 30 June 2023, the Company’s estimated contingent
consideration liability is $30.7 million (2022: $10.1 million).
Reconciliation of carrying amounts of contingent
consideration payable:
In thousands of AUD
30 June 2022
Contingency recognised on business
combinations
Payments made
Fair value gain recognised in relation to
McDonald Butler Associates, ROI DNA
and GetIT
Present value interest unwind and foreign
exchange movements
30 June 2023
Maturity profile (at present value):
FY2024
FY2025
FY2026
Total
10,113
53,467
(2,671)
(34,648)
4,479
30,740
4,315
9,992
16,433
30,740
Refer to Note 22 Acquisitions for further information.
56 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 57
Directors’ Report
DIRECTORS’
REPORT
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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 2023. 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.
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;
– 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.
During the year ended 30 June 2023, the Committee
engaged Ernst & Young as a remuneration consultant for
the provision of a CEO remuneration benchmarking report
of global advertising organisations. A fee of $16,480 was
paid to Ernst & Young for this advice.
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.
Name
Non-Executive
Directors
Ann Sherry
Anouk Darling
Ian Rowden
David Brain
Louise Higgins
Executives
Brent Scrimshaw
Carla Webb-Sear
Fiona Chilcott
Role
Non-Executive Director (Chair)
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Chief Executive Officer
Chief Financial Officer
Chief People and Culture Officer
–
–
–
–
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.
In structuring the remuneration mix for each role, the Board
aims to balance fixed and variable remuneration to best
achieve short-term and long-term performance outcomes.
4(a) Fixed remuneration
Fixed remuneration consists of base remuneration (which
is calculated on a total cost-to-Company basis and includes
fringe benefits tax charges related to employee benefits),
as well as employer contributions to superannuation and
pension funds.
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.
Short-term incentives (STI):
There are no guaranteed fixed remuneration increases
included in any Executive contracts.
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 and key leadership
for meeting or exceeding financial, strategic and personal
targets.
The STI for the CEO and Company Executives align
Executives with the creation of shareholder value through
driving top-line revenue growth along with EBITDA margin
improvements.
E
N
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A
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2
0
2
3
P
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5
9
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 Executive
Performance measures and rationale
The STI is an annual maximum short-term incentive payment of 125% of the fixed
remuneration determined by the achievement of 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. Where the STI opportunity exceeds 80%, a portion of the STI
award may be deferred up to 25% in the form of restricted ordinary shares. Any restricted
shares will be held in trust for a period determined by the Board at the time of issue.
The STI is an annual cash-based maximum short-term incentive payment of 70% of the
fixed remuneration determined by the achievement of 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 STIs are paid in cash following the end of the financial year and approval from the Remuneration and Nomination
Committee. The Company Executives are not contractually entitled to the STI in their respective employment agreements
and the Remuneration and Nomination Committee retains discretion to withdraw or amend the STI at any time.
The Remuneration and Nomination Committee has the discretion to take into account any significant items in determining
whether the financial KPIs have been achieved, where it is considered appropriate for linking remuneration reward to
Company performance.
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.
58 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 59
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Directors’ Report
DIRECTORS’
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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).
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, with SAR vesting in equal
tranches of 1/3 each year over the performance period.
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.
The number of shares to be granted will equal the number of SARs awarded multiplied by
the above conversion formula.
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 2023
21 October 2020
3,900,000
Senior Executives
21 October 2021
4,525,000
Senior Executives
21 October 2022
4,425,000
Senior Executives
$1.52
$3.02
$2.85
30 June 2021
30 June 2022
30 June 2023
30 September 2023
908,340
30 June 2022
30 June 2023
30 June 2024
30 September 2024
3,016,670
30 June 2023
30 June 2024
30 June 2025
30 September 2025
4,425,000
E
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N
U
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2
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6
1
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 2026
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
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.
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 2023.
Total remuneration paid to Non-Executive Directors for the year ending 30 June 2023 amounted to $552,500
(30 June 2022: $450,577), which is 73.7% (30 June 2022: 60.1%) 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 2023 and 30 June 2022:
Base fees – annual
Chair
Other Non-Executive Directors
Committee fees – annual
Audit and Risk Committee – Chair
Remuneration and Nomination Committee – Chair
2023
$
150,000
100,000
2022
$
120,000
75,000
20,000
20,000
10,000
10,000
Remuneration details of Non-Executive Directors are set out in Section 7 Directors’ and Executive Officers’ remuneration.
60 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 61
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Directors’ Report
DIRECTORS’
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7 Directors’ and Executive Officers’ remuneration
7(a) Directors’ and Executive Officers’ short-term cash benefits, post-employment benefits, other long-term remuneration
and equity-based remuneration
Details of the nature and amount of each element of the remuneration of each Director of the Company, and each of the
Executives of the Company who are KMPs, are shown in the table below:
Short-term benefits
Post-
employment
Long-term
benefits
Share-based
payments
Salary
and fees
$
Cash
STI(i)
$
Annual
leave(ii) Superannuation
$
$
Long service
leave(ii)
$
Termination
benefit
$
Value of
Share
Appreciation
Rights (LTI)(iii)
$
Non-Executive Directors
Ann Sherry
Anouk Darling
Ian Rowden
David Brain
Louise Higgins
Susan McIntosh(vi)
Executive Director
Brent Scrimshaw
Director and CEO
Executives
Carla Webb-Sear
Chief Financial Officer
Executives
Fiona Chilcott
Chief People and
Culture Officer
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2022
2023
2022
2023
2022
2023
2022
142,500
120,833
93,750
78,523
111,250
84,167
93,750
75,000
111,250
66,410
22,727
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
823,408
424,350
5,931
800,432
576,800
42,667
424,209
189,000
(11,464)
396,432
294,000
12,325
386,494
172,950
2,120
374,500
278,648
18,804
–
–
-
644
–
–
–
–
–
–
2,273
25,292
23,568
25,292
23,568
25,292
23,568
–
–
–
–
–
–
–
–
–
–
–
4,648
2,513
2,133
947
7,319
4,350
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Proportion of
total
remuneration
performance
related(iv)
%
–
–
–
–
–
–
–
–
–
–
–
57.10
56.68
53.79
53.53
52.00
54.18
Total
$
142,500
120,833
93,750
79,167
111,250
84,167
93,750
75,000
111,250
66,410
25,000
–
–
–
–
–
–
–
–
–
–
–
719,365
2,002,994
560,419
2,006,399
323,377
952,547
205,028
932,300
283,355
877,530
219,438
919,308
(i) The short-term incentive bonus is for performance during the 30 June 2023 and 30 June 2022 financial year using the criteria set out on page 59. The table
above includes the expense incurred during the financial year for the bonuses awarded. Refer to the table on page 63 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) Executives receive salary continuance insurance cover. There are no other benefits offered by the Company.
(vi) Susan McIntosh retired as a Non-Executive Director effective 21 October 2021.
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 59.
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.
Short-term incentive bonus(i)
Company Executives
Brent Scrimshaw
Carla Webb-Sear
Fiona Chilcott
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
594,090
315,000
288,250
424,350
189,000
172,950
70%
60%
60%
–
–
–
50%
42%
42%
100%
100%
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.
Annual performance for Company Executives is assessed against the following measures in determining the percentage of
fixed remuneration payable as STI:
E
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2
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6
3
Measure
Financial
EBITDA
EPS Growth
Non-financial
Weighting
Target
Outcome
Outcome as % of
target
48%
32%
$77.0 million
$78.8 million
10%
(15%)
102%
(150%)
Strategy and Culture
20%
Delivery of measure
Met
–
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 2023
Number of
rights granted
during 2023
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
1,275,000
624,999
525,000
21 Oct 2022
21 Oct 2022
21 Oct 2022
0.41 – 0.68
0.41 – 0.68
0.41 – 0.68
2.85
2.85
2.85
30 Sept 2025
30 Sept 2025
30 Sept 2025
Company Executives
Brent Scrimshaw
Carla Webb-Sear
Fiona Chilcott
(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.
62 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 63
Directors’ Report
DIRECTORS’
REPORT
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:
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:
4
6
E
G
A
P
3
2
0
2
Y
F
T
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O
P
E
R
L
A
U
N
N
A
O
R
E
N
E
Number of
rights
granted
Type of rights
granted
Grant date
%
vested
in year
%
forfeited
in year
%
exercised
in year
Company Executives
Brent
Scrimshaw
1,250,000
SAR 21 Oct 2020
33
1,300,000
SAR 21 Oct 2021
33
Carla Webb-
Sear
Fiona Chilcott
1,275,000
SAR 21 Oct 2022
–
650,000
SAR 21 Oct 2021
33
624,999
SAR 21 Oct 2022
–
350,000
100,000
550,000
SAR 24 Oct 2019
SAR 21 Oct 2020
SAR 21 Oct 2021
33
33
33
525,000
SAR 21 Oct 2022
–
–
–
–
–
–
–
–
–
–
33
33
–
33
–
33
33
33
–
% remaining to
vest
Vesting date(i)
33 30 Sep 2022 and
30 Sep 2023
100
100
66
66
30 Sep 2022, 30
Sep 2023 and 30
Sep 2024
30 Sep 2023, 30
Sep 2024 and 30
Sep 2025
30 Sep 2022, 30
Sep 2023 and 30
Sep 2024
30 Sep 2023, 30
Sep 2024 and 30
Sep 2025
30 Sep 2022
33 30 Sep 2022 and
30 Sep 2023
30 Sep 2022, 30
Sep 2023 and 30
Sep 2024
30 Sep 2023, 30
Sep 2024 and 30
Sep 2025
66
–
100
(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.
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:
Expired
Cancelled Exercised
Granted
held at
30 Jun 2023
Vested
during
the year
Vested and
exercisable at
30 Jun 2023
Value of
rights
granted
during
the year
$
Value of
rights
exercised
during the
year
$
–
(849,999)
2,558,335 849,999
– 706,138
440,110
Granted
held at
1 Jul 2022
Granted as
remuneration
in year
2,133,334
1,275,000
650,000
733,333
624,999
525,000
Director
Brent Scrimshaw
Executives
Carla Webb-Sear
Fiona Chilcott
–
–
–
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
R
T
F
Y
2
0
2
3
P
A
G
E
6
5
Held at
1 July 2022
Purchases
Issued as
remuneration
Directors
Ann Sherry
Brent
Scrimshaw
Anouk Darling
Ian Rowden
David Brain
Louise Higgins
Executives
Carla Webb-
Sear
Fiona Chilcott
18,750
216,877
19,607
75,000
75,000
–
–
208,506
31,250
–
15,384
5,000
45,500
12,699
–
–
–
–
–
–
–
–
–
–
Received on
exercise of
rights
–
257,927
–
–
–
–
17,175
73,322
Sales
Held at
30 June 2023
–
–
–
–
–
–
–
(281,828)
50,000
474,804
34,991
80,000
120,500
12,699
17,175
–
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.
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 ($’000)
EBITDA1 ($’000)
EBITDA1 margin (%)
Net profit/(loss) to equity holders ($’000)
Net profit to equity holders pre significant
items ($’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)
Opening share price (1 July) ($)
Closing share price (30 June) ($)
30 June
2023
30 June
2022
30 June
2021
30 June
2020
30 June
2019
241,643
78,841
32.6%
56,474
193,426
66,196
34.2%
25,387
160,634
49,904
31.1%
(402)
135,825
29,230
21.5%
10,707
129,535
20,722
16.0%
5,661
24,402
27,112
22,835
12,881
12,051
20.3
(15%)
61.1
11.0
2.90
1.46
30.9
17%
28.9
12.5
2.56
2.90
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
–
–
(216,666)
(333,332)
1,058,333 216,666
925,001 333,332
– 346,145
– 290,763
139,013
183,909
1.
EBITDA, as defined in the basis of preparation section on page 56.
No share-based payments held by KMP are vested but not exercisable at 30 June 2023.
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.
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 (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 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.
64 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 65
Directors’ Report
DIRECTORS’
REPORT
Consolidated income statement
for the year ended 30 June 2023
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
6
6
E
G
A
P
3
2
0
2
Y
F
T
R
O
P
E
R
L
A
U
N
N
A
O
R
E
N
E
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 financial year. The Remuneration and
Nomination Committee believes the current year achievement of:
• Net Revenue and EBITDA increases;
•
•
•
•
strategic repositioning of Hotwire through additional capabilities of revenue generating services;
expanded Enero footprint into Asia Pacific;
synergies between agencies; and
strategic investments in programmatic media capabilities to fuel growth,
are aligned with the achievement of future shareholder wealth and therefore confirm the Executive Remuneration policy
and framework.
