More annual reports from Euroz Limited:
2023 ReportPeers and competitors of Euroz Limited:
Black KnightA N N U A L
R E P O R T
2 0 2 1
EUROZ IS A
DIVERSIFIED
FINANCIAL
SERVICES
COMPANY
FINANCIAL
YEAR
HIGHLIGHTS
2021
GROUP FUM
MARKET CAPITALISATION
$3.37b
1
$325m
DIVIDENDS
FULLY FRANKED DIVIDENDS IN 20 YEARS
16cps
$265m
1
CASH & INVESTMENTS
NET PROFIT AFTER TAX
$181m
1
$52.5m
1
1. As at 30 June 2021
4
EUROZ LIMITED | ANNUAL REPORT 2021 CONTENTS
PAGE
CORPORATE DIRECTORY
Corporate Directory
Executive Chairman’s Report
Euroz Limited Board Of Directors
Euroz Group Structure
Corporate Transactions
Euroz Hartleys Limited – Managing Director’s Report
Euroz Hartleys Limited
Westoz Funds Management
Entrust Wealth Management
Euroz Hartleys Foundation
Financial Report
Additional Information
Euroz Limited Contact Details
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REGISTERED OFFICE AND
PRINCIPAL PLACE OF BUSINESS
Level 18 Alluvion
58 Mounts Bay Road
PERTH WA 6000
Telephone:
Facsimile:
Email:
+61 8 9488 1400
+61 8 9488 1477
info@euroz.com
SHARE REGISTRY
Computershare Investor
Services Pty Ltd
Level 11
172 St Georges Terrace
PERTH WA 6000
Telephone:
1300 787 575
AUDITORS
KPMG
235 St Georges Terrace
Perth WA 6000
Telephone:
+61 8 9263 7171
BANKERS
Westpac Banking Corporation
109 St George’s Terrace
PERTH WA 6000
SECURITIES EXCHANGE LISTINGS
Euroz Limited shares are listed
on the Australian Securities Exchange
(ASX: EZL)
WEBSITE ADDRESS
www.euroz.com
CORPORATE GOVERNANCE STATEMENT
www.euroz.com/investor-relations/corporate-governance
BOARD OF DIRECTORS
Andrew McKenzie
Executive Chairman
Jay Hughes
Executive Director
Robert Black
Executive Director
Ian Parker
Executive Director - Appointed 6 October 2020
Richard Simpson
Executive Director - Appointed 6 October 2020
Robin Romero
Independent Non - Executive Director - Appointed
2 December 2020
COMPANY SECRETARY
Anthony Hewett
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EUROZ LIMITED | ANNUAL REPORT 2021 CHAIRMAN’S REPORT EXECUTIVE CHAIRMAN’S REPORT CHAIRMAN’S REPORT CHAIRMAN’S REPORT
EXECUTIVE CHAIRMAN’S REPORT EXECUTIVE CHAIRMAN’S REPORT EXECUTIVE CHAIRMAN’S REPORT CHAIRMAN’S REPORT
CHAIRMAN’S REPORT EXECUTIVE CHAIRMAN’S REPORT EXECUTIVE CHAIRMAN’S REPORT EXECUTIVE CHAIRMAN’S REPORT
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CHAIRMAN’S REPORT EXECUTIVE CHAIRMAN’S REPORT EXECUTIVE CHAIRMAN’S REPORT CHAIRMAN’S REPORT
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CHAIRMAN’S REPORT EXECUTIVE CHAIRMAN’S REPORT EXECUTIVE CHAIRMAN’S REPORT CHAIRMAN’S REPORT
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CHAIRMAN’S REPORT EXECUTIVE CHAIRMAN’S REPORT CHAIRMAN’S REPORT CHAIRMAN’S REPORT
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CHAIRMAN’S REPORT EXECUTIVE CHAIRMAN’S REPORT EXECUTIVE CHAIRMAN’S REPORT CHAIRMAN’S REPORT
CHAIRMAN’S REPORT EXECUTIVE CHAIRMAN’S REPORT CHAIRMAN’S REPORT CHAIRMAN’S REPORT
CHAIRMAN’S REPORT CHAIRMAN’S REPORT CHAIRMAN’S REPORT CHAIRMAN’S REPORT
On 1 October 2020 Euroz
completed the transaction
with Hartleys Limited (now
Euroz Hartleys Limited (“Euroz
Hartleys”) through the issue of
approximately 33 million shares.
Euroz Hartleys is now Western
Australia’s largest stockbroking
and wealth management
business. We are pleased to
report excellent progress on this
merger of equals and our ongoing
cultural and brand alignment
has been well received by our
clients. This is the direct result
of the significant efforts of our
major asset – our staff, who have
embraced this merger and worked
tirelessly to ensure its success.
On 26 April 2021 we rebranded and
merged the operations of Euroz Hartleys
Limited by combining the staff and
operations of Euroz Hartleys Limited
(formerly Hartleys Limited), Euroz
Hartleys Securities Limited (formerly
Euroz Securities Limited) and Entrust
Wealth Management Pty Ltd into a single
entity and licence.
Euroz Limited reported an audited
result of $52.5 million net profit after
tax attributable to members for the
financial year ended 30 June 2021.
The Group’s profitability consisted of
“cash” profit after tax of $34.9 million
and $17.6 million in “non-cash” after
tax profit from the mark to market on
our investments.
Underlying cash profitability was driven
by a strong performance from Euroz
Hartleys which delivered Equity Capital
Market raisings of $2 billion versus
$1.1 billion last year. Brokerage
income for the year was up 90%
versus last year which only included
9 months of revenue contribution
from Hartleys following completion
of the merger. Euroz Hartleys Funds
Under Management (“FUM”) as at 30
June 2021 was $3.1 billion, (2020: $1.3
billion) an increase of 130% from the
previous year.
2021 WAS A TRANSFORMATIONAL YEAR FOR EUROZ LIMITED AND
DELIVERED POSITIVE OUTCOMES FOR ALL OUR STAKEHOLDERS.
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CHAIRMAN’S REPORT CHAIRMAN’S REPORT CHAIRMAN’S REPORT CHAIRMAN’S REPORT
I would once again like to sincerely thank
our staff for their significant efforts
and who as our largest shareholders,
remain committed to growing this
proudly Western Australian financial
services company.
Andrew McKenzie
Executive Chairman
Stockbroking and Corporate Finance
revenue was up by 181% to $95.2 million
from $33.9 million. Euroz Hartleys
managed 76 (2020:36) Equity Capital
Market transactions in FY21 raising
$2.0 billion (2020: $1.1 billion).
Wealth Management revenue increased
by 59% to $14.5 million from $9.1 million.
We are pleased with the quality and
stability of our wealth management
offering at a time of significant change.
Euroz Hartleys is well positioned for
continued growth given our established
team of private wealth advisers.
Revenue from Funds Management
increased by 326% to $17.2 million
from $4.0 million in the prior year.
Revenue included performance and
management fees received from Westoz
Funds Management (“WFM”). Westoz
Investment Company Limited (ASX:
WIC”) and Ozgrowth Limited (ASX: OZG)
performed well in rising global markets
with gross investment performance
of 34% and 62.9% for the financial
year respectively.
Total Group FUM as at 30 June was
$3.4 billion (2020: $1.6 billion) an
increase of 117% from the previous year.
Solid underlying cash profitability
enabled your Directors to declare and
pay a final fully franked dividend of
13.5 cents per share (“cps”) which
combined with the interim dividend of
2.5 cps brings the full year dividend to
16 cps (previous year 9.5 cps).
Whilst COVID-19 continued to create
challenges and uncertainty within the
broader national landscape, Euroz
was able to utilise its remote working
infrastructure to continue to deliver
its normal business activities relatively
uninterrupted. Our adjustment to virtual
client and investor interactions last
year, coupled with our strong culture of
remote working and ability to respond
quickly to changing circumstances
meant that overall engagement remained
high and the services we provided to
our clients did not change. Strength and
volatility in markets saw Euroz Hartleys
record solid brokerage throughout
the year as investors sought to take
advantage of solid market conditions.
Euroz Limited now employs 195 staff
across our businesses as we continue
to pursue our diversification and
consolidation strategy. Euroz maintains a
strong balance sheet with a cash balance
at 30 June 2021 of $82 million and
zero debt.
We are proud that Euroz Limited has
now paid $265 million in fully franked
dividends to shareholders across our
21-year history.
At our upcoming AGM we will be
proposing to change the name of
our listed parent company to “Euroz
Hartleys Group Limited” to reflect the
deep history of our two iconic Western
Australian businesses.
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EUROZ LIMITED
P R O F I T B E F O R E T A X & N E T P R O F I T A F T E R T A X
N
O
I
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L
I
M
$
n
o
i
l
l
i
m
$
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
-10.0
-20.0
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
YEAR
Profit Before Tax
Net Profit After Tax
Profit before tax
Net profit after tax
attributable to members
EUROZ LIMITED
D I V I D E N D H I S T O R Y
Euroz Limited Dividend History
E
R
A
H
S
R
E
P
S
T
N
E
C
e
r
a
h
S
r
e
P
s
t
n
e
C
30.0
25.0
20.0
15.0
10.0
5.0
0.0
8
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
YEAR
1H Dividend per share
2H Dividend per share
1H Dividend Per Share
2H Dividend Per Share
EUROZ LIMITED | ANNUAL REPORT 2021
EUROZ LIMITED
N T A P E R S H A R E
Euroz Limited NTA Per Share
E
R
A
H
S
R
E
P
S
T
N
E
C
100.0
80.0
60.0
40.0
20.0
0.0
e
r
a
h
S
r
e
P
s
t
n
e
C
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
YEAR
Cents Per Share
EUROZ LIMITED GROUP
F U N D S U N D E R M A N A G E M E N T
)
)
m
m
$
$
A
A
(
(
M
M
U
U
F
F
3,400
3,400
3,200
3,200
3,000
3,000
2,800
2,800
2,600
2,600
2,400
2,400
2,200
2,200
2,000
2,000
1,800
1,800
1,600
1,600
1,400
1,400
1,200
1,200
1,000
1,000
800
800
600
600
400
400
200
200
0
0
DEC 15
DEC 15
JUN 16
JUN 16
DEC 16
DEC 16
JUN 17
JUN 17
DEC 17
DEC 17
JUN 18
JUN 18
DEC 18
DEC 18
JUN 19
JUN 19
DEC 19
DEC 19
JUN 20
JUN 20
DEC 20
DEC 20
JUN 21
JUN 21
OZG
WIC
Entrust
Euroz Hartleys
Other
Note 1: As at 30 June 2021
Note 2: ‘Other’ represents historical FUM from Flinders Investment Partners, Dalton Street Capital and Equus Point Capital
Note 3: Entrust FUM included within Euroz Hartleys from Jun ‘21 onwards
9
WIC (143m)
WIC (143m)
OZG ($71m(
OZG ($71m(
Euroz ($370m)
Euroz ($370m)
Entrust ($969m)
Entrust ($969m)
WIC ($143m)
WIC ($143m)
Euroz ($370m)
Euroz ($370m)
OZG ($71m)
OZG ($71m)
Entrust ($969m)
Entrust ($969m)
EUROZ LIMITED | ANNUAL REPORT 2021
BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS
BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS
BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS
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BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS
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BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS
BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS
ANDREW M CKEN ZI E
JAY H UGHE S
EX E CUTIVE C HA IRMAN
EXEC UTIVE DIRECTOR
R ICHA R D SI MPSON
EXECUTIVE DIRECTOR
Andrew is Executive Chairman of Euroz
Limited, Euroz Hartleys Limited and
Prodigy Investment Partners Limited.
Andrew is a past board member of the
Stockbrokers and Financial Advisers
Association (SAFAA), Presbyterian
Ladies College (PLC) and the PLC
Foundation. He holds a Bachelor of
Economics from the University of
Western Australia (UWA), a Graduate
Diploma in Applied Finance and
Investment and is an individual member
(MSAFAA) of the SAFAA. Andrew has
worked in the stockbroking industry
since 1991 specialising in advice to
institutional clients.
Jay has worked in stockbroking since
1986, starting his career on the trading
floor. He is Non-Executive Chairman of
Westoz Investment Company Limited
and Ozgrowth Limited and a Non-
Executive Director of Westoz Funds
Management Pty Ltd, Euroz Hartleys
Limited and Prodigy Investment
Partners Limited. He is an Institutional
Adviser specialising in promoting
Australian stocks to domestic and
international clients. Jay holds a
Graduate Diploma in Applied Finance
and Investment from the Financial
Services Institute of Australasia
(FINSIA). He was recognised as an
affiliate of the ASX in December 2000
and was admitted in May 2004 as a
master member (MSAFAA) of SAFAA.
Richard brings to the board extensive
corporate finance, advisory and
equity capital market experience and
knowledge gained through a number
of senior Australian and international
corporate finance positions.
Richard holds a Bachelor of Applied
Science (Hons), and an MBA from
the University of Western Australia.
Richard began his career as a
petroleum engineer prior to joining NM
Rothschild & Sons in London working
in corporate finance and specialising
in natural resources and privatisations.
Richard returned to Australia to join
the US Investment Bank, Salomon
Brothers Inc based in both Sydney and
Melbourne, specialising in M&A and
corporate advisory transactions in the
resource and infrastructure sectors. In
1995 Richard returned to Perth to join
Hartleys Corporate Finance. Richard
served as Head of Corporate Finance
from February 2002 to 2009 and was
an Executive Chairman and Managing
Director of Hartleys Limited from the
successful management buyout in 2003
until August 2008.
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BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS
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IAN PARKE R
EX E C UTIV E DIRE CTOR
RO B BLACK
EXECU TIVE DIRECTOR
Rob has been working in the
stockbroking industry since 1995
and has spent time based in Sydney,
Melbourne and London. Rob is the
Managing Director of Euroz Hartleys
Limited and is responsible for servicing
domestic and international institutions.
Rob is an Executive Director of Euroz
Limited, Euroz Hartleys Limited and
Entrust Wealth Management Pty Ltd.
Rob holds a Bachelor of Business in
Finance and Accounting from Edith
Cowan University and is a Graduate
of the Australian Institute of Company
Directors (AICD).
Ian has extensive knowledge in the
areas of stockbroking, investment
advice and domestic equities.
Ian holds a Bachelor of Arts
(Economics) degree from Murdoch
University (WA) and is a master
member (MSAFAA) of SAFAA. Ian
has been in the financial services
industry since 1981 and later became a
Director of Gilpear Investment Group.
In January 1991 Ian joined Hartleys as a
Private Client Adviser, was a member
of the Executive Council, Underwriting
Committee and Head of the Private
Client Advisory Board for 2 years. Ian
was appointed a Director of Hartleys
Limited in May 2003 as part of the
successful management buyout in
October 2003 and was appointed
Chairman of Hartleys Limited in
February 2015.
R OB IN R OMER O
I NDEPENDENT NON-EXECUTIVE
DIRECTOR
Robin brings to the board extensive
legal, accounting and commercial
experience. Robin is Legal Counsel
and a former Executive Director of
FMR Investments Pty Ltd (formerly
Barminco Pty Ltd) and a Non-Executive
Director of Rangelands Natural
Resource Management Inc. Robin has
15 years of in-house legal experience
predominantly in the mining services
sector. Prior to this, Robin spent 11
years working in large commercial law
and accounting firms including King
& Wood Mallesons, Corrs Chambers
Westgarth and KPMG servicing medium
to large clients across diverse sectors,
predominantly ASX listed companies.
Robin holds a Bachelor of Commerce
and a Bachelor of Laws, is a graduate
of the Australian Institute of Company
Directors and holds a practising
certificate from the Legal Practice
Board of Western Australia.
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EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE
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EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE
EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE
EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE
EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE
EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE
EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE
EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE
EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE
EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE
EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE
E U R O Z L I M I T E D
ASX CODE: EZL
EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE EUROZ GROUP STRUCTURE
S T O C K B R O K I N G ,
C O R P O R A T E F I N A N C E
A N D P R I VA T E W E A LT H
F U N D S
M A N A G E M E N T
EN TRUST
WEA LTH
M ANAGEM EN T
OZG ROWTH
LIMITE D
ASX CODE: OZG
40.58% Equity Stake
WESTOZ
IN VESTMENT
COMPA NY LIMITED
ASX CODE: WIC
26.25% Equity Stake
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CORPORATE TRANSACTIONS FY21
CORPORATE TRANSACTIONS FY21
CORPORATE TRANSACTIONS 2021
CORPORATE TRANSACTIONS FY21
CORPORATE TRANSACTIONS FY21
CORPORATE TRANSACTIONS 2021
CORPORATE TRANSACTIONS FY21
CORPORATE TRANSACTIONS FY21
CORPORATE TRANSACTIONS 2021
CORPORATE TRANSACTIONS FY21
CORPORATE TRANSACTIONS FY21
CORPORATE TRANSACTIONS 2021
CORPORATE TRANSACTIONS FY21
CORPORATE TRANSACTIONS FY21 CORPORATE TRANSACTIONS 2021
P L A C E M E N T
$116.9 MILLION
L E A D M A N A G E R
J O I N T L E A D M A N A G E R
P L A C E M E N T S + A N R E O
$76 MILLION
L E A D M A N A G E R
+ U N D E R W R I T E R ,
J O I N T L E A D M A N A G E R
P L A C E M E N T
$56 MILLION
J O I N T L E A D M A N A G E R
P L A C E M E N T
$50.4 MILLION
J O I N T L E A D M A N A G E R
Euroz Hartleys Ltd
Euroz Hartleys Ltd
JUN 21, SEP 20
JUN 21, JUL 20
Euroz Hartleys Ltd
Euroz Hartleys Ltd
JUN 21
JUN 21
P L A C E M E N T
$50 MILLION
J O I N T L E A D M A N A G E R
P L A C E M E N T + I P O
$42.5 MILLION
J O I N T L E A D M A N A G E R ,
L E A D M A N A G E R
+ U N D E R W R I T E R
P L A C E M E N T S
$37.1 MILLION
J O I N T L E A D M A N A G E R
P L A C E M E N T
$80 MILLION
J O I N T L E A D M A N A G E R
Euroz Hartleys Ltd
Euroz Hartleys Ltd
Euroz Hartleys Ltd
Euroz Hartleys Ltd
JUN 21
JUN 21, JAN 21
MAY 21, OCT 20
APR 21
P L A C E M E N T S + A N R E O
$118.6 MILLION
C O M A N A G E R
+ U N D E R W R I T E R ,
J O I N T L E A D M A N A G E R
P L A C E M E N T S
$69.4 MILLION
J O I N T L E A D M A N A G E R ,
L E A D M A N A G E R
P L A C E M E N T
$90 MILLION
J O I N T L E A D M A N A G E R
P L A C E M E N T
$40.8 MILLION
J O I N T L E A D M A N A G E R
Euroz Hartleys Ltd
Euroz Hartleys Ltd
Euroz Hartleys Ltd
Euroz Hartleys Ltd
MAR 21, AUG 20
MAR 21, DEC 20, JUL 20
FEB 21
FEB 21
P L A C E M E N T + A N R E O
$75 MILLION
L E A D M A N A G E R
+ U N D E R W R I T E R
I P O
$52.9 MILLION
L E A D M A N A G E R
+ U N D E R W R I T E R
P L A C E M E N T
$37 MILLION
L E A D M A N A G E R
P L A C E M E N T
$62.5 MILLION
J O I N T L E A D M A N A G E R
+ U N D E R W R I T E R
Euroz Hartleys Ltd
Euroz Hartleys Ltd
Euroz Hartleys Ltd
Euroz Hartleys Ltd
DEC 20
NOV 20
NOV 20
AUG 20
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EUROZ LIMITED | ANNUAL REPORT 2021
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2021 was an incredibly busy and
transformational year for Euroz
Hartleys Limited (Euroz Hartleys).
The merger between Euroz Hartleys
Securities Limited (formerly Euroz
Securities Limited) and Euroz Hartleys
Limited (formerly Hartleys Limited) was
finalised in October 2020, with formal
systems and licence integration being
completed on 26 April 2021.
During this same period, we merged
our Entrust Wealth Management entity
and licence into Euroz Hartleys whilst
maintaining a separate division and brand
for Entrust.
Throughout this period our operations
team have worked tirelessly to ensure
business continuity whilst managing
the integration of the three businesses
including trading, back office and
finance systems.
All staff in some way have been affected
with office moves and fit outs as we
restructured our Wholesale and Private
Wealth divisions between our Alluvion
and Westralia Square locations. Our
working from home systems have
been in place for some time and have
served our staff well during lockdowns
and disruptions allowing our staff to
seamlessly move to home offices at any
time. This has allowed us to continue
operating as normal while physically
transitioning staff to new offices.
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Our office fit outs are now complete
which marks the final piece of our
integration projects and we look forward
to welcoming our Private Wealth and
Entrust clients at the newly renovated
Westralia Square premises.
The current regulatory environment
means we have a significant volume of
regulatory change affecting advisers and
clients alike along with enhanced forward
fee disclosures, client opt in, enhanced
breach reporting and the introduction of
the Single Disciplinary Body. In addition,
the Financial Adviser Standards and
Ethics Authority (FASEA) education
requirements for all advisers with retail
clients has required a significant amount
of effort on the part of all advisers to
combine study and work to ensure
they meet the education standards.
The vast majority of our advisers have
already completed the necessary initial
FASEA training requirements that have
been mandated.
