ANNUAL REPORT 2023
Together, we create
rental communities where
Seniors want to belong.
Contents
2023 ANNUAL REPORT
FY23 Results Overview
Executive Chairman’s Report
5 Year Growth Trends
2023 FINANCIAL REPORT
Directors’ Report
Financial Statements
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Auditor’s Independence Declaration
Corporate Governance Statement
Security Holder Information
Corporate Directory
ii
iv
xii
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17
21
63
64
69
70
71
73
i
2023 Annual Report Eureka Group FY23 Results Overview
Revenue
Profit after tax
Underlying EBITDA
$36.4m
$19.2m
$12.6m
22%
134%
19%
ii
Eureka Group 2023 Annual Report
Underlying
EBITDA margin
34.6%
35.3% (FY22)
Earnings per share
Dividends per share
6.97c
100%
1.34c
6%
iii
2023 Annual Report Eureka Group
Executive
Chairman’s Report
Eureka has delivered a
strong operating result
underpinned by increased
village earnings, valuation
increases and acquisitions.
Financial
Review
For the 2023 financial year (the year),
Eureka Group Holdings Limited
(Eureka) achieved a profit after tax
of $19.16 million, a 134% increase
on the FY22 profit after tax of
$8.17 million.
Key financial metrics for the year were:
Underlying earnings before interest, tax,
depreciation and amortisation (EBITDA)
was $12.61 million, up 19% on the prior year
Underlying EBITDA of $10.62 million.
Earnings per share increased by 100%
to 6.97 cents.
Net operating cash flow was $8.71 million,
up 5% on the prior year. Adjusting the prior
year for insurance payments relating to the
Lismore flood, the increase was 14% over
the previous year.
Net tangible assets per share was 45.0 cents,
up 18% on the prior year of 38.2 cents.
iv Eureka Group 2023 Annual Report
The strong operating result was underpinned by organic
growth in existing villages, new acquisitions and improved
maintainable earnings.
Revenue growth offset the impact of inflation on wages
and energy costs. The solar energy program being rolled out
across the portfolio continues to mitigate the risk of energy
cost increases.
Underlying EBITDA margin of 34.6% is in line with the
previous year margin of 35.3% after adjusting for the Lismore
flood impact of 0.7%.
Eureka has invested for the future in people and resources
and has reset its operating platform for growth and margin
improvement in FY24 and beyond.
Profit after tax included a net gain on the change in fair value
of investment properties of $25.28 million, including assets
held in joint venture. During the second half of the year, Eureka
engaged independent external valuers to value its property
portfolio. The valuation uplift was driven by improvements
in maintainable earnings and the firming capitalisation rates.
The weighted average capitalisation rate for the investment
property valuations was 8.3% compared with 9.4% in FY22,
an improvement of 11.7%.
The property revaluations were a key contributor to the 100%
increase in earnings per share to 6.97 cents (2022: 3.48 cents).
The valuation uplift substantiates the favourable location of
Eureka’s properties and the recognition of the affordable build-
to-rent sector that serves a growing retiree segment seeking
affordable rental accommodation.
Total assets increased by $54.64 million to $237.41 million.
The “whole of portfolio” valuation in the second half of
the year, combined with acquisitions, development works
and capital improvements increased the total value of the
investment property portfolio, including 50% of the assets held
in the joint venture, to $228.55 million, an increase of 33%
over the portfolio value of $171.60 million in the prior year.
During the year, the debt facility with the National Australia
Bank increased to $83.00 million to facilitate the acquisition
of units and management letting rights at a village in Eagleby,
Qld and to make a deferred consideration payment associated
with the prior year acquisition of the village in Hervey Bay.
The facility has been extended to 31 March 2026.
Eureka also entered into fixed interest rate swaps with a
weighted average expiry of 2.15 years covering 72% of drawn
debt at year end. The gearing ratio, calculated as net debt to
net debt plus equity, was 32.1% at 30 June 2023, down from
40.8% in the prior year.
Eureka successfully completed a $28.23 million equity raise
comprising both institutional and retail investors. The proceeds
of the capital raise were deployed to acquire villages in
Tamworth, NSW and Horsham, Vic, commence development
at Brassall, Qld and reduce gearing.
Village Numbers
Unit Numbers
5
254
46
13
2,551
721
28
1,576
Owned
Managed
Joint Venture
46
villages
2023 Annual Report Eureka Group
v
Portfolio Highlights
Eureka has more than 2,500
owned and managed units in its
portfolio which spans 46 villages.
Acquisitions resulted in a 13%
increase in the number of owned
units during the year.
Portfolio snapshot at 30 June 2023
Total units
Occupancy
Capitalisation rate
2,551
99.0%
8.3%
Key portfolio highlights for the year were:
Investment Property Values ($m) at 30 June 23
Maintained an occupancy rate in
excess of 98%.
Strong like-for-like organic revenue growth.
Acquisition of 55 units and the management
and letting rights for a village in Eagleby,
Qld for $7.30 million.
Acquisition of a rental village in Tamworth,
NSW, comprising 50 units for $6.70 million.
Acquisition of a rental village in Horsham,
Vic, comprising 46 units for $5.05 million.
Capital recycling resulted in the disposal of
91 lower yielding managed units and the
acquisition of 37 higher yielding individual
units in managed villages.
Commencement of construction on 51
new dwellings and refurbished community
facilities in Brassall, Qld. Stage one (10 units)
completed and fully leased in August 2023.
Stages two and three comprising 25 units are
fully pre-leased and leasing is underway for
stage four. On completion in January 2024,
the village will comprise 106 free standing
residences.
QLD $138.5m
NSW $25.5m
VIC $17.6m
SA $31.4m
TAS $15.5m
(Joint Venture)
$228.5m
Total
33% growth in portfolio driven by
acquisitions and valuations
Investment Property Values ($m)
25.3
228.5
8.3
23.3
171.6
FY22
valuation
Acquisitions
Development
& capex
Net
change in
fair value
FY23
valuation
vi
Eureka Group 2023 Annual Report Operations
The Five Pillar Operating Platform
continues to underpin our management
philosophy through an absolute focus on
our residents, our team, and our assets,
while maintaining close oversight of our risk
and compliance obligations.
Our village managers are well supported by experienced
and dedicated operations and property teams to enable
them to keep our residents at the centre of each and
every day.
Our Resident First philosophy is the key to our ability to
attract new residents and employ and retain people aligned
to our core values, whilst the quality of the experience we
provide is a key characteristic of our value proposition.
A key focus over the last year has been the expansion of
our resident activity program to provide our residents with
access to an extensive and varied calendar of social events
and activities to ensure their engagement within their
community. An increase in activities targeting cognitive
and physical stimulation is a core part of our health and
well-being strategy which contributes to extending tenure
of our residents, whilst welcoming more external providers
has delivered increased participation and collaboration
with the wider community.
Our commitment to enhancing the livability of our
villages was evidenced this year through the delivery of
comprehensive refurbishments to community rooms across
20 villages, and through the addition of new recreational
facilities including off-lead dog parks and outdoor pergolas.
In addition, the upgrading of existing plant and equipment
including hot water systems and air conditioners to modern
energy efficiency standards has improved asset quality,
whilst providing cost savings to our residents.
During the year, we established a 5-year asset management
plan (AMP). The technology transformation project in
FY24 will facilitate an extension of the AMP to a 10-year
plan, which will better align to our asset lifecycle planning
requirements.
Operating Platform
Occupancy and
Revenue Initiatives
Team Culture
and Engagement
Safety, Risk
and Compliance
Technology
and Brand
Environmental, Social
and Governance
Organic revenue growth
delivered through
implementation of
national rental
pricing strategy
Exceptional resident
experience & sense
of community drives
increased tenure
& demand
Resident satisfaction
of greater than 80%
drives increased tenure
& demand
Enhanced resident
well-being through
activity program drives
increased tenure &
stable occupancy
Focus on high level
employee engagement
Regular review of risk
management systems
Strengthen & mature
our safety learning
culture
Streamline & mature
risk management
processes
Focus on safety to
ensure well-being for
the Eureka community
Efficient management
of risks, hazards &
incidents
Implement fit for
purpose systems
& processes with
automation, compliance
& efficiency in mind
Build organisational
effectiveness (now)
& readiness/agility
(future) through
capability & capacity
to respond to current
& future demands
Create a culture of
values-based leadership
Investing in targeted
learning and
development programs
to facilitate elevated
business performance
Further development of
the ESG action plan by
establishing a suite of
sustainability policies
Reduce our carbon
footprint through
initiatives to improve
waste management
& energy efficiency
Balance Duty of Care
responsibilities towards
ageing residents while
facilitating independent
living
Implement technology
transformation program
for FY24
Commitment to
fostering digital
innovation across
the business
Change management
strategy to facilitate
adoption of new
processes &
technologies
Brand revitalisation &
repositioning complete
Drive value creation
through brand
consolidation
vii
2023 Annual Report Eureka Group Environmental, Social
and Governance (ESG)
Eureka is focussed on creating
sustainable communities within the social
infrastructure segment in which it operates.
A 4-year ESG framework and action plan has been
established to guide a planned and responsible approach
to the implementation of environmental standards and
social responsibilities. Eureka has in place a well-developed
governance framework.
The Board’s ESG Committee will oversee the
implementation of the action plan. The initial actions under
the plan involve the development of formal sustainability
policies and establishing the framework for the integration
of ESG into Eureka’s employment functions and investment
and asset management decisions. Concurrent with these
actions is the development of an ESG materiality matrix.
Eureka already has in place initiatives that
enhance social responsibility obligations, risk
focused management and environmental
practices. These initiatives cover:
Environmental
Solar energy
Waste management and recycling
Water conservation
Build environment
Social
Resident First philosophy
Village activity programs including
physical, well-being and educational
Community engagement
Governance
Ethical business practices
Risk mitigation systems
Safety and compliance
Employee welfare and diversity
In FY24, Eureka will focus on measuring
these initiatives against recognised standards
and frameworks.
viii
Eureka Group 2023 Annual Report
Brand
Evolution
A key pillar underpinning Eureka’s growth
strategy includes achieving value creation
through our strategic brand repositioning
and revitalisation project.
Consolidation of the Eureka Villages brand will connect
our investor, resident and employee communities, enhance
the Eureka Villages identity and cement Eureka Villages
as a leader in the build-to-rent sector providing affordable
rental living to seniors.
The Eureka Villages new brand presence is as warm and
welcoming as our communities.
Through a measured introduction of the Eureka Villages
brand across our network, we will connect all stakeholders
along with the communities in which we operate and build
the awareness of Eureka Villages as a leading build-to-rent
operator providing customer-centric experiences which
ensure satisfaction, loyalty and advocacy.
The brand’s design and the newly defined company
purpose, vision, mission and values have been introduced,
preserving the strengths, values and culture of Eureka
while looking to the future.
Calming
Lively
Supportive
Purpose
Eureka Villages exists to
reimagine Seniors living
Mission
Together, we create
rental communities where
Seniors want to belong
Vision
A world where every Senior can live well
Values
We are compassionate
We have fun
Community is at our core
We are motivated by better
We do the right thing
ix
2023 Annual Report Eureka Group Dividends
Your Board is pleased to have declared and
paid unfranked dividends of 1.34 cents per
share for the year, an increase of 6% over
the prior year.
The Dividend Reinvestment Plan (DRP) remained in
operation during the year as a capital management
initiative to support our ongoing investment in growth.
FY24
Priorities
Capital management planning to support
performance and growth is fundamental
to Eureka achieving its strategic aim of
institutional scale for the portfolio to
generate improved returns and value
enhancement for shareholders.
We will continue to pursue earnings accretive acquisitions
and deliver on development opportunities identified and
to expand the development pipeline in high demand
regional markets.
While we are focused on securing scalability in a
sustainable way, we are mindful of our operating cost
structure. The implementation of preferred technology
systems across the business in the coming financial year
is a key priority and will underpin efficiency gains in the
growth platform.
The brand repositioning and revitalisation program will be
rolled out in FY24 and will facilitate a connection, visibility
and consistency in service delivery for all stakeholders from
investors to residents and the communities we work in.
We are a nationally important provider of social
infrastructure with a Resident First philosophy and we are
well placed to provide affordable build-to-rent facilities
that enhance resident experience.
x
Eureka Group 2023 Annual Report Directors and Staff
Eureka has a cohesive board that has a
well-balanced skill set covering property
investment and management, property
funds management, finance, healthcare,
organisational development, commercial
experience and corporate governance
including a comprehensive understanding of
ESG principles and application.
Eureka has a senior leadership group with the experience
and skills across real estate, finance, operations, people
and culture and business transformation that are engaged
and empowered to drive Eureka’s strategic growth
plans. This group is aligned with Eureka’s cultural values
characterised by compassion, respect and trust in the
village and support office teams.
During the latter period of the year Cameron Taylor,
Chief Executive Officer (CEO) took leave due to a non-work
related accident. As a consequence of this accident,
Cameron resigned in July 2023 to spend time with his
family. The Board is very appreciative of the contribution
Cameron has made to Eureka during his time as CEO.
An executive search firm has been appointed and has
commenced a search for a CEO to replace Cameron.
Following the appointment of a new CEO, the
Executive Chairman role will revert to that of an
independent non-executive chairman.
I would like to take this opportunity to thank my Board
colleagues for their support and contribution throughout
the year. The Board has the balance of skills and
experience required for strong governance and the further
development of Eureka’s business.
On behalf of the Board, I thank the management team and
all our people for their commitment and achievements this
year. Attracting and retaining the best people is critical to
Eureka’s success. Investing in our people to support our
future continues to be a priority.
To our shareholders and other stakeholders your continued
support is respected and appreciated.
Murray Boyte
Executive Chairman and Interim CEO
2023 Annual Report Eureka Group
xi
5 Year Growth Trends
Revenue and Other Income ($m)
Dividends (cents per share)
36.6
29.4
30.9
26.1
23.4
1.10
1.18
1.00
1.26
1.34
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Profit Before Tax ($m)
Net Assets ($m)
29.8
144.0
81.5
85.9
90.9
99.0
9.1
8.7
10.5
6.8
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Operating Cash Flows ($m)
Underlying EBITDA ($m)
7.6
7.8
8.3
8.7
4.7
33.7% 35.1%
38.3%
35.3%
34.6%
12.6
10.6
10.5
7.8
8.7
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Underlying EBITDA
Underlying EBITDA
Underlying EBITDA margin
•
•
Reduction in margin due to essential investment in people and resources
Improvement expected from FY24 through organic growth, acquisitions
and economies of scale
xii
Eureka Group 2023 Annual Report
FINANCIAL REPORT 2023
2023 Annual Report Eureka Group
Eureka Group Holdings Limited and controlled entities
Directors’ Report
The Directors present their report on Eureka Group Holdings Limited (the Company) and its controlled entities (the Group,
Eureka or the Consolidated Entity) for the year ended 30 June 2023 (the year).
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
Russell Banham
Greg Paramor AO
PRINCIPAL ACTIVITIES
The principal activities of the Group include the provision of:
•
•
Accommodation and services to independent senior residents; and
Specialist property management and caretaking services for seniors’ independent living communities.
REVIEW OF OPERATIONS AND RESULTS
The Group has reported a profit before tax for the year of $29.75 million (2022: $10.48 million) and a profit after tax of $19.16
million (2022: $8.17 million). Underlying EBITDA1 increased by 18.8% to $12.61 million (2022: $10.62 million) while underlying
profit before tax1 increased by 3.5% to $8.05 million (2022: $7.78 million) due to increased finance costs of $3.72 million
(2022: $2.11 million).
Growth in the Group’s underlying and statutory results are underpinned by organic growth in existing villages, new acquisitions
and improved maintainable earnings. Growth in the underlying EBITDA1 has been achieved despite a significant flood event
which affected the Lismore property during the prior year and rendered the asset unusable in the current year.
Occupancy remained stable across the portfolio and was 99% at balance date (2022: 98%). Strategies to increase village
revenue, while maintaining affordability for residents, have contributed to the organic revenue growth experienced during the
year. Independent valuations were obtained as at 30 June 2023 for 24 of the Group’s investment properties and the 5 assets
held in the Tasmanian joint venture. Improvement in maintainable earnings combined with firming of capitalisation rates have
resulted in a $25.28 million net gain on change in the fair value of the Group’s investment properties (2022: $9.96 million2)
including a 50% share of those in Tasmania which are owned in a joint venture.
