ANNUAL
REPORT
2014
CORPORATE
DIRECTORY
COMPANY
SECRETARY
Matthew Haes
Appointed 10 September 2012
REGISTERED OFFICE
AND PRINCIPAL
PLACE OF BUSINESS
Level 8
20 Bridge St
Sydney NSW 2000
Tel: (02) 8274 6000
SOLICITORS
BANKERS
Australia and New Zealand
Banking Group Limited
20 Martin Place
Sydney NSW 2000
Minter Ellison
Rialto Towers
525 Collins Street
Melbourne VIC 3000
Minter Ellison
Aurora Place
88 Phillip Street
Sydney NSW 2000
INTERNET
ADDRESS
www.hub24.com.au
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
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)
AUDITORS
BDO East Coast Partnership
Level 10
1 Margaret Street
Sydney NSW 2000
CONTENTS
2
3
8
12
RESULTS FOR
ANNOUNCEMENT
TO THE MARKET
(APPENDIX 4E)
CHAIRMAN AND
CEO REPORT
BUSINESS
OVERVIEW
DIRECTORS’
REPORT
30
31
41
90
AUDITOR’S
INDEPENDENCE
DECLARATION
CORPORATE
GOVERNANCE
FINANCIAL
STATEMENTS
DIRECTORS’
DECLARATION
91
93
INDEPENDENT
AUDITOR’S REPORT
ASX ADDITIONAL
INFORMATION
HUB24 ANNUAL REPORT 2014
CONTENTS
1
RESULTS FOR ANNOUNCEMENT
TO THE MARKET
APPENDIX 4E
From continuing operations
Year ended
30 June 2014
$’000
Year ended
30 June 2013
$’000
% change
Revenue from ordinary activities
3,745
From
1,806
Increase
107%
Net loss for the year attributable to members
(7,743)
From
(5,798)
Increase
33%
From discontinued operations
Revenue from ordinary activities
-
From
5,278
Decrease
-100%
Net loss for the year attributable to members
(680)
From
(3,985)
Decrease
-83%
From continuing and discontinued operations
Revenue from ordinary activities
3,745
From
7,084
Decrease
Net loss for the year attributable to members
(8,423)
From
(9,783)
Decrease
-47%
-14%
DIVIDENDS
The directors have not declared a final dividend for the
year ended 30 June 2014 (2013: Nil).
AUDITOR REVIEW
The report is based on accounts that have been audited by
the company’s auditors, BDO East Coast Partnership.
EXPLANATION OF RESULT
Refer to the attached Directors’ Report and review of
operations for further explanation.
Net tangible assets per fully paid
ordinary share 30 June 2014
Net tangible assets per fully paid
ordinary share 30 June 2013
$0.279
$0.255
ENTITIES OVER WHICH CONTROL HAS BEEN
GAINED OR LOST DURING THE PERIOD
HUB24 Limited has not gained control over any entity
during the reporting period.
HUB24 Limited has lost control over the following entities
during the period:
Aequs Capital Ltd
Date control lost: 27 June 2014
Alert Trader Pty Ltd
Date control lost: 3 July 2013
Alert Trader Publishing Pty Ltd
Date control lost: 22 August 2013
Alert Trader Securities Pty Ltd
Date control lost: 22 August 2013
These entities have not made a material contribution to the
consolidated entity’s profit/(loss) before income tax during
the current or previous period.
2
HUB24 ANNUAL REPORT 2014
RESULTS FOR ANNOUNCEMENT TO THE MARKET
CHAIRMAN AND CEO
REPORT
BRUCE HIGGINS
ANDREW ALCOCK
Dear Shareholders,
On behalf of the directors we are pleased to announce the
results for HUB24 for the year ended 30 June 2014.
The financial year ended 30 June 2014 was a
significant period for the company with rapid growth
and consolidation of the business to focus on the
HUB24 platform as well as continued investment in
platform improvements which have resulted in very
strong growth momentum. We are also pleased to
advise that this momentum has continued into the
new financial year.