Euroz Hartleys reported a net profit after
tax of $16.6 million for the year ended
30 June 2021 compared to $7.9 million
in the previous corresponding period, an
increase of 110% and revenue of $79.4
million for the year ended 30 June 2021
compared to $39.4 million in the previous
corresponding period, an increase
of 102%.
This result in any market would be viewed
as a terrific year, but given the quantum of
operational changes and other disruptions
over the year to achieve this was a credit
to all our staff.
Euroz Hartleys is now the largest broker
in Western Australia by all measures and
we are proud of our respective histories
but equally excited about the combined
journey ahead with an increase in scale
and significant synergies to provide us
with a solid platform for growth.
Euroz Hartleys consists of 2 core divisions
– Private Wealth and Wholesale.
The Private Wealth division hosts the
largest retail desk in Western Australia
and is based in Westralia Square. We have
74 investment/wealth advisers which
include some of the most experienced
stockbrokers in the state. Our wealth
advisory team oversees ~$3.1 billion
of Funds Under Management (FUM)
(2020: $1.3 billion) across a diverse
range of clients including high net worth
individuals, family offices and “not for
profit” organisations.
Our Wholesale division consists of
Research, Institutional Sales and
Corporate Finance, is based in Alluvion.
We employ 9 Research analysts covering
over 127 stocks encompassing a range
of largely WA based resources and
industrial companies. In FY21 Euroz
Hartleys raised ~$2 billion for our
corporate clients in what was a very
solid year of Equity Capital Markets
(ECM) business. Our Institutional
Sales team is the largest small-mid
cap institutional desk in Australia and
provides significant domestic and global
distribution capabilities.
Both divisions generate revenue across
a range of services including brokerage,
ECM transactions, corporate advisory,
FUM fees and incentive fees. This diversity
of our earnings provides the business with
a solid foundation for continued growth.
Staff remain our key asset and whilst
there have been some disruptions over
the period associated with the merger of
our businesses, everyone worked tirelessly
through these periods and maintained
a high level of service to clients. With
the disruption of the merger and fit outs
behind us and coupled with our strong
balance sheet we are in a unique and
enviable position to capitalise on our
position in the market, improve and grow
our client offering and continue to deliver
results for all our stakeholders.
Rob Black
Managing Director
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EUROZ HARTLEYS LIMITED
C O M B I N E D C A P A B I L I T Y A N D E A R N I N G S L E V E R A G E O F W A ’ S
T W O M O S T S U C C E S S F U L B R O K I N G F I R M S
CORPORATE FINANCE
RESEARCH
14 CORPORATE FINANCE EXECUTIVES
9 RESEARCH ANALYSTS
•
•
•
•
•
Deep relationships and knowledge across WA resources
and industrial sectors
Specialising in:
Equity Capital Markets transactions
M&A Advisory
Strategic Corporate Advisory
•
•
•
Extensive coverage of ASX listed industrials, resources and
energy companies
Focus on institutional quality research to a global client
base
Over 127 stocks under research
LARGEST BRO KI NG
FIRM IN WESTE RN
AUST RAL IA
S IGN IF ICA N T GLOB A L &
D OMESTI C DIST RIB U TION
CA PAB ILITY
+1 27 STOCKS
U ND ER R ESEAR CH
COV ERAGE
EUROZ HARTLEYS LIMITED
I N C O M E B Y D I V I S I O N
EUROZ HARTLEYS LIMITED
I N C O M E B Y S O U R C E *
Wholesale (57%)
Retail (43%)
Advisory (8%)
Brokerage (24%)
FUM Fees (11%)
Equity Incentive
Fees (4%)
Management
and Performance
Fee (13%)
Other (2%)
ECM (38%)
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*Excludes 3 months of contributions from Hartleys Limited (now Euroz Hartleys Limited)
EUROZ LIMITED | ANNUAL REPORT 2021 INSTITUTIONAL SALE S
PRIVATE WEALTH
12 INSTITUTIONAL SALES ADVISERS
74 PRIVATE CLIENT ADVISERS
•
•
•
Largest small-mid cap institutional desk in Australia with
specific focus on resources, mining services and small to
mid-cap WA industrials
Long term relationships with all key domestic institutional
investors
•
•
•
•
Targeted global distribution network
Largest retail desk in WA
2
FUM of ~$3.1B
Extensive high net worth and family office client base
Focus on providing timely and high quality financial advice
to clients
Note 1: Capital raised in FY21, including funds raised by Hartleys Limited prior to completion of the merger
Note 2: As at 30 June 2021 and includes Entrust Wealth Management
EUROZ HARTLEYS LIMITED
F Y 2 1 W H O L E S A L E R E V E N U E
T O T A L = $ 6 5 . 4 M *
EUROZ HARTLEYS LIMITED
F Y 2 1 R E T A I L R E V E N U E
T O T A L = $ 4 9 M *
Advisory ($12.4m)
Brokerage ($9m)
ECM ($41.3m)
Equity Incentive Fees ($2.7m)
FUM Fess ($14.5m)
Brokerage ($22.0m)
ECM ($10.3m)
Equity Incentive Fees ($2.2m)
*Includes realized equity incentive fees
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EUROZ LIMITED | ANNUAL REPORT 2021 WESTOZ FUNDS MANAGEMENT
WESTOZ FUNDS MANAGEMENT
WESTOZ FUNDS MANAGEMENT
WESTOZ FUNDS MANAGEMENT
WESTOZ FUNDS MANAGEMENT
WESTOZ FUNDS MANAGEMENT
WESTOZ FUNDS MANAGEMENT
WESTOZ FUNDS MANAGEMENT
WESTOZ FUNDS MANAGEMENT
WESTOZ FUNDS MANAGEMENT
WESTOZ FUNDS MANAGEMENT
WESTOZ FUNDS MANAGEMENT
Westoz Funds Management
(WFM) was established in
2005 and is responsible for
$290 million of Funds Under
Management at 30 June 2021
up 35% on FY20.
WFM manages the portfolios of two
listed investment companies, Westoz
Investment Company Limited (WIC)
and Ozgrowth Limited (OZG). WIC
commenced its investment activities in
2005 and OZG commenced in 2008.
Each company’s objective is to generate
a positive return over the medium to
long-term, regardless of the movements
of the broader share market, from an
actively managed portfolio of small to
mid-cap ASX listed investments and
provide shareholders with a consistent
stream of dividends. Stocks selected
within the portfolios are generally
outside the Top 100 and will typically
have a connection to Western Australia
whether it be through their assets,
operations and/or management.
monetary policies we are ever likely to
witness. This strong backdrop propelled
the ASX All Ordinaries Accumulation
Index to a 30.2% gain for FY2021. Equity
market strength was more broad-based
than the initial bounce back experienced
in the latter part of FY2020 but still
heavily influenced by: COVID mobility
and supply restrictions; and, the very
benign interest rate environment. Market
volatility remained low but it would be
expected that this will increase over the
forward period as liquidity declines in
line with less generous Government and
Central Bank policy settings.
For the year ended 30 June 2021 WFM
delivered gross investment performance
of 34.0% for WIC and 62.9% for OZG.
The 2021 financial year was a strong one
for financial markets. This strength was
driven by a faster than expected rebound
of the global economy, complimented
by the most accommodative fiscal and
WIC and OZG have paid $177.7 million in
fully franked dividends to shareholders
since inception. WIC and OZG have
contributed $44.7m in dividend income
to Euroz Limited since inception. Euroz
owns 26.25% of WIC and 40.58% of OZG.
WESTOZ FUNDS MANAGEMENT
ENTRUST WEALTH MANAGEMENT
WESTOZ FUNDS MANAGEMENT
ENTRUST WEALTH MANAGEMENT
ENTRUST WEALTH MANAGEMENT
ENTRUST WEALTH MANAGEMENT
ENTRUST WEALTH MANAGEMENT
WESTOZ FUNDS MANAGEMENT
ENTRUST WEALTH MANAGEMENT
ENTRUST WEALTH MANAGEMENT
ENTRUST WEALTH MANAGEMENT
ENTRUST WEALTH MANAGEMENT
Entrust Wealth Management
(Entrust) was founded in 2002.
Entrust was acquired by Euroz
Limited in July 2015 and provides
high net worth, family office,
not-for-profit & SMSF clients
with tailored strategic financial
planning & investment advice.
Entrust had client Funds Under
Management (FUM) of $1.2 billion
at 30 June 2021.
During the 2021 financial year the
management team remained focused
on FUM growth and it is pleasing to
report growth in FUM of 24% for the
financial year. Through a combination
of revenue growth and strong focus
on cost reduction, Entrust reported an
improvement in profitability versus the
prior year. Going forward all financial
results will be reported through Euroz
Hartleys.
Entrust continues to pursue strategic
bolt on acquisitions and we have
evaluated numerous adviser acquisition
opportunities during the period.
In April 2021, Entrust merged its
operations and Australian Financial
Services Licence with Euroz Hartleys
(formerly Hartleys Limited) and Euroz
Hartleys Securities Limited (formerly
Euroz Securities Limited) as part of
the broader transaction with Hartleys
Limited. This saw Entrust’s FUM
incorporated within the combined Euroz
Hartleys business and provides increased
synergies and efficiencies within the
business.
Importantly we have retained the Entrust
Wealth Management brand as a division
of Euroz Hartleys to retain distinct focus
on this specialist managed discretionary
account provider of relationship driven
bespoke investment solutions.
Entrust’s primary focus is to manage
wealth for high net worth individuals,
business owners, multi-generational
families, self-managed superannuation
funds and “not for profit” organisations.
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EUROZ LIMITED | ANNUAL REPORT 2021 FOUNDATION EUROZ HARTLEYS FOUNDATION FOUNDATION CHARITABLE FOUNDATION CHARITABLE FOUNDATION CHARITABLE FOUNDATION
EUROZ HAREUROZ HARTLEYS FOUNDATION EUROZ HARTLEYS FOUNDATION
FOUNDATION EUROZ HARTLEYS FOUNDATION FOUNDATION CHARITABLE FOUNDATION CHARITABLE FOUNDATION CHARITABLE FOUNDATION
EUROZ HAREUROZ HARTLEYS FOUNDATION EUROZ HARTLEYS FOUNDATION
FOUNDATION EUROZ HARTLEYS FOUNDATION FOUNDATION CHARITABLE FOUNDATION CHARITABLE FOUNDATION CHARITABLE FOUNDATION
EUROZ HAREUROZ HARTLEYS FOUNDATION EUROZ HARTLEYS FOUNDATION
FOUNDATION EUROZ HARTLEYS FOUNDATION FOUNDATION CHARITABLE FOUNDATION CHARITABLE FOUNDATION CHARITABLE FOUNDATION
EUROZ HAREUROZ HARTLEYS FOUNDATION EUROZ HARTLEYS FOUNDATION
FOUNDATION EUROZ HARTLEYS FOUNDATION FOUNDATION CHARITABLE FOUNDATION CHARITABLE FOUNDATION CHARITABLE FOUNDATION
EUROZ HAREUROZ HARTLEYS FOUNDATION EUROZ HARTLEYS FOUNDATION
FOUNDATION EUROZ HARTLEYS FOUNDATION FOUNDATION CHARITABLE FOUNDATION CHARITABLE FOUNDATION CHARITABLE FOUNDATION
EUROZ HAREUROZ HARTLEYS FOUNDATION EUROZ HARTLEYS FOUNDATION
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In 2006, the Euroz Hartleys
Foundation (the Foundation)
was formed in a Private Ancillary
Fund structure through which the
Euroz Group and its staff could
make donations, invest these
funds, make distributions to
worthy charities and contribute
to our broader community. Since
its inception, the Foundation has
donated in excess of $2.5 million
to over 100 individual charities
and worthy causes.
The Foundation forms the central plank
in our social giving program. As a proudly
Western Australian company, we feel
it is our obligation to give back to the
community that has supported us over
the past 21 years.
The Foundation’s focus is on Western
Australian charitable causes where
we believe we can make a positive
community impact.
The effects of the COVID-19 pandemic in
Australia continued to ripple through the
not-for-profit and charitable sector during
FY21. Whilst we have been very fortunate
with the management of the COVID-19
pandemic in Western Australia and much
of the sector has now adjusted to a COVID
safe model of operation, the capacity for
charities to engage with the public through
large-scale fundraising events continued to
be curtailed throughout the year.
It is likely that the impact of the COVID-19
pandemic within the charitable space
will be felt for a significant period of time
as the pace of the depletion charitable
resources outstrips their ability to be
regenerated.
The centralised message is donations
have slowed but the increasing need from
the community and charities has not.
Our Foundation will continue to support
worthy local charities during these
difficult times.
On 18 June 2021 the Foundation held
its 3rd annual Commission for a Cause
event. This year, the event was enhanced
through the significantly expanded size of
Euroz Hartleys following the completion
of the merger of Euroz Hartleys
Securities Limited (formerly Euroz
Securities Limited) and Euroz Hartleys
Limited (formerly Hartleys Limited) on
26 April 2021.
In total the event raised $450,000 which
is an amazing outcome and doubled our
2020 result.
The funds were divided equally between
Perth Children’s Hospital Foundation
(PCHF), Women and Infants Research
Foundation (WIRF) and WA Cricket
Foundation (WACF).
Perth Children’s Hospital Foundation are
deploying their funds to support medical
research into early intervention to prevent
respiratory illness in children through
the Wal-yan Respiratory Research
Centre. PCHF continues to strive to
make a positive impact on the enormous
burden of childhood respiratory disease
in Australia.
The Wal-yan Respiratory Research
Centre is a global epicentre for paediatric
respiratory research, informing clinical
practice and driving a new research
agenda for childhood lung health. This
powerhouse partnership between the
Telethon Kids Institute, Perth Children’s
Hospital Foundation and Perth Children’s
Hospital (PCH) ensures that the
Centre will lead paediatric research in
Australia and contribute significantly
to global efforts to improve the lives of
children with respiratory conditions and
their families.
The Women & Infants Research
Foundation is utilising the funds from
Commission for a Cause to advance and
accelerate its Predict 1000 Study. WIRF’s
doctors and scientists have unveiled
a new research discovery which could
reduce premature birth by up to 40%.
Through the Predict 1000 study, WIRF
are seeking to determine if it is possible
to reduce the risk of preterm birth by
implementing a simple antibiotic and
probiotic treatment program in mid-
pregnancy.
WIRF are pioneering a new era of
preventative medicine, solving problems
at the earliest stages before they start.
Their world’s first national preterm birth
prevention program, which has its origins
firmly rooted here in WA, is making
pregnancy safer and saving untold
heartache for Australian families. This
transformative work is complemented
by collaborative efforts in the fields of
women’s cancers and women’s mental
health which is focussed on curing
disease and improving outcomes across a
life course.
The Euroz Hartleys Foundation is proud
to have supported the WA Cricket
Foundation and its female, disability and
Aboriginal cricket programs as they strive
to support positive social outcomes.
The WA Cricket Foundation is the
philanthropic arm of the Western
Australian Cricket Association and was
established in December 2017 to support
the future of cricket in Western Australia
and the community in which it operates.
Through the WACF, the Association is
funding and supporting key initiatives
that will deepen its engagement in
the community.
The WA Cricket Foundation is active and
engaged with leaders in Australian sport,
who seek to enrich, support and inspire
our state to be a better, healthier and
more inclusive community.
We are delighted with our significant
contributions to support and give back to
our local Western Australian community
through our Foundation in this past
year and look forward to continuing this
important work in the years ahead.
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22
EUROZ LIMITED | ANNUAL REPORT 2021 FINANCIAL
REPORT
2021
For the year ended 30 June 2021
CONTENTS
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
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EUROZ LIMITED | ANNUAL REPORT 2021 DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2021
The Directors present their report on the consolidated group consisting of Euroz Limited (“Euroz”) and the entities it controlled
(“Group”) at the end of, or during the year ended 30 June 2021.
The following persons were Directors of Euroz at any time during or since the end of the financial year and up to the date of
this report:
EXECUTIVE CHAIRMAN
Andrew McKenzie
INDEPENDENT NON-EXECUTIVE DIRECTOR
Robin Romero – Appointed 2 December 2020
EXECUTIVE DIRECTORS
Jay Hughes
Robert Black
Ian Parker - Appointed 6 October 2020
Richard Simpson - Appointed 6 October 2020
Russell Kane - Resigned 9 October 2020
Simon Yeo - Resigned 9 October 2020
Anthony Brittain - Resigned 9 October 2020
Greg Chessell - Resigned 9 October 2020
CHIEF OPERATING OFFICER / CHIEF FINANCIAL OFFICER
Anthony Brittain is the Chief Operating Officer and Chief Financial Officer. Mr Brittain is an Executive Director of Euroz Hartleys
Limited. He is a member of the Euroz Limited Audit and Risk Committee as well as a member of Euroz Hartleys Limited Underwriting
Committee and Compliance Committee. Mr Brittain holds a Bachelor of Commerce degree from the University of Western Australia
(UWA) and is a member of the Chartered Accountants Australia and New Zealand (CA). He also holds a Graduate Diploma in Applied
Finance and Investment from FINSIA, is a Graduate member of (GAICD) of Australian Institute of Company Directors (AICD) and a
Master Member (MSAFAA) of the Stockbrokers and Financial Advisers Association of Australia (SAFAA).
COMPANY SECRETARY
Anthony Hewett is the Company Secretary. Mr Hewett is a Chartered Secretary, Chartered Governance Professional and holds a
Master of Business Law (MBusLaw) from Curtin University and a Graduate Diploma in Applied Corporate Governance (GradDipACG)
from the Governance Institute of Australia. Mr Hewett is a Fellow of the Chartered Governance Institute (FCG), a Fellow of the
Governance Institute of Australia (FGIA), a Master Member (MSAFAA) of SAFAA and a member of the AICD.
PRINCIPAL ACTIVITIES
During the year the principal activities of Euroz consisted of:
(a)
Stockbroking & Corporate Finance;
(b) Funds Management;
(c) Wealth Management; and
(d)
Investing.
REVIEW OF RESULTS
The consolidated entity reports a net profit attributable to members of $52.5 million for the financial year ended 30 June 2021
(2020: net loss -$1.4 million). This result represents basic earnings per share of 29.16 cents (2020: basic loss per share of 0.87 cents).
On 1 October 2020 Euroz completed the acquisition of Hartleys Limited (now Euroz Hartleys Limited (“Euroz Hartleys”) through the
issue of 33,000,075 shares. Euroz Hartleys is now Western Australia’s largest stockbroking and wealth management business. We are
pleased to report excellent progress on this merger of equals and our ongoing cultural and brand alignment has been well received
by our clients. This is the direct result of the significant efforts of our major asset – our staff, who have embraced this merger and
worked tirelessly to ensure its success.
Due to the restructure of operations within the Euroz Limited Group during the year, on 26 April 2021 Euroz Hartleys Securities
Limited (formerly Euroz Securities Limited), Euroz Hartleys Limited (formerly Hartleys Limited) and Entrust Wealth Management Pty
Ltd (“Entrust”) consolidated their businesses under one single operating entity Euroz Hartleys Limited.
The Group’s profitability consists of “cash” profit after tax of $34.9 million and $17.6 million in “non-cash” after tax profit from the
mark to market on investments.
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DIRECTORS’ REPORT (CONT'D)
FOR THE YEAR ENDED 30 JUNE 2021
REVIEW OF RESULTS (CONT'D)
Underlying cash profitability was driven by a strong performance from Euroz Hartleys which delivered Equity Capital Market (“ECM”)
raisings of $2.0 billion versus $1.1 billion last year. Brokerage income for the year was up 90% versus last year with 9 months of
revenue contribution from Hartleys following completion of the merger on 1 October 2020. Euroz Hartleys Funds Under Management
(“FUM”) as at 30 June 2021 was $3.1 billion (2020: $1.3 billion), an increase of 130% from the previous year.
Total Group FUM as at 30 June 2021 was $3.4 billion (2020: $1.6 billion), an increase of 117% from the previous year.
Solid underlying cash profitability enabled your Directors to declare and pay a final fully franked dividend of 13.5 cents per share
(“cps”) which combined with the interim dividend of 2.5 cps brought the full year dividend to 16 cps (2020: 9.5 cps).
REVIEW OF OPERATIONS INCLUDING DISCONTINUED OPERATIONS
Brokerage
Underwriting and placement fees
Performance and management fees
Wealth management fees
Corporate advisory
Dividends and trust distributions received
Interest received
Other revenue
Total revenue
Net Profit after tax
(i)
Refer to note 4 (a)
2021
$
31,115,479
51,658,163
17,218,045
14,531,619
12,381,468
3,063,965
197,344
889,808
RESTATED (i )
2020
$
16,395,507
16,830,047
4,039,361
9,148,623
684,802
3,636,078
272,679
357,335
131,055,891
51,364,432
52,540,905
4,350,450
OPERATING AND FINANCIAL REVIEW
The purpose of this review is to set out information that shareholders may require to assess Euroz’s operations, financial position,
business strategies and prospects for future financial years. This information complements and supports the report presented herein.
On 26 April 2021 Euroz Securities Limited merged with Hartleys Limited and transformed the scale of its operations. The rebranded
and merged operation of Euroz Hartleys Limited combines the staff, operations and licences of Euroz Hartleys Limited, Euroz
Hartleys Securities Limited (formerly Euroz Securities Limited) and Entrust Wealth Management Pty Ltd into a single entity.
This merger involved the transfer of all employees who signed new employment agreements with Euroz Hartleys Limited along
with the migration of all clients to Euroz Hartleys. Substantial work has been undertaken to merge trading systems and back office
operations into a single operating entity.
