ABN 80 148 142 634
ANNUAL REPORT
30 June 2018
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Corporate directory
DIRECTORS
ANNUAL REPORT
30 June 2018
Tony Leibowitz
Chairman
Adam Davey
Tony Wehby
Non-Executive Director
Non-Executive Director
Appointed 29 September 2017
Appointed 17 August 2012
Appointed 3 May 2018
COMPANY SECRETARY
Sam Hallab (appointed 1 February 2017)
REGISTERED OFFICE & PRINCIPAL PLACE OF BUSINESS
SHARE REGISTRY
Street:
Level 2/2 Glen St
Computershare Investor Services Pty Limited
Milsons Point NSW 2061
Level 11, 172 St Georges Terrace
Postal:
PO Box 523
PERTH WA 6000
Milsons Point NSW 1565
Telephone: 1300 850 505 (investors within
Telephone: +61 (0)2 9806 2000
Facsimile:
+61 (0)2 9806 2099
Australia)
Telephone: +61 (0)3 9415 4000
Email:
web.queries@computershare.com.au
Website:
www.ensurance.com.au
Website:
www.investorcentre.com
SECURITIES EXCHANGE
Australian Securities Exchange
SOLICITORS TO THE COMPANY
Steinepreis Paganin
Level 40, Central Park, 152-158 St Georges Terrace
Level 4, The Read Buildings, 16 Milligan Street
Perth WA 6000
Telephone:
Telephone:
Facsimile:
Website:
131 ASX (131 279) (within Australia)
+61 (0)2 9338 0000
+61 (0)2 9227 0885
www.asx.com.au
ASX Code:
ENA
PERTH WA 6000
AUDITORS
Mazars Risk & Assurance Pty Limited
Level 12, 90 Arthur Street
NORTH SYDNEY NSW 2060
Telephone:
+61 (0) 2 99 22 11 66
Website:
www.mazars.com.au
P a g e | i
ANNUAL REPORT
30 June 2018
Contents
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Directors' report .................................................................................................................................................................... 3
Remuneration report ........................................................................................................................................................... 10
Auditor's independence declaration .................................................................................................................................... 17
Consolidated statement of profit or loss and other comprehensive income ...................................................................... 18
Consolidated statement of financial position ..................................................................................................................... 19
Consolidated statement of changes in equity ..................................................................................................................... 20
Consolidated statement of cash flows ................................................................................................................................. 21
Notes to the consolidated financial statements .................................................................................................................. 22
Directors' declaration .......................................................................................................................................................... 61
Independent auditor's report .............................................................................................................................................. 62
Corporate governance statement ........................................................................................................................................ 67
Additional Information for Listed Public Companies ........................................................................................................... 73
P a g e | ii
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Directors' report
ANNUAL REPORT
30 June 2018
Your directors present their report on the consolidated entity, consisting of Ensurance Limited (Ensurance or the Company)
and its controlled entities (collectively the Group), for the financial year ended 30 June 2018.
1. Directors
The names of Directors in office at any time during or since the end of the year are:
Mr Tony Leibowitz
Chairman (appointed 29 September 2017)
Mr Adam Davey
Mr Tony Wehby
Mr Stefan Hicks
Mr Brett Graves
Mr Neil Pinner
Mr Grant Priest
Non-Executive Director (resigned as Chairman 29 September 2017)
Non-Executive Director (appointed 3 May 2018)
Non-Executive Director (resigned 3 May 2018)
Executive Director (resigned 21 September 2017)
Non-Executive Director (resigned 3 November 2017)
Non-Executive Director (resigned 3 November 2017)
Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. For
additional information of Directors including details of the qualifications of Directors please refer to paragraph 6 “Information
relating to the directors” of this Directors Report.
Company secretary
2.
The following person held the position of Company Secretary at the end of the financial year:
Mr Sam Hallab
Qualifications
Experience
(cid:1) B.Ec., CA, F-AIST, GAICD, Diploma FP
Mr Hallab has spent more than 35 years in the financial sector and brings extensive
experience to the group. As a chartered accountant, he was a partner with Sydney
accounting firm Sothertons for more than a decade before moving
into the
superannuation industry as Deputy CEO of the Australian Catholic Superannuation and
Retirement Fund. Mr Hallab also held positions of COO, CFO and Company Secretary. He
is a registered auditor and tax agent and has gained extensive experience in risk
management and compliance.
3. Dividends paid or recommended
There were no dividends paid or recommended during the financial year ended 30 June 2018.
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ANNUAL REPORT
30 June 2018
Directors' report
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
4.
Significant changes in the state of affairs
Following an analysis of its business and key drivers for future growth, the group announced it would adopt a new
strategic direction and build its international operations as a Managing General Agent (MGA) with large insurance
capacity lines. Subsequently, the company announced its intent to dispose of its Australian retail brokerage business to
allow it to apply its resources to expansion of its UK operations and underwriting agencies. On 25 July 2018, an
agreement was reached to sell 100% of the issued capital, including all assets and related management, in Savill Hicks
Corp Pty Ltd for consideration of $4.1m. The sale is expected to complete in October 2018.
5. Operating and financial review
5.1. Operating review
During the financial year, a new, experienced leadership team was appointed to drive the long-term growth of the
Company, with a complete Board and management team refresh. Following a strategic review led by the new Board, the
decision was made to focus on building the Company’s operations as a Managing General Agency (MGA), initially in the
UK and Australia.
The Company has seized on a growing opportunity to provide specialist insurance underwriting to the construction and
engineering market, estimated to be worth GBP 2.9 billion in the UK and EU alone. Following two years of investment,
management is focused on delivering strong growth in FY19 and beyond, supported by the recent launch of a new
Engineering Inspection and Insurance product to bolster the Company’s product portfolio in the UK and the addition of
specialist underwriting staff.
The financial year delivered a number of milestones for the Company’s UK operations (Ensurance UK (EUK)), as a globally-
focused MGA with the capacity to underwrite large wholesale policies.
Successful partnerships with Swiss Re, Lloyds of London and XL Catlin have provided EUK with the capacity to offer a
range of specialised insurance products focused on the construction and engineering market, on an exclusive basis in the
UK and parts of the EU, with the capacity to write up to GBP 100 million per risk.
In December 2017, the Financial Conduct Authority (FCA) – the UK’s financial regulatory body – granted EUK with FCA
approval, giving it full authorisation as an MGA, less than 18 months since the Company’s UK operations were established
and representing a major milestone for the business.
Adding to its product portfolio, EUK launched a new Engineering Inspection and Insurance product in July, to provide
policyholders with protection against sudden and unforeseen damage during construction. The policy will provide access
to over 450 engineer surveyors and was developed in partnership with British Engineering Services, a privately-owned
company, which was formerly part of the FTSE 100 insurer RSA. The product is expected to be met with strong customer
demand.
Providing strong validation and recognition of one of the most recently established independent Managing General
Agents in the UK, EUK has been shortlisted for MGA of the Year for the 7th annual Insurance Insider Honours after just 18
months of operation. The Insurance Insider Honours Awards are supported by an international judging panel of industry
experts, bringing expert knowledge and experience to the adjudication process.
P a g e | 4
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Directors' report
5.2. Financial Review
ANNUAL REPORT
30 June 2018
a. Operating results
The Group delivered an FY18 loss after tax of $8.707m, representing an increase of $3.614m on the prior year loss of
$5.093m. The increase in the loss of the group was due to several main factors:
Increase in Employment Costs of $1.78m (predominantly in the establishment of the London office);
Increase in Finance costs of $530k (principally involved in short-term financing)
A one-off impairment charge of $2.007m to impair the Group’s intangible assets
Revenue from all of the Group’s operations increased to $3.82m (2017: $3.22m). In its first full year of trade, Ensurance
UK turned over GBP £161k (AUD $280k) and has shown strong indications of future growth, operating as an MGA in the
UK to provide wholesale insurance for construction and engineering in the UK and EU. Fully authorised by the FCA,
Ensurance UK has the ability to sell insurance globally and develop an Appointed Representative Network.
In the financial year, the Company successfully completed three capital raisings, including a $3.5m placement of shares to
sophisticated investors in December 2017, a further placement of $800k in April 2018 and a fully underwritten
entitlement issue of one new fully paid ordinary share for every share held by eligible shareholders in June 2018. The
entitlement issue raised $6.9m before costs and its completion was announced to the market on 21 June 2018 with the
under subscription taken up jointly by Transocean Securities Pty Ltd and Patersons Securities Limited, as underwriters of
the issue.
The financial statements have been prepared on a going concern basis, which contemplates the continuation of normal
business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business. Details of
the Company's assessment in this regard can be found in Note 1a.ii Basis of preparation: Going Concern.
b. Financial position
The net assets of the Group have increased from 30 June 2017 by $1.998m to a net deficiency of $778 at 30 June 2018
(2017: Net deficiency of $1.999m).
As at 30 June 2018, the Group's cash and cash equivalents increased from 30 June 2017 by $2,819,633 to $3,203,479 at
30 June 2018 (2017: $383,846) and had working capital of $1.402m (2017: $1.754m working capital deficit).
5.3. Events Subsequent to Reporting Date
On 25 July 2018, the Company announced an agreement had been reached to dispose of 100% of the issued capital of
Savill Hicks Corp Pty Ltd, including all assets and related management. The consideration for the sale is $4.1m and
proceeds will be used to build out ENA’s specialised insurance offering, hire additional underwriting resources and invest
in sales and marketing staff to support the Group’s strong growth as a globally focused Managing General Agent.
The sale proceeds will comprise of $2.2m cash, the buyback of 30,140,905 fully paid ordinary shares in ENA, assumption of
employee entitlements and the cancellation of convertible notes held by a related party of Stefan Hicks. The sale is subject to a
number of conditions precedent, including shareholder approval and is expected to complete in October 2018.
There are no other significant after balance date events that are not covered in this Directors' Report or within the
financial statements at Note 27 - Events subsequent to reporting date.
5.4. Future Developments, Prospects and Business Strategies
Likely developments, future prospects and business strategies of the operations of the Group and the expected results of
those operations have not been included in this report as the Directors believe that the inclusion of such information
would be likely to result in unreasonable prejudice to the Group.
5.5. Environmental Regulations
The Group's operations are not subject to significant environmental regulations in the jurisdictions it operates in, namely
Australia and the United Kingdom.
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ANNUAL REPORT
30 June 2018
Directors' report
6.
Information relating to the directors
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Mr Tony Leibowitz
Qualifications
Length of service
Experience
Interest in Shares and
Options
(cid:1) Executive Chairman
(cid:1) Chartered Accountant (FCA)
(cid:1) 9 months from appointment 29 September 2017
(cid:1) Mr Leibowitz has over 30 years of corporate finance, investment banking and broad
commercial experience and has a proven track record of providing the necessary skills and
guidance to assist companies grow and generate sustained shareholder value. Previous roles
include Chandler Macleod Limited and Pilbara Minerals Limited, where as Chairman and an
early investor in both companies, he was responsible for substantial increases in shareholder
value and returns. Mr Leibowitz was a global partner at PricewaterhouseCoopers and is a
Fellow of the Institute of Chartered Accountants in Australia.
(cid:1) 45,210,780 ordinary shares in Ensurance Limited (indirect) (2017: 2,633,722). Shareholding
increased as a result of share placement completed 15 December 2017, Entitlement Issue
dated 28 May 2018 and as a sub-underwriter of the Entitlement Issue.
1,000,000 options exercisable at 8 cents, expiring 31 July 2020; 250,000 options exercisable at
4 cents, expiring 31 July 2020; 250,000 options exercisable at 4.6 cents, expiring 31 July 2020;
2,000,000 options exercisable at 8 cents, expiring 15 December 2019; 3,150,000 options
exercisable at 5 cents, expiring 15 December 2019; 3,500,000 options exercisable at 5 cents,
expiring 15 December 2020.
Directorships held in
other listed entities
(cid:1) None
Mr Adam Davey
Length of service
Qualifications
Experience
Interest in Shares and
Options
Directorships held in
other listed entities
Mr Tony Wehby
Length of service
Qualifications
Experience
Interest in Shares and
Options
Directorships held in
other listed entities
(cid:1) Independent Non-Executive Director
(cid:1) 5 years, 11 months from appointment 17 August 2012 (last re-elected 29 November 2016)
(cid:1) Professional Diploma in Stockbroking
(cid:1) Mr Davey has had experience in the securities industry over the past 25 years. He has served
as a Non-Executive Director of a number of industrial and mining companies. He has
significant experience in capital raisings, mergers and acquisitions. Mr Davey also serves as
Chairman of the not-for-profit organisation Teen Challenge Foundation.
(cid:1) 3,542,819 ordinary shares in Ensurance Limited (indirect) (2017: 604,090). Increased holding
a result of Entitlement Issue dated 28 May 2018 and as a sub-underwriter of the Entitlement
Issue. Cash was paid for these shares.
4,000,000 partly paid shares in Ensurance Limited (indirect) (2017: 4,000,000)
3,000,000 options exercisable at 8 cents, expiring 15 December 2019.
(cid:1) Non-executive director of PainChek Limited (PCK) and The Agency Group Australia Ltd (AU1).
(cid:1) Independent Non-Executive Director
(cid:1) 2 months from appointment 3 May 2018
(cid:1) Chartered Accountant (FCA), member of Australian Institute of Company Directors.
(cid:1) Mr Wehby was a partner in PricewaterhouseCoopers for 19 years where he specialised in
Corporate Finance and was responsible for the management of that part of the national
practice. Since 2001 he has held Non-Executive Director roles and maintained a financial
consulting practice, focusing on companies considering significant changes. Mr Wehby was a
founding Director and Chairman of Aurelia Metals Limited (AMI), Chairman of Tellus
Resources Ltd and member of the Board Advisory Committee of Moss Capital Funds
Management Limited. Mr Wehby is currently chair of Kingston Resources Ltd (KSN) and
deputy chair (and Chair of the Audit and Risk Committee) of Royal Rehab.
(cid:1) 1,077,603 ordinary shares in Ensurance Limited (indirect) (2017: nil). Acquired shares as a
sub-underwriter to the Entitlement Issue dated 28 May 2018. Cash was paid for these shares.
1,000,000 options (yet to be issued) exercisable at 5 cents, expiring 3 years from date of
issue; 1,000,000 options (yet to be issued) exercisable at 8 cents, expiring 3 years from issue.
(cid:1) Chairman of Kingston Resources Ltd (KSN)
P a g e | 6
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Directors' report
ANNUAL REPORT
30 June 2018
7. Meetings of directors and committees
During the financial year ten meetings of Directors were held. Attendances by each Director during the year are stated in the
following table.
DIRECTORS
MEETINGS
Number eligible to
attend
Number Attended
Tony Leibowitz
Adam Davey
Tony Wehby
Stefan Hicks
Brett Graves
Neil Pinner
Grant Priest
8
10
1
9
1
3
3
8
10
1
7
1
1
3
8.
Indemnifying officers or auditor
8.1.
Indemnification
The Company has entered an Indemnity, Insurance and Access Deed with each Director. Pursuant to the Deed:
The Director is indemnified by the Company against any liability incurred in that capacity as an officer of the
Company to the maximum extent permitted by law subject to certain exclusions.
The Company must keep a complete set of company documents until the later of:
a. The date which is seven years after the Director ceases to be an officer of the Company; and
b. The date after a final judgment or order has been made in relation to any hearing, conference, dispute, enquiry or
investigation in which the Director is involved as a party, witness or otherwise because the Director is or was an
officer of the Company (Relevant Proceedings).
The Director has the right to inspect and copy a Company document in connection with any relevant proceedings
during the period referred to above.
Subject to the next sentence, the Company must maintain an insurance policy insuring the Director against liability as a
director and officer of the Company while the Director is an officer of the Company and until the later of:
a. The date which is seven years after the Director ceases to be an officer of the Company; and
b. The date any Relevant Proceedings commenced before the date referred to above have been finally resolved.
The Company may cease to maintain the insurance policy if the Company reasonably determines that the type of
coverage is no longer available.
The Company has not entered into any agreement with its current auditors indemnifying them against any claims by third
parties arising from their report on the financial report.
8.2.
Insurance premiums
During the year the Company paid insurance premiums to insure directors and officers against certain liabilities arising
out of their conduct while acting as an officer of the Group.
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ANNUAL REPORT
30 June 2018
Directors' report
9. Options
9.1. Unissued shares under option
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
At the date of this report, Ensurance Limited has the following unissued ordinary shares under option (unlisted):
Issuing Entity
Kli Pty Ltd
Transocean Securities Pty Ltd
Kalonda Pty Ltd
Portafortuna Pty Ltd
Jalonex Investments Pty Ltd
Transocean Securities Pty Ltd
Kalonda Pty Ltd
Portafortuna Pty Ltd
Jalonex Investments Pty Ltd
Mr Adam Davey
Kalonda Pty Ltd
Kalonda Pty Ltd
Kalonda Pty Ltd
Transocean Securities Pty Ltd
Kalonda Pty Ltd
Kli Pty Ltd
Shares Under
Option
No.
Class of Shares
Exercise Price of
Option
$
Expiry Date of
Option
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
1,000,000
1,321,429
250,000
250,000
1,178,571
1,948,465
1,250,000
250,000
2,648,849
3,000,000
2,000,000
2,000,000
1,150,000
3,500,000
3,500,000
250,000
25,497,314
0.120
0.046
0.046
0.046
0.046
0.080
0.080
0.080
0.080
0.080
0.080
0.050
0.050
0.050
0.050
0.050
31 July 2020
31 July 2020
31 July 2020
31 July 2020
31 July 2020
31 July 2020
31 July 2020
31 July 2020
31 July 2020
15 Dec 2019
15 Dec 2019
15 Dec 2019
15 Dec 2019
15 Dec 2020
15 Dec 2020
15 Dec 2020
The holders of these options do not have the right, by virtue of the option, to participate in any share issue or interest
issue of the Company. These options were issued in connection with the Entitlement Offer Prospectus dated 6 June 2017
(9,097,314 options), short-term loan agreements (2,400,000 options), an executive employment agreement (4,000,000
options), for services provided (3,000,000 options) and with the share placement completed in December 2017 (7,000,000
options). Prior to the end of the financial year, the Board resolved to grant Tony Wehby 1,000,000 options exercisable at 5
cents, within 3 years and 1,000,000 options exercisable at 8 cents within 3 years. These options are in connection with his non-
executive employment agreement and as at the date of this report, Mr Wehby’s options are yet to be issued.
9.2. Shares issued on exercise of options
No ordinary shares were issued by the Company as a result of the exercise of options during or since the end of the
financial year.
10. Non-audit services
During the year the Company’s auditor, Mazars Risk and Assurance Pty Limited (Mazars), did not provide any taxation
compliance advice & assistance (2017: $28,630). During the year the Company’s auditor in the UK, Buzzacott LLP (Buzzacott),
did provide taxation, payroll and compliance advice amounting to $40,148 (2017: $32,836). Details of remuneration paid to
the auditor can be found within the financial statements at Note 5 - Auditor's Remuneration.
The Board has established certain procedures to ensure that the provision of non-audit services are compatible with, and do
not compromise, the auditor independence requirements of the Corporations Act 2001 (Cth). These procedures include:
non-audit services will be subject to the corporate governance procedures adopted by the Company and will be reviewed
by the Board to ensure they do not impact the integrity and objectivity of the auditor; and
ensuring non-audit services do not involve reviewing or auditing the auditor's own work, acting in a management or
decision making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.
The Directors are satisfied that the provision of non-audit services during the year by the auditor (or by another person or firm
on the auditor’s behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act
2001 (Cth).
P a g e | 8
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Directors' report
ANNUAL REPORT
30 June 2018
11. Proceedings on behalf of company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to
which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those
proceedings.
The Company was not a party to any such proceedings during the year.
12. Auditor's independence declaration
The auditor's independence declaration under section 307C of the Corporations Act 2001 (Cth) for the year ended
30 June 2018 has been received and can be found on page 17 of the annual report.
P a g e | 9
ANNUAL REPORT
30 June 2018
DIRECTORS' REPORT
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
13. Remuneration report (audited)
The information in this remuneration report has been audited as required by s308(3C) of the Corporations Act 2001.
