More annual reports from HUB24:
2023 ReportANNUAL
REPORT
2013
Corporate
iNfORmATiON
Directors
Bruce Higgins
(Chairman – appointed 19 October 2012)
Ian Litster
(appointed 26 September 2012)
Hugh Robertson
(appointed 20 April 2011)
Vaughan Webber
(appointed 19 October 2012)
Jason Entwistle
(acting Chairman – resigned 19 October 2012)
Darren Pettiona
(resigned 26 September 2012)
Robert Bishop
(resigned 25 July 2012)
Otto Buttula
(Chairman – resigned 25 July 2012)
David Spessot
(resigned 26 September 2012)
Robert Spano
(resigned 19 October 2012)
Company Secretary
Matthew Haes
registered office and
principal place of Business
Level 45, Governor Phillip Tower
1 Farrer Place
Sydney NSW 2000
Telephone: (02) 8274 6000
B
Share registry
Boardroom Pty Limited
Level 7, 207 Kent Street
Sydney NSW 2000
HUB24 Limited shares are listed on the Australian
Securities Exchange (ASX: HUB).
Solicitors
Minter Ellison
Rialto Towers
525 Collins Street
Melbourne VIC 3000
Minter Ellison
Aurora Place
88 Phillip Street
Sydney NSW 2000
Bankers
Australia and New Zealand Banking Group Limited
20 Martin Place
Sydney NSW 2000
auditors
BDO East Coast Partnership
Level 10, 1 Margaret Street
Sydney NSW 2000
Internet address
www.hub24.com.au
ContentS
2
3
Results for Announcement
to the market (Appendix 4E)
Chairman and
CEO Report
6
Platform
Overview
10
HUB24
Directors
12
HUB24
Executive Team
14
29
Directors’
Report
Auditor’s independence
Declaration
30
Corporate
Governance
40
financial
Statements
88
Directors’
Declaration
89
independent
Auditor’s Report
91
ASX Additional
information
HUB24 ANNUAL REPORT 2013 CONTENTS
1
reSultS for announCement
TO THE mARkET
appendix 4e
From continuing operations
Revenue from ordinary activities
Net loss for the year attributable to members
From discontinued operations
Revenue from ordinary activities
Net loss for the year attributable to members
From continuing and discontinued operations
Revenue from ordinary activities
Net loss for the year attributable to members
Dividends
Year ended
30 June 2013
Year ended
30 June 2012
$’000
1,806
(5,798)
5,278
(3,985)
7,084
(9,783)
$’000
% change
from
from
from
from
from
from
853
increase
(23,098)
Decrease
6,446
Decrease
(7,418)
Decrease
7,299
Decrease
(30,516)
Decrease
112%
-75%
-18%
-46%
-3%
-68%
The Directors have not declared a final dividend for the year ended 30 June 2013 (2012: Nil).
explanation of result
Refer to the attached Directors’ Report and review of operations for further explanation.
Net tangible assets per fully paid ordinary share
$0.255
$0.352
30 June 2013
30 June 2012
entities over Which Control Has Been Gained or lost During the period
HUB24 Limited has not gained or lost control over any entity during the period.
auditor review
The report is based on accounts that have been audited by the company’s auditors, BDO East Coast Partnership.
2
RESULTS FOR ANNOUNCEMENT TO THE MARKET – APPENDIX 4E HUB24 ANNUAL REPORT 2013
CHaIrman anD Ceo
REPORT
Dear Shareholders
On behalf of the Directors we are pleased to announce the
results for HUB24 for the year ended 30 June 2013.
HUB24 has achieved significant growth demonstrated by
the increase in advisers using our platform up 75%. funds
Under Administration (fUA) have grown since July 2012
by 291% to $479 million as at the date of this report and
we expect fUA to grow rapidly in the coming year. Our
Statement of financial Position is significantly stronger
and as at 30 June 2013 our cash position was $9.5 million.
The company has reported a consolidated net loss after
income tax for the year of $9.8 million, after recognising
amortisation and depreciation charges of $1.0 million. This
result included the losses from the stockbroking business
which was divested during the year. On a continuing
operations basis the HUB24 business reported a net
loss after income tax of $5.8 million. Operating losses
are to be expected as the HUB24 business focusses on
attracting and servicing new clients to increase in scale.
We anticipate that these losses will continue to narrow as
the platform business grows.
Corporate
During the year there have been changes to the
Directors, Chairman and Chief Executive Officer of
the company. Today we have a Board that has the full
support of shareholders and the company has a strong
executive team led by Andrew Alcock, our new CEO, who
commenced in July.
Shareholders have been very supportive of the
company with the capital raised during the year totalling
$12.7 million. As at 30 June we have $9.5 million in
cash and cash equivalents. Our net tangible assets are
$10.0 million, representing 25.8 cents per share.
operations
We are making excellent progress in
establishing HUB24 as the leading next-
generation investment and superannuation
platform.
Based on in-house proprietary technology,
the HUB24 platform is designed specifically
to meet Australian regulatory requirements
for superannuation, pension and investor
directed portfolio service client accounts.
HUB24 is a truly independent platform, not owned by
a fund manager, insurer, dealer group or bank. Our
independence and strong internal technology development
capability allows us to have full control over product
development priorities. We have been recognised for
delivering platform enhancements at a more rapid rate
than most, if not all of our competitors, providing a
significant competitive advantage.
The HUB24 platform has two main offerings:
• HUB24 invest – a comprehensive investment portfolio
solution designed to meet the needs of individuals,
trusts and self-managed super funds. Operating as an
investor Directed Portfolio Service (iDPS), HUB24 invest
provides access to a very broad range of investment
options allowing the implementation of highly
customised portfolio solutions
• HUB24 Super – a comprehensive, public offer
superannuation fund that provides accumulation,
account-based pension and transition to retirement
pension accounts. The broad range of investment
options allows significantly flexible design to build
superannuation savings and draw a pension in
retirement.
Bruce Higgins and
andrew alcock
3
CHaIrman anD Ceo
REPORT
Company Successes
FUA growth of 291% to
$479m
at the date of this report, including
$140m in our superannuation offer
launched last year
Cash and cash equivalents of
Single focus and new corporate identity
$9.5m
and no corporate debt
HuB24
having successfully divested and
transitioned the stockbroking business
Growth in active advisers of
Launch of
75%
serving 46 financial planning groups
with 6 white label agreements
new features
including market access share trading
and improvements to the adviser
interface providing easier access
to meaningful information
HUB24 awarded
1st
Most New Developments and 3rd in the
product category by market researcher
Investment Trends, in December 2012
Platform Report covering 25 leading platforms*
Received in July 2013, a Research & Development
tax incentive payment from AusIndustry of
$1.1m
for our qualifying investment in the
development of the HUB24 platform
during the 2012 financial year
4
CHAIRMAN AND CEO REPORT HUB24 ANNUAL REPORT 2013
*Results from investment Trends 2012 Platform Report, based on a
face-to-face research and audit methodology.
Today we have 46 financial planning groups with
commercial agreements to distribute the HUB24 platform.
The popularity and scalability of our market-leading
managed portfolio functionality within the HUB24 platform
is demonstrated by the 170 managed portfolios operated
by professional fund managers, dealer groups and asset
consultants on behalf of their clients. This capability
supports the achievement of superior outcomes for
investors and the number of portfolios is set to increase,
with several currently under development. Our platform
offers over 900 managed funds, more than 770 listed
securities, 65 exchange traded funds and 12 term deposits
across five banks, in addition to multiple margin lending
and insurance options.
The future of financial Advice (fofA) reforms announced
last year became mandatory from 1 July 2013 and are
designed to improve the trust and confidence of Australian
retail investors in the financial planning sector. These
reforms are targeted to address conflicts of interest that
may impact the quality of financial advice provided to
Australian investors. The HUB24 platform is compliant
with these requirements and provides dealer groups and
advisers access to a modern platform without the legacy
of remuneration conflicts.
Investorfirst Stockbroking
Business
The Directors conducted a strategic review of operations
in November 2012 that resulted in a decision to exit the
stockbroking business and focus wholly on the further
development and commercialisation of the HUB24
platform. This decision was taken to avoid incurring
further losses due to the unexpected continuation of poor
performance in equity markets and an overall challenging
business environment for small to medium stockbroking
businesses.
in December 2012, the company announced the divestment
of the stockbroking business to Wilson HTm investment
Group Ltd (Wilson HTm). This transaction resulted in the
transfer of a number of clients, advisers and analysts to
Wilson HTm, which was effected on 8 february 2013.
The company recorded a loss on sale of the stockbroking
business of $2.201 million. This loss includes all costs
associated with the windup of this business such as
contract closures, excess office rental space, vesting of
options and redundancies.
Corporate Governance
The Board of HUB24 Limited is committed to achieving
and demonstrating standards of corporate governance
that are best practice and compliant with the Australian
Stock Exchange (ASX) regulations and principles of
good corporate governance. Our goal is to ensure that
we protect the rights and interests of shareholders and
ensure the company is properly managed through the
implementation of sound strategies and action plans.
We achieve this through the management team of our
company and by supervising an integrated framework
of controls over the company’s resources to ensure our
commitment to high standards of ethical behaviour.
Our remuneration report is enclosed. This outlines
the Group remuneration policies, Board performance
and the senior executive remuneration policies and
compensation.
outlook
HUB24 currently services over 230 financial advisers from
some of Australia’s leading financial advisory firms. We
have a strong pipeline of opportunity for fUA growth from
existing clients and new clients, including a number of
white label client opportunities.
Our strategy is to position HUB24 as the independent
platform of choice for independent financial advisers,
stockbrokers and accountants. Our investment in HUB24
is aimed at maintaining and extending our platform
capability to deliver broad investment choice. This includes
market-leading managed portfolio functionality, high
quality reporting to advisers and clients and access to
excellent online functionality through the AdviserHub and
investorHub portals.
On behalf of the Directors we wish to thank our
management team and all employees for their
commitment and customer service focus across all
segments during the year. We would also like to thank our
customers and shareholders for their continuing support
for HUB24.
Bruce Higgins
Chairman of Directors
29 August 2013
andrew alcock
Chief Executive Officer
HUB24 ANNUAL REPORT 2013 CHAIRMAN AND CEO REPORT
5
platform
OVERViEW
our Industry
HUB24 operates in a growing sector, in which assets held
on investment platforms are expected to almost double by
2026 according to the Rice Warner ‘Personal investments
market Projections Report 2012’. Our capability is well
positioned given the report specifically concludes that
‘Wrap platforms, including separately managed accounts
and model portfolio products, will be the fastest growing
segment’ of the personal investments market.
Additionally, the progressive rise in employer
Superannuation Guarantee (SG) contributions from 9%
to 12% commencing from 1 July 2013, will underpin
the growth of superannuation in Australia. much of this
growth is in the SmSf sector where investment platforms,
especially those that offer a broad choice of investment
and insurance options, are well positioned to participate in
this growth.
According to the December 2012 Platform Benchmarking
Report published by investment Trends, there is currently
around $260 billion held in retail investment platforms.
Of this, 29% is held in investor Directed Portfolio Services
(iDPS), with 37% in superannuation and 34% in pension
accounts. The report highlighted there was an estimated
$100 million invested in platform development across the
industry in 2012 at an average of $8 million per platform
owner. HUB24 invested less than 35% of the industry
average whilst winning the award from investment Trends
for most New Developments.
about HuB24
HUB24 Limited is a financial services company listed on
the Australian Stock Exchange. The business is focussed
on the delivery of the HUB24 platform which supports the
achievement of superior superannuation and investment
outcomes for investors by offering choice, flexibility and
transparency. HUB24 provides a next-generation service
with state-of-the-art portfolio management, transaction,
and reporting solutions for licensees, financial advisers,
accountants, stockbrokers, and investment managers.
HUB24 was established by a team with extensive
experience in building leading technology solutions for the
financial services industry. As specialists in proprietary
platform technology, we are able to rapidly respond to
demand and provide customised solutions for clients
including the delivery of white label solutions for our larger
corporate customers.
HUB24 operates independently and is not owned by, or
aligned to any bank, fund manager or institution. it does
not operate its own financial advice channel.
The business is focussed on the delivery of the HUB24
platform which supports the achievement of superior
superannuation and investment outcomes for investors
by offering choice, flexibility and transparency
6
PLATFORM OVERVIEW HUB24 ANNUAL REPORT 2013
platform Heritage
HUB24 commenced development of the platform in 2007 and launched in 2009. Since then we have continued to add products,
features and investments at a rapid rate. The following is a brief history of key milestones in the platform’s development.
2007
2009
HUB24 was incorporated and platform
development commenced
Investment platform launched as Managed
Discretionary Account service
Platform offered access to Separately Managed
Accounts and Exchange Traded Funds
2010
2011
Added listed securities, managed funds, term
deposits and margin lending
Platform relaunched as an Investor
Directed Portfolio Service
Added online applications, model portfolios and
an iPhone app for advisers and investors
Added online corporate actions, regular
savings and payments, exchange traded
options and white label branding capability
2012
2013
HUB24 superannuation fund launched
New listed security trading capability
Group and retail insurance options added
Further expansion of insurance providers
New managed portfolio capability added
Added dealer group margin capability
for white label arrangements
Expanded range of term deposit
and margin lending providers
Adviser interface completely rebuilt allowing
easier access to client and portfolio information
Improved report and online application format
New email notification functionality
HUB24 ANNUAL REPORT 2013 PLATFORM OVERVIEW
7
platform
OVERViEW
Key Strengths
managed portfolio Heritage
HUB24’s market-leading managed portfolio capability
enables dealer groups to offer advisers and their clients
fully implemented Seperately managed Accounts
(SmAs) and managed portfolios comprising a range of
asset types and classes. This efficient implementation
model provides benefits for advisers and enables dealer
groups to participate in the value chain as a product
manufacturer. investors using managed portfolios
are able to benefit from professional investment
management in a structure with potentially lower fees
and taxes, transparency of underlying holdings and online
tax optimisation tools.
Independence
Our independence ensures we are able to objectively
offer the best choice of service providers for advisers and
investors. This includes a range of term deposits, margin
lenders and insurers. Our non-reliance on in-house
products to generate revenue is a key differentiation point
compared to institutionally owned platforms where ‘house’
brand investment and insurance products are widely
promoted.
The fofA reforms have created a new regulatory
environment that is removing conflicted remuneration
and hidden fees. HUB24 is at the forefront of platforms in
delivering a compliant technology solution that enables
licensees to deliver more comprehensive services to
clients and be rewarded for those services by participating
more widely in the value chain should they wish to do so.
communications, which enable HUB24 to deliver efficient
and cost-effective services to all clients.
A key channel opportunity for HUB24 is the ability to brand
or ‘white label’ our platform for licensees with enough
scale who want to tailor their platform solution. This is a
streamlined process for HUB24, and already accounts for
more than 50% of total fUA with expectation for strong
growth in coming years.
technology
Industry recognition
HUB24 has purpose-built a proprietary technology
platform in-house which allows us to have full control over
development priorities and provide tailored solutions for
our clients. We are not constrained by external vendors,
and are recognised for delivering platform enhancements
at a more rapid rate than most, if not all, of our
competitors, providing a significant competitive advantage.
Our clients, including advisers, fund managers and
investors enjoy real-time access to investment and
account information through 24/7 web access. Clients
can also access account information through a dedicated
iPhone app. Our technology incorporates electronic
account opening, trading, reports, statements and
HUB24 was awarded the most New Developments
Award by market researcher investment Trends, in
their December 2012 Platform Benchmarking Report.*
This award recognises HUB24’s rapid advancements in
platform functionality and our position as an established
alternative to major bank-owned platforms.
HUB24 improved its rating by 23% in the 12 months
to December 2012, with the next best platform
improving 9%. This significant increase reflects our
investment in the superannuation product, retail and
group insurance options and direct market access
share trading. The platform was also ranked third in
the Product category and seventh overall out of 25
8
PLATFORM OVERVIEW HUB24 ANNUAL REPORT 2013
*Results from investment Trends 2012 Platform Report, based on a
face-to-face research and audit methodology.
leading platforms. This is a remarkable achievement
given the short space of time HUB24 has been operating
and the success of our R&D program in comparison to
other established platforms.
our Success
The quality of the HUB24 platform and related services,
the speed with which we develop new features, the unique
managed portfolio functionality and our independence from
institutions have contributed to the strong momentum that
the platform is currently experiencing. month-on-month
growth in fUA has averaged 9.25% for the year ended 30
June 2013, with a strong pipeline of new clients promising
further growth momentum during fY2014.
The number of advisers using the platform has increased
by 75% since July 2012, with average fUA per adviser
increasing by 64% over that time. Given that many of the
advisers are relatively new to using the HUB24 platform,
we expect significant upside in both the penetration of the
platform into the advisers’ businesses, increasing average
fUA per adviser, and the recruitment of new advisers,
producing increasing momentum in fUA growth.
Since winning the most New Developments Award in 2012,
we have continued to improve the platform with better
client reporting, a new email notification system, additional
insurance options, a group insurance quote calculator
and other features. We will continue to invest in platform
improvements during fY2014 to maintain our market
leading technology position, believing it will drive adoption
by advisers as their preferred platform.
HUB24 won a number of new dealer clients throughout
2013 as well as recently winning an initiative to deliver a
white label platform for interPrac, a licensee with over 90
representatives offering a range of services that includes
financial planning to the almost 9000 National Tax and
Accountants’ Association (NTAA) members.
r&D Incentive
HUB24 received an R&D tax incentive payment from
Ausindustry of $1.1 million in July for the 2012 financial
year related to the significant investment made in the
ongoing development of the HUB24 investment and
superannuation platform. The company continues to invest
in the development of new features and will apply for
further payments based on eligibility in the coming year.
We will continue to invest in platform improvements
during fY2014 to maintain our market-leading
technology position, believing it will drive adoption by
advisers as their preferred platform
HUB24 ANNUAL REPORT 2013 PLATFORM OVERVIEW
9
HuB24
DiRECTORS
the HuB24 Board is committed to delivering the leading investment platform solution to
our client. each Director contributes their own relevant expertise to guide the business to
profitability and success, with a strong focus on corporate governance.
Bruce Higgins B Eng CP Eng, mBA, fAiCD
Chairman and non-executive Director
Vaughan Webber B Ec
non-executive Director
Bruce Higgins has extensive experience as a company
director and chief executive both within Australia and
internationally and has mentored and directed profitable
rapid growth businesses for the past 25 years. Bruce has
previous roles relevant to the activities of the company as
director of technology and software solutions businesses
with both software engineering and e-learning businesses,
start-up and successful restructure and commercialisation
of listed companies. Bruce has prior experience as
Chairman and Non-Executive Director on a variety of listed
companies over the past 11 years and has also served in
CEO or executive roles with Raytheon and Honeywell.
Vaughan Webber is an experienced finance professional
with a background in chartered accounting at a major
international accountancy firm. Recently, Vaughan has
had extensive financial public markets experience, having
spent 10 years in corporate finance at a leading Australian
stockbroker focussing on creating, funding and executing
strategies for mid to small cap ASX listed companies.
Vaughan also has experience as a director with ASX
listed public companies and is currently Non-Executive
Chairman of Wentworth Holdings Limited and Non-
Executive Director of Anchor Resources Limited. Vaughan
has a Bachelor Degree in Economics.
Vaughan was appointed to the company’s Board on 19
October 2012 and is the Chairman of the Audit, Risk and
Compliance Committee.
Bruce is currently Chairman and Non-Executive Director
of Legend Corporation Limited and Chairman and Non-
Executive Director of Q Technology consolidated entity. Bruce
was awarded the Ernst & Young Entrepreneur of the Year
award in Southern California in 2005 and has a Bachelor
Degree in Electronic Engineering and an mBA in Technology
management. He is a Chartered Professional Engineer and
fellow of the Australian institute of Company Directors.
Bruce was appointed as Chairman of the Board on
19 October 2012.
Previous listed company directorships held in the last
three years:
• Chairman of TSV Holdings Limited (appointed July 2007,
resigned August 2010)
• Global Heath Limited (appointed January 2010, resigned
November 2010)
• feore Limted (appointed August 2011, resigned
August 2013).
Each Director contributes their own relevant expertise
to guide the business to profitability and success,
with a strong focus on corporate governance
10 HUB24 DIRECTORS HUB24 ANNUAL REPORT 2013
Hugh robertson
executive Director
Ian litster B Sc (Hons)
non-executive Director
Hugh Robertson has over 25 years experience in the
financial services industry, commencing his stockbroking
career in 1983. During that time he was involved in a
number of successful stockbroking and equity capital
markets businesses, including falkiners Stockbroking
and most recently Bell Potter Securities.
Hugh is currently a Non-Executive Director at
Wentworth Holdings Limited and Rattoon Limited.
Previously, Hugh has also held directorships with NSX
Ltd, OAmPS Ltd, Catalyst Recruitment Ltd and Bell
Potter Ltd (pre-iPO).
Hugh was appointed to the Board on 20 April 2011.
ian Litster has over 10 years experience in designing
and developing software for the financial services
industries, particularly in the area of financial planning.
He has been the founder of the companies behind the
VisiPlan and COiN software packages, two of the leading
financial planning systems in Australia. His main
areas of expertise are the management of information
technology organisations and software development.
ian has a Bachelor Degree in Science (Honours in
mathematics).
left to right:
Ian litster
Bruce Higgins
Hugh robertson
Vaughan Webber
HuB24
EXECUTiVE TEAm
our HuB24 executive team has broad experience in australian financial services and
particularly investment platforms. as business leaders in their field, they are recognised
for their extensive accomplishments. Collectively, they are well positioned to lead the
HuB24 business into the future.
andrew alcock
Chief executive officer
Andrew has over 20 years experience across wealth
management encompassing advice, platforms, industry
superannuation, insurance and information technology.
Andrew was formerly Chief Operating Officer of Genesys
Wealth Advisers and Head of the Genesys Equity Program,
where he was a director of over 20 financial planning
practices across Australia. His previous executive
roles include General manager for Asteron’s wealth
management business, where he was responsible for a
broad range of superannuation and investment solutions
for investors, employers, licensees and advisers. Andrew’s
extensive financial services experience solidly underpins
his role as CEO of HUB24 Limited.
matthew Haes
Chief financial officer and
Company Secretary
matthew’s financial services experience spans over
16 years in senior finance roles, covering wealth
management, securitisation, capital markets, stockbroking
and funds management. He spent eight years as finance
manager and Company Secretary at Centric Wealth
Limited where he developed the finance function and
integrated businesses resulting from the company’s
merger and acquisition activities. matthew is a Director
of HUB24’s subsidiary companies, a member of the
executive committee and serves the committees of the
Board. Outside HUB24 he is a non-executive director and
chairman of the Audit & Risk committee of an APRA-
regulated Authorised Deposit-taking institution (ADi).
Jason entwistle
Director Strategic Development
Jason Entwistle has over 20 years experience in financial
services, establishing and managing a number of
successful wealth management-related businesses.
in 1990, he was part of a small team that created the
successful Navigator master trust (now owned by National
Australia Bank). Jason consulted extensively on portfolio
administrative platforms to over 20 leading financial
institutions throughout Asia Pacific and the Uk. He was
the co-founder of Avanteos, which was launched in 2001 as
Australia’s first online wrap platform and later purchased
by the Commonwealth Bank of Australia.
HUB24, our investment and superannuation platform,
was built by some of Australia’s most respected and
successful pioneers in delivering market-leading
financial solutions
12
HUB24 EXECUTIVE TEAM HUB24 ANNUAL REPORT 2013
Wes Gillett
Head of product and Distribution
Joseph Gioffre
Head of operations
Wes has been in the financial services industry for over
24 years, managing sales and marketing teams for several
prominent organisations such as Asgard, Skandia, iNG
and kPmG. His experience spans administration, product,
investments, advice and technology, and he has managed
multi-million dollar client relationships for over 15 years.
Wes has chaired platform investment committees and
been involved in product development and industry forums.
He also brings substantial insight into the structure and
drivers within the platform, superannuation and advice
industry and their relationship to all participants, from
manufacturers to end customers.
Joseph Gioffre has over 13 years of operational and
client service management experience in financial
services, managing operational teams at Colonial first
State, Challenger and Ord minnett. Joseph’s experience
encompasses asset and investment management, broking,
platform and reporting services over a wide spectrum of
financial products and asset classes. Joseph is a Director
of HUB24 Custodial Services, an ASiC Responsible
manager for HUB24’s Australian financial Services
Licence, and a member of the company’s Compliance
and Risk and investment management committees. He
is also a senior associate at finsia and a member of the
Australian institute of management.
left to right:
matthew Haes
Joseph Gioffre
andrew alcock
Jason entwistle
Wes Gillett
DIreCtorS’
REPORT
Your Directors present their report together with the
financial statements, on the consolidated entity (referred
to hereafter as the ‘consolidated entity’ or ‘HUB24
consolidated entity’) consisting of HUB24 Limited (referred
to hereafter as the ‘company’) and the entities it controlled
for the year ended 30 June 2013.
Directors
The names and details of the company’s Directors in office
during the financial year and until the date of this report
are as follows.
Bruce Higgins
B Eng CP Eng, MBA, FAICD
Chairman and Non-Executive Director
Bruce Higgins has extensive experience as a company
director and chief executive both within Australia and
internationally and has mentored and directed profitable
rapid growth businesses for the past 25 years. Bruce has
previous roles relevant to the activities of the company as
director of technology and software solutions businesses
with both software engineering and e-learning businesses,
start-up and successful restructure and commercialisation
of listed companies. Bruce has prior experience as
Chairman and Non-Executive Director on a variety of listed
companies over the past 11 years and has also served in
CEO or executive roles with Raytheon and Honeywell.
Bruce is currently Chairman and Non-Executive Director
of Legend Corporation Limited and Chairman and Non-
Executive Director of Q Technology consolidated entity. Bruce
was awarded the Ernst & Young Entrepreneur of the Year
award in Southern California in 2005 and has a Bachelor
Degree in Electronic Engineering and an mBA in Technology
management. He is a Chartered Professional Engineer and
fellow of the Australian institute of Company Directors.
Bruce was appointed as Chairman of the Board on 19
October 2012.
Previous listed company directorships held in the last
three years:
• Chairman of TSV Holdings Limited (appointed July 2007,
resigned August 2010)
• Global Heath Limited (appointed January 2010, resigned
November 2010)
• feore Limted (appointed August 2011, resigned
August 2013).
Vaughan Webber
B Ec
Non-Executive Director
Vaughan Webber is an experienced finance professional
with a background in chartered accounting at a major
international accountancy firm. Recently, Vaughan has
had extensive financial public markets experience, having
spent 10 years in corporate finance at a leading Australian
stockbroker focussing on creating, funding and executing
strategies for mid to small cap ASX listed companies.
Vaughan also has experience as a director with ASX
listed public companies and is currently Non-Executive
Chairman of Wentworth Holdings Limited and Non-
Executive Director of Anchor Resources Limited. Vaughan
has a Bachelor Degree in Economics.
Vaughan was appointed to the company’s Board on
19 October 2012 and is the Chairman of the Audit, Risk
and Compliance Committee.
Hugh robertson
Executive Director
Hugh Robertson has over 25 years experience in the
financial services industry, commencing his stockbroking
career in 1983. During that time he has been involved in
a number of successful stockbroking and equity capital
markets businesses, including falkiners Stockbroking and
most recently Bell Potter Securities.
Hugh is currently a Non-Executive Director at
Wentworth Holdings Limited and Rattoon Limited.