DISCLOSURE OF OPERATIONS – PROFIT
Net profit after tax attributable to members was $52.5 million compared to loss of -$1.4 million in the 2020 financial year. Underlying
“cash” profit after tax of $34.9 million were combined with $17.6 million in “non-cash” after tax profit from the mark to market on
investments.
DISCLOSURE OF OPERATIONS – SALES
Revenue has increased by 155% to $131.1 million (inclusive of 9 months contribution from Hartleys since 1 October 2020) from restated
previous year amount of $51.4 million.
(a) Stockbroking & Corporate Finance
Stockbroking and Corporate Finance revenue was up by 181% to $95.2 million from $33.9 million. Euroz Hartleys managed 76
(2020:36) Equity Capital Market (“ECM”) transactions this year raising $2.0 billion (2020: $1.1 billion). FUM growth in the business
made significant progress and was up 130% to $3.1 billion from $1.3 billion.
(b) Funds Management
Revenue from Funds Management increased by 326% to $17.2 million from $4.0 million in the prior year. Revenue predominantly
included performance and management fees received from Westoz Funds Management (“WFM”). Westoz Investment Company
Limited (“WIC”) and Ozgrowth Limited (“OZG”) performed well in rising global markets with gross investment performance of 34%
and 62.9% for the financial year respectively. WFM received performance fees of $14.5 million (2020: $0).
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DIRECTORS’ REPORT (CONT'D)
FOR THE YEAR ENDED 30 JUNE 2021
DISCLOSURE OF OPERATIONS – SALES (CONT'D)
(c) Wealth Management
Wealth Management revenue increased by 59% to $14.5 million from $9.1 million. We are pleased with the quality and stability of our
wealth management service offering at a time of significant change in the Wealth Management landscape. Euroz Hartleys is well
positioned for continued growth given our established team of private wealth advisers.
(d)
Investment Income
Investment income decreased by 17% to $3.3 million (2020: $3.9 million). Previous year income included distributions from
investments which were disposed of towards the end of the 2020 financial year.
DISCLOSURE OF OPERATIONS
The consolidated group is principally involved in the following activities:
(a) Stockbroking & Corporate Finance;
(b) Funds Management;
(c) Wealth Management; and
(d) Investing.
Our operations are conducted in Perth, Western Australia (WA) and details of our operations are outlined below:
(a) Stockbroking & Corporate Finance
The Euroz Hartleys stockbroking operation comprises 4 main divisions as follows:
i.
•
•
•
•
Equities Research
Highly rated research from market leading research team of 9 analysts
Our views are highly regarded by Australian and international institutional investors
Access to the latest online news and financial information
Based on fundamental analysis, strict financial modelling and regular company contact
-
-
-
Goal: Identify and maximise equity investment opportunities for our clients
Approach: Intimate knowledge of the companies we cover
Coverage: Broad cross section of mostly WA based industrial & resource companies
•
Research Products:
-
-
-
-
Company Reports: Detailed analysis on companies as opportunities emerge
Morning Note: Overnight market updates
Weekly Informer: Compilation of all company reports throughout the preceding week
Quarterly and / or Semi-annual Review: Regular coverage on companies in book format
ii.
Institutional Sales
•
One of the largest institutional small to mid-cap dealing desks in the Australian market with a sales team of 13 staff
•
•
•
•
Extensive client base of Australian and International institutional investors with strong relationships with small
company fund managers
Distribution network strength - long standing relationships with major institutional investors in the small to mid-
cap market
Western Australia’s geographic isolation makes it difficult for institutional investors to maintain close contact with
companies based here - investors can rely on our “on the ground” information
Institutional dealing team “highly focused” on providing the following services:
-
-
-
-
-
Quality advice and idea generation
Efficient execution
Regular company contact
Site visits
Roadshows
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DIRECTORS’ REPORT (CONT'D)
FOR THE YEAR ENDED 30 JUNE 2021
DISCLOSURE OF OPERATIONS (CONT'D)
iii.
iv.
Private Wealth
•
Team of 74 highly experienced and qualified private wealth advisers providing a broader investment offering for
clients of Euroz Hartleys. Our wealth management service provides strategic investment advice, superannuation
advice, investment management and portfolio administration service
•
•
•
•
•
Significant capacity to support new issues and construct quality retail share registers
Substantial “high net worth” client base (s.708 compliant investors)
Exposure to high net worth clients via in-house conferences and one-on-one presentations
Extensive research support - high quality research on WA based resource and industrial companies enable our
advisers to provide quality investment and trading advice
Specialised broking allows:
-
-
Close interaction between research analysts and private wealth advisers
Timely communication of ideas with clients
•
Sophisticated investors are able to participate in many of our capital raisings
Corporate Finance
•
The corporate finance team of 17 staff focused on developing strong, long term relationships with our clients.
•
Clients are provided with specialised Corporate Advisory services in:
-
-
-
-
Equity Capital Raisings and Underwriting
Mergers and Acquisitions
Strategic Planning and Reviews
Privatisation and Reconstructions
•
Established track record in raising equity capital via:
-
-
-
Initial Public Offerings (IPO)
Placements
Rights Issues
(b) Funds Management
Westoz Funds Management Pty Ltd (“WFM”) is responsible for managing FUM of $290.5 million (2020: $214.5 million). It manages
funds under mandate from two listed investment companies; Westoz Investment Company Limited (“WIC”) and Ozgrowth Limited
(“OZG”). Both companies have enjoyed competitive portfolio returns since inception.
WIC commenced its investment activities in May 2005, with OZG commencing in January 2008. Both investment mandates focus
on the generation of the target level of returns from investment in small to mid-cap ASX listed securities, generally with a connection
to Western Australia. Both portfolios have produced returns in excess of comparable equity benchmarks.
In the past 16 years, WIC and OZG have returned $177.7 million in fully franked dividends to their shareholders.
(c) Wealth Management
In July 2015, Euroz acquired Entrust Wealth Management Pty Ltd (“Entrust”) which has an 18-year track record as a leading wealth
management business. The strategy in acquiring Entrust was to leverage an established wealth management business with long
term ongoing revenues as a platform for further acquisitions and organic growth. The past year has seen a modest improvement in
funds under management in line with our growth strategy.
On 26 April 2021, Euroz Securities Limited merged with Hartleys Limited and Entrust Wealth Management Pty Ltd. Since the merger
the Euroz Hartleys Limited business now has FUM of $3.1 billion.
(d)
Investing
Euroz Limited owns significant shareholdings of 26.25% in WIC and 40.58% in OZG. The investment focus of these funds is on small
to mid-cap ASX securities with a general connection to Western Australia.
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DIRECTORS’ REPORT (CONT'D)
FOR THE YEAR ENDED 30 JUNE 2021
DISCLOSURE OF BUSINESS STRATEGIES AND PROSPECTS - GROWTH
Our aim is to build real diversification of revenues into our overall business. We are cognisant that we need to continue to grow our
wealth management FUM. We are pleased to report a Group FUM as at 30 June 2021 of $3.4 billion (2020: $1.6 billion).
On 1 October 2020, Euroz completed the transaction with Hartleys Limited through the issue of 33,000,075 shares. Euroz Hartleys is
now Western Australia’s largest stockbroking and wealth management business. We are pleased to report excellent progress on this
merger of equals and our ongoing cultural and brand alignment has been well received by our clients. This is the direct result of the
significant efforts of our major asset – our staff, who have embraced this merger and worked tirelessly to ensure its success.
The merger of Euroz Hartleys Securities Limited and Entrust Wealth Management Pty Ltd into Euroz Hartleys Limited has created
a financial services company with a strong balance sheet, critical scale, strong operational synergies with solid recurring and
transactional revenues delivering a positive outcome for clients and shareholders alike.
The Directors believe that Euroz has laid the foundations for our strategy to build a more consistent base of underlying recurring
revenues through our growing wealth management businesses whilst still retaining the transaction-based upside of our traditional
stockbroking business and performance fee upside from our funds management business.
DISCLOSURE OF BUSINESS STRATEGIES AND PROSPECTS - MATERIAL BUSINESS RISKS
Due to the impact of Coronavirus (COVID-19) pandemic, the past year continues the trend of good but volatile trading conditions.
Like many businesses we adapted quickly to remote working and our continued provision of key client services and operations. We
have experienced record trading months with the volatility of the markets, however, significant economic concerns remain within
the community.
Given this backdrop and the increasingly competitive landscape it has created, we are pleased with our overall results for the financial
year. Our entire team has worked hard to manage our costs and generate profits and dividends for shareholders.
FINANCIAL POSITION
The net assets of the consolidated group have increased to $171.1 million at 30 June 2021 from $114.3 million at 30 June 2020. The
Company and consolidated group’s financial performance has enabled it to continue to pay dividends to shareholders during the
year while maintaining a healthy working capital ratio. The consolidated group’s working capital, being current assets less current
liabilities, is $51.0 million at 30 June 2021 (30 June 2020: $31.9 million).
During the past 21 years the Company has invested in expanding each of its business units to secure its long-term success.
In particular it has increased its strategic investments via the acquisitions of Hartleys and Entrust to develop a market leading
platform for our future wealth management ambitions.
Our group remains in an extremely sound financial position with cash and investments of $181.3 million as at 30 June 2021. We have a
Net Tangible Assets (NTA) of 71¢ per share and no debt to develop a market leading. Euroz has a proud history of consistent profits
and dividends having paid a total of $265 million in fully franked dividends over the past 21 years.
The Directors believe the Company is in a strong and stable financial position to expand and grow its current operations.
Profit / (Loss) per share
Basic profit / (loss) per share
Diluted profit / (loss) per share
DIVIDENDS – EUROZ LIMITED
Dividends paid or provided for during the financial year were as follows:
Interim ordinary dividend of 2.5 cents (2020: 1.75 cents) per fully paid ordinary share was
paid on 19 February 2021.
Provision for final ordinary dividend for 30 June 2021 of 13.5 cents (2020: 6 cents) per
fully paid ordinary share paid on 6 August 2021.
2021
Cents
29.16
28.17
2020
Cents
(0.87)
(0.84)
2021
$
2020
$
4,887,958
2,838,449
26,394,973
9,751,095
31,282,931
12,589,544
Of the total dividends paid during the year, $63,005 (2020: $4,140) was paid to the Euroz Share Trust and is undistributed. Therefore,
it has been eliminated on consolidation.
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DIRECTORS’ REPORT (CONT'D)
FOR THE YEAR ENDED 30 JUNE 2021
STATE OF AFFAIRS
On 1 October 2020, Euroz completed the acquisition of Hartleys Limited through the issue of 33,000,075 shares. Euroz Hartleys is
now Western Australia’s largest stockbroking and wealth management business. We are pleased to report excellent progress on this
merger of equals and our ongoing cultural and brand alignment has been well received by our clients.
Due to the restructure of operations within the Euroz Limited Group during the year, on 26 April 2021 Euroz Hartleys Securities
Limited (formerly Euroz Securities Limited), Euroz Hartleys Limited (formerly Hartleys Limited) and Entrust Wealth Management Pty
Ltd consolidated their businesses under one single operating entity, Euroz Hartleys Limited.
Euroz acquired 5,298,017 treasury shares on-market and vested 1,996,076 shares under the Performance Rights Plan.
Other than described above there has been no other significant changes in the state of affairs of the consolidated Group.
SHARE OPTIONS
There were no options on issue at 30 June 2021 and 30 June 2020.
ENVIRONMENTAL REGULATION
The consolidated group is not subject to significant environmental regulation in respect of its operations.
EVENTS AFTER REPORTING DATE
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has not significantly impacted the Group up to 30
June 2021, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly
developing and is dependent on vaccination rates across the population as well as measures imposed by the Australian Government
and other countries, such as vaccination rates, maintaining social distancing requirements, quarantine, travel restrictions and any
economic stimulus that may be provided.
On 2 July 2021, the Board of Directors announced its intention to table a special resolution at the Company’s Annual General Meeting
to seek shareholder approval to change the name of Euroz Limited to Euroz Hartleys Group Limited. The Board has proposed
the change of name to reflect the deep history of the two most iconic and successful stockbroking, corporate finance and wealth
management businesses based in Western Australia.
The Directors are not aware of any other matter or circumstance subsequent to 30 June 2021 that has significantly affected, or may
significantly affect:
(a) the consolidated group’s operations in future financial years; or
(b) the results of those operations in future financial years; or
(c) the consolidated group’s state of affairs in future financial years.
LIKELY DEVELOPMENTS
The Directors are confident that a strong statement of financial position and established business platforms will support the
Company in increasingly volatile market conditions.
Further information on likely developments in the operations of the consolidated group and the expected results of operations
have not been included in this report because the Directors believe it would be likely to result in unreasonable prejudice to the
consolidated group.
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DIRECTORS’ REPORT (CONT'D)
FOR THE YEAR ENDED 30 JUNE 2021
INFORMATION ON DIRECTORS
I NFORM ATI ON O N DIRECTOR S
DI RE CTOR
A McKenzie
Executive Chairman
Experience
Mr McKenzie has worked in the
stockbroking industry since 1991.
J Hughes
Executive Director
Experience
Mr Hughes has worked in the
stockbroking industry since 1986.
R Black
Executive Director
Experience
Mr Black has worked in stockbroking
industry since 1993.
R Simpson
Executive Director
Experience
Mr Simpson has worked in the
stockbroking industry since 1990
I Parker
Executive Director
Experience
Mr Parker has worked in the
stockbroking industry since 1981
R Romero
Independent Non-executive Director
Experience
Ms Romero has over 26 years’
experience in law and accounting
PARTICULAR S O F
DIRECTORS’ INTERESTS I N
SHARES OF EUROZ LI MI T ED
SPECIAL RESPONSIBILITIES AND QUALIFICATIONS
ORDINARY SHARE S *
Executive Chairman of Euroz Limited and Euroz Hartleys Limited
13,268,724
Member of Euroz Limited Remuneration Committee, Euroz
Hartleys Limited Executive Remuneration Committee and Euroz
Hartleys Limited Underwriting Committee
Holds a Bachelor of Economics Degree from UWA, a Graduate
Diploma in Applied Finance and Investment from FINSIA and is a
Master Member (MSAFAA) of SAFAA
Executive Director of Euroz Limited and Euroz Hartleys Limited.
13,745,094
Non-Executive Chairman of Westoz Funds Management Pty Ltd,
Westoz Investment Company Limited and Ozgrowth Limited
Member of Euroz Hartleys Limited Executive Remuneration
Committee and Euroz Hartleys Limited Underwriting Committee
Holds a Graduate Diploma in Applied Finance and Investment
from FINSIA and is a Master Member (MSAFAA) of SAFAA
Executive Director of Euroz Limited and Euroz Hartleys Limited
5,042,340
Managing Director of Euroz Hartleys Limited
Member of Euroz Limited Audit and Risk Committee
Member of Euroz Hartleys Limited Executive Remuneration
Committee, Euroz Hartleys Limited Underwriting Committee,
Euroz Hartleys Limited Research Committee and Euroz Hartleys
Limited Compliance Committee
Holds a Bachelor of Business Degree from ECU and is a Graduate
member (GAICD) of AICD
Executive Director of Euroz Limited and Euroz Hartleys Limited
2,503,878
Chairman of Euroz Limited Audit and Risk Committee
Member of Euroz Hartleys Limited Executive Remuneration
Committee, Euroz Hartleys Limited Underwriting Committee and
Euroz Hartleys Limited Research Committee
Holds a Bachelor of Applied Science (Hons) from Curtin University
and a Masters in Business Administration (MBA) from UWA
Executive Director of Euroz Limited and Euroz Hartleys Limited
1,845,921
Member of Euroz Limited Remuneration Committee, Euroz
Hartleys Limited Underwriting Committee and Euroz Hartleys
Limited Research Committee
Holds a Bachelor of Arts (Economics) from Murdoch University
and is a Master Member (MSAFAA) of SAFAA
Independent Non-executive Director of Euroz Limited
22,575
Chairperson of Euroz Limited Remuneration Committee
Member of Euroz Limited Audit and Risk Committee
Holds a Bachelor of Laws from UWA and a Bachelor of Commerce
from UWA, is a member of Chartered Accountants Australia and
New Zealand and holds a practising certificate from the Legal
Practice Board of Western Australia
*Balance as at the date of signing the report and total shares includes shares allocated under the Performance Rights Plan.
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DIRECTORS’ REPORT (CONT'D)
FOR THE YEAR ENDED 30 JUNE 2021
MEETINGS OF DIRECTORS
The numbers of meetings of the Company’s Board of Directors held during the year ended 30 June 2021 and the numbers of
meetings attended by each Director were:
DI RECTO R
DIRECTORS MEETINGS
COMMITTEE MEETINGS
NUMBER ELIGIBLE
NUMBER
NUMBER ELIGIBLE
NUMBER
NUMBER ELIGIBLE
NUMBE R
TO ATTEND
ATTENDED
TO ATTEND
ATTENDED
TO ATTEND
ATTEND E D
AUDIT
REMUNERATION
Andrew McKenzie
Jay Hughes
Robert Black
Richard Simpson
Ian Parker
Robin Romero
Russell Kane
Simon Yeo
Anthony Brittain
Greg Chessell
12
12
12
10
10
7
3
3
3
3
12
12
12
9
10
6
3
3
3
3
-
-
1
1
-
1
-
1
1
1
-
-
1
1
-
1
-
1
1
1
2
1
1
-
1
1
-
-
-
-
2
1
1
-
1
1
-
-
-
-
REMUNERATION REPORT (AUDITED)
This Remuneration Report outlines the Key Management Personnel (“KMP”) remuneration arrangements of the Company and the
consolidated group in accordance with the requirements of the Corporations Act 2001 and its regulations. For the purposes of this
report KMP of the consolidated group are defined as those persons having authority for the strategic management and direction of
the consolidated group including any Director (whether executive or otherwise) of the parent Company.
Key Management Personnel Remuneration
Remuneration packages are set at levels that are intended to attract and retain executives capable of managing the consolidated
group’s operations. The Board undertakes regular reviews of its performance and the performance of the Board against expectations
made at the start of the year. Performance related bonuses are available to KMP based on their performance and that of
the Company.
Remuneration Policy
The remuneration policy has been designed to align the interests of shareholders, Directors and executives. Euroz remunerates its
Directors, executives and other employees by way of a fixed base salary, commission and a combination of short and long term
incentives. The Company believes this policy to have been effective in increasing shareholder wealth since inception.
The following table shows a summary of the gross revenue, profits and dividends for the Group, as well as the share price at the end
of the respective financial years.
Revenue (including discontinued operations)
Net profit / (loss) after tax attributable to members
Share price at year end
Dividends paid or recommended
2021
$
131,055,891
52,540,905
1.73
2020
$
49,587,996
(1,354,726)
1.03
31,282,931
12,589,544
The objective of the Company’s remuneration framework is to ensure reward for performance is competitive and appropriate to the
results delivered. The Board / Remuneration Committee ensure that executive rewards satisfy the following key criteria for good
reward governance practices:
•
•
•
•
•
competitiveness and reasonableness
acceptability to shareholders
performance linked
transparency
capital management
Directors’ fees
No Directors fees are paid to Executive Directors.
Non-Executive Directors are paid a fixed base fee and superannuation for their role on the Board.
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DIRECTORS’ REPORT (CONT'D)
FOR THE YEAR ENDED 30 JUNE 2021
REMUNERATION REPORT (CONT'D)
Remuneration Policy (cont'd)
Base pay
All Directors and executives are offered a competitive base salary and superannuation. Base pay for senior executives is reviewed
semi annually by the Remuneration Committee to ensure it is competitive with the market. Base pay is also reviewed upon promotion
or additional responsibilities.
There is no guarantee of base pay increases fixed in any senior executive or Directors contracts.
Executives are offered a competitive salary that comprises of a base salary inclusive of superannuation and a combination of some of
the following short term incentives, dependant on the terms of the individual employment contract:
•
•
•
Participation in the profit share pool
Commission
Discretionary Bonus
Profit share pool
Directors and executives are invited to participate in the profit share pool. The Remuneration Committee determines the allocation
of up to 45% pre tax profit on an ongoing basis. In consultation with relevant Department Heads, the Committee uses the following
informal criteria to assist in the allocation:
•
•
•
•
•
•
Ability to perform individual tasks within the relevant department.
Ability to add value and innovate beyond the job standard specifications.
Development of new and existing client relationships.
Ability to interact with other relevant departments as part of a larger team approach.
Relevant industry salary benchmarking.
General requirements to attract and retain staff.
The profit share payment is made as a combination of cash (75%) and equity (25%) in the Performance Rights Plan as detailed below
in “Equity based payments”.
During the year, the Board introduced an additional bonus sacrifice arrangement as part of the Performance Rights Plan. Employees
who qualify for this have the opportunity to elect to sacrifice an additional amount of their bonus above the 25% to be settled via the
issue or allotment of shares in accordance with the terms of the Performance Rights Plan, instead of cash. Shares acquired as part of
the bonus sacrifice arrangement are subject to escrow for a period of 14 years and one day.
The three Directors on the Remuneration Committee are Ms Robin Romero (Chair) (Independent Non-Executive Director), Ian Parker
and Andrew McKenzie (Executive Directors). Ms Romero and Mr Parker are not entitled to participate in the profit share pool.
Commission
Private Wealth Advisers are paid commission in addition to a base salary and superannuation. This is calculated on a sliding scale.
