ANNUAL REPORT
2017-2018
Delivering affordable, caring
and inclusive communities
For personal use only 2017-2018 ANNUAL REPORTFor personal use only Contents
FY2018 Highlights
Executive Chairman’s Report
FY2018 Acquisitions
Directors’ Report
Consolidated Statement of Profit or
Loss and Other Comprehensive Income
02
04
10
16
30
Consolidated Statement of Financial Position
31
Consolidated Statement of Cash Flows
32
Consolidated Statement of Changes in Equity 33
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Auditor’s Independence Declaration
Corporate Governance Statement
Corporate Directory
Security Holder Information
34
75
76
81
82
83
84
All images within this Annual Report show residents
at Eureka villages.
01
01
EUREKA GROUP HOLDINGSFor personal use only FY2018
Highlights
92.9%
FY18 Occupancy
up 3.3% on FY17 at 89.6%
Supported Residential Facilities (SRFs)
Underperforming SRF, Amber Lodge in
Adelaide sold in March 2018 with the sale of a
second SRF facility, Lambert Village in Mount
Gambier sold subsequent to year end.
A third SRF in Adelaide has received
accreditation under the National Disability
Insurance Scheme (NDIS) and is operating
profitably. Eureka expects further profit
gains in the coming year.
Corporate Governance
Eureka has strengthened its corporate
governance procedures that are
underpinned by the appointments of new
independent Chair, Murray Boyte and
Director, Sue Renkin who also assumed
the role of independent Chair of the
Audit and Risk Committee. Eureka also
appointed Laura Fanning, an experienced
corporate governance professional, as
Company Secretary.
Finance Facility
Eureka has re-negotiated its banking
arrangements, consolidating debt into
one facility maturing in 3.5 years on 31
December 2021. This represents a two-year
extension to the $20million component
of the facility demonstrating Eureka’s
excellent relationship with its bankers.
02
17%
increase on FY17
EBITDA from group’s core operations
FY18 $6,942,000
FY17 $5,931,000
12.8%
Growth in unit assets
1,934
2,182
UNITS FY17
UNITS FY18
Eureka
brand expands
into Tasmania
Now Operating in
Australian
States5
2017-2018 ANNUAL REPORTFor personal use only Eureka has a strong platform to expand its business base through acquisitions and infill
developments including at some existing Eureka villages. An excellent opportunity exists for
Eureka to scale its platform of providing secure, safe and friendly residential accommodation
in the social infrastructure segment of retirement living.
41
20
6
2
5
8
Couran Cove
Eureka has reached a pragmatic resolution by disposing of
its property assets at Couran Cove subsequent to year end
and retaining the right to recover value from the equitable
land interest.
This transaction will return $3.60 million cash scheduled
for 6 September 2018 and will free up capital to redeploy to
Eureka’s core business activities.
32 Owned
9 under management
03
EUREKA GROUP HOLDINGSFor personal use only Executive Chairman’s Report
Financial Review
While Eureka Group Holdings Limited (Eureka) has
experienced a difficult year as reflected in the results
set out within, the core operating business providing
affordable senior rental accommodation and other
services has performed strongly with an improved
EBITDA. Excellent occupancy levels have been achieved
across the portfolio. Eureka has acquired 8 new villages
including 5 villages in conjunction with a joint venture
partner and has secured a long term management
contract with the joint venture.
The redeploying of capital into the core business can
contribute to a substantial improvement in profitability
off the existing capital base.
For the year ended 30 June 2018 Eureka Group Holdings
Limited (Eureka) has reported a net loss before (and
after) tax of $0.28 million, compared with a 2017 profit
before (and after) tax of $6.54 million. These results were
arrived at after property adjustments as follows:
Gain on revaluation of
investment properties
Write downs on Supported
Residential Facilities
Inventory write down on
Couran Cove Eco units and
transaction costs
Write down for Couran Cove
residual assets
FY18
$’000
FY17
$’000
1,233
3,701
(2,672)
(2,655)
(1,124)
(1,763)
-
-
(4,326)
1,046
The year under review has been a disappointing one
for shareholders:
» Asset write downs and realised losses on property
sales adversely impacting the results.
» Core operating cash flow reduced as a result of
expenditure at Couran Cove and Terranora.
» Non-core assets including Terranora and Couran
Cove, which during the period were recorded in
the financial statements at $20.00 million - $24.00
million, have had a material detrimental effect on
earnings and cash flow.
The Group’s EBITDA¹ prior to property adjustments
was $7.05 million. This compares to the FY17 EBITDA¹
of $8.37 million. These EBITDA¹ results include a
number of items, which if adjusted for, demonstrate the
strength in the Group’s core business operations.
04
2017-2018 ANNUAL REPORTFor personal use only EBITDA¹ prior to gains and losses
on revaluations and write-offs
FY18
$’000
FY17
$’000
7,054
8,369
Net operating cash flow at $2.94 million was 27.8%
below FY17. Interest paid at $2.78 million increased by
22% over FY17 with development costs at Terranora and
Couran Cove negatively affecting operating cashflow of
$1.67 million (FY17 a $1.30 million).
Bartercard write-down/(gain)
253
(1,320)
Couran Cove consulting fees
Insurance gain
Director termination payments
CEO retirement payment
-
-
-
136
Profit on sale of Victoria St, Mackay
(501)
(1,000)
(638)
520
-
-
EBITDA¹ from core operations
6,942
5,931
Adjusted for the above items, EBITDA1 from the
Group’s core operations increased by 17% over FY17.
This was achieved as a result of a higher occupancy
rate of 92.9% (FY17 89.6%), the acquisition of 3 villages,
acquisition of 50% interest in the Tasmanian Joint
Venture (2.5 months contribution only) and control of
expenditure levels.
Bank debt increased by 9.5% to $55.34 million (FY17
$50.56 million). During the period Eureka complied
with all bank covenants. In April 2018 the bank covenant
for loan to value ratio was increased from 55% to 57.5%
until September 30, 2018 to fund Eureka’s $4.50 million
commitment to the joint venture established to acquire
the Tasmanian villages. The improving cash flow and
asset sales has meant Eureka has not exceeded the 55%
limit. The realisation of proceeds from the settlement of
Couran Cove transactions, Terranora land and unit sales
and remaining Supported Residential Facility (SRF)
assets will generate in excess of $20.00 million that can
be utilised for debt reduction and acquisitions.
1 EBITDA (Earnings before interest, tax, depreciation and amortisation)
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.
Top left: Residents at Eureka
Launceston Gardens
Top right: Residents at Eureka
Glenorchy Gardens
Bottom right: Eureka Devonport
Gardens manager, Donna Mackrell
Opposite page: Dining at Eureka
Claremont Gardens
05
EUREKA GROUP HOLDINGSFor personal use only Subsequent to year-end, Eureka has re-negotiated its
banking arrangements, consolidating the debt into
one facility maturing in 3.5 years on 31 December 2021.
This reflects a 2 year extension to the $20.00 million
component of the facility and demonstrates Eureka’s
excellent relationship with its bankers.
During the period, asset sales totalled $3.90 million
from the sale of the Mackay property, Amber Lodge
Supported Residential Facility and ancillary assets.
Portfolio Occupancy
The occupancy performance for the 100% owned
villages increased from 89.6% in FY17 to 92.9% in FY18.
This is an excellent result achieved through a focused
local market strategy including open days, close liaison
with institutional and health care agencies and media
sales programs. Eureka expects further occupancy
improvement in FY19.
Acquisitions
During the period Eureka acquired 3 new villages for
$6.26 million, including acquisition costs:
July 2017
Gympie
42 units
August 2017
Townsville
12 units
August 2017
Ayr
18 units
72 units
$’000
4,282
880
1,095
6,257
Eureka also entered into a joint venture with a group of
unrelated private investors to acquire five senior rental
villages in Tasmania comprising 254 units. The 50%
investment totalled $4.50 million. Eureka entered into a
10 year management agreement with the joint venture.
At year end Eureka’s portfolio comprised 32 owned
villages (including owned through joint venture) and 9
villages under management representing 2,182 units, a
12.8% increase on FY17’s 1,934 units.
Supported Residential Facilities (SRF)
During FY16 and FY17 Eureka acquired 3 SRFs in South
Australia at a cost of $11.76 million. The SRFs have not
performed as expected, resulting in write downs of
$5.33 million over the last two years.
As the SRFs do not fit with Eureka’s core senior rental
village business, Amber Lodge in Adelaide was sold in
March 2018 for written down book value of $2.20 million
and subsequent to year end, a contract has been entered
into for the sale of the Lambert facility at Mount Gambier
for $1.10 million, in line with written down book value. The
sale is conditional on a consent for the transfer of the SRF
licence. Two properties owned adjacent to the facility
have been put to market and will be sold separately with
expected proceeds of $0.70 million.
The third SRF in Adelaide has a book value of $3.60
million. This facility has accreditation under the
National Disability Insurance Scheme (NDIS). This
facility is operating profitably, and we expect further
improvement in the coming year.
Blue Care Alliance
In June 2016 Eureka and Uniting Church Queensland
(Blue Care) entered into a strategic partnership
that provided Eureka residents with a range of
home services, offering preferred care and support
programs enabled through government funding
programs. These programs enhance the living
environment provided through the Eureka senior rental
accommodation model.
06
2017-2018 ANNUAL REPORTFor personal use only The partnership is consistent with Eureka’s philosophy
of delivering quality independent living communities
that are safe, secure and well managed. It is also
consistent with a growing national health trend enabling
senior residents to participate in self-management of
health under professional guidance. During FY18 the
number of visits, hours and services delivered by Blue
Care liaison officers increased significantly over FY17.
While off a low base, the improved service delivery
rates demonstrates the partnership is beneficial for the
Eureka business model. Jointly Blue Care and Eureka
management are committed to proactively expanding
the partnership, including the acceleration of referrals to
the Eureka villages.
Bartercard
Eureka has in recent years used Bartercard as a medium
of exchange for business transactions including
contracting to receive Bartercard dollars for a portion of
sales at Terranora and the Couran Cove loan repayment.
At balance date Eureka has T$2.10 million Bartercard
dollars, a portion of which is held as deposits for
future receipt of goods. Eureka will no longer receive
Bartercard dollars except for committed transactions
under Terranora sales. The use of Bartercard dollars
for the purchase of goods and services will be actively
managed to reduce this exposure.
Bottom left: Resident at Eureka
Cascade Gardens, Mackay, Qld
Bottom right: Eureka Murray River
Gardens Mildura village manager,
Collette Hazeldene helping a resident
to master the internet
Above: Terranora Village
Terranora
Terranora Village and associated property was acquired
in December 2015 for $7.00 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.
With the larger apartments, excess land and strength
in the Gold Coast property market, it was determined
to strata title existing apartments and sell them on a
retail basis.
Town planners were engaged and a subdivision plan,
comprising the existing apartments plus surplus
development land lots were designed, and an
application was lodged with the Tweed Shire Council.
The property is now designed as a two lot subdivision
in accordance with the final development approval.
The previously identified third lot is now required to be
transferred to the Body Corporate as common property.
All conditions have been complied with to achieve titling
of the two lot subdivision creating a separate title for the
4.8ha of vacant land. We expect to receive Tweed Shire
Council confirmation for the subdivision in September
enabling this component to proceed to titling.
Significant progress has been made in finalising
certificates of compliance and meeting development
approval conditions for the 61 strata title units situated on
a separate title on completion of the two lot subdivision.
Despite the delay of the titling process, 12 conditional sales
contracts (subject to titling) and 12 Expressions of Interest
(EOIs) have been received. As soon as titling is achieved,
the sales program will be accelerated. These contracts
and EOIs approximate to $6.98 million sale value.
07
EUREKA GROUP HOLDINGSFor personal use only Couran Cove
Directors and staff
On 30 August 2018, Eureka released to the ASX an
announcement on a settlement which Eureka has
reached with Onterran Limited, Couran Cove entities
and other parties pertaining to outstanding loans and
property transactions.
The financial impact of the transactions on asset values
and transactions costs is included in the financial
statements. The details of these transactions are
specifically set out in the financial statements note 34.
The settlement of the Couran Cove issues is a
pragmatic resolution given the financial challenges
that are being faced by Onterran Limited. While it is not
entirely satisfactory due to the asset write downs and
losses incurred on this investment, the independent
directors are of the view this settlement is in the long
term interests of Eureka and is the best outcome in
the circumstances.
Outlook
The completion of the Couran Cove transaction and
expected finalisation of titling for the 61 apartments at
Terranora in the next few months has, and will continue
to free up capital to redeploy in the core business and
as a consequence contribute to improved returns on
the existing capital base.
The Eureka senior rental accommodation business is
capable of generating satisfactory returns on capital
employed. Management focus will be on improving
operations at the village level, streamlining support
services, cost reductions, evaluating and implementing
upgraded financial and operating systems to exploit
operating efficiencies and improved reporting.
The Board is mindful that debt levels are at the high
end of the range considered acceptable. The Group’s
business model, however, which is based on building
a steady, sustainable cashflow from a profitable asset
base, can support a level of debt to fund the acquisition
and expansion program.
Eureka has a strong platform to expand its business base
through acquisitions and infill developments including
at some existing Eureka villages. An excellent opportunity
exists for Eureka to scale its platform of providing secure,
safe and friendly residential accommodation in the
social infrastructure segment of retirement living. The
accommodation and other services needs of Australia’s
ageing population continues to grow. Eureka’s affordable
senior rental living model is well placed to capitalise on
supplying services to the growing number of Australians
reaching retirement with few or no assets, together with
the baby boomer segment moving into retirement in
significant numbers.
08
The Company is implementing improvements in its
corporate governance practices and will continuously
undertake to ensure best practice is achieved.
I was appointed Chairman of Eureka in November 2017. Mr
Robin Levison stepped down as Chairman and remained
on the Board until his retirement on 29 March 2018.
Sue Renkin was appointed a Director in November 2017
and immediately assumed Chair of the Audit and Risk
Committee. I thank all Directors for their contribution
and effort during the year under review.
Laura Fanning was appointed Company Secretary on
June 28, 2018. Ms Fanning has broad listed company
finance and secretarial experience including in risk
management and corporate governance.
We have a short-list of excellent candidates for the
position of Chief Executive Officer and expect to
announce an appointment in September 2018.
This appointment will provide leadership to our
management team and enhance the focus on the
FY19 business plan to achieve improved financial
returns for shareholders.
The Chief Executive Officer Mr Jeff Weigh retired on
May 31, 2018 for personal reasons. I then assumed
the role of Executive Chairman and will remain in
that position until a new Chief Executive Officer is
appointed. An extensive search has been conducted
through an independent search consultant. I thank all
staff for their contribution and effort during a difficult
period. It is very much appreciated.
To our shareholders, your Board and management
are committed to expediently finalising the asset
restructuring program. Eureka is well placed for the
profitable expansion of its operating platform that will
underpin increased shareholder value on a sustainable
basis in the future.
Murray Boyte
Executive Chairman
31 August 2018
Pictured right: Eureka Devonport
Gardens, Tasmania
2017-2018 ANNUAL REPORTFor personal use only 09
EUREKA GROUP HOLDINGSFor personal use only FY2018 Acquisitions
Eureka Group
Holdings continued its
strategy of investing
in core property assets
to build on its business
model and deliver
financial returns
to investors.
During FY17-18, EGH added
a further eight seniors’
rental villages to its portfolio,
numbering an additional
326 units and associated
onsite facilities. This also
included the company
expanding its operations
into Tasmania through a
50% joint venture with a
group of private investors
in which EGH has existing
business relationships.
The Tasmanian joint venture
was settled in April 2018 and
comprises the purchase of
five new villages in Devonport,
Launceston and Hobart
with EGH also providing
management services at
each village.
Freshwater Villas
Gympie, Queensland
Eureka Freshwater Villas contains 42 units
within short driving distance to retail,
entertainment and medical facilities.
The village has additional land that can
accommodate further residential units.
Units: 42 (plus vacant land)
Facilities: Communal dining, kitchen,
community room and reception/
manager’s office
Koinonia Village
Ayr, North Queensland
Eureka purchased the 18-unit Koinonia Village
in Ayr from Blue Care in August 2017. Eureka
Koinonia Village is conveniently located close
to Ayr’s town centre with hospital, retail and
recreational facilities within a short driving
distance from the village.
Units: 18
Galilee Lodge
Townsville, North Queensland
Located in the suburb of South Townsville,
Eureka Galilee Court is a small independent
seniors’ village comprised of 12 self-contained
one-bedroom units. The village was purchased
from Blue Care in August 2017 and has vacant
land to develop further units.
Units: 12 (plus vacant land)
Facilities: Community room
* Eureka holds 50% ownership in five Tasmanian seniors’ village assets through a joint venture that includes the provision of management
services at each property.
10
2017-2018 ANNUAL REPORTFor personal use only Devonport Gardens
Devonport, Tasmania *
Featuring 51 self-contained units, Eureka Devonport Gardens is centrally located
close to the Devonport CBD with medical, retail and service facilities nearby.
Units: 51
Facilities: Communal dining, kitchen, community room and
reception/manager’s office
Launceston Gardens
Launceston, Tasmania *
Eureka Launceston Gardens comprises 55 self-contained units affording
residents easy access to public transport, medical, retail and service facilities.
Units: 55
Facilities: Communal dining, kitchen, community room and
reception/manager’s office
Elphinwood Gardens
Launceston, Tasmania *
Eureka Elphinwood Gardens is located within short travelling distance to
Launceston’s CBD and features 55 one-bedroom units.
Units: 55
Facilities: Communal dining, kitchen, community room and
reception/manager’s office
Claremont Gardens
Hobart, Tasmania *
Eureka Claremont Gardens is a secure gated seniors’ community containing
51 units located close to the Derwent River and parklands and is within easy
access to retail, medical and service facilities.
Units: 51
Facilities: Communal dining, kitchen, community room and
reception/manager’s office
Glenorchy Gardens
Hobart, Tasmania *
Eureka Glenorchy Gardens is located within Hobart’s northern suburbs. The
42-unit village has panoramic views to Mount Wellington and offers residents
access to a range of health and retail facilities nearby.
Units: 42
Facilities: Communal dining, kitchen, community room and
reception/manager’s office
11
EUREKA GROUP HOLDINGSFor personal use only “Julie and Rob did their utmost
to make mum’s transition to her
new unit as seamless as possible
… Mum is settling in well and has
enjoyed meeting new people and
has loved being part of the social
club. From a family point of view,
it is nice to be able to have lunch
with mum in the community
room … I feel that this has been a
positive move for mum.”
Donna Greenhouse, daughter of a
resident living at Eureka Elphinwood
Gardens, Launceston
12
“We’ve got a really good village
here where residents can choose
to be as social or as private as
they wish…independent living
is the key here but it’s good to
know there are neighbours
who’ve grown to become great
friends who keep an eye out for
each other.”
Dot Jensen, resident at Eureka Care
Communities, Rockhampton
2017-2018 ANNUAL REPORTFor personal use only “I believe that Eureka Myall Place
ticks all the boxes in delivering
a caring and safe living
environment where residents
can choose to be as social as they
want, while also respecting the
privacy of others.
Another really important reason
for me choosing to live here is my
dear little 8-year-old spaniel dog,
EJ. Eureka is pet friendly and
I know how special pets are to
their elderly owners.”