Previously, Hugh has also held directorships with NSX
Ltd, OAmPS Ltd, Catalyst Recruitment Ltd and Bell
Potter Ltd (pre-iPO).
Hugh was appointed to the Board on 20 April 2011.
Ian litster
B Sc (Hons)
Non-Executive Director
ian Litster has over 10 years experience in designing
and developing software for the financial services
industries, particularly in the area of financial planning.
He has been the founder of the companies behind the
VisiPlan and COiN software packages, two of the leading
financial planning systems in Australia. His main areas of
expertise are the management of information technology
organisations and software development. ian has a
Bachelor Degree in Science (Honours in mathematics).
14 DIRECTORS’ REPORT HUB24 ANNUAL REPORT 2013
ian was appointed to the Board on 25 September 2012 and
is Chair of the Remuneration and Nomination Committee.
matthew was appointed Company Secretary on
10 September 2012.
The names and details of the company’s Directors who
held office during the financial year but were not company
directors at the date of this report are as follows.
The name and details of the Company Secretary in office
during the financial year but not at the date of this report is
as follows:
• Otto Buttula (Non-Executive Chairman) –
resigned 25 July 2012
• Andrea Steele (Company Secretary) –
resigned 11 September 2012
• Jason Entwistle (Acting Chairman) –
resigned 19 October 2012
• Robert Bishop (Non-Executive Director) –
resigned 25 July 2012
• Darren Pettiona (Non-Executive Director) –
resigned 26 September 2012
• David Spessott (Executive Director) –
resigned 26 September 2012
• Robert Spano (Non-Executive Director) –
resigned 19 October 2012
Directors’ Interests
As at the date of this report, the interests of the Directors
in the shares of the company were:
Director
Number of ordinary shares
Bruce Higgins
Hugh Robertson
ian Litster
Vaughan Webber
410,000
161,500
3,588,751
Nil
Company Secretary
The name and details of the Company Secretary in office
during the financial year and at the date of this report is
as follows:
matthew Haes
B Ec (Syd) ACA ACSA
matthew Haes is the Chief financial Officer and Company
Secretary for HUB24 Limited.
matthew’s financial services experience spans over
16 years in senior finance roles, covering wealth
management, securitisation, capital markets, stockbroking
and funds management. He spent eight years as finance
manager and Company Secretary at Centric Wealth
Limited where he developed the finance function and
integrated businesses resulting from the company’s
merger and acquisition activities. matthew is a Director
of HUB24’s subsidiary companies, a member of the
executive committee and serves the committees of the
Board. Outside HUB24 he is a non-executive director and
chairman of the Audit & Risk committee of an APRA-
regulated Authorised Deposit-taking institution (ADi).
matthew has a Bachelor of Economics, and is a Chartered
Accountant and Chartered Secretary.
Consolidated entity overview
The consolidated entity operates the HUB24 investment
and superannuation platform and, until the 2013 financial
year, the investorfirst Securities stockbroking business.
The investorfirst Securities stockbroking business offered
investment advice, investment research, trade execution and
clearing and corporate finance activities until february 2013.
The HUB24 investment and superannuation platform
is recognised as a leading independent portfolio
administration service that provides financial advisers with
the capability to offer their clients access to a wide range
of investment options including market-leading managed
portfolio functionality, efficient and cost effective trading,
and comprehensive reporting, for all types of investors –
individuals, companies, trusts or self-managed super funds.
The company was established in 2007 by a team with
a very strong track record of delivering market leading
solutions in the financial services industry.
principal activities
The principal activities during the year of the consolidated
entity were the provision of investment and superannuation
portfolio administration services and stockbroking activities.
HUB24 ANNUAL REPORT 2013 DIRECTORS’ REPORT
15
DIreCtorS’
REPORT
A decision was made by the Board to divest the
stockbroking business in December 2012 which was
transferred to Wilsons HTm in february 2013.
The sole activity provided by the consolidated entity
from march 2013 is the provision of its investment and
superannuation portfolio administration service.
Capital raisings
The company conducted two capital raisings during the period.
The first capital raising was completed in August 2012 to
meet the capital expenditure requirements of the HUB24
platform, fund the deferred consideration commitments of
the marketsplus acquisition, fund operating expenses for
both the stockbroking operations to february 2013 and the
HUB24 platform during the year and meet the regulatory
capital requirements of the business as an ASX market
participant and iDPS Operator for the HUB24 platform.
A rights issue seeking to raise a total of $10.298 million
was initiated in July 2012, with a total of $8.396 million
raised through the rights issue, shortfall placement and
a further placement.
A consolidation of the company’s capital (40 to 1) was
undertaken on 11 December 2012 after being approved at
the company’s Annual General meeting.
The second capital raising, in march 2013, raised
$4.653 million through the placement of approximately
25% of the company’s share capital to sophisticated and
professional investors at $0.60 per share.
reconciliation of results for
Continuing and Discontinued
operations
The consolidated entity recorded a net loss after income
tax for the year ended 30 June 2013 of $9.783 million
(2012: $30.516 million).
The loss after income tax from the continuing operation
(HUB24 Platform) for the year ended 30 June 2013
was $5.798 million or $4.769 million when adjusted for
depreciation, amortisation and impairment expenses
(2012: $23.098 million, or $5.928 million when adjusted
for depreciation, amortisation and impairment
expenses).
The loss after income tax from the discontinued operation
(Stockbroking) for the year ended 30 June 2013 was
$3.985 million (2012: $7.418 million).
included in this result were the following significant items:
The HUB24 investment and superannuation platform
provides financial advisers with the capability to offer
their clients access to a wide range of investment
options including market leading managed portfolio
functionality, efficient and cost effective trading,
and comprehensive reporting
16 DIRECTORS’ REPORT HUB24 ANNUAL REPORT 2013
Continuing operations
• An increase in operational revenue from $0.226 million
to $1.228 million driven by an increase in client fUA from
$121.694 million to $384.568 million over the financial Year
to 30 June 2013. This increase came from $114.146 million
in superannuation and $248.729 million in iDPS
• Amortisation of $0.918 million associated with
the platform intangible asset and depreciation of
$0.111 million associated with office equipment
• The capitalisation of platform development costs of
$0.927 million for additional product features to support
additional revenue streams
• An R&D incentive of $1.173 million (credit to income tax
expense) relating to the ongoing investment in platform
development.
Discontinued operations
• Loss on disposal of the stockbroking business of
$2.201 million.
The company has analysed its results to attribute revenue
and expenses to opening fUA (Existing Operation) and to
fUA growth (Growth) during the year for each of financial
years 2013 and 2012.
2013
Financial
Year
FUA
Platform revenue
Platform direct costs
Gross margin
Operating expenses
EBITDA
EBiTDA % of fUA
Depreciation, amortisation and impairment
Capitalised development
EBIT
interest
Loss before income tax
Tax (expense)/benefit
Loss after income tax from continuing operations
Loss after income tax from discontinued operations
Loss after income tax
Existing
operation
$
Growth
$
122m
263m
Total
FY13
$
385m
346,800
881,566
1,228,366
2,206,481
2,966,569
5,173,050
(1,859,681)
(2,085,003)
(3,944,684)
3,503,170
-
3,503,170
(5,362,851)
(2,085,003)
(7,447,854)
(4.4%)
(0.8%)
(1.9%)
(1,029,775)
927,617
(7,550,011)
577,771
(6,972,240)
1,173,832
(5,798,408)
(3,984,560)
(9,782,968)
HUB24 ANNUAL REPORT 2013 DIRECTORS’ REPORT
17
DIreCtorS’
REPORT
Composition of Continuing Operations
2012
Financial
Year
FUA
Platform revenue
Platform direct costs
Gross margin
Operating expenses
EBITDA
EBiTDA % of fUA
Depreciation, amortisation and impairment
Capitalised development
EBIT
interest
Loss before income tax
Tax (expense)/benefit
Loss after income tax from continuing operations
Loss after income tax from discontinued operations
Loss after income tax
Existing
operation
$
Growth
$
73m
49m
Total
FY12
$
122m
135,720
90,541
226,261
1,992,298
2,548,281
4,540,579
(1,856,578)
(2,457,740)
(4,314,318)
3,692,473
-
3,692,473
(5,549,051)
(2,457,740)
(8,006,791)
(7.6%)
(5.0%)
(6.6%)
(17,169,826)
2,747,928
(22,428,689)
626,847
(21,801,842)
(1,295,877)
(23,097,719)
(7,417,948)
(30,515,667)
Platform revenue has increased substantially in fY13 with
$20 million average monthly growth in fUA throughout
the year.
Direct fixed costs increased during fY13 with the launch
of superannuation and insurance developments via the
introduction of Trustee and superannuation administration
expenses.
The business has made the conscious decision to
invest in order to accelerate fUA growth so that the
company can bring forward scale benefits of the existing
cost base.
increasing the rate of investment to transition fUA
onto the platform will accelerate the improved financial
performance of the company.
Despite these fixed cost increases in fY13, the
gross margin was maintained and EBiTDA improved
marginally.
We expect further scale benefits in servicing the existing
business in fY14 to continue.
The investment in development in fY12, represented
by capitalised development costs of $2.747 million, has
underpinned the growth in fUA and revenue of $0.8 million
(2012: $0.09 million) during fY13.
review of operations
During the period, after incurring further losses due
to the unexpected continuation of poor performance in
equity markets and the overall challenging business
environment for the small to medium stockbroking
businesses sector, the company’s Board conducted a
strategic review of operations that resulted in a decision
to exit the stockbroking business and focus wholly on the
18 DIRECTORS’ REPORT HUB24 ANNUAL REPORT 2013
further development and commercialisation of the
HUB24 platform.
The decision to exit the stockbroking business was based
on the following factors:
funds Under
Administration
30 June
2013
30 June
2012
Annual
growth
$384.6m $121.7m
216%
• Expected continuing losses of this business
Gross fund inflows
$302.7m
$80.6m
276%
• future capital requirements
• Continuing low trade volumes within the local
broking industry and consolidation within the major
stockbroking firms
• Structural issues, lack of scale and margin
compression
• importance of growing shareholder value and focussing
on the HUB24 business as the major driver of
shareholder value creation.
On 18 December 2012, the company announced the
divestment of the stockbroking business to Wilson HTm.
This transaction resulted in the transfer of a number of
clients, advisers and analysts to Wilson HTm, which was
effected on 8 february 2013.
The company recorded a loss on sale of the stockbroking
business of $2.201 million. This loss includes all costs
associated with the windup of this business such as
contract closures, excess office rental space, vesting of
options and redundancies.
The consolidated entity relinquished its ASX Clear license
and ASX market Participant status on 15 may 2013.
following the successful exit from the stockbroking
business and placement of shares to sophisticated and
professional investors, the Board and management have
focussed on the HUB24 business and on the development
of the senior executive team to lead the platform
business and accelerate the growth in fUA in the
coming years.
HuB24 platform
The company has succeeded in commercialising
the HUB24 platform with fUA as at the end of June
2013 reaching $384 million, representing month
on month growth of 9.25% since 1 July 2012. Solid
growth in fund inflows since the end of the period has
further increased fUA at the date of this report to
$479 million.
HUB24 currently services some of Australia’s leading
independent financial advisory firms. During the year,
white label versions of the HUB24 platform came online
including the Compass HUB24 Super and Compass HUB24
invest products operated by the Sentry Group. We have a
strong pipeline of opportunity for fUA growth from existing
and new clients.
During the period we completed development of the direct
market access share trading functionality, which provides
financial advisers with straight through processing share
trade execution and access to live market data including
share prices and market depth information.
HUB24 Platform – Trend of Monthly Funds
Under Administration
500
450
400
350
300
250
200
150
100
50
0
fua
Jul '11
Sep '11
N ov '11
Jan '12
M ar '12
M ay '12
Jul '12
Sep '12
N ov '12
Jan '13
M ar '13
M ay '13
Jul '13
HUB24 ANNUAL REPORT 2013 DIRECTORS’ REPORT
19
DIreCtorS’
REPORT
Significant Changes in
the State of affairs
likely Developments and
expected results
The consolidated entity divested the stockbroking business
in february 2013. The financial impact of this change is
described in Note 8 to the financial Statements and also
set out above in the Directors’ Report.
There have been no other significant changes in the nature
or state of affairs of the consolidated entity.
further information on likely developments in the operations
of the consolidated entity and the expected results of the
operations have not been included in this financial report
because the Directors believe that the uncertainty of the
rate of growth of fUA, market conditions, underlying market
movements and general business environment do not provide
sufficient certainty to provide a forecast.
Significant events after
the reporting Date
On 29 July 2013 Andrew Alcock commenced employment
with the company in the role of Chief Executive Officer.
On 7 August the company issued the following:
• 980,000 employee share options to employees under
the company’s Employee Share Option Plan approved by
shareholders in 2011
• 31,000 shares to employees under the share
ownership plan.
On 8 August 2013 the company held a General meeting
of shareholders where the following resolutions where
approved:
• The change of name of the company to HUB24 Limited
• To refresh the company’s placement capacity under ASX
Listing Rule 7.1
• To issue 600,000 share options in the company to
Andrew Alcock
• To issue 510,000 share options in the company to
Bruce Higgins
• To issue 480,000 share options in the company to
Jason Entwistle
• To issue 360,000 share options in the company to
Wes Gillett.
Other than the matters disclosed above, no other matter
or circumstance has arisen since 30 June 2013 that
has significantly affected, or may significantly affect the
consolidated entity’s operations, the results of those
operations, or the consolidated entity’s state of affairs in
future financial years.
HUB24 Custodial Services Ltd, a wholly owned subsidiary
of the company, is an Australian financial Services License
(AfSL) holder and is required to meet minimum financial
requirements as an iDPS Operator and its custodial function.
These regulations impose Net Tangible Asset (NTA) and
cashflow projection requirements on the company and
are subject to changes by the Australian Securities and
investments Commission (ASiC) from time to time.
The Directors are aware that changes to the financial
requirements of Regulatory Guide 166 (June 2013),
Class Order 13/760 – AfSL Holders as iDPS operators,
Class Order 13/761 – AfSL holders as providers of
custodial services and associated explanatory statements
and regulatory impact guides may impose additional
requirements for the company to hold NTA in excess of
the current requirements effective in 1 July 2014 by up
to an additional $5 million above the current maximum
requirement of $5 million. The company is seeking
clarification on these requirements from ASiC as these
class orders relate to the consolidated entity’s specific
operations.
environmental regulation
and performance
The consolidated entity’s operations are not subject to
significant environmental regulations under Australian
legislation in relation to the conduct of its operations.
Directors Indemnity
During the 2013 financial year the consolidated entity
paid a premium in respect of a contract, insuring all the
Directors and officers against liability, except wilful breach
of duty, of a nature that is required to be disclosed under
section 300(8) of the Corporations Act 2001. in accordance
with commercial practice, the amount of the premium has
not been disclosed.
20 DIRECTORS’ REPORT HUB24 ANNUAL REPORT 2013
Contingent assets and liabilities
There are no material contingent assets or liabilities of which
the consolidated entity is aware that exist at balance date.
rounding of amounts
The company is a kind referred to in Class Order 98/100,
issued by the ASiC, relating to the ‘rounding off’ of
amounts in the Directors’ and financial reports. Amounts
in these reports have been rounded off in accordance with
that Class Order to the nearest dollar, or in certain cases
to the nearest thousand dollars.
meetings of Directors
The number of meetings of Directors (including meetings
of committees of Directors) held during the year and the
number of meetings attended by each Director was as per
the table below.
remuneration report –
audited
This remuneration report, which has been audited,
outlines the key management personnel remuneration
arrangements for the consolidated entity, in accordance
with the requirements of Section 300A of the Corporations
Act 2001 and its Regulations.
The remuneration report is set out under the following
main headings:
• A – Principles used to determine the nature and amount
of remuneration
• B – Details of remuneration
• C – Service agreements
• D – Share based compensation
• E – Additional information
a. principles used to Determine the nature
and amount of remuneration
for the purposes of this report key management
Personnel (kmP) of the consolidated entity are defined
as those persons having authority and responsibility for
planning, directing and controlling the major activities
of the company and the consolidated entity, directly or
indirectly, including any Director (whether executive or
otherwise) of the company, and includes the five executives
in the company and the consolidated entity receiving the
highest remuneration (where applicable).
Director
Bruce Higgins
ian Litster
Hugh Robertson
Vaughan Webber
Jason Entwistle
Otto Buttula
David Spessot
Robert Bishop
Darren Pettiona
Robert Spano
Board
Meetings
Audit, Risk & Compliance
Committee Meetings
Remuneration &
Nomination Committee
Attended
Held*
Attended
Held*
Attended
Held*
12
13
22
12
13
5
11
2
8
13
12
13
24
12
13
5
11
5
11
13
-
2
-
2
1
-
-
-
-
1
-
2
-
2
1
-
-
-
-
1
2
2
-
2
-
-
-
-
-
-
2
2
-
2
-
-
-
-
-
-
*Number of meetings held during the time the Director held office or was a member of the committee.
HUB24 ANNUAL REPORT 2013 DIRECTORS’ REPORT
21
DIreCtorS’
REPORT
Remuneration Philosophy
The performance of the consolidated entity depends upon
the quality of its Directors and Executives (collectively
hereafter key management Personnel). To prosper, the
consolidated entity must attract, motivate and retain
highly skilled key management Personnel. To this end, the
consolidated entity embodies the following principles in its
remuneration framework:
• focus on sustained growth in shareholder wealth,
consisting of share price growth
• Provide competitive rewards to attract high calibre
individuals
• focus the executive on key drivers of value.
Remuneration and Nomination Committee
The Remuneration and Nomination Committee is
responsible for making recommendations to the Board
on the remuneration arrangements for Non-Executive
Directors and management. The Remuneration and
Nomination Committee assesses the appropriateness
of the nature and amount of remuneration on a periodic
basis by reference to relevant employment market
conditions, with the overall objective of ensuring maximum
stakeholder benefit from the retention of a high performing
Director and management team.
The current members of the Remuneration Committee are
ian Litster (Chair), Bruce Higgins and Vaughan Webber. Their
qualifications and experience are set out earlier in this report.
in reviewing performance, the Remuneration and
Nomination Committee conducts an evaluation based
on specific criteria, including the consolidated entity’s
business performance, whether strategic objectives are
being achieved and the development and performance of
management and personnel.
in determining compensation arrangements, the
Remuneration and Nomination Committee assesses the
appropriateness of the nature and amount of remuneration
of the key management Personnel on a periodic basis by
reference to relevant employment market conditions with
the overall objective of ensuring maximum stakeholder
benefit from the retention of a high quality team.
management Personnel remuneration is separate and
distinct.
Non-Executive Director Remuneration
Objective and Structure
The Board seeks to set aggregate remuneration at a level
which provides the company with the ability to attract and
retain Directors of the highest calibre, whilst incurring a
cost which is acceptable to shareholders.
The amount of fixed remuneration is established for individual
Non-Executive Directors by resolution of the full Board, at its
discretion. The annual aggregate non-executive remuneration
may not exceed the amount fixed by the company in General
meeting for that purpose (currently fixed at a maximum of
$400,000 per annum as approved by shareholders at the
Annual General meeting held on 26 November 2010).
The Remuneration and Nomination Committee may
from time to time receive advice from independent
remuneration consultants to ensure Non-Executive
Directors’ fees and payments are appropriate and in
line with market. The Chairman’s fees are determined
independently to the fees of other non-executive directors
based on comparative roles in the external market.
No additional fees are paid for each Board committee on
which a Director sits, however Directors are also entitled
to be reimbursed for reasonable travel, accommodation
and other expenses incurred as a consequence of their
attendance at Board meetings and otherwise in the
execution of their duties as Directors.
The remuneration of Non-Executive Directors for the financial
years ending 30 June 2013 and 30 June 2012 respectively are
detailed in the Remuneration of key management Personnel
section of this Remuneration Report.
Executive Remuneration
Objective
The consolidated entity aims to reward executives with a
level and mix of remuneration commensurate with their
position and responsibilities to:
• align the interests of executives with those of
shareholders
• link reward with the strategic goals and performance of
Remuneration Structure
the consolidated entity
in accordance with best practice corporate governance,
the structure of Non-Executive Director and other key
• ensure total remuneration is competitive by market
standards.
22 DIRECTORS’ REPORT HUB24 ANNUAL REPORT 2013
Structure
The Remuneration and Nomination Committee may
from time to time receive advice from independent
remuneration consultants to ensure executive
remuneration is appropriate and in line with market.
Remuneration may consist of the following key elements:
• fixed salary
• Cash/equity bonus – Short Term incentive Plan (STiP)
• Long Term incentive Plan (LTiP)
• Share based incentives
of the company, which was established at the Annual
General meeting of the company on 28 November 2011
for the purposes of issuing options over ordinary shares.
Additionally, the Board of Directors may, at their discretion
and with the approval of shareholders, (as required) elect
to remunerate key management Personnel through the
issue of share options outside of this plan.
The terms of the options issued are structured so that
sales restrictions are in force over the options or shares
for two or more years as well as vesting structures
that incorporate share price performance hurdles and
continuing service obligations ensuring alignment with
shareholder value creation.
Fixed Salary
Objective and Structure
The level of fixed remuneration is set in order to provide a
base level of remuneration, which is both appropriate to
the position and is competitive in the market.
fixed salaries are reviewed annually by the Board of
Directors and the process consists of a review of company-
wide business unit and individual performances, relevant
comparative remuneration in the market and internal
and, where appropriate, external advice on policies and
practices. key management Personnel receive their fixed
remuneration in cash.
Cash/Equity Bonus – STIP
Objective and Structure
The objective of the STiP is to reward executives who
are remunerated with fixed remuneration in a manner
that focusses them on achieving personal and business
goals which contribute to the creation of sustained
shareholder value.
STiP payments are granted to executives based upon
specific annual financial and business plan targets being
achieved as determined by the Board.
The STiP facilitates annual cash/equity opportunities that
reflect performance. Details of the STiP bonuses earned
for each executive are detailed below.
Equity Bonus – LTIP
Objective and Structure
Share Based Incentives
Objective
The objective of share based remuneration is to reward
key management Personnel and staff (where applicable)
in a manner that aligns this element of remuneration
with the creation of shareholder value. As such, ordinary
share and share option grants may be made to executive
key management Personnel who are able to influence the
generation of shareholder wealth and thus have an impact
on the company’s performance.
Structure
Share based remuneration to key management Personnel
may be delivered in the form of shares, partly-paid
shares, or grants under the Employee Share Plan or as
share option grants, as the Board recommends in its
discretion, on a case by case basis. Recipients of share
based remuneration may be required to meet vesting or
issue conditions, including length-of-service, and market
and non-market performance based criteria, including
sustained share price targets.
HUB24 Performance and Link to Remuneration
Remuneration of certain individuals is directly linked
to performance of the consolidated entity. A portion of
incentive payments is dependent on defined earnings
targets being met while the remaining portion of
the incentive payments is at the discretion of the
Remuneration and Nomination Committee.
Use of Remuneration Consultants
key management Personnel may be eligible to participate
as recipients in the Employee Share Option Plan (ESOP)
During the financial year ended 30 June 2013 the company
sought guidance from Primary Asset Consultants,
HUB24 ANNUAL REPORT 2013 DIRECTORS’ REPORT
23
DIreCtorS’
REPORT
remuneration and recruitment consultants, to review
the proposed structure of remuneration of the Chief
Executive Officer including fixed Remuneration, Short
Term incentive and Long Term incentive. The guidance
was sought by the Chairman of the Board. Primary Asset
Consultants received a fee of $88,800 for the placement
of the CEO role and no further fee for remuneration
consultant services.
An agreed set of protocols were put in place to ensure that
the remuneration recommendations would be free from
undue influence from key management Personnel. The
Board is satisfied that these protocols were followed and
as such there was no undue influence.
(b) Remuneration
• fixed service fee – a monthly package of $22,500
($270,000 annual equivalent)
• Short Term incentive – a cash bonus of $100,000 to be
assessed by the Board.
Andrew Alcock was appointed to the role of Chief Executive
Officer of the company on 7 may 2013, to commence with
the company on 29 July 2013. The details of mr Alcock’s
service agreement are set out in part C of this report.
Remuneration of Key Management Personnel
Voting and Comments Made at the Company’s 2012
Annual General Meeting
At the 2012 AGm, 98.19% of votes received supported the
adoption of the remuneration report for the year ended
30 June 2012. The company did not receive any specific
feedback at the AGm regarding its remuneration practices.
Details of the nature and amount of each element of
the emolument of key management Personnel of the
consolidated entity for the financial year. key management
Personnel are defined as those persons having authority
and responsibility for planning, directing and controlling
the activities of the company, directly or indirectly,
including any Director (whether executive or otherwise).
B. Details of remuneration
Summary of Key Terms of Chief Executive Officer’s
Employment Agreement
Jason Entwistle was appointed as Acting Chief Executive
Officer on 26 September 2012.
Jason Entwistle’s contractor arrangement was established
by taking into account the ASX Corporate Governance
Council’s Principles of Good Corporate Governance and Best
Practice Recommendations as well as industry practice.
(a) Duration of the Contract
Jason Entwistle was contracted under a continuing service
agreement which expired on 1 August 2013, whereupon he
relinquished his Acting Chief Executive role and commenced
as Director of Strategic Development with the company.
All executives have rolling agreements. The company
may generally terminate the executive’s employment
agreement by providing between one and six months’
written notice depending on the agreement or providing
payment in lieu of the notice period (based on the fixed
component of the executive’s remuneration).
The company may terminate the contract at any time
without notice if serious misconduct has occurred. Where
termination with cause occurs, the executive is only
entitled to that portion of remuneration that is fixed, and
only up to the date of termination. On termination with
cause, any unvested options will immediately be forfeited.
Bonuses paid for the year ended 30 June 2013 are
discretionary and are not dependent on the satisfaction of
a particular performance condition. Specific performance
conditions for bonuses will be implemented for the fY14
financial year.
Our independence ensures we are able to objectively
offer the best choice of service providers for advisers
and investors
24 DIRECTORS’ REPORT HUB24 ANNUAL REPORT 2013
Short
Term
Post
Employment
Share Based
Payments
Salary
and Fees
Cash
Bonus
Termination
Payment
Super-
annuation
Shares Options
Total Performance
Related %
Remuneration of Key Management Personnel
2013
$
Non-Executive Directors
Bruce Higgins1
Vaughan Webber2
Jason Entwistle3
Robert Bishop4
Darren Pettiona5
Robert Spano6
ian Litster7
70,560
40,376
19,383
3,058
9,534
20,000
64,259
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sub-Total Non-Executive Directors
227,170
Executive Directors
Hugh Robertson8*
Otto Buttula9
David Spessot10
Sub-Total Executive Directors
Key Management Personnel
Jason Entwistle3 – Acting Chief
Executive Officer
Wes Gillett11 – Head of Product and
Distribution
778,124
6,815
74,529
859,468
207,581
44,705
Joseph Gioffre – Head of Operations
200,000 30,000
matthew Haes – CfO and Company
Secretary
205,262
Neil Sheather12 – Head of Stockbroking
126,519
Andrea Steele13 – Company Secretary
72,348
-
-
-
Sub-Total Key Management Personnel
856,415 30,000
-
-
-
-
-
-
-
-
-
-
62,500
62,500
-
-
-
-
-
-
-
-
-
-
275
-
-
-
275
-
-
12,332
12,332
-
4,007
18,000
18,473
9,298
4,510
54,288
66,895
-
-
-
-
-
-
-
-
-
-
70,560
40,376
19,383
3,333
9,534
20,000
64,259
227,445
453,540
1,231,664
-
-
6,815
149,361
- 453,540 1,387,840
-
-
-
-
-
-
-
-
-
-
-
207,581
48,712
248,000
223,735
13,668
149,485
-
76,858
13,668
954,371
- 467,208 2,569,656
0%
0%
0%
0%
0%
0%
0%
98%
0%
0%
0%
0%
0%
0%
0%
0%
Total
1,943,053 30,000
62,500
1. Bruce Higgins appointed 19 October 2012
2. Vaughan Webber appointe 19 October 2012
3. Jason Entwistle resigned as Non-Executive Director and appointed
Acting Chief Exective Officer 26 September 2012
4. Robert Bishop resigned from the Board 25 July 2012
5. Darren Pettiona resigned from the Board 26 September 2012
6. Robert Spano resigned from the Board 19 October2012
7.
