ABN 80 148 142 634
ANNUAL REPORT
30 June 2019
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Corporate directory
DIRECTORS
ANNUAL REPORT
30 June 2019
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 5/ 68 Alfred St
Computershare Investor Services Pty Limited
MILSONS POINT NSW 2061
Level 11, 172 St Georges Terrace
Postal:
PO Box 483
PERTH WA 6000
MILSONS POINT NSW 1565
Telephone: 1300 850 505 (investors within Australia)
Telephone: +61 (0)2 8070 1800
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
Perth WA 6000
Telephone:
Australia)
Telephone:
Facsimile:
Website:
131 ASX (131 279) (within
+61 (0)2 9338 0000
+61 (0)2 9227 0885
www.asx.com.au
ASX Code:
ENA
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 2019
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 ........................................................................................................................................ 68
Additional Information for Listed Public Companies ........................................................................................................... 74
P a g e | ii
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Directors' report
ANNUAL REPORT
30 June 2019
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 2019.
1. Directors
The names of Directors in office at any time during or since the end of the year are:
Mr Tony Leibowitz
Chairman
Mr Adam Davey
Mr Tony Wehby
Non-Executive Director
Non-Executive Director
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
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 2019.
P a g e | 3
ANNUAL REPORT
30 June 2019
Directors' report
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
4.
Significant changes in the state of affairs
On 12 November 2018, the Company completed the sale of 100% of the issued capital, including all assets and related
management, in Savill Hicks Corp Pty Ltd for consideration of $4.1m.
5. Operating and financial review
5.1. Operating review
FY19 was a highly active period which delivered strong growth in Ensurance’s UK business, its investment to build out its
operations and product offering, a reduction in overheads and efficiencies gained from the disposal of non-core parts of its
business.
During the period, Ensurance launched a range of new products in both the UK and Australian markets, significantly
broadening its specialist insurance offering into underserved and emerging growth markets.
Ensurance UK launched its Cyber Insurance product in November 2018, targeting any business which is responsible for the
handling of customer data. Designed to minimise disruption caused to a business caused by cyber-attacks and data
breaches, the comprehensive product provides privacy breach response management and information security insurance
and is underwritten by Beazley – a leading global speciality insurer. The UK business also launched an Engineering and
Inspection Insurance product, strategically partnering with British Engineering Services to provide a tailored solution for
sudden and unforeseen damage for the construction and engineering sectors.
Significantly expanding the Company’s addressable market, Ensurance UK launched Terrorism and Sabotage insurance for
the UK and European market in May 2019. Providing cover for an act of terrorism or sabotage which results in damage to
buildings, profits, employees or customers, the product is available to a business of any size and across all industries. Two
well-known underwriting specialists were appointed in the UK to support the product’s launch. The product is already being
met with strong interest from the market and the Company has also secured capacity for the product’s launch in the US,
followed by Australia.
The Company launched its Latent Defects Insurance product in Australia in May. This product provides policyholders with
cover against property damage caused by structural defects discovered up to 10 years after construction is complete.
Targeting the Australian building construction market, estimated to be worth over $100 billion annually, this is the first
product of its kind in Australia featuring coverage of this kind and will be sold exclusively through Ensurance’s Australian
network of over 330 licensed intermediaries. Lloyd’s, the world’s leading specialist insurance market has provided capacity
for the product.
In FY19, Ensurance delivered strong growth in gross written premiums and the rate of annual policy renewals, following
continued investment in the UK business and the launch of multiple new products during the period.
For FY19, gross written premiums were £7m (FY18 £1.9m), with annual policy renewals for the period achieving a 85%
retention rate – setting a strong base of recurring revenue for FY20 and providing strong validation of the business’ product
offering and customer satisfaction.
To support the strategic growth driven by Ensurance’s UK business, the Company appointed Mr Timothy Cramphorn to the
Ensurance UK board as Non-Executive Director, effective 1 November 2018. Tim was the former Managing Director of HSB
Haughton Engineering Insurance Services Limited and a Director of HSB Engineering Insurance Limited, owned by the multi-
billion dollar global reinsurer, Munich Re (ETR:MUV2). With a background in construction and engineering and over 45
years of experience in the industry, Tim’s deep expertise and extensive network of industry contacts has proven to be of
great value, adding relevant insight and bringing highly complementary skills to the UK leadership team.
The Company completed the sale of Savill Hicks Corp Pty Ltd on 12 November 2018, receiving total consideration of $4.1
million, allowing capital to be redeployed into the appointment of specialist underwriting resources, expanding the
Company’s product offering and sales and marketing activity to drive the Company’s global expansion plans. The disposal
follows approval of the sale by the Company’s shareholders at the General Meeting held on 12 September 2018.
Demonstrating clear support and alignment of the Company’s directors with Ensurance’s strategic growth plans, Executive
Chairman and largest shareholder Tony Leibowitz extended a $2.5 million unsecured loan to the Company in June, to
support its next phase of growth.
Furthermore, existing holders of $2.2 million of convertible notes agreed to extend the maturity date to 30 June 2021,
providing further strong endorsement of the Company’s plans from its existing lenders, and their confidence in the long-
term value that is being created for shareholders.
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 2019
a. Operating results
The Group delivered an FY19 loss after tax of $1.402m, representing a decrease of $7.306m on the prior year loss of
$8.707m. The decrease in the loss of the group was due to several main factors:
Sale of Savill Hicks Corp Pty Ltd resulted in a profit on disposal of $3.648m;
Increase in revenue in the United Kingdom of $994k;
The prior period contained a one-off impairment charge of $2.007m to impair the Group’s intangible assets
Revenue from the Group’s continuing operations increased to $2.477m (2018: $1.208m). Ensurance UK turned over GBP
£697k (AUD $1.261m) 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.
The sale of Savill Hicks Corp Pty Ltd was completed on 12 November 2018 for consideration of $4.1m and generated a
profit on disposal of $3.65m.
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 decreased from 30 June 2018 by $2.293m to a net deficiency of $2.294m at 30 June 2019
(2018: Net deficiency of $778).
As at 30 June 2019, the Group's cash and cash equivalents decreased from 30 June 2018 by $669,343 to $2,534,136 at 30
June 2019 (2018: $3,203,479) and had working capital of $2.102m (2018: $1.402m).
5.3. Events Subsequent to Reporting Date
There are no 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.
6.
Information relating to the directors
Mr Tony Leibowitz
Qualifications
Length of service
Experience
Executive Chairman
Chartered Accountant (FCA)
1 year, 9 months from appointment 29 September 2017
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.
P a g e | 5
ANNUAL REPORT
30 June 2019
Directors' report
Interest in Shares and
Options
Directorships held in
other listed entities
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
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
61,159,739 ordinary shares in Ensurance Limited (indirect) (2018: 45,210,780). Shareholding
increased as a result of multiple purchases on open trade market, at arms length.
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; 3,000,000 options exercisable at 4 cents expiring 31 December
2021, 5,000,000 options exercisable at 6 cents expiring 31 December 2022; 7,000,000 options
exercisable at 9 cents expiring 31 December 2023.
Non-executive chairman of Bardoc Gold (BDC)
Independent Non-Executive Director
6 years, 11 months from appointment 17 August 2012 (last re-elected 29 November 2016)
Professional Diploma in Stockbroking
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.
3,542,819 ordinary shares in Ensurance Limited (indirect) (2018: 3,542,819). Cash was paid for
these shares.
4,000,000 partly paid shares in Ensurance Limited (indirect) (2018: 4,000,000)
3,000,000 options exercisable at 8 cents, expiring 15 December 2019.
Non-executive director of PainChek Limited (PCK) and The Agency Group Australia Ltd (AU1).
Independent Non-Executive Director
1 year, 2 months from appointment 3 May 2018
Chartered Accountant (FCA), member of Australian Institute of Company Directors.
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.
1,077,603 ordinary shares in Ensurance Limited (indirect) (2018: 1,077,603). Acquired shares
as a sub-underwriter to the Entitlement Issue dated 28 May 2018. Cash was paid for these
shares.
1,000,000 options exercisable at 5 cents, expiring 10 July 2021; 1,000,000 options exercisable
at 8 cents, expiring 10 July 2021.
Directorships held in
other listed entities
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 2019
7. Meetings of directors and committees
During the financial year seven 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
7
7
7
7
7
7
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.
P a g e | 7
ANNUAL REPORT
30 June 2019
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
Kalonda Pty Ltd
Kalonda Pty Ltd
Kalonda Pty Ltd
Tony Wehby
Tony Wehby
Convertible note holders (grouped)
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
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
3,000,000
5,000,000
7,000,000
1,000,000
1,000,000
12,634,301
55,131,615
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
0.040
0.060
0.090
0.050
0.080
0.040
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
31 Dec 2021
31 Dec 2022
31 Dec 2023
10 July 2021
10 July 2021
30 Jun 2021
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 (19,000,000 options), for
services provided (3,000,000 options), with the share placement completed in December 2017 (7,000,000 options), a non-
executive employment agreement (2,000,000 options) and the extension of the Company’s convertible notes (12,634,301
options).
