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Gresham House Strategic PlcA N N U A L R E P O R T
2022
3
Financial Year
Highlights
2022
$3.0b
GROUP FUM
1
MARKET CAPITALISATION
$315.7m
DIVIDENDS
FULLY FRANKED DIVIDENDS IN 22 YEARS
11cps
$287m
1
CASH & INVESTMENTS
NET PROFIT AFTER TAX
$194.2m
1
$40.7m
1. As at 30 June 2022
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 CONTENTS
03
05
06
FINANCIAL YEAR
HIGHLIGHTS
CORPORATE
DIRECTORY
EXECUTIVE
CHAIRMAN’S REPORT
10
12
16
EUROZ HARTLEYS
GROUP LIMITED
DIRECTORS
EUROZ HARTLEYS
LIMITED DIRECTORS &
OFFICERS
EUROZ HARTLEYS
GROUP STRUCTURE
17
19
24
CORPORATE
TRANSACTIONS
MANAGING
DIRECTOR’S REPORT
EUROZ HARTLEYS
FOUNDATION
27
89
FINANCIAL REPORT
ASX ADDITIONAL
INFORMATION
91
EUROZ HARTLEYS
GROUP CONTACT
DETAILS
5
CORPORATE DIRECTORY
REGISTERED OFFICE AND
PRINCIPAL PLACE OF BUSINESS
Level 18 Alluvion
58 Mounts Bay Road
PERTH WA 6000
Telephone: +61 8 9488 1400
Facsimile: +61 8 9488 1477
Email: 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
Bankwest
306 Murray Street
PERTH WA 6000
SECURITIES EXCHANGE LISTINGS
Euroz Hartleys Group Limited shares
are listed on the Australian Securities
Exchange (ASX:EZL)
WEBSITE ADDRESS
www.euroz.com
CORPORATE GOVERNANCE
STATEMENT
www.euroz.com/investors/
corporate-governance
BOARD OF DIRECTORS
Andrew McKenzie
Executive Chairman
Jay Hughes
Executive Director
Robert Black
Executive Director
Ian Parker
Executive Director
Richard Simpson
Executive Director
Robin Romero
Independent Non - Executive Director
Fiona Kalaf
Independent Non - Executive Director
- Appointed 28 June 2022
COMPANY SECRETARY
Anthony Hewett
NOTES TO FINANCIAL STATEMENTFINANCIAL REPORTOVERVIEWCHAIRMAN’S REPORTCONTENTS PAGEEUROZ HARTLEYS GROUP ANNUAL REPORT 2022 6
Executive
Chairman’s Report
Last year Euroz Hartleys Group Limited (“Euroz Hartleys” or the “Company”) completed the merger of three separate
licenses: Euroz Securities Limited, Hartleys Limited and Entrust Wealth Management Pty Ltd. Throughout 2022,
our integration program continued to fully bring these significant WA brands together in order to provide the best
possible platform for our staff, clients and shareholders. We believe that Euroz Hartleys Limited is now recognised as
Western Australia’s leading financial services business.
Following a successful vote at our 2021
AGM the Company changed the name
of our listed parent company to “Euroz
Hartleys Group Limited” to reflect the
deep history of our two iconic Western
Australian businesses.
The past year delivered strong profitability,
a significantly stronger balance sheet and
a simplified corporate structure.
Euroz Hartleys Group Limited reported an
audited result of $40.7 million net profit
after tax attributable to members for
the financial year ended 30 June 2022.
Underlying cash profitability was
driven by a solid performance
from Euroz Hartleys Limited which
delivered Equity Capital Market
(“ECM”) raisings of $2.2 billion versus
$2.0 billion last year. ECM revenue
was down approximately 16% and
overall corporate revenues down
approximately 23% from the previous
exceptional year.
Brokerage and recurring Funds Under
Management (“FUM”) revenue for
the year were broadly in line with
the previous year. Euroz Hartleys
Limited FUM as at 30 June 2022 was
$3.0 billion.
Solid underlying cash profitability
enabled your Directors to declare and
pay a final fully franked dividend of 8.5
cents per share (“cps”) which combined
with the interim dividend of 2.5 cps
brought the full year dividend to 11 cps.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 7
We are proud of our significant shared
achievements in what proved to be another
strong year for Euroz Hartleys Group Limited.
Summary
Euroz Hartleys maintains a strong
balance sheet with a cash and
investments balance at 30 June 2022
of $194.2 million and zero debt (prior
to final dividend and $80 million capital
management initiative).
The best measure of a strong business
and underlying cashflow is of course
the payment of dividends. We are proud
that following the upcoming AGM
approval of our capital management
initiative we will have returned $327
million in fully franked dividends and
$40 million of capital to shareholders
across our 22-year history.
I would like to sincerely thank our 184
staff who represent 100% of the goodwill
in our business. I thank them for their
significant efforts and who as our largest
shareholders, remain committed to
continuing to grow this proudly Western
Australian financial services business.
Andrew McKenzie
Executive Chairman
I would like to also thank Rob Black
for his tireless efforts as Managing
director for the past 8 Years. Rob has
helped steer us well through evolving
markets and he will continue to serve
us well in the increasingly important
role of Head of Syndication and as an
Executive Director of Euroz Hartleys
Group Limited.
Your Company has an excellent track
record of counter cyclical and well
executed acquisitions in a financial
landscape that continues to evolve and
benefit those that have true scale and
that can provide the best investment
solutions to their clients. We are
the “Best of the Best” combination
of four major Western Australian
financial advice businesses and with
our balance sheet, people and track
record of successful integrations/
mergers believe we will continue to be
a natural consolidator in an exciting
growth industry.
Capital Management
Post balance date we have announced
that subject to shareholder and other
approvals we intend to return $80
million of excess capital to shareholders.
A wide range of alternatives and
combinations of structures (including
various buyback methods) were
considered after several months of
internal analysis and external advice.
These funds intend to be distributed as a
$40 million fully franked special dividend
and a $40 million return of capital by
way of an equal capital reduction.
Your Directors are confident that the
chosen method strikes the right balance
between the most tax efficient outcome
for shareholders, provides EPS accretion
to the Company and rewards all
shareholders fairly.
Westoz Funds Management Pty Ltd
(“WFM”), a wholly owned subsidiary
of Euroz Hartleys Group Limited, was
responsible for managing the mandates
of Westoz Investment Company Limited
(“Westoz”) and Ozgrowth Limited
(“Ozgrowth”). On 23 December 2021,
Westoz and Ozgrowth announced that
they had entered into separate Schemes
of Arrangements with WAM Capital
Limited. On 21 April 2022, WAM Capital
Limited acquired Westoz and Ozgrowth
following the completion of two
separate Scheme of Arrangements.
Euroz Hartleys Group Limited received
approximately 49.95 million WAM
Capital Limited ordinary shares upon
the finalisation of the Schemes of
Arrangements, which subsequently
have been sold resulting in proceeds of
approximately $103.9 million.
WFM will no longer receive management
or performance fees from these funds.
We have determined to retain the WFM
Australian Financial Services Licence
(AFSL) to maintain future low cost
optionality in funds management.
We have been the beneficiaries of the
past two years of very strong markets.
We remind staff and shareholders
that whilst we are building a stronger
overall business with an increasing
base of underlying recurring revenues
our earnings can still be quite cyclical/
volatile.
During the last quarter of FY22 rapidly
increasing inflation and interest rates
saw a slowdown in broader markets
and lower levels of capital raisings
and trading volumes. After two very
strong years it is likely that we will now
experience naturally slower markets.
We know that this provides the perfect
opportunity to work even harder to
improve our underlying business and
strategy for the future.
In recent months we have made
significant changes to our business,
in particular by appointing a new
Managing Director (Tim Bunney), Head
of Corporate Finance (Ben Crossing),
Head of Research (Gavin Allen) and
Head of Advice (Amanda Boyce).
These major appointments and the
great energy and enthusiasm they
have already brought to our entire
business gives me great comfort in our
future direction.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT 8
N
O
I
L
L
I
M
$
E
R
A
H
S
R
E
P
S
T
N
E
C
Euroz Hartleys Group
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
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
-10.0
-20.
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
FI NA N CIA L YE AR
Profit before tax
Net profit after tax
attributable to members
Euroz Hartleys Group
D I V I D E N D H I S T O R Y
30.0
25.0
20.0
15.0
10.0
5.0
0.0
FI NA N CIA L Y EAR
1H Dividend per share
2H Dividend per share
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022
9
Euroz Hartleys Group
N T A P E R S H A R E
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
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
FI NA N CIA L Y EAR
Euroz Hartleys Group
F U N D S U N D E R M A N A G E M E N T
)
M
$
A
(
M
U
F
3,400
3,200
3,000
2,800
2,600
2,400
2,200
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
DEC 15
JUN 16
DEC 16
JUN 17
DEC 17
JUN 18
DEC 18
JUN 19
DEC 19
JUN 20 DEC 20
JUN 21
OZG
WIC
Entrust
Euroz Hartleys
Other
‘Other’ represents historical FUM from Flinders Investment Partners, Dalton Street Capital and Equus Point Capital
Entrust FUM included within Euroz Hartleys from Jun ‘21 onwards
NOTES TO FINANCIAL STATEMENTFINANCIAL REPORTOVERVIEWCHAIRMAN’S REPORTCONTENTS PAGEEUROZ HARTLEYS GROUP ANNUAL REPORT 2022
10
Euroz Hartleys Group
Limited Directors
ANDREW MCKENZIE
EXECUTIV E CHAIRM AN
JAY HUGHES
EX EC UT IVE D IR ECTO R
RI CH ARD SI MPS ON
EX ECU TIVE DIR ECTO R
IAN PARKE R
EX ECU TIVE DIR ECTOR
Jay has worked in
stockbroking since 1986,
starting his career on the
trading floor. He is the
Non-Executive Chairman of
Westoz Funds Management
Pty Ltd. 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
of SIAA.
Andrew is Executive
Chairman of Euroz Hartleys
Group Limited (ASX:EZL),
Euroz Hartleys Limited and
is Chairman of the Euroz
Hartleys Foundation. Andrew
is a board member of the
Perth Children’s Hospital
Foundation and Chairman
of their Investment Sub-
Committee. Andrew is a
past board member of the
Australian Stockbrokers
Association, 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 a
Master Practitioner Member
(MSIAA) of the Stockbrokers
and Investment Advisers
Association (SIAA).
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 of SIAA.
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 Limited 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.
Richard Simpson 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.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 11
R OB BLACK
EXECUTIV E DIR ECTO R
ROBIN ROMERO
INDEPENDENT
NON-EXECUTIVE DIRECTOR
FI O NA KALA F
INDEPENDENT
NON-EXECUTIVE DIRECTOR
Rob has been working in the
stockbroking industry since
1995 and has spent time
based in Sydney, Melbourne
and London. Rob was
formally Managing Director
of Euroz Hartleys Limited
and is an Executive Director
of Euroz Hartleys Group
Limited and Euroz Hartleys
Limited. Rob sits on the Euroz
Hartleys Group Limited Audit
and Risk committee, and
the Euroz Hartleys Limited
Remuneration committee and
its Underwriting Allocation
committee. He is Head of
Equity Syndications and
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).
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 Greening Australia. She
has 17 years of in-house legal
experience predominantly
in the mining 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 AICD and
holds a practising certificate
from the Legal Practice Board
of Western Australia.
Fiona is an experienced
CEO, senior executive and
director across a broad
range of sectors, including
financial services and wealth
management, private health
insurance and mental health
services. Fiona is also a
Director of Perth Festival and
Celebrate WA. She has held
numerous senior executive and
directorship roles, including
CEO of Lifeline WA and
Youth Focus, executive roles
at Wesfarmers and HBF, and
board roles, including Chair
of the Art Gallery of WA and
Deputy Presiding Member
of Healthway.
Fiona holds a Bachelor of Arts,
a Bachelor of Architecture
and a Master of Business
Administration (Advanced),
and is a graduate of the AICD.
Fiona has also completed the
Strategic Perspectives in Non-
profit Management course at
Harvard Business School.
NOTES TO FINANCIAL STATEMENTFINANCIAL REPORTOVERVIEWCHAIRMAN’S REPORTCONTENTS PAGEEUROZ HARTLEYS GROUP ANNUAL REPORT 2022 12
Euroz Hartleys Limited
Directors and Officers
ANDREW MCKENZIE
EXECUTIV E CHAIRM AN
TIM BU NNEY
MANAGING DIRECTOR AND
HEAD OF INSTITUTIONAL
SALES
IAN PARK ER
EX ECU TIVE DIR ECTO R
A ND PR IVATE WE ALTH
A DVISE R
RO B B LACK
EX ECU TIVE DIR ECTOR
A ND HEA D OF
SYND ICATION
Tim has been working in the
stockbroking industry since
2010 and is the Managing
Director of Euroz Hartleys
Limited and Head of our
Institutional Sales Division.
He holds a Bachelor of
Commerce from Curtin
University majoring in finance
and management. He is
currently undertaking post
graduate study in geology
and finance. Tim is a member
of the SIAA institutional
broking committee.
Andrew is Executive
Chairman of Euroz Hartleys
Group Limited (ASX:EZL),
Euroz Hartleys Limited and
is Chairman of the Euroz
Hartleys Foundation. Andrew
is a board member of the
Perth Children’s Hospital
Foundation and Chairman
of their Investment Sub-
Committee. Andrew is a
past board member of the
Australian Stockbrokers
Association, 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 a
Master Practitioner Member
(MSIAA) of the Stockbrokers
and Investment Advisers
Association (SIAA).
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 of SIAA.
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 Limited 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.
Rob has been working in the
stockbroking industry since
1995 and has spent time
based in Sydney, Melbourne
and London. Rob was
formally Managing Director
of Euroz Hartleys Limited
and is an Executive Director
of Euroz Hartleys Group
Limited and Euroz Hartleys
Limited. Rob sits on the Euroz
Hartleys Group Limited Audit
and Risk committee, and
the Euroz Hartleys Limited
Remuneration committee and
its Underwriting Allocation
committee. He is Head of
Equity Syndications and
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).
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 13
MARC LINCOLN
EXECUTIV E DIR ECTO R
AND HEAD OF PR IVATE
WE ALTH
AMANDA BOYCE
EXECUTIVE DIRECTOR AND
HEAD OF ADVICE
ANTHONY BRITTAIN
EX ECU TIVE DIR ECTO R
A ND CHIEF OPER ATIN G
A ND FIN AN CIA L OFF ICER
B EN C ROSS ING
EXECUTIVE DIRECTOR AND
HEAD OF CORPORATE
FINANCE
Marc has worked in financial
services for more than 25
years. Prior to returning to
Euroz Hartleys as Head of
Private Wealth, where his
stockbroking career began
in the late 90’s, he made the
move to Bell Potter as their
State Manager. Most recently
he was CEO of financial
services company VSource
after a stint running a multi-
state commercial insurance
business within Suncorp.
Ben is Head of Corporate
Finance and has been a
member of the Corporate
Finance team since 2010.