The commercialisation of our HUB24 platform business
is now well on track with inflows gaining momentum on
the back of consecutive record quarters in the second
half of FY2014. The operations and technology of our
systems are proving to be highly scalable. Our maiden
gross profit was achieved in March 2014 and direct
operating expenses continue to grow at a lower rate than
our top line revenues.
We continue to invest in our core business of the HUB24
platform and its technology to remain at the forefront
of the market and ensure that our business continues
to prove highly scalable with the growing momentum of
inflows.
Australia, which advise on more than $2.5 billion of client
funds. HUB24 and Paragem are highly complementary
with minimal overlap and share a common goal to create
strong financial advice practices and a platform group not
aligned to product manufacturers.
Both HUB24 and Paragem will retain their existing brands
and will continue to operate independently. Paragem will
retain its open architecture approach to approved products
and platforms. HUB24 will support the growth and
business of Paragem licensee advisers and their clients
and continue to focus on our core business providing
white labels to financial planning groups, accountants and
stockbrokers.
CORPORATE
During the year there have been changes in the executive
team as announced to the market. Andrew Alcock
commenced as CEO in July 2013 and Jason Entwistle,
previously Acting CEO, was appointed Director, Strategic
Developments.
The Directors also wish to announce the appointment
of Andrew Alcock to the board of the company and the
position of Managing Director effective today.
Recently we announced the transaction (subject to
conditions precedent) to acquire the independently owned
financial planning licensee Paragem Pty Ltd (Paragem).
Paragem is a leading boutique dealer group, founded by
Ian Knox and Charlie Haynes that has grown strongly to
license 20 high quality financial advisory practices across
Shareholders have continued to be supportive of the
company with the capital raising completed in December
2013 raising $10.6 million. As at 30 June 2014 we had
$13.8 million in cash and cash equivalents, our net
tangible assets were $19.4 million representing 28 cents
per share.
HUB24 ANNUAL REPORT 2014
CHAIRMAN AND CEO REPORT
3
CHAIRMAN AND CEO
REPORT
Continued
COMPANY SUCCESSES
FUA growth of 155% to
Cash and cash equivalents of
Launched in June 2012
$991m
as at 28 August 2014.
$13.8m
Super
and no corporate debt. $10.6m
raised in a placement at $1.30.
now represents more than
half of all client accounts.
Growth in active advisers of 109 to
Increase in platform revenue of
HUB24 awarded
345
161%
3rd
serving 52 financial planning
groups with 3 new white label
agreements.
achieved through growing Funds
Under Administration with
consistent gross profit margins.
in the Product category by
market researcher Investment
Trends, in December 2013
Platform Report covering 25
leading platforms. Now ranked
ahead of many mainstream and
traditional industry leaders.
188
Managed Portfolios offered with
FUA in these increasing 170%.
4
HUB24 ANNUAL REPORT 2014
CHAIRMAN AND CEO REPORT
CHAIRMAN AND CEO
REPORT
Continued
The business carefully manages the timing and extent
of further investment in resources to provide a stable
platform for continued rapid growth. This management
includes ongoing review of platform administration, client
service and transition functions for further efficiencies to
underpin future operating margins.
We define investment expenses as those expenses which
are expected to result in increased inflow of FUA and are
across development, product, sales and client transition
areas. These expenses increased by $1.8 million in FY14
and included fewer headcount costs capitalised during the
period, accrual of performance incentives and share based
payment expenses arising from the issue of options to staff
and executives within that cost centre.
The increase in investment resources has assisted HUB24
in accelerating the transition of FUA to reach its first
month of gross profit in March 2014. Continued investment
to both maintain and increase FUA growth and financial
performance will accelerate HUB24 along its pathway to
profitability.