End of Remuneration Report.
In thousands of AUD
Gross revenue
Directly attributable costs of sales
Gross profit
Other income
Employee expenses
Occupancy costs
Travel expenses
Communication expenses
Compliance expenses
Depreciation and amortisation expenses
Administration expenses
Gain on disposal of controlled entities
Incidental acquisition costs
Contingent consideration fair value gain/(loss)
Finance income
Finance costs
Restructuring 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 72 to 113 are an integral part of these consolidated financial statements.
66 Enero Group Limited Annual Report 2023
67 Enero Group Limited Annual Report 2023
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
R
T
F
Y
2
0
2
3
P
A
G
E
6
7
Note
3
2023
740,207
(498,564)
241,643
106
2022
522,124
(328,698)
193,426
259
(141,647)
(111,716)
(1,568)
(2,013)
(2,364)
(3,348)
(10,069)
(11,968)
-
(216)
34,648
307
(4,432)
(3,135)
95,944
(14,468)
81,476
56,474
25,002
81,476
61.1
60.7
(1,424)
(1,565)
(1,732)
(2,032)
(6,940)
(9,020)
600
(1,324)
(1,001)
20
(990)
-
56,561
(14,340)
42,221
25,387
16,834
42,221
28.9
28.2
23
22
13
4
5
18
18
8
6
E
G
A
P
3
2
0
2
Y
F
T
R
O
P
E
R
L
A
U
N
N
A
O
R
E
N
E
Consolidated statement of comprehensive income
for the year ended 30 June 2023
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
Consolidated statement of changes in equity
CONSOLIDATED STATEMENT OF CHANGES IN
for the year ended 30 June 2023
EQUITY FOR THE YEAR ENDED 30 JUNE 2023
In thousands of AUD
Profit for the year
Other comprehensive income
Note
2023
81,476
2022
42,221
Total items that will not be reclassified subsequently to profit or loss
–
–
In thousands of AUD
Note
Attributable to owners of the Company
Retained
profits/
(Accumulated
losses)
Share
capital
Profit
appropriation
reserve
Share-
based
payment
reserve
Reserve
change in
ownership
interest in
subsidiary
Foreign
currency
translation
reserve
Non-
controlling
interests
Total
Total
equity
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 72 to 113 are an integral part of these consolidated financial statements.
7,610
7,610
7,610
89,086
63,792
25,294
89,086
1,231
1,231
1,231
43,452
26,077
17,375
43,452
Opening balance at 1 July 2021
100,456
(16,555)
36,847
10,592
–
–
–
25,387
–
25,387
–
–
–
–
–
–
Profit for the year
Other comprehensive income for
the year, net of tax
Total comprehensive income for
the year
Transactions with owners
recorded directly in equity:
Shares issued to employees on
exercise of Share Appreciation
Rights
Dividends paid to equity holders
Share-based payment expense
Closing balance at 30 June 2022
104,861
8,832
17
17
4,405
–
–
–
–
–
–
(4,405)
(9,157)
–
27,690
–
1,902
8,089
Opening balance at 1 July 2022
104,861
8,832
27,690
8,089
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 vendors of ROI
DNA and GetIT
Shares issued to employees on
exercise of Share Appreciation
Rights
Share buy-back
Dividends paid to equity holders
Share-based payment expense
–
–
–
56,474
–
56,474
17
10,857
17
17
17
2,690
(593)
–
–
–
–
–
–
–
–
–
–
–
–
–
(12,054)
–
Closing balance at 30 June 2023
117,815
65,306
15,636
–
–
–
–
(2,690)
–
–
2,501
7,900
The notes on pages 72 to 113 are an integral part of these consolidated financial statements.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(3,018) 128,322
3,761 132,083
–
25,387
16,834
42,221
690
690
541
1,231
690
26,077
17,375
43,452
–
–
–
–
–
–
(9,157)
1,902
(12,954) (22,111)
1,902
–
(2,328) 147,144
8,182 155,326
(2,328) 147,144
8,182 155,326
–
56,474
25,002
81,476
7,318
7,318
292
7,610
7,318
63,792
25,294
89,086
–
–
10,857
–
–
(593)
– (12,054)
2,501
–
–
–
10,857
–
–
(593)
(26,303) (38,357)
2,501
–
4,990 211,647
7,173 218,820
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
R
T
F
Y
2
0
2
3
P
A
G
E
6
9
Enero Group Limited Annual Report 2023 68
69 Enero Group Limited Annual Report 2023
Consolidated statement of financial position
CONSOLIDATED STATEMENT OF FINANCIAL
as at 30 June 2023
POSITION AS AT 30 JUNE 2023
Consolidated statement of cash flows
for the year ended 30 June 2023
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
Note
2023
2022
Note
2023
2022
0
7
E
G
A
P
3
2
0
2
Y
F
T
R
O
P
E
R
L
A
U
N
N
A
O
R
E
N
E
In thousands of AUD
Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Income tax receivable
Total current assets
Deferred tax assets
Plant and equipment
Right-of-use assets
Other assets
Intangible assets
Total non-current assets
Total assets
Liabilities
Trade and other payables
Contingent consideration payable
Lease liabilities
Employee benefits
Income tax payable
Total current liabilities
Contingent consideration payable
Lease liabilities
Employee benefits
Deferred tax liabilities
Interest bearing liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Other reserves
Profit appropriation reserve
Retained earnings
Total equity attributable to equity holders of the parent
Non-controlling interests
Total equity
The notes on pages 72 to 113 are an integral part of these consolidated financial statements.
6
7
8
5
5
9
10
8
11
12
13
14
15
5
13
14
15
5
16
17
52,432
74,801
7,744
3,298
138,275
1,582
2,567
12,980
169
227,683
244,981
383,256
98,316
4,316
4,264
5,857
161
112,914
26,424
9,878
1,027
5,458
8,735
51,522
164,436
218,820
117,815
12,890
15,636
65,306
211,647
7,173
218,820
98,742
63,995
6,112
222
169,071
2,020
3,200
5,950
162
114,664
125,996
295,067
76,496
2,711
5,841
5,679
1,798
92,525
7,402
2,756
783
-
36,275
47,216
139,741
155,326
104,861
5,761
27,690
8,832
147,144
8,182
155,326
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
Proceeds received from bank loans
Bank loan repayment
Dividends paid to equity holders of the parent
Dividends paid to non-controlling interests in controlled entities
Payments for share buy-back
Net cash (used in)/from financing activities
Net (decrease)/ 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
The notes on pages 72 to 113 are an integral part of these consolidated financial statements.
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
R
T
F
Y
2
0
2
3
P
A
G
E
7
1
744,505
(663,778)
80,727
307
(17,704)
(1,850)
61,480
11
(1,087)
(32,000)
–
(2,671)
(35,747)
(6,053)
–
(28,915)
(12,054)
(26,303)
(593)
(73,918)
(48,185)
1,875
98,742
52,432
524,510
(460,748)
63,762
20
(14,933)
(29)
48,820
6
(1,148)
–
1,018
(11,000)
(11,124)
(5,732)
36,275
–
(9,157)
(12,954)
–
8,432
46,128
1,896
50,718
98,742
6
9
22
23
13
14
17
17
6
Enero Group Limited Annual Report 2023 70
71 Enero Group Limited Annual Report 2023
Notes to the consolidated financial statements
for the year ended 30 June 2023
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Notes to the consolidated financial statements
for the year ended 30 June 2023
2
7
E
G
A
P
3
2
0
2
Y
F
T
R
O
P
E
R
L
A
U
N
N
A
O
R
E
N
E
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. Interest bearing liabilities
17. Capital and reserves
18. Earnings per share
Risk
19. Financial risk management/financial instruments
20. Impairment of non-financial assets
Group structure
21. Controlled entities
22. Acquisitions
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
72 Enero Group Limited Annual Report 2023
Page
73
75
78
80
81
83
84
84
85
86
87
89
89
90
91
92
93
94
95
101
103
105
107
108
109
110
110
110
110
111
113
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
R
T
F
Y
2
0
2
3
P
A
G
E
7
3
1. Basis of preparation
In preparing these consolidated 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 2023 comprise the Company and its subsidiaries
(together referred to as the ‘Group’).
The consolidated financial statements for the year ended
30 June 2023 were authorised for issue in accordance with
a resolution of the Directors on 18 August 2023.
(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 2023.
(iii) Use of estimates and judgements
The preparation of consolidated financial statements in
conformity with AASBs requires management to make
judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and
liabilities, income and expenses. Actual results may differ
from these estimates. The estimates and associated
assumptions are based on historical experience and
various other factors that are believed to be reasonable
under the circumstances, the results of which form the
basis of making the judgements about carrying values of
assets and liabilities that are not readily apparent from
other sources.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is
revised and in any future periods if affected.
Further information about critical accounting estimates and
judgements made is included in the following notes:
• 5. Income tax expense and deferred tax
• 13. Contingent consideration payable
• 20. Impairment of non-financial assets
• 22. Acquisitions
(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:
• 19. Financial instruments
(Contingent consideration payable)
• 22. Acquisitions
• 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.
Enero Group Limited Annual Report 2023 73
4
7
E
G
A
P
3
2
0
2
Y
F
T
R
O
P
E
R
L
A
U
N
N
A
O
R
E
N
E
Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED
for the year ended 30 June 2023
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
1. Basis of preparation (continued)
(f) Changes in accounting policies
(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
consolidated 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
consolidated 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 consolidated 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.
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 2023 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 consolidated financial statements
The notes include information which is required to
understand the consolidated 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 consolidated 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 consolidated
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.
Notes to the consolidated financial statements
for the year ended 30 June 2023
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
nature 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’s portfolio is separated into the following two
segments to assess its performance, make decisions on
resource allocation and report both to the CODM and to the
Board:
•
Brand Transformation: human generated creative
ideas to transform the way customers and
stakeholders connect and engage with brands.
This includes public relations and
communications consultancy CPR and Hotwire
(including recently acquired strategic B2B sales
and marketing agencies ROI DNA and GetIT) and
creative agency BMF.
• Creative Technology and Data: high quality
customer experience connected by technology
and enabled by data. This includes digital agency
Orchard and advertising technology platform
OBMedia.
The measure of reporting to the Enero Executive team is
on an EBITDA basis (defined below), which excludes
significant 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:
EBITDA is calculated as profit before interest, taxes,
depreciation, amortisation and any significant items.
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
R
T
F
Y
2
0
2
3
P
A
G
E
7
5
2023
In thousands of AUD
Gross revenue
Directly attributable costs of sales
Gross profit
Other income
Operating expenses
EBITDA
Depreciation of right-of-use assets
Depreciation of plant and equipment and
amortisation of intangibles
Contingent consideration fair value gain
Restructuring costs
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
Brand
Transformation
176,795
Creative
Technology
and Data
563,412
Total
segments Unallocated Eliminations
–
740,207
–
(48,606)
128,189
106
(449,958)
(498,564)
113,454
241,643
–
106
–
–
–
(106,226)
(45,017)
(151,243)
(11,665)
22,069
68,437
90,506
(11,665)
34,648
–
34,648
–
189,371
22,391
71,743
283,505
63,014
63,014
3,739
4,934
786
15,921
205,292
–
22,391
71,909
87,830
60,154
60,154
–
1,013
211
143,652
371,335
123,168
123,168
3,739
5,947
997
–
–
30,860
30,860
60,207
60,207
–
383
90
–
–
–
–
–
–
–
–
(18,939)
(18,939)
(18,939)
(18,939)
–
–
–
Consolidated
740,207
(498,564)
241,643
106
(162,908)
78,841
(4,253)
(5,816)
34,648
(3,135)
(216)
(4,125)
95,944
(14,468)
81,476
205,292
22,391
155,573
383,256
164,436
164,436
3,739
6,330
1,087
74 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 75
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
R
T
F
Y
2
0
2
3
P
A
G
E
7
7
6
7
E
G
A
P
3
2
0
2
Y
F
T
R
O
P
E
R
L
A
U
N
N
A
O
R
E
N
E
Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED
for the year ended 30 June 2023
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Notes to the consolidated financial statements
for the year ended 30 June 2023
2. Operating segments (continued)
2. Operating segments (continued)
2022
In thousands of AUD
Gross revenue
Directly attributable costs of sales
Gross profit
Other income
Operating expenses
EBITDA
Depreciation of right-of-use assets
Depreciation of plant and equipment and
amortisation of intangibles
Contingent consideration fair value loss
Gain on disposal of business
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
Brand
Transformation
142,476
Creative
Technology
and Data
380,046
Total
segments Unallocated Eliminations Consolidated
522,124
522,522
(398)
–
398
(328,698)
(35,756)
106,720
186
(79,141)
27,765
(293,340)
(329,096)
86,706
193,426
73
259
–
–
–
(37,256)
(116,397)
(11,092)
49,523
77,288
(11,092)
–
–
–
–
–
–
–
–
193,426
259
(127,489)
66,196
(3,996)
(2,944)
(1,001)
600
(1,324)
(970)
56,561
(14,340)
42,221
112,236
2,428
180,403
295,067
139,741
139,741
1,222
5,718
1,148
–
–
–
–
76,366
76,366
62,323
62,323
–
268
103
(14,797)
(14,797)
(14,797)
(14,797)
–
–
–
(1,001)
–
–
600
(1,001)
600
96,315
2,428
54,100
152,843
51,895
51,895
857
4,373
825
15,921
112,236
–
64,734
80,655
40,320
40,320
365
1,077
220
2,428
118,834
233,498
92,215
92,215
1,222
5,450
1,045
Major Customer
Revenue from 2 customers (2022: 1 customer) represents more than 10% of Group’s total revenue, with a
breakdown by segment provided below:
Percentage of Group’s total revenue
Brand Transformation
Creative Technology and Data
2023
–
37.2
2022
-
21.7
37.2
21.7
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.