Eligible Private Wealth Advisers are also invited to participate in the Performance Rights Plan based on certain performance hurdles
set out in their employment contract.
Discretionary bonus
Executives and other staff members who do not participate in the profit share pool are paid a discretionary bonus based on
the profitability of the Company. Similar to the profit share pool, the distribution of the discretionary bonus is also leveraged to
the individual’s performance and is made as a combination of cash (75%) and equity (25%) as detailed below in “Equity based
payments”.
Equity based payments
The Performance Rights Plan was established in 2014 as a long term incentive to assist in the reward, retention and motivation of
Directors, executives and staff members. The overarching intention is to increase the alignment of staff with shareholder return.
Eligible employees are invited to participate in this plan and are awarded a Performance Right at the beginning of the year. There are
three separate long term incentives depending on the individual employment contract as below:
•
•
•
Profit share
Discretionary bonus
Commission
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DIRECTORS’ REPORT (CONT'D)
FOR THE YEAR ENDED 30 JUNE 2021
REMUNERATION REPORT (CONT'D)
Remuneration Policy (cont'd)
Equity based payments (cont'd)
The Performance Right represents a right to be issued a number of ordinary shares in Euroz to reflect 25% of the profit share or the
discretionary bonus that is paid to the participant. Private Wealth Advisers who are paid a commission may also be paid a portion of
their total monthly brokerage and portfolio administration revenue in equity based payments. The shares issued will only vest to the
employee after 3 years subsequent service following the initial year of service and are escrowed for a further 11 years.
On 7 June 2021, 14 nominal ‘rights’ were issued under the Performance Rights Plan to 14 separate staff classed as sophisticated
investors in accordance with section 708(8) of the Corporations Act for the sole purpose of permitting those staff members to
sacrifice up to a further 75% of their profit share or discretionary bonus into the Performance Rights Plan and receive ordinary shares.
The shares resulting from the election to sacrifice an amount greater than 25% into the Performance Rights Plan were purchased
on market utilising funds accrued from the participants remuneration at market prices in accordance with ASX Listing Rule 10.16
and allotted to participants at the 30-day volume weighted average price in accordance with the terms of the Performance Rights
Plan. Any shares that resulted from the additional sacrifice of a participant’s profit share or the discretionary bonus above 25% are
escrowed until 1 July 2035 and may not be sold, transferred or otherwise dealt with until that date. Andrew McKenzie, Jay Hughes,
Robert Black, Anthony Brittain and Richard Simpson elected to sacrifice amounts greater than 25% into the Performance Rights Plan
and as such the shares received via the PRP are representative of this additional amount.
Details of remuneration
Details of the nature and amount of each element of the emoluments of each KMP of the Group are set out in the following tables.
SHORT-TERM
PROFIT SHAR E/
POST-
SHARE BASED
EMPLOYMENT
PAYMENT
BASE SALARY
COMMISSION
BENEFITS SUPERANNUATION
RIGHTS
TOTAL
R EL AT E D
BONUS/
OTHER
PERFORMANCE
PERFOR MANC E
$
$
250,587
230,452
250,587
250,587
225,129
185,236
50,000
43,750
63,326
63,326
63,326
842,796
843,750
842,796
524,046
618,748
2,692,118
1,068,432
-
150,000
120,000
90,000
$
28,492
26,776
19,526
23,147
12,143
16,655
16,136
-
4,961
5,451
7,007
$
25,999
23,725
25,999
25,999
25,000
21,159
16,271
4,156
5,424
5,424
5,424
162,500
162,500
152,188
78,750
85,546
37,500
-
-
58,750
77,813
54,063
$
1,310,374
1,287,203
1,291,096
902,529
966,566
2,952,668
1,150,839
47,906
282,461
272,014
219,820
77%
78%
77%
67%
73%
92%
93%
0%
74%
73%
66%
2021
Andrew McKenzie
Jay Hughes
Robert Black
Anthony Brittain***
Dermot Woods
Richard Simpson
Ian Parker
Robin Romero*
Greg Chessell**
Russell Kane**
Simon Yeo**
Total
1,676,306
7,792,686
160,294
184,580
869,610
10,683,476
* Appointed Non-Executive Director on 2 December 2020
** Ceased being KMP on 9 October 2020
*** Resigned 9 October 2020 as Executive Director but remains a KMP
Executive Directors did not receive any Directors fees.
Richard Simpson and Ian Parker were appointed to the Board on 6 October 2020, following completion of the off-market takeover offer
by Euroz of Hartleys Limited on 1 October 2020. In connection with the takeover offer, it was agreed that certain amounts would be
permitted to be distributed by Hartleys to its shareholders prior to completion of the takeover offer. This included cash proceeds from
the sale of the securities held by Zenix Nominees Pty Ltd (a subsidiary of Hartleys) as at 30 June 2020 distributed by way of a dividend
/ return of capital as approved by Hartleys shareholders. Richard Simpson and Ian Parker each received (i) a completion bonus in
connection with the takeover offer (paid from Hartleys cash reserves pre-completion of the takeover offer); and (ii) a corporate bonus
which was paid following their respective appointments to the Euroz Board, however, which relates to the period up to completion of the
takeover offer (such amount predominantly as a result of the sale of securities held by Zenix Nominees Pty Ltd).
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33
DIRECTORS’ REPORT (CONT'D)
FOR THE YEAR ENDED 30 JUNE 2021
REMUNERATION REPORT (CONT'D)
Remuneration Policy (cont'd)
SHORT-TERM
PROFIT SHAR E/
POST-
SHARE BASED
EMPLOYMENT
PAYMENT
BASE SALARY
COMMISSION
BENEFITS SUPERANNUATION
RIGHTS
TOTAL
RE LAT E D
BONUS/
OTHER
PERFORMANCE
PERFORM ANCE
$
$
246,092
250,000
250,000
225,000
253,997
253,997
253,997
250,000
337,500
337,500
337,500
172,500
210,000
187,500
187,500
157,500
$
23,569
25,708
18,508
10,551
19,384
19,557
22,279
20,491
$
25,000
25,000
25,000
25,000
21,003
21,004
21,003
25,000
133,438
133,438
114,063
63,438
65,000
95,000
71,250
50,313
$
765,599
771,646
745,071
496,489
569,384
577,058
556,029
503,304
62%
61%
61%
48%
48%
49%
47%
41%
2020
Andrew McKenzie
Jay Hughes
Robert Black
Dermot Woods
Greg Chessell
Russell Kane
Simon Yeo
Anthony Brittain
Total
1,983,083
1,927,500
160,047
188,010
725,940
4,984,580
Executive Directors did not receive any Directors fees.
Service agreements
Remuneration and other terms of employment for the Key Management Personnel are formalised in service agreements. Each of
these agreements provide for performance related cash bonuses and other benefits. Notwithstanding the agreed salary in the service
agreement, the base salary may be reduced or increased based on trading conditions. Other major provisions of the agreements relating
to remuneration are set out below.
Andrew McKenzie, Executive Chairman
•
•
•
Term of contract - ongoing employment contract
Base salary, exclusive of superannuation for the year ended 30 June 2021 of $253,500 (2020 - $253,997) plus profit share
Payment on termination of employment by the employer, other than for gross misconduct - three months’ salary
Jay Hughes, Executive Director
•
•
•
Term of contract - ongoing employment contract
Base salary, exclusive of superannuation for the year ended 30 June 2021 of $253,500 (2020 - $253,997) plus profit share
Payment on termination of employment by the employer, other than for gross misconduct - three months’ salary
Robert Black, Executive Director
•
•
•
Term of contract - ongoing employment contract
Base salary, exclusive of superannuation for the year ended 30 June 2021 of $253,500 (2020 - $253,997) plus profit share
Payment on termination of employment by the employer, other than for gross misconduct - three months’ salary
Anthony Brittain, Executive Director - Resigned 9 October 2020, Chief Operating and Financial Officer
•
•
•
Term of contract - ongoing employment contract
Base salary, exclusive of superannuation for the year ended 30 June 2021 of $253,997 (2020 - $253,997) plus discretionary bonus
Payment on termination of employment by the employer, other than for gross misconduct - three months’ salary
Richard Simpson, Executive Director
•
•
•
Term of contract - ongoing employment contract
Base salary, exclusive of superannuation for the year ended 30 June 2021 of $253,500 (2020 - $0) plus profit share
Payment on termination of employment by the employer, other than for gross misconduct - six months’ salary
Ian Parker, Executive Director
•
•
•
Term of contract - ongoing employment contract
Base salary, exclusive of superannuation for the year ended 30 June 2021 of $66,000 (2020 - $0) plus commission
Payment on termination of employment by the employer, other than for gross misconduct - six months’ salary
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34
DIRECTORS’ REPORT (CONT'D)
FOR THE YEAR ENDED 30 JUNE 2021
REMUNERATION REPORT (CONT'D)
Service agreements (cont’d)
Robin Romero, Independent Non-Executive Director
•
•
Term of contract - ongoing consulting contract
Directors fee, exclusive of superannuation for the year ended 30 June 2021 of $75,000 (2020 - $0)
Dermot Woods, Executive Director Westoz Funds Management Pty Ltd
•
•
•
Term of contract - ongoing employment contract
Base salary, exclusive of superannuation for the year ended 30 June 2021 of $229,000 (2020 - $228,997) plus discretionary
bonus
Payment on termination of employment by the employer, other than for gross misconduct - three months’ salary
Greg Chessell, Executive Director - Resigned 9 October 2020
•
•
•
Term of contract - ongoing employment contract
Base salary, exclusive of superannuation for the year ended 30 June 2021 of $253,997 (2020 - $253,997) plus profit share
Payment on termination of employment by the employer, other than for gross misconduct - three months’ salary
Russell Kane, Executive Director - Resigned 9 October 2020
•
•
•
Term of contract - ongoing employment contract
Base salary, exclusive of superannuation for the year ended 30 June 2021 of $253,997 (2020 - $253,997) plus profit share
Payment on termination of employment by the employer, other than for gross misconduct - three months’ salary
Simon Yeo, Executive Director - Resigned 9 October 2020
•
•
•
Term of contract - ongoing employment contract
Base salary, exclusive of superannuation for the year ended 30 June 2021 of $253,997 (2020 - $253,997) plus profit share
Payment on termination of employment by the employer, other than for gross misconduct - three months’ salary
Shareholdings of Key Management Personnel
The movement during the reporting year in the number of shares in Euroz Limited held, directly, indirectly or beneficially, by each member
of KMP, including related parties, is as follows:
2021
Ordinary shares
A McKenzie
J Hughes
R Black
A Brittain
R Simpson
I Parker
R Romero
D Woods
R Kane
S Yeo
G Chessell
BALANCE AT 1 JULY
RECEIVED
BOUGHT
NET CHANGE
BALANC E AT 3 0
2020
VIA PRP (I)
& (S OLD)*
OTHER **
JUNE 2021
12,844,846
12,955,676
4,578,068
643,633
-
-
-
876,948
3,501,647
4,792,972
4,952,924
232,716***
599,418***
317,340***
219,396***
188,054***
-
-
129,287
-
-
-
191,162
190,000
146,932
-
50,000
23,683
22,575
-
5,000
172,028
114,771
-
-
-
-
2,265,824
1,845,921
-
-
(3,506,647)
(4,965,000)
(5,067,695)
13,268,724
13,745,094
5,042,340
863,029
2,503,878
1,869,604
22,575
1,006,235
-
-
-
45,146,714
1,686,211
916,194
9,427,597
38,321,479
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DIRECTORS’ REPORT (CONT'D)
FOR THE YEAR ENDED 30 JUNE 2021
REMUNERATION REPORT (CONT'D)
Shareholdings of Key Management Personnel (cont’d)
2020
Ordinary shares
A McKenzie
J Hughes
R Black
A Brittain
D Woods
R Kane
S Yeo
G Chessell
BALANCE AT
RECEIVED
NET CHANGE
BOUGHT &
BALANC E AT
1 JULY 2019
VIA PRP (I)
OTHER*
(SOLD)**
30 JUNE 2 020
12,680,051
12,690,912
4,275,630
590,062
818,275
3,353,006
4,609,197
4,740,280
114,795
114,795
114,795
53,571
58,673
63,775
63,775
71,428
50,000
149,969
187,643
-
-
84,866
120,000
141,216
43,757,413
655,607
733,694
-
-
-
-
-
-
-
-
-
12,844,846
12,955,676
4,578,068
643,633
876,948
3,501,647
4,792,972
4,952,924
45,146,714
*
Inclusive of shares allocated in Dividend Reinvestment Plan (DRP).
** Net change reflects commencement or cessation as a KMP.
*** Inclusive of shares allotted via the sacrifice of amounts greater than 25% in to the PRP.
(i)
These shares are held by the Euroz Share Trust and are currently vesting in accordance with the Euroz Performance Rights Plan (PRP).
Performance Rights held by Key Management Personnel
The movement during the reporting period in performance rights in Euroz Limited held, directly, indirectly or beneficially, by each KMP,
including related parties, is as follows:
2021
Performance Rights
A McKenzie
J Hughes
R Black
A Brittain
R Simpson
D Woods
R Kane
S Yeo
G Chessell
DATE
GRANTED
1 July 2020
1 July 2020
1 July 2020
1 July 2020
18 May 2021
1 July 2020
1 July 2020
1 July 2020
1 July 2020
GRANTED AS
REMUNERATION
VESTED
1
1
1
1
1
1
1
1
1
9
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(9)
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DIRECTORS’ REPORT (CONT'D)
FOR THE YEAR ENDED 30 JUNE 2021
REMUNERATION REPORT (CONT'D)
Performance Rights held by Key Management Personnel (cont’d)
2020
Performance Rights
A McKenzie
J Hughes
R Black
D Woods
R Kane
S Yeo
A Brittain
G Chessell
DATE
GRANTED
1 July 2019
1 July 2019
1 July 2019
1 July 2019
1 July 2019
1 July 2019
1 July 2019
1 July 2019
GRANTED AS
REMUNERATION
VESTED
1
1
1
1
1
1
1
1
8
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(8)
These performance rights were issued in accordance with the PRP. Rights are granted on 1 July each year and vest on 30 June.
SHARE BASED COMPENSATION
A performance right was issued to KMPs as part of their annual bonus / profit share plan. The fair value of each right is calculated as 25%
of each member’s bonus entitlement. The performance rights are subject to a vesting period of up to 1 year. Total fair values of shares
resulting from the exercise of the performance rights issued to KMPs in the year amounts to $1,495,000 (2020: $642,500).
LOANS KEY MANAGEMENT PERSONNEL
No loans were made to Directors of Euroz Limited and the KMPs of the consolidated group, including their personally related entities
during the year.
(End of Remuneration Report)
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37
DIRECTORS’ REPORT (CONT'D)
FOR THE YEAR ENDED 30 JUNE 2021
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
Euroz Limited has a Deed of Indemnity for all the Directors and Officers of the Company against all losses or liabilities incurred by each
Director and Officer in their capacities as Directors and Officers of the Company. The Company agreed to indemnify and keep indemnified
the Directors and Officers against all liabilities by the Directors and Officers as a Director and Officer of the Company to the extent
permitted under the Corporations Act 2001.
During the financial year, Euroz Hartleys Limited paid a premium on behalf of the Group to insure the Directors and Officers of the
Company. The liabilities insured include costs and expenses that may be incurred in defending civil or criminal proceedings that may be
brought against the Directors and Officers in their capacity as Directors and Officers of the Company.
INDEMNIFICATION OF AUDITORS
The Company has not indemnified the auditor and has not paid an insurance premium to insure the auditor.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceedings to which the
Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.
The Company was not a party to such proceedings during the year.
NON-AUDIT SERVICES
The following non-audit services were provided by the group’s auditor, KPMG. The Directors are satisfied that the provision of non-audit
services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and
scope of non-audit service provided means that auditor independence was not compromised. KPMG received or is due to receive the
following amounts for the provision of non-audit services:
Other services
AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor’s independence declaration for the year ended 30 June 2021 has been received and follows the Directors’ report.
This report is made in accordance with a resolution of the Directors.
$
15,000
Andrew McKenzie
Executive Chairman
Date: 31 August 2021
Richard Simpson
Executive Director
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38
AUDITOR’S INDEPENDENCE DECLARATION
FOR THE YEAR ENDED 30 JUNE 2021
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Euroz Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Euroz Limited for the
financial year ended 30 June 2021 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Trevor Hart
Partner
Perth
31 August 2021
KPM_INI_01
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by
a scheme approved under Professional Standards Legislation.