Cecelia (Bubs) Hancock, resident at
Eureka Myall Place, Whyalla
13
“My mother has found a home
here. We are thankful that we
know she has people who look
out for her, (and) found friends
she enjoys life with. My mum
likes quality when it comes to
meals and the staff bend over
backwards to cater to her food
restrictions. So happy knowing
that the transition from our
family home to Eureka was a
great move.”
Diane Clark, daughter of a resident at
Eureka Cascade Gardens, Mackay
EUREKA GROUP HOLDINGSFor personal use only Clockwise from top left: Resident from Eureka
Devonport Gardens; Eureka Care Communities
Wulguru; Eureka Claremont Gardens; Resident
and pooch from Eureka Glenorchy Gardens;
Eureka Care Communities Condon; Patsy and
Puss from Eureka Mount Gambier Retirement
Village; Sun-filled sitting room at Eureka
Launceston Gardens.
14
2017-2018 ANNUAL REPORTFor personal use only 15
EUREKA GROUP HOLDINGSFor 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 2018.
DIRECTORS
The following persons were directors of the Company during the whole of the financial year and up to the date of this report,
unless otherwise stated:
Murray Boyte
Sue Renkin
Nirmal Hansra
Lachlan McIntosh
Robin Levison
Appointed 24 November 2017
Appointed 24 November 2017
Resigned 29 March 2018
PRINCIPAL ACTIVITIES
The principal activities of EGH include:
•
•
Providing specialist property asset management through property ownership and caretaking and infrastructure
management; and
Providing accommodation and tailored services to a broad market of aged residents with discretionary and non-
discretionary spend characteristics.
REVIEW OF OPERATIONS AND RESULTS
The Group has reported a loss for the year of $0.28 million (2017: profit of $6.54 million). The Group’s core assets have
performed strongly and achieved an overall increase in occupancy, revenue growth from existing and acquired villages and
cost reductions. However, asset revaluations, write-downs and realised losses on non-core property assets totalling $4.33
million (2017: gain of $1.05 million) have adversely impacted the results.
A summary of the Group’s performance is shown in Table 1.
Table 1: Performance Summary
Revenue - rental
- catering and service fees
- other
Other income including share of joint venture profit
Total Revenue and other income (excluding revaluation gains)
Expenses from operations
EBITDA1 prior to asset revaluations and write-offs
Net gain/(loss) on revaluation of investment property
Loss on revaluation of assets associated with Couran Cove investment 2
Couran Cove inventory write down and transaction costs 2
EBITDA1
Finance costs
Depreciation and amortisation
Profit/(loss) before tax
Consolidated
30 June 2018
$’000
30 June 2017
$’000
15,674
6,036
864
810
23,384
(16,330)
7,054
(1,439)
(1,763)
(1,124)
2,728
(2,753)
(251)
(276)
14,826
5,980
3,247
1,374
25,427
(17,058)
8,369
1,046
-
-
9,415
(2,606)
(271)
6,538
1 EBITDA (Earnings before interest, tax, depreciation and amortisation) 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.
2 Further details about the Couran Cove investment are provided in Note 9.
As shown in Table 1, the Group’s EBITDA prior to asset revaluations and write-offs, was $7.05 million (2017: $8.37 million).
16
EGH ANNUAL REPORT 2018
16
Directors’ Report2017-2018 ANNUAL REPORTFor personal use only
The following persons were directors of the Company during the whole of the financial year and up to the date of this report,
Eureka Group Holdings Limited and controlled entities
Directors’ Report
DIRECTORS
unless otherwise stated:
Murray Boyte
Sue Renkin
Nirmal Hansra
Lachlan McIntosh
Robin Levison
PRINCIPAL ACTIVITIES
The principal activities of EGH include:
•
•
management; and
discretionary spend characteristics.
REVIEW OF OPERATIONS AND RESULTS
Appointed 24 November 2017
Appointed 24 November 2017
Resigned 29 March 2018
Providing specialist property asset management through property ownership and caretaking and infrastructure
Providing accommodation and tailored services to a broad market of aged residents with discretionary and non-
The Group has reported a loss for the year of $0.28 million (2017: profit of $6.54 million). The Group’s core assets have
performed strongly and achieved an overall increase in occupancy, revenue growth from existing and acquired villages and
cost reductions. However, asset revaluations, write-downs and realised losses on non-core property assets totalling $4.33
million (2017: gain of $1.05 million) have adversely impacted the results.
Table 1: Performance Summary
Revenue - rental
- other
- catering and service fees
Other income including share of joint venture profit
Total Revenue and other income (excluding revaluation gains)
Expenses from operations
EBITDA1 prior to asset revaluations and write-offs
Net gain/(loss) on revaluation of investment property
Loss on revaluation of assets associated with Couran Cove investment 2
Couran Cove inventory write down and transaction costs 2
EBITDA1
Finance costs
Depreciation and amortisation
Profit/(loss) before tax
Consolidated
30 June 2018
30 June 2017
$’000
15,674
6,036
864
810
23,384
(16,330)
7,054
(1,439)
(1,763)
(1,124)
2,728
(2,753)
(251)
(276)
$’000
14,826
5,980
3,247
1,374
25,427
(17,058)
8,369
1,046
-
-
9,415
(2,606)
(271)
6,538
1 EBITDA (Earnings before interest, tax, depreciation and amortisation) 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.
2 Further details about the Couran Cove investment are provided in Note 9.
As shown in Table 1, the Group’s EBITDA prior to asset revaluations and write-offs, was $7.05 million (2017: $8.37 million).
The Directors present their report on Eureka Group Holdings Limited (the “Company”, “EGH” or “Eureka”) and its controlled
Eureka now owns 32 villages and has 9 villages under management, representing 2,182 units (2017: 1,934 units).
entities (the “Group”, or the “Consolidated Entity”) for the year ended 30 June 2018.
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Financial Position
Key financial information in relation to the Group’s financial position at year end is shown below:
$’000
Total Assets
$’000
Net assets
Working capital (current assets less current liabilities) $’000
$’000
Cash and cash equivalents
$’000
Debt
‘000
Shares on issue
cents
Earnings per share (basic and diluted)
cents
Net tangible assets per share
Consolidated
30 June 2018
30 June 2017
133,300
74,700
16,327
1,986
55,337
230,038
(0.12)
29.8
128,534
74,867
11,872
4,395
50,556
229,672
2.84
29.8
Significant balance sheet movements during the financial year were as follows:
•
•
Total assets increased by $4.77 million, primarily due to the acquisition of 3 villages and Eureka’s 50% investment in a
joint venture for another 5 villages.
Total liabilities increased by $4.93 million due to a net increase in borrowings ($4.78 million) which partly funded the
above acquisitions.
• Working capital increased by $4.46 million, due the reclassification of properties from Investment Property to Inventory
(Terranora and Couran Cove) and Assets held for sale (Lambert Village).
• Cash reduced by $2.41 million, primarily as a result of the acquisitions during the year. However, cash flow from
operations was negatively impacted by non-core and underperforming assets including Terranora and Couran Cove.
Further details on changes in the Group’s financial position are provided below.
A summary of the Group’s performance is shown in Table 1.
Acquisitions
The following villages were acquired during the year for $6.26 million (including transaction costs) and meet the Group’s target
performance hurdle rates for village and associated management rights performance:
•
Freshwater Villas in Gympie - July 2017
• Galilee Lodge in Townsville - August 2017
• Koinonia Village in Ayr - August 2017
Eureka invested $4.50 million to acquire a 50% interest in a joint venture that acquired 5 villages in Tasmania for a total
purchase price of $18.00 million. The acquisition of the villages was funded by a $9.90 million bank loan in the joint venture
and cash contributed by the joint venture partners. EGH also issued $100,000 of EGH shares to its joint venture partner to
secure the management rights of the 5 Tasmanian villages.
In addition, the Group spent $3.10 million on enhancing existing properties through capital additions.
Disposals
During the 30 June 2018 financial year, the Group divested its Victoria St, Mackay property and Amber Lodge, one of the
Group’s supported residential facilities in Adelaide, for combined sales proceeds of $3.40 million.
The Group received $0.31 million in sale proceeds from the disposal of a number of gaming licenses during the year.
Couran Cove
Subsequent to year end, Eureka reached agreement with Onterran Ltd, Couran Cove entities and other parties pertaining to
outstanding loans and property transactions.
The financial impact of the transaction on asset values and transaction costs is included in the financial statements with details
outlined in Note 34, Subsequent Events.
EGH ANNUAL REPORT 2018
16
EGH ANNUAL REPORT 2018
17
17
Directors’ ReportEUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Terranora
Eureka continues to work through the extensive list of Council conditions for the Development Approval for the subdivision
and strata titling of the Terranora project.
Completion of the two lot subdivision in accordance with the final development approval is nearing completion. The previously
identified third lot is now required to be transferred to the body corporate as common property. All conditions have been
complied with to achieve titling of the two lot subdivision creating a separate title for the 4.8ha of vacant land. We expect to
receive Tweed Shire Council confirmation for the subdivision in September enabling this component to proceed to titling.
Significant progress has been made in finalising certificates of compliance and meeting development approval conditions for
the 61 strata title units which will be situated on a separate title on completion of the two lot subdivision. Despite the delay of
the titling process, 12 conditional sales contracts (subject to titling) and 12 Expression of Interests have been achieved. As
soon as titling is received, the sales program will be accelerated.
Capital management – debt & equity
Debt
Bank debt increased from $50.56 million to $55.30 million to fund the above village acquisitions. The Group was in compliance
with all banking covenants during the year. Subsequent to year end, the Group consolidated its NAB debt into one facility,
which matures on 31 December 2021. This represents a two year extension for $20.00 million of the facility.
Equity
The following changes in equity occurred during the year:
•
•
•
The Company issued 365,715 ordinary shares in consideration for securing the management rights associated with the
Tasmanian villages, as noted above. In 2017, 5.263 million shares were issued as part of a capital raising.
The on-market share buy-back was extended until 16 March 2019 but no shares were bought back and cancelled
during the year (2017: 1,375,950 shares).
1,500,000 options (2017: nil) and 878,465 performance rights (2017: nil) were issued as detailed in the Remuneration
Report. 500,000 options and 319,375 performance rights remain outstanding at 30 June 2018 after the others lapsed
during the year.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the Group, other than those addressed in the Directors’ Report and
in Note 34 Subsequent Events.
DIVIDENDS
No dividends have been paid during the year (2017: $nil). No dividends are recommended for the financial year ended 30
June 2018.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
In the 2019 financial year, the Board will remain committed to disposing of the Group’s non-core and underperforming assets.
The sale of the Lambert facility and the partial realisation of the Couran Cove investment will free up capital to redeploy in the
core business. Achieving the approvals necessary for the issuing of titles at Terranora, and subsequent unit sales, is a major
focus for the Group.
Eureka will continue to pursue growth of its seniors’ rental accommodation platform through village acquisition, infill
developments and the active management of its existing portfolio. Management focus will be on improving operations and
profitability at the village level, streamlining support services, cost reductions, evaluating and implementing upgraded financial
and operating systems to gain operating efficiencies and improved reporting.
The Company regularly reviews its management rights portfolio and will seek to extend its management rights contracts where
possible.
Eureka is in the final selection stages for a new Chief Executive Officer to replace recently retired Jeff Weigh, and expects to
announce the appointment of a new Chief Executive Officer in September 2018.
18
EGH ANNUAL REPORT 2018
18
Directors’ Report2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Terranora
Eureka Group Holdings Limited and controlled entities
Directors’ Report
MATERIAL BUSINESS RISKS
Eureka continues to work through the extensive list of Council conditions for the Development Approval for the subdivision
and strata titling of the Terranora project.
The Board is committed to monitoring and mitigating business risks faced by the Group, including the following key risks that
have the potential to materially impact its financial prospects:
Completion of the two lot subdivision in accordance with the final development approval is nearing completion. The previously
identified third lot is now required to be transferred to the body corporate as common property. All conditions have been
complied with to achieve titling of the two lot subdivision creating a separate title for the 4.8ha of vacant land. We expect to
receive Tweed Shire Council confirmation for the subdivision in September enabling this component to proceed to titling.
• Acquisition risk – acquiring villages has and will continue to be a source of growth for the Group. Identifying properties
that meet the Group’s target performance hurdle rate, and sit within the risk appetite set by the Board, is critical to the
Group’s performance. The Group’s Board and management is experienced in acquiring properties and will conduct
comprehensive analysis and due diligence as part of its acquisition process.
Significant progress has been made in finalising certificates of compliance and meeting development approval conditions for
the 61 strata title units which will be situated on a separate title on completion of the two lot subdivision. Despite the delay of
the titling process, 12 conditional sales contracts (subject to titling) and 12 Expression of Interests have been achieved. As
soon as titling is received, the sales program will be accelerated.
• Changes in Government funding (pension and rent assistance) – the Group provides affordable rental accommodation
to seniors and many of the villages’ residents are reliant on government funding in the form of pensions or rent
assistance. An adverse change in government funding, may have a direct impact on village occupancy, profitability and
asset values. The Group manages its village and support office costs having regard to occupancy levels.
Capital management – debt & equity
• Demand for non-core products – the Group has exposure to non-core properties at Terranora and Couran Cove. The
Group’s successful exit from these properties is dependent on achievement of approvals and/or unit sales occurring at
forecast values within an acceptable timeframe.
Bank debt increased from $50.56 million to $55.30 million to fund the above village acquisitions. The Group was in compliance
with all banking covenants during the year. Subsequent to year end, the Group consolidated its NAB debt into one facility,
which matures on 31 December 2021. This represents a two year extension for $20.00 million of the facility.
SUBSEQUENT EVENTS
Details of events that occurred after the end of the financial year are contained in Note 34. These transactions include a
material restructure of the Couran Cove investment, the sale of the Lambert village and an extension of the NAB debt facility.
No other matter or circumstance has arisen since 30 June 2018 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.
INFORMATION ON DIRECTORS
The details of each Director’s qualifications, experience and special responsibilities for those in office during the year are:
Name:
Title:
Qualifications:
Experience & expertise:
Other listed company directorships:
Former directorships (last 3 years)
Special responsibilities:
Interests in shares:
Interests in options:
Murray Boyte
Independent non-executive Chairman - 24 November 2017 to 29 April 2018
Executive Chairman - 30 April 2018 (ongoing)
Murray holds a Bachelor of Commerce and Administration from the Victoria University
in Wellington and is a member of the Australian Institute of Company Directors, the
Institute of Directors of New Zealand and Chartered Accountants Australia & New
Zealand.
Murray has over 35 years’ experience in merchant banking and finance, undertaking
company reconstructions, mergers and acquisitions in Australia, New Zealand, North
America and Hong Kong. In addition, Murray has held executive positions and
Directorships in the transport, horticulture, financial services, investment, health
services and property industries. He was the Chief Executive Officer of ASX listed
Ariadne Australia Limited from 2002 to 2015.
Abano Healthcare Group Limited (NZX) and National Tyre & Wheel Limited (ASX:
NTD).
Unity Pacific Group (ASX: UPG)
Chair of the Board from 24 November 2017, Member of Audit & Risk Committee from
28 June 2018, Member of Nomination & Remuneration Committee from 28 June 2018
Nil
Nil
EGH ANNUAL REPORT 2018
18
EGH ANNUAL REPORT 2018
19
19
Debt
Equity
•
•
•
DIVIDENDS
June 2018.
The following changes in equity occurred during the year:
The Company issued 365,715 ordinary shares in consideration for securing the management rights associated with the
Tasmanian villages, as noted above. In 2017, 5.263 million shares were issued as part of a capital raising.
The on-market share buy-back was extended until 16 March 2019 but no shares were bought back and cancelled
during the year (2017: 1,375,950 shares).
1,500,000 options (2017: nil) and 878,465 performance rights (2017: nil) were issued as detailed in the Remuneration
Report. 500,000 options and 319,375 performance rights remain outstanding at 30 June 2018 after the others lapsed
during the year.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the Group, other than those addressed in the Directors’ Report and
in Note 34 Subsequent Events.
No dividends have been paid during the year (2017: $nil). No dividends are recommended for the financial year ended 30
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
In the 2019 financial year, the Board will remain committed to disposing of the Group’s non-core and underperforming assets.
The sale of the Lambert facility and the partial realisation of the Couran Cove investment will free up capital to redeploy in the
core business. Achieving the approvals necessary for the issuing of titles at Terranora, and subsequent unit sales, is a major
focus for the Group.
Eureka will continue to pursue growth of its seniors’ rental accommodation platform through village acquisition, infill
developments and the active management of its existing portfolio. Management focus will be on improving operations and
profitability at the village level, streamlining support services, cost reductions, evaluating and implementing upgraded financial
and operating systems to gain operating efficiencies and improved reporting.
The Company regularly reviews its management rights portfolio and will seek to extend its management rights contracts where
possible.
Eureka is in the final selection stages for a new Chief Executive Officer to replace recently retired Jeff Weigh, and expects to
announce the appointment of a new Chief Executive Officer in September 2018.
Directors’ ReportEUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Name:
Title:
Qualifications:
Experience & expertise:
Robin Levison
Non-Executive Chairman - 1 July 2017 to 23 November 2017
Non-Executive Director 24 November 2017 to 29 March 2018
Robin 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 a Deputy
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: PPK Group Limited
Former directorships (last 3 years)
Special responsibilities:
Interests in shares:
Interests in options:
Nil
Chair of the Board to 23 November 2017
As per Remuneration Report for the period Robin was a director.
Nil
Name:
Title:
Qualifications:
Experience & expertise:
Lachlan McIntosh
Non-Executive Director
Lachlan 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: Onterran Limited.
Former directorships (last 3 years)
Special responsibilities:
Interests in shares:
Interests in options:
Name:
Title:
Qualifications:
Experience & expertise:
Nil
Member of Audit & Risk Committee, Member of Nomination & Remuneration
Committee.
11,916,166
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 the
Governance Institute of Australia, 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 12 years of
board and corporate advisory experience. During this time Nirmal had roles as Chief
Financial Officer/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 and non-executive director of Kuringai
Financial Services Limited, Link Housing Limited, Council of the Ageing (COTA) in
New South Wales, Children’s Tumour Foundation of Australia Limited and Have A
Voice Pty Limited. Recently he has been appointed Independent Member of the Audit
& Risk Committee for the Department of Finance, Services and Innovation and the
Property & Advisory Group of the NSW Government.
Other listed company directorships: Nil
Nil
Former directorships (last 3 years)
Chair of Nomination & Remuneration Committee, Member of Audit & Risk Committee
Special responsibilities:
839,834 shares
Interests in shares:
Nil
Interests in options:
20
EGH ANNUAL REPORT 2018
20
Directors’ Report2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Name:
Title:
Robin Levison
Non-Executive Chairman - 1 July 2017 to 23 November 2017
Non-Executive Director 24 November 2017 to 29 March 2018
Qualifications:
Robin holds a Masters of Business Administration from the University of Queensland
Experience & expertise:
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 a Deputy
Chair of the University of Queensland Business, Economics and Law Alumni
Ambassador Council, and is a Graduate and Fellow of Australian Institute of Company
Other listed company directorships: PPK Group Limited
Former directorships (last 3 years)
Nil
Directors.