8. Hugh Robertson currently acts in a Non-Executive Director capacity,
however, is classified as an Executive Director as at 30 June 2013
ian Litster appointed 26 September 2012
9. Otto Buttula resigned from the Board 25 July 2012
10. David Spessot resigned from the Board 26 September 2012
11. Wes Gillett appointed 22 April 2013
12. Neil Sheather departed 6 march 2013
13. Andrea Steele departed 11 September 2012
*in february 2013, Hugh Robertson departed the company as an advisor
with the divestment of the stockbroking business, whilst remaining as a
Director. He remains as an Executive Director for six months, until 8 August
2013, post departure as defined under the Corporations Act 2001.
Hugh Robertson’s salary and fees were paid to his private company as follows:
Corporate advisory and stockbroking services – Hugh Robertson
13,350
Corporate advisory and stockbroking services – Spouse
Director fees
Total
742,595
22,179
778,124
Hugh Robertson has 750,000 options over ordinary shares with an expiry date
of 31 January 2015 and exercise price of $5.20 per options. These options
became fully vested on 8 february 2013 with the divestment of the stockbroking
business resulting in a share based payments expense of $453,540.
HUB24 ANNUAL REPORT 2013 DIRECTORS’ REPORT
25
DIreCtorS’
REPORT
Remuneration of Key Management Personnel
2012
$
Non-Executive Directors
Jason Entwistle
Robert Bishop
kim Hogan1
Darren Pettiona2
Robert Spano
53,304
36,697
15,012
4,384
40,000
Sub-Total Non-Executive Directors
149,397
Executive Directors
Hugh Robertson
Otto Buttula
Darren Pettiona2
David Spessot3
910,065
63,583
131,761
112,738
Sub-Total Executive Directors
1,218,147
Key Management Personnel
Aaron Bull – Head of iT4
mark mansfield – Compliance
manager5
matthew Press – COO Stockbroking
and Operations6
Paul Sarkis – Head of Product7
Neil Sheather – Head of Stockbroking8
Ariel Sivikofsky – CfO and Company
Secretary9
Andrea Steele – Company Secretary
frances Taylor – Product and
Compliance
Therese Taylor – Compliance
and Legal10
123,649
65,656
42,918
117,857
104,852
152,279
192,660
165,138
65,350
Sub-Total Key Management Personnel 1,030,359
Total
2,397,903
Short
Term
Post
Employment
Share Based
Payments
Salary
and Fees
Cash
Bonus
Termination
Payment
Super-
annuation
Shares Options
Total Performance
Related %
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,538
-
11,538
-
-
-
-
-
-
-
-
-
-
11,538
-
3,303
1,351
-
-
4,654
-
-
12,842
10,146
22,988
11,128
5,909
3,515
10,607
9,436
12,844
17,340
14,862
5,882
91,523
119,165
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
53,304
40,000
16,363
4,384
40,000
154,051
0%
0%
0%
0%
0%
76,279
986,344
100%
-
-
63,583
156,141
7,469
130,353
83,748 1,336,421
7,470
142,247
-
-
71,565
46,433
2,421
2,462
130,885
116,750
-
165,123
2,421
1,937
212,421
181,937
-
71,232
16,711 1,138,593
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
- 100,459 2,629,065
1. kim Hogan resigned from the Board 27 October 2011
2. Darren Pettiona resigned as Chief Executive Officer 30 march 2012 and was appointed as Non-Executive Director 17 may 2012
3. David Spessot appointed Chief Executive Officer-Designate 30 march 2012
4. Aaron Bull appointed 1 September 2011
5. mark mansfield appointed 5 January 2012
6. matthew Press resigned 16 September 2011
7. Paul Sarkis appointed 1 November 2011
8. Neil Sheather appointed 7 September 2011
9. Ariel Sivikofsky resigned 15 march 2012
10. Therese Taylor resigned 11 November 2011
26 DIRECTORS’ REPORT HUB24 ANNUAL REPORT 2013
C. Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service
agreements.
The major provisions of the agreements relating to remuneration are set out below. Salaries are for fY 2014 and are
subject to review annually by the Remuneration and Nominations Committee. There are no termination payment benefits
other than the contracted notice periods.
Name
Base Salary
(including
superannuation)
STI2
LTI3
Term of
agreement
Notice period –
either party
Andrew Alcock1 – Chief
Executive Officer
$370,000
100% of
base salary
600,000
options*
Jason Entwistle – Director,
Strategic Development
$300,000
100% of
base salary
480,000
options*
Wes Gillett – Head of Product
and Distribution
$250,700
100% of
base salary
360,000
options*
matthew Haes – Chief financial
Officer and Company Secretary
Joseph Gioffre – Head of
Operations
$226,050
$223,995
Nil
Nil
115,000
options**
80,000
options**
Unspecified –
commenced
29 July 2013
Unspecified –
commenced
1 August 2013
Unspecified –
commenced
19 April 2013
Unspecified –
commenced
26 June 2012
Unspecified –
commenced
3 July 2012
6 months
6 months
6 months
1 month
1 month
1. Andrew Alcock commenced employment 29 July 2013.
2. 50% of STi payable upon achieving financial and business plan targets set by the Board. A further 50% payable upon the achievement of stretch targets
set by the Board.
3. Options for Andrew Alcock, Jason Entwistle and Wes Gillett with two year sale restriction after vesting and exercise with vesting in three annual tranches
no earlier than 12, 24 and 36 months upon achieving share price hurdles.
Options for matthew Haes and Joseph Gioffre with minimum two year sale restriction after vesting and exercise. Vesting no earlier than 12 months from
date of issue subject to achieving share price hurdle.
*Options issued 7 August 2013
**Options issued 8 August 2013
management personnel have no entitlement to termination payments in the event of removal for misconduct.
D. Share Based Compensation
There were no options or shares issued to Directors or
other key management Personnel as part of compensation
during the year ended 30 June 2013. Refer to Note 23 of
the notes to the consolidated financial Report for options
issued to key management Personnel after 30 June 2013.
There are no options over ordinary shares affecting
remuneration of Directors and other key management
Personnel in this financial year. Refer to Note 28 of the
notes to the consolidated financial Report for shares and
options held by key management Personnel.
HUB24 ANNUAL REPORT 2013 DIRECTORS’ REPORT
27
DIreCtorS’
REPORT
e. additional Information
The earnings of the consolidated entity for the five years ended 30 June 2013 are summarised below:
EBiTDA
EBiT
Profit /(Loss) after income tax
2013
$’000
(10,504)
(11,534)
(9,783)
2012
$’000
(12,677)
(29,847)
(30,516)
2011
$’000
(3,464)
(5,235)
(4,451)
The factors that are considered to affect shareholder value are summarised below:
Share price at financial year end
2013
$’000
$0.75
2012
$’000
$0.95
2011
$’000
$2.78
2010
$’000
(1,901)
(2,204)
(1,068)
2010
$’000
$1.58
Basic earnings per share
(0.008)
(0.044)
(0.009)
(0.005)
2009
$’000
(2,330)
(3,536)
(2,010)
2009
$’000
$2.21
(0.02)
This concludes the remuneration report which has
been audited.
Corporate Governance
in recognising the need for the highest standards of
corporate behaviour and accountability, the Directors of
the company support and have substantially adhered to
the principles of corporate governance. The company’s
corporate governance statement is contained in the
following section of this Annual Report.
non-audit Services
Tax, compliance and consulting services of $81,000 were
paid to BDO (2012: $Nil). The Directors are satisfied that
the provision of non-audit services is compatible with the
general standard of independence for auditors as set out in
APES 110 Code of Ethics for Professional Accountants as
they did not involve reviewing or auditing the auditor’s own
work, acting in a management or decision-making capacity
for the consolidated entity, acting as an advocate for the
consolidated entity or jointly sharing rights and rewards.
proceedings on Behalf
of the Company
No person has applied to the Court under section
237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the company, or to intervene in
any proceedings to which the company is a party, for the
purpose of taking responsibility on behalf of the company
for all or part of those proceedings.
No proceedings have been brought or intervened in on
behalf of the company with leave of the Court under
section 237 of the Corporations Act 2001.
auditor Independence
The Directors received an independence Declaration from
the auditors of the company as required under Section
307C of the Corporations Act 2001 that follows on the
next page.
Refer to Note 25: Auditors Remuneration of the financial
statements for details of the remuneration that the
auditors received or are due to receive for the provision of
audit and other services.
Bruce Higgins
Chairman
Sydney, 29 August 2013
28 DIRECTORS’ REPORT HUB24 ANNUAL REPORT 2013
auDItor’S InDepenDenCe
DECLARATiON
HUB24 ANNUAL REPORT 2013 AUDITOR’S INDEPENDENCE DECLARATION
29
Corporate
GOVERNANCE
The Board of Directors of the company is responsible for establishing the corporate governance framework of the
consolidated entity having regard to the ASX Corporate Governance Council (CGC) published guidelines as well as its
corporate governance principles and recommendations. The Board guides and monitors the business and affairs of the
company on behalf of the shareholders by whom they are elected and to whom they are accountable. The table below
summarises the company’s compliance with the CGS’s recommendations:
Recommendation
Comply
Principle 1 – Lay solid foundations for management and oversight
1.1
1.2
1.3
Companies should establish the functions reserved to the Board and those delegated to senior
executives and disclose those functions.
Companies should disclose the process for evaluating the performance of senior executives.
Companies should provide the information indicated in the guide to reporting on Principle 1.
Principle 2 – Structure the Board to add value
2.1
2.2
2.3
2.4
2.5
2.6
A majority of the Board should be independent Directors.
As a result of the restructure of the Board in October 2012, the Board is currently comprised of two
independent non-executive directors and two non-independent non-executive directors.
The Chair should be an independent Director.
The roles of Chair and Chief Executive Officer should not be exercised by the same individual.
The Board should establish a nomination committee.
Companies should disclose the process for evaluating the performance of the Board, its committees and
individual Directors.
Principle 3 – Promote ethical and responsible decision-making
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
3.1
Companies should establish a code of conduct and disclose the code or a summary of the code as to:
Yes
• The practices necessary to maintain confidence in the company’s integrity
• The practices necessary to take into account their legal obligations and the reasonable expectations of
their stakeholders
• The responsibility and accountability of individuals for reporting and investigating reports of unethical
practices.
3.2
Companies should establish a policy concerning diversity and disclose the policy or a summary of that
policy. The policy should include requirements for the board to establish measurable objectives for
achieving gender diversity for the board to assess annually both the objectives and progress in
achieving them.
No
The Company has not established a policy concerning diversity and disclosed the policy or a summary of
that policy. it is the intention of the Company to comply with this principle at a time when the size of the
Company and its activities warrant establishment of a policy.
3.3
Companies should disclose in each annual report the measurable objectives for achieving gender
diversity set by the Board in accordance with the diversity policy and progress towards achieving them.
(Refer to 3.2)
No
30 CORPORATE GOVERNANCE HUB24 ANNUAL REPORT 2013
Recommendation
3.4
Companies should disclose in each annual report the proportion of women employees in the whole
organisation, women in senior executive positions and women on the Board.
Proportion of Women in the whole organisation: 29% (9.4 of 32.4),Women in senior executive positions: 0%
(0 of 5), Women on Board: Nil)
3.5
Companies should provide the information indicated in the Guide to reporting on Principle 3.
Principle 4 – Safeguard integrity in financial reporting
4.1
4.2
4.3
4.4
The Board should establish an audit committee.
The audit committee should be structured so that it:
• Consists only of Non-Executive Directors
• Consists of a majority of independent Directors
• is chaired by an independent chair, who is not Chair of the Board
• Has at least three members.
The ARCC comprises two members which the Board considers to be sufficient given the overall reduction
in Board members to four from seven during the financial year.
The audit committee should have a formal charter.
Companies should provide the information indicated in the Guide to reporting on Principle 4.
Principle 5 – Make timely and balanced disclosure
5.1
Companies should establish written policies designed to ensure compliance with ASX listing rule
disclosure requirements and to ensure accountability at a senior executive level for that compliance and
disclose those policies or a summary of those policies.
5.2
Companies should provide the information indicated in the guide to reporting on Principle 5.
Principle 6 – Respect the rights of shareholders
6.1
Companies should design a communications policy for promoting effective communication with shareholders
and encouraging their participation at general meetings and disclose their policy or a summary of that policy.
6.2
Companies should provide the information indicated in the guide to reporting on Principle 6.
Principle 7 – Recognise and manage risk
7.1
7.2
7.3
Companies should establish policies for the oversight and management of material business risks and
disclose a summary of those policies.
The Board should require management to design and implement the risk management and internal
control system to manage the company's material business risks and report to it on whether those risks
are being managed effectively. The Board should disclose that management has reported to it as to the
effectiveness of the company's management of its material business risks.
The Board should disclose whether it has received assurance from the Chief Executive Officer (or equivalent)
and the Chief financial Officer [or equivalent] that the declaration provided in accordance with section 295A of
the Corporations Act 2001 is founded on a sound system of risk management and internal control and that the
system is operating effectively in all material respects in relation to financial reporting risks.
Comply
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
7.4
Companies should provide the information indicated in the guide to reporting on Principle 7.
Yes
HUB24 ANNUAL REPORT 2013 CORPORATE GOVERNANCE
31
Corporate
GOVERNANCE
Recommendation
Principle 8 – Remunerate fairly and responsibly
8.1
8.2
The Board should establish a remuneration committee.
The remuneration committee should be structured so that it:
• Consists of a majority of independent Directors
• is chaired by an independent Chair
The Remuneration and Nomination Committee is chaired by a non-executive Director who is defined
as non-independent by reason of having a substantial shareholding in the company
• Has at least three members
8.3
Companies should clearly distinguish the structure of Non-Executive Directors remuneration from that
of Executive Directors and senior executives.
8.4
Companies should provide the information indicated in the Guide to reporting on Principle 8
Comply
Yes
Yes
No
Yes
Yes
Yes
Board functions
The Board seeks to identify the expectations of the
shareholders, as well as other regulatory and ethical
expectations and obligations. in addition, the Board is
responsible for identifying areas of significant business
risk and ensuring arrangements are in place to adequately
manage those risks.
To ensure that the Board is well equipped to discharge
its responsibilities it has established guidelines for the
nomination and selection of Directors and for the operation
of the Board. The responsibility for the operation and
administration of the consolidated entity is delegated, by
the Board, to the Chief Executive Officer and the Executive
management Team. The Board ensures that this team is
appropriately qualified and experienced to discharge their
responsibilities and has in place procedures to assess
the performance of the Chief Executive Officer and the
executive management team.
Whilst at all times the Board retains full responsibility for
guiding and monitoring the consolidated entity, in discharging
its stewardship it makes use of sub-committees. Specialist
committees are able to focus on a particular responsibility
and provide informed feedback to the Board.
To this end the Board has established an Audit, Risk and
Compliance Committee, chaired by Vaughan Webber, an
independent Director.
The Board is responsible for ensuring that management’s
objectives and activities are aligned with the expectations
and risk identified by the Board. The Board has a number
of mechanisms in place to ensure this is achieved
including:
• Board approval of a strategic plan designed to meet
stakeholders’ needs and manage business risk
• Ongoing development of the strategic plan and
approving initiatives and strategies designed to ensure
the continued growth and success of the company
• Development of budgets by management and
monitoring progress against budget - via the
establishment and reporting of both financial and non
financial key performance indicators.
Other functions reserved to the Board include:
• Approval of the annual and half-yearly financial reports
• Approving and monitoring the progress of major capital
expenditure, capital management, and acquisitions and
divestitures
• Ensuring that any significant risks that arise are
identified, assessed, appropriately managed and
monitored
• Reporting to shareholders.
32 CORPORATE GOVERNANCE HUB24 ANNUAL REPORT 2013
Structure of the Board
The skills, experience and expertise relevant to the
position of Director held by each Director in office at the
date of the annual report are included in the Directors’
Report. Directors of the company are considered to be
independent when they are independent of management
and free from any business or other relationship that
could materially interfere with (or could reasonably be
perceived to materially interfere with), the exercise of
their unfettered and independent judgement.
in the context of Director independence, ‘materiality’
is considered from both the consolidated entity and
individual Director perspective. The determination of
materiality requires consideration of both quantitative
and qualitative elements. An item is presumed to be
quantitatively immaterial if it is equal to or less than
5% of the appropriate base amount. it is presumed to
be material (unless there is qualitative evidence to the
contrary) if it is equal to or greater than 10% of the
appropriate base amount.
Qualitative factors considered include whether a
relationship is strategically important, the competitive
landscape, the nature of the relationship and the
contractual or other arrangements governing it and other
factors that point to the actual ability of the Director in
question to shape the direction of the consolidated entity.
in accordance with the definition of independence above,
and the materiality thresholds set, the following Directors
of HUB24 are all considered to be independent:
Bruce Higgins
Non-Executive Director and Chairman
(appointed 19 October 2012)
Vaughan Webber
Non-Executive Director
(appointed 19 October 2012)
There are procedures in place, agreed by the Board, to
enable Directors in furtherance of their duties to seek
independent professional advice at the company’s expense.
performance
The performance of the Board and key executives is
reviewed regularly against both measurable and qualitative
indicators. The Board will conduct self performance
evaluations that involve an assessment of each Board
member’s and key executive’s performance against
specific and measurable qualitative and quantitative
performance criteria.
The performance criteria against which Directors and
executives are assessed are aligned with the financial and
non-financial objectives of the company.
Due to the restructure of the consolidated entity and
changes in the HUB24 board and executive management
team, no formal review of the skills and performance has
been undertaken during the financial year ended 30 June
2013. The following will be addressed during the 2014
financial year:
• How gender diversity is achieved and when to introduce
a formal policy
• Review of the performance of the Board members
• Performance of the newly appointed executive
management team.
remuneration and nomination
Committee
The primary function of the Remuneration and Nomination
Committee is to assist the Board of Directors of HUB24
Limited in fulfilling its oversight responsibilities to
shareholders by:
• Assisting the Board to develop a remuneration strategy
and policy that:
1. Attracts and retains talent
2. motivates the CEO and direct reports
3. Links remuneration with performance and the
creation of value for shareholders
4. is appropriate compared to the market practice.
• Recommending the appropriate size and composition of
the Board
• Developing an appropriate criteria for Board
membership
• making proposals on the remuneration framework for
non-executive Directors
• making recommendations on the levels of remuneration
for the CEO and CEO’s direct reports
• Overseeing the design of equity based incentive plans
• Reviewing annual incentives of the CEO and direct
reports
HUB24 ANNUAL REPORT 2013 CORPORATE GOVERNANCE
33
Corporate
GOVERNANCE
• Reviewing the company’s objectives in achieving its
diversity objectives
• Overseeing compliance with applicable legal and
regulatory requirements associated with remuneration
matters
• Considering the circumstances in which external
remuneration consultants may be sought.
The company is committed to the principle that its
Remuneration and Nomination Committee should be of
sufficient size, independence and technical expertise to
discharge its mandate effectively.
The Committee shall be comprised of:
• At least three members
The minutes shall be circulated and approved by the
Remuneration and Nomination Committee members, and
included in the papers for the next full Board meeting after
each Remuneration and Nomination Committee meeting.
reporting requirements
The Remuneration and Nominations Committee is
responsible for:
• Reviewing and recommending to the Board for
approval the remuneration report to be included in the
company’s annual report and overseeing the process in
support of its preparation
• Reporting to the Board, including recommendations on
any specific decisions or actions the board should consider
• All members of the Committee shall be non-executive
• Ensuring that shareholder approval is sought for
Directors
• A majority of independent Non-Executive Directors.
‘independence’ for these purposes will be assessed by
reference to criteria approved by the Board.
The Chairperson of the Remuneration and Nomination
Committee will be appointed by the Board. The
Chairperson must be a Non-Executive Director and may
not hold the position of the Chairperson of the Board.
The Chairperson of the Committee shall be appointed
annually.
Should the Chairperson of the Remuneration and
Nomination Committee be absent from a meeting and no
acting Chairperson has been appointed, the members of
the Committee present at the meeting have authority to
choose one of their number to be Chairperson for that
particular meeting.
meetings and Quorum
The Remuneration and Nomination Committee will meet
at least once per year and at such other times as required.
in general, the CEO, Company Secretary and CfO are
invited to attend the Remuneration Committee meetings. A
quorum of any meeting will be two members.
minutes of meetings shall be taken by the Company
Secretary or their delegate. The agenda and supporting
documentation will be circulated to the Remuneration
Committee members within a reasonable period in
advance of each meeting.
remuneration matters which require it eg shares to
executive Directors.
Charter and performance review
The Remuneration and Nomination Committee Charter
is reviewed and updated at least annually and changes
required should be recommended to the Board and
Remuneration and Nomination Committee for approval.
The Committee reviews its own performance annually.
audit, risk and Compliance
Committee (arCC)
purpose
The primary function of the ARCC is to assist the Board
of Directors of the company in fulfilling its oversight
responsibilities to shareholders by reviewing the:
• integrity of the financial statements of the consolidated
entity, including:
1. Reviewing and reporting to the Board on the half
yearly and annual reports and financial statements of
the company and associated entities
2. monitoring and reviewing the reliability of financial
reporting
3. monitoring and reviewing mandatory statutory
requirements
34 CORPORATE GOVERNANCE HUB24 ANNUAL REPORT 2013
• External auditor’s qualifications, performance and
independence, including:
1. Nominating the external auditor
2. Reviewing the adequacy, scope and quality of the
annual statutory audit and half yearly statutory
review
• management of financial and operational risk, including
a review of the:
1. Effectiveness of the consolidated entity’s internal
control systems
2. Business Continuity and Risk Plan and Disaster
Recovery Plan
3. Consolidated entity’s insurance policy and coverage
• Consolidated entity’s compliance with legal and
regulatory requirements:
1. Occupational Health and Safety
2. AfS Licence conditions.
Composition
The company is committed to the principle that its ARCC
should be of sufficient size, independence and technical
expertise to discharge its mandate effectively.
The ARCC shall be comprised of two or more Directors,
whom shall be Non-Executive Directors, free from any
business or other relationship that would materially
interfere with their exercise of duties as a member of the
ARCC. The Chairman of the ARCC will be an independent
Director and not the Chairman of the main holding entity,
HUB24 Limited.
All members of the ARCC shall have a working familiarity
with basic finance and accounting practices, and at
least one member must have financial expertise or
at a minimum considerable financial experience.
The members of the ARCC are expected to have an
understanding of the industries in which the company
operates. Where the member does not have the requisite
expertise upon initial appointment, financial literacy
should be attained within a reasonable period of time
after his or her appointment.
injection of new ideas. ARCC members should not serve
on the audit committees of more than two other public
companies unless the Board determines that such service
does not impair the member’s ability to serve on the
committee.
The ARCC should be given the necessary power and
resources to meet its charter. This will include rights
of access to management and to auditors (external and
internal) without management present and rights to seek
explanations and additional information.
meetings
The ARCC meetings take place as often as required
to undertake its role effectively. in general, the Chief
Executive Officer, Company Secretary and CfO are invited
to attend the ARCC meetings. A quorum of any meeting
will be two members.
The ARCC meets at least twice per year with the
external auditor, including at least one meeting without
management present to discuss any matters that may
be unresolved with management. The ARCC must report,
follow up and resolve any differences of view between the
internal auditors and management.
minutes of meetings shall be taken by the Company
Secretary or their delegate. The agenda and supporting
documentation will be circulated to the ARCC members
within a reasonable period in advance of each meeting.
The minutes shall be circulated and approved by the ARCC
members, and included in the papers for the next full
Board meeting after each ARCC meeting.
ensuring the effectiveness of the arCC
in order to ensure that the ARCC is able to effectively carry
out its duties, the ARCC shall:
• Have unlimited access to both internal and external
auditors and to all senior management and all
employees
• Have available to it resources sufficient to engage
outside expertise if needed i.e., legal and technical
consultants
• Be provided with a status report for all
membership should be periodically assessed to ensure
the skills and experience are present to undertake the
committee’s duties and if necessary rotated to ensure the
recommendations provided by the auditors for which
agreed action is required, which reports include
accountable officers and implementation dates.
HUB24 ANNUAL REPORT 2013 CORPORATE GOVERNANCE
35
Corporate
GOVERNANCE
limitation of audit, risk and Compliance
Committee’s role
management framework will need to adapt as the
business develops.”
While the Audit, Risk and Compliance Committee has the
responsibilities and powers set out in its Charter, it is not
the duty of the Audit, Risk and Compliance Committee
to plan or conduct audits or to determine that the
consolidated entity’s financial statements and disclosures
are complete and accurate and are in accordance with
generally accepted accounting principles and applicable
rules and regulations.
These are the responsibilities of management and the
external auditor.
Charter and performance review
The Charter will be reviewed and updated at least annually
and changes required will be recommended to the Board
for approval. The Committee annually reviews its own
performance.
The purpose of HUB24’s risk management framework is to:
• Affirm the company’s commitment to the management
of risk
• integrate risk management practices across the
company
• foster a culture where staff assume responsibility for
managing risk
• Define the approach to risk management against
regulatory and industry standards, and how these apply
to the company.
A structured risk management program will provide a
number of beneficial outcomes by:
• Enhancing strategic planning through the identification
of threats to the company
The current members of the ARCC are Vaughan Webber
and ian Litster. Their qualifications and experience are set
out earlier in this report.
• Encouraging a proactive approach to issues likely to
impact on the company’s strategic and operational
objectives
executive Committee
The HUB24 Executive Committee meets fortnightly, and its
main functions include:
• Ensuring the company is managed in a commercial and
legal manner
• Ensuring the company adopts, maintains and applies
appropriate business policies and procedures
• improving the quality of decision-making by providing
structured methods for the exploration of threats,
opportunities and resource allocation.
The company has adopted a methodology consistent with
Risk management Standard iSO 31000:2009 for identifying,
assessing and managing risks. This standard is now
considered to be the acceptable standard for all Australian
financial Service licence holders. This methodology
provides a structure for:
• Communicating, mitigating and escalating major risk
• Providing direction to management and staff on
issues
strategic and policy matters
• identifying and evaluating new business
opportunities.
• incorporating risk management principles and
objectives into strategic, operational and resource
planning activities.
risk
procedures
Risk is inherent in all of the day-to-day activities of
all companies within the HUB24 Limited consolidated
entity.
Risk Management Framework
Board delegation
ASiC RG 104 states that a “risk management
framework will depend on the nature, scale and
complexity of the business and risk profile. The risk
The company Board sets the organisational appetite for
risk and has delegated oversight of the company’s risk
management function to the ARCC.