13.1. Key management personnel (KMP)
KMP have authority and responsibility for planning, directing and controlling the activities of the Group. KMP comprise the
directors of the Company and key executive personnel. All individuals held their positions throughout the financial year unless
otherwise stated:
Mr Tony Leibowitz
Executive Chairman (appointed 29 September 2017)
Mr Adam Davey
Mr Tony Wehby
Mr Stefan Hicks
Mr Brett Graves
Mr Neil Pinner
Mr Grant Priest
Non-Executive Director (resigned as Chairman 29 September 2017)
Non-Executive Director (appointed 3 May 2018)
Non-Executive Director (resigned 3 May 2018 after resignation as Executive Director 18 Jan 2018)
Chief Operating Officer (resigned as Executive Director 21 September 2017)
Non-Executive Director (resigned 3 November 2017)
Non-Executive Director (resigned 3 November 2017)
Mr Michael Huntly
CEO of Ensurance Underwriting
Mr Peter Fielding
COO of Ensurance IT
Mr Tim James CEO of Ensurance UK
Mr Sam Hallab
Chief Financial Officer & Company Secretary (resigned as Chief Financial Officer 28 February 2018)
Mr Arjan van Ameyde
Chief Financial Officer (appointed 1 February 2018)
13.2. Principles used to determine the nature and amount of remuneration
The remuneration policy of the Company has been designed to ensure reward for performance is competitive and appropriate to
the result delivered. The framework aligns executive reward with the creation of value for shareholders, and conforms to market
best practice. The Board ensures that Director and executive reward satisfies the following key criteria for good reward
governance practices:
Competitiveness and reasonableness;
Acceptability to the shareholders;
Performance;
Transparency; and
Capital management.
The remuneration policy has been tailored to increase the direct positive relationship between shareholders' investment
objectives and Directors' and Executives' performance. Currently, this is facilitated through the issue of options to the majority of
Directors and Executives to encourage the alignment of personal and shareholder interests. The Company believes this policy will
be effective in increasing shareholder wealth. The Board's policy for determining the nature and amount of remuneration for
Board members and Senior Executives of the Company is as follows:
a. Executive Directors and other Senior Executives
Executives receive a base salary (which is based on factors such as length of service and experience), retirement benefits, options
and performance incentives. The Board reviews Executive packages annually by reference to the Company's performance,
Executive performance, and comparable information from industry sectors and other listed companies in similar industries.
Executives are also entitled to participate in the employee share and option arrangement.
b. Non-Executive Directors
The Company's Constitution provides that Directors are entitled to be remunerated for their services as follows:
(cid:1) The total aggregate fixed sum per annum to be paid to the Directors (excluding salaries of executive Directors) from time to
time will not exceed the sum determined by the Shareholders in general meeting and the total aggregate fixed sum will be
divided between the Directors as the Directors shall determine and, in default of agreement between them, then in equal
shares.
(cid:1) The Directors' remuneration accrues from day to day.
(cid:1) The total aggregate fixed sum per annum which may be paid to non-executive Directors is $250,000. This amount cannot be
increased without the approval of the Company's Shareholders.
The Directors are entitled to be paid reasonable travelling, accommodation and other expenses incurred by them respectively in
or about the performance of their duties as Directors.
P a g e | 10
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
DIRECTORS' REPORT
13. Remuneration report (audited)
c. Fixed Remuneration
ANNUAL REPORT
30 June 2018
Other than statutory superannuation contributions, no retirement benefits are provided for Executive and Non-Executive
Directors of the Company. To align Directors' interests with shareholder interests, the Directors are encouraged to hold shares in
the company.
d. Performance Based Remuneration – Short-term and long-term incentive structure
The Board will review short-term and long-term incentive structures from time to time. Any incentive structure will be aligned
with shareholders' interests.
(cid:1) Short-term incentives
Cash bonuses were granted during the year to Mr Peter Fielding and Mr Sam Hallab.
(cid:1) Long-term incentives
The Board has a policy of granting incentive options to executives with exercise prices above market share price. As such,
incentive options granted to executives will generally only be of benefit if the executives perform to the level whereby the
value of the Group increases sufficiently to warrant exercising the incentive options granted.
The directors of the Company are not eligible to participate in the "Ensurance Limited Employee Incentive Option Plan".
e. Service Contracts
Remuneration and other terms of employment for the directors, KMP and the company secretary are formalised in contracts of
employment.
f. Engagement of Remuneration Consultants
During the financial year, the Company did not engage any remuneration consultants.
g. Relationship between Remuneration of KMP and Earnings
The Board does not consider earnings in determining the nature and amount of remuneration of KMP.
13.3. Remuneration Details for the Year Ended 30 June 2018
Details of the remuneration of the key management personnel are set out in the following table:-
2018
Group Key Management
Person
Short-term benefits
Salary, fees
and leave
$
237,645
62,500
9,125
230,343
197,293
18,250
16,667
231,000
Profit share
and bonuses
$
-
-
-
-
-
-
-
-
Tony Leibowitz
Adam Davey
Tony Wehby
Stefan Hicks
Brett Graves
Grant Priest
Neil Pinner
Michael Huntly
Peter Fielding
190,000
33,000
Non-
monetary
$
-
-
-
-
-
-
-
-
-
-
Tim James
Sam Hallab
312,392
-
169,459
45,000
24,353
Arjan van Ameyde
94,654
-
-
Post-
employment
benefits
Super-
annuation
$
20,454
5,937
-
15,307
18,616
Other
$
-
-
-
-
-
35,000
-
-
-
-
-
-
-
1,583
21,945
18,050
15,620
14,345
8,992
Long-term
benefits
Equity-settled share-
based payments
Total
Other
Equity
$
$
Options /
Rights
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
51,000
309,099
29,550
97,987
14,700
23,825
-
-
-
-
-
-
-
-
-
245,650
215,909
53,250
18,250
252,945
241,050
328,012
253,157
103,646
95,250
2,142,780
1,769,328
78,000
24,353
35,000
140,849
P a g e | 11
ANNUAL REPORT
30 June 2018
Directors' report
13. Remuneration report (audited)
2017
Group Key Management
Person
Short-term benefits
Adam Davey
Stefan Hicks
Brett Graves
Grant Priest
Neil Pinner
Michael Huntly
Peter Fielding
Tim James
Sam Hallab
Salary, fees
and leave
$
100,000
419,371
195,183
54,750
50,000
238,108
194,110
177,904
227,236
1,656,662
Profit share
and bonuses
$
-
-
-
-
-
-
-
-
-
-
Non-
monetary
$
-
1,852
7,031
-
-
-
-
-
19,523
28,406
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Post-
employment
benefits
Super-
annuation
$
9,500
42,600
18,542
-
4,750
22,620
16,258
3,812
23,879
141,961
Other
$
-
-
-
-
-
-
-
-
-
-
Long-term
benefits
Equity-settled share-
based payments
Total
Other
Equity
$
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
Options/
Rights
$
-
-
-
-
-
-
-
-
-
-
$
109,500
463,823
220,756
54,750
54,750
260,728
210,368
181,716
270,638
1,827,029
13.4. Service Agreements
a. Executive services contract (ESC) with Tony Leibowitz
The Company has entered into an executive services contract with Mr Tony Leibowitz on the following terms:
Mr Leibowitz is employed by the Company as Executive Chairman under an ESC that commenced 1 May 2017.
The gross annual remuneration package (including superannuation) is $394,200 per annum, payable in fortnightly
instalments
Should Mr Leibowitz hold any office or directorship with any other Group company, he will not be entitled to any
additional remuneration in respect of those appointments.
The remuneration will be reviewed by the Board annually in accordance with the Company's policies and procedures.
The ESC formalises Mr Leibowitz’s full-time employment as Executive Chairman, following an initial appointment of
six months. The current ESC expires 31 December 2018 and any extension beyond this date is to be on a month to
month basis, as agreed between Mr Leibowitz and the Board.
b. Non-Executive Director appointment letter with Adam Davey
The Company appointed Mr Adam Davey as a non-executive Director, on standard terms for agreements of this nature,
under which he is entitled to director fees of $50,000 per annum, plus superannuation.
c. Non-Executive Director appointment letter with Tony Wehby
The Company appointed Mr Tony Wehby as non-executive Director, on standard terms for agreements of this nature,
under which he is entitled to director fees of $54,750 per annum.
P a g e | 12
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Directors' report
13. Remuneration report (audited)
13.5. Share-based compensation
a. Securities Received that are not performance-related
ANNUAL REPORT
30 June 2018
No members of KMP are entitled to receive securities that are not performance-based as part of their remuneration package.
b. Options and Rights Granted as Remuneration
As referred to in Note 26 ‘Share-based payments’ and paragraph 13.6.c of this Remuneration Report, on 30 November
2015, 6,500,000 Performance Rights Class A (Note 26a.i) and 500,000 Performance Rights Class B (Note 26a.ii) were
issued to Directors of the Company. During the year, 5,500,000 Performance Rights Class A were forfeited when the
holding Director terminated their Directorship with the Company. The balance of Performance Rights at 30 June 2018
were 1,000,000 Class A and 500,000 Class B.
During the financial year, 3,000,000 options were granted to Adam Davey in relation to services provided over and above
the normal scope of his duties as Director. They are exercisable at 8 cents within two years of issue. 4,000,000 options
were granted to Tony Leibowitz as part of his executive services agreement to become Chairman of the Company.
2,000,000 are exercisable at 8 cents within 2 years of issue and 2,000,000 are exercisable at 5 cents within 2 years of
issue. Prior to the end of the financial year, the Board resolved to grant Tony Wehby 1,000,000 options exercisable at 5
cents, within 3 years and 1,000,000 options exercisable at 8 cents within 3 years. These options are in connection with
his executive employment agreement and as at the date of this report, Mr Wehby’s options are yet to be issued.
There were no equity instruments issued during the year to Directors as result of performance rights converting or
options being exercised that had previously been granted as compensation.
13.6. Key Management Personnel equity holdings
a. Fully paid ordinary shares of Ensurance Limited held by each Key Management Person
2018
Group Key Management Person
Tony Leibowitz (1) (3) (5)
Adam Davey (2) (3) (5)
Tony Wehby (3)
Stefan Hicks (4)(5)
Brett Graves (4)
Grant Priest (4) (5)
Neil Pinner (4)
Michael Huntly (4)
Peter Fielding
Tim James
Sam Hallab
Arjan van Ameyde (3)
Balance at
start of year
No.
2,633,722
4,604,090
-
25,930,006
4,210,899
72,725
758,181
1,813,818
-
-
-
-
40,023,441
Received during
the year as
compensation
No.
Received during
the year on the
exercise of options
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other changes
during the year
No.
Balance at
end of year
No.
42,577,058
45,210,780
2,938,729
1,077,603
-
-
-
-
-
-
-
-
7,542,819
1,077,603
25,930,006
4,210,899
72,725
758,181
1,813,818
-
-
-
500,000
500,000
47,093,390
87,116,831
(1) Mr Leibowitz and his related parties held 2,633,722 shares prior to accepting his position with the Company.
(2) Mr Davey's shares include 4,000,000 partly-paid ordinary shares held by Mr Davey and his related parties.
(3) Other changes during the year represent shares issued under the Share Placement completed 15 December 2017, the Entitlement Issue
Prospectus dated 28 May 2018 and the underwriting agreement associated with the Entitlement Issue Prospectus.
(4) Messrs Hicks, Graves, Priest, Pinner and Huntly did not take up their entitlement under the Entitlement Issue Prospectus dated 28 May
(5)
2018.
A number of the above KMP hold Convertible Notes. Upon conversion, shareholdings will increase as follows: Stefan Hicks: 12,500,000;
Tony Leibowitz: 2,500,000; Adam Davey: 2,500,000; Grant Priest: 500,000 (see 13.6 (d)).
P a g e | 13
ANNUAL REPORT
30 June 2018
Directors' report
13. Remuneration report (audited)
2017
Group Key Management Person
Adam Davey (1) (2) (4)
Stefan Hicks (3)(4)
Brett Graves (2)
Grant Priest (2) (4)
Neil Pinner (2)
Michael Huntly (2)
Peter Fielding
Tim James
Sam Hallab
Balance at
start of year
No.
4,520,000
25,930,006
2,894,994
50,000
527,500
1,222,861
-
-
-
35,145,361
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Received during
the year as
compensation
No.
Received during
the year on the
exercise of options
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other changes
during the year
No.
Balance at
end of year
No.
84,090
4,604,090
-
25,930,006
1,315,905
4,210,899
22,725
230,681
590,957
-
-
-
72,725
758,181
1,813,818
-
-
-
2,244,358
37,389,719
(1) Mr Davey's shares include 4,000,000 partly-paid ordinary shares held by Mr Davey and his related parties.
(2) Other changes during the year represent the number of shares issued under the Entitlement Issue Prospectus dated 6 June 2017.
(3) Mr Hicks did not take up his entitlement under the Entitlement Issue Prospectus dated 6 June 2017.
(4)
During the year these Directors subscribed to the Company’s Convertible Notes issue.
b. Options in Ensurance Limited held by each Key Management Person
2018 – Group
Group Key
Management Person
Balance at
start of year
No.
Granted as
Remuneration
during the year
No.
Tony Leibowitz (1) (2)
1,500,000
4,000,000
Adam Davey
Tony Wehby (3)
Stefan Hicks
Brett Graves
Grant Priest
Neil Pinner
Michael Huntly
Peter Fielding
Tim James
Sam Hallab
Arjan van Ameyde
-
-
-
-
-
-
-
-
-
-
-
3,000,000
2,000,000
-
-
-
-
-
-
-
-
-
1,500,000
9,000,000
Exercised
during the year
No.
Other changes
during the year
No.
Balance at
end of year
No.
Vested and
Exercisable
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
4,650,000
10,150,000
-
-
-
-
-
-
-
-
-
-
-
3,000,000
2,000,000
-
-
-
-
-
-
-
-
-
4,650,000
15,150,000
-
-
-
-
-
-
-
-
-
-
-
-
-
Not Vested
No.
10,150,000
3,000,000
2,000,000
-
-
-
-
-
-
-
-
-
15,150,000
(1) Mr Leibowitz and his related parties held 1,500,000 options prior to accepting his position with the Company.
(2) Other changes during the year represent options granted to Mr Leibowitz and his related parties in relation to a short-term loan
agreement (1,150,000) and in connection with the share placement completed 15 December 2017 (3,500,000)
(3) Options granted to Mr Wehby are yet to be issued as at the date of this report.
P a g e | 14
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
ANNUAL REPORT
30 June 2018
2017 – Group
Group Key
Management Person
Balance at
start of year
No.
Granted
during the year
No.
Exercised
during the year
No.
Other changes
during the year
No.
Balance at
end of year
No.
Vested and
Exercisable
No.
Not Vested
No.
Adam Davey
Stefan Hicks
Brett Graves
Grant Priest
Neil Pinner
Michael Huntly
Peter Fielding
Tim James
Sam Hallab
250,000
-
-
-
-
-
-
-
-
250,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(250,000)
-
-
-
-
-
-
-
-
(250,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
c. Performance Rights of Ensurance Limited held by each Key Management Person
2018 – Group
Group Key
Management Person
Tony Leibowitz
Adam Davey
Tony Wehby
Stefan Hicks
Brett Graves
Grant Priest
Neil Pinner
Michael Huntly
Peter Fielding
Tim James
Sam Hallab
Arjan van Ameyde
Balance at
start of year
No.
-
1,500,000
-
4,000,000
1,000,000
250,000
250,000
-
-
-
-
-
7,000,000
Granted as
Remuneration
during the year
No.
Other changes
during the year
No.
-
-
-
(4,000,000)
(1,000,000)
(250,000)
(250,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
end of year
No.
-
1,500,000
-
-
-
-
-
-
-
-
-
-
Vested and
Exercisable
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
Not Vested
No.
-
1,500,000
-
-
-
-
-
-
-
-
-
-
1,500,000
(5,500,000)
1,500,000
Other changes during the year relate to performance rights forfeited by the termination of each individual’s Directorship with the Company.
P a g e | 15
ANNUAL REPORT
30 June 2018
Directors' report
13. Remuneration report (audited)
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
2017 – Group
Group Key
Management Person
Adam Davey
Stefan Hicks
Brett Graves
Grant Priest
Neil Pinner
Michael Huntly
Peter Fielding
Tim James
Sam Hallab
Balance at
start of year
No.
1,500,000
4,000,000
1,000,000
250,000
250,000
-
-
-
-
7,000,000
Granted as
Remuneration
during the year
No.
Other changes
during the year
No.
-
-
-
-
-
-
-
-
-
-
Balance at
end of year
No.
1,500,000
4,000,000
1,000,000
250,000
250,000
-
-
-
-
7,000,000
Vested and
Exercisable
No.
-
-
-
-
-
-
-
-
-
-
Not Vested
No.
1,500,000
4,000,000
1,000,000
250,000
250,000
-
-
-
-
7,000,000
13.7. Other Equity-related KMP Transactions
There have been no other transactions involving equity instruments other than those described in the tables above
relating to options, rights, converting loans and shareholdings.
13.8. Loans to Key Management Personnel
The Group has a loan payable to Mr Brett Graves of $94,728 plus accrued interest of $17,637 as at 30 June 2018 (2017:
$94,728 plus accrued interest of $12,164).
13.9. Other transactions with Key Management Personnel and or their Related Parties
Transactions involving equity instruments are described in the tables above. For details of other transactions with KMP,
refer Note 23 Related party transactions.
END OF REMUNERATION REPORT
This Report of the Directors, incorporating the Remuneration Report, is signed in accordance with a resolution of directors
made pursuant to s.298(2) of the Corporations Act 2001 (Cth).
A H LEIBOWITZ
Chairman
Dated this Monday, 24 September 2018
P a g e | 16
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001 TO THE DIRECTORS OF ENSURANCE LIMITED
AND ITS CONTROLLED ENTITIES
I declare that, to the best of my knowledge and belief during the year ended 30 June 2018, there have
been:
— no contraventions of the auditor independence requirements as set out in the Corporations Act 2001
in relation to the audit; and
— no contraventions of any applicable code of professional conduct in relation to the audit.
MAZARS RISK & ASSURANCE PTY LIMITED
R. Megale
Director
Dated in Sydney this 24th day of September 2018.
M A Z A R S R I S K & A S S U R A N C E P T Y L I M I T E D
A B N : 3 9 1 5 1 8 0 5 2 7 5
L E V E L 1 2 , 9 0 A R T H U R S T R E E T , N O R T H S Y D N E Y N S W 2 0 6 0
P O B O X 1 9 9 4 , N O R T H S Y D N E Y N S W 2 0 5 9
T E L : + 6 1 2 9 9 2 2 1 1 6 6 - F A X : + 6 1 2 9 9 2 2 2 0 4 4
E M A I L : E M A I L @ M A Z A R S . C O M . A U
L I A B I L I T Y L I M I T E D B Y A S C H E M E , A P P R O V E D U N D E R T H E P R O F E S S I O N A L S T A N D A R D S L E G I S L A T I O N
ANNUAL REPORT
30 June 2018
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Consolidated statement of profit or loss and other comprehensive income
for the year ended 30 June 2018
Continuing operations
Revenue
Business development
Compliance costs
Computers and communications
Depreciation and amortisation
Employment costs
Finance costs
Legal and consulting fees
Occupancy costs
Impairment of intangible assets
Travel and accommodation
Other expenses
Loss before tax
Income tax benefit
Loss from continuing operations
Profit/(loss) from discontinued operations
Total net loss for the year
Other comprehensive income, net of income tax
Items that will not be reclassified subsequently to profit or loss:
(cid:1) Revaluation of assets
Items that may be reclassified subsequently to profit or loss:
Other comprehensive income for the year, net of tax
Note
2018
$
2017
$
3
1,208,336
1,008,352
1,208,336
1,008,352
(311,399)
(301,869)
(397,807)
(223,603)
(342,690)
(345,328)
(671,924)
(404,461)
(5,092,453)
(3,315,496)
4
4
(874,774)
(355,568)
(347,881)
4
(2,007,461)
(99,030)
(197,904)
(344,025)
(70,165)
(211,189)
-
(204,248)
(118,585)
6
30
(9,001,413)
(5,019,759)
286,084
276,994
(8,715,329)
(4,742,765)
7,924
(350,267)
(8,707,405)
(5,093,032)
1,305
-
1,305
1,801
-
1,801
Total comprehensive income attributable to members of the parent entity
(8,706,100)
(5,091,231)
Profit/(loss) for the period attributable to:
Non-controlling interest
Owners of the parent
Total comprehensive income/(loss) attributable to:
Non-controlling interest
Owners of the parent
Earnings per share:
Basic and diluted loss per share (cents per share)
-
-
(8,707,405)
(5,093,032)
-
-
(8,706,100)
(5,091,231)
₵
(2.51)
7
₵
(6.13)
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.