Revenue and profit growth is also attributable to acquisitions made during the current and prior years. Current period
acquisitions comprised rental villages in Tamworth, NSW and Horsham, Vic, units and management and letting rights in
Eagleby, Qld, and various individual unit purchases in villages managed by the Group.
At balance date, Eureka owned 33 villages (2022: 30), 5 of which are owned in a joint venture and has 13 villages under
management (2022: 14), representing 2,551 units at the end of the year (2022: 2,507 units). The weighted average
capitalisation rate at balance date was 8.32% (2022: 9.43%).
The Group is committed to growth through asset acquisition and development opportunities. During the year, the Group
progressed its technology improvement and brand refresh projects and invested in key support office roles to enhance team
capability. This investment in people, systems and brand is a prerequisite to upscaling the business.
The Group’s statutory tax rate is 25% (2022: 25%). Deferred tax balances have been stated at 30% (2022: 25%), resulting in
an effective tax rate of 36% for the year. No cash tax will be payable until the Group has utilised its carry forward revenue tax
losses.
1 The terms EBITDA, Underlying EBITDA and underlying profit before tax are defined on page 2.
2 Excluding a $7.15 million net loss on the change in fair value of the flood affected property in Lismore, NSW.
1
ANNUAL REPORT 2023
1
Eureka Group 2023 Annual ReportDirectors’ Report
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Net operating cash flow for the year was $8.71 million (2022: $8.28 million).
A summary of the Group’s performance and reconciliation to the Group’s Underlying EBITDA1 is shown below:
Performance summary
Profit before income tax expense
Profit after income tax expense
Basic earnings per share (cents)
Diluted earnings per share (cents)
Underlying EBITDA1 reconciliation
Profit after income tax expense
Income tax expense
Depreciation and amortisation
Finance costs
EBITDA1
Net (gain)/loss on change in fair value of:
Investment properties, including joint venture properties
Lismore property, due to flood impact3
-
-
- Other assets
Impairment of:
Financial assets
-
- Other assets
Loss on sale of assets
Lismore flood event – insurance income less expenses3
Transaction costs including acquisitions, disposals and asset realisations
Strategic projects including technology, brand and capital funding
Interest expense included in the share of profit of a joint venture
Other
Underlying EBITDA1
Consolidated
30 June 2023
$’000
30 June 2022
$’000
29,751
19,158
6.97
6.95
19,158
10,593
846
3,720
34,317
(25,284)
-
-
146
1,756
46
-
10,981
515
895
227
(4)
12,614
10,483
8,173
3.48
3.47
8,173
2,310
737
2,106
13,326
(9,961)
7,150
(20)
-
-
136
(655)
9,976
40
562
107
(65)
10,620
Underlying Profit before tax2
8,049
7,777
1
2
3
EBITDA (Earnings before interest, tax, depreciation and amortisation) is an unaudited non-IFRS measure. The Directors believe it is a
readily calculated measure that has broad acceptance and is referred to by regular users of published financial statements as a proxy
for overall operating performance. EBITDA is calculated from amounts disclosed in the financial statements.
Underlying EBITDA is an unaudited non-IFRS measure that represents the operating performance of the Group and excludes valuation
adjustments, asset disposals and certain non-core or non-recurring transactions.
Underlying Profit before tax is an unaudited non-IFRS measure and equals Underlying EBITDA less finance costs, depreciation and
amortisation.
The Group’s property in Lismore, NSW was inundated during a significant flood event in February 2022 which had a material impact
on the Group’s prior year result. The Group had limited insurance for flood damage for this property due to its Lismore location. The
property has not been operational since the flood occurred. Opportunities to realise value from this site in the future are being
considered in conjunction with the relevant authorities.
ANNUAL REPORT 2023
2
2
2023 Annual Report Eureka GroupDirectors’ Report
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Financial Position
Summary information in relation to the Group’s financial position is shown below:
Total assets
Net assets
Cash and cash equivalents
Debt – bank loan
Shares on issue
Net tangible assets per share
Balance sheet gearing1
$’000
$’000
$’000
$’000
‘000
cents
%
Consolidated
30 June 2023
30 June 2022
237,412
143,956
1,815
69,724
301,063
45.0
32.1
182,768
99,033
1,837
70,075
237,187
38.2
40.8
1
Balance sheet gearing is calculated as net debt (being interest-bearing drawn debt net of cash) divided by net debt plus equity.
Significant balance sheet movements during the year are described below.
Acquisitions and asset management
During the year, the Group made the following acquisitions:
•
•
•
•
55 of 72 rental units, a manager’s unit and associated management and letting rights for a village in Eagleby, Qld for
consideration of $7.30 million;
a rental village in Tamworth, NSW for consideration of $6.70 million comprising 50 units;
a rental village in Horsham, Vic for consideration of $5.05 million comprising 46 units; and
37 additional rental units in its managed strata-titled villages in Qld, Vic and SA for consideration of $3.68 million.
The Group spent $4.17 million on village developments including $3.65 million for the 51-unit Brassall, Qld expansion and
$0.43 million planning for the proposed 110-unit Kingaroy greenfield development.
Construction commenced in February 2023 on a 51-unit development at Brassall, Qld. The development is being completed
across four stages. The first stage of 10 units was completed in August 2023 and is fully leased. The remaining three stages
will be completed progressively by January 2024. Stages two and three comprising 25 units are fully pre-leased and leasing
is underway for stage four. In addition to developing the new units, Eureka is also investing in the upgrade of the common
area facilities.
A further $3.57 million was spent on enhancing its owned villages through capital improvements including expenditure on
community room upgrades and unit refurbishments.
There were no other significant acquisitions made during the year.
Disposals
Capital recycling is a key factor in the Group’s growth strategy. Assets will be recycled where they are non-core or cease to
meet target performance levels, risk appetite levels or efficiency metrics.
During the year, the Group made the following disposals:
•
•
Griffith, Qld management rights for $0.03 million comprising 42 units;
Tivoli, Qld management rights and manager’s unit for $0.34 million comprising 49 units.
Capital management – debt & equity
Debt
During the year, the Group’s National Australia Bank (NAB) facility increased to $83.00 million to facilitate the Eagleby, Qld
acquisition and make a deferred consideration payment associated with the prior year acquisition of the village in Hervey Bay,
Qld. The Group was in compliance with all banking covenants during the year. Under the terms of its NAB debt facility, Eureka
is able to deposit and withdraw funds in accordance with its working capital needs, subject to satisfaction of the bank
covenants.
3
ANNUAL REPORT 2023
3
Eureka Group 2023 Annual ReportDirectors’ Report
Eureka Group Holdings Limited and controlled entities
Directors’ Report
At balance date, the drawn amount under the facility was $69.72 million (2022: $70.08 million) and 72% of the debt was
hedged using interest rate swaps (2022: nil). The loan expires on 31 March 2026. Further details of the NAB facility and the
interest rate swaps are contained in Note 19.
Equity
During the year, the Group successfully completed a $28.23 million equity raise comprising both institutional and retail
components. The entitlement offer comprised new shares issued on a 1 for 4 pro-rata basis and was fully underwritten. The
proceeds raised were used to fund the village acquisitions in Tamworth, NSW and Horsham, Vic, retire debt and pay
associated transaction costs. The proceeds are also being used to fund the 51-unit development of the Brassall, Qld village.
Shares were issued at $0.47 as follows:
•
•
The associated capital raising costs of $1.20 million (net of tax) have been recognised directly in equity.
Institutional offer – 50,153,787 shares totalling $23.57 million; and
Retail offer – 9,921,441 shares totalling $4.66 million.
Other equity movements and balances for the year are as follows:
•
•
•
•
Dividends of $3.51 million (2022: $2.85 million) were paid during the year, comprising cash dividends of $2.60 million
(2022: $2.25 million) and shares issued pursuant to the Dividend Reinvestment Plan (DRP) of $0.91 million (2022:
$0.60 million).,
The DRP for the dividend paid on 6 October 2022 was fully underwritten resulting in proceeds being received from the
underwriter of $0.89 million (2022: $2.24 million).
In total, 3,372,347 shares were issued pursuant to the DRP (2022: 4,802,104) totalling $1.80 million (2022: $2.84
million).
429,362 share rights vested and were exercised under the long-term incentive scheme, resulting in the issue of 429,362
shares under the Company’s Omnibus Equity Plan (2022: nil). There were a further 353,783 share rights outstanding
at balance date (2022: 783,145) and 226,830 lapsed subsequent to balance date. Further details are provided in the
Remuneration Report.
DIVIDENDS
Dividends paid during the year were as follows:
Final dividend – 2022: 0.63 cents per share (2021: 0.59 cents per share)
Interim dividend – 2023: 0.67 cents per share (2022: 0.63 cents per share)
Total dividends paid
30 June 2023
$’000
30 June 2022
$’000
1,496
2,014
3,510
1,371
1,478
2,849
A final dividend for the year of 0.67 cents per share, amounting to $2.02 million, was declared at the date of signing these
financial statements and is payable on 12 October 2023. The record date is 22 September 2023. The DRP will be in effect
for this dividend. The financial effect of this dividend has not been brought to account in the financial statements for the year
ended 30 June 2023 and will be recognised in subsequent financial reports.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Eureka is committed to:
•
•
Implementing its environmental, social and governance framework. The Company’s Environmental, Social &
Governance (ESG) Committee is responsible for overseeing social, governance and environmental initiatives in
accordance with the Group’s ‘resident-first’ philosophy, its social licence to provide affordable rental accommodation
to a growing number of seniors and minimising the Group’s environmental impact. An integrated ESG framework and
action plan has been developed during the year;
Further expanding its core business of providing rental accommodation for independent seniors through the active
management of existing assets, the acquisition of additional villages and units, and the realisation of development
opportunities, including the expansion of the Group’s village in Brassall, Qld and development of the Group’s greenfield
site in Kingaroy, Qld;
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•
•
•
Improving the performance of the existing portfolio with continued focus on maintaining and improving occupancy
through the ongoing strengthening of relationships within its communities;
Implementing operational efficiencies, cost reduction and streamlined support services through process and systems
improvements across our villages and support office; and
Recycling of capital through the divestment of the Group’s non-core assets and active portfolio management including
the disposal of assets which may cease to meet target performance levels, risk appetite levels or efficiency metrics.
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 33.
MATERIAL BUSINESS RISKS
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:
•
•
•
•
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 conducts
comprehensive analysis and due diligence as part of its acquisition process;
Interest rate risk – interest rate changes may have a material impact on profitability. The Group mitigates this risk
through its capital management plan and interest rate hedging;
Cyber risk – the Group recognises the importance of cyber security in safeguarding digital assets, systems, and
information from unauthorised access or disruption. The Group mitigates this risk through various security measures
and a contingency Cyber Security Incident Response Plan for business continuity; and
Changes in Government legislation or funding (pension, rent assistance and National Disability Insurance Scheme
(NDIS)) – the Group provides affordable rental accommodation predominantly to seniors and many of the villages’
residents are reliant on government funding in the form of pensions or rent assistance and NDIS. An adverse change
in government legislation or funding may have a direct impact on village occupancy, profitability and asset values. The
Group manages its village costs having regard to occupancy levels.
SUBSEQUENT EVENTS
Subsequent to year end, the following significant transactions have occurred:
•
•
•
Dividend – the Company declared a final dividend in respect of the year of 0.67 cents per share, payable on 12 October
2023 amounting to $2.02 million. The record date is 22 September 2023. The Group’s dividend reinvestment plan is
effective for this dividend.
Chief Executive Officer (CEO) resignation – effective 17 July 2023, Mr Cameron Taylor resigned as the Company's
CEO following a period of personal leave due to a non-work-related accident. Executive Chairman, Mr Murray Boyte,
is the interim CEO while a search is undertaken for a replacement.
226,830 share rights lapsed following Mr Taylor’s resignation.
No other matter or circumstance has arisen since balance date that has significantly affected the group’s operations, results
or state of affairs.
ROUNDING OF AMOUNTS
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’. The amounts contained in the
financial and directors’ report have been rounded to the nearest $1,000 (where rounding is applicable) where noted ($’000).
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.
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Directors’ Report
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:
Murray Boyte
Executive Chairman and Interim CEO
BCA, MAICD, CMInstD, CA
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 restructures, mergers and acquisitions in Australia, New Zealand, North
America and Hong Kong. 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.
Other listed company directorships: National Tyre & Wheel Limited (ASX: NTD), Hillgrove Resources Ltd (ASX: HGO) and
Former directorships (last 3 years)
Special responsibilities:
Interests in shares:
Interests in options:
Name:
Title:
Qualifications:
Experience & expertise:
Eumundi Group Ltd (ASX: EBG).
Abano Healthcare Group Limited (NZX)
Chair of the Board, Member of the Audit & Risk Committee, Member of the Nomination
& Remuneration Committee, Member of the Environmental, Social & Governance
Committee.
1,186,497
Nil
Sue Renkin
Non-Executive Director
RN, MBA, FCDA, GradDip Corp Gov, MAICD
Sue 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 Chair of Executive Growth, a Director of the National Imaging Facility’s
Governing Board, Chair of the South Eastern Melbourne Primary Health Network and
a strategic advisor to McKenzie Aged Care Group. She is also a previous Telstra
Business Woman of the year.
Other listed company directorships: Nil
Nil
Former directorships (last 3 years)
Chair of the Nomination & Remuneration Committee, Member of the Environmental,
Special responsibilities:
Social & Governance Committee.
Nil
Nil
Interests in shares:
Interests in options:
Name:
Title:
Qualifications:
Experience & expertise:
Russell Banham
Non-Executive Director
B. Com, GAICD, FCA
Russell has a Bachelor of Commerce degree, is a Graduate Member of the Australian
Institute of Company Directors and is a fellow of the Institute of Chartered Accountants
Australia and New Zealand.
Russell is an experienced company director with a demonstrated history of working in
various industries including mining & metals, property development and management,
manufacturing and gaming and hospitality. He is skilled in financial management, risk
management and corporate governance. He was an audit partner and had functional
leadership responsibilities at Deloitte, Ernst & Young and Andersen.
Russell is an independent non-executive director of HKSE listed MGM China Holdings
Limited and, until May 2023, of LSE listed National Atomic Company Kazatomprom.
He is also a member of the Audit and Risk Management Committee of the Queensland
Audit Office.
Other listed company directorships: MGM China Holdings Limited (HKSE)
Former directorships (last 3 years)
Nil
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Special responsibilities:
Interests in shares:
Interests in options:
Name:
Title:
Qualifications:
Experience & expertise:
Chair of Audit & Risk Committee, Member of the Nomination & Remuneration
Committee, Member of the Environmental, Social & Governance Committee.
Nil
Nil
Greg Paramor AO
Non-Executive Director
FAPI, FAICD, FRICS
Greg has extensive property expertise with more than 50 years’ experience in the real
estate and fund management industry. He was the co-founder of Growth Equities
Mutual, Paladin Australia and the James Fielding Group. He was the CEO of Mirvac
Group between 2004 and 2008 before becoming the Managing Director of Folkestone
Limited, a specialist property funds management group.
Greg is currently a non-executive director of ASX-listed Charter Hall Group, a board
member of the Sydney Swans, the Chair of BackTrack Youth Works, a Trustee of The
Nature Conservancy (Australia) and a board member of the Garvan Research
Foundation.
He was awarded an Officer in the General Division (AO) of the Order of Australia in
January 2015.
Other listed company directorships: Charter Hall Group Ltd (ASX: CHC).
Former directorships (last 3 years)
Special responsibilities:
Nil
Member of Audit & Risk Committee, Chair of the Environmental, Social & Governance
Committee
5,674,002
Nil
Interests in shares:
Interests in options:
COMPANY SECRETARIES
Laura Fanning, B. Bus, CA, ACG (CS, CGP)
Laura is a Chartered Secretary and Chartered Accountant with more than 25 years’ financial, governance and commercial
experience. Laura is Eureka’s Chief Financial Officer and was previously the Company Secretary at National Tyre & Wheel
Limited. She has 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.
Patricia Vanni de Oliveira, B. Law (appointed 21 February 2023)
Patricia Vanni de Oliveira has over 15 years of professional experience in corporate governance working as a company
secretary of various Australian ASX listed, unlisted and non-for-profit companies. Mrs Vanni de Oliveira has a Bachelor of
Laws and is admitted to practice in Brazil and in Victoria, Australia. She is also an Affiliate of the Governance Institute of
Australia.