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 (2018: nil). Details of remuneration paid to the auditor can be found within the financial statements at Note
5 - Auditor's Remuneration.
P a g e | 8
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Directors' report
ANNUAL REPORT
30 June 2019
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).
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 2019 has been received and can be found on page 17 of the annual report.
P a g e | 9
ANNUAL REPORT
30 June 2019
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
Mr Adam Davey
Non-Executive Director
Mr Tony Wehby
Non-Executive Director
Mr Brett Graves
Chief Operating Officer (resigned 12 November 2018)
Mr Michael Huntly
CEO of Ensurance Underwriting
Mr Peter Fielding
COO of Ensurance IT (resigned 1 November 2018)
Mr Tim James CEO of Ensurance UK
Mr Sam Hallab
Company Secretary
Mr Arjan van Ameyde
Chief Financial Officer & Chief Operating Officer
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 2019
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
No short-term incentives were granted during the year.
(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 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 2019
Details of the remuneration of the key management personnel are set out in the following table:-
2019
Group Key Management
Person
Salary, fees
and leave
$
Tony Leibowitz
283,846
Adam Davey
Tony Wehby
Brett Graves
Michael Huntly
Peter Fielding
Tim James
Sam Hallab
50,000
54,750
69,547
231,000
99,355
325,674
48,000
Arjan van Ameyde
242,692
1,300,114
Short-term benefits
Profit share
and bonuses
$
-
-
-
-
-
-
-
-
-
-
Non-
monetary
$
-
-
-
-
-
-
-
-
-
-
Post-
employment
benefits
Super-
annuation
$
26,965
4,750
-
6,607
21,945
9,233
16,284
-
23,056
108,840
Other
$
-
-
-
-
-
-
-
-
-
-
Long-term
benefits
Equity-settled share-
based payments
Total
Other
Equity
$
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
Options /
Rights
$
$
20,310
331,121
-
54,750
4,900
59,650
-
-
-
76,154
252,945
108,588
435
342,393
-
46
48,000
265,794
25,691
1,539,395
P a g e | 11
ANNUAL REPORT
30 June 2019
Directors' report
13. Remuneration report (audited)
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
1,769,328
78,000
24,353
35,000
140,849
13.4. Service Agreements
a. Executive services contract (ESC) with Tony Leibowitz
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
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
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) was $394,200 per annum, reduced to $197,100
from 1 February 2019 and 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 expired 31 December 2018 and is extended beyond this date 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 2019
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 25 ‘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. The balance of Performance Rights at 30 June 2019 were 1,000,000 Class A and 500,000 Class
B. (2018: 1,000,000 and 500,000, respectively)
During the financial year, 15,000,000 options were granted to Tony Leibowitz as part of his executive services agreement.
3,000,000 are exercisable at 4 cents within 3 years of issue, 5,000,000 are exercisable at 6 cents within 4 years of issue and
7,000,000 are exercisable at 9 cents within 5 years of issue.
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
2019
Group Key Management Person
Tony Leibowitz (1) (3) (5)
Adam Davey (2) (5)
Tony Wehby
Brett Graves (4)
Michael Huntly
Peter Fielding
Tim James
Sam Hallab
Arjan van Ameyde
Balance at
start of year
No.
45,210,780
7,542,819
1,077,603
4,210,899
1,813,818
-
-
-
500,000
60,355,919
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.
15,948,959
61,159,739
-
-
(4,210,899)
-
-
-
-
-
7,542,819
1,077,603
-
1,813,818
-
-
-
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 purchased by Mr Leibowitz on the open trade market at arms length.
(4)
(5)
Brett Graves shares were bought back and cancelled by the Company as part of the consideration of the sale of Savill Hicks Corp Pty Ltd.
A number of the above KMP hold Convertible Notes. Upon conversion, shareholdings will increase as follows: Tony Leibowitz: 2,500,000;
Adam Davey: 2,500,000 (see 13.6 (d)).
P a g e | 13
ANNUAL REPORT
30 June 2019
Directors' report
13. Remuneration report (audited)
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
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
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
Received during
the year as
compensation
No.
Received during
the year on the
exercise of options
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(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
(5)
May 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)).
b. Options in Ensurance Limited held by each Key Management Person
2019 – Group
Group Key
Management Person
Balance at
start of year
No.
Granted as
Remuneration
during the year
No.
Tony Leibowitz (1) (2)
10,150,000
15,000,000
Adam Davey
Tony Wehby
Brett Graves
Michael Huntly
Peter Fielding
Tim James
Sam Hallab
Arjan van Ameyde
3,000,000
2,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,150,000
15,000,000
Exercised
during the year
No.
Other changes
during the year
No.
Balance at
end of year
No.
Vested and
Exercisable
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,150,000
3,000,000
2,000,000
-
-
-
-
-
-
30,150,000
-
-
-
-
-
-
-
-
-
-
Not Vested
No.
25,150,000
3,000,000
2,000,000
-
-
-
-
-
-
30,150,000
(1) Mr Leibowitz and his related parties held 1,500,000 options prior to accepting his position with the Company.
(2)
During the financial year, 15,000,000 options were granted to Tony Leibowitz as part of his executive services agreement. 3,000,000
are exercisable at 4 cents within 3 years of issue, 5,000,000 are exercisable at 6 cents within 4 years of issue and 7,000,000 are
exercisable at 9 cents within 5 years of issue.
P a g e | 14
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
ANNUAL REPORT
30 June 2019
2018 – 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.
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
-
-
-
-
-
-
-
-
-
-
-
-
-
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.
c. Performance Rights of Ensurance Limited held by each Key Management Person
2019 – Group
Group Key
Management Person
Tony Leibowitz
Adam Davey
Tony Wehby
Brett Graves
Michael Huntly
Peter Fielding
Tim James
Sam Hallab
Arjan van Ameyde
Balance at
start of year
No.
-
1,500,000
-
-
-
-
-
-
-
1,500,000
Granted as
Remuneration
during the year
No.
Other changes
during the year
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
end of year
No.
-
1,500,000
-
-
-
-
-
-
-
1,500,000
Vested and
Exercisable
No.
-
-
-
-
-
-
-
-
-
-
Not Vested
No.
-
1,500,000
-
-
-
-
-
-
-
1,500,000
P a g e | 15
ANNUAL REPORT
30 June 2019
Directors' report
13. Remuneration report (audited)
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
-
-
-
-
-
-
-
-
-
-
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
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.
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 no loans outstanding to Key Management Personnel at 30 June 2019.
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 22 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 Tuesday, 24 September 2019
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 half-year ended 30
June 2019, 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
Rose Megale
Director
Dated in Sydney, this 24th day of September 2019.