During this time, Ben
has provided strategic
corporate advice in relation
to equity capital market
transactions, mergers,
takeovers and acquisitions
for a number of Australian
Securities Exchange (ASX)
listed resource, energy and
industrial companies.
Ben has broad corporate
advisory experience, having
originated and executed
a wide range of corporate
transactions focussed
predominantly in the mid-
large cap resources and
mining services sectors.
Ben holds a Masters in
Applied Finance and a
Bachelor of Science.
Amanda has taken on senior
leadership roles in Advice,
Institutional Wealth and
Strategic Projects, giving her
the breadth of experience and
insight to focus on shaping
the advice strategy as Head of
Advice at Euroz Hartleys.
Amanda holds a Bachelor of
Economics (Hons) from the
University of Western Australia.
She began her career with
Goldman Sachs JBWere, where
she was appointed Executive
Director before joining JBWere
as Head of Syndicate through
the sale of that business to
NAB in 2009.
Amanda has varied experience
in Private Wealth Management
and Investment Markets,
across Advice and specialist
trading including equities,
derivatives, fixed income and
syndicate distribution. She
has been based in Perth since
2013, most recently in the
nationally focused role of Head
of Business Implementation for
JBWere prior to joining Euroz
Harleys in June 2022.
Anthony is the Chief Operating
and Financial Officer and an
Executive Director of Euroz
Hartleys Limited and is a
former board member of Euroz
Hartleys Group Limited.
Prior to joining Euroz Hartleys,
he spent 7 years with IWL
Limited (and antecedent firms
Hartleys Limited and JDV
Limited). His career started
with KPMG (and antecedent
firm Touche Ross) and then
worked in London and
Singapore for 7 years with a
UK fund manager, Newton
Investment Management
during which it was acquired
by BNY Mellon. Anthony holds
a Bachelor of Commerce
from UWA, is a member
of Chartered Accountants
Australia and New Zealand
(CA), holds a Graduate
Diploma in Applied Finance
and Investment from FINSIA, is
a Graduate of AICD and is an
individual member (MSIAA) of
SIAA. Anthony is a member of
the Audit and Risk Committee,
a member of the professional
conduct tribunal of the SIAA
and is a panel member of the
Markets Disciplinary Panel
(MDP) of the Australian
Securities and Investment
Commission (ASIC).
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT 14
BRIAN BERESFORD
EXECUTIV E DIR ECTO R
AND CORPORATE
FINANCE DIRE CTO R
DALE BRYAN
EX EC UT IVE D IR ECTOR
AN D CO RP OR ATE
FINA NC E DIRE CTO R
ROWAN JONES
EX ECU TIVE DIR ECTO R
A ND HEA D OF ENTR UST
WE ALTH
G AV IN ALLE N
EX ECU TIVE DIR ECTOR
A ND HEAD OF RESEARCH
Brian is a Director in our
Corporate Finance Division.
Prior to joining Euroz in 2011,
Brian was a Partner at PwC
where he led the Corporate
Finance and M&A practice
in Western Australia. He has
provided corporate advice to
clients across the resources,
mining services, engineering
and technology sectors for
over 25 years. Brian holds
a Masters in Finance from
London Business School, a
Bachelor of Commerce and
Bachelor of Laws from UWA.
Gavin heads up the Euroz
Hartley’s Research Division
and is a Research Analyst
with 18 years’ experience
specialising in detailed
analysis and research of mid
cap industrial companies.
Prior to joining Euroz, Gavin
held a senior position in the
Corporate Finance Division
of a major accounting firm,
specialising in the financial
analysis of mergers and
acquisitions. Gavin holds a
Bachelor of Commerce, is
a member of the Chartered
Accountants Australia and
New Zealand (CA) and holds
a Chartered Financial Analyst
(CFA) designation.
Dale is a Director in our
Corporate Finance Division
and has been a member
of the Corporate Finance
team since 2004. During
this time, Dale has provided
strategic corporate advice
to a number of Australian
Securities Exchange (ASX)
listed resource, energy and
industrial clients, including
originating and executing
most types of corporate
finance transactions. Dale
holds a Bachelor of Laws
and a Bachelor of Commerce
(Finance, Accounting and
Applied Statistics). Dale is a
member of the Euroz Hartleys
Remuneration Committee.
Prior to the merger of Euroz
and Hartleys, Dale was a
Board member of Hartleys
Limited, Chairman of the Risk
Committee and a member of
the Operating Committee.
Rowan joined Entrust
Wealth Management Pty
Ltd in January 2008 and
was appointed an Executive
Director in September 2016. He
holds a Bachelor of Commerce
from Curtin University, a
Graduate Diploma of Applied
Finance and Investment from
FINSIA and he is a Self-
Managed Superannuation
Fund Specialist adviser
through the SMSF Association.
Rowan provides strategic and
investment advice to a broad
range of clients, including
families and Not–For–Profit
organisations. Prior to joining
Entrust, Rowan spent ten years
as a professional sportsperson
in the AFL with the West
Coast Eagles Football Club.
He is now a member of Board
of the West Coast Eagles
Football Club. Rowan has
completed and successfully
passed the FASEA professional
qualifications required to act
as a financial adviser.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 15
DAVID SYMTH
EXECUTIV E DIR ECTO R
AND PRIVATE WEALTH
ADVISER
David specialises in
professional management
of investment and
superannuation portfolios,
and asset allocation.
David joined the industry
in 2000 and works closely
with clients to manage and
build their wealth. By having
a complete understanding
of each client’s financial
position and goals, David is
able to develop and manage
a specifically tailored strategy
for each client.
David holds a Graduate
Diploma in Financial Planning
and a Bachelor of Business
Degree.
David was also on the
Hartleys board for 6 years
until the merger with Euroz
and has served on numerous
committees including the
investment and Compliance
Committee’s.
ANTHONY HEWE T T
COMPANY SECRETARY
Anthony is the group’s
Company Secretary and an
Executive Director of the
Euroz Hartleys Foundation.
Anthony commenced his
career in financial services
in 2000 with Hartleys
Limited and JDV Limited.
In 2003 Anthony joined
DJ Carmichaels before
joining Euroz in 2004.
During his career he has
held a variety of positions
in operations, and risk and
compliance. Mr Hewett is
a Chartered Secretary and
Chartered Governance
Professional and holds a
Master of Business Law
from Curtin University and a
Graduate Diploma in Applied
Corporate Governance 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 of SIAA and a
member of AICD. Mr Hewett
is also a board member
and honorary treasurer of
Holyoake.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT 16
Euroz Hartleys
Group
Structure
E U R O Z H A R T L E Y S G R O U P L I M I T E D
ASX CODE: EZL
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 W E A LT H M A N A G E M E N T
EN TR UST
WEA LT H
MA NAGEMEN T
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 Selected Corporate
Transactions FY22
17
T W O T R A N C H E
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
Euroz Hartleys Ltd
AUG 21
P L A C E M E N T S + A N R E O
E N T I T L E M E N T O F F E R
P L A C E M E N T S
$188.4 MILLION
J O I N T L E A D M A N A G E R
+ J O I N T U N D E R W R I T E R
Euroz Hartleys Ltd
AUG 21, MAY 22
$24 MILLION
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
AUG 21
$56 MILLION
L E A D M A N A G E R
Euroz Hartleys Ltd
AUG 21, FEB 22
P L A C E M E N T
P L A C E M E N T
P L A C E M E N T
P L A C E M E N T S
$65 MILLION
$40 MILLION
$126.2 MILLION
$43.5 MILLION
J O I N T 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
J O I N T 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
Euroz Hartleys Ltd
SEP 21
Euroz Hartleys Ltd
SEP 21
Euroz Hartleys Ltd
OCT 21
Euroz Hartleys Ltd
NOV 21, MAR 22
P L A C E M E N T
P L A C E M E N T
I P O
P L A C E M E N T
$19 MILLION
$20 MILLION
$7 MILLION
$20 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
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
Euroz Hartleys Ltd
NOV 21
Euroz Hartleys Ltd
NOV 21
Euroz Hartleys Ltd
JAN 22
Euroz Hartleys Ltd
JAN 22
NOTES TO FINANCIAL STATEMENTFINANCIAL REPORTOVERVIEWCHAIRMAN’S REPORTCONTENTS PAGEEUROZ HARTLEYS GROUP ANNUAL REPORT 2022 18
P L A C E M E N T
P L A C E M E N T
P L A C E M E N T
P L A C E M E N T
$20 MILLION
$45 MILLION
$40.7 MILLION
$70.4 MILLION
J O I N T 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
J O I N T L E A D M A N A G E R
Euroz Hartleys Ltd
FEB 22
Euroz Hartleys Ltd
MAR 22
Euroz Hartleys Ltd
MAR 22
J O I N T L E A D M A N A G E R +
J O I N T U N D E R W R I T E R
Euroz Hartleys Ltd
MAR 22
P L A C E M E N T
P L A C E M E N T
P L A C E M E N T
I P O
$15 MILLION
$30 MILLION
$35 MILLION
$8 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
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
Euroz Hartleys Ltd
APR 22
Euroz Hartleys Ltd
APR 22
Euroz Hartleys Ltd
APR 22
Euroz Hartleys Ltd
MAY 22
I P O
P L A C E M E N T + A N R E O
$100 MILLION
$244 MILLION
J O I N T L E A D A R R A N G E R
Euroz Hartleys Ltd
JUN 22
J O I N T L E A D M A N A G E R +
J O I N T U N D E R W R I T E R
Euroz Hartleys Ltd
JUN 22
C O R P O R A T E B R O K E R T O
R A M E L I U S R E S O U R C E S
L I M I T E D I N R E L A T I O N T O
I T S T A K E O V E R O F F E R F O R
A P O L L O C O N S O L I D A T E D
$181 MILLION
Euroz Hartleys Ltd
NOV 21
C O R P O R A T E A D V I S E R T O
E M E R A L D R E S O U R C E S
N L I N R E L A T I O N T O I T S
O F F ‑ M A R K E T T A K E O V E R
B I D F O R B U L L S E Y E
M I N I N G
$117 MILLION
Euroz Hartleys Ltd
JAN 22
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 Managing
Director’s Report
19
It’s a great privilege to be appointed to the role of Managing Director. I am extremely fortunate to have
succeeded Rob Black, who oversaw a significant transformation of our business with the merger of Euroz and
Hartleys. With the completion of the merger, I am fully committed to executing our company’s vision of being
recognised as Western Australia’s leading financial services business. To deliver this, I believe we need to
maximise our existing asset base; we have the best people, a strong proud culture and supportive resources.
Bringing these all together, under one banner of Euroz Hartleys Limited (“Euroz Hartleys”), will ensure that we
deliver exceptional outcomes for our clients across our Private Wealth and Wholesale divisions.
Market Conditions
Global markets in the first nine
months of FY22 were characterised
by both strength and volatility,
which saw strong agency
brokerage for Euroz Hartleys as
investors took advantage of market
conditions.
The last quarter of FY22 saw
tightening macro conditions driven,
in part, by increases to official
interest rates, not only in Australia,
but also in other OECD countries,
global inflationary pressures as
well as a tumultuous geopolitical
backdrop. Notwithstanding these
challenges, we experienced
good trading months, however,
significant economic concerns
remain within the investment
community and wider economy.
Financial Performance
Turning to our financial performance, Euroz
Hartleys reported a net profit after tax of
$14.7m for the year ended 30 June 2022,
compared to $16.6 million in the previous
corresponding period, a decrease of 11.5%,
and revenue of $106.2 million for the year
ended 30 June 2022 compared to $79.4
million in the previous corresponding
period, an increase of 33.8%.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT 20
This result in any market would be
viewed as a solid year, but given the
wider economic concerns and other
disruptions this result is a credit to
our people.
Operational Performance
2022 continued the theme of
transformation from 2021 for Euroz
Hartleys. The integration of Euroz
Hartleys Securities Limited (formerly
Euroz Securities Limited), Euroz Hartleys
Limited (formerly Hartleys Limited) and
Entrust Wealth Management Pty Ltd
continued throughout 2022. Bringing
these iconic WA businesses together
has created Western Australia’s largest
financial services firm driving excellent
outcomes for clients and staff alike.
As an organisation we will continue
to reflect on areas of improvement
to ensure we remain at the forefront
of excellence for our three main
stakeholders: shareholders, clients and
our people.
Many of the initiatives undertaken over
the past 18 months continue into FY23
as we seek further operating efficiencies
and continue to enhance our platforms
to provide better services to all our
clients. Throughout this period our
operations team have continued to work
tirelessly to ensure business continuity
whilst managing the integration of the
three businesses including trading, back
office and finance systems.
People
FY22 saw a number of leadership
changes as we set Euroz Hartleys up
for its next phase of growth. I believe
our Wealth and Wholesale business are
led by some truly exceptional people.
Amanda Boyce was appointed as Head
of Advice, joining Euroz Hartleys from
JBWere, with over 18 years of wealth
management and financial markets
experience. The depth of Amanda’s
professional experience and networks,
combined with her passion for our
people will see the Private Wealth
business continue to evolve and
grow. We were excited to make two
additional internal promotions, with Ben
Crossing assuming the role as Head
of Corporate Finance and Gavin Allen
the Head of Research. It’s a testament
to the talent within our business that
we were able to fill these important
roles in the leadership team internally.
We are grateful for the effort and
leadership from Dale Bryan and Brian
Beresford who together have brought
together the Corporate teams from the
2 businesses. They have stepped down
from their roles as Head of Corporate,
but importantly remain within our
corporate division to continue to
service our clients with their wealth
of experience. Jon Bishop, our former
Head of Research left the business after
15 years and we wish him all the best on
his next endeavours.
I am pleased to announce the Euroz
Hartleys graduate program has
completed recruitment ready to
commence in the new year. People
are our most important asset, and it is
essential we have avenues for talent to
join our organisation and grow with us,
we are excited for Sonali, Moulika, John
and Amr to join the team.
We are all extremely proud of what
the Euroz Hartleys Foundation delivers
to the Western Australian community
each year. In FY22 we donated in
excess of $555,000 to more than 20
separate charitable causes. Our annual
Commission for a Cause this year was
more lively than usual with some big
cricket personalities trying their hand
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 21
at stockbroking. The enthusiasm and
commitment that our people and clients
bring to these events is a testament to
our connections with the community.
Euroz Hartleys ties to the community
extend well beyond our business
dealings and the Foundation reminds
us of this throughout the year. We are
proud of the contribution we can make
to our community.
Divisional Update
The Private Wealth division hosts one of
the largest teams in Western Australia.
We have a team of 63 investment &
wealth advisers which include some
of the most experienced advisors in
Western Australia. Our wealth advisory
team oversees $3.0 billion of Funds
Under Management (FUM) (2021: $3.1
billion) across a diverse range of clients
including high net worth individuals,
family offices and Not–For–Profit
organisations. The continued growth of
our Private Wealth division remains a
key priority for the business.
