Ensurance Limited
Annual Report 2021

Plain-text annual report

Ensurance Limited and controlled entities ABN 80 148 142 634 Annual Report 30 June 2021 Ensurance Limited and controlled entities 30 June 2021 Corporate directory Directors Registered office Share register Auditor Solicitors Stock exchange listing Mr Tony Leibowitz Chairman Appointed 29 September 2017 Mr Tony Wehby Non-Executive Director Appointed 3 May 2018 Mr Sam Hallab Non-Executive Director Appointed 2 July 2021 Mr Adam Davey Non-Executive Director Appointed 17 August 2012 Resigned 2 July 2021 Level 21, Westfield Tower 2 101 Grafton St BONDI JUNCTION NSW 2022 Telephone: +61 (0)2 9167 8050 Website: www.ensurance.com.au Computershare Investor Services Pty Limited Level 11, 172 St Georges Terrace PERTH WA 6000 Telephone: 1300 555 159 (Australia) Telephone: +61 (0)3 9415 4062 (Overseas) Website: www.investorcentre.com Mazars Risk & Assurance Pty Limited Level 12, 90 Arthur Street NORTH SYDNEY NSW 2060 Telephone: +61 (0)2 9922 1166 Website: www.mazars.com.au Steinepreis Paganin Level 4, The Read Buildings 16 Milligan Street PERTH WA 6000 Telephone: +61 (0)8 9321 4000 Website: www.steinpag.com.au Australian Securities Exchange Level 40, Central Park 152-158 St George Terrace PERTH WA 6000 Telephone: +61 (0)8 9224 0000 Website: www.asx.com.au (ASX code: ENA) 1 Ensurance Limited and controlled entities 30 June 2021 Contents Directors' report Auditor's independence declaration Statement of profit or loss and other comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements Directors' declaration Independent auditor's report to the members of Ensurance Limited Shareholder information General information 3 15 16 17 18 19 20 47 48 52 The financial statements cover Ensurance Limited as a consolidated entity consisting of Ensurance Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Ensurance Limited's functional and presentation currency. Ensurance Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Level 21, Westfield Tower 2 101 Grafton St BONDI JUNCTION NSW 2022 A description of the nature of the consolidated entity's operations and its principal activities are included in the directors' report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of directors, on 22 September 2021. The directors have the power to amend and reissue the financial statements. 2 Ensurance Limited and controlled entities 30 June 2021 Directors' report The directors present their report, together with the financial statements, on the consolidated entity ('consolidated entity') consisting of Ensurance Limited ('company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2021. Directors The following persons were directors of Ensurance Limited during the whole of the financial year and up to the date of this report, unless otherwise stated: Mr Tony Leibowitz Mr Tony Wehby Mr Sam Hallab (appointed on 2 July 2021) Mr Adam Davey (resigned 2 July 2021) Principal activities During the financial year the principal continuing activities of the consolidated entity consisted of providing customised insurance solutions specialising in construction, liability product range, terrorism and sabotage. Dividends There were no dividends paid, recommended or declared during the current or previous financial year. Review of operations The loss for the consolidated entity after providing for income tax amounted to $1,302,838 (30 June 2020: $2,153,771). Ensurance UK Limited Ensurance UK Limited has achieved a significant milestone in generating its first annual profit since its incorporation, with over $185,000 AUD (>£100,000 GBP) of profit being reported. The strong financial performance was mainly due to the continued growth, combined with other new revenue initiatives launched during the year. The UK business continued to expand its broker network, which has led to improved penetration in the UK market and higher levels of deal flow. Liability product launch The UK business launched its new Liability product offering, at the end of the 2021 financial year. The business is backed by three capacity providers, one of which has provided Ensurance UK Limited with full delegated authority to write Employers, Public, Product, and Pollution Liability, as well as Excess of Loss, for a range of business trades and sizes. Ensurance UK is well positioned to cement itself within this market space. Additionally, the introduction of the Liability product range is expected to bring about further increases to the Contractors All Risk business written, as the business now has the ability to provide a combined insurance offering. The business continues to explore opportunities to add new product ranges to help drive increased profitability and diversification. It is expected to launch additional product lines in coming months. Capacity agreement with AXA During the year, the UK business secured a new capacity agreement with AXA Insurance UK Plc (“AXA”). It allows the business to continue to provide excellent solutions for Construction and Engineering risks, that have been provided to the market in the UK since 2017. The business has seen Gross Written Premium (GWP) increase by 25%, compared with the prior year. This increase demonstrates that Ensurance UK has successfully passed through the transition phase associated with changing capacity from Swiss Re to AXA UK. The increase in GWP shows the underlying strength of these results, in the face of the tight COVID restrictions that were in place within the UK. With full restrictions in the UK being lifted post year end, the Company is well placed to benefit as the operating environment improves. 3 Ensurance Limited and controlled entities 30 June 2021 Directors' report The digitisation journey continues Following the completion of a major part of development towards a new internal IT system, the team in the UK has moved across to a new fully integrated IT platform, complete with workflows and CRM capabilities. The platform brings substantial efficiencies to the business and will significantly reduce quotation time for underwriters, allowing instant quote and bind access for brokers through a portal. The new system has also automated current manual processes. These efficiencies will further increase the profitability of the business as well as ensuring that as the UK business grows, the service levels provided by the Company remain at the highest standard. During June 2021, the UK business continued with the development of this new IT system, turning its attention to portal access for select external brokers. The UK business launched a portal for its Homebuild product, providing instant access to quotes for brokers. The introduction of this portal allows the business to better service its broker partners whilst further increasing internal efficiencies. The Company will continue to develop the IT system, with further internal releases expected over the coming months. Significant growth opportunities and further efficiency gains are expected to be produced by the system, as it continues through this development phase. Asia Pacific Transformational acquisition provides new platform for growth in Australia During the last quarter of 2021, the Company executed an agreement to acquire 100% of the issued share capital of Australian boutique underwriting agency, TK Specialty Risks Pty Ltd (TKSR), from its sole shareholder Mr Tom Kent. The strategic acquisition of TKSR provides Ensurance with the opportunity to scale existing operations and expand into both Professional and Financial lines insurance markets and emerging risk classes, including Cyber Liability in Australia. TKSR was established in November 2015 as an underwriting agency and has experienced strong, profitable growth in recent years through its network of more than 70 insurance broking houses Australia-wide and now has insurance premiums under management in excess of $10 million. Additionally, TKSR offers first-rate claims handling expertise, principally in partnership with global insurer, AXA. The Company believes TKSR, through its complementary underwriting business lines and existing partnership agreement with AXA, provides an excellent opportunity to scale and grow into the Australian market. Australia has seen significant growth in more tailored product offerings, which is where TKSR has been building its presence through specialty underwriting. Ensurance has been seeking to grow and scale its existing business as well as consider earnings accretive acquisition opportunities when they present. Through TKSR and further future acquisitions, the Company intends to grow its Australian operations by expanding into New Zealand and the wider Asia Pacific markets over time. Mr Tom Kent will remain with Ensurance Limited and lead the freshly re-branded Australian operation as it begins to further expand its footprint via: (1) organic growth within its existing Australia-wide network of Australian brokers; (2) accretive acquisitions; (3) distribution of products on behalf of the UK division of Ensurance; and (4) release of new insurance products backed by key insurance partners. Significant changes in the state of affairs There were no significant changes in the state of affairs of the consolidated entity during the financial year. Matters subsequent to the end of the financial year Ensurance has acquired 100% of an Australian boutique underwriting agency, TKSR, through the issue of 83,333,334 Ensurance shares at a deemed 3 cents per share. This was approved at the General Meeting of shareholders on 28th of July 2021. The acquisition is effective from 1 July 2021. 4 Ensurance Limited and controlled entities 30 June 2021 Directors' report The above shares were issued and quoted pre-consolidation on the 28 July 2021. On this basis, the total securities on issue pre-consolidation were 801,587,451. Subsequent to year end, the Company implemented a 10 to 1 share consolidation. Post consolidation there were a total of 80,158,845 securities on issue. This was approved at the General Meeting of shareholders on 28th of July 2021. Ensurance Underwriting Pty Limited was sold to 360 Construction and Engineering Pty Limited (360) on the 1st of March 2020. The sale proceeds were to be paid in instalments over a number of years. 360 made the decision to pay all amounts outstanding ahead of the contract dates of the 31st of July 2022 and the 31st of July 2023 and as a consequence, all funds were received by the 12th of August 2021. No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years. Likely developments and expected results of operations Information on likely developments in the operations of the consolidated entity and the expected results of operations have not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the consolidated entity. Ensurance Australia Pty Limited (formerly TKSR) was integrated into the group from 1 July 2021. Environmental regulation The Group's operations are not subject to significant environmental regulations in the jurisdictions it operates in, namely Australia and the United Kingdom. 5 Ensurance Limited and controlled entities 30 June 2021 Directors' report Information on directors Name: Title: Mr Tony Leibowitz Executive Chairman Qualifications: Chartered Accountant (FCA) Experience and expertise: 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. Other current directorships: Non-Executive Chairman of: - Bardoc Gold Limited (BDC) - Trek Metals Limited (TKM) - Greenvale Mining Limited (GRV) Former directorships (last 3 years): Nil Interests in shares: Interests in options: 14,236,083 ordinary shares in Ensurance Limited (indirect) (2020: 11,895,496). Shareholding increased as a result of multiple market purchases, at arm’s length and conversion of options and convertible notes. 