GROWTH
The company has succeeded in further commercialising
the HUB24 platform with FUA as at 30 June 2014 reaching
$854 million, representing an increase of 122% since 30
June 2013 and servicing over 345 financial advisers. Further
growth in fund inflows since the end of the period has
further increased FUA at 28 August 2014 to $991 million.
Monthly average net inflows* by financial years to date are
as follows:
FINANCIAL PERFORMANCE
Revenue increased to $3.2 million for the financial
year, an increase of 161% over the prior corresponding
period (PCP) driven by an increase in Funds Under
Administration (FUA) of 122% to $854 million. Revenue
during the year was at an average 52 basis points of FUA
(48 basis point PCP) driven by increasing transaction
activity across platform trading, managed funds and
insurance.
Direct platform costs increased by 33.3% driven by
increased transaction volumes from platform trading and
insurance. Direct costs during the year were at an average
of 56 basis points of FUA declining from 103 basis points
for the prior corresponding period demonstrating that scale
benefits are accelerating with growing FUA and revenues.
Operating expenses increased by 12.5% due to an
increase in headcount, the accrual of FY14 performance
incentives and share based payment expenses arising
from the issue of options to staff and Chairman. Non-
headcount related operating expenses decreased by 4.7%
during the financial year.
Operating expenses during the year were at an average of
60 basis points of FUA declining from 131 basis points for
the prior corresponding period.
GROSS PROFIT EMERGES WITH INCREASING SCALE
$ PER MONTH
400,000
300,000
200,000
100,000
0
FY12
FY13
FY14
March
2014
*Excludes market movements
**$41.7m March to June
$ 5.4m
$19.0m
$32.8m**
Gross profits
achieved
from this
point forward
1H FY13
2H FY13
1H FY14
2H FY14
Significant investment was made in FY12 for HUB24’s
superannuation and insurance development products for
which the company received a Research and Development
incentive from the ATO of $1.1m. Superannuation client
accounts are now more than half of all client accounts on
the platform.
Revenue Direct FTE costs
Total Direct Expenses (including FTE Costs)
This growth accelerated during FY14 thanks to a stable
board, investment in the business teams, growth from
existing clients and three new white labels.
HUB24 ANNUAL REPORT 2014
CHAIRMAN AND CEO REPORT
5
CHAIRMAN AND CEO
REPORT
Continued
FUA BALANCE $M
900
800
700
600
500
400
300
200
100
0
Sep '11
D ec '11
M ar '12
Jun '12
Sep '12
D ec '12
M ar '13
Jun ' 13
Sep '13
D ec '13
M ar '14
Jun '14
FUA AND INFLOWS
HUB24 has recorded consecutive quarters of record gross and
net inflows during the second half of the 2014 financial year.
During the financial year HUB24 increased the number of
client accounts administered per adviser by 58.1% as well
as overall FUA by adviser while introducing a number of
new clients. This indicates increasing engagement by both
current and new advisers during the year.
The number of advisers using the platform has increased
by 46.2% over the financial year. 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,
continuing the increased momentum in FUA growth.
HUB24 offers an open architecture model whereby it is able to
offer a diverse range of investment products. HUB24 currently
offers the most extensive range of managed portfolios within
a full service wrap in the Australian market today. It is not
only the breadth of the offering but also the depth of model
portfolio tools available that has underpinned fund flows into
HUB24’s managed portfolios (increase of 169.8%) in excess of
overall FUA growth over the financial year.
ACQUISITIONS
During the financial year HUB24 has devoted significant
resources to reviewing the market for suitable synergistic
acquisitions that could provide opportunity to deliver scale
to the business.
No acquisitions were made during the financial year, however
progress was made and a transaction to acquire Paragem Pty
Ltd was announced to the market on 21 August 2014. Subject
to completion we believe the acquisition and strategy in
developing the Paragem business for independently minded
financial advisers will deliver considerable earnings growth
for the company in the coming years.
