Delivering
affordable, caring
and inclusive
communities
EUREKA GROUP HOLDINGS
ABN 15 097 241 159
2016-2017 ANNUAL REPORT
For personal use only 2016-2017
HIGHLIGHTS
Strong profitability with
EBITDA of $9.4m
and Statutory Profit after tax of
$6.5m.
Marked improvement of occupancy
levels at EGH‑owned villages
following a company‑wide strategy,
implemented in February 2017 that led
to occupancies lifting to 89.6%
from a base of 83‑84% in first half of FY16‑17.
Significant progress in determining pathway to realise value over the next 1 to
2 years through complementary value creation opportunities at Couran Cove
and Terranora.
Continued growth of portfolios:
acquired
4
growing to
27
and
9
additional villages
EGH‑owned villages
managed villages
• Significant structural changes
Recruitment of additional senior
executives and the separation of
board and executive functions,
to allow each to fulfill its
responsibilities.
• Blue Care Alliance
Strengthening the alliance between
Eureka Group Holdings and Blue
Care to improve the quality of
services to Eureka residents,
increased occupancies through
extended resident stays and Blue
Care referrals, while capitalising
on a pipeline of potential future
village acquisitions.
• The fundamentals for the sector in
which Eureka operates remain very
strong and continue to improve.
There remains opportunity for the
ongoing growth and expansion of
the company’s portfolio.
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2016-2017 ANNUAL REPORTFor personal use only 3
EUREKA GROUP HOLDINGSFor personal use only Above left: Couran Cove Eco Village
Above right: Terranora interior
Bottom left: Couran Cove Eco Village interior
Bottom right: Terranora exterior
4
2016-2017 ANNUAL REPORTFor personal use only Industry Award
In September 2016, Rockhampton
Village managers, Kevin and
Mika Humphreys were awarded
Queensland Manager of the
Year by the Property Council
of Queensland.
Kevin and Mika have built strong relationships with
a range of community care providers and work with
them to help any residents who need additional
support. Living on site, Kevin and Mika play an active
role in engaging all residents in activities and social
interactions, including sourcing entertainers, hosting
craft classes, organising religious congregations and
trips to the local zoo.
Kevin and Mika have continually showed an unsurpassed
enthusiasm for our residents’ care, complemented by
an incredible drive to make their village stand out and
Eureka is proud to have such an energetic and caring
team at the helm of Eureka Care village Rockhampton.
Pictured L to R: Mika Humphreys (QLD Winner),
Kevin Humphreys (QLD Winner) and Andrew Heyer (Eureka)
5
EUREKA GROUP HOLDINGSFor personal use only Contents
FINANCIAL HIGHLIGHTS
Chairman’s Report
CEO’s Report
Acquisitions in 2016-17
Directors’ Report
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Auditor’s Independence Declaration
Corporate Governance Statement
Corporate Directory
Security Holder Information
2
8
10
16
20
31
32
33
34
35
69
70
75
76
77
78
All images within this Annual Report show residents
at Eureka villages.
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2016-2017 ANNUAL REPORTFor personal use only EUREKA GROUP HOLDINGS
7
For personal use only Chairman’s Report
I am pleased to report to shareholders
a year of continued expansion with four
new property acquisitions, together
with a significant structural change
to Eureka Group Holdings Ltd (EGH)
corporate organisational environment.
Given the rapid growth of Eureka over recent years, your
Board decided it was essential to create a platform that would
underpin its future growth by streamlining EGHs corporate
structure, while also strengthening and improving resources
and internal systems.
It was decided to fully separate the Board from the Executive to
allow each to fulfill its responsibilities. To that end, Executive
Directors, Mr Greg Rekers and Mr Kerry Potter retired from
Eureka Group in early February 2017 after many years of
outstanding input during a strong growth phase of the business.
I would like to formally record the Board’s appreciation for
Mr Rekers and Mr Potter’s long-term service and commitment.
As part of this structural change, the Board conducted an open
and competitive recruitment process to identify a new Chief
Executive Officer to steer the business into the future. After
evaluating approximately 120 candidates, Eureka appointed Jeff
Weigh CEO, who commenced in early February 2017.
The Board is confident that Mr Weigh has the specific skills,
vision and enthusiasm to lead Eureka Group’s next phase
of growth. Specifically, Mr Weigh brings over 15 years of
experience in heading regionally-based property operations
and has a strong track record of building and growing profitable
enterprises. For four years he was CEO of South Bank
Corporation (Brisbane based corporation owning and managing
over $700 million of assets adjacent to the Brisbane CBD)
where he more than doubled profit to $26 million per annum.
He also reduced the Corporation’s debt from $35 million to
zero during his four-year tenure. Prior to that, Mr Weigh also
spent 10 years as Managing Director of Fortland Hotels, a 3.5
star hotel management company, which he built over that time
before selling the portfolio to Accor Asia Pacific. Jeff also sits
on the Board of Directors at Port of Brisbane Pty Ltd, a position
he has held for the past two-and-a-half years.
8
The priorities set for Mr Weigh from the outset were:
a) Reshaping the corporate structure to separate the Board
and Executive duties;
b) Focusing the responsibility of the day-to-day management
of all aspects of the business over to the CEO and
senior management;
c) Improving the operating systems of the business;
d) Lifting the depth and experience of the Executive Team; and
e) Building a solid platform of systems, people and resources
to prepare for robust growth into the future.
The transition to the new structure at EGH has been achieved
seamlessly with the implementation of this new structure and
systems now working very effectively.
Bookending FY 2017 was the appointment in June of Mr
Paul Cochrane as Chief Financial Officer, who brings to
the company significant expertise as a senior commercial
executive with extensive public company, retirement living
and property experience. The Board is extremely pleased with
the strengthening of the executive team, which is progressing
very well.
BLUE CARE ALLIANCE
I am delighted to report that the relationship with Uniting
Church Blue Care has flourished during the year. Strong and
functional working relationships have been developed between
both organisations and the partnership is now delivering results
for both organisations. The relationship between EGH and
Blue Care is an important and valued alliance that is set for
continued and sustained growth well into the future as Blue
Care continues to roll out its in home care services to Eureka’s
Queensland Villages adding a material improvement to our
residents’ quality of life.
INDUSTRY OUTLOOK
Australia’s ageing population continues unabated and provides
a strong platform for continued growth and commercial
opportunity. Recent national research into Australia’s
retirement village sector and demographic profiles that are
underpinning the sector, was undertaken by Ibisworld in August
2016. This industry-wide research confirms the confidence we
share in the future of the Eureka business and our business
model of providing quality and affordable rental accommodation
for seniors and disability pensioners in safe, caring and well
managed environments.
The Ibisiworld report states: “Industry revenue is forecast to grow
at a compound annual rate of 10.1% over the five years through
2021-22, to reach $6.3 billion. Australia’s ageing population is
projected to underpin this growth, as more and more retirees will
require accommodation.”
2016-2017 ANNUAL REPORTFor personal use only Chart 1
Chart 2
Population aged 70 and older
Real household disposable income
Major market segmentation (2016)
0
0
0
‘
e
l
p
o
e
P
3500
3000
2500
2000
1500
e
g
n
a
h
c
%
6
5
4
3
2
1
0
08 10 12 14 16 18 20 22
Year
10 12 14 16 18 20 22
Year
9.5%
Self-funded
18.1%
Department
of Veterans’
Affairs pension
Total $3.9bn
72.4%
Centrelink
Source:www.ibisworld.com.au
Source:www.ibisworld.com.au
In addition, as retirees’ life expectancies continue to increase and
medical developments seek to reduce the burden on Australia’s
healthcare system, residents are expected to live in the industry’s
independent and low-level care retirement villages for longer,
before transitioning into higher care nursing homes if required.
This trend will greatly benefit industry operators as they will be
able to maintain occupancy rates for longer periods of time and
potentially reduce the costs associated with resident turnover.
Greater occupancy rates and cost reductions would subsequently
contribute to growth in the industry’s profit margins.
Source: Ibisworld (August 2016)
Driving commercial performance and growth within our
affordable rental portfolio and continuing to expand through
acquisitions and infill developments, remain the core of the
Eureka strategy and we are well positioned to take advantage of
the opportunities in this ever-increasing market.
I would like to thank my fellow directors and Board for their
ongoing commitment, hard work and governance of Eureka.
The management team, village managers and staff have all
worked very hard and professionally to deliver outstanding
results in a year of considerable change.
As illustrated in Chart 2 above, there is a significant majority of
retirement village customers who fund their accommodation
through Centrelink (72%) and Department of Veterans
Affairs (18%).
I also sincerely thank our loyal shareholders for their enduring
confidence in Eureka. The achievements of this financial year
provide a solid platform as we head into the future and strive to
deliver long-term value accretion to our shareholders.
These two market segments continue to account for some 90%
of the burgeoning retirement village market. These customers
most often pay through the Centrepay system and are very
satisfied with the quality and affordability of the Eureka product.
The strength of this sector in such a growing market segment
bodes well for the future growth of Eureka.
The continued strong growth in the number of Australians
reaching retirement with few or no assets, together with the
baby boomer segment moving into retirement in significant
numbers augers very well for the EGH business model.
According to Steven Wood of UBS: “this is actually a space
that cannot be outsourced, and cannot be disrupted.” Source :
Steven Wood, UBS, 2017.
Robin Levison
Chairman
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EUREKA GROUP HOLDINGSFor personal use only
CEO’s Report
The 2017 year has been one of
fundamental change in the structure,
operations and governance of the
company. The Eureka Board decided
to move to a more conventional
corporate structure with full
separation between the Board and the
Executive. The Executive Chairman
moved to non‑executive Chairman
upon the appointment of a CEO in
February 2017.
The immediate focus of the CEO was to implement a range of
commercial initiatives:
a) Lifting village occupancy across EGH-owned villages from
83% to 89% by the end of June;
CHIEF FINANCIAL OFFICER APPOINTMENT
In June 2017, Eureka appointed Mr Paul Cochrane as Chief
Financial Officer following the resignation of Mr Ryan Maddock.
Mr Cochrane is a highly experienced financial and commercial
executive with demonstrated experience in the aged care
sector, ASX-listed companies (including Company secretarial)
and property development and management. The appointment
of Mr Cochrane was a key opportunity to add value to and
complement the skills and capabilities of the Executive.
VILLAGE ACQUISITIONS
During FY2017, Eureka Group acquired 4 additional villages to a
value of $11.3 million.
ACQUISITIONS FY2017
September 2016 Orange
55 units
$5.115m
December 2016
Broken Hill
42 units
March 2017
June 2017*
Mackay
Gympie
38 units
42 units
$1.05m
$1.16m
$4.0m
TOTAL
4 Villages
177 units
$11.325m
b) Improving the financial performance of three properties in
* settled July 2017
South Australia;
c) Building the acquisition pipeline to sustain the growth path
of the business;
d) Introducing a range of cost saving initiatives across
the business: by reducing two regional management
positions and achieving better economies of scale through
procurement savings in utilities, waste services, pest control,
fire maintenance and communications;
While this is a lower rate of acquisition than the previous
financial year, it reflected a number of potential villages that
failed to meet Eureka’s selection criteria – other than the
financial return – and under the new corporate structure that
is focusing on robust and long-term growth by securing assets
that bolster the EGH business model and deliver financial
returns to our shareholders.
e) Defining a role for Eureka in the Couran Cove (Gold
BLUE CARE ALLIANCE GAINING MOMENTUM
Coast) project;
f) Gaining more traction with the Blue Care Alliance; and
g) Bringing together the operations, finance and property
management teams into one cohesive support office
in Southport and introducing defined channels of
communication and reporting between operating teams.
The alliance between Eureka and Blue Care has completed
its first year of operation. The alliance ensures that Eureka
residents enjoy a range of in home services, offering
professional and tailored programs for each individual, that are
enabled through government funding available to residents.
The program instils confidence among Eureka residents
through the provision of improved health and home services
outcomes. Eureka residents also have peace of mind in knowing
they can live independently for extended periods while enjoying
a healthier and more active retirement. The Blue Care alliance
is fully consistent with Eureka’s philosophy of delivering quality,
independent living communities within safe, caring and well-
managed environments.
Four trial sites were established to test how the program would
be delivered. Each of the trial sites at Ipswich, Cairns, Wynnum
(Brisbane) and Rockhampton were successful and allowed the
service delivery and interaction between Eureka and Blue Care
to be honed and streamlined.
10
2016-2017 ANNUAL REPORTFor personal use only By way of example, Blue Care Chaplains provide counselling
to help minimise the trauma around stressful events such as
the passing of a resident, which leads to improved resident
sentiment towards village life and Eureka in general.
As well as the improved level of care provided by Blue Care,
the program will be positive in reducing resident turnover and
ultimately, will lead to improved occupancy rates across the
Eureka portfolio over the medium term.
The integrated delivery of in home care also has positive
reputational benefits to Eureka. Blue Care Liaison Officers are
guiding residents or their family members, through the ‘My
Aged Care’ portal to confirm their eligibility for services and to
help take the stress and anxiety out of the process. Blue Care
services are highly complementary to Eureka’s “independent
living” ethos, which in turn, is driving, increased enquiries from
new clients and their families.
Since trialling the Blue Care Alliance at the four locations listed
earlier, the Alliance has now been rolled out to all Eureka
villages in Queensland and the benefits are beginning to flow to
both partners (EGH and Blue Care).
There are now jointly branded marketing collateral materials
available to existing and prospective residents at all Eureka
villages in Queensland. Furthermore, regional Blue Care
Managers and Liaison Officers have all received inductions into
Eureka’s Queensland villages.
What is also pleasing since the initial trial and subsequent roll
out of the Alliance to all EGH villages is Queensland is that
take-up of Blue Care services has been relatively strong and
referrals to Eureka villages from Blue Care regional and central
staff are steadily increasing. The Blue Care and Eureka Alliance
is an important platform for both organisations going forward.
SUPPORTED RESIDENTIAL FACILITIES
Over the past two years, Eureka acquired three Supported
Residential Facilities (SRFs) in South Australia. There are two in
Adelaide and one in Mount Gambier. At the time of acquisition,
these properties were showing strong EBITDA performance.
However, their subsequent performance was below budget due
to shortfalls in revenue and materially higher operating costs. A
targeted improvement plan was put in place in March 2017 that
lifted their collective performance.
Consequently, EGH is undertaking a detailed assessment of
these businesses to evaluate alternate options for their future
operations. This report is expected to be completed in the
second quarter of the 2017-18 financial year.
Top left: Albert Street Gardens, Orange
Top right: Residents at Eureka Care Communities, Gladstone
Bottom right: Residents and staff at Eureka Madross Gardens, Albury
11
EUREKA GROUP HOLDINGSFor personal use only TERRANORA VILLAGE, NORTHERN NEW SOUTH WALES
Terranora Village and associated property was acquired in
December 2015 for $7 million.
Originally built as the Royal Terranora Resort to service an
18-hole golf course and associated licensed premises, the
apartments were generally larger than typical Eureka units,
being up to 100 square metres internally.
The village had a strong rental income despite not having been
renovated for many years and has over 5 hectares of adjoining
hilltop land 20 minutes from Gold Coast Airport, with views
spanning the Tweed Valley, Gold Coast and Pacific Ocean.
With the larger apartments, excess land and strength in the
Gold Coast property market, it was determined to strata title the
existing apartments and sell them on a retail basis.
Town planners were engaged and a three-lot subdivision,
comprising the existing apartments plus two other development
lots were designed and an application was lodged with the
Tweed Shire Council.
Top left: Eureka Murray River Gardens Mildura managers, Ian and
Collette Hazeldene
Bottom left: Eureka Cascade Gardens Mackay
Top right: Avenell Village on Vasey, Bundaberg
Bottom right: A resident at Eureka Care Communities Gladstone
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2016-2017 ANNUAL REPORTFor personal use only During the process, council requested various changes to the
plan, including readvertising the development.
At all times it has been a positive consultative process
with council working towards a long term solution for a
property being reclassified from a resort to residential.
The process has been meticulous, that needed to take into
account future development on the site, which is significant
together with upgrading the existing apartments to current
council requirements.
All work has been completed in upgrading the existing property
to current standards and the future development potential for
Stage 1 vacant land is for up to 240 townhouses, or indeed, a
higher number of Eureka type product if that path is chosen in
the future.
Once this initial stage is complete, Eureka will be in a position
to focus on Stage 2 through the completion of a full feasibility
assessment of a 125-unit Eureka Village development or sale of
the undeveloped land.
While the approval process has taken longer than originally
expected, we anticipate receipt of the approval in the near
future. Terranora is a very exciting and productive asset
for Eureka.
COURAN COVE, GOLD COAST
Eureka assets at Couran Cove include:
» 29 eco cabins — four of which are currently being
refurbished or upgraded with the balance (25) rented.
» Option over 60 development sites with power, water and
sewer services connected to the boundary. These sites
are suitable to be developed into an independent low cost
rental village for 120 duplex accommodation units. Eureka
is currently evaluating the strategic fit of these assets within
the portfolio.
Meanwhile, the owner of Couran Cove’s central visitor,
hospitality and marine facilities has completed extensive
refurbishment works to refresh and upgrade the entire Couran
Cove experience, which also creates an enhanced environment
and backdrop for the Eureka assets.
Terranora
13
EUREKA GROUP HOLDINGSFor personal use only PORTFOLIO OCCUPANCY
IMPLEMENTING CULTURAL CHANGE — FY2017 HIGHLIGHTS:
The occupancy performance of our owned village portfolio was
averaging around 83%-84% for the first half of this financial
year. A company-wide strategy was introduced to improve
occupancy in the period from February 2017 onwards, resulting
in a lift to 89.6% by the end of June 17. This strategic initiative
has laid a solid base and set the benchmark for improved
performance in the new financial year.
STRUCTURAL CHANGE
As outlined earlier, this financial year has been one of
significant change in the structure, operations and governance
of the company. The Eureka Board elected to move to a more
conventional corporate structure with full separation between
the Board and the Executive and the Executive Chairman moved
to non-executive Chairman following the appointment of a CEO
in February 2017.
» Merging the Robina and Southport offices into one new office
at Southport;
» Rebranding the Southport office to “Support Office” rather
than Head Office in recognition that our villages are the
central core of the Eureka business;
» Carrying out an extensive team building campaign across
all business units within the company to focus on village
occupancy; and
» Streamlining the company structure and removing some
middle management roles.
I would like to thank the entire Eureka team for a stellar
performance and dedication throughout the year and for
embracing the transition to the new structure. I must also
sincerely thank the Board for their unwavering support and
commitment to the future success of Eureka Group Holdings.
Jeff Weigh
Chief Executive Officer
Owned
Owned Villages Occupancy Trend
95
90
85
80
%
y
c
n
a
p
u
c
c
O
14
1 Jan
2017
1 Feb
2017
1 Mar
2017
1 Apr
2017
1 May
2017
1 Jun
2017
1 Jul
2017
1 Aug
2017
Week Ending
2016-2017 ANNUAL REPORTFor personal use only
Terranora poolside
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EUREKA GROUP HOLDINGSFor personal use only FY2017 Acquisitions
Eureka Group aims to provide the
highest level of low cost rental
accommodation and associated care
to independent retirees who are either
completely or primarily reliant on
the Australian Government pension
and rent assistance. In Australia,
77 percent of people over the age of
65 rely on pensions as their primary
source of income.
During FY2017, Eureka Group acquired 4 additional villages to
a value of $11.3 million. While this is a lower rate of acquisition
than the previous financial year, it reflected a number of
potential villages that failed to meet Eureka’s selection criteria
– other than the financial return. Under the new corporate
structure, Eureka is focusing on robust and long-term growth
by securing assets that bolster the EGH business model and
deliver financial returns to our shareholders.
16
FRESHWATER VILLAS
GYMPIE, QLD
The 42-unit Freshwater Villas retirement village in Gympie is located close to the hospital, medical facilities and broad mix of
retail shops. The property has undeveloped land sufficient for an additional 8 units to be added as required. Freshwater already
trades at high occupancy levels and is expected to be a positive addition to Eureka on the $4 million purchase price with room for
occupancy improvements.
UNITS: 42
Purchase price: $4 million
EUREKA MACKAY VILLAGE
MACKAY, QLD
Eureka Group purchased the 38-unit village in Mackay in March 2017 for $1.16 million, which includes a dining and communal
area and large commercial kitchen. This is the second property for EGH in Mackay and complements the company’s other villages
throughout North Queensland including facilities located at Condon, Smithfield, Wulguru, Townville and Bowen.
UNITS: 38
Purchase price: $1.16 million
SHORTY O’NEIL VILLAGE
BROKEN HILL, NSW
Eureka acquired the 42-unit Shorty O’Neil Village for $1.05 million in December 2016. The village includes a community centre,
a separate office building and large commercial kitchen facilities. Purchased as ‘Vacant Possession’ the village is now trading at
100 percent occupancy with a waiting list of potential residents following a highly successful marketing campaign.
UNITS: 42
Purchase price: $1.05 million
ALBERT STREET GARDENS
ORANGE, NSW
This 55-unit retirement village in western New South Wales was purchased in September 2016 for $5.115 million. Known as Albert
Street Gardens, the village has a long-term historic occupancy rate of 92% that is underpinned by the demographic profile of
Orange, which has a population of around 40,000 with 20 percent of people aged 65 years and over.
UNITS: 55
Purchase price: $5.115 million
2016-2017 ANNUAL REPORTFor personal use only
FRESHWATER VILLAS
GYMPIE, QLD
The 42-unit Freshwater Villas retirement village in Gympie is located close to the hospital, medical facilities and broad mix of
retail shops. The property has undeveloped land sufficient for an additional 8 units to be added as required. Freshwater already
trades at high occupancy levels and is expected to be a positive addition to Eureka on the $4 million purchase price with room for
occupancy improvements.
UNITS: 42
Purchase price: $4 million
EUREKA MACKAY VILLAGE
MACKAY, QLD
Eureka Group purchased the 38-unit village in Mackay in March 2017 for $1.16 million, which includes a dining and communal
area and large commercial kitchen. This is the second property for EGH in Mackay and complements the company’s other villages
throughout North Queensland including facilities located at Condon, Smithfield, Wulguru, Townville and Bowen.
UNITS: 38
Purchase price: $1.16 million
SHORTY O’NEIL VILLAGE
BROKEN HILL, NSW
Eureka acquired the 42-unit Shorty O’Neil Village for $1.05 million in December 2016. The village includes a community centre,
a separate office building and large commercial kitchen facilities. Purchased as ‘Vacant Possession’ the village is now trading at
100 percent occupancy with a waiting list of potential residents following a highly successful marketing campaign.
UNITS: 42
Purchase price: $1.05 million
ALBERT STREET GARDENS
ORANGE, NSW
This 55-unit retirement village in western New South Wales was purchased in September 2016 for $5.115 million. Known as Albert
Street Gardens, the village has a long-term historic occupancy rate of 92% that is underpinned by the demographic profile of
Orange, which has a population of around 40,000 with 20 percent of people aged 65 years and over.
UNITS: 55
Purchase price: $5.115 million
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EUREKA GROUP HOLDINGSFor personal use only
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2016-2017 ANNUAL REPORTFor personal use only Financials
Directors’ Report
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Auditor’s Independence Declaration
Corporate Governance Statement
Corporate Directory
Security Holder Information
20
31
32
33
34
35
69
70
75
76
77
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EUREKA GROUP HOLDINGS
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For personal use only Eureka Group Holdings Limited and controlled entities
Directors’ Report
The Directors present their report on Eureka Group Holdings Limited (the “Company”, “EGH” or “Eureka”) and its controlled
entities (the “Group”, or the “Consolidated Entity”) for the year ended 30 June 2017.
PRINCIPAL ACTIVITIES
The principal activities of EGH include:
Providing specialist property asset management through property ownership and caretaking and infrastructure
management;
Providing accommodation and tailored services to a broad market of aged residents with discretionary and non-
discretionary spend characteristics; and
Project management.
REVIEW OF OPERATIONS AND RESULTS
The performance of the Group as represented by the results of operations for the year, were as follows:
Performance Measure
Net profit
Add back:
Interest expense
Tax
Depreciation
Amortisation
Earnings before interest, tax, depreciation and amortisation (EBITDA)
Consolidated
30 June 2017
$’000
30 June 2016
$’000
6,538
2,606
-
129
142
9,415
10,467
1,733
-
113
155
12,468
EBITDA is a non-IFRS measure, however the directors believe that it is a readily calculated measure that has broad
acceptance and is used by regular users of published financial statements as proxy for overall operating performance. EBITDA
presented has been calculated from amounts disclosed in the financial statements.
The decrease in EBITDA to $9.4 million was largely reflective of lower net fair value gain of $1.1 million compared to $4.0
million in the previous year and additional payments to two directors of $0.5 million.
Financing costs increased during the 30 June 2017 year as a result of increased borrowings to fund the village acquisitions.
Financial Position
Total Assets
Net assets
Working capital (current assets less current liabilities)
Consolidated
30 June 2017
$’000
30 June 2016
$’000
128,534
74,867
11,872
111,323
64,934
8,505
The Group continues to strengthen its financial position. During the year, the Group acquired investment properties for total
consideration including transactions costs of $13.1 million. These acquisitions were partly funded through bank debt, which
resulted in bank debt increasing from $42.7 million to $50.5 million.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
During the 30 June 2017 financial year the Group acquired 3 seniors’ rental villages and a number of units within other senior
rental villages where Eureka is the manager. This is consistent with Eureka’s growth strategy to acquire high performing
villages and associated management rights. The villages acquired include:
Albert Street Gardens Village Orange for $5.11 million in September 2016
Shorty O’Neil Village Broken Hill for $1.05 million in December 2016
Eureka Mackay Village for $0.55 million in March 2017
The purchase prices above are exclusive of applicable acquisition costs. During the period the Group also spent $4.29 million
on enhancing properties held through capital additions.