300,000 options exercisable at 40 cents expiring 31 December 2021 500,000 options exercisable at 60 cents expiring 31 December 2022 700,000 options exercisable at 90 cents expiring 31 December 2023 Name: Title: Mr Tony Wehby Non-Executive Director Qualifications: Member of Australian Institute of Company Directors Experience and expertise: 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 Limited and member of the Board Advisory Committee of Moss Capital Funds Management Limited. Other current directorships: Mr Wehby is a Non-Executive director of Kingston Resources Limited (KSN) and Deputy Chairman (and Chairman of the Audit and Risk Committee) of Royal Rehab (a not for profit organisation). Former directorships (last 3 years): Interests in shares: Nil 632,188 ordinary shares in Ensurance Limited (indirect) (2020: 523,702). Shareholding increased as a result of either open market trades at arm’s length or conversion of options. Interests in options: Nil 6 Ensurance Limited and controlled entities 30 June 2021 Directors' report Name: Title: Mr Sam Hallab Non-Executive Director (appointed 2 July 2021) Qualifications: B.Ec., CA, F-AIST, GAICD, Diploma FP Experience and expertise: 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 tax agent and has gained extensive experience in risk management and compliance. Other current directorships: Non-Executive Director of Fiducian Group Limited (FID) Former directorships (last 3 years): Nil Interests in shares: Nil Name: Title: Qualifications: Mr Adam Davey Non-Executive Director (resigned 2 July 2021) Professional Diploma in Stockbroking Experience and expertise: Mr Davey has had experience in the securities industry over the past 25 years. He has served as a Non-Executive Director of several 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. Other current directorships: Non-Executive Director of: - PainChek Limited (PCK) - The Agency Group Australia Limited (AU1) Former directorships (last 3 years): Nil Interests in shares: in Ensurance Limited (indirect) (2020: 637,707). 1,418,450 ordinary shares Shareholding increased as a result of either open market trade, at arm’s length or conversion of options and convertible notes. Interests in options: Nil 'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. 'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. Company secretary Mr Sam Hallab appointed 1 February 2017 Meetings of directors Mr Tony Leibowitz Mr Tony Wehby Mr Adam Davey Held: represents the number of meetings held during the time the director held office. 7 Held Attended 6 6 6 6 6 6 Ensurance Limited and controlled entities 30 June 2021 Directors' report Audited remuneration report The remuneration report details the key management personnel remuneration arrangements for the consolidated entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors. The remuneration report is set out under the following main headings: ● ● ● ● ● Principles used to determine the nature and amount of remuneration Details of remuneration Service agreements Share-based compensation Additional disclosures relating to key management personnel Principles used to determine the nature and amount of remuneration The objective of the consolidated entity's executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward governance practices: ● ● ● ● competitiveness and reasonableness acceptability to shareholders performance linkage / alignment of executive compensation transparency The reward framework is designed to align executive reward to shareholders' interests. The Board have considered that it should seek to enhance shareholders' interests by: ● ● having economic profit as a core component of plan design focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value attracting and retaining high calibre executives ● Additionally, the reward framework should seek to enhance executives' interests by: ● ● ● rewarding capability and experience reflecting competitive reward for contribution to growth in shareholder wealth providing a clear structure for earning rewards In accordance with best practice corporate governance, the structure of non-executive director and executive director remuneration is separate. Non-executive directors’ remuneration The Company's Constitution provides that Directors are entitled to be remunerated for their services as follows: 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. The Directors' remuneration accrues from day to day. 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. 8 Ensurance Limited and controlled entities 30 June 2021 Directors' report Audited remuneration report (continued) ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general meeting. The most recent determination was at the Annual General Meeting held on 25 November 2020. Executive remuneration The consolidated entity aims to reward executives based on their position and responsibility, with a level and mix of remuneration which has both fixed and variable components. 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. No short-term incentives were granted during the year. 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”. Details of remuneration Amounts of remuneration Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables. The key management personnel of the consolidated entity consisted of the directors of Ensurance Limited, Sam Hallab and Tim James. 2021 Non-Executive Directors: Adam Davey Tony Wehby Executive Directors: Tony Leibowitz Other Key Management Personnel: Sam Hallab Tim James Short-term benefits Post- employment benefits Long-term benefits Share- based payments Cash salary and fees $ Cash bonus $ Non- Super- monetary annuation $ $ Long service leave $ Options/ Equity $ Total $ - - 3,752 - - - - 4,900 43,252 48,152 - 25,453 7,949 40,620 341,945 - - - - 22,198 51,403 - - 7,949 - 13,233 58,753 37,000 417,507 887,856 39,500 43,252 267,923 37,000 382,076 769,751 - - - - - - 9 Ensurance Limited and controlled entities 30 June 2021 Directors' report Audited remuneration report (continued) Short-term benefits Post- employment benefits Long-term benefits Share- based payments Cash salary and fees $ Cash bonus $ Non- Super- monetary annuation $ $ Long service leave $ Options/ Equity $ Total $ 45,000 48,562 205,962 154,731 374,374 48,000 173,154 1,049,783 - - - - - - - - - - 4,275 - - - - 4,900 49,275 53,462 - 19,566 - 40,620 266,148 - - - - - 14,699 21,588 - 14,725 74,853 - - - - - - 13,233 - 42,000 169,430 409,195 48,000 229,879 100,753 1,225,389 2020 Non-Executive Directors: Adam Davey Tony Wehby Executive Directors: Tony Leibowitz Other Key Management Personnel: Michael Huntly Tim James Sam Hallab Arjan van Ameyde Service agreements Executive services contract (ESC) with Tony Leibowitz The Company has entered into an executive services contract with Mr Tony Leibowitz on the following terms: ● ● ● ● ● Mr Leibowitz is employed by the Company as Executive Chairman under an ESC that commenced 1 May 2017. The gross annual remuneration package was $270,000 per annum plus superannuation. 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. Non-Executive Director appointment letter with Adam Davey (resigned 2 July 2021) The Company appointed Mr Adam Davey on 13 August 2012 as a Non-Executive Director, on standard terms for agreements of this nature. He was entitled to director fees of $36,000 per annum plus superannuation. Non-Executive Director appointment letter with Tony Wehby The Company appointed Mr Tony Wehby on 3 May 2018 as a Non-Executive Director, on standard terms for agreements of this nature. He is currently entitled to director fees of $39,600 per annum. Non-Executive Director appointment letter with Sam Hallab The Company appointed Mr Sam Hallab on 2 July 2021 as Non-Executive Director, on standard terms for agreements of this nature. He is currently entitled to director fees of $39,600 per annum. 10 Ensurance Limited and controlled entities 30 June 2021 Directors' report Audited remuneration report (continued) Share-based compensation All shares, options and rights disclosed below are stated as at 30 June 2021 and on a pre-consolidation of capital basis. Consolidation of capital occurred on 28 July 2021. Securities Received that are not performance-related No members of KMP are entitled to receive securities that are not performance-based as part of their remuneration package. Options and Rights Granted as Remuneration On 30 November 2015, 6,500,000 Performance Rights Class A and 500,000 Performance Rights Class B were issued to Directors of the Company. The balance of these Performance Rights at 30 June 2021 were nil Class A and nil Class B. (2020: 1,000,000 and 500,000, respectively). On 28 November 2018, 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 a result of performance rights. Issue of shares There were no shares issued to directors and other key management personnel as part of compensation during the year ended 30 June 2021. Options There were no options over ordinary shares issued to directors and other key management personnel as part of compensation that were outstanding as at 30 June 2021. There were no options over ordinary shares granted to or vested by directors and other key management personnel as part of compensation during the year ended 30 June 2021. Performance rights There following performance rights over ordinary shares were issued to Tim James on 24 February 2021 which remain outstanding as at 30 June 2021: 7,500,000 Class C 7,500,000 Class D, and 10,000,000 Class E Additional disclosures relating to key management personnel Shareholding The number of shares in the company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below: Balance at Received as part of the start of the year remuneration Additions Disposals/ other Balance at the end of the year Ordinary shares Tony Leibowitz Tony Wehby Adam Davey 118,954,957 5,273,018 10,377,073 134,605,048 - 16,739,197 1,048,853 - - 7,807,429 - 25,595,479 - 135,694,154 6,321,871 - (4,000,000) 14,184,502 (4,000,000) 156,200,527 Adam Davey's shares include 4,000,000 partly paid shares which lapsed during the year. 11 Ensurance Limited and controlled entities 30 June 2021 Directors' report Audited remuneration report (continued) Option holding The number of options over ordinary shares in the company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below: Options over ordinary shares Tony Leibowitz Tony Wehby Adam Davey Balance at the start of the year Granted Exercised Expired/ forfeited/ other Balance at the end of the year 33,894,197 3,048,853 3,708,563 40,651,613 - - - - (14,894,197) (1,048,853) (708,563) (16,651,613) (4,000,000) 15,000,000 - 2,000,000 - (3,000,000) (7,000,000) 17,000,000 * Options held by Tony Leibowitz are in a related entity Kalonda Pty Limited Performance rights holding The number of performance rights over ordinary shares in the company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below: Performance rights over ordinary shares Tim James Adam Davey Balance at the start of the year Granted Expired/ forfeited/ other Balance at the end of the year Vested 25,000,000 - 1,500,000 - 1,500,000 25,000,000 - - - 25,000,000 - (1,500,000) - (1,500,000) 25,000,000 Other transactions with key management personnel and their related parties The Group has a loan from Kalonda Pty Limited of $2.5m. This company is a related party to the Executive Chairman. This concludes the audited remuneration report. Shares under option Unissued ordinary shares of Ensurance Limited under option at the date of this report are as follows: Grant date Kalonda Pty Limited Kalonda Pty Limited Kalonda Pty Limited Expiry date 31 December 2021 31 December 2022 31 December 2023 Exercise price $0.40 $0.60 $0.90 Number under option 300,000 500,000 700,000 1,500,000 These options are disclosed on a post-consolidation of capital basis. No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the company or of any other body corporate. Shares under performance rights There were 2,500,000 unissued ordinary shares of Ensurance Limited under performance rights outstanding at the date of this report. These rights are stated on a post-consolidation of capital basis. 