The acquisition of Paragem is consistent with HUB24’s
strategy to pursue significant growth by partnering with
quality independently minded financial advisers (IFAs). We
will be working together with Paragem and HUB24’s existing
highly valued advice licensees with the company continuing
to develop solutions for the benefit of the IFA market and
consumers. Together we will provide a compelling home
for like-minded financial advisers who value choice and the
ability to freely run their own business, while working with
HUB24 to develop better, more cost effective client outcomes.
Both HUB24 and Paragem will retain their existing business
and brands and will continue to operate independently.
Importantly, Paragem will retain its open architecture
approach to approved products and platforms and HUB24 will
maintain its focus on supporting the growth and prosperity
Platform statistics1
FUA – total
Net fund inflows (Qtr)
Jun ‘14
$853.8m
$117.7m
Gross inflows (Qtr)
$166.8m**
Number of active Advisers
345
Mar ‘14
$730.2m
$108.7m
$126.6m
314
Dec ‘13
$618.9m
$60.8m
$80.0m
307
Sep ‘13
$527.5m
$106.5m
$120.5m
278
Jun ‘13
$384.6m
$56.7m
$69.6m
236
TTM*
122.0%
107.6%
139.7%
46.2%
1. Statistics are approximate, have been rounded and are not audited. Inflows do not include any market movement.
* % variance of Trailing Twelve Months.
** A one-off, non-recurring outflow of $20m in June contributed to the variance between gross inflows and netflows for the June ’14 quarter.
6
HUB24 ANNUAL REPORT 2014
CHAIRMAN AND CEO REPORT
CHAIRMAN AND CEO
REPORT
Continued
of its existing licensee clients and pursuing new client
opportunities with its market-leading platform solution.
This acquisition is consistent with HUB24’s core proposition
of providing high value services to licensees and advisers.
This entry into the advice space is expected to result in a
further enhancement of HUB24’s rapid growth, diversification
of the company’s revenue streams and continued
improvements to platform functionality, which will be highly
valued by the broader IFA market. In addition to providing
our HUB24 retail products to advisers, we will continue to
focus on our core business providing white labels to financial
planning groups, accountants and stockbrokers whilst also
developing and supporting the Paragem business.
HUB24’s platform will enhance Paragem advisers’ ability
to act in the best interests of their clients. We will offer a
pathway to a broad investment universe, free of product
issuer conflict, utilising direct securities, managed accounts,
traditional managed funds as well as multiple term deposit
and insurance providers. Our competitive advantage is that
we are not aligned with product manufacturers and therefore
not constrained in the products we offer.
OPERATIONS
In August the Shareholders approved the change of company
name to HUB24 Limited to align our name with our business.
In November we relocated the office to the ASX building in
Bridge St Sydney and in the process improved our security
within our building while reducing our tenancy expenses.
During the financial year HUB24 reviewed platform
administration fees to improve competitive market positioning
and attract higher account balances and transaction fees to
improve margins from increasing scale. These changes have
been implemented during the second half of the financial year.
HUB24 has undertaken substantial effort to incorporate
the introduction of significant new regulatory requirements
during the financial year including Stronger Super, RG148
for Investor Directed Portfolio Services (IDPS) and the
implementation of short form Product Disclosure (PDS)
disclosure documents. We have also confirmed regulatory
NTA requirements for the company at 0.5% of IDPS
assets from 1 July 2014. The implementation of these
requirements, while delivering significant FUA growth, is
testament to the quality and dedication of the HUB24 team.
Platform developments during the financial year have
focussed upon specific client requests and projects to
ensure operational scalability by decreasing administration
staff required to service FUA. In February we commenced
development of significant enhancements to the HUB24
capability that will broaden our market appeal to a wider
range of clients and these will be announced in the coming
months as they are released.
CORPORATE GOVERNANCE
The Board of HUB24 is committed to achieving and
demonstrating standards of corporate governance that
are best practice and compliant with the Australian Stock
Exchange (ASX) regulations 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 in the annual report
and outlines the group remuneration policies, Board
performance and the senior executive remuneration
policies and compensation.