P a g e | 18
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Consolidated statement of financial position
as at 30 June 2018
Current assets
Cash and cash equivalents
Trade and other receivables
Trust account insurer assets
Other current assets
Total current assets
Non-current assets
Financial assets
Plant and equipment
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Trust account insurer liabilities
Provisions
Borrowings
Total current liabilities
Non-current liabilities
Provisions
Trade and other payables
Borrowings
Total non-current liabilities
Total liabilities
Net liabilities of continued operations
Net assets of discontinued operations
Net (liabilities)
Equity
Issued capital
Reserves
Accumulated losses
Total equity
ANNUAL REPORT
30 June 2018
Note
2018
$
2017
$
8
9
11
10
12
13
14
15
11
17
16a
17
3,203,479
823,087
3,672,347
202,960
383,846
1,704,960
1,599,327
68,154
7,901,873
3,756,287
70,204
180,788
26,562
38,240
-
1,934,645
250,992
1,999,447
8,152,865
5,755,734
2,051,180
3,672,347
309,223
467,288
2,535,813
1,599,327
292,680
1,082,394
6,500,038
5,510,214
28,889
-
25,968
25,453
16b
2,583,632
2,747,536
2,612,521
2,798,957
9,112,559
8,309,171
(959,694)
(2,553,437)
958,916
554,598
(778)
(1,998,839)
18
19
17,527,964
1,545,350
7,210,755
1,157,093
(19,074,092)
(10,366,687)
(778)
(1,998,839)
The consolidated statement of financial position is to be read in conjunction with the accompanying notes.
P a g e | 19
ANNUAL REPORT
30 June 2018
Consolidated statement of changes in equity
for the year ended 30 June 2018
Note
Issued
Capital
Accumulated
Losses
$
$
Balance at 1 July 2016
6,097,054
(5,273,655)
Loss for the year attributable owners of the
parent
Other comprehensive income for the year
attributable owners of the parent
Total comprehensive income for the year
attributable owners of the parent
Transaction with owners, directly in equity
Issue of ordinary shares
Capital raising transaction costs
Share options granted
Equity derivative issued
-
-
(5,093,032)
-
-
(5,093,032)
2,077,851
(964,150)
-
-
-
-
-
-
Balance at 30 June 2017
7,210,755
(10,366,687)
Balance at 1 July 2017
7,210,755
(10,366,687)
Loss for the year attributable owners of the
parent
Other comprehensive income for the year
attributable owners of the parent
Total comprehensive income for the year
attributable owners of the parent
Transaction with owners, directly in equity
Issue of ordinary shares
Capital raising transaction costs
Share options granted
Translation of Ensurance UK ledger
-
-
(8,707,405)
-
-
(8,707,405)
11,224,554
(907,345)
-
-
-
-
-
-
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Foreign
Currency
Translation
Reserve
Share-
Based
Payment
Reserve
Share
Option
Reserve
Revaluation
Reserve
Convertible Note
Option Premium
Reserve
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(54,487)
$
8,980
-
-
-
-
-
-
-
$
-
-
-
-
-
-
838,242
-
$
9,687
-
1,801
1,801
-
-
-
-
$
-
-
-
-
-
-
-
298,383
Total
$
842,066
(5,093,032)
1,801
(5,091,231)
2,077,851
(964,150)
838,242
298,383
8,980
838,242
11,488
298,383
(1,998,839)
8,980
838,242
11,488
298,383
(1,998,839)
-
-
-
-
-
-
-
-
-
-
-
-
470,710
-
-
1,305
1,305
-
-
-
-
-
-
-
-
-
(8,707,405)
1,305
(8,706,100)
11,224,554
(907,345)
(29,271)
441,439
-
(54,487)
Balance at 30 June 2018
17,527,964
(19,074,092)
(54,487)
8,980
1,308,952
12,793
269,112
(778)
The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.
P a g e | 20
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Consolidated statement of cash flows
for the year ended 30 June 2018
Cash flows from operating activities
Receipts from customers
Interest received
Interest and borrowing costs paid
Payments to suppliers and employees
Refund of income taxes
Net used in operating activities
Cash flows from investing activities
Payment for development of intangible assets
Proceeds from sale of financial assets
Proceeds from intercompany loan with discontinued operation
Purchase of plant and equipment
Net used in investing activities
Cash flows from financing activities
Proceeds from share issue
Proceeds from convertible notes subscriptions
Net proceeds from borrowings
Convertible notes interest paid
Repayment of borrowings
Net cash provided by financing activities
ANNUAL REPORT
30 June 2018
Note
2018
$
2017
$
1,614,846
1,055,323
8,663
8,084
(513,508)
(176,279)
(8,856,640)
(4,841,019)
342,285
-
8d.i
(7,404,354)
(3,953,891)
(241,983)
(533,265)
492
271,304
17,649
136,093
(193,757)
(23,337)
(163,944)
(402,860)
11,098,632
457,507
-
3,000,007
5,372,696
1,171,916
(241,429)
(145,692)
(5,841,968)
(87,140)
10,387,931
4,396,598
Net increase in cash held
2,819,633
39,847
Cash and cash equivalents at the beginning of the year
383,846
Cash and cash equivalents at the end of the year
8b
3,203,479
343,999
383,846
Cashflows from discontinued operations
(4,583)
126,096
The consolidated statement of cash flows is to be read in conjunction with the accompanying notes.
.
P a g e | 21
ANNUAL REPORT
30 June 2018
Notes to the consolidated financial statements
for the Year Ended 30 June 2018
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Statement of significant accounting policies
Note 1
These are the consolidated financial statements and notes of Ensurance Limited (Ensurance or the Company) and controlled
entities (collectively the Group). Ensurance is a company limited by shares, domiciled and incorporated in Australia.
The separate financial statements of Ensurance, as the parent entity, have not been presented with this financial report as
permitted by the Corporations Act 2001 (Cth).
The financial statements were authorised for issue on 24 September 2018 by the directors of the Company.
a. Basis of preparation
The financial statements comprise the consolidated financial statements of the Group. For the purposes of preparing the
consolidated financial statements, the Company is a for-profit entity. Material accounting policies adopted in the preparation
of these financial statements are presented below. They have been consistently applied unless otherwise stated.
The consolidated financial statements have been prepared on an accruals basis and are based on historical costs modified,
where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.
Historical cost is generally based on the fair values of the consideration given in exchange for goods and services.
i. Statement of compliance
These financial statements are general purpose financial statements which have been prepared in accordance with
Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board (AAS Board) and
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and
the Corporations Act 2001 (Cth).
Australian Accounting Standards (AASBs) set out accounting policies that the AAS Board has concluded would result in a
financial report containing relevant and reliable information about transactions, events and conditions to which they apply.
Compliance with AASBs ensures that the financial statements and notes also comply with IFRS as issued by the IASB.
ii. Going Concern
The financial statements have been prepared on a going concern basis, which contemplates the continuity of normal
business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business.
The Group has incurred a net loss for the year of $8,707,405 (2017: $5,093,032). As at 30 June 2018, the Group had
working capital of $1,401,835 (2017: negative $1,753,927), a net liability of $778 (2017: $1,998,839), and accumulated
losses of $19,074,092 (2017: $10,366,687). The Group has had recurring operating losses as a result of the delivery of new
products and cashflow generating business units in accordance with the Group’s strategic goals.
Based on a cashflow forecast, the Group has sufficient working capital to fund its mandatory obligations for the period
ending 12 months from the date of this report. Should the Group be unable to generate sufficient funds from its
operations or it is unable to raise sufficient capital, the planned operations of the Company may have to be amended. The
Directors consider the going concern basis of preparation to be appropriate based on forecast cash flows.
iii. Reverse acquisition
Ensurance Ltd is listed on the Australian Securities Exchange. The Company completed the legal acquisition of Ensurance
Capital Pty Ltd (Ensurance Capital) on 5 May 2015.
Ensurance Capital (the legal subsidiary) was deemed to be the acquirer for accounting purposes as it has obtained control
over the operations of the legal acquirer Ensurance (accounting subsidiary). Notwithstanding, as Ensurance Ltd is the listed
entity and the ultimate holding company of the Ensurance Group of companies, the financial statements have been
referred to as the financial statements of Ensurance Ltd.
iv. Use of estimates and judgments
The preparation of consolidated financial statements requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.
These estimates and associated assumptions are based on historical experience and various 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. Actual results may differ from these estimates.
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 affected.
Judgements made by management in the application of AASBs that have significant effect on the consolidated financial
statements and estimates with a significant risk of material adjustment in the next year are discussed in Note 1p.
P a g e | 22
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the Year Ended 30 June 2018
Note 1
Statement of significant accounting policies
ANNUAL REPORT
30 June 2018
v. Comparative figures
Where required by AASBs comparative figures have been adjusted to conform with changes in presentation for the current
financial year.
Where the Group retrospectively applies an accounting policy, makes a retrospective restatement or reclassifies items in its
financial statements, an additional (third) statement of financial position as at the beginning of the preceding period in
addition to the minimum comparative financial statements is presented.
b. Accounting Policies
The Group has consistently applied the following accounting policies to all periods presented in the financial statements. The
Group has considered the implications of new and amended Accounting Standards applicable for annual reporting periods
beginning after 1 July 2017 but determined that their application to the financial statements is either not relevant or not
material.
c. Principles of consolidation
As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated financial
statements as well as their results for the year then ended. Where controlled entities have entered (left) the Consolidated
Group during the year, their operating results have been included (excluded) from the date control was obtained (ceased).
i. Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on
which control is transferred to the Group. Control exists when the Group is exposed to variable returns from another entity
and has the ability to affect those returns through its power over the entity.
The Group measures goodwill at the acquisition date as:
the fair value of the consideration transferred; plus
the recognised amount of any non-controlling interests in the acquire; plus
if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree;
less
the net recognised amount of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
The consideration transferred does not include amounts related to settlement of pre-existing relationships. Such amounts
are generally recognised in profit or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group
incurs in connection with a business combination are expensed as incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is
classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to
the fair value of the contingent consideration are recognised in profit or loss.
ii. Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the date that control ceases.
The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the
Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even
if doing so causes the non-controlling interests to have a deficit balance.
A list of controlled entities is contained in Note 20 Controlled Entities of the financial statements.
iii. Transactions eliminated on consolidation
All intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial statements.
P a g e | 23
ANNUAL REPORT
30 June 2018
Notes to the consolidated financial statements
for the Year Ended 30 June 2018
Note 1
Statement of significant accounting policies
d. Foreign currency transactions and balances
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
i. Functional and presentation currency
The functional currency of each of the Group's entities is measured using the currency of the primary economic
environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which
is the parent entity's functional and presentation currency.
ii. Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured
at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured
at fair value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the profit or loss except where
deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive
income to the extent that the gain or loss is directly recognised in other comprehensive income, otherwise the exchange
difference is recognised in the profit or loss.
iii. Group companies and foreign operations
The financial results and position of foreign operations whose functional currency is different from the Group's
presentation currency are translated as follows:
assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations are transferred directly to the Group's foreign currency
translation reserve in the statement of financial position. These differences are recognised in the profit or loss in the period
in which the operation is disposed.
e. Taxation
Income tax
i.
The income tax expense/(benefit) for the year comprises current income tax expense/(benefit) and deferred tax
expense/(benefit). Gains and losses on discontinued operations are aggregated with the results of continuing operations
for the purposes of income taxes up to the point where the operation no longer forms a legal part of the consolidated tax
group.
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable
income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore
measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as
well as unused tax losses.
Current and deferred income tax expense (benefit) is charged or credited outside profit or loss when the tax relates to
items recognised outside profit or loss.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have
been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial
recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable
profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is
realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement
also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or
liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is
probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
P a g e | 24
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the Year Ended 30 June 2018
Note 1
Statement of significant accounting policies
ANNUAL REPORT
30 June 2018
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures,
deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be
controlled and it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets
and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it
is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in
future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
Where the Group receives the Australian Government's Research and Development Tax Incentive, the Group accounts for
the refundable tax offset under AASB 112. Funds are received as a rebate through the parent company's income tax return
and disclosed as such in Note 6 Income Tax.
ii. Tax consolidation
The Board of Ensurance Ltd has entered into the Tax Consolidation Regime from 1 July 2015. This will include the
preparation and signing of a Tax Sharing and Funding Agreement. Ensurance Limited is the head entity in the newly formed
tax consolidated group. As a consequence, the entities are taxed as a single entity and the deferred tax assets and liabilities
of these entities are set off in the consolidated financial statements.
Under the tax funding agreement, the members of the Group are required to contribute to the head entity for their
current tax liabilities. The assets and liabilities arising under the tax funding agreements are recognised as intercompany
assets and liabilities at call. Members of the tax consolidated group via the tax sharing agreement may be called to provide
for the income tax liabilities between the entities should the head entity default on its tax payment obligations. No amount
has been recognised in respect of this component of the agreement as the outcome is considered remote.
iii. Goods and Services Tax (GST) and Value Added Tax (VAT)
Revenues, expenses, and assets are recognised net of the amount of GST/VAT, except where the amount of GST/VAT
incurred is not recoverable from the taxation authority. In these circumstances the GST/VAT is recognised as part of the
cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial
position are shown inclusive of GST/VAT.
The net amount of GST/VAT recoverable from, or payable to, the Australian Taxation Office in Australia or HM Revenue &
Customs in the UK is included as a current asset or liability in the balance sheet.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST/VAT component of investing
and financing activities, which are disclosed as operating cash flows.
f. Fair Value
i. Fair Value of Assets and Liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending
on the requirements of the applicable AASB.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly
unforced transaction between independent, knowledgeable and willing market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine
fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation
techniques. These valuation techniques maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the
market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most
advantageous market available to the entity at the end of the reporting period (i.e. the market that maximises the receipts
from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction
costs and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant's ability to use the asset
in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use.
P a g e | 25
ANNUAL REPORT
30 June 2018
Notes to the consolidated financial statements
for the Year Ended 30 June 2018
Note 1
Statement of significant accounting policies
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
The fair value of liabilities and the entity's own equity instruments (excluding those related to share-based payment
arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial
instruments, by reference to observable market information where such instruments are held as assets. Where this
information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective
note to the financial statements.
ii. Fair value hierarchy
AASB 13 Fair Value Measurement requires the disclosure of fair value information by level of the fair value hierarchy, which
categorises fair value measurements into one of three possible levels based on the lowest level that an input that is
significant to the measurement can be categorised into as follows:
Level 1
Level 2
Level 3
Measurements based on quoted prices
(unadjusted) in active markets for
identical assets or liabilities that the
entity can access at the measurement
date.
Measurements based on inputs other
than quoted prices included in Level 1
that are observable for the asset or
liability, either directly or indirectly.
Measurements based on unobservable
inputs for the asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation
techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all
significant inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or more
significant inputs are not based on observable market data, the asset or liability is included in Level 3.
iii. Valuation techniques
The Group selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available
to measure fair value. The availability of sufficient and relevant data primarily depends on the specific characteristics of the
asset or liability being measured. The valuation techniques selected by the Group are consistent with one or more of the
following valuation approaches:
Market approach: valuation techniques that use prices and other relevant information generated by market transactions for
identical or similar assets or liabilities.
Income approach: valuation techniques that convert estimated future cash flows or income and expenses into a single
discounted present value.
Cost approach: valuation techniques that reflect the current replacement cost of an asset at its current service capacity.
Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the
asset or liability, including assumptions about risks. When selecting a valuation technique, the Group gives priority to those
techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs that are
developed using market data (such as publicly available information on actual transactions) and reflect the assumptions
that buyers and sellers would generally use when pricing the asset or liability are considered observable, whereas inputs
for which market data is not available and therefore are developed using the best information available about such
assumptions are considered unobservable.
g. Plant and equipment
i. Recognition and measurement
Items of plant and equipment are measured on the cost basis and carried at cost less accumulated depreciation (see below)
and impairment losses (see Note 1i Impairment of non-financial assets).
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets
includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working
condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are
located, and an appropriate proportion of production overheads.
The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows
that will be received from the assets employment and subsequent disposal. The expected net cash flows have not been
discounted to their present values in determining recoverable amounts.
Where parts of an item of plant and equipment have different useful lives, they are accounted for as separate items of
plant and equipment.
P a g e | 26
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the Year Ended 30 June 2018
Note 1
Statement of significant accounting policies
ANNUAL REPORT
30 June 2018
ii. Subsequent costs
The cost of replacing part of an item of plant and equipment is recognised in the carrying amount of the item if it is
probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured
reliably. Any costs of the day-to-day servicing of plant and equipment are recognised in the income statement as an
expense as incurred.
iii. Depreciation
Depreciation is charged to the income statement on a straight-line basis over the asset's useful life to the consolidated
group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the
shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.
Depreciation rates and methods are reviewed annually for appropriateness. The depreciation rates used for the current
and comparative period are:
Fixtures, furniture, and equipment
Plant and equipment
2018
%
2017
%
11.25 – 37.50
11.25 – 37.50
25.00 – 37.50
25.00 – 37.50
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater
than its estimated recoverable amount.
Gains and losses on disposal of an item of plant and equipment are determined by comparing the proceeds from disposal
with the carrying amount of plant and equipment and are recognised net within “other income” in profit or loss.
Impairment of non-financial assets
h.
The carrying amounts of the Group's non-financial assets, other than deferred tax assets (see Note 1e) 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.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.
A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from
other assets and groups. Impairment losses are recognised in the income statement, unless the asset has previously been
revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any
excess recognised through the income statement. Impairment losses recognised in respect of cash-generating units are
allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of
the other assets in the unit on a pro rata basis.
The recoverable amount of an asset or cash-generating unit is the greater of its fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not
generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the
asset belongs.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine
the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation and amortisation, if no impairment loss had been
recognised.
i. Financial instruments
Initial recognition and measurement
i.
A financial instrument is recognised if the Group becomes party to the contractual provisions of the instrument. Financial
assets are derecognised if the Group's contractual rights to the cash flows from the financial assets expire or if the Group
transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset.
Financial liabilities are derecognised if the Group's obligations specified on the contract expire or are discharged or
cancelled.
P a g e | 27
ANNUAL REPORT
30 June 2018
Notes to the consolidated financial statements
for the Year Ended 30 June 2018
Note 1
Statement of significant accounting policies
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair
value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised immediately in profit or loss.
ii. Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity securities, trade and other receivables, cash and cash
equivalents and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through
profit or loss, any directly attributable transactions costs. Subsequent to initial recognition non-derivative financial
instruments are measured as described below.
iii. Classification and Subsequent Measurement
Cash and cash equivalents
(1)
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of nine months or less, and bank overdrafts. Bank overdrafts are shown within
short-borrowings in current liabilities on the Statement of financial position.
Loans
(2)
Loans are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market
and are subsequently measured at amortised cost.
Loans are included in current assets, except for those which are not expected to mature within 12 months after the end
of the reporting period.
Trade and other receivables
(3)
Receivables are usually settled within 60 days. Receivables expected to be collected within 12 months of the end of the
reporting period are classified as current assets. All other receivables are classified as non-current assets.