12 Ensurance Limited and controlled entities 30 June 2021 Directors' report Shares issued on the exercise of options The following ordinary shares of Ensurance Limited were issued during the year ended 30 June 2021 and up to the date of this report on the exercise of options granted: Date shares granted 30 April 2021 21 May 2021 8 June 2021 These shares were issued pre-consolidation of capital Exercise price $0.02 $0.02 $0.02 Number of shares issued 1,244,800 24,267,358 25,186,932 50,699,090 Shares issued on the exercise of performance rights There were no ordinary shares of Ensurance Limited issued on the exercise of performance rights during the year ended 30 June 2021 and up to the date of this report. Indemnification and insurance of officers Under the terms of its constitution, Ensurance Ltd indemnifies officers of the Company to the maximum extent permitted by law out of the property of the Company in relation to the period during which that officer held his or her office against a liability for costs and expenses incurred by that officer in that capacity:     in defending proceedings, whether civil or criminal, in which: judgment is given in favour of that officer; or that officer is acquitted; or in connection with an application in relation to any proceedings referred to in clause 28.2(c) in which relief is granted to that officer by the Court under the Corporations Act. The Company or a related body corporate of the Company may pay, or agree to pay, a premium under a contract insuring an officer in relation to the period during which that officer held that office, including in respect of a liability for costs and expenses incurred by a person in defending civil or criminal proceedings whether or not the officer has successfully defended himself or herself in these proceedings, provided that:   the provisions of the Corporations Act (including, but not limited to, Chapter 2E) are complied with in relation to the payment of the premium; and the liability does not arise out of conduct involving a wilful breach of duty to the Company or a contravention of sections 182 or 183 of the Corporations Act. No liability has arisen under these indemnities as at the date of this report. Ensurance Limited has paid a premium under a combined policy of insurance for liability of officers of the Company and related bodies corporate, professional indemnity and crime. In accordance with normal commercial practice, disclosure of the total amount of premium payable under, and the nature of the liabilities covered by, the insurance contract is prohibited by a confidentiality clause in the contract. Indemnity and insurance of auditor The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor. During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity. 13 Ensurance Limited and controlled entities 30 June 2021 Directors' report Proceedings on behalf of the company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to 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 part of those proceedings. Non-audit services There were no non-audit services provided during the financial year by the auditor. Officers of the company who are former partners of Mazars Risk & Assurance Pty Limited There are no officers of the company who are former partners of Mazars Risk & Assurance Pty Limited. Auditor's independence declaration A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors' report. Auditor Mazars Risk & Assurance Pty Limited continues in office in accordance with section 327 of the Corporations Act 2001. This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001. ___________________________ Tony Leibowitz Executive Chairman 22 September 2021 14 Level 12, 90 Arthur Street North Sydney NSW 2060 PO Box 1994 North Sydney NSW 2059 Australia Tel: +61 2 9922 1166 Fax: +61 2 9922 2044 www.mazars.com.au AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF ENSURANCE LIMITED AND ITS CONTROLLED ENTITIES I declare that, to the best of my knowledge and belief during the year ended 30 June 2021, there have been: — no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and — no contraventions of any applicable code of professional conduct in relation to the audit. MAZARS RISK & ASSURANCE PTY LIMITED James Martin Director Sydney, 22 September 2021 Mazars Risk & Assurance Pty Limited ABN: 39 151 805 275 Liability limited by a scheme approved under Professional Standards Legislation Ensurance Limited and controlled entities Statement of profit or loss and other comprehensive income For the year ended 30 June 2021 Revenue from continuing operations Other income Interest revenue Expenses Business development Compliance costs Computers and communications Depreciation and amortisation Employment costs Commissions Legal and consulting fees Occupancy costs Travel and accommodation Other expenses Finance costs Operating loss Modified loss on sale of subsidiary Loss before income tax expense from continuing operations Income tax expense Loss after income tax expense from continuing operations Profit after income tax expense from discontinued operations Consolidated Note 2021 $ 2020 $ 4 5 6 6 6 7 8 4,340,747 3,612,313 189,436 3,959 84,788 99,015 (79,737) (363,566) (334,850) (152,097) (3,602,239) (182,621) (109,327) (167,092) (7,576) (172,651) (663,138) (158,049) (324,527) (237,334) (344,240) (4,322,579) - (109,151) (174,879) (156,034) (93,171) (740,740) (1,300,752) (2,864,588) (2,086) - (1,302,838) (2,864,588) - - (1,302,838) (2,864,588) - 710,817 Loss after income tax expense for the year attributable to the owners of Ensurance Limited 26 (1,302,838) (2,153,771) Other comprehensive income for the year, net of tax - - Total comprehensive income for the year attributable to the owners of Ensurance Limited Total comprehensive income for the year is attributable to: Continuing operations Discontinued operations (1,302,838) (2,153,771) (1,302,838) - (2,005,897) (147,874) (1,302,838) (2,153,771) Cents Cents Earnings per share for loss from continuing operations attributable to the owners of Ensurance Limited Basic earnings per share Diluted earnings per share 37 37 (0.23) (0.23) (0.50) (0.50) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 16 Ensurance Limited and controlled entities Statement of financial position As at 30 June 2021 Consolidated Note 2021 $ 2020 $ Assets Current assets Cash and cash equivalents Trade and other receivables Trust account insurer assets Other Total current assets Non-current assets Receivables Investments Property, plant and equipment Right-of-use assets Intangibles Bonds on deposit Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Borrowings Lease liabilities Provisions Trust account insurer liabilities Total current liabilities Non-current liabilities Borrowings Provisions Total non-current liabilities Total liabilities Net assets/(liabilities) Equity Issued capital Reserves Accumulated losses Total equity/(deficiency) 9 10 11 12 13 14 15 16 17 1,464,031 1,768,777 1,276,309 1,630,714 19,226,262 13,240,759 64,591 22,588,351 16,212,373 129,281 273,347 1,200 11,506 - 133,692 18,743 438,488 856,471 1,200 91,419 30,289 125,665 77,466 1,182,510 23,026,839 17,394,883 18 19 20 21 22 1,309,351 66,665 - 88,917 359,862 4,714,997 231,106 52,709 18,859,720 13,097,128 20,324,653 18,455,802 23 2,500,000 9,936 2,509,936 - 3,276 3,276 22,834,589 18,459,078 192,250 (1,064,195) 24 25 26 22,241,201 19,291,070 1,911,211 (22,266,476) 74,164 (22,123,115) 192,250 (1,064,195) The above statement of financial position should be read in conjunction with the accompanying notes 17 Ensurance Limited and controlled entities Statement of changes in equity For the year ended 30 June 2021 Consolidated Issued capital $ Reserves $ Accumulated losses $ Total deficiency in equity $ Balance at 1 July 2019 16,301,785 1,481,655 (20,077,098) (2,293,658) Adjustment for change in accounting policy - - (84,381) (84,381) Balance at 1 July 2019 - restated 16,301,785 1,481,655 (20,161,479) (2,378,039) Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Rollover of convertible notes Expense of options Translation of Ensurance UK ledger Forfeit of options Asset revaluation - - - - - - - - - - - (2,153,771) - (2,153,771) - (2,153,771) (2,153,771) (47,985) 75,487 (149,916) (8,438) (120) 40,335 8,439 - - - (7,650) 83,926 (149,916) (8,438) (120) Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 24) Share-based payments (note 38) 2,989,285 - - 560,528 - - 2,989,285 560,528 Balance at 30 June 2020 19,291,070 1,911,211 (22,266,476) (1,064,195) Consolidated Issued capital $ Reserves $ Accumulated Total equity / (deficiency) $ losses $ Balance at 1 July 2020 19,291,070 1,911,211 (22,266,476) (1,064,195) Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Expense of Options Foreign exchange movements Lapse of options & performance rights Issue of shares on conversion of convertible notes Issue of shares on exercise of options Redemption of convertible notes - - - - - - (1,302,838) - (1,302,838) - (1,302,838) (1,302,838) - - - 1,550,703 1,399,428 - 79,563 16,752 (1,391,973) (101,717) (385,446) (54,226) - - 1,391,973 - - 54,226 79,563 16,752 - 1,448,986 1,013,982 - Balance at 30 June 2021 22,241,201 74,164 (22,123,115) 192,250 The above statement of changes in equity should be read in conjunction with the accompanying notes 18 Ensurance Limited and controlled entities Statement of cash flows For the year ended 30 June 2021 Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest received Other revenue Consolidated Note 2021 $ 2020 $ 4,187,831 (5,053,611) 3,581,464 (7,318,010) (865,780) 6,145 168,242 (3,736,546) 93,877 84,788 Net cash used in operating activities 35 (691,393) (3,557,881) Cash flows from investing activities Payments for investments Payments for property, plant and equipment Payments for intangibles Payments for financial assets Proceeds from disposal of business Net cash from investing activities Cash flows from financing activities Proceeds from issue of shares Proceeds from borrowings Interest and other finance costs paid Repayment of borrowings Repayment of lease liabilities Net cash from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year 15 17 24 - (9,252) (36,892) (5,650) 633,128 (131,606) - - (5,745) 220,000 581,334 82,649 1,013,982 66,666 (585,272) (26,662) (170,933) 3,511,291 - (688,530) (284,518) (320,838) 297,781 2,217,405 187,722 1,276,309 (1,257,827) 2,534,136 Cash and cash equivalents at the end of the financial year 9 1,464,031 1,276,309 The above statement of cash flows should be read in conjunction with the accompanying notes 19 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 1. Significant accounting policies The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. New or amended Accounting Standards and Interpretations adopted The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. 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 incurred a net loss for the period of $1,302,838 (2020: $2,153,771 loss). As at 30 June 2021, the Group had positive working capital of $2,263,698 (June 2020 negative working capital of $2,213,137) and net assets of $192,250 (June 2020 net liabilities of $1,064,193). The Group’s liabilities include an interest bearing $2,500,000 related party loan from Kalonda Pty Limited due for repayment on the 31 December 2022. Kalonda Pty Limited is owned by the Executive Chairman Tony Leibowitz. The going concern basis of preparation is deemed appropriate by the board owing to the following factors. Cash flow forecasts show the cash generation from the Australian entities (including TK Speciality Risks Pty Ltd) and Ensurance UK Limited being sufficient to offset their own respective cash outflows. In addition, the Board has secured a working capital facility of $750,000 from Kalonda Pty Ltd on equivalent terms to the existing loan, in order to support the business as it continues to execute on identified growth initiatives. This facility has not been drawn upon as at the date of this report. The ultimate ability of the Group to continue as a going concern is dependent upon it achieving the cash flow forecast prepared by management and where needed, drawing down upon the working capital facility to the extent required to meet their obligations for a period of 12 months from the date of this report. 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. 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. Accounting for Government Grants and Disclosure of Government Assistance During the period grants were received in the form of cash flow boosts due to COVID-19. The cash flow boost is recognised as income when the cash is received. Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB'). Historical cost convention The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of Shares in Listed Companies. 20 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 1. Significant accounting policies (continued) Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2. Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 32. Operating segments Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance. Foreign currency translation The financial statements are presented in Australian dollars, which is Ensurance Limited's functional and presentation currency. Foreign currency transactions Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Foreign operations The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity. The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of. Revenue Revenue consists principally of commission and administration fees associated with the placement of insurance contracts. This income is net of commissions payable to other directly involved parties. Revenues are recognised on the later of the inception date of the risk and the date of receipt of the order. Any adjustments to commission arising from premium additions or reductions are recognised as and when they are notified by third parties. Profit commissions are recognised when the amount can be estimated with a reasonable degree of certainty and when it is highly probable that the commission will be received. All revenue is stated net of the amount of GST/VAT. Income tax The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. 21 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 1. Significant accounting policies (continued) Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a ● transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. ● Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Ensurance Limited (the 'head entity') and its wholly owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group. Discontinued operations A discontinued operation is a component of the consolidated entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately on the face of the statement of profit or loss and other comprehensive income. Current and non-current classification Assets and liabilities are presented in the statement of financial position based on current and non-current classification. An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current. A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current. Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Trade and other receivables Other receivables are recognised at amortised cost, less any allowance for expected credit losses. Investments and other financial assets Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless an accounting mismatch is being avoided. 22 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 1. Significant accounting policies (continued) Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, its carrying value is written off. Intangible assets - Software Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their expected benefit, being their finite life of 5 years. Impairment of financial assets The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the consolidated entity's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. For financial assets mandatorily measured at fair value through other comprehensive income, the loss allowance is recognised in other comprehensive income with a corresponding expense through profit or loss. In all other cases, the loss allowance reduces the asset's carrying value with a corresponding expense through profit or loss. Impairment of non-financial assets Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit. Trade and other payables These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. Due to their short-term nature, they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition. Borrowings Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method. The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the statement of financial position, net of transaction costs. Lease liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. 23 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 1. Significant accounting policies (continued) Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. Finance costs Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred. Employee benefits Short-term employee benefits Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled. Other long-term employee benefits The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Share-based payments Equity-settled and cash-settled share-based compensation benefits are provided to employees. Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price. The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions. The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods. If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited. If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification. 24 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 1. Significant accounting policies (continued) Fair value measurement When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market. Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Issued capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of Ensurance Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. Goods and Services Tax ('GST') and Value Added Tax (VAT) Revenues, expenses and assets are recognised net of the amount of associated GST/VAT, unless the GST/VAT incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST/VAT receivable or payable. The net amount of GST/VAT recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position. Cash flows are presented on a gross basis. The GST/VAT components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows. New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2021. The consolidated entity has not yet assessed the impact of these new or amended Accounting Standards and Interpretations. 25 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 2. Critical accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below. Trust assets and liabilities Insurance intermediaries act as agents in placing the insurable risks of their clients with insurers and as such generally are not liable as principals for the amounts arising from such transactions. Accordingly, we have accounted for the trust asset and trust liability insurance transactions until the Group receives cash in respect of Commissions. Fiduciary cash arising from insurance intermediary transactions is included as Trust assets. The company is entitled to retain the investment income on any cash flows arising from insurance related transactions. Coronavirus (COVID-19) pandemic Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the consolidated entity based on known information. This consideration extends to the nature of the products and services offered, customers, supply chain, staffing and geographic regions in which the consolidated entity operates. Other than as addressed in specific notes, there does not currently appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the consolidated entity unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic. Share-based payment transactions The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black- Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. Employee incentive share plans Employees who hold these are required to maintain their performance metrics and be employed by the Group for a specified period. These plans have a vesting period of 2, 3 and 4 years. Performance Rights These rights are issued at 30 June 2021, 2022 and 2023 based on both short and long term incentives. The vesting conditions relate to Ensurance UK Pty Limited achieving agreed upon NRC and EBITA at year end. The rights will be brought to account when it is probable that the vesting conditions will be met. Allowance for expected credit losses The allowance for expected credit losses requires a degree of estimation and judgement. There is an increased risk of fee and commission income not being received, once the income is past the payment due dates. These assumptions include a historical analysis of credit losses from contracts in arrears. Income tax The consolidated entity is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The consolidated entity recognises liabilities for anticipated tax audit issues based on the consolidated entity's current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made. 26 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 2. Critical accounting judgements, estimates and assumptions (continued) Recovery of deferred tax assets Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Note 3. Operating segments Identification of reportable operating segments The consolidated entity is organised into 2 operating segments: These being the business in the UK and the head office in Australia. These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources. There is no aggregation of operating segments. The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements. The information reported to the CODM is on a monthly basis. Intersegment transactions Intersegment transactions were made at cost. Intersegment transactions are eliminated on consolidation. Operating segment information Consolidated - 2021 Revenue Sales to external customers Interest revenue Other revenue Total revenue EBITDA Depreciation and amortisation Impairment of assets Finance costs Profit/(loss) before income tax expense Income tax expense Loss after income tax expense Assets Segment assets Intersegment eliminations Total assets Liabilities Segment liabilities Intersegment eliminations Total liabilities Ensurance UK $ Head Office $ Total $ 4,340,747 2,356 14,418 4,357,521 - 1,603 175,018 176,621 4,340,747 3,959 189,436 4,534,142 326,198 (54,244) (68,335) (6,060) 197,559 (843,943) (1,420) - (655,034) (1,500,397) (517,745) (55,664) (68,335) (661,094) (1,302,838) - (1,302,838) 21,418,769 26,456,738 47,875,507 (24,848,668) 23,026,839 19,351,543 13,148,557 32,500,100 (9,665,511) 22,834,589 27 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 3. Operating segments (continued) Consolidated - 2020 Revenue Sales to external customers Other revenue Interest revenue Total revenue EBITDA Depreciation and amortisation Loss before income tax expense Income tax expense Loss after income tax expense Assets Segment assets Intersegment eliminations Total assets Liabilities Segment liabilities Intersegment eliminations Total liabilities Note 4. Revenue From continuing operations Underwriting commission Profit commission Policy administration fees Revenue from continuing operations Note 5. Other income Net gain on disposal of business Government grants - cash flow boost Other income Other income Ensurance UK $ Head Office $ Information Discontinued technology Operations $ $ Total $ 3,612,313 24,966 11,196 3,648,475 - 4,964 87,819 92,783 - 54,858 - 54,858 588,510 - - 588,510 4,200,823 84,788 99,015 4,384,626 (181,278) (300,633) (481,911) (1,482,591) (43,608) (1,526,199) 15,145,703 26,968,157 13,579,124 14,699,261 - - - - - (145,661) - (145,661) (1,809,530) (344,241) (2,153,771) - (2,153,771) - 42,113,860 (24,718,977) 17,394,883 - 28,278,385 (9,819,307) 18,459,078 Consolidated 2021 $ 2020 $ 3,998,072 206,078 136,597 3,612,313 - - 4,340,747 3,612,313 Consolidated 2021 $ 2020 $ 21,220 153,798 14,418 - 54,858 29,930 189,436 84,788 28 Consolidated 2021 $ 2020 $ (23,343) (31,593) (29,319) (67,842) (48,071) - (296,170) - (152,097) (344,241) Consolidated 2021 2020 (255,585) (399,449) (8,104) (264,749) (403,839) (72,152) (663,138) (740,740) Consolidated 2021 $ 2020 $ (82,752) (42,867) (215,509) (2,927,521) (32,758) (300,832) (93,563) 57,973 (262,756) (3,673,307) (53,576) (297,350) (3,602,239) (4,322,579) Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 6. Other expenses Depreciation and amortisation Depreciation expense Amortisation - Software Amortisation - Right of use assets Write off of office furniture Finance costs Interest on convertible notes Interest on related party loans Interest on lease liability Employee Entitlements Non-executive Director fees Increase/(Decrease) in employee benefit provisions Superannuation expenses Wages and salaries Other employment related costs Employee National Insurance Contributions (UK) 29 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 7. Income tax expense Numerical reconciliation of income tax expense and tax at the statutory rate Loss before income tax expense from continuing operations Profit before income tax expense from discontinued operations Tax at the statutory tax rate of 26% (2020: 27.5%) Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Non-deductible expenses Loss on sale of investment (Profit) / Losses in Ensurance UK Limited Non-assessable income Deferred tax asset not recognised Income tax expense Franking account Consolidated 2021 $ 2020 $ (1,302,838) - (2,864,588) 710,817 (1,302,838) (2,153,771) (338,738) (592,287) 202 - (51,365) (35,528) 425,429 3,112 189,618 130,116 (44,948) 314,389 - - Consolidated 2021 $ 2020 $ Balance of franking account