Our Wholesale division consists of
Research, Institutional Sales and
Corporate Finance. Our Research
division has incredibly strong
connections to the WA business
community, with over 120 stocks under
coverage. Our knowledge of the WA
mining and industrial landscape remains
unparalleled. In FY22 Euroz Hartleys
raised ~$2.2 billion (2021: $2.0 billion)
for our corporate clients in what was
a solid year of Equity Capital Markets
(ECM) activity. 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.
The business is supported by an
incredible operations team, the day to
day execution that our advisors provide
their client is underpinned by the talent
and dedication of our operations team.
We continue to work with our operations
team to enhance the client experience.
We will continue to review, refine and
improve our operations to facilitate
better client outcomes and, in turn, lead
to better returns for our shareholders.
Notwithstanding the macroeconomic
and geopolitical challenges that take
us into FY23, the combination of our
people, our improved client offering
and our strong balance sheet ensures
that I remain optimistic that we can
deliver another successful period for
all stakeholders. I would like to take
this opportunity to thank all Euroz
Hartleys staff for their continued efforts
in delivering a strong FY22 result and
ensuring the company is in an enviable
position for the years ahead.
Tim Bunney
Managing Director
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT 22
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
CORP ORATE F INANC E
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 small-mid cap resources,
energy, mining services and WA industrial companies
Focus on institutional quality research to a global client
base
Over 100 stocks under research
LARGEST FI NAN CI AL
SE RVICES FI RM
IN WESTERN
AUSTRAL IA
S IGN IF ICA N T GLOB A L &
D O MESTI C DIST RIB U TION
CA PAB ILITY
+1 00 STOC KS
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
FUM Fees (18%)
ECM (42%)
Other (1%)
Advisory (5%)
Brokerage (35%)
Wholesale (48%)
Private Wealth (52%)
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 23
INSTITUTIONAL SALE S
PRIVATE WEALTH
9 INSTITUTIONAL SALES ADVISERS
64 PRIVATE CLIENT ADVISERS
•
•
•
Significant small-mid cap institutional desk with specific
focus on resources, energy, mining services and WA
industrials
Long term relationships with all key domestic institutional
investors
•
•
•
•
Targeted global distribution network
Largest private wealth desk in WA
FUM of $3.0B1
Extensive high net worth and family office client base
Focus on providing timely and high quality financial advice
to clients
Note 1: As at 30 June 2022 and includes Entrust Wealth Management
A LONG HISTORY
OF DELIV ERI NG
RESULTS
D EEP R ELATIO N SHIPS
AN D KN OWLE DGE
AC ROSS WA R ESOU RCE S
A ND IND USTRIA L
SECTOR S
FU LL SPE CTR UM OF CORPO RATE
FI NA N CE, STOCK B ROK IN G,
WEA LT H MA N AGEME NT,
IN STI TUT ION AL SA LE S A ND
R ESEA RCH SERVICES
EUROZ HARTLEYS LIMITED
F Y 2 2 W H O L E S A L E R E V E N U E
T O T A L = $ 5 1 . 4 M *
EUROZ HARTLEYS LIMITED
F Y 2 2 P R I VA T E W E A LT H R E V E N U E
T O T A L = $ 5 6 . 7 M *
ECM ($32.8m)
ECM ($10.8m)
Brokerage ($10.2m)
Equity Incentive
Fees ($2.4m*)
Other ($0.3m)
Advisory ($5.7m)
*Includes realized equity incentive fees
FUM Fees ($18.4m)
Equity Incentive
Fees ($1.1m*)
Other ($0.05m)
Brokerage ($26.3m)
NOTES TO FINANCIAL STATEMENTFINANCIAL REPORTOVERVIEWCHAIRMAN’S REPORTCONTENTS PAGEEUROZ HARTLEYS GROUP ANNUAL REPORT 2022 24
Euroz Hartleys
Foundation
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 25
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 $3.1 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 22 years.
The Foundation’s focus is on Western
Australian charitable causes where
we believe we can make a positive
community impact.
On 17 June 2022 the Foundation
held its 4th annual Commission for
a Cause event. This year, the event
raised $400,000 which is an amazing
outcome given the volatile market
conditions and trading headwinds. The
funds were divided equally between
Perth Children’s Hospital Foundation
(PCHF), Women and Infants Research
Foundation (WIRF), WA Cricket
Foundation (WACF) and Lifeline
WA (Lifeline).
Perth Children’s Hospital Foundation
are deploying their funds to secure
a revolutionary piece of surgery
visualisation technology. The Vitom
3D allows for magnification and image
quality equivalent to a microscope
during surgery, improving medical
outcomes for children. This cutting-
edge technology at Perth Children’s
Hospital will change the lives of the
50-60 Western Australian children born
each year with cleft lip and cleft palate
issues. Without corrective surgery these
children face a lifetime of struggle. They
may have eating and speech difficulties,
other facial development complications
and potential social issues.
support and inspire our state to be a
better, healthier and more inclusive
community.
Driven by a vision of a community safe
from suicide, Lifeline WA has been
providing a free, 24-hour, telephone
crisis support service, 13 11 14, in Western
Australia for more than 30 years.
Lifeline WA’s mission is to prevent
suicide, support people in crisis and
reduce stigmas around mental health
and suicide, which can be a barrier to
people seeking help.
Lifeline WA are utilising funds from
Commission for a Cause to provide
ongoing resources, supervision and
professional development to existing
crisis supporters and onboard and
train new crisis supporters who will
collectively help more than 50,000
people via phone, text and online chat.
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.
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 midpregnancy. 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,
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT 26
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 27
FINANCIAL REPORT
2022
28
DIRECTORS’
REPORT
44
AUDITOR’S INDEPENDENCE
DECLARATION
45
CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
46
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
47
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
48
CONSOLIDATED STATEMENT
OF CASH FLOWS
49
NOTES TO THE FINANCIAL
STATEMENTS
84
DIRECTORS’
DECLARATION
85
INDEPENDENT
AUDITOR’S REPORT
NOTES TO FINANCIAL STATEMENTFINANCIAL REPORTOVERVIEWCHAIRMAN’S REPORTCONTENTS PAGEEUROZ HARTLEYS GROUP ANNUAL REPORT 2022 28
Directors’ Report
FOR THE YEAR ENDED 30 JUNE 2022
The Directors present their report on the consolidated group consisting of Euroz Hartleys Group Limited (Euroz Hartleys Group) and the
entities it controlled (Group) at the end of, or during the year ended 30 June 2022.
On 22 November 2021, Euroz Limited changed its name to Euroz Hartleys Group Limited.
The following persons were Directors of Euroz Hartleys Group 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 DIRECTORS
Robin Romero
Fiona Kalaf – Appointed 28 June 2022
EXECUTIVE DIRECTORS
Jay Hughes
Robert Black
Ian Parker
Richard Simpson
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
(Euroz Hartleys). He is a member of the Euroz Hartleys Group 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 (MSIAA) of the Stockbrokers and Investment Advisers Association of Australia (SIAA).
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 (MSIAA) of SIAA and a member of the AICD.
PRINCIPAL ACTIVITIES
During the year the principal activities of the Group 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 $40.7 million for the financial year ended 30 June 2022
(2021: $52.5 million). This result represents basic earnings per share of 21.68 cents (2021: 29.16 cents).
Westoz Funds Management Pty Ltd (WFM), a wholly owned subsidiary of Euroz Hartleys Group was responsible for managing the
mandates of Westoz Investment Company Limited (Westoz) and Ozgrowth Limited (Ozgrowth). On 21 April 2022, WAM Capital Limited
acquired Westoz and Ozgrowth following the completion of two separate Schemes of Arrangements.
Euroz Hartleys Group received approximately 49.95 million WAM Capital Limited ordinary shares upon the finalisation of the Schemes of
Arrangements, which subsequently have been sold resulting in proceeds of approximately $103.9 million.
Underlying cash profitability was driven by a solid performance from Euroz Hartleys which delivered Equity Capital Market (ECM) raisings
of $2.2 billion versus $2.0 billion last year. ECM revenue is down approximately 16% and overall corporate revenues down approximately
23% from the previous exceptional year. Brokerage and recurring Funds Under Management (FUM) revenue for the year were broadly in
line with the previous year. Euroz Hartleys FUM as at 30 June 2022 was $3.0 billion (2021: $3.1 billion).
Solid underlying cash profitability enabled your Directors to declare and pay a final fully franked dividend of 8.5 cents per share (“cps”)
which combined with the interim dividend of 2.5 cps brought the full year dividend to 11 cps (2021: 16 cps).
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 Directors’ Report (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
REVIEW OF OPERATIONS
Revenues
Brokerage
Underwriting and placement fees
Performance and management fees
Wealth management fees
Corporate advisory
Dividends and trust distributions received
Interest received
Other revenue
Net Profit after tax
(i)
Refer to Note 7
OPERATING AND FINANCIAL REVIEW
29
2022
$
36,499,569
43,613,675
13,791,010
18,433,771
5,740,096
107,589
239,070
266,118
RESTAT E D (i)
2021
$
31,115,479
51,658,163
17,218,045
14,531,619
12,381,468
76,452
197,344
889,808
118,690,898
128,068,378
40,723,715
52,540,905
The purpose of this review is to set out information that shareholders may require to assess Euroz Hartleys Group’s operations,
financial position, business strategies and prospects for future financial years. This information complements and supports the report
presented herein.
DISCLOSURE OF OPERATIONS – PROFIT
Net profit after tax attributable to members was $40.7 million compared to $52.5 million in the 2021 financial year. Headline profitability
comprises underlying “cash” profits after tax of $52.1 million and “non – cash” after tax adjustments of $11.4 million mostly from the equity
accounting of investments in Westoz and Ozgrowth and mark to market of other investments.
DISCLOSURE OF OPERATIONS – SALES
Revenue has decreased by 7.3% to $118.7 million from previous year restated amount of $128.1 million (inclusive of 9 months contribution
from Hartleys since 1 October 2020 for the 2021 financial year).
(a) Stockbroking & Corporate Finance
Stockbroking and Corporate Finance revenue decreased by 9.8% to $85.9 million from $95.2 million. Euroz Hartleys managed 76
(2021: 76) Equity Capital Market (ECM) transactions this year raising $2.2 billion (2021: $2.0 billion). FUM in the business remained
steady at $3.0 billion (2021: $3.1 billion).
(b) Funds Management
Revenue from Funds Management decreased by 19.9% to $13.8 million from $17.2 million in the prior year. Revenue predominantly
related to the performance fees of $11.3 million (2021: $14.5 million) and management fees of $2.5 million (2021: $2.7 million) received
from Westoz and Ozgrowth. On 21 April 2022, pursuant to two separate Schemes of Arrangements, Westoz and Ozgrowth were
acquired by WAM Capital Limited and WFM no longer manages the investment mandates.
(c) Wealth Management
Wealth Management revenue increased by 26.9% to $18.4 million from $14.5 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 increased by 40.7% to $0.1 million (restated 2021: $0.08 million).
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
30
Directors’ Report (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
DISCLOSURE OF OPERATIONS
The 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 9 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
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022
31
Directors’ Report (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
DISCLOSURE OF OPERATIONS (CONT’D)
(a) Stockbroking & Corporate Finance (cont’d)
iii.
Private Wealth
•
•
•
•
•
•
Team of 64 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
iv.
Corporate Finance
•
•
The corporate finance team of 14 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
WFM was responsible for managing the mandates of two listed investment companies; Westoz and Ozgrowth. Both funds have
enjoyed competitive portfolio returns since inception. On 21 April 2022, pursuant to two separate Scheme of Arrangements, Westoz
and Ozgrowth were acquired by WAM Capital Limited. WFM no longer manages the investment mandates and will no longer
receive management or performance fees from these funds. We retain the WFM Australian Financial Services Licence (AFSL) to
maintain future funds management optionality.
(c) Wealth Management
In July 2015, the Group acquired Entrust Wealth Management Pty Ltd (“Entrust”) which has a 19-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. In October 2020, the Group acquired Euroz
Hartleys Limited (then Hartleys Limited) with a FUM of $1.2 billion. Euroz Hartleys FUM remains broadly in line with the previous year
at $3.0 billion.
(d)
Investing
Euroz Hartleys Group owned significant shareholdings of 26.25% in Westoz and 40.58% in Ozgrowth. These investments have been
disposed of during the financial year but the business retains a number of other smaller and mostly listed investments.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
32
Directors’ Report (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
DISCLOSURE OF BUSINESS STRATEGIES AND PROSPECTS ‑ GROWTH
Our aim is to build real diversification of revenues across our business. We are cognisant that we need to continue to grow our wealth
management FUM and report a Group FUM as at 30 June 2022 of $3.0 billion (2021: $3.4 billion). The reduction in FUM is mostly due to
the ceasing of managing the WFM mandates of Westoz and Ozgrowth.
The Directors believe that Euroz Hartleys Group 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.
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 good trading months within the volatility of these markets, however, significant economic concerns remain within the
investment community and wider economy.
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 Group have increased to $193.2 million at 30 June 2022 from $171.1 million at 30 June 2021. The 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 Group’s working capital, being current assets less current liabilities, is $149.0 million at 30 June 2022 (30 June 2021: $51.0 million).
During the past 22 years the Group 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 Limited in 2020 and Entrust in 2015 to develop a
market leading platform for our future wealth management ambitions.
This financial year, the Group has realised a significant investment in Westoz and Ozgrowth and wound back the operations of WFM.
Our Group remains in an extremely sound financial position with cash and investments of $194.2 million as at 30 June 2022. We have a Net
Tangible Assets (NTA) of 82¢ per share and no debt to further develop our market leading financial services offering. Euroz Hartleys Group
has a proud history of consistent profits and dividends having paid a total of $287.5 million in fully franked dividends over the past 22 years.
The Directors believe the Group is in a strong and stable financial position to expand and grow its current operations.
Earnings per share
Basic earnings per share
Diluted earnings per share
Dividends – Euroz Hartleys Group Limited
Dividends paid or provided for during the financial year were as follows:
Interim ordinary dividend of 2.5 cents (2021: 2.5 cents) per fully paid ordinary share was
paid on 25 February 2022.
Provision for final ordinary dividend for 30 June 2022 of 8.5 cents (2021: 13.5 cents) per
fully paid ordinary share paid on 5 August 2022.
2022
CENTS
21.68
20.68
2022
$
2021
C E NTS
29.16
28.17
2021
$
4,925,483
4,910,292
16,770,251
26,394,973
21,695,734
31,305,265
Of the total dividends paid during the year, $42,983 (2021: $63,005) was paid to the Euroz Share Trust and is undistributed. Therefore, it
has been eliminated on consolidation.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 Directors’ Report (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
33
STATE OF AFFAIRS
Westoz Funds Management Pty Ltd, a wholly owned subsidiary of Euroz Hartleys Group was responsible for managing the mandates of
Westoz and Ozgrowth. On 21 April 2022, WAM Capital Limited acquired Westoz and Ozgrowth following the completion of two separate
Scheme of Arrangements.