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using
the effective interest method, less any provision for impairment. Collectability of trade and other receivables are
reviewed on an ongoing basis. An impairment loss is recognised for debts which are known to be uncollectible. An
impairment provision is raised for any doubtful amounts.
Trade and other payables
(4)
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year
which are unpaid and stated at their amortised cost. The amounts are unsecured and are generally settled on 30 day
terms.
Share capital
(5)
Ordinary issued capital is recorded at the consideration received. Incremental costs directly attributable to the issue of
ordinary shares and share options are recognised as a deduction from equity, net of any related income tax benefit.
Ordinary issued capital bears no special terms or conditions affecting income or capital entitlements of the
shareholders.
iv. Amortised cost
Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial recognition
less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the
difference between that initial amount and the maturity amount calculated using the effective interest method.
v. Fair value
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to
determine the fair value for all unlisted securities, including recent arm's length transactions, reference to similar
instruments and option pricing models.
P a g e | 28
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the Year Ended 30 June 2018
Note 1
Statement of significant accounting policies
ANNUAL REPORT
30 June 2018
vi. Effective interest method
The effective interest method is used to allocate interest income or interest expense over the relevant period and is
equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and
other premiums or discounts) over the expected life (or when this cannot be reliably predicted, the contractual term) of the
financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net
cash flows will necessitate an adjustment to the carrying amount with a consequential recognition of an income or expense
item in profit or loss.
vii. Impairment
A financial asset is assessed at each reporting date 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.
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.
Financial assets are tested for impairment on an individual basis.
All impairment losses are recognised in the income statement.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was
recognised. For financial assets measured at amortised cost the reversal is recognised in the income statement.
viii. Derecognition
Financial assets are derecognised where the contractual rights to cash flow expires or the asset is transferred to another
party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the
asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The
difference between the carrying value of the financial liability extinguished or transferred to another party and the fair
value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.
ix. Finance income and expenses
Finance income comprises interest income on funds invested (including available-for-sale financial assets), gains on the
disposal of available-for-sale financial assets and changes in the fair value of financial assets at fair value through profit or
loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method.
Financial expenses comprise interest expense on borrowings calculated using the effective interest method, unwinding of
discounts on provisions, changes in the fair value of financial assets at fair value through profit or loss and impairment
losses recognised on financial assets. All borrowing costs are recognised in profit or loss using the effective interest
method.
Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a
substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as
the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in income in the
period in which they are incurred.
Foreign currency gains and losses are reported on a net basis.
j. Employee benefits
i. Short-term benefits
Liabilities for employee benefits for wages, salaries and annual leave that are expected to be settled within 12 months of
the reporting date represent present obligations resulting from employees' services provided to the reporting date and are
calculated at undiscounted amounts based on remuneration wage and salary rates that the Group expects to pay at the
reporting date including related on-costs, such as workers compensation insurance and payroll tax.
Non-accumulating non-monetary benefits, such as medical care, housing, cars and free or subsidised goods and services,
are expensed based on the net marginal cost to the Group as the benefits are taken by the employees.
ii. Other long-term benefits
The Group's obligation in respect of long-term employee benefits other than defined benefit plans is the amount of future
benefit that employees have earned in return for their service in the current and prior periods plus related on-costs; that
benefit is discounted to determine its present value, and the fair value of any related assets is deducted.
P a g e | 29
ANNUAL REPORT
30 June 2018
Notes to the consolidated financial statements
for the Year Ended 30 June 2018
Note 1
Statement of significant accounting policies
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
iii. Retirement benefit obligations: Defined contribution superannuation funds
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions onto a
separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to
defined contribution superannuation funds are recognised as an expense in the income statement as incurred.
iv. Termination benefits
When applicable, the Group recognises a liability and expense for termination benefits at the earlier of: (a) the date when
the Group can no longer withdraw the offer for termination benefits; and (b) when the Group recognises costs for
restructuring pursuant to AASB 137 Provisions, Contingent Liabilities and Contingent Assets and the costs include
termination benefits. In either case, unless the number of employees affected is known, the obligation for termination
benefits is measured on the basis of the number of employees expected to be affected. Termination benefits that are
expected to be settled wholly before 12 months after the annual reporting period in which the benefits are recognised are
measured at the (undiscounted) amounts expected to be paid. All other termination benefits are accounted for on the
same basis as other long-term employee benefits.
v. Equity-settled compensation
The Group operates an employee share option plan. The fair value of options granted is recognised as an employee
expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period
during which the employees become unconditionally entitled to the options. The fair value of the options granted is
measured using the Black-Scholes pricing model, taking into account the terms and conditions upon which the options
were granted. The amount recognised is adjusted to reflect the actual number of share options that vest except where
forfeiture is only due to market conditions not being met.
k. Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will results and that outflow can be reliably measured.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, when appropriate, the risks specific to the liability.
Leases
l.
Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal
ownership, are transferred to entities in the Group are classified as finance leases.
Leased assets are depreciated on a straight-line basis over their estimated useful lives where it is likely that the Group will
obtain ownership of the asset or over the term of the lease.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised in the
income statement on a straight-line basis over the term of the lease.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the
lease term.
m. Revenue and other income
Interest revenue is recognised in accordance with Note 1i.ix Finance income and expenses.
Revenue is recognised when it is probable that the economic benefit will flow to the Group and the revenue can be reliably
measured. Revenue is recognised to the extent that there is no future obligation. Where there is a future obligation, a portion
is deferred over the expected service period. When the inflow of consideration is deferred, it is treated as the provision of
financing and is discounted at a rate of interest that is generally accepted in the market for similar arrangements. The
difference between the amount initially recognised and the amount ultimately received is interest revenue.
The research and development (R&D) tax offset, also known as the R&D tax incentive provides for a 43.5% refundable tax
offset on eligible R&D expenditure for entities incurring costs on eligible R&D activities and falling under an aggregated
turnover threshold of $20m. For financial reporting purposes, this is treated as an income tax item and recognised when the
work required to receive the grant has been completed.
All revenue is stated net of the amount of GST/VAT (Note 1e.iii Goods and Services Tax (GST) and Value Added Tax (VAT)).
P a g e | 30
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the Year Ended 30 June 2018
Note 1
Statement of significant accounting policies
ANNUAL REPORT
30 June 2018
n. Segment reporting
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 Managing Director to make decisions about resources to be
allocated to the segment and assess its performance, and for which discrete financial information is available.
o. Critical Accounting Estimates and Judgments
Management discusses with the Board the development, selection and disclosure of the Group's critical accounting policies and
estimates and the application of these policies and estimates. The estimates and judgements that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed
below.
i. Key Estimate – Taxation
Balances disclosed in the financial statements and the notes thereto, related to taxation, are based on the best estimates
of directors. These estimates take into account both the financial performance and position of the company as they pertain
to current income taxation legislation, and the directors understanding thereof. No adjustment has been made for pending
or future taxation legislation. The current income tax position represents the directors' best estimate, pending an
assessment by tax authorities in relevant jurisdictions. Refer Note 6 Income Tax.
ii. Key Estimate —Impairment
(1)
Legal Parent Financial Assets related to Subsidiaries
At the end of each financial year, an assessment is made on whether there are indicators that the Company’s
investments in subsidiaries and loans to subsidiaries are impaired. Where necessary, the Company’s assessments
are based on the estimation of the value-in-use of the assets defined in AASB 136 Impairment of Assets by
forecasting the expected future cash flows for a period of up to 5 years, using a suitable discount rate in order to
calculate the present value of those cash flows. The Company’s carrying amount of investments in subsidiaries as
at 30 June 2018 was $169,121 (2017: $nil), and loans $nil (2017: $212,025) after an impairment loss of $6,993,937
was recognised in 2018 (2017: $4,550,809). The impairment losses have been included in the parent Company’s
results for the year. Details of the impairment loss calculation are set out in Note 29.
In determining whether an impairment exists, management assumes that a subsidiary will only be able to repay
its loans to the extent it has positive net assets. It is also assumed that the Company’s legal subsidiaries have no
realisable value as standalone entities and so the shares it owns in them must be fully impaired. It is assumed
that loans with each subsidiary are interchangeable and so the extent of any impairment on loans is limited to the
amount of the net deficiency of the sub-group.
P a g e | 31
ANNUAL REPORT
30 June 2018
Notes to the consolidated financial statements
for the Year Ended 30 June 2018
Note 1
Statement of significant accounting policies
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
(2)
Intangible Assets
The Company assesses impairment of intangible assets at each reporting date by evaluating conditions specific to
the Company and to the particular asset that may lead to impairment. If an impairment trigger exists, the
recoverable amount of the asset is determined. The Company used the income approach in determining the fair
value which reflects the current market expectations about future amounts that will be generated by the
intangible assets. This involves employing present value techniques that are dependent on the circumstances
specific to the intangible asset and the availability of sufficient data.
During this reporting period, the directors have taken a view to impair the full value of the software development
costs until the economic benefits flowing from this asset are material and can be determined with reasonable
accuracy. The directors are presently of the opinion that the additional economic benefits to be derived from this
asset cannot be determined with reasonable accuracy. The decision to fully impair the carrying amount of the
intangible asset has resulted in a one-off impairment charge to the profit & loss account in the sum of $2.01
million.
iii. Key Estimate —Intangible assets and amortisation
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value
at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising
from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying
amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes
in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method
or period.
Intangible Assets, arising from software development costs, are initially recognised as an asset when it is expected that
material future economic benefits will be derived from such expenditure. The estimated future economic benefits are used
to determine the recoverable amount of this asset, however, where the timing and value of these future economic benefits
cannot be determined with reasonable accuracy, the carrying amount is written down to the recoverable amount through
an impairment charge to the profit & loss account.
P a g e | 32
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the Year Ended 30 June 2018
Note 1
Statement of significant accounting policies
ANNUAL REPORT
30 June 2018
iv. Key Estimate – Discontinued operations
An operation is classified as discontinued when a decision is made by management to dispose of an operating segment of
the business. Due to transactions and agreements incurred at 30 June 2018, which include the taking of a non-refundable
deposit from the purchaser, it was concluded that there was a high likelihood of the completion of the sale of Savill Hicks
Corp Pty Ltd. It therefore meets the criteria for classification as a discontinued operation in the financial year and the
results of this entity are disclosed separately in this document from the continuing operations of the business.
p. Amendments to AASBs and the new Interpretations that are mandatorily effective for the current period
The accounting policies adopted are consistent with those of the previous financial years except the following which the
Group adopted from 1 July 2017:
AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of deferred tax assets for unrealised tax
losses.
AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative – Amendments to AASB 107.
AASB 2017-2 Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting
Standards 2014-2016 Cycle
The adoption of these standards did not have any impact on the current period or any prior period and is not likely to affect
future periods.
q. New Accounting Standards and Interpretations applicable from 1 July 2017 not yet mandatory or early adopted
A number of new standards, amendments to standards and interpretations issued by the AASB which are not yet mandatorily
applicable to the Group have not been applied in preparing these financial statements. Those which may be relevant to the
Group are set out below. The Group does not plan to adopt these standards early.
i. AASB 9 Financial Instruments and associated Amending Standards (applicable for annual reporting period commencing
on or after 1 January 2018)
The Standard will be applicable retrospectively (subject to the comment on hedge accounting below) and includes revised
requirements for the classification and measurement of financial instruments, revised recognition and derecognition
requirements for financial instruments and simplified requirements for hedge accounting.
Key changes made to this standard that may affect the Group on initial application include certain simplifications to the
classification of financial assets, simplifications to the accounting of embedded derivatives, and the irrevocable election to
recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive
income.
The Directors anticipate that the adoption of AASB 9 will not have a material impact on the Group’s financial instruments.
ii. AASB 15 Revenue from Contracts with Customers (applicable to annual reporting periods commencing on or after 1
January 2018).
When effective, this Standard will replace the current accounting requirements applicable to revenue with a single,
principles-based model. Except for a limited number of exceptions, including leases, the new revenue model in AASB 15 will
apply to all contracts with customers as well as non-monetary exchanges between entities in the same line of business to
facilitate sales to customers and potential customers.
The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange
for the goods or services. To achieve this objective, AASB 15 provides the following five-step process:
(1)
(2)
Identify the contract(s) with a customer;
Identify the performance obligations in the contract(s);
(3) Determine the transaction price;
(4) Allocate the transaction price to the performance obligations in the contract(s); and
(5)
Recognise revenue when (or as) the performance obligations are satisfied.
This Standard will require retrospective restatement, as well as enhanced disclosures regarding revenue.
P a g e | 33
ANNUAL REPORT
30 June 2018
Notes to the consolidated financial statements
for the Year Ended 30 June 2018
Note 1
Statement of significant accounting policies
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
The Directors anticipate that the adoption of AASB 15 will not have a material impact on the Group’s revenue recognition
and disclosures.
iii. AASB 16: Leases (applicable to annual reporting periods commencing on or after 1 January 2019).
AASB 16 removes the classification of leases as either operating leases or finance leases for the lessee effectively treating
all leases as finance leases. Short term leases (less than 12 months) and leases of a low value are exempt from the lease
accounting requirements. Rent is no longer charged, instead depreciation and a finance charge, impacting EBITDA. Lessor
accounting remains similar to current practice.
The Directors anticipate that the adoption of AASB 16 will require representing the Group’s office rental leases in Melbourne
and London as finance leases, with applicable accounting treatment applied. There will also be some minor adjustments for
representing operating leases over office equipment. An analysis of the Group’s current exposure to leases falling under
AASB 16 would not have a material impact on the net profit or net assets of the Group, but would require reclassification of
the above assets in accordance with the new standard and as such, the effect on the individual line items of the Statement
of Financial Position will be material. It is estimated that non-current assets would increase by approximately $1.0m to
recognise the right-of-use assets, less accumulated amortisation, with a corresponding increase in liabilities of $1.1m to
recognise the lease liability.
iv. AASB 2016-5: Amendments to Australian Accounting Standards – Classification and measurement of share-based
payment transactions (applicable to annual reporting periods commencing on or after 1 July 2018).
AASB 2016-5 amends AASB 2, clarifying how to account for certain types of share-based payment transactions. The
amendments provide requirements on the accounting for the effects of vesting and non-vesting conditions on the
measurement of cash-settled share-based payments; Share-based payment transactions with a net settlement feature for
withholding tax obligations and; a modification to the terms and conditions of a share-based payment that changes the
classification of the transaction from cash-settled to equity-settled.
The Directors anticipate that the adoption of AASB 2016-5 will not have a material impact on the Group’s recognition of
share-based payments.
v. AASB 2017-4: Amendments to Australian Accounting Standards – Uncertainty over Income Tax Treatments (applicable
to annual reporting periods commencing on or after 1 January 2019).
AASB 2017-4 amends AASB 1 to clarify that a first-time adopter whose date of transition to Australian Accounting
Standards is before 1 July 2017 may elect not to reflect the application of AASB Interpretation 23, as identified in AASB
1048 Interpretation of Standards, in comparative information in its first financial statements prepared in accordance with
Australian Accounting Standards.
The Directors anticipate that the adoption of AASB 2017-4 will not have a material impact on the Group’s presentation of its
financial statements.
vi. Other standards not yet applicable
There are no other standards that are not yet effective and that would be expected to have a material impact on the entity
in the current or future reporting periods and on foreseeable future transactions
P a g e | 34
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Note 2
Registered Office and Principal Place of Business
ANNUAL REPORT
30 June 2018
The registered office and principal place of business of the Company is:
Address:
Street:
Level 2/2 Glen St
Milsons Point NSW 2061
PO Box 523
Milsons Point NSW 1565
+61 (0)2 9806 2000
+61 (0)2 9806 2099
Postal:
Telephone:
Facsimile:
Other business locations
Melbourne:
Telephone:
London:
Telephone:
4/400 Canterbury Road
Surrey Hills VIC 3127
+61 1300 794 079
Level 2, 10 Philpot Lane
London, EC3M 8AA, United Kingdom
+44 (0)20 3941 7710
P a g e | 35
ANNUAL REPORT
30 June 2018
Notes to the consolidated financial statements
for the year ended 30 June 2018
Note 3
Revenue and other income
a. Revenue
Sales revenue
Interest
Other
Note 4
Loss before income tax
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
2018
$
1,201,076
7,260
-
2017
$
977,872
3,947
26,533
1,208,336
1,008,352
Note
2018
$
2017
$
The following significant revenue and expense items are relevant in explaining
the financial performance:
a. Depreciation and amortisation:
Depreciation and amortisation of plant and equipment
Impairment of intangibles
Amortisation of intangibles
13b
14b
b. Employment costs:
Directors fees
Increase in employee benefits provisions
Superannuation expenses
Wages and salaries
Other employment related costs
Note 5
Auditor's remuneration
Audit and review of financial statements:
(cid:1) Mazars Risk and Assurance Pty Limited
(cid:1) Buzzacott LLP
Other services - Taxation compliance provided by a related practice of the
Auditor - Mazars
Other services - Taxation compliance provided by a related practice of the
Auditor - Buzzacott
50,436
2,007,461
173,167
2,231,064
114,875
21,977
367,836
27,709
-
376,752
404,461
204,750
121,277
294,200
4,002,505
2,270,809
585,260
424,460
5,092,453
3,315,496
2018
$
2017
$
118,790
24,297
102,500
15,249
-
28,630
40,148
32,836
183,235
179,215
P a g e | 36
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the year ended 30 June 2018
Note 6
Income tax
Note
a.
Income tax (benefit)/expense
Current tax
Deferred tax
Tax rebate for Research and Development
b. Reconciliation of income tax benefit to prima facie tax payable
The prima facie tax payable / (benefit) on loss from ordinary activities before
income tax is reconciled to income tax expense as follows:
Prima facie tax benefit on operating loss of Australian continued operations
at 27.5% (2017: 27.5%)
Prima facie tax expense/(benefit) on operating profit of Australian
discontinued operations at 27.5% (2017: 27.5%)
Prima facie tax expense on operating loss of UK continued operations at 19%
(2017: 19%)
Add / (Less)
Tax effect of:
Capital-raising costs deductible
Timing differences
Non-deductible expenses
Other
Losses in Ensurance UK Limited at 19%
Deferred tax asset not brought to account
ANNUAL REPORT
30 June 2018
2018
$
-
-
2017
$
-
-
(286,084)
(276,994)
(286,084)
(276,994)
(1,869,479)
(1,380,434)
2,179
(114,278)
(418,629)
(192,856)
-
-
3,471
-
418,629
(20,312)
(91,436)
-
(3,087)
192,856
1,863,829
1,609,547
Income tax (benefit)/expense attributable to operating loss
-
-
Less rebates:
Tax rebate for Research and Development
Income tax (benefit)/expense
c. The applicable weighted average effective tax rates attributable to operating
profit are as follows
(286,084)
(276,994)
(286,084)
(276,994)
%
-
$
%
-
$
d. Balance of franking account at year end of the legal parent
8,620
350,906
P a g e | 37
ANNUAL REPORT
30 June 2018
Notes to the consolidated financial statements
for the year ended 30 June 2018
Note 6
Income tax (cont.)
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Note
2018
$
2017
$
e. Deferred tax assets
Provisions
Other
Capital raising costs
Tax losses
Set-off against deferred tax liabilities
Net deferred tax assets
Less deferred tax assets not recognised
Net tax assets
f. Deferred tax liabilities
Intangibles
Set-off deferred tax assets
Net deferred tax liabilities
g. Tax losses and deductible temporary differences
Unused tax losses and deductible temporary differences for which no
deferred tax asset has been recognised, that may be utilised to offset tax
liabilities:
Deductible temporary differences
Revenue losses
(47,066)
180,902
28,215
1,494,097
1,656,148
455,549
79,023
-
38,444
1,340,313
1,457,780
(171,700)
2,111,697
1,286,080
(2,111,697)
(1,286,080)
-
-
455,549
(455,549)
171,700
(171,700)
-
-
617,600
(54,233)
3,213,657
2,134,779
3,831,256
2,080,546
Potential deferred tax assets attributable to tax losses have not been brought to account at 30 June 2018 because the
directors do not believe it is appropriate to regard realisation of the deferred tax assets as probable at this point in time.
