A N N U A L R E P O R T
2023
C O R P O R A T E D I R E C T O R Y
3
F I N A N C I A L Y E A R H I G H L I G H T S
2023
$178.3m1
MARKET
CAPITALISATION
$3.4b1
FUNDS UNDER
MANAGEMENT
6cps
ORDINARY
DIVIDENDS
20.27cps
SPECIAL
DIVIDEND
$40m
EQUAL CAPITAL
REDUCTION
1. As at 30 June 2023
$94.5m1
$337.3m1
$9.3m1
CASH &
INVESTMENTS
FULLY FRANKED
DIVIDENDS IN 23 YEARS
NET PROFIT
AFTER TAX
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 4
A N N U A L R E P O R T 2 0 2 3
Table of Contents
Corporate Directory
Financial Year Highlights
Contents Page
Executive Chairman’s Report
Euroz Hartleys Group Limited Director Profiles
Euroz Hartleys Limited Managing Director’s Report
Euroz Hartleys Limited Director and Officer Profiles
Selected Corporate Transactions
Euroz Hartleys Foundation
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes In Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
Euroz Hartleys Group Contact Details
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EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 5
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CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
6
R E F L E C T I N G O N 2 0 2 3
Executive
Chairman’s
Report
The past year delivered solid profitability in quieter and more uncertain markets. During the 2023
financial year, Euroz Hartleys Group Limited (“Euroz Hartleys” or the “Company”) continued our
journey to provide the best possible platform for our staff, clients and shareholders.
We believe that Euroz Hartleys is now recognised as Western
and capital raising activity were all negatively influenced by rising
Australia’s leading financial services business which is a
interest rates and inflationary concerns.
reflection of the deep history and trust in our iconic Western
Australian brand.
Equity Capital Market (ECM) raisings during the year of ~$1.9
billion were similar to the previous year but was an excellent
Euroz Hartleys reported an audited result of $9.3 million net
achievement given lower ECM market activity over the period.
profit after tax attributable to members for the financial year
This was evidenced by our Number 1 ranking in the Business
ended 30 June 2023. This result is difficult to compare with the
News Western Australian (CYTD) ECM League Tables and a
previous financial year which included significant one-off profits
National Number 6 ranking in the Australian Financial Review (FY)
related to the sale of our Westoz and Ozgrowth investments and
ECM rankings.
performance fees associated with these funds.
Our Advisory revenues doubled during this period and we see
Underlying cash profitability was driven by a solid performance
further opportunity to provide quality Merger and Acquisitions
from Euroz Hartleys Limited in a year in which markets, volumes
advice to our extensive client base going forward.
We are proud of
our results and
achievements while
we continue to build
and consolidate of our
Western Australian
market position.
Transactional brokerage revenues were down 31.2% for the
period, reflecting markets that lacked direction and confidence for
the majority of the year.
We remain focused on increasing our proportion of recurring
revenues and can report a modest increase in Funds Under
Management (FUM) to $3.4 billion. Our team has spent
considerable time and effort in developing new strategies to drive
FUM growth and consolidate our wealth offering. We are confident
our investment in improving our adviser platforms, support and
capabilities will enable the largest team of Private Wealth advisers
in WA to continue to grow FUM.
Underlying cash profitability enabled your Directors to declare and
pay a final fully franked dividend of 3.5 cents per share (“cps”)
which combined with the interim dividend of 2.5 cps brought the
full year dividend to 6 cps.
The best measure of a strong business is the payment of
dividends and we are proud that we have now returned $337.3
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 7
million in fully franked dividends and $40 million of capital to
supporting the strategy and growth of the business during their
shareholders across our 23-year history.
respective tenures.
During this past year we have simplified our overall business,
returned $80 million of excess cash to shareholders and
simultaneously cancelled 16.85% of our issued capital via a
capital return.
Thank you
In May 2023 Mr Robert Black retired as a Director of Euroz
Summary
Euroz Hartleys maintains a strong balance sheet with cash and
investments at 30 June 2023 of $94.5 million and zero debt. This
balance sheet strength gives our advisers and clients significant
confidence and differentiates us from many of our competitors.
I would like to sincerely thank our 189 staff who represent 100% of
Hartleys. Rob joined the business in January of 2002 as an
the goodwill in our business. Our people are what ultimately drives
institutional sales dealer and subsequently became Head of
our success and our significant reinvestment into our team and
Institutional Sales. He was Managing Director of Euroz Hartleys
our culture will help to ensure growth and resilience in all aspects
Limited from 2014 to 2022 and was appointed a Director of Euroz
of our Euroz Hartleys business going forward.
Hartleys in 2017.
Post balance date we announced the retirement of Mr Jay Hughes
as a Director of Euroz Hartleys. Mr Hughes continues in his role
as a key employee of Euroz Hartleys Limited and Non-executive
Chairman of Westoz Funds Management Pty Ltd and Westoz
Andrew McKenzie
Resources Fund Limited.
Executive Chairman
The Board would like to thank Mr Robert Black and Mr
Jay Hughes for their invaluable service as Directors of
Euroz Hartleys. They have been instrumental in driving and
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 8
E U R O Z H A R T L E Y S G R O U P
Profit Before Tax & Net Profit After Tax
N
O
I
L
L
I
M
$
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
-10.0
-20.0
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Profit Before Tax
Net Profit After Tax
E U R O Z H A R T L E Y S G R O U P
Dividend History
E
R
A
H
S
R
E
P
S
T
N
E
C
30.0
25.0
20.0
15.0
10.0
5.0
0.0
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
2H Dividend Per Share
1H Dividend Per Share
Special Dividend
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
9
E U R O Z H A R T L E Y S G R O U P
NTA per share
E
R
A
H
S
R
E
P
S
T
N
E
C
100.0
80.0
60.0
40.0
20.0
0.0
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Cents Per Share
E U R O Z H A R T L E Y S G R O U P
Funds Under Management
)
M
$
A
(
M
U
F
3,500
3,000
2,500
2,000
1,500
1,000
500
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
Jun-22
Jun-23
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
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
10
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
Director Profiles
Andrew McKenzie
E XECUTIVE CHAIR MAN
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).
Robin Romero
INDEPENDENT NON ‑ E XECUTIVE DIR ECTOR
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 West African Resources Limited and Greening Australia Limited. She has 20 years
of in-house legal experience, largely 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 Chartered Accountant and a graduate of
the AICD. She also holds a practising certificate from the Legal Practice Board of Western Australia.
Fiona Kalaf
INDEPENDENT NON ‑ E XECUTIVE DIR ECTOR
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.
Richard Simpson
E XECUTIVE DIR ECTOR
Richard brings to the board extensive corporate finance, advisory and equity capital market experience
gained through a number of senior Australian and international investment banking positions. Richard is
a past board member of Hartleys Limited (Chairman and Managing Director), Botanic Gardens & Parks
Authority (Chairman 2002-2021),) State Emergency Management Authority and FINSIA. 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, Salomon Brothers
Inc (now Citigroup) based in both Sydney and Melbourne, and returning to Perth to join Hartleys in 1994.
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 11
Ian Parker
E XECUTIVE DIR ECTOR
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 initially with a financial planning 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.
Jay Hughes
E XECUTIVE 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, Non-Executive Chairman Westoz
Resources Fund Limited and a Non-Executive Director of Emerald Resources NL. 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. Mr Hughes retired as a Director of Euroz Hartleys Group Limited effective
8 August 2023.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 12
R E F L E C T I N G O N 2 0 2 3
Managing
Director’s Report
In FY23 we continued our efforts to maximise our existing asset base; we have the best people, a
strong culture and the right resources which enable us to deliver exceptional outcomes for our clients
across our entire business.
I’m proud to have had the opportunity to lead our exceptional
team over the last 12 months and I look forward to supporting the
Operational Performance
Following the completion of the integration of Euroz Hartley Securities
business as we strive to be the pre-eminent financial services firm
Limited (formerly Euroz Securities Limited), Euroz Hartleys Limited
in Western Australia.
(formerly Hartleys Limited) and Entrust Wealth Management Pty Ltd in
2022 to create Western Australia’s leading financial services firm, the
Market Conditions
Markets for the most part of FY23 were largely more subdued
focus for FY23 was the strengthening of our team and driving areas
of improvement to ensure we remain at the forefront of excellence for
than previous years, interspersed with short periods of frenetic
our three main stakeholders: shareholders, clients and our people.
action and volatility. Macro factors such as rapid monetary policy
changes, multiple interest rate rises and increasing inflationary
pressure coupled with a continuing tumultuous geopolitical
backdrop weighed heavily on markets. Notwithstanding these
challenges, we experienced some good trading months. Euroz
Hartleys and its clients took advantage of these market conditions
where appropriate, however, significant economic concerns
remain within the investment community and wider economy.
Financial Performance
Turning to our financial performance, Euroz Hartleys Group
Limited reported a net profit after tax attributable to members of
$9.3 million for the year ended 30 June 2023, compared to $40.7
million in the previous corresponding period, a decrease of 77.1%,
and revenue of $95.9 million for the year ended 30 June 2023
compared to $118.7 million in the previous corresponding period,
a decrease of 19.2%. This result is difficult to compare with the
previous financial year which included significant one-off profits
related to the sale of our Westoz and Ozgrowth investments and
performance fees associated with these funds.
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 staff and demonstrates the resilience of
our business.
Throughout FY23 we continued to seek out operating efficiencies
within the business and sought new pathways to enhance our
product, service and system offering to all of our clients. These
activities will continue into FY24 as we continually refine and
streamline our offering. Our Operations team have continued to work
With global trends
continuing to underwrite
greater need for the world’s
natural resources we feel
the time is right to continue
to invest in our people and
platforms to capitalise on
this trend.
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 13
tirelessly to ensure business continuity whilst managing the
incentive fees. This diversity of our earnings provides the business with
demanding project timetables.
a solid foundation for continued growth.
Community
In FY23 we donated in excess of $504,000 to more than 20
separate charitable causes. Our 5th annual Commission for a
Cause was again an amazing success raising $300,000 for our
The business is supported by an experienced 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.
chosen charities. Commission for a Cause has now raised more
We will continue to review, refine and improve our operations to
than $1.57 million for charity since its inception five years ago and
facilitate better client outcomes and, in turn, lead to better returns
we look forward to continuing with this initiative. The enthusiasm and
for our shareholders. Notwithstanding the macroeconomic and
commitment that our people and clients bring to these events is a
geopolitical challenges that take us into FY24, the combination of our
testament to our connections with the community. Euroz Hartleys
people, our improved client offering and our strong balance sheet
ties to the community extend well beyond our business dealings and
ensures that I remain optimistic that we can deliver another successful
the Foundation reminds us of this throughout the year. We are all
period for all stakeholders. I would like to take this opportunity to thank
extremely proud of what the Euroz Hartleys Foundation delivers to the
all Euroz Hartleys staff for their continued efforts in delivering a solid
Western Australian community each year.
FY23 result in difficult market conditions and ensuring the company is
in an enviable position for the years ahead.
Divisional Update
Our Wholesale division consists of Research, Institutional Sales and
Corporate Finance. Our Research division has deep connections to
Outlook
In December of 2023 we are targeting the move into our new office
the WA business community. With over 120 stocks under coverage
space on Levels 37 and 38 of QV1. This move will bring all our teams
our knowledge of the WA mining and industrial landscape remains
together in one location for the first time since the merger of Euroz
unparalleled. In FY23 Euroz Hartleys raised ~$1.9 billion (2022: $2.2
Securities Limited and Hartleys Limited in 2020. As this piece of the
billion) for our corporate clients in what was a more subdued year for
puzzle falls into place we will be well positioned to forge ahead as one
Equity Capital Markets (ECM) activity. Our Institutional Sales team is
combined team leveraging off our strengths which will in turn further
the largest small-mid cap institutional desk in Australia and provides
enhance our capacity to better serve our stakeholders. Although
significant domestic and global distribution capabilities.
markets remain volatile in the short term, we have conviction around
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 ~$3.4 billion of Funds Under
Management (FUM) (2022: $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.
the mid-long term outlook for the Western Australian economy. With
global trends continuing to underwrite greater need for the world’s
natural resources we feel the time is right to continue to invest in our
people and platforms to capitalise on this trend.
Both divisions generate revenue across a range of services including
brokerage, ECM transactions, corporate advisory, FUM fees and
Tim Bunney
Managing Director
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
14
E U R O Z H A R T L E Y S L I M I T E D
Director and Officer Profiles
Andrew McKenzie
E XECUTIVE CHAIR MAN
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).
Tim Bunney
MANAG ING DIR ECTOR AND HE AD OF INSTITUTIONAL SALES
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.
Gavin Allen
E XECUTIVE DIR ECTOR AND HE AD OF R ESE ARCH
Gavin is the department head of Euroz Hartley’s Research Division and is a Research Analyst with 19
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.
Anthony Brittain
E XECUTIVE DIR ECTOR AND CHIEF OPER ATING AND FINANCIAL OFFICER
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 Hartley Poynton, Hartleys 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, was formerly a Certified information System Auditor, is a Graduate of AICD and is an individual member
(MSIAA) of SIAA. Anthony is a member of the Audit and Risk, Compliance and Underwriting Committees of Euroz
Hartleys. Anthony is a member of the Profession Committee and 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 2023 15
Ben Crossing
E XECUTIVE DIR ECTOR AND HE AD OF COR POR ATE
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.
Brian Beresford
E XECUTIVE DIR ECTOR AND COR POR ATE FINANCE DIR ECTOR
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.
Dale Bryan
E XECUTIVE DIR ECTOR AND COR POR ATE FINANCE DIR ECTOR
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.
Marc Lincoln
E XECUTIVE DIR ECTOR AND HE AD OF PR IVATE WE ALTH
Marc is currently serving as Head of Private Wealth and an Executive Director of Euroz Hartleys having
spent more than 25 years in financial services.
Marc’s journey in Stockbroking/Wealth Management began at Hartleys (then Hartley Poynton) in the late
90’s before assuming the role of WA State Manager at Bell Potter.
In 2021, Marc returned to Euroz Hartleys, where he is dedicated to helping the Private Wealth advisers
deliver exceptional service and investment solutions to private wealth clients.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 16
E U R O Z H A R T L E Y S L I M I T E D
Director and Officer Profiles
Amanda Boyce
E XECUTIVE DIR ECTOR AND HE AD OF ADVICE
Amanda is an experienced financial market professional with 20 years of experience in the industry. She has
held senior leadership roles in Advice, Institutional Wealth, and Strategic Projects and has a proven track
record of success. Her career began with Goldman Sachs JBWere and later became Head of Syndicate at
JBWere before becoming Head of Advice for WA & SA.
Amanda has had significant influence building and safeguarding the cultural and reputational interests of the
businesses she works for through leadership, governance and committee roles she has held throughout her
career. Amanda is Executive Director of Euroz Hartleys Limited & Euroz Hartleys Foundation and Head of
Advice, responsible for shaping the growth and advice strategy. She joined Euroz Hartleys in July 2022.