LEVEL 12, 90 ARTHUR STREET, NORTH SYDNEY NSW 2060 – PO BOX 1994, NORTH SYDNEY NSW 2059
TEL: +61 2 9922 1166 - FAX: +61 2 9922 2044 – www.mazars.com.au
EMAIL: audit@mazars.com.au
MAZARS RISK & ASSURANCE PTY LIMITED – ABN: 39 151 805 275
Liability limited by a scheme approved under Professional Standards Legislation
ANNUAL REPORT
30 June 2019
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 2019
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
Gain on disposal of discontinued operation
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
2019
$
2018
$
3
2,476,854
1,208,336
2,476,854
1,208,336
4
4
4
6
30
30
(214,365)
(292,525)
(346,823)
(52,964)
(311,399)
(301,869)
(397,807)
(223,603)
(4,810,243)
(5,092,453)
(558,417)
(365,692)
(625,985)
(874,774)
(355,568)
(347,881)
-
(2,007,461)
(125,416)
(212,449)
(99,030)
(197,904)
(5,128,025)
(9,001,413)
-
286,084
(5,128,025)
(8,715,329)
78,376
3,647,914
7,924
-
(1,401,735)
(8,707,405)
(880)
-
(880)
1,305
-
1,305
Total comprehensive income attributable to members of the parent entity
(1,402,615)
(8,706,100)
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)
-
-
(1,401,735)
(8,707,405)
-
-
(1,402,615)
(8,706,100)
₵
(0.44)
7
₵
(2.51)
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 2019
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
Other non-current assets – Bonds on deposit
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
Gross assets of discontinued operations
Gross liabilities of discontinued operations
Net (liabilities)
Equity
Issued capital
Reserves
Accumulated losses
Total equity
ANNUAL REPORT
30 June 2019
Note
2019
$
2018
$
8
9
11
10
12a
12b
13
14
15
11
17
16a
17
2,534,136
3,203,479
624,167
823,087
7,389,279
3,672,347
210,343
202,960
10,757,925
7,901,873
1,684
72,131
134,698
-
2,564
67,640
180,788
-
208,513
250,992
10,966,438
8,152,865
767,654
7,389,279
208,731
289,892
2,051,180
3,672,347
309,223
467,288
8,655,556
6,500,038
38,994
-
28,889
-
16b
4,565,546
2,583,632
4,604,540
2,612,521
13,260,096
9,112,559
(2,293,658)
(959,694)
-
-
5,709,989
(4,751,073)
(2,293,658)
(778)
18
19
16,301,785
17,527,964
1,481,654
1,545,350
(20,077,097)
(19,074,092)
(2,293,658)
(778)
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 2019
Consolidated statement of changes in equity
for the year ended 30 June 2019
Note
Issued
Capital
Accumulated
Losses
$
$
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
$
Total
$
$
-
-
-
-
-
-
-
(54,487)
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)
Balance at 1 July 2018
17,527,964
(19,074,092)
(54,487)
8,980
1,308,952
12,793
269,112
(778)
Impact due to change in accounting
standard*
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
Rollover of convertible notes
-
177,602
60,915
-
-
-
-
238,517
17,527,964
(18,896,490)
6,428
8,980
1,308,952
12,793
269,112
237,739
-
-
(1,401,735)
-
-
(1,401,735)
-
(20,543)
-
-
-
221,128
-
-
-
-
-
-
-
-
(17,625)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
72,094
-
(880)
(880)
-
-
-
-
(12,593)
(100,422)
-
-
-
-
-
-
-
-
(1,401,735)
(880)
(1,402,615)
-
(20,543)
(65,185)
228,037
-
-
-
(1,218,229)
(100,422)
(17,625)
Sale of Savill Hicks Corp Pty Ltd
(1,205,636)
Share options granted
Translation of Ensurance UK ledger
-
-
-
-
-
Balance at 30 June 2019
16,301,785
(20,077,097)
(11,197)
8,980
1,280,624
(680)
203,927
(2,293,658)
*The Group adopted AASB 15 Revenue from Contracts with Customers using the cumulative effect method. This resulted in a credit of $177,602
to retained earnings and $60,915 to reserves at 1 July 2018, being the cumulative effect on initial application of the standard. As permitted by
the new accounting standard, the comparative results for the year ended 30 June 2018 are not restated.
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 2019
Cash flows from operating activities
Receipts from customers
Interest received
Interest and borrowing costs paid
Payments to suppliers and employees
Refund of income taxes
ANNUAL REPORT
30 June 2019
Note
2019
$
2018
$
2,223,241
1,614,846
131,238
8,663
(215,063)
(513,508)
(7,493,365)
(8,856,640)
284,000
342,285
Net cash used in operating activities
8d.i
(5,069,949)
(7,404,354)
Cash flows from investing activities
Payment for development of intangible assets
Proceeds from sale of financial assets
Proceeds from sale of discontinued operation
-
-
1,999,011
(241,983)
492
-
Payments of/proceeds from intercompany loan with discontinued operation
(223,660)
271,304
Payment of lease deposit
Purchase of plant and equipment
(3,636)
(2,727)
-
(193,757)
Net cash provided by/(used in) investing activities
1,768,988
(163,944)
Cash flows from financing activities
Proceeds from share issue
Net proceeds from borrowings
Convertible notes interest paid
Repayment of borrowings
Net cash provided by financing activities
503,335
11,098,632
2,500,000
5,372,696
(223,452)
(241,429)
(148,265)
(5,841,968)
2,631,618
10,387,931
Net (decrease)/increase in cash held
(669,343)
2,819,633
Cash and cash equivalents at the beginning of the year
3,203,479
383,846
Cash and cash equivalents at the end of the year
8b
2,534,136
3,203,479
Cashflows from discontinued operations
(181,444)
(400,122)
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 2019
Notes to the consolidated financial statements
for the Year Ended 30 June 2019
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 2019 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 $1,401,735 (2018: $8,707,405). As at 30 June 2019, the Group had working
capital of $2,102,369 (2018: $1,401,835), a net liability of $2,293,658 (2018: $778), and accumulated losses of $20,077,097
(2018: $19,074,092). 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. The Group is exploring various capital raising strategies and the Group has also
received confirmation of continued and ongoing financial support from one of its major shareholders. This continued
financial support will enable the Group to meet its current obligations as and when they fall due.
Ultimately the ability of the Group to continue as a going concern is dependent upon the continued unconditional financial
support provided by a major shareholder of Ensurance Limited, which was provided in writing on 19 September 2019. On
this basis, it is the Directors belief that the Group is able to pay its debts as and when they fall due and will have adequate
resources to continue operating for the foreseeable future. For this reason, the Directors consider the going concern basis of
preparation to be appropriate.
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.
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 2019
Note 1
Statement of significant accounting policies
ANNUAL REPORT
30 June 2019
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 1o.
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 2018 and applied them as required, including the adoption of AASB 15, Revenue from Contracts with
Customers. Other new and amended Accounting Standards have been assessed and it has been 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. 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.
ii. 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.
d. Foreign currency transactions and balances
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:
P a g e | 23
ANNUAL REPORT
30 June 2019
Notes to the consolidated financial statements
for the Year Ended 30 June 2019
Note 1
Statement of significant accounting policies
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
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.
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.
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 2019
Note 1
Statement of significant accounting policies
ANNUAL REPORT
30 June 2019
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. 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.
ii. 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
2019
%
2018
%
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.
P a g e | 25
ANNUAL REPORT
30 June 2019
Notes to the consolidated financial statements
for the Year Ended 30 June 2019
Note 1
Statement of significant accounting policies
g. Financial instruments
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Initial recognition and measurement
i.
The Group has adopted AASB 9 Financial Instruments from 1 July 2018. AASB 9 replaces AASB 139 Financial Instruments:
Recognition and Measurement, bringing together all three aspects of the accounting for financial instruments: Classification
and measurement, impairment and hedge accounting. The accounting for the Group’s financial assets, financial liabilities
and hedge accounting remains largely the same as under AASB 139, with the main changes falling under the category of
impairment. 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.
AASB 9 contains three principal classification categories: Measured at amortised cost, Fair Value through Other
Comprehensive Income (FVOCI) and Fair Value through Profit or Loss (FVPL). This is based on the concept that financial
assets should be classified and measured at fair value, with changes in fair value recognised in profit or loss as they arise
(FVPL), unless restrictive criteria are met for classifying and measuring the asset at either amortised cost or FVOCI. 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. The application of AASB 9 had no
material impact on the Group’s financial assets in regards to their classification and measurement.
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. The Group has elected to account for listed shares using FVOCI.
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.
Collectability of trade and other receivables are reviewed on an ongoing basis. Under AASB 9, doubtful debts are
calculated based on an expected credit risk model. AASB 9 requires impairment allowances for all exposures from a time
a loan is originated, based on the deterioration of credit risk since initial recognition. If credit risk does not significantly
increase, allowances are based on 12 month expected losses. A cancellation provision is raised by looking at the previous
12 months’ cancellations and negative endorsements as a percentage of the overall premiums sold. (It is assumed this
percentage will not materially change). This percentage is then applied to the trade receivable balance to create a
cancellation provision.
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.
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 2019
Note 1
Statement of significant accounting policies
ANNUAL REPORT
30 June 2019
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.
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
In relation to the impairment of financial assets, AASB 9 introduces a new forward-looking expected credit loss approach,
replacing AASB 139’s incurred loss approach whereby the Group needs to record an allowance for expected credit loss upon
initial recognition of the financial instrument. For Trade and other receivables, the Group has elected to measure the
cancellation provision based on the expected value by looking at the previous year’s cancellations and negative
endorsements as a percentage of the overall premiums sold. As such, the Group has assessed the historical credit loss
experience and applied it to the current balance to establish the basis of the cancellation provision. Other financial assets
are assessed at each reporting date to determine whether there is any objective evidence of impairment. 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. AASB 9 did not have a material impact on the Group’s financial statements.
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.
P a g e | 27
ANNUAL REPORT
30 June 2019
Notes to the consolidated financial statements
for the Year Ended 30 June 2019
Note 1
Statement of significant accounting policies
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
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. Hedge accounting is not used and so the adoption of the hedge accounting requirements
of AASB 9 had no impact on the Group’s financial statements.
Foreign currency gains and losses are reported on a net basis.
h. 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.
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.
i. 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
j.
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.
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 2019
ANNUAL REPORT
30 June 2019
Statement of significant accounting policies
Note 1
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.
k. Revenue and other income
Interest revenue is recognised in accordance with Note 1i.ix Finance income and expenses.