Geoffrey Stirton, B. Comm, CA, FAICD, FGIA (appointed 6 April 2022 until 13 December 2022)
Geoffrey has over 30 years’ experience working with listed and unlisted companies as well as not for profits in both governance
and line management roles. He has primarily worked in financial services for a number of ASX 100 companies. He is a
Chartered Accountant and Chartered Secretary and a Fellow of both the Australian Institute of Company Directors and the
Governance Institute of Australia.
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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:
Directors’
Meetings
Audit & Risk
Committee
Meetings
Name
Murray Boyte
Sue Renkin
Russell Banham
Greg Paramor
Held 1
25
25
25
25
Attended
25
24
25
25
Held 1
8
8*
8
8
Attended
8
8*
8
8
Nomination &
Remuneration
Committee Meetings
Attended
3
3
3
3*
Held 1
3
3
3
3*
Environmental,
Social & Governance
Committee Meetings
Attended
1
1
1
1
Held 1
1
1
1
1
1
*
Number of meetings held while a director during the financial year.
Attended by invitation. All directors have a standing invitation to attend Committee meetings, even when they are not a member.
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for Eureka’s non-executive directors, executive directors and
other key management personnel (KMP) for the year. The information provided in this remuneration report has been audited
as required by Section 308(3C) of the Corporations Act 2001.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including all directors.
This remuneration report has been set out under the following headings:
a)
b)
c)
d)
e)
f)
g)
h)
i)
Principles of compensation of key management personnel
Details of remuneration
Non-executive director remuneration policy
Service agreements
Relationship between remuneration policy and Company performance
Remuneration consultants
Equity instruments held by key management personnel
Loans to/from key management personnel
Other transactions with key management personnel
(a) PRINCIPLES OF COMPENSATION OF KEY MANAGEMENT PERSONNEL
Compensation for key management personnel comprises remuneration determined having regard to industry practice and the
need to attract and retain appropriately qualified 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 remuneration and
reward. The Board of Directors (‘the Board’) ensures that executive reward satisfies the following key criteria for good
remuneration 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 the
Group’s directors and executives and making recommendations to the Board for consideration and approval. The
performance of the Group depends upon the quality of its directors and executives. The remuneration philosophy is to attract,
motivate and retain high performance and high quality personnel.
The reward framework is designed to align executive reward to shareholders' interests. The Board considers that it should
seek to enhance shareholders' interests by:
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Directors’ Report
•
•
•
having achievement of profit goals as a core component of the plan design;
focusing on sustained growth in total shareholder returns consisting of dividends and growth in share price, delivering
constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value including
initiatives aligned to the Group’s commitment to social, governance and environmental focus areas; and
attracting and retaining high calibre executives.
Additionally, the reward framework should seek to enhance executives' interests by:
•
•
•
rewarding capability and experience;
reflecting competitive reward for contribution to growth in shareholder wealth; and
providing a clear structure for earning rewards.
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
Executive remuneration
The Group aims to reward executives based on their position and responsibilities, with total remuneration including both fixed
and variable components.
The remuneration for the Executive Chairman was determined by the Nomination & Remuneration Committee, having regard
to the additional responsibilities required in his executive capacity. His agreed remuneration comprises fixed remuneration
only.
For other executives, the remuneration framework includes the following components:
•
•
•
Fixed remuneration – comprising base salary, superannuation contributions and other benefits, having regard to
comparable market benchmarks. Executives may receive their fixed remuneration in the form of cash or other fringe
benefits where it does not create any additional costs to the Group and provides additional value to the executive;
Short Term Incentive (STI) program – an ‘at risk’ component of remuneration where, if individual and Group
performance measures are met, senior executives will be awarded cash bonuses equal to a percentage of their fixed
remuneration. Performance measures include financial and non-financial KPIs and include a financial gateway hurdle.
The percentage of fixed remuneration received as an STI is capped and may vary between individuals, depending on
the level of performance achieved. 100% of the STI is paid as cash; and
Long Term Incentive (LTI) program – an ‘at risk’ component of remuneration for senior executives where 100% is
awarded as equity instruments (such as options and share rights) which are subject to performance and service
conditions. The number of equity instruments to be awarded will be determined by the Board having regard to the
overall amount of executive remuneration.
The combination of these elements comprises the executives’ total remuneration. The Board believes that this remuneration
framework ensures that remuneration outcomes link to company performance and the long-term interests of shareholders.
All executives have detailed job descriptions with identified key performance indicators against which annual reviews are
undertaken.
STIs
Senior executives’ entitlement to an STI is based upon achievement of agreed performance objectives including:
•
•
•
•
•
Financial performance;
Operational performance;
Strategic initiatives;
Workplace health and safety; and
Risk mitigation and management.
Actual performance criteria may vary between executives, having regard to their roles and responsibilities.
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The Board applies the following general principles when determining and measuring performance targets and any STI. The
Board retains discretion in relation to the impact that non-recurring or unusual items may have on achievement of the STIs.
STI Pool
The size of the STI pool is determined by the Board, upon advice from the Nomination &
Remuneration Committee, having regard to individual employment contracts.
In consultation with the Nomination & Remuneration Committee, the Board assesses the
Group’s financial performance and the performance of KMP against agreed performance
objectives.
Payment of any STI is subject to achievement of the financial gateway.
Financial gateway
Achievement of budgeted Underlying EBITDA1.
Structure
Performance targets
A portion of the STI is linked to the achievement of the budgeted Underlying EBITDA
financial hurdle (2023: 30%; 2022: 55%); and
A portion of the STI is linked to the achievement of non-financial performance objectives
(2023: 70%; 2022: 45%).
For the proportion of the STI linked to financial performance, entitlement is based on a tiered
approach, with 100% of the financial portion only being paid if the budgeted Underlying
EBITDA is exceeded by a predetermined amount.
1
Refer to page 2 for the definition of Underlying EBITDA.
During the year, the financial gateway was met. 65% of the total STI pool available for KMP was awarded.
The actual amounts received by executives are listed in the remuneration tables below.
LTIs
Equity instruments may be granted under the Omnibus Equity Plan (OEP) which was adopted on 23 November 2017. Each
equity instrument entitles the participant to subscribe for one ordinary share in the Company. The specific terms of a grant
are set out in an offer from the Company to the executive which contains details of the application price (if any), the expiry
date, the exercise price, the vesting date, any applicable performance conditions and other specific terms.
Share rights
During the year, no new share rights were approved for issue by the Board. During the prior year, 226,830 were issued to the
Chief Executive Officer and 126,953 were issued to the Chief Financial Officer on the following key terms:
•
•
•
•
•
The Vesting Date of the share rights is 30 September 2024, subject to meeting the performance and service conditions;
Performance condition – total shareholder return (TSR) compound annual growth rate (CAGR) hurdle, to be tested on
the Vesting Date:
TSR CAGR1
Less than 7% per annum
At least 7% but less than 10%
At least 10% but less than 15%
At least 15%
1 TSR CAGR is an unaudited non-IFRS measure.
% of Rights to vest
0%
50%
70% to 100% on a straight-line basis
100%
Service condition – the employee must remain employed by the Group from the Grant Date until the Vesting Date;
TSR includes share price appreciation, capital returns and dividends. Share price appreciation is determined as being
the difference between the base VWAP of 61.72 cents (being the volume weighted average price of shares over the 5
trading days immediately after the release of Eureka’s results for the year ended 30 June 2021 on 30 August 2021)
and vesting VWAP (the volume weighted average price of shares over the 5 trading days immediately after the release
of Eureka’s results for the year ended 30 June 2024); and
Exercise price - $nil.
The last day on which the share rights may be exercised is 30 September 2026, at which time the rights expire and lapse.
At 30 June 2023 there were 353,783 share rights outstanding (2022: 783,145). Subsequent to balance date, 226,830 share
rights issued to Cameron Taylor lapsed due to his resignation as Chief Executive Officer on 17 July 2023.
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Directors’ Report
(b) DETAILS OF REMUNERATION
The names of persons who were key management personnel of Eureka at any time during the financial year and at the date
of this report are shown in the following table:
Name
Directors
Murray Boyte
Role
Period in role
Executive Chair
Interim CEO
24 November 2017 – ongoing
23 May 2023 - ongoing
Sue Renkin
Non-Executive Director
24 November 2017 – ongoing
Russell Banham
Non-Executive Director
21 November 2018 – ongoing
Greg Paramor
Executives
Cameron Taylor
Laura Fanning
Non-Executive Director
19 June 2020 – ongoing
Chief Executive Officer
1 July 2021 – 17 July 2023
Chief Financial Officer
1 December 2020 – ongoing
Cameron Taylor resigned subsequent to balance date on 17 July 2023. Murray Boyte has assumed the Chief Executive Officer
role. There were no other changes to KMP.
Details of the remuneration of the Group's key management personnel for the current and prior years are set out in the
following tables.
Short term
Post
employment
Salary/
fees3
$
STI
$
Non-
monetary
$
Super-
annuation
$
Share
based
payments
$
Termi-
nation
benefits2
$
30 June 2023
Directors
Murray Boyte1
322,598
Sue Renkin
Russell Banham
Greg Paramor
81,448
91,403
81,448
Total Directors
576,897
-
-
-
-
-
Executives
Cameron Taylor2
349,708
115,000
Laura Fanning
250,708
60,000
Total Executives
600,416
175,000
Total KMP
1,177,313
175,000
-
-
-
-
-
-
-
-
-
25,292
8,552
9,597
8,552
51,993
25,292
25,292
50,584
-
-
-
-
-
46,509
18,798
65,307
102,577
65,307
-
-
-
-
-
-
-
-
-
Total
$
347,890
90,000
101,000
90,000
628,890
536,509
354,798
891,307
1,520,197
% of TFR
that was
awarded
as LTI
-
-
-
-
-
-
-
-
-
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Short term
Post
employment
Salary/
fees3
$
STI/
bonus
$
Non-
monetary
$
Super-
annuation
$
Share
based
payments
$
Termi-
nation
benefits
$
30 June 2022
Directors
Murray Boyte1
321,188
Sue Renkin
Russell Banham
Greg Paramor
76,364
79,091
76,364
Total Directors
553,007
Executives
-
-
-
-
-
Cameron Taylor
326,432
30,000
Laura Fanning
237,619
20,000
Total Executives
564,051
50,000
Total KMP
1,117,058
50,000
-
-
-
-
-
-
-
-
-
23,568
7,636
7,909
7,636
46,749
23,568
23,568
47,136
93,885
-
-
-
-
-
56,508
2,935
59,443
59,443
-
-
-
-
-
-
-
-
-
Total
$
344,756
84,000
87,000
84,000
599,756
436,508
284,122
720,630
1,320,386
% of TFR
that was
awarded
as LTI
-
-
-
-
-
40
30
-
-
1
2
3
Murray Boyte’s fixed remuneration includes his chairman’s fee of $121,096 per annum (2022: $120,548) and an additional $226,246
per annum for the period he is Executive Chair (2022: $224,208). Mr Boyte assumed the duties of the Chief Executive Officer on 24
May 2023 while Mr Taylor was on medical leave. He has continued in this role following Mr Taylor’s resignation on 17 July 2023.
There was no change to his remuneration.
Mr Taylor was on medical leave from 24 May 2023 until his resignation on 17 July 2023. He received a gross payment after balance
date of $219,400 comprising salary of $18,380, superannuation of $6,850 and termination benefits of $194,170 including unused
leave entitlements, payment in lieu of notice and extended personal leave.
Disclosure in remuneration includes executives’ annual remuneration as per their service agreement.
The STIs/bonuses are paid subsequent to balance date.
The proportion of remuneration linked to performance and the fixed proportion (at maximum performance levels) are as
follows:
Directors
Murray Boyte
Sue Renkin
Russell Banham
Greg Paramor
Executives
Cameron Taylor
Laura Fanning
Fixed remuneration
At Risk - STI
At Risk - LTI
2023
2022
2023
2022
2023
2022
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50%
67%
50%
83%
25%
20%
25%
17%
25%
13%
25%
-
The proportion of cash STI paid/payable or forfeited:
Executives
Cameron Taylor
Laura Fanning
Cash STI paid/payable
Cash STI forfeited
2023
2022
2023
2022
61%
73%
-%
-%
39%
27%
100%
100%
In the prior year, no STIs were paid. However, the Board resolved to award small discretionary bonuses.
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Directors’ Report
(c) NON-EXECUTIVE DIRECTOR REMUNERATION POLICY
Fees and payments to non-executive directors reflect the demands that are made on, and the responsibilities of, the directors.
The Nomination & Remuneration Committee reviews non-executive directors’ fees annually. Non-executive directors do not
receive share options or other incentives.
Non-executive directors’ fees are determined within an aggregate directors’ fee pool limit, which is periodically recommended
for approval by shareholders. The maximum is $600,000 in aggregate (2022: $600,000) which provides the Board with
flexibility to appoint additional directors to broaden the skill base of the Board collectively.
The table below summarises Board and Committee fees payable to each non-executive directors (inclusive of
superannuation):
Board fees
Chair
Non-executive director
Committee fees payable to Chair of Committees
Audit and Risk
Remuneration and Nomination
Environmental, Social and Governance
Annualised Board and Committee fees
2023
$
121,096
81,000
20,000
9,000
9,000
402,096
2022
$
120,548
75,000
12,000
9,000
9,000
375,548
Directors may also be reimbursed for travelling and other expenses incurred in connection with their Company duties.
(d) SERVICE AGREEMENTS
Directors
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. In addition, the Executive Chair has received written confirmation of additional remuneration for the additional
responsibility and time required to fulfil the executive chairman role, payable during his time in this role.
Executives
Remuneration and other terms of employment for other key management personnel are formalised in service agreements.
The details of these agreements for executive key management personnel for the year are as follows:
Cameron Taylor - Chief Executive Officer
Commencement 1 July 2021 until 17 July 2023
Term
The agreement has no fixed term and may be terminated by either the Company or Mr Taylor with 2
months’ notice or without notice by the Company in the event of a material breach or misconduct by Mr
Taylor.
Mr Taylor’s remuneration as Chief Executive Officer included total fixed remuneration (TFR) of $375,000,
including a base salary, superannuation and car allowance. Certain benefits such as car parking, mobile
phone expenses and use of laptop are also provided. His remuneration also included STI of up to 50% of
his TFR and long-term incentives of up to 50% of his TFR in the form of share rights, as determined by
the Board from time to time. Mr Taylor is responsible for management of the Group’s operations and
reports to the Executive Chairman.
Laura Fanning - Chief Financial Officer and Company Secretary
Commencement 1 December 2020
Term
The agreement has no fixed term and may be terminated by either the Company or Ms Fanning with 2
months’ notice or without notice by the Company in the event of a material breach or misconduct by Ms
Fanning.
Ms Fanning’s remuneration includes a TFR of $276,000, including a base salary and superannuation.
Certain benefits such as car parking, mobile phone expenses and use of laptop are also provided. Her
remuneration also comprises additional STI of up to 30% of her TFR and long-term incentives of up to
20% of her TFR in the form of share rights, as determined by the Board from time to time. Ms Fanning is
responsible for the accounting and finance functions of the Company and its associated companies. Ms
Fanning reports to the Chief Executive Officer.
ANNUAL REPORT 2023
13
Details
Details:
13
Eureka Group 2023 Annual ReportDirectors’ Report
Eureka Group Holdings Limited and controlled entities
Directors’ Report
(e) RELATIONSHIP BETWEEN REMUNERATION POLICY AND COMPANY PERFORMANCE
The Group’s current remuneration policy provides executives with a base level of remuneration as well as ‘at-risk’ components
that are aligned with shareholder returns. The STI program is weighted towards Underlying EBITDA1 and therefore earnings
per share. The LTI program is weighted towards total shareholder returns.
The following table shows key metrics for the past 5 years of the Company which demonstrates the effectiveness of the current
policy. There has been steady growth in earnings per share and dividends over this period and, despite a reduction in share
price during the current year, the 3-year total shareholder return is 15.6% per annum.