Ian Parker
E XECUTIVE DIR ECTOR AND PR IVATE WE ALTH ADVISER
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 initially with a financial planning 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.
Rowan Jones
E XECUTIVE DIR ECTOR AND HE AD OF ENTRUST WE ALTH
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.
David Smyth
E XECUTIVE DIR ECTOR AND PR IVATE WE ALTH ADVISER
David advises and 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 on the
Hartleys board for 6 years until the merger with Euroz and has served on numerous committees including the
Investment and Compliance Committee. David remains an Executive Director of the merged Euroz Hartleys.
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 17
Anthony Hewett
G ROUP COMPAN Y SECR E TARY
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.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 18
F I N A N C I A L Y E A R 2 0 2 3
Selected Corporate Transactions
Equity Capital Markets
PLACEMENTS
PLACEMENT + ANREO
PLACEMENT + ANREO
PLACEMENT
$570 Million
$244 Million
$224 Million
$193 Million
JOINT LEAD MANAGER
Euroz Hartleys Ltd
JUL 22, APR 23
JOINT LEAD MANAGER +
UNDERWRITER
JOINT LEAD MANAGER +
UNDERWRITER
JOINT LEAD MANAGER +
UNDERWRITER
Euroz Hartleys Ltd
JUL-22
Euroz Hartleys Ltd
JAN-23
Euroz Hartleys Ltd
JUN-23
PLACEMENT
$120 Million
PLACEMENT
$75 Million
JOINT LEAD MANAGER
JOINT LEAD MANAGER
Euroz Hartleys Ltd
FEB-23
Euroz Hartleys Ltd
FEB-23
PLACEMENTS
$62 Million
JOINT LEAD MANAGER
+ LEAD MANAGER
Euroz Hartleys Ltd
OCT 22, FEB 23
PLACEMENT
$57 Million
JOINT LEAD MANAGER
Euroz Hartleys Ltd
MAR-23
PLACEMENT
$55 Million
LEAD MANAGER &
UNDERWRITER
Euroz Hartleys Ltd
DEC-22
PLACEMENT
$46 Million
PLACEMENTS
$43 Million
PLACEMENT
$40 Million
JOINT LEAD MANAGER
JOINT LEAD MANAGER
JOINT LEAD MANAGER
Euroz Hartleys Ltd
FEB-23
Euroz Hartleys Ltd
AUG 22, APR 23
Euroz Hartleys Ltd
MAY-23
PLACEMENTS
$37 Million
JOINT LEAD MANAGER
Euroz Hartleys Ltd
JUL 22, APR 23
PLACEMENTS
$32 Million
LEAD MANAGER
Euroz Hartleys Ltd
AUG 22, FEB 23
PLACEMENT
$30 Million
JOINT LEAD MANAGER
Euroz Hartleys Ltd
SEP-22
PLACEMENT
$30 Million
LEAD MANAGER
Euroz Hartleys Ltd
MAR-23
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 F I N A N C I A L Y E A R 2 0 2 3
Selected Corporate Transactions
Equity Capital Markets
19
PLACEMENT
$20 Million
PLACEMENT
$20 Million
PLACEMENT
$20 Million
PLACEMENT
$15 Million
JOINT LEAD MANAGER
JOINT LEAD MANAGER
JOINT LEAD MANAGER
JOINT LEAD MANAGER
Euroz Hartleys Ltd
MAR-23
Euroz Hartleys Ltd
APR-23
Euroz Hartleys Ltd
APR-23
Euroz Hartleys Ltd
MAY-23
PLACEMENT
$10 Million
LEAD MANAGER
Euroz Hartleys Ltd
NOV-22
PLACEMENT
$10 Million
JOINT LEAD MANAGER
Euroz Hartleys Ltd
APR-23
Mergers and Acquisitions
2023
2022
2022
2022
$497 Million
$367 Million
$117 Million
$42 Million
ADVISER TO NORWEST
ENERGY IN RELATION TO
THE OFF-MARKET TAKEOVER
BY MINERAL RESOURCES
ADVISER TO MACA
IN RELATION TO THE
OFF-MARKET TAKEOVER
BY THIESS
ADVISER TO EMERALD
IN RELATION TO THE
OFF-MARKET TAKEOVER OF
BULLSEYE MINING
ADVISER TO DEMETALLICA
IN RELATION TO THE
OFF-MARKET TAKEOVER BY
AIC MINES
Euroz Hartleys Ltd
Euroz Hartleys Ltd
Euroz Hartleys Ltd
Euroz Hartleys Ltd
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 20
S O C I A L G I V I N G
Euroz Hartleys
Foundation
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 $3.6 million to over 100 individual charities and
worthy causes.
The Foundation forms the central plank in our social giving
Since its inaugural event in 2019, Commission for a Cause has
program. As a proudly Western Australian company, we feel it is
raised more than $1.57m for charity through the generosity and
our obligation to give back to the community that has supported
support of our clients and staff.
us over the past 23 years.
Perth Children’s Hospital Foundation will use the funds raised on
The Foundation’s focus is on Western Australian charitable
the day to secure two urgently needed pieces of equipment. This
causes where we believe we can make a positive
includes electromagnetic navigation software to make brain surgery
community impact.
On 9 June 2023 the Foundation held its 5th annual Commission
for a Cause event. This year, the event raised $300,000 which
is an amazing outcome given the turbulent market conditions
safer and more accurate for children under two, and an Indirect
Calorimetry device, which more accurately estimates the energy
requirements of children in Paediatric Critical Care, delivering
tailored nutrition to improve recovery.
and trading headwinds. The funds were divided equally between
The Women & Infants Research Foundation is utilising the funds
Perth Children’s Hospital Foundation (PCHF), Women and
from Commission for a Cause to advance its pioneering Lyfe
Infants Research Foundation (WIRF), WA Cricket Foundation
Languages program. Lyfe Languages brings medical students,
(WACF) and Lifeline WA (Lifeline).
doctors, and clinicians together with community to translate
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 21
E
U
R
O
Z
H
A
R
T
L
E
Y
S
G
R
O
U
P
•
A
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P
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2
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2
3
C
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N
T
E
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P
A
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complex medical terminology into accurate and culturally safe
The WA Cricket Foundation is active and engaged with leaders in
Indigenous languages making it easier for regional and remote First
Australian sport, who seek to enrich, support and inspire our state
Nations people to get the healthcare they need.
to be a better, healthier and more inclusive community.
The program was initially developed to close the major healthcare
Driven by a vision of a community safe from suicide, Lifeline WA
communication gap which continues to affect First Nations
has been providing a free, 24-hour, telephone crisis support
people and communities. Lyfe Languages aims to retain and
service, 13 11 14, in Western Australia for more than 30 years.
empower Indigenous languages, partnering with new technologies
to equitably transform health and well-being, and to create
connected communities.
In 2023, Commission for a Cause supported the WA Cricket
Foundation’s programs that provide opportunities for young
Aboriginal people, those in our community with a disability
and young women who will benefit from an inclusive and
supportive environment.
The WA Cricket Foundation continues to build an inclusive and
diverse tomorrow, it is creating equal opportunity for every Western
Australian to benefit from a sense of belonging to a team through
the game of cricket.
Through the WACF, the Association is funding and supporting
key initiatives that will deepen its engagement in the community.
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.
CHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTS
22
A N N U A L R E P O R T 2 0 2 3
Financial Report
CONTENTS
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
23
42
43
44
45
46
47
86
87
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 23
Directors’ Report
FOR T HE YE A R E ND E D 30 JUNE 20 23
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 2023.
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
Executive directors
Jay Hughes (retired 8 August 2023)
Robert Black (retired 31 May 2023)
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 ANZ). He also holds a Graduate Diploma in
Applied Finance and Investment from FINSIA, is a Graduate Member (GAICD) of the Australian Institute of Company Directors (AICD) and
a Master Practitioner (MSIAA) of the Stockbrokers and Investment Advisers Association of Australia (SIAA) as well as a Member of SIAA
Profession Committee and the Professional Conduct Tribunal. He is also a panel member of the Markets Disciplinary Tribunal (MDP) of the
Australian Securities and Investment Committee (ASIC).
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 Practitioner (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 group reports a net profit attributable to members of $9.3 million for the financial year ended 30 June 2023 (2022: $40.7
million). This result represents basic earnings per share of 5.51 cents (2022: 21.68 cents).
Underlying cash profitability was driven by a solid performance from Euroz Hartleys. Equity Capital Market (ECM) raisings of $1.9 billion versus
$2.2 billion last financial year led to ECM revenue being down approximately 11% while overall corporate revenues were down approximately
23% from the previous year. Brokerage revenues were down 31% for the period, reflecting equity markets that lacked direction and confidence
for the majority of the year. Funds Under Management (FUM) revenue for the year was broadly in line with the previous year. Euroz Hartleys
FUM as at 30 June 2023 was $3.4 billion (2022: $3.0 billion).
Underlying cash profitability enabled your Directors to declare and pay a final fully franked dividend of 3.5 cents per share (“cps”) which
combined with the interim dividend of 2.5 cps brought the full year dividend to 6 cps (2022: 11 cps).
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 24
Directors’ Report (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
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
Total revenue
Net profit after tax
2023
$
2022
$
25,111,267
36,499,569
38,693,105
43,613,675
307,431
13,791,010
18,197,903
18,433,771
11,066,059
5,740,096
-
2,320,121
239,572
107,589
239,070
266,118
95,935,458
118,690,898
9,338,637
40,723,715
Operating and financial review
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 $9.3 million compared to $40.7 million in the 2022 financial year. Previous financial year
result included significant one-off profits related to the sale of Westoz Investment Company Limited (Westoz) and Ozgrowth Limited (Ozgrowth)
investments and performance fees associated with these funds.
We are pleased with the overall performance of our underlying business during a year in which markets, volumes and capital raising activity
were all negatively influenced by rising interest rates and inflationary concerns.
Disclosure of operations – Sales
Revenue has decreased by 19.2% to $95.9 million from previous year amount of $118.7 million.
(a) Stockbroking & Corporate Finance
Corporate Finance comprises of corporate advisory, underwriting and placement fees. Stockbroking and Corporate Finance revenue
decreased by 12.9% to $74.8 million from $85.9 million.
Euroz Hartleys was Lead or Joint Lead Manager to 64 (2022: 76) ECM transactions this year raising $1.9 billion (2022: $2.2 billion),
similar to the previous year, however, this was an excellent achievement given lower ECM market activity over the period. This was
evidenced by our Number 1 ranking in the Business News Western Australian ECM League Tables and a National Number 6 ranking in
the Australian Financial Review ECM rankings.
Our Corporate Advisory revenues doubled during this period to $11.1 million (2022: $5.7 million) and we see further opportunity to
provide quality Merger and Acquisitions advice to our extensive client base going forward.
Transactional brokerage revenues were down 31.2% for the period to $25.1 million (2022: $36.5 million), reflecting markets that lacked
direction and confidence for the majority of the year.
(b) Wealth Management
Wealth Management revenue decreased slightly by 1.1% to $18.2 million from $18.4 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. We report a modest increase in FUM to
$3.4 billion (2022: $3.0 billion).
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 25
Directors’ Report (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
Disclosure of operations – Sales (cont’d)
(c)
Funds Management – Performance and Management fees
Revenue from Funds Management decreased by 97.8% to $0.3 million from $13.8 million in the prior year. This revenue consists of
performance fees of $0.15 million (2022: $11.3 million) and management fees of $0.15 million (2022: $2.5 million). The decrease in
revenue can be attributed to the completion of two separate Scheme of Arrangements in April 2022, where Westoz and Ozgrowth were
disposed to WAM Capital Limited. As a result, Westoz Funds Management Pty Ltd (WFM), a subsidiary of Euroz Hartleys Group no
longer manages the mandates of Westoz and Ozgrowth. In October 2022, a new fund was launched, Westoz Resources Fund Limited
and the investment mandate is being managed by WFM. The revenue for this financial year is derived from the management of this
new mandate.
(d)
Investment Income
There was no dividend or trust distributions received during the year (2022: $0.1 million).
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: Summary coverage on companies
ii.
Institutional Sales
•
•
•
•
One of the largest institutional small to mid-cap dealing desks in the Australian market with a sales team of 10 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
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 26
Directors’ Report (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
Disclosure of operations (cont’d)
ii.
Institutional Sales (cont’d)
•
Institutional dealing team “highly focused” on providing the following services:
-
-
-
-
-
Quality advice and idea generation
Efficient execution
Regular company contact
Site visits
Roadshows
iii.
Private Wealth
•
•
•
•
•
Team of 61 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
In October 2022, WFM was appointed to be the responsible manager for Westoz Resources Fund Limited (WRFL). WRFL is a new
unlisted investment fund whose purpose is to generate positive returns from a portfolio of stocks generally associated with the
resources sector in Western Australia (WA). Euroz Hartleys Group Limited owns approximately 7.7% of the issued share capital of the
fund which now manages approximately $28.5 million as at 31 July 2023.
(c) Wealth Management
We remain focused on increasing our proportion of recurring revenues and can report a modest increase in FUM to $3.4 billion
(2022: $3.0 billion).
(d)
Investing
The business has some listed and unlisted investments.
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 27
Directors’ Report (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
Disclosure of business strategies and prospects - Growth
Our aim is to build real diversification of transactional and recurring revenues across our business.
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.
We remain focused on increasing our proportion of recurring revenues and can report a modest increase in FUM to $3.4 billion. Our team has spent
considerable time and effort in developing new strategies to drive FUM growth and consolidate our wealth offering. We are confident our investment
in improving our adviser platforms, support and capabilities will enable the largest team of Private Wealth advisers in WA to continue to grow FUM.
We believe this high performing team environment and our upcoming office move to QV1 will also attract other quality advisers to join our business.
Disclosure of business strategies and prospects - Material Business Risks
Overview
Euroz Hartleys Group Limited has adopted the ASX Corporate Governance Principles and Recommendations (4th Edition) and is committed to
recognising and managing risk. We recognise risk as the effect of uncertainty, both positive and negative, on our objectives and we manage risk to
create and sustain value for shareholders and other stakeholders.
Uncertainty and risk are inherent when conducting operations within financial markets. As an active participant in the Australian capital markets,
Euroz Hartleys Group Limited is exposed to risks that could result in financial losses. We foster a risk aware culture with consideration of risk
supporting our formulation of strategy and informing business decision-making.
The Group has identified its principal risks as market risk, credit risk, operational risk and other risks. Accordingly, risk management and control of
the balance between risk and return are critical elements in maintaining the Group’s financial stability and profitability. Therefore, an effective risk
management framework is integral to our success.
Details of risks identified:
RISK CATEGORY
RISK SUMMARY DESCRIPTION KEY RISK EXPOSURES ASSESSED
Market Risk
A change in market prices
and / or any of the underlying
market forces may result in
loss.
The macroeconomic
uncertainty of changing
business models.
Credit Risk
This is where an entity is
unable to fulfil its financial
obligations.
Operational Risk
This refers to the risk of
failure to achieve strategic
objectives and / or respond
to changes in our competitive
landscape with competitive
products.
Policies and procedures are in place to measure, monitor and control risks where
possible.