For the year ended 30 June 2019, the Group adopted AASB 15: Revenue from Contracts with Customers, which replaced all
revenue standards and interpretations. Revenue will be recognised when the Group has satisfied its performance obligations,
which occurs when control of the goods or services are transferred to the customer. This is deemed to be the policy inception
date. An invoice and policy documents are created at the date of inception, which specify each party’s rights and obligations,
the price of the policy, the payment terms and the level of coverage. The insured party assumes full control at the date of
inception and cover is enforceable as at that date, regardless of when payment is received. When the performance obligation
has been satisfied, the Group will recognise as revenue the amount of the transaction price that is allocated to the performance
obligation, after excluding any estimates of variable consideration that are constrained in respect of settlement activities. See
Note 3 for further information.
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)).
l. 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.
m. 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 2019 was $669,754 (2018: $169,121), and loans $2,361 (2018: $nil) after an impairment loss of $231,465
was recognised in 2019 (2018: $6,993,937). 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 | 29
ANNUAL REPORT
30 June 2019
Notes to the consolidated financial statements
for the Year Ended 30 June 2019
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 the previous reporting period, the directors took a view to impair the full value of the software development
costs until economic benefits flowing from this asset are material and can be determined with reasonable accuracy.
The directors are still 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
resulted in a one-off impairment charge to the profit & loss account in the prior year 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.
iv. Key Estimate —Revenue
Under AASB 9, the Group’s Trade and other receivables need to recognise an allowance for expected credit loss upon initial
recognition of the financial instrument as a cancellation provision. The Group has elected to measure the cancellation
provision based on the expected value by looking at the previous year’s cancellations and negative endorsements as a
percentage of the overall premiums sold. As such, the Group has assessed the historical credit loss experience and applied
it to the current balance to establish the basis of the cancellation provision. This makes the assumption that the rate of
cancellation and negative endorsement will be materially the same as in the previous year and this is assessed annually. For
the year ended 30 June 2019, a cancellation provision of 7.2% was applied to Australian receivables and 1.2% to UK
receivables.
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 2019
Note 1
Statement of significant accounting policies
ANNUAL REPORT
30 June 2019
v. Management Judgement – Discontinued operations
An operation is classified as discontinued when a decision is made by management to dispose of an operating segment of
the business. The sale of Savill Hicks Corp Pty Ltd completed on 12 November 2018, it therefore met 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.
n. 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 2018:
AASB 9 Amendments to Australian Accounting Standards – Financial Instruments and associated Amending Standards.
AASB 15 Amendments to Australian Accounting Standards – Revenue from Contracts with Customers.
The adoption of AASB 9 did not have a material impact on the current period or any prior period and is not likely to materially
affect future periods (refer to Note 1i).
The adoption of AASB 15 had an impact on the current period (refer to Note 3) and was applied using the cumulative effect
method. This resulted in a credit of $177,602 to retained earnings and $60,915 to reserves at 1 July 2018, being the
cumulative effect on initial application of the standard. As permitted by the new accounting standard, the comparative
results for the year ended 30 June 2018 are not restated.
o. New Accounting Standards and Interpretations applicable from 1 July 2018 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 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 on the balance sheet. 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 Sydney,
Melbourne and London as finance leases, with applicable accounting treatment applied. An analysis of the Group’s current
exposure to leases falling under AASB 16 has shown the following impact on the net profit and net assets of the Group at 30
June 2019: Non-current assets would increase by approximately $0.8m to recognise the right-of-use assets, less accumulated
amortisation, with a corresponding increase in liabilities of $0.9m to recognise the lease liability. The reclassification of
operating lease payments as depreciation and finance costs would have seen EBITDA increase by $0.3m, but net loss would
increase by $0.1m. Overall cashflows are unaffected, however all cash payments made for leases would be reclassified from
operating cashflows to financing cashflows.
ii. 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.
iii. 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 | 31
ANNUAL REPORT
30 June 2019
Note 2
Registered Office and Principal Place of Business
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
The registered office and principal place of business of the Company is:
Address:
Street:
Level 5/68 Alfred St
Milsons Point NSW 2061
PO Box 483
Milsons Point NSW 1565
+61 (0)2 8070 1800
Postal:
Telephone:
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 | 32
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the year ended 30 June 2019
Note 3
Revenue and other income
a. Revenue
Sales revenue
Interest
Other
ANNUAL REPORT
30 June 2019
2019
$
2018
$
2,209,355
1,201,076
131,239
136,260
7,260
-
2,476,854
1,208,336
For the year ended 30 June 2019, the Group adopted AASB 15: Revenue from Contracts with Customers, which replaced all
revenue standards and interpretations. As permitted by AASB 15, the Group adopted the standard on a cumulative effect basis,
so that prior year comparative results have not been restated.
Commission, brokerage and fees will be recognised when the Group has satisfied its performance obligations, which occurs
when control of the goods or services are transferred to the customer. This is deemed to be the policy inception date. An
invoice and policy documents are created at the date of inception, which specify each party’s rights and obligations, the price
of the policy, the payment terms and the level of coverage. The insured party assumes full control at the date of inception and
cover is enforceable as at that date, regardless of when payment is received. When the performance obligation has been
satisfied, the Group will recognise as revenue the amount of the transaction price that is allocated to the performance
obligation, after excluding any estimates of variable consideration that are constrained in respect of settlement activities.
To the extent a policy is negatively endorsed or cancelled, the Company still retains the right to collect the premium pro-rata
to the point of endorsement or cancellation. The Company estimates variable consideration based on the expected value by
looking at the previous year’s cancellations and negative endorsements as a percentage of the overall premiums sold. (It is
assumed this percentage will not materially change). This percentage is then applied to the trade receivable balance to create
a refund liability. The refund liability is considered an acceptable way to account for variable consideration in the standard.
The adoption of AASB 15 is a reflection of a shift in timing of revenue recognised with no change in the quantum of revenue
recognised. This change arises from the bringing forward of revenue recognition from the point settlement is received to the
policy inception date, subject to variable consideration, which is constrained to reflect potential cancellations. Refer to the
Consolidated Statement of Changes In Equity, which shows the quantitative impact of AASB 15.
Set out below are the amounts by each line item in the Consolidated Statement of Profit or Loss and Other Comprehensive
Income and the Consolidated Statement of Financial Position affected by the adoption of AASB 15. The first column shows
amounts prepared under AASB 15, the second column shows the AASB 15 adjustment and the last column shows the amounts
had AASB 15 not been adopted.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Revenue
Expenses
Finance Costs
Net Profit/(Loss)
Amounts Prepared Under
AASB 15
$
2,476,854
(7,046,462)
(558,417)
(5,128,025)
Current Period Adjustments
Under AASB 15
$
376,787
(5,833)
-
370,954
Amounts Prepared Under
Previous AASB 1023
$
2,100,067
(7,040,629)
(558,417)
(5,498,979)
P a g e | 33
ANNUAL REPORT
30 June 2019
Consolidated Statement of Financial Position
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Current Assets
Non-current Assets
Current Liabilities
Non-current Liabilities
Net Assets
Equity
Amounts Prepared Under
AASB 15
$
10,757,925
208,513
(8,655,556)
(4,604,540)
(2,293,658)
Current Period Adjustments
Under AASB 15
$
(16,821)
-
627,153
-
610,332
Amounts Prepared Under
Previous AASB 1023
$
10,774,746
208,513
(9,282,709)
(4,604,540)
(2,903,990)
(2,293,658)
610,332
(2,903,990)
Note 4
Loss before income tax
Note
2019
$
2018
$
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
b. Employment costs:
Directors fees
(Decrease)/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
13b
14b
52,964
-
-
50,436
2,007,461
173,167
52,964
2,231,064
104,750
(15,763)
315,516
114,875
21,977
367,836
4,030,690
4,002,505
375,050
585,260
4,810,243
5,092,453
2019
$
2018
$
90,000
-
118,790
24,297
-
N/A
-
40,148
90,000
183,235
P a g e | 34
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the year ended 30 June 2019
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 expense/(benefit) on operating loss of Australian continued
operations at 27.5% (2018: 27.5%)
Prima facie tax expense/(benefit) on operating profit of Australian
discontinued operations at 27.5% (2018: 27.5%)
Prima facie tax expense on operating loss of UK continued operations at 19%
(2018: 19%)
Add / (Less)
Tax effect of:
Capital-raising costs deductible
Timing differences
Non-deductible expenses
Loss on sale of investments
Losses in Ensurance UK Limited at 19%
Deferred tax asset not brought to account
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
ANNUAL REPORT
30 June 2019
2019
$
-
-
-
-
2018
$
-
-
(286,084)
(286,084)
153,684
(1,869,479)
21,553
2,179
(387,403)
(418,629)
-
-
3,962
(2,026,782)
-
-
3,471
-
387,403
418,629
1,847,583
1,863,829
-
-
-
%
-
$
-
(286,084)
(286,084)
%
-
$
d. Balance of franking account at year end of the legal parent
8,620
8,620
P a g e | 35
ANNUAL REPORT
30 June 2019
Notes to the consolidated financial statements
for the year ended 30 June 2019
Note 6
Income tax (cont.)