Euroz Hartleys Group received approximately 49.95 million WAM Capital Limited ordinary shares upon the finalisation of the Scheme of
Arrangements, which subsequently have been sold resulting in proceeds of approximately $103.9 million.
Other than described above there has been no other significant changes in the state of affairs of the Group.
SHARE OPTIONS
There were no options on issue at 30 June 2022 and 30 June 2021.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
In recognition of its increasing importance to our stakeholders, we have initiated a corporate Environmental, Social and Governance
(ESG) program. The program will include a group wide review of our sustainability practices and the development of an ESG strategy and
associated plans that consider topics material to our business, along with a reporting framework.
i.
Environmental
•
•
•
•
•
•
We are looking to better understand our carbon footprint over financial year 2023 with a view to formulating a suitable
future carbon emissions reduction strategy
A green office policy was implemented in 2015 with a view to reducing our environmental footprint and a focus of
reducing paper use where practicable
We participate in proactive waste management with a recycling system in place for all paper / cardboards
We introduced online account opening in 2009 and where possible use electronic signatures in corporate and client
documentation (except those that require a wet signature under law)
Our head office location has a 5.5 star NABERS energy rating and 4.5 star NABERS water rating
We participate in the “Containers for Change” program
ii.
Social
•
•
•
•
•
•
•
•
Commission for a Cause - $400,000 raised as part of our annual “Commission for a Cause” on the 17th of June 2022
with four equal donations of $100,000 to worthy WA charities, being Perth Children’s Hospital Foundation, Lifeline WA,
WA Cricket Foundation and the Women and Infants Research Foundation. This program has raised $1.24 million in the
four years since inception
We support the Financial Services Red Cross Blood Drive by providing leave to staff to give blood
We benchmark salaries by gender to ensure equality with the results published in the Workplace Gender Equality
Agency (WGEA) website and our corporate website (www.euroz.com)
28% Euroz Hartleys Group Limited Board of Directors are female
42% of Euroz Hartleys employees are female
We encourage diversity in our recruitment process and have robust policies around sexual harassment and domestic
violence
We provide 12 weeks paid parental leave and support flexible working arrangements
We provide free flu vaccination to all staff for their well-being and health and free COVID-19 tests on request
iii.
Governance
•
•
•
Two Independent Non Executive Board members on Euroz Hartleys Group Limited Board
Robust Audit and Risk Committee, Remuneration Committee and Underwriting and Compliance Committee with
representatives holding relevant qualifications
Employee biographical data (e.g. average age, tenure, gender) reported to the Euroz Hartleys Group Limited Board of
Directors on a monthly basis
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT 34
Directors’ Report (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
IMPACTS OF CORONAVIRUS (COVID‑19)
The impact of the COVID-19 pandemic is ongoing and while it has not significantly impacted the Group up to 30 June 2022, it is not
practicable to estimate the potential impact, positive or negative, after the reporting date. The situation continues to evolve globally and is
continuing to impact various supply chains, resourcing and various industries in many ways.
EVENTS AFTER REPORTING DATE
The Directors are not aware of any matter or circumstance subsequent to 30 June 2022 that has significantly affected, or may
significantly affect:
(a)
the Group’s operations in future financial years; or
(b)
the results of those operations in future financial years; or
(c)
the 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 Group in
increasingly volatile market conditions.
Further information on likely developments in the operations of the 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 Group.
INFORMATION ON DIRECTORS
I NFORMATION O N DIR ECTORS
PARTICULAR S O F
DIRECTORS’ INTE RE STS
IN SHARES OF E UROZ
HARTL EYS GROUP L IM I TE D
DIRE CTOR
E XPERIENC E
SPECIAL RESPONSIBILITIES AND QUALIFICATIONS
ORDINARY SH ARE S *
A McKenzie
Executive
Chairman
Mr McKenzie has
worked in the
stockbroking industry
since 1991.
J Hughes
Director
Mr Hughes has worked
in the stockbroking
industry since 1986.
R Black
Director
Mr Black has worked in
stockbroking industry
since 1993.
Executive Chairman of Euroz Hartleys Group Limited and Euroz
Hartleys Limited
13,390,097
Member of Euroz Hartleys Group 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 SIAA
Executive Director of Euroz Hartleys Group Limited
13,866,497
Non-Executive Chairman of Westoz Funds Management Pty Ltd and
former Non-Executive Chairman of 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 SIAA
Executive Director of Euroz Hartleys Group Limited and Euroz
Hartleys Limited
Managing Director of Euroz Hartleys Limited from 2015 to 2022
Member of Euroz Hartleys Group 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 Edith Cowan University
(ECU) and is a Graduate member (GAICD) of AICD
5,262,362
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022
Directors’ Report (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
INFORMATION ON DIRECTORS (CONT’D)
I NFORMATION O N DIR ECTORS
35
PARTICULAR S O F
DIRECTORS’ INTE RE STS
IN SHARES OF E UROZ
HARTL EYS GROUP L IM I TE D
DIRE CTOR
E XPERIENC E
SPECIAL RESPONSIBILITIES AND QUALIFICATIONS
ORDINARY SH ARE S *
R Simpson
Director
Mr Simpson has
worked in the
stockbroking industry
since 1990.
Executive Director of Euroz Hartleys Group Limited
2,537,181
Chairman of Euroz Hartleys Group Limited Audit and Risk Committee
Member of Euroz Hartleys Group Limited 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
I Parker
Director
Mr Parker has worked
in the stockbroking
industry since 1991.
Executive Director of Euroz Hartleys Group Limited and Euroz
Hartleys Limited
1,988,473
R Romero
Independent
Non-executive
Director
Ms Romero has over
26 years’ experience in
law and accounting.
Member of Euroz Hartleys Group 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 SIAA
Independent Non-executive Director of Euroz Hartleys Group Limited
22,575
Chairperson of Euroz Hartleys Group Limited Remuneration
Committee
Member of Euroz Hartleys Group Limited Audit and Risk Committee
Holds a Bachelor of Laws from UWA and a Bachelor of Commerce
from UWA, is a graduate of the AICD and holds a practising
certificate from the Legal Practice Board of Western Australia
Fiona Kalaf
Independent
Non-executive
Director
Ms Kalaf has over
25 years’ experience in
strategy, marketing and
management.
Independent Non-executive Director of Euroz Hartleys Group Limited
Nil
Holds a Bachelor of Arts from UWA, a Bachelor of Architecture from
UWA, a Master of Business Administration (Advanced) from Curtin
and is a graduate of the AICD
* Balance as at the date of signing the report and total shares includes shares allocated under the Performance Rights Plan.
MEETINGS OF DIRECTORS
The numbers of meetings of the Company’s Board of Directors held during the year ended 30 June 2022 and the numbers of meetings
attended by each Director were:
D IREC TOR
DIRECTORS MEETINGS
COMMITTEE MEETINGS
NUMBER ELIGIBLE
NUMBER
NUMBER ELIGIBLE TO
NUMBER
NUMBER ELIGIBLE TO
NUMB E R
TO ATTEND
ATTENDED
ATTEND
ATTENDED
ATTEND
ATTE NDE D
AUDIT
REMUNERATION
Andrew McKenzie
Jay Hughes
Robert Black
Richard Simpson
Ian Parker
Robin Romero
Fiona Kalaf
17
15
17
17
17
17
1
17
15
16
16
14
16
1
-
-
4
4
-
4
-
-
-
4
4
-
4
-
2
-
-
-
3
3
-
2
-
-
-
3
3
-
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
36
Directors’ Report (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
REMUNERATION REPORT (AUDITED)
This Remuneration Report outlines the Key Management Personnel (KMP) remuneration arrangements of the Company and the Group
in accordance with the requirements of the Corporations Act 2001 and its regulations. For the purposes of this report, KMP of the Group
are defined as those persons having authority for the strategic management and direction of the 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 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 Hartleys Group
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 Group believes this policy to have been effective in increasing shareholder wealth since inception.
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.
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 plus 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% of pre tax profits 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.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 37
Directors’ Report (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
REMUNERATION REPORT (CONT’D)
Remuneration Policy (cont’d)
Profit share pool (cont’d)
The profit share payment is made as a combination of cash (75%) and equity (25%) in the Performance Rights Plan (PRP) to
employees that opt in the Performance Rights Plan as detailed below in “Equity based payments”. Employees that opt out have
their entire profit share paid in cash.
In 2021 financial 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 from the date of
the allotment of the shares.
The four Directors on the Remuneration Committee are Ms Robin Romero (Chair) (Independent Non-Executive Director), Ian
Parker, Richard Simpson (Executive Director) and Andrew McKenzie (Executive Director). Ms Romero and Mr Parker are not
entitled to participate in the profit share pool. Ms Romero is not entitled to participate in the Performance Rights Plan.
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 Group. 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%) in the Performance Rights Plan to
employees that opt in the Performance Rights Plan as detailed below in “Equity based payments”. Employees that opt out have
their entire profit share paid in cash.
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. Where an eligible employee elects to opt in to the Performance Right
Plan, they are awarded a Performance Right at the beginning of June of that financial year. There are three separate long term
incentives depending on the individual employment contract as below:
•
•
•
Profit share
Discretionary bonus
Commission
The Performance Right represents a right to be issued a number of ordinary shares in Euroz Hartleys Group to reflect 25% of
the profit share or the discretionary bonus that is paid to the participant who opts in. Private Wealth Advisers who are paid a
commission may also opt in to 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.
During the 2022 financial year, employees and executives eligible for the Performance Rights Plan were given the option to elect
whether to opt in / opt out into the Performance Rights Plan. Any election to opt out would mean that the entire profit share,
discretionary bonus or commission payment will be paid entirely in cash.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT 38
Directors’ Report (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
REMUNERATION REPORT (CONT’D)
Details of remuneration
Details of the nature and amount of each element of the emoluments paid or payable of each KMP of the Group are set out in the
following tables.
SHORT‑TERM
POST‑EMPLOYMENT
PAYMENT
SHARE BASED
PROFIT SHARE
BASE
/ BONUS /
OTHER
PERFORMANCE
TERMINATION
PERFORM ANCE
SALARY
COMMISSION
BENEFITS
SUPER ANNUATION
RIGHTS
BENEFIT
TOTAL
RE LATE D
2022
$
$
$
Andrew McKenzie
249,568
615,000
36,078
Jay Hughes
Robert Black
249,568
249,568
615,000
21,844
577,500
16,256
Anthony Brittain
249,568
281,250
19,000
Dermot Woods *
193,507
250,000
8,583
Richard Simpson
190,125
168,750
5,174
Ian Parker
66,000
1,244,596
9,626
Robin Romero
75,000
Fiona Kalaf**
852
-
-
-
-
$
27,500
27,500
27,500
27,500
27,500
20,845
23,567
7,500
85
$
173,125
173,125
169,063
88,125
$
-
-
-
-
$
1,101,271
1,087,037
1,039,887
665,443
75,938
502,504 1,058,032
51,563
-
-
-
-
-
-
-
436,457
1,343,789
82,500
937
72%
73%
72%
56%
31%
50%
93%
0%
0%
Total
1,523,756
3,752,096
116,561
189,497
730,939
502,504 6,815,353
* Resigned on 20 May 2022 as Executive Director of Westoz Funds Management Pty Ltd and KMP
** Appointed Non-Executive Director on 28 June 2022
Executive Directors did not receive any Directors fees.
SHORT‑TERM
PROFIT SHARE
POST‑EMPLOYMENT
PAYMENT
SHARE BASED
BASE
/ BONUS /
OTHER
PERFORMANCE
PERFOR MANC E
SALARY
COMMISSION
BENEFITS
SUPER ANNUATION
RIGHTS
TOTAL
REL AT E D
2021
$
$
$
Andrew McKenzie
250,587
842,796
28,492
Jay Hughes
Robert Black
230,452
250,587
843,750
26,776
842,796
19,526
Anthony Brittain***
250,587
524,046
23,147
Dermot Woods
Richard Simpson
Ian Parker
Robin Romero*
Greg Chessell**
Russell Kane**
Simon Yeo**
225,129
185,236
50,000
43,750
63,326
63,326
63,326
618,748
12,143
2,692,118
16,655
1,068,432
16,136
-
150,000
120,000
90,000
-
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
1,310,374
162,500
1,287,203
152,188
1,291,096
78,750
902,529
85,546
966,566
37,500 2,952,668
-
-
1,150,839
47,906
58,750
282,461
77,813
272,014
54,063
219,820
77%
78%
77%
67%
73%
92%
93%
0%
74%
73%
66%
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
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022
Directors’ Report (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
39
REMUNERATION REPORT (CONT’D)
Details of remuneration (cont’d)
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 Hartleys Group 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).
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 2022 of $253,500 (2021 - $253,500) plus profit share
Payment on termination of employment by the employer, other than for gross misconduct – three months’ salary
Jay Hughes, Director
•
•
•
Term of contract – ongoing employment contract
Base salary, exclusive of superannuation for the year ended 30 June 2022 of $253,500 (2021 - $253,500) plus profit share
Payment on termination of employment by the employer, other than for gross misconduct – three months’ salary
Robert Black, Director
•
•
•
Term of contract – ongoing employment contract
Base salary, exclusive of superannuation for the year ended 30 June 2022 of $253,500 (2021 - $253,500) plus profit share
Payment on termination of employment by the employer, other than for gross misconduct three – months’ salary
Anthony Brittain, Director Euroz Hartleys Limited - Chief Operating and Financial Officer
•
•
•
Term of contract – ongoing employment contract
Base salary, exclusive of superannuation for the year ended 30 June 2022 of $253,500 (2021 - $253,997) plus discretionary bonus
Payment on termination of employment by the employer, other than for gross misconduct – three months’ salary
Richard Simpson, Director
•
•
•
Term of contract – ongoing part time employment contract
Base salary, exclusive of superannuation for the year ended 30 June 2022 of $253,500 (2021 - $253,500) plus profit share
Payment on termination of employment by the employer, other than for gross misconduct – six months’ salary
Ian Parker, Director
•
•
•
Term of contract – ongoing employment contract
Base salary, exclusive of superannuation for the year ended 30 June 2022 of $66,000 (2021 - $66,000) plus commission
Payment on termination of employment by the employer, other than for gross misconduct – six months’ salary
Robin Romero, Non-Executive Director
•
•
Term of contract – ongoing consulting contract
Directors fee, exclusive of superannuation for the year ended 30 June 2022 of $75,000 (2021 - $75,000)
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT 40
Directors’ Report (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
REMUNERATION REPORT (CONT’D)
Service agreements (cont’d)
Fiona Kalaf, Non-Executive Director – appointed 28 June 2022
•
•
•
Term of contract – ongoing consulting contract
Directors fee, exclusive of superannuation for the year ended 30 June 2022 of $852
Annual entitlement of Directors fee, exclusive of superannuation of $75,000
Dermot Woods, Director Westoz Funds Management Pty Ltd - resigned 20 May 2022
•
•
•
•
Term of contract – ongoing employment contract
Base salary, exclusive of superannuation for the year ended 30 June 2022 of $229,000 (2021 - $229,000) plus discretionary bonus
Payment on termination of employment by the employer, other than for gross misconduct – three months’ salary
Resigned on 20 May 2022 as Executive Director of Westoz Funds Management Pty Ltd and KMP
Shareholdings of Key Management Personnel
The movement during the reporting year in the number of shares in Euroz Hartleys Group Limited held, directly, indirectly or beneficially, by
each member of KMP, including related parties, is as follows:
2022
Ordinary shares
A McKenzie
J Hughes
R Black
A Brittain
R Simpson
I Parker
R Romero
D Woods***
F Kalaf ****
BALANCE AT
RECEIVED
BOUGHT
NET CHANGE
BALANCE AT 3 0
1 JULY 2021
VIA PRP (i)
& (S OLD)*
OTHER **
JUN E 2022
13,268,724
13,745,094
5,042,340
863,029
2,503,878
1,869,604
22,575
1,006,235
-
121,373
121,373
113,972
55,506
33,303
-
-
-
-
-
-
106,050
-
-
118,869
-
-
-
-
-
-
-
-
-
-
(1,006,235)
-
13,390,097
13,866,467
5,262,362
918,535
2,537,181
1,988,473
22,575
-
-
38,321,479
445,527
224,919
(1,006,235)
37,985,690
*Inclusive of shares allocated in Dividend Reinvestment Plan (DRP)
** Net change reflects cessation as a KMP
***Resigned on 20 May 2022 as Executive Director of Westoz Funds Management Pty Ltd and KMP
**** Appointed on 28 June 2022 as an Independent Non-Executive Director of Euroz Hartleys Group Limited
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 41
Directors’ Report (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
REMUNERATION REPORT (CONT’D)
Shareholdings of Key Management Personnel (cont’d)
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
RECEIVED
BOUGHT
NET CHANGE
1 JULY 2020
VIA PRP (i)
& (S OLD)*
OTHER **
BALANC E AT
30 JUN E 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***
191,162
190,000
146,932
-
188,054***
50,000
-
-
129,287
-
-
-
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
916,151
(9,427,597)
38,321,479
*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 Hartleys Group PRP.