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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
Revenue from continuing operations
4
131,055,891
49,587,996
NOTES
2021
$
RESTATE D (i )
2020
$
Gain / (Loss) on fair value movement on investments
Employee benefits expense
Depreciation and amortisation expenses
Regulatory expenses
Legal, professional and consultancy expenses
Conference and seminar expenses
Stockbroking expenses
Communication expenses
Impairment expenses
Other expenses
33,788,240
(1,491,922)
(70,228,999)
(27,444,866)
(2,722,739)
(716,330)
(1,406,836)
(379,667)
(8,410,708)
(263,534)
(270,371)
(5,996,606)
(1,331,240)
(423,714)
(859,283)
(670,544)
(3,911,055)
(266,796)
(3,130,000)
(4,066,366)
Profit before income tax expense from continuing operations
Income tax (expense) / benefit
Profit after income tax expense for the year from continuing operations
Loss after income tax expense for the year from discontinued operations
5
6
7
74,448,341
(21,907,436)
52,540,905
5,992,210
1,979,426
7,971,636
-
(3,621,186)
Profit after income tax expense for the year
52,540,905
4,350,450
Other comprehensive income
Other comprehensive income net of tax
Total comprehensive income for the year
Profit / (Loss) for the year is attributable to:
Non-controlling interest
Owners of Euroz Limited
Total comprehensive income / (loss) for the year is attributable to:
Continuing operations
Discontinued operations
Non-controlling interest
Continuing operations
Discontinued operations
Owners of Euroz Limited
(i)
Refer to note 4 (a)
-
-
52,540,905
4,350,450
-
52,540,905
5,705,176
(1,354,726)
52,540,905
4,350,450
-
-
-
52,540,905
-
52,540,905
(220,563)
5,925,739
5,705,176
8,192,199
(9,546,925)
(1,354,726)
52,540,905
4,350,450
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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
Earnings / (loss) per share for profit / (loss) from continuing operations
attributable to the owners of Euroz Limited
Basic earnings per share
Diluted earnings per share
Earnings / (loss) per share for profit / (loss) from discontinued operations
attributable to the owners of Euroz Limited
Basic earnings / (loss) per share
Diluted earnings / (loss) per share
Earnings / (loss) per share for profit / (loss) attributable to the owners of
Euroz Limited
Basic earnings / (loss) per share
Diluted earnings / (loss) per share
NOTES
36
36
36
36
36
36
2021
¢
29.16
28.17
-
-
29.16
28.17
2020
¢
5.26
5.09
(6.13)
(5.93)
(0.87)
(0.84)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
NOTES
2021
$
2020
$
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other financial assets
Other current assets
Total current assets
NON-CURRENT ASSETS
Financial assets
Investments
Investment entities at fair value
Plant and equipment
Deferred tax assets
Intangible assets
Right of use asset
Total non current assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Current tax liabilities
Short term provisions
Lease liability
Total current liabilities
NON-CURRENT LIABILITIES
Deferred tax liabilities
Long term provisions
Lease liability
Total non current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained earnings
8
9
10
11
12
13
14
15
16
17
21
18
19
20
21
22
23
21
24 (a)
24 (g)
Equity attributable to the owners of Euroz Limited
Non-controlling interest
TOTAL EQUITY
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
96,050,325
28,779,550
21,455,932
2,804,724
41,106,390
2,368,924
7,164,665
1,418,940
149,090,531
52,058,919
1,362,701
826,040
5,216,699
599,790
75,827,068
56,998,090
1,129,497
9,013,841
39,969,660
5,494,070
472,987
9,464,820
9,798,785
4,556,400
133,622,877
87,107,571
282,713,408
139,166,490
81,057,681
8,123,786
7,526,510
1,354,249
13,390,880
2,548,489
3,339,778
879,398
98,062,226
20,158,545
8,602,736
109,882
4,836,380
946,875
72,656
3,653,897
13,548,998
4,673,428
111,611,224
24,831,973
171,102,184
114,334,517
134,665,226
102,167,440
7,955,369
28,481,589
171,102,184
-
4,869,667
7,267,597
114,304,704
29,813
171,102,184
114,334,517
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
SHARE BASED
RETAINED
CONTROLL ING
NON-
ISSUED CAPITAL
PAYMENT RESERVE
EARNINGS
INTEREST
$
$
$
$
TOTAL
$
101,333,244
3,846,281
18,503,754
(5,887,863)
117,795,416
Balance at 1 July 2019
Adjustment for change in accounting
policy (Note 1)
Balance 1 July 2019 - restated
-
-
101,333,244
3,846,281
Loss for the period
Total comprehensive loss for the period
-
-
Transactions with owners, recorded
directly in equity
Shares issued during the period
1,639,362
(46,036)
18,457,718
(1,354,726)
(1,354,726)
-
(46,036)
(5,887,863)
5,705,176
5,705,176
117,749,380
4,350,450
4,350,450
-
212,500
1,851,862
Reclassification of subsidiary share
capital
Vested shares under employee share
plan
Treasury shares
Share based payments
Dividends declared
Total contributions by and
distributions to owners
-
902,234
(1,707,400)
-
-
2,749,999
-
-
-
-
(12,585,394)
-
-
-
-
-
2,749,999
-
(1,707,400)
1,925,620
(12,585,394)
834,196
1,023,386
(9,835,395)
212,500
(7,765,313)
-
-
-
-
(902,234)
-
1,925,620
Balance at 30 June 2020
102,167,440
4,869,667
7,267,597
29,813
114,334,517
Balance at 1 July 2020
102,167,440
4,869,667
7,267,597
29,813
114,334,517
52,540,905
(29,813)
52,511,092
52,540,905
(29,813)
52,511,092
Profit for the period
Total comprehensive income for the
period
Transactions with owners, recorded
directly in equity
-
-
Shares issued during the period
38,280,087
-
-
-
Vested shares under employee share
plan
Treasury shares
Share based payments
Dividends declared
Total contributions by and
distributions to owners
2,167,647
(2,167,647)
(7,949,948)
-
5,253,349
-
-
-
(31,326,913)
32,497,786
3,085,702
(31,326,913)
-
-
-
-
Balance at 30 June 2021
134,665,226
7,955,369
28,481,589
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
-
-
-
-
-
-
-
38,280,087
-
(7,949,948)
5,253,349
(31,326,913)
4,256,575
171,102,184
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CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of goods and services tax)
Payments to suppliers and employees (inclusive of goods and services tax)
Interest received
Proceeds from sale of trading shares
Income taxes
Payments for trading shares
NOTES
2021
$
2020
$
111,728,760
(59,370,947)
52,357,813
207,963
13,961,244
(7,953,595)
(8,058,362)
46,627,655
(37,160,919)
9,466,736
265,238
6,505,285
195,551
(4,152,186)
Net cash flows from operating activities
34
50,515,063
12,280,624
CASH FLOWS FROM INVESTING ACTIVITIES
Cash acquired on acquisition of subsidiary
Pershing / FinClear Services security deposit
Payments for investment in WIC & OZG
Payments for management investment schemes
Receipts from disposal of management investment schemes
Dividends and trust distributions received
Transfer to financial assets
Payments for plant and equipment
21,553,544
4,600,000
-
-
-
3,060,278
-
(762,533)
-
-
(164,750)
(250,020)
11,452,043
2,975,099
(216,699)
(159,049)
Net cash flows from investing activities
28,451,289
13,636,624
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid
Payments for treasury shares
Repayment of lease liabilities
Interest paid on lease liabilities
Proceeds from share issue
Net cash flows used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 July
(14,683,034)
(7,949,948)
(1,141,310)
(248,125)
-
(10,883,769)
(1,707,400)
(1,076,592)
(165,505)
1,639,362
(24,022,417)
(12,193,904)
54,943,935
13,723,344
41,106,390
27,383,046
Cash and cash equivalents at 30 June
8
96,050,325
41,106,390
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
CONTENTS
PAGE
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
NOTE 2: SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
NOTE 3: SEGMENT INFORMATION
NOTE 4: REVENUE
NOTE 5: PROFIT / (LOSS) BEFORE INCOME TAX EXPENSE FROM CONTINUING OPERATIONS
NOTE 6: INCOME TAX
NOTE 7: DISCONTINUED OPERATIONS
NOTE 8: CASH AND CASH EQUIVALENTS
NOTE 9: TRADE AND OTHER RECEIVABLES
NOTE 10: OTHER FINANCIAL ASSETS
NOTE 11: OTHER CURRENT ASSETS
NOTE 12: FINANCIAL ASSETS
NOTE 13: INVESTMENTS
NOTE 14: INVESTMENT ENTITIES AT FAIR VALUE
NOTE 15: PLANT AND EQUIPMENT
NOTE 16: DEFERRED TAX ASSETS
NOTE 17: INTANGIBLE ASSETS
NOTE 18: TRADE AND OTHER PAYABLES
NOTE 19: CURRENT TAX ASSETS AND LIABILITIES
NOTE 20: SHORT TERM PROVISIONS
NOTE 21: RIGHT OF USE ASSET AND LEASE LIABILITY
NOTE 22: DEFERRED TAX LIABILITIES
NOTE 23: LONG TERM PROVISIONS
NOTE 24: CONTRIBUTED EQUITY
NOTE 25: DIVIDENDS
NOTE 26: FINANCIAL INSTRUMENTS
NOTE 27: REMUNERATION OF AUDITORS
NOTE 28: CONTINGENT LIABILITIES
NOTE 29: COMMITMENTS FOR EXPENDITURE
NOTE 30: RELATED PARTIES
NOTE 31: INVESTMENTS IN CONTROLLED ENTITIES
NOTE 32: ACQUISITION OF EUROZ HARTLEYS LIMITED
NOTE 33: EVENTS SUBSEQUENT TO REPORTING DATE
NOTE 34: RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
NOTE 35: NON-CASH INVESTING AND FINANCING ACTIVITIES
NOTE 36: EARNINGS / (LOSS) PER SHARE
NOTE 37: PARENT ENTITY DISCLOSURES
NOTE 38: COMPANY DETAILS
46
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61
62
62
62
62
63
63
63
63
64
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65
66
66
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting
Standards, other authoritative pronouncements as issued by the Australian Accounting Standards Board and the Corporations Act
2001 as appropriate for “for-profit” oriented entities.
This financial report has been authorised by the Directors to be issued on 31 August 2021. The Directors have the power to amend
and reissue the financial statements.
Euroz Limited is a listed public company, trading on the Australian Securities Exchange and Chi - X, limited by shares, incorporated
and domiciled in Australia.
The financial report of Euroz Limited and its controlled entities (the group or consolidated group), complies with Australian
Accounting Standards and International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board.
Separate financial information of the parent Company has been included in Note 37 as permitted by amendments to the
Corporations Act 2001. The financial report is presented in Australian dollars which is the group’s functional and presentation
currency. Amounts are rounded to the nearest dollar in accordance with Corporations (Rounding in Financial / Directors’ Reports)
Instrument 2016/191.
The following is a summary of the material accounting policies adopted by the consolidated group in the preparation of the financial
report. The accounting policies have been consistently applied, unless otherwise stated.
Basis of preparation
Reporting basis and conventions
The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected
non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.
Presentation and functional currency
The consolidated financial statements are presented in Australian Dollars, which is the consolidated Group’s functional currency. All
amounts have been rounded to the nearest dollar, unless otherwise indicated.
Accounting policies
(a) Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all entities controlled by Euroz Limited
('Company' or 'parent entity') as at 30 June 2021 and the results of all controlled entities for the year then ended. Euroz
Limited and its controlled entities together are referred to in this financial report as the consolidated group.
Subsidiaries are all those entities over which the consolidated group has control. The consolidated group controls an entity
when the consolidated group 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.
Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated group. They are de-
consolidated from the date that control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the consolidated group.
A change in ownership interest without the loss of control is accounted for as an equity transaction, where the difference
between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised
directly in equity attributable to the parent.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the consolidated group. All controlled entities have a 30 June financial year end.
(b)
Income tax
The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(b)
Income tax (cont’d)
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets
are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
•
•
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability
in a transaction that is not a business combination and that, at the time of the transaction, affects neither the
accounting nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and
the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable
that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entity’s which intend to settle simultaneously.
Euroz Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the Tax
Consolidation Regime. The group formed an income tax consolidated group to apply from 1 July 2003. The tax consolidated
group has entered a tax sharing agreement whereby each Company in the group contributes to the income tax payable in
proportion to their contribution to the net profit before tax of the tax consolidated group.
(c) 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 consolidated group assesses the financial assets acquired and liabilities assumed
for appropriate classification and designation in accordance with the contractual terms, economic conditions, and the
consolidated group’s operating or accounting policies and other pertinent conditions in existence at the acquisition-date.
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 acquirer. The consideration transferred does not include amounts related to the
settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.
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.
(d) Revenue recognition
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be entitled
in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated entity:
identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction
price which takes into account estimates of variable consideration and the time value of money; allocates the transaction
price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or
service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts
the transfer to the customer of the goods or services promised.
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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(d) Revenue recognition (cont’d)
Revenue from contracts with customers (cont’d)
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts,
rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates
are determined using either the ‘expected value’ or ‘most likely amount’ method. The measurement of variable consideration
is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues
until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are
subject to the constraining principle are initially recognised as deferred revenue in the form of a separate refund liability.
The consolidated group recognises revenue when it transfers control over a service to a customer. The nature and timing of
satisfaction of performance obligations for each of the consolidated group’s main revenue streams is set out below.
Brokerage revenue
Brokerage revenue from share trading is considered to be derived from a single obligation being the completion of a share
trading transaction. Accordingly, at the completion of the transaction the revenue is recognised.
Underwriting, placement fees and corporate retainers
Corporate retainers relate to the service fee for work performed such as corporate advisory services. This service is
considered a distinct performance obligation and accordingly revenue is recognised as the service is completed in
accordance with the engagement mandate.
Placement fees are fees charged on raising capital for clients. This is determined to be the single performance obligation and
revenue is recognised as the service is completed in accordance with the engagement mandate.
Underwriting fees are derived upon the satisfactory completion of the engagement criteria which may be the execution of a
capital raising or the sale of a pre-determined number of shares for a client. The performance obligation is determined to be
the completion of the capital raise or sale of the shares and revenue is recognised as the service is completed in accordance
with the engagement mandate.
The payment terms in relation to this source of revenue is up to 7 days.
Performance and management fees
Performance fee income is derived from investment management agreements based on the performance of an underlying
fund over a contracted period of time. If the fund performance exceeds a specified threshold the performance fee payable is
determined and recorded as revenue at the conclusion of the performance period. The performance obligation is determined
to be singular being to achieve a certain performance target over a specified period.
Management fee income is derived from investment management agreements whereby a monthly management fee is
payable based on the fund value. The performance obligation is the monthly management of the fund and revenue is
recorded monthly following the completion of the month.
The payment terms in relation to this source of revenue is up to 20 days.
Wealth management fees
Wealth management fee income is derived from agreements with clients individually whereby a monthly management fee
is payable based on the portfolio value or alternatively a fixed fee arrangement. The performance obligation is the monthly
management of the portfolio and revenue is recorded monthly following the completion of the month.
Proceeds from the sale of investments
Share trading revenue from the sale of stocks in the jobbing account is recognised on the day the security is traded. Revenue
comprises the gross proceeds on sale of the security. The single performance obligation is the sale of the security.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the
net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(e) Receivables
Trade receivables are recognised as current receivables as they are generally settled within 30 days from the date of
recognition. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are
written off. The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a
lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days
overdue.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s receivables from customers and investment securities. For the
Group it arises from receivables from subsidiaries, as well as from customers.
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer and has established
a credit and trading policy which sets certain trading limits and guidelines. These limits are reviewed and adjusted by
management when and, if required, depending on circumstances prevailing at that time.
(f) Other Financial Assets
Other financial assets are securities in listed and unlisted companies held at fair value through profit and loss. Refer to Note
1(v) financial assets at fair value through profit or loss.
(g) Plant and equipment
Each class of plant and equipment is carried at cost as indicated less, where applicable, any accumulated depreciation and
impairment losses.
The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing
costs and an appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be
measured reliably. All other repairs and maintenance are charged to the statement of profit or loss during the financial period
in which they are incurred.
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight-line basis over their useful lives to the residual values
commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets
are:
CL ASS OF FIXED ASSET
Leasehold improvements
Plant and equipment
DEPRECIATION RAT E
2 - 25%
25 – 33%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are
included in the statement of profit or loss. When revalued assets are sold, amounts included in the revaluation reserve relating
to the asset are transferred to retained earnings.
(h)
Leasehold improvements
The cost of improvements to or on leasehold properties are amortised over the unexpired period of the lease or the estimated
useful life of the improvement to the consolidated group, whichever is the shorter.
(i)
Leases
Short term lease payments are charged to the statement of profit or loss in the periods in which they are incurred, as this
represents the pattern of benefits derived from the leased assets.
(j)
Trade and other payables
Trade and other payables also include other liabilities for goods and services provided to the consolidated group prior to the
end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and not
discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
(k) Dividends
Provision is made for the amount of any dividend declared and authorised by the Directors on or before the end of the
financial year, but not distributed at reporting date.
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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(l) Options
The fair value of options in the shares of the Company issued to Directors and other parties is recognised as an expense in the
financial statements in relation to the granting of these options.
(m) Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the
period in which they are incurred.
(n) Provisions
Provisions are recognised when the Company has a present (legal or constructive) obligation as a result of a past event, it
is probable the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of
money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision
resulting from the passage of time is recognised as a finance cost.
(o) Employee benefits
(i) Wages, salaries and annual leave
Liabilities for wages, salaries and annual leave expected to be settled within 12 months of the reporting date are
recognised in respect of employees’ services up to the reporting date and are measured at the amounts expected to
be paid when the liabilities are settled.
(ii)
Employee benefits payable later than one year
Employee benefits payable later than one year have been measured at the present value of the estimated future cash
outflows to be made for those benefits. There have been no changes to the method used to calculate this liability.
(iii) Superannuation
Contributions are made by the consolidated group to superannuation funds as stipulated by statutory requirements
and are charged as expenses when incurred.
(iv) Employee benefit on costs
Employee benefit on costs, including payroll tax, are recognised and included in employee benefits liabilities and costs
when the employee benefits to which they relate are recognised as liabilities.
(v) Options / performance rights
Options and/or performance rights issued are equity settled. The fair value of options/performance rights granted
is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at
grant date. For the right to vest, the employee has to be an Eligible Employee.
The fair value of options at grant date is independently determined using the Black-Scholes option pricing model
that takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact
of dilution, the non-tradeable nature of the option, the share price at grant date and expected price volatility of the
underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.
The fair value of performance rights is estimated at grant date based on expectations of the bonus that will be paid at
year end to eligible employees. Each performance right is subject to a service based vesting condition. At the end of
each, the performance right converts to plan shares that are subject to a further 3-year service condition. The Board
may, at their discretion accelerate the vesting period. Unvested shares are subject to leaver clawback provisions during
the 3 year period.
(vi) Profit-sharing
The consolidated group recognises a liability and an expense for profit-sharing based on a formula that takes into
consideration the profit attributable to the Company’s employees after certain adjustments.
(vii) Termination benefits
The consolidated group recognises a liability and an expense when the group demonstrates a commitment to either
terminate the employee before the normal retirement date or provide termination benefits as a result of an offer made
to the employee prior to retirement date.
(p) Cash and cash equivalents
For purposes of the statement of cash flows, cash and cash equivalents includes deposits at call which are readily convertible
to cash on hand and are subject to an insignificant risk of changes in value, net of outstanding bank overdrafts.
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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(q) Earnings per share
(i)
Basic earnings per share
Basic earnings per share is determined by dividing the net profit after income tax attributable to members 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 year.
(ii) 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. The potential impact of issuing treasury shares externally is considered when
calculating diluted earnings per share.
(r)
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 principle
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 interest. For non-financial assets, the fair value measurement is based on its highest and best
use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair
value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
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 each reporting date and
transfers between levels are determined based on a reassessment of the lowest level 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.
(s)
Fair value estimation
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-
for-sale securities) is based on quoted market prices at the reporting date. The quoted market price used for financial assets
held by the consolidated group is the current closing price; the appropriate quoted market price for financial liabilities is the
current closing price.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
determined using valuation techniques. The consolidated group uses a variety of methods and makes assumptions that are
based on market conditions existing at each reporting date. Quoted market prices or dealer quotes for similar instruments
are used for long-term debt instruments held. Other techniques, such as estimated discounted cash flows and Black-Scholes
model are used to determine fair value for the remaining financial instruments.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair
values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash
flows at the current market interest rate that is available to the consolidated group for similar financial instruments.
(t) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not
recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition
of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown
inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and
financing activities, which are disclosed as operating cash flows.
(u) Treasury Shares
Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or
loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the group’s own equity instruments. Any
difference between the carrying amount and the consideration, if reissued, is recognised in share-based payments reserve.
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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(v)
Investments and Other Financial Assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial
measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either
amortised cost or fair value depending on their classification. Classification is determined based on both the business model
within which such assets are held and the contractual cash flow characteristics of the financial asset unless, an accounting
mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the
consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable
expectation of recovering part or all of a financial asset, its carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as
financial assets at Fair Value Through Profit or Loss (“FVTPL”). Typically, such financial assets will be either: (i) held for trading,
where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii)
designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the consolidated entity
intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition.
Financial assets at amortised cost
The Group measures financial assets at amortised cost if both of the following conditions are met:
(i)
(ii)
The financial asset is held within a business model with the objective to hold financial assets to collect contractual
cashflows; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and are subject
to impairment. Expected Credit Losses (ECL’s) on financial assets at amortised costs are based on the difference between
the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest rate.
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured
at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon
the consolidated entity’s assessment at the end of each reporting period as to whether the financial instrument’s credit risk
has increased significantly since initial recognition, based on reasonable and supportable information that is available, without
undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit
loss allowance is estimated. This represents a portion of the asset’s lifetime expected credit losses that is attributable to a
default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is
determined that credit risk has increased significantly, the loss allowance is based on the asset’s lifetime expected credit
losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of
anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within other
comprehensive income. In all other cases, the loss allowance is recognised in profit or loss.
(w) Current / non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is current when: it is expected to be realised or intended to be sold or consumed in normal operating cycle; it is held
primarily for the purpose of trading; it is expected to be realised within twelve months after the reporting period; or the asset
is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after
the reporting period. All other assets are classified as non-current.
A liability is current when: it is expected to be settled in normal operating cycle; it is held primarily for the purpose of
trading; it is due to be settled within twelve months after the reporting period; or there is no unconditional right to defer the
settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current.
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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(x) 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. Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a
business, are included in the cost of the acquisition as part of the purchase consideration.
(y)
Intangible asset
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value
at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Indefinite life intangibles are tested
for impairment annually or more frequently if events, conditions or circumstances indicate that they might be impaired.
Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses
recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net
disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets
are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by
changing the amortisation method or period.
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment
or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less
accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.
(z)
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-
financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount.
Recoverable amount is the higher of an asset’s fair value less costs to sell and value-in-use. The value-in-use is the present
value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-
generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a
cash-generating unit.
(aa) Discontinued operations
In March 2020, the Group concluded a strategic review of the investment in Prodigy which resulted in the decision to
discontinue the operations of the three subsidiaries, as follows:
FIP Management Services Pty Ltd (Note 31)
DSC Investment Management Pty Ltd (Note 31)
EPC Investment Pty Ltd (Note 31)
The results of discontinued operations are presented separately on the face of the Statement of Profit or Loss and Other
Comprehensive Income.
(ab) Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the
cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and
restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful
life of the asset, whichever is the shorter. Where the consolidated group expects to obtain ownership of the leased asset at
the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or
adjusted for any remeasurement of lease liabilities.
The consolidated group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term
leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit
or loss as incurred.
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53
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(ac) Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or,
if that rate cannot be readily determined, the consolidated group’s incremental borrowing rate. Lease payments comprise
of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts
expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is
reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an
index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if
there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee;
lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment
is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully
written down.
Australian Accounting Standards Board (‘AASB’) 16 Leases
The consolidated entity has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 ‘Leases’ and for lessees
will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a ‘right-of-use’ asset will be
capitalised in the statement of financial position, measured at the present value of the unavoidable future lease payments
to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value
assets (such as personal computers and small office furniture) where an accounting policy choice exists whereby either a
‘right-of-use’ asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the
capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred
and an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition
will be replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on the
recognised lease liability (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease
under AASB 16 will be higher when compared to lease expenses under AASB 117. However, EBITDA (Earnings Before Interest,
Tax, Depreciation and Amortisation) results will be improved as the operating expense is replaced by interest expense and
depreciation in profit or loss under AASB 16. For classification within the statement of cash flows, the lease payments will
be separated into both a principal (financing activities) and interest (either operating or financing activities) component. For
lessor accounting, the standard does not substantially change how a lessor accounts for leases.
Impact of adoption
AASB 16 was adopted using the modified retrospective approach and as such the comparatives have not been restated. The
impact of adoption on opening retained profits as at 1 July 2019 was as follows:
Operating lease commitments as at 1 July 2019 (AASB 117)
Finance lease commitments as at 1 July 2019 (AASB 117)
Operating lease commitments discount based on the weighted average incremental borrowing rate
of 3.5% (AASB 16)
Short-term leases not recognised as a right-of-use asset (AASB 16)
Right-of-use assets (AASB 16)
Lease liabilities - current (AASB 16)
Lease liabilities - non-current (AASB 16)
Reduction in opening retained profits as at 1 July 2019
1 July 2019
$
6,131,095
-
(567,242)
-
5,563,853
(1,076,737)
(4,533,152)
(46,036)
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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(ad) New standards and interpretations
The consolidated group has adopted all of the new and revised Standards and Interpretations issued by the Australian
Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current year.
New Accounting Standards and Interpretations not yet mandatory or early adopted
The AASB has issued the following new and amended accounting standards and interpretations that have mandatory
application dates for future reporting periods. The group has not early adopted any of these standards.
AAS B NO.
TITLE
AP PLICATION DAT E
OF STANDAR D
AASB 2014-10
Sale or Contributions of Assets between an Investor and its Associate or Joint Venture
1 January 2022
AASB 2020-1
Classification of Liabilities as Current or Non-current
AASB 2020-3
Annual Improvements 2018 – 2020 and Other Amendment
AASB 17
Insurance Contracts
1 January 2023
1 January 2022
1 January 2023
2.