These benefits will only be obtained if:
i. the Group derives future assessable income of a nature and of an amount sufficient to enable the benefit from the
deductions for the loss to be realised;
ii. the company continues to comply with conditions for deductibility imposed by law; and
iii. no changes in tax legislation adversely affect the Group in realising the benefit from the deductions for the loss.
h. Tax consolidation
The Board of Ensurance Ltd has entered into the Tax Consolidation Regime from 1 July 2015. This includes the preparation
and signing of a Tax Sharing and Funding Agreement. Ensurance Limited is the head entity in the newly formed tax
consolidated group. As a consequence, the entities are taxed as a single entity and the deferred tax assets and liabilities of
these entities are set off in the consolidated financial statements. Under the tax funding agreement, the members of the
Group are required to contribute to the head entity for their current tax liabilities. The assets and liabilities arising under
the tax funding agreements are recognised as intercompany assets and liabilities at call. Members of the tax consolidated
group via the tax sharing agreement may be called to provide for the income tax liabilities between the entities should the
head entity default on its tax payment obligations. No amount has been recognised in respect of this component of the
agreement as the outcome is considered remote.
P a g e | 38
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the year ended 30 June 2018
Note 7
Earnings per share (EPS)
a. Reconciliation of earnings to profit or loss
Loss for the year
Less: loss attributable to non-controlling equity interest
Loss used in the calculation of basic EPS
b. Number of ordinary shares outstanding during the year used in calculation
of basic EPS
c. Earnings per share
Basic EPS (cents per share)
ANNUAL REPORT
30 June 2018
Note
2018
$
2017
$
(8,707,405)
(5,093,032)
-
-
(8,707,405)
(5,093,032)
2018
$
2017
$
346,227,724
83,113,862
2018
$
2017
$
(2.51)
(6.13)
d. At the balance date, the Group has 25,497,314 unissued shares under options (2017: 10,097,314), 8,000,000 partly-paid shares
on issue (2017: 8,000,000), 1,500,000 performance rights (2017: 7,000,000) and 75,000,000 convertible notes (2017: 37,500,000).
The Group does not report diluted earnings per share on annual losses generated by the Group. During the 2018 financial year the
Group's unissued shares under option, partly-paid shares, and performance rights were anti-dilutive. The Group’s convertible
notes are dilutive.
e. During the year, the group issued the following unissued shares under options: 5,000,000 options exercisable at 8 cents and
expiring 15 December 2019; 3,150,000 options exercisable at 5 cents and expiring 15 December 2019 and 7,250,000 options
exercisable at 5 cents and expiring 15 December 2020. Additionally, 3,000,000 options issued in the previous financial year,
exercisable at 9.2 cents and expiring 31 Jul 2020 were repriced to be exercisable at 4.6 cents. 3,500,000 options issued in the
previous financial year, exercisable at 8 cents and expiring 31 July 2020 were also repriced, to be exercisable at 4 cents. All these
options are anti-dilutive.
P a g e | 39
ANNUAL REPORT
30 June 2018
Notes to the consolidated financial statements
for the year ended 30 June 2018
Note 8
Cash and cash equivalents
Note
a. Current
Cash at bank
Cash on hand
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
2018
$
3,201,734
1,745
3,203,479
2017
$
382,667
1,179
383,846
b. Reconciliation of cash
Cash at the end of the financial year as shown in the statement of cash flows
is reconciled to items in the statement of financial position as follows:
Cash and cash equivalents
8a
3,203,479
3,203,479
383,846
383,846
c. The Group's exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in Note
27 Financial risk management.
d. Cash Flow Information
Note
2018
$
2017
$
i. Reconciliation of cash flow from operations to (loss)/profit after income tax
Loss after income tax
(8,707,405)
(5,093,032)
Cash flows excluded from (loss)/profit attributable to operating activities
-
-
Non-cash flows in (loss)/profit from ordinary activities:
Depreciation and amortisation
Convertible note interest
Impairment
Other (option reserves)
Movements related to discontinued operations
Changes in assets and liabilities, net of the effects of purchase and disposal of
subsidiaries:
(Increase)/decrease in receivables
(Increase)/decrease in prepayments and other assets
(Increase)/decrease in net tax assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
Cash flow from operations
e. Credit standby facilities
The Group has no credit standby facilities.
f. Non-cash investing and financing activities
Nil.
Note 9
Trade and other receivables
a. Current
Trade receivables
R&D Tax rebate receivable
Receivable from underwriter
243,225
344,705
2,007,461
103,770
(612,463)
(20,364)
(149,927)
58,285
(669,840)
(1,801)
436,542
145,692
-
-
(219,445)
(28,460)
(40,158)
(342,285)
1,049,678
137,577
(7,404,354)
(3,953,891)
2018
$
35,751
284,000
503,336
2017
$
27,865
342,285
1,334,810
823,087
1,704,960
b. The Group's exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 27
Financial risk management.
P a g e | 40
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the year ended 30 June 2018
Note 10 Other assets
Current
Prepayments
Note 11
Compliance of underwriting assets and liabilities
30 JUNE 2017
Trust account insurer assets
Insurance debtors
Trust accounts
Total trust account insurance assets
Trust account insurer liabilities
Underwriter's liability
Unearned commissions
Other
Total trust account insurance liabilities
Excess of insurance assets over insurance liabilities
30 JUNE 2018
Trust account insurer assets
Insurance debtors
Trust accounts
Total trust account insurance assets
Trust account insurer liabilities
Underwriter's liability
Unearned commissions
Other
Total trust account insurance liabilities
ANNUAL REPORT
30 June 2018
2018
$
202,960
202,960
2017
$
68,154
68,154
Ensurance
Underwriting Pty
Limited
$
Ensurance
UK Limited
$
747,323
849,517
1,596,840
1,462,783
80,912
53,145
1,596,840
-
2,487
-
2,487
2,487
-
-
2,487
-
Total
$
749,810
849,517
1,599,327
1,465,270
80,912
53,145
1,599,327
-
1,019,367
1,387,150
864,152
401,678
1,883,519
1,788,828
2,406,517
1,265,830
3,672,347
2,276,691
128,254
1,572
1,103,927
121,263
40,640
3,380,618
249,517
42,212
2,406,517
1,265,830
3,672,347
Excess of insurance assets over insurance liabilities
-
-
-
The above note reflects only the trust account assets and liabilities of continued operations. However, until the completion of
the sale of Savill Hicks Corp Pty Ltd, Ensurance Ltd is still responsible for the compliance of its trust account. As at the balance
date, Savill Hicks Corp Pty Ltd had trust account assets of $4,345,981, represented by cash balances of $3,042,805 and
insurance debtors of $1,303,176. Corresponding trust liabilities of $4,345,981 were held, represented by Underwriter
liabilities of $4,146,877, unearned commissions of $184,681 and other amounts of $14,422. The excess/deficiency of assets
over liabilities was nil.
Note 12
Financial assets
a. Non-current
Tier 1 Financial assets: Listed shares
Bonds on deposit
P a g e | 41
2018
$
2,564
67,640
70,204
2017
$
2,164
24,398
26,562
ANNUAL REPORT
30 June 2018
Notes to the consolidated financial statements
for the year ended 30 June 2018
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Note 13
Plant and equipment
Fixtures, furniture, and fittings
Accumulated depreciation
Plant and equipment
Accumulated depreciation
Total plant and equipment
Movements in Carrying Amounts
Carrying amount: 1 July 2016
Additions
Disposals
2018
$
187,428
(25,873)
161,555
91,639
(72,406)
19,233
180,788
Fixtures,
furniture & fittings
Plant & equipment
$
292
9,255
-
$
43,611
12,791
-
Depreciation expense
(2,011)
(25,698)
Carrying amount: 30 June 2017
Carrying amount: 1 July 2017
Additions
Disposals
Depreciation expense
7,536
7,536
177,120
-
(23,101)
30,704
30,704
16,637
(773)
(27,335)
2017
$
35,525
(27,989)
7,536
76,463
(45,759)
30,704
38,240
Total
$
43,903
22,046
-
(27,709)
38,240
38,240
193,757
(773)
(50,436)
Carrying amount: 30 June 2018
161,555
19,233
180,788
Note 14
Intangible assets
Software development costs
Impairment
Accumulated amortisation
Total intangible assets
Movements in Carrying Amounts
Carrying amount: 1 July 2016
Additions
Amortisation expense
Carrying amount: 30 June 2017
Carrying amount: 1 July 2017
Additions
Amortisation expense
Impairment
Carrying amount: 30 June 2018
2018
$
2017
$
3,698,562
3,452,579
(2,007,461)
-
(1,691,101)
(1,517,934)
-
1,934,645
Software
Development
$
1,768,131
543,266
(376,752)
1,934,645
1,934,645
245,983
(173,167)
(2,007,461)
-
P a g e | 42
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the year ended 30 June 2018
Note 15
Trade and other payables
a. Current
Unsecured
Trade payables & accruals
Other payables
Other taxes
Related party payables
Loan with discontinued operation
ANNUAL REPORT
30 June 2018
2018
$
2017
$
Note
15b
351,644
401,158
238,620
-
488,871
461,143
608,659
163,141
813999
15d
1,059,758
2,051,180
2,535,813
b. Trade payables are non-interest bearing and usually settled within the lower of terms of trade or 30 days.
c. The Group's exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 26
Financial risk management.
d. The loan with discontinued operation represents an intercompany loan balance owing from Ensurance Limited to its
subsidiary, Savill Hicks Corp Pty Ltd. Normally eliminated on consolidation, with the operations of Savill Hicks Corp Pty Ltd
discontinued pending the sale, the balance is restated as a liability owing from Ensurance Limited. However, the balance of
$1.06m is not wholly payable in cash. The retained earnings of the discontinued operation of $825k were declared as a
dividend on 1 July 2018 and offset against the loan. The remaining balance of $235k is payable in cash and will be settled
on completion of the sale.
Note 16 Borrowings
a. Current
Short term loans
Related party loans
Non-refundable sale deposit taken
Premium funding loans
b. Non-Current
Convertible notes (i)
Convertible loans
Accrued interest
Less: Equity component – value of conversion rights (ii)
2018
$
-
120,378
200,000
146,910
2017
$
963,900
114,906
-
3,588
467,288
1,082,394
3,000,007
2,280,007
-
76,987
720,000
45,912
(493,362)
(298,383)
2,583,632
2,747,536
(i) A $3m convertible note was issued by the Company on 11 July 2016 at an issue price of $0.22 per note. Each note
entitles the holder to convert to one ordinary share. Conversion may occur at any time for a period of three years from
the subscription date. If the notes have not been converted, they will be redeemed at this point. Interest of 8% will be
paid quarterly up until that settlement date. In the prior period $720,000 of these notes were classified as convertible
loans, to the extent they were held by Directors of the Company and pending shareholder approval. Approval was
granted at the AGM on 29 November 2017 enabling the convertible loans to be reclassified as convertible notes.
The conversion price of the note reduces in line with the issue price of any capital raising conducted during the life of the
note. As at the balance date, the conversion price was 4 cents and as such a further 75,000,000 shares stand to be issued.
P a g e | 43
ANNUAL REPORT
30 June 2018
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
(ii) The net proceeds received from the issue of the convertible notes have been split between the financial liability
element and an equity component, representing the residual attributable to the option to convert the financial liability
into equity of the Company. The equity derivative of $493,362 has been credited to equity (option premium on
convertible notes). The liability component is measured at amortised cost. The interest component is measured at
amortised cost. The interest expense is calculated by applying an effective interest rate of 12.57% for the period since the
loan notes were issued.
Note 17
Employee benefit provisions
Note
a. Disclosed as:
Current
Non-current
Carrying amount at the end of year
b. Movements in Carrying Amounts
Carrying amount at the beginning of year
Additional provisions raised during the year
Amounts used
2018
$
309,223
28,889
338,112
Long service
Leave
$
65,486
14,319
2017
$
292,680
25,968
318,648
Total
$
318,648
198,837
Annual leave
$
253,162
184,518
(173,700)
(5,673)
(179,373)
Carrying amount at the end of year
263,980
74,132
338,112
c. Description of provisions
Provision for employee benefits represents amounts accrued for annual leave and long service leave.
The current portion for this provision includes the total amount accrued for annual leave entitlements and the amounts
accrued for long service leave entitlements that have vested due to employees having completed the required period of
service. Based on past experience, the Group does not expect the full amount of annual leave or long service leave
balances classified as current liabilities to be settled within the next 12 months. However, these amounts must be classified
as current liabilities since the Group does not have an unconditional right to defer the settlement of these amounts in the
event employees wish to use their leave entitlement.
The non-current portion for this provision includes amounts accrued for long service leave entitlements that have not yet
vested in relation to those employees who have not yet completed the required period of service.
P a g e | 44
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the year ended 30 June 2018
ANNUAL REPORT
30 June 2018
Note 18
Issued capital
2018
No.
2017
No.
2018
$
2017
$
Fully paid ordinary shares at no par value
346,227,724
83,113,862
17,527,964
7,210,755
a. Ordinary shares
At the beginning of the period
83,113,862
57,140,909
7,210,755
6,097,054
Shares issued during the year
263,113,862
25,972,953
11,224,554
2,077,851
Capital raising transaction costs
-
-
(907,345)
(964,150)
Balance at reporting date
346,227,724
83,113,862
17,527,964
7,210,755
b. Partly paid shares
Partly-paid Shares
2018
No.
2017
No.
18b.i
8,000,000
8,000,000
i. Each Partly Paid Share is issued at a price of 20 cents of which 0.01 of one cent is paid with the balance payable, at
the election of the holder, any time within five years from the date of Shareholder approval of the special
resolution, being 30 November 2020, in accordance with resolution 13 of the Company's 2015 Annual General
Meeting.
The Partly Paid Shares will not be subject to calls by Ensurance and any of the Partly Paid Shares which are not fully
paid up at the expiration date of 30 November 2020 shall be forfeited (in accordance with Ensurance’s constitution)
and the holder shall have no right to pay up and shall retain no rights in relation thereto.
c. Options
2018
No.
2017
No.
Options exercisable at 12 cents expiring 31 July 2020
1,000,000
1,000,000
Options exercisable at 4.6 cents expiring 31 July 2020
3,000,000
-
Options exercisable at 9.2 cents expiring 31 July 2020
-
3,000,000
Options exercisable at 8 cents expiring 31 July 2020
2,597,314
6,097,314
Options exercisable at 4 cents expiring 31 July 2020
Options exercisable at 8 cents expiring 15 December 2019
Options exercisable at 5 cents expiring 15 December 2019
Options exercisable at 5 cents expiring 15 December 2020
P a g e | 45
3,500,000
5,000,000
3,150,000
7,250,000
-
-
-
-
25,497,314
10,097,314
ANNUAL REPORT
30 June 2018
Options were valued using the Black-Scholes model as follows
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
2018
$
2017
$
Options exercisable at 12 cents expiring 31 July 2020
76,100
76,100
Options exercisable at 4.6/9.2 cents expiring 31 July 2020
245,700
245,700
Options exercisable at 8 cents expiring 31 July 2020
219,992
516,442
Options exercisable at 4 cents expiring 31 July 2020
Options exercisable at 8 cents expiring 15 December 2019
Options exercisable at 5 cents expiring 15 December 2019
Options exercisable at 5 cents expiring 15 December 2020
d. Performance rights
Performance Rights Class A
Performance Rights Class B
Carrying amount at the end of year
e. Convertible Notes
Convertible notes
Converting loans
Carrying amount at the end of year
f. Capital Management
296,450
98,500
98,595
273,615
-
-
-
-
1,308,952
838,242
2018
No.
2017
No.
1,000,000
6,500,000
500,000
500,000
1,500,000
7,000,000
25a.i
25a.ii
16b.i
16b.i
75,000,000
28,500,000
-
9,000,000
75,000,000
37,500,000
The Directors' objectives when managing capital are to ensure that the Group can maintain a capital base so as to maintain
investor, creditor and market confidence and to sustain future development of the business. The Board of Directors
monitors the availability of liquid funds in order to meet its short-term commitments.
Current ratio
2018
1.22
2017
0.68
The focus of the Group's capital risk management is the current working capital position against the requirements of the
Group in respect of operations, software development and overheads. The Group's strategy is to ensure appropriate
liquidity is maintained to meet forecast operating requirements, with a view to initiating capital raisings as required.
The Group is subject to externally imposed capital requirements under the FSRA Legislation through its Australian Financial
Services (AFS) Licensees, Savill Hicks Corp Pty Limited and Ensurance Underwriting Pty Limited. This legislation requires that
the insurance assets of the entity be equal to or exceed the insurance liabilities. Refer also note 11.
P a g e | 46
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the year ended 30 June 2018
ANNUAL REPORT
30 June 2018
The working capital position of the Group at 30 June 2018 and 30 June 2017 were as follows:
Cash and cash equivalents
Trade and other receivables
Other current assets
Trust account insurer assets
Trust account insurer liabilities
Trade and other payables
Short-term borrowings
Short-term provisions
Working capital position
Note 19 Reserves
Investment revaluation reserve
Share-based payment reserve
Convertible note option premium reserve
Foreign currency translation reserve
Share option reserve
Total reserves
a.
Investment revaluation reserve
Note
8
9
11a
11b
15
16
17
Note
19a
19b
19c
19e
19d
2018
$
3,203,479
823,087
202,960
2017
$
383,846
1,704,960
68,154
3,672,347
1,599,327
(3,672,347)
(1,599,327)
(2,051,180)
(2,535,813)
(467,288)
(309,223)
(1,082,394)
(292,680)
1,401,835
(1,753,927)
2018
$
12,793
8,980
269,112
(54,487)
2017
$
11,488
8,980
298,383
-
1,308,952
838,242
1,545,350
1,157,093
The investment revaluation reserve records revaluations of investments held by the Group.
b.
Share-based payment reserve
The share-based payment reserve records items recognised as expenses on the value of equity issues.
c. Convertible note option premium reserve
The convertible note option premium reserve recognises the equity component attached to the Company’s convertible
notes.
d.
Share option reserve
The share option reserve recognises the value of the unlisted share options in the Company.
e.
Foreign currency translation reserve
The foreign currency translation reserve records the unrealised foreign currency gains or losses on translation of the
financial statements of subsidiaries where the functional currency differs to that of the parent entity.
P a g e | 47
ANNUAL REPORT
30 June 2018
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the year ended 30 June 2018
Note 20
Controlled entities
a. Legal parent entity
Ensurance Limited is the ultimate parent of the Group (refer to Note 1a.iii).
i. Legal subsidiaries
Ensurance Capital Pty Limited
Ensurance IT Pty Limited
Ensurance Underwriting Pty Limited
Savill Hicks Corp Pty Limited
Savill Hicks Corp (NSW) Pty Ltd
Ensurance Life Pty Ltd
Ensurance UK Limited
Country of
Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
United Kingdom
Class of
Shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
b. Investments in subsidiaries are accounted for at cost.
Percentage Owned
2018
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
2017
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
c. Savill Hicks Corp Pty Limited and Savill Hicks Corp (NSW) Pty Ltd together form the Australian retail brokerage business to
be sold in October 2018 and their results are classified as discontinued operations in this annual report.
Note 21
Commitments
a. Operating lease commitments:
Minimum lease payments under non-cancellable operating leases
not later than 12 months
between 12 months and 5 years
greater than 5 years
2018
$
2017
$
322,668
266,195
-
267,848
178,401
-
588,863
446,249
A renewed operating lease is held over 400 Canterbury Road, Surrey Hills Melbourne Vic. The period of the lease is a non-
cancellable three-year period commencing 9 March 2018. A further operating lease is held over Level 2, 10 Philpot Lane,
London. The period of lease is five years commencing 27 November 2017, with an optional break clause after two years.