Performance Rights held by Key Management Personnel
The movement during the reporting period in performance rights in Euroz Hartleys Group Limited held, directly, indirectly or beneficially, by
each KMP, including related parties, is as follows:
2022
Performance Rights
A McKenzie
J Hughes
R Black
A Brittain
R Simpson
D Woods*
DATE GRANTED
REMUNERATION
VESTED
GRANTED AS
1 June 2022
1 June 2022
1 June 2022
1 June 2022
1 June 2022
-
1
1
1
1
1
-
5
(1)
(1)
(1)
(1)
(1)
-
(5)
* Resigned on 20 May 2022 as Executive Director of Westoz Funds Management Pty Ltd and KMP
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT 42
Directors’ Report (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
REMUNERATION REPORT (CONT’D)
Performance Rights held by Key Management Personnel (cont’d)
2021
Performance Rights
A McKenzie
J Hughes
R Black
A Brittain
R Simpson
D Woods
R Kane
S Yeo
G Chessell
DATE GRANTED
REMUNERATION
VESTED
GRANTED AS
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
1
1
1
1
1
1
1
1
1
9
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(9)
These performance rights were issued in accordance with the PRP. In financial year 2022, rights were granted on 1 June 2022 and vested
on 30 June 2022.
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 profit share or 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 $752,500 (2021: $1,495,000).
LOANS KEY MANAGEMENT PERSONNEL
No loans were made to Directors of Euroz Hartleys Group Limited and the KMPs of the Group, including their personally related entities
during the year.
Remuneration Report – end
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 Directors’ Report (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
43
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
Euroz Hartleys Group Limited has a Deed of Indemnity for all the Directors and Officers of the Group against all losses or liabilities
incurred by each Director and Officer in their capacities as Directors and Officers of the Group. The Group 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 Group 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 Group.
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 Group.
INDEMNIFICATION OF AUDITORS
The Group has not indemnified the auditor and has not paid an insurance premium to insure the auditor.
PROCEEDINGS ON BEHALF OF THE GROUP
No person has applied for leave of court to bring proceedings on behalf of the Group or intervene in any proceedings to which the Group
is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those proceedings.
The Group was not a party to such proceedings during the year.
NON‑AUDIT SERVICES
There were no non-audit services provided by the group’s auditor, KPMG during the year.
AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor’s independence declaration for the year ended 30 June 2022 has been received and follows the Directors’ report.
This report is made in accordance with a resolution of the Directors.
Andrew McKenzie
Executive Chairman
Date: 31 August 2022
Richard Simpson
Executive Director
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT 44
Auditor’s Independence Declaration
To the Directors of Euroz Hartleys Group Limited
FOR THE YEAR ENDED 30 JUNE 2022
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Euroz Hartleys Group Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Euroz Hartleys Group
Limited for the financial year ended 30 June 2022 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 2022
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.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022
Consolidated Statement of Profit or Loss and
other Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2022
45
Revenue from continuing operations
Share of profits of equity accounted investments, net of tax
Gain / (Loss) on investments
Employee benefits expense
Depreciation and amortisation expenses
Regulatory expenses
Legal, professional and consultancy expenses
Conference and seminar expenses
Stockbroking expenses
Impairment reversal
Other expenses
Profit before income tax expense
Income tax expense
NOTE
4
14
5, 14
5
6
2022
$
RESTAT E D (i)
2021
$
118,690,898
128,068,378
15,808,439
2,246,212
(67,215,981)
(2,471,480)
(989,341)
(1,479,492)
(755,337)
(5,758,370)
6,510,348
(6,518,919)
17,648,033
14,959,262
(70,228,999)
(2,722,739)
(716,330)
(1,406,836)
(379,667)
(8,410,708)
3,898,087
(6,260,140)
58,066,977
74,448,341
(17,343,262)
(21,907,436)
Profit after income tax expense for the year
40,723,715
52,540,905
Other comprehensive income
Other comprehensive income net of tax
-
-
Total comprehensive income for the year attributable to owners of
Euroz Hartleys Group Limited
40,723,715
52,540,905
Basic earnings per share (cents)
Diluted earnings per share (cents)
(i)
Refer to note 7
34
34
21.68
20.68
29.16
28.17
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT 46
Consolidated Statement of Financial Position
AS AT 30 JUNE 2022
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other financial assets at fair value
Other current assets
Total current assets
NON‑CURRENT ASSETS
Financial assets at amortised cost
Investments at fair value through profit and loss
Equity accounted investments
Property, 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
Current provisions
Lease liability
Total current liabilities
NON‑CURRENT LIABILITIES
Deferred tax liabilities
Non-current provisions
Lease liability
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained earnings
TOTAL EQUITY
(i)
Refer to Note 7
NOTE
8
9
10
11
12
13
14
15
6
16
20
17
18
19
20
6
21
20
22 (a)
22 (g)
2022
$
190,667,525
18,071,214
15,317,064
2,482,114
RESTATE D (i)
2021
$
96,050,325
28,779,550
21,455,932
2,804,724
226,537,917
149,090,531
1,069,380
-
-
2,097,562
4,238,048
39,362,702
4,244,049
1,362,701
826,040
75,827,068
1,129,497
9,013,841
39,969,660
5,494,070
51,011,741
133,622,877
277,549,658
282,713,408
59,537,023
8,834,084
7,788,835
1,354,750
81,057,681
8,123,786
7,526,510
1,354,249
77,514,692
98,062,226
3,131,101
140,970
3,552,525
8,602,736
109,882
4,836,380
6,824,596
13,548,998
84,339,288
111,611,224
193,210,370
171,102,184
136,740,320
134,665,226
8,917,497
47,552,553
7,955,369
28,481,589
193,210,370
171,102,184
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2022
47
Balance at 1 July 2020
102,167,440
4,869,667
7,267,597
29,813 114,334,517
SHARE BASED
NON‑
ISSUED
PAYMENT
RETAINED
CONTROLLING
CAPITAL
RESERVE
EARNINGS
INTEREST
TOTAL
$
$
$
$
$
52,540,905
52,540,905
(29,813)
52,511,092
(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
2,167,647
(2,167,647)
(7,949,948)
-
5,253,349
-
-
-
-
-
(31,326,913)
Total contributions by and distributions to owners
32,497,786
3,085,702
(31,326,913)
Balance at 30 June 2021
134,665,226
7,955,369
28,481,589
Balance at 1 July 2021
134,665,226
7,955,369
28,481,589
Profit for the period
Total comprehensive income for the period
-
-
Transactions with owners, recorded directly in equity
Shares issued during the period
2,868,844
-
-
-
Vested shares under employee share plan
Treasury shares
Share based payments
Dividends declared
2,101,174
(2,101,174)
(2,894,924)
-
3,063,302
40,723,715
40,723,715
-
-
-
-
-
(21,652,751)
-
-
-
-
-
-
-
-
-
‑
‑
‑
-
-
-
-
-
-
-
38,280,087
-
(7,949,948)
5,253,349
(31,326,913)
4,256,575
171,102,184
171,102,184
40,723,715
40,723,715
2,868,844
-
(2,894,924)
3,063,302
(21,652,751)
Total contributions by and distributions to owners
2,075,094
962,128
(21,652,751)
‑ (18,615,529)
Balance at 30 June 2022
136,740,320
8,917,497
47,552,553
‑
193,210,370
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT 48
Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2022
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 paid
Payments for trading shares
NOTE
2022
$
2021
$
124,142,518
111,728,760
(90,132,105)
(59,370,947)
34,010,413
52,357,813
233,152
9,831,789
(17,328,806)
(4,148,814)
207,963
13,961,244
(7,953,595)
(8,058,362)
Net cash flows from operating activities
32
22,597,734
50,515,063
CASH FLOWS FROM INVESTING ACTIVITIES
Cash acquired on acquisition of subsidiary
FinClear Services security deposit
Receipts on disposal of investments
Maturity of term deposit
Dividends and trust distributions received
Payments for property, plant and equipment
-
-
21,553,544
4,600,000
105,011,618
216,699
1,674,202
(2,132,213)
-
-
3,060,278
(762,533)
Net cash flows from investing activities
104,770,306
28,451,289
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid
Payments for treasury shares
Repayment of lease liabilities
Interest paid on lease liabilities
Proceeds from share issue
(31,277,473)
(2,894,927)
(1,206,174)
(241,110)
2,868,844
(14,683,034)
(7,949,948)
(1,141,310)
(248,125)
-
Net cash flows used in financing activities
(32,750,840)
(24,022,417)
Net increase in cash and cash equivalents
94,617,200
54,943,935
Cash and cash equivalents at 1 July
96,050,325
41,106,390
Cash and cash equivalents at 30 June
8
190,667,525
96,050,325
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2022
49
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 BEFORE INCOME TAX EXPENSE
NOTE 6: INCOME TAX
NOTE 7: RESTATEMENT
NOTE 8: CASH AND CASH EQUIVALENTS
NOTE 9: TRADE AND OTHER RECEIVABLES
NOTE 10: OTHER FINANCIAL ASSETS AT FAIR VALUE
NOTE 11: OTHER CURRENT ASSETS
NOTE 12: FINANCIAL ASSETS AT AMORTISED COST
NOTE 13: INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS
NOTE 14: EQUITY ACCOUNTED INVESTMENTS
NOTE 15: PROPERTY, PLANT AND EQUIPMENT
NOTE 16: INTANGIBLE ASSETS
NOTE 17: TRADE AND OTHER PAYABLES
NOTE 18: CURRENT TAX LIABILITIES
NOTE 19: CURRENT PROVISIONS
NOTE 20: RIGHT OF USE ASSET AND LEASE LIABILITY
NOTE 21: NON-CURRENT PROVISIONS
NOTE 22: CONTRIBUTED EQUITY
NOTE 23: DIVIDENDS
NOTE 24: FINANCIAL INSTRUMENTS
NOTE 25: REMUNERATION OF AUDITORS
NOTE 26: CONTINGENT LIABILITIES
NOTE 27: COMMITMENTS FOR EXPENDITURE
NOTE 28: RELATED PARTIES
NOTE 29: INVESTMENTS IN CONTROLLED ENTITIES
NOTE 30: ACQUISITION OF EUROZ HARTLEYS LIMITED
NOTE 31: EVENTS SUBSEQUENT TO REPORTING DATE
NOTE 32: RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
NOTE 33: NON-CASH INVESTING AND FINANCING ACTIVITIES
NOTE 34: EARNINGS PER SHARE
NOTE 35: PARENT ENTITY DISCLOSURES
NOTE 36: COMPANY DETAILS
50
59
60
61
62
62
64
65
65
65
65
65
66
66
66
67
68
68
69
69
70
71
72
73
76
76
76
77
78
79
81
81
82
82
83
83
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT 50
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2022
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 2022.
Euroz Hartleys Group Limited is a listed public company, trading on the Australian Securities Exchange and Cboe, limited by shares,
incorporated and domiciled in Australia.
The financial report of Euroz Hartleys Group Limited and its controlled entities (the 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 35 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 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 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 Hartleys Group
Limited (‘Company’ or ‘parent entity’) as at 30 June 2022 and the results of all controlled entities for the year then ended.
Euroz Hartleys Group Limited and its controlled entities together are referred to in this financial report as the Group.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the 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 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 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 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.
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.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
51
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(b)
Income tax (cont’d)
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 Hartleys Group 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 Group assesses the financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, and the 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.
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
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 Group’s main revenue streams is set out below.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
52
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(d) Revenue recognition (cont’d)
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
Gross proceeds on sale of investments are shown as part of the gain/loss on fair value movement in investments along with
cost of the disposal in investments and unrealised gains in investments held.
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.
(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.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
53
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(e) Receivables (cont’d)
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) Property, plant and equipment
Each class of property, plant and equipment is carried at cost as indicated less, where applicable, any accumulated
depreciation and impairment losses.
The cost of property, plant and equipment constructed within the 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 property, plant and equipment 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 PROPERTY, PLANT AND EQUIPMENT
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 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.
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 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 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.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
54
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(i)
Leases (cont’d)
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 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.
(j)
Trade and other payables
Trade and other payables also include other liabilities for goods and services provided to the 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.
(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 Group has a present (legal or constructive) obligation as a result of a past event, it
is probable the Group 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 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.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
55
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(o) Employee benefits (cont’d)
(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
considers 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 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 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.
(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.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
56
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(r)
Fair value measurement (cont’d)
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 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 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 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.
(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.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
57
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(v)
Investments and Other Financial Assets (cont’d)
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.
(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.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
58
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(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) Equity accounted investments
Associates are those entities which the Group has significant influence, but not control or joint control, over the financial and
operating policies.
Interests in associates are accounted for using the equity method. These equity accounted investments are initially recognised
at cost. Subsequent to initial recognition, the consolidated financial statements include the Group’s share of profit or loss
of equity accounted investees until the date on which significant influence ceases. Dividends received from associates are
recognised as a reduction to the equity accounted investments.