During the 30 June 2017 financial year, the Group divested its manager’s unit at Slacks Creek for $0.17 million.
20
EGH ANNUAL REPORT 2017
20
2016-2017 ANNUAL REPORTDirectors’ ReportFor personal use only
Eureka Group Holdings Limited and controlled entities
Directors’ Report
DIVIDENDS
No dividends have been paid during the year (2016: $nil). No dividends are recommended for the financial year ended 2017.
SHARE CAPITAL AND SHARE OPTIONS
The number of ordinary shares on issue at 30 June 2017 was 229,671,923 (2016: 225,784,473 ).
On 8 July 2016, the Company’s Share Purchase Plan (‘SPP’) was finalised. 5,263,400 shares at $0.75 were allotted on 14
July 2016.
1,375,950 ordinary shares were cancelled from the Share Buy Back during the financial year (2016: Nil).
There were no options issued during the year (2016: Nil).
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
In the 2018 Financial Year there will be a continued commitment to Eureka’s “Buy and Build” strategy which has seen the
company move away from its historical ownership of management rights only, over low cost rental retirement villages to a
dominant and holistic bricks and mortar village ownership and management model which has generated far superior returns
to shareholders.
Eureka will continue to acquire existing assets which meet its EBITDA return hurdle rate and will continue to improve the
performance of recently acquired assets which to date have consistently added to the value of each village.
Each year the company also reviews its management rights portfolio and there may be further divestments from that portfolio
should it be seen as opportune.
The transformation of the Terranora property acquired for $7 million in December 2015 is well advanced. Negotiations with
the Tweed Shire Council have been conducted professionally and thoroughly. Eureka holds 25 sales subject to a D.A. from
the Tweed Shire and issue of individual titles. The marketing for the Terranora excess vacant land not required by Eureka will
also start within the next 6-12 months.
Lastly, Eureka will continue to build on the Blue Care partnership announced in June 2016 and expects the Blue Care “in
home care” model to be a valuable alliance for both parties. Further information is included in the Chairman’s Review.
SUBSEQUENT EVENTS
The Group has completed the acquisition of the 42 unit village in Gympie QLD on 19 July 2017, otherwise known as
‘Freshwater Villas’ for $3.8 million.
Other than the above mentioned items, no other matter or circumstance has arisen since 30 June 2017 that has significantly
affected, or may significantly affect, the operations of the Group, the results of those operations or the state of affairs of the
Group in subsequent financial years.
ENVIRONMENTAL REGULATION
The Group’s operations are not subject to any particular or significant environmental regulation under a law of the
Commonwealth or of a State or Territory.
INDEMNIFICATION AND INSURANCE OF OFFICERS OR AUDITORS
During or since the end of the financial year, the Group has not given any indemnity or entered into any agreement to indemnify
any person who is or has been an officer of the Company.
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young Australia, as part of the
terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount).
No payment has been made to indemnify Ernst & Young during or since the financial year. During the financial year the Group
has paid a premium of $74,643 for Directors’ and Officers’ liability for current and former Directors and Officers.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to
which the Company is a party for the purposes of taking responsibility on behalf of the Company for all or any part of those
proceedings. The Company was not a party to any such proceedings during the year.
EUREKA GROUP HOLDINGS
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Directors’ ReportFor personal use only
Eureka Group Holdings Limited and controlled entities
Directors’ Report
ROUNDING OF AMOUNTS
The company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191’Class issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this
report have been rounded off in accordance with that legislation to the nearest thousand dollars, or in certain cases, the
nearest dollar.
DIRECTORS AND MEETINGS ATTENDED
The names of all Directors who held office since the beginning of the year together with the numbers of meetings the
Company’s Directors held during the year, and the numbers of meetings held and attended by each Director are:
Name
Robin Levison
Lachlan McIntosh
Greg Rekers
Kerry Potter
Nirmal Hansra
Director's
Meetings
Audit & Risk Committee
Meetings
Held
7
7
2
2
7
Attended
7
7
1
2
7
Held
3*
3
-
-
3
Attended
3*
3
-
-
3
Nomination &
Remuneration
Committee Meetings
Attended
3*
3
-
-
3
Held
3*
3
-
-
3
*Attended by invitation
INFORMATION ON DIRECTORS
The details of each Director’s qualifications, experience and special responsibilities for those in office during the year are:
Robin Levison – Executive Chairman, CEO 1 July 2016 to 7 February 2017, Non-Executive Chairman 7 Feb 2017
onwards
Robin Levison holds a Masters of Business Administration from the University of Queensland and is a Member of Chartered
Accountants Australia and New Zealand. Robin has 15 years of Public Company Management experience. During this time
he served as Managing Director at Industrea Limited and Spectrum Resources and has held senior roles at KPMG, Barclays
Bank and Merrill Lynch. Robin is also Chair of the University of Queensland Business, Economics and Law Alumni
Ambassador Council, and is a Graduate and Fellow of Australian Institute of Company Directors.
Other listed company directorships in the last 3 years: PPK Group Limited.
Special responsibilities: Chair of the Board.
Lachlan McIntosh – Non-Executive Director
Lachlan McIntosh has a Bachelor of Commerce degree and is a Member of Chartered Accountants Australia and New
Zealand. He specialises in corporate finance and mergers and acquisitions. He has had substantial experience in the real
estate and retirement accommodation industry along with significant experience in the franchising industries and mining
services industries.
Other listed company directorships in the last 3 years: New Guinea Gold Corporation (April 2013 to April 2014) and Onterran
Limited (from 11 October 2014).
Special responsibilities: Member of Audit & Risk Committee, Member of Nomination & Remuneration Committee.
Greg Rekers – Executive Director and Head of Real Estate (Resigned on 8 February 2017)
Greg led the Company’s real estate activities during his employment. Greg is also a director of Navigator Property Group
(NPG), a consultancy group specialising in the areas of property development and project marketing.
Greg worked for PRD Gold Coast, a national and international property marketing company where he was a leading project
salesman. Upon departing PRD, Greg continued to be highly successful in providing project marketing services to numerous
property developers, which then led to the creation of NPG.
Other listed company directorships in the last 3 years: nil
Special responsibilities: nil
22
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2016-2017 ANNUAL REPORTDirectors’ ReportFor personal use only
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Kerry Potter – Executive Director and Chief Operating Officer (Resigned on 8 February 2017)
Kerry was the Company’s Chief Operating Officer during his employment. Kerry is also a director of Navigator Property Group,
a consultancy specialising in the areas of property development and project marketing.
Kerry holds a Bachelor of Commerce degree and worked with the Commonwealth public service until 1987 where he had
been a director of the Government’s real estate arm. Kerry then became the Director of Project Marketing for PRD Gold Coast,
a successful national and international organisation. After leaving PRD, Kerry became CEO of Raine and Horne Queensland
and Chesterton International. Kerry then became the principal and hands-on director of numerous development residential
and commercial projects for various consortia in the period 2000 to 2007.
Other listed company directorships in the last 3 years: nil
Special responsibilities: nil
Nirmal Hansra – Non-Executive Director
Nirmal holds a Master of Commerce (Business Management) degree from University of NSW and is a Fellow of the Australian
Institute of Company Directors, Fellow of Chartered Accountants Australia and New Zealand and Fellow of Australian Society
of Certified Practicing Accountants.
He has over 35 years of senior executive management experience and 11 years of board and corporate advisory experience.
During this time Nirmal had roles as CFO / Finance Director of listed companies such as Industrea Limited, ISoft Group
Limited, Australian Pharmaceutical Industries Limited and Ruralco Holdings Limited.
Nirmal is Chair of Campbell Page Limited, non-executive director and chair of the finance, audit and risk committee of Kuringai
Financial Services Limited, Council of the Ageing (COTA) in New South Wales and Children’s Tumour Foundation Limited.
He is also a non-executive director of Have A Voice Pty Ltd.
Other listed company directorships in the last 3 years: nil
Special responsibilities: Chair of Audit & Risk Committee, Chair of Nomination & Remuneration Committee
COMPANY SECRETARY
Oliver Schweizer – Company Secretary
Oliver has a Bachelor of Economics degree and is a Chartered Financial Analyst. Oliver has over 15 years’ experience in
commercial accounting, finance, investments and listed entities.
KEY MANAGEMENT PERSONNEL
The details of each key management personnel’s qualifications, experience and special responsibilities for those in office
during the year (excluding Head of Real Estate and Chief Operating Officer noted above) are:
Jeff Weigh – Chief Executive Officer (Appointed on 7 February 2017)
Jeff Weigh holds a Master of Economic Studies from the University of Queensland and completed the Executive Hotel
Management course from Cornell University, USA. He is a highly experienced executive whose immediate previous role was
CEO of South Bank Corporation for 4 years until September 2016. Jeff was Queensland Manager of I-Med, a member
company of DCA Group Ltd that became an ASX top 200 public company specialised in medical imaging and aged care. He
also co-founded Fortland Hotels & Resorts in 1990 and was Managing Director.
Paul Cochrane – Chief Financial Officer (Appointed on 28 June 2017)
Paul Cochrane holds a Bachelor of Commerce from University of Queensland, is a Member of Chartered Accountants
Australia and New Zealand and holds an REIQ Real Estate License. He spent three years as CFO and Company Secretary
at Ariadne Australia Ltd, followed by 7 years in a variety of senior roles at Lend Lease Ltd, including 3 years as Project Director
of Springfield Lakes. Paul was also General Manager – Finance at Aveo Ltd, a full service property group with a principal
focus on retirement living. He was also CFO for Devine Ltd for 5 years, ultimately assuming the role of Company Secretary
as well. He began his career with Price Waterhouse serving in the audit Division in Brisbane, followed by tenure in Hong Kong
and London.
EGH ANNUAL REPORT 2017
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23
EUREKA GROUP HOLDINGSDirectors’ ReportFor personal use only
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Ryan Maddock – Chief Financial Officer (Ceased role on 30 June 2017)
Ryan Maddock is a Chartered Accountant and has a Bachelor of Business with a Major in Accounting from Griffith University.
He has over 12 years of accounting experience working in both Australia and North America and most recently held the role
of Senior Financial Accountant at a Perth-based TSX-listed company. Prior to that he held the roles of Audit Manager at
KPMG and Accountant at PKF.
INTEREST IN SHARES AND OPTIONS HELD AT THE DATE OF THIS REPORT
Directors
Robin Levison
Lachlan McIntosh
Nirmal Hansra
Directors Total
Executives
Jeff Weigh
Paul Cochrane
Executives Total
OPTIONS
Ordinary shares
12,905,000
11,916,166
839,834
25,661,000
400,000
-
400,000
There were no options outstanding during the financial year and up to the date of the Directors’ report.
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for Eureka Group Holdings Limited’s non-executive directors’,
executive directors and other key management personnel (“KMP”) of Eureka Group Holdings Limited for the year ended 30
June 2017. The information provided in this remuneration report has been audited as required by Section 308(3C) of the
Corporations Act 2001.
This remuneration report has been set out under the following headings:
a) Principles of compensation of key management personnel
b) Details of remuneration
c) Non-executive director remuneration policy
d) Service agreements
e) Relationship between remuneration and Company performance
f) Remuneration consultants
g) Equity Instruments held by Key Management Personnel
h) Loans to/from Key Management Personnel
i) Other transactions with Key Management Personnel
(a) PRINCIPLES OF COMPENSATION OF KEY MANAGEMENT PERSONNEL
Compensation of key management personnel comprise remuneration determined having regard to industry practice and the
need to obtain appropriately qualified independent persons. Compensation aligns executive reward with the achievement of
strategic objectives and the creation of value for shareholders, and conforms to the market best practice for 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, and
transparency.
The Nomination & Remuneration Committee is responsible for determining and reviewing remuneration arrangements for its
directors and executives. Consideration is given to normal commercial rates of remuneration for similar levels of responsibility
and the Company’s financial performance.
24
EGH ANNUAL REPORT 2017
24
2016-2017 ANNUAL REPORTDirectors’ ReportFor personal use only
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Ryan Maddock – Chief Financial Officer (Ceased role on 30 June 2017)
Remuneration comprises the following:
Ryan Maddock is a Chartered Accountant and has a Bachelor of Business with a Major in Accounting from Griffith University.
He has over 12 years of accounting experience working in both Australia and North America and most recently held the role
of Senior Financial Accountant at a Perth-based TSX-listed company. Prior to that he held the roles of Audit Manager at
KPMG and Accountant at PKF.
INTEREST IN SHARES AND OPTIONS HELD AT THE DATE OF THIS REPORT
Directors
Robin Levison
Lachlan McIntosh
Nirmal Hansra
Directors Total
Executives
Jeff Weigh
Paul Cochrane
Executives Total
OPTIONS
Ordinary shares
12,905,000
11,916,166
839,834
25,661,000
400,000
-
400,000
There were no options outstanding during the financial year and up to the date of the Directors’ report.
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for Eureka Group Holdings Limited’s non-executive directors’,
executive directors and other key management personnel (“KMP”) of Eureka Group Holdings Limited for the year ended 30
June 2017. The information provided in this remuneration report has been audited as required by Section 308(3C) of the
Corporations Act 2001.
This remuneration report has been set out under the following headings:
a) Principles of compensation of key management personnel
b) Details of remuneration
c) Non-executive director remuneration policy
d) Service agreements
e) Relationship between remuneration and Company performance
f) Remuneration consultants
g) Equity Instruments held by Key Management Personnel
h) Loans to/from Key Management Personnel
i) Other transactions with Key Management Personnel
(a) PRINCIPLES OF COMPENSATION OF KEY MANAGEMENT PERSONNEL
Compensation of key management personnel comprise remuneration determined having regard to industry practice and the
need to obtain appropriately qualified independent persons. Compensation aligns executive reward with the achievement of
strategic objectives and the creation of value for shareholders, and conforms to the market best practice for 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, and
transparency.
The Nomination & Remuneration Committee is responsible for determining and reviewing remuneration arrangements for its
directors and executives. Consideration is given to normal commercial rates of remuneration for similar levels of responsibility
and the Company’s financial performance.
EGH ANNUAL REPORT 2017
24
base pay (salaries/fees) and benefits, including superannuation;
short-term incentives (bonuses); and
long-term incentives such as options or rights or shares.
The performance of the Group depends on the quality of its directors and executives. The remuneration philosophy is to
attract, motivate and retain high performance and high quality personnel.
All executives have detailed job descriptions with identified key performance indicators against which annual reviews are
compared in relationship between the benefits contained in the employment agreements and the Company’s performance in
the 2017 financial year.
Remuneration details for certain individuals are described at (d). While bonus payments are generally at the discretion of the
Board, management is assessed on items including:
Occupancy targets
Profitability
Property capital appreciation
Operational cost management
Bonus payments can be dependent on key criteria, refer to the table in section (e) Relationship Between Remuneration and
Company Performance for further details.
The performance conditions described above were chosen because they were considered appropriate for senior management
given the operations. They are measured by comparing what has been achieved vs set budgets/targets.
The Nomination & Remuneration Committee is of the opinion that continued improved results can be achieved in part by the
adoption of performance based compensation. Accordingly, the Board intends to institute a Long Term Incentive Plan (LTI)
and is satisfied that this scheme will assist in generating increased shareholder returns if maintained over the coming years.
(b) DETAILS OF REMUNERATION
The names of persons who were key management personnel of Eureka Group Holdings Limited at any time during the financial
year are shown in the following table. Key management personnel are defined as those who have a direct impact on the
strategic direction of the Company. At the date of this report and during the year, the key management personnel of the Group
are:
Name
Role
Robin Levison
Non-Executive Director/Chair
Lachlan McIntosh
Non-Executive Director
Nirmal Hansra
Non-Executive Director
Period in role
24/12/2013 – ongoing
20/07/2009 – ongoing
24/04/2012 – ongoing
Greg Rekers
Executive Director/Head of Real Estate
24/04/2012 – Resigned 08/02/2017
Kerry Potter
Executive Director/Chief Operating Officer
24/04/2012 – Resigned 08/02/2017
Jeff Weigh
Chief Executive Officer
Paul Cochrane
Chief Financial Officer
07/02/2017 – ongoing
28/06/2017 – ongoing
Ryan Maddock
Chief Financial Officer
16/06/2014 – Ceased role on 30/06/2017
EGH ANNUAL REPORT 2017
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EUREKA GROUP HOLDINGSDirectors’ ReportFor personal use only
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Key management personnel remuneration for the year ended 30 June 2017 and 30 June 2016:
Short term
Salary/
fees
$
Bonus
$
Post
employm
ent
Super-
annuatio
n
$
Share
based
payme
nts
$
Other
long
term
benefits
$
30 June 2017
Directors
Robin Levison
Lachlan McIntosh
Nirmal Hansra
Greg Rekers 1
Kerry Potter 1
120,000
50,000
50,000
-
-
-
159,389
65,000
159,389
65,000
Directors Total
538,778
130,000
-
-
-
-
-
-
Executives
Jeff Weigh 2
Ryan Maddock 3
Paul Cochrane 4
134,097
-
9,335
193,151
17,908
19,053
-
-
-
Executives Total
327,248
17,908
28,388
Total
866,026
147,908
28,388
30 June 2016
Directors
Robin Levison
Lachlan McIntosh
Nirmal Hansra
Greg Rekers
Kerry Potter
105,000
39,000
37,998
-
-
-
229,241
100,000
229,241
100,000
Directors Total
640,480
200,000
Executives
-
-
-
-
-
-
Ryan Maddock
141,294
40,539
17,697
Executives Total
141,294
40,539
17,697
Total
781,774
240,539
17,697
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Perform
-ance
related
%
% of
bonus
that
was
paid
-
-
-
-
-
-
29%
29%
100%
100%
Total
$
120,000
50,000
50,000
224,389
224,389
668,778
143,432
230,112
-
-
8%
100%
-
-
-
373,544
1,042,322
105,000
39,000
37,998
329,241
329,241
840,480
-
-
-
-
-
-
30%
30%
100%
100%
199,530
20%
100%
199,530
1,040,010
1 Greg Rekers and Kerry Potter ceased as key management personnel on 8 February 2017. Bonus was paid for the July 2016 to December
2016 period. Additional payments were made as disclosed in section (d) of the Remuneration Policy.
2 Jeff Weigh commenced as key management personnel on 7 February 2017.
3 Ryan Maddock ceased as key management personnel on 30 June 2017.
4 Paul Cochrane commenced as key management personnel on 28 June 2017.
(c) NON-EXECUTIVE DIRECTOR REMUNERATION POLICY
Fees and payments to non-executive directors reflect the demands that are made on, and the responsibilities of, the directors.
The Nomination & Remuneration Committee reviews non-executive directors’ fees and payments annually. Non-executive
directors do not receive share options or other incentives.
Non-executive directors’ fees are determined within an aggregate directors’ fee pool limit, which is periodically recommended
for approval by shareholders. The maximum currently stands at $250,000 in aggregate plus statutory superannuation. With
the growth planned for the Group and the associated need to increase the number of directors on the board, the Board is
proposing that at the next shareholders’ meeting in November 2017, shareholders approve an increase to the directors’ fee
pool to $500,000 plus statutory superannuation.
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2016-2017 ANNUAL REPORTDirectors’ ReportFor personal use only
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Key management personnel remuneration for the year ended 30 June 2017 and 30 June 2016:
The following fees have applied during the year:
Post
employm
ent
Super-
annuatio
Short term
Salary/
fees
$
Bonus
$
n
$
Share
based
payme
nts
$
Other
long
term
benefits
$
Total
$
Perform
-ance
related
%
% of
bonus
that
was
paid
120,000
50,000
50,000
159,389
65,000
159,389
65,000
-
-
-
-
-
Directors Total
538,778
130,000
134,097
9,335
193,151
17,908
19,053
-
Executives Total
327,248
17,908
28,388
Total
866,026
147,908
28,388
30 June 2017
Directors
Robin Levison
Lachlan McIntosh
Nirmal Hansra
Greg Rekers 1
Kerry Potter 1
Executives
Jeff Weigh 2
Ryan Maddock 3
Paul Cochrane 4
30 June 2016
Directors
Robin Levison
Lachlan McIntosh
Nirmal Hansra
Greg Rekers
Kerry Potter
Executives
105,000
39,000
37,998
-
-
-
229,241
100,000
229,241
100,000
Directors Total
640,480
200,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29%
29%
100%
100%
8%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30%
30%
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
120,000
50,000
50,000
224,389
224,389
668,778
143,432
230,112
-
373,544
1,042,322
105,000
39,000
37,998
329,241
329,241
840,480
199,530
1,040,010
Ryan Maddock
141,294
40,539
17,697
199,530
20%
100%
Executives Total
141,294
40,539
17,697
Total
781,774
240,539
17,697
2 Jeff Weigh commenced as key management personnel on 7 February 2017.
3 Ryan Maddock ceased as key management personnel on 30 June 2017.
4 Paul Cochrane commenced as key management personnel on 28 June 2017.
(c) NON-EXECUTIVE DIRECTOR REMUNERATION POLICY
Fees and payments to non-executive directors reflect the demands that are made on, and the responsibilities of, the directors.
The Nomination & Remuneration Committee reviews non-executive directors’ fees and payments annually. Non-executive
directors do not receive share options or other incentives.
Non-executive directors’ fees are determined within an aggregate directors’ fee pool limit, which is periodically recommended
for approval by shareholders. The maximum currently stands at $250,000 in aggregate plus statutory superannuation. With
the growth planned for the Group and the associated need to increase the number of directors on the board, the Board is
proposing that at the next shareholders’ meeting in November 2017, shareholders approve an increase to the directors’ fee
pool to $500,000 plus statutory superannuation.
Base fees
Robin Levison – Non-Executive Chairman
Lachlan McIntosh – Non-Executive Director
Nirmal Hansra – Non-Executive Director
$
120,000
60,000
60,000
No superannuation has been paid to non-executive directors. Non-executive directors fees were increased to $60,000 on 1
January 2017.
(d) SERVICE AGREEMENTS
On appointment to the board, all non-executive directors enter into a service agreement with the Company in the form of a
letter of appointment. The letter summarises the board policies and terms, including remuneration, relevant to the office of
director. Remuneration and other terms of employment for the chief executive officer, chief financial officer and the other key
management personnel are also formalised in service agreements.
The details of these agreements for executive key management personnel are as follows:
Jeff Weigh (Chief Executive Officer)
Agreement Commenced 7 February 2017
Term of the Agreement:
The agreement may be terminated by either the Company or Mr Weigh with 6 months’ notice or by the Company in the event
of a material breach of misconduct by Mr Weigh.
Details:
Mr Weigh’s remuneration comprises a base salary of $350,000 plus 9.5% superannuation and certain benefits such as car
parking, mobile phone expenses and use of laptop. His remuneration also comprises additional short-term incentives equal
to 50% of his base salary and a long-term incentive to be approved by the shareholders at the next Annual General Meeting
in November 2017. Mr Weigh is responsible for the overall management of the Group and reports to the Chair of the Board.
Greg Rekers (Executive Director & Head of Real Estate)
Agreement Commenced 24 April 2012 (Resigned 8 February 2017)
Term of the Agreement:
The Agreement may be terminated by the Company after the first anniversary of the contract, provided that the Company
pays Mr Rekers a lump sum equal to the value of the salary package for one year. The agreement may be terminated by Mr
Rekers with 3 months’ notice. The agreement may also be terminated by the Company in the event of grave misconduct.
Details:
Mr Rekers remuneration comprises a consulting fee of $200,000 plus 30% of all sales commissions (consulting fee is half of
the total payment to Navigator Property Group) and a travel allowance of $24,000. His remuneration also comprises additional
short-term incentives equal to 50% of his base fee, for reaching agreed upon budgets, adhering to all relevant legislative
requirements and reporting financials in a timely manner. Mr Rekers is responsible for the departments of real estate, property
development and project marketing for the Company. The directors believe that the remuneration is appropriate for the duties
allocated to Mr Rekers. Upon termination subject to adherence of contractual clauses, Mr Rekers is entitled to a lump sum
equal to the value of the salary package for 1 year. Mr Rekers will receive no entitlements if terminated for grave misconduct.
1 Greg Rekers and Kerry Potter ceased as key management personnel on 8 February 2017. Bonus was paid for the July 2016 to December
2016 period. Additional payments were made as disclosed in section (d) of the Remuneration Policy.
Mr Rekers ceased his position on 8 February 2017. In accordance with the terms noted above, a payment of $260,000 was
made. These amounts are recorded in Consultancy Expenses.
Kerry Potter (Executive Director & Chief Operations Officer)
Agreement Commenced 24 April 2012 (Resigned on 8 February 2017)
Term of the Agreement:
The Agreement may be terminated by the Company after the first anniversary of the contract, provided that the Company
pays Mr Potter a lump sum equal to the value of the salary package for one year. The agreement may be terminated by Mr
Potter with 3 months’ notice. The agreement may also be terminated by the Company in the event of grave misconduct.
Details:
Mr Potters’ remuneration comprises a consulting fee of $200,000 plus 30% of all sales commissions (consulting fee is half of
the total payment to Navigator Property Group) and a travel allowance of $24,000. His Remuneration also comprises additional
short-term incentives equal to 50% of his base fee, for reaching agreed upon budgets, adhering to all relevant legislative
requirements and reporting financials in a timely manner. Mr Potter is responsible for the day to day management and
operations of the Company. The directors believe that the remuneration is appropriate for the duties allocated to Mr Potter.