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements incorporated in the financial statements are based on historical knowledge and best available current
information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data,
obtained both externally and within the group.
Key estimates and judgments
(i)
Impairment
At each reporting date, the consolidated group compares the carrying values and market values of investments to determine
whether there is any indication of impairment. If impairment indicators exist, any excess of the investment entity’s carrying
value over the recoverable amount is expensed to the statement of profit or loss.
Where it is not possible to estimate the recoverable amount of an individual asset, the consolidated group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
(ii) Classification of other financial assets
The consolidated group has decided to classify investments in listed securities at fair value through profit and loss. These
securities are accounted for at fair value. Any increments or decrements in their value at year end are charged or credited to
the statement of profit or loss.
(iii) Taxation
Judgement is required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised on the
statement of financial position. Deferred tax assets, including those arising from temporary differences and tax losses, are
recognised only where it is considered more likely than not they will be recovered, which is dependent on the generation of
sufficient future taxable profits. Deferred tax liabilities arising from temporary differences are recognised to the extent that
there are future profits.
(iv) Goodwill
Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be
impaired. For the purpose of impairment testing, the goodwill on acquisition of Blackswan Equities Limited is allocated to
Blackswan private client broking cash-generating unit which represents the lowest level at which it is monitored for internal
management purposes. Goodwill allocated to this was $2,803,345. The assumptions used for determining the recoverable
amount are based on past experience and expectations for the future. Projected cash flows for each cash-generated unit are
discounted using an appropriate discount rate and a value in use is determined over a 5-year life. The discount rate deemed
applicable amounted to 7.06 % and a 2% growth rate on cash flows was assumed. The Board have assessed that there is no
indication the goodwill is impaired.
Goodwill on the acquisition of Entrust totalling $5,639,200 has been allocated to the Entrust cash-generating unit. The
assumptions used for determining the recoverable amount are based on past experience and expectations for the future.
Projected cash flows for each cash-generated unit are discounted using an appropriate discount rate and a value in use is
determined over a 5-year life. The discount rate deemed applicable amounted to 7.06 % and a 2% growth rate on cash flows
was assumed. The Board have assessed that there is no indication the goodwill is impaired.
Goodwill on the acquisition of Hartleys Limited totalling $7,507,619 has been recognised as at 30 June 2021. The Board have
assessed that there is no indication the goodwill is impaired.
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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
2.
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT’D)
Key estimates and judgments (cont’d)
(v)
Intangible assets
Upon acquisition of Entrust, Euroz acquired $1,736,240 in other intangible assets consisting 3 separate client portfolios. The
useful life of the intangibles is assessed as 10 years.
The Group is in the process of reviewing the cash generating units following the restructure of the Group operations.
On acquisition of Hartleys Limited, the Group recognised an intangible for Hartleys’ brand name of $19,500,000 with an
indefinite useful life and customer relationship asset of $3,900,000 with a useful life of 9 years. Amortisation expense of the
customer relationship of $325,000 for the 9 months to 30 June 2021was recognised. The values of these intangibles were
measured by an external professional valuer.
(vi)
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to
discount future lease payments to measure the present value of the lease liability at the lease commencement date. Such a
rate is based on what the consolidated entity estimates it would have to pay a third party to borrow the funds necessary to
obtain an asset of a similar value to the right-of-use asset, with similar terms, security and economic environment.
(vii) Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have,
on the consolidated entity based on known information. This consideration extends to the nature of the products and services
offered, customers, supply chain, staffing and geographic regions in which the consolidated entity operates.
3. SEGMENT INFORMATION
Identification of reportable segments
The consolidated group has identified its operating segments based on the internal reports that are reviewed and used by the
executive team (the chief operating decision makers) in assessing performance and in allocating resources.
Following the consolidation of operations of Euroz Hartleys Securities, Euroz Hartleys and Entrust into one business, Euroz Hartleys
business segments have been determined to be:
Retail
Retail refers to private wealth advisers who deal with high net wealth non-institutional clients. The private wealth advisers provide
a broad investment offering for the clients. The wealth management team provides strategic investment advice, superannuation
advice, investment management and portfolio administration service. The specialised broking services allows close interaction
between research analysts and private wealth advisers and hence allowing timely communication with clients.
Wholesale
Wholesale refers to the Institutional Dealing, Research and Corporate Finance team who deal with companies and other institutional
clients. The Institutional dealing team provides quality advice, idea generation, site visits, roadshows highly focused on resources,
mining services and small to mid- cap Western Australia (WA) industrials. Working along the Institutional team is the Research team
which has extensive coverage of ASX listed industrials, resources and energy companies. The Corporate Finance team specialises in
Equity Capital Markets (ECM), Mergers and Acquisitions (M&A) and strategic Corporate Advisory.
Funds Management
The consolidated group provides funds management services. It manages funds under mandate from two listed investment
companies; Westoz Investment Company Limited (“WIC”) and Ozgrowth Limited (“OZG”). Both companies have enjoyed
competitive portfolio returns since inception.
Due to the nature of the business providing financial services to the clients driven by the employees, management does not consider
asset and liabilities separation to be an appropriate measure of segments.
Basis of accounting for purpose of reporting by operating segments
The accounting policies used by the consolidated group in reporting segments internally are consistent with those adopted in the
financial statements of the consolidated group, unless otherwise stated.
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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
3. SEGMENT INFORMATION (CONT’D)
Segment performance
2021
Brokerage
Underwriting and placement fees
Performance and management fees
Wealth management fees
Corporate advisory
Dividends and trust distributions received
Interest received
Other revenue
RETAIL
WHOLESALE
MANAGEMENT
OTHER
TOTAL
FUNDS
$
$
8,964,048
41,351,011
-
17,218,045
36,583
12,381,468
-
-
177,000
-
-
-
11,002
-
22,151,431
10,307,152
-
14,495,036
-
-
-
-
$
-
-
-
-
-
3,063,965
186,342
712,808
$
31,115,479
51,658,163
17,218,045
14,531,619
12,381,468
3,063,965
197,344
889,808
Total segment revenue
46,953,619
62,910,110
17,229,047
3,963,115
131,055,891
Segment net operating profit after tax
6,497,804
14,941,039
10,712,822
20,389,240
52,540,905
RETAIL (ii) WHOLESALE (ii)
(ii)
OTHER (ii)
FUNDS
MANAGEMENT
2020
Brokerage
Underwriting and placement fees
Performance and management fees
Wealth management fees
Corporate advisory
Dividends and trust distributions received
Interest received
Other revenue
$
$
9,044,407
7,351,100
768,370
16,061,678
$
-
-
-
4,039,361
-
9,129,608
-
-
-
-
19,015
684,802
-
-
135,000
3,636,079
3,636,079
24,933
-
247,746
222,335
272,679
357,335
TOTAL
RESTATE D
(i ) ( i i )
$
16,395,507
16,830,048
4,039,361
9,148,623
684,802
$
-
-
-
-
-
$
-
-
-
-
-
Total segment revenue
18,942,385
24,251,595
4,064,294
4,106,160
51,364,432
Segment net operating profit / (loss) after tax
931,908
3,526,010
(6,503,491)
6,396,023
4,350,450
(i)
Refer to note 4 (a)
(ii)
As a result of the acquisition of Hartleys Limited during the year ended 30 June 2021 (see Note 32) and the consolidation of Euroz Hartleys Securities,
Euroz Hartleys and Entrust in to one business, the consolidated group has changed its internal organisation and the composition of its operating segments,
which resulted in a change in reportable segments. Accordingly, the consolidated group has restated the previously reported segment information for the
year ended 30 June 2020.
Entity-wide disclosures
The consolidated group predominately operates with in the geographical region of Australia. Therefore, the total revenue and non-
current assets are reflected on the face of the financial statements.
During the year ended 30 June 2021, approximately 15.43% (2020: 10.47%) of the consolidated group’s external revenue was derived
from management fees and dividends from Ozgrowth Limited and Westoz Investment Company Limited.
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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
4. REVENUE
Revenue from continuing operations
Revenue from discontinued operations
Disaggregation of revenue including discontinued operations
The disaggregation of revenue is as follows:
Brokerage
Underwriting and placement fees
Performance and management fees
Wealth management fees
Corporate advisory fees
Dividends and trust distributions received
Interest received
Other revenue
(a) Restatement
2021
$
131,055,891
-
2020
RESTATE D (a )
$
49,587,996
1,776,436
131,055,891
51,364,432
31,115,479
51,658,163
17,218,045
14,531,619
12,381,468
3,063,965
197,344
889,808
16,395,507
16,830,047
4,039,361
9,148,623
684,802
3,636,078
272,679
357,335
131,055,891
51,364,432
In the comparative period, in the statement of profit or loss, the Group included within Revenue the proceeds on sale of
financial assets as “Proceeds on sale of principal trading shares” when securities were sold. In addition, the cost of those
securities was disclosed as an expense described as “Carrying value of principle trading stock sold” with any prior period
revaluation gains/losses on those securities sold being recognised in “Gain/(Loss) on fair value movement on investments”.
In order to comply with the requirements of AASB15 Revenue from Contracts with Customers and AASB 9 Financial
Instruments, the Directors have restated the presentation of the Consolidated Statement of Profit or Loss and Other
Comprehensive Income to disclose the difference between the proceeds and the carrying amount of securities sold as part
of “Gain/(Loss) on fair value movement on investments”. No restatement was required for Profit before income tax or Profit
after income tax for the period. No restatement was required to the consolidated statement of financial position (other than
to refer to investments in traded securities as other financial assets rather than inventory), consolidated statement of changes
in equity and consolidated statement of cash flows in relation to the above.
Extracts from the Consolidated Statement of Profit or Loss and Other Comprehensive Income in the table below set out the
impact on the comparative for the year ended 30 June 2020.
Revenue
Gain on fair value movement on investments
Carrying Value of principal trading stock
Profit before Tax
Profit after tax expense for the period
(i)
Refer to note 4 (a)
30 JUNE 202 0
ADJUSTMENT
67,545,324
1,587,010
(21,036,260)
5,992,210
4,350,450
(17,957,328)
(3,078,932)
21,036,260
-
-
RESTATE D
AMOUNT (i)
49,587,996
(1,491,922)
-
5,992,210
4,350,450
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58
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
5. PROFIT / (LOSS) BEFORE INCOME TAX EXPENSE FROM CONTINUING OPERATIONS
Profit / (loss) before income tax is determined after accounting for the following specific expenses:
Plant and equipment – depreciation
Leasehold improvements – amortisation
Right of use asset – amortisation
Right of use asset – impairment
Amortisation – intangible asset
Less depreciation and amortisation from discontinued operations
2021
$
2020
$
354,278
128,305
983,041
270,371
986,744
-
2,722,739
242,655
126,176
1,007,453
-
-
(45,044)
1,331,240
Finance costs
Interest and finance charges paid/payable on lease liabilities
248,125
165,505
Leases
Short term lease payments
Superannuation expense
Share based payments – PRP
Impairment expenses
Impairment – investment
Impairment – intangible asset
6.
INCOME TAX
The components of tax benefit / expense comprise:
Current tax
Deferred tax
Income tax benefit / expense is attributable to:
Expense / (benefit) from continuing operations
Expense / (benefit) from discontinued operations
Numerical reconciliation between tax expense and pre-tax accounting profit / (loss)
Profit / (loss) before income tax expense from continuing operations
Profit / (loss) before income tax expense from discontinued operations
-
770
2,040,313
1,058,927
5,253,350
1,900,220
-
270,371
2,750,000
380,000
13,800,596
8,106,840
2,570,078
(2,870,406)
21,907,436
(300,328)
21,907,436
-
(1,979,426)
1,679,098
21,907,436
(300,328)
74,448,341
-
74,448,341
5,992,210
(1,942,088)
4,050,122
Income tax using company’s tax rate of 30% (2020: 30%)
22,334,502
1,215,037
Add tax effect of:
- deferred tax not recognised on temporary differences
- other non-allowable items
(116,263)
82,542
22,300,781
(246,127)
82,333
1,051,243
1
2
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59
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
6.
INCOME TAX (CONT’D)
Less tax effect of:
- franked dividends received
2021
$
2020
$
(393,345)
1,351,571
Income tax expense/(benefit) attributable to entity
21,907,436
(300,328)
Reconciliations
i.
Gross movements
The overall movement in the deferred tax account is as follows:
Balance at 1 July
Recognised in statement of profit or loss
Balance at 30 June
ii.
Deferred tax liability
Movement in temporary differences during the year:
Fair value gain adjustments
Balance at 1 July
Recognised in the statement of profit or loss
Balance at 30 June
Other
Balance at 1 July
Recognised in the statement of profit or loss
Balance at 30 June
iii.
Deferred tax assets
Movement in temporary difference during the year:
Fair value gain adjustments
Balance at 1 July
Recognised in the statement of profit or loss
Balance at 30 June
Provisions
Balance at 1 July
Recognised in the statement of profit or loss
Balance at 30 June
Other (i)
Balance at 1 July
Recognised in the statement of profit or loss
Balance at 30 June
(i)
Deferred tax arising from debt forgiven $3,637,673 (2020: $4,708,994)
8,517,945
(8,106,840)
411,105
5,647,539
2,870,406
8,517,945
35,212
7,229,741
7,264,953
911,663
426,120
1,337,783
446,308
(411,096)
35,212
866,760
44,903
911,663
8,602,736
946,875
2,292,692
(2,292,692)
-
3,150,224
(857,532)
2,292,692
1,088,718
2,926,051
4,014,769
2,617,564
(1,528,846)
1,088,718
6,083,410
(1,084,338)
4,999,072
1,192,819
4,890,591
6,083,410
9,013,841
9,464,820
1
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60
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
6.
INCOME TAX (CONT’D)
Tax consolidation legislation
Euroz Limited and its wholly-owned Australian subsidiaries implemented the tax consolidation legislation as of 1 July 2003. The
accounting policy on implementation of the legislation is set out in Note 1(b). The impact on the income tax expense for the year is
disclosed in the tax reconciliation above.
The entities have also entered into a tax sharing and funding agreement. Under the terms of this agreement, the wholly-owned
entities reimburse Euroz Limited for any current income tax payable by Euroz Limited arising in respect of their activities. The
reimbursements are payable at the same time as the associated income tax liability falls due and have therefore been recognised
as a current tax-related receivable by Euroz Limited. In the opinion of the Directors, the tax sharing agreement is also a valid
agreement under the tax consolidation legislation and limits the joint and several liability of the wholly owned entities in the case of a
default by Euroz Limited.
7. DISCONTINUED OPERATIONS
In 2020, the Group concluded a strategic review of the investment in Prodigy which resulted in the decision to discontinue the
operations of the three subsidiaries, as follows:
•
•
•
FIP Management Services Pty Ltd (Note 31)
DSC Investment Management Pty Ltd (Note 31)
EPC Investment Pty Ltd (Note 31)
The results of the discontinued subsidiaries operations are presented below:
Financial performance information
Revenue
Employee benefits expense
Depreciation and amortisation expenses
Regulatory expenses
Legal, professional and consultancy expenses
Conference and seminar expenses
Stockbroking & Portfolio management expenses
Communication expenses
Other expenses from ordinary activities
Loss before income tax
Income tax benefit / (expense)
Loss after income tax expense from discontinued operations
Assets
Cash
Other current assets
Plant and equipment
Deferred tax asset
Liabilities
Trade and other payables
Short term provisions
Deferred tax liability
Other non-current liabilities
Net assets (liabilities) directly associated to the subsidiaries classified as discontinued
2020
$
1,776,436
(2,023,635)
(45,044)
(20,481)
(101,101)
(36,689)
(1,138,152)
(107,776)
(245,646)
(1,942,088)
(1,679,098)
(3,621,186)
6
-
-
-
6
-
-
-
-
-
6
1
2
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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
7. DISCONTINUED OPERATIONS (CONT’D)
CAS H FLOW INFORMATION
Net cash from / (used in) operating activities
Net cash used in investing activities
Net cash from / (used in) investing activities
Net decrease in cash and cash equivalents from discontinued operations
8. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Restricted cash:
Cash margin account
Client trust account
Total restricted cash
2021
$
2020
$
-
-
-
-
1,126,637
(1,100)
(1,159,934)
(34,397)
78,587,456
41,106,390
3,330,943
14,131,926
17,462,869
-
-
-
Total cash and cash equivalents
96,050,325
41,106,390
The cash margin account is held by the Australian Securities Exchange (ASX) as a margin requirement to cover possible market
participant default and is adjusted each day to reflect the Company’s current obligation to the clearing house at ASX. Client trust
bank balances are client funds, and not available for general use by the Group.
9. TRADE AND OTHER RECEIVABLES
Trade receivables
Broker receivable
Other receivable
2,191,154
2,368,924
26,505,144
83,252
-
-
28,779,550
2,368,924
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Group has
established a credit and trading policy which sets certain trading limits and guidelines. These limits are reviewed and adjusted by
management when and, if required, depending on circumstances prevailing at that time.
Receivables are measured at amortised cost and their carrying amount approximates fair value.
10. OTHER FINANCIAL ASSETS
Fair value of securities in listed companies (i)
Fair value of unlisted securities (ii)
Total
(i)
(ii)
The fair value adjustment is based on the closing price of each investment at year end.
These securities are held at fair value through profit or loss.
11. OTHER CURRENT ASSETS
Prepayments
Accrued income
Total
14,683,377
6,772,555
6,932,665
232,000
21,455,932
7,164,665
2,647,821
156,903
1,043,453
375,487
2,804,724
1,418,940
1
2
0
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62
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
12. FINANCIAL ASSETS
Security deposit
Financial guarantee – term deposit
Other non-current receivable
2021
$
400,000
842,122
120,579
2020
$
5,000,000
216,699
-
1,362,701
5,216,699
Security deposit is held by FinClear Services Pty Ltd (formerly Pershing Securities (Australia) Pty Ltd) who is the clearing and
trading participant on behalf of Euroz Hartleys Limited for international trades.
13.
INVESTMENTS
Fair value of investment in managed investment schemes (i)
826,040
599,790
(i)
The fair value adjustment is based on the closing unit value of the scheme.
14.
INVESTMENT ENTITIES AT FAIR VALUE
Listed ordinary shares in investment entities at fair value through profit or loss
75,827,068
56,998,090
Reconciliation
Reconciliation of the fair values at the beginning and end of the current financial
year are set out below:
Opening fair value
Additions
Fair value increments / (decrements)
Closing fair value
56,998,090
58,016,264
-
18,828,978
164,750
(1,182,924)
75,827,068
56,998,090
Investment entities encompass listed entities – Westoz Investment Company Limited and Ozgrowth Limited. While the consolidated
group is deemed to control these entities, exemption from consolidation is obtained as the Company meets the definition of
investment entity under AASB 2013-5 – Investment Entities. Accordingly, these investments are fair valued.
15. PLANT AND EQUIPMENT
Leasehold improvements
At cost
Less: Accumulated amortisation
Software
At cost
Less: Accumulated depreciation
Office equipment
At cost
Less: Accumulated depreciation
Furniture, fixtures and fittings
At cost
Less: Accumulated depreciation
476,351
(277,902)
198,449
2,215,907
(1,612,339)
603,568
880,582
(662,311)
218,271
219,759
(110,550)
109,209
413,396
(321,264)
92,132
283,238
(212,301)
70,937
697,265
(469,005)
228,260
105,437
(23,779)
81,658
1,129,497
472,987
1
2
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63
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
15. PLANT AND EQUIPMENT (CONT’D)
Reconciliations
Reconciliations of the carrying amounts of each class of plant and equipment at the beginning and end of the current and previous
financial years are set out below:
2021
Carrying amount at 1 July 2020
Additions as a result of acquisition of business
Additions
Disposal
Depreciation / amortisation expense
LEASEHOLD
IMP ROVEMENTS
PLANT AND
EQUIP MENT
$
$
92,132
246,279
201,441
(213,098)
(128,305)
380,855
391,790
561,092
(48,411)
(354,278)
TOTAL
$
472,987
638,069
762,533
(261,509)
(482,583)
Carrying amount at 30 June 2021
198,449
931,048
1,129,497
2020
Carrying amount at 1 July 2019
Additions
Disposal
Depreciation / amortisation expense
248,163
-
(29,855)
(126,176)
466,989
159,049
(2,528)
(242,655)
715,152
159,049
(32,383)
(368,831)
Carrying amount at 30 June 2020
92,132
380,855
472,987
Capital commitments – Property, plant and equipment
The Group had capital commitments of $2,328,592 for office renovations, plant and equipment at 30 June 2021 (30 June 2020: Nil).
16. DEFERRED TAX ASSETS
2021
$
2020
$
Deferred tax asset (Note 6)
9,013,841
9,464,820
Deferred tax assets are recognised only to the extent that it is probable that future taxable profits can be generated.
17.
INTANGIBLE ASSETS
Goodwill (refer (a) below)
Other intangible assets (refer (b) below)
(a)
Split of goodwill:
Goodwill on acquisition of Blackswan
Goodwill on acquisition of Entrust
Goodwill on acquisition of Hartleys Limited
15,950,164
24,019,496
8,442,545
1,356,240
39,969,660
9,798,785
2,803,345
5,639,200
7,507,619
2,803,345
5,639,200
-
15,950,164
8,442,545
Goodwill balances are deemed to have an indefinite useful life and accordingly an impairment test was performed during the year.