36 CORPORATE GOVERNANCE HUB24 ANNUAL REPORT 2013
Design of framework for managing risk
Staff trading approval required for all Staff
Risks within HUB24 are entered into the risk register and
allocated relevant risk classifications. Risks are measured
against operational, HR, financial, strategic and regulatory
categories.
Monitoring and review of the framework
Once implemented, the framework must be continually
monitored to ensure it remains appropriate for the
company. in the absence of any required changes
throughout the year, an annual review will be undertaken
to ensure the currency of the framework, as well as the
internal compliance with the framework.
All Staff, including Directors and Designated Staff, must
complete a Staff Trading Approval form prior to dealing
in HUB24 securities. Directors and Staff must not deal in
HUB24 securities before a Staff Trading Approval form is
approved or where authorisation is not given.
The Staff Trading Approval form must be authorised by any
one of the following officers: in the first instance by the Chief
Executive Officer or Chief financial Officer; if neither are
available, the Chairman of HUB24 Limited. it is the preference
that such approvals be given by the Chief Executive Officer or
Chief financial Officer in the first instance.
Continual improvement of the framework
Continuous Disclosure policy
There is an expectation that the framework will develop
over time, particularly as the organisation changes size
and direction.
Guiding principle
trading policy
All Staff, including Directors and designated Staff,
must obtain approval prior to trading in securities of
the company. in addition, the company encourages any
Staff and Directors who hold company securities to be
long term holders, and therefore, short-term trading is
discouraged.
HUB24 must immediately notify the market via an
announcement to the ASX of any market sensitive
information (ie. information concerning HUB24 that a
reasonable person would expect to have a material effect
on the price or value of HUB24’s securities).
exception to the Guiding principle
Disclosure is not required where one or more of the
following requirements apply (LR 3.1A.1):
trading During Blackout period
• it would be a breach of a law to disclose the information
All Directors and Staff are prohibited from trading in
the company’s securities in the six week period prior
to the release of the half year results (end of february)
and the full year results (the end of August). There
is also an information ‘blackout’ period for briefings
with institutional investors, individual investors or
stockbroking analysts to discuss financial information
concerning the HUB24 consolidated entity.
During the ‘blackout’ period, approval will not be given to
trade in HUB24 securities unless there is an exceptional
circumstance or in compliance with the staff trading
policy. An application may be made to the Chairman who
may, in their absolute discretion, reject an application to
trade during a blackout period. Approval to trade during
the blackout period may be allowed, for example, where
earnings guidance has been released to the market and
the company is satisfied that the market is sufficiently
informed.
• The information concerns an incomplete proposal or
negotiation
• The information comprises matters of supposition or is
insufficiently definite to warrant disclosure
• The information is generated for the internal
management purposes of the entity
• The information is a trade secret, and:
1. The information is confidential and the ASX has not
formed the view that the information has ceased to
be confidential
2. A reasonable person would not expect the
information to be disclosed.
Where an announcement is delayed or information has
leaked to the market ahead of the announcement a trading
halt may need to be considered.
HUB24 ANNUAL REPORT 2013 CORPORATE GOVERNANCE
37
Corporate
GOVERNANCE
What is ‘market Sensitive’ Information?
market Communication
HUB24’s market Disclosure Committee is responsible for
making decisions about what information will be disclosed.
The following is the test to be applied:
• information is market sensitive if there is a substantial
likelihood that the information would influence
investors in deciding whether to buy, hold or sell
HUB24’s securities
• market sensitivity is assessed considering HUB24’s
circumstances, externally available public information
and previous information supplied to the market.
ASX Guidance Note 8 is to be consulted for further
information on the application of LR 3.1 and the
information which is required to be disclosed to the ASX.
managing market Speculation
and rumours
market speculation and rumours, whether substantiated
or not, have a potential to impact HUB24. Speculation may
also result in the ASX formally requesting disclosure by
HUB24 on the matter. Speculation may also contain factual
errors that could materially affect the company.
Communication of Disclosable Information
All information disclosed to the ASX in compliance with
this policy will be released onto the ASX market platform
first and then will be promptly placed on the company’s
website following receipt of confirmation from the ASX
in accordance with this policy. The announcements are
located in the investor Relations section of the HUB24
corporate website, located at www.HUB24.com.au. A
summary of this policy has been placed in the Corporate
Governance section of the HUB24 website.
trading Halts
it may be necessary to request a trading halt from the ASX
to ensure that orderly trading in the company’s securities
is maintained and to manage disclosure issues. The
company’s market Disclosure Committee will make all
decisions in relation to trading halts. No HUB24 employee
is authorised to seek a trading halt except with the
approval of the company’s’s market Disclosure Committee
or the Chairman or the Chief Executive Officer.
the Company’s Contact with the market
Throughout the year, the company follows a calendar of
regular disclosures to the market on its financial and
operational results. At all times when interacting with
external individuals, investors, stockbroking analysts and
market participants, the company adheres to the guiding
principle set out in this policy.
Communication ‘Blackout’ periods
To protect against inadvertent disclosure of market
sensitive information, the company imposes
communication blackout periods between the end of its
financial reporting periods (31 December and 30 June) and
announcement of results to the market.
The blackout periods in place are:
1. 15 December to 28 february each year (half yearly
reporting period)
2. 15 June to market release of full year results (31 August
each year) (full year reporting period)
3. Any period announced by the company, which may
include briefings with institutional investors, individual
investors, individual investors or analysts to discuss
financial information concerning the consolidated entity
or in the event of any other corporate activity deemed to
require a blackout period be put in place.
in the blackout periods the company will not hold:
• One on one briefings with institutional investors,
individual investors or stockbroking analysts to discuss
financial information concerning the company
• Open briefings other than to deal with matters which
are the subject of an announcement via the ASX.
The market Communication Policy assists in maintaining
communication with shareholders.
Ceo and Cfo Certification
in accordance with section 295A of the Corporations Act
2001, the Chief Executive Officer and Chief financial
Officer, as defined under sections 295A(4) and 295A(6) have
provided a written statement to the Board that:
38
CORPORATE GOVERNANCE HUB24 ANNUAL REPORT 2013
• Their view provided on the company’s financial report is
founded on a sound system of risk management
• internal compliance and control which implements the
financial policies adopted by the Board
• The company’s risk management and internal
compliance and control system is operating effectively
in all material respects.
The Board agrees with the views of the ASX on this
matter and notes that due to its nature, internal control
assurance from the CEO and CfO can only be reasonable
rather than absolute. This is due to such factors as the
need for judgement, the use of testing on a sample basis,
the inherent limitations in internal control and because
much of the evidence available is persuasive rather than
conclusive and therefore is not and cannot be designed to
detect all weaknesses in control procedures.
Safeguard Integrity in
financial reporting
The consolidated entity has established an Audit, Risk and
Compliance Committee. it has a formal charter which
outlines the primary responsibilities of the committee.
The Audit, Risk and Compliance Committee is composed of
Vaughan Webber (independent Chairman) and ian Litster.
make timely and Balanced
Disclosure and respect the
rights of Shareholders
The Board strives to ensure that shareholders are provided
with sufficient information to assess the performance
of the consolidated entity and to make well-informed
investment decisions.
information is communicated to shareholders through:
• Annual and half-yearly financial reports
• Annual and other general meetings convened for
shareholder review and approval of Board proposals
• Continuous disclosure of material changes to ASX for
open access to the public
• A website where all ASX announcements, notices and
financial reports can be accessed.
The consolidated entity has adopted formal policies and
procedures with regard to the ASX Listing Rules disclosure
requirements.
The auditor will be requested to attend the Annual General
meeting of shareholders. Shareholders may ask questions
of the auditor about the conduct of the audit and the
preparation and content of the audit report.
HUB24 ANNUAL REPORT 2013 CORPORATE GOVERNANCE 39
FINANCIAL
STATEMENTS
40 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
42
43
44
Statement of Profit or
Loss and Other
Comprehensive Income
Statement of
Financial Position
Statement of
Changes in Equity
45
46
Statement of
Cash Flows
Notes to the
Financial Statements
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
41
HUB24
LIMITED
–
2013
ANNUAL
REPORT
STATEMENT
OF
PROFIT
OR
LOSS
AND
OTHER
COMPREHENSIVE
Statement of
INCOME
PROfiT OR LOSS AND OTHER COmPREHENSiVE iNCOmE
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 3
for the year ended 30 June 2013
Note
6(a)
6(b)
6(c)
6(d)
6(e)
7
8
Revenue
from
continuing
operations
Revenue
Interest
and
other
income
Expenses
Platform
and
custody
fees
Employee
benefits
expenses
Property
and
occupancy
costs
Depreciation,
amortisation
and
impairment
Administrative
expenses
Profit
before
income
tax
expense
from
continuing
operations
Income
tax
(expense)/benefit
Loss
after
income
tax
from
continuing
operations
Loss
after
income
tax
from
discontinued
operations
Loss
after
income
tax
for
the
year
Other
comprehensive
income
Total
comprehensive
loss
for
the
year
Total
comprehensive
loss
for
the
year
attributable
to
ordinary
equity
members
of
Investorfirst
Limited
Earnings
per
share
from
continuing
operations,
attributable
to
ordinary
equity
members
of
HUB24
Limited
Basic
earnings
per
share
Diluted
earnings
per
share
Earnings
per
share
from
discontinued
operations,
attributable
to
ordinary
equity
members
of
HUB24
Limited
Basic
earnings
per
share
Diluted
earnings
per
share
Earnings
per
share
for
profit
attributable
to
ordinary
equity
members
of
HUB24
Limited
Basic
earnings
per
share
Diluted
earnings
per
share
CONSOLIDATED
2012
$
2013
$
1,228,366
577,771
1,806,137
226,261
626,847
853,108
(838,661)
(4,374,859)
(354,115)
(1,029,775)
(2,180,967)
(8,778,377)
(418,358)
(3,027,831)
(348,126)
(17,169,826)
(1,690,811)
(22,654,950)
(6,972,240)
1,173,832
(5,798,409)
(21,801,842)
(1,295,877)
(23,097,719)
(3,984,560)
(9,782,968)
(7,417,948)
(30,515,667)
-‐
(9,782,968)
-‐
(30,515,667)
(9,782,968)
(30,515,667)
Cents
Cents
(18.65)
(18.65)
(134.57)
(134.57)
(12.82)
(12.82)
(43.22)
(43.22)
(31.47)
(31.47)
(177.79)
(177.79)
On
11
December
2012
the
company's
share
capital
was
consolidated
on
a
40
for
1
basis.
Calculations
of
earnings
per
share
for
the
current
and
prior
period
have
been
performed
on
a
post
share
consolidation
basis.
The
above
Statement
of
Profit
or
Loss
and
Other
Comprehensive
Income
should
be
read
in
conjunction
with
the
accompanying
notes.
42 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
P A G E | 3 7
HUB24
LIMITED
–
2013
ANNUAL
REPORT
STATEMENT
OF
FINANCIAL
POSITION
A T
3 0
J U N E
2 0 1 3
Statement of
fiNANCiAL POSiTiON
for the year ended 30 June 2013
ASSETS
Current
Assets
Cash
and
cash
equivalents
Trade
and
other
receivables
Other
current
assets
Total
Current
Assets
Non-‐Current
Assets
Office
equipment
Intangible
assets
Other
non-‐current
assets
Total
Non-‐Current
Assets
Total
Assets
LIABILITIES
Current
Liabilities
Trade
and
other
payables
Provisions
Total
Current
Liabilities
Non-‐Current
Liabilities
Provisions
Total
Non-‐Current
Liabilities
Total
Liabilities
Net
Assets
EQUITY
Issued
capital
Reserves
Accumulated
losses
Total
Equity
Note
20(b)
9
10
11
12
13
14
15
16
17
18
CONSOLIDATED
2012
$
2013
$
9,542,846
1,383,130
343,868
11,269,844
7,062,254
15,619,496
39,042
22,720,792
54,929
7,409,144
460,339
7,924,412
291,525
7,400,000
778,862
8,470,387
19,194,256
31,191,179
741,399
1,068,411
1,809,810
17,320,587
417,989
17,738,576
62,318
62,318
10,548
10,548
1,872,128
17,749,124
17,322,128
13,442,055
66,843,612
1,878,436
(51,399,920)
54,151,655
907,352
(41,616,952)
17,322,128
13,442,055
The
above
Statement
of
Financial
Position
should
be
read
in
conjunction
with
the
accompanying
notes.
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
P A G E | 3 8
43
HUB24
LIMITED
–
2013
ANNUAL
REPORT
Statement of
STATEMENT
OF
CHANGES
IN
EQUITY
CHANGES iN EQUiTY
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 3
for the year ended 30 June 2013
CONSOLIDATED
As
at
1
July
2012
Total
comprehensive
loss
for
the
year
Transactions
with
equity
members
in
their
capacity
as
equity
members
Capital
raising
Employee
Options
granted
As
at
30
June
2013
As
at
1
July
2011
Total
comprehensive
loss
for
the
year
Transactions
with
equity
members
in
their
capacity
as
equity
members
Acquisition
of
shares
by
ESOT
Employee
Options
granted
As
at
30
June
2012
Issued
Capital
$
Reserves
$
Accumulated
Losses
$
Total
$
54,151,655
-‐
907,352
-‐
(41,616,952)
(9,782,968)
13,442,055
(9,782,968)
12,691,957
-‐
66,843,612
54,301,655
-‐
(150,000)
-‐
54,151,655
-‐
971,084
1,878,436
-‐
-‐
(51,399,920)
12,691,957
971,084
17,322,128
634,860
-‐
(11,101,285)
(30,515,667)
43,835,230
(30,515,667)
-‐
272,492
907,352
-‐
-‐
(41,616,952)
(150,000)
272,492
13,442,055
The
above
Statement
of
Changes
in
Equity
should
be
read
in
conjunction
with
the
accompanying
notes
44 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
P A G E | 3 9
HUB24
LIMITED
–
2013
ANNUAL
REPORT
STATEMENT
OF
CASH
FLOWS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 3
Cash
flows
from
operating
activities
Receipts
from
customers
(inclusive
of
GST)
Payments
to
suppliers
and
employees
(inclusive
of
GST)
Interest
received
Net
movement
from
client
and
dealer
balances
Net
cash
inflow/(outflow)
from
operating
activities
Cash
flows
from
investing
activities
Purchase
of
fixed
assets
Payment
for
security
deposits
Payment
for
capitalised
development
costs
Proceeds/(payment)
for
acquisition
of
shares
in
subsidiaries,
net
of
cash
acquired
Net
cash
inflow/(outflow)
from
investing
activities
Cash
flows
from
financing
activities
Proceeds
from
share
placement
Payment
of
treasury
shares
Net
cash
inflow/(outflow)
from
financing
activities
Net
increase/(decrease)
in
cash
and
cash
equivalents
Cash
and
cash
equivalents
at
beginning
of
year
Statement of
CASH fLOWS
for the year ended 30 June 2013
CONSOLIDATED
Note
2013
$
2012
$
7,056,326
(17,270,607)
362,860
567,882
(9,283,539)
7,328,451
(15,531,206)
522,748
467,512
(7,212,495)
20(a)
-‐
-‐
(927,825)
-‐
(927,825)
(100,007)
(446,600)
(2,747,928)
334,984
(2,959,551)
12,691,957
-‐
12,691,957
-‐
(150,000)
(150,000)
2,480,592
7,062,254
(10,322,046)
17,384,300
Cash
and
cash
equivalents
at
end
of
year
20(b)
9,542,846
7,062,254
The
above
Statement
of
Cash
Flows
should
be
read
in
conjunction
with
the
accompanying
notes.
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
P A G E | 4 0
45
HUB24
LIMITED
–
2013
ANNUAL
REPORT
noteS to tHe
NOTES
TO
THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
for the year ended 30 June 2013
1.
CORPORATE
INFORMATION
The
Annual
Report
of
HUB24
Limited
(the
company
or
parent
entity)
for
the
year
ended
30
June
2013
was
authorised
for
issue
in
accordance
with
a
resolution
of
the
Directors
on
29
August
2013
and
covers
the
company
as
an
individual
entity
as
well
as
the
consolidated
entity
consisting
of
the
company
and
its
subsidiaries
as
required
by
the
Corporations
Act
2001.
The
company
is
limited
by
shares
and
incorporated
and
domiciled
in
Australia
whose
shares
are
publicly
traded
on
the
Australian
Securities
Exchange.
The
nature
of
the
operations
and
principal
activities
of
the
company
are
described
in
the
Directors
Report.
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
Basis
of
preparation
These
general
purpose
financial
statements
have
been
prepared
in
accordance
with
Australian
Accounting
Standards
and
Interpretations
issued
by
the
Australian
Accounting
Standards
Board
(AASB)
and
the
Corporations
Act
2001,
as
appropriate
for
profit
oriented
entities.
The
financial
statements
have
also
been
prepared
under
the
historical
cost
convention,
except
for,
where
applicable,
the
revaluation
of
certain
classes
of
assets
and
liabilities.
The
financial
report
is
presented
in
Australian
dollars.
Parent
entity
information
In
accordance
with
the
Corporations
Act
2001,
these
financial
stratements
present
the
results
of
the
consolidated
entity
only.
Supplementary
information
about
the
parent
entity
is
disclosed
in
Note
27.
Compliance
with
IFRS
The
financial
report
complies
with
Australian
Accounting
Standards
and
International
Financial
Reporting
Standards
(IFRS)
as
issued
by
the
International
Accounting
Standards
Board.
New
accounting
standards
and
interpretations
The
consolidated
entity
has
adopted
all
of
the
new,
revised
or
amending
Accounting
Standards
and
Interpretations
issued
by
the
Australian
Accounting
Standards
Board
(AASB)
that
are
mandatory
for
the
current
reporting
period.
The
adoption
of
these
Accounting
Standards
and
Interpretations
did
not
have
any
impact
on
the
financial
performance
or
position
of
the
consolidated
entity.
The
following
Accounting
Standards
and
Interpretations
are
most
relevant
to
the
consolidated
entity:
(cid:127)
AASB
2011-‐9
Amendments
to
Australian
Accounting
Standards
–
Presentation
of
Items
of
Other
Comprehensive
Income
The
consolidated
entity
has
applied
AASB
2011-‐9
amendments
from
1
July
2012.
The
amendments
required
grouping
together
of
items
within
other
comprehensive
income
on
the
basis
of
whether
they
will
eventually
be
‘recycled’
to
the
profit
or
loss
(reclassification
adjustments).
The
change
provides
clarity
about
the
nature
of
items
presented
as
other
comprehensive
income
and
the
related
tax
presentations.
The
amendments
also
introduced
the
term
‘Statement
of
profit
or
loss
and
other
comprehensive
income’
clarifying
that
there
are
two
discrete
sections,
the
profit
or
loss
section
and
other
comprehensive
income
section.
Going
concern
The
financial
report
has
been
prepared
on
a
going
concern
basis.
46 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
P A G E | 4 1
HUB24
LIMITED
–
2013
ANNUAL
REPORT
NOTES
TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
Management
regularly
reviews
the
cashflow
requirements
and
financing
options
for
the
company
and
the
consolidated
entity
as
part
of
its
normal
operations.
The
consolidated
entity
is
focussed
on
the
development,
commercialisation
and
revenue
growth
of
the
HUB24
investment
platform
and
operating
in
the
current
regulatory
environment
which
is
likely
to
require
additional
capital
within
the
next
twelve
month
period.
The
consolidated
entity
has
raised
capital
in
prior
years
from
multiple
sources
for
acquisition,
regulatory
capital
requirements,
investment
platform
development
and
working
capital
purposes.
Accordingly,
the
directors
of
the
company
are
confident
of
sourcing
additional
capital
as
and
when
required.
Basis
of
consolidation
The
consolidated
financial
statements
comprise
the
financial
statements
of
the
company
and
its
subsidiaries
(the
consolidated
entity)
as
at
30
June
each
year.
There
are
no
interests
in
associates.
Subsidiaries
are
all
those
entities
over
which
the
consolidated
entity
has
the
power
to
govern
the
financial
and
operating
policies
so
as
to
obtain
benefits
from
their
activities.
The
existence
and
effect
of
potential
voting
rights
that
are
currently
exercisable
or
convertible
are
considered
when
assessing
whether
a
consolidated
entity
controls
another
entity.
Special
purpose
entities
are
those
entities
over
which
the
consolidated
entity
has
no
ownership
interest
but
in
effect
the
substance
of
the
relationship
is
such
that
the
consolidated
entity
controls
the
entity
so
as
to
obtain
the
majority
of
benefits
from
its
operation.
There
are
no
special
purpose
entities.
The
financial
statements
of
the
subsidiaries
are
prepared
for
the
same
reporting
period
as
the
parent
company,
using
consistent
accounting
policies.
In
preparing
the
consolidated
financial
statements,
all
intercompany
balances
and
transactions,
income
and
expenses
and
profit
and
losses
resulting
from
intra-‐consolidated
entity
transactions
have
been
eliminated
in
full.
Subsidiaries
are
fully
consolidated
from
the
date
on
which
control
is
obtained
by
the
consolidated
entity
and
cease
to
be
consolidated
from
the
date
on
which
control
is
transferred
out
of
the
consolidated
entity.
There
were
no
transfers
out
of
the
consolidated
entity
during
the
year.
Investments
in
subsidiaries
held
by
the
company
are
accounted
for
at
cost
in
the
separate
financial
statements
of
the
parent
entity
less
any
impairment
charges.
The
acquisition
of
subsidiaries
is
accounted
for
using
the
acquisition
method
of
accounting.
The
acquisition
method
of
accounting
involves
recognising
at
acquisition
date,
separately
from
goodwill,
the
identifiable
assets
acquired,
the
liabilities
assumed
and
any
non-‐controlling
interest
in
the
acquiree.
The
identifiable
assets
acquired
and
liabilities
assumed
are
measured
at
the
acquisition
date
fair
values.
The
difference
between
the
above
items
and
the
fair
value
of
the
consideration
is
goodwill
or
a
discount
on
acquisition.
After
initial
recognition,
goodwill
is
measured
at
cost
less
any
accumulated
impairment
losses.
For
the
purpose
of
impairment
testing,
goodwill
acquired
in
a
business
combination
is,
from
the
acquisition
date,
allocated
to
each
of
the
consolidated
entity’s
cash-‐generating
units
that
are
expected
to
benefit
from
the
combination,
irrespective
of
whether
other
assets
or
liabilities
of
the
acquiree
are
assigned
to
those
units.
Non-‐controlling
interests
are
allocated
their
share
of
net
profit
after
tax
in
the
statement
of
profit
or
loss
and
other
comprehensive
income
and
are
presented
within
equity
in
the
consolidated
statement
of
financial
position,
separately
from
the
equity
of
the
owners
of
the
parent.
Losses
are
attributed
to
the
non-‐controlling
interest
even
if
that
results
in
a
deficit
balance.
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
P A G E | 4 2
47
HUB24
LIMITED
–
2013
ANNUAL
REPORT
noteS to tHe
NOTES
TO
THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
Foreign
currency
translation
Functional
and
presentation
currency
Both
the
functional
and
presentation
currency
of
the
consolidated
entity
is
Australian
dollars.
Revenue
and
income
recognition
Revenue
is
measured
at
the
fair
value
of
the
consideration
received
or
receivable.
The
consolidated
entity
recognises
revenue
when
the
amount
can
be
reliably
measured,
it
is
probable
that
future
economic
benefits
will
flow
to
the
consolidated
entity
and
specific
criteria
have
been
met
for
each
of
the
activities.
Revenue
is
recognised
for
the
major
business
activities
as
follows:
Platform
revenue
(cid:127)
(cid:127)
(cid:127)
Portfolio
service
fee
revenue
is
recognised
and
measured
at
the
fair
value
of
the
consideration
received
or
receivable
on
the
value
of
client
account
balances.
Cash
margin
is
recognised
and
measured
at
the
fair
value
of
the
interest
received
or
receivable
on
that
portion
of
client
account
balances
held
in
cash.
Broking
revenue
is
recognised
and
measured
at
the
fair
value
of
the
consideration
received
or
receivable
on
the
execution
of
trades.
Finance
income
Finance
income
comprises
interest
income
on
funds
invested.
Interest
income
is
recognised
as
it
accrues
in
profit
or
loss,
using
the
effective
interest
method.
Leases
The
determination
of
whether
an
arrangement
is
or
contains
a
lease
is
based
on
the
substance
of
the
arrangement
and
requires
an
assessment
of
whether
the
fulfilment
of
the
arrangement
is
dependent
on
the
use
of
a
specific
asset
or
assets
and
the
arrangement
conveys
a
right
to
use
the
asset.
Finance
leases,
which
transfer
to
the
consolidated
entity
substantially
all
the
risks
and
benefits
incidental
to
ownership
of
the
leased
item,
are
capitalised
at
the
inception
of
the
lease
at
the
fair
value
of
the
leased
asset
or,
if
lower,
at
the
present
value
of
the
minimum
lease
payments.
Lease
payments
are
apportioned
between
the
finance
charges
and
reduction
of
the
lease
liability
so
as
to
achieve
a
constant
rate
of
interest
on
the
remaining
balance
of
the
liability.
Finance
charges
are
recognised
as
an
expense
in
the
income
statement.
Capitalised
leased
assets
are
depreciated
over
the
shorter
of
the
estimated
useful
life
of
the
asset
and
the
lease
term
if
there
is
no
reasonable
certainty
that
the
consolidated
entity
will
obtain
ownership
by
the
end
of
the
lease
term.
Operating
lease
payments
are
recognised
as
an
expense
in
the
income
statement
on
a
straight-‐line
basis
over
the
lease
term.
Operating
lease
incentives
are
recognised
as
a
liability
when
received
and
subsequently
reduced
by
allocating
lease
payments
between
rental
expense
and
reduction
of
the
liability.
48 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
P A G E | 4 5
HUB24
LIMITED
–
2013
ANNUAL
REPORT
NOTES
TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
Discontinued
operations
A
discontinued
operation
is
a
component
of
the
consolidated
entity
that
has
been
disposed
of
or
is
classified
as
held
for
sale
and
that
represents
a
separate
major
line
of
business
or
geographical
area
of
operations,
is
part
of
a
single
co-‐
ordinated
plan
to
dispose
of
such
a
line
of
business
or
area
of
operations,
or
is
a
subsidiary
acquired
exclusively
with
a
view
to
resale.
The
results
of
discontinued
operations
are
presented
separately
on
the
face
of
the
statement
of
profit
or
loss
or
other
comprehensive
income.
Cash
and
cash
equivalents
Cash
and
cash
equivalents
in
the
statement
of
financial
position
comprise
cash
at
bank
and
in
hand
and
short-‐term
deposits
with
an
original
maturity
of
three
months
or
less
that
are
readily
convertible
to
known
amounts
of
cash
and
which
are
subject
to
an
insignificant
risk
of
changes
in
value.
For
the
purposes
of
the
statement
of
cash
flows,
cash
and
cash
equivalents
consist
of
cash
and
cash
equivalents
as
defined
above,
net
of
outstanding
bank
overdrafts.
Trade
and
other
receivables
Trade
receivables
are
recognised
initially
at
fair
value
and
subsequently
measured
at
amortised
cost
using
the
effective
interest
method,
less
an
allowance
for
impairment.