EGH ANNUAL REPORT 2017
26
EGH ANNUAL REPORT 2017
27
27
EUREKA GROUP HOLDINGSDirectors’ ReportFor personal use only
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Upon termination subject to adherence of contractual clauses, Mr Potter is entitled to a lump sum equal to the value of the
salary package for 1 year. Mr Potter will receive no entitlements if terminated for grave misconduct.
Mr Potter ceased his position on 8 February 2017. In accordance with the terms noted above, a payment of $260,000 was
made. These amounts are recorded in Consultancy Expenses.
Ryan Maddock (Chief Financial Officer)
Agreement Commenced 16 June 2014 (Ceased role on 30 June 2017)
Term of the Agreement:
The agreement may be terminated by either the Company or Mr Maddock with six weeks’ notice or by the Company in the
event of a material breach of misconduct by Mr Maddock.
Details:
Mr Maddock’s remuneration comprises of a salary of $182,648 plus superannuation. Mr Maddock’s remuneration is not linked
to the company’s performance and he is entitled to a bonus at the Directors’ discretion. Mr Maddock was responsible for the
finance division and the accounting and finance functions of the Company and its associated companies. The directors believe
that the remuneration is appropriate for the duties allocated to Mr Maddock. There are no other pay-outs upon resignation or
termination.
Paul Cochrane (Chief Financial Officer)
Agreement Commenced 28 June 2017
Term of the Agreement:
The agreement may be terminated by either the Company or Mr Cochrane with 3 months’ notice or by the Company in the
event of a material breach of misconduct by Mr Cochrane.
Details:
Mr Cochrane’s remuneration comprises a base salary of $275,000 plus 9.5% superannuation and certain benefits such as
car parking, mobile phone expenses and use of laptop. His remuneration also comprises additional short-term incentives
equal to 35% of his base salary and a long-term incentive to be approved by the shareholders at the next Annual General
Meeting in November 2017. Mr Cochrane is responsible for the finance division and the accounting and finance functions of
the Company and its associated companies.
(e) RELATIONSHIP BETWEEN REMUNERATION AND COMPANY PERFORMANCE
The following table shows the revenue, net profit before tax, earnings per share, share price and dividend per share for the
past 5 years of the Company.
Total Revenue and Income $’000
Net Profit before tax $’000
EBITDA $’000
Earnings per share (cents per
share)
Share price at year end
Dividend per share
(f) REMUNERATION CONSULTANTS
2017
26,473
6,538
9,415
2.84
0.37
0.00
2016
24,155
10,467
12,468
5.19
0.79
0.00
2015
12,213
3,105
4,129
2.24
0.51
0.00
2014
10,662
661
1,512
0.80
0.12
0.00
2013
10,874
75
865
0.10
0.065
0.00
The Group did not engage any remuneration consultants during the 2017 financial year.
28
EGH ANNUAL REPORT 2017
28
2016-2017 ANNUAL REPORTDirectors’ ReportFor personal use only
Mr Potter ceased his position on 8 February 2017. In accordance with the terms noted above, a payment of $260,000 was
made. These amounts are recorded in Consultancy Expenses.
Ryan Maddock (Chief Financial Officer)
Agreement Commenced 16 June 2014 (Ceased role on 30 June 2017)
Term of the Agreement:
The agreement may be terminated by either the Company or Mr Maddock with six weeks’ notice or by the Company in the
event of a material breach of misconduct by Mr Maddock.
Mr Maddock’s remuneration comprises of a salary of $182,648 plus superannuation. Mr Maddock’s remuneration is not linked
to the company’s performance and he is entitled to a bonus at the Directors’ discretion. Mr Maddock was responsible for the
finance division and the accounting and finance functions of the Company and its associated companies. The directors believe
that the remuneration is appropriate for the duties allocated to Mr Maddock. There are no other pay-outs upon resignation or
Details:
termination.
Details:
Paul Cochrane (Chief Financial Officer)
Agreement Commenced 28 June 2017
Term of the Agreement:
Total Revenue and Income $’000
Net Profit before tax $’000
EBITDA $’000
Earnings per share (cents per
share)
Share price at year end
Dividend per share
(f) REMUNERATION CONSULTANTS
2017
26,473
6,538
9,415
2.84
0.37
0.00
2016
24,155
10,467
12,468
5.19
0.79
0.00
2015
12,213
3,105
4,129
2.24
0.51
0.00
2014
10,662
661
1,512
0.80
0.12
0.00
2013
10,874
75
865
0.10
0.065
0.00
The Group did not engage any remuneration consultants during the 2017 financial year.
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Upon termination subject to adherence of contractual clauses, Mr Potter is entitled to a lump sum equal to the value of the
(g) EQUITY INSTRUMENTS HELD BY KEY MANAGEMENT PERSONNEL
salary package for 1 year. Mr Potter will receive no entitlements if terminated for grave misconduct.
Shares held
The numbers of securities held during the financial year by each director and other key management personnel of the Group,
including their personally related parties, are set out below. There were no shares granted during the reporting period as
compensation.
Balance
1 July 2016
Received as
remuneration
Shares
acquired
Ceased
employment
Balance
30 June 2017
The agreement may be terminated by either the Company or Mr Cochrane with 3 months’ notice or by the Company in the
Total
30,104,608
event of a material breach of misconduct by Mr Cochrane.
Directors
Robin Levison
12,549,608
Lachlan McIntosh
11,896,166
Nirmal Hansra
Greg Rekers 1
Kerry Potter 1
Executives
Jeff Weigh 2
Ryan Maddock 3
Paul Cochrane 4
583,334
2,120,608
2,866,442
-
88,450
-
-
-
-
-
-
-
-
-
-
355,392
20,000
256,500
-
-
-
12,905,000
11,916,166
839,834
20,000
(2,140,608)
40,000
(2,906,442)
-
-
400,000
-
400,000
-
-
(88,450)
-
-
-
1,091,892
(5,135,500)
26,061,000
Mr Cochrane’s remuneration comprises a base salary of $275,000 plus 9.5% superannuation and certain benefits such as
car parking, mobile phone expenses and use of laptop. His remuneration also comprises additional short-term incentives
equal to 35% of his base salary and a long-term incentive to be approved by the shareholders at the next Annual General
Meeting in November 2017. Mr Cochrane is responsible for the finance division and the accounting and finance functions of
the Company and its associated companies.
(e) RELATIONSHIP BETWEEN REMUNERATION AND COMPANY PERFORMANCE
1 Ceased to be key management personnel on 8 February 2017
2 Commenced to be key management personnel on 7 February 2017
3 Ceased to be key management personnel on 30 June 2017
4 Commenced to be key management personnel on 28 June 2017
Options held
There were no options over ordinary securities held during the financial year by any of the directors of the Group or other key
management personnel of the Group, including their personally related parties.
The following table shows the revenue, net profit before tax, earnings per share, share price and dividend per share for the
past 5 years of the Company.
(h) LOANS TO/FROM KEY MANAGEMENT PERSONNEL
As at 30 June 2017, total loans outstanding to Kathlac Pty Ltd, an entity associated with Lachlan McIntosh, from Eureka Group
Holdings Limited, was $nil (2016: $nil).
Balance at beginning of year
Increase in loan amount
Loan repayments made
Interest charged
Conversion of debt to convertible notes/shares
Amount included in current financial liabilities – Shareholder Loans
Consolidated
30 June 2017
$
30 June 2016
$
-
-
-
-
-
-
-
410,000
(411,105)
1,105
-
-
There were no loans to any director or key management personnel at any time during the year and prior year.
(i) OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
Dotted Line Pty Ltd
The Company traded from a premises owned by Dotted Line Pty Ltd, an entity associated with Greg Rekers. The premises
was rented on commercial terms. Rent totalling $34,573 was paid during the year (2016: $39,600). As at 30 June 2017 the
amount outstanding to Rekers Family Trust was $nil (2016: $nil).
Greg Rekers and Associates
Greg Rekers and Associates, a business associated with Greg Rekers, was paid fees of $nil (2016: $22,000) for providing
due diligence research and advice during the year.
EGH ANNUAL REPORT 2017
29
29
EGH ANNUAL REPORT 2017
28
EUREKA GROUP HOLDINGSDirectors’ ReportFor personal use only
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Griffith Scenic Village Pty Ltd
Griffith Scenic Village Pty Ltd, an entity associated with Lachlan McIntosh, paid the Group management fees of $8,203 on
commercial terms (2016: $8,414). As at 30 June 2017 the amount outstanding from Griffith Scenic Village Pty Ltd Pty Ltd was
$nil (2016: $25,480).
Griffith Scenic Village Pty Ltd, an entity associated with Lachlan McIntosh, was paid $22,178 for Manager’s unit rental fees
on commercial terms (2016: $22,178). As at 30 June 2017 the amount outstanding to Griffith Scenic Village Pty Ltd was $nil
(2016: $nil).
Gladstone Scenic Village Pty Ltd
Gladstone Scenic Village Pty Ltd, an entity associated with Lachlan McIntosh, paid the Group management fees of $10,320
on commercial terms (2016: $8,044). As at 30 June 2017 the amount outstanding from Gladstone Scenic Village Pty Ltd was
$nil (2016: $nil).
Gladstone Scenic Village Pty Ltd, an entity associated with Lachlan McIntosh, was paid $29,229 for Manager’s unit rental fees
on commercial terms (2016: $29,229). As at 30 June 2017 the amount outstanding to Gladstone Scenic Village Pty Ltd was
$nil (2016: $nil).
22 Capital Pty Ltd
During the year, 22 Capital Pty Ltd, an entity associated with Lachlan McIntosh, was paid $206,250 in consulting fees (2016:
$375,815). At 30 June 2017, the amount outstanding to 22 Capital Pty Ltd was $nil (2016: $66,000).
Ignition Equity Partners Pty Ltd
During the year, Ignition Equity Partners Pty Ltd, an entity associated with Robin Levison, received investor relations and
capital raising fees of $nil (2016: $346,740). At 30 June 2017, the amount outstanding to Ignition Equity Partners Pty Ltd was
$nil (2016: $206,250).
This concludes the remuneration report, which has been audited.
NON-AUDIT SERVICES
Details of the amounts paid or payable to the auditor for non-audit services during the financial year by the auditor are outlined
in note 28 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor, is compatible with
the general standard of independence for auditors imposed by the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 28 to the financial statements do not compromise the
external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board,
including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the
company, acting as advocate for the company or jointly sharing economic risks and rewards.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out on
page 75.
This report is made in accordance with a resolution of the Directors.
Robin Levison
Executive Chairman
Dated in Brisbane this 24th day of August, 2017.
30
EGH ANNUAL REPORT 2017
30
2016-2017 ANNUAL REPORTDirectors’ ReportFor personal use only
Griffith Scenic Village Pty Ltd, an entity associated with Lachlan McIntosh, paid the Group management fees of $8,203 on
commercial terms (2016: $8,414). As at 30 June 2017 the amount outstanding from Griffith Scenic Village Pty Ltd Pty Ltd was
FOR THE YEAR ENDED 30 JUNE 2017
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of Profit or Loss
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
and Other Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2017
Note
Consolidated
30 June 2017
$’000
30 June 2016
$’000
Revenue
Other income
Expenses
Village operating costs
Impairment – trade receivables
Employee benefits expenses
Finance expense
Marketing expenses
Consultancy expenses
Depreciation & amortisation expenses
Lease expenses
Other expenses
Profit before income tax expense
Income tax expense
Profit after income tax expense
Other comprehensive income
Items that may be reclassified to profit or loss
Items that will not be reclassified to profit or loss
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
3
3
4
4
4
5
The directors are of the opinion that the services as disclosed in note 28 to the financial statements do not compromise the
external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
Basic and diluted earnings per share (cents per share)
23
24,053
2,420
(12,796)
(126)
(1,339)
(2,606)
(205)
(653)
(271)
(201)
(1,738)
6,538
-
6,538
-
-
-
6,538
2.84
19,350
4,805
(8,804)
(37)
(1,172)
(1,733)
(274)
(151)
(268)
(255)
(994)
10,467
-
10,467
-
-
-
10,467
5.19
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Griffith Scenic Village Pty Ltd
$nil (2016: $25,480).
(2016: $nil).
Gladstone Scenic Village Pty Ltd
$nil (2016: $nil).
$nil (2016: $nil).
22 Capital Pty Ltd
Griffith Scenic Village Pty Ltd, an entity associated with Lachlan McIntosh, was paid $22,178 for Manager’s unit rental fees
on commercial terms (2016: $22,178). As at 30 June 2017 the amount outstanding to Griffith Scenic Village Pty Ltd was $nil
Gladstone Scenic Village Pty Ltd, an entity associated with Lachlan McIntosh, paid the Group management fees of $10,320
on commercial terms (2016: $8,044). As at 30 June 2017 the amount outstanding from Gladstone Scenic Village Pty Ltd was
Gladstone Scenic Village Pty Ltd, an entity associated with Lachlan McIntosh, was paid $29,229 for Manager’s unit rental fees
on commercial terms (2016: $29,229). As at 30 June 2017 the amount outstanding to Gladstone Scenic Village Pty Ltd was
During the year, 22 Capital Pty Ltd, an entity associated with Lachlan McIntosh, was paid $206,250 in consulting fees (2016:
$375,815). At 30 June 2017, the amount outstanding to 22 Capital Pty Ltd was $nil (2016: $66,000).
During the year, Ignition Equity Partners Pty Ltd, an entity associated with Robin Levison, received investor relations and
capital raising fees of $nil (2016: $346,740). At 30 June 2017, the amount outstanding to Ignition Equity Partners Pty Ltd was
Ignition Equity Partners Pty Ltd
$nil (2016: $206,250).
This concludes the remuneration report, which has been audited.
NON-AUDIT SERVICES
Details of the amounts paid or payable to the auditor for non-audit services during the financial year by the auditor are outlined
in note 28 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor, is compatible with
the general standard of independence for auditors imposed by the Corporations Act 2001.
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board,
including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the
company, acting as advocate for the company or jointly sharing economic risks and rewards.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out on
page 75.
This report is made in accordance with a resolution of the Directors.
Robin Levison
Executive Chairman
Dated in Brisbane this 24th day of August, 2017.
EGH ANNUAL REPORT 2017
30
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.
EGH ANNUAL REPORT 2017
31
31
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
AS AT 30 JUNE 2017
AS AT 30 JUNE 2017
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Loans receivable
Total current assets
Non-Current Assets
Loans receivable
Other assets
Investment property
Property, plant and equipment
Intangible assets
Total non-current assets
Total Assets
Current Liabilities
Trade and other payables
Other financial liabilities
Provisions
Total current liabilities
Non-current liabilities
Other financial liabilities
Provisions
Total non-current liabilities
Total Liabilities
Net Assets
Equity
Share capital
Accumulated losses
Total Equity
Consolidated
Note
30 June 2017
$’000
30 June 2016
$’000
19
6
7
8
10
10
8
12
13
14
15
17
16
17
16
18
4,395
2,632
7,649
1,623
76
6,841
3,407
6,300
846
66
16,375
17,460
501
3,000
100,666
1,665
6,327
112,159
539
-
86,472
1,232
5,620
93,863
128,534
111,323
2,660
1,554
289
4,503
49,019
145
49,164
3,688
5,123
144
8,955
37,393
41
37,434
53,667
46,389
74,867
64,934
94,255
(19,388)
74,867
90,860
(25,926)
64,934
The consolidated statement of financial position is to be read in conjunction with the accompanying notes
32
EGH ANNUAL REPORT 2017
32
2016-2017 ANNUAL REPORTFor personal use only
Consolidated Statement of Financial Position
AS AT 30 JUNE 2017
Consolidated
30 June 2017
30 June 2016
Note
$’000
$’000
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2017
AS AT 30 JUNE 2017
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Loans receivable
Total current assets
Non-Current Assets
Loans receivable
Other assets
Investment property
Property, plant and equipment
Intangible assets
Total non-current assets
Total Assets
Current Liabilities
Trade and other payables
Other financial liabilities
Provisions
Total current liabilities
Non-current liabilities
Other financial liabilities
Provisions
Total non-current liabilities
Total Liabilities
Net Assets
Equity
Share capital
Accumulated losses
Total Equity
Consolidated
Note
30 June 2017
$’000
30 June 2016
$’000
Cash Flows from Operating Activities
Receipts from customers (2)
Payments to suppliers & employees (1)
Interest received
Interest paid
16,375
17,460
Net Cash provided by/(used) in Operating Activities (2)
19(b)
Cash Flows from Investing Activities
Payments for additions to investment properties (2)
Payments for property, plant & equipment (3)
Proceeds from the sale of intangible assets
Payments made to sell intangible assets
Payments for loans provided
Repayments of loans provided (2)
Repayment of residential obligation loans
Payments for intangible assets
Net Cash provided by/(used) in Investing Activities (2)
Cash Flows from Financing Activities
Proceeds from borrowings
Repayment of borrowings
Payments of transaction costs related to borrowings
Proceeds from share issues
Payments for share buy back
Payments for share issue and buy back transaction costs
Net Cash provided by/(used in) Financing Activities
Net increase/(decrease) in cash and cash equivalents
18
18
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
19(a)
24,277
(17,987)
49
(2,266)
4,073
(15,719)
(302)
171
(10)
(561)
67
(246)
(849)
(17,449)
9,848
(1,667)
(440)
3,948
(523)
(236)
10,930
(2,446)
6,841
4,395
17,030
(11,247)
44
(1,587)
4,240
(40,514)
(111)
482
-
(1,141)
178
-
(803)
(41,909)
18,637
(827)
(250)
22,900
-
(1,104)
39,356
1,687
5,154
6,841
(1) Included in cash payments made was an amount of $1.3 million for capital and other improvements to inventory held
at Terranora to prepare the inventory for sale.
(2) A significant non-cash investing activity took place during the year ended 30 June 2017 for $3 million. Refer to Note
8. Also Investment Property of $0.93 million was purchased on non-cash basis, refer to note 19.
(3) Property, plant and equipment of $0.27 million was purchased on non-cash basis, refer to note 19.
19
6
7
8
10
10
8
12
13
14
15
17
16
17
16
18
4,395
2,632
7,649
1,623
76
501
3,000
100,666
1,665
6,327
112,159
2,660
1,554
289
4,503
49,019
145
49,164
6,841
3,407
6,300
846
66
539
-
86,472
1,232
5,620
93,863
3,688
5,123
144
8,955
37,393
41
37,434
128,534
111,323
53,667
46,389
74,867
64,934
94,255
(19,388)
74,867
90,860
(25,926)
64,934
The consolidated statement of financial position is to be read in conjunction with the accompanying notes
The consolidated statement of cash flows is to be read in conjunction with the accompanying notes.
EGH ANNUAL REPORT 2017
32
EGH ANNUAL REPORT 2017
33
33
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
Share Capital
$’000
Consolidated
Accumulated Losses
$’000
Total
$’000
For the year ended 30 June 2017
Balance at 1 July 2016
90,860
(25,926)
64,934
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Share issued during the year
Share buy back
Capital raising costs
Balance at 30 June 2017
-
-
-
3,948
(523)
(30)
94,255
6,538
-
6,538
-
-
-
(19,388)
6,538
-
6,538
3,948
(523)
(30)
74,867
For the year ended 30 June 2016
Balance at 1 July 2015
68,248
(36,393)
31,855
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Shares issued during the year
Capital raising costs
Balance at 30 June 2016
-
-
-
23,920
(1,308)
90,860
10,467
-
10,467
-
-
(25,926)
10,467
-
10,467
23,920
(1,308)
64,934
The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.
34
EGH ANNUAL REPORT 2017
34
2016-2017 ANNUAL REPORTFor personal use only
FOR THE YEAR ENDED 30 JUNE 2017
Eureka Group Holdings Limited and controlled entities
FOR THE YEAR ENDED 30 JUNE 2017
Notes to the Financial Statements
Notes to the Financial Statements
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2017
Balance at 1 July 2016
90,860
(25,926)
64,934
For the year ended 30 June 2017
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Share issued during the year
Share buy back
Capital raising costs
Balance at 30 June 2017
For the year ended 30 June 2016
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Shares issued during the year
Capital raising costs
Balance at 30 June 2016
Consolidated
Share Capital
Accumulated Losses
$’000
$’000
Total
$’000
3,948
(523)
(30)
94,255
-
-
-
-
-
-
23,920
(1,308)
90,860
6,538
-
6,538
-
-
-
(19,388)
10,467
-
10,467
-
-
(25,926)
6,538
-
6,538
3,948
(523)
(30)
74,867
10,467
-
10,467
23,920
(1,308)
64,934
Balance at 1 July 2015
68,248
(36,393)
31,855
The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.
EGH ANNUAL REPORT 2017
34
Transactions with owners in their capacity as owners:
The registered office of the company is Suite 2D 7 Short St, Southport QLD 4215
1. INTRODUCTION
Eureka Group Holdings Limited (covering the financial statements of Eureka Group Holdings Limited and all of its subsidiaries)
(“EGH” or the “Group” or the “Consolidated Entity”) for the year ended 30 June 2017 is a company incorporated and domiciled
in Australia. EGH is a for-profit entity for the purposes of preparing the financial statements.
The Group’s operations and principal activities comprise ownership and property management of Independent Living
Communities.
The financial report is presented in Australian dollars. The company is of a kind referred to in ASIC Corporations (Rounding
in Financial/Directors’ Reports) Instrument 2016/191’, issued by the Australian Securities and Investments Commission,
relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that legislation to the nearest
thousand dollars, or in certain cases, the nearest dollar.
The financial report was authorised for issue on 24 August 2017 by the Directors.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF PREPARATION
The principal accounting policies adopted by the Group, comprising the parent entity Eureka Group Holdings Limited and its
subsidiaries, are stated in order to assist in the general understanding of the financial report. These policies have been
consistently applied to all the years presented, unless otherwise stated.
The consolidated financial report is a general purpose financial report which has been prepared in accordance with Australian
Accounting Standards and the Corporations Act 2001.
Compliance with IFRS
The consolidated financial report of EGH complies with International Financial Reporting Standards (IFRSs) and
interpretations adopted by the International Accounting Standards Board (IASB).
New, revised and amended Accounting Standards adopted by the Group
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board that are mandatory for the current period. The adoption of these Accounting Standards and
Interpretations did not have any significant impact on the financial performance or position of the Group.
Early adoption of standards
The Group has not elected to apply any pronouncements before their operative date in the annual reporting period beginning
1 July 2016.
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation
of available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss, investment properties
and derivative financial instruments.
CONSOLIDATION
This financial report covers the consolidated entity consisting of Eureka Group Holdings Limited and its controlled entities.
Eureka Group Holdings Limited is the ultimate parent entity.
The consolidated financial statements incorporate the assets and liabilities of all entities controlled by Eureka Group Holdings
Limited as at 30 June 2017 and the results of all controlled entities for the year then ended. The effects of all transactions
between entities in the Group are eliminated in full.
Subsidiaries are entities controlled by the Company. Control exists when the Company is exposed to, or has rights to variable
returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities
of the entity. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account.
The financial statements of subsidiaries are included in the financial report from the date that control commences until the
date that control ceases.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. Refer to the 'business
combinations' accounting policy for further details. A change in ownership interest, without the loss of control, is accounted for
as an equity transaction, where the difference between the consideration transferred and the book value of the share of the
non-controlling interest acquired is recognised directly in equity attributable to the parent.
EGH ANNUAL REPORT 2017
35
35
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling
interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises the
fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or
loss.
BUSINESS COMBINATIONS
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments
or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued
or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the
acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the
proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.
On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, the Group's operating or
accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the Group remeasures its previously held equity interest in the acquiree
at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in
profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes
in the fair value of contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent
consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest
in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the
acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of
the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly
in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement
of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's
previously held equity interest in the acquiree.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional
amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new
information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends
on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
REVENUE RECOGNITION
Rent Revenue
Rent revenue from investment properties is recognised on a straight-line basis over the lease term. Rent not received at
balance date is reflected in the balance sheet as a receivable, or if paid in advance, as deferred revenue. Lease incentives
granted are recognised over the lease term, on a straight-line basis, as a reduction of rent. Rental subsidy receipts from
government bodies are recorded on an accruals basis as an entitlement to this income accrues on the provision of
accommodation.
Management, Property Maintenance, Catering and Service Fees
The Group is entitled to receive a fee from unit owners for managing the units under management services agreements. The
Group also receives a fee from the tenants of the units for the provision of property maintenance, catering and other services.
The Group also provides property consulting services to third parties for agreed fees. Revenue is recognised when the services
are provided.
Interest Revenue
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established. Certain transactions
undertaken involve the exchange of assets. Where an exchange of assets is undertaken which has commercial substance
and appropriate measurement can be made, acquired assets are measured at fair value and assets exchanged are
derecognised at their carrying value. Any differences are recorded in the profit and loss.
36
EGH ANNUAL REPORT 2017
36
2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling
interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises the
fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or
loss.
BUSINESS COMBINATIONS
or other assets are acquired.
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued
or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the
acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the
proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.
On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, the Group's operating or
accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the Group remeasures its previously held equity interest in the acquiree
at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in
profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes
in the fair value of contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent
consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest
in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the
acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of
the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly
in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement
of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's
previously held equity interest in the acquiree.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional
amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new
information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends
on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
REVENUE RECOGNITION
Rent Revenue
accommodation.
are provided.