Special responsibilities:
Chair of the Board to 23 November 2017
Interests in shares:
Interests in options:
Nil
As per Remuneration Report for the period Robin was a director.
Name:
Title:
Qualifications:
Experience & expertise:
Lachlan McIntosh
Non-Executive Director
Lachlan 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: Onterran Limited.
Former directorships (last 3 years)
Nil
Special responsibilities:
Member of Audit & Risk Committee, Member of Nomination & Remuneration
Committee.
11,916,166
Nil
Nirmal Hansra
Non-Executive Director
Interests in shares:
Interests in options:
Name:
Title:
Qualifications:
Experience & expertise:
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 the
Governance Institute of Australia, 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 12 years of
board and corporate advisory experience. During this time Nirmal had roles as Chief
Financial Officer/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 and non-executive director of Kuringai
Financial Services Limited, Link Housing Limited, Council of the Ageing (COTA) in
New South Wales, Children’s Tumour Foundation of Australia Limited and Have A
Voice Pty Limited. Recently he has been appointed Independent Member of the Audit
& Risk Committee for the Department of Finance, Services and Innovation and the
Property & Advisory Group of the NSW Government.
Other listed company directorships: Nil
Former directorships (last 3 years)
Nil
Interests in shares:
Interests in options:
839,834 shares
Nil
Special responsibilities:
Chair of Nomination & Remuneration Committee, Member of Audit & Risk Committee
Name:
Title:
Qualifications:
Experience & expertise:
Sue Renkin
Non-Executive Director (appointed 24 November 2017)
Sue Renkin holds a Master of Business Administration from Monash University, a
Graduate Diploma in Corporate Governance from UNE and attended Harvard
Business School for a course on Competition and Strategy.
Sue enjoyed almost thirty years as CEO for private hospitals, emergency services and
not for profit entities. She now operates a portfolio career as a non-executive director
and executive coach and mentor.
Sue is a past National Telstra Business Woman of the year. She is the current
Chairman of Southern Metropolitan Cemeteries Trust, a Director of GMHBA Limited,
member of the Global Leadership Board International Women’s Forum, Chairman of
Monash Bio Medical Research Institute and a member of the GJK Facility Services
Advisory Board.
Other listed company directorships: Nil
Nil
Former directorships (last 3 years)
Chair of Audit & Risk Committee
Special responsibilities:
Nil
Interests in shares:
Nil
Interests in options:
COMPANY SECRETARIES
Paul Cochrane – Chief Financial Officer and Company Secretary
Paul Cochrane holds a Bachelor of Commerce from University of Queensland, is a Member of The Chartered Accountants
Australia and New Zealand and holds an REIQ Real Estate License. He spent three years as Chief Financial Officer 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 Chief Financial Officer 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.
Laura Fanning – Company Secretary (appointed 28 June 2018)
Laura is a Chartered Secretary and Chartered Accountant with more than 20 years’ financial, governance and commercial
experience. Laura is currently the Company Secretary at National Tyre & Wheel Limited and has previously held Chief
Financial Officer and Company Secretary roles at National Veterinary Care Limited and Unity Pacific Group Limited, as well
as senior management positions in other listed and unlisted companies. She has gained broad financial and secretarial
experience across several industries including funds management, property, veterinary services, wholesale distribution and
franchising.
DIRECTORS AND MEETINGS ATTENDED
The number of meetings of the Company’s Board of Directors (‘the Board’) and of each Board Committee held during the
year, and the number of meetings attended by each Director were:
Name
Murray Boyte
Robin Levison
Lachlan McIntosh
Nirmal Hansra
Sue Renkin
Directors’
Meetings
Audit & Risk Committee
Meetings
Held1
8
6
10
10
8
Attended
8
6
9
9
8
Held1
2*
1*
3
3
2
Attended
2*
1*
3
2
2
Nomination &
Remuneration
Committee Meetings
Held1
Attended
-
-
3*
3*
4
4
4
4
1*
1*
*Attended by invitation
1 Number of meetings held while a director during the financial year
EGH ANNUAL REPORT 2018
20
EGH ANNUAL REPORT 2018
21
21
Directors’ ReportEUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
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 2018. 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.
Remuneration comprises the following:
•
•
•
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 2018 financial year.
Remuneration details for certain individuals are described at (d).
Short term incentives (STIs)
Bonus payments are payable to management based on achievement of agreed performance hurdle (threshold) criteria
including:
• Profitability;
• Occupancy targets;
• Successful outcomes on Couran Cove and Terranora transactions; and
• Business growth.
22
EGH ANNUAL REPORT 2018
22
Directors’ Report2017-2018 ANNUAL REPORTFor personal use only
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 2018. The information provided in this remuneration report has been audited as required by Section 308(3C) of the
Corporations Act 2001.
Eureka Group Holdings Limited and controlled entities
Directors’ Report
REMUNERATION REPORT (AUDITED)
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
competitiveness and reasonableness;
acceptability to shareholders;
performance linkage/alignment of executive compensation, and
transparency.
and the Company’s financial performance.
Remuneration comprises the following:
base pay (salaries/fees) and benefits, including superannuation;
short-term incentives (bonuses); and
long-term incentives such as options or rights or shares.
•
•
•
•
•
•
•
(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:
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
Remuneration details for certain individuals are described at (d).
Bonus payments are payable to management based on achievement of agreed performance hurdle (threshold) criteria
the 2018 financial year.
Short term incentives (STIs)
including:
• Profitability;
• Occupancy targets;
• Business growth.
• Successful outcomes on Couran Cove and Terranora transactions; and
Eureka Group Holdings Limited and controlled entities
Directors’ Report
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 against set budgets/targets.
Long term incentives (LTIs)
The Company introduced a new Long Term Incentive (LTI) (Omnibus Equity Plan) plan granting share rights and options to
the Chief Executive Officer and Chief Financial Officer, which commenced from 23 November 2017.
Share rights
Rights were issued at face value having regard to the volume weighted average share price of shares over the 30 trading
days following the announcement of the company’s 2017 results.
A total of 878,465 share rights were issued during this period representing 45% of total fixed remuneration for the Chief
Executive Officer and 35% of total fixed remuneration for the Chief Executive Officer. 559,090 share rights lapsed upon the
retirement of the Chief Executive Officer.
The 319,375 remaining share rights are divisible into two traches of equal value, both tranches being subject to the company’s
shares achieving a total shareholder return compared to the constituents of All Ordinaries Small Cap index excluding
companies in the materials, industrials, energy and utilities sectors. Tranche 1 and Tranche 2 will be tested following the
announcement of the company’s result for the year ending 30 June 2020 and 2021 respectively using a 10 day VWAP. The
share rights progressively vest over 3 and 4 years.
Options
A total of 1,500,000 share options were granted during the period to the Chief Executive Officer and Chief Financial Officer.
1,000,000 options lapsed upon the retirement of the Chief Executive Officer.
The options were granted for a 4.5 year period and are exercisable from 23 November 2021. The exercise price is $0.33
representing the volume weighted average share price of shares over the 30 trading days following the announcement of the
company’s 2017 results. These options will be capable of vesting 3 years from the grant date subject to the share price being
at 75c or greater on 10 trading days in any 20 sequential trading days following the grant date. While the share price hurdle
may be met, these options can only be exercised upon completion of 4 year employment service.
If an executive resigns or is terminated, any LTI awards (whether or not those awards have vested) are forfeited.
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
(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
Period in role/s
Murray Boyte
Non-Executive Chair/Executive Chair
24/11/2017 – ongoing
Nirmal Hansra
Non-Executive Director
24/04/2012 – ongoing
Robin Levison
Chair/Non-Executive Director
24/12/2013 – 29/03/2018
Lachlan McIntosh
Non-Executive Director
Sue Renkin
Non-Executive Director
Paul Cochrane
Chief Financial Officer
20/07/2009 – ongoing
24/11/2017 – ongoing
28/06/2017 – ongoing
Jeff Weigh
Chief Executive Officer
07/02/2017 – 31/05/2018
EGH ANNUAL REPORT 2018
22
EGH ANNUAL REPORT 2018
23
23
Directors’ ReportEUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Key management personnel remuneration for the year ended 30 June 2018 and 30 June 2017:
Short term
Salary/
fees
$
Bonus
$
Post
employment
Super-
annuation
$
Share
based
payments
$
Termin-
ation
benefits
$
Performance
related
%
% of
bonus that
was
achieved
Total
$
30 June 2018
Directors
Murray Boyte 1
Nirmal Hansra
Robin Levison2
Lachlan McIntosh
Sue Renkin 3
86,407
60,000
70,000
60,000
31,823
Directors Total
308,230
Executives
-
-
-
-
-
-
Paul Cochrane
278,779
77,568
Jeff Weigh4
342,744
215,880
Executives Total
621,523
293,448
Total
929,753
293,448
30 June 2017
Directors
Robin Levison
120,000
-
-
-
Lachlan McIntosh
Nirmal Hansra
Greg Rekers 5
Kerry Potter 5
50,000
50,000
159,389
65,000
159,389
65,000
Directors Total
538,778
130,000
Executives
Jeff Weigh 4
Ryan Maddock 6
Paul Cochrane 7
134,097
-
193,151
17,908
-
-
Executives Total
327,248
17,908
Total
866,026
147,908
8,209
-
-
-
3,023
11,232
25,924
35,886
61,810
73,042
-
-
-
-
-
-
9,335
19,053
-
28,388
28,388
-
-
-
-
-
-
11,997
-
-
-
-
-
-
-
-
136,667
94,616
60,000
70,000
60,000
34,846
319,462
394,268
731,177
11,997
136,667
1,125,445
11,997
136,667
1,444,907
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
120,000
50,000
50,000
224,389
224,389
668,778
143,432
230,112
-
373,544
1,042,322
-
-
-
-
-
-
-
-
-
-
20%
30%
74%
74%8
-
-
-
29%
29%
-
8%
-
-
-
-
100%
100%
-
100%
-
1 Murray Boyte commenced as key management personnel on 24 November 2017; Executive Chair from 29 April 2018.
2 Robin Levison ceased as key management personnel on 29 March 2018.
3 Sue Renkin commenced as key management personnel on 24 November 2017.
4 Jeff Weigh commenced as key management personnel on 7 February 2017, retired on 31 May 2018.
5 Greg Rekers and Kerry Potter ceased as key management personnel on 8 February 2017.
6 Ryan Maddock ceased as key management personnel on 30 June 2017.
7 Paul Cochrane commenced as key management personnel on 28 June 2017.
8 During the period Jeff Weigh was paid a discretionary bonus of $65,000. The nature of this bonus being discretionary has no total potential
amount to be achieved and therefore is not included in the average presented above.
24
EGH ANNUAL REPORT 2018
24
Directors’ Report2017-2018 ANNUAL REPORTFor personal use only
Short term
employment
Post
Super-
Share
based
Termin-
ation
Bonus
annuation
payments
benefits
$
$
$
$
Total
$
Performance
related
%
% of
bonus that
was
achieved
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Salary/
fees
$
86,407
60,000
70,000
60,000
31,823
30 June 2018
Directors
Murray Boyte 1
Nirmal Hansra
Robin Levison2
Lachlan McIntosh
Sue Renkin 3
Directors Total
308,230
Executives
Robin Levison
120,000
30 June 2017
Directors
Lachlan McIntosh
Nirmal Hansra
Greg Rekers 5
Kerry Potter 5
Executives
Jeff Weigh 4
Ryan Maddock 6
Paul Cochrane 7
50,000
50,000
159,389
65,000
159,389
65,000
134,097
193,151
17,908
-
Directors Total
538,778
130,000
Executives Total
327,248
17,908
Total
866,026
147,908
Paul Cochrane
278,779
77,568
11,997
Jeff Weigh4
342,744
215,880
-
136,667
20%
30%
74%
74%8
Executives Total
621,523
293,448
11,997
136,667
1,125,445
Total
929,753
293,448
11,997
136,667
1,444,907
-
-
-
-
-
-
-
-
-
-
-
8,209
-
-
-
3,023
11,232
25,924
35,886
61,810
73,042
-
-
-
-
-
-
-
9,335
19,053
28,388
28,388
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
94,616
60,000
70,000
60,000
34,846
319,462
394,268
731,177
120,000
50,000
50,000
224,389
224,389
668,778
143,432
230,112
-
373,544
1,042,322
-
-
-
-
-
-
-
-
29%
29%
8%
-
-
-
-
-
-
-
-
-
-
-
-
100%
100%
100%
1 Murray Boyte commenced as key management personnel on 24 November 2017; Executive Chair from 29 April 2018.
2 Robin Levison ceased as key management personnel on 29 March 2018.
3 Sue Renkin commenced as key management personnel on 24 November 2017.
4 Jeff Weigh commenced as key management personnel on 7 February 2017, retired on 31 May 2018.
5 Greg Rekers and Kerry Potter ceased as key management personnel on 8 February 2017.
6 Ryan Maddock ceased as key management personnel on 30 June 2017.
7 Paul Cochrane commenced as key management personnel on 28 June 2017.
8 During the period Jeff Weigh was paid a discretionary bonus of $65,000. The nature of this bonus being discretionary has no total potential
amount to be achieved and therefore is not included in the average presented above.
Key management personnel remuneration for the year ended 30 June 2018 and 30 June 2017:
(c) NON-EXECUTIVE DIRECTOR REMUNERATION POLICY
Eureka Group Holdings Limited and controlled entities
Directors’ Report
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. An increase to the total non-executive directors’ fee pool limit was approved at the November
2017 Annual General Meeting. The maximum currently stands at $450,000 in aggregate which provides the Board with
flexibility to appoint additional directors to broaden the skill base of the Board collectively.
The following fees have applied during the year:
Base fees
Murray Boyte – Non-Executive Chair 1
Robin Levison – Non-Executive Chair
Robin Levison – Non-Executive Director
Nirmal Hansra – Non-Executive Director
Lachlan McIntosh – Non-Executive Director
Sue Renkin – Non-Executive Director
Annual fee
$
120,000
120,000
60,000
60,000
60,000
60,000
1 In addition to non-executive director fees, $18,000 per month will be paid for the period he is an Executive Chair effective 30
April 2018.
(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 (retired on 31 May 2018)
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 or misconduct by Mr Weigh.
Details:
Mr Weigh’s remuneration comprised a base salary of $374,430 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. In addition, as agreed with the Board, Mr Weigh would be paid 4 months
of fixed remuneration following his retirement. $136,667 including 9.5% superannuation has been included in Employee
Benefits expense in relation to this payment. Mr Weigh was responsible for the overall management of the Group and reported
to the Chair of the Board.
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 or 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 long-term incentive equal to 35% of his base salary. In addition, the Board have approved
that in the event of termination of employment arising from the change of control during the 3 years from the date of
employment, the Company will pay 6 months of fixed remuneration. Mr Cochrane is responsible for the finance division and
the accounting and finance functions of the Company and its associated companies.
EGH ANNUAL REPORT 2018
24
EGH ANNUAL REPORT 2018
25
25
Directors’ ReportEUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Directors’ Report
(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/(loss) before tax $’000
EBITDA $’000
Earnings per share (cents per share)
Share price at year end
Dividend per share
(f) REMUNERATION CONSULTANTS
2018
23,384
(276)
2,728
(0.12)
0.28
0.00
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
The Group utilised the services of remuneration consultants (Egan Associates Pty Ltd) during the 2018 financial year, at a
total cost of $38,115. The services were in relation to advice and recommendation on the establishment of the Eureka
Omnibus Equity Plan and reviewing the Executive Chair’s remuneration.
(g) EQUITY INSTRUMENTS HELD BY KEY MANAGEMENT PERSONNEL
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 2017
Shares
acquired
Ceased
employment
Balance
30 June 2018
Directors
Robin Levison 1
12,905,000
25,000
(12,930,000)
-
Lachlan McIntosh
11,916,166
Nirmal Hansra
Murray Boyte
Sue Renkin
Executives
Jeff Weigh 2
Paul Cochrane
839,834
-
-
400,000
-
-
-
-
-
-
-
-
-
-
-
(400,000)
-
11,916,166
839,834
-
-
-
-
Total
26,061,000
25,000
(13,330,000)
12,756,000
1 Ceased to be key management personnel on 29 March 2018
2 Retired on 31 May 2018
Options held
Details of options over ordinary shares in the Company that were granted as compensation to each key management
personnel during the reporting period, are set out below. The vesting conditions are set out in Note 26. No options vested
during the financial year.
Number of
options
granted
during 2018
Grant date
FV at
grant
date per
option
Exercise
price per
option
Expiry date
%
forfeite
d in the
year
Financial
year in
which
option
vests
Financial
years in
which
option
exercisable
KMP
Jeff Weigh 1
1,000,000
23-Nov-17
$0.0144
$0.33
23-May-22
Paul Cochrane
500,000
23-Nov-17
$0.0144
$0.33
23-May-22
Total
1 Retired on 31 May 2018 and as a result the options lapsed.
1,500,000
100%
-
-
-
2022
2021-2022
26
EGH ANNUAL REPORT 2018
26
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Directors’ Report
(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/(loss) before tax $’000
EBITDA $’000
Earnings per share (cents per share)
Share price at year end
Dividend per share
(f) REMUNERATION CONSULTANTS
2018
23,384
(276)
2,728
(0.12)
0.28
0.00
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
The Group utilised the services of remuneration consultants (Egan Associates Pty Ltd) during the 2018 financial year, at a
total cost of $38,115. The services were in relation to advice and recommendation on the establishment of the Eureka
Omnibus Equity Plan and reviewing the Executive Chair’s remuneration.
(g) EQUITY INSTRUMENTS HELD BY KEY MANAGEMENT PERSONNEL
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
Shares held
compensation.
Directors
Robin Levison 1
Nirmal Hansra
Murray Boyte
Sue Renkin
Executives
Jeff Weigh 2
Paul Cochrane
Balance
1 July 2017
Shares
acquired
Ceased
Balance
employment
30 June 2018
12,905,000
25,000
(12,930,000)
Lachlan McIntosh
11,916,166
839,834
11,916,166
839,834
-
-
-
-
-
-
-
-
-
-
-
-
-
-
400,000
(400,000)
-
-
-
-
-
Total
26,061,000
25,000
(13,330,000)
12,756,000
1 Ceased to be key management personnel on 29 March 2018
2 Retired on 31 May 2018
Details of options over ordinary shares in the Company that were granted as compensation to each key management
personnel during the reporting period, are set out below. The vesting conditions are set out in Note 26. No options vested
Options held
during the financial year.
Number of
Grant date
options
granted
during 2018
FV at
grant
date per
option
Exercise
price per
option
Expiry date
%
Financial
forfeite
d in the
year
year in
which
option
vests
Financial
years in
which
option
exercisable
KMP
Jeff Weigh 1
1,000,000
23-Nov-17
$0.0144
$0.33
23-May-22
100%
-
-
Paul Cochrane
500,000
23-Nov-17
$0.0144
$0.33
23-May-22
-
2022
2021-2022
Total
1,500,000
1 Retired on 31 May 2018 and as a result the options lapsed.
Share rights held
Details of share rights over ordinary shares in the Company that were granted as compensation to each key management
personnel during the reporting period, are set out below.