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
2023
Gross profit(iii)
EBITDA
EBITDA margin
Australia and
Asia
64,462
11,856
18.4%
UK and
Europe
31,265
4,145
13.3%
USA
145,916
74,505
51.1%
Support
Office(i)
Unallocated
intangibles(ii)
–
(11,665)
–
–
–
–
Total
241,643
78,841
32.6%
Non-current assets
10,127
6,366
805
–
227,683
244,981
In thousands of AUD
2022
Gross profit(iii)
EBITDA
EBITDA margin
Australia and
Asia
68,776
15,893
23.1%
UK and
Europe
36,622
9,108
24.9%
USA
88,028
52,287
59.4%
Support
Office(i)
Unallocated
intangibles(ii)
–
(11,092)
–
–
–
–
Total
193,426
66,196
34.2%
Non-current assets
6,519
3,028
1,785
–
114,664
125,996
(i) Support office includes the share-based payment charge in the consolidated income statement.
(ii) Goodwill and other intangibles are allocated to the reportable segments. However, as the reportable segments are managed at a global
level they cannot be allocated across geographical segments.
(iii) Gross profit represents Net Revenue, which is gross revenue less directly attributable costs of sales.
76 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 77
8
7
E
G
A
P
3
2
0
2
Y
F
T
R
O
P
E
R
L
A
U
N
N
A
O
R
E
N
E
Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED
for the year ended 30 June 2023
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Notes to the consolidated financial statements
for the year ended 30 June 2023
3. Revenue
3. Revenue (continued)
Nature of our services
The Group provides marketing and communication services to a broad range of customers across three key geographic
locations – Australia, UK & Europe, 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 provides a
comprehensive range of services across its continuing businesses, with its advertising technology platform and digital
advertising and marketing services capabilities delivered through the Creative Data and Technology segment and
technology communications consultancy, brand transformation consultancy, and public affairs and communications
consultancy delivered through the Brand Transformation segment. With the divestment of the TLE and TDE businesses
disclosed in Note 23, the Group no longer provides strategic data consultancy and online research and data delivery
services.
The duration of the Group’s time or project-based customer contracts is typically from one up to five months, with stand-
ready (“retainer”) contracts typically lasting up to one year and which may be cancelled with notice periods in accordance
with respective contracts. In substantially all cases, the Group is the principal in the arrangements with its customers. In
some customer arrangements, we act as an agent and arrange, at the customer’s direction, for third parties to perform
certain services.
In thousands of AUD
Gross revenue from the rendering of services
Directly attributable costs of sales
Gross profit
Disaggregation of revenue
Consulting revenue (excluding revenue from advertising technology
platform) by type of contract
Fixed Fee retainers
Variable retainers (% of total digital advertising spend)
Project based retainers (can be fixed fee or time and cost recovery)
Total
Revenue by timing of performance obligations
Point in time
Recognised over time
Total
2023
740,207
(498,564)
241,643
2022
522,124
(328,698)
193,426
2023
47%
11%
42%
100%
2023
72%
28%
100%
2022
50%
0%
50%
100%
2022
66%
44%
100%
Revenue is disaggregated by service type across reportable segments in Note 2.
Revenue is further disaggregated by primary geographical markets in the following table, which reconciles to the revenue
of the Group’s segments (see Note 2).
In thousands of AUD
Australia and Asia
UK and Europe
USA
Total reportable segments
2023
102,941
43,867
593,399
740,207
2022
94,405
46,235
381,484
522,124
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
2023
72,423
3,506
(20,222)
55,707
2022
64,196
3,293
(17,440)
50,049
Contract assets:
The contract assets relate to the Group’s work in progress for accrued fees 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. There were no significant impairment losses to contract assets recorded in
either the current or prior year.
Contract liabilities:
The contract liabilities relate to the Group’s unearned revenue for consideration received from advance billings to
customers prior to the satisfaction of performance obligations in accordance with the terms of the customer contracts.
Given the short-term nature of customer contracts in the Group, it is expected that both contract assets will be recovered
and contract liabilities will be settled within 12 months from reporting date. Revenue recognised in the current year that
was included in the contract liability balance as at 30 June 2022 amounted to $17,440,000. Revenue recognised in the
current year from performance obligations satisfied (or partially satisfied) as at prior year end was not material.
Accounting policy
Revenue is recognised when a customer obtains control of promised goods or services (the performance obligation) in an
amount that reflects the consideration we expect to receive in exchange for those goods or services (the transaction price).
We measure revenue by estimating the transaction price based on the consideration specified in the customer
arrangement. Revenue is recognised as the performance obligations are satisfied. Our customer contracts are primarily
fees for service on either a project or a rate per hour basis. Revenue is recorded net of sales, use and value added taxes.
Performance obligations
In substantially all our service categories, the performance obligation is to provide advisory and consulting services at an
agreed-upon level of effort to accomplish the specified engagement. Our customer contracts are comprised of diverse
arrangements involving fees based on an agreed fee or rate per hour for the level of effort expended by our employees
and reimbursement for third-party costs that we are required to include in revenue when we control the vendor services
related to these costs and we act as principal.
The transaction price of a contract is allocated to each distinct performance obligation based on its relative stand-alone
selling price and is recognised as revenue when, or as, the customer receives the benefit of the performance obligation.
Customers typically receive and consume the benefit of our services as they are performed. Substantially all our customer
contracts provide that we are compensated for services performed to date and allow for cancellation by either party on
short notice, typically 1 to 3 months, without penalty.
Generally, our short-term contracts, which normally take 1 to 3 months to complete, are performed by a single agency and
consist of a single performance obligation. As a result, we do not consider the underlying services as separate or distinct
performance obligations because our services are highly interrelated, occur in close proximity, and the integration of the
various components of a marketing message is essential to overall service. In certain of our long-term customer contracts,
which have a term of up to one year, the performance obligation is a stand-ready obligation, because we provide a
constant level of similar services over the term of the contract.
Revenue recognition methods
A substantial portion of our revenue is recognised over time, as the services are performed, because the customer
receives and consumes the benefit of our performance throughout the contract period, or we create an asset with no
alternative use and are contractually entitled to payment for our performance to date in the event the customer terminates
the contract for convenience. For these customer contracts, other than when we have a stand-ready obligation to perform
services, revenue is recognised over time using input measures that correspond to the level of staff effort expended to
satisfy the performance obligation on a rate per hour or equivalent basis or output measures that correspond to the stage
of completion of the deliverables. For customer contracts when we have a stand-ready obligation to perform services on an
ongoing basis over the life of the contract, typically for periods up to one year, where the scope of these arrangements is
broad and there are no significant gaps in performing the services, we recognise revenue using a time-based measure
resulting in a straight-line revenue recognition. From time to time, there may be changes in the customer service
requirements during the term of a contract and the changes could be significant. These changes are typically negotiated as
new contracts covering the additional requirements and the associated costs, as well as additional fees for the incremental
work to be performed. As a result, the Group’s customer arrangements do not typically include variable consideration
provisions and therefore, variable consideration amounts do not need to be estimated when determining the transaction
price for its contracts.
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
R
T
F
Y
2
0
2
3
P
A
G
E
7
9
78 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 79
Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED
for the year ended 30 June 2023
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
0
8
E
G
A
P
3
2
0
2
Y
F
T
R
O
P
E
R
L
A
U
N
N
A
O
R
E
N
E
3. Revenue (continued)
Principal vs agent
The Group incurs a number of third party out-of-pocket costs on behalf of customers, including direct costs and incidental,
or out-of-pocket costs. Third-party direct costs incurred in connection with the creation and delivery of advertising or
marketing communication services include, among others: purchased media, studio production services, specialised talent,
including artists and other freelance labour, event marketing supplies, materials and services, promotional items, market
research and third-party data and other related expenditures. Out-of-pocket costs include, among others: transportation,
hotel, meals and telecommunication charges incurred by us in the course of providing our services.
Billings related to out-of-pocket costs are included in revenue since we control the goods or services prior to delivery to the
customer. However, the inclusion of billings related to third-party direct costs in revenue depends on whether we act as a
principal or as an agent in the customer contract.
In substantially all of our customer arrangements, we act as principal when contracting for third-party services on behalf of
our customers because we control the specified goods or services before they are transferred to the customer and we are
responsible for providing the specified goods or services, or we are responsible for directing and integrating third-party
vendors to fulfill our performance obligation at the agreed upon contractual price. In such arrangements, we also take
pricing risk under the terms of the customer contract. When we act as principal, we include billable amounts related to
third-party costs in the transaction price and record revenue over time at the gross amount billed, including out-of-pocket
costs, consistent with the manner that we recognise revenue for the underlying services contract.
When we act as an agent and arrange, at the customer’s direction, for third parties to perform certain services, we do not
control the goods or services prior to the transfer to the customer. As a result, revenue is recorded net of these costs,
equal to the amount retained for our fee or commission.
4. Finance costs
In thousands of AUD
Interest and finance costs
Contingent consideration present value interest
Lease present value interest
Finance costs
2023
1,889
2,311
232
4,432
2022
29
441
520
990
Foreign exchange loss of $199,000 (2022: gain of $376,000) 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 consolidated 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 consolidated 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 consolidated income statement using the effective interest method and includes
the effective interest cost relating to lease liabilities recognised for contracts that contain leases.
Notes to the consolidated financial statements
for the year ended 30 June 2023
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
R
T
F
Y
2
0
2
3
P
A
G
E
8
1
5.
Income tax expense and deferred tax
Income tax expense
Recognised in the consolidated 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 the consolidated income statement
Numerical reconciliation between tax expense and pre-tax accounting profit
Profit for the year
Income tax expense
Profit before income tax
Income tax expense using the Company’s domestic tax rate of 30% (2022: 30%)
Increase/(decrease) in income tax expense due to:
Share-based payment expense
Unwind of present value interest
Contingent consideration fair value (gain)/loss
Incidental acquisition costs
Gain on disposal of controlled entities
Effect of lower tax rate on overseas incomes
Over provision for tax in previous years
Other non-assessable items
Income tax expense on pre-tax net profit
2023
14,821
(194)
14,627
(159)
(159)
14,468
81,476
14,468
95,944
28,783
–
682
(10,399)
65
–
(4,161)
(194)
(308)
14,468
2022
14,370
(66)
14,304
36
36
14,340
42,221
14,340
56,561
16,968
571
132
300
397
(180)
(3,607)
(66)
(175)
14,340
Current taxes
The Group has a net current tax receivable of $3,137,000 (tax receivable $3,298,000 and tax payable $161,000) at
30 June 2023 (2022: net current tax payable $1,576,000).
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 before set-off
Set-off
Net deferred tax assets
2023
3,653
1,643
279
154
42
519
6,290
(4,708)
1,582
2022
3,653
1,613
1,076
695
10
66
7,113
(5,093)
2,020
80 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 81
2
8
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3
2
0
2
Y
F
T
R
O
P
E
R
L
A
U
N
N
A
O
R
E
N
E
Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED
for the year ended 30 June 2023
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Notes to the consolidated financial statements
for the year ended 30 June 2023
5. Income tax expense and deferred tax (continued)
6. Cash and cash equivalents
In thousands of AUD
Deferred tax liabilities
Fair value gain
Identifiable intangibles
Plant and equipment
Work in progress
Others
Gross deferred tax liabilities before set-off
Set-off
Net deferred tax liability
2023
(3,653)
(5,767)
(41)
(705)
–
(10,166)
4,708
(5,458)
2022
(3,653)
(729)
(171)
(469)
(71)
(5,093)
5,093
–
Movement in deferred tax balances
The movement in deferred tax balances during the year was all recognised in the consolidated income statement.