of the legal parent entity 8,620 8,620 Note 8. Discontinued operations Financial performance information Discontinued revenue Other discontinued income Discontinued expense Loss before income tax expense Income tax expense Loss after income tax expense Gain on disposal before income tax Income tax expense Gain on disposal after income tax expense Profit after income tax expense from discontinued operations 30 Consolidated 2021 $ 2020 $ - - - - - - - - - - 588,510 313 (734,484) (145,661) - (145,661) 856,478 - 856,478 710,817 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 8. Discontinued operations (continued) Cash flow information Net cash used in operating activities Note 9. Current assets - cash and cash equivalents Cash on hand Cash at bank Cash on deposit Note 10. Current assets - trade and other receivables Commission on Trust Assets Less: Allowance for expected credit losses Other receivables Funds owing on the sale of Ensurance Underwriting Pty Limited Consolidated 2021 $ 2020 $ - (273,112) Consolidated 2021 $ 2020 $ 184 1,463,847 - 1,690 1,245,673 28,946 1,464,031 1,276,309 Consolidated 2021 $ 2020 $ 1,613,593 (34,125) 1,579,468 1,446,122 (33,211) 1,412,911 17,849 171,460 30,495 187,308 1,768,777 1,630,714 Allowance for expected credit losses The consolidated entity has recognised an additional loss of $914 to $34,125 (2020: $33,211) in profit or loss in respect of the expected credit losses for the year ended 30 June 2021. Note 11. Current assets - Trust account insurer assets Insurance debtors Trust accounts 31 Consolidated 2021 $ 2020 $ 11,418,742 7,807,520 9,515,767 3,724,992 19,226,262 13,240,759 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 12. Current assets - other Prepayments Note 13. Non-current assets - receivables Other receivables Less: Allowance for expected credit losses Allowance for expected credit loss Consolidated 2021 $ 2020 $ 129,281 64,591 Consolidated 2021 $ 2020 $ 280,859 (7,512) 871,493 (15,022) 273,347 856,471 The consolidated entity has reduced the expected credit loss by $7,510 to $7,512 (2020: $15,022). This has resulted in a write back in profit or loss in respect of the expected credit loss for the year ended 30 June 2021. Note 14. Non-current assets - investments Consolidated 2021 $ 2020 $ 1,200 1,200 Consolidated 2021 $ 2020 $ 77,673 (67,529) 10,144 5,283 (3,921) 1,362 85,683 (80,390) 5,293 179,766 (93,640) 86,126 11,506 91,419 Shares in listed Companies Note 15. Non-current assets - property, plant and equipment Plant and equipment - at cost Less: Accumulated depreciation Fixtures and fittings - at cost Less: Accumulated depreciation 32 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 15. Non-current assets - property, plant and equipment (continued) Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Consolidated Balance at 1 July 2019 Additions Depreciation expense Balance at 30 June 2020 Additions Exchange differences Write off of assets Depreciation expense Balance at 30 June 2021 Note 16. Non-current assets - right-of-use assets Right of use assets Less: Accumulated depreciation Plant & Equipment $ Furniture & Fittings $ Total $ 8,786 7,649 (11,142) 5,293 9,252 133 - (4,534) 125,912 870 (40,656) 86,126 - 2,361 (68,335) (18,790) 134,698 8,519 (51,798) 91,419 9,252 2,494 (68,335) (23,324) 10,144 1,362 11,506 Consolidated 2021 $ 2020 $ 684,753 (684,753) 729,007 (698,718) - 30,289 Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Consolidated Balance at 1 July 2019 Revaluation decrements Exchange differences Depreciation expense Balance at 30 June 2020 Exchange differences Depreciation expense Balance at 30 June 2021 33 Office Space $ 866,611 (486,951) (53,202) (296,169) 30,289 (970) (29,319) Total $ 866,611 (486,951) (53,202) (296,169) 30,289 (970) (29,319) - - Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 17. Non-current assets - intangibles Software - at cost Less: Accumulated amortisation Consolidated 2021 $ 2020 $ 166,013 (32,321) 125,665 - 133,692 125,665 Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Consolidated Balance at 1 July 2019 Balance at 30 June 2020 Additions Exchange differences Amortisation expense Balance at 30 June 2021 Note 18. Current liabilities - trade and other payables Trade payables Convertible note redemption payout with interest Other payables Refer to note 28 for further information on financial instruments. Note 19. Current liabilities - borrowings Bank loans Related party loan (refer note 23) Convertible notes payable Refer to note 28 for further information on financial instruments. 34 Software $ Total $ 125,665 125,665 125,665 36,892 3,456 (32,321) 125,665 36,892 3,456 (32,321) 133,692 133,692 Consolidated 2021 $ 2020 $ 332,851 816,814 159,686 262,507 - 97,355 1,309,351 359,862 Consolidated 2021 $ 2020 $ 66,665 - - 26,662 2,500,000 2,188,335 66,665 4,714,997 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 20. Current liabilities - lease liabilities Lease liability Refer to note 28 for further information on financial instruments. Note 21. Current liabilities - provisions Employee benefits Note 22. Current liabilities - Trust account insurer liabilities Underwriter's liability Other Trust account insurer assets Insurance debtors Trust accounts Total trust account assets Trust account insurer liabilities Underwriter's liability Other Total trust account liabilities Excess of insurance assets over liabilities Note 23. Non-current liabilities - borrowings Related party loan Refer to note 28 for further information on financial instruments. 35 Consolidated 2021 $ 2020 $ - 231,106 Consolidated 2021 $ 2020 $ 88,917 52,709 Consolidated 2021 $ 2020 $ 18,336,288 12,719,614 377,514 523,432 18,859,720 13,097,128 Consolidated 2021 $ 2020 $ 11,418,742 7,807,520 9,515,767 3,724,992 19,226,262 13,240,759 (18,336,288) (523,432) (18,859,720) (12,719,614) (377,514) (13,097,128) 366,542 143,631 Consolidated 2021 $ 2020 $ 2,500,000 - Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 23. Non-current liabilities - borrowings (continued) The total secured and unsecured liabilities (current and non-current) are as follows: Secured liabilities Bank loan Unsecured liabilities Related party loan Note 24. Equity - issued capital Consolidated 2021 $ 2020 $ 66,665 26,662 2,500,000 2,500,000 Consolidated 2021 Shares 2020 Shares 2021 $ 2020 $ Ordinary shares - fully paid 718,254,117 570,956,232 22,241,201 19,291,070 Movements in ordinary share capital Details Date Shares Issue price $ Balance Capital raising and transaction costs Balance Conversion of options Conversion of options Conversion of options Conversion of convertible notes Movement of Reserves to Issued Capital 01 July 2019 30 June 2020 30 April 2021 21 May 2021 08 June 2021 30 June 2021 316,086,819 254,869,413 16,301,785 2,989,285 $0.015 570,956,232 1,244,800 24,267,358 25,186,932 96,598,795 $0.020 $0.020 $0.020 $0.015 19,291,070 24,896 485,347 503,739 1,448,982 487,167 Balance (Pre-consolidation of capital) 30 June 2021 718,254,117 22,241,201 Consolidation of Capital Subsequent to year end the Company implemented a 10 to 1 share consolidation. Post consolidation there were a total of 80,158,845 securities on issue. This was approved at the General Meeting of shareholders on 28th of July 2021. Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital. On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Partly Paid Shares Partly Paid Shares were issued at a price of 20 cents of which 0.01 of one cent was 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 were not subject to calls by Ensurance and any of the Partly Paid Shares which were not fully paid up at the expiration date of 30 November 2020 shall be forfeited. All Partly paid shares were forfeited during the year. Partly paid shares - 8,000,000 36 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 24. Equity - issued capital (continued) Options 63,217,342 unlisted $0.02 options expired on 6th June 2021. Of these options 50,699,090 were exercised into ordinary shares and 12,518,252 options lapsed. Convertible notes The convertible notes expired on 30 June 2021. Of these notes, $1,448,982 were converted into share capital, resulting in the issue of 96,598,795 ordinary shares. The remaining notes balance of $772,506 was repaid to subscribers. The interest rate on the notes was 8%. Capital risk management The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital. Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents. In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to the current company's share price at the time of the investment. The consolidated entity is not actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies. The consolidated entity is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk management decisions. There have been no events of default on the financing arrangements during the financial year. The capital risk management policy remains unchanged from the 30 June 2020 Annual Report. Note 25. Equity - reserves Revaluation surplus reserve Foreign currency translation reserve Share-based payments reserve Convertible notes options premium reserve Consolidated 2021 $ 2020 $ (800) (144,362) 219,326 - (800) (161,113) 1,917,182 155,942 74,164 1,911,211 37 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 25. Equity - reserves (continued) Movements in reserves Movements in each class of reserve during the current and previous financial year are set out below: Consolidated Balance at 1 July 2019 Revaluation - gross Translation of Ensurance UK Rollover of Convertible Notes Capital raising and transaction costs Forfeit of options Expense of Options Balance at 30 June 2020 Foreign currency translation Expense of options Lapse of options and performance rights Issue of shares on exercise of options Redemption of convertible notes Issue of shares on conversion of convertible notes Asset Revaluation $ Share Based Payment $ Foreign Currency Translation $ Convertible Note Option Premium $ 1,289,604 - - - 560,528 (8,438) 75,488 1,917,182 - 79,563 (1,391,973) (385,446) - (11,197) - (149,916) - - - - (161,113) 16,751 - - - - 203,927 - - (47,985) - - - 155,942 - - - - (54,225) (680) (120) - - - - - (800) - - - - - - - - (101,717) (101,717) Total $ 1,481,654 (120) (149,916) (47,985) 560,528 (8,438) 75,488 1,911,211 16,751 79,563 (1,391,973) (385,446) (54,225) Balance at 30 June 2021 (800) 219,326 (144,362) - 74,164 Note 26. Equity - accumulated losses Accumulated losses at the beginning of the financial year Loss after income tax expense for the year Transfer from Share based payment reserve Transfer from Convertible notes options premium reserve Accumulated losses at the end of the financial year Note 27. Equity - dividends Consolidated 2021 $ 2020 $ (22,266,476) (1,302,838) 54,225 1,391,974 (20,161,478) (2,153,771) 40,335 8,438 (22,123,115) (22,266,476) There were no dividends paid, recommended or declared during the current or previous financial year. Note 28. Financial instruments Financial risk management objectives The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The consolidated entity uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for credit risk and beta analysis in respect of investment portfolios to determine market risk. 38 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 28. Financial instruments (continued) Market risk Foreign currency risk The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations. Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and cash flow forecasting. The Group has no material exposure to foreign exchange risk on its financial instruments. Price risk The consolidated entity is not exposed to any significant price risk. Interest rate risk The consolidated entity's main interest rate risk arises from long-term borrowings. Borrowings obtained at variable rates expose the consolidated entity to interest rate risk. Borrowings obtained at fixed rates expose the consolidated entity to fair value interest rate risk. 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. Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated entity. The consolidated entity has a strict code of credit, including obtaining agency credit information, confirming references and setting appropriate credit limits. The consolidated entity obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is 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. The consolidated entity does not hold any collateral. 