Interest Revenue
Other revenue
Rent revenue from investment properties is recognised on a straight-line basis over the lease term. Rent not received at
balance date is reflected in the balance sheet as a receivable, or if paid in advance, as deferred revenue. Lease incentives
granted are recognised over the lease term, on a straight-line basis, as a reduction of rent. Rental subsidy receipts from
government bodies are recorded on an accruals basis as an entitlement to this income accrues on the provision of
Management, Property Maintenance, Catering and Service Fees
The Group is entitled to receive a fee from unit owners for managing the units under management services agreements. The
Group also receives a fee from the tenants of the units for the provision of property maintenance, catering and other services.
The Group also provides property consulting services to third parties for agreed fees. Revenue is recognised when the services
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
INCOME TAX
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit and loss except to the
extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not
recognised for the differences relating to investments in subsidiaries to the extent that it is probable that it will not reverse in
the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences
when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax
assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the
deferred tax balances relate to the same taxation authority. A deferred tax asset is recognised to the extent that it is probable
that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be
realised.
TAX CONSOLIDATION
The Company and its wholly-owned Australian resident entities have formed a tax-consolidation group with effect from 1 July
2003 and are therefore taxed as a single entity from that date. The head entity within the tax-consolidation group is Eureka
Group Holdings Limited.
Current tax expense/income, deferred tax liabilities and deferred assets arising from temporary differences of the members of
the tax-consolidation group are recognised in the separate financial statements of the members of the tax-consolidation group
using the ‘separate taxpayer within group’ approach by reference to the carrying amounts of assets and liabilities in the
separate financial statements of each entity and the tax values applying under tax consolidation.
Any current tax liabilities (assets) and deferred tax assets arising from unused tax losses of the subsidiaries is assumed by
the head entity in the tax-consolidation group and are recognised by the Company as amounts payable/(receivable) to/(from)
other entities in the tax-consolidation group in conjunction with any tax funding arrangement amounts (refer below). Any
difference between these amounts is recognised by the Company as an equity contribution or distribution.
The Company recognises deferred tax assets arising from unused tax losses of the tax-consolidation group to the extent that
it is probable that future taxable profits of the tax-consolidation group will be available against which the asset can be utilised.
Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of revised assessments
of the probability of recoverability is recognised by the head entity only.
Nature of Tax Funding Arrangements and Tax Sharing Arrangements
The head entity in conjunction with other members of the tax-consolidation group has entered into a tax funding arrangement
which sets out the funding obligations of members of the tax-consolidation group in respect of tax amounts. The tax funding
arrangements require payments to/from the head entity to the current tax liability/ (asset) assumed by the head entity and any
tax-loss deferred tax asset assumed by the head entity, resulting in the head entity recognising an inter-entity receivable/
(payable) equal in amount to the tax liability/ (asset) assumed. The inter-entity receivables/ (payables) are at call.
Contributions to fund the current tax liabilities are payable as per the tax funding arrangement and reflect the timing of the
head entity’s obligation to make payments for tax liabilities to the relevant authorities.
The head entity, in conjunction with other members of the tax-consolidated group, has also entered into a tax sharing
agreement. The tax sharing agreement provides for the determination of the allocation of income tax liabilities between the
entities should the head entity default on its tax payment obligations.
CASH AND CASH EQUIVALENTS
For the purpose of the statement of cash flows, cash includes cash at bank and on hand as well as highly liquid investments
with short periods to maturity which are readily convertible to cash on hand and are subject to an insignificant risk of changes
in value, net of outstanding bank overdrafts.
Other revenue is recognised when it is received or when the right to receive payment is established. Certain transactions
undertaken involve the exchange of assets. Where an exchange of assets is undertaken which has commercial substance
and appropriate measurement can be made, acquired assets are measured at fair value and assets exchanged are
derecognised at their carrying value. Any differences are recorded in the profit and loss.
TRADE AND OTHER RECEIVABLES
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest
method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.
EGH ANNUAL REPORT 2017
36
EGH ANNUAL REPORT 2017
37
37
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off
by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective
evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant
financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or
delinquency in payments (more than 90 days overdue) are considered indicators that the trade receivable may be impaired.
The amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of
estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are
not discounted if the effect of discounting is immaterial.
Other receivables are recognised at amortised cost, less any provision for impairment.
INVESTMENT PROPERTY
Land and buildings have the function of investment and are regarded as composite assets. In accordance with applicable
accounting standards, the buildings, including plant and equipment, are not depreciated.
Transfers from investment property to inventory are determined by a change of use as evidenced by a start of development
with a view to subsequent sale The fair value of the investment property at the date of transfer becomes the deemed cost of
inventory.
Investment property is initially measured at cost, including transaction costs. Subsequent to initial recognition, investment
properties are stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes
in the fair values of investment properties are recognised in profit or loss in the period in which they arise.
Transfers to and from investment properties to property, plant and equipment are determined by a change in use of owner-
occupation. The fair value on the date of change of use from investment properties to property, plant and equipment are used
as deemed cost for the subsequent accounting. The existing carrying amount of property, plant and equipment is used for the
subsequent accounting cost of investment properties on date of change of use.
Fair value is determined from market based evidence, by an appraisal undertaken by a professionally qualified valuer with
experience in the location, category of the investment property, reputation, independence and whether professional standards
are maintained. It is the Group’s policy to have all investment properties externally valued at intervals of not less than three
years or a third of the properties each year. Internal valuations are undertaken with reference to current market conditions and
available information for those investment properties not externally valued at each reporting date. It is the policy of the Group
to review the fair value of each investment property at each reporting date and to cause investment properties to be revalued
to fair values.
Any gain or loss on disposal of investment property (calculated as the difference between the net proceeds from disposal and
the carrying amount of the item) is recognised in profit or loss.
PROPERTY PLANT & EQUIPMENT
Property plant and equipment is recognised at cost. Depreciation and amortisation is calculated on the straight line (SL) or
diminishing value (DV) basis so as to write off the net cost of each item of property, plant and equipment over its expected
useful life to the Group. Rates used for each class of asset are:
Class
Rate
Method
Plant and equipment
6-33%
SL/DV
Buildings
2.5%
SL
INTANGIBLE ASSETS
Only intangible assets that have been purchased or paid for by the Group are recognised in the accounts. Internally generated
intangibles such as management rights on Communities that the Group has constructed are not recognised in the accounts.
Management rights and letting rights have a finite life and are carried at the lower of cost or recoverable amount. The
management rights and letting rights are amortised using the straight line method over 40 years being the estimated useful
life (for strata-titled villages), or over the period of the management right contract (for single-owner villages).
Rent rolls have a finite life and are carried at the lower of cost or recoverable amount. Rent rolls are amortised using the
straight line method over 15 years being the estimated useful life.
Other intangible assets relate to sundry operational licences. These assets have an indefinite life as their renewal and
maintenance is routine
38
EGH ANNUAL REPORT 2017
38
2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
Notes to the Financial Statements
Notes to the Financial Statements
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off
by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective
evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant
financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or
delinquency in payments (more than 90 days overdue) are considered indicators that the trade receivable may be impaired.
The amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of
estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are
not discounted if the effect of discounting is immaterial.
Other receivables are recognised at amortised cost, less any provision for impairment.
Intangible assets with indefinite useful lives are not amortised, but tested for impairment annually, either individually or at the
cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life
continues to be supportable.
Goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised, instead goodwill is reviewed
for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be
impaired. Goodwill acquired is allocated to each of the cash-generating units expected to benefit from the combination’s
synergies. Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill
relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is
recognised. Impairment losses for goodwill are not subsequently reversed.
INVESTMENT PROPERTY
IMPAIRMENT OF ASSETS
Financial Assets
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A
financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect
on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its
carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An
impairment loss in respect of an available-for-sale financial asset is calculated by reference to its fair value.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are
assessed collectively in groups that share similar credit risk characteristics.
All impairment losses are recognised in profit or loss. Any cumulative loss in respect of an available-for-sale financial asset
previously recognised in equity is reclassified to profit or loss. Any impairment loss is reversed if the reversal can be related
objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost,
the reversal is recognised in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is
recognised directly in other comprehensive income.
Non-Financial Assets
The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether there is
any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. For goodwill and
intangible assets that have indefinite lives, recoverable amount is estimated at each reporting date.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to
sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose
of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating
unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating
units that are expected to benefit from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable
amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units
are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount
of the other assets in the unit (group of units) on a pro rata basis.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has
decreased or no longer exists. Except for goodwill, an impairment loss is reversed if there has been a change in the estimates
used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount
does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment
loss had been recognised.
Only intangible assets that have been purchased or paid for by the Group are recognised in the accounts. Internally generated
intangibles such as management rights on Communities that the Group has constructed are not recognised in the accounts.
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.
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
Land and buildings have the function of investment and are regarded as composite assets. In accordance with applicable
accounting standards, the buildings, including plant and equipment, are not depreciated.
Transfers from investment property to inventory are determined by a change of use as evidenced by a start of development
with a view to subsequent sale The fair value of the investment property at the date of transfer becomes the deemed cost of
inventory.
Investment property is initially measured at cost, including transaction costs. Subsequent to initial recognition, investment
properties are stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes
in the fair values of investment properties are recognised in profit or loss in the period in which they arise.
Transfers to and from investment properties to property, plant and equipment are determined by a change in use of owner-
occupation. The fair value on the date of change of use from investment properties to property, plant and equipment are used
as deemed cost for the subsequent accounting. The existing carrying amount of property, plant and equipment is used for the
subsequent accounting cost of investment properties on date of change of use.
Fair value is determined from market based evidence, by an appraisal undertaken by a professionally qualified valuer with
experience in the location, category of the investment property, reputation, independence and whether professional standards
are maintained. It is the Group’s policy to have all investment properties externally valued at intervals of not less than three
years or a third of the properties each year. Internal valuations are undertaken with reference to current market conditions and
available information for those investment properties not externally valued at each reporting date. It is the policy of the Group
to review the fair value of each investment property at each reporting date and to cause investment properties to be revalued
to fair values.
Any gain or loss on disposal of investment property (calculated as the difference between the net proceeds from disposal and
the carrying amount of the item) is recognised in profit or loss.
PROPERTY PLANT & EQUIPMENT
Property plant and equipment is recognised at cost. Depreciation and amortisation is calculated on the straight line (SL) or
diminishing value (DV) basis so as to write off the net cost of each item of property, plant and equipment over its expected
useful life to the Group. Rates used for each class of asset are:
Class
Rate
Method
Plant and equipment
6-33%
SL/DV
Buildings
2.5%
SL
INTANGIBLE ASSETS
Management rights and letting rights have a finite life and are carried at the lower of cost or recoverable amount. The
management rights and letting rights are amortised using the straight line method over 40 years being the estimated useful
life (for strata-titled villages), or over the period of the management right contract (for single-owner villages).
Rent rolls have a finite life and are carried at the lower of cost or recoverable amount. Rent rolls are amortised using the
straight line method over 15 years being the estimated useful life.
Other intangible assets relate to sundry operational licences. These assets have an indefinite life as their renewal and
maintenance is routine
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 including investment properties, 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.
EGH ANNUAL REPORT 2017
38
EGH ANNUAL REPORT 2017
39
39
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers
between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value
measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not
available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and
reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is
undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable,
with external sources of data.
FINANCIAL ASSETS AND LIABILITIES
A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial
assets are derecognised if the Group’s contractual rights to the cash flows from the financial asset expire or if the Group
transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Regular
purchases and sales of financial assets are accounted for at trade date i.e. the date that the Group commits itself to purchase
or sell the asset. Financial liabilities are derecognised if the Group’s obligation specified in the contract expire or are discharged
or cancelled.
An instrument is classified as at fair value through profit and loss if it is held for trading or is designated as such upon initial
recognition. Financial instruments are designated at fair value through profit or loss if the group manages such investments
and makes purchase and sale decisions based on their fair value in accordance with the Group’s documented risk
management or investment strategy. Upon initial recognition, attributable transaction costs are recognised in profit or loss
when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes are recognised
in profit or loss.
Investments are designated as available-for-sale financial assets if they do not have fixed maturities and fixed or determinable
payments, and management intends to hold them for the medium to long-term. Financial assets that are not classified into
any of the other categories (at fair value through profit or loss, loans and receivables or held-to-maturity investments) are also
included in the available-for-sale category.
NON-CURRENT ASSETS (OR DISPOSAL GROUPS) CLASSIFIED AS HELD FOR SALE
Non-current assets and assets of disposal groups are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continuing use. They are measured at the lower of their carrying
amount and fair value less costs to sell. For non-current assets or assets of disposal groups to be classified as held for sale,
they must be available for immediate sale in their present condition and their sale must be highly probable.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less
costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group),
but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the
date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.
Non-current assets (including those that are part of the disposal group) are not depreciated or amortised while they are
classified as held for sale. Non-current assets classified as held for sale and the assets of a disposal group classified as held
for sale are presented separately from the other assets in the statement of financial position. The liabilities of a disposal group
classified as held for sale are presented separately from other liabilities in the statement of financial position.
TRADE AND OTHER PAYABLES
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and
which are unpaid at that date. The amounts are unsecured and are generally settled within 30-60 days.
BORROWINGS
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in
profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable
that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised
over the period of the facility to which is relates.
The fair value of the liability portion of a convertible bond is determined using a market interest rate for an equivalent non-
convertible bond. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion or maturity
40
EGH ANNUAL REPORT 2017
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2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers
between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value
measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not
available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and
reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is
undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable,
with external sources of data.
FINANCIAL ASSETS AND LIABILITIES
A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial
assets are derecognised if the Group’s contractual rights to the cash flows from the financial asset expire or if the Group
transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Regular
purchases and sales of financial assets are accounted for at trade date i.e. the date that the Group commits itself to purchase
or sell the asset. Financial liabilities are derecognised if the Group’s obligation specified in the contract expire or are discharged
or cancelled.
in profit or loss.
An instrument is classified as at fair value through profit and loss if it is held for trading or is designated as such upon initial
recognition. Financial instruments are designated at fair value through profit or loss if the group manages such investments
and makes purchase and sale decisions based on their fair value in accordance with the Group’s documented risk
management or investment strategy. Upon initial recognition, attributable transaction costs are recognised in profit or loss
when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes are recognised
Investments are designated as available-for-sale financial assets if they do not have fixed maturities and fixed or determinable
payments, and management intends to hold them for the medium to long-term. Financial assets that are not classified into
any of the other categories (at fair value through profit or loss, loans and receivables or held-to-maturity investments) are also
included in the available-for-sale category.
NON-CURRENT ASSETS (OR DISPOSAL GROUPS) CLASSIFIED AS HELD FOR SALE
Non-current assets and assets of disposal groups are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continuing use. They are measured at the lower of their carrying
amount and fair value less costs to sell. For non-current assets or assets of disposal groups to be classified as held for sale,
they must be available for immediate sale in their present condition and their sale must be highly probable.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less
costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group),
but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the
date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.
Non-current assets (including those that are part of the disposal group) are not depreciated or amortised while they are
classified as held for sale. Non-current assets classified as held for sale and the assets of a disposal group classified as held
for sale are presented separately from the other assets in the statement of financial position. The liabilities of a disposal group
classified as held for sale are presented separately from other liabilities in the statement of financial position.
TRADE AND OTHER PAYABLES
BORROWINGS
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and
which are unpaid at that date. The amounts are unsecured and are generally settled within 30-60 days.
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in
profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable
that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised
over the period of the facility to which is relates.
The fair value of the liability portion of a convertible bond is determined using a market interest rate for an equivalent non-
convertible bond. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion or maturity
EGH ANNUAL REPORT 2017
40
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
of the bonds. The remainder of the proceeds is allocated to the conversion option. This is recognised and included in
shareholders’ equity, net of income tax effects.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or
expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another
party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or
loss as other income or finance costs.
Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor to extinguish all
or part of the liability (debt for equity swap), a gain or loss is recognised in profit or loss, which is measured as the difference
between the carrying amount of the financial liability and the fair value of the equity instruments issued.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for
at least 12 months after the reporting period.
EMPLOYEE BENEFITS
Short-term Employee Benefits
Liabilities for wages and salaries, annual leave and long service leave expected to be settled within 12 months of the reporting
date are recognised in current liabilities, and are measured as the amounts expected to be paid when the liabilities are settled
inclusive of on-costs. Sick leave is non-vesting and is expensed as paid.
Long-term Employee Benefits
The liabilities for annual leave and long service leave expected to not be settled within 12 months of the reporting date are
recognised in non-current liabilities, provided there is an unconditional right to defer settlement of the liability. The liability is
measured as the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date. Consideration is given for expected future wage and salary levels, experience of employee departures and
periods of service. Expected future payments are discounted using market yields as at the reporting date on corporate bond
rates with the terms to maturity that match, as closely as possible, the estimated future cash outflows.
PROVISIONS
Provisions are recognised when the Group has a present obligation, the future sacrifice of economic benefits is probable, and
the amount of the provision can be measured reliably.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at
reporting date, taking into account the risks and uncertainties surrounding the obligation.
RETIREMENT VILLAGE RESIDENT LOANS
These loans, which are repayable on the departure of the resident, are classified as financial liabilities at fair value through
profit and loss with resulting fair value adjustments recognised in the income statement. The fair value of the obligation is
measured as the ingoing contribution plus the resident’s share of capital appreciation to reporting date. Although the
expected average residency term is between one to ten years, these obligations are classified as current liabilities, as
required by Accounting Standards, because the Group does not have an unconditional right to defer settlement to more than
twelve months after reporting date.
This liability is stated net of accrued deferred management fees at reporting date, because the Group’s contracts with
residents require net settlement of those obligations.
FINANCE COSTS
Finance costs include interest on short-term and long-term borrowings, amortisation of discounts or premiums relating to
borrowings, amortisation of ancillary costs in connection with the arrangement of borrowings and finance lease charges.
Finance costs incurred whilst qualifying assets are under construction are capitalised in the period in which they are incurred.
Once each project is completed and ready for sale, subsequent finance costs are expensed when incurred. All other finance
costs are expensed when incurred.
GOODS AND SERVICES TAX
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount
of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or
as part of an item of expense.
EGH ANNUAL REPORT 2017
41
41
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
Receivables and payables are recognised inclusive of GST. The net amount of GST recoverable from, or payable to, the
taxation authority is included as part of receivables or payables.
LEASES
Leases of property, plant and equipment where the group, as lessee, has substantially all the risks and rewards of ownership
are classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property
or, if lower the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges,
are included in financial liabilities. Each lease payment is allocated between the liability and finance cost. The finance cost
is charged to the profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over
the asset’s useful life or over the shorter of the asset’s useful life and the lease term if there is no reasonable certainty that the
group will obtain ownership at the end of the lease term.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the group as lessee are
classified as operating leases. Operating lease payments are recognised as an expense on a straight line basis over the
lease term.
DIVIDENDS
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of
the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
CAPITAL MANAGEMENT
The Group considers its share capital and accumulated losses as capital. When managing capital, the objective is to ensure
the Group continues as a going concern, as well as to maintain optimum returns to shareholders and benefits for other
stakeholders. The Group also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity.
The Group does not have any specific capital targets and nor is it subject to any external capital restrictions. The Board and
Senior Management meet regularly and review in detail the current cash position and cash flow forecasts having regard to
planned expansions and take the necessary action to ensure sufficient funds are available.
CONTRIBUTED EQUITY
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.
When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable
costs is recognised as a deduction from equity.
EARNINGS PER SHARE
Basic Earnings Per Share
Basic earnings per share is calculated by dividing the profit attributable to the owners of the Company, 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.
OPTIONS OVER PROPERTY
Options over property are initially measured at cost. Subsequent to acquisition options continue to be recorded at cost,
however are tested for impairment on an annual basis. Impairment is tested by reference to the assessed value of the
underlying property assets or final cash settlement alternatives. Impairment losses are recorded as incurred.
USE OF JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may
differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised and in any future periods affected.
42
EGH ANNUAL REPORT 2017
42
2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
Notes to the Financial Statements
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
LEASES
Leases of property, plant and equipment where the group, as lessee, has substantially all the risks and rewards of ownership
are classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property
or, if lower the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges,
are included in financial liabilities. Each lease payment is allocated between the liability and finance cost. The finance cost
is charged to the profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over
the asset’s useful life or over the shorter of the asset’s useful life and the lease term if there is no reasonable certainty that the
group will obtain ownership at the end of the lease term.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the group as lessee are
classified as operating leases. Operating lease payments are recognised as an expense on a straight line basis over the
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of
the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
The Group considers its share capital and accumulated losses as capital. When managing capital, the objective is to ensure
the Group continues as a going concern, as well as to maintain optimum returns to shareholders and benefits for other
stakeholders. The Group also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity.
The Group does not have any specific capital targets and nor is it subject to any external capital restrictions. The Board and
Senior Management meet regularly and review in detail the current cash position and cash flow forecasts having regard to
planned expansions and take the necessary action to ensure sufficient funds are available.
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.
When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable
costs is recognised as a deduction from equity.
lease term.
DIVIDENDS
CAPITAL MANAGEMENT
CONTRIBUTED EQUITY
EARNINGS PER SHARE
Basic Earnings Per Share
Basic earnings per share is calculated by dividing the profit attributable to the owners of the Company, 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.
OPTIONS OVER PROPERTY
Options over property are initially measured at cost. Subsequent to acquisition options continue to be recorded at cost,
however are tested for impairment on an annual basis. Impairment is tested by reference to the assessed value of the
underlying property assets or final cash settlement alternatives. Impairment losses are recorded as incurred.
USE OF JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may
differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised and in any future periods affected.
Receivables and payables are recognised inclusive of GST. The net amount of GST recoverable from, or payable to, the
taxation authority is included as part of receivables or payables.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting
policies that have most significant effect on the amount recognised in the financial statements are described as follows:
Goodwill
The Group tests annually, or more frequently, if events or changes in circumstances indicate impairment on whether goodwill
has suffered any impairment. The recoverable amounts of cash-generating units have been determined based on value-in-
use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current
cost of capital and growth rates of the estimated future cash flows. Refer to note 14 for further information.
Amortisation of Management Rights
Management rights are amortised over either 40 years (for strata-titled villages) or the period of the management right contract
(for single-owner villages).
For strata-titled villages where management rights are attached, the Group amortises its management rights over a period of
40 years (being the estimated useful life). The amortisation period used reflects the pattern in which the asset’s future
economic benefits are expected to be consumed by the Group. In determining the useful life, the Group considered the
expected usage of the assets, the legal rights over the asset and the renewal period of the management right agreements. The
management rights are attached to each individual village’s property and include options or the ability to renew the
contract. Taking these points into consideration, the Directors believe the amortisation period should be similar to the life of
the property rather than agreement period.
For Single-owner villages where management rights are attached, its management rights are amortised over the life of the
contract. This is because Eureka has materially less control over future contract renewals than it does with the strata-titled
villages. Eureka considers that it has materially less control over future contract renewals in single-owner villages primarily
because: (a) it does not own or have any sort of tenure in respect of the managers unit; and (b) a single vote of the owner can
elect to not renew Eureka’s management rights contract.
Investment Property – Classification
The Group classifies property as investment property when it meets the following key criteria:
•
•
The property is held by the Group to generate long term investment growth and ongoing rental returns; and
Ancillary services are insignificant to the arrangement as a whole.
Associated with these properties are insignificant ancillary services – principally the provision of food services to residents.
Judgement is required as to whether the ancillary services are significant. Management has determined that the ancillary
services are not significant by comparing the fair value of the ancillary services to the total income generated from the property.
In addition, qualitative factors have been considered as part of the assessment of ancillary services including both operational
and legislative considerations. An assessment of the qualitative and economic factors associated with these services has
been made and the ancillary services have been concluded not to be significant and hence property has been recorded as
investment property.
Properties that do not meet this criteria are classified as property, plant and equipment.
Investment Property – Measurement
The Group carries its investment property at fair value, with changes in fair value being recognised in profit or loss. The best
evidence of fair value is current prices in an active market for similar investment properties. Where such information is not
available, the Group determines a property’s value within a range of reasonable fair value estimates. In making its judgment,
the Group considers information from a variety of sources including:
a) Acquisition price paid for the property;
b) Recent prices of similar properties with adjustments to reflect any changes in economic conditions since the date of
the transactions that occurred at those prices; and
c) Capitalised income projections based upon a property’s estimated net market income, which is assumed to be a
level annuity in perpetuity and capitalisation rate derived from analysis of market evidence.
Fair value measurement hierarchy
The consolidated entity is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy,
based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices
(unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2:
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly;
and Level 3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant
to fair value and therefore which category the asset or liability is placed in can be subjective.
The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These include
discounted cash flow analysis or the use of observable inputs that require significant adjustments based on unobservable
inputs.
EGH ANNUAL REPORT 2017
42
EGH ANNUAL REPORT 2017
43
43
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite life intangible
assets at each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that may
lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value
less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.
Recovery of Deferred Tax Assets
Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that future
taxable amounts will be available to utilise those temporary difference and tax losses.
Recovery of Other Receivables
At each reporting date the Group assesses the recoverability of other receivables and loans by reference to the expected
future cash flows and credit worthiness of the borrower. Security provided is also considered.
PARENT ENTITY
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supplementary
information about the parent entity is disclosed in Note 29. The accounting policies of the parent entity are consistent with
those of the Group, as disclosed above, except for the following:
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Investments in associates are accounted for at cost, less any impairment, in the parent entity.
Financial Guarantees
Where the parent entity has provided financial guarantees in relation to loans and payables of subsidiaries for no
compensation, the fair values of these guarantees are accounted for as contributions and recognised as part of the cost of the
investment.