As with our operational risk, we take a proactive approach to understand macroeconomic,
climate and geopolitical factors that may have an impact on our business.
Changes in market conditions influence the volume and timing of transactions across
the business and the value of various equity, credit and market risk positions held by
the Group at balance sheet date.
We have defined and set credit standards, policies and procedures to enable ongoing
financial review with respect to existing and potential new clients.
High risk transactions and strategies are carefully monitored and supervised.
Policies and procedure are in place to measure, monitor and control risks where possible.
We maintain a comprehensive Business Continuity Plan and Disaster Recovery
processes to address identified operational risks.
We constantly assess our client investment offerings including technology changes and
innovation.
Other Risks
Regulatory and
legal risk
The risk of legal or regulatory
sanctions or loss, resulting
from failure to comply with
laws, regulations, licensing or
contractual requirements.
We conduct strategy sessions with Senior Executives on a bi-annual basis.
We have access to external legal counsel if required.
We have active engagement with all regulators including ASIC and ASX.
We provide feedback on consultation papers where appropriate.
We have active engagement in various committees through our premier industry
association SIAA.
Regular attendance at seminars and participation in working groups within our industry.
We take active steps to comply with all Austrac guidance and conform with Australian
Privacy Principals.
We monitor the regulators for proposed and approved changes which require
implementation within our business.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 28
Directors’ Report (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
RISK CATEGORY
RISK SUMMARY DESCRIPTION KEY RISK EXPOSURES ASSESSED
Cybersecurity risk
The risk of loss or other
damage resulting from
our failure to appropriately
respond to our technology,
physical security or
cybersecurity being
compromised.
Reputational Risk
Expectation over our ESG
commitment, or compromise
of our reputation due to
perceived inaction.
Risk of modern slavery
exposure in our supply chain
and business operations.
The risk of damage to our
brand due to inappropriate
conduct and culture.
Review of third-party providers and platform vulnerabilities to assess risk and potential loss
or other damage.
Data security and access is monitored internally on an ongoing basis.
Data management and control procedures are documented and in place.
Implementation of multi factor authentication for remote access and client systems access
where available.
Annual penetration testing of our network to identify vulnerabilities.
Alignment to the Australian Cyber Security Centre Essential Eight Framework.
Privacy policy is in place to ensure all obligations are considered and complied with. This
policy is also available on our website.
Cyber Incident Response Plan is in place to support and direct necessary actions should
this event occur.
Disaster Recovery and Business Continuity plans are in place for the business as a whole.
This is tested on an ongoing basis.
Ongoing staff training on all areas of risk (phishing, malware etc).
Senior management and Board engagement is ongoing as this subject is part of the
ongoing Board reporting.
We have an ongoing policy development to identify and assist with the reduction of
our carbon footprint in a positive and meaningful manner. Careful attention is paid to
government commitments and policies on climate and carbon emissions.
Ongoing development of Modern Slavery considerations within our business, including
consideration of our third-party providers.
Code of Ethical Conduct for employees.
Whistleblowing Policy.
Graduate and Emerging Leaders Program.
Annual obligation to attest to personal Good Fame and Character along with
acknowledgement of compliance policy updates as required.
Fraud
We have internal policies and procedures to ensure awareness as our first line of defence.
Non-compliance with laws and
regulations.
Internal team who regularly review applicable laws and regulations to ensure ongoing
compliance with obligations.
Pandemic Risk
Significant
geopolitical,
economic and
market risk
Financial Risk and
Financial Crime
Management
Large scale breakouts of
infectious diseases that can
greatly increase morbidity
and mortality over wide
geographical areas and
cause significant social and
economic disruption.
The effects of geopolitics
on the global economy
are difficult to predict. We
remain alert to supply chain
disruptions, geopolitical
instability, volatile markets and
inflation negatively impacting
household budgets.
Performance is closely linked
to local and global economic
performance. Awareness of
regulatory requirements for
managing financial risk and
financial crime risks within our
industry.
A comprehensive management plan has been developed, including the use of flexible /
virtual working arrangements which supports the availability of skilled staff in the event
something of this nature occurs.
We have considered third party arrangements, change management and business
continuity.
Our systems are designed to support data security and management, technology
vulnerabilities, remote access and load testing.
With the current war in Ukraine and the continuation of Russian sanctions, this is having a
substantial economic impact given their influences on global oil, commodity and agricultural
markets.
Consideration is given to impact on revenue, operating margins, compensation ratios and
expense levels which may negatively impact market volumes, asset prices, volatility or
liquidity.
Ongoing monitoring and supervision to ensure client protection regarding financial criminal
activities globally.
Policies have been developed to assist to identify country and individual sanctions, anti-
money laundering and counter terrorism financing, anti-bribery and corruption and anti-tax
evasion facilitation.
Ongoing compliance with regulatory changes in this area.
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 29
Directors’ Report (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
Financial position
During the year, Euroz Hartleys Group Limited returned $80 million of capital to shareholders via a $40.0 million fully franked special dividend
and a $40.0 million return of capital by way of equal share capital reduction resulting in the simultaneous cancellation of 16.85% of our
issued capital.
As a result, the net assets of the Group have decreased to $115.0 million at 30 June 2023 from $193.2 million at 30 June 2022. 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 $66.9 million at 30 June 2023 (2022: $149.0 million).
During the past 23 years the Group has invested in expanding each of its businesses to secure their long-term success.
In particular it has increased its strategic investments via the acquisitions of Entrust in 2015 and Hartleys Limited in 2020 to develop a market
leading platform for our future wealth management ambitions.
The Group remains in an extremely sound financial position with a balance of cash (excluding restricted cash in client trust account), other
financial assets at fair value and investments at fair value as at 30 June 2023 of $94.5 million (2022: $194.2 million). The Group has a Net
Tangible Assets (NTA) of 49¢ 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 $337.3 million in fully franked dividends over the past 23 years.
The Directors believe that 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:
2023
CENTS
5.51
5.25
2023
$
Special dividend 20.27 cents per fully paid ordinary share paid on 7 October 2022 (i)
39,992,116
2022
CENTS
21.68
20.68
2022
$
-
Interim ordinary dividend of 2.5 cents (2022: 2.5 cents) per fully paid ordinary share was paid on
17 February 2023
4,101,042
4,925,483
Provision for final ordinary dividend for 30 June 2023 of 3.5 cents (2022: 8.5 cents) per fully paid
ordinary share to be paid on 1 September 2023
5,753,047
16,770,251
(i)
Special dividends to equity holders comprise $40.0 million fully franked special dividend of $0.2027 per share paid to shareholders in October 2022 as
part of the Group’s strategic cash and capital management.
Of the total dividends paid during the year, $35,210 (2022: $42,983) was paid to the Euroz Share Trust and is undistributed. Therefore, it has
been eliminated on consolidation.
49,846,205
21,695,734
State of affairs
In the opinion of the Directors, there has been no significant changes in the state of affairs of the Group.
Share options
There were no options on issue at 30 June 2023 and 30 June 2022.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 30
Directors’ Report (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
Environmental, Social and Governance
In recognition of its increasing importance to our stakeholders, the Group 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 the business, along with a reporting framework.
i.
Environmental
In light of the changing global climate, as a business, the Group is fully committed to reducing our impact on the environment and we
are taking proactive steps to reduce our emissions. Emissions can be categorized into three scopes:
Scope 1: This scope covers emissions from sources that a business owns or controls directly. This scope generally affects the mining
and oil and gas industry and is not applicable to Euroz Hartleys Group Limited as the business does not directly generate carbon
emissions from its day to day operations.
Scope 2: This scope encompasses emissions that a company causes indirectly resulting from the energy it purchases for example
electricity used to power office buildings.
Scope 3: This scope encompasses emissions that are not produced by the business itself, and not the result of activities from assets
owned or controlled by the business, but by those that it’s indirectly responsible for up and down its value chain for example business
travel, personnel travel to work or waste disposal.
Some initiatives that the business has implemented are:
•
•
•
•
•
•
We are currently tracking our carbon footprint in relation to Scope 2 with a view to formulating a suitable future carbon emission
offset and 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 - $300,000 raised as part of our annual “Commission for a Cause” on 9 June 2023 with four equal
donations of $75,000 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 $1.54 million in the five years since inception
We support the Financial Services Red Cross Blood Drive by providing leave to staff to give blood
We benchmark salaries by position and ensure equity across those roles
We have identified female talent and supported them with carer development to create more gender balance within the business
We participate in the workplace gender equality reporting with the results published on the Workplace Gender Equality Agency
(WGEA) website and our corporate website (www.euroz.com)
Introduction of the Diversity, Equity and Inclusion council (DEI)
Introduction of the Employee Assistance Program (EAP) where employees can seek professional counselling
40% Euroz Hartleys Group Limited Board of Directors are female
43% 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 2023 31
Directors’ Report (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
Events after reporting date
Euroz Hartleys Group Limited obtained a secured bank guarantee in respect of our new office lease at QV1 of $2,388,352.
The Directors are not aware of any matter or circumstance subsequent to 30 June 2023 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 a market
that is currently lacking in direction and confidence.
We remain focused on increasing our proportion of recurring revenues. Our team will continue to spend considerable time and effort in
developing new strategies to drive FUM growth and consolidate our wealth offering.
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
PARTICULARS OF
DIRECTORS’ INTERESTS
IN SHARES OF EUROZ
HARTLEYS GROUP LIMITED
DIRECTOR
EXPERIENCE
SPECIAL RESPONSIBILITIES AND QUALIFICATIONS
ORDINARY SHARES*
A McKenzie
Executive
Chairman
Mr McKenzie
has worked in
the stockbroking
industry since
1991.
J Hughes
Director,
retired
8 August 2023
Mr Hughes has
worked in the
stockbroking
industry since
1986.
R Simpson
Director
Mr Simpson has
worked in the
stockbroking
industry since
1990.
I Parker
Director
Mr Parker has
worked in the
stockbroking
industry since
1981.
Executive Chairman of Euroz Hartleys Group Limited and Euroz Hartleys
Limited
11,620,406
Member of 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
Practitioner (MSIAA) of SIAA
Executive Director of Euroz Hartleys Group Limited
11,552,820
Non-Executive Chairman of Westoz Funds Management Pty Ltd and
Westoz Resources Fund Limited.
Member of Euroz Hartleys Group Limited Remuneration Committee and
Euroz Hartleys Limited Underwriting Committee
Holds a Graduate Diploma in Applied Finance and Investment from
FINSIA and is a Master Practitioner (MSIAA) of SIAA
Executive Director of Euroz Hartleys Group Limited
2,133,108
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
Executive Director of Euroz Hartleys Group Limited and Euroz Hartleys
Limited
1,723,261
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 Practitioner (MSIAA) of SIAA
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 32
Directors’ Report (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
Information on Directors (cont’d)
PARTICULARS OF
DIRECTORS’ INTERESTS
IN SHARES OF EUROZ
HARTLEYS GROUP LIMITED
DIRECTOR
EXPERIENCE
SPECIAL RESPONSIBILITIES AND QUALIFICATIONS
ORDINARY SHARES*
R Romero
Independent
Non-Executive
Director
Ms Romero has
over 27 years’
experience in law
and accounting.
Independent Non-Executive Director of Euroz Hartleys Group Limited
73,713
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 and member of the AICD, a Chartered Accountant
(CA ANZ) and holds a practising certificate from the Legal Practice
Board of Western Australia
F Kalaf
Independent
Non-Executive
Director
Ms Kalaf has
over 26 years’
experience in
strategy, marketing
and management.
Independent Non-Executive Director of Euroz Hartleys Group Limited
26,311
Holds a Bachelor of Arts from UWA, a Bachelor of Architecture from
UWA, a Master of Business Administration (Advanced) from Curtin
University 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 2023 and the numbers of meetings
attended by each Director were:
DIRECTORS MEETINGS
COMMITTEE MEETINGS
DIRECTOR
NUMBER ELIGIBLE TO
ATTEND
NUMBER
ATTENDED
NUMBER ELIGIBLE TO
ATTEND
NUMBER
ATTENDED
NUMBER ELIGIBLE TO
ATTEND
NUMBER
ATTENDED
AUDIT
REMUNERATION
Andrew McKenzie
Jay Hughes *
Robert Black **
Richard Simpson
Ian Parker
Robin Romero
Fiona Kalaf
15
15
13
15
15
15
15
15
14
12
14
14
14
14
-
-
4
4
-
4
-
-
-
4
4
-
4
-
-
2
-
2
2
2
-
-
2
-
2
2
2
-
* Retired as a Director of Euroz Hartleys Group Limited on 8 August 2023
** Retired as a Director of Euroz Hartleys Group Limited on 31 May 2023 and employee of Euroz Hartleys Limited on 30 June 2023
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 33
Directors’ Report (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
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 KMPs 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.
Profit is one of the financial performance targets considered in setting the Short Term Incentive (STI) and profit amounts have been calculated
in accordance with Australian Accounting Standards.
In considering the Group’s performance and benefits for shareholder wealth, the Remuneration Committee have regarded the following in
respect of the current financial year and the previous two financial years (since the merger of Euroz and Hartleys in October 2020):
2023
$
2022
$
2021
$
Profit attributable to owners of Euroz Hartleys Group
9,338,637
40,723,715
52,540,905
Dividends paid or declared
Share price at year end
Return of capital to owners of Euroz Hartleys Group
Remuneration Policy
49,810,995
21,652,751
31,326,913
1.09
8.1%
1.57
21.1%
1.51
30.7%
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 has been effective in increasing shareholder wealth since inception.
The objective of the Group’s remuneration framework is to ensure reward for performance is competitive and appropriate to the results
delivered. The Board / Remuneration Committee ensures that Executive rewards satisfy the following key criteria for good reward
governance practices:
• competitiveness and reasonableness
• acceptability to shareholders
• performance linked
• transparency
• retention
• capital management
Non-Executive Directors’ fees
Non-Executive Directors are paid a fixed base fee and superannuation for their role on the Board.
Executive Directors and Executives
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 agreement
of additional responsibilities.
There is no guarantee of base pay increases fixed in any Senior Executive or Directors’ contracts.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 34
Directors’ Report (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
Remuneration Report (audited) (cont’d)
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
No Directors fees are paid to Executive Directors.
Profit share pool
The four Directors on the Remuneration Committee during the period were Ms Robin Romero (Chair) (Independent Non-Executive Director),
Ian Parker (Executive Director), Richard Simpson (Executive Director) and Jay Hughes (Retired as Executive Director on 8 August 2023). Ms
Romero and Mr Parker are not entitled to participate in the bonus or 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. The Committee uses the following informal criteria to assist in the allocation:
• Generation of returns for shareholders
• Ability to perform individual tasks within the relevant department
• Ability to add value and innovate beyond the standard job specification
• Development of new and existing client relationships
• Ability to interact with other relevant departments and work collaboratively as part of a larger team approach
• Relevant industry salary benchmarking
• General requirements to attract and retain staff
The profit share payment may be made as a combination of cash (75%) and equity (25%) in the Performance Rights Plan (PRP) to Directors
and Executives who opt in to the PRP as detailed below in “Equity based payments”. Directors and Executives that do not opt in to the PRP
have their entire profit share paid in cash. Where a Director or Executive opts in to the PRP, they elect to receive 25% of their allocation of the
profit share pool as equity. Shares allotted under the PRP are purchased on market utilising funds accrued from the profit share pool.