Based on the assessment, no impairment was identified. Note 2 (iv) contains additional information on this assessment.
1
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64
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
17.
INTANGIBLE ASSETS (CONT’D)
(b) Other intangible assets
Client portfolios (i)
Hartleys Brand (ii)
Customer relationship - Hartleys (ii)
ASX Licence
2021
$
2020
$
694,496
19,500,000
3,575,000
250,000
1,356,240
-
-
-
24,019,496
1,356,240
2021
Carrying amount at 1 July 2020
Additions as a result of acquisition of business
Amortisation expense
CUSTOMER
CLIENT
RELATIONSHIP -
PORTFOLIOS
HARTLEYS
$
$
TOTAL
$
1,356,240
-
(661,744)
-
3,900,000
(325,000)
1,356,240
3,900,000
(986,744)
Carrying amount at 30 June 2021
694,496
3,575,000
4,269,496
2020
Carrying amount at 1 July 2019
Amortisation expense
Carrying amount at 30 June 2020
1,736,240
(380,000)
1,356,240
-
-
-
1,736,240
(380,000)
1,356,240
(i)
(ii)
During the year the useful life of the intangibles was assessed as 10 years and amortised accordingly.
On acquisition of Hartleys Limited, the Group recognised an intangible for Hartleys’ brand name of $19,500,000 with an indefinite useful life and customer
relationship asset of $3,900,000 with a useful life of 9 years. Amortisation expense of the customer relationship of $325,000 for the 9 months to 30 June 2021
was recognised. The values of these intangibles were measured by an external professional valuer.
18. TRADE AND OTHER PAYABLES
Trade and other payables
Broker payable
Dividend payable
Accruals
2021
$
2020
$
4,275,581
38,516,434
26,394,973
11,870,693
479,554
-
9,751,095
3,160,231
81,057,681
13,390,880
Payables are measured at amortised cost and their carrying amount approximates fair value.
Dividend payable represents the dividend declared by the Board before the reporting date and to be paid out to shareholders
subsequent to year end.
Movement in dividend payable is set out below:
Carrying amount at 1 July
Additional amount recognised
Amounts paid out
Carrying amount at 30 June
9,751,095
31,389,918
(14,746,040)
8,049,469
12,589,545
(10,887,919)
26,394,973
9,751,095
1
2
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65
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
19. CURRENT TAX ASSETS AND LIABILITIES
Provision for taxation
20. SHORT TERM PROVISIONS
Employee benefits (annual leave)
Employee benefits (long service leave)
Total
Movements in employee benefits, are set out below:
Annual leave:
Carrying amount at 1 July
Additional provisions recognised
Addition as a result of acquisition of business
Amounts paid out
Carrying amount at 30 June
Long service leave:
Carrying amount at 1 July
Additional provisions recognised
Addition as a result of acquisition of business
Amounts paid out
2021
$
2020
$
8,123,786
2,548,489
3,320,114
4,206,396
1,483,615
1,856,163
7,526,510
3,339,778
1,483,615
1,739,372
1,088,152
(991,025)
1,476,970
820,814
-
(814,169)
3,320,114
1,483,615
1,928,818
1,517,642
1,375,858
(506,040)
1,944,333
347,745
-
(363,259)
Carrying amount at 30 June including long term portion (Note 23)
4,316,278
1,928,819
21. RIGHT OF USE ASSET AND LEASE LIABILITY
Leased premises
Accumulated amortisation
Office Equipment
Accumulated amortisation
Right of use asset
Lease liability – current
Lease liability – non current
1
2
0
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66
8,271,695
(2,852,240)
5,974,870
(1,418,470)
5,419,455
4,556,400
159,692
(85,077)
74,615
-
-
-
5,494,070
4,556,400
1,354,249
879,398
4,836,380
3,653,897
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
21. RIGHT OF USE ASSET AND LEASE LIABILITY (CONT’D)
Reconciliation of right of use asset:
Balance as at 1 July
Right of use assets on acquisition of Hartleys Limited
Adoption of AASB 16
Amortisation expense
Impairment
Transfer to lease receivable and write off
2021
$
2020
$
4,556,400
2,633,583
-
(983,041)
(270,371)
(442,501)
-
-
5,563,853
(1,007,453)
-
-
Balance as at 30 June
5,494,070
4,556,400
The following table sets out a maturity analysis of lease liabilities showing the undiscounted lease payments to be paid after the
reporting date.
Less than one year
One to two years
Two to three years
Three to four years
Four to five years
More than 5 years
1,354,249
1,334,508
1,336,492
1,374,675
505,614
285,091
879,398
944,351
927,366
894,048
888,132
-
6,190,629
4,533,295
The above right of use asset and lease liability relates to:
•
•
•
•
The lease on the premises at Level 18 Alluvion, 58 Mounts Bay Road is for a period of 15 years commencing 2 July 2010
and expiring on 1 July 2025.
The lease on the premises at Level 6 Westralia, 141 St Georges Terrace is for a period of 8 years commencing 1 January
2019 and expiring on 31 December 2026.
The licence on the premises at Level 9, 20 Bond Street, Sydney NSW is for a period of 5 years commencing 15 December
2018 and expiring on 14 December 2023. In December 2020, the Group sublet the Sydney office space. This has been
presented as part of a right use asset.
The licence on the premises at Level 15, 385 Bourke Street, Melbourne is for a period of 8 years commencing 1 June 2015
and expiring on 31 May 2022. These premises are in the process of being sub-let.
22. DEFERRED TAX LIABILITIES
2021
$
2020
$
Deferred tax liability (Note 6)
8,602,736
946,875
23. LONG TERM PROVISIONS
Employee benefits (long service leave)
109,882
72,656
24. CONTRIBUTED EQUITY
(a) Share capital
Ordinary shares
Issued and paid up capital consisting of ordinary shares
(net of Treasury shares)
185,374,535
156,676,401
134,665,226
102,167,440
2021
Shares
2020
Shares
2021
$
2020
$
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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
24. CONTRIBUTED EQUITY (CONT’D)
(b) Movements in ordinary share capital
At the beginning of the reporting period
Issue of new shares
Acquisition of Treasury shares
Vested shares under Performance Rights Plan
At the end of the year
(c) Movements in ordinary share capital
At the beginning of the reporting period
Shares issued during the period
Acquisition of Treasury shares
Vested shares under Performance Rights Plan
At the end of the year
(d) Treasury shares
2021
Shares
2020
Shares
155,676,401
33,000,075
(5,298,017)
1,996,076
155,012,651
1,528,860
(1,940,740)
1,075,630
185,374,535
156,676,401
102,167,440
38,280,087
(7,949,948)
2,167,647
101,333,244
1,639,362
(1,707,400)
902,234
134,665,226
102,167,440
2021
Shares
2020
Shares
2021
$
2020
$
Balance of Treasury shares at the end of the
reporting period
(10,143,782)
(6,841,841)
13,025,440
7,137,510
Treasury shares were acquired by the Employee Share Trust at various times during the year. The acquisition of Treasury
shares forms part of the Performance Right Plan.
(e) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion
to the number of and amounts paid on the shares held. Ordinary shares have no par value.
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
upon a poll each share is entitled to one vote.
(f) Options
There were no options on issue at 30 June 2021 (30 June 2020: Nil).
(g) Share based payments reserve
The reserve records items recognised as expenses on valuation of share based payments. The movement in the current
period totalling $5,253,349 (2020: $1,925,620) relates to the vesting expense related to the fair value of performance rights
issued in the prior year and the current year in connection with the Performance Rights Plan.
Balance on share based payment reserve at 1 July
Recognised during the year
Vested shares under Performance Rights Plan
4,869,667
5,253,349
(2,167,647)
3,846,281
1,925,620
(902,234)
Balance on share based payments reserve at 30 June
7,955,369
4,869,667
(h) Capital management
The Directors primary objective is to maintain a capital structure that ensures the lowest cost of capital available to the group.
At reporting date, the group has no external borrowings and significant cash reserves. As the holder of various Australian
Financial Services Licences and as a market participant of the Australian Securities Exchange the group is exposed to
externally imposed capital requirements, which have been complied with throughout the year.
1
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68
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
25. DIVIDENDS
Ordinary shares
Interim dividend for the half year ended 31 December 2020 of 2.5 cents
(2020 – 1.75 cents) per fully paid ordinary share paid on 19 February 2021
Fully franked based on tax paid @ 30%
Final dividend declared and provided for at 30 June 2021 of 13.5 cents
(2020 – 6 cents) per fully paid ordinary share paid on 6 August 2021.
Fully franked based on tax paid @ 30%
Total dividends provided for or paid
2021
$
2020
$
4,887,958
2,838,449
26,394,973
9,751,095
31,282,931
12,589,544
Of the total dividends paid during the year, $63,005 (2020: $4,140) was paid to the Euroz Share Trust and is undistributed.
Therefore, it has been eliminated on consolidation.
Franked dividends
The franked portions of the dividends recommended after 30 June 2021 will be franked out of existing franking credits or out of
franking credits arising from the payment of income tax in the year ending 30 June 2021.
2021
$
2020
$
Franking credits available for subsequent financial years based on a tax rate of 30%
(2020: 30%)
7,609,902
12,258,670
These dividends are fully-franked and therefore, there are no income tax consequences for the owners of Euroz Limited.
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
(a) franking credits that will arise from the payment of the current tax liability
(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date
(c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date, and
(d) franking credits that may be prevented from being distributed in subsequent financial years.
The consolidated amounts include franking credits that would be available to the parent entity if distributable profits of controlled
entities were paid as dividends.
26. FINANCIAL INSTRUMENTS
(a) Financial risk management
The group’s financial instruments consist of deposits with banks, trade receivables and payables, short term investments and long
term investments. Derivative financial instruments are not used by the group. Senior executives meet regularly to analyse and
monitor the financial risk associated with the financial instruments used by the group.
(b) Financial risk exposure and management
(i)
Interest rate risk
The group has no borrowings and therefore is not exposed to interest rate risk associated with debt. The group has
significant cash reserves and the interest income earned from these cash reserves will be affected by movements in the
interest rate. A sensitivity analysis has been provided in the note to illustrate the effect of interest rate movements on
interest income earned.
1
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69
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
26. FINANCIAL INSTRUMENTS (CONT’D)
(b) Financial risk exposure and management (cont’d)
(ii)
Liquidity risk
The group manages liquidity risk using forward cash flow projections, maintaining cash reserves and having no
borrowings or debt.
Trade and other payables are expected to be paid as follows:
Less than 1 month
1 to 3 months
(iii) Credit risk
2021
$
54,662,708
26,394,973
2020
$
3,639,785
9,751,095
81,057,681
13,390,880
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations, and arises principally from the Group’s receivables from customers and investment
securities. For the Company it arises from receivables from subsidiaries, as well as from customers.
Senior management monitors its exposure to customers on a regular basis to ensure recovery and repayment of
outstanding amounts. Cash deposits are only made with Australian based banks.
The maximum exposure to credit risk, excluding the value of any collateral or security, at reporting date is the carrying
amount of the financial assets disclosed in the statement of financial position. There is no collateral or security held for
those assets at 30 June 2021.
The carrying amount of the consolidated entity’s cash and cash equivalents, receivables and deposits represents the
maximum credit exposure.
The consolidated entity’s maximum exposure to credit risk at the reporting date was:
Cash and cash equivalents
Trade and other receivables
Financial Assets
NOTE
8
9
12
CARRYING AMOUNT
2021
$
2020
$
96,050,325
28,779,550
1,362,701
41,106,390
2,368,924
5,216,699
126,192,576
48,692,013
Impairment losses
All of the consolidated group’s receivables are considered recoverable.
1
2
0
2
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70
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
26. FINANCIAL INSTRUMENTS (CONT’D)
(b) Financial risk exposure and management (cont’d)
(iv) Financial instruments composition
WEIGHTED AVERAGE
EFFECTIVE INTEREST
FLOATING
NON-INTER EST
RATE
2021
%
2020
%
INTEREST RATE
2021
$
2020
$
BEARING
2021
$
2020
$
FINANCIAL ASSETS
Cash and cash equivalents
Trade and other receivables
Financial assets held for trading
Financial assets at fair value through
profit and loss
Other investments
Financial Assets
0.29
0.57 96,050,325 41,106,390
-
-
-
- 28,779,550
21,455,932
-
-
2,368,924
7,164,665
0.36
0.08
-
-
1,279,449
- 75,827,068 56,998,090
599,790
-
-
5,216,699
826,040
83,252
Total financial assets
97,329,774 46,323,089 126,971,842
67,131,469
FINANCIAL LIABILITIES
Trade and other payables
Lease liability (current and non current)
4.25
3.5
-
6,190,629
-
4,533,295
81,057,681
-
13,390,880
-
6,190,629
4,533,295
81,057,681
13,390,880
(v) Fair value hierarchy
The following table details the consolidated group’s fair value of financial instruments categorised by the
following levels:
Level 1:
Quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2:
Inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices). Techniques, such as estimated discounted cash
flows and Black-Scholes model are used to determine fair value for the financial instruments.
Level 3:
Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
1
2
0
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71
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
26. FINANCIAL INSTRUMENTS (CONT’D)
(b) Financial risk exposure and management (cont’d)
(v) Fair value hierarchy (cont’d)
2021
CURRENT FINANCIAL ASSETS
Cash and cash equivalents (i)
Trade and other receivables (i)
Other Financial Assets
NON - CURRENT FINANCIAL
ASSETS
Financial assets (i)
Investments
Investment entities at fair value
CURRENT FINANCIAL
LIABILITIES
Trade and other payables (i)
CARRYING AMOUNT
FAIR VALUE
FINANCIAL
ASSETS /
LIABILITIES
AT
AMORTISED
COST
TOTAL
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
$
$
$
$
$
$
MANDATORILY
NOTE
AT FVTPL(II)
$
8
9
10 21,455,932
- 96,050,325 96,050,325
- 28,779,550 28,779,550
21,455,932
-
-
-
14,683,377 6,589,954
-
-
-
-
-
-
182,601 21,455,932
-
12
13
826,040
14 75,827,068
-
1,362,701
-
-
- 75,827,068 75,827,068
1,362,701
826,040
18
-
81,057,681
81,057,681
-
-
-
-
-
-
826,040
-
826,040
- 75,827,068
-
-
98,109,040 45,134,895 143,243,935 90,510,445 6,589,954
1,008,641 98,109,040
Balances are measured at amortised cost and their carrying amount approximates fair value.
Fair value through profit and loss (FVTPL)
(i)
(ii)
2020
CURRENT FINANCIAL ASSETS
Cash and cash equivalents (i)
Trade and other receivables (i)
Other Financial Assets
NON - CURRENT FINANCIAL
ASSETS
Financial assets (i)
Investments
Investment entities at fair value
CURRENT FINANCIAL
LIABILITIES
Trade and other payables (i)
CARRY ING AMOUNT
FAIR VALUE
FINANCIAL
ASSETS /
LIABILITIES
AT
AMORTISED
COST
MANDATORILY
NOTE
AT FVTPL
TOTAL
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
$
$
$
$
$
$
$
8
9
10
- 41,106,390 41,106,390
2,368,924
-
7,164,665
7,164,665
2,368,924
-
-
-
6,642,665
-
-
247,500
-
-
274,500
-
-
7,164,665
-
12
599,790
13
14 56,998,090
-
5,216,699
-
-
- 56,998,090 56,998,090
5,216,699
599,790
18
-
13,390,880 13,390,880
-
-
-
-
-
-
599,790
-
599,790
- 56,998,090
-
-
(i)
Balances are measured at amortised cost and their carrying amount approximates fair value.
64,762,545 35,301,133 100,063,678 63,640,755
247,500
874,290 64,762,545
1
2
0
2
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72
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
26. FINANCIAL INSTRUMENTS (CONT’D)
(b) Financial risk exposure and management (cont’d)
(vi) Sensitivity analysis
Assuming all variables remain constant and the interest rate fluctuated by 1% at year end the effect on the consolidated
group’s equity and profit as follows:
Increase by 1%
Decrease by 1%
2021
$
681,891
(681,891)
2020
$
324,262
(324,262)
Assuming all variables remain constant and the equity market fluctuated by 5% at year end the effect on the group’s
equity and profit is as follows:
Increase by 5%
Decrease by 5%
3,433,816
2,266,689
(3,433,816)
(2,266,689)
27. REMUNERATION OF AUDITORS
AUDIT SERVICES
Audit and review of financial reports for the Group
Fees paid to KPMG
Fees paid to PKF Perth firm
Other services
Tax compliance services to PKF Perth firm
Other fees paid to KPMG
Other services to PKF Perth firm
28. CONTINGENT LIABILITIES
The parent entity and consolidated group had contingent liabilities at 30 June as follows:
Secured guarantees in respect of leases of a controlled group entity:
Westpac Banking Corporation
Bankwest
285,000
-
-
15,000
-
15,000
2021
$
1,013,514
625,423
-
187,500
41,700
-
6,700
48,400
2020
$
1,013,514
-
1,638,937
1,013,514
As detailed in note 12 the consolidated group has a deposit with FinClear Services Pty Ltd (formerly Pershing Securities (Australia)
Pty Ltd) as part of Euroz Hartleys Limited international trading and settlement arrangements. This deposit totalled $400,000 at
reporting date (2020: $5,000,000).
The Group has no contingent assets at reporting date (2020: Nil).
1
2
0
2
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73
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
29. COMMITMENTS FOR EXPENDITURE
CAPITAL COMMITMENTS
Office renovations and property, plant and equipment
Within one year
Later than one year but not later than five years
Later than five years
Commitments not recognised in the financial statements
2021
$
2020
$
2,328,592
-
-
2,328,592
-
-
-
-
The lease on the premises at Level 18 Alluvion, 58 Mounts Bay Road is for a period of 15 years commencing 2 July 2010 and expiring
on 1 July 2025.
The lease on the premises at Level 6 Westralia, 141 St Georges Terrace is for a period of 8 years commencing 1 January 2019 and
expiring on 31 December 2026.
The licence on the premises at Level 9, 20 Bond Street, Sydney NSW is for a period of 5 years commencing 15 December 2018 and
expiring on 14 December 2023.
The licence on the premises at Level 15, 385 Bourke Street, Melbourne is for a period of 8 years commencing 1 June 2015 and
expiring on 31 May 2022.
The lease commitment has been included as part of lease liabilities. Refer to note 21.
30. RELATED PARTIES
(a) Key Management Personnel compensation
Short-term employee benefits
Post-employment benefits
Share based payments
Total compensation
2021
$
2020
$
9,629,286
184,580
869,610
4,070,630
188,010
725,940
10,683,476
4,984,580
Richard Simpson and Ian Parker were appointed to the Board on 6 October 2020, following completion of the off-market
takeover offer by Euroz of Hartleys Limited on 3 October 2020. In connection with the takeover offer, it was agreed that
certain amounts would be permitted to be distributed by Hartleys to its shareholders prior to completion of the takeover
offer. This included cash proceeds from the sale of the securities held by Zenix Nominees Pty Ltd (a subsidiary of Hartleys) as
at 30 June 2020 distributed by way of a dividend / return of capital as approved by Hartleys shareholders. Richard Simpson
and Ian Parker each received (i) a completion bonus in connection with the takeover offer (paid from Hartleys cash reserves
pre-completion of the takeover offer); and (ii) a corporate bonus which was paid following their respective appointments to
the Euroz Board however which relates to the period up to completion of the takeover offer (such amount predominantly as
a result of the sale of securities held by Zenix Nominees Pty Ltd).
(b)
Individual Key Management Personnel (KMP) compensation disclosure
Information regarding individual KMP compensation and some equity instruments disclosures as required by Corporations
Regulation is provided in the remuneration report section of the Directors’ Report.
Apart from the details disclosed in this note, no KMP has entered into a material contract with the group since the end of the
previous financial year and there were no material contracts involving KMP interest existing at year end.
(c) Parent entity
The ultimate parent entity within the group is Euroz Limited.
1
2
0
2
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74
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
30. RELATED PARTIES (CONT’D)
(d) Share-based payments
During the year performance rights were issued to 127 employees (2020: 81 employees). This performance right entitles the
holder to a number of shares in Euroz Limited calculated as 25% of their bonus entitlement for the year. At point of issue,
these performance rights are subject to a 4-year vesting period. The fair value of each performance right is calculated as 25%
of the individual’s bonus entitlement.
During the year, the Board introduced an additional bonus sacrifice arrangement as part of the Performance Rights Plan.
Employees who qualify for this will have the opportunity to elect to sacrifice an additional amount of their bonus above
the 25% to be settled via the issue of a separate Performance Right, instead of cash. Shares acquired as part of the bonus
sacrifice arrangement will not be subject to any vesting conditions.
(e) Wholly-owned group transactions
Wholly owned group
The wholly owned group consists of Euroz Limited and its wholly owned controlled entities. See Note 31.
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available
to other parties unless otherwise stated.
Transactions with related parties consisting of:
(i)
Subsidiaries
•
•
•
Loans advanced by Euroz Limited to subsidiaries
Payments of dividends to Euroz Limited by subsidiaries
Management fees charged by Euroz Hartleys Securities Limited to
subsidiaries
Management fees charged by Prodigy Investment Partners Limited to
subsidiaries
Impairment of intercompany loan by Euroz Limited to subsidiaries
Impairment of intercompany loan by Prodigy Investment Partners
Limited to subsidiaries
•
•
•
(ii) Other
2021
$
2020
$
18,531,540
37,175,000
3,351,937
7,575,000
1,748,262
1,761,454
-
351,000
2,174,607
15,696,648
-
15,641,791
•
•
•
Dividends received by Euroz Limited from investment entities
Management fee received by the Euroz Group from investment
entities
Performance fee received by the Euroz Group from investment
entities
2,987,513
2,912,157
2,688,557
3,304,512
14,545,035
734 849
Ownership interests in related parties
Interests held in controlled entities are set out in note 31.