OUTLOOK
Our strategy is to position HUB24 as the independent
platform of choice for financial advisers, stockbrokers and
accountants while building a profitable, scalable business.
We see opportunity in a changing market where HUB24
is able to take advantage of new regulations, adviser and
clients’ needs for compliance to deliver state of the art
reporting and investment products.
We will continue to invest in platform development and
operational efficiency, with the objective of accelerating FUA
to the platform.
On behalf of the Directors, we wish to thank our
management team and all employees for their
commitment and customer service focus during the
year. We would also like to thank our customers and
shareholders for their continuing support for HUB24.
Bruce Higgins
Chairman of Directors
Andrew Alcock
Chief Executive Officer
29 August 2014
HUB24 ANNUAL REPORT 2014
CHAIRMAN AND CEO REPORT
7
BUSINESS
OVERVIEW
OUR INDUSTRY
ABOUT HUB24
Australia’s investment fund pool was estimated to be the
third largest in the world at 30 June 2013 at $1,553bn,
underpinned by employer Superannuation Guarantee (SG)
contributions, which are progressively rising from 9.5% to
12% commencing from 1 July 2014. 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.
HUB24 Limited is a financial services company focussed
on the delivery of the HUB24 platform which supports
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 operates in a sector fuelled by legislated growth via
superannuation, growth in the trend towards directly held
assets and growth in managed portfolios. ‘Wrap platforms,
including separately managed accounts and model
portfolio products, will be the fastest growing segment’
according to the Rice Warner ‘Personal Investments
Market Projections Report 2013’.
Against this industry expansion Australia has been through
a period of unprecedented regulatory change including
reforms to superannuation and financial advice laws. While
many platforms have been diverting significant resources
to changing legacy systems to comply with new regulations,
the HUB24 platform has been able to focus on the continued
development of its inhouse proprietary technology and
addressing client needs. This nimble responsiveness has
underpinned HUB24’s FUA increase during 2014.
PROJECTED SUPERANNUATION ASSETS
(2012 TO 2033)
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 of product manufacturers
and is not owned by, or aligned to any bank, fund manager
or insurance institution.
OUR GROWTH
Over the financial year, HUB24 grew funds under
administration to $854m as at 30 June 2014, representing an
increase of 122% over the year. With consecutive quarters of
record inflows during the second half of the 2014 financial year,
growth momentum is continuing into FY15 with funds under
administration standing at $991m as at 28 August 2014.
s
n
o
i
l
l
i
b
$
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
Pre-retirement assets Post-retirement assets
Source: Deloitte Actuaries & Consultants, 2013
8
HUB24 ANNUAL REPORT 2014
BUSINESS OVERVIEW
BUSINESS
OVERVIEW
Continued
KEY PLATFORM STATISTICS
FUA BALANCE $M
INFLOWS – QUARTERLY $M
900
800
700
600
500
400
300
200
100
180
160
140
120
100
80
60
40
20
0
Sep '11
D ec '11
M ar '12
Jun '12
Sep '12
D ec '12
M ar '13
Jun ' 13
Sep '13
D ec '13
M ar '14
Jun '14
0
Sep '11
D ec '11
M ar '12
Jun '12
Sep '12
D ec '12
M ar '13
Jun ' 13
Sep '13
D ec '13
M ar '14
Jun '14
YEAR ON YEAR INCREASES (FY14 OVER FY13)
Net Inflows Gross Inflows
FUA per active advisers
Active advisers
Gross inflows
Net inflows
0%
10%
20%
30%
40%
50%
60%
70%
80%
The number of advisers using the platform has increased by
46.2% over the financial year, with average FUA per adviser
increasing by 71.7% 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,
continuing the increased momentum in FUA growth.