Commission
Directors and Executives who are also Private Wealth Advisers are paid commission in addition to a base salary and superannuation. This is
calculated on a sliding scale. Eligible Directors and Executives who are also Private Wealth Advisers may also be invited to participate in the
PRP based on certain performance hurdles set out in their employment contract.
Discretionary bonus
Directors and Executives 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 may be made
as a combination of cash (75%) and equity (25%) in the PRP to Directors and Executives that opt in to the PRP as detailed below in “Equity
based payments”. Directors and Executives that do not opt in to the PRP have their entire discretionary bonus paid in cash. Shares allotted
under the PRP are purchased on market utilising funds accrued from the profit share / bonus pool.
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 Directors,
Executives and employees are invited to participate in this plan. Where an eligible Director, Executive or employee elects to opt in to the PRP,
they are awarded a Performance Right during the course of the financial year. This right then automatically vests at the end of the financial
year where the Director, Executive or employee has met the vesting requirements, being that they are an Eligible Employee at the vesting
date. An Eligible Employee means a full time or part-time employee of any member of the Group or a Director of any member of the Group
who holds a salaried employment or office with a member of the Group. If there is a change in the employing entity of a Participant from one
member of the Group to another member of the Group, the Participant will be considered, for the purposes of the plan, to have continued to
be an Eligible Employee at all relevant times.
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 35
Directors’ Report (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
Remuneration Report (audited) (cont’d)
Equity based payments (cont’d)
There are three separate incentives depending on the individual employment contract as below:
• Profit share
• Discretionary bonus
• Commission
The Performance Right represents a right to be allotted a number of ordinary shares in Euroz Hartleys Group Limited to reflect 25% of the profit
share or the discretionary bonus that would have been paid to the participant who opts in to the PRP. Directors or Executives who are also
Private Wealth Advisers who are paid a commission may also opt in to be paid a portion of their total monthly brokerage, corporate income
and / or portfolio administration commission in equity-based payments. The shares allotted will only vest to the Director or Executive after 3
years subsequent service following the initial year of service and are escrowed for a further 11 years and one day. No amount is payable upon
vesting of shares issued under the PRP. Shares allotted under the PRP are subject to income tax at the participants individual income tax rate
at the time of vesting from the PRP.
During the 2023 financial year, Directors, Executives and employees eligible for the PRP were given the election to opt into the PRP. Any
election to opt out of the PRP means that the entire profit share, discretionary bonus or commission payment due to the Director, Executive or
employee is paid entirely in cash.
Long Term Incentive (LTI)
During the year Long Term Incentive (LTI) rights were issued to two (2) Executives under the PRP (2022: nil Executives). These LTI rights
entitled the holder to a number of shares in Euroz Hartleys Group Limited calculated to the value of 1 x their base salary and superannuation
for the year. The LTI was determined by the Remuneration Committee having regard to the participant’s performance over the relevant
performance period and the profitability of the Group during that period. The shares allotted in satisfaction of the rights were purchased
on-market. The LTI shares are subject to a 3-year service condition and a further escrow period.
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
SHARE-BASED PAYMENT
BASE
SALARY
DIRECTOR’S
FEES
PROFIT
SHARE /
BONUS /
COMMISSION
OTHER
BENEFITS
SUPERANNUATION
PERFORMANCE
RIGHTS PLAN
LONG TERM
INCENTIVE
PLAN
TOTAL
PERFORMANCE
RELATED
2023
$
$
$
$
$
$
$
$
Andrew McKenzie 253,500
Jay Hughes *
253,500
Robert Black **
232,375
Anthony Brittain
253,500
Richard Simpson
126,750
Ian Parker
70,000
Timothy Bunney
253,000
-
-
-
-
-
-
-
529,500
26,083
25,292
222,943
69,698 1,127,016
84,000
24,948
25,292
185,818
18,750
16,193
23,044
176,202
198,500
20,764
83,250
2,613
753,082
11,663
25,292
17,880
25,292
95,588
69,562
20,558
-
-
-
-
-
573,558
466,564
593,644
300,055
880,595
618,750
6,265
25,292
202,901
69,573 1,175,781
Robin Romero
Fiona Kalaf
-
-
75,000
75,000
-
-
-
-
7,875
7,879
-
-
-
-
82,875
82,879
73%
47%
42%
50%
51%
88%
76%
0%
0%
Total
1,442,625
150,000
2,285,832 108,529
183,138
973,572
139,271 5,282,967
* Retired as a Director of Euroz Hartleys Group Limited on 8 August 2023
** Retired as a Director of Euroz Hartleys Group Limited on 31 May 2023 and employee of Euroz Hartleys Limited on 30 June 2023
Executive Directors did not receive any Directors fees.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
36
Directors’ Report (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
Remuneration Report (audited) (cont’d)
Details of remuneration (cont’d)
SHORT-TERM
POST-EMPLOYMENT
SHARE- BASED PAYMENT
BASE
SALARY
DIRECTOR’S
FEES
PROFIT
SHARE /
BONUS /
COMMISSION
OTHER
BENEFITS
SUPERANNUATION
PERFORMANCE
RIGHTS PLAN
TERMINATION
BENEFIT
2022
$
$
$
$
$
$
PERFORMANCE
RELATED
TOTAL
$
Andrew McKenzie
253,500
Jay Hughes
253,500
Robert Black
253,500
Anthony Brittain
253,500
Dermot Woods *
197,773
Richard Simpson
190,125
Ian Parker
66,000
-
-
-
-
-
-
-
615,000
36,078
615,000
21,844
577,500
16,256
281,250
19,000
250,000
8,583
168,750
5,174
1,244,596
9,626
Robin Romero
Fiona Kalaf**
-
-
75,000
852
-
-
-
-
23,568
23,568
23,568
23,568
23,234
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
1,467,898 75,852
3,752,096
116,561
169,503
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.
Service agreements
Remuneration and other terms of employment for the Key Management Personnel are formalised in service agreements. Non-Executive
Directors are paid a fixed base fee and superannuation for their role on the Board. Executive Directors agreements provide for
performance-related cash bonuses and other benefits. 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 2023 of $253,500 (2022 - $253,500) plus profit share
• Payment on termination of employment by the employer, other than for gross misconduct – three months’ salary
Jay Hughes, Director, retired on 8 August 2023
• Term of contract - ongoing employment contract
• Base salary, exclusive of superannuation for the year ended 30 June 2023 of $253,500 (2022 - $253,500) plus profit share
• Payment on termination of employment by the employer, other than for gross misconduct – three months’ salary
Robert Black, Director, retired on 31 May 2023
• Term of contract - ongoing employment contract
• Base salary, exclusive of superannuation for the year ended 30 June 2023 of $253,500 (2022 - $253,500) plus profit share
• Payment on termination of employment by the employer, other than for gross misconduct – three months’ salary
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
37
Directors’ Report (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
Remuneration Report (audited) (cont’d)
Service agreements (cont’d)
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 2023 of $253,500 (2022 - $253,500) 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 2023 of $253,500 (2022 - $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 2023 of $70,000 (2022 - $66,000) plus commission
• Payment on termination of employment by the employer, other than for gross misconduct – six months’ salary
Timothy Bunney, Managing Director Euroz Hartleys Limited
• Term of contract – ongoing employment contract
• Base salary, exclusive of superannuation for the year ended 30 June 2023 of $253,000 (2022 - $235,000) plus profit share
• Payment on termination of employment by the employer, other than for gross misconduct – three months’ salary
Robin Romero, Non-Executive Director
• Term of contract – ongoing consulting contract
• Directors fee, exclusive of superannuation for the year ended 30 June 2023 of $75,000 (2022 - $75,000)
Fiona Kalaf, Non-Executive Director
• Term of contract – ongoing consulting contract
• Directors fee, exclusive of superannuation for the year ended 30 June 2023 of $75,000 (2022 - $852)
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 38
Directors’ Report (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
Remuneration Report (audited) (cont’d)
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:
2023
BALANCE AT
1 JULY 2022
RECEIVED
VIA PRP (i)
RECEIVED
VIA LTI (ii) *
CANCELLED **
BOUGHT &
(SOLD)***
BALANCE AT
30 JUNE 2023
VESTED
1 JULY 2022
****
VESTED
BALANCE AS AT
30 JUNE 2023
*****
Ordinary shares
A McKenzie
13,390,097
150,212
237,270
(2,257,173)
J Hughes******
13,866,467
23,829
R Black*******
5,262,362
24,680
(887,077)
124,715
4,524,680
66,010
918,535
-
2,537,181
23,617
1,988,473
69,984
-
-
-
-
-
(2,337,476)
(154,833)
(427,690)
(335,196)
-
-
11,520,406
74,855
11,552,820
74,855
763,702
22,549
2,133,108
1,723,261
-
-
-
-
-
-
134,931
134,931
115,948
61,345
-
-
730,283
175,531
236,844
(123,100)
1,019,558
22,549
44,699
22,575
-
-
-
-
-
(8,862)
60,000
(5,334)
31,645
73,713
26,311
-
-
-
-
A Brittain
R Simpson
I Parker
T Bunney
R Romero
F Kalaf
38,715,973
467,853
474,114
(6,536,741)
216,360
33,337,559
260,818
491,854
*
**
Shares allotted under Long Term Incentive (LTI) Plan. Shares utilised to fulfil LTI were purchased on market
Cumulative shares cancelled in accordance with the equal capital reduction approved by shareholders on 17 November 2022
***
Inclusive of shares allocated in Dividend Reinvestment Plan (DRP)
****
Vested amount on 1 July 2022 shown pre-Equal Capital Reduction and Euroz Hartleys Group Limited Share price on the date was $1.57
*****
Included in Balance at 30 June 2023 and vested balance post Equal Capital Reduction
****** Retired as a Director of Euroz Hartleys Group Limited on 8 August 2023
******* Retired as a Director of Euroz Hartleys Group Limited on 31 May 2023 and employee of Euroz Hartleys Limited on 30 June 2023
(i)
(ii)
These shares are held by the Euroz Share Trust and are currently vesting in accordance with the Euroz Hartleys Group PRP. The shares were granted on
30 June 2023, fair value on grant date was based on the profit share / bonus awarded and number of shares was determined by dividing the profit share /
bonus awarded by Euroz Hartleys Group Limited 30-day Volume Weighted Average Price (VWAP) to 31 May 2023 being $1.175.
These shares are held in escrow and are currently vesting in accordance with the Euroz Hartleys Group PRP. The shares were granted on 30 June 2023,
fair value on grant date was based on the LTI amount awarded and number of shares was determined by dividing the LTI amount awarded by Euroz
Hartleys Group Limited 30-day Volume Weighted Average Price (VWAP) to 31 May 2023 being $1.175.
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 39
Directors’ Report (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
Remuneration Report (audited) (cont’d)
Shareholdings of Key Management Personnel (cont’d)
2022
BALANCE AT
1 JULY 2021
RECEIVED VIA
PRP (i)
BOUGHT &
(SOLD)*
NET CHANGE
OTHER **
BALANCE AT
30 JUNE 2022
VESTED
1 JULY 2021
*****
VESTED
BALANCE AS AT
30 JUNE 2022
Ordinary shares
A McKenzie
13,268,724
J Hughes
R Black
A Brittain
R Simpson
I Parker
R Romero
13,745,094
863,029
2,503,878
1,869,604
22,575
D Woods***
1,006,235
F Kalaf ****
-
5,042,340
113,972
106,050
121,373
121,373
-
-
55,506
33,303
-
-
-
-
-
-
118,869
-
-
-
-
-
-
-
-
-
-
13,390,097
13,866,467
5,262,362
918,535
2,537,181
1,988,473
22,575
30,000
30,000
27,500
26,345
-
-
-
87,433
87,433
73,446
51,233
-
-
-
(1,006,235)
-
-
-
20,897
68,758
-
-
38,321,479
445,527
224,919
(1,006,235)
37,985,690
134,742
368,303
*
**
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
***** Shares vested on 1 July 2021 when Euroz Hartleys Group Limited Share price $1.53
(i)
These shares are held by the Euroz Share Trust and are currently vesting in accordance with the Euroz Hartleys Group PRP. The shares were granted on
30 June 2022, fair value on grant date was based on the profit share / bonus awarded and number of shares was determined by dividing the profit share /
bonus awarded by Euroz Hartleys Group Limited 30-day Volume Weighted Average Price (VWAP) to 31 May 2022 being $1.175.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 40
Directors’ Report (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
Remuneration Report (audited) (cont’d)
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:
2023
Performance Rights
A McKenzie
J Hughes - Retired 8 August 2023
R Black - Retired 31 May 2023
R Simpson
I Parker
T Bunney
A McKenzie - LTI
T Bunney - LTI
2022
Performance Rights
A McKenzie
J Hughes
R Black
A Brittain
R Simpson
DATE GRANTED
GRANTED AS
REMUNERATION
VESTED AND
EXERCISED
7 June 2023
7 June 2023
7 June 2023
7 June 2023
7 June 2023
7 June 2023
13 June 2023
13 June 2023
1
1
1
1
1
1
1
1
8
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(8)
DATE GRANTED
GRANTED AS
REMUNERATION
VESTED AND
EXERCISED
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)
These performance rights were issued in accordance with the PRP. In financial year 2023, rights were granted in June 2023 and vested on
30 June 2023.
Share-based compensation
A performance right was issued to KMPs as part of their annual bonus / profit share plan. Where the KMP participates in the profit share pool
or receives a discretionary bonus then the fair value of the shares allotted under the PRP of each right is calculated as 25% of each member’s
profit share or discretionary bonus entitlement. Where the KMP is a Private Wealth Adviser then the fair value of the shares allotted under the
PRP is calculated as paid a portion of their total monthly brokerage, corporate income and / or portfolio administration commission. Shares
issued under the PRP have a 3-year service vesting condition. Total fair value of shares resulting from the exercise of the performance rights
issued to KMPs in the year amounts to $666,252 (2022: $752,500).
In accordance with the terms of the PRP, where a Director, Executive or employee meets the vesting requirements being that they are an
Eligible Employee at the vesting date, then the Performance Rights will be automatically exercised and participants will be allotted the
requisite number of Shares. Performance Rights that do not vest will lapse.
Loans To 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 2023 41
Directors’ Report (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
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
The Group’s auditor, KPMG has provided assurance services in addition to the audit and review of financial statements. Details are set out in
Note 23 to the financial statements. The board has considered the non-audit services provided during the year by the auditor and is satisfied
that the provision of those non-audit services is compatible with, and did not compromise, the auditor independence requirements of the
Corporations Act 2001.
Auditor’s independence declaration
The lead auditor’s independence declaration for the year ended 30 June 2023 has been received and forms part of the Directors’ report.
This report is made in accordance with a resolution of the Directors.