Deferred tax assets not recognised
Deferred tax assets have not been recognised in respect of the following items because it is not probable that future taxable profit
will be available against which the Group can utilise the benefits:
In thousands of AUD
Revenue losses
Capital losses
Gross tax losses carried forward
These tax losses do not have an expiry date.
2023
2,745
235,324
238,069
2022
3,152
235,324
238,476
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 consolidated 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 judgements
The Group operates in multiple overseas jurisdictions and from time to time is subject to tax reviews, audits and
investigations. The Group currently is not subject to any significant reviews, audits or investigations by a tax authority and
there are no significant uncertain tax positions in any of the jurisdictions in which the Group operates.
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.
In thousands of AUD
Cash at bank and on hand
Bank short-term deposits
Cash and cash equivalents in the consolidated statement of financial position
and the consolidated statement of cash flows
2023
51,667
765
52,432
2022
96,618
2,124
98,742
Included within cash and cash equivalents are funds held by ROI DNA in relation to the media advertising spend paid in
advance by customers according to the contractual terms which amounted to $6,500,000. As such, this balance is
restrictive in use.
For 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 $683,000 for indemnity
guarantee facilities (see Note 16 Interest bearing liabilities). The remaining bank short-term deposits are unrestricted.
The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in
Note 19 Financial risk management/financial instruments.
Reconciliation of cash flows from operating activities
(i) Reconciliation of cash
For the purpose of the consolidated 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 Consolidated
statement of cash flows is reconciled to the related items in the consolidated statement of financial position as follows:
In thousands of AUD
Cash assets
(ii) Reconciliation of profit after income tax to net cash provided by
operating activities
Profit after income tax
2023
52,432
2022
98,742
81,476
42,221
Add/(less) non-cash items:
Gain 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 (gain)/loss
Contingent consideration present value interest
Lease present value interest
Accrued interest and fees on bank loan
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 in work in progress
Increase in prepayments
Decrease in other assets
Increase in payables and accruals
(Decrease)/Increase in unearned income
(Decrease)/Increase in employee benefits
Net cash from operating activities
–
16
2,501
2,077
4,253
3,739
(34,648)
2,311
232
37
(3,285)
(172)
(600)
8
1,902
1,722
3,996
1,222
1,001
441
520
–
(579)
18
58,537
51,872
(4,661)
(213)
(948)
233
14,177
(5,122)
(523)
61,480
(17,275)
(535)
(692)
24
13,040
1,030
1,356
48,820
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
R
T
F
Y
2
0
2
3
P
A
G
E
8
3
82 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 83
4
8
E
G
A
P
3
2
0
2
Y
F
T
R
O
P
E
R
L
A
U
N
N
A
O
R
E
N
E
Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED
for the year ended 30 June 2023
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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
2023
2022
19
72,423
(617)
71,806
2,995
74,801
64,196
(225)
63,971
24
63,995
No interest is charged on trade receivables. The Group’s exposure to credit and currency risk and impairment losses
related to trade and other receivables is disclosed in Note 19 Financial risk management/financial instruments.
8. Other assets
In thousands of AUD
Current
Work in progress
Prepayments
Other current assets
Non-current
Deposits
2023
3,506
3,760
478
7,744
169
169
2022
3,293
2,812
7
6,112
162
162
Notes to the consolidated financial statements
for the year ended 30 June 2023
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
R
T
F
Y
2
0
2
3
P
A
G
E
8
5
Office
furniture and
equipment
Plant and
equipment
Leasehold
improvements
Total
9. Plant and equipment
Computer
equipment
5,243
(3,691)
1,552
In thousands of AUD
2023
2,136
Cost
(1,713)
Accumulated depreciation
423
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 combinations
(Note 22)
Depreciation
Effect of movements in exchange rates
Disposals
Carrying amount at the end of the year
(1,038)
66
–
1,552
(163)
17
(2)
423
1,575
690
301
259
266
4
4,528
(2,953)
1,575
2022
2,055
Cost
(1,789)
Accumulated depreciation
266
Net carrying amount
Reconciliations of the carrying amounts of each class of plant and equipment:
Carrying amount at the beginning of the
year
Additions
Transfers
Disposal of controlled businesses (Note
23)
Depreciation
Effect of movements in exchange rates
Disposals
Carrying amount at the end of the year
(736)
8
(8)
1,575
(201)
3
–
266
1,041
33
52
(33)
1,254
(17)
445
–
174
(174)
–
7
–
–
(1)
–
(6)
–
4,672
(4,080)
592
1,352
96
17
(875)
21
(19)
592
228
(221)
7
6,302
(4,950)
1,352
9
–
–
–
(3)
1
–
7
2,088
55
–
–
(782)
(4)
(5)
1,352
12,225
(9,658)
2,567
3,200
1,087
280
(2,077)
104
(27)
2,567
13,113
(9,913)
3,200
3,796
1,148
–
(17)
(1,722)
8
(13)
3,200
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 consolidated 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 consolidated income statement.
(iii) Depreciation
Depreciation is charged to the consolidated 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.
84 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 85
Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED
for the year ended 30 June 2023
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
6
8
E
G
A
P
3
2
0
2
Y
F
T
R
O
P
E
R
L
A
U
N
N
A
O
R
E
N
E
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
Acquisition through business combinations (Note 22)
Re-measurement of lease liabilities
Depreciation
Effect of movements in exchange rates
Carrying amount at the end of the year
2023
2022
24,196
(11,216)
12,980
5,950
5,129
239
5,536
(4,253)
379
12,980
17,300
(11,350)
5,950
7,979
–
–
1,945
(3,996)
22
5,950
During the current year, the Group recognised $61,000 (2022: $91,000) occupancy costs in the consolidated income
statement in relation short-term leases that have a lease term of 12 months or less.
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 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 a 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 consolidated 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.
Notes to the consolidated financial statements
for the year ended 30 June 2023
11. Intangible assets
In thousands of AUD
2023
Cost
Accumulated amortisation
Net carrying amount
Reconciliations of the carrying amounts of intangibles:
Carrying amount at the beginning of the year
Acquired through business combinations
Amortisation
Effect of movements in exchange rates
Carrying amount at the end of the year
2022
Cost
Accumulated amortisation
Net carrying amount
Reconciliations of the carrying amounts of intangibles:
Carrying amount at the beginning of the year
Disposal of controlled entities
Amortisation
Effect of movements in exchange rates
Carrying amount at the end of the year
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
R
T
F
Y
2
0
2
3
P
A
G
E
8
7
Goodwill
Contracts and
customer
relationships
Website
Total
206,246
(954)
205,292
112,236
88,297
–
4,759
205,292
112,236
–
112,236
114,506
(856)
–
(1,414)
112,236
30,011
(9,094)
20,917
2,428
22,183
(3,694)
–
20,917
7,759
(5,331)
2,428
3,650
–
(1,222)
–
2,428
1,519
(45)
1,474
–
1,519
(45)
–
1,474
–
–
–
–
–
–
–
–
237,776
(10,093)
227,683
114,664
111,999
(3,739)
4,759
227,683
119,995
(5,331)
114,664
118,156
(856)
(1,222)
(1,414)
114,664
Amortisation charge
The amortisation charge of $3,739,000 (2022: $1,222,000) is recognised in the depreciation and amortisation expense in
the consolidated income statement.
Goodwill CGU group allocation
In thousands of AUD
Cash Generating Unit (CGU):
Brand Transformation
Creative Technology and Data
ROI DNA
GetIT
Net carrying amount
.
2023
2022
101,074
15,921
80,603
7,694
96,315
15,921
–
–
205,292
112,236
86 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 87
Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED
for the year ended 30 June 2023
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
8
8
E
G
A
P
3
2
0
2
Y
F
T
R
O
P
E
R
L
A
U
N
N
A
O
R
E
N
E
11. Intangible assets (continued)
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) 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.
(iii) 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 to six-year period.
Amortisation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.
(iv) Impairment
Refer to Note 20 Impairment of non-financial assets for further details on impairment.
Notes to the consolidated financial statements
for the year ended 30 June 2023
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
R
T
F
Y
2
0
2
3
P
A
G
E
8
9
12. Trade and other payables
In thousands of AUD
Current
Trade payables
Other payables and accrued expenses
Unearned revenue
2023
53,633
24,461
20,222
98,316
2022
41,026
18,030
17,440
76,496
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 19 Financial
risk management/financial instruments.
13. Contingent consideration payable
In thousands of AUD
Current
Contingent consideration payable
Non-current
Contingent consideration payable
Total
Reconciliations of the carrying amounts of
contingent consideration payable:
Carrying amount at the beginning of the year
Recognised in business combinations (Note 22)
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
2023
4,316
26,424
30,740
10,113
53,467
(34,648)
2,311
2,168
(2,671)
30,740
2022
2,711
7,402
10,113
20,126
–
1,001
441
(455)
(11,000)
10,113
During the current year, the Group recognised a contingent consideration fair value gain of $34,648,000 (2022: loss of
$1,001,000) relating to a change in the best estimate of future contingent consideration payable to the vendors of
McDonald Butler Associates, ROI DNA and GetIT.
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
consolidated income statement as the discount unwinds. Any change in estimate of contingent consideration payable is
recognised in the consolidated income statement as a fair value gain or loss during the period when the estimate is
revised.
Key estimates
There is uncertainty around the actual payments that will be made as the payments are subject to the performance of
McDonald Butler Associates (MBA), ROI DNA and GetIT subsequent to the reporting date. Factors which could vary the
amount of contingent consideration payable due include a net revenue, EBITDA and EBIT 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 19 Financial risk management/financial instruments.
Level 3 fair values
Refer to Note 19.
88 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 89
0
9
E
G
A
P
3
2
0
2
Y
F
T
R
O
P
E
R
L
A
U
N
N
A
O
R
E
N
E
Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED
for the year ended 30 June 2023
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
14. Lease liabilities
This note provides information about the contractual terms of the Group’s leases. For more information about the Group’s
exposure to interest rate risk, liquidity risk and foreign currency risk, see Note 19 Financial risk management/financial
instruments.
In thousands of AUD
Current
Lease liabilities
Non-current
Lease liabilities
Total
Reconciliations of the carrying amounts of lease
liabilities:
Carrying amount at the beginning of the year
Additions
Acquired controlled entities
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
Accounting policy
Refer to Note 10.
2023
4,264
9,878
14,142
8,597
5,139
239
5,535
(6,053)
232
453
14,142
2022
5,841
2,756
8,597
11,851
–
–
1,945
(5,732)
520
13
8,597
Notes to the consolidated financial statements
for the year ended 30 June 2023
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
R
T
F
Y
2
0
2
3
P
A
G
E
9
1
15. Employee benefits
In thousands of AUD
Aggregate liability for employee benefits, including on-costs
Current
Annual leave
Long service leave
Non-current
Long service leave
2023
2022
4,677
1,180
5,857
1,027
4,442
1,237
5,679
783
The Group has recognised $2,532,000 (2022: $2,315,000) as an expense in the consolidated 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 consolidated 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 consolidated 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.
90 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 91
Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED
for the year ended 30 June 2023
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
16. Interest bearing liabilities
In thousands of AUD
Non-current
Unsecured bank loan
Financing arrangements
The Group has access to the following lines of credit:
Notes to the consolidated financial statements
for the year ended 30 June 2023
2023
8,735
2022
36,275
17. Capital and reserves
In thousands of AUD
Share capital
Ordinary shares, fully paid
2023
2022
117,815
104,861
2
9
E
G
A
P
3
2
0
2
Y
F
T
R
O
P
E
R
L
A
U
N
N
A
O
R
E
N
E
In thousands of AUD
Bank loan (cash advance)
Indemnity guarantee
Credit card
2023
Available
50,000
3,351
1,345
54,696
2023
Utilised
8,735
2,031
306
11,072
2022
Available
50,000
3,618
1,575
55,193
2022
Utilised
36,275
2,103
321
38,699
The Group was in compliance with all covenants as at 30 June 2023.