Trade
and
other
receivables
Collectability
of
trade
receivables
is
reviewed
on
an
ongoing
basis
at
an
operating
unit
level.
Individual
debts
that
are
known
to
be
uncollectible
are
written
off
when
identified.
An
impairment
provision
is
recognised
when
there
is
objective
evidence
that
the
consolidated
entity
will
not
be
able
to
collect
the
receivable.
Financial
difficulties
of
the
debtor,
default
payments
or
debts
more
than
30
days
overdue
are
considered
objective
evidence
of
impairment.
The
amount
of
the
impairment
loss
is
the
receivable
carrying
amount
compared
to
the
present
value
of
estimated
future
cash
flows,
discounted
at
the
original
effective
interest
rate.
Income
taxes
and
other
taxes
Current
tax
assets
and
liabilities
for
the
current
and
prior
years
are
measured
at
the
amount
expected
to
be
recovered
from
or
paid
to
the
taxation
authorities
based
on
the
current
year's
taxable
income.
The
tax
rates
and
tax
laws
used
to
compute
the
amount
are
those
that
are
enacted
or
substantively
enacted
by
the
reporting
date.
Deferred
income
tax
is
provided
on
all
temporary
differences
at
the
reporting
date
between
the
tax
bases
of
assets
and
liabilities
and
their
carrying
amounts
for
financial
reporting
purposes.
Deferred
income
tax
liabilities
are
recognised
for
all
taxable
temporary
differences
except:
(cid:127) When
the
deferred
income
tax
liability
arises
from
the
initial
recognition
of
goodwill
or
of
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
profit
nor
taxable
profit
or
loss
(cid:127) When
the
taxable
temporary
difference
is
associated
with
investments
in
subsidiaries,
associates
or
interests
in
joint
ventures,
and
the
timing
of
the
reversal
of
the
temporary
difference
can
be
controlled
and
it
is
probable
that
the
temporary
difference
will
not
reverse
in
the
foreseeable
future.
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
P A G E | 4 4
49
HUB24
LIMITED
–
2013
ANNUAL
REPORT
noteS to tHe
NOTES
TO
THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
Deferred
income
tax
assets
are
recognised
for
all
deductible
temporary
differences,
carry-‐forward
of
unused
tax
credits
and
unused
tax
losses,
to
the
extent
that
it
is
probable
that
taxable
profit
will
be
available
against
which
the
deductible
temporary
differences
and
the
carry-‐forward
of
unused
tax
credits
and
unused
tax
losses
can
be
utilised,
except:
(cid:127) When
the
deferred
income
tax
asset
relating
to
the
deductible
temporary
difference
arises
from
the
initial
recognition
of
an
asset
or
liability
in
a
transaction
that
is
not
a
business
combination
and,
at
the
time
of
the
transaction,
affects
neither
the
accounting
profit
nor
taxable
profit
or
loss
(cid:127) When
the
deductible
temporary
difference
is
associated
with
investments
in
subsidiaries,
associates
or
interests
in
joint
ventures,
in
which
case
a
deferred
tax
asset
is
only
recognised
to
the
extent
that
it
is
probable
that
the
temporary
difference
will
reverse
in
the
foreseeable
future
and
taxable
profit
will
be
available
against
which
the
temporary
difference
can
be
utilised.
The
carrying
amount
of
deferred
income
tax
assets
is
reviewed
at
each
reporting
date
and
reduced
to
the
extent
that
it
is
no
longer
probable
that
sufficient
taxable
profit
will
be
available
to
allow
all
or
part
of
the
deferred
income
tax
asset
to
be
utilised.
Unrecognised
deferred
income
tax
assets
are
reassessed
at
each
reporting
date
and
are
recognised
to
the
extent
that
it
has
become
probable
that
future
taxable
profit
will
allow
the
deferred
tax
asset
to
be
recovered.
Deferred
income
tax
assets
and
liabilities
are
measured
at
the
tax
rates
that
are
expected
to
apply
to
the
year
when
the
asset
is
realised
or
the
liability
is
settled,
based
on
tax
rates
(and
tax
laws)
that
have
been
enacted
or
substantively
enacted
at
the
reporting
date.
Deferred
tax
assets
and
deferred
tax
liabilities
are
offset
only
if
a
legally
enforceable
right
exists
to
set
off
current
tax
assets
against
current
tax
liabilities
and
the
deferred
tax
assets
and
liabilities
relate
to
the
same
taxable
entity
and
the
same
taxation
authority.
Tax
consolidation
legislation
The
company
and
its
wholly-‐owned
Australian
controlled
entities
have
implemented
the
tax
consolidation
legislation.
The
company
and
the
controlled
entities
in
the
tax
consolidated
consolidated
entity
continue
to
account
for
their
own
current
and
deferred
tax
amounts.
The
consolidated
entity
has
applied
the
consolidated
entity
allocation
approach
in
determining
the
appropriate
amount
of
current
taxes
and
deferred
taxes
to
allocate
to
members
of
the
tax
consolidated
consolidated
entity.
In
addition
to
its
own
current
and
deferred
tax
amounts,
the
company
also
recognises
the
current
tax
liabilities
(or
assets)
and
the
deferred
tax
assets
arising
from
unused
tax
losses
and
unused
tax
credits
assumed
from
controlled
entities
in
the
tax
consolidated
entity.
Assets
or
liabilities
arising
under
tax
funding
agreements
with
the
tax
consolidated
entities
are
recognised
as
amounts
receivable
from
or
payable
to
other
entities
in
the
consolidated
entity.
Any
difference
between
the
amounts
assumed
and
amounts
receivable
or
payable
under
the
tax
funding
agreement
are
recognised
as
a
contribution
to
(or
distribution
from)
wholly-‐owned
tax
consolidated
entities.
50 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
P A G E | 4 5
HUB24
LIMITED
–
2013
ANNUAL
REPORT
NOTES
TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
Other
taxes
Revenues,
expenses
and
assets
are
recognised
net
of
the
amount
of
GST
except:
(cid:127) When
the
GST
incurred
on
a
purchase
of
goods
and
services
is
not
recoverable
from
the
taxation
authority,
in
which
case
the
GST
is
recognised
as
part
of
the
cost
of
acquisition
of
the
asset
or
as
part
of
the
expense
item
as
applicable
(cid:127)
(cid:127)
Receivables
and
payables,
which
are
stated
with
the
amount
of
GST
included
(UIG
1031.8).
The
net
amount
of
GST
recoverable
from,
or
payable
to,
the
taxation
authority
is
included
as
part
of
receivables
or
payables
in
the
statement
of
financial
position
Cash
flows
are
included
in
the
statement
of
cash
flow
on
a
gross
basis
and
the
GST
component
of
cash
flows
arising
from
investing
and
financing
activities,
which
is
recoverable
from,
or
payable
to,
the
taxation
authority
is
classified
as
part
of
operating
cash
flows.
Commitments
and
contingencies
are
disclosed
net
of
the
amount
of
GST
recoverable
from,
or
payable
to,
the
taxation
authority.
Office
equipment
Office
equipment
is
stated
at
historical
cost
less
accumulated
depreciation
and
any
accumulated
impairment
losses.
Such
cost
includes
the
cost
of
replacing
parts
that
are
eligible
for
capitalisation
when
the
cost
of
replacing
the
parts
is
incurred.
Similarly,
when
each
major
inspection
is
performed,
its
cost
is
recognised
in
the
carrying
amount
of
the
office
equipment
as
a
replacement
only
if
it
is
eligible
for
capitalisation.
All
other
repairs
and
maintenance
are
recognised
in
profit
or
loss
as
incurred.
The
assets'
residual
values,
useful
lives
and
amortisation
methods
are
reviewed,
and
adjusted
if
appropriate,
at
each
reporting
date.
Depreciation
is
calculated
on
a
straight-‐line
basis
over
the
estimated
useful
life
of
the
specific
assets
as
follows:
(cid:127)
(cid:127)
(cid:127)
Office
furniture
and
fittings
-‐
over
2.5
to
5
years
Computer
equipment
-‐
3
years
Leased
assets
-‐
over
the
term
of
the
lease
Impairment
The
carrying
values
of
office
equipment
are
reviewed
for
impairment
when
events
or
changes
in
circumstances
indicate
the
carrying
value
may
not
be
recoverable.
For
an
asset
that
does
not
generate
largely
independent
cash
inflows,
the
recoverable
amount
is
determined
for
the
cash
generating
unit
to
which
the
asset
belongs.
If
any
such
indication
exists
and
where
the
carrying
values
exceed
the
estimated
recoverable
amount,
the
assets
or
cash
generating
units
are
written
down
to
their
recoverable
amount.
The
recoverable
amount
of
office
equipment
is
the
greater
of
fair
value
less
costs
to
sell
and
value
in
use.
In
assessing
value
in
use,
the
estimated
future
cash
flows
are
discounted
to
their
present
value
using
a
pre-‐tax
discount
rate
that
reflects
current
market
assessments
of
the
time
value
of
money
and
risks
specific
to
the
asset.
De-‐recognition
and
disposal
An
item
of
office
equipment
is
derecognised
upon
disposal
or
when
no
further
future
economic
benefits
are
expected
from
its
use.
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
P A G E | 4 6
51
HUB24
LIMITED
–
2013
ANNUAL
REPORT
noteS to tHe
NOTES
TO
THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
Financial
Instruments
Non-‐derivative
financial
instruments
Non-‐derivative
financial
instruments
comprise
investments
in
equity,
trade
and
other
receivables,
cash
and
cash
equivalents
and
trade
and
other
payables.
Non-‐derivative
financial
instruments
are
recognised
initially
at
fair
value
plus,
for
instruments
not
at
fair
value
through
the
profit
or
loss,
any
directly
attributable
transaction
costs.
Subsequent
to
initial
recognition,
non-‐derivative
financial
instruments
are
measured
as
described
below.
A
financial
instrument
is
recognised
if
the
consolidated
entity
becomes
a
party
to
the
contractual
provisions
of
the
instrument.
Financial
assets
are
derecognised
if
the
consolidated
entity’s
contractual
rights
to
the
cash
flows
from
the
financial
assets
expire
or
if
the
consolidated
entity
transfers
the
financial
asset
to
another
party
without
retaining
control
or
substantially
all
risks
and
rewards
of
the
asset.
Regular
way
purchases
and
sales
of
financial
assets
are
accounted
for
at
trade
date,
i.e.,
the
date
that
the
consolidated
entity
commits
itself
to
purchase
or
sell
the
asset.
Financial
liabilities
are
derecognised
if
the
consolidated
entity’s
obligations
specified
in
the
contract
expire
or
are
discharged
or
are
cancelled.
Cash
and
cash
equivalents
comprise
cash
balances
and
call
deposits.
Bank
overdrafts
that
are
repayable
on
demand
and
form
an
integral
part
of
the
consolidated
entity’s
cash
management
are
included
as
a
component
of
cash
and
cash
equivalents
for
the
purpose
of
the
statement
of
cash
flows.
Held
to
maturity
investments
If
the
consolidated
entity
has
the
positive
intent
and
ability
to
hold
debt
securities
to
maturity,
then
they
are
classified
as
held-‐to-‐maturity.
Held-‐to-‐maturity
investments
are
measured
at
amortised
cost
using
the
effective
interest
method,
less
any
impairment
losses.
Other
Other
non-‐derivative
financial
instruments
are
measured
at
amortised
cost
using
the
effective
interest
rate
method,
less
any
impairment
losses.
The
fair
values
of
investments
that
are
actively
traded
in
organised
financial
markets
are
determined
by
reference
to
quoted
market
bid
prices
at
the
close
of
business
on
the
reporting
date.
For
investments
with
no
active
market,
fair
values
are
determined
using
valuation
techniques.
Such
techniques
include:
using
recent
arm’s
length
market
transactions;
reference
to
the
current
market
value
of
another
instrument
that
is
substantially
the
same;
discounted
cash
flow
analysis
and
option
pricing
models
making
as
much
use
of
available
and
supportable
market
data
as
possible
and
keeping
judgemental
inputs
to
a
minimum.
Goodwill
and
Intangibles
Goodwill
Goodwill
acquired
in
a
business
combination
is
initially
measured
at
cost
being
the
excess
of
the
cost
of
the
business
combination
over
the
consolidated
entity's
interest
in
the
net
fair
value
of
the
acquirer’s
identifiable
assets,
liabilities
and
contingent
liabilities.
Following
initial
recognition,
goodwill
is
measured
at
cost
less
any
accumulated
impairment
losses.
52 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
P A G E | 4 7
HUB24
LIMITED
–
2013
ANNUAL
REPORT
NOTES
TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
For
the
purpose
of
impairment
testing,
goodwill
acquired
in
a
business
combination
is,
from
the
acquisition
date,
allocated
to
each
of
the
consolidated
entity's
cash-‐generating
units
that
are
expected
to
benefit
from
the
synergies
of
the
combination,
irrespective
of
whether
other
assets
or
liabilities
of
the
consolidated
entity
are
assigned
to
those
units.
When
the
recoverable
amount
of
the
cash-‐generating
unit
is
less
than
the
carrying
amount,
an
impairment
loss
is
recognised.
When
goodwill
forms
part
of
a
cash-‐generating
unit
and
an
operation
within
that
unit
is
disposed
of,
the
goodwill
associated
with
the
operation
disposed
of
is
included
in
the
carrying
amount
of
the
operation
when
determining
the
gain
or
loss
on
disposal
of
the
operation.
Goodwill
disposed
of
in
this
manner
is
measured
based
on
the
relative
values
of
the
operation
disposed
of
and
the
portion
of
the
cash-‐generating
unit
retained.
Impairment
losses
recognised
for
goodwill
are
not
subsequently
reversed.
Intangibles
Intangible
assets
acquired
separately
or
in
a
business
combination
are
initially
measured
at
cost.
The
cost
of
an
intangible
asset
acquired
in
a
business
combination
is
its
fair
value
as
at
the
date
of
acquisition.
Following
initial
recognition,
intangible
assets
are
carried
at
cost
less
any
accumulated
amortisation
and
any
accumulated
impairment
losses.
Internally
generated
intangible
assets,
excluding
capitalised
development
costs,
are
not
capitalised
and
expenditure
is
recognised
in
profit
or
loss
in
the
year
in
which
the
expenditure
is
incurred.
The
useful
lives
of
intangible
assets
are
assessed
to
be
either
finite
or
indefinite.
Intangible
assets
with
finite
lives
are
amortised
over
the
useful
life
and
tested
for
impairment
whenever
there
is
an
indication
that
the
intangible
asset
may
be
impaired.
The
amortisation
period
and
the
amortisation
method
for
an
intangible
asset
with
a
finite
useful
life
is
reviewed
at
least
at
each
reporting
date.
Changes
in
the
expected
useful
life
or
the
expected
pattern
of
consumption
of
future
economic
benefits
embodied
in
the
asset
are
accounted
for
prospectively
by
changing
the
amortisation
period
or
method,
as
appropriate,
which
is
a
change
in
accounting
estimate.
The
amortisation
expense
on
intangible
assets
with
finite
lives
is
recognised
in
profit
or
loss
in
the
expense
category
consistent
with
the
function
of
the
intangible
asset.
Intangible
assets
with
indefinite
useful
lives
are
tested
for
impairment
annually
either
individually
or
at
the
cash-‐
generating
unit
level
consistent
with
the
methodology
outlined
for
goodwill
above.
Such
intangibles
are
not
amortised.
The
useful
life
of
an
intangible
asset
with
an
indefinite
life
is
reviewed
each
reporting
period
to
determine
whether
indefinite
life
assessment
continues
to
be
supportable.
If
not,
the
change
in
the
useful
life
assessment
from
indefinite
to
finite
is
accounted
for
as
a
change
in
an
accounting
estimate
and
is
thus
accounted
for
on
a
prospective
basis.
Trade
and
other
payables
Trade
and
other
payables
are
carried
at
amortised
cost
and
represent
liabilities
for
goods
and
services
provided
to
the
consolidated
entity
prior
to
the
end
of
the
financial
year
that
are
unpaid
and
arise
when
the
consolidated
entity
becomes
obliged
to
make
future
payments
in
respect
of
the
purchase
of
these
goods
and
services.
Provisions
Provisions
are
recognised
when
the
consolidated
entity
has
a
present
obligation
(legal
or
constructive)
as
a
result
of
a
past
event,
it
is
probable
that
an
outflow
of
resources
embodying
economic
benefits
will
be
required
to
settle
the
obligation
and
a
reliable
estimate
can
be
made
of
the
amount
of
the
obligation.
Provisions
are
measured
at
the
present
value
of
management’s
best
estimate
of
the
expenditure
required
to
settle
the
present
obligation
at
the
reporting
date.
If
the
effect
of
the
time
value
of
money
is
material,
provisions
are
discounted
using
a
current
pre-‐tax
rate
that
reflects
the
risks
specific
to
the
liability.
When
discounting
is
used,
the
increase
in
the
provision
due
to
the
passage
of
time
is
recognised
as
a
borrowing
cost.
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
P A G E | 4 8
53
HUB24
LIMITED
–
2013
ANNUAL
REPORT
noteS to tHe
NOTES
TO
THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
Employee
benefits
Short-‐term
benefits
Liabilities
for
wages
and
salaries,
including
non-‐monetary
benefits
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.
They
are
measured
at
the
amounts
expected
to
be
paid
when
the
liabilities
are
settled.
Long-‐term
benefits
The
liability
for
long
service
leave
is
recognised
and
measured
as
the
present
value
of
expected
future
payments
to
be
made
in
respect
of
services
provided
by
employees
up
to
the
reporting
date.
Consideration
is
given
to
expected
future
wage
and
salary
levels,
experience
of
employee
departures,
and
periods
of
service.
Expected
future
payments
are
discounted
using
market
yields
at
the
reporting
date
of
national
government
bonds
with
terms
to
maturity
and
currencies
that
match,
as
closely
as
possible,
the
estimated
future
cash
outflows.
Pensions
and
other
post
employment
benefits
All
Australian
employees
are
entitled
to
varying
levels
of
benefits
on
retirement,
disability
or
death.
The
superannuation
plans
provide
accumulated
benefits.
Employees
contribute
to
the
plans
at
various
percentages
of
their
wages
and
salaries.
Share-‐based
payment
transactions
Equity
settled
transactions:
The
consolidated
entity
provides
benefits
to
employees
(including
Directors)
in
the
form
of
share-‐based
payments,
whereby
services
are
rendered
in
exchange
for
shares
or
rights
over
shares
(equity
settled
transactions).
There
are
currently
two
plans
in
place
to
provide
these
benefits:
(cid:127)
(cid:127)
The
Employee
Share
Option
Plan
(ESOP);
and
The
Employee
Share
Plan
(ESP).
The
cost
of
these
equity-‐settled
transactions
with
employees
is
measured
by
reference
to
the
fair
value
of
the
equity
instruments
at
the
date
at
which
they
are
granted.
The
fair
value
is
determined
by
reference
to
the
active
market
for
the
shares
which
trade
on
the
Australian
Securities
Exchange,
at
grant
date.
In
valuing
equity
settled
transactions,
no
account
is
taken
of
any
vesting
conditions,
other
than
(if
applicable):
(cid:127)
(cid:127)
Non-‐vesting
conditions
that
do
not
determine
whether
the
consolidated
entity
or
company
receives
services
that
entitle
the
employee
to
receive
payment
in
equity
or
cash
Conditions
that
are
linked
to
the
price
of
the
shares
of
the
company
The
cost
of
equity-‐settled
transactions
is
recognised,
together
with
a
corresponding
increase
in
equity,
over
the
period
in
which
the
performance
and/or
service
conditions
are
fulfilled,
ending
on
the
date
on
which
the
relevant
employees
become
entitled
to
the
award
(the
vesting
period).
The
cumulative
expense
recognised
for
equity-‐settled
transactions
at
each
reporting
date
until
the
vesting
date
reflects
the
extent
to
which
the
vesting
period
has
expired
and
the
entity’s
best
estimate
of
the
number
of
equity
instruments
that
will
ultimately
vest.
The
income
statement
expense
or
credit
for
a
period
is
recorded
in
Employee
Benefits
Expense
and
represents
the
movement
in
cumulative
expense
recognised
as
at
the
beginning
and
end
of
that
period.
54 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
P A G E | 4 9
HUB24
LIMITED
–
2013
ANNUAL
REPORT
NOTES
TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
At
each
subsequent
reporting
date
until
vesting,
the
cumulative
charge
to
the
statement
of
profit
or
loss
and
other
comprehensive
income
is
the
product
of:
(cid:127)
(cid:127)
The
grant
date
fair
value
of
the
award;
The
current
best
estimate
of
the
number
of
awards
that
will
vest,
taking
into
account
such
factors
as
the
likelihood
of
employee
turnover
during
the
vesting
period
and
the
likelihood
of
non-‐market
performance
conditions
being
met;
and
(cid:127)
The
expired
portion
of
the
vesting
period.
The
charge
to
the
statement
of
profit
or
loss
and
other
comprehensive
income
for
the
period
is
the
cumulative
amount
as
calculated
above
less
the
amounts
already
charged
in
previous
periods.
There
is
a
corresponding
entry
to
equity.
Equity
settled
awards
granted
by
the
company
to
employees
of
subsidiaries
are
recognised
in
the
parent’s
separate
financial
statements
as
an
additional
investment
in
the
subsidiary
with
a
corresponding
credit
to
equity.
As
a
result,
the
expense
recognised
by
the
company
in
relation
to
equity-‐settled
awards
only
represents
the
expense
associated
with
grants
to
employees
of
the
parent.
The
expense
recognised
by
the
consolidated
entity
is
the
total
expense
associated
with
all
such
awards.
Until
an
award
has
vested,
any
amounts
recorded
are
contingent
and
will
be
adjusted
if
more
or
fewer
awards
vest
than
were
originally
anticipated
to
do
so.
Any
award
subject
to
a
market
condition
or
non-‐vesting
condition
is
considered
to
vest
irrespective
of
whether
or
not
that
market
condition
or
non-‐vesting
is
fulfilled,
provided
that
all
other
conditions
are
satisfied.
If
a
non-‐vesting
condition
is
within
the
control
of
the
consolidated
entity,
company
or
the
employee,
the
failure
to
satisfy
the
condition
is
treated
as
a
cancellation.
If
a
non-‐vesting
condition
within
the
control
of
the
consolidated
entity,
company
or
employee
is
not
satisfied
during
the
vesting
period,
any
expense
for
the
award
not
previously
recognised
is
recognised
over
the
remaining
vesting
period,
unless
the
award
is
forfeited.
If
the
terms
of
an
equity-‐settled
award
are
modified,
as
a
minimum
an
expense
is
recognised
as
if
the
terms
had
not
been
modified.
An
additional
expense
is
recognised
for
any
modification
that
increases
the
total
fair
value
of
the
share-‐based
payment
arrangement,
or
is
otherwise
beneficial
to
the
employee,
as
measured
at
the
date
of
modification.
If
an
equity-‐settled
award
is
cancelled,
it
is
treated
as
if
it
had
vested
on
the
date
of
cancellation,
and
any
expense
not
yet
recognised
for
the
award
is
recognised
immediately.
However,
if
a
new
award
is
substituted
for
the
cancelled
award
and
designed
as
a
replacement
award
on
the
date
that
it
is
granted,
the
cancelled
and
new
award
are
treated
as
if
they
were
a
modification
of
the
original
award,
as
described
in
the
previous
paragraph.
The
dilutive
effect,
if
any,
of
outstanding
options
is
reflected
as
additional
share
dilution
in
the
computation
of
diluted
earnings
per
share.
Issued
Capital
Ordinary
shares
are
classified
as
equity.
Incremental
costs
directly
attributable
to
the
issue
of
new
equity
instruments
are
shown
in
equity
as
a
deduction,
net
of
GST,
from
the
proceeds.
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NOTES
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THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
Earnings
Per
Share
(EPS)
Basic
EPS
is
calculated
by
dividing
the
profit
attributable
to
members
of
the
company,
adjusted
for
the
after-‐tax
effect
of
preference
dividends
on
preference
shares
classified
as
equity,
by
the
weighted
average
number
of
ordinary
shares
outstanding
during
the
financial
year,
adjusted
for
bonus
elements
in
ordinary
shares
during
the
year.
The
weighted
average
number
of
issued
shares
outstanding
during
the
financial
year
does
not
include
shares
issued
as
part
of
the
Employee
Share
Loan
Plan
that
are
treated
as
in-‐substance
options.
Diluted
EPS
is
calculated
by
adjusting
the
basic
earnings
by
the
after-‐tax
effect
of
dividends
and
interest
associated
with
dilutive
potential
ordinary
shares.
The
weighted
average
number
of
shares
used
is
adjusted
for
the
weighted
average
number
of
ordinary
shares
that
would
be
issued
on
the
conversion
of
all
the
dilutive
potential
ordinary
shares
into
ordinary
shares.
Comparatives
Where
required
by
the
Accounting
Standards
and
/
or
for
improved
presentation
purposes,
comparative
figures
have
been
adjusted
to
conform
to
changes
in
presentation
for
the
current
year.
Accounting
Standards
Issued
Not
Yet
Effective
The
following
new
and
amended
accounting
standards
and
interpretations
have
been
issued,
but
are
not
mandatory
for
the
financial
year
ended
30
June
2013.
They
have
not
been
adopted
in
preparing
the
financial
statements
for
the
year
ended
30
June
2013
and
are
expected
to
impact
the
consolidated
entity
in
the
period
of
initial
application.
In
all
cases
the
consolidated
entity
intends
to
apply
these
standards
from
application
date
as
indicated
below.
(i) AASB
9
Financial
Instruments
(issued
December
2009
and
amended
December
2010),
AASB
2012-‐6
Amendments
to
Australian
Accounting
Standards
-‐
Mandatory
Effective
Date
of
AASB
9
and
Transition
Disclosures
(issued
September
2012)
-‐
effective
for
annual
reporting
periods
beginning
on
or
after
1
January
2015.
AASB
9
amends
the
requirements
for
classification
and
measurement
of
financial
assets.
The
available-‐for-‐sale
and
held-‐to-‐maturity
categories
of
financial
assets
in
AASB
139
have
been
eliminated.
Under
AASB
9,
there
are
three
categories
of
financial
assets:
1. Amortised
cost
2.
3.
Fair
value
through
profit
or
loss
Fair
value
through
other
comprehensive
income.
The
following
requirements
have
generally
been
carried
forward
unchanged
from
AASB
139
Financial
Instruments:
Recognition
and
Measurement
into
AASB
9:
(cid:127)
(cid:127)
Classification
and
measurement
of
financial
liabilities;
and
Derecognition
requirements
for
financial
assets
and
liabilities.
However,
AASB
9
requires
that
gains
or
losses
on
financial
liabilities
measured
at
fair
value
are
recognised
in
profit
or
loss,
except
that
the
effects
of
changes
in
the
liability’s
credit
risk
are
recognised
in
other
comprehensive
income.
The
consolidated
entity
does
not
have
any
financial
liabilities
measured
at
fair
value
through
profit
or
loss.
There
will
therefore
be
no
impact
on
the
financial
statements
when
these
amendments
to
AASB
9
are
first
adopted.
56 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
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FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
(ii) AASB
10
Consolidated
Financial
Statements
(issued
August
2011)
–
effective
for
annual
reporting
periods
beginning
on
or
after
1
January
2013.
The
main
changes
under
AASB
10
include:
(cid:127)
(cid:127)
(cid:127)
Introduces
‘de
facto’
control
for
entities
with
less
than
a
50%
ownership
interest
in
an
entity,
but
which
have
a
large
shareholding
compared
to
other
shareholders.