Andrew McKenzie
Executive Chairman
Date: 23 August 2023
Richard Simpson
Executive Director
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 42
Auditor’s Independence Declaration
To the Directors of Euroz Hartleys Group Limited
FOR T HE YE A R E ND E D 30 JUNE 20 23
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 2023 there have been:
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.
i.
ii.
KPM_INI_01
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
KPMG
Trevor Hart
Partner
Perth
23 August 2023
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 2023
43
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
FOR T HE YE A R E ND E D 30 JUNE 20 23
NOTE
2023
$
2022
$
Revenue from continuing operations
3, 4
95,935,458
118,690,898
Share of profits of equity accounted investments, net of tax
13
-
15,808,439
Gain on investments
Employee benefits expense
346,055
2,246,212
(64,359,362)
(67,215,981)
Depreciation and amortisation expenses
5
(2,552,380)
(2,471,480)
Regulatory expenses
Legal, professional and consultancy expenses
Conference and seminar expenses
Stockbroking expenses
Impairment (expense) / reversal
Other expenses
(881,227)
(989,341)
(1,202,312)
(1,479,492)
(1,243,768)
(755,337)
(4,955,844)
(5,758,370)
5, 13
(1,489,556)
6,510,348
(5,805,765)
(6,518,919)
Profit before income tax expense
13,791,299
58,066,977
Income tax expense
6
(4,452,662)
(17,343,262)
Profit after income tax expense for the year
9,338,637
40,723,715
Other comprehensive income
Other comprehensive income net of tax
-
-
Total comprehensive income for the year attributable to owners of Euroz
Hartleys Group Limited
9,338,637
40,723,715
Basic earnings per share (cents)
Diluted earnings per share (cents)
30
30
5.51
21.68
5.25
20.68
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
44
Consolidated Statement of Financial Position
AS AT 30 JU NE 20 23
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value through profit and loss
Other current assets
Current tax receivable
Total current assets
NON-CURRENT ASSETS
Financial assets at amortised cost
Investments at fair value through profit and loss
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 payable
Provisions
Lease liability
Total current liabilities
NON-CURRENT LIABILITIES
Deferred tax liabilities
Provisions
Lease liability
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Share-based payment reserve
Retained earnings
TOTAL EQUITY
NOTE
2023
$
2022
$
7
8
9
10
17
11
12
14
6
15
19
16
17
18
19
6
18
19
88,155,855
190,667,525
25,136,908
16,130,200
4,207,730
1,675,992
18,071,214
15,317,064
2,482,114
-
135,306,685
226,537,917
686,296
2,084,000
1,384,911
5,512,310
1,069,380
-
2,097,562
4,238,048
38,755,745
39,362,702
1,842,069
50,265,331
4,244,049
51,011,741
185,572,016
277,549,658
55,475,560
59,537,023
-
9,016,263
1,358,111
8,834,084
7,788,835
1,354,750
65,849,934
77,514,692
2,267,797
221,819
2,194,393
4,684,009
3,131,101
140,970
3,552,525
6,824,596
70,533,943
84,339,288
115,038,073
193,210,370
20 (a)
20 (g)
98,562,525
136,740,320
9,395,353
7,080,195
8,917,497
47,552,553
115,038,073
193,210,370
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 45
Consolidated Statement of Changes in Equity
FOR T HE YE A R E ND E D 30 JUNE 20 23
ISSUED CAPITAL
SHARE-BASED
PAYMENT RESERVE
RETAINED
EARNINGS
$
$
$
TOTAL
$
Balance at 1 July 2021
134,665,226
7,955,369
28,481,589
171,102,184
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
2,101,174
(2,101,174)
Treasury shares
Share-based payments
Dividends declared
Total contributions by and distributions to owners
2,075,094
Balance at 30 June 2022
136,740,320
Balance at 1 July 2022
Profit for the period
Total comprehensive income for the period
136,740,320
(2,894,924)
-
-
-
-
Transactions with owners, recorded directly in equity
Shares issued during the period
Return of capital (i)
369,286
(39,998,187)
Vested shares under employee share plan
3,639,833
(3,639,833)
Treasury shares
Share-based payments
Dividends to equity holders (ii)
(2,188,727)
-
-
4,117,689
-
-
3,063,302
962,128
8,917,497
8,917,497
-
-
-
-
-
-
40,723,715
40,723,715
40,723,715
40,723,715
-
-
-
-
2,868,844
-
(2,894,924)
3,063,302
(21,652,751)
(21,652,751)
(21,652,751)
(18,615,529)
47,552,553
193,210,370
47,552,553
193,210,370
9,338,637
9,338,637
9,338,637
9,338,637
-
-
-
-
-
369,286
(39,998,187)
-
(2,188,727)
4,117,689
(49,810,995)
(49,810,995)
Total contributions by and distributions to owners
(38,177,795)
477,856
(49,810,995)
(87,510,934)
Balance at 30 June 2023
98,562,525
9,395,353
7,080,195
115,038,073
(i)
(ii)
Return of capital relates to the $40.0 million equal capital reduction and share cancellation paid in December 2022 as part of the Group’s strategic cash
and capital management initiative. This resulted in the simultaneous cancellation of 16.85% of the issued capital.
Dividends to equity holders includes $40.0 million fully franked special dividend of $0.2027 per share paid to shareholders in October 2022 as part of
the Group’s strategic cash and capital management initiative, $4.1 million fully franked December 2022 half year dividend of $0.025 per share paid in
February 2023 and $5.7 million fully franked final dividend of $0.035 per share payable to shareholders in September 2023.
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 46
Consolidated Statement of Cash Flows
FOR T HE YE A R E ND E D 30 JUNE 20 23
NOTE
2023
$
2022
$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of goods and services tax)
88,599,464
124,142,518
Payments to suppliers and employees (inclusive of goods and services tax)
(74,404,717)
(90,132,105)
Interest received
Proceeds from sale of trading shares
Income taxes paid
Payments for trading shares
14,194,747
34,010,413
2,316,999
6,428,387
233,152
9,831,789
(17,100,305)
(17,328,806)
(2,245,226)
(4,148,814)
Net cash flows from operating activities
29
3,594,602
22,597,734
CASH FLOWS FROM INVESTING ACTIVITIES
Payment into investment fund
Return of FinClear Services Pty Ltd security deposit
Receipts on disposal of investments
Maturity of term deposit
Dividends and trust distributions received
Payments for plant and equipment
(2,000,000)
350,000
-
-
-
-
-
105,011,618
216,699
1,674,202
(327,434)
(2,132,213)
Net cash flows (used in) / from investing activities
(1,977,434)
104,770,306
CASH FLOWS FROM FINANCING ACTIVITIES
Return of capital (i)
Dividends paid (ii)
Payments for treasury shares
Repayment of lease liabilities
Interest paid on lease liabilities
Proceeds from share issue
(39,998,186)
-
(60,458,913)
(31,277,473)
(2,188,727)
(2,894,927)
(1,306,290)
(1,206,174)
(176,722)
(241,110)
-
2,868,844
Net cash flows used in financing activities
(104,128,838)
(32,750,840)
Net (decrease) / increase in cash and cash equivalents
(102,511,670)
94,617,200
Cash and cash equivalents at 1 July
190,667,525
96,050,325
Cash and cash equivalents at 30 June
7
88,155,855
190,667,525
(i)
(ii)
Return of capital relates to the $40.0 million equal capital reduction and share cancellation paid in December 2022 as part of the Group’s strategic cash
and capital management initiative. This resulted in the simultaneous cancellation of 16.85% of the issued capital.
Dividends paid includes $16.7 million fully franked June 2022 final dividend of $0.085 per share paid to shareholders in August 2022, $40.0 million fully
franked special dividend of $0.2027 per share paid to shareholders in October 2022 as part of the Group’s strategic cash and capital management
initiative and $3.7 million fully franked December 2022 half year dividend of $0.025 per share paid to shareholders in February 2023.
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 Notes to the Financial Statements
FOR T HE YE A R E ND E D 30 JUNE 20 23
CONTENTS
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: CASH AND CASH EQUIVALENTS
NOTE 8: TRADE AND OTHER RECEIVABLES
NOTE 9: OTHER FINANCIAL ASSETS AT FAIR VALUE
NOTE 10: OTHER CURRENT ASSETS
NOTE 11: FINANCIAL ASSETS AT AMORTISED COST
NOTE 12: INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS
NOTE 13: EQUITY ACCOUNTED INVESTMENTS
NOTE 14: PLANT AND EQUIPMENT
NOTE 15: INTANGIBLE ASSETS
NOTE 16: TRADE AND OTHER PAYABLES
NOTE 17: CURRENT TAX RECEIVABLE / (PAYABLE)
NOTE 18: PROVISIONS
NOTE 19: RIGHT OF USE ASSET AND LEASE LIABILITY
NOTE 20: CONTRIBUTED EQUITY
NOTE 21: DIVIDENDS
NOTE 22: FINANCIAL INSTRUMENTS
NOTE 23: REMUNERATION OF AUDITORS
NOTE 24: CONTINGENT LIABILITIES
NOTE 25: COMMITMENTS FOR EXPENDITURE
NOTE 26: RELATED PARTIES
NOTE 27: INVESTMENTS IN CONTROLLED ENTITIES
NOTE 28: EVENTS SUBSEQUENT TO REPORTING DATE
NOTE 29: RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
NOTE 30: EARNINGS PER SHARE
NOTE 31: PARENT ENTITY DISCLOSURES
NOTE 32: COMPANY DETAILS
47
48
57
59
61
62
63
64
64
64
65
65
65
66
66
68
69
69
70
71
72
74
75
79
79
79
80
82
83
84
84
85
85
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 48
Notes to the Financial Statements
FOR T HE YE A R E ND E D 30 JUNE 20 23
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 23 August 2023.
Euroz Hartleys Group Limited is a listed public company, trading on the Australian Securities Exchange and Cboe Australia, 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 31 as permitted by amendments to the Corporations
Act 2001.
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 2023 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 Australia, 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 2023 49
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
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.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 50
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
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 when 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
investment portfolio and revenue is recorded monthly following the completion of the month.
Proceeds from the sale of investments
Gross proceeds and cost of disposal on sale of investments are disclosed as gain / loss on investments along with unrealised gains /
losses in investments held at year end.
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.
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.
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 51
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(f) Plant and equipment
Each class of plant and equipment is carried at cost as indicated less, where applicable, any accumulated depreciation and
impairment losses.
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 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:
CLASS OF PLANT AND EQUIPMENT
DEPRECIATION RATE
Leasehold improvements
Plant and equipment
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.
(g) 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.
(h) 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 which aligns with the date when the leased asset is ready for use.
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.
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.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 52
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(i) Trade and other payables
Trade and other payables comprise 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.
(j) 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.
(k) 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.
(l) 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.
(m) 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.
(v) Performance rights
The Performance Right represents a right to be allotted a number of ordinary shares in Euroz Hartleys Group Limited to reflect
25% of the profit share or the discretionary bonus or for Private Wealth Advisers who are paid a commission, a portion of
their total monthly brokerage, corporate income and / or portfolio administration commission that would have been paid to an
Eligible Employee who opts in.
An Eligible Employee means a full time or part-time employee of any member of the Group or a Director of any member of
the Group who holds a salaried employment or office with a member of the Group. If there is a change in the employing entity
of a Participant from one member of the Group to another member of the Group, the Participant will be considered, for the
purposes of this plan, to have continued to be an Eligible Employee at all relevant times.
Each performance right is subject to a service based vesting condition. Performance Rights are issued for nil consideration
and Performance Rights that do not vest lapse with a nil value.
In accordance with the terms of the PRP, where an Eligible Employee meets the vesting requirements being that they are an
Eligible Employee at the vesting date, then the Performance Rights will be automatically exercised and participants will be
allotted the requisite number of Shares. Shares utilised to fulfil the awards made under the PRP are purchased on market
utilising funds accrued from the profit share pool, discretionary bonuses or brokerage, corporate income and / or portfolio
administration commission.
The fair value of shares allotted under the PRP is estimated at grant date based on 25% of profit share or discretionary bonus
or for Private Wealth Advisers who are paid a commission, a portion of their total monthly brokerage, corporate income and /
or portfolio administration commission that will be paid at year end to eligible employees.
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 53
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(m) Employee benefits (cont’d)
(v) Performance rights (cont’d)
For financial year 2023, where an employee had met the relevant criteria and had opted in to the PRP, the relevant
Performance Rights were granted in June 2023 and vested on 30 June 2023 with the requisite number of shares being
allotted on 30 June 2023.
Once the performance right converts to plan shares these are subject to a further 3-year service condition. following the initial
year of service and are escrowed for a further period of 11 years and one day. No amount is payable upon vesting of shares
issued under the PRP. Shares allotted under the PRP are subject to income tax at the participants individual income tax rate at
the time of vesting from the PRP.
The Board may, at their discretion accelerate the vesting period. Unvested shares are subject to bad 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 calculates 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.
(n) 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.
(o) 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.
(p) Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value
is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date; and assumes that the transaction will take place either: in the principle market; or in the
absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming
they act in their economic best interest. For non-financial assets, the fair value measurement is based on its highest and best use.
Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are
used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance
of the inputs used in making the measurements. Classifications are reviewed each reporting date and transfers between levels are
determined based on a reassessment of the lowest level input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not
available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and
reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is
undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable,
with external sources of data.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 54
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(q) Fair value estimation
The fair value of financial instruments traded in active markets (such as publicly traded shares or share options, 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, unlisted options) is determined using
valuation techniques. The Group uses the Black-Scholes option pricing model to value unlisted options, taking into consideration
the terms on which the options were granted. Other techniques, such as estimated discounted cash flows, 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.
(r) 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.
(s) 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.
(t)
Investments and Financial Assets
Investments and other financial assets are securities in listed and unlisted companies 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 amortised cost
The Group measures financial assets at amortised cost if both of the following conditions are met:
(i)
The financial asset is held within a business model with the objective to hold financial assets to collect contractual cashflows;
and
(ii)
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) 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.
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 55
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(t)
Investments and Financial Assets (cont’d)
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.
(u) 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 the 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.
(v) 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.
(w)
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.
(x)
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.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 56
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Accounting policies (cont’d)
(y) 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.
(z) New standards and interpretations
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards
Board (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.
AASB NO.
NEW STANDARDS OR AMENDMENTS
APPLICATION DATE
AASB 2021-2
Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and
Definition of Accounting Estimates
1 January 2023
AASB 2021-5
5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and
Liabilities arising from a Single Transaction
AASB 2022-7
7 Editorial Corrections to Australian Accounting Standards and Repeal of Superseded and
Redundant Standards
AASB 17
Insurance Contracts
AASB 2020-1
Amendments to Australian Accounting Standards – Classification of Liabilities as Current or
Non-current
1 January 2023
1 January 2023
1 January 2023
1 January 2024
AASB 2020-6
Amendments to Australian Accounting Standards – Classification of Liabilities as Current or
Non-current – Deferral of Effective Date
1 January 2024
AASB 2015-10
Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10
and AASB 128
1 January 2025
AASB 2017-5
Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10
and AASB 128 and Editorial Corrections
1 January 2025
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 57
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
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) Classification of other financial assets
The Group classifies investments in listed and unlisted 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.