At each reporting date, the Group reviews the carrying amounts of its equity accounted investments to determine whether
there is an indication of impairment. If any indication exists, then the asset’s recoverable amount is estimated, being the higher
of value in use and fair value less costs of disposal. The Group measures fair value of its equity accounted investments using a
quoted price in an active market for that investment, when one is available.
An impairment loss is recognised if the carrying amount of the asset exceeds its recoverable amount and is recognised in
profit or loss.
Any impairment loss recognised is reversed only to the extent that the asset’s carrying amount does not exceed its carrying
amount that would have been determined if no impairment loss had been recognised.
(ab) New standards and interpretations
The 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.
NEW STANDARDS OR AMEND MENTS
AASB 2014-10
Sale or Contributions of Assets between an Investor and its Associate or
Joint Venture
AP PLICATI O N
DAT E
1 January 2022
AASB 2020-3
Annual Improvements 2018 – 2020 and Other Amendment
1 January 2022
AASB 137
AASB 116
AASB 108
Onerous Contracts – Cost of Fulfilling a Contract
(Amendments to AASB 137)
Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to AASB 116)
1 January 2022
1 January 2022
Definition of Accounting Estimates (Amendments to AASB 108)
1 January 2023
AASB 2020-1
Classification of Liabilities as Current or Non-current
AASB 17
Insurance Contracts
1 January 2023
1 January 2023
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
59
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 of non-financial assets
At each reporting date, the 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 Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
(ii) Classification of other financial assets
The Group classifies 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 and on the acquisition
of Entrust have been allocated to the Retail CGU. Goodwill on the acquisition of Hartleys Limited has been allocated to the
Retail and Wholesale CGU respectively at $3,139,199 and $4,368,420. The Board have assessed that there is no indication the
goodwill is impaired.
The assumptions used for determining the recoverable amount are based on past experience and expectations for the future.
Projected cash flows for each CGU were over a 5-year period and a terminal value using a value in use model, discounted
using an appropriate discount rate. The discount rate deemed applicable amounted to 9.5 % and a 1% growth rate on cash
flows for determining the terminal value.
(v)
Intangible assets
Upon acquisition of Entrust, Euroz Hartleys Group acquired $1,736,240 in other intangible assets consisting 3 separate client
portfolios. The useful life of these intangibles is assessed as 10 years and the balance as at 30 June 2022 was $520,872.
On acquisition of Hartleys Limited, the Group recognised an intangible for Hartleys Limited 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. The values of these
intangibles were measured by an external professional valuer. Amortisation expense of the customer relationship of $433,333
was recognized during the year. The intangible assets associated with the Hartley Limited’s brand name was allocated to the
retail and wholesale CGU respectively at $8.2 million and $11.3 million.
The brand name intangible was tested for impairment along with the goodwill as noted above.
The Board have assessed that there is no indication the intangible assets are impaired.
(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.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
60
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
3. SEGMENT INFORMATION
Identification of reportable segments
The 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.
Euroz Hartleys Group Limited 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 Group provides funds management services. During the year, the Group managed mandates from two listed investment
companies; Westoz and Ozgrowth. On 21 April 2022, pursuant to two separate Scheme of Arrangements, Westoz and
Ozgrowth were acquired by WAM Capital Limited. WFM no longer manages the investment mandates and will no longer
receive management or performance fees from these funds. We retain the WFM Australian Financial Services Licence (AFSL)
to maintain future funds management optionality.
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 Group in reporting segments internally are consistent with those adopted in the financial
statements of the Group, unless otherwise stated.
Segment performance
2022
Brokerage
Underwriting and placement fees
Performance and management fees
Wealth management fees
Corporate advisory
Dividends received
Interest received
Other revenue
RETAIL
WHOLESALE
MANAGEMENT
OTHER
TOTAL
FUNDS
$
$
26,301,047
10,198,522
10,843,132
32,770,543
$
-
-
-
13,791,010
-
18,375,377
-
-
-
58,393
5,740,096
-
-
51,490
206,555
-
-
-
29,684
-
$
-
-
-
-
-
107,589
209,386
8,074
$
36,499,569
43,613,675
13,791,010
18,433,770
5,740,096
107,589
239,070
266,119
Total segment revenue
55,571,046
48,974,109
13,820,694
325,049
118,690,898
Segment income tax expense
3,603,568
2,137,204
3,679,858
7,922,632
17,343,262
Segment net operating profit after tax
8,552,775
13,044,100
7,931,491
11,195,349
40,723,715
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
61
3. SEGMENT INFORMATION (CONT’D)
Segment performance (cont’d)
2021
Brokerage
Underwriting and placement fees
Performance and management fees
Wealth management fees
Corporate advisory
Dividends received (i)
Interest received
Other revenue
Total segment revenue
RETAIL
WHOLESALE
MANAGEMENT
OTHER (i)
RESTAT E D (i)
FUNDS
TOTAL
$
$
22,151,431
8,964,048
10,307,152
41,351,011
$
-
-
-
-
17,218,045
14,495,036
-
-
-
-
36,583
12,381,468
-
-
177,000
-
-
-
11,002
-
$
-
-
-
-
-
76,452
186,342
712,808
$
31,115,479
51,658,163
17,218,045
14,531,619
12,381,468
76,452
197,344
889,808
46,953,619
62,910,110
17,229,047
975,602
128,068,378
Segment income tax expense
4,739,088
6,116,805
4,598,369
6,453,174
21,907,436
Segment net operating profit after tax
6,497,804
14,941,039
10,712,822
20,389,240
52,540,905
(i)
Refer to note 7 for restatement impact of prior period adjustment. As a result, dividend revenue decreased from $3,063,965 to $76,452 in the comparative
financial information.
Entity‑wide disclosures
The 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 2022, approximately 11.62% (2021: 13.44%) of the Group’s external revenue was derived from
management and performance fees from Westoz and Ozgrowth. Following the acquisition of these entities by WAM Capital Limited,
the Group no longer manages their investment mandates.
4. REVENUE
Revenue
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 (i)
Interest received
Other revenue
2022
$
RESTATE D (i)
2021
$
118,690,898
128,068,378
118,690,898
128,068,378
36,499,569
43,613,675
13,791,010
18,433,771
5,740,096
107,589
239,070
266,118
31,115,479
51,658,163
17,218,045
14,531,619
12,381,468
76,452
197,344
889,808
118,690,898
128,068,378
(i)
Refer to Note 7 for restatement impact of prior period adjustment. As a result, dividend revenue decreased from $3,063,965 to $76,452 in the comparative
financial information.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
62
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
5. PROFIT BEFORE INCOME TAX EXPENSE
Profit before income tax is determined after accounting for the following specific expenses:
Property, plant and equipment – depreciation
Leasehold improvements – amortisation
Right of use asset – amortisation
Right of use asset – impairment
Intangible asset – amortisation
2022
$
RESTAT E D (i)
2021
$
216,115
396,264
1,252,144
-
606,957
354,278
128,305
983,041
270,371
986,744
2,471,480
2,722,739
Finance costs
Interest and finance charges paid / payable on lease liabilities
241,110
248,125
Superannuation expense
2,919,314
2,040,313
Share based payments – PRP
3,063,302
5,253,350
Impairment expenses
Impairment (reversal) / expense – equity accounted investments
(6,510,348)
(4,168,458)
Impairment – intangible asset
(i)
Refer to Note 7
-
270,371
The equity accounted investments were recorded at their recoverable amounts which was lower than their pre impairment carrying
amounts. Given an increase in share price (fair value) compared to equity accounting value, recorded impairments were reversed in
the financial year 2021 and 2022.
6.
INCOME TAX
The components of tax expense / (benefit) comprise:
Current tax
Deferred tax
2022
$
2021
$
18,039,103
(695,841)
13,800,596
8,106,840
17,343,262
21,907,436
Numerical reconciliation between tax expense and pre-tax accounting profit:
Profit before income tax expense
58,066,977
74,448,341
Income tax using Group’s tax rate of 30% (2021: 30%)
17,420,093
22,334,502
Add tax effect of:
- deferred tax not recognised on temporary differences
- other non-allowable items
Less tax effect of:
- franked dividends received
Income tax expense attributable to entity
227,500
185,253
(116,263)
82,542
17,832,846
22,300,781
(489,584)
(393,345)
17,343,262
21,907,436
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
63
6.
INCOME TAX (CONT’D)
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
Share based payments and prepaid expenses
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 right of use $0.1m (2021: $0.1m) and debt forgiven and impairment $0.1m (2021: $4.6m).
Effective tax rate
Tax consolidation legislation
2022
$
2021
$
411,105
695,841
1,106,946
8,517,945
(8,106,840)
411,105
7,264,953
(6,558,963)
705,990
1,337,783
1,087,328
2,425,111
3,131,101
35,212
7,229,741
7,264,953
911,663
426,120
1,337,783
8,602,736
-
-
-
2,292,692
(2,292,692)
-
4,014,769
58,727
4,073,496
1,088,718
2,926,051
4,014,769
4,999,072
(4,834,520)
164,552
4,238,048
6,083,410
(1,084,338)
4,999,072
9,013,841
2022
29.9%
2021
29.4%
Euroz Hartleys Group Limited and its wholly-owned Australian subsidiaries implemented the tax consolidation legislation as of
1 July 2003.
The entities have also entered into a tax sharing and funding agreement. Under the terms of this agreement, the wholly-owned
entities reimburse Euroz Hartleys Group Limited for any current income tax payable by Euroz Hartleys Group 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 Hartleys Group 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 Hartleys Group Limited.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
64
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
7. RESTATEMENT
Previously, Euroz Hartleys Group Limited applied the investment entity accounting exemption within AASB 10 Consolidated
Financial Statements (the investment entity exemption) to its investments in Westoz and Ozgrowth and accounted for these
investments at fair valued through profit and loss. Dividends received from associates were recognised as revenue from
continuing operations.
During the year, a reassessment of the accounting treatment of the investments in Westoz and Ozgrowth was performed. As
a result, Euroz Hartleys Group Limited accounted for the investments in Westoz and Ozgrowth as associates using the equity
accounting method and tested these investments for impairment as described in the accounting policy Note 1(aa).
Applying the Group’s accounting policy to associates (refer to Note 1(aa)) the carrying amounts of these investments equalled
their recoverable amounts which was measured at fair value at each comparative reporting date. As a result, no change was
required to the Group’s opening retained earnings at 1 July 2020, net profit before or after income tax for the year ended 30 June
2021 nor total assets or net assets as at 30 June 2021.
On 21 April 2022, pursuant to two separate Schemes of Arrangements, Westoz and Ozgrowth were acquired by WAM Capital
Limited and the Group no longer manages the investment mandates and the Group no longer holds investments in these entities.
The following table summarises the impact of the restatement on the comparatives on each line item affected of the Group’s
consolidated financial statements.
CO NS OLIDAT ED STATEMENT OF PROFIT OR LOSS AND OTHER
CO MPREHENS IVE INCOME
AS PREVIOUSLY
REPORTED
ADJ USTMENTS
RESTATE D
$
$
$
30 June 2021
Revenue from continuing operations
Share of profits of equity accounted investments, net of tax
Gain / (Loss) on fair value movement on investments
Impairment (expense) / reversal (i)
Profit before income tax expense
Profit after income tax expense
131,055,891
-
(2,987,513)
17,648,033
33,788,240
(18,828,978)
(270,371)
74,448,341
52,540,905
4,168,458
-
-
128,068,378
17,648,033
14,959,262
3,898,087
74,448,341
52,540,905
(i)
The adjustment represents a partial reversal of impairment of equity accounted investments recognised in previous years.
CO NSO LIDATED STATEMEN T OF FINANCIAL POSIT ION
30 June 2021
Investment entities at fair value
Equity accounted investments
Total assets
Total liabilities
Net assets
Total equity
75,827,068
(75,827,068)
-
75,827,068
282,713,408
111,611,224
171,102,184
171,102,184
-
-
-
-
-
75,827,068
282,713,408
111,611,224
171,102,184
171,102,184
There is no impact on the Group’s basic or diluted earnings per share and no impact on the total operating, investing or financing
cash flows for the year ended 30 June 2021.
30 June 2020
Investment entities at fair value
Equity accounted investments
Total assets
Total liabilities
Net assets
Total equity
56,998,090
(56,998,090)
-
56,998,090
139,166,490
24,831,973
114,334,517
114,334,517
-
-
-
-
-
56,998,090
139,166,490
24,831,973
114,334,517
114,334,517
There is no impact on the Group’s basic or diluted earnings per share and no impact on the total operating, investing or financing
cash flows for the year ended 30 June 2020.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
65
8. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
175,256,542
78,587,456
2022
$
2021
$
Restricted cash:
Cash margin account
Client trust account
Total restricted cash
Total cash and cash equivalents
3,593,551
11,817,432
15,410,983
3,330,943
14,131,926
17,462,869
190,667,525
96,050,325
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 Group’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 (i)
Other receivable
1,138,100
16,849,172
83,942
2,191,154
26,505,144
83,252
18,071,214
28,779,550
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.
(i)
Broker receivables relates to outstanding client accounts and amounts owed to the Group by ASX Clearing. This is offset by broker payable as disclosed
in Note 17.
10. OTHER FINANCIAL ASSETS AT FAIR VALUE
Fair value of securities in listed companies
Fair value of unlisted securities
Total
6,779,359
8,537,705
14,683,377
6,772,555
15,317,064
21,455,932
These securities are held at fair value through profit or loss and the fair values are based on the closing price of each investment at
year end.
11. OTHER CURRENT ASSETS
Prepayments
Accrued income
Total
12. FINANCIAL ASSETS AT AMORTISED COST
Security deposit
Financial guarantee – term deposit
Other non-current receivable
2,313,978
168,136
2,647,821
156,903
2,482,114
2,804,724
400,000
625,935
43,445
400,000
842,122
120,579
1,069,380
1,362,701
Security deposit is held by FinClear Services Pty who is the clearing and trading participant on behalf of Euroz Hartleys Limited for
international trades.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
66
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
13.
INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS
Fair value of investment in managed investment schemes
-
826,040
2022
$
2021
$
Investment was disposed during the year.
14. EQUITY ACCOUNTED INVESTMENTS
Reconciliation
Equity accounted investments as at 1 July
Add: Share of profits of equity accounted investments, net of tax
Add: Impairment reversal / (expense) (Note 5)
Less: Dividend received
Disposal (ii)
2022
$
RESTAT E D (i)
2021
$
75,827,068
15,808,439
6,510,348
(1,566,614)
(96,579,241)
56,998,090
17,648,033
4,168,458
(2,987,513)
-
Equity accounted investment as at 30 June
-
75,827,068
Equity accounted investment entities were Westoz and Ozgrowth and these investments have since been disposed during the year.