Metric
Total revenue and other income
Underlying EBITDA1
Profit before tax
Profit after tax
Earnings per share (basic)
Share price at year end
Dividend paid per share
Total shareholder return – 1 year
Measure
$’000
$’000
$’000
$’000
cents per share
cents per share
cents per share
% of share price
at start of year
2023
36,564
12,614
29,751
19,158
6.97
46.5
1.30
(21.6)
2022
30,882
10,620
10,483
8,173
3.48
61.0
1.22
2.0
2021
29,434
10,569
8,742
6,283
2.73
61.0
1.14
91.2
2020
26,068
8,700
9,075
8,095
3.52
32.5
1.55
31.0
Total shareholder return – 3 year % per annum
15.6
35.7
31.5
(2.7)
KMP remuneration
$’000
1,520
1,320
1,446
1,201
KMP remuneration
% of total revenue
and other income
4.2
4.3
4.9
4.6
2019
23,394
7,832
6,794
6,794
2.95
26.0
0.00
(7.1)
-
868
3.7
1
Refer to page 2 for the definition of Underlying EBITDA. Prior to 2021, EBITDA from core operations was the term used to describe
Underlying EBITDA.
(f) REMUNERATION CONSULTANTS
The Group did not engage any remuneration consultants during the year. In the prior year, the Group utilised the services of
remuneration consultants at a total cost of $9,009.
(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.
KMP
Directors
Murray Boyte
Sue Renkin
Russell Banham
Greg Paramor
Executives
Cameron Taylor
Laura Fanning
Total
Balance
1 July 2022
Acquired
during the year
Disposed
during the year
Share rights
exercised
during the year
Balance
30 June 2023
925,205
261,292
-
-
-
-
5,388,011
285,991
-
-
-
-
6,313,216
547,283
-
-
-
-
-
-
-
-
-
-
-
1,186,497
-
-
5,674,002
429,362
429,362
-
-
429,362
7,289,861
ANNUAL REPORT 2023
14
14
2023 Annual Report Eureka GroupDirectors’ Report
Eureka Group Holdings Limited and controlled entities
Directors’ Report
Share rights held
The number of share rights held during the financial year by each director and other key management personnel are set out
below.
KMP
Directors
Murray Boyte
Sue Renkin
Russell Banham
Greg Paramor
Executives
Cameron Taylor
Laura Fanning
Total
Balance
1 July 2022
Issued
during the year
Vested and
exercised during
the year
Balance
30 June 2023
-
-
-
-
656,192
126,953
783,145
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(429,362)
-
(426,362)
226,830
126,953
353,783
There were no new share rights granted as compensation to key management personnel during the year. The maximum
future expense relating to share rights held at balance date is $0.06 million. The table below discloses details of the share
rights held at balance date.
KMP
Number of share
rights granted
during 2022
Grant date
FV at grant
date per
share right
$
Exercise
price per
share right
$
Value of share
rights granted
$
Expiry date
Cameron Taylor
Laura Fanning
226,830
126,953
4-May-22
4-May-22
0.357
0.357
-
-
80,978
45,322
30-Sep-26
30-Sep-26
For details on the valuation of the share rights, refer to Note 27.
Options held
There were no options granted over equity instruments as compensation to key management personnel during the year.
(h) LOANS TO/FROM KEY MANAGEMENT PERSONNEL
There were no loans to any director or other key management personnel at any time during the year.
(i) OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
There were no other transactions with key management personnel at any time during the year.
This concludes the remuneration report, which has been audited.
SHARES UNDER OPTION & SHARE RIGHTS
There were 126,953 share 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 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.
15
ANNUAL REPORT 2023
15
Eureka Group 2023 Annual ReportDirectors’ Report
Eureka Group Holdings Limited and controlled entities
Directors’ Report
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 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
Ernst & Young did not provide any non-audit services during the current or prior years.
OFFICERS OF THE COMPANY WHO ARE FORMER PARTNERS OF ERNST & YOUNG
No officers of the Company were partners of Ernst & Young at the time it undertook the audit of the Company.
ROUNDING OF AMOUNTS
The company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191’Class issued by the Australian Securities and Investment Commission, relating to ‘rounding-off’. The amounts
contained in the financial and directors’ report have been rounded to the nearest $1,000 (where rounding is applicable) where
noted ($’000).
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on
page 69.
AUDITOR
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
Murray Boyte
Executive Chair
Dated in Brisbane this 28th day of August 2023
ANNUAL REPORT 2023
16
16
2023 Annual Report Eureka GroupDirectors’ Report
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of Profit or Loss and Other
Consolidated Statement of Profit or Loss
Comprehensive Income
and Other Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2023
For the year ended 30 June 2023
Note
30 June 2023
$’000
30 June 2022
$’000
Rental income
Catering income
Service and caretaking fees
Total revenue
Finance income
Other income
Total revenue and other income
Village operating expenses
Employee expenses
Finance costs
Marketing expenses
Depreciation & amortisation
Other expenses
Total operating expenses
Share of profit of a joint venture
Net gain on change in fair value of:
Investment property
Other assets
Impairment of:
Financial assets
Other assets
Total other items
Profit before income tax expense
Income tax expense
Profit after income tax expense
Other comprehensive income
Items that may be reclassified to profit or loss
Gain on cash flow hedges
Income tax expense
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
3
3
3
3
5
4
4
11
12
8
9
6
6
26
26
24,795
5,533
6,092
36,420
19
125
36,564
(17,441)
(5,617)
(3,720)
(386)
(846)
(3,198)
(31,208)
4,246
22,051
-
(146)
(1,756)
24,395
29,751
(10,593)
19,158
535
(161)
374
19,532
6.97
6.95
20,395
4,842
4,512
29,749
21
1,112
30,882
(14,558)
(4,497)
(2,106)
(119)
(737)
(2,193)
(24,210)
1,500
2,291
20
-
-
3,811
10,483
(2,310)
8,173
-
-
-
8,173
3.48
3.47
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.
ANNUAL REPORT 2023
17
17
Eureka Group 2023 Annual Report
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of
Consolidated Statement of Financial Position
Financial Position
AS AT 30 JUNE 2023
As at 30 June 2023
Current assets
Cash and cash equivalents
Trade and other receivables
Loans receivable
Other assets
Total current assets
Non-current assets
Loans receivable
Joint venture investment
Investment property
Property, plant and equipment
Right of use assets
Intangible assets
Other assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Other financial liabilities
Total current liabilities
Non-current liabilities
Trade and other payables
Provisions
Other financial liabilities
Borrowings
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained profits
Total equity
Note
22(a)
7
8
9
8
11
12
13
14
15
9
16
17
18
16
17
18
19
6
20
20
30 June 2023
$’000
30 June 2022
$’000
1,815
499
-
991
3,305
-
10,934
213,072
348
766
8,452
535
234,107
237,412
5,936
946
248
7,130
161
31
606
69,579
15,949
86,326
93,456
1,837
756
340
1,287
4,220
42
7,196
159,660
523
1,265
8,471
1,391
178,548
182,768
3,231
671
2,847
6,749
161
41
1,053
70,018
5,713
76,986
83,735
143,956
99,033
127,378
434
16,144
143,956
98,422
115
496
99,033
The consolidated statement of financial position is to be read in conjunction with the accompanying notes.
ANNUAL REPORT 2023
18
18
2023 Annual Report Eureka Group
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of
Consolidated Statement of Cash Flows
Cash Flows
FOR THE YEAR ENDED 30 JUNE 2023
Note
30 June 2023
$’000
30 June 2022
$’000
For the year ended 30 June 2023
Cash flows from operating activities
Receipts from customers
Payments to suppliers & employees
Distributions from joint venture
Insurance proceeds
Interest received
Interest paid
Net cash provided by operating activities
22(b)
Cash flows from investing activities
Payments for additions to investment property
Payments for property, plant & equipment
Payments for intangible assets
Payments for other assets
Payments to sell property assets
Proceeds from sale of investment properties
Proceeds from sale of non-current assets held for sale
Proceeds from the sale of intangible assets
Proceeds from repayments of loans provided
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Payment of dividends
Proceeds from share issue
Payments for share issue transactions
Principal portion of lease payments
Payment of transaction costs related to borrowings
Net cash provided by financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
22(a)
36,964
(25,777)
508
29
11
(3,029)
8,706
(32,465)
(31)
(749)
(65)
(10)
35
-
330
91
(32,864)
34,989
(35,340)
(2,602)
29,126
(1,711)
(276)
(50)
24,136
(22)
1,837
1,815
29,386
(21,073)
1,150
1,027
21
(2,228)
8,283
(21,457)
(102)
(5,309)
(83)
(245)
664
5,478
-
162
(20,892)
23,100
(10,200)
(2,246)
2,240
(98)
(223)
(17)
12,556
(53)
1,890
1,837
The consolidated statement of cash flows is to be read in conjunction with the accompanying notes.
19
ANNUAL REPORT 2023
19
Eureka Group 2023 Annual Report
Eureka Group Holdings Limited and controlled entities
Consolidated Statement of
Consolidated Statement of Changes in Equity
Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2023
For the year ended 30 June 2023
Note
Share
capital
$’000
Retained
profits /
(Accumulated
losses)
$’000
Share
based
payment
reserve
$’000
Cash
flow
hedge
reserve
$’000
Total
$’000
For the year ended 30 June 2023
Balance at 1 July 2022
Profit after income tax expense
Other comprehensive income, net of tax
Transactions with owners in their capacity
as owners:
Issue of share capital
Transaction costs - share issue (net of tax)
Share based payments
Dividends paid
Balance at 30 June 2023
For the year ended 30 June 2022
Balance at 1 July 2021
Profit after income tax expense,
representing total comprehensive income
for the year
Transactions with owners in their capacity
as owners:
Issue of share capital
Transaction costs - share issue (net of tax)
Share based payments
Dividends paid
Balance at 30 June 2022
20
20
20
21
20
20
20
21
98,422
-
-
30,152
(1,196)
-
-
127,378
496
19,158
-
-
-
-
(3,510)
16,144
95,652
(4,828)
-
8,173
2,844
(74)
-
-
98,422
-
-
-
(2,849)
496
115
-
-
(120)
-
65
-
60
56
-
-
-
59
-
115
-
-
374
99,033
19,158
374
-
-
-
-
30,032
(1,196)
65
(3,510)
374
143,956
-
-
-
-
-
-
-
90,880
8,173
2,844
(74)
59
(2,849)
99,033
The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.
ANNUAL REPORT 2023
20
20
2023 Annual Report Eureka Group
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
1. INTRODUCTION
The financial statements cover Eureka Group Holdings Limited and its subsidiaries (Eureka, the Group or the Consolidated
Entity) for the year ended 30 June 2023. Eureka Group Holdings Limited is a company incorporated and domiciled in
Australia. Eureka is a for-profit entity for the purposes of preparing the financial statements.
The Group’s operations and principal activities comprise ownership and property management of senior independent living
communities.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($'000)
unless otherwise stated.
The registered office of the Company is Suite 2D, 7 Short St, Southport QLD 4215.
The financial report was authorised for issue on 28 August 2023 by the Directors.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PREPARATION
The principal accounting policies adopted by the Group 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 the Group complies with International Financial Reporting Standards (IFRS) and
interpretations adopted by the International Accounting Standards Board (IASB).
New, revised and amended Accounting Standards adopted by the Group
Several amendments and interpretations apply for the first time for the year but do not have an impact on the consolidated
financial statements of the Group. The Group has not early adopted any standards, interpretations or amendments that
have been issued or which are not yet effective. This includes IFRS Interpretations Committee agenda decision
Configuration or Customisation Costs in a Cloud Computing Arrangement, which includes software-as-a-service
arrangements. The Group does not have any capitalised configuration or customisation costs.
Other new accounting standards, amendments to accounting standards, and interpretations have been published that are
not mandatory for the current reporting period and are not expected to have a material impact on the Group’s future
financial reporting.
HISTORICAL COST CONVENTION
The financial statements have been prepared under the historical cost convention, except for, where applicable, financial
assets and liabilities at fair value through profit or loss, investment properties and some assets held for sale.
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 2023 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.
ANNUAL REPORT 2023
21
21
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
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.
REVENUE FROM CONTRACTS WITH CUSTOMERS
Catering income
The revenue from contracts with residents for the provision of catering services includes one performance obligation.
Revenue is recognised at a point in time when services are provided to the resident.
Service and Caretaking fees
The revenue from service and caretaking fees is recognised over time, as the customer simultaneously receives and
consumes the benefits provided by the Group.
BUSINESS COMBINATIONS
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest
in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value
or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to
profit or loss.
On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, the Group's operating or
accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the Group remeasures its previously held equity interest in the
acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is
recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within
equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling
interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment
in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair
value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a
gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and
measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred
and the acquirer's previously held equity interest in the acquiree.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional
amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new
information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends
on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
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
ANNUAL REPORT 2023
22
22
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
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 income tax expense, 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 for 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 and other receivables are recognised initially at original invoice amount, and subsequently adjusted for Expected
Credit Loss (ECL). An ECL allowance is recognised by analysing the age of outstanding balances and applying historical
default percentages. Historical loss rates are adjusted to reflect forward-looking observable data affecting the ability of
customers to settle debts.
INVESTMENT PROPERTY
Investment property comprises land and/or buildings held to earn rental income and/or for capital appreciation. In
accordance with applicable accounting standards, the buildings, including plant and equipment, are not depreciated.
ANNUAL REPORT 2023
23
23
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
Investment property is initially measured at cost, including transaction costs. Subsequent to initial recognition, investment
property is stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes
in the fair values of investment property are recognised in profit or loss in the period in which they arise.
Transfers are made to (or from) investment property only when there is a change in use.
•
For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is
the fair value at the date of change in use. If owner-occupied property becomes an investment property, the Group
accounts for such property in accordance with the policy stated under property, plant and equipment up to the date
of change in use.
•
•
•
For a transfer from investment property to inventory, the deemed cost for subsequent accounting is the fair value
at the date of change in use. If inventory becomes an investment property, the Group accounts for it in accordance
with the policy stated under inventory up to the date of change in use.
For a transfer from investment property to intangibles, the deemed cost for subsequent accounting is the fair value
at the date of change in use. If an intangible (management rights) becomes an investment property, the Group
accounts for it in accordance with the policy stated under intangibles up to the date of change in use.
Transfers are made from investment property to non-current assets held for sale when the carrying amount will be
recovered principally through a sale transaction rather than continuing use.
The Group’s policy is 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.
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.
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 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.
Upon loss of significant influence 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.
ANNUAL REPORT 2023
24
24
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
PROPERTY PLANT & EQUIPMENT
Property plant and equipment is recognised at cost. Depreciation and amortisation is calculated on the straight line or
diminishing value 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
Plant and equipment
Rate
6-33%
Method
Straight-line or
Diminishing value
Buildings
2.5%
Straight-line
INTANGIBLE ASSETS
Only intangible assets that have been purchased or paid for by the Group are recognised in the accounts.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there
is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an
intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected
useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to
modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The
amortisation expense on intangible assets with finite lives is recognised in the statement of profit or loss in the expense
category that is consistent with the function of the intangible assets.
Management rights have a finite life and are carried at cost less accumulated amortisation and accumulated impairment
losses. The management rights are amortised using the straight-line method over their estimated useful life. If the
contractual or other legal rights of the management rights can be renewed, the useful life of the intangible asset includes
the renewal period if there is evidence to support renewal by the entity without significant cost. Otherwise the management
rights are amortised over the life of the contract.
Rent rolls have a finite life and are carried at cost less accumulated amortisation and accumulated impairment losses. Rent
rolls are amortised using the straight-line method over 15 years being the estimated useful life.
Other intangible assets relate to website development which is amortised using the straight-line method over 3-15 years
being the estimated useful life.
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
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, 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
ANNUAL REPORT 2023
25
25
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
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
Current and non-current financial assets and liabilities within the scope of AASB 9 are classified as fair value through profit
or loss, fair value through other comprehensive income or amortised cost. The Group determines the classification of its
financial assets and liabilities at initial recognition with the classification depending on the purpose for which the asset or
liability was acquired or issued. Financial assets and liabilities are initially recognised at fair value plus directly attributable
transaction costs, unless their classification is at fair value through profit or loss. They are subsequently measured at fair
value or amortised cost using the effective interest method.
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 it relates.
Borrowings are derecognised 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.
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.
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING
A derivative is a type of financial instrument typically used to manage risk. A derivative’s value changes over time in
response to an underlying benchmark, such as interest rates, exchange rates, or asset values, and is entered into for a
fixed period. A hedge is where a derivative is used to manage an underlying exposure.
ANNUAL REPORT 2023
26
26
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
The Group is exposed to certain risks relating to its ongoing business operations. The primary risk managed using
derivative instruments is interest rate risk.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the
Group’s current and future debt obligations with floating interest rates.