Grant date
Number of
share rights
granted
during 2018
FV at grant
date per
share right
(Tranche 1)
FV at grant
date per
share right
(Tranche 2)
Exercise
price per
share right
Expiry date
Number of
share rights
vested
during 2018
KMP
Jeff Weigh 1
559,090
23-Nov-17
Paul Cochrane
319,375
23-Nov-17
Total
878,465
$0.207
$0.207
$0.138
$0.138
-
-
31-Dec-23
31-Dec-23
-
-
-
1 Retired on 31 May 2018 and as a result the share rights lapsed.
Value of options
The movement during the reporting period, by value, of options over ordinary shares in the Company held by each key
management personnel is detailed below.
Options granted
KMP
Jeff Weigh 1
Paul Cochrane
1 Retired on 31 May 2018
Value of share rights
Value of options
granted in the year
Value of options
exercised in year
Value of options lapsed
in the year
$14,419
$7,210
$21,629
-
-
-
($14,419)
-
($14,419)
The movement during the reporting period, by value, of share rights in the Company held by each key management
personnel is detailed below.
Share rights granted
KMP
Jeff Weigh 1
Paul Cochrane
1 Retired on 31 May 2018
Share rights
Value of share rights
granted in the year
Value of share rights
exercised in year
Value of share rights
lapsed in the year
$96,523
$55,138
$151,661
-
-
-
($96,523)
-
($96,523)
The number of share rights granted to key management personnel during the financial year was 878,465 share rights.
KMP
Jeff Weigh
Paul Cochrane
Number of share rights
granted
559,090
319,375
878,465
EGH ANNUAL REPORT 2018
26
EGH ANNUAL REPORT 2018
27
27
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Directors’ Report
Reconciliation of options and share rights held by key management personnel
The table below shows a reconciliation of options held by each KMP during the financial year.
Balance at start of
year
Balance at end of year
Vested
Unvested
Granted as
compensation
Vested
Exercised
Forfeited
Vested and
exercisable
Unvested
KMP
Jeff Weigh 1
Paul Cochrane
Total
1 Retired on 31 May 2018
-
-
-
-
-
-
1,000,000
500,000
1,500,000
-
-
-
-
-
-
(1,000,000)
-
(1,000,000)
-
-
-
-
500,000
500,000
The table below shows how many share rights were granted, vested and forfeited during the year.
Balance at
start of year
Granted during
year
Vested
Forfeited
Balance at end of
year (unvested)
-
-
-
559,090
319,375
878,465
-
-
-
(559,090)
-
(559,090)
-
319,375
319,375
KMP
Jeff Weigh 1
Paul
Cochrane
Total
1 Retired on 31 May 2018
(h) LOANS TO/FROM KEY MANAGEMENT PERSONNEL
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
Griffith Scenic Village Pty Ltd
Griffith Scenic Village Pty Ltd, an entity associated with Lachlan McIntosh, paid the Group management fees of $6,263 on
commercial terms (2017: $8,203). As at 30 June 2018 the amount outstanding from Griffith Scenic Village Pty Ltd was $nil
(2017: $nil).
Griffith Scenic Village Pty Ltd, an entity associated with Lachlan McIntosh, was paid $22,178 for Manager’s unit rental fees
on commercial terms (2017: $22,178). As at 30 June 2018 the amount outstanding to Griffith Scenic Village Pty Ltd was $nil
(2017: $nil).
Leisure Living Gladstone Pty Ltd
Leisure Living Gladstone Pty Ltd, an entity associated with Lachlan McIntosh, paid the Group management fees of $14,846
on commercial terms (2017: $10,320). As at 30 June 2018 the amount outstanding from Leisure Living Gladstone Pty Ltd was
$nil (2017: $nil).
Leisure Living Gladstone Pty Ltd, an entity associated with Lachlan McIntosh, was paid $29,229 for Manager’s unit rental fees
on commercial terms (2017: $29,229). As at 30 June 2018 the amount outstanding to Leisure Living Gladstone Pty Ltd was
$nil (2017: $nil).
22 Resolution Pty Ltd
During the year, 22 Resolution Pty Ltd, an entity associated with Lachlan McIntosh, was paid $nil in consulting fees (2017:
$206,250). At 30 June 2018, the amount outstanding to 22 Resolution Pty Ltd was $nil (2017: $nil).
This concludes the remuneration report, which has been audited.
28
EGH ANNUAL REPORT 2018
28
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Directors’ Report
Reconciliation of options and share rights held by key management personnel
SHARES UNDER OPTION & PERFORMANCE RIGHTS
The table below shows a reconciliation of options held by each KMP during the financial year.
Balance at start of
year
Vested
Unvested
compensation
Vested
Exercised
Forfeited
Granted as
Balance at end of year
Vested and
exercisable
Unvested
-
-
-
-
-
-
1,000,000
500,000
1,500,000
-
-
-
-
-
-
(1,000,000)
-
(1,000,000)
-
-
-
-
500,000
500,000
The table below shows how many share rights were granted, vested and forfeited during the year.
Balance at
start of year
Granted during
year
Vested
Forfeited
Balance at end of
year (unvested)
-
-
-
559,090
319,375
878,465
-
-
-
(559,090)
-
(559,090)
-
319,375
319,375
(h) LOANS TO/FROM KEY MANAGEMENT PERSONNEL
(i) OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
Griffith Scenic Village Pty Ltd
Griffith Scenic Village Pty Ltd, an entity associated with Lachlan McIntosh, paid the Group management fees of $6,263 on
commercial terms (2017: $8,203). As at 30 June 2018 the amount outstanding from Griffith Scenic Village Pty Ltd was $nil
Griffith Scenic Village Pty Ltd, an entity associated with Lachlan McIntosh, was paid $22,178 for Manager’s unit rental fees
on commercial terms (2017: $22,178). As at 30 June 2018 the amount outstanding to Griffith Scenic Village Pty Ltd was $nil
KMP
Jeff Weigh 1
Paul Cochrane
Total
1 Retired on 31 May 2018
KMP
Jeff Weigh 1
Paul
Cochrane
Total
1 Retired on 31 May 2018
(2017: $nil).
(2017: $nil).
$nil (2017: $nil).
$nil (2017: $nil).
22 Resolution Pty Ltd
During the year, 22 Resolution Pty Ltd, an entity associated with Lachlan McIntosh, was paid $nil in consulting fees (2017:
$206,250). At 30 June 2018, the amount outstanding to 22 Resolution Pty Ltd was $nil (2017: $nil).
This concludes the remuneration report, which has been audited.
There were 500,000 unissued ordinary shares of Eureka Group Holdings Limited under option and 319,375 performance
rights on issue as at the date of this report.
INDEMNIFICATION AND INSURANCE OF OFFICERS
During or since the end of the financial year, the Company has indemnified the directors and executives of the Company for
costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is
a lack of good faith.
During the financial year the Group paid a premium in respect of a contract to insure the directors and executives of the
Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure
of the nature of the liability and the amount of the premium.
INDEMNIFICATION AND INSURANCE OF AUDITORS
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.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Company or 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.
NON-AUDIT SERVICES
There were no non-audit services provided by the auditors in the current or prior period.
OFFICERS OF THE COMPANY WHO ARE FORMER PARTNERS OF ERNST & YOUNG
There are no officers of the Company who are former partners of Ernst & Young.
There were no loans to any director or key management personnel at any time during the year and prior year.
ROUNDING OF AMOUNTS
Leisure Living Gladstone Pty Ltd
Leisure Living Gladstone Pty Ltd, an entity associated with Lachlan McIntosh, paid the Group management fees of $14,846
on commercial terms (2017: $10,320). As at 30 June 2018 the amount outstanding from Leisure Living Gladstone Pty Ltd was
Leisure Living Gladstone Pty Ltd, an entity associated with Lachlan McIntosh, was paid $29,229 for Manager’s unit rental fees
on commercial terms (2017: $29,229). As at 30 June 2018 the amount outstanding to Leisure Living Gladstone Pty Ltd was
Ernst & Young continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of the Directors, pursuant to section 298(2)(a) of the Corporations Act
2001.
On behalf of the directors
The amounts contained in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) where
noted ($’000) under the option available to the Company under ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191. The Company is an entity to which this legislative instrument applies.
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 81.
AUDITOR
Murray Boyte
Executive Chair
Dated in Brisbane this 31st day of August 2018.
EGH ANNUAL REPORT 2018
28
EGH ANNUAL REPORT 2018
29
29
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of Profit or Loss and Other
Consolidated Statement of Profit or
Comprehensive Income
Loss and Other Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
Note
3
13
3
7
9
4
4
4
5
Revenue
Share of profit of a joint venture
Other income
Expenses
Village operating costs
Impairment – trade receivables
Loss on revaluation of investment property and other assets
Couran Cove inventory write down and transaction costs
Write down of other assets associated with Couran Cove
Employee benefits expenses
Finance expense
Marketing expenses
Consultancy expenses
Depreciation & amortisation expenses
Lease expenses
Other expenses
Profit/(loss) before income tax expense
Income tax expense
Profit/(loss) after income tax expense
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss
Items that will not be reclassified to profit or loss
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive income/(loss) for the year
Basic and diluted earnings per share (cents per share)
25
Consolidated
30 June 2018
$’000
30 June 2017
$’000
22,574
172
638
(11,910)
-
(1,692)
(1,124)
(1,763)
(1,884)
(2,753)
(136)
-
(251)
(280)
(1,867)
(276)
-
(276)
-
-
-
(276)
(0.12)
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
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.
30
EGH ANNUAL REPORT 2018
30
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
AS AT 30 JUNE 2018
AS AT 30 JUNE 2018
Consolidated
AS AT 30 JUNE 2018
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2018
Consolidated
30 June 2018
30 June 2017
Note
$’000
$’000
Revenue
Other income
Share of profit of a joint venture
Expenses
Village operating costs
Impairment – trade receivables
Loss on revaluation of investment property and other assets
Couran Cove inventory write down and transaction costs
Write down of other assets associated with Couran Cove
Employee benefits expenses
Finance expense
Marketing expenses
Consultancy expenses
Depreciation & amortisation expenses
Lease expenses
Other expenses
Profit/(loss) before income tax expense
Income tax expense
Profit/(loss) after income tax expense
3
13
3
7
9
4
4
4
5
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss
Items that will not be reclassified to profit or loss
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive income/(loss) for the year
Basic and diluted earnings per share (cents per share)
25
22,574
172
638
(11,910)
-
(1,692)
(1,124)
(1,763)
(1,884)
(2,753)
(136)
-
(251)
(280)
(1,867)
(276)
(276)
-
-
-
-
(276)
(0.12)
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
Current Assets
Cash and cash equivalents
Current Assets
Trade and other receivables
Cash and cash equivalents
Inventories
Trade and other receivables
Other assets
Inventories
Loans receivable
Other assets
Loans receivable
Assets held for sale
Total current assets
Assets held for sale
Total current assets
Non-Current Assets
Loans receivable
Non-Current Assets
Joint Venture Investment
Loans receivable
Other assets
Joint Venture Investment
Investment property
Other assets
Property, plant and equipment
Investment property
Intangible assets
Property, plant and equipment
Total non-current assets
Intangible assets
Total non-current assets
Total Assets
Total Assets
Current Liabilities
Trade and other payables
Current Liabilities
Other financial liabilities
Trade and other payables
Provisions
Other financial liabilities
Total current liabilities
Provisions
Total current liabilities
Non-current liabilities
Other financial liabilities
Non-current liabilities
Provisions
Other financial liabilities
Total non-current liabilities
Provisions
Total non-current liabilities
Total Liabilities
Total Liabilities
Net Assets
Net Assets
Equity
Share capital
Equity
Equity reserve
Share capital
Accumulated losses
Equity reserve
Total Equity
Accumulated losses
Total Equity
Note
Note
21
6
21
7
6
9
7
11
9
11
8
8
11
13
11
9
13
14
9
15
14
16
15
16
17
19
17
18
19
18
19
18
19
18
20
20
20
20
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.
The consolidated statement of financial position is to be read in conjunction with the accompanying notes
EGH ANNUAL REPORT 2018
30
The consolidated statement of financial position is to be read in conjunction with the accompanying notes
Consolidated
30 June 2018
$’000
30 June 2018
$’000
30 June 2017
$’000
30 June 2017
$’000
1,986
2,402
1,986
11,783
2,402
1,469
11,783
72
1,469
17,712
72
1,750
17,712
19,462
1,750
19,462
456
4,672
456
1,237
4,672
100,756
1,237
682
100,756
6,035
682
113,838
6,035
113,838
133,300
4,395
2,632
4,395
7,649
2,632
1,623
7,649
76
1,623
16,375
76
-
16,375
16,375
-
16,375
501
-
501
3,000
-
100,666
3,000
1,665
100,666
6,327
1,665
112,159
6,327
112,159
128,534
133,300
128,534
2,709
163
2,709
263
163
3,135
263
3,135
55,320
145
55,320
55,465
145
55,465
58,600
58,600
74,700
74,700
94,352
12
94,352
(19,664)
12
74,700
(19,664)
74,700
2,660
1,554
2,660
289
1,554
4,503
289
4,503
49,019
145
49,019
49,164
145
49,164
53,667
53,667
74,867
74,867
94,255
-
94,255
(19,388)
-
74,867
(19,388)
74,867
EGH ANNUAL REPORT 2018
EGH ANNUAL REPORT 2018
31
31
31
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
AS AT 30 JUNE 2018
AS AT 30 JUNE 2018
Consolidated
Note
30 June 2018
$’000
30 June 2017
$’000
Cash Flows from Operating Activities
Receipts from customers
Payments to suppliers & employees (1)
Interest received
Interest paid
Net Cash provided by/(used) in Operating Activities
21(b)
Cash Flows from Investing Activities
Payments for additions to investment properties
Payments for property, plant & equipment
Payments for Joint Venture investment
Proceeds from sale of assets held for sale
Proceeds from sale of investment property
Proceeds from the sale of intangible assets
Payments made to sell intangible assets
Payments for loans provided
Repayments of loans provided
Payment of residential obligation loans
Payments for intangible assets
Net Cash provided by/(used) in Investing Activities
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
20
20
24,849
(19,144)
8
(2,777)
2,936
(8,704)
(30)
(4,500)
2,200
1,335
312
-
-
85
(832)
-
(10,134)
9,425
(4,559)
(75)
-
-
(2)
4,789
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
Net increase/(decrease) in cash and cash equivalents
(2,409)
(2,446)
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
21(a)
4,395
1,986
6,841
4,395
(1) Included in cash payments during the year ended 30 June 2018 was an amount of $1.67 million for capitalised
development costs on inventory held at Terranora and Couran Cove to prepare the inventory for sale.
The consolidated statement of cash flows is to be read in conjunction with the accompanying notes.
32
EGH ANNUAL REPORT 2018
32
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of Cash Flows
AS AT 30 JUNE 2018
Consolidated
30 June 2018
30 June 2017
Note
$’000
$’000
Net Cash provided by/(used) in Operating Activities
21(b)
Cash Flows from Operating Activities
Receipts from customers
Payments to suppliers & employees (1)
Interest received
Interest paid
Cash Flows from Investing Activities
Payments for additions to investment properties
Payments for property, plant & equipment
Payments for Joint Venture investment
Proceeds from sale of assets held for sale
Proceeds from sale of investment property
Proceeds from the sale of intangible assets
Payments made to sell intangible assets
Payments for loans provided
Repayments of loans provided
Payment of residential obligation loans
Payments for intangible assets
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
20
20
24,849
(19,144)
8
(2,777)
2,936
(8,704)
(30)
(4,500)
2,200
1,335
312
85
(832)
-
-
-
-
-
9,425
(4,559)
(75)
(2)
4,789
24,277
(17,987)
49
(2,266)
4,073
(15,719)
(302)
-
-
-
171
(10)
(561)
67
(246)
(849)
9,848
(1,667)
(440)
3,948
(523)
(236)
10,930
Net Cash provided by/(used) in Investing Activities
(10,134)
(17,449)
Net increase/(decrease) in cash and cash equivalents
(2,409)
(2,446)
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
21(a)
4,395
1,986
6,841
4,395
(1) Included in cash payments during the year ended 30 June 2018 was an amount of $1.67 million for capitalised
development costs on inventory held at Terranora and Couran Cove to prepare the inventory for sale.
FOR THE YEAR ENDED 30 JUNE 2018
For the year ended 30 June 2018
Share Capital
$’000
Share Capital
$’000
Consolidated
Accumulated
Losses
Consolidated
$’000
Accumulated
Losses
$’000
Equity
Reserves
$’000
Equity
Reserves
$’000
Total
$’000
Total
$’000
For the year ended 30 June 2018
Balance at 1 July 2017
94,255
(19,388)
Balance at 1 July 2017
Profit/(loss) for the year
Other comprehensive income/(loss)
Profit/(loss) for the year
Total comprehensive income/(loss) for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss) for the year
Transactions with owners in their capacity as owners:
Shares issued during the year
Transactions with owners in their capacity as owners:
Share based payments
Shares issued during the year
Capital raising costs
Share based payments
Balance at 30 June 2018
Capital raising costs
Balance at 30 June 2018
For the year ended 30 June 2017
For the year ended 30 June 2017
Balance at 1 July 2016
Balance at 1 July 2016
Profit for the year
Other comprehensive income
Profit for the year
Total comprehensive income 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
Transactions with owners in their capacity as owners:
Share buy back
Shares issued during the year
Capital raising costs
Share buy back
Balance at 30 June 2017
Capital raising costs
Balance at 30 June 2017
94,255
-
-
-
-
-
-
100
-
100
(3)
-
94,352
(3)
94,352
(19,388)
(276)
-
(276)
(276)
-
(276)
-
-
-
-
-
(19,664)
-
(19,664)
90,860
(25,926)
90,860
-
-
-
-
-
-
3,948
(523)
3,948
(30)
(523)
94,255
(30)
94,255
(25,926)
6,538
-
6,538
6,538
-
6,538
-
-
-
-
-
(19,388)
-
(19,388)
-
-
-
-
-
-
-
-
-
12
-
-
12
12
-
12
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
74,867
74,867
(276)
-
(276)
(276)
-
(276)
100
12
100
(3)
12
74,700
(3)
74,700
64,934
64,934
6,538
-
6,538
6,538
-
6,538
3,948
(523)
3,948
(30)
(523)
74,867
(30)
74,867
The consolidated statement of cash flows is to be read in conjunction with the accompanying notes.
The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.
The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.
EGH ANNUAL REPORT 2018
32
EGH ANNUAL REPORT 2018
EGH ANNUAL REPORT 2018
33
33
33
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 2018
FOR THE YEAR ENDED 30 JUNE 2018
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 2018 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 registered office of the company is Suite 2D 7 Short St, Southport QLD 4215
The financial report was authorised for issue on 31 August 2018 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 2017.
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 2018 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.
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.
EGH ANNUAL REPORT 2018
34
34
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
1. INTRODUCTION
BUSINESS COMBINATIONS
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 2018 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 registered office of the company is Suite 2D 7 Short St, Southport QLD 4215
The financial report was authorised for issue on 31 August 2018 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.
The Group has not elected to apply any pronouncements before their operative date in the annual reporting period beginning
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
Early adoption of standards
1 July 2017.
Historical cost convention
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 2018 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.
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.
EGH ANNUAL REPORT 2018
34
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.
EGH ANNUAL REPORT 2018
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 2018
FOR THE YEAR ENDED 30 JUNE 2018
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.