All finance facilities are negotiated by the Company on behalf of the Group. The carrying amount of amounts drawn on
facilities as at the reporting date equates to face value.
Cash advance facility
The cash advance facility is an unsecured revolving multi-currency general-purpose facility with Westpac Banking
Corporation (Westpac). The bank loan matures in June 2025 at a commercial interest rate. In the case of funds drawn in
AUD, the interest rate is Bank Bill Swap rate (BBSY) plus margin. In the case of funds drawn in USD, the interest rate is
Secured Overnight Funding Rate (SOFR) plus a credit adjustment spread.
Indemnity guarantee facility
The indemnity guarantee facility is in place to support financial guarantees for property rental and other obligations. The
indemnity guarantees issued by banks other than Westpac are secured by cash deposits held by the issuing bank. The
Group has pledged short-term deposits amounting to $683,000 for indemnity guarantee facilities at 30 June 2023.
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.
The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in
Note 19 Financial risk management/financial instruments.
Accounting policy
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured
at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is
recognised in profit or loss over the period of the borrowings using the effective interest method. Borrowings are classified
as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months
after the balance sheet date.
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N
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2
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2
3
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3
The Company does not have authorised capital or par value in respect of its shares.
Movement in ordinary shares
Balance at beginning of year
Shares issued to the employees of the Group on
exercise of Share Appreciation Rights(i)
Shares issued to vendors of ROI DNA and GetIT(ii)
Share buy-back
Balance at end of year
2023
Shares
88,045,107
820,120
3,855,147
(386,059)
92,334,315
2023
In thousands
of AUD
104,861
2022
Shares
86,655,518
2022
In thousands
of AUD
100,456
2,690
10,857
1,389,589
-
(593)
117,815
-
88,045,107
4,405
-
-
104,861
(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 $3.28 (2022: $3.17).
(ii) Share capital recognised on shares issued to vendors of ROI DNA and GetIT.
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.
Share buy-back
When the Company re-acquires its own ordinary shares as the result of a share buy-back, those shares are deducted from
equity and the associated shares are cancelled. No gain or loss is recognised in the consolidated income statement and
the consideration paid including any directly attributable incremental costs is recognised directly in equity.
On 4 April 2023, the Company announced an on-market buy-back of shares with a maximum number of ordinary Enero
shares to be acquired of 8,804,510 which commenced on 1 May 2023. From 1 May 2023 to 30 June 2023 the Company
purchased and cancelled 386,059 ordinary shares at a total cost of $592,931 including brokerage costs at an average of
$1.54 excluding brokering costs.
Profit appropriation reserve
The profit appropriation reserve comprises profits appropriated by the parent entity.
Foreign currency 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 2023
Fully franked final dividend – 2022
Fully franked interim dividend – 2023
Subsequent to the balance sheet date, at the date of this report
Fully franked final dividend – 2023
During the year ended 30 June 2022
Fully franked final dividend – 2021
Fully franked interim dividend – 2022
Cents per
share
6.5
6.5
4.5
4.4
6.0
Total amount
in thousands of
AUD Date of payment
6,027
6,027
4 October 2022
15 March 2023
4,149
3 October 2023
3,874
5,283
6 October 2021
16 March 2022
Dividend franking account
In thousands of AUD
Franking credits available for future years at 30% to shareholders of Enero Group Limited
2023
5,273
2022
9,934
92 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 93
Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED
for the year ended 30 June 2023
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Notes to the consolidated financial statements
for the year ended 30 June 2023
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17. Capital and reserves (continued)
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.
The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends and
any restrictions to paying dividends.
Accounting policy
(i) Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share
options are recognised as a deduction from equity, net of tax effects.
(ii) Dividends
Dividends are recognised as a liability in the period in which they are declared.
(iii) Transaction costs
Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income tax
benefit.
18. Earnings per share
Profit attributable to equity holders of the parent
In thousands of AUD
Profit for the year
Non-controlling interests
Profit/(loss) 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
2023
81,476
(25,002)
56,474
2023
92,485
619
93,104
2023
61.1
60.7
2022
42,221
(16,834)
25,387
2022
87,756
2,257
90,013
2022
28.9
28.2
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.
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2
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2
3
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9
5
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
2022
2023
63,971
71,806
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
the consolidated income
statement
Provision raised during year
Provision used during year
Balance at 30 June
2023
225
2022
232
255
137
–
617
19
–
(26)
225
Average credit loss for year(i)
Credit loss provision at balance
date(ii)
–
–
0.9%
0.4%
(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 2023
and the Group continues to provide for 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
2023
63,872
7,042
892
617
72,423
(617)
71,806
2022
61,318
2,430
223
225
64,196
(225)
63,971
(i) Impairment includes trade receivables specifically impaired of $427,000 (2022:
$35,000) plus expected credit losses of $190,000 (2022: $190,000).
19. Financial risk management/financial instruments
The Group’s exposure to financial risks, objectives, policies
and processes for managing the risks including methods
used to measure the risks, and the management of capital,
are presented below.
The Group’s activities expose it to the following financial
risks:
•
•
•
liquidity risk; and
market risk.
credit risk;
The Group’s principal financial instruments comprise cash,
receivables, payables, interest-bearing liabilities,
contingent consideration payable and other financial
liabilities.
The Board has overall responsibility for the oversight of the
risk management framework. Risk management policies
are established to identify and analyse the risks faced by
the Group, to set appropriate risk limits and controls, and to
monitor risks and adherence to limits. Risk management
policies and systems are reviewed regularly and modified
as appropriate to reflect changes in market conditions and
the Group’s activities.
The Group considers that there are no changes to the
objectives, policies and processes to managing risk and
the exposure to risks from the prior reporting period.
Credit risk
Exposure to credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to
meet its contractual obligation, and arises principally from
the Group’s receivables from customers.
Each subsidiary performs credit analysis of a new
customer and standard payment terms are offered only to
creditworthy customers.
During the year ended 30 June 2023, the Group entered
into transactions with approximately 470 unique customers.
The 10 largest customers accounted for 56% of Net
Revenue for the year ended 30 June 2023, 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 consolidated statement of financial position.
The carrying amount of financial assets and contract
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
2022
2023
6
52,432
98,742
7
8
8
74,801
3,506
169
130,908
63,995
3,293
162
166,192
94 Enero Group Limited Annual Report 2023
95 Enero Group Limited Annual Report 2022
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2
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9
7
6
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N
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Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED
for the year ended 30 June 2023
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Notes to the consolidated financial statements
for the year ended 30 June 2023
19. Financial risk management/financial instruments (continued)
19. Financial risk management/financial instruments (continued)
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’s borrowings which have a variable interest rate attached give
rise to cash flow interest rate risk, as do the Group’s lease liabilities. Whilst there is no formal policy in place mandating
hedging levels, the Group may hedge the interest rate risk by taking out floating to fixed rate swaps on drawn debt. Such
interest rate swaps have the economic effect of converting borrowings from variable rates to fixed rates.
The following considerations are made to material interest rate transactions to ensure that the Group:
•
is afforded some protection from significant increases in interest rates, thereby adding some degree of certainty
to the financial budgeting process; and
• maintains sufficient interest rate flexibility to participate in normal yield curve environments without unduly paying
up for term interest rate hedges; repay debt without significant swap (fixed rate) break costs; and undertake
interest rate maturity extension trades as appropriate.
As at 30 June 2023, the Group has not entered into any interest rate swaps to convert the borrowings from variable rate
to fixed rates. Accordingly, the Group’s interest-bearing liabilities of $8,735,000 at 30 June 2023 (30 June 2022:
$36,275,000) are variable rate financial instruments.
Cash flow sensitivity analysis for variable-rate instruments
A reasonably possible change of 100 basis points in interest rates at the reporting dates would have increased
(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in
particular foreign currency exchange rate, remain constant.
2023
In thousands of AUD
Interest-bearing liabilities
Profit or Loss
100 bp
increase
313
100 bp
decrease
(313)
Equity
100 bp
increase
100 bp
decrease
313
(313)
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 businesses generated approximately 74% of their Net Revenue and 87% of their EBITDA from international
markets. 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 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 as the relevant transaction. Additionally, as at 30 June 2023, the Group held USD denominated banks loans of
8,735,000 (USD 5,800,000 (2022: 36,275,000 (USD 25,000,000)) which were drawn in order to fund the acquisition of ROI
DNA Inc., a USA based agency. In future financial reporting periods, the Group intends to hedge its exposure to changes
in the value of its net investment in its US foreign operations through these borrowings as they are denominated in the
same currency as the foreign operation’s functional currency.
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 (refer to
Note 16); and re-estimating the value of contingent consideration liabilities semi-annually.
The following are the contractual maturities of financial liabilities, including estimated interest payments.
2023
In thousands of AUD
Non-derivative financial liabilities
Lease liabilities
Trade and other payables
(excluding unearned revenue)
Contingent consideration payable
Interest bearing liabilities
2022
In thousands of AUD
Non-derivative financial liabilities
Lease liabilities
Trade and other payables
(excluding unearned revenue)
Contingent consideration payable
Interest bearing liabilities1
Carrying
amount
Contractual
cash flows
Less than
1 year
1 to 5 years Over 5 years
14,142
15,385
4,827
10,528
78,094
30,740
8,735
131,711
78,094
30,349
9,149
132,977
78,094
4,516
547
87,984
–
25,833
8,602
44,963
30
–
–
30
Carrying
amount
Contractual
cash flows
Less than
1 year
1 to 5 years Over 5 years
8,597
9,045
5,899
2,985
59,056
10,113
36,275
114,041
59,056
10,575
40,060
118,736
59,056
2,732
1,262
68,949
–
7,843
38,798
49,626
161
–
–
161
1. Interest in respect of interest-bearing liabilities was not significant as at 30 June 2022 given the close proximity of
entering into the financing arrangement relative to balance date.
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.
Enero Group Limited Annual Report 2023 96
Enero Group Limited Annual Report 2023 97
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Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED
for the year ended 30 June 2023
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Notes to the consolidated financial statements
for the year ended 30 June 2023
19. Financial risk management/financial instruments (continued)
19. Financial risk management/financial instruments (continued)
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.
Fair values
Fair values versus carrying amounts
The fair values of financial assets and liabilities, together with the carrying amounts shown in the consolidated statement
of financial position, are as follows:
2023
2022
Consolidated
In thousands of AUD
Cash at bank and on hand
Bank short-term deposits
Trade receivables
Trade and other payables (excluding
unearned revenue)
Contingent consideration payable
Lease liabilities
Interest bearing liabilities
Fair value measurement:
Level 3 fair values
Note Carrying amount
51,667
765
71,806
6
6
7
Fair value Carrying amount Fair value
96,618
2,124
63,971
96,618
2,124
63,971
51,667
765
71,806
12
13
14
16
(78,094)
(78,094)
(59,056)
(59,056)
(30,740)
(14,142)
(8,735)
(30,740)
(14,142)
(8,735)
(10,113)
(8,597)
(36,275)
(10,113)
(8,597)
(36,275)
The following tables show the valuation techniques used in measuring Level 3 fair values for financial instruments
measured at fair value in the consolidated statement of financial position, as well as the significant unobservable inputs
used. There is uncertainty around the actual payments that will be made as the payments are subject to the performance
of McDonald Butler Associates (MBA), ROI DNA and GetIT subsequent to the reporting date. Factors which could vary the
amount of contingent consideration payable due include a net revenue, EBITDA and EBIT 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.
Type
Contingent
consideration
payable
Valuation technique
Discounted cash flows: The valuation
model considers the present value of
expected capped payments (payable over
3 years), discounted using a risk-adjusted
discount rate. The expected payment is
determined by considering forecast
performance indicators, the amount to be
paid under each scenario and the
probability of each scenario.
Significant
unobservable inputs
– Forecast
performance
indicator.
– Risk-adjusted
discount rate: 4.28%
- 5.52%
Inter-relationship between
significant unobservable
inputs and fair value
measurement
The estimated fair value
would increase (decrease)
if:
–
the forecast
performance indicators
are higher (lower); or
–
the risk-adjusted
discount rates were
lower (higher).
Reconciliation of Level 3 fair values
Refer to Note 13 Contingent consideration payable for a reconciliation of the opening and closing carrying amounts of
contingent consideration payable.