(ii)
Impairment of non-financial assets
At each reporting date, the Group compares the carrying values and the recoverable amount of non-financial assets 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.
(iii) 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 Private Wealth cash generating units (CGUs). Goodwill on the acquisition of Hartleys Limited has been
allocated to the Private Wealth and Wholesale CGU respectively at $3,139,199 and $4,368,420.
(iv) 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 carrying value as at 30 June 2023 was $347,247.
The client portfolios were allocated to the Private Wealth CGU.
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 Hartleys Limited’s brand name was allocated to the Private Wealth and
Wholesale CGU respectively at $8.2 million and $11.3 million.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 58
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
2. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT’D)
Key estimates and judgments (cont’d)
(iv) Intangible assets (cont’d)
Impairment assessment of cash generating units containing goodwill and intangibles results
For the purpose of impairment testing, goodwill and intangibles were allocated to the Group’s CGUs as follows:
Private Wealth
Wholesale
2023
$
2022
$
22,790,960
23,397,918
15,714,785
15,714,785
38,505,745
39,112,703
The recoverable amount of both CGUs were based on their value in use, estimated using discounted cashflows.
The assumptions used in the estimation of the recoverable amount are set out in the table below. The values assigned to the key
assumptions represent management’s assessment of future cashflows and economic outlook and have been based on historical
data from both external and internal sources.
Discount rate
Terminal value growth rate
Average growth rate in next 5 years
2023
%
11.0
1.0
0
2022
%
9.5
1.0
0
The cash flow projections were based on historical averages. Projected cash flows for each CGU included specific estimates for a
5-year period and a terminal value thereafter, discounted using an appropriate discount rate.
The following analysis is for the Private Wealth CGU which had a lower headroom than the Wholesale CGU:
Sensitivity analysis
Discount rate
CHANGE REQUIRED FOR CARRYING AMOUNT TO
EQUAL RECOVERABLE AMOUNT
2023
%
20.35
2022
%
18.4
The impairment assessment is not overly sensitive to the terminal value growth rate. The Private Wealth CGU is able to withstand a
reduction in forecast cashflows of up to 20% before carrying amount exceeds its recoverable amount.
The Board have assessed that there is no indication that goodwill or intangible assets are impaired.
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 59
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
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:
Private Wealth
Private Wealth refers to private wealth advisers who work with high net wealth individuals, companies, SMSF and other clients. Private
wealth advisers provide a broad investment offering of stockbroking and corporate services for clients. The wealth management team
provides strategic investment advice, superannuation advice, investment management and portfolio administration services.
Wholesale
Wholesale refers to the Institutional Dealing, Research and Corporate Finance team who work with companies and other institutional
clients. The Institutional Dealing team provides quality advice, idea generation, site visits, and roadshow corporate access highly focused
on resources, mining services and small to mid- cap Western Australia (WA) industrials. Working with the Institutional team is the Research
team which has extensive coverage of ASX listed industrials, resources and energy companies and provides these insights for our
institutional clients. The Corporate Finance team specialises in Equity Capital Markets (ECM), Mergers and Acquisitions (M&A) and
strategic Corporate Advisory.
Funds Management
Westoz Funds Management Pty Ltd (WFM), a wholly owned subsidiary of Euroz Hartleys Group has an Australian Financial Services
Licence (AFSL). In October 2022, Westoz Resources Fund Limited (WRFL), was launched with a focus on small to mid-cap ASX listed
securities with exposure to the resources sector. The investment mandate is being managed by WFM. The funds management revenue
for this financial year is derived from the management of this new mandate. In the prior year funds management revenue was from the
management of Westoz Investment Company Limited (Westoz) and Ozgrowth Limited (Ozgrowth) mandates which were disposed to WAM
Capital Limited in April 2022 following completion of two separate Scheme of Arrangements. WFM no longer manages the mandates of
Westoz and Ozgrowth.
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.
Entity-wide disclosures
The Group 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.
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.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 60
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
3. SEGMENT INFORMATION (CONT’D)
Segment performance
2023
Brokerage
PRIVATE
WEALTH
$
WHOLESALE
$
19,995,900
5,115,367
Underwriting and placement fees
10,229,130
28,463,975
FUNDS
MANAGEMENT
OTHER
TOTAL
$
25,111,267
38,693,105
307,431
18,197,903
11,066,059
TOTAL
$
36,499,569
43,613,675
13,791,010
18,433,770
5,740,096
$
-
-
-
-
-
$
-
-
-
-
-
Performance and management fees
-
-
307,431
Wealth management fees
18,180,185
17,718
Corporate advisory
Interest received
Other revenue
11,066,059
-
-
-
27,234
2,292,887
2,320,121
46,004
175,634
-
17,934
239,572
Total segment revenue
48,451,219
44,838,753
334,665
2,310,821
95,935,458
Segment income tax expense
581,675
3,770,030
1,343
99,614
4,452,662
Segment net operating profit/(loss) after tax
961,431
6,243,201
(103,803)
2,237,808
9,338,637
2022
Brokerage
PRIVATE
WEALTH
$
WHOLESALE
$
26,301,047
10,198,522
Underwriting and placement fees
10,843,132
32,770,543
FUNDS
MANAGEMENT
OTHER
Performance and management fees
-
-
13,791,010
Wealth management fees
18,375,377
58,393
Corporate advisory
Dividends received
Interest received
Other revenue
-
-
-
5,740,096
-
-
107,589
107,589
29,684
209,386
239,070
51,490
206,555
-
8,074
266,119
Total segment revenue
55,571,046
48,974,109
13,820,694
325,049
118,690,898
Segment income tax expense
2,467,921
3,272,851
3,679,858
7,922,632
17,343,262
Segment net operating profit after tax
5,930,533
8,650,010
7,756,493
18,386,679
40,723,715
$
-
-
-
-
$
-
-
-
-
-
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
61
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
Interest received
Other revenue
2023
$
2022
$
95,935,458
118,690,898
95,935,458
118,690,898
2023
$
2022
$
25,111,267
36,499,569
38,693,105
43,613,675
307,431
13,791,010
18,197,903
18,433,771
11,066,059
5,740,096
-
2,320,121
239,572
107,589
239,070
266,118
95,935,458
118,690,898
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 62
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
5. PROFIT BEFORE INCOME TAX EXPENSE
Profit before income tax is determined after accounting for the following specific expenses:
Plant and equipment – depreciation
Leasehold improvements – amortisation
Right of use asset – amortisation
Intangible asset – amortisation
2023
$
2022
$
197,162
526,228
216,115
396,264
1,222,033
1,252,144
606,957
606,957
2,552,380
2,471,480
Finance costs
Interest and finance charges paid / payable on lease liabilities
176,722
241,110
Superannuation expense
3,026,550
2,919,314
Share-based payments: - Performance Rights Plan
3,978,418
3,063,302
- Long term Incentive
Impairment expense (reversal)
Right of use assets impairment expense (i)
Leasehold improvements impairment expense (i)
139,271
1,174,911
314,645
-
-
-
Equity accounted investments impairment reversal (ii)
-
(6,510,348)
(i)
In May 2023, the Group executed a lease agreement for a new office building which it expects to occupy in December 2023. Accordingly,
management estimated the recoverable amount of its existing lease assets comprising right of use assets and leasehold improvements for the
current office premises. The terms of the leases are set out in note 25.
The recoverable amount of the assets was estimated based on their fair value less costs of disposal. Fair value less costs of disposal was determined
based on the present value of cash flows that the Group estimates it could achieve for the premises through either surrendering the lease or entering
into a sub-lease arrangement, as advised by external, independent commercial tenancy advisors. The discount rate used was 6.5%. The fair value
measurement has been based on the inputs to the valuation technique as detailed in note 1(p).
As a result of the assessment, an impairment loss for the right of use assets of $1.2 million and for leasehold improvements of $0.3 million
was recognised.
The Group performed a review of the remaining expected useful life of its leasehold improvements related to the leases above (net book value of
$0.8 million, after impairment). As a result of the Group’s intention to vacate the current office premises in December 2023, the expected remaining
useful life of the leasehold improvements decreased to six months. This change in estimate useful life is accounted for prospectively.
(ii)
In prior year, the $6.5 million impairment reversal was related to the reversal of impairment on equity accounted investments (see note 13).
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
63
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
6.
INCOME TAX
2023
$
2022
$
Profit before income tax expense
13,791,299
58,066,977
Income tax using Group’s tax rate of 30% (2022: 30%)
4,137,390
17,420,093
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
The components of tax expense / (benefit) comprise:
Current tax
Deferred tax
Income tax expense
-
315,272
4,452,662
227,500
185,253
17,832,846
-
(489,584)
4,452,662
17,343,262
2023
$
2022
$
6,549,907
(2,097,245)
18,039,103
(695,841)
4,452,662
17,343,262
Effective tax rate
32.3%
29.9%
Deferred tax asset is attributable to the following:
Employee benefits
Accruals
2023
$
2,768,559
2,743,751
5,512,310
Deferred tax assets are recognised only to the extent that it is probable that future taxable profits can be generated.
Deferred tax liability is attributable to the following:
Investments
Performance rights plan
2023
$
359,482
1,908,315
2022
$
2,378,942
1,859,106
4,238,048
2022
$
705,990
2,425,111
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.
2,267,797
3,131,101
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 64
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
7. CASH AND CASH EQUIVALENTS
2023
$
2022
$
Cash at bank and on hand
74,119,850
175,256,542
Restricted cash:
Cash margin account
Client trust account
Total restricted cash
2,180,899
3,593,551
11,855,106
11,817,432
14,036,005
15,410,983
Total cash and cash equivalents
88,155,855
190,667,525
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.
8. TRADE AND OTHER RECEIVABLES
Trade receivables
Broker receivable (i)
Other receivable
2023
$
2022
$
3,355,027
1,138,100
21,720,082
16,849,172
61,799
83,942
25,136,908
18,071,214
Receivables are measured at amortised cost and their carrying amount approximates fair value.
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.
(i)
Broker receivables relates to outstanding client accounts and amounts owed to the Group by ASX Clearing. These are settled with the broker payable
as disclosed in Note 16.
9. OTHER FINANCIAL ASSETS AT FAIR VALUE
Fair value of listed securities
Fair value of unlisted securities
Total
2023
$
2022
$
5,728,629
6,779,359
10,401,571
8,537,705
16,130,200
15,317,064
These securities are held at fair value through profit or loss. The fair values of listed securities are based on the closing price of each
investment at year end. The fair values of unlisted securities are measured using the Black-Scholes model at year end.
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
65
10. OTHER CURRENT ASSETS
Prepayments
Accrued income
Total
11. FINANCIAL ASSETS AT AMORTISED COST
Security deposit
Financial guarantee – term deposit
Other non-current receivable
2023
$
2022
$
2,469,727
2,313,978
1,738,003
168,136
4,207,730
2,482,114
2023
$
50,000
636,296
-
2022
$
400,000
625,935
43,445
686,296
1,069,380
Security deposit is held by FinClear Services Pty Ltd who is the clearing and trading participant on behalf of Euroz Hartleys Limited for
international trades.
12.
INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS
Opening fair value – 1 July
Additions (i)
Fair value increments
Disposals
Closing fair value 30 June
2023
$
-
2,000,000
2022
$
826,040
-
84,000
93,500
-
(919,540)
2,084,000
-
(i)
Investments at fair value through profit and loss relates to Euroz Hartleys Group Limited’s 7.7% investment in Westoz Resources Fund Limited
(“WRFL”). WRFL is an unlisted investment fund whose purpose is to generate positive returns and returning dividends to investors through the
trading of stocks generally associated with the resources sector in Western Australia. The responsible manager of the fund is Westoz Funds
Management Pty Ltd a wholly owned subsidiary of Euroz Hartleys Group Limited.
WRFL is measured at fair value through profit or loss accounting in accordance with the Group accounting policies as disclosed in the annual report.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
66
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
13. 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 (Note 5)
Less: Dividend received
Disposal (i)
Equity accounted investments as at 30 June
2023
$
2022
$
-
-
-
-
-
-
75,827,068
15,808,439
6,510,348
(1,566,614)
(96,579,241)
-
(i)
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 2022 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.
14. PLANT AND EQUIPMENT
Leasehold improvements
At cost
Less: Accumulated amortisation
Impairment expense
Office equipment
At cost
Less: Accumulated depreciation
Furniture, fixtures and fittings
At cost
Less: Accumulated depreciation
2023
$
2022
$
2,288,948
2,384,745
(925,483)
(314,645)
(674,166)
-
1,048,820
1,710,579
1,014,997
1,149,396
(763,798)
(852,857)
251,199
296,539
135,393
(50,501)
84,892
132,839
(42,395)
90,444
1,384,911
2,097,562
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 67
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
14. PLANT AND EQUIPMENT (CONT’D)
Reconciliations
Reconciliations of the carrying amounts of each class of plant and equipment at the beginning and end of the current and previous
financial year are set out below:
2023
Carrying amount at 1 July 2022
Additions
Write-off
Depreciation / amortisation expense (note 5)
Impairment expense
LEASEHOLD
IMPROVEMENTS
PLANT AND
EQUIPMENT
$
$
1,710,579
181,164
(2,050)
(526,228)
(314,645)
386,983
146,270
-
(197,162)
-
TOTAL
$
2,097,562
327,434
(2,050)
(723,390)
(314,645)
Carrying amount at 30 June 2023
1,048,820
336,091
1,384,911
2022
Carrying amount at 1 July 2021
Additions
Reclassification
Write-off
Depreciation / amortisation expense
198,449
1,846,035
62,589
931,048
286,178
(62,589)
(230)
(551,539)
(396,264)
(216,115)
1,129,497
2,132,213
-
(551,769)
(612,379)
Carrying amount at 30 June 2022
1,710,579
386,983
2,097,562
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 68
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
15.
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
2023
$
2022
$
15,950,164
15,950,164
22,805,581
23,412,538
38,755,745
39,362,702
2023
$
2022
$
2,803,345
2,803,345
5,639,200
5,639,200
7,507,619
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 (iii) contains additional information on this assessment.
(b)
Other intangible assets
Client portfolios (i)
Hartleys Brand (ii)
Customer relationship - Hartleys (ii)
ASX Licence
2023
Balance as at 1 July 2022
Amortisation expense
2023
$
2022
$
347,247
520,871
19,500,000
19,500,000
2,708,334
3,141,667
250,000
250,000
22,805,581
23,412,538
CLIENT
PORTFOLIOS
CUSTOMER
RELATIONSHIP
- HARTLEYS
$
$
TOTAL
$
520,871
3,141,667
3,662,538
(173,624)
(433,333)
(606,957)
Balance as at 30 June 2023
347,247
2,708,334
3,055,581
2022
Balance as at 1 July 2021
Amortisation expense
694,495
3,575,000
4,269,495
(173,624)
(433,333)
(606,957)
Balance as at 30 June 2022
520,871
3,141,667
3,662,538
(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 (iv).