P a g e | 48
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the year ended 30 June 2018
Note 22 Key Management Personnel compensation (KMP)
The names and positions of KMP are as follows:
ANNUAL REPORT
30 June 2018
Mr Tony Leibowitz
Chairman (appointed 29 September 2017)
Mr Adam Davey
Mr Tony Wehby
Mr Stefan Hicks
Mr Brett Graves
Mr Neil Pinner
Non-Executive Director (resigned as Chairman 29 September 2017)
Non-Executive Director (appointed 3 May 2018)
Non-Executive Director (resigned 3 May 2018)
Chief Operating Officer (resigned as Executive Director 21 September 2017)
Non-Executive Director (resigned 3 November 2017)
Mr Grant Priest
Non-Executive Director (resigned 3 November 2017)
Mr Arjan van Ameyde
Chief Financial Officer (appointed 1 February 2018)
Mr Michael Huntly
CEO of Ensurance Underwriting
Mr Peter Fielding
COO of Ensurance IT
Mr Sam Hallab
Mr Tim James
Company Secretary (resigned as Chief Financial Officer 28 February 2018)
CEO of Ensurance UK Limited
The total remuneration paid to KMP during the year is as follows:
Short-term employee benefits
Post-employment benefits
Total
Note 23 Related party transactions
Transactions between related parties are on normal commercial terms and
conditions no more favourable than those available to other parties unless
otherwise stated.
Payments made in respect to remuneration of related parties of the KMP:
(cid:1) K Graves (spouse of Mr Brett Graves)
(cid:1) C Graham (executive assistant of Mr Tony Leibowitz)
(cid:1)
J Huntly (son of Mr Michael Huntly)
2018
$
2017
$
2,001,931
1,685,068
140,849
141,961
2,142,780
1,827,029
2018
$
2017
$
46,738
40,684
21,088
45,865
-
11,585
During the year, outstanding Director fees were paid to former Directors Grant Priest and Neil Pinner. Due to the long
outstanding nature of these fees, interest of 8% was paid on the overdue amounts. The interest amounted to $9,776 for Mr
Priest and $2,804 for Mr Pinner.
During the year, the Company established a loan facility with Kalonda Pty Ltd, a related entity of Mr Tony Leibowitz. Interest
on the facility was charged at 1.5% per calendar month on any drawn amounts and 0.66% per calendar month on any
undrawn amounts. The facility limit was $2.5m. The balance of the loan account was cleared, and the facility was closed on
29 June 2018. Total interest paid to Kalonda Pty Ltd in the year was $249,931. Additionally, Kalonda Pty Ltd was granted
1,150,000 options as a result of establishing the loan facility. These options are exercisable at 5 cents and expire two years
from the date of issue.
The Company currently has a loan payable to Mr Brett Graves of $94,728 plus accrued interest of $17,637 as at 30 June 2018
(2017: $94,728 plus accrued interest of $12,164). Interest accrues on the principal at a rate of 10% per annum. This loan will
be cleared as partial payment towards the purchase price of Savill Hicks Corp Pty Ltd. Additionally, the Company has a
payable of $6,000 to Mr Adam Davey (2017: $6,000), representing interest on a loan that was settled in the previous financial
year.
P a g e | 49
ANNUAL REPORT
30 June 2018
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
During the year, the Company underwent three capital raisings; a $3.5m placement of shares in December 2017; an $800k
placement of shares in April 2018 and; a fully-underwritten entitlement issue of $6,924,554 in June 2018. The related party
transactions involved in each of these events is detailed below:
a. December 2017 - $3.5m placement of shares.
The placement was fully underwritten by Transocean Securities Pty Ltd and part of their fee involved the issue of 7m options.
For its involvement in securing investors to take part in this capital-raising on behalf of Transocean, Kalonda Pty Ltd, a related
entity of Mr Tony Leibowitz received 3.5m of these options. These options are exercisable at 5 cents and expire 3 years from
the date of issue.
b. April 2018 - $800k placement of shares.
Patersons Securities Limited, a Company on which Mr Adam Davey serves as a Director, received $34,950 as payment for their
involvement in organising and securing investors for this capital-raising. This is represented by a $12,000 issue management
fee and a $22,950 selling fee.
c. June 2018 - $6,924,554 entitlement issue.
The entitlement issue was fully underwritten by Transocean Securities Pty Ltd and Patersons Securities Limited, the latter
being a Company on which Mr Adam Davey serves as a Director. Patersons underwrote $2,639,936 of the shortfall offer,
approximately 44.22% of the total shortfall. They received fees of $271,671, represented by a $30,000 corporate advisory
fee, a management fee of $51,934 and an underwriting fee of $189,737.
Of the underwritten amounts, a portion was sub-underwritten by Kalonda Pty Ltd, a related entity of Mr Tony Leibowitz, and
by Rosemary Wehby, a related party of Mr Tony Wehby. Kalonda Pty Ltd received sub-underwriting fees of 4% on $250,000
and 4.5% on $1.3m sub-underwritten, a total of $68,500. Rosemary Wehby received sub-underwriting fees of 4% on $50,000
sub-underwritten, a total of $2,000. These amounts were paid by Patersons Securities Limited out of their own fees as
disclosed above.
P a g e | 50
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the year ended 30 June 2018
Note 24 Operating segments
a.
Identification of reportable segments
ANNUAL REPORT
30 June 2018
2014
$
2013
$
The Group operates predominantly in the insurance industry. This comprises sale of insurance products & underwriting,
and development of industry information technology. Inter-segment transactions are priced at cost to the Group.
The Group has identified its operating segments based on the internal reports that are provided to the Board of Directors
(the Board) on a monthly basis and in determining the allocation of resources. Management has identified four reportable
segments: insurance (both in Australia and the UK), information technology and corporate overheads.
b. Basis of accounting for purposes of reporting by operating segments
i. Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board, being the chief decision maker with respect to operating
segments, are determined in accordance with accounting policies that are consistent to those adopted in the annual
financial statements of the Group.
ii.
Inter-segment transactions
An internally determined transfer price is set for all inter-segment sales. This price is based on what would be realised
in the event the sale was made to an external party at arm's length. All such transactions are eliminated on
consolidation of the Group's financial statements.
Inter-segment loans payable and receivable are initially recognised at the consideration received/to be received net of
transaction costs. If inter-segment loans receivable and payable are not on commercial terms, these are not adjusted to
fair value based on market interest rates. This policy represents a departure from that applied to the statutory financial
statements.
iii. Segment assets
Where an asset is used across multiple segments, the asset is allocated to that segment that receives majority
economic value from that asset. In the majority of instances, segment assets are clearly identifiable on the basis of their
nature and physical location.
iv. Segment liabilities
Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the
operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a whole and
are not allocated. Segment liabilities include trade and other payables and certain direct borrowings.
v. Unallocated items
The following items of revenue, expenses, assets and liabilities are not allocated to operating segments as they are not
considered part of the core operations of any segment:
Depreciation and amortisation
Gains or losses on sales of financial and non-financial assets
Investment income
c. Basis of accounting for purposes of reporting by operating segments
The Group operates in two geographical areas being Australia and the United Kingdom. Segment results are reported
under the Australian regulatory body’s accounting standards.
P a g e | 51
ANNUAL REPORT
30 June 2018
Notes to the consolidated financial statements
for the year ended 30 June 2018
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Note 24 Operating segments (cont.)
For the Year to 30 June 2018
Insurance
$
Insurance (UK)
$
Information
Technology
$
Corporate Head
Office
$
Revenue
Revenue
Interest revenue
Total segment revenue
Reconciliation of segment revenue to group
revenue
920,927
5,169
280,149
71
926,096
280,220
Intra-segment income and expense
-
-
-
-
-
-
Total
$
1,201,076
7,260
1,208,336
-
2,020
2,020
-
_
-
1,208,336
57,010
(2,179,251)
(988,242)
(3,659,866)
(6,770,349)
Depreciation, amortisation & impairment
(223,546)
(24,057)
-
(1,978,385)
-
(5,076)
-
(2,231,064)
-
_
(9,001,413)
Total group revenue and other income
Segment net/profit (loss) from continuing
operations before tax
Reconciliation of segment loss to group loss
(i) Amounts not included in segment results
but reviewed by Board:
(ii) Unallocated items
Loss before income tax
As at 30 June 2018
Segment Assets
Reconciliation of segment assets to group assets
Intra-segment eliminations
Total assets
Segment asset increases for the year:
Capital expenditure
Acquisitions
3,098,256
1,690,855
17,387
25,524,176
30,330,674
(22,177,809)
_
8,152,865
-
9,287
9,287
-
175,744
175,744
245,983
-
245,983
-
8,726
8,726
245,983
193,757
439,740
Segment Liabilities
2,963,087
1,521,734
4,468,800
9,830,797
18,784,418
Reconciliation of segment liabilities to group
liabilities
Intra-segment eliminations
Total liabilities
(9,671,859)
_
9,112,559
P a g e | 52
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the year ended 30 June 2018
ANNUAL REPORT
30 June 2018
Note 24 Operating segments (cont.)
For the Year to 30 June 2017
Insurance
$
Insurance (UK)
$
Information
Technology
$
Corporate Head
Office
$
Revenue
Revenue
Interest revenue
Total segment revenue
Reconciliation of segment revenue to group
revenue
841,158
2,537
843,695
Intra-segment income and expense
-
-
-
-
-
Total
$
841,158
3,947
845,105
-
-
-
-
1,410
1,410
(147,819)
311,066
163,247
_
1,008,352
81,361
(1,013,351)
(1,009,827)
(2,673,482)
(4,615,299)
(37,186)
-
(1,681)
(361,554)
-
(4,039)
-
(404,460)
-
_
(5,019,759)
5,913,543
128,133
1,741,599
11,708,489
19,491,764
(13,736,030)
_
5,755,734
76,265
8,557
84,822
-
8,981
8,981
466,999
-
466,999
-
2,255
2,255
543,264
19,793
563,057
1,996,248
1,142,995
3,226,384
2,927,657
9,293,284
(984,113)
_
8,309,171
Total group revenue and other income
Segment net/profit (loss) from continuing
operations before tax
Reconciliation of segment loss to group loss
(iii) Amounts not included in segment results
but reviewed by Board:
Depreciation and amortisation
(iv) Unallocated items
Loss before income tax
As at 30 June 2017
Segment Assets
Reconciliation of segment assets to group
assets
Intra-segment eliminations
Total assets
Segment asset increases for the year:
Capital expenditure
Acquisitions
Segment Liabilities
Reconciliation of segment liabilities to group
liabilities
Intra-segment eliminations
Total liabilities
P a g e | 53
ANNUAL REPORT
30 June 2018
Notes to the consolidated financial statements
for the year ended 30 June 2018
Note 25
Share-based payments
Share-based payment expense
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
2018
$
-
2017
$
8,980
a. The above share-based payment expense is comprised of the following arrangements in place at 30 June 2018:
i. On 30 November 2015, 6,500,000 Performance Rights Class A (Class A Rights) were granted to Directors of the
Company. Upon the Company achieving the target share price of $0.80, based on a 30-day volume weighted average
share price, within 5 years, the Class A Rights will vest, entitling the holder or his nominee to 1 fully paid ordinary share
in the Company per vested Class A Right. The Class A Rights hold no voting or dividend rights and are not transferable.
At balance date, no Class A Right has converted, 5,500,000 had been forfeited and 1,000,000 Class A Rights remain.
ii. On 30 November 2015, 500,000 Performance Rights Class B (Class B Rights) were granted to Mr Adam Davey. Class B
Rights will vest on the introduction to, and entry into an agreement with, a strategic partner to the Company which
results directly or indirectly in a material increase in the Company's revenue or otherwise increases the value of the
Company, at the discretion of the Board of the Company. The Class B Rights hold no voting or dividend rights and are
not transferable. At balance date, no Class B Right has converted or been forfeited and 500,000 Class B Rights remain.
b. A summary of the movements of all Company performance rights issued as share-based payments is as follows:
Outstanding at the beginning of the year
Granted
Converted to ordinary shares
Expired
Outstanding at year-end
2018
No.
2017
No.
7,000,000
7,000,000
-
-
(5,500,000)
-
-
-
1,500,000
7,000,000
The weighted average remaining contractual life of performance rights outstanding at year end was 2.423 years.
The fair value of the performance rights granted to Directors is deemed to represent the value of the Directors' services
received over the vesting period. These values were calculated using the Monte-Carlo option pricing model, applying the
following inputs to performance rights issued:
Grant date:
Grant date share price:
Deemed strike price
Number of performance rights issued:
Remaining life of the performance rights (years):
Expected share price volatility:
Risk-free interest rate:
Class A Rights
Class B Rights
30 November 2015 30 November 2015
$0.19
$0.80
6,500,000
3.423
31.06%
2.00%
$0.19
$0.25
500,000
3.423
31.06%
2.00%
Volatility has been determined based on the historical share price for the period between 5 May 2015 and 19 October 2015.
The start date of May 5 2015 was used as this was the date the Company announced its reinstatement to Official Quotation
on the ASX.
P a g e | 54
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the year ended 30 June 2018
Note 26
Financial risk management
a. Financial Risk Management Policies
ANNUAL REPORT
30 June 2018
This note presents information about the Group's exposure to each of the above risks, its objectives, policies and
procedures for measuring and managing risk, and the management of capital.
The Group's financial instruments consist mainly of deposits with banks, short-term investments, and accounts payable and
receivable.
The Group does not speculate in the trading of derivative instruments.
A summary of the Group's Financial Assets and Liabilities is shown below:
Floating
Interest
Rate
$
3,203,479
-
-
-
Financial Assets
(cid:1) Cash and cash equivalents
(cid:1) Trade and other receivables
(cid:1) Trust account insurer assets
(cid:1) Financial assets
Fixed
Interest
Rate
$
-
-
Non-
interest
Bearing
$
2018
Total
$
Floating
Interest
Rate
$
-
3,203,479
383,846
823,087
823,087
1,788,828
1,883,519
3,672,347
-
70,204
70,204
Fixed
Interest
Rate
$
-
-
Non-
interest
Bearing
$
2017
Total
$
-
383,846
1,704,960
1,704,960
849,517
749,810
1,599,327
-
26,562
26,562
-
-
-
Total Financial Assets
3,203,479
1,788,828
2,776,810
7,769,117
383,846
849,517
2,481,332
3,714,695
Financial Liabilities
Financial liabilities at
amortised cost
(cid:1) Trade and other payables
(cid:1) Trust account insurer
liabilities
(cid:1) Borrowings
Total Financial Liabilities
Net Financial
Assets/(Liabilities)
-
-
-
-
-
-
2,051,180
2,051,180
3,672,347
3,672,347
3,050,920
-
3,050,920
3,050,920
5,723,527
8,774,447
-
-
-
-
-
-
2,535,813
2,535,813
1,599,327
1,599,327
3,826,342
3,588
3,829,930
3,826,342
4,138,728
7,965,070
3,203,479
(1,262,092)
(2,946,717)
(1,005,330)
383,846
(2,976,825)
(1,657,396)
(4,250,375)
b. Specific Financial Risk Exposures and Management
The main risks the Group is exposed to through its financial instruments are credit risk, liquidity risk and market risk
consisting of interest rate, foreign currency risk and equity price risk.
The Board of directors has overall responsibility for the establishment and oversight of the risk management framework.
The Board adopts practices designed to identify significant areas of business risk and to effectively manage those risks in
accordance with the Group's risk profile. This includes assessing, monitoring and managing risks for the Group and setting
appropriate risk limits and controls.
i. Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of
contract obligations that could lead to a financial loss to the Group.
The Group does not have any material credit risk exposure to any single receivable or group of receivables under
financial instruments entered into by the Group.
P a g e | 55
ANNUAL REPORT
30 June 2018
Notes to the consolidated financial statements
for the year ended 30 June 2018
Note 26 Financial risk management (cont.)
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
The objective of the Group is to minimise the risk of loss from credit risk. Although revenue from operations is minimal,
the Group trades only with creditworthy third parties.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad
debts is insignificant. The Group's maximum credit risk exposure is limited to the carrying value of its financial assets as
indicated on the statement of financial position.
The Group establishes that no allowance for impairment is necessary in respect of trade and other receivables.
Credit risk exposures
The maximum exposure to credit risk is that to its alliance partners and that is limited to the carrying amount, net
of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the
financial statements.
Credit risk related to balances with banks and other financial institutions is managed by the Group in accordance
with approved Board policy. Such policy requires that surplus funds are only invested with financial institutions
residing in Australia, wherever possible.
Impairment losses
The ageing of the Group's trade and other receivables at reporting date was as follows:
Gross
2018
$
Impaired
2018
$
811,369
618,804
264,723
188,623
1,883,519
35,751
1,919,270
-
-
-
-
-
-
Past due but not
impaired
2018
$
Net
2018
$
811,369
618,804
264,723
188,623
-
618,804
264,723
188,623
1,883,519
1,072,150
35,751
-
1,919,270
1,072,150
Trade receivables
Not past due
Past due up to 30 days
Past due 30 days to 3 months
Past due over 3 months
Other receivables
Not past due
Total
ii. Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities.
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring sufficient cash
and marketable securities are available to meet the current and future commitments of the Group.
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall 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, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group's reputation.
Typically the Group ensures that it has sufficient cash to meet expected operational expenses for a period of 60 days,
including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot
reasonably be predicted, such as natural disasters.
In addition, the Group's AFS Licensees are subject to the conditions of their AFS License. Accordingly, in meeting the
cash needs requirement, the Group prepares cash flow projections to demonstrate the Licensees will have sufficient
cash under the terms of their license.
P a g e | 56
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the year ended 30 June 2018
Note 26 Financial risk management (cont.)
ANNUAL REPORT
30 June 2018
All trade and other payables are non-interest bearing and due within 30 days of the reporting date.
Contractual Maturities
The following are the contractual maturities of financial liabilities of the Group:
Within 1 Year
Greater Than 1 Year
2018
$
2017
$
2018
$
2017
$
Total
2018
$
2017
$
Financial liabilities due for payment
Trade and other payables
Trust account insurer liabilities
Borrowings
2,051,180
3,672,347
467,288
2,535,813
1,599,327
1,082,394
-
-
2,583,632
25,453
-
2,747,536
2,051,180
3,672,347
3,050,920
2,561,266
1,599,327
3,829,930
Total contractual outflows
6,190,815
5,217,534
2,583,632
2,772,989
8,774,447
7,990,523
Financial assets
Cash and cash equivalents
Trade and other receivables
Trust account insurer assets
3,203,479
823,087
3,672,347
383,846
1,704,960
1,599,327
Total anticipated inflows
7,698,913
3,688,133
-
-
-
-
-
-
-
-
3,203,479
823,087
3,672,347
383,846
1,704,960
1,599,327
7,698,913
3,688,133
Net (outflow)/inflow on financial
instruments
i. Market risk
1,508,098
(1,529,401)
(2,583,632)
(2,772,989)
(1,075,534)
(4,302,390)
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will
affect the Group's income or the value of its holdings of financial instruments. The objective of market risk
management is to manage and control market risk exposures within acceptable parameters, while optimising the
return.
The Board meets on a regular basis and considers the Group's interest rate risk.
(1) Interest rate risk
Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the
reporting period whereby a future change in interest rates will affect future cash flows or the fair value of fixed
rate financial instruments. The Group is also exposed to earnings volatility on floating rate instruments.
Due to the low amount of debt exposed to floating interest rates, interest rate risk is not considered a high risk to
the Group. Movement in interest rates on the Group's financial liabilities and assets is not material.
(2) Foreign exchange risk
Exposure to foreign exchange risk may result in the fair value or future cash flows of a financial instrument
fluctuating due to movement in foreign exchange rates of currencies in which the Group holds financial
instruments which are other than the AUD functional currency of the Group.
The Group has no material exposure to foreign exchange risk on its financial instruments.
P a g e | 57
ANNUAL REPORT
30 June 2018
Notes to the consolidated financial statements
for the year ended 30 June 2018
Note 26 Financial risk management (cont.)