COMPARATIVES
Where necessary, comparative information has been reclassified to achieve consistency in disclosure with current financial
year amounts and other disclosures.
NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2017 reporting
periods. Eureka Group Holdings Limited assessment of the impact of these new standards and interpretations is set out below.
AASB 9 Financial Instruments
AASB 9 Financial Instruments includes requirements for the classification, measurement and de-recognition of financial
assets. These requirements improve and simplify the approach for classification and measurement of financial assets
compared with the requirements of AASB 139. The standard is not applicable to the Group until 1 July 2018 but is available
for early adoption. The Group is currently assessing the impact of the new guidance.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all existing
revenue recognition accounting standards and interpretations. The standard introduces five step model and provides a single
standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. For goods, the performance obligation would be satisfied when the
customer obtains control of the goods. For services, the performance obligation is satisfied when the service has been
provided, typically for promises to transfer services to customers. For performance obligations satisfied over time, an entity
would select an appropriate measure of progress to determine how much revenue should be recognised as the performance
obligation is satisfied. Sufficient quantitative and qualitative disclosure is required to enable users to understand the contracts
with customers; the significant judgments made in applying the guidance to those contracts; and any assets recognised from
the costs to obtain or fulfil a contract with a customer. The consolidated entity will conduct impact assessment during the 2018
financial year. The impact will be quantified when the assessment has been completed. As a result of the complete
assessment, the result and impact on revenue if any, will invariably impact the transition method adopted.
44
EGH ANNUAL REPORT 2017
44
2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite life intangible
assets at each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that may
lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value
less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.
Recovery of Deferred Tax Assets
Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that future
taxable amounts will be available to utilise those temporary difference and tax losses.
Recovery of Other Receivables
At each reporting date the Group assesses the recoverability of other receivables and loans by reference to the expected
future cash flows and credit worthiness of the borrower. Security provided is also considered.
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supplementary
information about the parent entity is disclosed in Note 29. The accounting policies of the parent entity are consistent with
those of the Group, as disclosed above, except for the following:
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Investments in associates are accounted for at cost, less any impairment, in the parent entity.
Where the parent entity has provided financial guarantees in relation to loans and payables of subsidiaries for no
compensation, the fair values of these guarantees are accounted for as contributions and recognised as part of the cost of the
PARENT ENTITY
Financial Guarantees
investment.
COMPARATIVES
Where necessary, comparative information has been reclassified to achieve consistency in disclosure with current financial
year amounts and other disclosures.
NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2017 reporting
periods. Eureka Group Holdings Limited assessment of the impact of these new standards and interpretations is set out below.
AASB 9 Financial Instruments
AASB 9 Financial Instruments includes requirements for the classification, measurement and de-recognition of financial
assets. These requirements improve and simplify the approach for classification and measurement of financial assets
compared with the requirements of AASB 139. The standard is not applicable to the Group until 1 July 2018 but is available
for early adoption. The Group is currently assessing the impact of the new guidance.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all existing
revenue recognition accounting standards and interpretations. The standard introduces five step model and provides a single
standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. For goods, the performance obligation would be satisfied when the
customer obtains control of the goods. For services, the performance obligation is satisfied when the service has been
provided, typically for promises to transfer services to customers. For performance obligations satisfied over time, an entity
would select an appropriate measure of progress to determine how much revenue should be recognised as the performance
obligation is satisfied. Sufficient quantitative and qualitative disclosure is required to enable users to understand the contracts
with customers; the significant judgments made in applying the guidance to those contracts; and any assets recognised from
the costs to obtain or fulfil a contract with a customer. The consolidated entity will conduct impact assessment during the 2018
financial year. The impact will be quantified when the assessment has been completed. As a result of the complete
assessment, the result and impact on revenue if any, will invariably impact the transition method adopted.
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
AASB 16 Leases
The new standard will be effective for annual periods beginning on or after 1 January 2019. Early application is permitted,
provided the new revenue standard, AASB 15 Revenue from Contracts with Customers, has been applied, or is applied at the
same date as AASB 16. The key features of AASB 16 are as follows:
Lessee accounting
Lessees are required to recognise assets and liabilities for all leases with a term of more than 12 months, unless the
underlying asset is of low value.
A lessee measures right-of-use assets similarly to other non-financial assets and lease liabilities similarly to other
financial liabilities.
Assets and liabilities arising from a lease are initially measured on a present value basis. The measurement includes
non-cancellable lease payments (including inflation-linked payments), and also includes payments to be made in
optional periods if the lessee is reasonably certain to exercise an option to extend the lease, or not to exercise an option
to terminate the lease.
AASB 16 contains disclosure requirements for lessees.
The consolidated entity will adopt this standard from 1 July 2019 but the impact of its adoption is yet to be assessed by the
Group.
3. REVENUE
Revenue
Catering – managed properties
Catering – owned properties
Service fees
Property maintenance and consulting services
Rental income
Other revenue
Other Income
Interest revenue
Net gain revaluation of investment property to fair value
Gain on sale of management rights
Insurance claim revenue
Other income
Consolidated
30 June 2017
$’000
30 June 2016
$’000
1,992
2,146
1,842
1,833
14,826
1,414
24,053
172
1,046
(10)
1,007
205
2,420
3,243
1,338
1,312
2,992
9,735
730
19,350
314
4,041
450
-
-
4,805
EGH ANNUAL REPORT 2017
44
EGH ANNUAL REPORT 2017
45
45
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
4. ITEMS INCLUDED IN PROFIT/(LOSS)
Consolidated
30 June 2017
$’000
30 June 2016
$’000
Profit/(loss) before income tax expense includes the following specific items:
Flood damage expense
519
-
Rental expense relating to operating leases
- Minimum lease payments
Finance cost
- Interest and finance charges paid/payable for financial liabilities not at fair value
through profit or loss
Total finance cost
Amortisation
- Management rights
- Rent rolls
- Website
Total amortisation
Depreciation
- Plant & equipment
- Buildings
- Motor vehicles
Total depreciation
Defined contribution superannuation expense
201
255
2,606
2,606
1,733
1,733
137
3
2
142
101
17
11
129
421
151
3
1
155
86
20
7
113
238
46
EGH ANNUAL REPORT 2017
46
2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
5. INCOME TAX
The major components of income tax expense for the years ended
30 June 2017 and 2016 are:
Consolidated Statement of Profit or Loss
Current income tax
Deferred income tax
Income tax expense reported in the Statement of Profit or Loss
A reconciliation of tax expense and the accounting profit multiplied by the
applicable tax rate of 30% presents as follows:
Accounting profit before tax
Income tax calculated at 30%
Tax effect of permanent differences
Recognition of deferred tax assets not previously recognised
Income tax expense reported in the Statement of Profit or Loss
6. TRADE AND OTHER RECEIVABLES
Trade debtors (i)
Other debtors
Financing extended (i)
Provision for impairment
Consolidated
30 June 2017
$’000
30 June 2016
$’000
-
-
-
-
-
-
6,538
10,427
1,961
3,140
1
(1,962)
-
1
(3,141)
-
382
400
1,939
(89)
2,632
2,102
327
1,076
(98)
3,407
(i) Refer to Note 8 – amounts previously classified as trade debtors and financing extended were transferred to other non-
current assets upon execution of the agreement disclosed in Note 8 between the Group and the parties to these amounts.
The amount transferred was $3 million during year ended 30 June 2017.
Trade receivables are non-interest bearing unless otherwise stated, and are generally on 30 day terms.
The amounts advanced are secured over assets of the third party.
7.
INVENTORIES
Catering inventory – at cost
Terranora units
7
7,642
7,649
29
6,271
6,300
The Terranora units transferred from investment property in 2016 were recognised at the date of transfer at fair value which,
as inventory, is considered deemed cost. The costs of additional development are capitalised to the inventory as incurred.
Inventory is recorded at the lower of cost and net realisable value. No valuation adjustments were required at 30 June 2017.
The inventory is expected to be realised within 12 months via sales to third parties.
EGH ANNUAL REPORT 2017
47
47
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
8. OTHER ASSETS
Current
Deposits
Prepayments and other assets (iii)
Capital replacement funds (ii)
Non-current
Other (i)
Consolidated
30 June 2017
$’000
30 June 2016
$’000
204
1,419
-
1,623
3,000
3,000
4
221
621
846
-
-
(i) The Group has acquired by way of a call option an equitable interest in land at Couran Cove. The option has a 3 year life.
The option is secured by registered mortgage over land assets at Couran Cove subject to the option and additional land
assets.
The land which is the subject of the option has a development approval for 60 lots/cabins and up to 120 tenancies. The land
is adjacent to the 29 cabins already owned by the Group at Couran Cove. The option is exercisable individually for up to 60
lots during the option period. At the conclusion of the three year term, for any lots for which an option has not been exercised,
the Group will receive a settlement in cash. Settlement will be based on the number of unexercised lots as a % of the 60 lots,
applied to a $3.0 million value.
The option was acquired on 31 December 2016 for $3.0 million and the nature of the asset is an Other non-current asset
which is measured at cost. At 30 June 2017, the directors valued the underlying land asset at $3.0 million which supports the
carrying amount of the asset.
The acquisition of the option described above for $3.0 million was in lieu of the receipt of cash for the settlement of consultancy
fees, trade and other loan amounts as disclosed in Note 6. If cash settlement had been received for the amounts receivable
and then cash paid for the option asset acquired, the reported cash receipts from customers and operating cash flows would
have increased by $2.67 million and repayments for loans provided would have increased by $0.33 million. Corresponding
increases would have been shown in net cash outflows for investing activities for the option purchase.
The Group has completed design and pricing for a development on the land and may exercise its option and commence
construction on the land of a senior’s rental village.
As part of this transaction, the Group has also retained the upside potential of this asset by having been granted an entitlement
right to 30% of the proceeds of the sale of certain Couran Cove management and infrastructure rights, if sold in the next 3
years by the current owner. This entitlement is secured by a specific charge over the management and infrastructure rights
and a general security agreement over the entity that owns the rights. The Directors have placed no value on this entitlement
as receipt of any benefit is dependent on the current owner taking a voluntary action to sell these rights. If the management
and infrastructure rights are not sold, the Group’s entitlement to receive 30% of the sale proceeds expires.
(ii) A statutory charge, imposed under the Retirement Villages Act 1999 (Qld), exists over all amounts held in capital
replacement funds, which restricts the use for which these funds can be applied. These amounts were utilised in the period to
satisfy capital replacement obligations.
(iii) Amounts included relate to prepaid expenses, deposits for assets and other operational assets used in ordinary business
activities.
48
EGH ANNUAL REPORT 2017
48
2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
8. OTHER ASSETS
Current
Deposits
Prepayments and other assets (iii)
Capital replacement funds (ii)
Non-current
Other (i)
assets.
Consolidated
30 June 2017
30 June 2016
$’000
$’000
204
1,419
-
1,623
3,000
3,000
4
221
621
846
-
-
(i) The Group has acquired by way of a call option an equitable interest in land at Couran Cove. The option has a 3 year life.
The option is secured by registered mortgage over land assets at Couran Cove subject to the option and additional land
The land which is the subject of the option has a development approval for 60 lots/cabins and up to 120 tenancies. The land
is adjacent to the 29 cabins already owned by the Group at Couran Cove. The option is exercisable individually for up to 60
lots during the option period. At the conclusion of the three year term, for any lots for which an option has not been exercised,
applied to a $3.0 million value.
carrying amount of the asset.
The option was acquired on 31 December 2016 for $3.0 million and the nature of the asset is an Other non-current asset
which is measured at cost. At 30 June 2017, the directors valued the underlying land asset at $3.0 million which supports the
The acquisition of the option described above for $3.0 million was in lieu of the receipt of cash for the settlement of consultancy
fees, trade and other loan amounts as disclosed in Note 6. If cash settlement had been received for the amounts receivable
and then cash paid for the option asset acquired, the reported cash receipts from customers and operating cash flows would
have increased by $2.67 million and repayments for loans provided would have increased by $0.33 million. Corresponding
increases would have been shown in net cash outflows for investing activities for the option purchase.
The Group has completed design and pricing for a development on the land and may exercise its option and commence
construction on the land of a senior’s rental village.
As part of this transaction, the Group has also retained the upside potential of this asset by having been granted an entitlement
right to 30% of the proceeds of the sale of certain Couran Cove management and infrastructure rights, if sold in the next 3
years by the current owner. This entitlement is secured by a specific charge over the management and infrastructure rights
and a general security agreement over the entity that owns the rights. The Directors have placed no value on this entitlement
as receipt of any benefit is dependent on the current owner taking a voluntary action to sell these rights. If the management
and infrastructure rights are not sold, the Group’s entitlement to receive 30% of the sale proceeds expires.
(ii) A statutory charge, imposed under the Retirement Villages Act 1999 (Qld), exists over all amounts held in capital
replacement funds, which restricts the use for which these funds can be applied. These amounts were utilised in the period to
satisfy capital replacement obligations.
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
9. DEFERRED TAX ASSETS AND LIABILITIES
Recognised in the Statement of Financial Position
Deferred tax assets
Tax losses
Deferred tax liabilities
Difference in depreciation for tax and accounting
Intangible assets
Investment properties
Net (assessable) and deductible differences on sundry items
Net deferred tax assets
Not recognised in the Statement of Financial Position
Unrecognised deferred tax assets
Tax losses
Net (assessable) and deductible differences on sundry items
the Group will receive a settlement in cash. Settlement will be based on the number of unexercised lots as a % of the 60 lots,
Net unrecognised deferred tax assets
Reconciliation of Unrecognised tax balances
Opening unrecognised amounts
Recognition of temporary differences
Recognition and use of tax losses
Adjustment to prior period balances
Total movement
Closing balance
Consolidated
30 June 2017
$’000
30 June 2016
$’000
4,741
2,812
(257)
-
(4,271)
(213)
-
3,968
-
3,968
6,589
-
(2,621)
-
(2,621)
3,968
(187)
-
(2,869)
244
-
6,589
-
6,589
9,412
-
(3,260)
437
(2,823)
6,589
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not
been recognised in respect of these items until it is probable that future taxable profits will be available against which the
Group can utilise these benefits. The benefits of the Group’s recognised and unrecognised tax losses will only be realised if
(a) The Group continues to meet the requirements of applicable tax laws to allow the losses to be carried forward and utilised;
(b) the Group earns taxable income in future periods; and (c) Applicable tax laws are not changed, causing the losses to be
unavailable.
10. LOANS RECEIVABLE
(iii) Amounts included relate to prepaid expenses, deposits for assets and other operational assets used in ordinary business
Loans – vendor finance
activities.
EGH ANNUAL REPORT 2017
48
Current
Non-current
Consolidated
30 June 2017
$’000
30 June 2016
$’000
577
577
76
501
577
605
605
66
539
605
EGH ANNUAL REPORT 2017
49
49
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
The Group acquired a loan book as part of the purchase of Elizabeth Vale Scenic Village Pty Ltd. Security for the loan consists
of a first ranking mortgage over the property to which the loan pertains.
Vendor finance loans have maturity dates of between 6.5 and 8.1 years and interest is payable on these loans at a rate of
between 5.50%-6.25%.
11. INVESTMENT IN SUBSIDIARIES
Equity Holding
Country of
Incorporation
30 June 2017
%
30 June 2016
%
Compton's Caboolture Pty Ltd
Compton's Villages Australia Unit Trust
Easy Living (Bundaberg) Unit Trust
Easy Living Unit Trust
ECG No. 1 Pty Ltd
EGL Finance Pty Ltd
Elizabeth Vale Scenic Village Pty Ltd
Eureka Care Communities Pty Ltd
Eureka Care Communities (Morphetville) Pty Ltd
Eureka Care Communities (Mount Gambier) Pty Ltd
Eureka Care Communities (Mount Gambier 2) Pty Ltd
Eureka Care Communities (Mount Gambier 3) Pty Ltd
Eureka Care Communities (Salisbury) Pty Ltd
Eureka Care Communities (Wynnum) Pty Ltd
Eureka Care Communities Unit Trust
Eureka Cascade Gardens (Albert Gardens) Pty Ltd
Eureka Cascade Gardens (Ayr) Pty Ltd
Eureka Cascade Gardens (Belgian Gardens) Pty Ltd
Eureka Cascade Gardens (Bowen) Pty Ltd
Eureka Cascade Gardens (Broken Hill) Pty Ltd
Eureka Cascade Gardens (Cairns) Pty Ltd
Eureka Cascade Gardens (Couran Cove) Pty Ltd
Eureka Cascade Gardens (Gladstone) Pty Ltd
Eureka Cascade Gardens (Lismore) Pty Ltd
Eureka Cascade Gardens (Margate) Pty Ltd
Eureka Cascade Gardens (Orange) Pty Ltd
Eureka Cascade Gardens (Southport) Pty Ltd
Eureka Cascade Gardens (Tivoli) Pty Ltd
Eureka Cascade Gardens (Townsville) Pty Ltd
Eureka Group Care Pty Ltd
Eureka Property Pty Ltd
Eureka Easy Living Pty Ltd
Eureka Whitsunday Pty Ltd
Fig Investments Pty Ltd
Rockham Two Pty Ltd
Rockham Unit Trust
SCV Leasing Pty Ltd
SCV Manager Pty Ltd
SCV No. 1 Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
100%
100%
-
100%
100%
-
100%
100%
100%
100%
-
-
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
50
EGH ANNUAL REPORT 2017
50
2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
The Group acquired a loan book as part of the purchase of Elizabeth Vale Scenic Village Pty Ltd. Security for the loan consists
of a first ranking mortgage over the property to which the loan pertains.
Vendor finance loans have maturity dates of between 6.5 and 8.1 years and interest is payable on these loans at a rate of
There are no significant restrictions on the Company’s ability to access or use the assets and settle the liabilities of the Group.
All new entities in the period were newly incorporated by the Group to purchase investment property assets and were not
acquired in a business combination.
Equity Holding
Country of
30 June 2017
30 June 2016
Incorporation
%
Consolidated
30 June 2017
$’000
30 June 2016
$’000
Investment properties at fair value
100,666
86,472
12. INVESTMENT PROPERTY
Movements in investment properties:
Balance at beginning of reporting period
Acquisitions
Disposals
Subsequent expenditure
Transfer to inventory
Net increment due to fair value adjustment
Balance at end of reporting period
86,472
9,029
(171)
4,290
-
1,046
100,666
39,689
48,235
-
778
(6,271)
4,041
86,472
The Group’s investment properties are shown individually in the table below. The investments consist of twenty six retirement
village assets along with associated manager’s units and other rental units. The Group considers their investments reside in
one class of asset – Seniors Rental Villages.
Independent valuations have been received during the current period for 35% of the portfolio. At 30 June 2017, the Group
undertook a review of the fair value of all investment properties held and as shown in the table above, recorded an increment
due to fair value adjustment. This adjustment related to all assets in the asset class and was based on inputs and assumptions
disclosed in Note 21.
The net change in fair value is recognised in profit or loss as net gain/(loss) on change in fair value of investment properties.
Fair value hierarchy disclosures for investment properties have been provided in Note 21.
Amounts recognised in profit or loss for investment properties:
Rental income
Direct operating expenses generating rental income
Net gain revaluation of investment property to fair value
Consolidated
30 June 2017
$’000
30 June 2016
$’000
14,826
(10,630)
1,046
9,735
(6,088)
4,041
The Group has no restrictions on the realisability of its investment properties and no contractual obligations to either purchase,
construct or develop investment properties or for repairs, maintenance and enhancements. Certain assets are however
pledged as security for borrowings – Refer to note 17(a).
EGH ANNUAL REPORT 2017
50
EGH ANNUAL REPORT 2017
51
51
between 5.50%-6.25%.
11. INVESTMENT IN SUBSIDIARIES
Compton's Caboolture Pty Ltd
Compton's Villages Australia Unit Trust
Easy Living (Bundaberg) Unit Trust
Easy Living Unit Trust
ECG No. 1 Pty Ltd
EGL Finance Pty Ltd
Elizabeth Vale Scenic Village Pty Ltd
Eureka Care Communities Pty Ltd
Eureka Care Communities (Morphetville) Pty Ltd
Eureka Care Communities (Mount Gambier) Pty Ltd
Eureka Care Communities (Mount Gambier 2) Pty Ltd
Eureka Care Communities (Mount Gambier 3) Pty Ltd
Eureka Care Communities (Salisbury) Pty Ltd
Eureka Care Communities (Wynnum) Pty Ltd
Eureka Care Communities Unit Trust
Eureka Cascade Gardens (Albert Gardens) Pty Ltd
Eureka Cascade Gardens (Ayr) Pty Ltd
Eureka Cascade Gardens (Belgian Gardens) Pty Ltd
Eureka Cascade Gardens (Bowen) Pty Ltd
Eureka Cascade Gardens (Broken Hill) Pty Ltd
Eureka Cascade Gardens (Cairns) Pty Ltd
Eureka Cascade Gardens (Couran Cove) Pty Ltd
Eureka Cascade Gardens (Gladstone) Pty Ltd
Eureka Cascade Gardens (Lismore) Pty Ltd
Eureka Cascade Gardens (Margate) Pty Ltd
Eureka Cascade Gardens (Orange) Pty Ltd
Eureka Cascade Gardens (Southport) Pty Ltd
Eureka Cascade Gardens (Tivoli) Pty Ltd
Eureka Cascade Gardens (Townsville) Pty Ltd
Eureka Group Care Pty Ltd
Eureka Property Pty Ltd
Eureka Easy Living Pty Ltd
Eureka Whitsunday Pty Ltd
Fig Investments Pty Ltd
Rockham Two Pty Ltd
Rockham Unit Trust
SCV Leasing Pty Ltd
SCV Manager Pty Ltd
SCV No. 1 Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
Details of investment properties are as follows:
Property
Location
Acquisition
date
Carrying
amount
Carrying
amount
30 Jun 17
30 Jun 16
$’000
$’000
92 Primrose Street Belgian Gardens
Belgian Gardens QLD
Jun-16
1,000
61 Marana Street Bilambil Heights
Bilambil Heights NSW
Dec-15
2,700
Bowen Village
Broken Hill Village
Avenell Village on Vasey Bundaberg
Lot 21 134-136 King Street Caboolture
Bowen QLD
Broken Hill NSW
Bundaberg QLD
Caboolture QLD
Dec-15
1,434
Dec-16
1,990
Oct-14
4,988
4,791
Sep-12
70
Lot 43 134-136 King Street Caboolture (manager’s unit)
Caboolture QLD
May-14
268
53 & 54 34 King Street Caboolture (manager’s unit)
Caboolture QLD
Jan-15
140
80 134-136 King Street Caboolture (manager’s unit)
Caboolture QLD
Jan-15
265
Cascade Gardens Cairns
Cairns QLD
Jul-14
4,952
Lot 51 Christie Downs Community Centre (manager’s unit) Christie Downs SA
Dec-14
260
Elizabeth Vale Scenic Village 1
Elizabeth Vale Scenic Village 2
Rockhampton Village 1
Rockhampton Village 2
15/8 Wicks Street, New Auckland
Elizabeth Vale SA
Oct-14
4,693
Elizabeth Vale SA
Apr-15
3,900
Frenchville QLD
Frenchville QLD
Gladstone QLD
Oct-15
3,201
Dec-15
5,674
Sept-16
50
Lot 49 Hackham Community Centre (manager’s unit)
Hackham SA
Oct-14
294
97 144 Main South Road Hackham
33 Mardross Court Lavington
Lismore Village
Cascade Gardens Mackay
176 Victoria Street Mackay
43 Macdonnell Court Margate
344 San Mateo Avenue Mildura
Lambert Village
10 Wyatt Street
Mt Gambier 2 Retirement Village
Amber Lodge
Hackham SA
Lavington VIC
Lismore NSW
Mackay QLD
Mackay QLD
Margate QLD
Mildura VIC
Mt Gambier SA
Mt Gambier SA
Mt Gambier SA
May-15
294
Jun-15
3,457
May-15
4,751
Apr-14
7,897
Mar-17
547
Jun-16
3,900
Jun-15
3,352
Sept-15
2,408
Aug-16
350
Dec-15
3,862
Morphettville SA
Jun-16
2,593
Albert Street Gardens Village
Orange NSW
Sept-16
5,599
Alexam Place
Salisbury East SA
Feb-16
4,527
60 Poplar Avenue Shepparton
Shepparton VIC
Jun-15
3,868
84 10 Winani Street Slacks Creek (manager’s unit)
Slacks Creek QLD
Jul-04
-
7 Meron Street Southport
Southport QLD
Jun-16
4,190
Couran Cove
Lot 8,9,20,21&22 56A Moores Pocket Road Tivoli
Myall Place Retirement Village
40 Federation Street Wynnum
Investment Property Enhancements
South Stradbroke
Island QLD
Tivoli QLD
Whyalla SA
Wynnum QLD
In Progress
Jun-16
Mar-15
2,747
535
Jan-15
4,013
Oct-15
5,147
June-17
750
52
100,666
86,472
EGH ANNUAL REPORT 2017
52
1,000
2,700
1,320
-
70
280
140
280
4,687
252
4,536
3,900
2,831
4,521
-
291
291
3,450
4,264
7,511
-
2,789
3,100
2,311
-
4,296
4,475
-
4,600
2,925
171
3,373
1,975
80
4,164
5,098
-
2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
Details of investment properties are as follows:
13. PROPERTY, PLANT & EQUIPMENT
Carrying
amount
Carrying
amount
30 Jun 17
30 Jun 16
$’000
$’000
Property
Location
Acquisition
date
92 Primrose Street Belgian Gardens
Belgian Gardens QLD
Jun-16
1,000
61 Marana Street Bilambil Heights
Bilambil Heights NSW
Dec-15
2,700
Bowen Village
Broken Hill Village
Avenell Village on Vasey Bundaberg
Lot 21 134-136 King Street Caboolture
Bowen QLD
Broken Hill NSW
Bundaberg QLD
Caboolture QLD
Dec-15
1,434
Dec-16
1,990
Oct-14
4,988
4,791
Sep-12
70
Lot 43 134-136 King Street Caboolture (manager’s unit)
Caboolture QLD
May-14
268
53 & 54 34 King Street Caboolture (manager’s unit)
Caboolture QLD
Jan-15
140
80 134-136 King Street Caboolture (manager’s unit)
Caboolture QLD
Jan-15
265
Cascade Gardens Cairns
Cairns QLD
Jul-14
4,952
Lot 51 Christie Downs Community Centre (manager’s unit) Christie Downs SA
Dec-14
260
Elizabeth Vale SA
Oct-14
4,693
Elizabeth Vale SA
Apr-15
3,900
Lot 49 Hackham Community Centre (manager’s unit)
Hackham SA
Oct-14
294
Frenchville QLD
Frenchville QLD
Gladstone QLD
Hackham SA
Lavington VIC
Lismore NSW
Mackay QLD
Mackay QLD
Margate QLD
Mildura VIC
Mt Gambier SA
Mt Gambier SA
Mt Gambier SA
Oct-15
3,201
Dec-15
5,674
Sept-16
50
May-15
294
Jun-15
3,457
May-15
4,751
Apr-14
7,897
Mar-17
547
Jun-16
3,900
Jun-15
3,352
Sept-15
2,408
Aug-16
350
Dec-15
3,862
Elizabeth Vale Scenic Village 1
Elizabeth Vale Scenic Village 2
Rockhampton Village 1
Rockhampton Village 2
15/8 Wicks Street, New Auckland
97 144 Main South Road Hackham
33 Mardross Court Lavington
Lismore Village
Cascade Gardens Mackay
176 Victoria Street Mackay
43 Macdonnell Court Margate
344 San Mateo Avenue Mildura
Mt Gambier 2 Retirement Village
Lambert Village
10 Wyatt Street
Amber Lodge
Alexam Place
Albert Street Gardens Village
Orange NSW
Sept-16
5,599
Morphettville SA
Jun-16
2,593
Salisbury East SA
Feb-16
4,527
60 Poplar Avenue Shepparton
Shepparton VIC
Jun-15
3,868
84 10 Winani Street Slacks Creek (manager’s unit)
Slacks Creek QLD
Jul-04
-
7 Meron Street Southport
Southport QLD
Jun-16
4,190
Couran Cove
Lot 8,9,20,21&22 56A Moores Pocket Road Tivoli
Myall Place Retirement Village
40 Federation Street Wynnum
Investment Property Enhancements
South Stradbroke
Island QLD
Tivoli QLD
Whyalla SA
Wynnum QLD
In Progress
Jun-16
Mar-15
2,747
535
Jan-15
4,013
Oct-15
5,147
June-17
750
100,666
86,472
EGH ANNUAL REPORT 2017
52
1,000
2,700
1,320
-
70
280
140
280
4,687
252
4,536
3,900
2,831
4,521
-
291
291
3,450
4,264
7,511
2,789
3,100
2,311
4,296
4,475
-
-
-
4,600
2,925
171
3,373
1,975
80
4,164
5,098
-
Buildings at cost
Accumulated depreciation
Plant & equipment at cost
Accumulated depreciation
Motor Vehicles at cost
Accumulated depreciation
Total property, plant & equipment
Consolidated
30 June 2017
$’000
30 June 2016
$’000
625
(174)
451
1,973
(827)
1,146
88
(20)
68
1,665
642
(176)
466
1,439
(752)
687
88
(9)
79
1,232
Reconciliation of movements in property, plant & equipment:
Opening balance at 1 July 2015
Additions at cost
Depreciation expense
Closing balance at 30 June 2016
Opening balance at 1 July 2016
Additions at cost
Depreciation expense
Closing balance at 30 June 2017
Buildings
$’000
Plant &
Equipment
$’000
Motor
Vehicle
$’000
Total
$’000
486
-
(20)
466
466
2
(17)
451
378
395
(86)
687
687
560
(101)
1,146
14
72
(7)
79
79
-
(11)
68
878
467
(113)
1,232
1,232
562
(129)
1,665
EGH ANNUAL REPORT 2017
53
53
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
14. INTANGIBLE ASSETS
Management rights – at cost
Accumulated amortisation
Carrying amount of management rights
Rent rolls – at cost
Accumulated amortisation
Carrying amount of rent rolls
Other intangibles – at cost
Accumulated amortisation
Carrying amount of other intangibles
Goodwill
Total intangible assets
Consolidated
30 June 2017
$’000
30 June 2016
$’000
4,682
(1,211)
3,471
140
(38)
102
830
(31)
799
4,512
(964)
3,548
140
(35)
105
41
(29)
12
1,955
1,955
6,327
5,620
The Group’s primary business activity is the management (through management rights agreements) of senior’s
accommodation throughout Australia. The Group’s primary intangible assets are management rights and goodwill. These
intangible assets, although separately classified per accounting standard requirements, all relate to the management of
senior’s accommodation. Their separate categorisation has arisen from acquisitions.