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.
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
36
EGH ANNUAL REPORT 2018
36
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
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.
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.
INVESTMENT IN JOINT VENTURE
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the
net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only
when decisions about the relevant activities require the unanimous consent of the parties sharing control.
The considerations made in determining joint control are similar to those necessary to determine control over subsidiaries.
The Group’s investments in its joint venture are accounted for using the equity method. Under the equity method, the
investment in a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise
changes in the Group’s share of net assets of the joint venture since the acquisition date. Goodwill relating to the joint venture
is included in the carrying amount of the investment and is not tested for impairment separately.
The statement of profit or loss reflects the Group’s share of the results of operations of the joint venture. Any change in other
comprehensive income (OCI) of those investees is presented as part of the Group’s OCI. In addition, when there has been a
change recognised directly in the equity of the joint venture, the Group recognises its share of any changes, when applicable,
in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the
joint venture are eliminated to the extent of the interest in the joint venture.
The aggregate of the Group’s share of profit or loss of a joint venture is shown on the face of the statement of profit or loss
outside operating profit and represents profit or loss after tax and non-controlling interests in the subsidiaries of the joint
venture.
The financial statements of the associate or joint venture are prepared for the same reporting period as the Group. When
necessary, adjustments are made to bring the accounting policies in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its
investment in its joint venture. At each reporting date, the Group determines whether there is objective evidence that the
investment in the joint venture is impaired. If there is such evidence, the Group calculates the amount of impairment as the
difference between the recoverable amount of the joint venture and its carrying value, and then recognises the loss as ‘Share
of profit of a joint venture’ in the statement of profit or loss.
EGH ANNUAL REPORT 2018
37
37
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
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
Group Holdings Limited.
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
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.
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.
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
CASH AND CASH EQUIVALENTS
in value, net of outstanding bank overdrafts.
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.
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
EGH ANNUAL REPORT 2018
36
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 2018
FOR THE YEAR ENDED 30 JUNE 2018
Upon loss of significant influence over the joint control over the joint venture, the Group measures and recognises any retained
investment at its fair value. Any difference between the carrying amount of the joint venture upon loss of joint control and the
fair value of the retained investment and proceeds from disposal 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
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.
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.
38
EGH ANNUAL REPORT 2018
38
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
Upon loss of significant influence over the joint control over the joint venture, the Group measures and recognises any retained
investment at its fair value. Any difference between the carrying amount of the joint venture upon loss of joint control and the
fair value of the retained investment and proceeds from disposal 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
continues to be supportable.
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
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.
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.
FAIR VALUE MEASUREMENT
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair
value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date; and assumes that the transaction will take place either: in the principal market;
or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming
they act in their economic best interests. For non-financial assets 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.
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.
EGH ANNUAL REPORT 2018
38
EGH ANNUAL REPORT 2018
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 2018
FOR THE YEAR ENDED 30 JUNE 2018
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
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.
Share based payments
Employees of the Group receive remuneration in the form of share-based payments, whereby employees render services as
consideration for equity instruments (equity-settled transactions).
40
EGH ANNUAL REPORT 2018
40
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
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 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
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
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.
Share based payments
Employees of the Group receive remuneration in the form of share-based payments, whereby employees render services as
consideration for equity instruments (equity-settled transactions).
EGH ANNUAL REPORT 2018
40
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate
valuation model.
That cost is recognised in employee benefits expense, together with a corresponding increase in equity (other capital
reserves), over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting
period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects
the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will
ultimately vest. The expense or credit in the statement of profit or loss for a period represents the movement in cumulative
expense recognised as at the beginning and end of that period.
Service and non-market performance conditions are not taken into account when determining the grant date fair value of
awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of equity
instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other
conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions.
Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless
there are also service and/or performance conditions.
No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions
have not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested
irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service
conditions are satisfied.
BORROWINGS
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
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.
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.
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.
EGH ANNUAL REPORT 2018
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 2018
FOR THE YEAR ENDED 30 JUNE 2018
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.
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.
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:
42
EGH ANNUAL REPORT 2018
42
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
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
CAPITAL MANAGEMENT
CONTRIBUTED EQUITY
EARNINGS PER SHARE
Basic Earnings Per Share
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.
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.
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.
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:
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
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 16 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.
EGH ANNUAL REPORT 2018
42
EGH ANNUAL REPORT 2018
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 2018
FOR THE YEAR ENDED 30 JUNE 2018
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.
Option 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. Refer to Note 9
for significant assumptions made in the assessment of impairment for these assets.
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 33. 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 joint ventures 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 2018 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 applicable to the Group from 1 July 2018. The new
requirements are not expected to impact the classification and measurement of the Group’s existing financial assets. However,
the impact of the application of the standard is continuously being monitored by the Group, and the Group expects to conclude
on the impact in due course.
44
EGH ANNUAL REPORT 2018
44
2017-2018 ANNUAL REPORTFor personal use only
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
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.
Option 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. Refer to Note 9
for significant assumptions made in the assessment of impairment for these assets.
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 33. 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 joint ventures 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
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 applicable to the Group from 1 July 2018. The new
requirements are not expected to impact the classification and measurement of the Group’s existing financial assets. However,
the impact of the application of the standard is continuously being monitored by the Group, and the Group expects to conclude
on the impact in due course.
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
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 Group has undertaken an analysis of how AASB 15 should be implemented. This analysis has been performed in
respect of revenue from the following major business activities being:
a) Provision of accommodation and food services;
b) Property maintenance and consulting services, and
c) Care services.
In respect to revenue from contracts with residents for the provision of accommodation and food, revenue will continue to be
recognised as and when accommodation and food is provided, as this is when the Group transfers control of this service
(satisfies its performance obligation).
In respect to revenue from management and caretaking services, revenue will continue to be recognised as and when the
Group performs the agreed services, as this is when the Group transfers control of this service (satisfies its performance
obligation).
When AASB 15 is adopted in the year ended 30 June 2019, entities are required to select either the modified retrospective
approach (comparatives are not restated) approach or the full retrospective (comparatives are restated) approach. Given
there is no change to the measurement and recognition criteria, there is no difference between the two approaches for the
Group.
In respect to revenue from the provision of care services, revenue will continue to be recognised as and when the Group
provides the accommodation and care services in accordance with the care plan, as this is when the Group transfers control
of this service (satisfies its performance obligation).
The Group’s existing disclosure meets the requirements under AASB 15 in respect of the disaggregation of revenue into
categories that depict how the nature, amount, timing and uncertainty of revenue and cashflows are effected by the
economic factors. Any new agreements for the provision of goods and services will be assessed as they arise throughout
the year ended 30 June 2019 and beyond.
AASB 16 Leases
The new standard will be effective for annual periods beginning on or after 1 January 2019. The key features of AASB 16 are
as follows:
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2018 reporting
periods. Eureka Group Holdings Limited assessment of the impact of these new standards and interpretations is set out below.
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. Existing operating leases and any entered into during the
year ending 30 June 2019 will be brought onto the balance sheet. Final impact is yet to be determined.
EGH ANNUAL REPORT 2018
44
EGH ANNUAL REPORT 2018
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 2018
FOR THE YEAR ENDED 30 JUNE 2018
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 on revaluation of investment property and other assets to fair value
Gain on sale of investment property
Gain on sale of intangibles
Insurance claim revenue
Other income
4. ITEMS INCLUDED IN PROFIT/(LOSS)
Profit/(loss) before income tax expense includes the following specific items:
Consolidated
30 June 2018
$’000
30 June 2017
$’000
2,193
2,081
1,762
864
15,674
-
22,574
41
-
501
60
-
36
638
1,992
2,146
1,842
1,833
14,826
1,414
24,053
172
1,046
(10)
-
1,007
205
2,420
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
280
201
2,753
2,753
2,606
2,606
134
4
2
140
81
16
14
111
431
137
3
2
142
101
17
11
129
421
46
EGH ANNUAL REPORT 2018
46
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
3. REVENUE
5.
INCOME TAX
Revenue
Catering – managed properties
Catering – owned properties
Property maintenance and consulting services
Service fees
Rental income
Other revenue
Other Income
Interest revenue
Gain on sale of investment property
Gain on sale of intangibles
Insurance claim revenue
Other income
Net gain on revaluation of investment property and other assets to fair value
4. ITEMS INCLUDED IN PROFIT/(LOSS)
Profit/(loss) before income tax expense includes the following specific items:
Flood damage expense
-
519
The major components of income tax expense for the years ended
30 June 2018 and 2017 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/(loss) multiplied by the
applicable tax rate of 30% presents as follows:
Accounting profit/(loss) before tax
Income tax calculated at 30%
Tax effect of permanent differences – non deductible land option amounts
Recognition of deferred tax assets not previously recognised
Income tax expense reported in the Statement of Profit or Loss
6. TRADE AND OTHER RECEIVABLES
Rental expense relating to operating leases
- Minimum lease payments
- Interest and finance charges paid/payable for financial liabilities not at fair value
Trade debtors (i)
Other debtors
Couran Cove receivable (i)
Provision for doubtful debts
Consolidated
30 June 2018
$’000
30 June 2017
$’000
-
-
-
-
-
-
(276)
6,538
(83)
1,961
533
(450)
-
1
(1,962)
-
Consolidated
30 June 2018
$’000
30 June 2017
$’000
132
186
2,260
(176)
2,402
382
400
1,939
(89)
2,632
(i) Refer to Note 9 – amounts relating to Couran Cove previously classified as trade debtors and financing extended were
transferred to other non-current assets upon execution of the agreement between the Group and the parties to these amounts.
The amount transferred was $3.00 million during year ended 30 June 2017. This reduced the amount receivable by $3.00
million.
Trade receivables are non-interest bearing unless otherwise stated and are generally on 30 day terms.
The amounts advanced in relation to the Couran Cove receivable are secured over assets of the third party. Subsequent to
30 June 2018 the nature of these receivables changed as disclosed in Note 34. There are no provisions recorded against
these amounts receivable for the reasons disclosed in Note 34. Other Couran Cove assets are described in Notes 7 and 9.
7. INVENTORIES
Catering inventory – at cost
Terranora units
Couran Cove units
12
9,771
2,000
11,783
7
7,642
-
7,649
EGH ANNUAL REPORT 2018
47
47
Consolidated
30 June 2018
30 June 2017
$’000
$’000
2,193
2,081
1,762
864
15,674
-
22,574
41
-
501
60
-
36
638
1,992
2,146
1,842
1,833
14,826
1,414
24,053
172
1,046
(10)
-
1,007
205
2,420
280
201
2,753
2,753
2,606
2,606
134
4
2
140
81
16
14
111
431
137
3
2
142
101
17
11
129
421
EGH ANNUAL REPORT 2018
46
Finance cost
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
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 2018
FOR THE YEAR ENDED 30 JUNE 2018
The Terranora units were transferred from investment property in 2016 and were recognised at the date of transfer at fair
value which, as inventory, is considered deemed cost. During 2018, intention to sell the manager’s residence was formed.
Therefore, the residence was transferred from investment property during the year at fair value ($400,000). The costs of
additional development are capitalised to the inventory as incurred.
The Couran Cove units transferred from investment property during the year were recognised at the date of transfer at fair
value. The units were written down by $0.83 million during the year to a net realisable value of $2.00 million as a result of the
post balance date transaction described in Note 34. Associated with the Couran Cove transaction the Group also incurred
legal and other costs of $0.29 million. These costs combined with the unit write down resulted in a total expense of $1.12
million.
Inventory is recorded at the lower of cost and net realisable value. The inventory is expected to be realised within 12 months
via sales to third parties.
8. ASSETS HELD FOR SALE
Current
Assets held for sale
Consolidated
30 June 2018
$’000
30 June 2017
$’000
1,750
1,750
-
-
This asset comprises the Lambert Village and two residential houses in Mt Gambier. A contract for the sale of Lambert Village
in Mt Gambier was executed on 20 August 2018 for $1.10 million. In accordance with the terms of the contract, settlement is
due on 30 November 2018. The two residential houses are expected to be realised within 12 months.
9. OTHER ASSETS
Current
Property Deposits
Prepayments and other assets (ii)
Bartercard (iii)
Non-current
Other (i)
(i) Couran Cove Land Option
Position at 30 June 2018
Consolidated
30 June 2018
$’000
30 June 2017
$’000
-
842
627
204
781
638
1,469
1,623
1,237
1,237
3,000
3,000
The Group had acquired by way of a call option an equitable interest in land at Couran Cove. The option had a 3 year life. The
option was secured by registered mortgage over land assets at Couran Cove subject to the option and additional land assets.
The land which was the subject of the option has a development approval for 60 lots. The land is adjacent to the cabins already
owned by the Group at Couran Cove. The option was 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 had not been exercised, the Group was to receive a
settlement in cash. Settlement was to be based on the number of unexercised lots as a % of the 60 lots, applied to a $3.00
million value.
The option was acquired with effect from 31 December 2016 for $3.00 million and the nature of the asset at 30 June 2018 is
an Other non-current asset which is measured at cost and tested for impairment.
The acquisition of the option described above for $3.00 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.
48
EGH ANNUAL REPORT 2018
48
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
The Terranora units were transferred from investment property in 2016 and were recognised at the date of transfer at fair
value which, as inventory, is considered deemed cost. During 2018, intention to sell the manager’s residence was formed.
Therefore, the residence was transferred from investment property during the year at fair value ($400,000). The costs of
additional development are capitalised to the inventory as incurred.
The Couran Cove units transferred from investment property during the year were recognised at the date of transfer at fair
value. The units were written down by $0.83 million during the year to a net realisable value of $2.00 million as a result of the
post balance date transaction described in Note 34. Associated with the Couran Cove transaction the Group also incurred
legal and other costs of $0.29 million. These costs combined with the unit write down resulted in a total expense of $1.12
Inventory is recorded at the lower of cost and net realisable value. The inventory is expected to be realised within 12 months
This asset comprises the Lambert Village and two residential houses in Mt Gambier. A contract for the sale of Lambert Village
in Mt Gambier was executed on 20 August 2018 for $1.10 million. In accordance with the terms of the contract, settlement is
due on 30 November 2018. The two residential houses are expected to be realised within 12 months.
Consolidated
30 June 2018
30 June 2017
$’000
$’000
1,750
1,750
-
-
Consolidated
30 June 2018
30 June 2017
$’000
$’000
-
842
627
204
781
638
1,469
1,623
1,237
1,237
3,000
3,000
million.
via sales to third parties.
8. ASSETS HELD FOR SALE
Current
Assets held for sale
9. OTHER ASSETS
Current
Property Deposits
Prepayments and other assets (ii)
Bartercard (iii)
Non-current
Other (i)
(i) Couran Cove Land Option
Position at 30 June 2018
The Group had acquired by way of a call option an equitable interest in land at Couran Cove. The option had a 3 year life. The
option was secured by registered mortgage over land assets at Couran Cove subject to the option and additional land assets.
The land which was the subject of the option has a development approval for 60 lots. The land is adjacent to the cabins already
owned by the Group at Couran Cove. The option was 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 had not been exercised, the Group was to receive a
settlement in cash. Settlement was to be based on the number of unexercised lots as a % of the 60 lots, applied to a $3.00
million value.
The option was acquired with effect from 31 December 2016 for $3.00 million and the nature of the asset at 30 June 2018 is
an Other non-current asset which is measured at cost and tested for impairment.
The acquisition of the option described above for $3.00 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.
As part of this transaction, the Group had 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 in 3 years by the current
owner.
Valuation at 30 June 2018
The asset has been assessed for impairment at 30 June 2018, having regard to the post balance date transaction described
in Note 34. The Group has considered the expected cash flows to be received from the asset and discounted these to their
present value to determine the recoverable value of the asset. This has resulted in the value of the asset being written down
to $1.24 million at 30 June 2018. This is an impairment charge of $1.76 million which has been recorded in the profit and loss
at 30 June 2018.
The significant assumptions made in the calculation of this amount are as follows. Any changes in these assumptions which
are detrimental to the cash flow would cause further impairment.
Input
Sales price per lot
Discount rate pre tax
Expected time frame of realisation
Position post 30 June 2018
Assumption
Selling price of between $50,000 and $45,000 less legal and
other costs of realisation.
35%
Progressive settlements through to late 2022.
Post 30 June 2018 the Group entered into amended agreements with respect to this asset. These details are disclosed in
Note 34 to the financial statements. Under the terms of these amended agreements the Group has concluded the recorded
value at 30 June 2018 of $1.24 million reflects the assets recoverable value.
(ii) Amounts included relate to prepaid expenses, deposits for assets and other operational assets used in ordinary business
activities.
(iii) Bartercard is an alternative currency and operates as a trade exchange. Bartercard is a subsidiary of ASX listed
IncentiaPay Ltd. EGH has utilised Bartercard over recent years. At 30 June 2018, the Bartercard balance is $0.63 million,
which is recorded at cost. In addition, amounts of Bartercard have been advanced to suppliers in exchange for future supply
of goods. These are recorded at the fair value of goods to be received and are disclosed in other assets $0.47 million and
Investment Properties $0.75 million. EGH intends to utilise Barter in ongoing expenditure and receive part proceeds from sales
of Terranora units already contracted.
10. DEFERRED TAX ASSETS AND LIABILITIES
Recognised in the Statement of Financial Position
Deferred tax assets
Tax losses
Deferred tax liabilities
Intangible assets
Investment properties, property, plant and equipment
Net (assessable) and deductible differences on sundry items
Net deferred tax assets/liability opening balance adjustment
Consolidated
30 June 2018
$’000
30 June 2017
$’000
4,330
4,741
-
(5,049)
719
-
-
(4,528)
(213)
-
EGH ANNUAL REPORT 2018
48
EGH ANNUAL REPORT 2018
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 2018
FOR THE YEAR ENDED 30 JUNE 2018
Not recognised in the Statement of Financial Position
Unrecognised deferred tax assets
Tax losses
Net (assessable) and deductible differences on sundry items
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 2018
$’000
-
4,205
30 June 2017
$’000
-
3,968
3,968
-
(181)
418
237
4,205
6,589
-
(2,621)
-
(2,621)
3,968
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.
11. LOANS RECEIVABLE
Loans – vendor finance
Current
Non-current
Consolidated
30 June 2018
$’000
30 June 2017
$’000
528
528
72
456
528
577
577
76
501
577
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 5 and 8.1 years and interest is payable on these loans at a rate of
between 5.50%-6.25%.
50
EGH ANNUAL REPORT 2018
50
2017-2018 ANNUAL REPORTFor personal use only
Not recognised in the Statement of Financial Position
Unrecognised deferred tax assets
Tax losses
Net (assessable) and deductible differences on sundry items
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
unavailable.
11. LOANS RECEIVABLE
Loans – vendor finance
Current
Non-current
$’000
-
4,205
3,968
-
(181)
418
237
4,205
528
528
72
456
528
$’000
-
3,968
6,589
-
-
(2,621)
(2,621)
3,968
577
577
76
501
577
Consolidated
30 June 2018
30 June 2017
$’000
$’000
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
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 5 and 8.1 years and interest is payable on these loans at a rate of
between 5.50%-6.25%.