Initial recognition and subsequent measurement
The Group uses derivative financial instruments, such as interest rate swaps, to hedge its interest rate risk. Such derivative
financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are
subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as
financial liabilities when the fair value is negative.
The Group’s interest rate swaps are classified as cash flow hedges because they hedge the exposure to variability in cash
flows that is attributable to a particular risk associated with a recognised liability.
At the inception of a hedge relationship, Eureka formally designates and documents the hedge relationship to which it
wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge.
The documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged
and how the Group will assess whether the hedging relationship meets the hedge effectiveness requirements (including
the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined). A hedging relationship qualifies
for hedge accounting if it meets all the following effectiveness requirements:
•
•
•
There is “an economic relationship” between the hedged item and the hedging instrument.
The effect of credit risk does not “dominate the value changes” that result from that economic relationship.
The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that
Eureka actually hedges and the quantity of the hedging instrument that Eureka actually uses to hedge that quantity
of hedged item.
Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as described below.
The effective portion of the gain or loss on the hedging instrument is recognised in other comprehensive income (OCI) in
the cash flow hedge reserve, while any ineffective portion is recognised immediately in the statement of profit or loss in
other operating income or expenses.
The Group uses interest rate swaps as hedges of its exposure to interest rate risk arising from debt obligations. The
ineffective portion relating to interest rate swaps is recognised in other operating income or expenses.
The amount accumulated in OCI is reclassified to profit or loss as a reclassification adjustment in the same period or
periods during which the hedged cash flows affect profit or loss.
If cash flow hedge accounting is discontinued, the amount that has been accumulated in OCI must remain in accumulated
OCI if the hedged future cash flows are still expected to occur. Otherwise, the amount will be immediately reclassified to
profit or loss as a reclassification adjustment. After discontinuation, once the hedged cash flow occurs, any amount
remaining in accumulated OCI must be accounted for depending on the nature of the underlying transaction.
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.
ANNUAL REPORT 2023
27
27
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
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.
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 not expected to 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).
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 (share based
payment reserve), 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.
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.
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 use or sale, subsequent finance costs are expensed when incurred.
All other finance costs are expensed when incurred.
ANNUAL REPORT 2023
28
28
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
GOODS AND SERVICES TAX
Revenues, expenses, assets and liabilities 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.
LEASES
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the
right to control the use of an identified asset for a period of time in exchange for consideration.
Group as a lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases
of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing
the right to use the underlying assets.
i) Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is
available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses
and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease
liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any
lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term
and the estimated useful lives of the assets.
If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a
purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also
subject to impairment. Refer to the accounting policy on Impairment of non-financial assets.
ii) Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed
payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase
option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease
term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a
rate are recognised as expenses in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease
commencement date where the interest rate implicit in the lease is not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments
made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease
term, a change in the lease payments (e.g. changes to future payments resulting from a change in an index or rate used
to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Group’s lease liabilities are included in financial liabilities.
iii) Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to leases that have a lease term of 12 months or less from
the commencement date and do not contain a purchase option. It also applies the lease of low-value assets recognition
exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and
leases of low value assets are recognised as expense on a straight-line basis over the lease term.
Group as a lessor
Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are
classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is
included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating
and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term
on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
29
ANNUAL REPORT 2023
29
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
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.
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.
Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that
have the most significant effect on the amount recognised in the financial statements are:
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 selling 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:
•
•
•
•
Valuations undertaken by accredited external independent valuers;
Acquisition price paid for the property;
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
Capitalised income projections based upon a property’s estimated maintainable earnings and capitalisation rate.
Investment Property – Classification
The Group classifies property as investment property when it meets the following key criteria:
•
•
Ancillary services are insignificant to the arrangement as a whole.
The property is held by the Group to generate long term investment growth and ongoing rental returns; and
The returns from the Group’s investment property include rental income and income from provision of ancillary services,
including 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 assessing qualitative factors, which include
both operational and legislative considerations, and quantitative factors, which includes comparing:
•
•
the value of the ancillary services to the total income generated from the property; and
the profit generated from ancillary services to the total profit generated from the property
ANNUAL REPORT 2023
30
30
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
Properties that do not meet this criteria are classified as property, plant and equipment.
Goodwill
Goodwill is allocated to the property management cash-generating unit (CGU). The Group tests the carrying value of
goodwill on an annual basis to assess for any impairment, or more frequently, if events or changes in circumstances
indicate impairment. The recoverable amount of the CGU is 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 15 for further information.
Amortisation of Management Rights
Management rights are amortised over their estimated useful life. If the contractual or other legal rights of the management
rights can be renewed, the useful life of the intangible asset includes the renewal period if there is evidence to support
renewal by the entity without significant cost. Otherwise the management rights are amortised over the life of the contract.
For strata-titled villages (where units are individually owned by third parties) where management rights are attached, the
Group generally 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 considers the expected usage of the assets, the legal rights over
the asset and the renewal period of the management rights agreements. Where there is evidence to support renewal of
the management rights, the amortisation period is 40 years, similar to the life of the property the management rights are
attached to, otherwise the amortisation period is the term of the management rights agreement.
For single-owner villages (where all units in the village are owned by a single third party) where management rights are
attached, the management rights are amortised over the life of the contract. Eureka considers that it has materially less
control over future contract renewals in single-owner villages than it does with the strata-titled villages primarily because
it does not own or have any sort of tenure in respect of the managers unit and a single vote of the owner can result in
Eureka’s management rights contract not being renewed.
The amortisation period and the amortisation method for management rights are reviewed at least at the end of each
reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits
embodied in the asset are considered to modify the amortisation period or method, as appropriate.
Recovery of receivables
At each reporting date the Group assesses the recoverability of trade, loan and other receivables by reference to the
expected future cash flows, the credit worthiness of the borrowers and the value of security provided. For trade receivables,
the Group applies a simplified approach in calculating expected credit losses (ECLs). The Group does not track changes
in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
Non-current amount receivable and associated 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 this asset.
Bartercard
Bartercard assets are initially recorded at cost. At each balance date an assessment is made of the cash equivalent value
(recoverable amount) obtainable on the expenditure of Bartercard. If this value exceeds cost, no adjustment is made,
however if the cash price equivalent is less than cost, an impairment charge is made to this asset.
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 and income tax losses. These assets are only
recognised if the Group considers it probable that future taxable amounts will be available to utilise those temporary
difference assets. Judgement is required in assessing the availability of income tax losses and satisfaction by the relevant
Group entities of legislative requirements at each reporting date, including for certain years satisfaction of the “Same
Business Test” as defined in section.165-210 of the Income Tax Assessment Act 1997.
31
ANNUAL REPORT 2023
31
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
Measurement of deferred tax balances
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. The Group is currently a base
rate entity and subject to a 25% tax rate. Judgement is required in assessing the tax rate that will apply when the temporary
differences reverse. Deferred tax balances have been reported at a 30% tax rate at balance date.
Fair value measurement hierarchy
The consolidated entity is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy,
based on the lowest level of input that is significant to the entire fair value measurement, being:
•
•
•
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at
the measurement date;
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly; and
Level 3: Unobservable inputs for the asset or liability.
Considerable judgement is required to determine what is significant to fair value and therefore which category the asset or
liability is placed in can be subjective.
The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These include
discounted cash flow analysis or the use of significant unobservable inputs as disclosed in Note 24.
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 32. The accounting policies of the parent entity are
consistent with those of the Group, as disclosed above, except for the following where in the parent entity:
•
•
Investments in subsidiaries are accounted for at cost, less any impairment; and
Investments in joint ventures are accounted for at cost, less any impairment.
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.
ANNUAL REPORT 2023
32
32
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
3. REVENUE AND OTHER INCOME
Rental income
Revenue from contracts with customers
Catering – owned properties
Catering – managed properties
Total catering income
Service fees
Caretaking fees
Total service and caretaking fees
Total revenue from contracts with customers
Total revenue
Other income
Insurance proceeds 1
Gain on sale of intangible and investment property assets
Other income
Consolidated
30 June 2023
$’000
30 June 2022
$’000
24,795
20,395
3,570
1,963
5,533
4,141
1,951
6,092
3,230
1,612
4,842
3,439
1,073
4,512
11,625
9,354
36,420
29,749
Consolidated
30 June 2023
$’000
30 June 2022
$’000
28
13
84
125
1,028
20
64
1,112
1 Insurance proceeds in the prior year included $1.02 million for losses sustained in a flood event in Lismore, NSW.
Disaggregation of revenue from contracts with customers
The Group derives revenue from the transfer of goods at a point in time (catering income) and services over time (service
and caretaking fees) in Australia:
Timing of revenue recognition
At a point in time
Over time
Total
Consolidated
30 June 2023
$’000
30 June 2022
$’000
5,533
6,092
11,625
4,842
4,512
9,354
33
ANNUAL REPORT 2023
33
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
4. ITEMS INCLUDED IN PROFIT
Profit before income tax expense includes the following specific items:
Finance costs
Interest and finance charges paid/payable for financial liabilities not at
fair value through profit or loss
Interest and finance charges paid/payable for lease liabilities
Total finance costs
Depreciation
Plant & equipment
Buildings
Motor vehicles
Right of use assets
Total depreciation
Amortisation
Management rights
Rent rolls
Other
Total amortisation
Total depreciation and amortisation
Defined contribution superannuation expense
5. VILLAGE OPERATING EXPENSES
Village operating expenses are comprised of the following:
Staff and village manager costs
Catering expenses
Other village expenses
Consolidated
30 June 2023
$’000
30 June 2022
$’000
3,693
27
3,720
2,058
48
2,106
50
15
7
309
381
460
3
2
465
846
943
46
15
9
302
372
355
4
6
365
737
745
Consolidated
30 June 2023
$’000
30 June 2022
$’000
8,701
2,889
5,851
17,441
8,132
1,819
4,607
14,558
ANNUAL REPORT 2023
34
34
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
6. INCOME TAX
The major components of income tax expense are as follows:
Consolidated Statement of Profit or Loss
Current income tax
Deferred income tax
Income tax expense reported in the Statement of Profit or Loss
Consolidated
30 June 2023
$’000
30 June 2022
$’000
-
10,593
10,593
-
2,310
2,310
A reconciliation of income tax expense and the profit before tax multiplied by
the applicable tax rate is as follows:
Profit before tax
29,751
10,483
Income tax calculated at 25% (2022: 25%)
7,438
2,621
Tax effect of permanent differences
Capital loss not recognised / (recognised)
Deferred tax assets not recognised
Recognition of deferred tax assets not previously recognised
Tax effect of changing deferred tax balances to 30% tax rate at 30 June 2023
Income tax expense reported in the Statement of Profit or Loss
Movement in deferred tax balances charged/(credited):
In profit or loss
Directly in equity – transaction costs
In other comprehensive income
Acquisition of investment property
Total deferred tax recognised
30
32
396
(21)
2,718
10,593
10,593
(514)
161
(4)
10,236
29
(409)
91
(22)
-
2,310
2,310
(24)
-
(12)
2,274
35
ANNUAL REPORT 2023
35
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
Deferred tax balances have been stated at 30% (2022: 25%).
Recognised in the Statement of Financial Position
Deferred tax assets
Tax losses - revenue
Deferred tax liabilities
Net (assessable) and deductible differences on sundry items
Investment properties, property, plant and equipment
Net deferred tax liability
Not recognised in the Statement of Financial Position
Unrecognised deferred tax assets
Tax losses - capital
Non-deductible capital items
Net unrecognised deferred tax assets
Reconciliation of unrecognised tax balances:
Opening balance
Capital tax losses not recognised / (recognised)
Movement attributable to non-deductible capital items
Adjustment to prior period balances
Tax effect of changing deferred tax balances to 30% tax rate at 30 June 2023
Total movement
Closing balance
Consolidated
30 June 2023
$’000
30 June 2022
$’000
8,125
6,498
(1,141)
(22,933)
(15,949)
(578)
(11,633)
(5,713)
269
2,009
2,278
1,491
32
375
-
380
787
2,278
192
1,299
1,491
1,831
(409)
91
(22)
-
(340)
1,491
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets are
not 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 because they relate to capital assets.
The benefits of the Group’s recognised and unrecognised tax losses will only be realised if:
•
the Group continues to meet the requirements of applicable tax laws to allow the losses to be carried forward and
utilised, including for certain years satisfaction of the “Same Business Test” as defined in section 165-210 of the
Income Tax Assessment Act 1997;
•
•
the Group earns taxable income in future periods; and
applicable tax laws are not changed, causing the losses to be unavailable.
ANNUAL REPORT 2023
36
36
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
7. TRADE AND OTHER RECEIVABLES
Trade receivables
Accrued debtors and other receivables
Consolidated
30 June 2023
$’000
30 June 2022
$’000
213
286
499
361
395
756
Trade receivables are non-interest bearing unless otherwise stated and are generally on 30-day terms. Expected credit
loss was considered not material at each reporting date.
8. LOANS RECEIVABLE
Current
Vendor finance
West Cabin loan
Non-current
Vendor finance
Consolidated
30 June 2023
$’000
30 June 2022
$’000
-
-
-
-
-
134
206
340
42
42
The West Cabin Loan is a secured loan to CCH Developments No 1 Pty Ltd (CCH) in its personal capacity and as trustee
of the CCH Developments No 1 Trust. The amount owed of $0.15 million (2022: $0.21 million), is secured by a real property
mortgage over two existing cabins owned by CCH at Couran Cove, Qld and is guaranteed by Onterran Ltd and Mr Lachlan
McIntosh in his personal capacity. Mr McIntosh was a director of Eureka until 31 December 2019, is a director of Onterran
Ltd and is a director of CCH. Recourse against CCH in respect of the loan is limited to the two existing cabins. Interest
accrues on this loan.
The Group received repayments of $0.09 million (2022: $0.12 million) during the year. Despite the validity and enforceability
of the security held by Eureka, the Group recorded an impairment expense of $0.15 million during the year (2022: nil) due
to commercial considerations related to land holdings at Couran Cove.
Eureka has reserved its rights under the loan agreement and the security.
Refer to Note 24 for fair value hierarchy disclosures.
37
ANNUAL REPORT 2023
37
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
9. OTHER ASSETS
Current
Prepayments and deposits
Bartercard 1
Capital replacement funds
Non-current
Bartercard 1
Derivative financial assets 2
Couran Cove loan 3
Consolidated
30 June 2023
$’000
30 June 2022
$’000
802
-
189
991
-
535
-
535
684
396
207
1,287
1,391
-
-
1,391
1
2
3
Bartercard is an alternative currency and operates as a trade exchange. At balance date, the Bartercard carrying
value was $nil (2022: $1.79 million). Eureka spent or sold $0.03 million of Barter dollars and recorded an impairment
expense of $1.76 million during the year (2022: $nil). The Group continues to hold Barter dollars with a face value of
$2.63 million. During the year, the carrying value of the asset was impaired by $1.76 million after a thorough
assessment of the options for Eureka to realise the asset.
The derivative financial assets relate to interest rate swaps entered into during the year. Refer Note 19.
The carrying value of a loan receivable from CCH Developments No 1 Pty Ltd for $3.00 million, including land option,
which gives the Group a first right of refusal to purchase 60 proposed cabin sites for $50,000 per site at Couran Cove,
Qld has been assessed based on a thorough review including independent assessment of the land held as security
for the loan. The assessed fair value of the loan is $nil (2022: $nil). There has been no change to the Group’s security
arrangements, including a mortgage over the land. The loan expiry date was 31 August 2021. Eureka has reserved
its rights in relation to the recovery of this loan. This loan is guaranteed by Onterran Ltd. No interest accrues on this
loan.
Although the loan and land option give Eureka a right of first refusal to purchase the proposed cabin sites for $50,000
per site, to be paid by way of set off against the loan on settlement, the Directors do not consider this to be the most
viable means of realising the asset.
ANNUAL REPORT 2023
38
38
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
10.