During the period, the Group also acquired certain trading and operating licences with investment property. These are included
in other intangibles. These assets are not amortised as their term is not limited and there is no expectation the licences will
be cancelled.
Impairment tests for Goodwill
Goodwill is monitored by the Board of Directors (who are identified as the chief operating decision makers) based on the share
of results of the owner operators’ net profit of the villages that EGH manages, less any overhead costs attributable to the
management of these villages. Goodwill has been allocated to the property management cash generating unit.
The Group tests whether goodwill has suffered any impairment on an annual basis. The recoverable amount of a cash
generating unit (CGU) is determined based on value-in-use calculations which require the use of assumptions.
The calculations use cash flow projections based on financial budgets covering a five-year period. Cash flows beyond the five-
year period are extrapolated using an estimated long term growth rate.
Key assumptions are those to which the recoverable amount of an asset or cash-generating units is most sensitive. The
following key assumptions were used in the discounted cash flow model:
cash flows were projected over a five year period by applying a 2% growth rate (2016: 2%) to the most recent
years’ cash flows;
the terminal value was calculated using a growth rate of 2% (2016: 2%);
cash flows have been discounted using a pre-tax discount rate of 25% (2016: 25%);
cash flows do not take into account the management of any new villages; and
cash flows are based on historical results.
The 2% growth rate for the projected cash flow is considered conservative when compared with the business activities over
the previous 12 months.
54
EGH ANNUAL REPORT 2017
54
2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
14. INTANGIBLE ASSETS
Reconciliation of movements in intangible assets:
Management rights – at cost
Accumulated amortisation
Carrying amount of management rights
Rent rolls – at cost
Accumulated amortisation
Carrying amount of rent rolls
Other intangibles – at cost
Accumulated amortisation
Carrying amount of other intangibles
Goodwill
Total intangible assets
Consolidated
30 June 2017
30 June 2016
$’000
$’000
4,682
(1,211)
3,471
140
(38)
102
830
(31)
799
4,512
(964)
3,548
140
(35)
105
41
(29)
12
1,955
1,955
6,327
5,620
The Group’s primary business activity is the management (through management rights agreements) of senior’s
accommodation throughout Australia. The Group’s primary intangible assets are management rights and goodwill. These
intangible assets, although separately classified per accounting standard requirements, all relate to the management of
senior’s accommodation. Their separate categorisation has arisen from acquisitions.
During the period, the Group also acquired certain trading and operating licences with investment property. These are included
in other intangibles. These assets are not amortised as their term is not limited and there is no expectation the licences will
be cancelled.
Impairment tests for Goodwill
Goodwill is monitored by the Board of Directors (who are identified as the chief operating decision makers) based on the share
of results of the owner operators’ net profit of the villages that EGH manages, less any overhead costs attributable to the
management of these villages. Goodwill has been allocated to the property management cash generating unit.
The Group tests whether goodwill has suffered any impairment on an annual basis. The recoverable amount of a cash
generating unit (CGU) is determined based on value-in-use calculations which require the use of assumptions.
The calculations use cash flow projections based on financial budgets covering a five-year period. Cash flows beyond the five-
year period are extrapolated using an estimated long term growth rate.
Key assumptions are those to which the recoverable amount of an asset or cash-generating units is most sensitive. The
following key assumptions were used in the discounted cash flow model:
cash flows were projected over a five year period by applying a 2% growth rate (2016: 2%) to the most recent
years’ cash flows;
the terminal value was calculated using a growth rate of 2% (2016: 2%);
cash flows have been discounted using a pre-tax discount rate of 25% (2016: 25%);
cash flows do not take into account the management of any new villages; and
cash flows are based on historical results.
The 2% growth rate for the projected cash flow is considered conservative when compared with the business activities over
the previous 12 months.
Management
Rights
$’000
Rent
Rolls
$’000
Goodwill
$’000
Other
intangibles
$’000
Total
$’000
Opening balance at 1 July 2015
2,932
108
1,955
Additions at cost
Transfer to/from assets held for sale
Amortisation expense
Closing balance at 30 June 2016
800
(33)
(151)
3,548
-
-
(3)
105
-
-
-
1,955
Opening balance at 1 July 2016
3,548
105
1,955
Additions at cost
Disposals
Amortisation expense
Closing balance at 30 June 2017
60
-
(137)
3,471
-
-
(3)
102
-
-
-
1,955
9
4
-
(1)
12
12
789
-
(2)
799
5,004
804
(33)
(155)
5,620
5,620
849
-
(142)
6,327
The remaining amortisation period on a weighted average basis of the management rights are 22 years (2016: 23 years).
15. TRADE & OTHER PAYABLES
Trade creditors and accruals
Retirement Village Resident Loans1
Capital Replacement Obligations
Acquisition related accruals
1 Movements from 30 June 2016 represents payments made to residents
16. PROVISIONS
Current
Employee benefits
Non-current
Employee benefits
Consolidated
30 June 2017
$’000
30 June 2016
$’000
1,625
928
-
107
2,660
289
289
145
145
1,435
1,162
621
470
3,688
144
144
41
41
EGH ANNUAL REPORT 2017
54
EGH ANNUAL REPORT 2017
55
55
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
17. OTHER FINANCIAL LIABILITIES
Current
Commercial bills – secured
Insurance funding
Finance lease
Motor vehicle loan
Non-current
Commercial bills – secured
Finance lease
Motor vehicle loan
Consolidated
30 June 2017
$’000
30 June 2016
$’000
(a)
1,538
5,087
-
8
8
12
8
16
1,554
5,123
(a)
49,018
37,374
1
-
9
10
49,019
37,393
(a) Commercial bills and advances
Terms and conditions – 30 June 2017
As at 30 June 2017, the Group has access to the following commercial bill facilities:
National Australia Bank (“NAB”):
During the period, NAB borrowings were consolidated and now comprises of two facilities:
Facility 1 – maximum limit of $20,000,000. Interest rates vary for each loan component within the facility limit.
Facility 2 – maximum limit of $35,000,000. Interest rates vary for each loan component within the facility limit.
Applicable interest rates on the drawn facilities are provided below:
Commercial bill – secured fully drawn limit $16,700,000. Expires on 31 December 2019. Monthly interest only
repayment. Interest on this facility has been fixed until 31 December 2019. Interest is payable at the rate of
4.99%.
Commercial bill – secured fully drawn limit of $2,525,000. Expires on 31 December 2021. Monthly interest
only repayment. Interest is payable at a variable rate on this facility (currently 4.05%).
Commercial bill – secured fully drawn limit of $3,700,000. Expires on 31 August 2020. Monthly interest only
repayment. Interest is payable at a fixed rate of 4.85%.
Commercial bill – secured fully drawn limit of $3,000,000. Expires on 31 August 2020. Monthly interest only
repayment. Interest is payable at a fixed rate of 4.95% on $2,500,000 and variable rate of $4.47% on $500,000.
Commercial bill – secured fully drawn limit of $6,500,000. Expires on 31 August 2020. Monthly interest only
repayment. Interest is payable at a fixed rate on this facility of 4.97%.
Commercial bill – secured fully drawn limit of $2,800,000. Expires on 31 December 2018. Monthly interest
only repayment. Interest is payable at a variable rate on this facility (currently 4.07%).
Commercial bill – secured fully drawn limit of $2,461,250. Expires on 31 December 2018. Monthly interest
only repayment. Interest is payable at a variable rate on this facility (currently 4.05%).
Commercial bill – secured fully drawn limit of $6,550,000. Expires on 31 December 2018. Monthly interest
only repayment. Interest is payable at a variable rate on this facility (currently 4.01%).
Commercial bill – secured fully drawn limit of $3,050,000. Expires on 31 December 2021. Monthly interest
only repayment. Interest is payable at a variable rate on this facility (currently 4.05%).
Commercial bill – secured fully drawn limit of $2,169,000. Expires on 31 December 2018. Monthly interest
only repayment. Interest is payable at a variable rate on this facility (currently 4.05%).
At 30 June 2017, total drawings on the facility were $49,455,250.
Westpac Banking Corporation (“Westpac”):
56
Commercial bill – secured fully drawn limit of $1,500,000. Expires on 31 December 2017. Monthly repayment of
$100,000 per month. Interest is payable at a variable rate on this facility (currently 5.1%).
EGH ANNUAL REPORT 2017
56
2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
Notes to the Financial Statements
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
17. OTHER FINANCIAL LIABILITIES
Current
Commercial bills – secured
Insurance funding
Finance lease
Motor vehicle loan
Non-current
Commercial bills – secured
Finance lease
Motor vehicle loan
1,554
5,123
-
8
8
1
-
12
8
16
9
10
49,019
37,393
(a) Commercial bills and advances
Terms and conditions – 30 June 2017
National Australia Bank (“NAB”):
As at 30 June 2017, the Group has access to the following commercial bill facilities:
During the period, NAB borrowings were consolidated and now comprises of two facilities:
Facility 1 – maximum limit of $20,000,000. Interest rates vary for each loan component within the facility limit.
Facility 2 – maximum limit of $35,000,000. Interest rates vary for each loan component within the facility limit.
Applicable interest rates on the drawn facilities are provided below:
4.99%.
Commercial bill – secured fully drawn limit of $2,525,000. Expires on 31 December 2021. Monthly interest
only repayment. Interest is payable at a variable rate on this facility (currently 4.05%).
Commercial bill – secured fully drawn limit of $3,700,000. Expires on 31 August 2020. Monthly interest only
repayment. Interest is payable at a fixed rate of 4.85%.
Commercial bill – secured fully drawn limit of $3,000,000. Expires on 31 August 2020. Monthly interest only
repayment. Interest is payable at a fixed rate of 4.95% on $2,500,000 and variable rate of $4.47% on $500,000.
Commercial bill – secured fully drawn limit of $6,500,000. Expires on 31 August 2020. Monthly interest only
repayment. Interest is payable at a fixed rate on this facility of 4.97%.
Commercial bill – secured fully drawn limit of $2,800,000. Expires on 31 December 2018. Monthly interest
only repayment. Interest is payable at a variable rate on this facility (currently 4.07%).
Commercial bill – secured fully drawn limit of $2,461,250. Expires on 31 December 2018. Monthly interest
only repayment. Interest is payable at a variable rate on this facility (currently 4.05%).
Commercial bill – secured fully drawn limit of $6,550,000. Expires on 31 December 2018. Monthly interest
only repayment. Interest is payable at a variable rate on this facility (currently 4.01%).
Commercial bill – secured fully drawn limit of $3,050,000. Expires on 31 December 2021. Monthly interest
only repayment. Interest is payable at a variable rate on this facility (currently 4.05%).
Commercial bill – secured fully drawn limit of $2,169,000. Expires on 31 December 2018. Monthly interest
only repayment. Interest is payable at a variable rate on this facility (currently 4.05%).
At 30 June 2017, total drawings on the facility were $49,455,250.
Westpac Banking Corporation (“Westpac”):
Commercial bill – secured fully drawn limit of $1,500,000. Expires on 31 December 2017. Monthly repayment of
$100,000 per month. Interest is payable at a variable rate on this facility (currently 5.1%).
EGH ANNUAL REPORT 2017
56
Consolidated
30 June 2017
30 June 2016
$’000
$’000
The commercial bill liabilities are secured against a certain amount of the Group’s investment property asset. The total amount
of security provided at 30 June 2017 was $100,666,155. This value represents the fair value of assets pledged based on the
carrying values recorded by the Group at 30 June 2017.
Commercial bill facilities are subject to covenants which are commensurate with normal secured lending terms.
(a)
1,538
5,087
As at 30 June 2017, the Group had the following banking covenants:
The Debt Service Cover Ratio for the Group must not be less than or equal to 2.5:1.
The Gearing Ratio for the Group must be less than 50%.
The LVR must not exceed 57% upto and including 30 March 2017 or 55% 31 March 2017 onwards.
The Dividend Payout Amount for the financial year must not exceed 100% of the Net Profit After Tax for the Group for
that Financial Year.
(a)
49,018
37,374
The Group complied with its covenants through 30 June 2017.
Terms and conditions – 30 June 2016
National Australia Bank (“NAB”):
Commercial bill – secured fully drawn limit of $2,349,000. Expires on 31 January 2017. Principal repayment of $30,000
per month. Interest is payable at a variable rate on this facility (currently 4.49%).
Commercial bill – secured fully drawn limit $16,700,000. Expires on 31 December 2019. Monthly interest only repayment.
Interest on this facility has been fixed until 31 December 2019. Interest is payable at the rate of 4.98% on $7,000,000
and 4.99% on $9,700,000.
Commercial bill – secured fully drawn limit of $2,525,000. Expires on 29 March 2018. Monthly interest only repayment.
Interest is payable at a variable rate on this facility (currently 4.44%).
Commercial bill – secured fully drawn limit of $3,700,000. Expires on 31 August 2020. Monthly interest only repayment.
Interest is payable at a fixed rate of 4.85%.
Commercial bill – secured fully drawn limit of $3,000,000. Expires on 31 August 2020. Monthly interest only repayment.
Interest is payable at a variable rate on this facility (currently 4.86%).
Commercial bill – secured fully drawn limit of $6,500,000. Expires on 31 August 2020. Monthly interest only repayment.
Interest is payable at a fixed rate on this facility of 4.97%.
Commercial bill – secured fully drawn limit of $2,800,000. Expires on 29 March 2019. Monthly interest only repayment.
Interest is payable at a variable rate on this facility (currently 4.45%).
Commercial bill – secured fully drawn limit of $2,461,250. Expires on 30 June 2019. Monthly interest only repayment.
Interest is payable at a variable rate on this facility (currently 4.39%).
Commercial bill – secured fully drawn limit $16,700,000. Expires on 31 December 2019. Monthly interest only
repayment. Interest on this facility has been fixed until 31 December 2019. Interest is payable at the rate of
Westpac Banking Corporation (“Westpac”):
Commercial bill – secured fully drawn limit of $2,700,000. Expires on 31 December 2016. Monthly repayment of $100,000
per month commenced from April 2016. Interest is payable at a variable rate on this facility (currently 5.31%).
The loans are secured by:
Registered mortgages over its managers’ units and other real estate at its Communities (carrying amount of
$92,758,611);
Guarantee and indemnity given by EGH and its controlled entities ($31,045,250); and
Fixed and floating charges over the assets of EGH and its controlled entities (carrying amount of $110,701,756).
As at 30 June 2016, the Group had the following banking covenants:
Minimum interest cover of 2.25 times as measured for the 3 month period ending on each quarter.
Minimum capital adequacy of 30% as measured on a daily basis and reported quarterly.
Minimum EBITDA of each of the freehold villages shall be as follows: Elizabeth Vale $202,300, Avenell Heights
$172,550, Whyalla $165,750, Mackay $269,025, Smithfield $96,475, Elizabeth Vale 2 $153,000, Lismore $229,500,
Mildura $129,625, Albury $108,800 Mt Gambier $127,500, Rockhampton 1 $160,650 and Rockhampton 2 $212,299,
Wynnum $182,750, Terranora $168,128 and Salisbury $286,875.
The Group complied with its covenants through 30 June 2016.
EGH ANNUAL REPORT 2017
57
57
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
18. SHARE CAPITAL
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and proceeds on winding up of the Company in proportion to the
number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting
in person or by proxy is entitled to one vote, and on a poll, each share is entitled to one vote.
Ordinary shares have no par value and the company does not have a limited amount of authorised capital.
Balance at start of year
Shares issued at $0.54 for cash
Shares issued at $0.54 for cash
Shares issued at $0.58 for acquisition of
villages 1
Shares issued at $0.75 for cash
Shares bought back during the period
Capital raising costs
On issue at end of the year
Consolidated
30 June 2017
Number
30 June 2017
$’000
30 June 2016
Number
30 June 2016
$’000
225,784,473
90,860
188,099,927
68,248
-
-
-
5,263,400
(1,375,950)
-
-
-
-
3,948
(523)
(30)
7,003,877
12,255,383
1,758,620
3,782
6,618
1,020
16,666,666
12,500
-
-
-
(1,308)
90,860
229,671,923
94,255
225,784,473
1 These shares were issued as part of the non-cash consideration paid to acquire Rockham Two Unit Trust during the
period.
Share Buy Back
During the year ended 30 June 2017, the company announced its intention to buy back up to 10% of the current ordinary
shares outstanding, for a period of 1 year from 16 March 2017. As at 30 June 2017, 1,375,950 ordinary shares have been
cancelled.
Options
No options were issued during the period.
19. CASH FLOW INFORMATION
(a) Reconciliation of cash
Cash at bank and on hand
Consolidated
30 June 2017
$’000
30 June 2016
$’000
4,395
6,841
(b) Reconciliation of profit/(loss) for the year to net cash flow from operating activities
Profit/(loss) for the year
Depreciation and amortisation
Impairment – management rights
Impairment – assets held for sale
Asset revaluation
(Gain)/loss on sale of management rights and managers units
58
Consolidated
30 June 2017
30 June 2016
$’000
$’000
6,538
271
-
-
(1,046)
10
10,467
268
-
-
(4,041)
(450)
EGH ANNUAL REPORT 2017
58
2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
Notes to the Financial Statements
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
18. SHARE CAPITAL
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and proceeds on winding up of the Company in proportion to the
number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting
in person or by proxy is entitled to one vote, and on a poll, each share is entitled to one vote.
Ordinary shares have no par value and the company does not have a limited amount of authorised capital.
Balance at start of year
Shares issued at $0.54 for cash
Shares issued at $0.54 for cash
Shares issued at $0.58 for acquisition of
villages 1
Shares issued at $0.75 for cash
Shares bought back during the period
Capital raising costs
On issue at end of the year
period.
Share Buy Back
cancelled.
Options
No options were issued during the period.
19. CASH FLOW INFORMATION
(a) Reconciliation of cash
Cash at bank and on hand
(Increase)/decrease in:
- Trade and other receivables
- Inventories
- Other current assets
Increase/(decrease) in:
- Trade and other payables
- Provisions
Net cash flow from/(used in) operating activities
(c) Non cash investing and financing activities
36
(1,372)
(725)
112
249
4,073
(2,848)
(10)
(39)
772
121
4,240
Refer to note 8 for details of non-cash investing activity which took place during the year. In addition to this, the Group is party
to an arrangement where it acquires goods and services by way of non-cash exchanges. During the period, property, plant
and equipment and investment property $1,190,648 was acquired in this manner.
16,666,666
12,500
In the prior financial year, the Group entered into the following non-cash investing and financing activities which are not
reflected in the consolidated statement of cash flows:
The Group assumed borrowings of $2,525,000 and issued $1,020,000 of shares as part of the acquisition of
Rockhampton 2 village;
The Group assumed borrowings of $3,000,000 as part of the acquisition of Mt Gambier 2 village; and
The Group acquired $357,200 of plant and equipment with non-cash consideration.
Consolidated
30 June 2017
30 June 2017
30 June 2016
30 June 2016
Number
$’000
Number
$’000
225,784,473
90,860
188,099,927
68,248
-
-
-
-
5,263,400
(1,375,950)
-
-
-
3,948
(523)
(30)
7,003,877
12,255,383
1,758,620
-
-
229,671,923
94,255
225,784,473
3,782
6,618
1,020
-
(1,308)
90,860
1 These shares were issued as part of the non-cash consideration paid to acquire Rockham Two Unit Trust during the
20. FINANCIAL INSTRUMENTS
Overall policy
During the year ended 30 June 2017, the company announced its intention to buy back up to 10% of the current ordinary
shares outstanding, for a period of 1 year from 16 March 2017. As at 30 June 2017, 1,375,950 ordinary shares have been
The Board of Directors have overall responsibility for the establishment and oversight of the risk management framework. The
Board of Directors are responsible for developing and monitoring risk management policy. Risk management policy is to
identify and analyse the risks faced by the entity, to set limits and controls, and to monitor risks and adherence to limits. Risk
management policy and systems are reviewed regularly to reflect changes in market conditions and Group’s activities. The
Group aims to develop a disciplined and constructive control environment in which all employees understand their roles and
obligations.
a) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s receivables from customers and amounts due from the senior
independent living communities in accordance with management agreements in place.
Credit risk arises principally from the Group’s cash and cash equivalents, receivables and other loans.