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
12. INVESTMENT IN SUBSIDIARIES
Consolidated
30 June 2018
30 June 2017
Equity Holding
Country of
Incorporation
30 June 2018
%
30 June 2017
%
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 Pty Ltd
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 (Terranora) Pty Ltd
Eureka Cascade Gardens (Tivoli) Pty Ltd
Eureka Cascade Gardens (Townsville) Pty Ltd
Eureka Group Care Pty Ltd
Eureka Property Pty Ltd
Eureka Whitsunday Pty Ltd
Fig Investments Pty Ltd
Eureka Living 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
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%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
EGH ANNUAL REPORT 2018
50
EGH ANNUAL REPORT 2018
51
51
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 2018
FOR THE YEAR ENDED 30 JUNE 2018
There are no significant restrictions on the Company’s ability to access or use the assets and settle the liabilities of the Group.
13. JOINT VENTURE INVESTMENT
On 9 April 2018, the Group entered into a Joint Venture (JV) for a 50% interest in both Affordable Living Services Unit Trust
and Affordable Living Unit Trust. The JV owns 5 retirement villages in Tasmania. The Group’s interest in the JV is accounted
for using the equity method in the consolidated financial statements. The accounting policies adopted by the JV are consistent
with the Group’s accounting policies. Summarised financial information of the JV, based on management accounts, and a
reconciliation with the carrying amount of the investment in the consolidated financial statements are set out below:
Summarised statement of financial position of Affordable Living Services Unit Trust:
Current assets, including cash and cash equivalents
Non-current assets, including investment properties of $18.77 million
Current liabilities, including long term borrowings of $0.30 million
Non-current liabilities, including long term borrowings of $9.55 million
Equity
Group’s share in equity – 50%
Group’s carrying amount of the investment
30 June 2018
$’000
30 June 2017
$’000
497
18,776
(381)
(9,550)
9,342
4,671
4,671
-
-
-
-
-
-
-
Summarised statement of profit or loss of Affordable Living Services Unit Trust:
Revenue
Cost of Sales
Finance costs
Profit before tax
Income tax expense
Profit for the year
Total comprehensive income for the year
Group’s share of profit for the year
30 June 2018
30 June 2017
$’000
$’000
807
(358)
(107)
342
-
-
-
-
-
-
342
342
171
-
-
-
52
EGH ANNUAL REPORT 2018
52
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
There are no significant restrictions on the Company’s ability to access or use the assets and settle the liabilities of the Group.
Summarised statement of financial position of Affordable Living Unit Trust:
13. JOINT VENTURE INVESTMENT
On 9 April 2018, the Group entered into a Joint Venture (JV) for a 50% interest in both Affordable Living Services Unit Trust
and Affordable Living Unit Trust. The JV owns 5 retirement villages in Tasmania. The Group’s interest in the JV is accounted
for using the equity method in the consolidated financial statements. The accounting policies adopted by the JV are consistent
with the Group’s accounting policies. Summarised financial information of the JV, based on management accounts, and a
reconciliation with the carrying amount of the investment in the consolidated financial statements are set out below:
Summarised statement of financial position of Affordable Living Services Unit Trust:
Current assets, including cash and cash equivalents
Non-current assets, including investment properties of $18.77 million
Current liabilities, including long term borrowings of $0.30 million
Non-current liabilities, including long term borrowings of $9.55 million
Equity
Group’s share in equity – 50%
Group’s carrying amount of the investment
Summarised statement of profit or loss of Affordable Living Services Unit Trust:
Revenue
Cost of Sales
Finance costs
Profit before tax
Income tax expense
Profit for the year
Total comprehensive income for the year
Group’s share of profit for the year
30 June 2018
30 June 2017
$’000
$’000
497
18,776
(381)
(9,550)
9,342
4,671
4,671
807
(358)
(107)
342
342
342
171
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Current assets, including cash and cash equivalents
Non-current assets, including investment properties
Current liabilities
Non-current liabilities
Equity
Group’s share in equity – 50%
Group’s carrying amount of the investment
Summarised statement of profit or loss of Affordable Living Unit Trust:
Revenue
Cost of Sales
Finance costs
Profit before tax
Income tax expense
Profit for the year
Total comprehensive income for the year
Group’s share of profit for the year
30 June 2018
30 June 2017
$’000
$’000
14. INVESTMENT PROPERTY
30 June 2018
$’000
30 June 2017
$’000
210
-
-
-
(208)
-
-
-
2
-
1
1
-
-
30 June 2018
$’000
30 June 2017
$’000
102
(100)
-
2
-
-
-
-
-
-
2
2
1
-
-
-
Consolidated
30 June 2018
$’000
30 June 2017
$’000
-
-
Investment properties at fair value
100,756
100,666
Movements in investment properties:
Balance at beginning of reporting period
Acquisitions
Disposals
Subsequent expenditure
Transfer to inventory – Couran Cove cabins
Transfer to inventory – Terranora Manager’s residence
Transfer to assets held for sale
Net increment/(decrement) due to fair value adjustment
Balance at end of reporting period
100,666
6,257
(791)
3,104
(2,747)
(400)
(3,894)
(1,439)
100,756
86,472
9,029
(171)
4,290
-
-
-
1,046
100,666
EGH ANNUAL REPORT 2018
52
EGH ANNUAL REPORT 2018
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 2018
FOR THE YEAR ENDED 30 JUNE 2018
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 36% of the portfolio. At 30 June 2018, the Group
undertook a review of the fair value of all investment properties held and as shown in the table above, recorded a decrement
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 23.
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 23.
Amounts recognised in profit or loss for investment properties:
Rental income
Direct operating expenses generating rental income
Net gain/(loss) revaluation of investment property to fair value
Consolidated
30 June 2018
$’000
30 June 2017
$’000
15,674
(9,596)
(1,439)
14,826
(10,630)
1,046
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 19(a).
Details of investment properties are as follows:
Property
Location
Acquisition
date
Carrying
amount
Carrying
amount
30 Jun 18
30 Jun 17
$’000
$’000
Koinonia Village
Ayr QLD
Aug-17
1,245
92 Primrose Street Belgian Gardens
Belgian Gardens QLD
Jun-16
1,364
61 Marana Street Bilambil Heights
Bilambil Heights NSW
Dec-15
2,300
Bowen Village
Broken Hill Village
Avenell Village on Vasey Bundaberg
Lot 21 134-136 King Street Caboolture
Bowen QLD
Dec-15
1,523
Broken Hill NSW
Dec-16
1,979
Bundaberg QLD
Caboolture QLD
Oct-14
5,250
Sep-12
-
Lot 43 134-136 King Street Caboolture (manager’s unit)
Caboolture QLD
May-14
268
53 & 54 134 King Street Caboolture (manager’s unit)
Caboolture QLD
Jan-15
-
80 134-136 King Street Caboolture (manager’s unit)
Caboolture QLD
Jan-15
265
Cascade Gardens Cairns
Cairns QLD
Jul-14
4,610
Lot 51 Christie Downs Community Centre (manager’s unit) Christie Downs SA
Dec-14
299
Elizabeth Vale Scenic Village 1
Elizabeth Vale Scenic Village 2
Rockhampton Village 1
Rockhampton Village 2
15/8 Wicks Street, New Auckland
Freshwater villas
Lot 49 Hackham Community Centre (manager’s unit)
Hackham SA
Lot 97 144 Main South Road Hackham
33 Mardross Court Lavington
Hackham SA
Lavington NSW
54
Elizabeth Vale SA
Oct-14
5,237
Elizabeth Vale SA
Apr-15
4,350
Frenchville QLD
Frenchville QLD
Gladstone QLD
Gympie QLD
Oct-15
3,054
Dec-15
5,485
Sept-16
50
Jul-17
4,367
Oct-14
266
May-15
285
Jun-15
4,034
3,457
EGH ANNUAL REPORT 2018
54
-
1,000
2,700
1,434
1,990
4,988
70
268
140
265
4,952
260
4,693
3,900
3,201
5,674
50
-
294
294
2017-2018 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 2018
FOR THE YEAR ENDED 30 JUNE 2018
Property
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
Location
Lismore NSW
Mackay QLD
Mackay QLD
Margate QLD
Mildura VIC
Mt Gambier SA
Mt Gambier SA
Mt Gambier SA
Carrying
amount
Carrying
amount
30 Jun 18
30 Jun 17
$’000
$’000
Acquisition
date
May-15
5,000
Apr-14
8,493
Mar-17
-
Jun-16
4,187
Jun-15
4,052
Sept-15
-
Aug-16
-
Dec-15
3,830
4,751
7,897
547
3,900
3,352
2,408
350
3,862
2,593
5,599
4,527
3,868
Albert Street Gardens Village
Orange NSW
Sept-16
5,318
Alexam Place
Salisbury East SA
Feb-16
3,656
60 Poplar Avenue Shepparton
Shepparton VIC
Jun-15
4,138
Morphettville SA
Jun-16
-
7 Meron Street Southport
Couran Cove
Southport QLD
South Stradbroke
Island QLD
Jun-16
4,219
4,190
Jun-16
-
2,747
Lot 6,8,9,20,21&22 56A Moores Pocket Road Tivoli
Tivoli QLD
Mar-15
535
Galilee Lodge
Myall Place Retirement Village
40 Federation Street Wynnum
Investment Property Enhancements
Townsville QLD
Aug-17
917
Whyalla SA
Wynnum QLD
In Progress
Jan-15
4,340
Oct-15
5,090
June-17
750
535
-
4,013
5,147
750
100,756
100,666
15. PROPERTY, PLANT & EQUIPMENT
Buildings at cost
Accumulated depreciation
Plant & equipment at cost
Accumulated depreciation
Motor Vehicles at cost
Accumulated depreciation
Total property, plant & equipment
Consolidated
30 June 2018
$’000
30 June 2017
$’000
625
(191)
434
345
(134)
211
54
(17)
37
682
625
(174)
451
1,973
(827)
1,146
88
(20)
68
1,665
EGH ANNUAL REPORT 2018
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 2018
FOR THE YEAR ENDED 30 JUNE 2018
Reconciliation of movements in property, plant & equipment:
Opening balance at 1 July 2016
Additions at cost
Depreciation expense
Closing balance at 30 June 2017
Opening balance at 1 July 2017
Additions at cost
Disposals
Depreciation expense
Closing balance at 30 June 2018
16. 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
Buildings
$’000
Plant &
Equipment
$’000
Motor
Vehicle
$’000
Total
$’000
466
2
(17)
451
451
-
-
(17)
434
687
560
(101)
1,146
1,146
35
(890)
(80)
211
79
-
(11)
68
68
-
(17)
(14)
37
1,232
562
(129)
1,665
1,665
35
(907)
(111)
682
Consolidated
30 June 2018
$’000
30 June 2017
$’000
4,695
(1,258)
3,437
4,682
(1,211)
3,471
140
(42)
98
577
(32)
545
140
(38)
102
830
(31)
799
1,955
1,955
6,035
6,327
The Group’s primary business activity is the management (through management rights agreements) of senior’s rental
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 prior 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.
56
EGH ANNUAL REPORT 2018
56
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
Reconciliation of movements in property, plant & equipment:
Impairment tests for Goodwill
Opening balance at 1 July 2016
Additions at cost
Depreciation expense
Closing balance at 30 June 2017
Opening balance at 1 July 2017
Additions at cost
Disposals
Depreciation expense
Closing balance at 30 June 2018
16. 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
Buildings
$’000
Plant &
Equipment
$’000
Motor
Vehicle
$’000
Total
$’000
466
2
(17)
451
451
-
-
(17)
434
687
560
(101)
1,146
1,146
35
(890)
(80)
211
79
-
(11)
68
68
-
(17)
(14)
37
1,232
562
(129)
1,665
1,665
35
(907)
(111)
682
Consolidated
30 June 2018
30 June 2017
$’000
$’000
4,695
(1,258)
3,437
4,682
(1,211)
3,471
140
(42)
98
577
(32)
545
140
(38)
102
830
(31)
799
1,955
1,955
6,035
6,327
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 (2017: 2%) to the most recent
years’ cash flows;
the terminal value was calculated using a growth rate of 2% (2017: 2%);
cash flows have been discounted using a pre-tax discount rate of 15% (2017: 15%);
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.
Reconciliation of movements in intangible assets:
Management
Rights
$’000
Rent
Rolls
$’000
Goodwill
$’000
Other
intangibles
$’000
Total
$’000
Opening balance at 1 July 2016
3,548
105
1,955
Additions at cost
Transfer to/from assets held for sale
Amortisation expense
Closing balance at 30 June 2017
60
-
(137)
3,471
-
-
(3)
102
-
-
-
1,955
Opening balance at 1 July 2017
3,471
102
1,955
Additions at cost
Disposals
Amortisation expense
Closing balance at 30 June 2018
100
-
(134)
3,437
-
-
(4)
98
-
-
-
1,955
12
789
-
(2)
799
799
-
(252)
(2)
545
5,620
849
-
(142)
6,327
6,327
100
(252)
(140)
6,035
The remaining amortisation period on a weighted average basis of the management rights are 21 years (2017: 22 years).
The Group’s primary business activity is the management (through management rights agreements) of senior’s rental
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 prior 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.
17. TRADE & OTHER PAYABLES
Trade creditors and accruals
Retirement Village Resident Loans1
Acquisition related accruals
Consolidated
30 June 2018
$’000
30 June 2017
$’000
2,255
96
358
2,709
1,625
928
107
2,660
EGH ANNUAL REPORT 2018
56
The carrying amounts of trade and other payables are considered to be the same as their fair value, due to their short
term nature.
EGH ANNUAL REPORT 2018
57
57
1 Movements from 30 June 2017 represents payments made to residents.
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 2018
FOR THE YEAR ENDED 30 JUNE 2018
18. PROVISIONS
Current
Employee benefits
Non-current
Employee benefits
19. OTHER FINANCIAL LIABILITIES
Current
Commercial bills – secured
Insurance funding
Finance lease
Motor vehicle loan
Non-current
Commercial bills – secured
Finance lease
Consolidated
30 June 2018
$’000
30 June 2017
$’000
263
263
145
145
289
289
145
145
Consolidated
30 June 2018
$’000
30 June 2017
$’000
(a)
(a)
17
144
1
1
163
55,320
-
55,320
1,538
-
8
8
1,554
49,018
1
49,019
(a) Commercial bills and advances
Terms and conditions – 30 June 2018
As at 30 June 2018, the Group has access to the following facilities:
National Australia Bank (“NAB”):
During the period, NAB borrowings were consolidated and at year end comprises of two facilities:
•
•
Facility 1 – maximum limit of $24,500,000. At 30 June 2018, $19,074,000 had been drawn on the facility. The
facility limit to 29 September 2018 is $24,500,000 and $20,000,000 to 31 December 2019. The reduction of
the facility limit does not require the repayment of any drawn debt within 12 months of 30 June 2018. Interest
is payable at a variable rate on this facility (currently 4.31%).
Facility 2 – maximum limit of $35,000,000. Expires on 31 December 2021. Monthly interest only repayment.
Interest on this facility has been fixed until 31 December 2021. Interest is payable at the rate of 4.97%.
At 30 June 2018, total drawings on the facility were $54,074,000.
Westpac Banking Corporation (“Westpac”):
• Commercial bill – secured fully drawn limit of $1,762,500. Expires on 29 November 2019. Interest is payable at a
variable rate on this facility (currently 5.44%).
The NAB facilities and the Westpac 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 2018 was $100,756,000. This value represents
the fair value of assets pledged based on the carrying values recorded by the Group at 30 June 2018.
Commercial bill facilities are subject to covenants which are commensurate with normal secured lending terms.
58
EGH ANNUAL REPORT 2018
58
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
18. PROVISIONS
Current
Employee benefits
Non-current
Employee benefits
19. OTHER FINANCIAL LIABILITIES
Current
Commercial bills – secured
Insurance funding
Finance lease
Motor vehicle loan
Non-current
Commercial bills – secured
Finance lease
Consolidated
30 June 2018
30 June 2017
$’000
$’000
263
263
145
145
289
289
145
145
Consolidated
30 June 2018
30 June 2017
$’000
$’000
(a)
(a)
17
144
1
1
163
55,320
-
55,320
1,538
-
8
8
1,554
49,018
1
49,019
(a) Commercial bills and advances
Terms and conditions – 30 June 2018
As at 30 June 2018, the Group has access to the following facilities:
National Australia Bank (“NAB”):
During the period, NAB borrowings were consolidated and at year end comprises of two facilities:
Facility 1 – maximum limit of $24,500,000. At 30 June 2018, $19,074,000 had been drawn on the facility. The
facility limit to 29 September 2018 is $24,500,000 and $20,000,000 to 31 December 2019. The reduction of
the facility limit does not require the repayment of any drawn debt within 12 months of 30 June 2018. Interest
is payable at a variable rate on this facility (currently 4.31%).
•
•
At 30 June 2018, total drawings on the facility were $54,074,000.
Westpac Banking Corporation (“Westpac”):
• Commercial bill – secured fully drawn limit of $1,762,500. Expires on 29 November 2019. Interest is payable at a
variable rate on this facility (currently 5.44%).
The NAB facilities and the Westpac 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 2018 was $100,756,000. This value represents
the fair value of assets pledged based on the carrying values recorded by the Group at 30 June 2018.
Commercial bill facilities are subject to covenants which are commensurate with normal secured lending terms.
EGH ANNUAL REPORT 2018
58
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
As at 30 June 2018, the Group had the following banking covenants with NAB:
•
•
•
•
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 55% up to and including 31 March 2018, 57.5% from 1 April 2018 to 29 September
2018 and 55% from 30 September 2018 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.
The Group complied with its covenants through 30 June 2018.
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%).
Facility 2 – maximum limit of $35,000,000. Expires on 31 December 2021. Monthly interest only repayment.
Interest on this facility has been fixed until 31 December 2021. Interest is payable at the rate of 4.97%.
Westpac Banking Corporation (“Westpac”):
At 30 June 2017, total drawings on the facility were $49,455,250.
•
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%).
The commercial bill liabilities are secured against a certain amount of the Group’s investment property assets. 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.
EGH ANNUAL REPORT 2018
59
59
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 2018
FOR THE YEAR ENDED 30 JUNE 2018
As at 30 June 2017, the Group had the following banking covenants with NAB:
•
•
•
•
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.
The Group complied with its covenants through 30 June 2017.
20. 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 $0.273 for acquisition of management
rights
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 2018
Number
30 June 2018
$’000
30 June 2017
Number
30 June 2017
$’000
229,671,923
94,255
225,784,473
90,860
365,715
-
-
-
100
-
-
(3)
-
5,263,400
(1,375,950)
-
-
3,948
(523)
(30)
230,037,638
94,352
229,671,923
94,255
Share Buy Back
The Company extended the share buy back period for a further 1 year from 16 March 2018. No ordinary shares had been
cancelled during the financial year (from share buy back 2017: 1,375,950).
Equity Reserves
Share based payments
The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to
employees, including key management personnel, as part of their remuneration. Refer to Note 26 for further details of these
plans.
As at 1 July 2016
Share-based payments expense during the year
At 30 June 2017
Share-based payments expense during the year
At 30 June 2018
Share based
payments
$000
-
-
-
12
12
60
EGH ANNUAL REPORT 2018
60
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
•
•
•
•
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.
The Group complied with its covenants through 30 June 2017.