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Note
2019
$
2018
$
e. Deferred tax assets
Provisions
Other
Capital raising costs
Asset revaluation reserve
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
Unearned income
Prepayments
Other
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
Capital losses
Revenue losses
141,162
-
-
242
4,991,231
5,132,635
(7,956)
(47,066)
180,902
28,215
-
1,494,097
1,656,148
455,549
5,124,679
2,111,697
(5,124,679)
(2,111,697)
-
-
27,603
(34,339)
(145)
(1,075)
7,956
455,549
-
-
-
(455,549)
-
-
133,450
1,023,605
3,967,625
617,600
-
3,213,657
5,124,680
3,831,256
Potential deferred tax assets attributable to tax losses have not been brought to account at 30 June 2019 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 | 36
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the year ended 30 June 2019
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 2019
Note
2019
$
2018
$
(1,401,735)
(8,707,405)
-
-
(1,401,735)
(8,707,405)
2019
$
2018
$
316,086,819
346,227,724
2019
$
2018
$
(0.44)
(2.51)
d. At the balance date, the Group has 55,131,615 unissued shares under options (2018: 25,497,314), 8,000,000 partly-paid shares on
issue (2018: 8,000,000), 1,500,000 performance rights (2018: 1,500,000) and 62,500,000 convertible notes (2018: 75,000,000). The
Group does not report diluted earnings per share on annual losses generated by the Group. During the 2019 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: 1,000,000 options exercisable at 5 cents and expiring
10 July 2021; 1,000,000 options exercisable at 8 cents and expiring 10 July 2021; 3,000,000 options exercisable at 4 cents and expiring
31 December 2021; 5,000,000 options exercisable at 6 cents and expiring 31 December 2022; 7,000,000 options exercisable at 9
cents and expiring 31 December 2023 and 12,634,301 options exercisable at 4 cents and expiring 30 June 2021. All these options
are anti-dilutive.
P a g e | 37
ANNUAL REPORT
30 June 2019
Notes to the consolidated financial statements
for the year ended 30 June 2019
Note 8
Cash and cash equivalents
a. Current
Cash at bank
Cash on hand
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Note
2019
$
2018
$
2,532,126
2,010
3,201,734
1,745
2,534,136
3,203,479
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
2,534,136
3,203,479
2,534,136
3,203,479
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. Cash Flow Information
Note
2019
$
2018
$
i. Reconciliation of cash flow from operations to (loss)/profit after income tax
Loss after income tax
(1,401,735)
(8,707,405)
Non-cash flows in (loss)/profit from ordinary activities:
Depreciation and amortisation
Convertible note interest
Impairment
Profit on disposal of Savill Hicks Corp Pty Ltd
Other (option reserves)
Movements related to discontinued operations
Changes in assets and liabilities, net of the effects of purchase and disposal of
subsidiaries:
Decrease/(Increase) in receivables
Increase in prepayments and other assets
Decrease in net tax assets
Decrease in trade and other payables
Decrease in provisions
52,964
275,749
-
(3,647,914)
(108,747)
(401,648)
198,920
(7,383)
284,000
(223,768)
(90,387)
243,225
344,705
2,007,461
-
103,770
(612,463)
(20,364)
(149,927)
58,285
(669,840)
(1,801)
Cash flow from operations
(5,069,949)
(7,404,354)
e. Debt Movements
Current Amounts
Opening Balance
Drawdowns
Movement from Non-Current to Current
Repayments
Closing Balance
2019
$
467,288
-
270,869
2018
$
1,082,394
348,794
-
(448,265)
(963,900)
289,892
467,288
P a g e | 38
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Non-Current Amounts
Opening Balance
Drawdowns
Movement from Non-Current to Current
Repayments
Closing Balance
f. Credit standby facilities
The Group has no credit standby facilities.
g. 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
ANNUAL REPORT
30 June 2019
2019
$
2018
$
2,583,632
2,500,000
(270,869)
(247,217)
2,747,536
-
-
(163,904)
4,565,546
2,583,632
2019
$
624,167
-
-
624,167
2018
$
35,751
284,000
503,336
823,087
b. 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.
P a g e | 39
ANNUAL REPORT
30 June 2019
Notes to the consolidated financial statements
for the year ended 30 June 2019
Note 10 Other assets
Current
Prepayments
Note 11
Compliance of underwriting assets and 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
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
2019
$
210,343
210,343
2018
$
202,960
202,960
Ensurance
Underwriting Pty
Limited
$
Ensurance
UK Limited
$
Total
$
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
-
-
-
30 JUNE 2019
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
1,029,523
816,757
4,275,676
1,267,323
5,305,199
2,084,080
1,846,280
5,542,999
7,389,279
1,788,037
-
58,243
5,376,106
-
166,893
7,164,143
-
225,136
1,846,280
5,542,999
7,389,279
Excess of insurance assets over insurance liabilities
-
-
-
Note 12
a - Financial assets
a. Non-current
Fair Value Through Other Comprehensive Income: Listed shares
Note 12 b - Other non-current assets
Bonds on deposit
2019
$
1,684
1,684
2019
$
2018
$
2,564
2,564
2018
$
1,684
72,131
2,564
67,640
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 2019
ANNUAL REPORT
30 June 2019
Note 12
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 2017
Additions
Disposals
Depreciation expense
Carrying amount: 30 June 2018
Carrying amount: 1 July 2018
Additions
Disposals
2019
$
192,604
(66,692)
125,912
93,599
(84,813)
8,786
134,698
Fixtures,
furniture & fittings
Plant & equipment
$
7,536
177,120
-
(23,101)
161,555
161,555
4,987
-
$
30,704
16,637
(773)
(27,335)
19,233
19,233
1,887
-
2018
$
187,428
(25,873)
161,555
91,639
(72,406)
19,233
180,788
Total
$
38,240
193,757
(773)
(50,436)
180,788
180,788
6,874
-
Depreciation expense
(40,630)
(12,334)
(52,964)
Carrying amount: 30 June 2019
125,912
8,786
134,698
Note 13
Intangible assets
Software development costs
Impairment
Accumulated amortisation
Total intangible assets
Movements in Carrying Amounts
Carrying amount: 1 July 2017
Additions
Amortisation expense
Impairment
Carrying amount: 30 June 2018
Carrying amount: 1 July 2018
Additions
Amortisation expense
Impairment
Carrying amount: 30 June 2019
P a g e | 41
2019
$
2018
$
3,698,562
3,698,562
(2,007,461)
(2,007,461)
(1,691,101)
(1,691,101)
-
-
Software
Development
$
1,934,645
245,983
(173,167)
(2,007,461)
-
-
-
-
-
-
ANNUAL REPORT
30 June 2019
Notes to the consolidated financial statements
for the year ended 30 June 2019
Note 14
Trade and other payables
a. Current
Unsecured
Trade payables & accruals
Other payables
Other taxes
Loan with discontinued operation
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Note
15b
15d
2019
$
2018
$
283,982
223,406
260,266
351,644
401,158
238,620
-
1,059,758
767,654
2,051,180
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 in the prior period 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, the balance was restated as a liability owing from Ensurance Limited. The balance owing to Savill
Hicks Corp Pty Ltd was settled on completion of the sale.
Note 15 Borrowings
a. Current
Convertible notes (i)
Related party loans
Non-refundable sale deposit taken
Premium funding loans
b. Non-Current
Convertible notes (i)
Related party Loans
2019
$
270,869
6,000
-
13,023
289,892
2018
$
-
120,378
200,000
146,910
467,288
2,065,546
2,500,000
2,583,632
-
4,565,546
2,583,632
(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. On 12 November 2018, $0.5m of the notes were cancelled, forming part of the
consideration for the sale of Savill Hicks Corp Pty Ltd.
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 62,500,000 shares stood to be issued.
Prior to year-end, existing holders of the remaining $2.5m convertible notes were offered an extension of the notes to 30
June 2021 on the same terms. Holders that opted to extend the terms were granted one option to acquire fully paid
ordinary shares in the Company for every four shares into which their convertible notes would convert. $2,221,488 of the
notes were extended and $278,518 were declined and will be redeemed as per the original terms of the agreement.
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 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.
P a g e | 42
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Note 16
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/forfeited
ANNUAL REPORT
30 June 2019
2019
$
208,731
38,994
247,725
Long service
Leave
$
74,132
22,910
2018
$
309,223
28,889
338,112
Total
$
338,112
126,583
Annual leave
$
263,980
103,673
(180,550)
(36,420)
(216,970)
Carrying amount at the end of year
187,103
60,622
247,725
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 | 43
ANNUAL REPORT
30 June 2019
Notes to the consolidated financial statements
for the year ended 30 June 2019
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Note 17
Issued capital
2019
No.