HUB24 ANNUAL REPORT 2014
BUSINESS OVERVIEW
9
BUSINESS
OVERVIEW
Continued
INDUSTRY RECOGNITION1
• Beneficial ownership of underlying investments
HUB24 ranked very well in the Investment Trends Report
2013 improving our overall position following our first
place award for Most New Developments in 2012. Key
highlights for HUB24 include:
• Ranking 3rd for Product Offering with a significantly
improved score due to the leading capabilities of the
platform
• Improvement in overall ranking from 7th to 5th place,
moving ahead of two major institutionally-owned wrap
providers
• The only platform that ranked in the top 10 in all
7 categories
• Ranked 1st in 9 out of 41 sub-categories amongst 25
respondents.
KEY STRENGTHS
MANAGED PORTFOLIOS
• Potential benefit of netting transactions within an
account, saving trading costs and taxes
• Flexibility with online capital gains modelling tools that
can assist in decision making.
The increasing popularity of managed portfolios is
underlined by the Investment Trends Platform Report 2013
which found that 17% of advisers were planning to start
using SMAs within the next 12 months, up from 10% the
year before.
HUB24 currently administers over 188 managed portfolios,
the most of any full service wrap platform in the market,
underlining the scalability of the HUB24 solution. These
portfolios are managed by professional fund managers,
licensees and asset consultants. The popularity amongst
advisers of the managed portfolio functionality is
evidenced by the 170% growth in managed portfolios funds
under administration during the year. Managed portfolios
represented 42% of HUB24 platform FUA at 30 June 2014,
up from 31% a year earlier.
FUA BY INVESTMENT TYPE $M
HUB24’s market-leading managed portfolio capability
enables licensees to offer advisers and their clients fully
implemented Separately Managed Accounts (SMAs) and
managed portfolios comprising a range of asset types and
classes. This implementation model enables dealer groups
to participate in the value chain as a product manufacturer
as well as proving a very efficient tool of adviser practices.
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.
HUB24’s managed portfolios offer significant advantages
over traditional managed funds as a vehicle to access
professional investment management services.
Advantages include:
• Tax effectiveness, as no inheritance of underlying
400
350
300
250
200
150
100
50
0
capital gains
• Transparency
• No buy/sell differential charged on entry
1. Investment Trends December 2013 Platform Benchmarking Report, based
on extensive analyst reviews of 25 platforms across 454 functional points.
10
HUB24 ANNUAL REPORT 2014
BUSINESS OVERVIEW
Direct
Equities
Managed
Portfolios
Managed
Funds
Cash & Term
Deposits
30 June 2013 30 June 2014
INDEPENDENCE
Our independence from product manufacturers ensures
we are able to objectively offer the best choice of service
providers for advisers and investors. This includes a
BUSINESS
OVERVIEW
Continued
range of term deposit, margin lending and insurance
providers. Our non-reliance on in-house products to
generate revenue is a key differentiation point compared
to institutionally owned platforms where ‘house’ brand
investment, banking and insurance products are widely
promoted.
The Future of Financial Advice (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.
TECHNOLOGY
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 and mobile access.
Our technology incorporates electronic account opening,
trading, reports, statements and 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.
We will continue to deliver significant technology and
product enhancements for financial advisers, stockbrokers
and accountants that value open architecture, flexibility
and transparency. We are not constrained in what we offer
through vertical integration with product manufacturers.
This independence is highly valued by our customers as
they can freely access a wide choice of options in the best
interests of their clients.
R&D INCENTIVES CONTINUE
HUB24 received an R&D tax incentive payment from
AusIndustry of $1.1 million in July 2013 for the 2012
financial year and $0.4 million in March 2014 for the 2013
financial year. These incentives 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.
HUB24 ANNUAL REPORT 2014
BUSINESS OVERVIEW
11
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 2014. 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
VAUGHAN WEBBER
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 13 years.
Bruce is currently Chairman and Non-Executive Director
of Legend Corporation Limited and Chairman and Non-
Executive Director of Q Technology Limited. 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:
• Feore Limited (appointed August 2011, resigned
August 2013).