Other transactions with Directors and specified Executives
During the year ended 30 June 2021 the Directors and KMP transacted share business through Euroz Hartleys Securities
Limited and Euroz Hartleys Limited on normal terms and conditions.
Aggregate amounts of the above transactions with Directors and KMP of the consolidated group:
AMOUNTS RECOGNISED AS REVENUE
Brokerage earned on Key Management Personnel accounts
2021
$
2020
$
62,923
33,602
1
2
0
2
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75
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
31.
INVESTMENTS IN CONTROLLED ENTITIES
NA ME OF ENTITY
COUNTRY OF
CLASS OF
INCORPORATION
SHARES
EQUITY
HOLDING
Euroz Hartleys Limited
Euroz Hartleys Securities Limited
Detail Nominees Pty Ltd (i)
Zero Nominees Pty Ltd (i)
Westoz Funds Management Pty Ltd
Invesco Nominee Pty Ltd (i)
Saltbush Nominee Pty Ltd (i)
Zenix Nominees Pty Ltd (i)
Poynton Pty Ltd (i)
Poynton Investments Pty Ltd (i)
Poynton Corporate Pty Ltd (i)
Poynton Nominees Pty Ltd (i)
Euroz Employee Share Trust
Ozgrowth Limited*
Westoz Investment Company Limited*
Prodigy Investment Partners Limited
FIP Management Services Pty Ltd (formerly
Flinders Investment Partners Pty Ltd) (ii)
DSC Investment Management Pty Ltd
(formerly Dalton Street Capital Pty Ltd) (ii)
EPC Investment Management Pty Ltd
(formerly Equus Point Capital Pty Ltd) (ii)
WIM WA Resources Limited
WIM Small Cap Limited
Entrust Wealth Management Pty Ltd
Prodigy Flinders Pty Ltd (ii)
Prodigy Corporate Pty Ltd (ii)
Prodigy DSC Pty Ltd (ii)
Prodigy EPC Pty Ltd (ii)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Australia
Ordinary
Australia
Ordinary
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2021
%
2020
%
100
100
100
100
100
100
100
100
100
100
100
100
-
40.58
26.25
100
-
-
-
100
100
100
-
-
-
-
-
100
100
100
100
-
-
-
-
-
-
-
-
40.58
26.25
80
50
50
50
100
100
100
100
100
100
100
COST OF PARENT ENTIT Y’ S
INVESTMENT
2021
$
2020
$
73,723,536
-
-
-
-
25,000,000
-
-
1,450,000
1,450,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
2
2
1
1
7,800,000
2
2
1
1
*Although Ozgrowth Limited and Westoz Investment Company Limited are controlled entities, exemption from consolidation was
derived from the adoption of AASB 2013-5 Investment Entities.
The ultimate parent entity in the wholly owned group is Euroz Limited.
(i) Owned by Euroz Hartleys Limited
(ii) Owned by Prodigy Investment Partners Limited and deregistered on 11 November 2020
A brief description of each entity (unless inactive and dormant) is as follows:
(a)
Euroz Limited – Group holding company listed on the Australian Securities Exchange. Euroz Limited manages cash and
investments including significant positions in Ozgrowth Limited and Westoz Investment Company Limited.
(b) Euroz Hartleys Securities Limited – Financial services company providing stockbroking services with a focus on Western
Australian companies. This business is inactive effective 26 April 2021 following the restructure of the Group.
(c)
Euroz Hartleys Limited – Financial services company providing stockbroking services with a focus on Western Australian
companies. This is the merged entity containing the businesses of Euroz Hartleys Securities Limited and Entrust Wealth
Management Pty Ltd from 26 April 2021.
(d) Westoz Funds Management Pty Ltd – Manages the mandates for two listed investment companies, Ozgrowth Limited and
Westoz Investment Company Limited with a focus on investing in opportunities with a Western Australian connection.
(e)
Zero Nominees – Custodian Company holding shares on behalf of clients of Euroz Hartleys Limited.
(f) Detail Nominees – Dormant Company that was previously used to for settlement obligation in relation to shares for the Group.
(g) Euroz Employee Share Trust – Vehicle established to acquire treasury shares on-market for distribution to eligible employees
in connection with the Performance Rights Plan.
1
2
0
2
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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
31.
INVESTMENTS IN CONTROLLED ENTITIES (CONT’D)
(h) Entrust Wealth Management Pty Ltd – Wealth management business providing advice in relation to wealth management
and strategic financial planning support for the entire Euroz Group. This business is inactive effective 26 April 2021 following
the restructure of the Group.
(i)
(j)
Prodigy Investment Partners Limited – Former 80/20 joint venture with Mr Steve Tucker to create a multi boutique funds
management business. Prodigy had partnerships with three separate boutique funds, Flinders, Dalton and Equus. In 2020, the
Company closed the Prodigy operations, including the partnership with the three separate boutiques.
FIP Management Services Pty Ltd (formerly Flinders Investment Partners Pty Ltd) – Boutique fund manager launched
in August 2015 specialising in investing in emerging companies. Prodigy Investment Partners Limited, the controlling parent
entered into a profit share arrangement with a trust resulting in a minority interest. In June 2020, the Company closed the
Prodigy operations, including the partnership with Flinders Investment Partners boutique fund. This entity was deregistered in
November 2020.
(k) DSC Investment Management Pty Ltd (formerly Dalton Street Capital Pty Ltd) – Boutique fund manager launched in
May 2016 specialising in alternative investment strategies. Prodigy Investment Partners Limited, the controlling parent
entered into a profit share arrangement with a trust resulting in a minority interest. In June 2020, the Company closed the
Prodigy operations, including the partnership with Dalton Street Capital Pty Ltd boutique fund. This entity was deregistered in
November 2020.
(l)
EPC Investment Management Pty Ltd (formerly Equus Point Capital Pty Ltd) – Boutique fund manager launched in August
2018 specialising in a systematic market neutral strategy. Prodigy Investment Partners Limited, the controlling parent
entered into a profit share arrangement with a trust resulting in a minority interest. In June 2020, the Company closed the
Prodigy operations, including the partnership with Equus Point Capital Pty Ltd boutique fund. This entity was deregistered in
November 2020.
32. ACQUISITION OF EUROZ HARTLEYS LIMITED
On 1 October 2020, the Group completed the acquisition of Hartleys Limited (now Euroz Hartleys Limited) when the Group received
100% acceptances of the takeover offer from shareholders of Hartleys Limited. The Group determines that with the takeover, Euroz
Hartleys has become one of Western Australia’s largest stockbroking and wealth management business. In addition, the Group also
expects cost synergies from the merger of the operations.
Consideration transferred
The consideration transferred in relation to the acquisition is the issue of 33,000,075 Euroz Limited (“EZL”) shares. As all shares
were issued on 1 October 2020, the fair value of the ordinary shares issued was $38,280,087, based on the listed share price of EZL
at 1 October 2020 of $1.16.
A portion of the consideration to the Hartleys Limited shareholders who are also employees was placed on voluntary escrow as
follows:
•
•
12% of the EZL shares are subject to voluntary escrow period of 42 months.
Further 12% of the EZL shares are subject to voluntary escrow period of 46 months.
Acquisition related costs
The Group incurred acquisition-related costs of $208,188 on legal fees and due diligence costs. These costs have been included in
“Consultancy expenses”.
Identifiable assets acquired and liabilities assumed
The following table summarises the recognised provisional amounts of assets acquired and liabilities assumed at the date of the
acquisition.
1
2
0
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77
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
32. ACQUISITION OF EUROZ HARTLEYS LIMITED (CONT’D)
Cash and cash equivalents
Trade and other receivables
Other financial assets
Other current assets
Right of use asset
Plant and equipment
Identifiable intangible assets
Deferred tax assets
Trade and other payables
Subordinated loans
Current tax liabilities
Employee benefits provision
Lease liability
Total net assets acquired
1 OCTOBE R 2020
$
32,168,127
14,856,238
652,048
210,240
2,633,883
638,069
23,650,000
596,351
(29,049,989)
(10,000,000)
(324,648)
(2,464,011)
(2,793,840)
30,772,468
Measurement of fair values
The valuation techniques used for measuring the fair value of the material assets acquired were as follows:
•
•
•
•
Other financial assets – The fair value of other financial assets is determined by reference to their quoted bid price at
reporting date or by an appropriate valuation model considering parameters applicable to the securities, such as last
close price, depth and bid/ask spread, liquidity, relationship discount, escrow, relative size of the holdings and volatility.
Right of use asset – The fair value of the right of use asset is determined by reference to its cost net of depreciation.
Intangible asset – The fair value of the intangible asset (ASX licence) is determined by reference to its cost. Consideration
has been made of the legal, commercial and technical factors that are likely to impact the useful life of the licence and
determined that indefinite useful life to be appropriate. As at the date of the acquisition, no economic, market or legal
indicators to suggest the licence is impaired.
Plant and equipment – The fair value of the plant and equipment is determined by reference to its cost net
of depreciation.
All trade and other receivables of $14,856,238 are expected to be collectable at the date of acquisition.
Fair values measured on a provisional basis
The intangible assets of $23,650,000 has been measured on a provisional basis. A preliminary assessment of the intangible assets
has been conducted by a third-party valuer. If new information obtained within one year of acquisition identifies adjustments to
the above amount or any additional provisions that existed at the date of acquisition, then the accounting for the acquisition will
be revised.
The difference between the purchase consideration and the fair value of identified assets and liabilities has been allocated to
goodwill. The fair value of identifiable intangible assets has been valued by a third-party professional valuer as below.
Consideration transferred
Fair value of identifiable net assets
Goodwill on acquisition
ALLOCATION OF INTANGIBLES
Customer relationship – Hartleys Limited
Hartleys Limited Brand
Goodwill
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$
38,280,087
(30,772,468)
7,507,619
$
3,900,000
19,500,000
7,507,619
30,907,619
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
33. EVENTS SUBSEQUENT TO REPORTING DATE
The Directors are not aware of any matter or circumstance subsequent to 30 June 2021 that has significantly affected, or may
significantly affect:
(a) the consolidated group’s operations in future financial years; or
(b) the results of those operations in future financial years; or
(c) the consolidated group’s state of affairs in future financial years.
34. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Profit / (Loss) for the year
Adjustments for:
Depreciation and amortisation
Impairment expenses
Share based payments
Unrealised loss / (gain) arising from investing activity investments
Loss on disposal of property, plant and equipment
Loss on sale of investment in managed investment schemes
Interest paid on lease liabilities
Distributions received from investing activity investments
Distributions received in lieu of units
Changes in assets and liabilities
Decrease / (increase) in trade and other receivables
Decrease / (increase) in other current assets
Decrease / (increase) in other financial assets
Decrease / (increase) in deferred tax assets
Increase / (decrease) in trade and other payables
Increase / (decrease) in current tax liabilities
Increase / (decrease) in deferred tax liabilities
Increase / (decrease) in provisions (excluding dividends)
2021
$
2020
$
52,540,905
4,350,450
2,722,739
270,371
5,253,349
(19,039,226)
261,508
-
248,125
(3,060,278)
-
(11,554,387)
(1,175,545)
(13,639,219)
1,401,703
21,972,934
5,250,649
7,301,488
1,759,947
1,376,284
3,130,000
2,138,120
2,364,089
32,381
790,380
165,505
(2,975,099)
(636,379)
(434,038)
(39,875)
265,550
(2,504,213)
1,866,904
2,765,628
(366,193)
(8,870)
Net cash from operating activities
50,515,063
12,280,624
35. NON-CASH INVESTING AND FINANCING ACTIVITIES
Share issued under employee share plan
Addition to the right-of-use assets - Hartleys
Conversion of debt to equity
2021
$
5,253,349
2,633,882
10,000,000
2020
$
1,925,620
5,563,853
212,500
17,887,231
7,701,973
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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
36. EARNINGS / (LOSS) PER SHARE
Earnings / (loss) per share for profit / (loss) from continuing operations attributable to
the owners of Euroz Limited
Basic earnings per share
Diluted earnings per share
Earnings / (loss) per share for profit / (loss) from discontinued operations attributable
to the owners of Euroz Limited
Basic earnings / (loss) per share
Diluted earnings / (loss) per share
Earnings / (loss) per share for profit / (loss) attributable to the owners of Euroz Limited
Basic earnings / (loss) per share
Diluted earnings / (loss) per share
2021
Cents
29.16
28.17
-
-
29.16
28.17
2021
Number
2020
Cents
5.26
5.09
(6.13)
(5.93)
(0.87)
(0.84)
2020
Number
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating
basic earnings / loss per share.
180,197,903
155,685,590
Weighted average number of ordinary shares and potential ordinary shares (including
treasury shares) used as the denominator in calculating diluted earnings / loss per share.
186,543,022
160,989,382
The profit / (loss) after tax figures used to calculate the earnings / loss per share for both the basic and diluted calculations was the
same as the profit figure from Consolidated Statement of Profit and Loss.
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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
37. PARENT ENTITY DISCLOSURES
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Retained earnings
Reserves
Share based payment reserve
Total equity
Financial performance
Profit / (loss) for the year
Total comprehensive income / (loss)
2021
$
2020
$
50,573,249
24,653,584
160,491,555
211,064,804
100,172,204
124,825,788
34,862,857
6,270,235
41,133,092
12,556,657
961,217
13,517,874
134,785,172
27,253,564
102,083,528
4,417,111
7,892,976
169,931,712
4,807,274
111,307,913
54,226,371
(4,835,145)
54,226,371
(4,835,145)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity and some of its subsidiaries are party to a deed of cross guarantee under which each company guarantees the
debts of the others. No deficiencies of assets exist in any of these subsidiaries.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2021 and 30 June 2020.
Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021 and 30 June 2020.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1,
except for the following:
•
•
•
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Investments in associates are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity.
38. COMPANY DETAILS
The registered office and principal place of business address of the Company is:
Euroz Limited
Level 18 Alluvion
58 Mounts Bay Road
PERTH WA 6000
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DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2021
The Directors declare that:
1.
The financial statements, notes and additional disclosures included in the Directors’ Report and designated as audited,
are in accordance with the Corporations Act 2001 and:
(a)
comply with Accounting Standards and Corporations Regulations 2001;
(b) give a true and fair view of the Company's and consolidated group's financial position as at 30 June 2021 and of their
performance for the year ended on that date;
(c)
the financial statements are in compliance with International Financial Reporting Standards, as stated in note 1
to the financial statements.
2.
The Executive Chairman and Chief Financial and Operating Officer have declared in accordance with section 295A of
the Corporations Act 2001 that:
(a)
the financial records of the Company for the financial year have been properly maintained in accordance with section 286 of
the Corporations Act 2001;
(b)
the financial statements and notes for the financial year comply with Accounting Standards; and
(c)
the financial statements and notes for the financial year give a true and fair view.
3.
In the Directors' opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
Andrew McKenzie
Executive Chairman
Date: 31 August 2021
Richard Simpson
Executive Director
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INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF EUROZ LIMITED
FOR THE YEAR ENDED 30 JUNE 2021
Independent Auditor’s Report
To the shareholders of Euroz Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of Euroz
Limited (the Company).
The Financial Report comprises:
• Consolidated statement of financial position as
In our opinion, the accompanying Financial Report
of the Company is in accordance with the
Corporations Act 2001, including:
• giving a true and fair view of the Group’s
financial position as at 30 June 2021 and of its
financial performance for the year ended on
that date; and
•
complying with Australian Accounting
Standards and the Corporations Regulations
2001.
at 30 June 2021
• 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 including a summary of significant
accounting policies
• Directors’ Declaration.
The Group consists of the Company and the
entities it controlled at the year-end or from time to
time during the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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 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 fulfilled our other ethical responsibilities in accordance with the
Code.
Emphasis of matter – restatement of comparative balances
We draw attention to Note 4(a) of the Financial report which states that the amounts reported in the
previously issued 30 June 2020 Financial report have been restated and disclosed as comparatives in this
Financial report. Our opinion is not modified in respect of this matter.
The Financial Report of Euroz Limited for the year ended 30 June 2020 was audited by another auditor
who issued an unmodified opinion on that Financial Report on 20 August 2020.
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by
a scheme approved under Professional Standards Legislation.
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INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF EUROZ LIMITED (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our
audit of the Financial Report of the current period.
This matter was addressed in the context of our audit of the Financial Report as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on this matter.
Acquisition Accounting $38 million – Hartleys Limited
Refer to Note 32 Acquisition of Euroz Hartleys Limited to the Financial Report.
The key audit matter
How the matter was addressed in our audit
During the year, the Group acquired Hartleys
Limited and its controlled entities through the
issue of 33,000,075 of its own shares for a total
consideration of $38.3 million.
Acquisition accounting was considered a key
audit matter due to the:
• Financial significance of the transaction to
the Group;
• Significant judgements made by the Group
relating to the purchase price allocation (PPA)
of the purchase consideration. In particular,
judgements made for the valuation of
intangible assets such as brand name
($19.5m) and customer contract intangibles
($3.9m) for which the Group engaged the
services of an external specialist.
The excess of purchase consideration and the
identifiable net assets acquired resulted in
Goodwill of $7.5m.
The Group’s valuation model used to determine
the fair value of acquired intangibles assets is
complex and sensitive to changes in a number of
key assumptions. This drives additional audit
effort specifically on the feasibility of these key
assumptions and consistency of application to
the Group’s strategy. The key assumptions we
focussed on in the valuations of intangible assets
included forecast earnings, growth rates, royalty
rate, discount rates and client attrition rate.
These conditions and complexity of the
acquisition accounting required significant audit
effort and involvement of senior audit team
members, including our specialists, in assessing
this key audit matter.
Our procedures included:
• Assessed the appropriateness of the Group’s
accounting policies against the requirements of
the accounting standard and our understanding of
the business and industry practice.
• Read the Bid Implementation Agreement related
to the acquisition to understand the structure, key
terms and conditions, and nature of purchase
consideration;
• Evaluated the accounting treatment of the
purchase consideration and transaction costs
against the criteria in the accounting standards;
• Assessed the scope, competence and objectivity
of the Group’s external experts engaged to value
the intangible assets;
• With the assistance of our specialists and using
our knowledge of the Group, their past
performance, business and customers, and our
industry experience:
• Evaluated the valuation methodology for the
intangible assets against our knowledge of
accepted industry practice and the
requirements of the accounting standards;
• Assessed the Group’s assumptions used in
the valuation of the intangible assets against
published comparable company assumptions
and considered differences for the Group’s
operations as follows:
• Brand names – royalty rate and discount
rate applied to forecast earnings
• Customer contracts – client attrition rate
and discount rate.
• Assessed the accuracy of previous forecasts
of Hartleys Limited to inform our evaluation of
forecast earnings used in the Group’s
valuation of the intangible assets.
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INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF EUROZ LIMITED (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
• Challenged the Group’s significant forecast
earnings and assumptions, including growth
rates and consistency of these to the Group’s
strategy. We compared forecast growth rates
to published studies of industry trends and
expectations, and considered differences for
the Group’s operations.
• Recalculated the goodwill balance recognised as a
result of the transactions and compared it to the
goodwill amount recorded by the Group;
• Assessed the Group’s disclosures in relation to
the business acquisition, by comparing these
disclosures to our understanding from our testing
and the requirements of the accounting
standards.
Other Information
Other Information is financial and non-financial information in Euroz Limited’s annual reporting which is
provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the
Other Information.
The Other Information we obtained prior to the date of this Auditor’s Report was the Director’s Report.
The Executive Chairman’s Report, Euroz Limited Board of Directors profiles, Euroz Group Structure, Euroz
Hartleys Limited – Managing Directors Report, Corporate Transactions, Euroz Hartleys Limited Report,
Entrust Wealth Management Report, Westoz Fund Management Report, Euroz Hartleys Foundation
Report, and Other Information are expected to be made available to us after the date of the Auditor's
Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not and
will not express an audit opinion or 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. In
doing so, we 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.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date of
this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001
•
implementing necessary internal control to enable the preparation of a Financial Report that gives a
true and fair view and is free from material misstatement, whether due to fraud or error
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INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF EUROZ LIMITED (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2021
• assessing the Group and Company’s ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless they either intend to
liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
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 Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
Auditor’s Report.
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of Euroz
Limited for the year ended 30 June 2021, complies
with Section 300A of the Corporations Act 2001.
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 responsibilities
We have audited the Remuneration Report included
in pages 11 to 18 of the Directors’ report for the
year ended 30 June 2021.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
KPMG
Trevor Hart
Partner
Perth
31 August 2021
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ASX ADDITIONAL INFORMATION
AS AT 31 AUGUST 2021
A) DISTRIBUTION OF SHAREHOLDERS
AN ALYSIS OF NUMBER OF S HAREHOLDERS BY SIZ E OF HOL DING.
RAN GE
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Total
Number of holders holding less than a marketable parcel: 215 at $1.525 per unit
B) TOP HOLDERS
The twenty largest holders of ordinary fully paid shares are listed below.
RAN K NA ME
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
MR JAY EVAN DALE HUGHES
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