(i)
(ii)
Refer to Note 7
Equity accounted investments were the investments in Westoz and Ozgrowth. On April 21, 2022, pursuant to two separate Scheme of Arrangements, all
the shares in Westoz and Ozgrowth were acquired by WAM Capital Limited in return for shares in WAM Capital Limited. Following the completion of the
Schemes, the Group received 49.95 million shares valued at $107.9 million. These WAM Capital Limited shares were subsequently sold during the financial year
resulting in proceeds of $103.9 million. The net gain/loss on these transactions are recorded in the profit and loss under gain/loss on investments.
15. PROPERTY, 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
2022
$
2021
$
2,384,745
(674,166)
1,710,579
-
-
-
1,149,396
(852,857)
296,539
132,839
(42,395)
90,444
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
2,097,562
1,129,497
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
67
15. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
Reconciliations
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the current and
previous financial years are set out below:
2022
Carrying amount at 1 July 2021
Additions
Reclassification
Write-off
Depreciation / amortisation expense
LEASEHOLD
PLANT AND
IMP ROVEMENTS
EQUIP MENT
$
$
198,449
1,846,035
62,589
(230)
(396,264)
931,048
286,178
(62,589)
(551,539)
(216,115)
TOTAL
$
1,129,497
2,132,213
-
(551,769)
(612,379)
Carrying amount at 30 June 2022
1,710,579
386,983
2,097,562
2021
Carrying amount at 1 July 2020
Additions as a result of acquisition of business
Additions
Disposal
Depreciation / amortisation expense
92,132
246,279
201,441
(213,098)
(128,305)
380,855
391,790
561,092
(48,411)
(354,278)
472,987
638,069
762,533
(261,509)
(482,583)
Carrying amount at 30 June 2021
198,449
931,048
1,129,497
Capital commitments – Property, plant and equipment
The Group had no capital commitments at 30 June 2022 (30 June 2021: $2,328,592).
16.
INTANGIBLE ASSETS
Goodwill (a)
Other intangible assets (b)
(a) Allocation of goodwill:
Goodwill on acquisition of Blackswan
Goodwill on acquisition of Entrust
Goodwill on acquisition of Hartleys
2022
$
2021
$
15,950,164
23,412,538
15,950,164
24,019,496
39,362,702
39,969,660
2,803,345
5,639,200
7,507,619
2,803,345
5,639,200
7,507,619
15,950,164
15,950,164
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.
(b) Other intangible assets
Client portfolios (i)
Hartleys Brand (ii)
Customer relationship - Hartleys (ii)
ASX Licence
520,871
19,500,000
3,141,667
250,000
694,496
19,500,000
3,575,000
250,000
23,412,538
24,019,496
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
68
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
16.
INTANGIBLE ASSETS (CONT’D)
2022
Balance as at 1 July 2021
Amortisation expense
CUSTOMER
CLIENT
RELATIONSHIP ‑
PORTFOL IOS
HARTL EYS
$
$
TOTAL
$
694,496
(173,625)
3,575,000
(433,333)
4,269,496
(606,958)
Balance as at 30 June 2022
520,871
3,141,667
3,662,538
2021
Balance as at 1 July 2020
Additions as a result of acquisition of business
Amortisation expense
Balance as at 30 June 2021
1,356,240
-
(661,744)
-
3,900,000
(325,000)
1,356,240
3,900,000
(986,744)
694,496
3,575,000
4,269,496
(i)
(ii)
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 the 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. An impairment assessment was performed during the year. Refer to Note 2 (v).
17. TRADE AND OTHER PAYABLES
Trade and other payables
Broker payable (i)
Dividend payable
Accruals
2022
$
4,860,636
27,254,709
16,770,251
10,651,427
2021
$
4,275,581
38,516,434
26,394,973
11,870,693
59,537,023
81,057,681
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.
(i)
Broker payable relates to outstanding client accounts and amounts owed by the Group to ASX Clearing. This is offset by broker receivable as disclosed in
Note 9.
Movement in dividend payable is set out below:
Opening balance
Amount provided during the year
Amounts paid out
Balance as at 30 June
18. CURRENT TAX LIABILITIES
Opening balance
Amount provided during the year
Amounts paid out
Balance as at 30 June
26,394,973
21,695,735
9,751,095
31,389,918
(31,320,457)
(14,746,040)
16,770,251
26,394,973
8,123,786
18,039,104
2,548,489
13,528,892
(17,328,806)
(7,953,595)
8,834,084
8,123,786
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
69
19. CURRENT PROVISIONS
Employee benefits (annual leave)
Employee benefits (long service leave)
2022
$
3,636,514
4,293,291
2021
$
3,320,114
4,316,278
Total Current and Non-Current
7,929,805
7,636,392
Disclosed as current (Refer Note 21 for non-current)
7,788,835
7,526,510
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
3,320,114
2,014,565
-
(1,698,165)
1,483,615
1,739,372
1,088,152
(991,025)
3,636,514
3,320,114
4,316,278
701,229
-
1,928,818
1,517,642
1,375,858
(724,216)
(506,040)
Carrying amount at 30 June including non-current portion as disclosed in Note 21
4,293,291
4,316,278
20. 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
Reconciliation of right of use asset:
Balance as at 1 July
Right of use assets on acquisition of Hartleys Limited
Additions
Amortisation expense
Impairment
Lease payout, transfer to lease receivable and write off
7,716,294
(3,554,360)
4,161,934
221,324
(139,209)
82,115
8,271,695
(2,852,240)
5,419,455
159,692
(85,077)
74,615
4,244,049
5,494,070
1,354,750
1,354,249
3,552,525
4,836,380
5,494,070
-
61,630
(1,252,144)
-
(59,507)
4,556,400
2,633,583
-
(983,041)
(270,371)
(442,501)
Balance as at 30 June
4,244,049
5,494,070
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT 70
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
20. RIGHT OF USE ASSET AND LEASE LIABILITY (CONT’D)
Reconciliation of right of use lease liability:
Balance as at 1 July
Right of use assets on acquisition of Hartleys Limited
Additions
Interest expense
Interest paid
Lease payments
Balance as at 30 June
2022
$
6,190,629
-
61,630
241,110
(241,110)
(1,344,984)
2021
$
4,533,295
2,793,840
-
248,125
(248,125)
(1,136,506)
4,907,275
6,190,629
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
1,354,751
1,358,111
1,379,300
535,289
279,824
-
1,354,249
1,334,508
1,336,492
1,374,675
505,614
285,091
4,907,275
6,190,629
The above right of use asset and lease liability relates to:
•
•
•
•
•
The lease on the premises at Level 18 Alluvion, 58 Mounts Bay Road, Perth WA 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, Perth WA 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.
Lease receivable of $0.1 million was recognised as at 30 June 2022 ( 2021:$0.2 million).
The lease of Minolta Copiers due to expire in November 2022 and Pitney Bowes franking and folding machines due to
expire on November 2024.
The lease of Franke coffee machine due to expire in August 2024 and Top Brewer coffee machine due to expire on
September 2024.
21. NON‑CURRENT PROVISIONS
2022
$
2021
$
Employee benefits (long service leave)
140,970
109,882
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
71
22. CONTRIBUTED EQUITY
(a) Share capital
Ordinary shares
Issued and paid up capital consisting of
ordinary shares (net of Treasury shares)
(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
Balance 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
2022
SHARES
2021
SHARES
2022
$
2021
$
187,106,282
185,374,535
136,740,320
134,665,226
2022
SHARES
2021
S HA RE S
185,374,535
1,778,756
(1,800,000)
1,752,991
155,676,401
33,000,075
(5,298,017)
1,996,076
187,106,282
185,374,535
2022
$
2021
$
134,665,226
2,868,844
(2,894,924)
2,101,174
102,167,440
38,280,087
(7,949,948)
2,167,647
136,740,320
134,665,226
2022
SHARES
2021
SHARES
2022
$
2021
$
Balance at the beginning of the reporting
period
(10,143,782)
(6,841,841)
13,025,440
Acquisition of Treasury shares
(1,800,000)
(5,298,017)
2,894,924
7,137,510
7,949,948
Vested shares under Performance Rights Plan
1,752,991
1,996,076
(2,004,082)
(2,062,018)
Balance of Treasury shares at the end of the
reporting period
(10,190,791)
(10,143,782)
13,916,281
13,025,440
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 2022 (30 June 2021: Nil).
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
72
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
22. CONTRIBUTED EQUITY (CONT’D)
(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 $3,063,302 (2021: $5,253,349) 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
2022
$
7,955,369
3,063,302
(2,101,174)
2021
$
4,869,667
5,253,349
(2,167,647)
Balance on share based payments reserve at 30 June
8,917,497
7,955,369
(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.
23. DIVIDENDS
Relating to ordinary shares
Interim dividend for the half year ended 31 December 2021 of 2.5 cents
(2020 – 2.5 cents) per fully paid ordinary share paid on 25 February 2022
Fully franked based on tax paid @ 30%
Final dividend declared and provided for at 30 June 2022 of 8.5 cents
(2021 – 13.5 cents) per fully paid ordinary share paid on 5 August 2022.
Fully franked based on tax paid @ 30%
Total dividends provided for or paid
2022
$
2021
$
4,925,483
4,910,292
16,770,251
26,394,973
21,695,734
31,305,265
Of the total dividends paid during the year, $42,983 (2021: $63,005) 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 2022 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 2022.
Franking credits available for subsequent financial years based on a
tax rate of 30% (2021: 30%)
2022
$
2021
$
26,119,761
7,609,902
These dividends are fully-franked and therefore, there are no income tax consequences for the owners of Euroz Hartleys Group
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.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
73
24. 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.
(ii)
Liquidity risk
The Group manages liquidity risk using forward cash flow projections, maintaining cash reserves and having no
borrowings or debt.
Current lease liability
Non-current lease liability
Total lease liability ( Note 20)
Interest on lease liabilities are expected to be paid as follows:
Less than one year
One to two years
Two to three years
Three to four years
Four to five years
More than 5 years
Trade and other payables are expected to be paid as follows:
Less than 1 month
1 to 3 months
(iii) Credit risk
2022
$
2021
$
1,354,750
3,552,525
1,354,249
4,836,380
4,907,275
6,190,629
181,251
126,268
71,435
29,040
4,172
-
239,589
181,251
126,268
71,435
29,040
4,172
412,166
651,755
42,766,772
54,662,708
16,770,251
26,394,973
59,537,023
81,057,681
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.
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 2022.
The carrying amount of the consolidated entity’s cash and cash equivalents, receivables and deposits represents the
maximum credit exposure.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
74
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
24. FINANCIAL INSTRUMENTS (CONT’D)
(b) Financial risk exposure and management (cont’d)
(iii) Credit risk (cont’d)
The consolidated entity’s maximum exposure to credit risk at the reporting date was:
NOTE
CARRYING AMOUNT
8
9
12
2022
$
2021
$
190,667,525
96,050,325
18,071,214
1,069,380
28,779,550
1,362,701
209,808,119
126,192,576
Cash and cash equivalents
Trade and other receivables
Financial assets at amortised cost
Impairment losses
All of the Group’s receivables are considered recoverable.
(iv) Financial instruments composition
WEIGHTED AVERAGE
EFFECTIVE INTEREST
FLOATING INTER EST
NON‑INTEREST
RATE
RATE
BEARING
2022
%
2021
%
2022
$
2021
$
2022
$
RESTAT E D (i)
2021
$
0.05
0.29 190,667,525 96,050,325
-
-
-
-
-
-
-
-
-
-
18,071,214
28,779,550
15,317,064
21,455,932
-
-
75,827,068
826,040
83,252
0.05
0.36
1,025,935
1,279,449
43,446
191,693,460
97,329,774 33,431,724
126,971,842
-
- 59,537,023
81,057,681
FINANCIAL ASSETS
Cash and cash equivalents
Trade and other receivables
Financial assets held for trading
Equity accounted investments
Other investments
Financial assets
Total financial assets
FINANCIAL LIABILITIES
Trade and other payables
Lease liability (current and non-current)
4.25
4.25
4,907,275
6,190,629
-
-
4,907,275
6,190,629 59,537,023
81,057,681
(i)
Refer to Note 7
(v) Fair value hierarchy
The following table details the 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).
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022
75
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
24. FINANCIAL INSTRUMENTS (CONT’D)
(b) Financial risk exposure and management (cont’d)
(v) Fair value hierarchy (cont’d)
CARRYING AMOUNT
FAIR VALUE
FINANCIAL
ASSETS /
LIABILITIES AT
MANDATORILY
AMORTISED
2022
AT FVTPL (ii)
TOTAL
LEVEL 1
LEVEL 2 LEVEL 3
TOTAL
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)
NOTE
8
9
10
12
13
14
17
COST
$
$
190,667,525
190,667,525
18,071,214
18,071,214
$
-
-
$
-
-
$
-
-
$
-
-
$
-
-
15,317,064
-
15,317,064 6,779,359 8,184,570 353,135
15,317,064
-
-
-
-
1,069,380
1,069,380
-
-
-
-
59,537,023
59,537,023
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,317,064
150,271,096
165,588,160 6,779,359 8,184,570 353,135
15,317,064
(i)
(ii)
Balances are measured at amortised cost and their carrying amount approximates fair value
Fair value through profit and loss (FVTPL)
CARRY ING AMOUNT
FAIR VALUE
FINANCIAL
ASSETS /
LIABILITIES AT
MANDATORILY
AMORTISED
2021
AT FVTPL (ii)
COST
TOTAL
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
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 (iii)
Current financial liabilities
Trade and other payables (i)
NOTE
8
9
10
12
13
14
17
$
-
-
$
$
96,050,325 96,050,325
28,779,550
28,779,550
$
-
-
$
-
-
$
-
-
$
-
-
21,455,932
-
21,455,932 14,683,377 6,589,954
182,601 21,455,932
-
1,362,701
826,040
75,827,068
-
-
1,362,701
826,040
-
-
-
-
-
- 826,040
826,040
75,827,068 75,827,068
-
81,057,681
81,057,681
-
-
-
- 75,827,068
-
-
98,109,040
45,134,895
143,243,935 90,510,445 6,589,954 1,008,641 98,109,040
(i)
(ii)
(iii)
Balances are measured at amortised cost and their carrying amount approximates fair value
Fair value through profit and loss (FVTPL)
Refer to Note 7
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
76
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
24. FINANCIAL INSTRUMENTS (CONT’D)
(b) Financial risk exposure and management (cont’d)
(vi) Market risk
Market risk is the risk that changes in market prices will affect the fair value the Group’s financial instruments. The
Group is subject to market risk as it invests in financial instruments which are not risk free and are traded in active
markets where prices of securities fluctuate.
(vii) Sensitivity analysis
Assuming all variables remain constant and the interest rate fluctuated by 1% at year end the effect on the Group’s
equity and profit as follows:
Increase by 1%
Decrease by 1%
2022
$
1,342,158
(1,342,158)
2021
$
681,891
(681,891)
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%
25. REMUNERATION OF AUDITORS
Audit services
Audit and review of financial reports for the Group - KPMG
Other services
Other fees paid to KPMG
26. CONTINGENT LIABILITIES
The parent entity and the Group had contingent liabilities at 30 June as follows:
Secured guarantees in respect of leases of a controlled group entity:
Westpac Banking Corporation
Bankwest
536,097
(536,097)
779,869
(779,869)
2022
$
2021
$
354,000
285,000
-
15,000
796,816
625,935
1,013,514
625,423
1,422,751
1,638,937
As detailed in note 12, the Group has a deposit with FinClear Services Pty Ltd as part of Euroz Hartleys Limited international trading
and settlement arrangements. This deposit totalled $400,000 at reporting date (2021: $400,000).