2018
No.
2019
$
2018
$
Fully paid ordinary shares at no par value
316,086,819
346,227,724
16,301,785
17,527,964
a. Ordinary shares
At the beginning of the period
364,227,724
83,113,862
17,527,964
7,210,755
Shares issued during the year
Capital raising transaction costs
-
-
263,113,862
-
11,224,554
-
(20,543)
(907,345)
Shares cancelled during the year
(30,140,905)
(1,205,636)
Balance at reporting date
316,086,819
346,227,724
16,301,785
17,527,964
b. Partly paid shares
Partly-paid Shares
2019
No.
2018
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
2019
No.
2018
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
3,000,000
Options exercisable at 8 cents expiring 31 July 2020
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
Options exercisable at 5 cents expiring 10 July 2021
Options exercisable at 8 cents expiring 10 July 2021
2,597,314
2,597,314
3,500,000
3,500,000
5,000,000
5,000,000
3,150,000
3,150,000
7,250,000
7,250,000
1,000,000
1,000,000
-
-
P a g e | 44
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Options exercisable at 4 cents expiring 31 December 2021
Options exercisable at 6 cents expiring 31 December 2022
Options exercisable at 9 cents expiring 31 December 2023
Options exercisable at 4 cents expiring 30 June 2021
Options were valued using the Black-Scholes model as follows
ANNUAL REPORT
30 June 2019
3,000,000
5,000,000
7,000,000
12,634,301
-
-
-
-
55,131,615
25,497,314
2019
$
2018
$
Options exercisable at 12 cents expiring 31 July 2020
76,100
76,100
Options exercisable at 4.6 cents expiring 31 July 2020
245,700
245,700
Options exercisable at 8 cents expiring 31 July 2020
219,992
219,992
Options exercisable at 4 cents expiring 31 July 2020
141,837
296,450
Options exercisable at 8 cents expiring 15 December 2019
98,500
98,500
Options exercisable at 5 cents expiring 15 December 2019
98,595
98,595
Options exercisable at 5 cents expiring 15 December 2020
273,615
273,615
Options exercisable at 5 cents expiring 10 July 2021
Options exercisable at 8 cents expiring 10 July 2021
Options exercisable at 4 cents expiring 31 December 2021
Options exercisable at 6 cents expiring 31 December 2022
Options exercisable at 9 cents expiring 31 December 2023
Options exercisable at 4 cents expiring 30 June 2021
d. Performance rights
Performance Rights Class A
Performance Rights Class B
Carrying amount at the end of year
e. Convertible Notes
Convertible notes
Carrying amount at the end of year
P a g e | 45
3,133
1,767
6,450
7,000
6,860
101,074
-
-
-
-
-
-
1,280,623
1,308,952
2019
No.
2018
No.
1,000,000
1,000,000
500,000
500,000
1,500,000
1,500,000
25a.i
25a.ii
16b.i
62,500,000
75,000,000
62,500,000
75,000,000
ANNUAL REPORT
30 June 2019
f. Capital Management
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
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
2019
1.24
2018
1.22
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 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) Licensee, 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 2019
ANNUAL REPORT
30 June 2019
The working capital position of the Group at 30 June 2019 and 30 June 2018 was 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 18 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
2019
$
2018
$
2,534,136
3,203,479
624,167
210,343
823,087
202,960
7,389,279
3,672,347
(7,389,279)
(3,672,347)
(767,654)
(289,892)
(208,731)
(2,051,180)
(467,288)
(309,223)
2,102,369
1,401,835
2019
$
(680)
8,980
203,928
(11,197)
2018
$
12,793
8,980
269,112
(54,487)
1,280,623
1,308,952
1,481,654
1,545,350
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 2019
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the year ended 30 June 2019
Note 19
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
Percentage Owned
2019
100.0%
100.0%
100.0%
-
-
100.0%
100.0%
2018
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
b. Investments in subsidiaries are accounted for at cost.
c. Savill Hicks Corp Pty Limited and Savill Hicks Corp (NSW) Pty Ltd together form the Australian retail brokerage business
sold on 12 November 2018 and their results are classified as discontinued operations in this annual report.
Note 20
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
2019
$
2018
$
240,202
69,626
-
322,668
266,195
-
309,828
588,863
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.
During the year, a non-cancellable operating lease was taken out over Level 5, 68 Alfred Street, Milsons Point, NSW. The
lease runs until June 2020.
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 2019
Note 21 Key Management Personnel compensation (KMP)
The names and positions of KMP are as follows:
Mr Tony Leibowitz
Chairman
Mr Adam Davey
Non-Executive Director
Mr Tony Wehby
Mr Brett Graves
Non-Executive Director
Chief Operating Officer (resigned 12 November 2018)
Mr Arjan van Ameyde
Chief Financial Officer & Chief Operating Officer
Mr Michael Huntly
CEO of Ensurance Underwriting
Mr Peter Fielding
COO of Ensurance IT (resigned 1 November 2018)
Mr Sam Hallab
Mr Tim James
Company Secretary
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 22 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:
K Graves (spouse of Mr Brett Graves)
C Graham (executive assistant of Mr Tony Leibowitz)
J Huntly (son of Mr Michael Huntly)
ANNUAL REPORT
30 June 2019
2019
$
2018
$
1,430,555
2,001,931
108,840
140,849
1,539,395
2,142,780
2019
$
2018
$
-
43,800
23,876
46,738
40,684
21,088
In June 2019, the Company established a $2.5m loan with Kalonda Pty Ltd, a related entity of Mr Tony Leibowitz. Interest on
the facility is charged at 16% per annum. Total interest paid to Kalonda Pty Ltd in the year was $14,545.
In March 2019, the Company paid Mr Tony Leibowitz $20,000 for a letter of guarantee, confirming he would continue to support
the Company financially for the twelve months following the signing of the half-year audit report dated 26 February 2019.
The Company has a payable of $6,000 to Mr Adam Davey (2018: $6,000), representing interest on a loan that was settled in a
previous financial year.
P a g e | 49
ANNUAL REPORT
30 June 2019
Notes to the consolidated financial statements
for the year ended 30 June 2019
Note 23 Operating segments
a.
Identification of reportable segments
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
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 | 50
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the year ended 30 June 2019
Note 24 Operating segments (cont.)
For the Year to 30 June 2019
Revenue
Revenue
Interest revenue
Other Income
Insurance
(AUS)
$
936,418
6,789
-
ANNUAL REPORT
30 June 2019
Insurance (UK)
$
Information
Technology
$
Corporate Head
Office
$
1,272,937
1,561
-
-
-
136,260
136,260
-
122,889
-
122,889
2,476,854
Total
$
2,209,335
131,239
136,260
Total segment revenue
Reconciliation of segment revenue to group
revenue
943,207
1,274,498
Intra-segment income and expense
-
-
-
-
-
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:
(213,780)
(1,997,059)
(748,699)
1,610,767
(1,348,771)
2,476,854
Depreciation, amortisation & impairment
(6,039)
(41,903)
-
(553)
-
(4,469)
-
(52,964)
-
(1,401,735)
(ii) Unallocated items
Loss before income tax
As at 30 June 2019
Segment Assets
Reconciliation of segment assets to group assets
Intra-segment eliminations
Total assets
Segment asset increases for the year:
Capital expenditure
Acquisitions
2,434,309
6,454,963
15,271
25,165,679
34,070,222
(23,103,784)
10,966,438
-
1,748
1,748
-
-
-
-
-
-
-
2,961
2,961
-
4,709
4,709
Segment Liabilities
2,201,706
5,785,208
5,215,936
8,173,388
21,376,238
Reconciliation of segment liabilities to group
liabilities
Intra-segment eliminations
Total liabilities
(8,116,142)
_
13,260,096
P a g e | 51
ANNUAL REPORT
30 June 2019
Notes to the consolidated financial statements
for the year ended 30 June 2019
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Note 24 Operating segments (cont.)
For the Year to 30 June 2018
Insurance (AUS)
$
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
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, amortisation &
impairment
(iv) 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
Segment Liabilities
Reconciliation of segment liabilities to group
liabilities
Intra-segment eliminations
Total liabilities
57,010
(2,179,251)
(988,242)
(3,659,866)
(6,770,349)
(223,546)
-
(24,057)
(1,978,385)
-
(5,076)
-
(2,231,064)
-
(9,001,413)
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
2,963,087
1,521,734
4,468,800
9,830,797
18,784,418
(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 2019
Note 24
Share-based payments
Share-based payment expense
ANNUAL REPORT
30 June 2019
2019
$
-
2018
$
-
a. The share-based payment expense is comprised of the following arrangements in place at 30 June 2019:
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
2019
No.
2018
No.