This
could
result
in
more
instances
of
control
and
more
entities
being
consolidated.
Potential
voting
rights
are
only
considered
when
determining
if
there
is
control
when
they
are
substantive
(holder
has
practical
ability
to
exercise)
and
the
rights
are
currently
exercisable.
This
may
result
in
possibly
fewer
instances
of
control.
Additional
guidance
included
to
determine
when
decision
making
authority
over
an
entity
has
been
delegated
by
a
principal
to
an
agent.
Factors
to
consider
include:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
Scope
of
decision
making
authority
Rights
held
by
other
parties,
e.g.
kick-‐out
rights
Remuneration
and
whether
commensurate
with
services
provided
Decision
maker’s
exposure
to
variability
of
returns
from
other
interests
held
in
the
investee.
While
the
consolidated
entity
does
not
expect
the
new
standard
to
have
an
impact
on
its
current
composition,
it
has
yet
to
perform
a
detailed
analysis
of
the
new
guidance.
(iii) AASB
12
Disclosure
of
Interests
in
Other
Entities
(issued
August
2011)
–
effective
for
annual
reporting
periods
beginning
on
or
after
1
January
2013.
AASB
12
combines
existing
disclosures
from
AASB
127
Consolidated
and
Separate
Financial
Statements,
AASB
128
Investments
in
Associates
and
AASB
131
Interests
in
Joint
Ventures.
Introduces
new
disclosure
requirements
for
interests
in
associates
and
joint
arrangements,
as
well
as
new
requirements
for
unconsolidated
structured
entities.
As
this
is
a
disclosure
standard
only,
there
will
be
no
impact
on
amounts
recognised
in
the
financial
statements.
(iv) AASB
13
Fair
Value
Measurement
(issued
September
2011)
-‐
effective
for
annual
reporting
periods
beginning
on
or
after
1
January
2013.
Currently,
fair
value
measurement
requirements
are
included
in
several
Accounting
Standards.
AASB
13
establishes
a
single
framework
for
measuring
fair
value
of
financial
and
non-‐financial
items
recognised
at
fair
value
in
the
statement
of
financial
position
or
disclosed
in
the
notes
in
the
financial
statements.
Under
AASB
13
additional
disclosures
will
be
required
for
items
measured
at
fair
value
in
the
statement
of
financial
position,
as
well
as
items
merely
disclosed
at
fair
value
in
the
notes
to
the
financial
statements.
The
consolidated
entity
has
yet
to
conduct
a
detailed
analysis
of
the
differences
between
the
current
fair
valuation
methodologies
used
and
those
required
by
AASB
13.
However,
when
this
standard
is
adopted
for
the
first
time
for
the
year
ended
30
June
2014,
there
will
be
no
impact
on
the
financial
statements
because
the
revised
fair
value
measurement
requirements
apply
prospectively
from
1
July
2013.
(v) AASB
119
Employee
Benefits
(reissued
September
2011)
-‐
effective
for
annual
reporting
periods
beginning
on
or
after
1
January
2013.
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
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57
HUB24
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ANNUAL
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noteS to tHe
NOTES
TO
THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
The
main
changes
under
AASB
119
include:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
Employee
benefits
expected
to
be
settled
(as
opposed
to
due
to
settled
under
current
standard)
wholly
within
12
months
after
the
end
of
the
reporting
period
are
short-‐term
benefits,
and
therefore
not
discounted
when
calculating
leave
liabilities.
Annual
leave
not
expected
to
be
used
wholly
within
12
months
of
end
of
reporting
period
will
in
future
be
discounted
when
calculating
leave
liability.
Elimination
of
the
‘corridor’
approach
for
deferring
gains/losses
for
defined
benefit
plans
Actuarial
gains/losses
on
remeasuring
the
defined
benefit
plan
obligation/asset
to
be
recognised
in
OCI
rather
than
in
profit
or
loss,
and
cannot
be
reclassified
in
subsequent
periods
Subtle
amendments
to
timing
for
recognition
of
liabilities
for
termination
benefits
The
consolidated
entity
currently
calculates
its
liability
for
annual
leave
employee
benefits
on
the
basis
that
it
is
due
to
be
settled
within
12
months
of
the
end
of
the
reporting
period
because
employees
are
entitled
to
use
this
leave
at
any
time.
The
amendments
to
AASB
119
require
that
such
liabilities
be
calculated
on
the
basis
of
when
the
leave
is
expected
to
be
taken,
i.e.
expected
settlement.
The
consolidated
entity
has
yet
to
quantify
the
impact
of
adopting
AASB
119.
(vi) AASB
2011-‐4
Amendments
to
Australian
Accounting
Standards
to
Remove
Individual
Key
Management
Personnel
Disclosure
Requirements
(issued
July
2011)
-‐
effective
for
annual
reporting
periods
beginning
on
or
after
1
July
2013.
AASB
2011-‐4
deletes
the
disclosure
requirements
for
individual
key
management
personnel
from
AASB
124
Related
Party
Disclosures.
When
this
standard
is
first
adopted
for
the
year
ended
30
June
2014,
individual
key
management
personnel
disclosures
relating
to
reconciliations
of
their
option
and
shareholding
balances,
loans,
and
other
transactions
and
balances,
will
no
longer
be
presented
in
the
notes
to
the
financial
statements
under
AASB
124.
Instead,
Regulation
2M.3.03(1)
of
the
Corporations
Act
2001
requires
that
these
disclosures
be
included
as
part
of
the
audited
remuneration
report.
(vii) AASB
2012-‐9
Amendment
to
AASB
1048
arising
from
the
Withdrawal
of
Australian
Interpretation
1039
(issued
December
2012)
-‐
effective
for
annual
reporting
periods
beginning
on
or
after
1
January
2013.
AASB
2012-‐9
deletes
Australian
Interpretation
1039
Substantive
Enactment
of
Major
Tax
Bills
In
Australia
from
the
list
of
mandatory
Australian
Interpretations
to
be
applied
by
entities
preparing
financial
statements
under
the
Corporations
Act
2001
or
other
general
purpose
financial
statements.
There
will
be
no
impact
on
first-‐time
adoption
of
this
amendment
as
the
consolidated
entity
does
not
account
for
proposed
changes
in
taxation
legislation
until
the
relevant
Bill
has
passed
through
both
Houses
of
Parliament,
which
is
consistent
with
the
views
expressed
by
the
Australian
Accounting
Standards
Board
in
their
agenda
decision
of
December
2012.
(viii) AASB
2013-‐5
Amendments
to
Australian
Accounting
Standards
-‐
Investment
Entities
(issued
August
2013)
-‐
effective
for
annual
reporting
periods
beginning
on
or
after
1
January
2014.
AASB
2013-‐5
defines
an
‘investment
entity’
and
requires
a
parent
that
is
an
investment
entity
to
measure
its
investments
in
particular
subsidiaries
at
fair
value
through
profit
or
loss
in
its
consolidated
and
separate
financial
statements.
The
amendment
prescribes
three
criteria
that
must
be
met
in
order
for
an
entity
to
be
defined
as
an
investment
entity,
as
well
as
four
‘typical
characteristics’
to
consider
in
assessing
the
criteria.
The
amendment
also
introduces
disclosure
requirements
for
investment
entities
into
AASB
12
Disclosure
of
Interests
in
Other
Entities
and
amends
AASB
127
Separate
Financial
Statements.
58 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
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LIMITED
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2013
ANNUAL
REPORT
NOTES
TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
While
the
consolidated
entity
does
not
expect
the
new
standard
to
have
an
impact,
it
has
yet
to
perform
a
detailed
analysis
of
the
new
guidance.
3.
FINANCIAL
RISK
MANAGEMENT
OBJECTIVES
AND
POLICIES
The
consolidated
entity’s
principal
financial
instruments
comprise
receivables,
payables,
finance
leases
and
cash
and
cash
equivalents.
The
company
and
consolidated
entity
do
not
have
debt
facilities
and
do
not
trade
in
derivative
instruments,
other
than
where
listed
and
unlisted
options
over
ordinary
shares
may
be
received
as
a
part
consideration
for
corporate
fees
earned.
The
consolidated
entity
has
exposure
to
the
following
risks
from
its
use
of
financial
instruments:
(cid:127)
(cid:127)
Credit
risk
Liquidity
risk
(cid:127) Market
risk.
This
note
presents
information
about
the
company’s
and
the
consolidated
entity’s
exposure
to
each
of
the
above
risks,
their
objectives,
policies
and
processes
for
measuring
and
managing
risk,
and
the
management
of
capital.
Further
quantitative
disclosures
are
included
throughout
this
financial
report.
The
Board
of
Directors
has
overall
responsibility
for
the
establishment
and
oversight
of
the
risk
management
framework.
Risk
management
policies
are
established
to
identify
and
analyse
the
risks
faced
by
the
company
and
the
consolidated
entity,
to
set
appropriate
risk
limits
and
controls,
and
to
monitor
risks
and
adherence
to
limits.
Risk
management
policies
and
systems
are
reviewed
regularly
to
reflect
changes
in
market
conditions
and
the
company’s
and
consolidated
entity’s
activities.
The
company
and
consolidated
entity,
through
their
training
and
management
standards
and
procedures,
aim
to
develop
a
disciplined
and
constructive
control
environment
in
which
all
employees
and
consultants
understand
their
roles
and
obligations.
The
consolidated
entity
Audit,
Risk
and
Compliance
Committee
oversees
how
management
monitors
compliance
with
the
company’s
and
the
consolidated
entity’s
risk
management
policies
and
procedures
and
reviews
the
adequacy
of
the
risk
management
framework
in
relation
to
risks
faced.
The
Committee
is
assisted
by
external
professional
advisors
from
time
to
time.
Credit
risk
Credit
risk
is
the
risk
of
financial
loss
to
the
consolidated
entity
if
a
customer
or
counterparty
to
a
financial
instrument
fails
to
meet
its
contractual
obligations,
and
arises
from
the
financial
assets
of
the
consolidated
entity,
which
comprise
cash
and
cash
equivalents
and
principally,
trade
receivables.
For
the
company
it
arises
from
receivables
due
from
subsidiaries.
Exposure
at
reporting
date
is
addressed
at
each
particular
note.
The
consolidated
entity
does
not
hold
any
credit
derivatives
to
offset
its
credit
exposure.
It
is
the
consolidated
entity's
policy
that
all
customers
who
wish
to
trade
on
credit
terms
are
subject
to
credit
verification
procedures
including
an
assessment
of
their
independent
credit
worthiness,
financial
position,
past
experience
and
industry
reputation.
Risk
limits
are
set
for
each
individual
customer
in
accordance
with
parameters
set
by
the
Board.
These
risk
limits
are
regularly
monitored.
In
addition,
credit
risk
exposures
and
receivable
balances
are
monitored
on
an
ongoing
basis
with
the
intended
result
that
the
consolidated
entity's
exposure
to
bad
debts
is
not
significant.
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noteS to tHe
NOTES
TO
THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
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3.
FINANCIAL
RISK
MANAGEMENT
OBJECTIVES
AND
POLICIES
(CONT’D)
The
consolidated
entity
also
has
credit
risk
in
respect
of
its
corporate
income
debtors.
In
the
case
of
most
transactions
involving
corporate
income,
revenue
is
generally
earned
over
a
period
of
several
months
due
to
the
complexity
and
size
of
the
work
involved.
The
consolidated
entity
manages
this
risk
by
entering
into
contractual
agreements
with
its
counterparties,
obtaining
external
legal
advice
where
necessary,
at
the
start
of
each
transaction.
The
Board
has
direct
involvement
with
the
counterparties
during
the
engagement
phase
of
each
transaction
in
order
to
assess
their
suitability.
The
consolidated
entity
policy
is
to
provide
financial
guarantees
only
to
wholly-‐owned
subsidiaries.
Liquidity
risk
Liquidity
risk
is
the
risk
that
the
consolidated
entity
will
not
be
able
to
meet
its
financial
obligations
as
they
fall
due.
The
consolidated
entity’s
approach
to
managing
liquidity
risk
is
to
ensure,
as
far
as
possible,
that
it
will
always
have
sufficient
liquidity
to
meet
its
liabilities
when
due,
under
both
normal
and
stressed
conditions,
without
incurring
unacceptable
losses
or
risking
damage
to
the
consolidated
entity’s
reputation.
The
consolidated
entity
typically
ensures
that
it
has
sufficient
cash
on
demand
to
meet
operational
expenses
for
a
period
of
90
days,
excluding
the
potential
impact
of
extreme
circumstances
that
cannot
be
reasonably
predicted.
The
consolidated
entity
has
no
debt
facilities
or
credit
lines.
Refer
to
Note
29:
Financial
Instruments
for
a
sensitivity
analysis
of
the
consolidated
entity’s
financial
assets
and
liabilities
maturity.
Market
risk
Market
risk
is
the
risk
that
changes
in
market
prices
will
affect
the
consolidated
entity’s
income
and
include
price
risk.
The
company
no
longer
carries
on
principal
trading
activities.
Capital
management
The
Board’s
policy
is
to
maintain
a
sufficient
capital
base
so
as
to
maintain
investor,
creditor
and
market
confidence
and
to
sustain
future
development
of
the
business.
It
is
noted
that
the
company,
through
its
subsidiary
HUB24
Custodial
Services
Limited,
fully
complied
with
the
minimum
capital
requirements
of
the
ASX
and
ACH
Market
Rules
as
a
market
participant
and
AFSL
base
level
financial
requirements
so
as
to
ensure
ongoing
capital
adequacy.
There
were
no
changes
in
the
consolidated
entity’s
approach
to
capital
management
during
the
year.
The
preparation
of
the
financial
statements
requires
management
to
make
judgments,
estimates
and
assumptions
that
affect
the
reported
amounts
in
the
financial
statements.
Management
continually
evaluates
its
judgments
and
estimates
in
relation
to
assets,
liabilities,
contingent
liabilities,
revenue
and
expenses.
Management
bases
its
judgments
and
estimates
on
historical
experience
and
on
other
various
factors
it
believes
to
be
reasonable
under
the
circumstances,
the
result
of
which
form
the
basis
of
the
carrying
values
of
assets
and
liabilities
that
are
not
readily
apparent
from
other
sources.
Actual
results
may
differ
from
these
estimates
under
different
assumptions
and
conditions.
Management
has
identified
the
following
critical
accounting
policies
for
which
significant
judgments,
estimates
and
assumptions
are
made.
Actual
results
may
differ
from
these
estimates
under
different
assumptions
and
conditions
and
may
materially
affect
financial
results
or
the
financial
position
reported
in
future
periods.
Further
details
of
the
nature
of
these
assumptions
and
conditions
may
be
found
in
the
relevant
notes
to
the
financial
statements.
60 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
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ANNUAL
REPORT
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TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
4.
SIGNIFICANT
ACCOUNTING
JUDGEMENTS,
ESTIMATES
AND
ASSUMPTIONS
Recovery
of
deferred
tax
assets
and
Research
and
Development
claim
Deferred
tax
assets
are
recognised
for
carried
forward
income
tax
losses
and
deductible
temporary
differences
to
the
extent
that
Directors
consider
that
it
is
probable
that
future
taxable
profits
will
be
available
to
utilise
those
temporary
differences
and
tax
losses.
Judgement
is
required
in
determining
the
amount
of
income
tax
revenue
relating
to
the
research
and
development
claim.
There
are
certain
transactions
and
calculations
undertaken
during
the
ordinary
course
of
business
for
which
the
ultimate
tax
determination
may
be
subject
to
change.
The
consolidated
entity
calculates
its
research
and
development
claim
based
on
the
consolidated
entity’s
understanding
of
the
tax
law.
Where
the
final
outcome
of
these
matters
is
different
from
the
amounts
that
were
initially
recorded,
such
differences
will
impact
the
profit
or
loss
in
the
year
in
which
such
determination
is
made.
Estimation
of
bad
debts
and
provisioning
Receivables
are
assessed
by
management
for
recoverability
based
on
days
past
due
or
pending
legal
actions
and
other
counter
party
information.
Intangible
assets
The
carrying
value
of
intangible
assets
(including
goodwill)
is
assessed
for
indications
that
the
asset
has
been
impaired
in
accordance
with
the
accounting
policy
under
the
heading
Goodwill
and
Intangibles.
The
recoverable
amounts
of
cash
generating
units
have
been
determined
based
on
value-‐in-‐use
calculations.
These
calculations
require
the
use
of
assumptions.
Refer
to
Note
12
for
details
of
these
assumptions
and
the
potential
impact
of
changes
to
these
assumptions.
Share-‐based
payment
transactions
The
consolidated
entity
measures
the
cost
of
equity-‐settled
transactions
with
employees
by
reference
to
the
fair
value
of
the
equity
instruments
at
the
date
at
which
they
were
granted.
The
fair
value
is
determined
using
a
binomial
method.
The
accounting
estimates
and
assumptions
relating
to
the
equity-‐settled
share-‐based
payments
would
have
no
impact
on
the
carrying
amounts
of
assets
or
liabilities
within
the
next
annual
reporting
period
but
may
impact
expenses
and
equity.
Capitalisation
of
development
costs
The
consolidated
entity
capitalises
project
development
costs
eligible
for
capitalisation.
The
capitalised
costs
are
all
directly
attributable
costs
necessary
to
create,
produce,
and
prepare
the
asset
to
be
capable
of
operating
in
the
manner
intended.
The
consolidated
entity
amortises
the
capitalised
project
costs
over
the
project’s
useful
life.
5.
OPERATING
SEGMENTS
Identification
of
reportable
segments
The
consolidated
entity
has
identified
its
operating
segments
based
on
the
internal
reports,
that
are
reviewed
and
used
by
the
executive
management
team
(the
chief
operating
decision
makers)
in
assessing
performance
and
in
determining
the
allocation
of
resources.
Discrete
financial
information
about
each
of
these
operating
businesses
is
reported
to
the
executive
management
team
on
a
monthly
basis.
The
accounting
policies
used
by
the
consolidated
entity
in
reporting
segments
internally
are
the
same
as
those
contained
in
Note
2
to
the
accounts
and
in
the
prior
period.
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
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61
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ANNUAL
REPORT
noteS to tHe
NOTES
TO
THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
5.
OPERATING
SEGMENTS
(CONT’D)
Investment
Platform
The
HUB24
Portfolio
Service
is
a
single
platform
solution
that
enables
clients
to
benefit
from
cost
effective
executions
and
management
of
trades
whilst
still
retaining
full
beneficial
ownership
of
securities
for
improved
tax
efficiencies.
The
platform
offers
full
transaction
and
reporting
capability
on
wholesale
managed
funds,
listed
securities,
exchanged
traded
funds,
non-‐unitised
portfolios
(SMA’s),
term
deposits,
bonds,
cash
and
margin
lending.
Stockbroking
The
stockbroking
segment,
now
a
discontinued
operation
conducted
a
business
of
stockbroking,
sponsoring
of
share
issues,
secondary
placements,
investment
research
and
advice,
corporate
structuring
and
corporate
finance.
Accounting
policies
and
inter-‐segment
transactions
The
accounting
policies
used
by
the
consolidated
entity
in
reporting
segments
internally
are
the
same
as
those
contained
in
Note
2.
Major
customers
The
consolidated
entity
had
no
external
clients
from
which
it
derived
more
than
10%
of
revenue.
Operating
Segment
Financial
Information
Year
ended
30
June
2013
Revenue
External
revenue
Stockbroking
(Discontinued
operations)
Investment
Platform
Corporate/
Administration
5,215,849
1,228,366
Total
6,444,215
6,444,215
-‐
-‐
Total
revenue
5,215,849
1,228,366
Segment
operating
result
Other
non-‐operating
items:
Interest
and
other
income
Bank
fees
Bad
debts
expense
Depreciation
and
amortisation
Onerous
contracts
expense
Share
based
payments
expense
Loss
before
income
tax
expense
Income
tax
benefit
Loss
after
income
tax
expense
(2,184,163)
(2,786,740)
(3,662,635)
(8,633,538)
61,685
(6,721)
(70,450)
-‐
(841,588)
(943,323)
(3,984,560)
106,260
(21,334)
-‐
(918,681)
-‐
-‐
(3,620,495)
471,511
(21,767)
-‐
(111,094)
-‐
(27,761)
(3,351,746)
639,456
(49,822)
(70,450)
(1,029,775)
(841,588)
(971,084)
(10,956,801)
1,173,832
(9,782,968)
The
Corporate/Administration
segment
has
been
separately
identified,
representing
unallocated
items
that
do
not
form
part
of
an
operating
segment.
The
consolidated
entity
operates
in
one
geographical
area
being
Australia
and
thus
all
revenues
are
derived
in
Australia.
62 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
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LIMITED
–
2013
ANNUAL
REPORT
NOTES
TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
5.
OPERATING
SEGMENTS
(CONT’D)
Year
ended
30
June
2012
Revenue
External
revenue
Total
revenue
Segment
operating
result
Other
non-‐operating
items:
Interest
and
other
income
Bank
fees
Bad
debts
expense
Depreciation
and
amortisation
Impairment
expense
Share
based
payments
expense
Loss
before
income
tax
expense
Income
tax
expense
Loss
after
income
tax
expense
Stockbroking
(Discontinued
operations)
Investment
Platform
Corporate/
Administration
Total
6,445,933
6,445,933
226,261
226,261
-‐
-‐
6,672,194
6,672,194
(2,854,382)
(2,540,780)
(2,401,651)
(7,796,813)
-‐
-‐
(96,746)
(423,697)
(4,043,123)
-‐
(7,417,948)
-‐
-‐
-‐
-‐
(2,095,762)
(14,664,135)
-‐
(19,300,677)
626,846
(43,941)
-‐
(5,429)
(404,499)
(272,492)
(2,501,166)
626,845
(43,941)
(96,746)
(2,524,888)
(19,111,757)
(272,492)
(29,219,790)
(1,295,877)
(30,515,667)
The
consolidated
entity
operates
in
one
geographical
area
being
Australia
and
thus
all
revenues
are
derived
in
Australia.
Total
Segment
Assets
Stockbroking
(Discontinued
operations)
Investment
Platform
Corporate/
Administration
Total
30
June
2013
Segment
Assets
3,916,924
11,206,394
4,070,938
19,194,256
30
June
2012
Segment
Assets
21,362,716
7,678,586
2,149,877
31,191,179
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
P A G E | 5 8
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ANNUAL
REPORT
noteS to tHe
NOTES
TO
THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
6.
REVENUE
AND
EXPENSES
FROM
CONTINUING
OPERATIONS
Revenue
(a)
Interest
and
other
income
Portfolio
service
fees
Cash
margin
Brokerage
Other
platform
fees
Expenses
(b)
Employee
benefits
expenses
Wages
and
salaries
(incl
super
and
payroll
tax)
Share
based
payments
expense
Other
employee
benefits
expenses
(c)
Property
and
occupancy
costs
Rent
Other
occupancy
costs
(d)
Depreciation,
impairment
and
amortisation
Depreciation
Amortisation
of
intangibles
Impairment
of
intangibles
(e)
Administrative
expenses
Corporate
fees
Professional
and
consultancy
fees
Information
services
and
communication
Travel
and
entertainment
Other
administrative
expenses
CONSOLIDATED
2012
$
2013
$
756,924
203,678
134,623
133,141
1,228,366
195,794
-‐
6,526
23,941
226,261
4,084,416
27,761
262,683
4,374,859
2,755,339
231,570
40,922
3,027,831
335,405
18,710
354,115
322,150
25,977
348,126
111,094
918,681
-‐
1,029,775
158,843
1,936,920
15,074,063
17,169,826
371,561
682,006
494,908
259,406
373,086
2,180,967
304,890
595,299
415,257
155,184
220,181
1,690,811
64 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
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LIMITED
–
2013
ANNUAL
REPORT
NOTES
TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
7.
INCOME
TAX
(a)
Income
tax
expense/(benefit)
Current
tax
Research
and
development
claim
Deferred
tax
Income
tax
expense/(benefit)
Deferred
tax
included
in
income
tax
expense/(benefit)
comprises:
Decrease/(increase)
in
deferred
tax
assets
(Decrease)/increase
in
deferred
tax
liabilities
(b)
Reconciliation
of
income
tax
expense/(benefit)
to
pre
tax
accounting
profit/(loss)
Loss
from
continuing
operations
before
income
tax
Loss
from
discontinued
operations
before
income
tax
Prima
facie
income
tax
at
30%
Tax
effect
of
amounts
which
are
not
deductible
(taxable)
in
calculating
taxable
income:
Impairment
of
intangibles
Deferred
acquisition
expenses
Share
based
payments
Entertainment
Sundry
items
Under/(over)
provision
in
prior
years
Research
and
development
claim
Adjustment
to
deferred
tax
asset
Non-‐recognition
of
deferred
tax
asset
Income
tax
expense/(benefit)
CONSOLIDATED
2012
$
2013
$
-‐
(1,173,832)
-‐
(57,237)
-‐
1,353,114
(1,173,832)
1,295,877
-‐
-‐
-‐
1,353,114
-‐
1,353,114
(6,972,240)
(21,801,842)
(7,417,948)
(3,984,559)
(10,956,799)
(29,219,790)
(3,287,040)
(8,765,937)
-‐
103,860
291,325
4,766
10,548
410,499
-‐
(1,173,832)
103,491
2,773,050
1,702,709
5,735,156
-‐
81,748
9,781
4,127
5,830,812
(57,237)
-‐
(89,371)
4,377,610
4,231,002
(1,173,832)
1,295,877
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
P A G E | 6 0
65
HUB24
LIMITED
–
2013
ANNUAL
REPORT
noteS to tHe
NOTES
TO
THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
7.
INCOME
TAX
(CONT’D)
(c)
Deferred
Tax
Asset
Deferred
tax
asset
comprises
temporary
differences
attributable
to:
Accrued
expenses
Provisions
Intangibles
Capital
raising
costs
Carry
forward
tax
losses
Non-‐recognition
of
deferred
tax
asset
Movements:
Opening
balance
Credited/(charged)
to
profit
or
loss
(Charged)/credited
to
equity
Current
tax
losses
Adjustment
to
prior
year
deferred
tax
asset
Non-‐recognition
of
deferred
tax
asset
Closing
balance
2013
$
CONSOLIDATED
2012
$
143,085
339,219
3,237,560
(85,801)
8,848,174
(12,482,237)
-‐
-‐
(279,729)
(21,450)
3,177,720
(103,491)
(2,773,050)
-‐
99,826
305,573
3,470,818
-‐
5,670,454
(9,546,671)
-‐
1,353,116
4,166,965
(30,730)
2,280,181
89,371
(7,858,903)
-‐
At
30
June
2013
the
consolidated
entity
has
unused
tax
losses
of
$8,848,174
and
other
temporary
differences
of
$3,634,063
(tax
effect
at
30%
value)
(2012:
unused
tax
losses
of
$5,670,454
and
other
temporary
differences
of
$3,876,217
tax
effect
at
30%
value)
for
which
no
asset
has
been
recognised.
(d) Tax
consolidation
(i)
Members
of
the
tax
consolidated
entity
and
the
tax
sharing
arrangement
The
company
and
its
100%
owned
Australian
resident
subsidiaries
formed
a
tax
consolidated
entity.
The
company
is
the
head
entity
of
the
tax
consolidated
entity.
Members
of
the
consolidated
entity
have
not
entered
into
a
tax
sharing
agreement.