20. 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
229,671,923
94,255
225,784,473
90,860
Shares issued at $0.273 for acquisition of management
30 June 2018
30 June 2018
30 June 2017
30 June 2017
Number
$’000
Number
$’000
Consolidated
365,715
-
-
-
100
-
-
(3)
5,263,400
(1,375,950)
-
-
-
3,948
(523)
(30)
230,037,638
94,352
229,671,923
94,255
The Company extended the share buy back period for a further 1 year from 16 March 2018. No ordinary shares had been
cancelled during the financial year (from share buy back 2017: 1,375,950).
rights
Shares issued at $0.75 for cash
Shares bought back during the period
Capital raising costs
On issue at end of the year
Share Buy Back
Equity Reserves
Share based payments
plans.
The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to
employees, including key management personnel, as part of their remuneration. Refer to Note 26 for further details of these
Share-based payments expense during the year
Share-based payments expense during the year
As at 1 July 2016
At 30 June 2017
At 30 June 2018
As at 30 June 2017, the Group had the following banking covenants with NAB:
21. CASH FLOW INFORMATION
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
(a) Reconciliation of cash
Cash at bank and on hand
Consolidated
30 June 2018
$’000
30 June 2017
$’000
1,986
4,395
(b) Reconciliation of profit/(loss) for the year to net cash flow from operating activities
Profit/(loss) for the year
Depreciation and amortisation
Couran Cove inventory write down and transaction costs
Couran Cove land option write down
(Gain)/Loss on revaluation – investment properties and other assets
Share of profit of joint venture
(Gain)/loss on sale of investment property
(Gain)/loss on sale of management rights and managers units
(Gain)/loss on sale of gaming licenses
Non-cash cost of sale purchases
(Increase)/decrease in:
- Trade and other receivables
- Inventories
- Other current assets
- Other capital reserves
Increase/(decrease) in:
- Trade and other payables
- Provisions
- Other financial liabilities
Consolidated
30 June 2018
30 June 2017
$’000
$’000
(276)
251
1,124
1,763
1,692
(172)
(501)
17
(60)
4
648
(1,634)
(81)
(12)
55
(26)
144
6,538
271
-
-
(1,046)
-
-
10
-
-
36
(1,372)
(725)
-
112
249
-
Share based
payments
$000
-
-
-
12
12
EGH ANNUAL REPORT 2018
60
Net cash flow from/(used in) operating activities
2,936
4,073
(c) Non-cash investing and financing activities
During the year, the Group acquired goods and services of $63,694 with Bartercard dollars.
In the prior financial year, the Group exchanged Bartercard dollars for $1.19 million of property, plant and equipment and
investment property improvements. Refer to Note 9 for details.
22. FINANCIAL INSTRUMENTS
Overall policy
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.
EGH ANNUAL REPORT 2018
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 2018
FOR THE YEAR ENDED 30 JUNE 2018
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.
Maximum exposure to credit risk
Cash and cash equivalents
Trade and other receivables
Loans receivable
Consolidated
30 June 2018
$’000
30 June 2017
$’000
1,986
2,402
528
4,916
4,395
2,632
577
7,604
Cash and cash equivalents
Deposits of cash are only held with approved banks and financial institutions. The Group predominantly banks with National
Australia Bank.
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 1 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
Consolidated
30 June 2018
30 June 2017
Gross amount
receivable
$’000
Provision for
Impairment
$’000
Gross amount
receivable
$’000
Provision for
Impairment
$’000
2,393
-
1
8
2,402
(176)
-
-
-
(176)
2,455
11
7
248
2,721
-
-
-
(89)
(89)
1 Refer Note 6 and 34 for a discussion on Couran Cove receivable.
62
EGH ANNUAL REPORT 2018
62
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
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.
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
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.
Consolidated
30 June 2018
30 June 2017
$’000
$’000
1,986
2,402
528
4,916
4,395
2,632
577
7,604
Loans receivable
Current
Non-current
Consolidated
30 June 2018
Gross amount
receivable
$’000
Provision for
Impairment
$’000
72
456
528
-
-
-
Refer to Notes 6, 9 and 34 with respect to loans and options related to Couran Cove.
b) Liquidity risk
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 $5,426,000 at the reporting date.
The tables below shows the Group’s financial liabilities classified into relevant maturity groupings based on their contractual
maturities.
30 June 2018
Trade and other payables
Commercial bills 1
Other financial liabilities
Total
30 June 2017
Trade and other payables
Commercial bills 1
Other financial liabilities
Total
Contractual
cash flows
$’000
Less than 6
months
$’000
Consolidated
6 - 12
months
$’000
1 – 2 years
$’000
More than 2
years
$’000
2,255
63,310
2
65,567
2,255
1,345
2
3,602
-
-
-
1,329
23,027
37,609
-
-
-
1,329
23,027
37,609
Contractual
cash flows
$’000
Less than 6
months
$’000
Consolidated
6 - 12
months
$’000
2,660
57,256
18
59,934
2,660
2,937
11
5,608
-
1,136
6
1,142
1 – 2 years
$’000
More than 2
years
$’000
-
-
13,801
39,382
1
-
13,802
39,382
1 This amount includes estimated interest during the contractual period.
c) Market risk
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.
EGH ANNUAL REPORT 2018
62
EGH ANNUAL REPORT 2018
63
63
Maximum exposure to credit risk
Cash and cash equivalents
Trade and other receivables
Loans receivable
Cash and cash equivalents
Australia Bank.
Trade and other receivables
Deposits of cash are only held with approved banks and financial institutions. The Group predominantly banks with National
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 1 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:
Consolidated
30 June 2018
30 June 2017
Gross amount
Provision for
Gross amount
Provision for
receivable
Impairment
receivable
Impairment
$’000
$’000
$’000
$’000
2,393
(176)
-
1
8
-
-
-
2,402
(176)
2,455
11
7
248
2,721
-
-
-
(89)
(89)
Due 0-30 days
Past due 30-60 days
Past due 60-90 days
Past due 90 + days
1 Refer Note 6 and 34 for a discussion on Couran Cove receivable.
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 2018
FOR THE YEAR ENDED 30 JUNE 2018
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. $20,836,500 of the commercial bills are at variable rates while
$35,000,000 is fixed (refer to Note 19). 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.
23. 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 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. Refer to Note 9 for details regarding the fair value and impairment assessment
of amounts related to Couran Cove Land Options. These are not shown in the table below.
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
Consolidated – 2018
Assets
Investment properties
Total assets
Liabilities
Retirement Village Resident Loans
Total liabilities
Consolidated – 2017
Assets
Investment properties
Total assets
Liabilities
Retirement Village Resident Loans
Total liabilities
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,756
100,756
100,756
100,756
96
96
96
96
100,666
100,666
100,666
100,666
928
928
928
928
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.
64
EGH ANNUAL REPORT 2018
64
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
d) Interest rate risk
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. $20,836,500 of the commercial bills are at variable rates while
$35,000,000 is fixed (refer to Note 19). The variable portion of the debt does not expose the Group to any material interest
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.
23. 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
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
•
•
•
the measurement date
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 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. Refer to Note 9 for details regarding the fair value and impairment assessment
of amounts related to Couran Cove Land Options. These are not shown in the table below.
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
Consolidated – 2018
Assets
Investment properties
Total assets
Retirement Village Resident Loans
Liabilities
Total liabilities
Consolidated – 2017
Assets
Investment properties
Total assets
Retirement Village Resident Loans
Liabilities
Total liabilities
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,756
100,756
100,756
100,756
96
96
96
96
100,666
100,666
100,666
100,666
928
928
928
928
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)
2018
2017
Capitalisation
method 1
–
Capitalisation
rate
8.25%-12.00%
(10.31%) 2
9.75%-12.50%
(11.04%)
Investment
properties
Retirement
Villages
Stabilised
occupancy
86%-100%
(94%)
81%-100%
(91%)
Investment
properties
Individual
Village Units
–
Direct
comparison
approach
Comparable
sales evidence
N/A
N/A
Retirement
village resident
loans
Ingoing
contribution less
deductions for
length of stay
Estimated length
of
stay
of
residents
1 – 10 years
1 – 10 years
Relationship of
unobservable
input to fair value
Capitalisation has
an inverse
relationship to
valuation.
Occupancy has a
direct correlation to
valuation (i.e. the
higher the
occupancy, the
greater the value).
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
(2)
result in a significantly higher(lower) fair value measurement.
Included in the investment properties are three assets which are residential complexes. These have a capitalisation rate range of
6% to 6.5%. These are not included in the weighted average calculation above.
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 14.
Valuation processes
Independent valuations have been obtained for a number of Senior’s Rental Villages during the year ended 30 June 2018 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 2018, 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.
EGH ANNUAL REPORT 2018
64
EGH ANNUAL REPORT 2018
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 2018
FOR THE YEAR ENDED 30 JUNE 2018
24. 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 2018
$’000
30 June 2017
$’000
270
617
729
1,616
234
692
840
1,766
The amount disclosed for the lease of office space does not include any adjustments for CPI or market rental reviews.
b) Capital expenditure
The Group had no capital commitments as at 30 June 2018.
25. EARNINGS PER SHARE
Net profit/(loss) 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 2018
$’000
30 June 2017
$’000
(276)
6,538
Thousands
Thousands
230,686
230,603
230,686
230,603
(0.12 cents)
2.84 cents
(0.12 cents)
2.84 cents
For the year ended 30 June 2018, there were no dilutive transactions to be included in the diluted earnings per share
calculation.
26. SHARE BASED PAYMENTS
During the period ended 30 June 2018 the following equity instruments were issued:
Share rights
The Company introduced a new long term incentive plan granting share rights to eligible participants, which commenced from
23 November 2017.
Rights were issued at face value having regard to the volume weighted average share price of shares over the 30 trading
days following the announcement of the company’s 2017 results.
The share rights do not have any voting rights, rights to dividends, rights to capital and have no entitlement to participate in
new issues offered to ordinary shareholders of the company.
66
EGH ANNUAL REPORT 2018
66
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
24. 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.
The amount disclosed for the lease of office space does not include any adjustments for CPI or market rental reviews.
Greater than 1 year but not longer than 5 years
Within 1 year
Greater than 5 years
b) Capital expenditure
The Group had no capital commitments as at 30 June 2018.
25. EARNINGS PER SHARE
Net profit/(loss) 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
Consolidated
30 June 2018
30 June 2017
$’000
$’000
270
617
729
1,616
234
692
840
1,766
30 June 2018
30 June 2017
$’000
$’000
(276)
6,538
Thousands
Thousands
230,686
230,603
230,686
230,603
(0.12 cents)
2.84 cents
(0.12 cents)
2.84 cents
Basic earnings per share
Diluted earnings per share
calculation.
26. SHARE BASED PAYMENTS
Share rights
23 November 2017.
For the year ended 30 June 2018, there were no dilutive transactions to be included in the diluted earnings per share
During the period ended 30 June 2018 the following equity instruments were issued:
The Company introduced a new long term incentive plan granting share rights to eligible participants, which commenced from
Rights were issued at face value having regard to the volume weighted average share price of shares over the 30 trading
days following the announcement of the company’s 2017 results.
The share rights do not have any voting rights, rights to dividends, rights to capital and have no entitlement to participate in
new issues offered to ordinary shareholders of the company.
EGH ANNUAL REPORT 2018
66
A total of 878,465 share rights were issued during this period but 559,090 lapsed upon the retirement of the Chief Executive
Officer. The 319,375 remaining share rights are divisible into two traches of equal value, both tranches being subject to the
company’s shares achieving a total shareholder return compared to the constituents of All Ordinaries Small Cap index
excluding companies in the materials, industrials, energy and utilities sectors. Tranche 1 and Tranche 2 will be tested following
the announcement of the company’s result for the year ending 30 June 2020 and 2021 respectively using a 10 day VWAP.
The share rights progressively vest over 3 and 4 years.
The fair value of the share rights is estimated at the grant date using the Monte Carlo pricing model, taking into account the
terms and conditions on which the share rights were granted.
There are no cash settlement alternatives. The Group accounts for the share rights as an equity settled plan.
Options
A total of 1,500,000 share options were granted during the period but 1,000,000 lapsed upon the retirement of the Chief
Executive Officer leaving 500,000 outstanding at 30 June 2018. The options were granted for a 4.5 year period and are
exercisable from 23 November 2021. The exercise price is $0.33 representing the volume weighted average share price of
shares over the 30 trading days following the announcement of the company’s 2017 results. These options will be capable of
vesting 3 years from the grant date subject to the share price being at 75c or greater on 10 trading days in any 20 sequential
trading days following the grant date. While the share price hurdle may be met, these options can only be exercised upon
completion of 4 year employment service.
The fair value of the share options is estimated at the grant date using the Monte Carlo pricing model, taking into account the
terms and conditions on which the share options were granted.
There are no cash settlement alternatives. The Group accounts for the share options as an equity settled plan.
The expense recognised during the year is shown in the following table:
Expense arriving from equity-settled share based payment transactions
Total expense arising from share-based payment transactions
30 June 2018
$’000
30 June 2017
$’000
12
12
-
-
There were no cancellations or modifications to the awards in 2018 or 2017, other than the lapsing of the share rights and
options noted above.
Movements during the year
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share rights
during the year:
Outstanding at 1 July
Granted during the year
Forfeited during the year
Outstanding at 30 June
Exercisable at 30 June
2018
Number
2018 WEAP
2017
Number
2017 WAEP
-
878,465
(559,090)
319,375
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options
during the year:
Outstanding at 1 July
Granted during the year
Forfeited during the year
Outstanding at 30 June
Exercisable at 30 June
2018
Number
2018 WEAP
2017
Number
2017 WAEP
-
1,500,000
(1,000,000)
500,000
-
-
$0.33
-
$0.33
-
-
-
-
-
-
-
-
-
-
-
EGH ANNUAL REPORT 2018
67
67
EUREKA GROUP HOLDINGSFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
The following table list the inputs to the models used for the two plans for the year ended 30 June 2018.
Weighted average of fair values at the measurement date ($)
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of share options/rights (years)
Weighted average of share price ($)
2018
Options
2018
Share rights
Tranche 1
Tranche 2
0.014
-
38.797
2.13
4.50
0.335
0.207
-
38.797
1.97
6.11
0.335
0.138
-
38.797
1.97
6.11
0.335
Model used
Monte Carlo
Monte Carlo
Monte Carlo
No options or share rights were issued or outstanding at 30 June 2017.
The expected volatility reflects the assumption that the historical volatility over the last 5 years will be an indication of the
expected future volatility of the company’s share price, which may not necessarily be the actual outcome.
27. RELATED PARTY TRANSACTIONS
(a) Key management personnel compensation
Short term employee benefits
Post-employment benefits
Other employee benefits
Total
Consolidated
30 June 2018
30 June 2017
$’000
$’000
1,223
73
149
1,445
1,014
28
-
1,042
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) Purchases from entities controlled by key management personnel:
The Group acquired the following goods and services from entities that are controlled by members of the Group’s key
management personnel:
Consulting fees
Rent
Consolidated
30 June 2018
30 June 2017
$’000
$’000
-
51
206
86
Amounts outstanding at the end of the reporting period in relation to these
transactions (included in Trade and other payables)
-
-
68
EGH ANNUAL REPORT 2018
68
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
The following table list the inputs to the models used for the two plans for the year ended 30 June 2018.
(ii) Fees received from entities controlled by key management personnel:
Weighted average of fair values at the measurement date ($)
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of share options/rights (years)
Weighted average of share price ($)
2018
Options
2018
Share rights
Tranche 1
Tranche 2
0.014
-
38.797
2.13
4.50
0.335
0.207
-
38.797
1.97
6.11
0.335
0.138
-
38.797
1.97
6.11
0.335
Model used
Monte Carlo
Monte Carlo
Monte Carlo
No options or share rights were issued or outstanding at 30 June 2017.
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)
(iii) Terms and conditions
Consolidated
30 June 2018
30 June 2017
$’000
$’000
21
-
19
-
The expected volatility reflects the assumption that the historical volatility over the last 5 years will be an indication of the
expected future volatility of the company’s share price, which may not necessarily be the actual outcome.
All transactions were made on commercial terms and conditions and at market rates. Outstanding balances are unsecured
and are repayable in cash.
Further details are contained in the remuneration report.
28. OTHER MATERIAL TRANSACTIONS WITH DIRECTOR RELATED ENTITIES
Couran Cove
Couran Cove is a resort on South Stradbroke Island. Ownership of Couran Cove consists of a group of companies that is
100% owned by Onterran Ltd (ASX:OTR). The Executive Chairman of Onterran Ltd is Mr. Lachlan McIntosh. Mr. McIntosh
does not have control over Onterran or other entities associated with Couran Cove which Eureka trades with. Mr. McIntosh is
also a director of EGH. EGH has had transactions with Couran Cove over recent years and has a number of balance sheet
items at 30 June 2018.
After entering into renegotiated agreements subsequent to year end, the following balances existed – Refer to Note 34:
•
•
•
Loan receivable of $2.26 million (interest bearing) owing from Couran Cove entities.
Inventory of $2.00 million comprising ownership of 28 cabins located at Couran Cove.
$3.00 million loan offset in exchange for right of first refusal on proposed dwelling sites recorded at fair value of
$1.24 million.
The Group acquired the following goods and services from entities that are controlled by members of the Group’s key
management personnel:
29. ULTIMATE PARENT ENTITY
The parent entity within the group is Eureka Group Holdings Limited, which is the ultimate parent entity within Australia.
30. CONTINGENCIES
There are no contingent liabilities or contingent assets at 30 June 2018 that require disclosure in the financial report.
31. OPERATING SEGMENTS
Identification of reportable operating segments and principal services
For the period ended 30 June 2018, 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.
EGH ANNUAL REPORT 2018
69
69
27. RELATED PARTY TRANSACTIONS
(a) Key management personnel compensation
Short term employee benefits
Post-employment benefits
Other employee benefits
Total
Consulting fees
Rent
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) Purchases from entities controlled by key management personnel:
Consolidated
30 June 2018
30 June 2017
$’000
$’000
1,223
73
149
1,445
1,014
28
-
1,042
Consolidated
30 June 2018
30 June 2017
$’000
$’000
-
51
206
86
EGH ANNUAL REPORT 2018
68
Amounts outstanding at the end of the reporting period in relation to these
transactions (included in Trade and other payables)
-
-
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 2018
FOR THE YEAR ENDED 30 JUNE 2018
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.
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 2018
Revenue
Interest revenue
Other revenue
Total Revenue
Expenses
Interest expense
Total expenses
Profit/(loss) before income tax expense
Income tax expense
Profit/(loss) after income tax expense
Segment Assets
Segment Liabilities
Rental
Villages
$’000
Property
Management
$’000
18,665
3,909
-
198
-
-
18,863
3,909
11,035
2,745
13,780
5,083
-
5,083
108,240
57,833
Non-cash and other significant items included in profit above:
Loss on revaluation of investment property
Depreciation & amortisation
Gain on disposal of Victoria St, Mackay
Segment acquisitions:
Acquisition of property, plant and equipment
Acquisition and subsequent expenditure of
investment property
Acquisition of Joint Venture investment
Acquisition of intangibles
Acquisition of inventory
(1,439)
(111)
-
9,361
4,500
-
-
Unallocated
$’000
Total
$’000
-
41
571
612
7,0661
8
7,074
(6,462)
-
(6,462)
18,922 2
702 3
-
-
501
35
-
-
-
4,134
22,574
41
769
23,384
20,907
2,753
23,660
(276)
-
(276)
133,300
58,600
(1,439)
(251)
501
35
9,361
4,500
100
4,134
2,806
-
2,806
1,103
-
1,103
6,138
65
-
(140)
-
-
-
100
-
1 Included within unallocated expenses is write down of Couran Cove inventory of $1.12 million, write off of Couran Cove Land Option $1.76
million, employee benefits expense of $2.16 million, office expenses of $0.45 million and other administrative expenses of $1.57 million.