1,500,000
7,000,000
-
-
-
-
-
(5,500,000)
1,500,000
1,500,000
The weighted average remaining contractual life of performance rights outstanding at year end was 1.423 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 | 53
ANNUAL REPORT
30 June 2019
Notes to the consolidated financial statements
for the year ended 30 June 2019
Note 25
Financial risk management
a. Financial Risk Management Policies
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
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
$
2,534,136
-
-
-
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
$
2019
Total
$
Floating
Interest
Rate
$
-
2,534,136
3,203,479
624,167
624,167
2,084,080
5,305,199
7,389,279
-
73,815
73,815
Fixed
Interest
Rate
$
-
-
Non-
interest
Bearing
$
2018
Total
$
-
3,203,479
823,087
823,087
1,788,828
1,883,519
3,672,347
-
70,204
70,204
-
-
-
Total Financial Assets
2,534,136
2,084,080
6,003,181
10,621,397
3,203,479
1,788,828
2,776,810
7,769,117
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)
-
-
-
-
-
-
767,654
767,654
7,389,279
7,389,279
4,855,438
-
4,855,438
4,855,438
8,156,933
13,012,371
-
-
-
-
-
-
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
2,534,136
(2,771,358)
(2,153,752)
(2,390,974)
3,203,479
(1,262,092)
(2,946,717)
(1,005,330)
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 | 54
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the year ended 30 June 2019
Note 26 Financial risk management (cont.)
ANNUAL REPORT
30 June 2019
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 (standard terms of trade are
90 days in the UK and 30 days in Australia):
Gross
2019
$
Impaired
2019
$
Past due but not
impaired
2019
$
Net
2019
$
4,057,895
1,247,303
5,305,198
-
-
-
4,057,895
1,247,303
5,305,198
-
1,247,303
1,247,303
634,667
(10,500)
624,167
-
5,939,865
(10,500)
5,929,365
1,247,303
Insurance receivables (premiums)
Current
Past due
Trade receivables (commissions)
Current
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 | 55
ANNUAL REPORT
30 June 2019
Notes to the consolidated financial statements
for the year ended 30 June 2019
Note 26 Financial risk management (cont.)
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
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
2019
$
2018
$
2019
$
2018
$
Total
2019
$
2018
$
Financial liabilities due for payment
Trade and other payables
Trust account insurer liabilities
Borrowings
767,654
7,389,279
289,892
2,051,180
3,672,347
467,288
-
-
4,565,546
-
-
2,583,632
767,654
7,389,279
4,855,438
2,051,180
3,672,347
3,050,920
Total contractual outflows
8,446,825
6,190,815
4,565,546
2,583,632
13,012,371
8,774,447
Financial assets
Cash and cash equivalents
Trade and other receivables
Trust account insurer assets
2,534,136
624,167
7,389,279
3,203,479
823,087
3,672,347
Total anticipated inflows
10,547,582
7,698,913
-
-
-
-
-
-
-
-
2,534,136
624,167
7,389,279
3,203,479
823,087
3,672,347
10,547,582
7,698,913
Net (outflow)/inflow on financial
instruments
i. Market risk
2,100,757
1,508,098
(4,565,546)
(2,583,632)
(2,464,789)
(1,075,534)
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 | 56
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the year ended 30 June 2019
Note 26 Financial risk management (cont.)
(3) Price risk
ANNUAL REPORT
30 June 2019
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 2019 financial year (2018: nil), and therefore was not subject
to material foreign exchange risk, and according not subject to material sensitivities.
iii. Net Fair Values
(1) Fair value estimation
The fair values of financial assets and financial liabilities are presented in the table in note 26a 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 26
Events subsequent to reporting date
There have been no material events subsequent to the reporting date
Note 27
Contingent liabilities
There are no contingent liabilities as at 30 June 2019 (2018: Nil).
P a g e | 57
ANNUAL REPORT
30 June 2019
Notes to the consolidated financial statements
for the year ended 30 June 2019
Note 28
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
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
2019
$
2018
$
1,966,939
3,637,274
671,074
171,321
2,638,013
3,808,595
146,119
4,939,319
391,620
3,988,480
5,085,438
4,380,100
(2,447,425)
(571,505)
21,423,381
22,649,560
(680)
269,112
(40,925)
200
269,112
(6,863)
1,221,735
1,423,232
(25,320,048)
(23,727,959)
(2,447,425)
(571,505)
(1,592,089)
(8,172,723)
-
-
(1,592,089)
(8,172,723)
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 $5,836,799 and loans to subsidiaries of $8,116,142. As a result of this
assessment, the Company has recognised an impairment to the investment of $7,525,195 and $5,167,044, respectively and an
impairment to the loans of $8,113,780. This equates to an impairment loss of $20,806,019. Of this amount $231,465 is recognised
in the current year (2018: $6,993,937). These impairments relate only to disclosures as contained in this Note 29
P a g e | 58
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Notes to the consolidated financial statements
for the year ended 30 June 2019
Note
30 Discontinued Operations
ANNUAL REPORT
30 June 2019
Discontinued operations comprise the Australian retail broking business, Savill Hicks Corp Pty Ltd, the sale of which was completed
on 12 November 2018. Results shown in this note represent the results of Savill Hicks Corp Pty Ltd as well as associated corporate
costs directly attributable to the operations of this business for the period 1 July 2018 up to the completion of the sale.
2019
$
2018
$
985,660
2,000
2,593,021
28,422
(900,159)
(2,590,691)
87,501
(9,125)
78,376
-
78,376
30,752
(22,828)
7,924
-
7,924
-
-
-
-
-
-
-
5,663,772
46,217
5,709,989
(4,744,086)
(6,987)
(4,751,073)
958,916
(181,444)
-
-
216,924
(3,443)
(613,603)
(181,444)
(400,122)
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
Equity
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
P a g e | 59
ANNUAL REPORT
30 June 2019
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
d. (Gain)/Loss on disposal of Discontinued Operations
Net assets of Savill Hicks Pty Ltd at disposal
Consideration:
Cash deposit received in June 2018
Cash received on settlement
Fair value of buy-back of shares
Carrying amount of convertible notes cancelled
Transfer of employee entitlements
Expenses incurred in sale:
Independent expert’s report
Legal and compliance costs
IT and transition costs
(Gain)/Loss on disposal
$
120,200
(200,000)
(1,999,011)
(1,205,636)
(450,230)
(44,648)
(3,899,525)
32,640
44,925
53,846
131,411
(3,647,914)
P a g e | 60
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Directors' declaration
ANNUAL REPORT
30 June 2019
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 2019 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 Tuesday, 24 September 2019
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
2019 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 61.
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 2019 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.a.ii in the financial report, which indicates that the Group incurred a
net loss of $1,401,735 during the year ended 30 June 2019 (2018: $8,707,405 loss) and as of
that date, the Group’s statement of financial position reflected positive working capital of
$2,102,369 (2018: $1,401,835), net liability of $2,293,658 (2018: $778) and accumulated losses
of $20,077,097 (2018: $19,074,092).
LEVEL 12, 90 ARTHUR STREET, NORTH SYDNEY NSW 2060 – PO BOX 1994, NORTH SYDNEY NSW 2059
TEL: +61 2 9922 1166 - FAX: +61 2 9922 2044 – www.mazars.com.au
EMAIL: audit@mazars.com.au
MAZARS RISK & ASSURANCE PTY LIMITED – ABN: 39 151 805 275
Liability limited by a scheme approved under Professional Standards Legislation
The ability of the Group to continue as a going concern and pay their debts as and when they fall
due is dependent upon the continued and ongoing unconditional financial support of a major
shareholder.
Should the ongoing financial support cease, then a material uncertainty exists 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.
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 requirements of the Australian
Financial Services License held by the
Group throughout the financial year. The
group holds an Australian financial services
license for - Ensurance Underwriting Pty
Ltd: 429874 which enables them to trade as
an insurance broker. Conditions attached
to the license include the need for positive
net assets, sufficiency of cash flows and
documentation of operational matters.
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
the significant judgements and estimates
required in their compilation.
comparing cash flow forecasts from
Our procedures included but were not limited
to:
prior periods to actual balances.
ensuring there are no calculation errors
within the projections and other financial
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
ensuring
operational
compliance with the licensing requirements.
the appropriateness of
disclosures made in the financial report
relating to the financial services licenses held
and compliance with their conditions.
requirements
assessing
LEVEL 12, 90 ARTHUR STREET, NORTH SYDNEY NSW 2060 – PO BOX 1994, NORTH SYDNEY NSW 2059
TEL: +61 2 9922 1166 - FAX: +61 2 9922 2044 – www.mazars.com.au
EMAIL: audit@mazars.com.au
MAZARS RISK & ASSURANCE PTY LIMITED – ABN: 39 151 805 275
Liability limited by a scheme approved under Professional Standards Legislation
Sale of SHC Entities
Note 30
The group disposed of 100% of the share
capital of Savill Hicks Corp Pty Ltd, effective
on 31st October 2018. In exchange for this,
Ensurance received multiple components of
consideration including cash, settlement of
convertible notes and receipt of shares. The
calculation of gain on settlement is a complex
accounting transaction to ensure all aspects
are appropriately recorded, presented and
disclosed.