(3) Price risk
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market prices. The Group does not presently hold material amounts subject to price risk. As such the
Board considers price risk as a low risk to the Group.
ii. Sensitivity Analyses
(1) Foreign exchange
Notwithstanding the Group’s subsidiary in the UK, namely Ensurance UK Limited, the Group did not carry
significant financial assets or liabilities in foreign currencies in the 2018 financial year (2017: nil), and therefore was
not subject to material foreign exchange risk, and according not subject to material sensitivities. Balances held by
Ensurance UK Limited are not currently material.
iii. Net Fair Values
(1) Fair value estimation
The fair values of financial assets and financial liabilities are presented in the table in note 27a and can be
compared to their carrying values as presented in the statement of financial position. Fair values are those
amounts at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an
arm's length transaction.
Financial instruments whose carrying value is equivalent to fair value due to their nature include:
Cash and cash equivalents;
Trade and other receivables;
Trust account insurance assets and liabilities; and
Trade and other payables.
The methods and assumptions used in determining the fair values of financial instruments are disclosed in the
accounting policy notes specific to the asset or liability.
Note 27
Events subsequent to reporting date
On 25 July 2018, the Company announced an agreement had been made to sell its shares in Savill Hicks Corp Pty Ltd to SHC
Insurance Holding Pty Ltd, an entity headed by former Ensurance Directors Stefan Hicks and Brett Graves. The sale is subject to
key conditions being met, including Ensurance shareholder approval, regulatory approval and a rebranding of the business
name “Ensurance Now”. The settlement is expected to occur in October 2018. A non-refundable deposit on the purchase price
was taken by the Company prior to the end of the financial year and as such, the 2018 operations of Savill Hicks Corp Pty Ltd
are classified as discontinued. Refer to note 30 for more information in this regard.
Note 28
Contingent liabilities
There are no contingent liabilities as at 30 June 2018 (2017: Nil).
P a g e | 58
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
ANNUAL REPORT
30 June 2018
Notes to the consolidated financial statements
for the year ended 30 June 2018
Note 29
Parent entity disclosures
Note
a. Financial Position of Ensurance Limited (legal parent)
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets/(deficiency)
Equity
Issued capital
Investment revaluation reserve
Convertible note option premium reserve
Foreign currency translation reserve
Share-based payment reserve
Accumulated losses
Total equity
b. Financial performance of Ensurance Limited
Profit / (loss) for the year
Other comprehensive income
Total comprehensive income
2018
$
2017
$
3,637,274
171,321
2,007,943
1,353,487
3,808,595
3,361,430
391,620
3,988,480
2,283,813
3,049,797
4,380,100
5,333,610
(571,505)
(1,972,180)
22,649,560
12,332,351
200
269,112
(6,863)
(200)
298,383
-
1,423,232
952,522
(23,727,959)
(15,555,236)
(571,505)
(1,972,180)
(8,172,723)
(5,065,172)
-
-
(8,172,723)
(5,065,172)
c. Guarantees entered into by Ensurance Limited for the debts of its subsidiaries
The Board of Ensurance Ltd has declared in writing that it will support the liabilities of its subsidiaries (the companies) and will
continue to financially support the companies while they remain wholly owned under the control of Ensurance Ltd.
d. Impairment of investments and loans to subsidiaries
The Board of Ensurance Ltd has undertaken an impairment assessment of the parent entity's investment in Ensurance Capital of
$7,525,195, its investment in Ensurance UK Ltd of $3,434,916 and loans to subsidiaries of $9,326,770. As a result of this
assessment, the Company has recognised an impairment to the investment of $7,525,195 and $3,265,795, respectively and an
impairment to the loans of $9,326,770. This equates to an impairment loss of $20,117,759. Of this amount $6,993,937 is
recognised in the current year (2017: $4,550,809). These impairments relate only to disclosures as contained in this Note 29
P a g e | 59
ANNUAL REPORT
30 June 2018
Notes to the consolidated financial statements
for the year ended 30 June 2018
Note
30 Discontinued Operations
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Discontinued operations comprise the Australian retail broking business, Savill Hicks Corp Pty Ltd, the sale of which was
announced to the ASX in July 2018. The sale of Savill Hicks Corp Pty Ltd is expected to complete in October 2018 and operations
will continue until that point. As such, results shown in this note represent the full financial year, 1 July 2017 to 30 June 2018
and include the results of Savill Hicks Corp Pty Ltd as well as associated corporate costs directly attributable to the operations of
this business, that will cease to exist after the sale completes.
a. Profit/(Loss) from Discontinued Operations
Revenue
Other income
Operating expenses
Profit/(Loss) from operating activities
Finance costs
Profit/(Loss) before tax
Tax benefit/(expense)
Profit/(Loss) for period
b. Net Assets of Discontinued Operations
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
2018
$
2017
$
2,593,021
2,354,305
28,422
25,481
(2,590,691)
(2,766,388)
30,752
(22,828)
7,924
-
7,924
(386,602)
(28,956)
(415,558)
65,291
(350,267)
5,663,772
46,217
5,709,989
3,349,871
1,177,054
4,526,925
(4,744,086)
(3,271,360)
(6,987)
(700,967)
(4,751,073)
(3,972,327)
Equity
958,916
554,598
c. Cash Flows from Discontinued Operations
Net cash from/(used in) operating activities
Net cash (used in)/from investing activities
Net cash used in financing activities
Net cash used in discontinued operations
216,924
(3,443)
(613,603)
(165,819)
46,293
(139,642)
(400,122)
(259,168)
P a g e | 60
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Directors' declaration
ANNUAL REPORT
30 June 2018
The Directors of the Company declare that:
1. The financial statements and notes, as set out on pages 18 to 60, are in accordance with the Corporations Act 2001 (Cth)
and:
(a) comply with Accounting Standards;
(b) are in accordance with International Financial Reporting Standards issued by the International Accounting Standards
Board, as stated in note 1 to the financial statements; and
(c) give a true and fair view of the financial position as at 30 June 2018 and of the performance for the year ended on
that date of the Group.
(d) the Directors have been given the declarations required by s.295A of the Corporations Act 2001 (Cth);
2.
in the directors' opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the
directors by:
TONY LEIBOWITZ
Chairman
Dated this Monday, 24 September 2018
P a g e | 61
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
ENSURANCE LIMITED AND ITS CONTROLLED ENTITIES
Report on the Financial Report
Opinion
We have audited the accompanying financial report of Ensurance Ltd and its controlled entities (the
“Group”), which comprises the consolidated statement of financial position as at 30 June 2018 and
consolidated statement of profit or loss and other comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year ended on that date, other selected
explanatory notes and the directors’ declaration as set out on pages 18 to 60.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(i)
(ii)
giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its
performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis of Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Group, would be in the same terms if given to the directors as at the time
of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 to the financial report, which indicates that the Group incurred a net loss
of $8,707,405 during the year ended 30 June 2018 (2017:$5,093,032 loss) and as of that date, the
Group’s reflected a positive working capital of $1,401,835 (2017: negative $1,228,955), net liability of
$778 (2017:$1,998,839) and accumulated losses of $19,074,092 (2017: $10,366,687).
M A Z A R S R I S K & A S S U R A N C E P T Y L I M I T E D
A B N : 3 9 1 5 1 8 0 5 2 7 5
L E V E L 1 2 , 9 0 A R T H U R S T R E E T , N O R T H S Y D N E Y N S W 2 0 6 0
P O B O X 1 9 9 4 , N O R T H S Y D N E Y N S W 2 0 5 9
T E L : + 6 1 2 9 9 2 2 1 1 6 6 - F A X : + 6 1 2 9 9 2 2 2 0 4 4
E M A I L : E M A I L @ M A Z A R S . C O M . A U
L I A B I L I T Y L I M I T E D B Y A S C H E M E , A P P R O V E D U N D E R T H E P R O F E S S I O N A L S T A N D A R D S L E G I S L A T I O N
The ability of the Group to continue as a going concern and pay their debts as and when they fall due is
dependent upon a number of factors including:
a) the Group’s ability to either generate sufficient funds from its operations or raise additional
funds through debt financing and capital raising arrangements such that they are adequate
enough to provide sufficient working capital in line with forecasts; and
b) the Group’s ability to realise forecast revenue and expense targets, in both Australia and the UK
over the next 12 months.
Should the Group be unable to generate sufficient funds from its operations or unable to raise sufficient
working capital then it may indicate the existence of a material uncertainty which may cast significant
doubt as to the Group’s ability to continue as a going concern and therefore, the Group may be unable
to realise its assets and discharge its liabilities in the normal course of business and at the amounts stated
in the financial report.
Key Audit Matters
The key audit matters are those matters that, in our professional judgement 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.
M A Z A R S R I S K & A S S U R A N C E P T Y L I M I T E D
A B N : 3 9 1 5 1 8 0 5 2 7 5
L E V E L 1 2 , 9 0 A R T H U R S T R E E T , N O R T H S Y D N E Y N S W 2 0 6 0
P O B O X 1 9 9 4 , N O R T H S Y D N E Y N S W 2 0 5 9
T E L : + 6 1 2 9 9 2 2 1 1 6 6 - F A X : + 6 1 2 9 9 2 2 2 0 4 4
E M A I L : E M A I L @ M A Z A R S . C O M . A U
L I A B I L I T Y L I M I T E D B Y A S C H E M E , A P P R O V E D U N D E R T H E P R O F E S S I O N A L S T A N D A R D S L E G I S L A T I O N
Key audit matter
How the matter was addressed in the audit
Compliance with Australian Financial Services Licence
Note 11
Our audit procedures focussed upon the group’s
compliance with the financial and operational
two Australian Financial
requirements of
Services Licenses held by the Group throughout
the financial year. The group holds Australian
financial
- Ensurance
Underwriting Pty Ltd: 429874 and Savill Hicks
Corp Pty Ltd: 240867 which enable them to
trade as an insurance broker. Conditions
attached to both licenses include the need for
positive net assets, sufficiency of cash flows
and documentation of operational matters.
services
licenses
Given the emphasis of matter relating to going
concern noted in Note 1.a.ii to the financial
report, our review of the cash flow requirements
and associated projections is a key area of the
audit, particularly given
significant
judgements and estimates required in their
compilation.
the
the projections and other
ensuring there are no calculation errors
financial
Our procedures included but were not limited to:
comparing cash flow forecasts from prior
periods to actual balances.
within
calculations used.
performing sensitivity analysis over key
assumptions and their impact on AFSL ratio
requirements.
assessing management’s assumptions and
judgements made in the preparation of cash flow
projections and performance of associated
sensitivities.
reviewing of documentation of all
operational requirements ensuring compliance
with the licensing requirements.
of
disclosures made in the financial report relating to
licenses held and
the
compliance with their conditions.
appropriateness
assessing
financial
services
the
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the annual report for the year ended 30 June 2018, but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we will not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above when it becomes available and, in doing so, consider whether the other information is
materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise
appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of the other
information, we are required to report that fact. We have nothing to report in this regard.
M A Z A R S R I S K & A S S U R A N C E P T Y L I M I T E D
A B N : 3 9 1 5 1 8 0 5 2 7 5
L E V E L 1 2 , 9 0 A R T H U R S T R E E T , N O R T H S Y D N E Y N S W 2 0 6 0
P O B O X 1 9 9 4 , N O R T H S Y D N E Y N S W 2 0 5 9
T E L : + 6 1 2 9 9 2 2 1 1 6 6 - F A X : + 6 1 2 9 9 2 2 2 0 4 4
E M A I L : E M A I L @ M A Z A R S . C O M . A U
L I A B I L I T Y L I M I T E D B Y A S C H E M E , A P P R O V E D U N D E R T H E P R O F E S S I O N A L S T A N D A R D S L E G I S L A T I O N
Responsibilities of Directors for the Financial Report
The directors of the Group are responsible for the preparation of the financial report that gives a true
and fair view in accordance with the Australian Accounting Standards and the Corporations Act 2001.
The directors’ responsibility also includes such internal control as the directors determine is necessary
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.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of the financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, designs and performs audit procedures responsive to those risks, and obtains
audit evidence that is sufficient and appropriate to provide a basis for the auditor’s opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the director’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If the auditor concludes that a material uncertainty exists, we are required to draw
attention in the auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of the auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
M A Z A R S R I S K & A S S U R A N C E P T Y L I M I T E D
A B N : 3 9 1 5 1 8 0 5 2 7 5
L E V E L 1 2 , 9 0 A R T H U R S T R E E T , N O R T H S Y D N E Y N S W 2 0 6 0
P O B O X 1 9 9 4 , N O R T H S Y D N E Y N S W 2 0 5 9
T E L : + 6 1 2 9 9 2 2 1 1 6 6 - F A X : + 6 1 2 9 9 2 2 2 0 4 4
E M A I L : E M A I L @ M A Z A R S . C O M . A U
L I A B I L I T Y L I M I T E D B Y A S C H E M E , A P P R O V E D U N D E R T H E P R O F E S S I O N A L S T A N D A R D S L E G I S L A T I O N
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
Obtain sufficient and appropriate evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain
solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that the
auditor identifies during the audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our audit report unless law or regulation precludes public
disclosure about the matter or when, in extreme rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included on pages 10 - 16 of the directors' report for the year
ended 30 June 2018.
In our opinion, the Remuneration Report of Ensurance Limited for the year ended 30 June 2018,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Group are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
MAZARS RISK & ASSURANCE PTY LIMITED
R. Megale
Director
Signed in Sydney this 24th day of September 2018
M A Z A R S R I S K & A S S U R A N C E P T Y L I M I T E D
A B N : 3 9 1 5 1 8 0 5 2 7 5
L E V E L 1 2 , 9 0 A R T H U R S T R E E T , N O R T H S Y D N E Y N S W 2 0 6 0
P O B O X 1 9 9 4 , N O R T H S Y D N E Y N S W 2 0 5 9
T E L : + 6 1 2 9 9 2 2 1 1 6 6 - F A X : + 6 1 2 9 9 2 2 2 0 4 4
E M A I L : E M A I L @ M A Z A R S . C O M . A U
L I A B I L I T Y L I M I T E D B Y A S C H E M E , A P P R O V E D U N D E R T H E P R O F E S S I O N A L S T A N D A R D S L E G I S L A T I O N
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
ANNUAL REPORT
30 June 2018
Corporate governance statement
This Corporate Governance summary discloses the extent to which the Company will follow the recommendations set by the ASX Corporate
Governance Council in its publication ‘Corporate Governance Principles and Recommendations (3rd Edition)’ (Recommendations). The
Recommendations are not mandatory, however, the Recommendations that will not be followed have been identified and reasons have been
provided for not following them.
The Company’s Corporate Governance Plan has been posted on the Company’s website at www.ensurance.com.au.
PRINCIPLES AND RECOMMENDATIONS
COMPLY
(YES/NO)
EXPLANATION
Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1
A listed entity should have and disclose a charter which:
(a)
YES
(b)
sets out the respective roles and responsibilities of
the board, the chair and management; and
includes a description of those matters expressly
reserved to the board and those delegated to
management.
The Company has adopted a Board Charter.
The Board Charter sets out the specific responsibilities of the Board,
requirements as to the Boards composition, the roles and
responsibilities of the Chairman and Company Secretary, the
establishment, operation and management of Board Committees,
Directors access to company records and information, details of the
Board’s relationship with management, details of the Board’s
performance review and details of the Board’s disclosure policy.
A copy of the Company’s Board Charter is stated in Schedule 1 of the
Corporate Governance Plan which is available on the Company’s
website.
(a) The Company has detailed guidelines for the appointment and
selection of the Board members. The Company’s Corporate
Governance Plan requires the Board to undertake appropriate
checks before appointing a person, or putting forward to
security holders a candidate for election, as a director.
(b) Material information relevant to any decision on whether or not
to elect or re-elect a Director will be provided to security holders
in the notice of meeting holding the resolution to elect or re-
elect the Director.
The Company’s Corporate Governance Plan requires the Board to
ensure that each Director and senior executive is a party to a written
agreement with the Company which sets out the terms of that
Director’s or senior executive’s appointment.
the
The Board Charter outlines
responsibilities and
accountability of the Company Secretary. The Company Secretary is
accountable directly to the Board, through the chair, on all matters to
do with the proper functioning of the Board.
(a) The Company has adopted a Diversity Policy.
roles,
(i)
(ii)
The Diversity Policy provides a framework for the
Company to achieve a list of 6 measurable objectives that
encompass gender equality.
The Diversity Policy provides for the monitoring and
evaluation of the scope and currency of the Diversity
Policy. The company is responsible for implementing,
monitoring and reporting on the measurable objectives.
(b) The Diversity Policy is stated in Schedule 8 of the Corporate
Governance Plan which is available on the company website.
(c)
(i)
(ii)
The measurable objectives set by the Board will be
included in the annual key performance indicators for the
CEO, MD and senior executives. In addition, the Board will
review progress against the objectives in its annual
performance assessment.
The Company currently has 46 employees, 20 of those
employees are woman.
Recommendation 1.2
A listed entity should:
(a) undertake appropriate checks before appointing a
person, or putting forward to security holders a
candidate for election, as a director; and
(b) provide security holders with all material information
relevant to a decision on whether or not to elect or re-
elect a director.
Recommendation 1.3
A listed entity should have a written agreement with each
director and senior executive setting out the terms of their
appointment.
Recommendation 1.4
The company secretary of a listed entity should be accountable
directly to the board, through the chair, on all matters to do
with the proper functioning of the board.
Recommendation 1.5
A listed entity should:
(a) have a diversity policy which includes requirements for
YES
YES
YES
YES
the board:
(i)
to set measurable objectives for achieving gender
diversity; and
to assess annually both the objectives and the
entity’s progress in achieving them;
(ii)
(b) disclose that policy or a summary or it; and
(c) disclose as at the end of each reporting period:
(i)
the measurable objectives for achieving gender
diversity set by the board in accordance with the
entity’s diversity policy and its progress towards
achieving them; and
(ii) either:
(A)
the respective proportions of men and
women on the board, in senior executive
positions and across the whole organisation
(including how the entity has defined “senior
executive” for these purposes); or
the entity’s “Gender Equality Indicators”, as
defined in the Workplace Gender Equality
Act 2012.
(B)
P a g e | 67
ANNUAL REPORT
30 June 2018
Corporate governance statement
PRINCIPLES AND RECOMMENDATIONS
Recommendation 1.6
A listed entity should:
(a) have and disclose a process for periodically evaluating the
performance of the board, its committees and individual
directors; and
(b) disclose in relation to each reporting period, whether a
performance evaluation was undertaken in the reporting
period in accordance with that process.
COMPLY
(YES/NO)
YES
Recommendation 1.7
A listed entity should:
(a) have and disclose a process for periodically evaluating the
YES
performance of its senior executives; and
(b) disclose in relation to each reporting period, whether a
performance evaluation was undertaken in the reporting
period in accordance with that process.
Principle 2: Structure the board to add value
Recommendation 2.1
The board of a listed entity should:
(a) have a nomination committee which:
NO
(i)
has at least three members, a majority of whom
are independent directors; and
is chaired by an independent director,
(ii)
and disclose:
(iii)
(iv)
(v)
the charter of the committee;
the members of the committee; and
as at the end of each reporting period, the
number of times the committee met throughout
the period and the individual attendances of the
members at those meetings; or
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
EXPLANATION
(a) The Board is responsible for evaluating the performance of the
Board and individual directors on an annual basis. It may do so
with the aid of an independent advisor. The process for this can
be found in Schedule 3 of the Company’s Corporate Governance
Plan.
(b) The Company’s Corporate Governance Plan requires the Board
to disclosure whether or not performance evaluations were
conducted during the relevant reporting period.
Due to the size of the Board and the nature of the business, it
institute a formal
has not been deemed necessary to
individuals.
documented performance review program of
However, the Chairman intends to conduct formal reviews each
financial year whereby the performance of the Board as a whole
and the individual contributions of each director are reviewed.
The Board considers that at this stage of the Company’s
development an informal process is appropriate.
The review will assist to indicate if the Board’s performance is
appropriate and efficient with respect to the Board Charter.