2 Included within unallocated assets is inventory of $11.78 million, Couran Cove land option of $1.24 million, trade and other receivables of $2.26
million, cash balances of $1.98 million, and other assets of $1.67 million.
3 Included within segment liabilities is provisions of $0.12 million and Superannuation and PAYG withholding payable $0.10 million, accrued
expenses $0.48 million.
70
EGH ANNUAL REPORT 2018
70
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
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.
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 2018
Rental
Villages
$’000
Property
Management
Unallocated
$’000
$’000
Total
$’000
18,665
3,909
Revenue
Interest revenue
Other revenue
Total Revenue
Expenses
Interest expense
Total expenses
Income tax expense
Segment Assets
Segment Liabilities
18,863
3,909
-
-
-
-
2,806
2,806
-
198
11,035
2,745
13,780
5,083
-
5,083
108,240
57,833
Profit/(loss) before income tax expense
1,103
(6,462)
Profit/(loss) after income tax expense
1,103
(6,462)
6,138
65
18,922 2
702 3
133,300
58,600
Non-cash and other significant items included in profit above:
Loss on revaluation of investment property
Depreciation & amortisation
Gain on disposal of Victoria St, Mackay
(1,439)
(111)
-
(140)
Segment acquisitions:
Acquisition of property, plant and equipment
Acquisition and subsequent expenditure of
investment property
Acquisition of Joint Venture investment
Acquisition of intangibles
Acquisition of inventory
9,361
4,500
-
-
-
-
-
-
-
100
1 Included within unallocated expenses is write down of Couran Cove inventory of $1.12 million, write off of Couran Cove Land Option $1.76
million, employee benefits expense of $2.16 million, office expenses of $0.45 million and other administrative expenses of $1.57 million.
2 Included within unallocated assets is inventory of $11.78 million, Couran Cove land option of $1.24 million, trade and other receivables of $2.26
million, cash balances of $1.98 million, and other assets of $1.67 million.
3 Included within segment liabilities is provisions of $0.12 million and Superannuation and PAYG withholding payable $0.10 million, accrued
expenses $0.48 million.
-
41
571
612
7,0661
8
7,074
-
-
-
501
35
-
-
-
4,134
22,574
41
769
23,384
20,907
2,753
23,660
(276)
-
(276)
(1,439)
(251)
501
35
9,361
4,500
100
4,134
EGH ANNUAL REPORT 2018
70
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
Consolidated - 30 June 2017
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
Rental
Villages
$’000
Property
Management
$’000
Unallocated
$’000
Total
$’000
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 $3.00 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 $0.10 million.
Non-cash and other significant items included in profit above:
Gain on revaluation of investment property
1,046
-
Depreciation & amortisation
(129)
(142)
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
1,046
(271)
560
13,148
849
1,349
32.
REMUNERATION OF AUDITORS
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
Consolidated
30 June 2018
30 June 2017
$
$
152,150
123,000
152,150
123,000
EGH ANNUAL REPORT 2018
71
71
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 2018
FOR THE YEAR ENDED 30 JUNE 2018
33. 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
Equity reserve
Accumulated losses
Total equity
30 June 2018
30 June 2017
$’000
$’000
(7,077)
-
(7,077)
90,099
7,162
97,261
711
53,702
54,413
94,353
12
(51,517)
42,848
(1,334)
-
(1,334)
81,633
12,477
94,110
479
43,816
44,295
94,253
-
(44,438)
49,815
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 Senior’s Rental Villages;
• 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 2018. 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 2018.
72
EGH ANNUAL REPORT 2018
72
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
33. 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
Equity reserve
Accumulated losses
Total equity
30 June 2018
30 June 2017
$’000
$’000
(7,077)
-
(7,077)
90,099
7,162
97,261
711
53,702
54,413
94,353
12
(51,517)
42,848
(1,334)
-
(1,334)
81,633
12,477
94,110
479
43,816
44,295
94,253
-
(44,438)
49,815
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 Senior’s Rental Villages;
• 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 2018. For information about guarantees given by the
Contingent liabilities of the parent entity
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 2018.
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
34. SUBSEQUENT EVENTS
Couran Cove
On 30 August 2018 a settlement and re-negotiated terms were announced with respect to amounts and assets associated
with Couran Cove. These are currently recorded at 30 June 2018 in the financial statements as follows:
Asset
Amounts Receivable
Land Option
Property Assets
Carrying Value 30 June 2018 $’000
2,260
1,237
2,000
The key elements of the agreement reached post period end are summarised below.
Sale of Property Assets
The remaining 28 cabins and apartments owned by Eureka are to be sold for $2.01m to a purchaser that is not a related party
of the Onterran Group. Settlement is scheduled to occur on 6 September 2018.
Repayment and refinance of the $2.26m Loan
The $2.26m loan owed to Eureka by Couran Cove Holdings Pty Ltd is to be repaid and refinanced by the following:
•
a lump sum repayment of $1.59m scheduled on 6 September 2018;
• Mr. Lachlan McIntosh in his personal capacity has assumed by way of a new loan $350,000 (the McIntosh Loan); and
•
a new secured loan to CCH Developments No 1 Pty Ltd in its personal capacity and as trustee of the
CCH Developments No 1 Trust for $320,000 (the West Cabin Loan).
a) McIntosh Loan
The McIntosh Loan is due for repayment on 31 December 2019. An additional restructure fee may be payable by the borrower
on the loan of up to $130,000.
The loan is on substantially the same terms as the existing loan to Couran Cove Holdings Pty Ltd. Interest at the general
interest charge set by the Australian Taxation Office from time to time, which for the period July 2018 to September 2018 is
set at 8.96% per annum, accrues on the loan on exactly the same terms as under the existing loan to Couran Cove Holdings
Pty Ltd. The Board considers this loan to be on arm’s length terms and expects that it will be repaid on the due date.
The amount of the restructure fee is linked to the value of 1 million shares in Eureka which are held by 22 Resolution Pty Ltd.
Mr. Lachlan McIntosh is the sole director of 22 Resolution Pty Ltd.
Eureka may issue a notice requiring payment of the restructure fee on any day where Eureka’s shares have traded on the
ASX at above 40 cents per share for a period of ten successive trading days. The restructure fee is payable within 30 days of
that notice extended for trading window blackout periods, unless Eureka’s shares cease to trade at above 40 cents per share
for a period of five successive trading days.
The amount of the restructure fee is the lesser of $130,000 and, if 22 Resolution Pty Ltd sells 1 million shares in Eureka on
arms’ length terms after the notice has been issued, the amount for which those shares were sold which is in excess of the
McIntosh Loan at that time.
No restructure fee is payable if Eureka’s shares do not trade on the ASX at above 40 cents per share before 31 December
2019.
b) West Cabin Loan
The West Cabin Loan is due for repayment no later than 28 February 2019. No interest accrues on this loan.
The loan is guaranteed by Onterran and Mr. Lachlan McIntosh in his personal capacity and secured by a real property
mortgage over two existing cabins owned by CCH Developments No 1 Pty Ltd. Recourse against CCH Developments No 1
Pty Ltd in respect of the loan is limited to the two existing cabins.
EGH ANNUAL REPORT 2018
72
EGH ANNUAL REPORT 2018
73
73
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 2018
FOR THE YEAR ENDED 30 JUNE 2018
Restructure of the $3m land option
The existing $3m amount owed to Eureka by Couran Cove Holdings Pty Ltd is to be refinanced under a new secured loan to
CCH Developments No 1 Pty Ltd. No interest accrues on this loan.
The loan is guaranteed by Onterran and secured by a real property mortgage over land owned by CCH Developments No 1
Pty Ltd relating to 60 proposed cabin sites. The proposed cabin sites correspond to the lots over which Eureka was to be
granted an option.
Eureka has a right of first refusal to purchase those proposed cabin sites for $50,000 per site. The purchase price would be
paid by way of set off against the $3m loan on settlement. The right can be exercised until the repayment date for the loan.
The loan is due for repayment on 31 August 2020. Eureka has the option to extend the repayment date, and the time in which
it can exercise its right of first refusal, to 31 August 2023.
In order for Eureka to realise value from this agreement, Eureka intends to reach arrangements for developers to construct
dwellings on the proposed cabin sites and ultimately acquire the sites from Eureka. Eureka’s interests will be protected by its
mortgage under any such arrangements with developers. Eureka is in discussions with a potential developer for some of these
sites and has entered into a non-binding term sheet for 5 lots for $50,000 per lot.
Conditions precedent
The restructure of the $2.26m and $3m loans are subject to the conditions precedent, the most important of which are:
•
•
completion occurring on the sale of the existing cabins and apartments owned by Eureka; and
the lump sum repayment of $1.59m being received by Eureka.
Releases
On satisfaction of the conditions precedent, Eureka will release the parties from the existing loan agreements, the entitlement
to 30% of the proceeds of the sale of certain management and infrastructure rights related to the Couran Cove Resort, and
will release the security it holds, other than the real property mortgage referred to above.
Summary of Transaction Outcomes
At completion scheduled for 6 September 2018 the following is expected to occur:
•
The existing cabins and apartments owned by Eureka will be transferred, leaving Eureka with no existing cabins and
apartments at the Couran Cove Resort.
• Eureka will receive $3.60 million in cash from the sale of the cabin and apartments and partial repayment of the $2.26
million loan.
•
Loans of $0.35 million and $0.32 million, totalling $0.67 million, will become the responsibility of Mr. Lachlan McIntosh
and CCH Development No1 Pty Ltd.
• Eureka will retain rights in relation to 60 proposed cabin sites.
Banking Facility
On 28 August 2018 the NAB facility was amended such that the $20,000,000 Facility 1 previously expiring on 31 December
2019 is now expiring on 31 December 2021 consistent with the expiry date of the $35,000,000 Facility 2.
Property Assets
On 20 August 2018, a contract for the sale of Lambert Village in Mount Gambier was executed for $1.10 million. In accordance
with the terms of the contract, settlement is due on 30 November 2018.
Other
Other than the above mentioned items, no other matter or circumstance has arisen since 30 June 2018 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.
74
EGH ANNUAL REPORT 2018
74
2017-2018 ANNUAL REPORTFor personal use only
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
Eureka Group Holdings Limited and controlled entities
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
FOR THE YEAR ENDED 30 JUNE 2018
Directors’ Declaration
Directors’ Declaration
Directors’ Declaration
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
The loan is guaranteed by Onterran and secured by a real property mortgage over land owned by CCH Developments No 1
Pty Ltd relating to 60 proposed cabin sites. The proposed cabin sites correspond to the lots over which Eureka was to be
granted an option.
Eureka has a right of first refusal to purchase those proposed cabin sites for $50,000 per site. The purchase price would be
paid by way of set off against the $3m loan on settlement. The right can be exercised until the repayment date for the loan.
The loan is due for repayment on 31 August 2020. Eureka has the option to extend the repayment date, and the time in which
it can exercise its right of first refusal, to 31 August 2023.
In order for Eureka to realise value from this agreement, Eureka intends to reach arrangements for developers to construct
dwellings on the proposed cabin sites and ultimately acquire the sites from Eureka. Eureka’s interests will be protected by its
mortgage under any such arrangements with developers. Eureka is in discussions with a potential developer for some of these
sites and has entered into a non-binding term sheet for 5 lots for $50,000 per lot.
Conditions precedent
The restructure of the $2.26m and $3m loans are subject to the conditions precedent, the most important of which are:
•
•
•
•
Releases
On satisfaction of the conditions precedent, Eureka will release the parties from the existing loan agreements, the entitlement
to 30% of the proceeds of the sale of certain management and infrastructure rights related to the Couran Cove Resort, and
will release the security it holds, other than the real property mortgage referred to above.
Summary of Transaction Outcomes
At completion scheduled for 6 September 2018 the following is expected to occur:
The existing cabins and apartments owned by Eureka will be transferred, leaving Eureka with no existing cabins and
apartments at the Couran Cove Resort.
• Eureka will receive $3.60 million in cash from the sale of the cabin and apartments and partial repayment of the $2.26
million loan.
Loans of $0.35 million and $0.32 million, totalling $0.67 million, will become the responsibility of Mr. Lachlan McIntosh
and CCH Development No1 Pty Ltd.
• Eureka will retain rights in relation to 60 proposed cabin sites.
On 28 August 2018 the NAB facility was amended such that the $20,000,000 Facility 1 previously expiring on 31 December
2019 is now expiring on 31 December 2021 consistent with the expiry date of the $35,000,000 Facility 2.
On 20 August 2018, a contract for the sale of Lambert Village in Mount Gambier was executed for $1.10 million. In accordance
with the terms of the contract, settlement is due on 30 November 2018.
Other than the above mentioned items, no other matter or circumstance has arisen since 30 June 2018 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.
Banking Facility
Property Assets
Other
Restructure of the $3m land option
The existing $3m amount owed to Eureka by Couran Cove Holdings Pty Ltd is to be refinanced under a new secured loan to
CCH Developments No 1 Pty Ltd. No interest accrues on this loan.
In accordance with a resolution of the directors of Eureka Group Holdings Limited, I state:
In accordance with a resolution of the directors of Eureka Group Holdings Limited, I state:
1.
1.
In the opinion of the Directors of Eureka Group Holdings Limited (the “company”):
In the opinion of the Directors of Eureka Group Holdings Limited (the “company”):
a. The accompanying financial statements and notes are in accordance with the Corporations Act 2001,
a. The accompanying financial statements and notes are in accordance with the Corporations Act 2001,
including:
including:
i. giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its performance
i. giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its performance
for the financial year ended on that date; and
ii. complying with Australian Accounting Standards and the Corporations Regulations 2001;
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
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
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
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 2018.
with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2018.
completion occurring on the sale of the existing cabins and apartments owned by Eureka; and
the lump sum repayment of $1.59m being received by Eureka.
On behalf of the Board
On behalf of the Board
Murray Boyte
Executive Chair
Murray Boyte
Executive Chair
Dated in Brisbane this 31st day of August 2018.
Dated in Brisbane this 31st day of August 2018.
EGH ANNUAL REPORT 2018
74
EGH ANNUAL REPORT 2018
EGH ANNUAL REPORT 2018
75
75
75
EUREKA GROUP HOLDINGSFor personal use only
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
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
76
2017-2018 ANNUAL REPORTFor personal use only
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
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
77
EUREKA GROUP HOLDINGSFor personal use only
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
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
78
2017-2018 ANNUAL REPORTFor personal use only
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
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
79
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
80
EGH ANNUAL REPORT 2017
74
2017-2018 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
EGH ANNUAL REPORT 2017
75
81
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
EUREKA GROUP HOLDINGSFor personal use only
Corporate Governance Statement
The Company’s directors and management are committed to achieving and demonstrating the highest standards
of corporate governance.
The Company has prepared a Corporate Governance Statement which sets out the corporate governance practices
that were in operation during the financial year.
The Board has adopted the ASX Corporate Governance Principles and Recommendations (3rd Edition)
(‘Recommendations’) to the extent considered appropriate for the size and nature of the Group’s operations. The
Corporate Governance Statement identifies any Recommendations that have not been followed, and provides
reasons for not following those Recommendations.
The Company’s Corporate Governance Statement and key policies can be found on its website:
http://www.eurekagroupholdings.com.au/governance/
82
2017-2018 ANNUAL REPORTFor personal use only Corporate Directory
Postal Address
Auditors
Ernst & Young 111 Eagle St
Brisbane Qld 4000
Tel: 07 3011-3333
Fax: 07 3011-3344
Share Registry
Link Market Services – Brisbane
Level 21, 10 Eagle 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
Suite 2D 7 Short St, Southport QLD 4215
Board of Directors
Murray Boyte (Executive Chair)
Lachlan McIntosh
Nirmal Hansra
Sue Renkin
Chief Financial Officer
Paul Cochrane
Company Secretary
Paul Cochrane and Laura Fanning
Solicitors
Jones Day
Riverside Centre
Level 31/123 Eagle Street
Brisbane QLD 4000
Tel: 07 3085 7000
Fax: 07 3085 7099
Mills Oakley
Level 14
145 Ann Street
Brisbane QLD 4000
Tel: 07 3228 0400
Fax: 07 3012 8777
83
EUREKA GROUP HOLDINGSFor personal use only Eureka Group Holdings Limited and controlled entities
Security Holder Information
Security Holder Information
Distribution of Securities as at 20 August 2018
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
303
234
112
379
165
1,193
Marketable Shares
There were 394 holders of less than a marketable parcel of 1,851
shares holding a total of 188,750 shares.
Voting Rights
Ordinary Shares carry voting rights of one vote per share. Options
carry no voting rights.
Substantial Holders as at 20 August 2018
Cooper Investors Pty Limited
Tribeca Investment Partners
Adam Smith Asset Management
Ignition Capital Pty Ltd, Ignition Capital No 2 Pty Ltd, Mr Robin Levison
22 Resolution Pty Ltd & Kathlac Pty Ltd
Total
No of Ordinary
Shares Held
% of Issued
Share
Capital
35,378,273
21,428,952
14,015,681
12,930,000
11,916,166
15.38%
9.33%
6.10%
5.62%
5.16%
95,679,072
41.59%
Twenty Largest Ordinary Shareholders as at 20 August 2018
No of Ordinary
Shares Held
National Nominees Limited
J P Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited
Ignition Capital Pty Ltd
Wavet Fund No 2 Pty Ltd
NGE Capital Limited
Kathlac Pty Ltd
22 Resolution Pty Ltd
One Managed Investment Funds Limited Folkestone Maxim A-Reit Securities
Account
Tolani Estate Pty Ltd
Brazil Farming Pty Ltd
Placement Pty Ltd
Mr Alister Charles Wright
H & G Limited
Ignition Capital No 2 Pty Ltd
Luton Pty Ltd
Armada Trading Pty Ltd
Mr Richard Mews and Mrs Wee Khoon Mews
G & P Investments (NSW) Pty Limited
Mr Brenden John Hall
Total
% of Issued
Share
Capital
17.72%
12.70%
8.96%
4.42%
4.01%
3.84%
2.91%
2.27%
2.08%
1.91%
1.82%
1.74%
1.63%
1.25%
1.12%
1.04%
1.01%
0.95%
0.77%
0.74%
40,758,160
29,219,151
20,609,545
10,175,000
9,228,000
8,840,949
6,700,138
5,216,028
4,788,499
4,400,000
4,179,681
4,000,000
3,741,000
2,883,148
2,580,000
2,400,000
2,318,937
2,188,607
1,770,000
1,701,091
167,697,934
72.90%
84
EGH ANNUAL REPORT 2018
80
2017-2018 ANNUAL REPORTFor personal use only
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EUREKA GROUP HOLDINGSFor personal use only Delivering affordable, caring
and inclusive communities
Head 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