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. The objective of the Group is to minimise the risk of loss from credit risk and 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 has impaired where necessary the trade and other receivables. Exposure 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 or the United Kingdom. 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): 39 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 28. Financial instruments (continued) Current trade and other receivables Commissions Ensurance Underwriting Pty Limited sale proceeds Other Non-current trade and other receivables Ensurance Underwriting Pty Limited sale proceeds Gross 2021 Impaired 2021 Net 2021 Past due but not impaired 2021 1,613,593 165,000 11,666 - 312,319 (34,125) - - - (15,362) 1,579,468 165,000 11,666 - 296,957 2,102,578 (49,487) 2,053,091 - - - - - - Liquidity risk Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable. The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities. 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. All trade and other payables are non-interest bearing and due within 30 days of the reporting date. Remaining contractual maturities The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position. Consolidated - 2021 Non-derivatives Non-interest bearing Trade payables Trust account insurer liabilities Interest-bearing - fixed rate Bank loans Other loans Total non-derivatives Weighted average interest rate % 1 year or less $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ Remaining contractual maturities $ - - (1,303,167) (18,859,720) - - 5.27% 11.00% (66,666) - (20,229,553) - (2,500,000) (2,500,000) - - - - - - - (1,303,167) (18,859,720) - - - (66,666) (2,500,000) (22,729,553) 40 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 28. Financial instruments (continued) Consolidated - 2020 Non-derivatives Non-interest bearing Trade payables Trust account insurer liabilities Interest-bearing - variable Bank loans Other loans Convertible notes Total non-derivatives Weighted average interest rate % 1 year or less $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ Remaining contractual maturities $ - - (359,862) (13,097,128) 2.27% 16.00% 8.00% (26,662) (2,500,000) (2,188,335) (18,171,987) - - - - - - - - - - - - - - (359,862) (13,097,128) - - - - (26,662) (2,500,000) (2,188,335) (18,171,987) The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above. Fair value of financial instruments Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. Note 29. Key management personnel disclosures Directors The following persons were directors of Ensurance Limited during or since the end of the financial year: Mr Tony Leibowitz Mr Adam Davey Mr Tony Wehby Mr Sam Hallab Executive Chairman Non-Executive Director (resigned 2 July 2021) Non-Executive Director Non-Executive Director (appointed 2 July 2021) and Company Secretary Other key management personnel The following person also had the authority and responsibility for planning, directing and controlling the major activities of the consolidated entity, directly or indirectly, during the financial year: Mr Tim James CEO of Ensurance UK Limited Compensation The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below: Short-term employee benefits Post-employment benefits 41 Consolidated 2021 $ 2020 $ 769,751 118,105 1,049,783 175,606 887,856 1,225,389 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 30. Remuneration of auditors During the financial year the following fees were paid or payable for services provided by Mazars Risk & Assurance Pty Limited, the auditor of the company: Consolidated 2021 $ 2020 $ 80,000 91,250 Audit services - Mazars Risk & Assurance Pty Limited Audit or review of the financial statements Note 31. Related party transactions Parent entity Ensurance Limited is the parent entity. Subsidiaries Interests in subsidiaries are set out in note 33. Key management personnel Disclosures relating to key management personnel are set out in note 29 and the remuneration report included in the directors' report. Transactions with related parties The following transactions occurred with related parties: Consolidated 2021 $ 2020 $ Interest paid to Kalonda Pty Limited 399,499 403,839 Other transactions: On 18 August 2020, the Company paid Mr Tony Leibowitz for a letter of guarantee, confirming he would continue to support the Company financially for eighteen months. Remuneration paid to related parties of KMP 20,000 20,000 - 47,464 Receivable from and payable to related parties There were no trade receivables from or trade payables to related parties at the current and previous reporting date. Loans to/from related parties The following balances are outstanding at the reporting date in relation to loans with related parties: Current borrowings: Kalonda Pty Limited Non-current borrowings: Kalonda Pty Limited 42 Consolidated 2021 $ 2020 $ - (2,500,000) (2,500,000) - Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 31. Related party transactions (continued) Unsecured loan form Kalonda Pty Ltd, associated entity of Executive Chairman Tony Leibowitz. Term of 2 years at interest rate of 16% pa. This agreement was renewed on 30 June 2021, with an effective date of 1 July 2021. The term is for 18 months at an interest rate of 11% pa. It also includes an additional working capital facility of $750,000, if required. Terms and conditions All transactions were made on normal commercial terms and conditions. Note 32. Parent entity information Set out below is the supplementary information about the parent entity. Statement of profit or loss and other comprehensive income Loss after income tax Statement of financial position Total current assets Total assets Total current liabilities Total liabilities Equity Issued capital Revaluation surplus reserve Foreign currency translation reserve Share-based payments reserve Convertible notes options premium reserve Accumulated losses Total deficiency in equity Impairment of investments and loans to subsidiaries Parent 2021 $ 2020 $ (1,060,889) (996,914) Parent 2021 $ 2020 $ 1,004,045 1,037,625 3,075,061 2,605,404 862,777 4,742,820 3,362,777 4,742,820 27,362,797 25,049,391 (800) (252,893) 1,500,476 155,942 (28,589,532) (800) (259,862) 324,626 - (27,714,477) (287,716) (2,137,416) 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 $7,657,953 and loans to subsidiaries of $9,665,510. As a result of this assessment, the Company has recognised an impairment to the investment of $7,525,195 and $5,590,727, respectively and an impairment to the loans of $9,665,510. This equates to an impairment loss of $22,781,432. Of this amount $0 is recognised in the current year (2020: $2,346,318). These impairments relate only to disclosures as contained in this Note. 43 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 32. Parent entity information (continued) Contingent liabilities The parent entity had no contingent liabilities as at 30 June 2021 and 30 June 2020. Capital commitments - Property, plant and equipment The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021 and 30 June 2020. Significant accounting policies The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1. The only exception to this is Investments in subsidiaries, which are accounted for at cost less any impairment in the parent entity. Note 33. Interests in subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1: Name Ensurance Capital Pty Limited Ensurance IT Pty Limited Ensurance UK Limited Note 34. Events after the reporting period Principal place of business / Country of incorporation Australia Australia United Kingdom Ownership interest 2020 2021 % % 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Acquisition of TK Specialist Risks Pty Ltd (TKSR) Ensurance has acquired 100% of an Australian boutique underwriting agency, TKSR, through the issue of 83,333,334 Ensurance shares at a deemed 3 cents per share. This was approved at the General Meeting of shareholders on 28th of July 2021. Post-acquisition, Mr Tom Kent will remain with Ensurance Limited and lead the freshly re-branded Australian operation as it begins to further expand its footprint via; (1) organic growth with via its existing Australia-wide network of Australian brokers, (2) accretive acquisitions, (3) distribution of products on behalf of the UK division of Ensurance, and (4) release of new insurance products backed by key insurance partners. The above shares were issued and quoted pre-consolidation on the 28 July 2021. On this basis, the total securities on issue pre-consolidation were 801,587,451. Consolidation of Capital Subsequent to year end, the Company implemented a 10 to 1 share consolidation. Post consolidation there were a total of 80,158,845 securities on issue. This was approved at the General Meeting of shareholders on 28th of July 2021. Ensurance Underwriting Pty Limited sale proceeds 360 Construction and Engineering Pty Limited paid the remaining sale proceeds outstanding, ahead of the contract dates of 31 July 2022 and 31 July 2023. The funds were received by the 12 August 2021. No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years. 44 Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 35. Reconciliation of loss after income tax to net cash used in operating activities Loss after income tax expense for the year (1,302,838) (2,153,771) Consolidated 2021 $ 2020 $ Adjustments for: Depreciation and amortisation Convertible note interest Profit on disposal of Ensurance Underwriting Pty Limited Convertible note option premium reserve Interest on related party loan Dilapidation costs Change in operating assets and liabilities: Decrease/(increase) in trade and other receivables Increase in prepayments Increase/(decrease) in trade and other payables Increase/(decrease) in employee benefits Net cash used in operating activities Note 36. Options At the date of signing this report, the following unlisted options were on issue: 152,097 177,719 - 96,264 407,553 52,554 405,780 192,226 (856,478) (352,294) 496,304 - (1,628,475) (64,689) 1,375,555 42,867 641,904 (60,443) (1,814,156) (56,953) (691,393) (3,557,881) Grant Date 28/11/2018 28/11/2018 28/11/2018 Expiry Date 31/12/2021 31/12/2022 31/12/2023 Note 37. Earnings per share Exercise Price Number of Options Pre share Post share Pre share Post share consolidation consolidation consolidation consolidation $0.04 $0.06 $0.09 $0.40 $0.60 $0.90 3,000,000 5,000,000 7,000,000 300,000 500,000 700,000 15,000,000 1,500,000 Earnings per share for loss from continuing operations Loss after income tax attributable to the owners of Ensurance Limited Consolidated 2021 $ 2020 $ (1,302,838) (2,864,588) Number Number Weighted average number of ordinary shares used in calculating basic earnings per share 575,745,376 570,956,232 Weighted average number of ordinary shares used in calculating diluted earnings per share 575,745,376 570,956,232 Basic earnings per share Diluted earnings per share 45 Cents Cents (0.23) (0.23) (0.50) (0.50) Ensurance Limited and controlled entities 30 June 2021 Notes to the financial statements Note 38. Share-based payments Employee incentive share plan An offer of fully paid ordinary shares were made and accepted by four employees under the Incentive Share Plan, to be issued in four tranches as follows: Ordinary Shares Target issue date of March 2022 Target issue date of March 2023 Target issue date of June 2022 Target issue date of June 2023 Performance Rights Class A Class B Class C Class D Class E 2021 2021 Pre share Post share Consolidation Consolidation 2020 1,000,000 1,000,000 3,250,000 3,250,000 100,000 100,000 325,000 325,000 1,000,000 1,000,000 3,250,000 3,250,000 8,500,000 850,000 8,500,000 2021 2021 Pre share Post share consolidation consolidation 2020 - - 7,500,000 7,500,000 10,000,000 - - 750,000 750,000 1,000,000 1,500,000 500,000 - - - 25,000,000 2,500,000 2,000,000 On 24 February 2021, 750,000 Performance Rights Class C (Class C Rights) were granted to Tim James. Upon Ensurance UK achieving an NRC of 2,689,310 pounds and EBITDA of 254,235 pounds at 30 June 2021, the Class C Rights will vest, entitling the holder or his nominee to 1 fully paid ordinary share in the Company per vested Class C Right. The Class C Rights hold no voting or dividend rights and are not transferable. On 24 February 2021, 750,000 Performance Rights Class D (Class D Rights) were granted to Tim James. Upon Ensurance UK achieving an NRC of 3,739,182 pounds and EBITDA of 875,970 pounds at 30 June 2022, the Class D Rights will vest, entitling the holder or his nominee to 1 fully paid ordinary share in the Company per vested Class D Right. On 24 February 2021, 1,000,000 Performance Rights Class E (Class E Rights) were granted to Tim James. Upon Ensurance UK achieving an NRC of 4,595,970 pounds and EBITDA of 1,426,675 pounds at 30 June 2023, the Class E Rights will vest, entitling the holder or his nominee to 1 fully paid ordinary share in the Company per vested Class E Right. During the year the vesting rules for Performance Rights Class A and Class B were not achieved and have been forfeited. 