Adoption of AASB 15
Note 3
the new standard
AASB 15 replaces AASB 1023 as the
applicable revenue standard and changes
revenue recognition to a 5 step model, using
the transfer of control as the point at which
revenue is recognised. For Ensurance, this
change in accounting policy has brought
forward the revenue recognition point from
the time when cash is received to the
inception date of the policy. The interpretation
is based upon
of
management's assessment of
the new
accounting standard and results in material
adjustments
significant
alongside
presentation and disclosure requirements for
the
Furthermore,
management's assessment in applying AASB
15 has changed since half year and this has
had a material
impact. The half year
financials will be reissued by management to
apply the reassessed AASB 15 application.
financial
report.
identifying and summarising the key
recalculating the gain on sale.
reviewing management’s journal entries
Our procedures included but were not limited
to:
terms of the purchase agreement.
and vouching them to supporting documents.
assessment of the tax treatment of the
transaction and whether it was made on an
arm’s length basis.
legal contracts and
agreements to check for appropriate dates and
signatures.
reporting
presentation and disclosure requirements with
reference to IFRS.
reviewing all
assessing
financial
the
impact
reviewed
assessed
management’s
reasonableness
Our procedures included but were not limited
to:
assessment memo for AASB 15 application
of
the
management’s interpretation of the standard
and the impact upon the Group’s accounting
policy
assessed the appropriateness of the
presentation and disclosure of AASB 15 in the
financial report
management’s interpretation of the standard
reviewed the 5 step model of AASB 15
and assessed the application of these in
respect of Ensurance
entries to supporting documentation
vouched the AASB 15 application journal
obtained technical consultancy as to
LEVEL 12, 90 ARTHUR STREET, NORTH SYDNEY NSW 2060 – PO BOX 1994, NORTH SYDNEY NSW 2059
TEL: +61 2 9922 1166 - FAX: +61 2 9922 2044 – www.mazars.com.au
EMAIL: audit@mazars.com.au
MAZARS RISK & ASSURANCE PTY LIMITED – ABN: 39 151 805 275
Liability limited by a scheme approved under Professional Standards Legislation
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 2019, 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.
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.
LEVEL 12, 90 ARTHUR STREET, NORTH SYDNEY NSW 2060 – PO BOX 1994, NORTH SYDNEY NSW 2059
TEL: +61 2 9922 1166 - FAX: +61 2 9922 2044 – www.mazars.com.au
EMAIL: audit@mazars.com.au
MAZARS RISK & ASSURANCE PTY LIMITED – ABN: 39 151 805 275
Liability limited by a scheme approved under Professional Standards Legislation
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.
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.
LEVEL 12, 90 ARTHUR STREET, NORTH SYDNEY NSW 2060 – PO BOX 1994, NORTH SYDNEY NSW 2059
TEL: +61 2 9922 1166 - FAX: +61 2 9922 2044 – www.mazars.com.au
EMAIL: audit@mazars.com.au
MAZARS RISK & ASSURANCE PTY LIMITED – ABN: 39 151 805 275
Liability limited by a scheme approved under Professional Standards Legislation
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 2019.
In our opinion, the Remuneration Report of Ensurance Limited for the year ended 30 June 2019,
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 2019
LEVEL 12, 90 ARTHUR STREET, NORTH SYDNEY NSW 2060 – PO BOX 1994, NORTH SYDNEY NSW 2059
TEL: +61 2 9922 1166 - FAX: +61 2 9922 2044 – www.mazars.com.au
EMAIL: audit@mazars.com.au
MAZARS RISK & ASSURANCE PTY LIMITED – ABN: 39 151 805 275
Liability limited by a scheme approved under Professional Standards Legislation
ANNUAL REPORT
30 June 2019
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
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.
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)
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 32 employees, 12 of those
employees are woman.
P a g e | 68
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
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
ANNUAL REPORT
30 June 2019
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 has
not been deemed necessary to institute a formal documented
performance review program of individuals. 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 senior
executives. The Board is to arrange an annual 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.
(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 Remuneration
& Nominations Committee. The Board devotes time at board
meetings to discuss board succession issues. All members of the
Board are involved 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.
(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 | 69
ANNUAL REPORT
30 June 2019
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)
(b)
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 the 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
(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.
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
COMPLY
(YES/NO)
YES
EXPLANATION
Board Skills Matrix
Listed Executive & Non- Executive
experience
Industry experience & knowledge at senior
management level
Leadership
Corporate governance & risk management
Development & implementation of strategy
M&A assessment & execution
Development & implementation of culture
International experience
Capital Markets experience
Subject matter expertise:
- accounting
- ASX compliance
- capital management
- corporate financing
- employee management & remuneration
- industry taxation
- industrial relations/communications/PR
- risk management
- legal
Number of Directors
that Meet the Skill
3
1
3
3
3
3
3
1
3
3
3
3
3
3
0
3
1
0
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.
P a g e | 70
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
ANNUAL REPORT
30 June 2019
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
program to facilitate effective two-way communication with
investors.
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.
The Company has adopted a Shareholder Communications Strategy
which aims to promote and facilitate effective two-way communication
with investors. The Shareholder Communications Strategy outlines a
range of ways in which information is 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.
P a g e | 71
ANNUAL REPORT
30 June 2019
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
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 | 72
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
ANNUAL REPORT
30 June 2019
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
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.
(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.
the different
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
roles and
that
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.
P a g e | 73
ANNUAL REPORT
30 June 2019
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Additional Information for Listed Public Companies
The following additional information is required by the Australian Securities Exchange in respect of listed public companies.
1
Capital
a. Ordinary share capital
316,086,819 ordinary fully paid shares held by 430 shareholders.
b. Unlisted Options over Unissued Shares
At the end of the financial year, the Company had 55,131,615 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. $500,000 of the notes were cancelled as part of the consideration
for the sale of Savill Hicks Corp Pty Ltd. 62,500,000 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.
Prior to year-end, existing holders of the remaining $2.5m convertible notes were offered an extension of the notes to 30
June 2021 on the same terms. Holders that opted to extend the terms were granted one option to acquire fully paid ordinary
shares in the Company for every four shares into which their convertible notes would convert. $2,221,488 of the notes were
extended and $278,518 were declined and will be redeemed as per the original terms of the agreement.
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 05 September 2019.
g.
Name
Kalonda Pty Ltd
Church Street Trustees Limited
Museum Investments Limited
Number of Ordinary
Fully Paid Shares Held
% Held of Issued Ordinary
Capital
61,159,739
29,412,063
17,164,047
19.35
9.25
5.43
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ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
Additional Information for Listed Public Companies
ANNUAL REPORT
30 June 2019
h. Distribution of Shareholders as at 05 September 2019.
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
14
1
71
172
172
430
2,714
4,546
705,663
7,870,436
307,503,460
316,086,819
0.00
0.00
0.22
2.49
97.29
100.00
i.
Unmarketable Parcels as at 05 September 2019.
As at 05 September 2019 there were 137 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 05 September 2019
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.
5.
Goldstake Corporation Pty Ltd
BNP Paribas Nominees Pty Ltd HUB24 Custodial Serv Ltd DRP
6.
Megalith Development Pty Ltd
7.
8.
Citicorp Nominees Pty Limited
Capricorn Eleven Superannuation Fund Pty Ltd
9.
HSBC Custody Nominees (Australia) Limited
10. Sliberman Holdings Pty Ltd
11.
Mr Robert John Peters + Mrs Sandra Lillian Peters
12. Flue Holdings Pty Ltd
13. Tabachnik Super Pty Ltd
14.
Mr Allan Graham Jenzen + Mrs Elizabeth Jenzen
15. J & TW Dekker Pty Ltd
16. Fidan Holdings Pty Ltd
17. Briar Place Pty Limited
18. Mr Richard Elkington + Mrs Christine Elkington
19. Mr David Alan Stern
20. The Brand Laboratories FZE\C
61,159,739
29,412,063
17,164,047
13,454,505
13,000,000
12,933,325
12,510,002
11,304,349
6,716,851
5,452,074
4,312,500
4,000,000
3,997,500
3,750,000
3,556,362
3,497,500
3,388,016
3,115,945
3,000,000
2,800,000
19.35
9.25
5.43
4.26
4.11
4.09
3.96
3.58
2.13
1.72
1.36
1.27
1.26
1.19
1.13
1.11
1.07
0.99
0.95
0.88
TOTAL
P a g e | 75
218,344,778
69.07
ANNUAL REPORT
30 June 2019
ENSURANCE LIMITED
AND CONTROLLED ENTITIES
ABN 80 148 142 634
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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