The Board regularly reviews its skill base and whether it remains
appropriate for the Company’s operational, legal and financial
requirements. New Directors are obliged to participate in the
Company’s induction process, which provides a comprehensive
understanding of the Company, its objectives and the market in
which the Company operates.
Directors are encouraged to avail themselves of resources
required to fulfil the performance of their duties.
(a) The Board is responsible for evaluating the performance of
is to arrange an annual
senior executives. The Board
performance evaluation of the senior executives.
(b) The Company’s Corporate Governance Plan requires the Board
to conduct annual performance evaluation of the senior
executives. Schedule 3 ‘Performance Evaluation’ requires the
Board to disclose whether or not performance evaluations were
conducted during the relevant reporting period.
During the financial year an evaluation of performance of the
individuals was not formally carried out. However, a general
review of the individuals occurs on an on-going basis to ensure
that structures suitable to the Company’s status as a listed entity
are in place.
that would normally be considered by
(a) Due to the size of the Board, it is not practical to maintain
separate Board Committees. The Board as a whole considers all
matters
the
Remuneration & Nominations Committee. The Board devotes
time at board meetings to discuss board succession issues. All
members of the Board are
in the Company’s
nomination process, to the maximum extent permitted under
the Corporations Act and ASX Listing Rules. The Board regularly
updates the Company’s board skills matrix (in accordance with
recommendation 2.2) to assess the appropriate balance of skills,
experience, independence and knowledge of the entity.
involved
(b)
if it does not have a nomination committee, disclose that
fact and the processes it employs to address board
succession issues and to ensure that the board has the
appropriate balance of skills, experience, independence
and knowledge of the entity to enable it to discharge its
duties and responsibilities effectively.
P a g e | 68
ANNUAL REPORT
30 June 2018
Number of Directors
that Meet the Skill
3
3
3
3
3
3
3
3
3
3
3
0
1
0
COMPLY
(YES/NO)
YES
EXPLANATION
Board Skills Matrix
Executive & Non- Executive experience
Industry experience & knowledge
Leadership
Corporate governance & risk management
Strategic thinking
Desired behavioural competencies
Geographic experience
Capital Markets experience
Subject matter expertise:
- accounting
- capital management
- corporate financing
- industry taxation
- risk management
- legal
YES
YES
NO
YES
(a) The Board Charter provides for the disclosure of the names of
Directors considered by the Board to be independent. These
details are provided in the Annual Reports and Company
website.
(b) The Board Charter requires Directors to disclose their interest,
positions, associations and relationships and requires that the
independence of Directors is regularly assessed by the Board in
light of the interests disclosed by Directors. Details of the
Directors interests, positions, associations and relationships are
provided in the Annual Reports and Company website.
The Board Charter provides for the determination of the
Directors’ terms and requires the length of service of each
Director to be disclosed. The length of service of each Director is
provided in the Annual Report and Company website.
(c)
The Board Charter requires that where practical the majority of the
Board will be independent.
Details of each Director’s independence are provided in the Annual
Report and Company website.
The Board Charter provides that where practical, the Chairman of the
Board will be a non-executive director. If the Chairman ceases to be
independent then the Board will consider appointing a
lead
independent Director. At the present time the Board has an Executive
Chairman in place.
The Board Charter states that a specific responsibility of the Board is to
procure appropriate professional development opportunities for
Directors. The Board is responsible for the approval and review of
induction and continuing professional development programs and
procedures for Directors to ensure that they can effectively discharge
their responsibilities.
YES
(a) The Corporate Code of Conduct applies to the Company’s
directors, senior executives and employees.
(b) The Company’s Corporate Code of Conduct is in Schedule 2 of
the Corporate Governance Plan which is on the Company’s
website.
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Corporate governance statement
PRINCIPLES AND RECOMMENDATIONS
Recommendation 2.2
A listed entity should have and disclose a board skill matrix
setting out the mix of skills and diversity that the board
currently has or is looking to achieve in its membership.
Recommendation 2.3
A listed entity should disclose:
(a)
the names of the directors considered by the board to be
independent directors;
if a director has an interest, position, association or
relationship of the type described in Box 2.3 of the ASX
Corporate Governance Principles and Recommendation
(3rd Edition), but the board is of the opinion that it does
not compromise the independence of the director, the
nature of
interest, position, association or
relationship in question and an explanation of why the
board is of that opinion; and
the length of service of each director
the
(b)
(c)
Recommendation 2.4
A majority of the board of a listed entity should be independent
directors.
Recommendation 2.5
The chair of the board of a listed entity should be an
independent director and, in particular, should not be the same
person as the CEO of the entity.
Recommendation 2.6
A listed entity should have a program for inducting new
directors and providing appropriate professional development
opportunities for continuing directors to develop and maintain
the skills and knowledge needed to perform their role as a
director effectively.
Principle 3: Act ethically and responsibly
Recommendation 3.1
A listed entity should:
(a) have a code of conduct for its directors, senior executives
and employees; and
(b) disclose that code or a summary of it.
P a g e | 69
ANNUAL REPORT
30 June 2018
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Corporate governance statement
PRINCIPLES AND RECOMMENDATIONS
COMPLY
(YES/NO)
EXPLANATION
Principle 4: Safeguard integrity in financial reporting
Recommendation 4.1
The board of a listed entity should:
(a) have an audit committee which:
NO
(i)
(ii)
has at least three members, all of whom are non-
executive directors and a majority of whom are
independent directors; and
is chaired by an independent director, who is not
the chair of the board,
(a) Due to the size of the Board, it is not practical to maintain
separate Board Committees. The Board as a whole considers all
matters that would normally be considered by the Audit and
Risk Committee.
(b) The Board devotes time at board meetings to review and
evaluate financial reporting, audit, risk and compliance issues.
The Board as a whole also considers the appointment and
removal of the external auditor.
and disclose:
(iii)
(iv)
(v)
the charter of the committee;
the relevant qualifications and experience of the
members of the committee; and
in relation to each reporting period, the number
of times the committee met throughout the
period and the individual attendances of the
members at those meetings; or
(b)
if it does not have an audit committee, disclose that fact
and the processes it employs that independently verify
and safeguard the integrity of its financial reporting,
including the processes for the appointment and removal
of the external auditor and the rotation of the audit
engagement partner.
Recommendation 4.2
The board of a listed entity should, before it approves the
entity’s financial statements for a financial period, receive from
its CEO and CFO a declaration that the financial records of the
entity have been properly maintained and that the financial
statements comply with the appropriate accounting standards
and give a true and fair view of the financial position and
performance of the entity and that the opinion has been
formed on the basis of a sound system of risk management and
internal control which is operating effectively.
Recommendation 4.3
A listed entity that has an AGM should ensure that its external
auditor attends its AGM and is available to answer questions
from security holders relevant to the audit.
Principle 5: Make timely and balanced disclosure
Recommendation 5.1
A listed entity should:
(a) have a written policy for complying with its continuous
disclosure obligations under the Listing Rules; and
(b) disclose that policy or a summary of it.
Principle 6: Respect the rights of security holders
Recommendation 6.1
A listed entity should provide information about itself and its
governance to investors via its website.
Recommendation 6.2
A listed entity should design and implement an investor
relations
two-way
program
communication with investors.
effective
facilitate
to
YES
YES
YES
YES
YES
The Company’s Corporate Governance Plan states that a duty and
responsibility of the Board is to ensure that before approving the
entity’s financial statements for a financial period, the CEO and CFO
have declared that in their opinion the financial records of the entity
have been properly maintained and that the financial statements
comply with the appropriate accounting standards and give a true and
fair view of the financial position and performance of the entity and
that the opinion has been formed on the basis of a sound system of
risk management and internal control which is operating effectively.
The Company’s Corporate Governance Plan provides that the Board
must ensure the Company’s external auditor attends its AGM and is
available to answer questions from security holders relevant to the
audit.
(a) The Board Charter provides details of the Company’s disclosure
policy. In addition, Schedule 4 of the Corporate Governance Plan
is entitled ‘Disclosure – Continuous Disclosure’ and details the
Company’s disclosure requirements as required by the ASX
Listing Rules and other relevant legislation.
(b) The Board Charter and Schedule 4 of the Corporate Governance
Plan are available on the Company’s website.
Information about the Company and its governance is available in the
Corporate Governance Plan which can be found on the Company’s
website.
facilitate effective
to promote and
The Company has adopted a Shareholder Communications Strategy
which aims
two-way
communication with investors. The Shareholder Communications
is
Strategy outlines a range of ways
communicated to shareholders.
The Shareholder Communications Strategy can be found in Schedule 7
of the Corporate Governance Plan which
is available on the
Company’s website.
information
in which
P a g e | 70
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Corporate governance statement
PRINCIPLES AND RECOMMENDATIONS
Recommendation 6.3
A listed entity should disclose the policies and processes it has
in place to facilitate and encourage participation at meetings of
security holders.
COMPLY
(YES/NO)
YES
Recommendation 6.4
A listed entity should give security holders the option to receive
communications from, and send communications to, the entity
and its security registry electronically.
Principle 7: Recognise and manage risk
Recommendation 7.1
The board of a listed entity should:
(a) have a committee or committees to oversee risk, each of
YES
NO
which:
(i)
(ii)
and disclose:
(iii)
(iv)
(v)
has at least three members, a majority of whom
are independent directors; and
is chaired by an independent director,
the charter of the committee;
the members of the committee; and
as at the end of each reporting period, the
number of times the committee met throughout
the period and the individual attendances of the
members at those meetings; or
ANNUAL REPORT
30 June 2018
EXPLANATION
The Shareholder Communications Strategy states that as a part of the
Company’s developing investor relations program, Shareholders can
register with the Company Secretary to receive email notifications of
when an announcement is made by the Company to the ASX,
including the release of the Annual Report, half yearly reports and
quarterly reports. Links are made available to the Company’s website
on which all information provided to the ASX is immediately posted.
Shareholders are encouraged to participate at all EGMs and AGMs of
the Company. Upon the despatch of any notice of meeting to
Shareholders, the Company Secretary sends out material with that
notice of meeting stating that all Shareholders are encouraged to
participate at the meeting.
Security holders can register with the Company to receive email
notifications when an announcement is made by the Company to the
ASX.
Shareholders queries should be referred to the Company Secretary at
first instance.
(a) Due to the size of the Board, it is not practical to maintain
separate Board Committees. The Board as a whole considers all
matters that would normally be considered by the Audit and
Risk Committee.
(b) The Board devote time at board meetings to fulfilling the roles
and responsibilities associated with overseeing risk and
maintaining the entity’s risk management framework and
associated internal compliance and control procedures.
(b)
if it does not have a risk committee or committees that
satisfy (a) above, disclose that fact and the process it
employs for overseeing the entity’s risk management
framework.
Recommendation 7.2
The board or a committee of the board should:
(a)
review the entity’s risk management framework with
management at least annually to satisfy itself that it
continues to be sound, to determine whether there have
been any changes in the material business risks the entity
faces and to ensure that they remain within the risk
appetite set by the board; and
(b) disclose in relation to each reporting period, whether
such a review has taken place.
Recommendation 7.3
A listed entity should disclose:
(a)
(b)
if it has an internal audit function, how the function is
structured and what role it performs; or
if it does not have an internal audit function, that fact and
the processes it employs for evaluating and continually
improving the effectiveness of its risk management and
internal control processes.
YES
(a)
The Company’s processes for risk management and internal
compliance includes a requirement to identify and measure
risk, monitor the environment for emerging factors and trends
that affect these risks, formulate risk management strategies
and monitor the performance of risk management systems.
Schedule 5 of the Corporate Governance Plan is entitled
‘Disclosure – Risk Management’ and details the Company’s
disclosure requirements with respect to the risk management
review procedure and internal compliance and controls.
YES
The company does not have an internal audit program. The Board is
responsible for monitoring the effectiveness of the Company’s risk
management and internal control processes.
Recommendation 7.4
A listed entity should disclose whether, and if so how, it has
regard to economic, environmental and social sustainability
risks and, if it does, how it manages or intends to manage those
risks.
YES
Schedule 5 of the Company’s Corporate Governance Plan details the
Company’s risk management systems which assist in identifying and
managing potential or apparent business, economic, environmental
and social sustainability risks (if appropriate). Review of the Company’s
risk management framework is conducted at least annually and
reports are continually created by management on the efficiency and
effectiveness of the Company’s risk management framework and
associated internal compliance and control procedures.
P a g e | 71
ANNUAL REPORT
30 June 2018
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Corporate governance statement
PRINCIPLES AND RECOMMENDATIONS
COMPLY
(YES/NO)
EXPLANATION
Principle 8: Remunerate fairly and responsibly
Recommendation 8.1
The board of a listed entity should:
(a) have a remuneration committee which:
NO
(i)
(ii)
(iii)
(iv)
(v)
has at least three members, a majority of whom
are independent directors; and
is chaired by an independent director,
and disclose:
the charter of the committee;
the members of the committee; and
as at the end of each reporting period, the
number of times the committee met throughout
the period and the individual attendances of the
members at those meetings; or
(b)
if it does not have a remuneration committee, disclose
that fact and the processes it employs for setting the level
and composition of remuneration for directors and senior
executives and ensuring that such remuneration
is
appropriate and not excessive.
Recommendation 8.2
A listed entity should separately disclose its policies and
practices regarding the remuneration of non-executive
directors and the remuneration of executive directors and
other senior executives and ensure that the different roles and
responsibilities of non-executive directors compared to
executive directors and other senior executives are reflected in
the level and composition of their remuneration.
Recommendation 8.3
A listed entity which has an equity-based remuneration scheme
should:
(a) have a policy on whether participants are permitted to
enter into transactions (whether through the use of
derivatives or otherwise) which limit the economic risk of
participating in the scheme; and
(b) disclose that policy or a summary of it.
Due to the size of the Board, it is not practical to maintain separate
Board Committees. The Board as a whole considers all matters that
would normally be considered by the Remuneration & Nominations
Committee.
The Board devotes time at board meetings to fulfilling the roles and
responsibilities associated with setting the level and composition of
remuneration for Directors and senior executives and ensuring that
such remuneration is appropriate and not excessive.
YES
The Company’s Corporate Governance Plan requires the Board to
disclose its policies and practices regarding the remuneration of non-
executive directors, executive directors and other senior executives.
YES
(a) The Company’s Corporate Governance Plan states that the
Board is required to review, manage and disclose the policy (if
any) on whether participants are permitted to enter into
transactions (whether through the use of derivatives or
otherwise) which limit the economic risk of participating in the
scheme. The Board must review and approve any equity based
plans.
(b) A copy of the Company’s Corporate Governance Plan is available
on the Company’s website.
P a g e | 72
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Additional Information for Listed Public Companies
ANNUAL REPORT
30 June 2018
The following additional information is required by the Australian Securities Exchange in respect of listed public companies.
1
Capital
a. Ordinary share capital
346,227,724 ordinary fully paid shares held by 498 shareholders.
b. Unlisted Options over Unissued Shares
At the end of the financial year, the Company had 25,497,314 unlisted options for ordinary shares. Details of these
options can be found in note 9 of the Directors’ report on page 8 of this annual report.
c.
Convertible notes
The Company raised $3m via a convertible notes issue on 11 July 2016 at a conversion price of $0.22 per note. The
conversion price has been reduced to $0.04 following the entitlement issue conducted as per the prospectus dated
28 May 2017. Each note entitles the holder to convert to one ordinary share. 75,000,000 shares currently stand to
be issued. Conversion may occur at any time for a period of three years from the subscription date. If the notes
have not been converted, they will be redeemed at this point. Interest of 8% will be paid quarterly up until the
settlement date.
d. Performance Rights
The Company has:
1,500,000 Performance Rights Class A (Class A Rights) on issue. Upon the Company achieving the target share
price of $0.80, based on a 30 day volume weighted average share price, within 5 years, the Class A Rights will
vest, entitling the holder or his nominee to 1 fully paid ordinary share in the Company per vested Class A Right.
500,000 Performance Rights Class B (Class B Rights) on issue. Class B Rights will vest on the introduction to, and
entry into an agreement with, a strategic partner to the Company which results directly or indirectly in a
material increase in the Company's revenue or otherwise increases the value of the Company, at the discretion
of the Board of the Company.
e. Partly Paid Shares
The Company has the following:
8,000,000 Partly Paid Shares issued at a price of 20 cents of which 0.01 of one cent is paid on issue with the
balance payable, at the election of the holder, any time within five years from the date of Shareholder approval
of the special resolution, being 30 November 2020.
f.
Voting Rights
The voting rights attached to each class of equity security are as follows:
Ordinary shares: Each ordinary share is entitled to one vote when a poll is called, otherwise each member
present at a meeting or by proxy has one vote on a show of hands.
Unlisted Options and Performance Rights: Options and performance rights do not entitle the holders to vote
nor participate in dividends, when declared, until such time as the options are exercised and subsequently
registered as ordinary shares.
Substantial Shareholders as at 17 September 2018.
g.
Name
Kalonda Pty Ltd
Church Street Trustees Limited
Museum Investments Limited
Number of Ordinary
Fully Paid Shares Held
% Held of Issued Ordinary
Capital
51,348,795
21,552,063
19,664,047
14.83
6.22
5.68
h. Distribution of Shareholders as at 17 September 2018.
P a g e | 73
ANNUAL REPORT
30 June 2018
Additional Information for Listed Public Companies
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Category (size of holding)
Total Holders
Number
Ordinary
% Held of Issued
Ordinary Capital
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
12
1
81
193
211
498
2,237
4,546
805,663
8,835,454
336,579,824
346,227,724
0.00
0.00
0.23
2.55
97.21
100.00
i.
Unmarketable Parcels as at 17 September 2018.
As at 17 September 2018 there were 102 fully paid ordinary shareholders holding less than a marketable parcel of
shares.
j. On-Market Buy-Back
There is no current on-market buy-back.
k. Restricted Securities
The Company has no shares on escrow or other restricted securities.
20 Largest Shareholders — Ordinary Shares as at as at 17 September 2018
l.
Rank Name
Number of Ordinary
Fully Paid Shares Held
% Held of Issued Ordinary
Capital
1.
Kalonda Pty Ltd
2.
Church Street Trustees Limited
3.
Museum Investments Limited
4.
Mr Stefan Hicks
5.
Cabletime Pty Ltd
6.
Tisia Nominees
7.
8.
9.
Mr Stefan Hicks
Citicorp Nominees Pty Limited
Megalith Development Pty Ltd
10. Church Street Trustees Limited
11. HSBC Custody Nominees (Australia) Limited
12. Capricorn Eleven Superannuation Fund Pty Ltd
13. Sliberman Holdings Pty Ltd
14. Megalith Development Pty Ltd
15.
Mr Robert John Peters + Mrs Sandra Lillian Peters
16. Mr Brett Graves + Mrs Kerrie Graves
17. Flue Holdings Pty Ltd
Mr Allan Graham Jenzen + Mrs Elizabeth Jenzen
18.
19. J & TW Dekker Pty Ltd
20. Fidan Holdings Pty Ltd
51,348,795
21,552,063
19,664,047
16,369,044
13,000,000
10,736,324
9,515,962
8,625,002
8,620,825
7,680,000
6,497,500
5,982,397
5,452,074
4,312,500
4,312,500
4,181,809
4,000,000
3,750,000
3,556,362
3,497,500
14.83
6.22
5.68
4.73
3.75
3.10
2.75
2.49
2.49
2.22
1.88
1.73
1.57
1.25
1.25
1.21
1.16
1.08
1.03
1.01
TOTAL
212,654,704
61.42
P a g e | 74
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
ANNUAL REPORT
30 June 2018
2
3
The name of the Company Secretary is Sam Hallab.
Principal registered office
As disclosed in Note 2 ‘Company details’ on page 35 of this Annual Report.
4
Registers of securities
As disclosed in the Corporate directory on page i of this Annual Report.
5
Stock exchange listing
Quotation has been granted for all the ordinary shares of the Company on all Member Exchanges of the Australian
Securities Exchange Limited, as disclosed in the Corporate directory on page i of this Annual Report.
6
Use of funds
The Company has used its funds in accordance with its initial business objectives.
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