(ii)
Tax
effect
accounting
by
members
of
the
tax
consolidated
entity
The
head
entity
and
the
controlled
entities
in
the
tax
consolidated
entity
continue
to
account
for
their
own
current
and
deferred
tax
amounts
as
per
UIG
1052
Tax
Consolidation
Accounting.
The
consolidated
entity
has
applied
the
consolidated
entity
allocation
approach
in
determining
the
appropriate
amount
of
current
taxes
and
deferred
taxes
to
allocate
to
members
of
the
tax
consolidated
entity.
The
current
and
deferred
tax
amounts
are
measured
in
a
systematic
manner
that
is
consistent
with
the
broad
principles
in
AASB
112
Income
Taxes.
In
addition
to
its
own
current
and
deferred
tax
amounts,
the
head
entity
also
recognises
current
tax
liabilities
(or
assets)
and
the
deferred
tax
assets
arising
from
unused
tax
losses
and
unused
tax
credits
(if
any)
assumed
from
controlled
entities
in
the
tax
consolidated
entity.
66 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
P A G E | 6 1
HUB24
LIMITED
–
2013
ANNUAL
REPORT
NOTES
TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
8.
DISCONTINUED
OPERATIONS
On
8
February
2013,
the
consolidated
entity
disposed
of
the
Broking
business
to
Wilsons
for
consideration
of
$1.
Financial
Performance
Revenue
from
discontinued
operations
Revenue
Interest
and
other
income
Expenses
from
discontinued
operations
Trading
fees
Employee
benefits
expenses
Property
and
occupancy
costs
Depreciation,
amortisation
and
impairment
Deferred
acquisition
exense
Other
expenses
Loss
before
income
tax
expense
from
disccontinued
operations
Income
tax
expense
Loss
after
income
tax
Loss
on
disposal
before
income
tax
expense
Income
tax
expense
Loss
on
disposal
after
income
tax
expense
CONSOLIDATED
2012
$
2013
$
5,215,849
61,685
5,277,535
6,445,933
-‐
6,445,933
3,914,995
1,810,161
450,838
-‐
346,200
538,749
7,060,942
5,085,930
2,984,077
713,356
4,466,820
-‐
613,698
13,863,881
(1,783,408)
-‐
(1,783,408)
(7,417,948)
-‐
(7,417,948)
(2,201,152)
-‐
(2,201,152)
-‐
-‐
-‐
Loss
after
income
tax
from
discontinued
operations
(3,984,560)
(7,417,948)
Cash
flow
information
Net
cash
used
in
operating
activities
Net
cash
used
in
financing
activities
Net
decrease
in
cash
and
cash
equivalents
from
discontinued
operations
Carrying
amounts
of
assets
and
liabilities
Total
assets
Provisions
Total
liabilities
Net
assets
2013
$
(3,638,360)
-‐
(3,638,360)
CONSOLIDATED
2012
$
(2,951,128)
-‐
(2,951,128)
CONSOLIDATED
2012
$
-‐
2013
$
-‐
43,611
43,611
25,561
25,561
(43,611)
(25,561)
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
P A G E | 6 2
67
HUB24
LIMITED
–
2013
ANNUAL
REPORT
noteS to tHe
NOTES
TO
THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
8.
DISCONTINUED
OPERATIONS
(CONT’D)
Details
of
the
disposal
Total
sale
consideration
Carrying
amount
of
employee
liabilities
transferred
on
sale
Disposal
costs
Loss
on
disposal
before
income
tax
Income
tax
expense
Loss
on
disposal
after
income
tax
9.
CURRENT
ASSETS
-‐
TRADE
AND
OTHER
RECEIVABLES
Client
receivables
Trade
receivables
Allowance
for
impairment
loss
(i)
Other
debtors
(i)
Allowance
for
impairment
loss
2013
$
1
43,611
(2,244,764)
(2,201,152)
-‐
(2,201,152)
CONSOLIDATED
2012
$
-‐
-‐
-‐
-‐
-‐
-‐
2013
$
-‐
127,031
-‐
127,032
1,256,098
1,383,130
CONSOLIDATED
2012
$
15,384,409
121,873
(84,306)
15,421,976
197,520
15,619,496
Trade
receivables
are
non-‐interest
bearing
and
are
generally
on
30
day
terms.
A
provision
for
impairment
loss
is
recognised
when
there
is
objective
evidence
that
an
individual
trade
receivable
is
impaired.
Impairment
losses
on
trade
and
client
debt
receivables
totalling
$Nil
(2012:
$84,306)
has
been
recognised
by
the
consolidated
entity
in
the
current
year.
These
amounts
have
been
included
in
the
statement
of
profit
or
loss
and
other
comprehensive
income
as
an
administrative
expense.
Movements
in
the
provision
for
impairment
loss
were
as
follows:
Opening
balance
Charge
for
the
year
Amounts
written
off
Closing
balance
(ii)
Other
debtors
84,306
-‐
(84,306)
-‐
56,673
96,746
(69,113)
84,306
As
at
30
June
2013,
a
tax
refund
receivable
from
the
ATO
was
recognised
for
a
2012
financial
year
research
and
development
tax
offset
claimed
with
respect
to
the
HUB24
platform
of
$1,173,000.
68 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
P A G E | 6 3
HUB24
LIMITED
–
2013
ANNUAL
REPORT
NOTES
TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
9.
CURRENT
ASSETS
-‐
TRADE
AND
OTHER
RECEIVABLES
(CONT'D)
At
30
June,
the
ageing
analysis
of
receivables
is
as
follows:
2013
Consolidated
2012
Consolidated
*
PDNI
-‐
Past
due
not
impaired
CI
-‐
Considered
impaired
0-‐30
days
1,383,130
31-‐60
days
-‐
61-‐90
days
PDNI
*
-‐
15,508,382
111,113
-‐
Other
balances
within
trade
and
other
receivables
do
not
contain
impaired
assets
and
are
not
past
due.
It
is
expected
that
these
other
balances
will
be
received
when
due.
(iii)
Fair
value
and
credit
risk
Due
to
the
short
term
nature
of
these
receivables,
their
carrying
value
is
assumed
to
approximate
their
fair
value.
10.
CURRENT
ASSETS
–
OTHER
CURRENT
ASSETS
Prepayments
Other
assets
11.
NON-‐CURRENT
ASSETS
–
OFFICE
EQUIPMENT
Computer
Equipment
At
cost
Accumulated
depreciation
Office
Furniture
and
Fittings
At
cost
Accumulated
depreciation
Leased
Assets
At
cost
Accumulated
depreciation
Total
Office
Equipment
Cost
Accumulated
depreciation
Total
Net
Carrying
Amount
CONSOLIDATED
2012
$
25,676
13,366
39,042
2013
$
20,100
323,768
343,868
CONSOLIDATED
2012
$
2013
$
104,669
(74,347)
30,322
229,497
(204,890)
24,607
-‐
-‐
-‐
390,024
(313,034)
76,990
457,296
(253,553)
203,743
17,500
(6,708)
10,792
334,166
(279,236)
54,929
864,820
(573,295)
291,525
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
P A G E | 6 4
69
HUB24
LIMITED
–
2013
ANNUAL
REPORT
noteS to tHe
NOTES
TO
THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
11.
NON-‐CURRENT
ASSETS
–
OFFICE
EQUIPMENT
(CONT’D)
Reconciliations
of
the
carrying
amounts
at
the
beginning
and
end
of
the
financial
year:
Computer
Equipment
Carrying
amount
at
beginning
Acquisitions
through
business
combinations
Other
additions
Disposals
Depreciation
expense
Net
Carrying
Amount
Office
Furniture
and
Fittings
Carrying
amount
at
beginning
Acquisitions
through
business
combinations
Other
additions
Disposals
Depreciation
expense
Net
Carrying
Amount
Leased
Assets
Carrying
amount
at
beginning
Additions
Disposals
Depreciation
expense
Net
Carrying
Amount
Total
Office
Equipment
Carrying
amount
at
beginning
Acquisitions
through
business
combinations
Other
additions
Disposals
Depreciation
Net
Carrying
Amount
CONSOLIDATED
2012
$
2013
$
76,990
-‐
-‐
(24,506)
(22,162)
30,322
203,743
-‐
-‐
(91,806)
(87,330)
24,607
10,792
-‐
(9,190)
(1,602)
(0)
62,139
36,843
14,327
-‐
(36,319)
76,990
134,137
135,894
57,004
-‐
(123,292)
203,743
14,000
-‐
-‐
(3,208)
10,792
291,525
-‐
-‐
(125,502)
(111,094)
54,929
210,276
172,737
71,331
-‐
(162,819)
291,525
70 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
P A G E | 6 5
HUB24
LIMITED
–
2013
ANNUAL
REPORT
NOTES
TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
12.
NON-‐CURRENT
ASSETS
–
INTANGIBLE
ASSETS
Investment
Platform
At
cost
Accumulated
amortisation
and
impairment
Net
carrying
amount
Total
Net
Carrying
Amount
Reconciliations
of
the
carrying
amount
at
the
beginning
and
end
of
the
financial
year:
Investment
Platform
Opening
carrying
amount
Acquisitions
through
business
combinations
Other
additions
–
capitalised
development
costs
Impairment
charge
Amortisation
charge
Closing
carrying
amount
(a)
Impairment
tests
for
intangible
assets
Investment
Platform
CONSOLIDATED
2012
$
2013
$
25,
493,112
(18,083,968)
7,409,144
24,565,287
(17,165,287)
7,400,000
7,409,144
7,400,000
7,400,000
-‐
927,825
-‐
(918,681)
7,409,144
19,564,222
1,106,588
2,747,928
(13,922,502)
(2,096,236)
7,400,000
7,409,144
7,409,144
7,400,000
7,400,000
Intangible
assets
are
allocated
to
the
consolidated
entity's
cash-‐generating
units
(CGUs)
identified
according
to
operating
segment.
The
recoverable
amount
of
a
CGU
is
determined
based
on
value-‐in-‐use
calculations.
These
calculations
use
cash
flow
projections
based
on
financial
budgets
reviewed
by
directors
covering
an
eight
year
period.
Cash
flows
beyond
the
eight
year
period
are
extrapolated
using
a
terminal
value.
(b)
Key
assumptions
used
for
value-‐in-‐use
calculations
1.
Growth
in
funds
under
administration
on
the
platform
-‐
Growth
in
the
number
of
client
accounts
and
hence
funds
under
administration
on
the
platform
are
a
key
assumption
used
in
calculating
future
cashflows.
Given
the
platform's
early
stage
of
development
and
relatively
low
base
of
existing
funds
under
administration,
assumed
growth
rates
are
significant
in
the
next
two
to
three
years
in
percentage
terms.
Management
have
estimated
future
funds
under
administration
on
the
platform
with
reference
to
current
client
transition
rates
and
pipeline
monitoring.
2.
Pre-‐tax
discount
rate
-‐
The
pre-‐tax
discount
rate
used
for
the
company's
value-‐in-‐use
calculations
is
18.5%.
3.
Terminal
growth
rate
-‐
The
terminal
growth
rate
used
for
the
company's
value-‐in-‐use
calculations
is
2.5%.
4.
Period
over
which
cashflows
have
been
discounted
-‐
Management
have
used
a
period
of
eight
years
to
discount
projected
cashflows
for
its
value-‐in-‐use
calculations.
This
period
is
considered
reasonable
given
the
early
stage
of
development
of
the
platform
and
the
remaining
useful
life
over
which
the
intangible
assets
is
being
amortised
(7.4
years
from
30
June
2013).
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
P A G E | 6 6
71
HUB24
LIMITED
–
2013
ANNUAL
REPORT
noteS to tHe
NOTES
TO
THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
12.
NON-‐CURRENT
ASSETS
–
INTANGIBLE
ASSETS
(CONT’D)
(c)
Impact
of
possible
changes
in
key
assumptions
If
the
projected
earnings
on
client
account
balances
used
in
the
value-‐in-‐use
calculation
for
the
investment
platform
CGU
are
2%
lower
than
management
estimates
over
the
period
of
the
value-‐in-‐use
calculation
there
would
be
an
impairment
of
intangible
assets
of
$3,500,000.
If
the
pre-‐tax
discount
rate
for
this
CGU
had
been
2%
higher
than
management
estimates
(20.5%
instead
of
18.5%)
there
would
be
an
impairment
of
intangible
assets
of
$735,000.
13.
NON-‐CURRENT
ASSETS
–
OTHER
NON-‐CURRENT
ASSETS
Security
deposits
and
guarantees
14.
CURRENT
LIABILITIES
–
TRADE
AND
OTHER
PAYABLES
Client
payables
Trade
creditors
Sundry
creditors
Deferred
consideration
15.
CURRENT
LIABILITIES
–
PROVISIONS
Employee
benefits
-‐
Annual
leave
Broking
closure
Lease
make
good
Broking
closure
CONSOLIDATED
2012
$
778,862
778,862
2013
$
460,339
460,339
CONSOLIDATED
2012
$
14,625,597
571,186
1,469,007
654,797
17,320,587
2013
$
-‐
321,388
420,011
-‐
741,399
CONSOLIDATED
2012
$
2013
$
292,532
687,479
88,400
1,068,411
357,989
-‐
60,000
417,989
The
provision
represents
the
estimated
costs
associated
with
exiting
the
stockbroking
business
including
$473,001
relating
to
onerous
rental
contracts
and
$214,478
relating
to
the
finalisation
of
claims.
Lease
make
good
The
provision
represents
the
present
value
of
the
estimated
costs
to
make
good
the
office
premises
leased
by
the
consolidated
entity
at
the
end
of
the
respective
lease
terms.
72 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
P A G E | 6 7
HUB24
LIMITED
–
2013
ANNUAL
REPORT
NOTES
TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
15.
CURRENT
LIABILITIES
–
PROVISIONS
(CONT’D)
Movements
in
each
class
of
provision
during
the
financial
year,
other
than
employee
benefits,
are
set
out
below:
Consolidated
-‐
2013
Carrying
amount
at
the
start
of
the
year
Additional
provisions
recognised
Amounts
used
Carrying
amount
at
the
end
of
the
year
16.
NON-‐CURRENT
LIABILITIES
–
PROVISIONS
Employee
Benefits
-‐
Long
service
leave
17.
ISSUED
CAPITAL
(a)
Issued
and
paid
up
capital
Ordinary
shares,
fully
paid
(b)
Other
equity
securities
Treasury
shares
Total
Issued
and
paid
up
capital
Movements
in
issued
and
paid
up
capital
Beginning
of
the
financial
year
Shares
Issued
-‐
Placement
20
August
2012
Shares
Issued
-‐
Rights
issue
23
August
2012
Shares
Issued
-‐
Placement
4
September
2012
Total
shares
pre
consolidation
Share
consolidation
(40
for
1)
Shares
Issued
-‐
Placement
for
25
March
2013
Capital
raising
costs
End
of
the
financial
year
Broking
closure
$
Lease
make
good
$
-‐
1,056,066
(368,587)
687,479
60,000
28,400
-‐
88,400
CONSOLIDATED
2012
$
2013
$
62,318
10,548
2013
Number
CONSOLIDATED
2012
Number
CONSOLIDATED
2012
$
2013
$
38,913,469
686,544,268
66,993,612
54,301,655
221,908
39,135,377
8,876,274
695,420,542
(150,000)
66,843,612
(150,000)
54,151,655
686,544,268
70,000,000
391,519,414
98,266,597
1,246,330,279
31,158,469
7,755,000
-‐
38,913,469
686,544,268
-‐
-‐
-‐
686,544,268
-‐
-‐
-‐
686,544,268
54,301,655
1,050,000
5,872,469
1,473,997
54,301,655
-‐
-‐
-‐
-‐
4,653,000
-‐
-‐
(357,509)
66,993,612
-‐
54,301,655
Movement
in
other
equity
securities
-‐
treasury
shares
Beginning
of
the
financial
year
Treasury
share
consolidation
(40
for
1)
Acquisition
of
shares
by
ESOT
End
of
the
financial
year
8,876,274
221,908
-‐
221,908
-‐
-‐
8,876,274
8,876,274
150,000
-‐
-‐
150,000
-‐
-‐
150,000
150,000
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
P A G E | 7 0
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HUB24
LIMITED
–
2013
ANNUAL
REPORT
noteS to tHe
NOTES
TO
THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
17.
CONTRIBUTED
EQUITY
(CONT’D)
Ordinary
shares
Fully
paid
ordinary
shares
carry
one
vote
per
share
and
carry
the
right
to
dividends.
On
20
August
2012
the
company
made
a
placement
of
70,000,000
ordinary
shares
at
$0.015
per
share
raising
$1,050,000
(post
share
consolidation
price
represents
$0.60).
On
23
August
2012
the
company
issued
391,519,414
shares
through
a
1
for
1
non-‐renounceable
pro
rata
rights
issue
at
$0.015
per
share
raising
$5,872,469
(post
share
consolidation
price
represents
$0.60).
On
4
September
2012
the
company
issued
8,266,597
ordinary
shares
at
$0.015
per
share
raising
$1,473,997
under
the
rights
offer
(post
share
consolidation
price
represents
$0.60).
On
25
March
2013
the
company
issued
7,755,000
ordinary
shares
at
$0.60
per
share
raising
$4,653,000
under
the
rights
offer.
Treasury
shares
Treasury
shares
are
shares
in
the
company
that
are
held
by
HUB24
Employee
Share
Ownership
Trust
(ESOT)
for
the
purpose
of
issuing
shares
under
the
company’s
Employee
Share
Option
Plan.
Share
consolidation
At
the
Annual
General
Meeting
of
the
company
held
30
November
2012,
shareholders
resolved
to
approve
a
consolidation
of
the
company's
shares
by
40
to
1.
The
consolidation
took
effect
on
11
December
2012.
18.
RESERVES
CONSOLIDATED
2012
$
2013
$
Share
based
payments
share
reserve
1,878,436
907,352
Represents
the
share
based
payments
expense
under
the
employee
and
advisor
share
plans.
19.
DIVIDEND
FRANKING
ACCOUNT
Franking
credits
available
to
shareholders
of
the
company
for
subsequent
financial
years
are
$445,120
(2012:
$311,934).
These
available
amounts
are
based
on
the
balance
of
the
dividend
franking
account
at
year
end
adjusted
for:
(a)
(b)
(c)
(d)
franking
credits
that
will
arise
from
the
payment
of
the
current
tax
liabilities;
franking
debits
that
will
arise
from
the
payment
of
dividends
recognised
as
a
liability
at
year
end;
franking
credits
that
will
arise
from
the
receipt
of
dividends
recognised
as
receivables
by
the
tax
consolidated
entity
at
the
year
end,
and
franking
credits
that
may
be
prevented
from
being
distributed
in
subsequent
years.
The
ability
to
utilise
the
franking
credits
is
dependent
upon
there
being
sufficient
available
reserves
to
declare
dividends.
In
accordance
with
the
tax
consolidation
legislation,
the
company
as
the
head
entity
in
the
tax-‐
consolidated
group
has
also
assumed
the
benefit
of
franking
credits.
74 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
P A G E | 6 9
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LIMITED
–
2013
ANNUAL
REPORT
NOTES
TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
20.
RECONCILIATION
OF
CASHFLOWS
(a)
Reconciliation
of
the
net
loss
after
tax
to
cash
flow
from
operations
CONSOLIDATED
2012
$
2013
$
Net
Loss
after
tax
for
the
year
(9,782,968)
(30,515,668)
Non-‐cash
items:
Bad
and
doubtful
debts
Depreciation
and
amortisation
Disposal/write-‐off
of
office
equipment
Share
based
payments
expense
Impairment
of
intangibles
Changes
in
operating
assets
and
liabilities:
(Increase)/decrease
in
trade
and
other
receivables
(Increase)/decrease
in
deferred
tax
assets
(Increase)/decrease
in
other
assets
(Increase)/decrease
in
non
current
assets
Increase/(decrease)
in
trade
and
other
payables
Increase/(decrease)
in
provisions
Net
cash
flow
from
operating
activities
(b)
Reconciliation
of
cash
and
cash
equivalents
Cash
and
cash
equivalents
comprises:
Cash
on
hand
and
at
bank
Cash
at
bank
-‐
trust
account
The
net
cash
position
from
unpaid
buys
and
cash
held
on
behalf
of
clients
is
$Nil
(2012:
$153,716).
-‐
Cash
on
hand
and
at
bank
-‐
Unpaid
buys
-‐
Cash
at
bank
-‐
trust
account
(c)
Terms
and
conditions
70,450
1,029,775
125,502
971,084
-‐
96,745
2,524,888
-‐
272,492
19,111,757
14,165,916
-‐
(304,826)
318,523
(16,579,188)
702,193
(9,283,539)
(3,645,029)
1,353,114
(238,516)
-‐
3,752,062
75,659
(7,212,495)
9,542,846
-‐
9,542,846
4,982,673
2,079,581
7,062,254
9,542,846
-‐
-‐
9,542,846
7,062,254
1,925,865
(2,079,581)
6,908,538
For
the
purposes
of
the
Statement
of
cash
flows,
cash
and
cash
equivalents
includes
cash
on
hand
and
at
bank,
deposits
held
at
call
with
financial
institutions,
other
short
term,
highly
liquid
investments
with
maturities
of
three
months
or
less,
that
are
readily
convertible
to
known
amounts
of
cash
and
which
are
subject
to
an
insignificant
risk
of
changes
in
value
and
bank
overdrafts.
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
P A G E | 7 0
75
HUB24
LIMITED
–
2013
ANNUAL
REPORT
noteS to tHe
NOTES
TO
THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
21.
COMMITMENTS
AND
CONTINGENCIES
(a) Commitments
Future
minimum
rentals
payable
under
non-‐cancellable
operating
leases:
Within
1
year
After
1
year
but
not
more
than
5
years
Total
minimum
lease
payments
(b)
Contingencies
Contingent
assets
and
Liabilities
Nil
(2012
:
Nil)
Guarantees
Australian
Securities
and
Investments
Commission
Rental
bond
Level
11,
7
Macquarie
Place,
Sydney
Rental
bond
Level
45,
1
Farrer
Place,
Sydney
Rental
bond
Level
29,
55
Collins
St,
Melbourne
Rental
bond
Level
13,
115
Pitt
St,
Sydney
Trust
Company
security
deposit
22.
SHARE
BASED
PAYMENTS
PLAN
CONSOLIDATED
2012
$
1,060,432
610,177
1,670,609
2013
$
509,879
124,451
634,330
CONSOLIDATED
2012
$
2013
$
-‐
-‐
20,000
-‐
270,347
116,600
40,056
330,000
777,003
20,000
132,211
270,347
116,600
40,056
330,000
909,214
(a)
Recognised
share-‐based
payment
expenses
The
expense
recognised
from
equity-‐settled
share-‐based
payment
transactions
during
the
year
is
$971,085
(2012:
$272,492).
The
share-‐based
payment
plans
are
described
below.
(b)
Types
of
share-‐based
payment
plans
No
employee
share
options
were
issued
for
the
year
ended
30
June
2013.
Share
options
have
been
issued
to
certain
employees
as
a
key
component
of
each
individual
staff
member’s
overall
remuneration
as
part
of
the
acquisition
of
the
stockbroking,
research
and
advisory
teams
and
the
retention
of
existing
staff
members.
The
key
terms
and
conditions
of
the
options
are
as
follows:
76 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
P A G E | 7 1
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LIMITED
–
2013
ANNUAL
REPORT
NOTES
TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
Advisor
Plan
1
Number
of
Options
Issued
Expiry
Date
Exercise
Price
Vesting
Conditions
for
All
Options
Voting
Dividends
Specific
Terms
for
625,000
Options
There
are
no
cash-‐settlement
alternatives.
Advisor
Plan
2
Number
of
Options
Issued
Expiry
Date
Exercise
Price
Vesting
Conditions
for
All
Options
Voting
Dividends
Specific
Terms
for
187,500
Options
There
are
no
cash-‐settlement
alternatives.
625,000
31
January
2016
The
exercise
price
for
each
Option
(which
is
payable
immediately
upon
exercise)
is
$4.00
per
Option.
Subject
to
a
determination
of
the
board
of
directors
to
the
contrary,
it
is
a
condition
of
the
exercise
of
an
Option
that
the
Option
Holder
is
an
employee
of
or
engaged
as
a
consultant
to
the
company
unless
the
Option
Holder's
employment
or
consultancy
has
ceased
due
to
permanent
disability,
incapacity,
illness,
redundancy
or
death.
Option
holders
are
not
entitled
to
vote.
The
options
do
not
provide
any
entitlement
to
dividends
or
other
distributions
paid
to
ordinary
shareholders.
Performance-‐based
Component
(375,000
options):
50%
of
the
Performance
based
options
became
fully
vested
upon
the
divestment
of
the
stockbroking
business
in
February
2013
while
the
remaining
50%
have
lapsed.
The
full
exercise
price
of
$4.00
per
option
is
payable
upon
exercise.
Upfront
Component
(250,000
options):
50%
of
the
Upfront
Component
options
are
available
to
be
exercised
at
any
time
after
grant
date
being
29
May
2012,
while
the
remaining
50%
have
lapsed.
The
full
exercise
price
of
$4.00
per
option
will
be
payable
upon
exercise.
187,500
1
January
2016
The
exercise
price
for
each
Option
(which
is
payable
immediately
upon
exercise)
is
$4.00
per
Option.
Subject
to
a
determination
of
the
board
of
directors
to
the
contrary,
it
is
a
condition
of
the
exercise
of
an
Option
that
the
Option
Holder
is
an
employee
of
or
engaged
as
a
consultant
to
the
company
unless
the
Option
Holder's
employment
or
consultancy
has
ceased
due
to
permanent
disability,
incapacity,
illness,
redundancy
or
death.
Option
holders
are
not
entitled
to
vote.
The
options
do
not
provide
any
entitlement
to
dividends
or
other
distributions
paid
to
ordinary
shareholders.
Performance-‐based
Options
(187,500
options):
50%
of
the
Performance
based
options
became
fully
vested
upon
the
divestment
of
the
stockbroking
business
in
February
2013
while
the
remaining
50%
have
lapsed.
The
full
exercise
price
of
$4.00
per
option
is
payable
upon
exercise.
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
P A G E | 7 4
77
HUB24
LIMITED
–
2013
ANNUAL
REPORT
noteS to tHe
NOTES
TO
THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
Advisor
Plan
3
Number
of
Options
Issued
Expiry
Date
Exercise
Price
Vesting
Conditions
for
All
Options
Voting
Dividends
Specific
Terms
for
1,500,006
Options
There
are
no
cash-‐settlement
alternatives.
Advisor
Plan
4
Number
of
Options
Issued
Expiry
Date
Exercise
Price
Vesting
Conditions
for
All
Options
Voting
Dividends
Specific
Terms
for
150,000
Options
There
are
no
cash-‐settlement
alternatives.
1,500,006
31
January
2015
The
exercise
price
for
each
Option
(which
is
payable
immediately
upon
exercise)
is
$5.20
per
Option.
Subject
to
a
determination
of
the
board
of
directors
to
the
contrary,
it
is
a
condition
of
the
exercise
of
an
Option
that
the
Option
Holder
is
an
employee
of
or
engaged
as
a
consultant
to
the
company
unless
the
Option
Holder's
employment
or
consultancy
has
ceased
due
to
permanent
disability,
incapacity,
illness,
redundancy
or
death.
Option
holders
are
not
entitled
to
vote.