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 11 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 Money3 Corporation 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.
Previous listed company directorships held in the last
three years:
• Wentworth Holdings Limited (resigned 21 November 2013).
12
HUB24 ANNUAL REPORT 2014
DIRECTORS’ REPORT
DIRECTORS’
REPORT
Continued
HUGH ROBERTSON
IAN LITSTER
HUGH ROBERTSON
NON-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 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 Oncard
International 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.
Previous listed company directorships held in the last
three years:
• Wentworth Holdings Limited (resigned 3 September 2013).
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).
Ian was appointed to the Board on 25 September 2012 and
is Chair of the Remuneration and Nomination Committee.
There were no other directors holding office during the
financial year.
HUB24 ANNUAL REPORT 2014
DIRECTORS’ REPORT
13
DIRECTORS’
REPORT
Continued
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 AGIA
Matthew Haes is the Chief Financial Officer and Company
Secretary for HUB24 Limited.
Matthew’s financial services experience spans over
18 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 the HUB24 Group’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.
Matthew was appointed Company Secretary on
10 September 2012.
DIRECTORS’ INTERESTS
As at the date of this report, the interests of the Directors
in the shares of the company were:
Director
Bruce Higgins
Hugh Robertson
Ian Litster
Vaughan Webber
Number of
ordinary shares
510,000
86,500
3,588,751
Nil
CONSOLIDATED ENTITY OVERVIEW
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 of the consolidated entity during the
year were the provision of investment and superannuation
portfolio administration services.
CAPITAL RAISING
The company conducted a capital raising during the
year ended 30 June 2014 to meet the capital expenditure
requirements of the HUB24 platform and meet ASIC
regulatory capital requirements for IDPS Operators and
providers of custodial services.
$10.6 million in capital was raised from a placement of
5,837,020 ordinary shares at $1.30 on 11 October 2013 and
2,307,692 ordinary shares at $1.30 on 3 December 2013.
The second tranche of the capital raising was completed
following approval by shareholders at the Annual General
Meeting held on 27 November 2013.
REVIEW OF FINANCIAL RESULTS
The consolidated entity recorded a net loss after income
tax for the year ended 30 June 2014 of $8.4 million (2013:
$9.8 million).
The loss after income tax from the continuing operations
(HUB24 Platform) for the year ended 30 June 2014
was $7.7 million or $6.7 million when adjusted for
depreciation, amortisation and impairment expenses
(2013: $5.8 million, or $4.8 million when adjusted for
depreciation, amortisation and impairment expenses).
The consolidated entity operates the HUB24 investment
and superannuation platform.
This negative variance in the loss after income tax to the
prior year was contributed to by:
14
HUB24 ANNUAL REPORT 2014
DIRECTORS’ REPORT
DIRECTORS’
REPORT
Continued
• Reduction in R&D incentive of $0.8 million
• Fewer headcount costs capitalised during FY14 of
$0.6 million
• An increase in share based payment expenses of
$0.4 million.
The loss after income tax from the discontinued operation
(Stockbroking) for the year ended 30 June 2014 was
$0.7 million (2013: $4.0 million).