Sensitivity analysis
Reasonably possible changes after 30 June 2023 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 forecast performance indicator
Movement of 7.5% in forecast performance indicator
Movement of 0.5% in risk-adjusted discount rate
Increase
1,957
2,935
(513)
Decrease
(1,863)
(2,730)
522
Other items
The carrying amounts of cash and cash equivalents, trade and other receivables, trade and other payables, interest
bearing liabilities 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 consolidated 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) 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 consolidated 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.
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98 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 99
Notes to the consolidated financial statements
for the year ended 30 June 2023
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
0
0
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19. Financial risk management/financial instruments (continued)
Non-derivative financial liabilities (continued)
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 consolidated income
statement as the discount unwinds. Any change in estimate of contingent consideration payable is recognised
in the consolidated income statement as a fair value gain or loss during the period when the estimate is
revised.
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 consolidated 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 consolidated 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.
Notes to the consolidated financial statements
for the year ended 30 June 2023
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
R
T
F
Y
2
0
2
3
P
A
G
E
1
0
1
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 consolidated income statement whenever the carrying amount of those assets exceeds the
recoverable amount.
Impairment tests for cash-generating units (CGUs) goodwill
For 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 continues to be based upon the interdependency of the cash inflows generated from
the service offering and synergies obtained by the business unit. ROI DNA and GetIT were acquired on 1 July 2022.
Goodwill arising from the acquisition of these new businesses is required to be tested independently of other goodwill
amounts as this represents the lowest level at which the performance of the respective businesses is monitored due to the
terms of the earn-out agreements.
The recoverable amount of the CGUs 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 CGUs 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 projected cash flows, the discount rates
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 next financial year’s Board approved budgets. This reflects the best
estimate of the CGU’s future cash flows at the reporting date. Projected cash flows can differ from future actual cash flows
and results of operations.
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
Projected cash flows for the first forecast year reflect the growth each CGU is expected to achieve over the current year’s
actual Net Revenue and EBITDA results. Projected cash flows for year two onwards have then been built off Net Revenue
and EBITDA growth for each CGU.
Long-term growth rate into perpetuity
Long-term growth rate is used into perpetuity, based on the expected long-range growth rate for the industry.
Impairment testing key assumptions:
CGU Groups
2023
Brand Transformation
Creative Technology and
Data
ROI DNA
GetIT
Post-tax discount rate %
10.5 – 11.8
Growth rate (CAGR) %
Long-term perpetuity
growth rate %
12.0
2.5
11.0
14.9
2.5
10.5
34.4
2.5
10.2
46.2
2.5
CGU Groups
2022
Post-tax discount rate %
Growth rate (CAGR) %
Long-term perpetuity growth rate %
Brand Transformation
Creative Technology and Data
9.1 – 10.5
4.9
2.5
10.5
8.0
2.5
100 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 101
Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED
for the year ended 30 June 2023
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
2
0
1
E
G
A
P
3
2
0
2
Y
F
T
R
O
P
E
R
L
A
U
N
N
A
O
R
E
N
E
20. Impairment of non-financial assets (continued)
Sensitivity range for impairment testing assumptions
Whilst it is management’s view that the assumptions used for growth rates over the forecast period and the long-term and
discount rates are reasonable, a sensitivity analysis was performed for each CGU taking into consideration the possible
impacts of adverse economic conditions over the forecast period. Specifically, the impact that severe and sustained
inflation in key geographies, supply chain issues affecting the distribution of customers’ products, or a disruption in the
credit markets may have on the key assumptions used in determining each CGU’s recoverable amount, being:
•
•
•
lower projected cash inflows as result of reductions, deferrals or cancellations by customers in terms of their
spending on advertising, marketing and corporate communications projects;
increased operating costs, including those to attract and retain the talent needed to grow revenues at forecast
levels; or
higher discount rates.
The results of this sensitivity analysis were such that any reasonably possible change in these key assumptions upon
which each CGU’s recoverable amounts were based would not cause any of the CGU’s carrying amount to exceed its
recoverable amount with the exception of the GetIT CGU. The estimated recoverable amount of the GetIT CGU exceeded
its carrying amount by approximately $63,000. Management has identified that a reasonably possible change in two key
assumptions could cause the carrying amount to exceed the recoverable amount as shown below:
GetIT CGU
Discount rate
Budgeted EBITDA growth rate
Change required for
carrying amount to equal
recoverable amount
0.5%
(0.4%)
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’).
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.
Notes to the consolidated financial statements
for the year ended 30 June 2023
21. Controlled entities
Particulars in relation to controlled entities:
Name
Parent entity
Enero Group Limited
Controlled entities
Enero Group UK Holdings Pty Limited
– Enero Group UK Limited
Enero Group (US) Pty Limited
– Enero Group (US) Inc.
BMF Holdco Pty Limited
BMF Advertising Pty Limited (Trustee of The BMF Unit Trust)
The BMF Unit Trust
Hotwire Integrated Communications Pty Limited (Dormant)
Naked Communications Australia Pty Limited (Dormant)
Hotwire Australia Pty Limited
Orchard Marketing Pty Ltd
Alfie Agency Pty Ltd
CPR Communications and Public Relations Pty Limited
Enero Group Finance Pty Limited
Domain Active Holdco Pty Limited
– Domain Active Pty Limited
The Leading Edge Market Research Consultants Pty Limited (Dormant)
– Hotwire Global Communications Pte Ltd
- GetIT Pte Ltd (Acquired July 2022)
- GetIT Japan G.K. (Acquired July 2022)
- GetIT Comms Sdn Bhd (Acquired July 2022)
- GetIT Communications Private Limited (Acquired July 2022)
The Digital Edge Online Consultants Pty Limited (Dormant)
Brigade Pty Limited (Dormant)
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 Limited
OBMedia LLC
– OBMedia Network 1 L.T.D
Domain Active LLC
IdealAds LLC
SiteMath LLC
– Clicksciences.com LLC
Orchard Creative Technology Inc.
Hotwire Public Relations Group LLC
ROI DNA, Inc (Acquired July 2022)
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
R
T
F
Y
2
0
2
3
P
A
G
E
1
0
3
2023
%
2022
%
Country of
incorporation
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
51
51
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
51
-
51
51
51
51
100
100
-
Australia
UK
Australia
USA
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
Singapore
Japan
Malaysia
India
Australia
Australia
UK
Germany
France
Spain
Italy
UK
UK
USA
Israel
USA
USA
USA
USA
USA
USA
USA
102 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 103
4
0
1
E
G
A
P
3
2
0
2
Y
F
T
R
O
P
E
R
L
A
U
N
N
A
O
R
E
N
E
Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED
for the year ended 30 June 2023
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Notes to the consolidated financial statements
for the year ended 30 June 2023
21. Controlled entities (continued)
22. Acquisitions
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 statements.
2023
On 1 July 2022, the Group acquired 100% of the issued capital of ROI DNA Inc. (“ROI DNA”), a USA based strategic B2B
sales and marketing agency. The purchase consideration was an upfront payment of $38,306,000 (US$26,400,000) in
cash and $9,014,000 (US$6,600,000) of Enero Group Limited shares. The Group agreed to pay the selling shareholders
over three years additional consideration up to $82,707,000 based on the acquiree’s EBITDA each year. The Group has
included $47,887,000 as contingent consideration related to the estimated additional earn-out payments, which represents
its fair value at the date of acquisition. At 30 June 2023, the contingent consideration had decreased to $21,556,000 due to
lower earnings expectations.
On 1 July 2022, the Group acquired 100% of the issued capital of GetIT Pte Ltd (“GetIT”), a Singapore based specialist
B2B technology marketing agency with presence in India, Malaysia and Japan. The purchase consideration was an upfront
payment of $2,816,000 (S$2,700,000) in cash and $1,843,000 (S$1,800,000) of Enero Group Limited shares. The Group
agreed to pay the selling shareholders over three years additional consideration up to $10,952,000 based on the
acquiree’s EBIT each year. The Group included $5,580,000 as contingent consideration related to the estimated additional
earn-out payments, which represents its fair value at the date of acquisition. At 30 June 2023, the contingent consideration
had decreased to $2,969,000 due to lower earnings expectations.
The acquisition of both ROI DNA and GetIT and introduction of revenue services to complement the reputation and
relationship services will enable the Group to strategically reposition the Hotwire agency and provide a unique marketplace
offering. The acquisitions will also expand its footprint into Asia Pacific and provide further opportunities to support global
technology clients.
For the 12 months ended 30 June 2023, ROI DNA contributed net revenue of $27,700,000 and EBITDA of $2,900,000 to
the Group’s results. GetIT Pte Ltd contributed net revenue of $2,200,000 and EBITDA of $200,000 to the Group’s results.
In the prior year’s subsequent event disclosure, these acquisitions were still subject to further review by management as
the Group had 12 months from the date of acquisition to finalise its purchase price accounting. The accounting for these
business combinations have now been finalised in the current year, including the allocation of the purchase price to
goodwill and any other qualifying intangible assets.
Fair value of the net identifiable assets and liabilities acquired at the date of acquisition for ROI DNA were:
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
R
T
F
Y
2
0
2
3
P
A
G
E
1
0
5
In thousands of AUD
Cash and cash equivalents
Trade and other receivables
Current tax asset
Other assets
Property, plant and equipment
Other intangible assets
Trade and other payables
Unearned revenue
Deferred tax liability
Employee benefits
Net assets acquired
Value of goodwill
In thousands of AUD
Initial consideration
Estimate of contingent consideration payable
Total consideration
Less: Working capital adjustment
Less: fair value of net assets acquired
Effect of movement in exchange rate
Value of goodwill
Fair value recognition
on acquisition
12,108
5,396
1,415
423
196
19,223
(2,274)
(7,510)
(5,618)
(810)
22,549
47,320
47,887
95,207
(17)
(22,549)
7,962
80,603
104 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 105
6
0
1
E
G
A
P
3
2
0
2
Y
F
T
R
O
P
E
R
L
A
U
N
N
A
O
R
E
N
E
Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED
for the year ended 30 June 2023
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
22. Acquisitions (continued)
Fair value of the net identifiable assets and liabilities acquired at the date of acquisition for GetIT were:
In thousands of AUD
Cash and cash equivalents
Trade and other receivables
Other assets
Property, plant and equipment
Other intangible assets
Trade and other payables
Unearned revenue
Deferred tax liability
Bank loans
Net assets acquired
Value of goodwill
In thousands of AUD
Initial consideration
Estimate of contingent consideration payable
Total consideration
Less: Working capital adjustment
Less: fair value of net assets acquired
Effect of movement in exchange rate
Value of goodwill
Fair value recognition
on acquisition
866
934
86
83
2,960
(833)
(341)
(468)
(315)
2,972
4,659
5,580
10,239
(352)
(2,972)
779
7,694
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
R
T
F
Y
2
0
2
3
P
A
G
E
1
0
7
Notes to the consolidated financial statements
for the year ended 30 June 2023
23. Disposals
2023
There were no disposals in the year ended 30 June 2023.
2022
On 6 May 2022, the Group entered into a sale agreement to sell the business assets of its strategic data consultancy
businesses, The Leading Edge (TLE) and The Digital Edge (TDE), for consideration of $1,350,000. The Group recognised
an accounting gain on sale of $600,000 in the consolidated income statement for the year ended 30 June 2022.
Assets and liabilities and cash flow of disposed entities
The major classes of assets and liabilities of the disposed businesses are as follows:
In thousands of AUD
Assets
Trade and other receivables
Other assets
Plant and equipment
Total assets disposed
Liabilities
Trade and other payables
Employee benefits
Total liabilities disposed
Net liabilities disposed
Gain on sale
In thousands of AUD
Consideration received, net of working capital adjustment
Less: relative value of goodwill
Add: net liabilities disposed
Less: incidental cost
Gain on sale in the consolidated income statement
Net cash received
In thousands of AUD
Total consideration
Less: working capital adjustment
Less: incidental cost
Reflected in the consolidated statement of cash flows
Carrying amounts
220
18
17
255
(458)
(235)
(693)
(438)
1,144
(856)
438
(126)
600
1,350
(206)
(126)
1,018
106 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 107
8
0
1
E
G
A
P
3
2
0
2
Y
F
T
R
O
P
E
R
L
A
U
N
N
A
O
R
E
N
E
Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED
for the year ended 30 June 2023
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
24. Parent entity disclosures
As at, and throughout, the financial year ended 30 June 2023, the parent company of the Group was Enero Group Limited.