46 Ensurance Limited and controlled entities 30 June 2021 Directors' declaration In the directors' opinion: ● ● ● ● the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 1 to the financial statements; the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at 30 June 2021 and of its performance for the financial year ended on that date; and there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. The directors have been given the declarations required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. ___________________________ Tony Leibowitz Executive Chairman 22 September 2021 47 Level 12, 90 Arthur Street North Sydney NSW 2060 PO Box 1994 North Sydney NSW 2059 Australia Tel: +61 2 9922 1166 Fax: +61 2 9922 2044 www.mazars.com.au 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 consolidated financial report of Ensurance Limited (the “Company”) and the entities it controlled (the “Group”), which comprises the consolidated statement of financial position as at 30 June 2021 and the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year ended on that date, other selected explanatory notes and the directors’ declaration. In our opinion, the accompanying consolidated financial report of the Group is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance for the year then ended; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for 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 including Independence Standards (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 in the financial report, which indicates that the Group incurred a net loss of $1,302,838 during the year ended 30 June 2021 (2020: $2,153,771 loss). As at 30 June 2021, the Group’s statement of financial position reflected positive working capital of $2,213,137 (2020: negative working capital $2,243,428), net assets of $192,250 (2020: net liabilities of $1,064,195) which includes a related party loan of $2,500,000 due for repayment on 31 December 2022. Accumulated losses are $22,123,115 (2020: Accumulated losses of $22,266,476). During the year ended 30 June 2021, the Group generated operating cash outflows of $691,393 (2020: Operating cash outflows of $3,557,881). 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 two interrelated uncertainties. First, it is dependent upon Ensurance UK Limited and the Australian entities (including TK Speciality Risks Pty Ltd) achieving the cash flow forecasts prepared by management, to the extent that the operating cash inflows from these entities are sufficient to cover their own respective cash outflows. Second, in the event that cash flow forecasts are not achieved, the Group will be dependent upon the continued financial support of the director related entity, Kalonda Pty Ltd, in the form of a $750,000 working capital facility. Should the cash flow forecasts not be achieved and the working capital facility not be available, 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. We have determined that there are no key audit matters to communicate in our report. 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 2021, 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 the Directors for the Financial Report The directors of the Group are responsible for the preparation of the financial report that gives a true and fair view in accordance with the Australian Accounting Standards and the Corporations Act 2001. The directors’ responsibility also includes such internal control as the directors determine is necessary to enable the preparation of a financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:  Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, designs and performs audit procedures responsive to those risks, and obtains audit evidence that is sufficient and appropriate to provide a basis for the auditor’s opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.  Conclude on the appropriateness of the director’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If the auditor concludes that a material uncertainty exists, we are required to draw attention in the auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.  Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.  Obtain sufficient and appropriate evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that the auditor identifies during the audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our audit report unless law or regulation precludes public disclosure about the matter or when, in extreme rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest of such communication. Opinion on the Remuneration Report We have audited the Remuneration Report included on pages 8-12 of the directors' report for the year ended 30 June 2021. In our opinion, the Remuneration Report of Ensurance Limited for the year ended 30 June 2021, 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 James Martin Director Sydney, 22 September 2021 Ensurance Limited and controlled entities 30 June 2021 Shareholder information 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 (4th 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) Principle 1: Lay solid foundations for management and oversight EXPLANATION Recommendation 1.1 A listed entity should have and disclose a board charter setting out: (a) the respective roles and responsibilities of the board and management; and (b) 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 director or senior executive or putting someone forward for election as a director; and (b) provide security holders with all material information in its possession 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 chairman, on all matters to do with the proper functioning of the board. Recommendation 1.5 A listed entity should: (a) have and disclose a diversity policy; (b) through its board or a committee of the board set measurable objectives for achieving gender diversity in the composition of its board, senior executives and workforce generally; and (c) disclose in relation to each reporting period: (1) the measurable objectives set for that period to achieve gender diversity; (2) the entity’s progress towards achieving those objectives; and (3) either: (A) the respective proportions of men and women on the board, in senior executive positions and across the whole workforce (including how the entity has defined “senior executive” for these purposes); or (B) if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in and published under that Act. YES The Company has adopted a Board Charter which sets out the respective roles and responsibilities of the Board and management. 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. YES YES YES NO (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 is 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 Board Charter outlines the roles, responsibilities and accountability of the Company Secretary. The Company Secretary is accountable directly to the Board, through the chairman, on all matters to do with the proper functioning of the Board. (a) The Company has adopted a Diversity Policy. The Diversity Policy provides a framework for the Company to achieve gender diversity in the composition of its board, senior executives and workforce generally. The Diversity Policy is stated in Schedule 8 of the Corporate Governance Plan which is available on the company website. (b) Whilst the Company may not exactly follow the ASX Corporate Governance Recommendations, the Company is an equal opportunity employer and does not discriminate on gender, age, cultural or country of origin. Given the size of the Group, the Company believes that all appointments and hiring decisions should be based on an assessment of merit in respect of the available talent pool at the time of the appointment. (c) Due to the size of the Company, the Board does not set measurable objectives to achieve gender diversity, however, the Board does review this matter on an informal basis. The Board is currently comprised of 3 Directors all of whom are men. The Company currently has 24 employees, 8 of those employees are woman. 52 Ensurance Limited and controlled entities 30 June 2021 Shareholder information 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 for each reporting period whether a performance evaluation has been undertaken in accordance with that process during or in respect of that period. Recommendation 1.7 A listed entity should: (a) have and disclose a process for evaluating the performance of its senior executives at least once every reporting period; and (b) disclose for each reporting period whether a performance evaluation has been undertaken in accordance with that process during or in respect of that period. YES YES (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 disclose 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. The Chairman conducts informal 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. (a) The Company’s Corporate Governance Plan requires the Board to conduct an 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. (b) During the financial year an evaluation of performance of the senior executives was not formally carried out. However, a general review of the individuals occurs on an on-going basis to ensure that these individuals are performing to the standards expected. Principle 2: Structure the board to be effective and add value Recommendation 2.1 The board of a listed entity should: (a) have a nomination committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) 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 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, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively. Recommendation 2.2 A listed entity should have and disclose a board skills matrix setting out the mix of skills that the board currently has or is looking to achieve in its membership. 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 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 updates the Company’s board skills matrix when required (in accordance with recommendation 2.2) to assess the appropriate balance of skills, experience, independence and knowledge of the entity. Board Skills Matrix Number of Directors that Meet the Skill 53 Ensurance Limited and controlled entities 30 June 2021 Shareholder information YES YES YES NO YES Recommendation 2.3 A listed entity should disclose: (a) the names of the directors considered by the board to be independent directors; (b) if a director has an interest, position or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position or relationship in question and an explanation of why the board is of that opinion; and (c) the length of service of each director. Recommendation 2.4 A majority of the board of a listed entity should be independent directors. Recommendation 2.5 The chairman 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 for periodically reviewing whether there is a need for existing directors to undertake professional development to maintain the skills and knowledge needed to perform their role as directors effectively. Listed company experience at Board level Industry experience 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 3 2 3 3 3 3 3 1 3 3 3 3 3 3 1 3 3 0 (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 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. (c) 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 Reports. relationships and requires that The Board Charter requires that where practical the majority of the Board will be independent. All of the non-executive directors are considered by the Board to 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 their responsibilities. they can effectively discharge to ensure that Principle 3: Instill a culture of acting lawfully, ethically and responsibly Recommendation 3.1 A listed entity should articulate and disclose its values. YES The directors and senior managers of the Group actively promote the Company’s values by ensuring that all of its activities are undertaken with “Trust, integrity and Expertise”. These values are promoted by the Group’s staff members by ensuring that our clients come first and that we do what we say we’ll do. Recommendation 3.2 A listed entity should: (a) have and disclose a code of conduct for its directors, senior executives and employees; and (b) ensure that the board or a committee of the board is informed of any material breaches of that code. YES (a) The Corporate Code of Conduct applies to the Company’s directors, senior executives and employees. Any breaches of the Code of Conduct are escalated to the Board. (b) The Company’s Corporate Code of Conduct is in Schedule 2 of the Corporate Governance Plan which is on the Company’s website. 