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
16. TRADE AND OTHER PAYABLES
Trade and other payables
Broker payable (i)
Dividend payable
Accruals
69
2023
$
2022
$
1,812,293
4,860,636
32,328,853
27,254,709
5,753,047
16,770,251
15,581,367
10,651,427
55,475,560
59,537,023
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. These are settled with the broker
receivable as disclosed in Note 8.
Movement in dividend payable is set out below:
Opening balance
Amount provided during the year
Amounts paid out
2023
$
2022
$
16,770,251
26,394,973
49,846,206
21,695,735
(60,863,410)
(31,320,457)
Balance as at 30 June
5,753,047
16,770,251
Of the total dividends paid during the year, $369,286 was through the dividend reinvestment plan and $35,210 (2022: $42,983) was
paid to the Euroz Share Trust and is undistributed, therefore, it has been eliminated on consolidation.
17. CURRENT TAX RECEIVABLE / (PAYABLE)
Opening balance
Amount provided during the year
Prior year adjustments
Amounts paid out
Balance as at 30 June
2023
$
2022
$
(8,834,084)
(8,123,786)
(6,549,907)
(18,039,104)
(40,322)
-
17,100,305
17,328,806
1,675,992
(8,834,084)
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
70
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
18. PROVISIONS
Employee benefits (annual leave)
Employee benefits (long service leave)
2023
$
2022
$
3,372,810
3,636,514
5,865,272
4,293,291
Total current and non-current
9,238,082
7,929,805
Disclosed as current
Disclosed as non- current liabilities
Movements in employee benefits, are set out below:
Annual leave:
Carrying amount at 1 July
Additional provisions recognised
Leave taken and paid out
9,016,263
7,788,835
221,819
140,970
2023
$
2022
$
3,636,514
3,320,114
1,896,513
2,014,565
(2,160,217)
(1,698,165)
Carrying amount at 30 June
3,372,810
3,636,514
Long service leave:
Carrying amount at 1 July
Additional provisions recognised
Leave taken and paid out
4,293,291
4,316,278
1,800,329
701,229
(228,348)
(724,216)
Carrying amount at 30 June
5,865,272
4,293,291
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
19. RIGHT OF USE ASSET AND LEASE LIABILITY
Leased premises
Accumulated amortisation
Impairment expense
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
Additions
Amortisation expense
Impairment expense
Disposal
71
2023
$
2022
$
7,716,294
7,716,294
(4,739,150)
(3,554,360)
(1,174,911)
-
1,802,233
4,161,934
105,056
(65,220)
39,836
221,324
(139,209)
82,115
1,842,069
4,244,049
1,358,111
1,354,750
2,194,393
3,552,525
4,244,049
5,494,070
-
61,630
(1,222,033)
(1,252,144)
(1,174,911)
(5,036)
-
-
Lease payout, transfer to lease receivable and write off
-
(59,507)
Balance as at 30 June
1,842,069
4,244,049
Reconciliation of right of use lease liability:
Balance as at 1 July
Additions
Disposals
Interest expense
Interest paid
Lease payments
2023
$
2022
$
4,907,275
6,190,629
-
(5,036)
176,722
(176,722)
61,630
-
241,110
(241,110)
(1,349,735)
(1,344,984)
Balance as at 30 June
3,552,504
4,907,275
The following table sets out a maturity analysis of lease liabilities showing the undiscounted lease payments to be paid after the
reporting date.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 72
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
19. RIGHT OF USE ASSET AND LEASE LIABILITY (CONT’D)
Less than one year
One to two years
Two to three years
Three to four years
Four to five years
More than 5 years
2023
$
2022
$
1,358,091
1,354,751
1,379,300
1,358,111
535,289
279,824
-
-
1,379,300
535,289
279,824
-
3,552,504
4,907,275
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 $0.04 million is
recognised as at 30 June 2023 (2022: $0.1 million).
Office leases
Euroz Hartleys Group Limited signed a new lease agreement in May 2023 for office space at QV1 Perth located at 250 St Georges
Terrace, Perth. An assessment of the contract determined that it qualifies as a lease, as it grants the right to control the use of a
specific asset for a defined period in exchange for compensation. The recognition of the right of use asset and lease liability will
occur when the office becomes available for use which is expected in December 2023.
20. CONTRIBUTED EQUITY
(a)
Share capital
Ordinary shares
2023
2022
SHARES
SHARES
2023
$
2022
$
Issued and paid up capital consisting of ordinary shares
(net of Treasury shares)
155,112,688
187,106,282
98,562,525
136,740,320
(b)
Movements in ordinary share capital net of Treasury shares
Balance at the beginning of the reporting period
Issue of new shares
Acquisition of Treasury shares
Share cancellation net of Treasury shares (i)
Vested shares under Performance Rights Plan
2023
2022
SHARES
SHARES
187,106,282
185,374,535
332,690
1,778,756
(1,940,000)
(1,800,000)
(31,773,026)
-
1,386,742
1,752,991
Balance at the end of the reporting period
155,112,688
187,106,282
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
20. CONTRIBUTED EQUITY (CONT’D)
(c)
Movements in ordinary share capital
Balance at the beginning of the reporting period
Shares issued during the period
Return of capital (i)
Treasury shares
Vested shares under Performance Rights Plan
At the end of the year
73
2023
2022
SHARES
SHARES
136,740,320
134,665,226
369,286
2,868,844
(39,998,187)
-
(2,188,727)
(2,894,924)
3,639,833
2,101,174
98,562,525
136,740,320
(i)
Return of capital / share cancellation relates to the $40.0 million equal capital reduction and share cancellation paid in December 2022 as part of
the Group’s strategic cash and capital management initiative. Total shares cancelled of 33,257,006 included 1,483,980 Treasury shares.
(d)
Treasury shares
2023
2022
SHARES
SHARES
2023
$
2022
$
Balance at the beginning of the reporting period
(10,190,791)
(10,143,782)
13,916,281
13,025,440
Acquisition of Treasury shares
Treasury share cancellation (i)
(1,940,000)
(1,800,000)
2,188,727
2,894,924
1,483,980
-
(1,758,541)
-
Vested shares under Performance Rights Plan
1,386,742
1,752,991
(1,596,237)
(2,004,083)
Balance of Treasury shares at the end of the reporting period
(9,260,069)
(10,190,791)
12,750,230
13,916,281
Treasury shares were acquired by the Employee Share Trust at various times during the year for grant to Executives and employees as
part of the Performance Right Plan.
(i)
Share cancellation relates to treasury shares that were cancelled as part of the $40.0 million equal capital reduction and share cancellation in
December 2022 as part of the Group’s strategic cash and capital management initiative.
(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 2023 (30 June 2022: Nil).
(g)
Share-based payments reserve
The reserve records items recognised as expenses on valuation of share-based payments. The movement in the current period totalling
$4,117,689 (2022: $3,063,302) relates to the vesting expense related to the fair value of shares issued under all share-based payments
plans in the prior year and the current year.
Balance on share-based payment reserve at 1 July
Recognised during the year
Vested shares under Performance Rights Plan
2023
$
2022
$
8,917,497
7,955,369
4,117,689
3,063,302
(3,639,833)
(2,101,174)
Balance on share-based payments reserve at 30 June
9,395,353
8,917,497
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 74
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
20. CONTRIBUTED EQUITY (CONT’D)
(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 significant cash reserves and no external borrowings. 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.
21. DIVIDENDS
Relating to ordinary shares
Special dividend 20.27 cents per fully paid ordinary share paid on 7 October 2022
39,992,116
2023
$
2022
$
-
Interim dividend for the half year ended 31 December 2022 of 2.5 cents
(2021 – 2.5 cents) per fully paid ordinary share paid on 17 February 2023.
Fully franked based on tax paid @ 30%
Final dividend declared and provided for at 30 June 2023 of 3.5 cents
(2022 – 8.5 cents) per fully paid ordinary share to be paid on 1 September 2023.
Fully franked based on tax paid @ 30%
4,065,832
4,882,500
5,753,047
16,770,251
Total dividends provided for or paid
49,810,995
21,652,751
Special dividends to equity holders comprise $40.0 million fully franked special dividend of $0.2027 per share paid to shareholders in
October 2022 as part of the Group’s strategic cash and capital management initiative.
Of the total dividends paid during the year, $35,210 (2022: $42,983) 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 2023 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 2023.
2023
$
2022
$
Franking credits available for subsequent financial years based on a tax rate of 30% (2022:
30%)
17,097,912
26,119,761
The 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)
(b)
(c)
(d)
franking credits that will arise from the payment of the current tax liability;
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date;
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date; and
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 2023 75
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
22. 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
2023
$
2022
$
1,358,111
1,354,750
2,194,393
3,552,525
Total lease liability (Note 19)
3,552,504
4,907,275
Interest on lease liabilities is 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
2023
$
126,268
71,435
29,040
4,172
-
-
2022
$
181,251
126,268
71,435
29,040
4,172
-
230,915
412,166
2023
$
2022
$
49,722,513
42,766,772
5,753,047
16,770,251
55,475,560
59,537,023
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
76
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
22. FINANCIAL INSTRUMENTS (CONT’D)
(b)
Financial risk exposure and management (cont’d)
(iii) 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.
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 2023.
The carrying amount of the consolidated entity’s cash and cash equivalents, receivables and deposits represents the
maximum credit exposure.
The consolidated entity’s maximum exposure to credit risk at the reporting date was:
Cash and cash equivalents
Trade and other receivables
Financial assets at amortised cost
The Group’s receivables are considered recoverable.
(iv) Financial instruments composition
NOTE
CARRYING AMOUNT
2022
2023
$
$
7
8
11
88,155,855
190,667,525
25,136,908
18,071,214
686,296
1,069,380
113,979,059
209,808,119
WEIGHTED AVERAGE
EFFECTIVE INTEREST RATE
2022
2023
%
%
FLOATING INTEREST
RATE
2023
$
2022
$
FINANCIAL ASSETS
Cash and cash equivalents
2.38
0.05
88,155,855 190,667,525
NON-INTEREST
BEARING
2023
2022
$
-
$
-
Trade and other receivables
Financial assets held for trading
-
-
-
-
25,136,908
18,071,214
16,130,200
15,317,064
Financial assets
1.64
0.05
636,296
1,025,935
50,000
43,446
88,792,151 191,693,460
41,317,108
33,431,724
FINANCIAL LIABILITIES
Trade and other payables
Lease liability (current and
non-current)
-
-
55,475,560
59,537,023
4.25
4.25
3,552,504
4,907,275
-
-
3,552,504
4,907,275
55,475,560
59,537,023
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
77
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
22. FINANCIAL INSTRUMENTS (CONT’D)
(b)
Financial risk exposure and management (cont’d)
(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).
CARRYING AMOUNT
FINANCIAL ASSETS
/ LIABILITIES AT
AMORTISED COST
DESIGNATED
AT FVTPL (ii)
FAIR VALUE
TOTAL
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
2023
NOTE
Current financial assets
Cash and cash equivalents (i)
7
Trade and other receivables (i)
8
$
-
-
$
$
88,155,855
88,155,855
25,136,908
25,136,908
$
-
-
$
-
-
$
-
-
$
-
-
Other financial assets
9
16,130,200
-
16,130,200 5,728,629 10,048,436
353,135 16,130,200
Non - Current financial assets
Financial assets (i)
Investments at fair value
11
12
-
686,296
686,296
2,084,000
-
2,084,000
Current financial liabilities
Trade and other payables (i)
16
-
(55,475,560)
(55,475,560)
-
-
-
-
2,084,000
-
-
-
-
-
2,084,000
-
18,214,200
58,503,499
76,717,699
5,728,629
12,132,436
353,135
18,214,200
(i)
Balances are measured at amortised cost and their carrying amount approximates fair value
(ii)
Fair value through profit or loss (FVTPL)
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
78
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
22. FINANCIAL INSTRUMENTS (CONT’D)
(b)
Financial risk exposure and management (cont’d)
CARRYING AMOUNT
FINANCIAL ASSETS
/ LIABILITIES AT
AMORTISED COST
DESIGNATED
AT FVTPL (ii)
FAIR VALUE
TOTAL
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
2022
NOTE
Current financial assets
Cash and cash equivalents (i)
7
Trade and other receivables (i)
8
$
-
-
$
$
190,667,525
190,667,525
18,071,214
18,071,214
$
-
-
$
-
-
$
-
-
$
-
-
Other financial assets
9
15,317,064
-
15,317,064 6,779,359
8,184,570
353,135 15,317,064
Non - Current financial assets
Financial assets (i)
11
Current financial liabilities
Trade and other payables (i)
16
-
-
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)
Balances are measured at amortised cost and their carrying amount approximates fair value
(ii)
Fair value through profit or loss (FVTPL)
(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%
2023
$
621,545
(621,545)
2022
$
1,342,158
(1,342,158)
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%
(c) Bank Guarantees
Secured guarantees in respect of leases of a controlled group entity:
Westpac Banking Corporation
Bankwest
2023
$
564,557
(564,557)
2022
$
536,097
(536,097)
2023
$
2022
$
796,816
636,295
796,816
625,935
1,433,111
1,422,751
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
79
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
23. REMUNERATION OF AUDITORS
Audit and assurance services
Audit and review of financial reports for the Group
Regulatory assurance services
Controls assurance services
Total paid to KPMG
24. CONTINGENT LIABILITIES
The Group has no contingent liabilities nor contingent assets at 30 June 2023 (2022: Nil).
25. COMMITMENTS FOR EXPENDITURE
Clearing and settlement services
Within one year
Later than one year but not later than five years
Later than five years
Office equipment (i)
Within one year
Later than one year but not later than five years
Later than five years
2023
$
2022
$
318,750
43,000
10,750
301,000
40,000
13,000
372,500
354,000
2023
$
2022
$
767,340
319,725
767,340
1,087,065
288,628
-
-
-
-
-
Commitments not recognised in the financial statements
1,375,693
1,854,405
(i)
Capital commitments relate to information technology infrastructure for QV1.
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.
These lease commitments have been included as part of lease liabilities. Refer to Note 19.
Euroz Hartleys Group Limited signed a new lease agreement in May 2023 for office space at QV1 Perth located at 250 St Georges
Terrace, Perth. The new lease for part Level 37 and whole Level 38 of QV1 situated at 250 St Georges Terrace, Perth WA is for a period
of 10 years commencing on 1 July 2024 with two options to renew for 5 years commencing 1 July 2034 and 1 July 2039. The lease for
2,505 square metres is on normal commercial terms with a market rate incentive.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 80
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
26. RELATED PARTIES
(a) Key Management Personnel compensation
Short-term employee benefits
Post-employment benefits
Share-based payments – Performance Rights Plan
Share-based payments – Long Term Incentive
Termination benefit
Total compensation
2023
$
2022
$
3,986,986
5,412,407
183,138
973,572
139,271
169,503
730,939
-
-
502,504
5,282,967
6,815,353
(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
Share-based payments were issued to Eligible Employees in line with terms and conditions as described in the remuneration
report “Equity based payments” section and note 1m (v).