The
options
do
not
provide
any
entitlement
to
dividends
or
other
distributions
paid
to
ordinary
shareholders.
Upfront
Component
(750,000
options):
The
Upfront
Component
options
are
available
to
be
exercised
at
any
time
after
grant
date
being
19
April
2011.
The
full
exercise
price
of
$5.20
will
be
payable
upon
exercise.
Performance-‐based
Component
(750,006
options):
All
the
Performance-‐based
options
became
fully
vested
in
February
2013
with
the
divestment
of
the
stockbroking
business.
150,000
31
January
2015
The
exercise
price
for
each
Option
(which
is
payable
immediately
upon
exercise)
is
$5.20
per
Option.
Subject
to
a
determination
of
the
board
of
directors
to
the
contrary,
it
is
a
condition
of
the
exercise
of
an
Option
that
the
Option
Holder
is
an
employee
of
or
engaged
as
a
consultant
to
the
company
unless
the
Option
Holder's
employment
or
consultancy
has
ceased
due
to
permanent
disability,
incapacity,
illness,
redundancy
or
death.
Option
holders
are
not
entitled
to
vote.
The
options
do
not
provide
any
entitlement
to
dividends
or
other
distributions
paid
to
ordinary
shareholders.
Upfront
Component
(75,000
options):
The
Upfront
Component
options
are
available
to
be
exercised
at
the
exercise
price
of
$5.20
at
any
time
after
grant
date
being
1
June
2011.
Performance-‐based
Component
(75,000
options):
All
the
Performance-‐based
options
became
fully
vested
in
February
2013
with
the
divestment
of
the
stockbroking
business.
78 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
P A G E | 7 5
HUB24
LIMITED
–
2013
ANNUAL
REPORT
NOTES
TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
Share
Option
Plan
(‘SOP’)
–
SOP
Plan
1
Number
of
Options
Issued
190,000
Expiry
Date
Exercise
Price
Vesting
Conditions
for
All
Options
Voting
Dividends
Specific
Terms
for
190,000
Options
5
December
2015
The
exercise
price
for
each
Option
(which
is
payable
immediately
upon
exercise)
is
$3.80
per
Option.
Subject
to
a
determination
of
the
board
of
directors
to
the
contrary,
it
is
a
condition
of
the
exercise
of
an
Option
that
the
Option
Holder
is
an
employee
of
or
engaged
as
a
consultant
to
the
company
unless
the
Option
Holder's
employment
or
consultancy
has
ceased
due
to
permanent
disability,
incapacity,
illness,
redundancy
or
death.
Option
holders
are
not
entitled
to
vote.
The
options
do
not
provide
any
entitlement
to
dividends
or
other
distributions
paid
to
ordinary
shareholders.
Upfront-‐based
Options
(190,000
options):
The
Upfront-‐based
options
are
available
to
be
exercised
at
any
time
after
grant
date
being
5
December
2011.
The
Upfront-‐based
options
will
vest
in
tranches
of
30%
/
30%
/
40%
over
the
period
as
follows:
a) Tranche
1
(2.28
million
options)
-‐
the
date
being
the
12
month
anniversary
of
5
December
2011
(‘SOP
Plan
1
Relevant
Date’)
b) Tranche
2
(2.28
million
options)
-‐
the
date
being
the
24
month
anniversary
of
the
SOP
Plan
1
Relevant
Date
c) Tranche
3
(3.04
million
options)
-‐
the
date
being
the
36
month
anniversary
of
the
SOP
Plan
1
Relevant
Date.
As
at
30
June
2013,
93,500
options
have
lapsed,
38,750
have
vested
leaving
57,750
options
yet
to
vest.
There
are
no
cash-‐settlement
alternatives.
SOP
Plan
2
Number
of
Options
Issued
75,000
Expiry
Date
Exercise
Price
Vesting
Conditions
for
All
Options
Voting
Dividends
Specific
Terms
for
75,000
Options
4
February
2016
The
exercise
price
for
each
Option
(which
is
payable
immediately
upon
exercise)
is
$0.10
per
Option.
Subject
to
a
determination
of
the
board
of
directors
to
the
contrary,
it
is
a
condition
of
the
exercise
of
an
Option
that
the
Option
Holder
is
an
employee
of
or
engaged
as
a
consultant
to
the
company
unless
the
Option
Holder's
employment
or
consultancy
has
ceased
due
to
permanent
disability,
incapacity,
illness,
redundancy
or
death.
Option
holders
are
not
entitled
to
vote.
The
options
do
not
provide
any
entitlement
to
dividends
or
other
distributions
paid
to
ordinary
shareholders.
Upfront-‐based
Options
(75,000
options):
The
Upfront-‐based
options
are
available
to
be
exercised
at
any
time
after
grant
date
being
4
February
2012.
The
Upfront-‐based
options
will
vest
in
tranches
of
30%
/
30%
/
40%
over
the
period
as
follows:
a) Tranche
1
(0.9
million
options)
-‐
the
date
being
the
12
month
anniversary
of
5
December
2011
(“SOP
Plan
2
Relevant
Date”);
b) Tranche
2
(0.9
million
options)
-‐
the
date
being
the
24
month
anniversary
of
the
SOP
Plan
2
Relevant
Date;
c) Tranche
3
(1.2
million
options)
-‐
the
date
being
the
36
month
anniversary
of
the
SOP
Plan
2
Relevant
Date.
As
at
30
June
2013,
25,250
options
have
lapsed,
27,875
have
vested
leaving
21,875
options
yet
to
vest.
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
P A G E | 7 6
79
HUB24
LIMITED
–
2013
ANNUAL
REPORT
noteS to tHe
NOTES
TO
THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
There
are
no
cash-‐settlement
alternatives.
Other
Unlisted
Options
On
1
December
2010,
the
company
issued
312,500
options
to
Southern
Cross
Equities
Limited
as
a
component
of
placement
fees
to
Southern
Cross
Equities
Limited
as
lead
manager
on
the
capital
raising
undertaken
in
December
2010.
These
options
expire
1
December
2013.
There
are
no
cash-‐settlement
alternatives.
(c)
Summaries
of
options
granted
The
following
table
illustrates
the
number
and
weighted
average
exercise
prices
(WAEP)
of,
and
movements
in,
share
options
issued
during
the
year:
Outstanding
at
the
beginning
of
the
year
Granted
during
the
year
Forfeited
during
the
year
Exercised
during
the
year
Expired
during
the
year
Outstanding
at
end
of
the
year
Exercisable
at
the
end
of
the
year
2013
Number
3,022,500
-‐
507,500
-‐
-‐
2,515,006
2,435,381
2013
WAEP
$
$4.72
-‐
$3.96
-‐
-‐
-‐
$4.88
2012
Number
1,962,500
1,077,500
17,500
-‐
-‐
3,022,500
1,462,500
2012
WAEP
$
$5.12
$4.00
$4.00
-‐
-‐
$4.72
$4.92
The
outstanding
balance
as
at
30
June
2013
is
represented
by:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
1,650,006
options
over
ordinary
shares
with
an
exercise
price
of
$5.20
each,
fully
vested.
406,250
options
over
ordinary
shares
with
an
exercise
price
of
$5.20
each,
fully
vested.
312,500
options
over
ordinary
shares
with
an
exercise
price
of
$4.80
each,
fully
vested.
146,250
options
over
ordinary
shares
with
an
exercise
price
of
$3.80
each,
66,625
of
which
are
fully
vested
while
79,625
remain
unvested.
(d)
Range
of
exercise
price
and
remaining
contractual
life
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
312,500
options
have
an
exercise
price
of
$4.80
per
share
and
an
expiry
date
of
1
December
2013.
1,650,006
options
have
an
exercise
price
of
$5.20
per
share
and
an
expiry
date
of
31
January
2015.
96,500
options
have
an
exercise
price
of
$3.80
per
share
and
an
expiry
date
of
5
December
2015.
312,500
options
have
an
exercise
price
of
$4.00
per
share
and
an
expiry
date
of
31
January
2016.
49,750
options
have
an
exercise
price
of
$3.80
per
share
and
an
expiry
date
of
4
February
2016.
93,750
options
have
an
exercise
price
of
$4.00
per
share
and
an
expiry
date
of
1
January
2016.
(e)
Option
pricing
model
The
fair
value
of
all
equity-‐settled
options
is
estimated
as
at
the
date
of
grant
using
the
Black-‐Scholes-‐Merton
option
formula.
80 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
P A G E | 7 7
HUB24
LIMITED
–
2013
ANNUAL
REPORT
NOTES
TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
The
following
table
lists
the
inputs
to
the
models
used:
Dividend
Yield
(%)
Expected
Volatility
(%)
Risk-‐free
Interest
Rate
(%)
Expected
Life
of
Options
(Months)
Option
Exercise
Price
($)
Average
Share
Price
at
Measurement
Date
($)
Model
Used
Advisor
Plan
1
-‐
50
2.49
44
4.00
2.04
Advisor
Plan
2
-‐
50
2.76
48
4.00
2.36
Advisor
Plan
3
-‐
35
5.02
45
5.20
4.40
Advisor
Plan
4
-‐
35
5.02
43
5.20
4.00
SOP
Plan
1
SOP
Plan
2
-‐
45
3.35
48
3.80
3.04
-‐
45
3.27
48
3.80
3.04
Black-‐
Scholes
Black-‐
Scholes
Black-‐
Scholes
Black-‐
Scholes
Black-‐
Scholes
Black-‐
Scholes
23.
SIGNIFICANT
EVENTS
AFTER
THE
REPORTING
DATE
On
29
July
2013
Andrew
Alcock
commenced
employment
with
the
company
in
the
role
of
CEO.
On
7
August
the
company
issued
the
following
:
(cid:127)
(cid:127)
980,000
employee
share
options
to
employees
under
the
company’s
employee
share
option
plan
31,000
shares
to
employees
under
the
share
ownership
plan.
On
8
August
2013
the
company
held
a
General
Meeting
of
shareholders
where
it
approved
:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
The
change
of
name
of
the
company
to
HUB24
Limited
To
refresh
the
company’s
placement
capacity
under
ASX
Listing
Rule
7.1
To
issue
600,000
share
options
in
the
company
to
Andrew
Alcock
To
issue
510,000
share
options
in
the
company
to
Bruce
Higgins
To
issue
480,000
share
options
in
the
company
to
Jason
Entwistle
To
issue
360,000
share
options
in
the
company
to
Wes
Gillett.
Other
than
the
matters
disclosed
above,
no
other
matter
or
circumstance
has
arisen
since
30
June
2013
that
has
significantly
affected,
or
may
significantly
affect
the
consolidated
entity's
operations,
the
results
of
those
operations,
or
the
consolidated
entity's
state
of
affairs
in
future
financial
years.
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
P A G E | 7 8
81
HUB24
LIMITED
–
2013
ANNUAL
REPORT
noteS to tHe
NOTES
TO
THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
24.
LOSS
PER
SHARE
The
following
reflects
the
income
and
share
data
used
in
the
calculations
of
basic
and
diluted
loss
per
share:
Earnings
per
share
from
continuing
operations
Profit/(Loss)
after
income
tax
Profit/(Loss)
after
income
tax
attributable
to
the
owners
of
HUB24
Limited
used
in
calculating
basic
and
diluted
earnings
per
share
Weighted
average
number
of
ordinary
shares
used
in
calculating
basic
and
diluted
earmings
per
share
Basic
earnings
per
share
Diluted
earnings
per
share
Earnings
per
share
from
discontinued
operations
Profit/(Loss)
after
income
tax
Profit/(Loss)
after
income
tax
attributable
to
the
owners
of
HUB24
Limited
used
in
calculating
basic
and
diluted
earnings
per
share
Weighted
average
number
of
ordinary
shares
used
in
calculating
basic
and
diluted
earmings
per
share
Basic
earnings
per
share
Diluted
earnings
per
share
Earnings
per
share
for
loss
Profit/(Loss)
after
income
tax
CONSOLIDATED
2012
$
2013
$
(5,798,408)
(23,097,719)
(5,798,408)
(23,097,719)
CONSOLIDATED
2012
Number
2013
Number
31,082,524
17,163,607
Cents
Cents
(18.65)
(18.65)
(134.57)
(134.57)
$
(3,984,560)
$
(7,417,948)
(3,984,560)
(7,417,948)
Number
Number
31,082,524
17,163,607
Cents
(12.82)
(12.82)
Cents
(43.22)
(43.22)
$
(9,782,968)
$
(30,515,667)
Profit/(Loss)
after
income
tax
attributable
to
the
owners
of
HUB24
Limited
used
in
calculating
basic
and
diluted
earnings
per
share
(9,782,968)
(30,515,667)
82 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
P A G E | 7 9
HUB24
LIMITED
–
2013
ANNUAL
REPORT
NOTES
TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
24.
LOSS
PER
SHARE
(CONT’D)
Weighted
average
number
of
ordinary
shares
used
in
calculating
basic
and
diluted
earmings
per
share
Basic
earnings
per
share
Diluted
earnings
per
share
Number
Number
31,082,524
17,163,607
Cents
(31.47)
(31.47)
Cents
(177.79)
(177.79)
On
11
December
2012
the
company's
share
capital
was
consolidated
on
a
40
for
1
basis.
Calculations
of
earnings
per
share
for
the
current
and
prior
period
have
been
performed
on
a
post
share
consolidation
basis.
There
are
no
instruments
(e.g.,
share
options)
excluded
from
the
calculation
of
diluted
earnings
per
share
that
could
potentially
dilute
basic
earnings
per
share
in
the
future
because
they
are
anti
dilutive
for
either
of
the
periods
presented.
25.
AUDITORS’
REMUNERATION
Amounts
received
or
due
and
receivable
by
BDO:
Audit
and
review
of
financial
statements
and
other
regulatory
returns
Tax
and
other
services
Total
audit
and
other
fees
26.
RELATED
PARTY
DISCLOSURES
(a) Subsidiaries
CONSOLIDATED
2012
$
2013
$
120,000
81,000
201,000
94,500
-‐
94,500
The
consolidated
financial
statements
include
the
financial
statements
of
HUB24
Limited
and
the
Australian
subsidiaries
listed
in
the
following
table.
Name
HUB24
Custodial
Services
Limited
(formerly
ANZIEX
Ltd)
HUB24
International
Nominees
Pty
Ltd
(formerly
ANZIEX
Nominees
Ltd)
Capfirst
Securities
Ltd
*
Firstfunds
Ltd
INQ
Management
Services
Ltd
Investorfirst
Securities
Ltd
HUB24
Nominees
Pty
Ltd
(formerly
Kardinia
Nominees
Pty
Ltd)
Researchfirst
Ltd
Captain
Starlight
Nominees
Pty
Ltd
Findlay
&
Co
Stockbrokers
Ltd**
Aequs
Capital
Ltd
HUB24
Administration
Pty
Ltd
Utrade
Securities
Pty
Ltd
(formerly
HUB24
Operations
Pty
Ltd)
*
HUB24
Services
Pty
Ltd
Alert
Trader
Pty
Ltd
**
Alert
Trader
Investment
Management
Pty
Ltd
*
Alert
Trader
Publishing
Pty
Ltd
**
%
Equity
Interest
2012
2013
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
81
100
81
-‐
81
100
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
P A G E | 8 0
83
HUB24
LIMITED
–
2013
ANNUAL
REPORT
noteS to tHe
NOTES
TO
THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
26.
RELATED
PARTY
DISCLOSURES
(CONT’D)
Name
Alert
Trader
Securities
Pty
Ltd
**
Marketsplus
Holdings
Pty
Ltd
Marketsplus
Australia
Pty
Ltd
%
Equity
Interest
2012
2013
81
100
100
100
100
100
*
These
companies
were
deregistered
on
22
August
2012.
**
These
companies
are
no
longer
trading
and
there
is
no
intention
that
they
will
resume
activities.
As
part
of
an
ongoing
restructuring
of
the
consolidated
entity,
a
process
has
been
initiated
to
liquidate
these
non
trading
entities
and
further
reduce
the
company’s
future
compliance
costs.
(b) Ultimate
parent
HUB24
Limited
is
the
ultimate
parent
entity
of
the
consolidated
entity.
27.
PARENT
ENTITY
FINANCIAL
INFORMATION
Set
out
below
is
the
supplementary
information
about
the
parent
entity.
Statement
of
Profit
or
Loss
and
Other
Comprehensive
Income
Profit/(Loss)
after
income
tax
Total
comprehensive
income
Statement
of
Financial
Position
Total
current
assets
Total
assets
Total
current
liabilities
Total
liabilities
Equity
Issued
capital
Reserves
Accumulated
losses
Total
equity
2013
$
(4,914,139)
(4,914,139)
CONSOLIDATED
2012
$
(35,056,025)
(35,056,025)
1,904,984
4,237,644
20,810,430
-‐
-‐
13,021,468
767,543
767,543
66,973,939
935,144
(47,118,621)
20,810,430
54,151,655
907,352
(42,805,082)
12,253,925
Contingent
liabilities
The
parent
entity
had
no
contingent
liabilities
as
at
30
June
2013
and
30
June
2012.
Capital
commitments
-‐
Office
equipment
The
parent
entity
had
no
capital
commitments
for
office
equipment
as
at
30
June
2013
and
30
June
2012.
Significant
accounting
policies
The
accounting
policies
of
the
parent
entity
are
consistent
with
those
of
the
consolidated
entity,
as
disclosed
in
Note
2,
except
for
investments
in
subsidiaries
which
are
accounted
for
at
cost,
less
any
impairment,
in
the
parent
entity.
84 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
P A G E | 8 1
HUB24
LIMITED
–
2013
ANNUAL
REPORT
NOTES
TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
28.
KEY
MANAGEMENT
PERSONNEL
(a)
Key
management
personnel
compensation
Short
term
employment
benefits
Post
employment
benefits
Share
based
payments
Total
compensation
(b) Option
holdings
of
Key
Management
Personnel
Options
held
in
HUB24
Limited
(number)
CONSOLIDATED
2013
$
2012
$
2,035,553
2,409,441
66,895
467,208
119,165
100,459
2,569,656
2,629,065
Balance
at
1
July
2012
Granted
as
remuneration
Balance
at
Forfeited
30
June
2013
Exercisable
Not
Exercisable
Mr.Hugh
Robertson
Neil
Sheather
David
Spessot
Andrea
Steele
Total
Option
holdings
750,000
18,750
37,500
12,500
818,750
-‐
-‐
-‐
-‐
-‐
-‐
-‐
37,500
12,500
50,000
750,000
18,750
-‐
-‐
768,750
750,000
18,750
-‐
-‐
768,750
-‐
-‐
-‐
-‐
-‐
(c) Share
holdings
of
Key
Management
Personnel
Shares
held
in
HUB24
Limited
(number)
2013
Bruce
Higgins
Hugh
Robertson
Ian
Litster
Jason
Entwistle
Matthew
Haes
Joseph
Gioffre
2012
Otto
Buttula
Darren
Pettiona
Robert
Spano
Jason
Entwistle
Andrea
Steele
Balance
at
1
July
2012
Share
based
payment
On
and
off
market
purchases/
(sales)
-‐
-‐
1,811,177
571,048
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
410,000
161,500
1,777,574
366,667
12,896
8,010
Net
change
410,000
161,500
1,774,574
366,667
12,896
8,010
Balance
at
30
June
2013
410,000
161,500
3,588,751
937,715
12,896
8,010
Balance
at
1
July
2011
797,500
1,628,075
185,798
566,048
12,500
Share
based
payment
-‐
-‐
-‐
-‐
61
On
and
off
market
purchases/
(sales)
-‐
(58,167)
-‐
5,000
-‐
Net
change
-‐
(58,167)
-‐
5,000
61
Balance
at
30
June
2012
797,500
1,569,908
185,798
571,048
12,561
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
P A G E | 8 0
85
HUB24
LIMITED
–
2013
ANNUAL
REPORT
noteS to tHe
NOTES
TO
THE
FINANCIAL
STATEMENTS
fiNANCiAL STATEmENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
29.
FINANCIAL
INSTRUMENTS
The
company’s
principal
financial
instruments
comprise
cash,
receivables,
and
payables.
For
the
year
ended
30
June
2013,
the
consolidated
entity
does
not
utilise
derivatives,
holds
no
debt
and
has
not
traded
in
financial
instruments
including
derivatives
other
than
listed
and
unlisted
securities
and
options
over
listed
and
unlisted
securities,
where
received
as
corporate
fee
income.
The
company
has
other
financial
assets
and
liabilities
such
as
trade
receivables
and
trade
and
other
payables,
which
arise
directly
from
its
operations
and
are
non-‐interest
bearing.
Interest
rate
risk
The
consolidated
entity
is
not
materially
exposed
to
movements
in
short-‐term
variable
interest
rates
on
cash
and
cash
equivalents.
All
other
financial
assets
and
liabilities
are
non-‐interest
bearing.
The
Directors
believe
a
50
basis
point
decrease
is
a
reasonable
sensitivity
given
current
market
conditions.
A
100
basis
point
increase
and
a
50
basis
point
decrease
in
interest
rates
would
increase/decrease
profit
and
loss
in
the
consolidated
entity
and
the
company
by:
Cash
and
cash
equivalents
at
end
of
period
100
basis
points
increase
in
interest
rate
50
basis
points
decrease
in
interest
rate
Net
impact
on
loss
after
tax
Loss
for
the
year
100
basis
points
increase
in
interest
rate
50
basis
points
decrease
in
interest
rate
Liquidity
risk
2013
$
9,542,846
CONSOLIDATED
2012
$
7,062,254
95,428
(47,714)
70,623
(35,311)
(9,782,968)
(9,687,539)
(9,830,682)
(30,515,667)
(30,466,231)
(30,540,385)
The
table
below
reflects
all
contractually
fixed
pay-‐offs
and
receivables
for
settlement,
resulting
from
recognised
financial
assets
and
liabilities.
Cash
flows
are
undiscounted.
The
remaining
contractual
maturities
of
the
consolidated
entity’s
and
parent
entity’s
financial
liabilities
are:
Not
later
than
one
month
Later
than
1
month
not
later
than
3
months
Later
than
3
months
not
later
than
1
year
Later
than
1
year
CONSOLIDATED
2012
$
2013
$
405,452
333,947
2,000
-‐
741,399
16,665,789
-‐
654,797
-‐
17,320,586
86 FINANCIAL STATEMENTS HUB24 ANNUAL REPORT 2013
P A G E | 8 3
HUB24
LIMITED
–
2013
ANNUAL
REPORT
NOTES
TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 13
29.
FINANCIAL
INSTRUMENTS
(CONT’D)
Maturity
Analysis
of
Financial
Assets
and
Liabilities
The
risk
implied
from
the
values
shown
in
the
table
below
is
based
on
best
estimates
and
reflect
a
balanced
view
of
cash
inflows
and
outflows.
Leasing
obligations,
trade
payables
and
other
financial
liabilities
mainly
originate
from
the
financing
of
assets
used
in
our
ongoing
operations
such
as
office
equipment,
platform
development
and
investments
in
working
capital
e.g.
receivables.
These
assets
are
considered
in
the
consolidated
entity’s
overall
liquidity
risk.
0-‐1
month
1-‐3
months
4-‐12
months
1-‐5
years
Total
30
June
2013
Consolidated
financial
assets:
Cash
and
cash
equivalents
Trade
and
other
receivables
Consolidated
financial
liabilities:
Trade
and
other
payables
9,542,846
1,383,130
10,925,976
-‐
-‐
-‐
-‐
-‐
-‐
405,452
405,452
333,947
333,947
2,000
2,000
Net
maturity
10,520,524
(333,947)
(2,000)
30
June
2012
Consolidated
financial
assets:
Cash
and
cash
equivalents
Trade
and
other
receivables
Consolidated
financial
liabilities:
Trade
and
other
payables
Net
maturity
7,062,254
15,619,496
22,681,750
16,665,789
16,665,789
6,015,960
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
654,797
654,797
(654,797)
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
9,542,846
1,383,130
10,925,976
741,399
741,399
10,184,577
7,062,254
15,619,496
22,681,750
17,320,586
17,320,586
5,361,163
The
consolidated
entity
monitors
rolling
forecasts
of
liquidity
reserves
on
the
basis
of
expected
cash
flow
and
aims
to
maintain
a
minimum
equivalent
of
90
days
worth
of
operational
expenses
in
cash
reserves.
Market
Risk
The
consolidated
entity
is
not
materially
exposed
to
movements
in
market
prices.
The
net
fair
value
of
financial
assets
and
liabilities
approximates
their
carrying
values
and
the
methods
for
estimating
fair
values
are
outlined
in
the
relevant
notes
to
the
financial
statements.
HUB24 ANNUAL REPORT 2013 FINANCIAL STATEMENTS
P A G E | 8 2
87
DIreCtorS’
DECLARATiON
in the opinion of the Directors:
a. the financial statements and notes of the consolidated
entity are in accordance with the Corporations Act 2001,
including:
i. giving a true and fair view of the consolidated entity’s
financial position as at 30 June 2013 and of its
performance for the year ended on that date; and
ii. complying with Australian Accounting Standards
(including the Australian Accounting interpretations),
the Corporations Regulations 2001 and other
mandatory professional reporting requirements.
c. there are reasonable grounds to believe that the
company will be able to pay its debts as and when they
become due and payable.
d. this declaration has been made after receiving the
declarations by the Chief Executive Officer and Chief
financial Officer required by section 295A of the
Corporations Act 2001.
Signed in accordance with a resolution of directors.
b. the financial statements and notes comply with
international financial Reporting Standards as
disclosed in Note 2.
Bruce Higgins
Chairman
Sydney, 29 August 2013
88 DIRECTORS’ DECLARATION HUB24 ANNUAL REPORT 2013
InDepenDent
AUDiTOR’S REPORT
HUB24 ANNUAL REPORT 2013 INDEPENDENT AUDITOR’S REPORT
89
InDepenDent
AUDiTOR’S REPORT
90 INDEPENDENT AUDITOR’S REPORT HUB24 ANNUAL REPORT 2013
aSX aDDItIonal
iNfORmATiON
Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is
as follows. This information is current as at 26 August 2013.
Distribution of equity Securities
Ordinary share capital – 38,913,469 fully paid ordinary shares are held by 1,056 individual security holders.
All issued ordinary shares carry one vote per share without restriction and carry the rights to dividends. The number of
security holders, by size of holding, in each class are:
Fully paid ordinary shares – Holdings Ranges
Holders
Total Units
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Totals
387
270
99
242
58
130,404
725,730
778,705
8,019,267
29,259,363
1,056
38,913,469
%
0.335
1.865
2.001
20.608
75.191
100.000
Holding less than a marketable parcel of shares, based on the closing price $1.38 on 26 August 2013, are 224 shareholders.
options
5,445,006 options are held by option holders. Options do not carry a right to vote.
Substantial Shareholders – Quoted ordinary Securities
Holder name
Number fully paid
Thorney Holdings Pty Ltd & Related Parties
ian Litster & Related Parties
Pie funds management Ltd
6,876,256
3,588,751
2,913,764
%
17.671
9.222
7.488
HUB24 ANNUAL REPORT 2013 ASX ADDITIONAL INFORMATION
91
aSX aDDItIonal
iNfORmATiON
HuB24 limited fully paid ordinary Shares
top 20 Holdings as at 26 august 2013
Holder name
Thorney Holdings Pty Ltd
Ubs Nominees Pty Ltd
Aust Executor Trustees Sa Ltd
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