(b) Reconciliation of profit/(loss) for the year to net cash flow from operating activities
Maximum exposure to credit risk
Cash and cash equivalents
Trade and other receivables
Loans receivable
Consolidated
30 June 2017
$’000
30 June 2016
$’000
4,395
2,632
577
7,604
6,841
3,407
605
10,853
Profit/(loss) for the year
Depreciation and amortisation
Impairment – management rights
Impairment – assets held for sale
Asset revaluation
(Gain)/loss on sale of management rights and managers units
Cash and cash equivalents
Deposits of cash are only held with approved banks and financial institutions. The Group currently banks with National
Australia Bank.
EGH ANNUAL REPORT 2017
59
59
Consolidated
30 June 2017
30 June 2016
$’000
$’000
4,395
6,841
Consolidated
30 June 2017
30 June 2016
$’000
$’000
6,538
271
-
-
(1,046)
10
10,467
268
-
-
(4,041)
(450)
EGH ANNUAL REPORT 2017
58
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
Trade and other receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristic of each customer or resident. The
Group has a diverse range of customers and residents and therefore there is no significant concentration of credit risk with
any single counterparty or group of counterparties.
The Directors have established a credit policy under which each new customer is analysed individually for creditworthiness
before the Group does business with them. The Group monitors and follows-up its accounts receivable to ensure collections
are being made promptly in accordance with contractual terms and conditions and actively pursues amounts past due.
Where applicable, an allowance for impairment has been made, that represents the estimate of impairment losses in respect
to trade and other receivables. The Group has no concentrations of credit risk that have not been provided for. A significant
component of trade debtors that are past due and greater than 90 days ageing are either on a payment plan or considered
recoverable. The Group has not provided for the remaining amounts past due as management believes these amounts will
be received.
The ageing of trade receivables and other receivables at the reporting date was:
Due 0-30 days
Past due 30-60 days
Past due 60-90 days
Past due 90 + days
30 June 2017
30 June 2016
Gross amount
receivable
$’000
Provision for
Impairment
$’000
Gross amount
receivable
$’000
Provision for
Impairment
$’000
2,455
11
7
248
2,721
-
-
-
(89)
(89)
1,072
637
574
1,222
3,505
-
-
-
(98)
(98)
Loans receivable
The Group’s exposure to credit risk is limited to the vendor finance book balance which was part of the acquisition of Elizabeth
Vale Scenic Village Pty Ltd during the prior year. The loan book consists of 10 individual loan contracts. The Group manages
the units which are being held as security for the loans. Repayments are received monthly in accordance with the individual
contracts or alternative agreed arrangements in place.
Where applicable, an allowance for impairment has been made, that represents the estimate of impairment losses in respect
to the loans receivable. The Group has no concentrations of credit risk that have not been provided for.
Loans receivable
Current
Non-current
b) Liquidity risk
30 June 2017
Gross amount
receivable
$’000
Provision for
Impairment
$’000
76
501
577
-
-
-
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach
to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due.
This process involves the review and updating of cash flow forecasts and, when necessary, the obtaining of credit standby
arrangements and loan facilities.
There were unused borrowing facilities of $5,544,750 at the reporting date.
The tables below shows the Group’s financial liabilities classified into relevant maturity groupings based on their contractual
maturities.
60
EGH ANNUAL REPORT 2017
60
2016-2017 ANNUAL REPORTFor personal use only
The Directors have established a credit policy under which each new customer is analysed individually for creditworthiness
before the Group does business with them. The Group monitors and follows-up its accounts receivable to ensure collections
are being made promptly in accordance with contractual terms and conditions and actively pursues amounts past due.
Where applicable, an allowance for impairment has been made, that represents the estimate of impairment losses in respect
to trade and other receivables. The Group has no concentrations of credit risk that have not been provided for. A significant
component of trade debtors that are past due and greater than 90 days ageing are either on a payment plan or considered
recoverable. The Group has not provided for the remaining amounts past due as management believes these amounts will
be received.
The ageing of trade receivables and other receivables at the reporting date was:
30 June 2017
30 June 2016
Gross amount
Provision for
Gross amount
Provision for
receivable
Impairment
receivable
Impairment
$’000
$’000
$’000
$’000
2,455
11
7
248
2,721
-
-
-
(89)
(89)
1,072
637
574
1,222
3,505
-
-
-
(98)
(98)
The Group’s exposure to credit risk is limited to the vendor finance book balance which was part of the acquisition of Elizabeth
Vale Scenic Village Pty Ltd during the prior year. The loan book consists of 10 individual loan contracts. The Group manages
the units which are being held as security for the loans. Repayments are received monthly in accordance with the individual
contracts or alternative agreed arrangements in place.
Where applicable, an allowance for impairment has been made, that represents the estimate of impairment losses in respect
to the loans receivable. The Group has no concentrations of credit risk that have not been provided for.
Due 0-30 days
Past due 30-60 days
Past due 60-90 days
Past due 90 + days
Loans receivable
Loans receivable
Current
Non-current
b) Liquidity risk
30 June 2017
Gross amount
receivable
Provision for
Impairment
$’000
$’000
76
501
577
-
-
-
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach
to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due.
This process involves the review and updating of cash flow forecasts and, when necessary, the obtaining of credit standby
arrangements and loan facilities.
There were unused borrowing facilities of $5,544,750 at the reporting date.
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
Trade and other receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristic of each customer or resident. The
Group has a diverse range of customers and residents and therefore there is no significant concentration of credit risk with
any single counterparty or group of counterparties.
30 June 2017
Trade and other payables
Commercial bills
Other financial liabilities
Total
30 June 2016
Trade and other payables
Commercial bills
Other financial liabilities
Total
c) Market risk
Contractual
cash flows
$’000
Less than 6
months
$’000
Consolidated
6 - 12
months
$’000
1 – 2 years
$’000
More than 2
years
$’000
2,660
57,256
18
59,934
2,660
2,937
11
5,608
-
-
-
1,136
13,801
39,382
6
1
-
1,142
13,802
39,382
Contractual
cash flows
$’000
Less than 6
months
$’000
Consolidated
6 - 12
months
$’000
1 – 2 years
$’000
More than 2
years
$’000
3,688
50,562
55
54,305
3,688
6,203
25
9,916
-
921
12
933
-
4,313
16
4,329
-
39,125
2
39,127
Market risk is the risk that changes in market prices such as interest rates will affect the Group’s income or the value of its
holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures
within acceptable parameters, while optimising the return.
d) Interest rate risk
The Group’s exposure to market interest rates arises from long term borrowings in the form of Commercial Bills. Borrowings
issued at variable rates expose the Group to interest rate risk. $21,555,250 of the commercial bills are at variable rates while
$29,400,000 is fixed (refer to note 17). The variable portion of the debt does not expose the Group to any material interest
rate risk.
The Group constantly analyses its interest rate exposure. Within this analysis, consideration is given to potential renewals of
existing positions, alternative financing, alternate hedging positions and the mix of fixed and variable interest rates.
21. FAIR VALUE MEASUREMENTS
Fair value hierarchy
Investment properties and retirement village resident loans are measured at fair value, using a three level hierarchy, based
on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at
the measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly
Level 3: Unobservable inputs for the asset or liability
There were no transfers between levels during the financial year. The Group’s policy is to recognise transfers into and transfers
out of fair value hierarchy levels as at the end of the reporting period.
The tables below shows the Group’s financial liabilities classified into relevant maturity groupings based on their contractual
maturities.
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair
values due to their short-term nature.
Fair value of financial instruments (unrecognised)
The Group has a number of financial assets and financial liabilities (loans receivable and commercial bills) which are not
measured at fair value in the statement of financial position. The fair values are not materially different to their carrying
amounts, since the interest receivable/payable is either close to current market rates or the instruments are short-term in
nature, and therefore have not been disclosed.
EGH ANNUAL REPORT 2017
60
EGH ANNUAL REPORT 2017
61
61
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
Consolidated – 2017
Assets
Investment properties
Total assets
Liabilities
Retirement Village Resident Loans
Total liabilities
Consolidated – 2016
Assets
Investment properties
Total assets
Liabilities
Retirement Village Resident Loans
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,666
100,666
100,666
100,666
928
928
928
928
86,472
86,472
86,472
86,472
1,162
1,162
1,162
1,162
Valuation techniques for fair value measurements categorised within level 2 and level 3
At the end of each reporting period, the directors update their assessment of the fair value of each property, taking into account
the most recent independent valuations. The directors determine a property’s value within a range of reasonable fair value
estimates.
Investment properties have been valued using 2 methods, the capitalisation method and direct comparison approach. Under
the capitalisation method, fair value is estimated using assumptions regarding the expectation of future benefits. The
capitalisation method involves estimating the expected income projections of the property into perpetuity and applying a
capitalisation rate. The capitalisation rate is based on current market evidence. Future income projections take into account
occupancy, rental income and operating expenses.
Under the direct comparison approach, key inputs are the recent sales of comparable units in comparable villages. All resulting
fair value estimates for properties are included in level 3.
Retirement village resident loans are measured as the ingoing contribution less deductions over time for the period of resident
stay as a % of the length of expected residence term. Although the expected average residency term is between one to ten
years, these obligations are classified as current liabilities, as required by the Accounting Standards, because the Group does
not have an unconditional right to defer settlement to more than twelve months after reporting date. The liability stated is stated
net of accrued deferred management fees at reporting date, because the Group’s contract with residents require net settlement
of those obligations. These are included in trade creditors.
The level 3 assets significant unobservable inputs and sensitivity are as follows:
Description
Valuation
technique
Significant
unobservable
inputs
Range
(weighted average)
2017
2016
Relationship of
unobservable input
to fair value
Investment
properties
Retirement
Villages
Capitalisation
method (1)
–
Capitalisation rate
9.75%-
12.50%
(11.04%)
5.67%-14.00%
(10.90%)
Capitalisation has an
inverse relationship to
valuation.
Stabilised
occupancy
81%-100%
(91%)
68%-98%
(88%)
Occupancy has a
direct correlation to
valuation (i.e. the
higher the
occupancy, the
greater the value).
62
EGH ANNUAL REPORT 2017
62
2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
Consolidated – 2017
Assets
Investment properties
Total assets
Retirement Village Resident Loans
Liabilities
Total liabilities
Consolidated – 2016
Assets
Investment properties
Total assets
Liabilities
Total liabilities
Retirement Village Resident Loans
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,666
100,666
100,666
100,666
928
928
928
928
86,472
86,472
86,472
86,472
1,162
1,162
1,162
1,162
Valuation techniques for fair value measurements categorised within level 2 and level 3
At the end of each reporting period, the directors update their assessment of the fair value of each property, taking into account
the most recent independent valuations. The directors determine a property’s value within a range of reasonable fair value
estimates.
Investment properties have been valued using 2 methods, the capitalisation method and direct comparison approach. Under
the capitalisation method, fair value is estimated using assumptions regarding the expectation of future benefits. The
capitalisation method involves estimating the expected income projections of the property into perpetuity and applying a
capitalisation rate. The capitalisation rate is based on current market evidence. Future income projections take into account
occupancy, rental income and operating expenses.
Under the direct comparison approach, key inputs are the recent sales of comparable units in comparable villages. All resulting
fair value estimates for properties are included in level 3.
Retirement village resident loans are measured as the ingoing contribution less deductions over time for the period of resident
stay as a % of the length of expected residence term. Although the expected average residency term is between one to ten
years, these obligations are classified as current liabilities, as required by the Accounting Standards, because the Group does
not have an unconditional right to defer settlement to more than twelve months after reporting date. The liability stated is stated
net of accrued deferred management fees at reporting date, because the Group’s contract with residents require net settlement
of those obligations. These are included in trade creditors.
Description
Valuation
technique
Significant
unobservable
inputs
Range
(weighted average)
2017
2016
Relationship of
unobservable input
to fair value
Investment
properties
Retirement
Villages
Capitalisation
Capitalisation rate
–
method (1)
5.67%-14.00%
Capitalisation has an
(10.90%)
inverse relationship to
9.75%-
12.50%
(11.04%)
Stabilised
occupancy
81%-100%
68%-98%
(91%)
(88%)
valuation.
Occupancy has a
direct correlation to
valuation (i.e. the
higher the
occupancy, the
greater the value).
EGH ANNUAL REPORT 2017
62
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
Investment
properties
–
Individual Village
Units
Direct comparison
approach
Comparable sales
evidence
N/A
Retirement
village resident
loans
Ingoing contribution
less deductions for
length of stay
Estimated
length
of stay of residents
1 – 10 years
Comparable sales
evidence has a direct
relationship to
valuation.
The longer the length
of stay, the lower the
value of resident
loans.
(1) Significant increases (decreases) in any of the significant unobservable valuation inputs under the capitalisation method would result in a
significantly higher(lower) fair value measurement.
Fair value measurements using significant unobservable inputs (level 3)
Movements in level 3 asset items during the current and previous financial year are set out in note 12.
Valuation processes
Independent valuations have been obtained for a number of Retirement Villages during the year ended 30 June 2017 and
were used as the basis for determining their fair values. Selection criteria include market knowledge, experience and
qualifications, reputation, independence and whether professional standards are maintained.
Where an independent valuation has not been performed on an investment property as at 30 June 2017, management has
estimated the fair values by performing internal valuations based on valuations performed by an independent valuer
commissioned by the Group when acquiring the properties.
22. COMMITMENTS
a) Operating leases: group as lessee
Non‑cancellable operating leases
The Group leases various managers’ units under non-cancellable operating leases expiring within two to twenty-five years.
The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.
Within 1 year
Greater than 1 year but not longer than 5 years
Greater than 5 years
Consolidated
30 June 2017
$’000
30 June 2016
$’000
234
692
840
1,766
164
491
951
1,606
The amount disclosed for the lease of office space does not include any adjustments for CPI or market rental reviews.
The level 3 assets significant unobservable inputs and sensitivity are as follows:
b) Capital expenditure
The Group had no capital commitments for property, plant and equipment as at 30 June 2017.
As at 30 June 2017, the Group had a contractual capital commitment for the acquisition of the Gympie Village totalling
$3,830,000 less the deposit paid of $100,000. This commitment was not recognised as a liability as the relevant assets had
not yet been received.
EGH ANNUAL REPORT 2017
63
63
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
23. EARNINGS PER SHARE
Net profit used in calculating basic and diluted earnings per share
Weighted average number of ordinary shares used in calculating basic
earnings per share
Weighted average number of ordinary shares & potential ordinary shares used
in calculating diluted earnings per share
Basic earnings per share
Diluted earnings per share
30 June 2017
$’000
30 June 2016
$’000
6,538
10,467
Thousands
Thousands
230,603
201,505
230,603
201,505
2.84 cents
5.19 cents
2.84 cents
5.19 cents
For the year ended 30 June 2017, there were no dilutive transactions to be included in the diluted earnings per share
calculation.
24. RELATED PARTY TRANSACTIONS
(a) Key management personnel compensation
Short term employee benefits
Post-employment benefits
Total
Consolidated
30 June 2017
30 June 2016
$’000
$’000
1,014
28
1,042
1,026
18
1,044
Detailed disclosures relating to key management personnel are set out in the remuneration report within the Directors' Report.
(b) Other transactions with key management personnel
(i) Loans from key management personnel
Shareholder loan: Kathlac Pty Ltd
Balance at beginning of the year
Increase in loan amount
Loan repayments made
Interest charged
Balance at end of the year
-
-
-
-
-
-
410
(411)
1
-
64
EGH ANNUAL REPORT 2017
64
2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
23. EARNINGS PER SHARE
(ii) Purchases from entities controlled by key management personnel:
For the year ended 30 June 2017, there were no dilutive transactions to be included in the diluted earnings per share
Net profit used in calculating basic and diluted earnings per share
Weighted average number of ordinary shares used in calculating basic
earnings per share
Weighted average number of ordinary shares & potential ordinary shares used
in calculating diluted earnings per share
Basic earnings per share
Diluted earnings per share
calculation.
24. RELATED PARTY TRANSACTIONS
(a) Key management personnel compensation
Short term employee benefits
Post-employment benefits
Total
(b) Other transactions with key management personnel
(i) Loans from key management personnel
Shareholder loan: Kathlac Pty Ltd
Balance at beginning of the year
Increase in loan amount
Loan repayments made
Interest charged
Balance at end of the year
30 June 2017
30 June 2016
$’000
$’000
6,538
10,467
Thousands
Thousands
230,603
201,505
230,603
201,505
2.84 cents
5.19 cents
2.84 cents
5.19 cents
Consolidated
30 June 2017
30 June 2016
$’000
$’000
1,014
28
1,042
1,026
18
1,044
-
-
-
-
-
410
(411)
-
1
-
Detailed disclosures relating to key management personnel are set out in the remuneration report within the Directors' Report.
The Group acquired the following goods and services from entities that are controlled by members of the Group’s key
management personnel:
Consulting fees
Commission
Rent
Capital raising fees
Amounts outstanding at the end of the reporting period in relation to these
transactions (included in Trade and other payables)
(iii) Fees received from entities controlled by Key Management Personnel:
Consolidated
30 June 2017
30 June 2016
$’000
$’000
206
-
86
-
-
398
10
91
347
272
The Group received fees for the following services from entities that are controlled by members of the Group’s Key
Management Personnel:
Caretaking and management fees
Amounts outstanding at the end of the reporting period in relation to these
transactions (included in Trade and other receivables)
19
-
16
25
(iv) Terms and conditions
All transactions were made on commercial terms and conditions and at market rates. Outstanding balances are unsecured
and are repayable in cash.
25. ULTIMATE PARENT ENTITY
The parent entity within the group is Eureka Group Holdings Limited, which is the ultimate parent entity within Australia.
26. CONTINGENCIES
There are no contingent liabilities or contingent assets at 30 June 2017 that require disclosure in the financial report.
27. OPERATING SEGMENTS
Identification of reportable operating segments and principal services
For the period ended 30 June 2017, the Group is organised into two operating segments, all located in Australia:
Rental Villages – Ownership of senior’s rental villages; and
Property Management - Management of seniors independent living communities.
The results not included in the two operating segments identified are treated as:
Unallocated – Represents the consulting fees charged, corporate services functions costs, inventory, cash balances
and capital replacement funds.
The operating segments have been identified based on reports reviewed by the Board of Directors (who are identified as the
chief operating decision makers) who are responsible for assessing performance and determining the allocation of resources.
There is no aggregation of operating segments and the Board of Directors views each segments performance based on profit
after tax. The accounting policies adopted for internal reporting to the chief operating decision makers are consistent with
those adopted in the financial statements.
EGH ANNUAL REPORT 2017
64
EGH ANNUAL REPORT 2017
65
65
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
Segment information is prepared in conformity with the accounting policies of the group as discussed in note 2 and Accounting
Standard AASB 8.
No reporting or reviews are made of cash flows and as such this is not measured or reported by segment.
Consolidated - 30 June 2017
Rental
Villages
$’000
Property
Management
$’000
Unallocated
$’000
Total
$’000
Revenue
Interest revenue
Other revenue
Total Revenue
Expenses
Interest expense
Total expenses
Profit before income tax expense
Income tax expense
Profit after income tax expense
Segment Assets
Segment Liabilities
17,213
-
2,244
19,457
10,629
2,454
13,083
6,374
-
6,374
103,252
53,117
5,426
-
-
5,426
2,751
-
2,751
2,675
-
2,675
6,203
93
-
172
1,418
1,590
3,9381
153
4,091
(2,501)
-
(2,501)
19,0792
5063
22,639
172
3,662
26,473
17,318
2,607
19,925
6,548
-
6,548
128,534
53,716
1 Included within unallocated expenses is employee benefits expense of $2.57 million and other administrative expenses of $1.37 million.
2 Included within unallocated assets is inventory of $7.64 million, Couran Cove land option of $3 million, trade and other receivables of $1.94
million, cash balances of $4.39 million, property, plant and equipment of $0.99 million and Other assets of $1.12 million.
3 Included within segment liabilities is Provisions of $0.19 million and Superannuation and PAYG withholding payable $0.1 million.
Non-cash and other significant items included in profit above:
Gain on revaluation of investment property
Depreciation & amortisation
1,046
(129)
-
(142)
-
-
1,046
(271)
Segment acquisitions:
Acquisition of property, plant and equipment
Acquisition of investment property
Acquisition of intangibles
Acquisition of inventory
-
13,148
789
-
2
-
60
-
558
-
-
1,349
560
13,148
803
1,349
Consolidated - 30 June 2016
Rental
Villages
$’000
Property
Management
$’000
Unallocated
$’000
Total
$’000
Revenue
Interest revenue
Other revenue
Total Revenue
Expenses
Interest expense
Total expenses
66
12,222
-
4,041
16,263
6,088
1,601
7,689
6,438
-
450
6,888
3,426
-
3,426
446
314
244
1,004
2,4421
131
2,573
19,106
314
4,735
24,155
11,956
1,732
13,688
EGH ANNUAL REPORT 2017
66
2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
Notes to the Financial Statements
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
Segment information is prepared in conformity with the accounting policies of the group as discussed in note 2 and Accounting
Standard AASB 8.
No reporting or reviews are made of cash flows and as such this is not measured or reported by segment.
Consolidated - 30 June 2017
Rental
Villages
$’000
Property
Management
Unallocated
$’000
$’000
Total
$’000
1 Included within unallocated expenses is employee benefits expense of $2.57 million and other administrative expenses of $1.37 million.
2 Included within unallocated assets is inventory of $7.64 million, Couran Cove land option of $3 million, trade and other receivables of $1.94
million, cash balances of $4.39 million, property, plant and equipment of $0.99 million and Other assets of $1.12 million.
3 Included within segment liabilities is Provisions of $0.19 million and Superannuation and PAYG withholding payable $0.1 million.
Non-cash and other significant items included in profit above:
Gain on revaluation of investment property
Depreciation & amortisation
1,046
(129)
-
(142)
Revenue
Interest revenue
Other revenue
Total Revenue
Expenses
Interest expense
Total expenses
Profit before income tax expense
Income tax expense
Profit after income tax expense
Segment Assets
Segment Liabilities
Segment acquisitions:
Acquisition of property, plant and equipment
Acquisition of investment property
Acquisition of intangibles
Acquisition of inventory
Revenue
Interest revenue
Other revenue
Total Revenue
Expenses
Interest expense
Total expenses
17,213
-
2,244
19,457
10,629
2,454
13,083
6,374
-
6,374
103,252
53,117
13,148
789
-
-
12,222
-
4,041
16,263
6,088
1,601
7,689
2,675
(2,501)
2,675
(2,501)
19,0792
5063
128,534
53,716
5,426
5,426
2,751
2,751
-
-
-
-
6,203
93
2
-
60
-
6,438
-
450
6,888
3,426
-
3,426
-
172
1,418
1,590
3,9381
153
4,091
-
-
-
-
-
558
1,349
446
314
244
1,004
2,4421
131
2,573
22,639
172
3,662
26,473
17,318
2,607
19,925
6,548
-
6,548
1,046
(271)
560
13,148
803
1,349
19,106
314
4,735
24,155
11,956
1,732
13,688
Consolidated - 30 June 2016
Rental
Villages
$’000
Property
Management
Unallocated
$’000
$’000
Total
$’000
Profit before income tax expense
Income tax expense
Profit after income tax expense
Segment Assets
Segment Liabilities
8,575
-
8,575
87,908
43,137
3,462
-
3,462
6,380
2,528
(1,570)
-
(1,570)
17,0352
724
10,467
-
10,467
111,323
46,389
1 Included within unallocated expenses is employee benefits expense of $1.37 million and other administrative expenses of $1.07 million.
2 Included within unallocated assets is inventory of $6.27 million, trade and other receivables of $2.83 million, cash balances of $6.84 million
and capital replacement funds of $0.62 million.
Non-cash and other significant items included in profit above:
Gain on revaluation of investment property
Gain on sale of management rights
Depreciation & amortisation
Impairment of receivables
Segment acquisitions:
Acquisition of property, plant and equipment
Acquisition of investment property
Acquisition of intangibles
Acquisition of inventory
28.
REMUNERATION OF AUDITORS
4,041
-
(50)
(39)
72
46,472
-
-
-
490
(175)
(7)
29
-
800
-
-
-
(43)
(52)
367
-
3
6,300
4,041
490
(268)
(98)
468
46,472
803
6,300
During the financial year the following fees were paid or payable for services
provided by the auditor of the company and its related practices:
(i) Audit and other assurance services – Ernst and Young
Audit and review of financial statements
(ii)
Audit and other assurance services –BDO Audit Pty Ltd 1
Audit and review of financial statements
1 Outgoing auditor
Consolidated
30 June 2017
30 June 2016
$
$
123,000
79,000
-
72,475
123,000
151,475
EGH ANNUAL REPORT 2017
66
EGH ANNUAL REPORT 2017
67
67
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
29. PARENT ENTITY DISCLOSURES
Information relating to Eureka Group Holdings Limited (parent entity):
Results of the parent entity
Profit/(loss) for the period
Other comprehensive income
Total comprehensive income for the year
Financial position of parent entity at year-end
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Share capital
Accumulated losses
Total equity
Consolidated
30 June 2017
30 June 2016
$’000
$’000
(1,334)
-
(1,334)
81,633
12,477
94,110
479
43,816
44,295
94,253
(44,438)
49,815
770
-
770
77,370
5,618
82,989
2,837
32,397
35,234
90,858
(43,104)
47,754
Guarantees entered into by the parent entity
The parent entity has provided financial guarantees in respect of the commercial bills amounting to $6,486,250 and is secured
by:
Registered mortgages over managers’ units and other real estate at its Communities;
Guarantee and indemnity given by EGH and its controlled entities; and
Fixed and floating charges over the assets of EGH and its subsidiaries.
Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 June 2017 or 30 June 2016. For information about guarantees
given by the parent entity, please see above.
Contractual commitments for capital items
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2017.