INVESTMENT IN SUBSIDIARIES
Comptons Caboolture Pty Ltd
Comptons 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 Bowen Pty Ltd
Eureka Brassall Pty Ltd
Eureka Bundamba Pty Ltd
Eureka Care Communities (Morphetville) Pty Ltd
Eureka Care Communities (Mount Gambier) Pty Ltd
Eureka Care Communities (Salisbury) Pty Ltd
Eureka Care Communities (Wynnum) Pty Ltd
Eureka Care Communities Pty Ltd
Eureka Care Communities Unit Trust
Eureka Cascade Gardens (Albert Gardens) Pty Ltd
Eureka Cascade Gardens (Ayr) Pty Ltd
Eureka Cascade Gardens (Belgian Gardens) Pty Ltd
Eureka Cascade Gardens (Bowen) Pty Ltd
Eureka Cascade Gardens (Broken Hill) Pty Ltd
Eureka Cascade Gardens (Cairns) Pty Ltd
Eureka Cascade Gardens (Couran Cove) Pty Ltd
Eureka Cascade Gardens (Gladstone) Pty Ltd
Eureka Cascade Gardens (Lismore) Pty Ltd
Eureka Cascade Gardens (Margate) Pty Ltd
Eureka Cascade Gardens (Orange) Pty Ltd
Eureka Cascade Gardens (Southport) Pty Ltd
Eureka Cascade Gardens (Terranora) Pty Ltd
Eureka Cascade Gardens (Tivoli) Pty Ltd
Eureka Cascade Gardens (Townsville) Pty Ltd
Eureka Cascade Gardens Pty Ltd
Eureka Eagleby Pty Ltd
Eureka Earlville Pty Ltd
Eureka Group Care Pty Ltd
Eureka Hervey Bay Pty Ltd
Eureka Horsham Pty Ltd
Eureka Kingaroy Pty Ltd
Eureka Liberty Villas Pty Ltd
Eureka Living Pty Ltd
Eureka Property Pty Ltd
Eureka Tamworth Pty Ltd
Eureka Whitsunday Pty Ltd
Fig Investments Pty Ltd
Rockham Two Pty Ltd
SCV Leasing Pty Ltd
SCV Manager Pty Ltd
SCV No. 1 Pty Ltd
The Trustee for Rockham Unit Trust
39
Equity Holding
Country of
Incorporation
Australia
30 June 2023
%
100%
30 June 2022
%
100%
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
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%
100%
-
100%
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
100%
ANNUAL REPORT 2023
39
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
There are no significant restrictions on the Company’s ability to access or use the assets and settle the liabilities of the
Group.
11. JOINT VENTURE INVESTMENT
The Group has a 50% interest in a joint venture (JV) comprising Affordable Living Unit Trust and Affordable Living Services
Unit Trust. The JV owns five rental 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, and a reconciliation with the carrying amount of the
investment in the consolidated financial statements are set out below:
Movements in carrying amount:
Opening balance
Share of profit from JV 1
Cash distribution received
Closing balance
Consolidated
30 June 2023
$’000
30 June 2022
$’000
7,196
4,246
(508)
10,934
6,846
1,500
(1,150)
7,196
1
Share of profit from JV includes the following amounts:
• The Group’s 50% share of a net gain on change in investment property fair value was $3.23 million (2022: $0.52
million); and
• The Group’s 50% share of interest expense $0.23 million (2022: $0.11 million).
Summarised statement of financial position of Affordable Living Unit Trust:
Current assets, including cash and cash equivalents
Non-current assets, comprising investment property
Current liabilities 1
Non-current liabilities 2
Net assets
Group’s share in net assets – 50%
30 June 2023
$’000
30 June 2022
$’000
132
30,950
(489)
(8,725)
21,868
10,934
256
23,876
(460)
(9,280)
14,392
7,196
Group’s carrying amount of the investment
10,934
7,196
1
2
Current liabilities include borrowings of $0.14 million (2022: $0.14 million), repayable within 12 months.
Non-current liabilities include long term borrowings of $8.72 million (2022: $9.28 million). The total facility is $9.78
million. $0.92 million of the loan facility is undrawn at balance date and is able to be used for working capital purposes.
ANNUAL REPORT 2023
40
40
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
Summarised statement of profit or loss of Affordable Living Unit Trust:
Revenue
Cost of sales
Net gain on change in fair value of investment property
Finance costs
Profit before tax
Income tax expense1
Profit for the year
Total comprehensive income for the year
Group’s share of profit for the year
30 June 2023
30 June 2022
$’000
5,066
(2,581)
6,465
(459)
8,491
-
8,491
8,491
4,246
$’000
4,698
(2,520)
1,040
(218)
3,000
-
3,000
3,000
1,500
1 Eureka and its JV partner are presently entitled to the net income of the trust for tax purposes. As a result, there is no
tax payable or tax expense in the JV.
Summarised statement of financial position of Affordable Living Services Unit Trust:
This entity has been dormant since May 2020.
The joint venture had no contingent liabilities or commitments at balance date (2022: $nil).
12.
INVESTMENT PROPERTY
Consolidated
30 June 2023
$’000
30 June 2022
$’000
Investment properties at fair value
213,072
159,660
Movements in investment properties:
Balance at beginning of year
Acquisitions1
Disposals
Development costs 2
Capital expenditure
Transfer to non-current assets held for sale
Transfer from intangibles – management rights
Transfer from property, plant and equipment
Net gain on change in fair value
Balance at end of year
159,660
23,400
(81)
4,171
3,569
-
167
135
22,051
213,072
139,037
15,377
(684)
3,347
2,878
(2,886)
300
-
2,291
159,660
Acquisitions during the year include villages in Horsham, Vic, Tamworth, NSW and Eagleby, Qld along with units
across various strata-titled villages. Prior year acquisitions include a village in Brassall, Qld, vacant land at Kingaroy,
Qld, a village in Bowen, Qld and manager’s units associated with the Oxford Crest, Qld acquisition.
The Group spent $4.17 million (2022: $3.30 million) on village developments including $3.65 million (2022: $0.21
million) for the 51-unit Brassall, Qld expansion and $0.43 million (2022: $0.41 million) planning for the proposed 110-
unit Kingaroy greenfield development. A further $3.57 million (2022: $2.88 million) was spent on enhancing its owned
villages through capital improvements including expenditure on community room upgrades and unit refurbishments.
ANNUAL REPORT 2023
41
1
2
41
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
The Group’s investment properties are shown individually in this note and consist of 28 rental village assets (2022: 25)
along with associated manager’s units, other rental units, the Kingaroy development and the Lismore property. The Group
considers investment properties reside in one class of asset, being seniors’ rental villages.
The Group’s external valuation program continued during the year, with 24 properties being independently valued at
30 June 2023. The Group reviewed the fair value of all investment properties held and recorded a net increase in fair value
for the year of $22.05 million (2022: $2.29 million). In 2022, the net increase included a loss on the change in fair value of
the Lismore property of $7.15 million, which offset a net gain on the change in fair value of the remaining investment
properties of $9.44 million.
The net gain on change in fair value adjustment related to all assets in the asset class and was based on inputs and
assumptions disclosed in Note 24. The net change in fair value is recognised in profit or loss in the reporting period in
which the assessment is made.
Refer to Note 24 for fair value hierarchy disclosures relating to investment properties.
Amounts recognised in profit or loss for investment properties:
Rental income
Catering income
Direct operating expenses generating rental and catering income
Net gain on change in fair value of investment properties
Consolidated
30 June 2023
$’000
30 June 2022
$’000
24,795
3,570
(14,224)
22,051
20,395
3,230
(12,749)
2,291
The Group has no restrictions on the realisability of its investment properties. There are no other contractual obligations to
either purchase, construct or develop investment properties or for repairs, maintenance, and enhancements apart from
those referred to in Note 25. Certain assets are pledged as security for borrowings as detailed in Note 19.
A summary of the investment properties by state is as follows:
State
Queensland
New South Wales
Victoria
South Australia
Carrying
amount
30 Jun 2023
$’000
Carrying
amount
30 Jun 2022
$’000
138,533
25,543
17,597
31,399
213,072
104,564
16,160
10,900
28,036
159,660
ANNUAL REPORT 2023
42
42
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
Details of investment properties are as follows:
Property
Albury Village, NSW
Ayr Village, Qld
Bowen Village, Qld
Brassall Village, Qld
Broken Hill Village, NSW
Bundaberg Avenell Village, Qld
Bundaberg Liberty Village, Qld
Bundamba Village, Qld (20 Lots)
Cairns Earlville Village, Qld
Cairns Smithfield Village, Qld
Eagleby Village, Qld (58 Lots)
Elizabeth Vale Scenic Village 1, SA
Elizabeth Vale Scenic Village 2, SA
Gladstone Village, Qld (14 Lots)
Gympie Village, Qld
Hervey Bay Village, Qld
Horsham Village, Vic
Kingaroy development, Qld
Lismore Village, NSW
Mackay Village, Qld
Margate Village, Qld
Mildura Village, Vic
Mt Gambier Village, SA
Orange Village, NSW
Rockhampton Village 1, Qld
Rockhampton Village 2, Qld
Salisbury Village, SA
Shepparton Village, Vic
Southport Village, Qld
Tamworth Village, NSW
Whyalla Village, SA
Wynnum Village, Qld
Managers’ units in managed villages
13. PROPERTY, PLANT & EQUIPMENT
Buildings at cost
Accumulated depreciation
Plant & equipment at cost
Accumulated depreciation
Motor vehicles at cost
Accumulated depreciation
Total property, plant & equipment
43
Carrying amount
30 Jun 2023
$’000
Carrying amount
30 Jun 2022
$’000
6,500
2,300
5,526
11,479
4,059
6,200
22,050
1,714
10,000
5,900
6,882
7,900
5,500
1,427
5,050
6,000
5,447
1,433
-
12,300
8,300
5,350
5,900
7,200
6,550
6,300
6,012
6,800
5,359
7,175
5,196
11,950
3,313
5,700
1,870
5,440
7,617
4,000
5,560
16,250
221
9,001
5,400
-
6,800
4,841
-
4,563
5,780
-
1,196
-
10,899
5,036
4,900
4,840
5,859
4,088
5,820
5,900
6,000
4,299
-
4,769
10,090
2,921
213,072
159,660
Consolidated
30 June 2023
$’000
30 June 2022
$’000
398
(183)
215
316
(186)
130
36
(33)
3
348
619
(264)
355
325
(167)
158
36
(26)
10
523
ANNUAL REPORT 2023
43
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
Reconciliation of movements in property, plant & equipment:
Opening balance at 1 July 2021
Additions at cost
Disposals
Transfers to investment property
Depreciation expense
Closing balance at 30 June 2022
Opening balance at 1 July 2022
Additions at cost
Disposals
Transfers to investment property
Depreciation expense
Closing balance at 30 June 2023
14. RIGHT OF USE ASSETS
Leased property
Opening balance
Additions
Modification on leases
Depreciation expense
Closing balance
Leased equipment
Opening balance
Additions
Depreciation expense
Closing balance
Buildings
$’000
Plant &
equipment
$’000
Motor
vehicles
$’000
Total
$’000
370
-
-
-
(15)
355
355
-
-
(125)
(15)
215
92
118
(6)
-
(46)
158
158
34
(2)
(10)
(50)
130
42
-
(23)
-
(9)
10
10
-
-
-
(7)
3
504
118
(29)
-
(70)
523
523
34
(2)
(135)
(72)
348
Consolidated
30 June 2023
$’000
30 June 2022
$’000
1,263
-
(199)
(306)
758
2
9
(3)
8
482
1,176
(96)
(299)
1,263
5
-
(3)
2
Total right of use assets
766
1,265
Income received from sub-leasing right of use assets was $0.02 million for the year (2022: $0.03 million).
ANNUAL REPORT 2023
44
44
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
15. INTANGIBLE ASSETS
Management rights – at cost
Accumulated amortisation and impairment
Net
Rent rolls – at cost
Accumulated amortisation
Net
Other intangibles – at cost
Accumulated amortisation
Net
Goodwill
Total intangible assets
Consolidated
30 June 2023
$’000
30 June 2022
$’000
8,820
(2,413)
6,407
8,548
(2,119)
6,429
140
(59)
81
33
(24)
9
140
(56)
84
25
(22)
3
1,955
1,955
8,452
8,471
The Group’s business activities include the ownership and management (through management letting rights agreements)
of seniors’ rental accommodation throughout Australia. The intangible assets were separately classified in accordance with
accounting standards following asset acquisitions.
Additions during the year relate to the acquisition of management and letting rights in Eagleby, Qld.
Impairment tests for goodwill
Goodwill is monitored by the Board of Directors (who are identified as the chief operating decision makers) based upon
the net profit of the villages managed by Eureka, after allowing for overhead costs attributable to respective village
management. Goodwill has been allocated to the property management CGU.
The Group tests goodwill for impairment on at least an annual basis. The recoverable amount of a CGU is determined
based on value-in-use calculations which require the use of assumptions.
The calculations use cash flow projections covering a five-year period comprising a one-year budget period and four-year
forecast 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 CGU is most sensitive. The following key
assumptions were used in the discounted cash flow model:
•
•
•
•
•
cash flows are forecasted by management taking into account historical results and current expectations of future
performance including renewal of management agreements;
cash flows were projected over a five-year period by applying a 2% growth rate (2022: 2%);
the terminal value was calculated using a growth rate of 2% (2022: 2%);
cash flows have been discounted using a pre-tax discount rate of 15% (2022: 15%); and
cash flows assume no additional villages will be managed.
There were no reasonably possible changes in assumptions used to determine the CGU’s recoverable amount that would
cause an impairment.
45
ANNUAL REPORT 2023
45
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
Reconciliation of movements in intangible assets:
Management
rights
$’000
Rent rolls
$’000
Goodwill
$’000
Other
intangibles
$’000
Total
$’000
Opening balance at 1 July 2021
Additions at cost
Transfer to investment property
Amortisation expense
Closing balance at 30 June 2022
Opening balance at 1 July 2022
Additions at cost
Disposals (cost)
Disposals (accumulated amortisation)
Transfer to investment property
Amortisation expense
Closing balance at 30 June 2023
1,775
5,309
(300)
(355)
6,429
6,429
908
(383)
80
(167)
(460)
6,407
88
1,955
-
-
(4)
84
-
-
-
1,955
84
1,955
-
-
-
-
(3)
81
-
-
-
-
-
1,955
9
-
-
(6)
3
3
8
-
-
-
(2)
9
3,827
5,309
(300)
(365)
8,471
8,471
916
(383)
80
(167)
(465)
8,452
The remaining amortisation period for the management rights, on a weighted average basis, is 36 years (2022: 35 years).
16. TRADE & OTHER PAYABLES
Current
Trade creditors and accruals
Unearned income
Accrued interest
Capital replacement fund liability
Non-current
Capital replacement fund liability
Consolidated
30 June 2023
$’000
30 June 2022
$’000
4,389
666
854
27
5,936
161
161
2,539
418
234
40
3,231
161
161
The carrying amounts of trade and other payables are considered to be the same as their fair value, due to their
short-term nature.
17. PROVISIONS
Current
Employee benefits
Non-current
Employee benefits
Other
Consolidated
30 June 2023
$’000
30 June 2022
$’000
946
946
21
10
31
671
671
31
10
41
ANNUAL REPORT 2023
46
46
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
18. OTHER FINANCIAL LIABILITIES
Current
Lease liability
Deferred consideration 1
Non-current
Lease liability
Consolidated
30 June 2023
$’000
30 June 2022
$’000
248
-
248
606
606
364
2,483
2,847
1,053
1,053
1 Vendor finance arrangement relating to the acquisition of the Hervey Bay village. The deferred consideration of
$2.50 million was paid during the year.
19. BORROWINGS
Non-current
Bank loan – secured
Borrowing costs
Consolidated
30 June 2023
$’000
30 June 2022
$’000
69,724
(145)
69,579
70,075
(57)
70,018
At balance date, the Group has access to National Australia Bank (“NAB”) facilities with the following terms:
Facility limit
Bank guarantee facility – deferred consideration
Drawn debt
Facility expiry
Hedged amount
Weighted average interest rate (including margin)
Weighted average term to hedge expiry
Consolidated
30 June 2023
30 June 2022
83,000
-
69,724
77,500
2,500
70,075
31 March 2026
31 March 2024
50,000
5.96
2.15
-
3.76
-
$’000
$’000
$’000
$’000
%
years
The facility limit increased by $5.50 million during the year to fund the village acquisition in Eagleby, Qld and payment of
the deferred consideration for the Hervey Bay village, upon return of the associated bank guarantee.
The NAB facilities are secured by a first priority general security over all present and future acquired property and specified
management letting rights. At balance date, property assets and management letting rights, with a carrying value of
$218.94 million (2022: $164.94 million), have been pledged by the Group.
The loan facilities are subject to covenants which are commensurate with normal secured lending terms. The Group
complied with its covenants throughout the current and prior years.
Interest is payable on the total drawn amount, inclusive of facility fees. A facility fee also applies to any undrawn amount.