During the year performance rights were issued to 55 employees who opted in to the Performance Rights Plan
(2022: 77 employees).
At 30 June 2023, the Group had the following outstanding share-based payment arrangements (post capital reduction in
December 2022):
GRANT DATE / EMPLOYEES ENTITLED
NUMBER OF SHARES
FAIR VALUE ON GRANT DATE*
VESTING CONDITIONS**
Shares granted to KMP and Employees on:
30 June 2020***
30 June 2021
30 June 2022
30 June 2023
Total
*
**
***
Held in escrow
1,301,322
2,824,699
1,877,634
2,065,125
8,068,780
$0.98
3-year service condition
$1.595
3-year service condition
$1.689
3-year service condition
$1.175
3-year service condition
Fair value on grant date represents the grant price being the 30-day VWAP in accordance with the PRP
After the 3-year service condition has been met the plan shares are escrowed for a further period according to the plan as described in
the remuneration report “Equity based payments” section and note 1m (v)
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
81
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
26. RELATED PARTIES (CONT’D)
(d) Share-based payments (cont’d)
Reconciliation of outstanding share-based payment arrangements:
2023
2022
NUMBER OF SHARES
WEIGHTED AVERAGE
EXERCISE PRICE
NUMBER OF SHARES
WEIGHTED AVERAGE
EXERCISE PRICE
Outstanding at 1 July
Cancelled during the year
Granted during the year
7,221,082
(1,217,427)
2,065,125
nil
nil
Outstanding at 30 June
8,068,780
4,962,811
-
2,258,271
7,221,082
nil
nil
Outstanding share-based payment shares are subject to a 3-year service condition from the grant date and a further escrow
period. Holders of shares under the plans receive dividends while they are serving the vesting condition. Shares cancelled
during the year include those cancelled as part of the capital reduction in December 2022.
Forfeited and vested shares during the year are detailed below:
2023
2022
NUMBER OF SHARES
WEIGHTED AVERAGE
EXERCISE PRICE
NUMBER OF SHARES
WEIGHTED AVERAGE
EXERCISE PRICE
Forfeited during the year
Vested during the year
15,361
620,743
nil
nil
451,958
355,959
nil
nil
(e) Group transactions
Wholly-owned group
The wholly-owned group consists of Euroz Hartleys Group Limited and its wholly-owned controlled entities. See Note 27.
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to
other parties unless otherwise stated.
Transactions with related parties consisting of:
• 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
Ownership interests in related parties
Interests held in controlled entities are set out in Note 27.
2023
$
-
-
-
2022
$
1,566,613
2,471,785
11,319,224
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
82
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
26. RELATED PARTIES (CONT’D)
(e) Group transactions (cont’d)
Other transactions with Directors and specified Executives
During the year ended 30 June 2023 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:
2023
$
2022
$
Amounts recognised as revenue
Brokerage earned on Key Management Personnel accounts
45,511
59,124
27.
INVESTMENTS IN CONTROLLED ENTITIES
NAME OF ENTITY
COUNTRY OF INCORPORATION
CLASS OF SHARES
EQUITY HOLDING
2022
2023
%
%
Euroz Hartleys Limited
Westoz Funds Management Pty Ltd
Zero Nominees Pty Ltd (i)
Invesco Nominee Pty Ltd (i)
Saltbush Nominee Pty Ltd (i)
Zenix Nominees Pty Ltd (i)
Euroz Employee Share Trust
Westoz Resources Fund Limited *
Detail Nominees Pty Ltd (i) **
Entrust Wealth Management Pty Ltd **
Westoz Investment Company Pty Ltd **
Ozgrowth Pty Ltd **
WIM Small Cap Limited ***
Euroz Hartleys Securities Pty Ltd ****
Prodigy Investment Partners Pty Ltd ****
Poynton Pty Ltd (i) ****
Poynton Investments Pty Ltd (i) ****
Poynton Corporate Pty Ltd (i) ****
Poynton Nominees Pty Ltd (i) ****
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
-
7.7
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
The ultimate parent entity in the Group is Euroz Hartleys Group Limited.
(i)
Owned by Euroz Hartleys Limited
*
Entity was dormant in 2022. During 2023, the entity changed its name from Westoz Australian Resources Limited to Westoz Resources Fund
Limited. Euroz Hartleys Group Limited contributed $2 million during the year to the newly established fund, which is accounted for at fair value
through profit or loss.
**
Dormant company.
***
The entity is dormant. An application for deregistering with ASIC was lodged on 23 June 2023 and this application is in progress.
****
The entity is dormant and was deregistered in August 2023.
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
83
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
27.
INVESTMENTS IN CONTROLLED ENTITIES (CONT’D)
A brief description of each entity (unless inactive and dormant) is as follows:
(a)
(b)
Euroz Hartleys Group Limited – Group holding entity listed on the Australian Securities Exchange. Euroz Hartleys Group Limited
manages cash and investments.
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 Limited and Entrust Wealth
Management Pty Ltd from 26 April 2021.
(c)
Zero Nominees Pty Ltd – Custodian Company holding shares on behalf of clients of Euroz Hartleys Limited.
(d) Westoz Funds Management Pty Ltd – Provides management services for investment funds.
(e)
(f)
Euroz Employee Share Trust – Vehicle established to acquire treasury shares on-market for distribution to eligible employees in
connection with the Performance Rights Plan.
Westoz Resources Fund Limited* - This entity is no longer controlled by Euroz Hartleys Group Limited. It’s now an unlisted
investment fund managed by Westoz Funds Management Pty Ltd.
(g)
Detail Nominees – Dormant Company that was previously used to for settlement obligation in relation to shares for the Group.
(h)
(i)
(j)
(k)
(l)
Euroz Hartleys Securities Limited – 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.
Westoz Funds Management Pty Ltd – Provides management services for investment funds.
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.
Prodigy Investment Partners Limited – In 2020, the Company closed the Prodigy operations, including the partnership with the
three separate boutiques.
Saltbush Nominees Pty Ltd – Custodian Company holding shares on behalf of clients of Euroz Hartleys Limited and to facilitate
the settlement of share placement and underwriting transactions.
(m)
Invesco Nominee Pty Ltd – This entity is an Entrepot Nominee Company used for CHESS settlement and clearing purposes only.
28. EVENTS SUBSEQUENT TO REPORTING DATE
Euroz Hartleys Group Limited obtained a secured bank guarantee in respect of new office lease at QV1 of $2,388,352.
The Directors are not aware of any matter or circumstance subsequent to 30 June 2023 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.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 84
Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
29. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year
Adjustments for:
Depreciation and amortisation
Impairment expense / (reversal)
Share of profits of equity accounted investments, net of tax
Share-based payments
Gain on investments
Write-off / loss on disposal of plant and equipment
Interest paid on lease liabilities
Interest on security deposit
2023
$
2022
$
9,338,637
40,723,715
2,552,380
2,471,480
1,489,556
(6,510,348)
-
(15,808,439)
4,117,689
3,063,302
(84,000)
(7,608,459)
2,050
176,722
(10,361)
551,769
241,110
(512)
Distributions received from investing activity investments
-
(107,589)
Changes in assets and liabilities:
(Increase) / decrease in trade and other receivables
(7,065,694)
10,708,336
(Increase) / decrease in other financial assets at fair value through profit or loss
(813,136)
6,138,868
(Increase) / decrease in other current assets
(Increase) / decrease in current tax receivables
(Increase) / decrease in deferred tax assets
(1,725,616)
322,610
(1,675,992)
-
(1,274,262)
4,775,793
Increase / (decrease) in trade and other payables (excluding dividends)
6,955,740
(11,895,978)
(Decrease) / increase in current tax liabilities
Decrease in deferred tax liabilities
Increase in provisions
(8,834,084)
710,298
(863,304)
(5,471,635)
1,308,277
293,413
Net cash from operating activities
3,594,602
22,597,734
30. 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)
2023
CENTS
2022
CENTS
5.51
5.25
2023
NUMBER
21.68
20.68
2022
NUMBER
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
169,367,175
187,826,101
Weighted average number of ordinary shares and potential ordinary shares (including
treasury shares) used as the denominator in calculating diluted earnings per share
177,866,437
196,966,210
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 2023 Notes to the Financial Statements (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
31. 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
85
2023
$
2022
$
28,563,579
130,246,455
91,598,117
89,509,831
120,161,696
219,756,286
6,046,902
2,011,970
26,259,147
2,752,482
8,058,872
29,011,629
98,577,622
136,804,690
4,211,973
45,084,643
Share-based payment reserve
9,313,229
8,855,324
Total equity
Financial performance
Profit for the year
Total comprehensive income
Contingent liabilities
112,102,824
190,744,657
8,973,537
39,526,767
8,973,537
39,526,767
The parent entity had no contingent liabilities as at 30 June 2023 and 30 June 2022.
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.
• Dividends received from subsidiaries are recognised as other income by the parent entity.
32. 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
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
86
Directors’ Declaration
FOR T HE YE A R E ND E D 30 JUNE 20 23
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 2023 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: 23 August 2023
Richard Simpson
Executive Director
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 Independent Auditor’s Report
To The Members of Euroz Hartleys Group Limited
FOR T HE YE A R E ND E D 30 JUNE 20 23
87
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 2023 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 2023
• 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.
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.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
88
Independent Auditor’s Report
To The Members of Euroz Hartleys Group Limited (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
Valuation of Goodwill and Indefinite Life Intangible Assets ($35.5 million)
Refer to Notes 2 and 15 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
intangible assets and goodwill.
The Group has prepared value in use cash flow
models for its Private Wealth 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.
Working with our valuation specialists, our procedures
included the following:
• 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’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 2023
Independent Auditor’s Report
To The Members of Euroz Hartleys Group Limited (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
89
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 Directors’ Report and
Remuneration Report. The Executive Chairman's Report, Euroz Hartleys Group Limited Directors' profiles,
Euroz Hartleys Limited Directors & Officers' profiles, Euroz Hartleys Group Structure, Corporate
Transactions, Managing Director's Report and Euroz Hartleys Foundation Report 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
• 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.
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
90
Independent Auditor’s Report
To The Members of Euroz Hartleys Group Limited (cont’d)
FOR T HE YE A R E ND E D 30 JUNE 20 23
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
2023, 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 16 to 23 of the Directors’ report
for the year ended 30 June 2023.
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
23 August 2023
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023
91
ASX Additional Information
AS AT 23 AUGU ST 20 23
A) Distribution of shareholders
ANALYSIS OF NUMBER OF SHAREHOLDERS BY SIZE OF HOLDING
RANGE
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Total
HOLDERS
UNITS
% UNIT
534
645
326
756
221
223,960
1,868,810
2,492,696
0.14
1.14
1.52
24,644,228
14.99
135,143,063
82.22
2,482
164,372,757
100
Number of holders holding less than a marketable parcel: 307 at $1.075 per unit.
B)
Top holders
The twenty largest holders of ordinary fully paid shares are listed below.
RANK NAME
ORDINARY
SHARES
UNITS
%
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
CITICORP NOMINEES PTY LIMITED
MR JAY EVAN DALE HUGHES
ICE COLD INVESTMENTS PTY LTD
MRS CATHERINE PATRICIA MCKENZIE
12,670,487
6,318,863
6,258,272
4,947,005
MR ANDREW MCKENZIE + MRS CATHERINE MCKENZIE
4,102,578
ICE COLD INVESTMENTS PTY LTD
UBS NOMINEES PTY LTD
MR JAY HUGHES + MRS LINDA HUGHES
3,410,948
3,334,064
2,693,831
MR SIMON DAVID YEO + MRS JENNIFER DALE YEO
2,272,189
ICE COLD INVESTMENTS PTY LTD
2,194,142
MR GREGORY CHESSELL + MRS MELANIE CHESSELL
2,038,289
BLACK MAGIC ENTERPRISES PTY LTD
LEXTON HOLDINGS PTY LTD
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
MRS MELANIE JANE CHESSELL
MR ROBERT HIRZEL BLACK
SOUTHERN MOTORS PTY LTD
WESTRADE RESOURCES PTY LTD
MR SIMON DAVID YEO + MRS JENNIFER DALE YEO
INKESE PTY LTD
Total
Remainder
Grand Total
7.71
3.84
3.81
3.01
2.50
2.08
2.03
1.64
1.38
1.33
1.24
1.22
1.15
1.13
1.05
1.01
0.99
0.98
0.93
0.84
2,000,000
1,883,875
1,857,926
1,721,285
1,656,081
1,621,288
1,616,325
1,520,536
1,380,173
65,498,157
39.85
98,874,600
60.15
164,372,757
100
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 92
ASX Additional Information (cont’d)
AS AT 23 AUGU ST 20 23
C) Shareholders with greater than 5%
As at 23 August 2023, the Company had 3 shareholders with greater than 5% of the issued ordinary share capital:
UNITS
12,188,362
11,620,406
11,552,820
%
7.39%
7.07%
7.03%
SHAREHOLDER
Ice Cold Investments Pty Ltd
Andrew William McKenzie
Jay Evan Dale Hughes
D) On-market buy-back
The Company has a current on-market buy-back.
E)
Voting Rights
The voting rights for each class of security on issue as at 23 August 2023 are:
Ordinary fully paid shares
Each ordinary shareholder is entitled to one vote for each ordinary fully paid share held.
F) Workplace gender equality report
The Company’s Workplace Gender Equality Agency report for FY23 is available on its website.
EUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 93
Euroz Hartleys Group contact details
EUROZ HARTLEYS LIMITED
Level 18 Alluvion
58 Mounts Bay Road
PERTH WA 6000
PO Box Z5036
St Georges Terrace
PERTH WA 6831
T: +61 8 9488 1400
F: +61 8 9488 1477
Level 6 Westralia Square
GPO Box 2777
141 St Georges Terrace
PERTH WA 6001
T: +61 8 9268 2888
F: +61 8 9268 2800
PERTH WA 6000
Euroz Hartleys Limited
Participant of the ASX, Cboe
and NSX
Authorised to provide financial
services
ABN 33 104 195 057
AFSL 230052
eurozhartleys.com
ENTRUST WEALTH MANAGEMENT
Level 6 Westralia Square
PO Box Z5034
141 St Georges Terrace
PERTH WA 6831
T: +61 8 9476 3900
F: +61 8 9321 6333
Entrust Wealth Management
A Division of Euroz Hartleys
PERTH WA 6000
Limited
info@entrustwealth.com.au
ABN 33 104 195 057
entrustwealth.com.au
Authorised to provide financial
services
AFSL 230052
CONTENTS PAGECHAIRMAN’S REPORTOVERVIEWFINANCIAL REPORTNOTES TO FINANCIAL STATEMENTSEUROZ HARTLEYS GROUP • ANNUAL REPORT 2023 Level 18 Alluvion
58 Mounts Bay Road
Perth WA 6000
PO Box Z5036
St Georges Terrace
Perth WA 6831
T: +61 8 9488 1400
F: +61 8 9488 1477
Euroz Hartleys Group Limited
ACN 000 364 465
www.euroz.com