In thousands of AUD
Result of the parent entity
Loss for the year
Other comprehensive income
Total comprehensive loss 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
2023
(5,572)
–
(5,572)
17,164
132,849
28,183
37,229
95,620
117,815
7,900
15,636
(45,731)
95,620
The Company
2022
(15,624)
–
(15,624)
15,553
129,144
23,539
28,663
100,481
104,861
8,089
27,690
(40,159)
100,481
For dividends declared and paid by the Company to members since the end of the previous financial year, refer to Note 17 Capital and
Reserves.
Parent entity guarantees in respect of debts of its subsidiaries
The parent entity has entered into a Deed of Cross Guarantee with the effect that the Company guarantees debts in
respect of its subsidiaries.
Further details of the Deed of Cross Guarantee, and the subsidiaries subject to the deed, are disclosed in
Note 25 Deed of Cross Guarantee.
Contingent liabilities
Indemnities
Indemnities have been provided to Directors and certain Executive Officers of the Company in respect of 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 2023.
Notes to the consolidated financial statements
for the year ended 30 June 2023
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
R
T
F
Y
2
0
2
3
P
A
G
E
1
0
9
Statement of financial position
In thousands of AUD
Assets
Cash and cash equivalents
Trade and other receivables
Income tax receivable
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
Lease liabilities
Employee benefits
Total current liabilities
Lease liabilities
Deferred tax 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
2023
2022
9,162
12,209
2,950
1,295
25,616
45,330
35,013
5,378
921
7,296
16,333
110,271
135,887
17,066
2,640
2,447
22,153
5,557
3.966
550
10,073
32,226
103,661
117,815
7,900
15,637
(37,691)
103,661
14,930
7,354
–
1,131
23,415
53,752
30,493
1,945
1,626
2,800
15,531
106,147
129,562
17,230
3,375
2,484
23,089
1,347
–
389
1,736
24,825
104,737
104,861
8,089
27,690
(35,903)
104,737
25. Deed of Cross Guarantee
Pursuant to ASIC Corporations (Wholly owned
Companies) Instrument 2016/785, the wholly owned
subsidiaries listed below are relieved from the
Corporations Act 2001 requirements for the preparation,
audit and lodgment of financial statements and a
Directors’ Report.
It is a condition of the Instrument 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 2023, is set out as
follows:
Income statement
In thousands of AUD
Gross revenue
Directly attributable costs of
sales
Gross profit
Other income
Employee expenses
Occupancy costs
Travel expenses
Communication expenses
Compliance expenses
Depreciation and amortisation
expenses
Administration expenses
Gain on disposal of business
Incidental acquisition costs
Restructuring costs
Finance income
Finance costs
Management fees received
from subsidiaries
Loan receivable impairment
Dividends received from
subsidiaries
Loss before income tax
Income tax benefit/(expense)
Loss for the year
Attributable to:
Equity holders of the Company
2023
64,213
(32,721)
31,492
2
(30,743)
(244)
(572)
(398)
(1,419)
(2,084)
(1,983)
–
(50)
(374)
275
(389)
3,879
–
–
(2,608)
820
(1,788)
2022
55,995
(22,283)
33,712
–
(31,733)
(205)
(505)
(388)
(799)
(2,055)
(2,608)
535
(89)
–
18
(466)
4,402
(4,144)
2,088
(2,237)
(482)
(2,719)
(1,788)
(2,719)
108 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 109
Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED
for the year ended 30 June 2023
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Notes to the consolidated financial statements
for the year ended 30 June 2023
0
1
1
E
G
A
P
3
2
0
2
Y
F
T
R
O
P
E
R
L
A
U
N
N
A
O
R
E
N
E
26. Commitments
Leases
Leases as lessee
Commitments for minimum lease payments
(undiscounted) in relation to non-cancellable low value
leases are payable as follows:
In thousands of AUD
Less than one year
Between one and five years
Over five years
2023
68
9
–
2022
96
11
–
77
107
The Group leases many assets, including properties and
office equipment, under non-cancellable low value
leases generally expiring in two to 10 years. Amounts
disclosed in the 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 of 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 2023.
28. Subsequent events
Transactions or events subsequent to the balance date,
were:
•
the Directors have declared a final dividend,
with respect to ordinary shares, of 4.5 cents
per share, fully franked. The final dividend will
have a record date of 19 September 2023 and
a payment date of 3 October 2023.
Except for these events 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.
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
Chief People and Culture Officer
Other transactions with the Company or its controlled
entities
A number of the Key Management Personnel, or their
related entities, hold positions in other entities that result
in them having control or significant influence over the
financial or operating policies of those entities.
During the year ended 30 June 2023, the CEO of ROI
DNA, Matt Quirie entered into a transaction for US
$247,000 for ROI DNA to build a website for Matt
Quirie’s company.
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 related party transactions with any
Director during the current or prior reporting period.
2023
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
Share-based payments – Share
Appreciation Rights
Total Key Management
Personnel compensation
2022
2,969,498 3,242,268
7,810
73,621
–
14,100
75,876
–
4,385,571 4,308,584
1,326,097
984,885
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 (SARP) in the current and prior
financial years.
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.
Summary of Share Appreciation Rights on issue:
E
N
E
R
O
A
N
N
U
A
L
R
E
P
O
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T
F
Y
2
0
2
3
P
A
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1
1
1
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.
The number of shares to be granted will equal the
number of SARs awarded multiplied by the above
conversion formula.
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.
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 2023
21 October 2020
3,900,000
Senior Executives
21 October 2021
4,525,000
Senior Executives
21 October 2022
4,425,000
Senior Executives
$1.52
$3.02
$2.85
30 June 2021
30 June 2022
30 June 2023
30 September 2023
908,340
30 June 2022
30 June 2023
30 June 2024
30 September 2024
3,016,670
30 June 2023
30 June 2024
30 June 2025
30 September 2025
4,425,000
110 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 111
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Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED
for the year ended 30 June 2023
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
30. Share-based payments (continued)
Share Appreciation Rights (SARs)
Summary of rights over unissued ordinary shares
Grant date
2023
24 Oct 2019
21 Oct 2020
21 Oct 2021
21 Oct 2022
Grant date
2022
18 Oct 2018
24 Oct 2019
21 Oct 2020
21 Oct 2021
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
2022
30 Sept
2023
30 Sept
2024
30 Sep
2025
$2.13
$1.52
$3.02
$2.85
–
416,670
–
416,670
– 2,066,670
– 1,033,330
– 4,525,000
- 1,508,330
–
– 4,425,000
-
7,008,340 4,425,000 2,958,330
–
–
–
-
–
-
-
125,000
908,340
–
-
3,016,670
4,425,000
125,000
8,350,010
–
–
–
–
–
–
–
–
–
–
–
–
–
–
146,087 0.9–2.9
554,472 0.9–2.9
119,561 0.9–2.9
– 0.9–2.9
820,120
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
2021
30 Sep
2022
30 Sept
2023
30 Sept
2024
$1.23
$2.13
$1.52
$3.02
–
900,000
– 1,083,336
–
–
900,000
599,998
– 3,633,333
– 1,233,329
–
– 4,525,000
–
5,616,669 4,525,000 2,733,327
–
–
–
–
–
–
–
66,668
416,670
333,334
2,066,670
–
4,525,000
400,002
7,008,340
–
–
–
–
–
–
–
–
–
–
–
–
–
–
550,788 0.9–2.9
196,848 0.9–2.9
641,953 0.9–2.9
– 0.9–2.9
1,389,589
The number and weighted average exercise price of share rights is as follows:
VWAP (for the
20 business
days prior to
the grant) 2023
$
2.52
Weighted
average
exercise
price 2023
–
VWAP (for the
20 business
days prior to
the grant) 2022
$
1.59
Number of
rights
2023
7,008,340
Weighted
average
exercise
price 2022
–
1.52
2.37
2.85
–
–
–
–
–
–
–
(125,000)
(2,958,330)
4,425,000
8,350,010
–
1.62
1.56
3.02
2.52
–
–
–
–
–
–
Number of
rights
2022
5,616,669
(400,002)
(2,733,327)
4,525,000
7,008,340
–
Outstanding at 1 July
Forfeited 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 2023 have a VWAP (for the 20 business days prior to the grant) range of $1.52 to $3.02
(30 June 2022: $1.23 to $3.02).
The SARs outstanding at 30 June 2023 have a weighted average contractual life of 0.96 years (30 June 2022: 1.05 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 2023 for share-based payment transactions
were $2,501,000 (2022: $1,902,000).
The VWAP for the 20 business days prior the date of exercise of SARs on 15 September 2022 was $3.28.
Notes to the consolidated financial statements
for the year ended 30 June 2023
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30. Share-based payments (continued)
Inputs for measurement of grant date fair value
The following factors and key assumptions were used in determining the fair value of the SARs on the grant date:
Expiry date
Value per
SAR
$
30 Sept 2023 0.35 – 0.40
30 Sept 2024 0.64 – 0.85
30 Sept 2025 0.41 – 0.68
VWAP (for the
20 business
days prior to
the grant)
$
1.52
3.02
2.85
Price of
shares
on grant
date
$
1.70
3.38
2.80
Expected
volatility
%
Risk-free
interest rate
%
35-55 0.07-0.25
40-50 0.01-0.36
40-45 0.03-0.04
Dividend
yield
%
Expected
life
(years)
4.7 0.9–2.9
5.0 0.9–2.9
4.0 0.9–2.9
Grant date
21 Oct 2020(i)
21 Oct 2021(ii)
21 Oct 2022(iii)
(i) 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.
(ii) Grant is in relation to SARs provided to senior employees of the Group which were issued on 21 October 2021. 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 2024, which is estimated to be around
30 September 2024.
(iii) Grant is in relation to SARs provided to senior employees of the Group which were issued on 21 October 2022. 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 2025, which is estimated to be around
30 September 2025.
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’s 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 methodology used by the expert and make enquiries with management to satisfy 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
2023
2022
565,000
335,632
900,632
–
144,000
144,000
357,000
136,000
493,000
–
295,000
295,000
112 Enero Group Limited Annual Report 2023
Enero Group Limited Annual Report 2023 113
Directors’ Declaration
DIRECTORS’
DECLARATION
INDEPENDENT
AUDITOR’S REPORT
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1.
In the opinion of the Directors of Enero Group Limited (the Company):
(a) the consolidated financial statements and notes that are set out on pages 72 to 113 and the Remuneration Report
set out on pages 58 to 66 in the Directors’ Report, 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 2023 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 Corporations (Wholly owned Companies) Instrument 2016/785.
3. The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer for the
financial year ended 30 June 2023 pursuant to section 295A of the Corporations Act 2001.
Independent Auditor’s Report
To the shareholders of Enero Group Limited
4. The Directors draw attention to Note 1(b) to the consolidated financial statements, which includes a statement of
Report on the audit of the Financial Report
compliance with International Financial Reporting Standards.
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Dated at Sydney this 18 day of August 2023.
Signed in accordance with a resolution of the Directors:
Ann Sherry AO
Chair
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 2023 and of its financial
performance for the year ended on
that date; and
•
complying with Australian
Accounting Standards and the
Corporations Regulations 2001.
Basis for opinion
The Financial Report comprises:
• Consolidated statement of financial position as at 30
June 2023
• Consolidated income statement, Consolidated
statement of comprehensive income, Consolidated
statement of changes in equity, and Consolidated
statement of cash flows for the year then ended
• Notes including a summary of significant accounting
policies
• Directors' Declaration.
The Group consists of the Company and the entities it
controlled at the year end or from time to time during the
financial year.
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
these requirements.
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.
Enero Group Limited Annual Report 2023 114
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INDEPENDENT
AUDITOR’S REPORT
Key Audit Matters
The Key Audit Matters we identified
are:
• Revenue recognition
• Annual impairment testing of
goodwill
• Acquisition accounting
Revenue recognition ($740.2 million)
Refer to Note 3 to the Financial Report
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.
The key audit matter
How the matter was addressed in our audit
The Group derives the majority of its
revenue from marketing and
communication service fees from
customers, which requires analysis of
recognition over the related contractual
term. The Group’s policy is for
consideration received from advance
billings to customers prior to the
satisfaction of performance obligations
are recognised as a contract liability and
classified as unearned revenue $20.2
million).
Revenue from contracts with customers
was a key audit matter due to:
•
•
•
The quantum of service revenue
earned during the year and contract
liabilities recognised at the end of
the year;
The different revenue recognition
policies for rendering of search
marketing services (point in time)
and all other services (over time);
and
The advanced billing arrangements
for the rendering of services that
require an adjustment for contract
liabilities at year end to comply with
the Group’s revenue recognition
policy. The contract liabilities
adjustment is prepared manually and
is prone to greater risk for bias, error
Our procedures included:
• We obtained an understanding of the nature of the
various revenue streams and the related revenue
recording processes, systems and key controls.