No principal payments are required until expiry and interest is paid quarterly.
The Group had unused borrowing facilities of $13.28 million (2022: $7.42 million) at balance date.
Under the terms of the loan facility, Eureka is able to deposit and withdraw funds in accordance with its working capital
needs, subject to satisfaction of the bank’s covenants. The bank loan facility has sufficient undrawn funds to enable
payments to be made as and when they fall due.
ANNUAL REPORT 2023
47
47
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
Cash flow hedges
During the year, the Group entered into three fixed interest rate swaps, swapping the liability to pay interest based on
variable BBSY for fixed interest rates. The effects of the interest rate swaps on the Group’s financial position and
performance are as follows:
At balance date
Swap amount
Effective date
Maturity date
Interest rate including margin
Carrying amount – derivative financial
assets (Refer Note 9)
Change in fair value of hedges recognised
in other comprehensive income
%
$’000
$’000
Interest rate
swap #1
Interest rate
swap #2
Interest rate
swap #3
$’000
20,000
20,000
10,000
30 Dec 2022
30 Dec 2022
30 Mar 2023
30 Dec 2024
30 Dec 2025
30 Mar 2026
5.86
193
193
5.85
234
234
5.89
108
108
At balance date, 72% of the Group’s drawn debt is hedged (2022: nil). The interest on the swaps is settled quarterly on
dates coinciding with the dates on which interest is payable on the underlying debt.
20. SHARE CAPITAL AND RESERVES
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.
Opening balance
Shares issued under the Dividend
Reinvestment Plan
Shares issued under long-term
incentive scheme
Shares issued under entitlement offer
Transaction costs (net of tax)
Closing balance
Consolidated
30 June 2023
Number
237,186,521
3,372,347
429,362
60,075,228
-
301,063,458
30 June 2023
$’000
98,422
1,796
120
28,236
(1,196)
127,378
30 June 2022
Number
232,384,417
4,802,104
-
-
-
237,186,521
30 June 2022
$’000
95,652
2,844
-
-
(74)
98,422
Pursuant to the Company’s Dividend Reinvestment Plan:
•
•
•
•
On 28 September 2021, 2,284,531 shares were issued at $0.5988 for the 2021 financial year final dividend.
On 23 March 2022, 2,517,573 shares were issued at $0.5862 for the 2022 financial year interim dividend.
On 06 October 2022, 2,685,348 shares were issued at $0.5557 for the 2022 financial year final dividend.
On 06 April 2023, 686,999 shares were issued at $0.4424 for the 2023 financial year interim dividend.
Pursuant to the Company’s Omnibus Equity Plan:
•
On 30 September 2022, 429,362 shares were issued at $nil consideration upon vesting and exercise of employee
share rights. $0.12 million was transferred from the share-based payments reserve to share capital.
Pursuant to the Company’s Entitlement Offer:
•
•
On 03 November 2022, 50,153,787 institutional shares were issued at $0.47.
On 28 November 2022, 9,921,441 retail shares were issued at $0.47.
ANNUAL REPORT 2023
48
48
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
Share based payment reserve
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 27 for further details of
these plans.
Reserves
Share based payment reserve
Opening balance
Share based payments expense
Transferred to share capital
Closing balance
Cash flow hedge reserve
Opening balance
Gain on change in fair value of hedge
Income tax expense
Closing balance
Total Reserves
21.
DIVIDENDS
Dividends on ordinary shares declared and paid:
Final dividend - 2022: 0.63 cents per share (2021: 0.59 cents per share)
Interim dividend - 2023: 0.67 cents per share (2022: 0.63 cents per share)
Consolidated
30 June 2023
$’000
30 June 2022
$’000
115
65
(120)
60
-
535
(161)
374
56
59
-
115
-
-
-
-
434
115
30 June 2023
$’000
30 June 2022
$’000
1,496
2,014
3,510
1,371
1,478
2,849
The Dividend Reinvestment Plan (DRP) was active for the above dividends and fully underwritten for the final dividends
for 2021 and 2022 and the interim dividend for 2022. Details of shares issued under the DRP are shown in Note 20.
Proceeds received from the underwriter were $0.89 million (2022: $2.24 million).
Since balance date, the Board has declared a final dividend of 0.67 cents per share, amounting to $2.02 million payable
on 12 October 2023. The financial effect of this dividend has not been brought to account in the financial statements for
the year ended 30 June 2023 and will be recognised in subsequent financial reports.
49
ANNUAL REPORT 2023
49
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
22. CASH FLOW INFORMATION
(a) Reconciliation of cash
Cash at bank and on hand
Consolidated
30 June 2023
$’000
30 June 2022
$’000
1,815
1,837
(b) Reconciliation of profit before tax to net cash flow from operating activities
Profit after income tax expense
Depreciation and amortisation
Bad and doubtful debts expense
Impairment of financial assets
Impairment of other assets
Distribution received from joint venture
Share of profit of joint venture
Net gain on change in fair value of investment properties
Net gain on change in fair value of other assets
(Gain)/loss on sale of investment property
(Gain)/loss on sale of management rights
Loss on sale of non-current assets held for sale
Loss on disposal of plant & equipment
Share based payments expense
Lease modification
Non-cash transactions
(Increase)/decrease in:
- Trade and other receivables
- Other current assets
Increase/(decrease) in:
- Trade and other payables
- Provisions
- Deferred tax liability
Net cash provided by operating activities
(c) Non-cash investing and financing activities
Consolidated
30 June 2023
30 June 2022
$’000
$’000
19,158
846
(2)
146
1,756
508
(4,246)
(22,051)
-
128
(21)
10
-
65
(69)
168
504
(119)
1,067
265
10,593
8,706
8,173
737
14
-
-
1,150
(1,500)
(2,291)
(20)
(124)
-
78
29
59
(52)
-
(329)
(66)
31
84
2,310
8,283
During the year, the Group acquired goods and services of $0.03 million with Bartercard dollars (2022: $0.01 million).
Shares valued at $0.91 million were issued pursuant to the Dividend Reinvestment Plan in lieu of the payment of dividends
(2022: $0.60 million).
ANNUAL REPORT 2023
50
50
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
23. FINANCIAL INSTRUMENTS
Overall policy
The Board has overall responsibility for the establishment and oversight of the Group’s risk management framework. The
Board is responsible for developing and monitoring the Group’s risk management policy 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 the Group’s activities. The Group aims to
develop a disciplined and constructive control environment in which all employees understand their roles and obligations.
CAPITAL MANAGEMENT
When managing capital, the objective is to ensure the Group has sufficient funds available for working capital and to meet
its commitments, 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 to ensure
that there is sufficient cash flow for working capital, settling obligations when due and ensuring funding is available for
growth opportunities.
(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 cash and cash equivalents, receivables from residents and
amounts due from the seniors’ independent living communities in accordance with management agreements in place,
other assets and loans receivable.
Maximum exposure to credit risk
Cash and cash equivalents
Trade and other receivables
Loans receivable
Bartercard
Consolidated
30 June 2023
$’000
30 June 2022
$’000
1,815
499
-
-
2,314
1,837
756
382
1,787
4,762
Cash and cash equivalents
Deposits of cash are only held with approved banks and financial institutions. The Group 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 counterparty or resident.
The Group has a diverse range of counterparties and residents and therefore there is no significant concentration of credit
risk with any single counterparty or group of counterparties. Exposure to credit risk is limited as the majority of residents
are supported by the government pension.
The Group has a credit policy under which each new counterparty or resident is analysed individually for creditworthiness
before the Group enters into a services agreement with them. The Group monitors 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 is 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. The 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 amounts past due as management believes these amounts will be received.
51
ANNUAL REPORT 2023
51
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
The ageing of trade receivables and other receivables at the reporting date was:
Trade and other receivables - gross amount receivable
Due 0-30 days
Past due 30-60 days
Past due 60-90 days
Past due 90 + days
Consolidated
30 June 2023
$’000
30 June 2022
$’000
482
13
2
2
499
596
61
33
66
756
Bartercard
Bartercard is an alternative currency and operates as a trade exchange. Bartercard is recorded at cost less any
accumulated impairment. The asset was impaired by $1.76 million during the year (2022: $nil) and the carrying value at
year end is $nil (2022: $1.79 million).
(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 has 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 especially in relation to financing of proposed acquisitions.
At balance date, the Group had a current asset deficiency of $3.82 million (2022: deficiency of $2.53 million). The Group
actively manages its cash and drawn debt to minimise interest costs. The bank loan facility has sufficient undrawn funds
for working capital needs. Under the terms of the loan facility, Eureka is able to deposit and withdraw funds in accordance
with its working capital needs, subject to satisfaction of the bank’s covenants. Refer further to Note 19.
The Group had unused borrowing facilities of $13.28 million (2022: $7.43 million) at the reporting date.
The tables below show the Group’s financial liabilities classified into relevant maturity groupings based on their contractual
maturities.
30 June 2023
Trade and other payables
Loans - secured 1
Other financial liabilities
Total
30 June 2022
Trade and other payables
Loans - secured 1
Other financial liabilities
Deferred payment liability
Total
Contractual
cash flows
$’000
Less than 6
months
$’000
Consolidated
6 - 12
months
$’000
1 – 2 years
$’000
More than 2
years
$’000
4,486
84,221
984
89,691
4,486
2,086
172
6,744
-
2,122
177
2,299
-
4,266
191
4,457
-
75,747
444
76,191
Contractual
cash flows
$’000
Less than 6
months
$’000
Consolidated
6 - 12
months
$’000
1 – 2 years
$’000
More than 2
years
$’000
3,158
75,032
1,606
2,500
82,296
3,158
1,068
181
2,500
6,907
-
1,348
183
-
-
72,616
278
-
1,531
72,894
-
-
964
-
964
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.
ANNUAL REPORT 2023
52
52
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
(d) Interest rate risk
The Group manages its interest rate risk by regularly monitoring interest rates. Eureka’s policy is to maintain a portion of
borrowings at fixed rates. To manage this, from time-to-time Eureka enters into interest rate swaps, in which it agrees to
exchange, at specified intervals, the difference between floating and fixed rate interest amounts calculated by reference to
an agreed-upon notional principal amount. At balance date, 72% of Eureka’s borrowings are at a fixed rate of interest
(2022: nil).
The Group regularly reviews its interest rate exposure, taking into account potential renewals of existing finance facilities,
alternative financing, hedging and the mix of fixed and variable interest rates.
24. FAIR VALUE MEASUREMENTS
Fair value hierarchy
Investment properties and other assets (Couran Cove loan including land option) are measured at fair value, using a three
level hierarchy, based upon 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
The Group has a number of financial assets and financial liabilities which are required to be 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.
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
Consolidated – 2023
Assets
Investment property
Derivative financial asset
Other assets – loan including land option
Total assets
Consolidated – 2022
Assets
Investment property
Other assets – loan including land option
Total assets
-
-
-
-
-
-
-
-
535
-
535
-
-
-
213,072
-
-
213,072
213,072
535
-
213,607
159,660
-
159,660
159,660
-
159,660
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 investment 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 may be valued using two 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 future maintainable earnings of each village into perpetuity and
applying a capitalisation rate. The capitalisation rate is based on current market evidence. Future earnings projections take
into account occupancy rates, rental income and operating expenses.
ANNUAL REPORT 2023
53
53
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
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.
Valuation processes
Independent valuations were obtained for the majority of investment property assets during the year in accordance with
the Group’s accounting policy and were used as the basis for determining their related fair values. Valuer selection criteria
include market knowledge, experience and qualifications, reputation, independence and whether professional standards
are maintained.
Where an independent valuation was not performed on an investment property at balance date, management has
estimated the fair values by performing internal valuations using the capitalisation method taking into account the most
recent external valuation undertaken by an independent valuer. The direct comparison method is used for assessing the
fair value of individual units acquired.
The fair value of nil ascribed to Eureka’s $3.00 million loan receivable (including land option at Couran Cove) was
determined in a prior period having regard to an independent external valuation of the secured land, commercial
considerations related to land holdings and development at Couran Cove and legal advice as to the avenues available to
the Group to realise the asset. Refer Note 9 for further details.
The level 3 assets significant unobservable inputs and sensitivity are as follows:
Description
Valuation
technique
Significant
unobservable
inputs
Range
(weighted average)
Relationship of
unobservable input to fair
value
Investment
properties –
rental villages
Capitalisation
method 1
Capitalisation
rate
Stabilised
occupancy
2023
6.5% -
11.0%
(8.32%) 2,4
95%-99%
(97.8%) 3,4
2022
7.00%-
10.50%
(9.43%) 2,4
94%-99%
(97.9%) 3,4
Investment
properties –
individual
village units
Other assets –
loan including
land option
Direct
comparison
approach
Comparable
sales evidence
N/A
N/A
External valuation Comparable
N/A
N/A
sales evidence
Costs to realise
the loan
N/A
N/A
Capitalisation rate 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 external valuation of the
secured land has a direct
correlation to the loan’s
value.
Costs of realisation have an
indirect correlation to the
loan’s value (i.e. the lower
they are, the greater the
value).
1
2
3
4
Significant changes in any of the significant unobservable valuation inputs under the capitalisation method would result in a
significantly lower or higher fair value measurement.
Excludes one apartment-style complex with a capitalisation rate of 6.25% (2022: 6.5%) and a village in which National Disability
Insurance Scheme services revenue is earned with a capitalisation rate of 7.5% (2022: 7.5%).
Excludes one short stay village with a stabilised occupancy rate of 70% (2022: 65%).
The range excludes the Lismore property which is non-operational following a significant flood event during the prior year.
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 Notes 9 and 12.
ANNUAL REPORT 2023
54
54
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
25. COMMITMENTS AND CONTINGENCIES
At balance date, the Group had the following commitments and contingencies:
•
The Group has a fully cancellable contract with the appointed builder for its Brassall, Qld development of 51
premium freestanding 2-bedroom residences. The total contract value is $8.82 million (GST exclusive) and is
subject to rise and fall. At balance date, the contractual amount has not been recognised as a liability, and $2.91
million has been spent.
The Group had no other material commitments at balance date.
There are no contingent liabilities.
26. EARNINGS PER SHARE
Basic earnings per share is determined by dividing profit attributable to the ordinary shareholders by the weighted average
number of ordinary shares on issue during the year.
Diluted earnings per share is determined by dividing profit attributable to the ordinary shareholders by the weighted average
number of ordinary shares and dilutive potential ordinary shares on issue during the year.
Profit after income tax expense
Weighted average number of ordinary shares used in calculating basic
earnings per share
30 June 2023
$’000
30 June 2022
$’000
19,158
#’000
275,029
8,173
#’000
234,738
Effects of dilution from share rights 1
461
485
Weighted average number of ordinary shares & potential ordinary shares
used in calculating diluted earnings per share
275,490
235,223
Basic earnings per share
Diluted earnings per share
6.97 cents
6.95 cents
3.48 cents
3.47 cents
1
The share rights (refer to Note 27) are unquoted securities. Conversion to ordinary shares and vesting to executives
is subject to performance and service conditions.
There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date
and the date of authorisation of these financial statements.
55
ANNUAL REPORT 2023
55
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
27. SHARE BASED PAYMENTS
Share rights
The Company has a long-term incentive plan pursuant to which share rights may be granted to key management personnel.
During the current year no share rights were issued. In the prior year, 353,783 share rights were issued with an exercise
price of $nil. These share rights vest on 30 September 2024, subject to the satisfaction of performance and service
conditions.
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. There are no cash settlement alternatives. The Group
accounts for the share rights as an equity settled plan.
The fair value of the share rights is estimated at the grant date using either a Black Scholes or Monte Carlo valuation
methodology, taking into account the terms and conditions on which the share rights were granted.
Share Options
No share options were issued during the year or were outstanding at balance date.
Share based payment expense
The expense recognised during the year is shown in the following table:
Total expense arising from share based payment transactions
Movements during the year
30 June 2023
$’000
30 June 2022
$’000
65
59
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share
rights during the year:
Share rights
30 June 2023
Number
2023 WAEP
$
30 June 2022
Number
2022 WAEP
$
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Forfeited during the year
Outstanding at the end of the year
783,145
-
(429,362)
-
353,783
-
-
-
-
-
429,362
353,783
-
-
783,145
-
-
-
-
-
The following table list the inputs to the model used to value the share rights issued to key management personnel using
the Monte Carlo method:
Grant date
Vesting date
Expiry date
Share price at grant date ($)
Exercise price ($)
Fair value of right ($)
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of share rights (years)
30 June 2022
Share rights
4 May 22
30 September 2024
30 September 2026
0.665
0.000
0.357
1.8
30.00
2.89
4.41
The expected volatility reflects the assumption that the historical volatility over the last 12 months will be an indication of
the expected future volatility of the Company’s share price, which may not necessarily be the actual outcome.