54 YES YES NO The Company has implemented an Anti-bribery and Corruption Policy that applies to all directors and employees. The Board is informed of any material incidents in relation to the policy. The Whistleblower Policy is available on the Company’s website. The Company has implemented a Whistleblower Policy that applies to all directors and employees. The Board is informed of any material incidents in relation to the policy. The Anti-bribery and Corruption Policy is available on the Company’s website. (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 Committee. (b) The Board devotes time at board meetings to review and evaluate financial reports, to ensure the integrity of its corporate reporting. The Board as a whole also considers the appointment and removal of the external auditor and the rotation of the audit engagement partner. Ensurance Limited and controlled entities 30 June 2021 Shareholder information Recommendation 3.3 A listed entity should: (a) have and disclose a whistleblower policy; and (b) ensure that the board or a committee of the board is informed of any material incidents reported under that policy. Recommendation 3.4 A listed entity should: (a) have and disclose an anti-bribery and corruption policy; and (b) ensure that the board or a committee of the board is informed of any material breaches of that policy. Principle 4: Safeguard the integrity in corporate reports Recommendation 4.1 The board of a listed entity should: (a) have an audit committee which: (1) has at least three members, all of whom are non- executive directors and a majority of whom are independent directors; and (2) is chaired by an independent director, who is not the chairman of the board, and disclose: (3) the charter of the committee; (4) the relevant qualifications and experience of the members of the committee; and (5) 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 corporate 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, 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. YES The Board ensures 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. Recommendation 4.3 A listed entity should disclose its process to verify the integrity of any periodic corporate report it releases to the market that is not audited or reviewed by an external auditor. YES The Company may release, from time to time, information to the market such as quarterly reports and investor presentations, that are neither audited or reviewed by the external auditors. Notwithstanding this, the information released to the market is derived from the same process as that developed for the collection of information and data that accompanies the Company’s Half Year Report and Annual Report. Therefore, shareholders can be confident that the information released to the market is reliable. 55 YES Information about the Company and its governance is available in the Corporate Governance Plan which can be found on the Company’s website. Recommendation 6.2 A listed entity should have an investor relations program that facilitates effective two-way communication with investors. YES 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. Recommendation 6.3 A listed entity should disclose how it facilitates and encourages participation at meetings of security holders. YES The Shareholder Communications Strategy states that as a part Ensurance Limited and controlled entities 30 June 2021 Shareholder information Principle 5: Make timely and balanced disclosure Recommendation 5.1 A listed entity should have and disclose a written policy for complying with its continuous disclosure obligations under listing rule 3.1 YES YES YES Recommendation 5.2 A listed entity should ensure that its board receives copies of all material market announcements promptly after they have been made. Recommendation 5.3 A listed entity that gives a new and substantive investor or analyst presentation should release a copy of the presentation materials on the ASX Market Announcements Platform ahead of the presentation. 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 6.4 A listed entity should ensure that all substantive resolutions at a meeting of security holders are decided by a poll rather than by a show of hands. NO Recommendation 6.5 A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically. YES 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. The Board Charter and Schedule 4 of the Corporate Governance Plan are available on the Company’s website. All market announcements are authorized by either the Board or the Executive Chairman prior to disclosure. A copy of material market announcements not authorized by the Board are promptly circulated to the Board after the announcement is made. Where analysts are briefed on aspects of the Group’s operations, the material used in such presentations that is not already released to the ASX, is released to the ASX Market Announcements Platform, ahead of the presentation. 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 dispatch 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. The Company’s Constitution stipulates that at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless a poll is demanded. Where there are special circumstances such as a pandemic or other event that render a physical meeting not possible, shareholders will be informed through the Notice of Meeting, that resolutions will be conducted by way of poll. The Company provides electronic reports and other communications to shareholders, who provide their email address and have opted for electronic communication. Hard copies are posted to other shareholders. Shareholders can also register with the Company to receive email notifications when an announcement is made by the Company to the ASX. 56 Ensurance Limited and controlled entities 30 June 2021 Shareholder information 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 which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) 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 risk committee or committees that satisfy (a) above, disclose that fact and the processes 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 at least annually to satisfy itself that it continues to be sound and that the entity is operating with due regard to 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) if it has an internal audit function, how the function is structured and what role it performs; or (b) 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 governance, risk management and internal control processes. Recommendation 7.4 A listed entity should disclose whether it has any material exposure to environmental or social risks and, if it does, how it manages or intends to manage those risks. Principle 8: Remunerate fairly and responsibly Recommendation 8.1 The board of a listed entity should: (a) have a remuneration committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive. Recommendation 8.2 A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives. NO (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 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. NO (a) Schedule 5 of the Corporate Governance Plan is entitled ‘Disclosure – Risk Management’ and details the Company’s review and disclosure requirements with respect to risk management, compliance and controls. (b) The Company did not conduct a formal review of its risk management framework this reporting period. NO (a)The company does not have an internal audit function. (b)The Board is responsible for monitoring the effectiveness of its governance, risk management and internal control processes. YES The Group does not have material direct exposure to environmental or social risks. NO (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 Committee. (b)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 Board is responsible for setting the level and composition of the remuneration of the Executive Chairman, non-executive directors and other senior executives. 57 Ensurance Limited and controlled entities 30 June 2021 Shareholder information 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. NO The Company does not 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. Additional Information for Listed Public Companies Company Secretary The name of the Company Secretary is Samir Hallab. Principal registered office Suite 2102, Level 21, 101 Grafton Street Bondi Junction NSW 2022. Register of securities As disclosed in the corporate directory of this Annual Report. 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 of this Annual Report. Shareholder Information A. Distribution of equity security holders by size of holding The Company implemented a 10:1 share consolidation effective 28 July 2021. Analysis of number of equity security holders by size of holding as at 13 August 2021 is as follows: Category (size of holding) Total Holders Number Ordinary 1 - 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – and over 82 168 82 169 66 567 62,590 468,488 663,611 5,857,653 73,106,503 80,158,845 % Held of Issued Ordinary Capital 0.08 0.58 0.83 7.31 91.20 100.00 There were 121 holders of less than marketable parcel of ordinary shares. On-Market Buy-Back There is no current on-market buy-back. Restricted Securities The Company has the following shares on escrow:  200,000 shares on escrow until 31 January 2022; and  8,333,334 shares on escrow until 28 July 2023. There are no other restricted securities. 58 Ensurance Limited and controlled entities 30 June 2021 Shareholder information B. Equity security holders Twenty largest quoted equity security holders The names of the 20 largest registered shareholders of quoted equity securities as at 13 August 2021 are listed below: Name Number Held Percentage of issued shares 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. KALONDA PTY LTD MR VAUGHAN THALES KENT BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD PETERS INVESTMENTS PTY LTD CHURCH STREET TRUSTEES LIMITED GABRIEL INVESTMENT AND MANAGEMENT LIMITED GOLDSTAKE CORPORATION PTY LTD CAPRICORN ELEVEN SUPERANNUATION FUND PTY LTD FIRST CAR INTERNATIONAL LIMITED <0312.6904.02.01 A/C> MUSEUM INVESTMENTS LIMITED MR ALLAN GRAHAM JENZEN + MRS ELIZABETH JENZEN HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED MR DAVID ALAN STERN MR ADAM STUART DAVEY NUTSVILLE PTY LTD INVIA CUSTODIAN PTY LIMITED 14,236,083 11,975,559 5,046,489 3,850,000 2,923,207 2,291,667 2,072,294 2,034,783 1,989,819 1,900,000 1,849,738 1,795,000 1,540,251 1,358,334 1,225,176 1,000,000 944,044 906,667 899,005 719,550 17.76 14.94 6.30 4.80 3.65 2.86 2.59 2.54 2.48 2.37 2.31 2.24 1.92 1.69 1.53 1.25 1.18 1.13 1.12 0.90 Total Unquoted equity securities As at 13 August 2021 60,557,666 75.55 Type of Security Name of Holders Number on Issue Number of Holders Options Performance Rights Kalonda Pty Ltd Timothy James 1,500,000 2,500,000 C. Substantial shareholders Substantial shareholders and associates as at 13 August 2021 (more than 5% of a class of shares) in the company are set out below: Name Number Held Percentage KALONDA PTY LTD MR VAUGHAN THALES KENT BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD 14,236,083 11,975,559 5,046,489 1 1 17.76 14.94 6.30 D. Voting rights The voting rights attaching to each class of equity securities are set out below: Ordinary Shares On a show of hands each holder of ordinary shares has one vote and upon a poll one vote for each share held Options No voting rights Performance Rights No voting rights 59 

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