The Group has no contingent assets at reporting date (2021: Nil).
27. 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
-
-
-
-
2,328,592
-
-
2,328,592
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
77
27. COMMITMENTS FOR EXPENDITURE (CONT’D)
The lease on the premises at Level 18 Alluvion, 58 Mounts Bay Road, Perth WA 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, Perth WA 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 lease commitment has been included as part of lease liabilities. Refer to Note 20.
28. RELATED PARTIES
(a) Key Management Personnel compensation
Short-term employee benefits
Post-employment benefits
Share based payments
Termination benefit
Total compensation
2022
$
5,392,413
189,497
730,939
502,504
2021
$
9,629,286
184,580
869,610
-
6,815,353
10,683,476
In financial year 2021, 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 Hartleys Group 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 Hartleys Group Limited.
(d) Share‑based payments
During the year performance rights were issued to 77 employees who opted in the Performance Rights Plan (2021: 127
employees). This performance right entitles the holder to a number of shares in Euroz Hartleys Group Limited calculated as
25% of their profit share, bonus or commission entitlement for the year if they opt in. 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 2021 financial 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.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
78
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
28. RELATED PARTIES (CONT’D)
(e) Group transactions
Wholly‑owned group
The wholly-owned group consists of Euroz Hartleys Group Limited and its wholly-owned controlled entities. See Note 29.
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available
to other parties unless otherwise stated.
2022
$
2021
$
Transactions with related parties consisting of:
(i)
Subsidiaries
•
•
•
•
Loans advanced by Euroz Hartleys Group Limited to subsidiaries
11,083,104
18,531,540
Payments of dividends to Euroz Hartleys Group Limited by
subsidiaries
Management fees charged by Euroz Hartleys Limited
Impairment of intercompany loan by Euroz Hartleys Group Limited
to subsidiaries
21,250,000
1,555,242
37,175,000
1,748,262
295,058
351,000
(ii) Other
•
Dividends received by Euroz Hartleys Group Limited from equity
accounted investments
• Management fee received by the Euroz Hartleys Group from equity
accounted investments
•
Performance fee received by the Euroz Hartleys Group from equity
accounted investments
1,566,613
2,987,513
2,471,785
2,688,557
11,319,224
14,545,035
Ownership interests in related parties
Interests held in controlled entities are set out in Note 29.
Other transactions with Directors and specified Executives
During the year ended 30 June 2022 the Directors and KMP transacted share business through Euroz Hartleys Limited on
normal terms and conditions.
Aggregate amounts of the above transactions with Directors and KMP of the Group:
Amounts recognised as revenue
Brokerage earned on Key Management Personnel accounts
29. INVESTMENTS IN CONTROLLED ENTITIES
2022
$
2021
$
59,124
62,923
NA ME O F ENTITY
INCORPORATION
SHARES
EQUITY HOLDING
COUNTRY OF
CLASS OF
Euroz Hartleys Limited
Euroz Hartleys Securities Pty Ltd *
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) *
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
2022
%
2021
%
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
79
29. INVESTMENTS IN CONTROLLED ENTITIES (CONT’D)
NA ME O F ENTITY
INCORPORATION
SHARES
EQUITY HOLDING
COUNTRY OF
CLASS OF
Poynton Corporate Pty Ltd (i) *
Poynton Nominees Pty Ltd (i) *
Euroz Employee Share Trust
Ozgrowth Limited (ii)
Westoz Investment Company Limited (ii)
Westoz Investment Company Pty Ltd *
Ozgrowth Pty Ltd *
Prodigy Investment Partners Pty Ltd
Westoz Australian Resources Limited *
WIM Small Cap Limited *
Entrust Wealth Management Pty Ltd *
* Dormant company
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
2022
%
100
100
-
-
-
100
100
100
100
100
100
2021
%
100
100
-
40.58
26.25
-
-
100
100
100
100
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
The ultimate parent entity in the wholly owned group is Euroz Hartleys Group Limited.
(i) Owned by Euroz Hartleys Limited
(ii) Investments in Westoz and Ozgrowth were disposed during the year.
A brief description of each entity (unless inactive and dormant) is as follows:
(a)
Euroz Hartleys Group Limited – Group holding entity listed on the Australian Securities Exchange. Euroz Hartleys Group
Limited manages cash and investments.
(b)
Euroz Hartleys Limited – Financial services entity providing stockbroking services with a focus on Western Australian
companies. This is the merged entity containing the businesses of Euroz Hartleys, Euroz Hartleys Securities Pty Ltd and
Entrust Wealth Management Pty Ltd from 26 April 2021.
(c)
Euroz Hartleys Securities Pty Ltd – Financial services entity providing stockbroking services with a focus on Western
Australian companies. This business is inactive effective 26 April 2021 following the restructure of the Group.
(d)
Westoz Funds Management Pty Ltd – Provides management services for investment funds.
(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)
(h)
Euroz Employee Share Trust – Vehicle established to acquire treasury shares on-market for distribution to eligible employees
in connection with the Performance Rights Plan.
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)
Prodigy Investment Partners Pty Ltd – In 2020, the Company closed the Prodigy operations, including the partnership with
the three separate boutiques.
30. 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 Limited has become one of Western Australia’s largest stockbroking and wealth management business. In addition, the
Group has also experienced cost synergies from the merger of the operations.
Consideration transferred
The consideration transferred in relation to the acquisition was the issue of 33,000,075 Euroz Hartleys Group 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.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
80
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
30. ACQUISITION OF EUROZ HARTLEYS LIMITED (CONT’D)
Consideration transferred (cont’d)
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 amounts of assets acquired and liabilities assumed at the date of the acquisition.
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
Measurement of fair values
1 OCTOBER 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
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.
Property, plant and equipment – The fair value of property, plant and equipment is determined by reference to its cost
net of depreciation.
All trade and other receivables of $14,856,238 were expected to be collectable at the date of acquisition.
Fair values
An assessment of the intangible assets was conducted by a third-party valuer. There has been no new information since nor any
additional provisions recognized that existed at the date of acquisition.
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:
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
30. ACQUISITION OF EUROZ HARTLEYS LIMITED (CONT’D)
Fair values (cont’d)
Consideration transferred
Fair value of identifiable net assets
Goodwill on acquisition
Allocation of Intangibles
Customer relationship – Hartleys
Hartleys Brand
Goodwill
81
$
38,280,087
(30,772,468)
7,507,619
3,900,000
19,500,000
7,507,619
30,907,619
31. EVENTS SUBSEQUENT TO REPORTING DATE
The Directors are not aware of any matter or circumstance subsequent to 30 June 2022 that has significantly affected, or may
significantly affect:
(a)
the Group’s operations in future financial years; or
(b)
the results of those operations in future financial years; or
(c)
the Group’s state of affairs in future financial years.
32. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year
Adjustments for:
Depreciation and amortisation
Impairment (reversal) / expense
Share of profits of equity accounted investments, net of tax
Share based payments
Gain arising from disposal of investments
Write-off / loss on disposal of property, plant and equipment
Interest paid on lease liabilities
Interest on security deposit
Distributions received from investing activity investments
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 in deferred tax assets
(Decrease) / increase in trade and other payables
Increase in current tax liabilities
Increase / (decrease) in deferred tax liabilities
Increase in provisions (excluding dividends)
Net cash from operating activities
(i)
Refer to Note 7
2022
$
RESTAT E D (i)
2021
$
40,723,715
52,540,905
2,471,480
(6,510,348)
(15,808,439)
3,063,302
(7,608,459)
551,769
241,110
(512)
(107,589)
10,708,336
322,610
6,138,868
4,775,793
(11,895,978)
710,298
(5,471,635)
293,413
2,722,739
(3,898,087)
(17,648,033)
5,253,350
(210,250)
261,508
248,125
-
(72,764)
(11,554,387)
(1,175,545)
(13,639,219)
1,401,703
21,972,934
5,250,649
7,301,488
1,759,947
22,597,734
50,515,063
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
82
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
33. 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
34. EARNINGS PER SHARE
Earnings per share attributable to the owners of Euroz Hartleys Group Limited
Basic earnings per share (cents)
Diluted earnings per share (cents)
2022
$
3,063,302
-
-
2021
$
5,253,349
2,633,882
10,000,000
3,063,302
17,887,231
2022
CENTS
21.68
20.68
2022
NUMBER
2021
C E NTS
29.16
28.17
2021
N UMB E R
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating
basic earnings per share.
187,826,101
180,197,903
Weighted average number of ordinary shares and potential ordinary shares (including
treasury shares) used as the denominator in calculating diluted earnings per share.
196,966,210
186,543,022
The profit after tax figure used to calculate the earnings per share for both the basic and diluted calculations was the same as the
profit after tax figure from Consolidated Statement of Profit or Loss and Other Comprehensive Income.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022 83
Notes to the Financial Statements (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
35. 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 for the year
Total comprehensive income
(i)
Refer to Note 7
Contingent liabilities
2022
$
RESTAT E D (i)
2021
$
130,246,455
89,509,831
50,573,249
160,491,555
219,756,286
211,064,804
26,259,147
2,752,482
29,011,629
34,862,857
6,270,235
41,133,092
136,804,690
45,084,643
134,785,172
27,253,564
8,855,324
190,744,657
7,892,976
169,931,712
39,526,767
54,226,371
39,526,767
54,226,371
The parent entity had no contingent liabilities as at 30 June 2022 and 30 June 2021.
Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2022 and 30 June 2021.
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.
36. COMPANY DETAILS
The registered office and principal place of business address of the Company is:
Euroz Hartleys Group Limited
Level 18 Alluvion
58 Mounts Bay Road
PERTH WA 6000
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
84
Directors’ Declaration
FOR THE YEAR ENDED 30 JUNE 2022
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)
(c)
give a true and fair view of the Company’s and consolidated group’s financial position as at 30 June 2022 and of their
performance for the year ended on that date; and
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 Group 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 Group 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 2022
Richard Simpson
Executive Director
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022
Independent Auditor’s Report
To the Members of Euroz Hartleys Group Limited
FOR THE YEAR ENDED 30 JUNE 2022
85
Independent Auditor’s Report
To the shareholders of Euroz Hartleys Group Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of Euroz
Hartleys Group Limited (the Company).
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 2022 and of its
financial performance for the year ended on
that date; and
The Financial Report comprises:
• Consolidated statement of financial position as
at 30 June 2022
• 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
•
complying with Australian Accounting
Standards and the Corporations Regulations
2001.
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 7 of the Financial Report which states that the amounts reported in the
previously issued 30 June 2021 Financial Report have been restated and disclosed as comparatives in this
Financial Report. Our opinion is not modified in respect of this matter.
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.
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.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
86
Independent Auditor’s Report
To the Members of Euroz Hartleys Group Limited (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
Valuation of Goodwill and Indefinite Life Intangible Assets ($35.5 million)
Refer to Note 16 of the Group Financial Report.
The key audit matter
How the matter was addressed in our audit
A key audit matter for us was the Group’s annual
impairment testing of indefinite life intangibles and
goodwill.
Our procedures included:
Working with our valuation specialists, our
procedures included the following:
The Group has prepared value in use cash flow
models for its Retail and Wholesale business cash
generating units (CGU), where portions of goodwill
and indefinite life intangible assets (collectively
referred to as “Intangibles”) have been allocated.
We focused on the significant forward-looking
assumptions the Group applied in their value in use
models, including:
• Forecast cash flows – which were based on
historical averages
• Forecast growth rates and terminal value
• Discount rates - these are complicated in nature
and vary according to the conditions and
environment the specific CGU is subject to
from time to time.
The models and the forward-looking assumptions
tend to be prone to greater risk for potential bias,
error and inconsistent application. These conditions
necessitate additional scrutiny by us, in particular to
address the objectivity of sources used for
assumptions, and their consistent application.
We involved valuation specialists to supplement
our senior audit team members in assessing this
key audit matter.
• We considered the appropriateness of the value
in use models applied by the Group to perform
the annual test for impairment against the
requirements of the accounting standards.
• We assessed the integrity of the value in use
models used, including the accuracy of the
underlying formulas.
• We compared forecast cash flows contained in
the value in use models to Board approved
forecasts.
• We assessed the accuracy of previous Group
forecasts to inform our evaluation of forecasts
incorporated in the models.
• We challenged the Group’s forecast cashflows,
growth rate assumptions and terminal value
multiples considering competitive market
conditions and the continuing volatility in the
global investment market.
• We used our knowledge of the Group, the
Group’s past and recent performance, business
and customers, and our industry experience.
• Working with our valuation specialists, we
independently developed a discount rate range
considered comparable using publicly available
market data for comparable entities, adjusted
by risk factors specific to the Group and its
CGUs and the industry it operates in.
• We considered the sensitivity of the models by
varying key assumptions, such as forecast cash
flows, growth rates and discount rates, within a
reasonably possible range. We did this to
identify those CGUs at higher risk of
impairment and to focus our further procedures.
• We assessed the disclosures in the Financial
Report using our understanding obtained from
our testing and against the requirements of the
accounting standards.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022
Independent Auditor’s Report
To the Members of Euroz Hartleys Group Limited (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
87
Other Information
Other Information is financial and non-financial information in Euroz Hartleys Group 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 Hartleys Group Limited Board of Directors profiles, Euroz
Hartleys Group Structure, Euroz Hartleys Limited – Managing Directors Report, Euroz Hartleys Limited
Board of Directors profiles, Corporate Transactions, Euroz Hartleys Limited Report, Entrust Wealth
Management Report, Westoz Fund Management Report, Euroz Hartleys Foundation Report, Euroz
Hartleys Foundation Board of Directors profiles 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; and
• 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.
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENT
88
Independent Auditor’s Report
To the Members of Euroz Hartleys Group Limited (CONT’D)
FOR THE YEAR ENDED 30 JUNE 2022
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of Euroz
Hartleys Group Limited for the year ended 30 June
2022, 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 12 to 18 of the Directors’ report
for the year ended 30 June 2022.
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 2022
EUROZ HARTLEYS GROUP ANNUAL REPORT 2022
ASX Additional Information
AS AT 31 AUGUST 2022
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: 220 at $1.60 per unit
B) TOP HOLDERS
The twenty largest holders of ordinary fully paid shares are listed below.
RAN K
N AM E
89
HOLDERS
497
627
339
750
251
UNITS
216,484
1,816,808
2,562,648
25,345,501
167,355,632
2,464
197,297,073
% UNI T
0.11
0.92
1.30
12.85
84.82
100
ORDINARY SH AR E S
MR JAY EVAN DALE HUGHES
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