ANNUAL REPORT 2023
56
56
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
28. RELATED PARTY TRANSACTIONS
(a) Key management personnel compensation
Short term employee benefits
Post-employment benefits
Other employee benefits
Total
Consolidated
30 June 2023
30 June 2022
$’000
$’000
1,352
103
65
1,520
1,167
94
59
1,320
Detailed disclosures relating to key management personnel are set out in the remuneration report within the Directors'
Report.
(b) Other transactions with related parties
(i) Sales and purchases
The following table shows the income earned, expenses incurred and balances arising from related party transactions
during the year:
Joint venture
Management fees
Sales to related parties
Amounts owed by related
parties
30 June 2023
$’000
30 June 2022
$’000
30 June 2023
$’000
30 June 2022
$’000
329
304
50
50
Amounts owed by related parties are classified as trade receivables.
All transactions were made on commercial terms and conditions and at market rates. Outstanding balances are unsecured
and are repayable in cash.
There were no transactions with parties related to a director during the year or the prior year.
29. ULTIMATE PARENT ENTITY
The parent entity within the group is Eureka Group Holdings Limited, which is the ultimate parent entity within Australia.
57
ANNUAL REPORT 2023
57
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
30. OPERATING SEGMENTS
Identification of reportable operating segments and principal services
The Group is organised into two operating segments located in Australia:
•
Rental villages – ownership of seniors’ rental villages; and
•
Property management - management of seniors’ independent living communities.
The operating segments have been identified based upon reports reviewed by the Board of Directors, who are identified
as the chief operating decision makers and 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 segment’s 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 per Note 2 and Australian
Accounting Standards.
Balances have been allocated to segments as follows:
•
•
•
Rental villages includes the investment in the joint venture;
Property management includes management rights; and
Unallocated includes support office costs, corporate overheads, cash, Bartercard, support office right of use assets
and Couran Cove assets. Segment liabilities include a deferred tax asset which is netted off against deferred tax
liabilities in the Group balance sheet.
Cash flows are not measured or reported by segment.
ANNUAL REPORT 2023
58
58
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
Rental
Villages
$’000
Property
Management
$’000
30,828
5,592
-
56
-
69
30,884
5,661
Consolidated - 30 June 2023
Revenue
Finance income
Other income
Total revenue and other income
Village operating expenses
Employee expenses
Finance costs
Marketing expenses
Depreciation & amortisation
Other expenses
Total operating expenses
Net gain on change in fair value of:
Investment property
Other assets
Impairment of:
Financial assets
Other assets
Share of profit of a joint venture
Profit/(loss) before income tax expense
Income tax (expense)/benefit
Profit/(loss) after income tax expense
Segment assets
Segment liabilities
(14,224)
-
(3,551)
-
(16)
-
(17,791)
22,051
-
-
-
4,246
26,297
39,390
(13,976)
25,414
224,703
72,271
Non-cash and other significant items included in profit:
Amortisation of borrowing costs
(53)
There were no other significant non-cash items.
Segment acquisitions:
Acquisition and subsequent expenditure of
investment property
Acquisition of property, plant, and equipment
Acquisition of intangible assets
31,141
-
-
Unallocated
$’000
Total
$’000
-
19
-
19
-
(5,617)
(25)
(386)
(290)
(3,131)
(9,449)
-
-
(146)
(1,756)
-
(1,902)
(11,332)
3,906
(7,425)
3,749
17,759
36,420
19
125
36,564
(17,441)
(5,617)
(3,720)
(386)
(846)
(3,198)
(31,208)
22,051
-
(146)
(1,756)
4,246
24,395
29,751
(10,593)
19,158
237,412
93,456
-
(53)
-
34
-
31,141
34
916
(3,217)
-
(144)
-
(540)
(67)
(3,969)
-
-
-
-
-
-
1,692
(523)
1,169
8,960
3,426
-
-
-
916
59
ANNUAL REPORT 2023
59
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
Rental Villages
$’000
Property
Management
$’000
Unallocated
$’000
Total
$’000
Consolidated - 30 June 2022
Revenue
Finance income
Other income
Total revenue and other income
Village operating expenses
Employee expenses
Finance costs
Marketing expenses
Depreciation & amortisation
Other expenses
Total operating expenses
Net gain/(loss) on change in fair value of:
Investment property
Other assets
Share of profit of a joint venture
Total other items
Profit/(loss) before income tax expense
Income tax (expense)/benefit
Profit/(loss) after income tax expense
Segment assets
Segment liabilities
Non-cash and other significant items included in profit:
Amortisation of borrowing costs
(96)
There were no other significant non-cash items.
Segment acquisitions:
Acquisition and subsequent expenditure of
investment property
Acquisition of property, plant and equipment
Acquisition of intangible assets
21,602
-
-
26,003
-
1,112
27,115
(12,172)
-
(2,038)
-
(23)
(554)
3,746
-
-
3,746
(2,134)
-
(45)
-
(451)
(5)
(14,787)
(2,635)
2,291
20
1,500
3,811
16,139
(3,552)
12,587
168,187
72,592
-
-
-
-
1,111
(249)
862
9,382
3,450
-
-
-
5,309
-
21
-
21
-
(4,092)
(23)
(85)
(264)
(2,324)
(6,788)
-
-
-
-
(6,767)
1,491
(5,276)
5,199
7,693
29,749
21
1,112
30,882
(14,306)
(4,092)
(2,106)
(85)
(738)
(2,883)
(24,210)
2,291
20
1,500
3,811
10,483
(2,310)
8,173
182,768
83,735
-
(96)
-
118
-
21,602
118
5,309
ANNUAL REPORT 2023
60
60
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
31. REMUNERATION OF AUDITORS
Consolidated
30 June 2023
30 June 2022
$
$
During the year the following fees were paid or payable for services provided
by the auditor of the Company and its related practices:
Fees to Ernst & Young (Australia)
Fees for auditing the statutory financial report of the parent covering the Group
and auditing the statutory financial reports of any controlled entities
217,132
190,700
32. PARENT ENTITY DISCLOSURES
30 June 2023
30 June 2022
$’000
$’000
Information relating to Eureka Group Holdings Limited (parent entity):
Results of the parent entity
Profit for the year
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
3,512
374
3,886
1,784
148,295
150,079
1,839
61,547
63,386
127,378
434
(41,119)
86,693
6,274
-
6,274
1,731
121,014
122,745
994
64,336
65,330
98,422
115
(41,122)
57,415
Guarantees entered into by the parent entity
From time to time, the parent entities provides financial guarantees in relation to the debts of its subsidiaries, in the ordinary
course of business.
Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities at balance date. Refer to Note 25 for further details.
Contractual commitments for capital items
The Parent has a fully cancellable contract with the appointed builder for its Brassall, Qld development of 51 premium
freestanding 2-bedroom residences. The total contract value is $8.82 million (GST exclusive) and is subject to rise and fall.
At balance date, the contractual amount has not been recognised as a liability, and $2.91 million has been spent.
61
ANNUAL REPORT 2023
61
Eureka Group 2023 Annual ReportNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2023
33. SUBSEQUENT EVENTS
Subsequent to year end, the following significant transactions have occurred:
• Dividend – the Company declared a final dividend in respect of the year of 0.67 cents per share, payable on 12 October
2023 amounting to $2.02 million. The record date is 22 September 2023. The Group’s dividend reinvestment plan is
effective for this dividend.
• Chief executive officer (CEO) resignation – effective 17 July 2023 Mr Cameron Taylor resigned as the Company's
CEO following a period of personal leave due to a non-work-related accident. Executive Chairman, Mr Murray Boyte,
will continue to act in the CEO role while a search is undertaken for a replacement.
•
226,830 share rights lapsed following Mr Taylor’s resignation.
Other than the abovementioned items, no other matter or circumstance has arisen since balance date 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.
ANNUAL REPORT 2023
62
62
2023 Annual Report Eureka GroupNotes to the Financial StatementsFor the year ended 30 June 2023
Eureka Group Holdings Limited and controlled entities
Directors’ Declaration
FOR THE YEAR ENDED 30 JUNE 2023
In accordance with a resolution of the directors of Eureka Group Holdings Limited, I state:
1.
In the opinion of the Directors of Eureka Group Holdings Limited (“the Company”):
a) The accompanying financial statements and notes are in accordance with the Corporations Act 2001, including:
i. giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its performance for the
financial year ended on that date; and
ii. complying with Australian Accounting Standards and the Corporations Regulations 2001;
b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable; and
c) The financial statements and notes thereto are in accordance with International Financial Reporting Standards
as disclosed in Note 2.
2. This declaration has been made after receiving the declarations required to be made to the directors in accordance
with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2023.
On behalf of the Board
Murray Boyte
Executive Chair
Dated in Brisbane this 28th of August 2023.
63
ANNUAL REPORT 2023
63
Eureka Group 2023 Annual ReportDirectors’ DeclarationFor the year ended 30 June 2023
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 2023, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year 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)
b)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
and of its consolidated financial performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
64
64
2023 Annual Report Eureka Group
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 the matter. 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 matter below, provide the basis for our audit opinion on the accompanying
financial report.
Valuation of Investment Properties
Why significant
How our audit addressed the key audit matter
At 30 June 2023, the Group had investment
properties carried at $213.1m, representing
90% of total assets at that date.
Investment properties are initially recognised
at cost, including transaction costs, and
subsequently measured at fair value. Gains or
losses arising from changes in fair value are
recognised in the statement of profit or loss
and other comprehensive income.
Fair value measurement involves a high
degree of estimation and judgement, and the
involvement of external valuation specialists.
The key inputs include capitalisation rates,
occupancy levels and maintainable earnings.
The fair value of investment property is
estimated based on conditions existing at
30 June 2023.
Notes 2, 12 and 24 of the financial report
details the accounting policy for investment
property assets, key inputs and sensitivities
associated with reasonably possible changes
in those inputs.
Valuation of investment property is
considered a key audit matter due to the
significance of this balance and the level of
estimation and judgement involved in
determining its carrying value.
Our audit procedures included the following:
• With the assistance of our real estate valuation
specialists we:
• Evaluated the valuation methodology used by
the Group against the requirements of relevant
accounting standards and industry practice.
• Assessed the competence, capabilities and
objectivity of the independent valuation experts
used by the Group.
• Compared the capitalisation rates used to a
reasonable range determined from our analysis
of published reports, recent market transactions
and industry experience.
• For a sample of investment properties, taking
into account geographies and characteristics of
individual investment properties, we challenged
significant assumptions, such as capitalisation
rates, discount rates, occupancy and future
earnings. We did this by analysing recent market
transactions, Eureka’s historical performance of
the investment property and using our industry
experience.
• We evaluated the reasonableness of key assumptions
of occupancy levels and maintainable earnings by
comparing them to historical actual occupancy levels
and earnings.
• We assessed the adequacy of disclosures included in
the Notes to the financial report against the
requirements of relevant accounting standards.
65
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
65
Eureka Group 2023 Annual Report
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s 2023 Annual Report, but does not include the financial report and
our auditor’s report thereon. We obtained the directors’ report that is to be included in the annual
report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the
annual report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and
our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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2023 Annual Report Eureka Group
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
•
•
•
•
•
•
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
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A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
67
Eureka Group 2023 Annual Report
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 8 to 15 of the directors' report for the
year ended 30 June 2023.
In our opinion, the Remuneration Report of Eureka Group Holdings Limited for the year ended 30 June
2023, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Ernst & Young
Wade Hansen
Partner
Brisbane
28 August 2023
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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2023 Annual Report Eureka Group
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
Auditor’s Independence Declaration to the Directors of Eureka Group
Holdings Limited
As lead auditor for the audit of the financial report of Eureka Group Holdings Limited for the financial
year ended 30 June 2023, I declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit;
b) no contraventions of any applicable code of professional conduct in relation to the audit; and
c) No non-audit services provided that contravene any applicable code of professional conduct in
relation to the audit.
This declaration is in respect of Eureka Group Holdings Limited and the entities it controlled during the
financial year.
Ernst & Young
Wade Hansen
Partner
Brisbane
28 August 2023
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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Eureka Group 2023 Annual Report
Eureka Group Holdings Limited and controlled entities
Corporate Governance Statement
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 ASX Corporate Governance Principles and Recommendations (4th Edition)
The Board has adopted
(‘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:
https://www.eurekagroupholdings.com.au/investors/corporate-governance/.
ANNUAL REPORT 2023
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2023 Annual Report Eureka Group
Eureka Group Holdings Limited and controlled entities
Security Holder Information
Security Holder Information
Distribution of Securities as at 07 August 2023
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
345
201
83
224
109
962
Substantial Holders as at 7 August 2023
Cooper Investors Pty Limited
Aspen Group Limited
Tribeca Investment Partners1
Ethical Partners Funds Management Pty Ltd
Charter Hall Property Securities Management Limited
1851 Capital Pty Ltd
Total
1 Includes Australian Retirement Trust
Twenty Largest Ordinary Shareholders as at 7 August 2023
National Nominees Limited
HSBC Custody Nominees (Australia) Limited
Aspen Group Limited
J P Morgan Nominees Australia Pty Limited
One Managed Investment Funds Limited
Bond Street Custodians Limited
Tolani Estate Pty Ltd
BNP Paribas Noms Pty Ltd
H & G Limited
Bond Street Custodians Limited
Strategic Value Pty Ltd
HIDIV Pty Ltd
Citicorp Nominees Pty Limited
Gold Tiger Investments Pty Ltd
NEJA Pty Ltd
Acadia Park Pty Ltd
Keiser Investments Pty Ltd
Mr Alister C Wright
Mr Murray Raymond Boyte & Mrs Jane Elizabeth Boyte
EXLDATA Pty Ltd
Total
Balance
Grand Total
Marketable Shares
There were 354 holders of less than a marketable parcel
of 93,796 shares holding a total of 0.03% shares.
Voting Rights
Ordinary Shares carry voting rights of one vote per
share. Options and share rights carry no voting rights.
No of Ordinary
Shares Held
% of Issued
Share Capital
59,567,482
41,157,590
35,761,887
26,228,845
15,779,657
14,693,725
193,189,186
17,881,208
19.79
13.67
11.88
8.71
5.24
4.88
64.17
5.94
No of Ordinary
Shares Held
% of Issued
Share Capital
102,182,592
49,689,480
41,157,590
17,849,879
13,851,451
5,602,238
4,877,127
3,320,069
3,195,359
2,940,415
2,760,143
2,372,594
2,317,093
2,276,238
2,000,000
1,795,827
1,564,838
1,200,044
1,155,247
1,142,915
263,251,139
37,812,319
301,063,458
33.94
16.50
13.67
5.93
4.60
1.86
1.62
1.10
1.06
0.98
0.92
0.79
0.77
0.76
0.66
0.60
0.52
0.40
0.38
0.38
87.44
12.56
100.00
Performance Rights
As at the Reporting Date, a total of 126,953 performance rights of the Company are on issue, held by Laura Fanning.
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ANNUAL REPORT 2023
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Eureka Group 2023 Annual Report
2023 Annual Report Eureka Group
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Corporate Directory
Registered Address & Contact Details
Company Secretary
Head Office
Patricia Vanni de Oliveira
Level 5, 120 Edward St, Brisbane QLD 4000
Registered Office
Suite 2D, 7 Short St, Southport QLD 4215
Postal Address
PO Box 10819,
Southport BC QLD 4215
Phone Number
07 5568 0205
Website
www.eurekagroupholdings.com.au
Email
info@eurekagroupholdings.com.au
Board of Directors
Murray Boyte
Executive Chair and interim Chief Executive Officer
Russell Banham
Sue Renkin
Greg Paramor AO
Senior Management
Laura Fanning
Chief Financial Officer & Company Secretary
Solicitors
Hamilton Locke
Riverside Centre
Level 19/123 Eagle Street
Brisbane QLD 4000
Tel: 07 3036 7886
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: 1300 554 474
Fax: 02 9287 0303
Securities Exchange Listing
ASX Limited
ASX Code: EGH (ordinary shares)
Australian Business Number
15 097 241 159
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Eureka Group 2023 Annual Report We exist to reimagine
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