• We evaluated the appropriateness of the Group’s
accounting policies for revenue recognition for each
significant revenue stream against the requirements of
Australian Accounting Standards (AASB 15) and our
understanding of the business.
• We read a sample of signed customer contracts for
search marketing and consulting services to
understand the key terms of the arrangements and the
performance obligations.
• We tested completeness and accuracy of the
underlying data within the Group’s revenue and billing
systems by tracing a sample of contract information in
the systems to signed customer contracts and
invoices.
• We tested point in time revenue transactions
recognised throughout the year by:
•
•
•
assessing existence of an underlying arrangement
with the customer;
comparing the timing of revenue recognition and
amounts invoiced to customers to external reports
provided by search engines to the Group; and
checking customer receipts to the Group’s bank
statements.
• We tested, on a sample basis, over time revenue
transactions with performance obligations completely
satisfied during the year. This included:
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and inconsistent application.
Additional audit effort was required
to evaluate the revenue recognised.
•
•
•
assessing the relevant features of the underlying
contracts, including what the Group identified as
performance obligations;
testing the amounts billed to customers to
underlying documentation such as signed
customer contracts, signed customer statements
of work, and/or signed customer purchase orders;
and
assessing the timing of revenue recognition for
each revenue contract based on completed
performance obligations (evidence of completed
marketing or communication deliverables such as a
podcast, billboard materials, press release) and the
Group’s stated revenue recognition policy.
• We assessed the manual contract liabilities adjustment
prepared by the Group for compliance with Australian
Accounting Standards. On a sample basis, we tested
the accuracy of key inputs to the contract liabilities
adjustment by:
•
•
checking an underlying arrangement with the
customer existed;
checking the customer’s billing cycle and pricing to
customer agreed contractual terms; and
• obtaining evidence of the estimated measure of
progress of the contract (such as timesheet reports
or third-party invoices for reimbursable purchases)
to assess the allocation between revenue and
unearned revenue liability.
• We assessed the disclosures in the Financial Report
against the requirements of Australian Accounting
Standards and using our understanding obtained from
our testing.
Annual impairment testing of goodwill ($205.3 million)
Refer to Notes 11 and 20 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group’s annual testing of goodwill
for impairment is a key audit matter,
given the size of the balance (being 54%
of total assets) and the degree of
judgement involved in the significant
forward-looking assumptions the Group
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.
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AUDITOR’S REPORT
applied in their value in use models,
including:
•
•
Forecast 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 due
to volatile economic conditions,
supply chain issues, rising interest
rates, and increasing employee
benefits costs. These conditions
increase the risk of inaccurate
forecasts or a significantly wider
range of possible outcomes for us to
consider.
Forecast growth rates, including
long-term growth rates into
perpetuity – in addition to the
uncertainties described above, the
Group’s models are highly 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 complex
in nature and vary according to the
conditions and environment the
specific Cash Generating Unit (CGU)
is subject to from time to time. We
involve our valuations specialists
with the assessment.
The Group uses complex models to
perform their annual testing of goodwill
for impairment. The models are largely
manually developed, use adjusted
historical performance, and a range of
internal and external sources as inputs to
the assumptions. Complex modelling,
particularly those containing judgemental
allocations of corporate assets and costs
to CGUs, using forward-looking
assumptions tend to be prone to greater
risk for potential bias, error and
inconsistent application. These
conditions necessitate additional scrutiny
by us, in particular to address the
objectivity of sources used for
• We assessed the integrity of the value in use
models used, including the accuracy of underlying
calculation formulas.
• We compared the forecast cash flows contained in
the value in use models to Board-approved
forecasts.
• We assessed the accuracy of previous Group
forecasts to inform our evaluation of forecasts
incorporated in the models. We noted previous
trends, where volatile conditions existed which
impacted businesses which were recently disposed
of, for use in further testing.
• We assessed the Group’s underlying methodology
and documentation for the allocation of corporate
costs to the forecast cash flows contained in the
value in use model, for consistency with our
understanding of the business and the criteria in the
accounting standards.
• We assessed the Group’s allocation of corporate
assets to CGUs for reasonableness and consistency
based on the requirements of the accounting
standards.
• We considered the Group’s determination of their
CGUs based on our understanding of the operations
of the Group’s business, impact of the ROI DNA
Inc. acquisition, and how independent cash inflows
were generated against the requirements of the
accounting standards.
• We analysed the significant acquisition of ROI DNA
Inc. during the year and the Group’s internal
reporting to assess the Group’s monitoring and
management of activities, and the consistency of
the allocation of goodwill to the ROI DNA CGU.
• We checked the consistency of the growth rates to
the Group’s latest Board-approved forecasts, past
performance of the Group, and our experience
regarding the feasibility of these in the industry and
economic environments in which the CGUs
operate.
• Working with our valuation specialists, we
challenged the Group’s significant forecast cash
flow and growth assumptions in light of the
expected continuation of volatile economic
conditions in key geographies, supply chain issues
affecting the Group’s customers, rising interest
rates, and increasing employee benefits costs. We
assessed how the Group had considered the
impacts of these possible events in the Board-
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assumptions, and their consistent
application.
The Group made a significant acquisition
of ROI DNA Inc. during the year,
necessitating our consideration of the
Group’s allocation of goodwill to the CGU
to which it belongs based on the
management and monitoring of the
business.
approved plan and strategy. We compared
forecast growth rates and long-term growth rates
into perpetuity to published studies of industry
trends and expectations, and considered
differences for the Group’s operations. We used
our knowledge of the Group, their past
performance, business and customers, and our
industry experience.
• 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 considered the sensitivity of the models by
varying key assumptions, such as forecast growth
rates, long-term growth rates into perpetuity, and
discount rates, within a reasonably possible range.
We did this to identify those CGUs at higher risk of
impairment and those assumptions at a higher risk
of bias or inconsistency in application and to focus
our further procedures.
• We assessed the Group’s reconciliation of
differences between the year-end market
capitalisation and the carrying amount of the net
assets, by comparing the implicit earnings
multiples from the Group’s valuation model to
market multiples of comparable entities.
• We assessed the disclosures in the financial report
using our understanding obtained from our testing
and against the requirements of the Australian
Accounting Standards.
Acquisition accounting
Refer to Note 22 to the Financial Report
The key audit matter
How the matter was addressed in our audit
On 1 July 2022, the Group acquired
100% of ROI DNA Inc. for consideration
of $95.2 million, resulting in the
recognition of customer relationships and
other intangible assets, and goodwill.
These transactions are considered to be
a key audit matter due to:
Our procedures included:
• We evaluated the acquisition accounting by the Group
against the requirements of Australian Accounting
Standards.
• We read the underlying transaction agreements to
understand the terms of the acquisition and nature of
INDEPENDENT
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The size of the acquisition having a
significant impact on the Group’s
financial statements.
The Group’s judgement relating to
the estimate of fair value of the
contingent consideration. We
focused on the forecast cash flows
assumptions, which are forward-
looking and tend to be prone to
greater risk for potential bias.
The Group’s judgement and
complexity relating to the
determination of the fair values of
assets and liabilities acquired in the
transaction requiring significant audit
effort. The Group engaged an
external valuation expert to assess
the fair value of customer
relationships and other intangible
assets.
The Group’s valuation model used to
determine the fair value of acquired
intangible assets is complex and
sensitive to changes in a number of
key assumptions. This drives
additional audit effort specifically on
the feasibility of these key
assumptions and consistency of
applicable to the Group’s strategy.
The key assumptions we focused on in
the valuation of intangible assets
included forecast earnings, attrition rates,
discount rates and useful lives.
the assets and liabilities acquired.
• We assessed the accuracy of the calculation and
measurement of consideration paid to acquire ROI DNA
Inc. based on the underlying transaction agreements,
the Group’s bank statements, and issued share
certificates.
• We challenged the forecast cash flows assumptions for
the entity acquired, as it forms the basis of contingent
consideration fair value. We assessed the feasibility of
these assumptions and consistency of application to
industry trends and expectations, and considered
differences for the Group’s operations. We used our
knowledge of the Group, past performance, business
and customers, and our industry experience.
• Working with our valuation specialists, we assessed the
Group’s external expert reports and:
•
•
•
Considered the objectivity, competence and scope
of the Group’s external valuation experts.
Evaluated the valuation methodology used to
determine the fair value of assets and liabilities
acquired, considering accounting standard
requirements and observed industry practices.
Assessed the key assumptions in the Group’s
external expert valuation report prepared in relation
to the identification and valuation of customer
relationships and other intangible assets, including
checking forecast earnings assumptions for
consistency with the Group’s valuation model used
as part of the pre-acquisition due diligence process.
• 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 recalculated the goodwill balance recognised as a
result of the transaction and compared it to the goodwill
amount recorded by the Group.
• We assessed the adequacy of disclosures in the
Financial Report using our understanding obtained from
our testing and against the requirements of Australian
Accounting Standards.
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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.
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:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
Auditor’s Report.
INDEPENDENT
AUDITOR’S REPORT
LEAD AUDITOR’S
INDEPENDENCE DECLARATION
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Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration
Report of Enero Group Limited for the
year ended 30 June 2023, 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
58 to 66 of the Directors’ Report for the year ended 30 June
2023.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
Kristen Peterson
Partner
Sydney
18 August 2023
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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 2023 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Kristen Peterson
Partner
Sydney
18 August 2023
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.
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ASX additional information
ASX ADDITIONAL
INFORMATION
Corporate Directory
CORPORATE
DIRECTORY
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 4 July 2023.
Company Secretary
Catherine Hoyle
Substantial shareholders
The number of ordinary shares held by substantial shareholders and their associates is set out below:
Shareholder
Regal Funds Management Pty Limited
Perpetual Limited
Perennial Value Management
Irish Global Equity
UBS Group
RG Capital Multimedia Limited
Merrill Lynch International
Unquoted equity securities
Number
16,556,578
12,892,915
12,377,983
6,002,926
5,547,706
5,220,342
4,847,328
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
Automic Group
Deutsche Bank, Tower Level 5
126 Phillip St
Sydney NSW 2000
Email: hello@automicgroup.com.au
Telephone: 1300 288 664
Outside Australia: +61 2 9698 5414
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As at 4 July 2023 there were no options granted over unissued ordinary shares in the Company.
Voting rights
Ordinary shares – refer to Note 17 Capital and reserves.
Distribution of equity security holders:
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Number of equity
security holders Ordinary shares
294,469
1,508,410
1,799,210
7,620,168
81,112,058
92,334,315
595
578
238
253
47
1,711
% of issued
capital
0.32
1.63
1.95
8.25
87.85
100.00
The number of shareholders holding less than a marketable parcel of ordinary shares is 33.
Twenty largest shareholders
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
IRISH GLOBAL EQUITY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LTD
ESCROWED HOLDERS
RG CAPITAL MULTIMEDIA LIMITED
CH GLOBAL PTY LTD
UBS NOMINEES PTY LTD
IRISH GLOBAL EQUITY LIMITED
Rank Name
1
2
3
4
5
6
7
8
9
10
11 MR FELICE TESTINI
12
NEWECONOMY COM AU NOMINEES PTY LIMITED
13
BETA GAMMA PTY LTD
14
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2
15
RG CAPITAL MULTIMEDIA LIMITED
16
BNP PARIBAS NOMS PTY LTD
17 MRS ANTONIA CAROLINE COLLOPY
18
19
20 MUTUAL TRUST PTY LTD
RG CAPITAL MULTIMEDIA LIMITED
BNP PARIBAS NOMINEES PTY LTD
Total
124 Enero Group Limited Annual Report 2023
Units
19,735,538
16,404,597
8,465,536
4,335,901
3,947,412
3,855,147
3,269,079
2,548,301
2,148,769
1,667,025
1,630,102
1,604,964
1,500,000
1,200,578
1,159,020
1,154,915
788,637
511,945
501,057
474,804
76,903,327
% of issued
capital
21.37
17.77
9.17
4.70
4.28
4.18
3.54
2.76
2.33
1.81
1.77
1.74
1.62
1.30
1.26
1.25
0.85
0.85
0.54
0.51
83.29
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
ABN
97 091 524 515
Enero Group Limited Annual Report 2023 125
+61 2 8213 3031
General - info@enero.com
Investor Relations - IR@enero.com
Level 2, 100 Harris Street
Pyrmont NSW 2009
Australia