30. SUBSEQUENT EVENTS
The Group has completed the acquisition of the 42 unit village in Gympie QLD on 19 July 2017, otherwise known as
‘Freshwater Villas’ for $3.8 million.
Other than the above mentioned items, no other matter or circumstance has arisen since 30 June 2017 that has significantly
affected, or may significantly affect, the operations of the Group, the results of those operations or the state of affairs of the
Group in subsequent financial years.
68
EGH ANNUAL REPORT 2017
68
2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
29. PARENT ENTITY DISCLOSURES
Eureka Group Holdings Limited and controlled entities
Directors’ Declaration
Directors’ Declaration
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEAR ENDED 30 JUNE 2017
Information relating to Eureka Group Holdings Limited (parent entity):
a. The accompanying financial statements and notes are in accordance with the Corporations Act 2001,
Consolidated
30 June 2017
30 June 2016
$’000
$’000
In accordance with a resolution of the directors of Eureka Group Holdings Limited, I state:
1.
In the opinion of the Directors of Eureka Group Holdings Limited (the “company”):
Results of the parent entity
Profit/(loss) for the period
Other comprehensive income
Total comprehensive income for the year
Financial position of parent entity at year-end
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Share capital
Accumulated losses
Total equity
(1,334)
-
(1,334)
81,633
12,477
94,110
479
43,816
44,295
94,253
(44,438)
49,815
770
-
770
77,370
5,618
82,989
2,837
32,397
35,234
90,858
(43,104)
47,754
including:
i. giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its performance
for the financial year ended on that date; and
ii. complying with Australian Accounting Standards and the Corporations Regulations 2001;
b. There are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable; and
c. The financial statements and notes thereto are in accordance with International Financial Reporting
Standards as disclosed in Note 2.
2. This declaration has been made after receiving the declarations required to be made to the directors in accordance
with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2017.
On behalf of the Board
Robin Levison
Executive Chairman
Dated in Brisbane this 24th day of August, 2017
Guarantees entered into by the parent entity
The parent entity has provided financial guarantees in respect of the commercial bills amounting to $6,486,250 and is secured
by:
Registered mortgages over managers’ units and other real estate at its Communities;
Guarantee and indemnity given by EGH and its controlled entities; and
Fixed and floating charges over the assets of EGH and its subsidiaries.
The parent entity did not have any contingent liabilities as at 30 June 2017 or 30 June 2016. For information about guarantees
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2017.
Contingent liabilities of the parent entity
given by the parent entity, please see above.
Contractual commitments for capital items
30. SUBSEQUENT EVENTS
‘Freshwater Villas’ for $3.8 million.
The Group has completed the acquisition of the 42 unit village in Gympie QLD on 19 July 2017, otherwise known as
Other than the above mentioned items, no other matter or circumstance has arisen since 30 June 2017 that has significantly
affected, or may significantly affect, the operations of the Group, the results of those operations or the state of affairs of the
Group in subsequent financial years.
EGH ANNUAL REPORT 2017
68
EGH ANNUAL REPORT 2017
69
69
EUREKA GROUP HOLDINGSFor personal use only
Ernst & Young
Ernst & Young
111 Eagle Street
111 Eagle Street
Brisbane QLD 4000 Australia
Eureka Group Holdings Limited and controlled entities
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
GPO Box 7878 Brisbane QLD 4001
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
AUDIT REPORT
TO BE SUPPLIED BY EY
Independent Auditor's Report to the Members of Eureka Group Holdings
Independent Auditor's Report to the Members of Eureka Group Holdings
Limited
Limited
Independent Auditor's Report to the Members of Eureka Group Holdings
Limited
Report on the Audit of the Financial Report
Report on the Audit of the Financial Report
Opinion
Opinion
Report on the Audit of the Financial Report
We have audited the financial report of Eureka Group Holdings Limited (the Company) and its
We have audited the financial report of Eureka Group Holdings Limited (the Company) and its
subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as
Opinion
subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as
at 30 June 2017, the consolidated statement of comprehensive income, consolidated statement of
at 30 June 2017, the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, notes to the
We have audited the financial report of Eureka Group Holdings Limited (the Company) and its
changes in equity and consolidated statement of cash flows for the year then ended, notes to the
financial statements, including a summary of significant accounting policies, and the directors'
subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as
financial statements, including a summary of significant accounting policies, and the directors'
declaration.
at 30 June 2017, the consolidated statement of comprehensive income, consolidated statement of
declaration.
changes in equity and consolidated statement of cash flows for the year then ended, notes to the
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
financial statements, including a summary of significant accounting policies, and the directors'
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
declaration.
Act 2001, including:
a)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2017
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2017
a)
and of its consolidated financial performance for the year ended on that date; and
Act 2001, including:
and of its consolidated financial performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2017
complying with Australian Accounting Standards and the Corporations Regulations 2001.
and of its consolidated financial performance for the year ended on that date; and
b)
a)
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
b)
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
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
Basis for Opinion
Report section of our report. We are independent of the Group in accordance with the auditor
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Report section of our report. We are independent of the Group in accordance with the auditor
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Report section of our report. We are independent of the Group in accordance with the auditor
ethical responsibilities in accordance with the Code.
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
ethical responsibilities in accordance with the Code.
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
our opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
ethical responsibilities in accordance with the Code.
our opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
Key Audit Matters
our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
Key audit matters are those matters that, in our professional judgment, were of most significance in our
Key Audit Matters
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
audit of the financial report of the current year. These matters were addressed in the context of our audit
opinion on these matters. For each matter below, our description of how our audit addressed the matter
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
Key audit matters are those matters that, in our professional judgment, were of most significance in our
is provided in that context.
opinion on these matters. For each matter below, our description of how our audit addressed the matter
audit of the financial report of the current year. These matters were addressed in the context of our audit
is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
opinion on these matters. For each matter below, our description of how our audit addressed the matter
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
included the performance of procedures designed to respond to our assessment of the risks of material
is provided in that context.
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
misstatement of the financial report. The results of our audit procedures, including the procedures
included the performance of procedures designed to respond to our assessment of the risks of material
performed to address the matters below, provide the basis for our audit opinion on the accompanying
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
misstatement of the financial report. The results of our audit procedures, including the procedures
financial report.
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
performed to address the matters below, provide the basis for our audit opinion on the accompanying
included the performance of procedures designed to respond to our assessment of the risks of material
financial report.
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
EGH ANNUAL REPORT 2017
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A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
AUDIT REPORT
TO BE SUPPLIED BY EY
AUDIT REPORT
TO BE SUPPLIED BY EY
Independent Auditor's Report to the Members of Eureka Group Holdings
Limited
Recognition and Valuation of Investment Properties
Report on the Audit of the Financial Report
Why significant
How our audit addressed the key audit matter
In obtaining sufficient and appropriate audit evidence, we:
Investment properties is a key audit matter due to the
Opinion
size of the recorded asset (30 June 2017:
$100,666,000) and the degree of estimation and
• Assessed all material additions to investment properties
We have audited the financial report of Eureka Group Holdings Limited (the Company) and its
assumptions required to be made by the Group,
during the year and the Group’s assessment as to
subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as
specifically concerning classification and fair value.
whether these are classified as an asset or business
at 30 June 2017, the consolidated statement of comprehensive income, consolidated statement of
acquisition. In doing so, we vouched material additions
changes in equity and consolidated statement of cash flows for the year then ended, notes to the
The Group assesses whether new acquisitions are
to contracts of purchase and settlement statements.
classified as an asset (individual acquisitions of
financial statements, including a summary of significant accounting policies, and the directors'
• Evaluated the Group’s assessment of each property that
investment property assets) or business acquisitions.
declaration.
it continues to be classified as an investment property
Each period end all assets are assessed to determine if
under Australian Accounting Standards with
they continue to meet the requirements under
consideration as to how significant returns are derived
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Australian Accounting Standards to be classified as
from these assets.
Act 2001, including:
investment property.
• On a sample basis we agreed investment properties to
• Assessed the Group’s fair value assessment of
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2017
and of its consolidated financial performance for the year ended on that date; and
applicable title and other documents evidencing
ownership.
a)
All investment properties are recorded at their fair
value. Fair values are determined each reporting period
by reference to independent valuations or internal
valuations with reference to current market conditions.
b)
Changes in fair value are recognised on the
consolidated statement of profit and loss.
complying with Australian Accounting Standards and the Corporations Regulations 2001.
investment properties (where material). In doing so, we
performed the following procedures with the involvement
of our real estate valuation specialists:
• Assessed the sustainable earnings for each
Basis for Opinion
property, including occupancy assumptions.
Note 2 and 12 to the financial report discloses the
• Considered the capitalisation rates for each
investment property assets, and Note 21 discloses the
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
assumptions used in valuing these assets.
• Assessed the independent valuations obtained by
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
the Group including, the independence (in respect
Report section of our report. We are independent of the Group in accordance with the auditor
of external valuations) and competence of the
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
valuers and the methodology of the valuations.
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
• Conducted analysis of a sample of properties for
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.
comparable sales evidence.
property.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter
is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
EGH ANNUAL REPORT 2017
70
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
EGH ANNUAL REPORT 2017
71
71
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
AUDIT REPORT
TO BE SUPPLIED BY EY
Independent Auditor's Report to the Members of Eureka Group Holdings
Impairment Testing of Intangible Assets
Limited
Impairment Testing of Intangible Assets
disclosure included in Note 14 to the financial report.
• Assessed the adequacy of the impairment tests
How our audit addressed the key audit matter
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Why significant
Report on the Audit of the Financial Report
Impairment testing of intangible assets is a key audit
In obtaining sufficient audit evidence in respect of the
Why significant
How our audit addressed the key audit matter
matter due to the size of the recorded asset
valuation of intangible assets, we:
Opinion
($6,327,000) and the degree of estimation and
Impairment testing of intangible assets is a key audit
In obtaining sufficient audit evidence in respect of the
assumptions required to be made by the Group,
matter due to the size of the recorded asset
valuation of intangible assets, we:
• Evaluated the Group’s assessment of impairment
specifically concerning future discounted cash flows.
We have audited the financial report of Eureka Group Holdings Limited (the Company) and its
($6,327,000) and the degree of estimation and
indicators for management and letting rights.
assumptions required to be made by the Group,
subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as
• Checked the mathematical accuracy of the cash flow
• Evaluated the Group’s assessment of impairment
Note 14 to the financial report discloses the Group’s
specifically concerning future discounted cash flows.
at 30 June 2017, the consolidated statement of comprehensive income, consolidated statement of
forecasts and impairment model.
indicators for management and letting rights.
intangible assets and the key assumptions used in
changes in equity and consolidated statement of cash flows for the year then ended, notes to the
• Considered the accuracy of the Group’s historical cash
• Checked the mathematical accuracy of the cash flow
testing these assets, including those used in the cash
Note 14 to the financial report discloses the Group’s
financial statements, including a summary of significant accounting policies, and the directors'
flow forecasts. We agreed the forecasts to Board
forecasts and impairment model.
flow forecasts.
intangible assets and the key assumptions used in
approved budgets and compared these forecasts to
declaration.
• Considered the accuracy of the Group’s historical cash
testing these assets, including those used in the cash
previously achieved results and any adjustments
flow forecasts. We agreed the forecasts to Board
We focused on the impairment assessment of goodwill
flow forecasts.
required for current trading and market activities.
approved budgets and compared these forecasts to
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
and management and letting rights. The Group
• Applied our knowledge of the business and corroborated
previously achieved results and any adjustments
Act 2001, including:
performs an annual impairment assessment of goodwill,
We focused on the impairment assessment of goodwill
our work with external information where possible,
required for current trading and market activities.
while definite life intangible assets are assessed for
and management and letting rights. The Group
including multiples based on current sales activity for
• Applied our knowledge of the business and corroborated
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2017
a)
indicators of impairment. Due to the range of judgments
performs an annual impairment assessment of goodwill,
management and letting rights assets.
our work with external information where possible,
and of its consolidated financial performance for the year ended on that date; and
and assumptions used in the impairment models and
while definite life intangible assets are assessed for
• Assessed the key assumptions within the impairment
including multiples based on current sales activity for
impairment assessments, this was an area considered
indicators of impairment. Due to the range of judgments
model including the growth rate and discount rate.
management and letting rights assets.
to be at risk of material misstatement.
and assumptions used in the impairment models and
b)
• Assessed the adequacy of the impairment tests
• Assessed the key assumptions within the impairment
impairment assessments, this was an area considered
disclosure included in Note 14 to the financial report.
model including the growth rate and discount rate.
to be at risk of material misstatement.
Basis for Opinion
Information Other than the Financial Report and Auditor’s Report
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
Information Other than the Financial Report and Auditor’s Report
The directors are responsible for the other information. The other information comprises the information
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
included in the Group’s 2017 Annual Report, but does not include the financial report and our auditor’s
Report section of our report. We are independent of the Group in accordance with the auditor
The directors are responsible for the other information. The other information comprises the information
report thereon.
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
included in the Group’s 2017 Annual Report, but does not include the financial report and our auditor’s
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
express any form of assurance conclusion thereon.
ethical responsibilities in accordance with the Code.
Our opinion on the financial report does not cover the other information and accordingly we do 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 and,
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
in doing so, consider whether the other information is materially inconsistent with the financial report or
our opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and,
our knowledge obtained in the audit or otherwise appears to be materially misstated.
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 this other
Key Audit Matters
information, we are required to report that fact. We have nothing to report in this regard.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
Key audit matters are those matters that, in our professional judgment, were of most significance in our
information, we are required to report that fact. We have nothing to report in this regard.
audit of the financial report of the current year. These matters were addressed in the context of our audit
Responsibilities of the Directors for the Financial Report
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter
Responsibilities of the Directors for the Financial Report
is provided in that context.
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
The directors of the Company are responsible for the preparation of the financial report that gives a true
such internal control as the directors determine is necessary to enable the preparation of the financial
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
included the performance of procedures designed to respond to our assessment of the risks of material
such internal control as the directors determine is necessary to enable the preparation of the financial
error.
misstatement of the financial report. The results of our audit procedures, including the procedures
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
performed to address the matters below, provide the basis for our audit opinion on the accompanying
error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
financial report.
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
operations, or have no realistic alternative but to do so.
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
EGH ANNUAL REPORT 2017
72
72
2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
AUDIT REPORT
TO BE SUPPLIED BY EY
AUDIT REPORT
TO BE SUPPLIED BY EY
a)
•
b)
•
Independent Auditor's Report to the Members of Eureka Group Holdings
Limited
Auditor's Responsibilities for the Audit of the Financial Report
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
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
Report on the Audit of the Financial Report
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
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
Opinion
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,
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
We have audited the financial report of Eureka Group Holdings Limited (the Company) and its
individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as
of users taken on the basis of this financial report.
at 30 June 2017, the consolidated statement of comprehensive income, consolidated statement of
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
changes in equity and consolidated statement of cash flows for the year then ended, notes to the
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
financial statements, including a summary of significant accounting policies, and the directors'
judgment and maintain professional scepticism throughout the audit. We also:
declaration.
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
•
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
Act 2001, including:
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
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
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2017
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
and of its consolidated financial performance for the year ended on that date; and
control.
Obtain an understanding of internal control relevant to the audit in order to design audit
complying with Australian Accounting Standards and the Corporations Regulations 2001.
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
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.
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
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.
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
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
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
our opinion.
continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
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
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves fair presentation.
a manner that achieves fair presentation.
Key audit matters are those matters that, in our professional judgment, were of most significance in our
•
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
audit of the financial report of the current year. These matters were addressed in the context of our audit
•
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
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
opinion on these matters. For each matter below, our description of how our audit addressed the matter
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
is provided in that context.
responsible for our audit opinion.
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 (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.
•
•
Key Audit Matters
We communicate with the directors regarding, among other matters, the planned scope and timing of the
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
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 we
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
included the performance of procedures designed to respond to our assessment of the risks of material
identify during our audit.
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
EGH ANNUAL REPORT 2017
72
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
EGH ANNUAL REPORT 2017
73
73
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
AUDIT REPORT
TO BE SUPPLIED BY EY
Independent Auditor's Report to the Members of Eureka Group Holdings
Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Eureka Group Holdings Limited (the Company) and its
subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as
at 30 June 2017, the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, notes to the
financial statements, including a summary of significant accounting policies, and the directors'
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2017
and of its consolidated financial performance for the year ended on that date; and
b)
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 (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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter
is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
74
EGH ANNUAL REPORT 2017
74
2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
AUDIT REPORT
TO BE SUPPLIED BY EY
AUDITOR INDEPENDENCE DECLARATION
TO BE SUPPLIED BY EY
Independent Auditor's Report to the Members of Eureka Group Holdings
Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Eureka Group Holdings Limited (the Company) and its
subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as
at 30 June 2017, the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, notes to the
financial statements, including a summary of significant accounting policies, and the directors'
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2017
and of its consolidated financial performance for the year ended on that date; and
b)
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 (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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter
is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
EGH ANNUAL REPORT 2017
74
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
EGH ANNUAL REPORT 2017
75
75
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Corporate Governance Statement
Corporate Governance Statement
The Board has prepared a corporate governance statement that set outs the key corporate governance practices approved
by the Board and to which both the Board collectively and the Directors individually are committed.
In formulating and adopting its corporate governance principles, the Directors have adopted and other than where explicitly
stated complies with ASX Corporate Governance Principles and Recommendations, 3rd Edition and is current as at 30
June 2017.
The Company's ASX Appendix 4G, which is a checklist cross-referencing the ASX Principles and Recommendations to
the relevant disclosures in the statement Corporate Governance Statement, the Company's 2017 Annual Report and other
relevance governance documents and materials on the Company's website, are provided in the corporate governance
section of the Company's website at http://www.eurekagroupholdings.com.au/governance/. The Company's Corporate
Governance Statement together with the ASX Appendix 4G and this Annual Report, were also lodged with the ASX on 24
August 2017.
Owing to the size of the Group and the transition necessary to grow and fund the business, the Board has three non-
executive Directors with one Director who is independent. The independent Director is chairman of the two board
committees and the committees are made up of non-executive Directors. Whilst this composition does not fully comply
with its charter and ASX recommendations, the Board believes the experience and skill set of the non-executive Directors
ensures both independent judgement and oversight of management is exercised by a majority of the Board.
The Board has also established the following charters that are available on the Company’s website:
Board Charter
Audit & Risk Committee Charter
Nomination & Remuneration Committee Charter
Share Trading Policy
Code of Conduct Policy
76
EGH ANNUAL REPORT 2017
76
2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Corporate Governance Statement
The Board has prepared a corporate governance statement that set outs the key corporate governance practices approved
by the Board and to which both the Board collectively and the Directors individually are committed.
In formulating and adopting its corporate governance principles, the Directors have adopted and other than where explicitly
stated complies with ASX Corporate Governance Principles and Recommendations, 3rd Edition and is current as at 30
The Company's ASX Appendix 4G, which is a checklist cross-referencing the ASX Principles and Recommendations to
the relevant disclosures in the statement Corporate Governance Statement, the Company's 2017 Annual Report and other
relevance governance documents and materials on the Company's website, are provided in the corporate governance
section of the Company's website at http://www.eurekagroupholdings.com.au/governance/. The Company's Corporate
Governance Statement together with the ASX Appendix 4G and this Annual Report, were also lodged with the ASX on 24
June 2017.
August 2017.
Owing to the size of the Group and the transition necessary to grow and fund the business, the Board has three non-
executive Directors with one Director who is independent. The independent Director is chairman of the two board
committees and the committees are made up of non-executive Directors. Whilst this composition does not fully comply
with its charter and ASX recommendations, the Board believes the experience and skill set of the non-executive Directors
ensures both independent judgement and oversight of management is exercised by a majority of the Board.
The Board has also established the following charters that are available on the Company’s website:
Board Charter
Audit & Risk Committee Charter
Nomination & Remuneration Committee Charter
Share Trading Policy
Code of Conduct Policy
Eureka Group Holdings Limited and controlled entities
Corporate Directory
Corporate Directory
Postal Address
Suite 2D 7 Short St, Southport QLD 4215
Board of Directors
Robin Levison (Non - Executive Chairman)
Lachlan McIntosh
Nirmal Hansra
Chief Executive Officer
Jeff Weigh
Company Secretary
Oliver Schweizer
Solicitors
Romans & Romans Lawyers
609 Logan Rd,
Greenslopes QLD 4120
Tel: 07 3847 3333
Fax: 07 3847 3336
Mills Oakley
Level 14
145 Ann Street
Brisbane QLD 4000
Tel: 07 3228 0400
Fax: 07 3012 8777
Auditors
Ernst & Young 111 Eagle St
Brisbane Qld 4000
Tel: 07 3011-3333
Fax: 07 3011-3344
Share Registry
Link Market Services – Brisbane
Level 12, 300 Queen Street
Brisbane Qld 4000
Call Centre: 02 8280-7454
Fax: 07 3228-4999
Listing Details
ASX Limited Brisbane
Code: Shares – EGH
Australian Business Number
15 097 241 159
EGH ANNUAL REPORT 2017
76
EGH ANNUAL REPORT 2017
77
77
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Security Holder Information
Security Holder Information
Distribution of Securities as at 24 August 2017
Number
of
Securities
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total Security
Holders
No of
Shareholders
343
316
170
481
200
1,510
Marketable Shares
There were 271 holders of less than a marketable parcel of 667
shares holding a total of 51,112 shares.
Voting Rights
Ordinary Shares carry voting rights of one vote per share. Options
carry no voting rights.
Twenty Largest Ordinary Shareholders as at 24 August 2017
National Nominees Limited
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Ignition Capital Pty Ltd
Wavet Fund No 2 Pty Ltd
NGE Capital Limited
BNP Paribas Noms Pty Ltd
Kathlac Pty Ltd
22 Capital Pty Ltd
Brazil Farming Pty Ltd
Tolani Estate Pty Ltd
Navigator Property Group
One Managed Investment Funds Limited Folkestone Maxim A-Reit Securities Account
Ignition Capital No 2 Pty Ltd
Mr Alister Charles Wright
Armada Trading Pty Ltd
RBC Investor Services Australia Nominees Pty Ltd
Richard Mews and Wee Khoon Mews
TNWDG Pty Ltd
G & P Investments (NSW) Pty Limited
Total
Securities in which Directors have a Relevant Interest at 24 August 2017
Robin Levison
Lachlan McIntosh
Nirmal Hansra
Total
No of Ordinary
Shares Held
40,148,968
% of Issued
Share Capital
17.48%
16,203,796
13,091,251
10,150,000
9,250,000
8,840,949
8,213,531
6,700,138
5,216,028
4,900,000
4,400,000
3,938,762
3,125,000
2,580,000
2,361,557
2,318,937
2,266,973
2,188,607
2,050,000
1,770,000
7.06%
5.70%
4.42%
4.03%
3.85%
3.58%
2.92%
2.27%
2.13%
1.92%
1.71%
1.36%
1.12%
1.03%
1.01%
0.99%
0.95%
0.89%
0.77%
149,714,497
65.19%
Ordinary
Shares
12,905,000
11,916,166
839,834
25,661,000
Options
-
-
-
-
78
EGH ANNUAL REPORT 2017
78
2016-2017 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Security Holder Information
Distribution of Securities as at 24 August 2017
No of
Shareholders
Marketable Shares
There were 271 holders of less than a marketable parcel of 667
shares holding a total of 51,112 shares.
Voting Rights
Ordinary Shares carry voting rights of one vote per share. Options
carry no voting rights.
Twenty Largest Ordinary Shareholders as at 24 August 2017
No of Ordinary
% of Issued
Shares Held
Share Capital
Number
of
Securities
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total Security
Holders
343
316
170
481
200
1,510
National Nominees Limited
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Ignition Capital Pty Ltd
Wavet Fund No 2 Pty Ltd
NGE Capital Limited
BNP Paribas Noms Pty Ltd
Kathlac Pty Ltd
22 Capital Pty Ltd
Brazil Farming Pty Ltd
Tolani Estate Pty Ltd
Navigator Property Group
Ignition Capital No 2 Pty Ltd
Mr Alister Charles Wright
Armada Trading Pty Ltd
Robin Levison
Lachlan McIntosh
Nirmal Hansra
Total
RBC Investor Services Australia Nominees Pty Ltd
Richard Mews and Wee Khoon Mews
TNWDG Pty Ltd
G & P Investments (NSW) Pty Limited
Total
One Managed Investment Funds Limited Folkestone Maxim A-Reit Securities Account
Securities in which Directors have a Relevant Interest at 24 August 2017
Options
40,148,968
16,203,796
13,091,251
10,150,000
9,250,000
8,840,949
8,213,531
6,700,138
5,216,028
4,900,000
4,400,000
3,938,762
3,125,000
2,580,000
2,361,557
2,318,937
2,266,973
2,188,607
2,050,000
1,770,000
Ordinary
Shares
12,905,000
11,916,166
839,834
25,661,000
17.48%
7.06%
5.70%
4.42%
4.03%
3.85%
3.58%
2.92%
2.27%
2.13%
1.92%
1.71%
1.36%
1.12%
1.03%
1.01%
0.99%
0.95%
0.89%
0.77%
-
-
-
-
149,714,497
65.19%
This page has been left intentionally blank.
EGH ANNUAL REPORT 2017
78
79
EUREKA GROUP HOLDINGSFor personal use only
Delivering
affordable, caring
and inclusive
communities
SUPPORT OFFICE
ABN 15 097 241 159
Level 2, 7 Short Street,
Southport Qld 4215
P: (07) 5568 0205
F: (07) 5302 6605
E: info@eurekagroupholdings.com.au
For personal use only