Key financial results
FUA (million)
INCOME
Revenue
Platform direct costs
Gross Profit
Gross Profit margin
Operating expenses
EBITDA (Pre-investment)
EBITDA (Pre-investment) margin
Investment
EBITDA (post investment)
EBITDA (Post-investment) margin
Depreciation & amortisation
EBIT
EBIT Margin
Interest
NPBT
NPBT Margin
Tax
NPAT
NPAT Margin
Discontinued operations
NPAT (post Discontinued Operations)
NPAT (post Discontinued Operations) Margin
Capitalised development costs
Cashflow
Year ended 30 June 2014
Year ended 30 June 2013 % change
854
$
3,209,190
(3,461,416)
(252,226)
(7.9%)
(3,724,652)
(3,976,878)
(123.9%)
(3,686,922)
(7,663,800)
(238.8%)
(1,028,915)
(8,692,715)
(270.9%)
535,391
(8,157,324)
(254.2%)
414,137
(7,743,187)
(241.3%)
(679,825)
(8,423,012)
(262.5%)
327,773
122.4%
384
$
1,228,366
161.3%
(2,597,463)
(33.3%)
(1,369,097)
81.6%
(111.5%)
(3,309,439)
(12.5%)
(4,678,536)
15.0%
(145.8%)
(1,841,703)
(6,520,239)
(17.5%)
(203.2%)
(1,029,775)
(7,550,014)
(15.1%)
(235.3%)
577,771
(6,972,243)
(17.0%)
(217.3%)
1,173,832
(5,798,411)
(33.5%)
(180.7%)
(3,984,560)
(9,782,971)
(304.8%)
927,617
13.9%
Operating cashflow (including capitalised costs)
(5,986,701)
(10,211,364)
Key financial results
FINANCIAL POSITION
Net assets
Cash & cash equivalents
30 June 2014
30 June 2013 % change
19,440,417
13,779,844
17,322,128
9,542,846
12.2%
44.4%
HUB24 ANNUAL REPORT 2014
DIRECTORS’ REPORT
15
DIRECTORS’
REPORT
Continued
The result for Continuing Operations contained the
following significant items:
GROSS PROFIT
• An increase in operational revenue from $1.2 million
to $3.2 million driven by an increase in client FUA from
$384.6 million to $853.8 million over the Financial Year
to 30 June 2014
• Gross Profit for the full year was a loss of $0.3 million
an improvement of 82% on the prior year. A positive
Gross Profit of $0.06 million was generated in the
second half of the financial year and we expect this
trend to continue
• The increase in direct costs, driven by increased
transaction volumes in platform trading and insurance,
was 33.2% while revenues increased by 161%.
The following chart shows the quarterly movement
in FUA (including market movement) which has
driven the 161% increase in revenue during the
financial year.
FUA BALANCE $M
900
800
700
600
500
400
300
200
100
0
Sep '11
D ec '11
M ar '12
Jun '12
Sep '12
D ec '12
M ar '13
Jun ' 13
Sep '13
D ec '13
M ar '14
Jun '14
EBITDA (PRE-INVESTMENT)
The Directors are of the view that an important
measure of the company’s progress is the EBITDA
16
HUB24 ANNUAL REPORT 2014
DIRECTORS’ REPORT
(pre-investment) which is the company’s representation
of the EBITDA result HUB24 would record if the company
were to service only the current amount of FUA and
associated client accounts – it assumes no resource
expense invested to bring additional FUA onto the
platform. During the year this improved from a loss
of $4.7 million to a loss of $3.9 million an improvement
of 15%.
GROSS PROFIT & EBITDA (PRE-INVESTMENT)
TREND $M
0.5
0.0
-0.5
-1.0
-1.5
-2.0
-2.5
-3.0
-3.5
1 H FY12
2 H FY12
1 H FY13
2 H FY13
1 H FY14
2 H FY14
Gross Profit EBITDA (Pre-investment)
EBITDA (POST-INVESTMENT)
EBITDA (Post investment) for the year ended
30 June 2014 has declined by 17.5% over the
previous corresponding period. This result reflects
the decision by the Board to invest in the business
to accelerate FUA to the platform while furthering
platform development and enhanced services to advisers
and their clients. Sustaining this rate of investment
to transition FUA onto the platform will continue to
accelerate the improved financial performance of
the company.
In February we commenced development of significant
enhancements to the HUB24 capability that will broaden
our market appeal to a wider range of clients and these
will be announced in the coming months as they are
released.
DIRECTORS’
REPORT
Continued
OTHER ITEMS
Other significant items included in the result for
Continuing Operations were:
• Amortisation of $1.0 million associated with the
platform intangible asset and depreciation of
$0.05 million associated with office equipment
• 188 managed portfolios are now offered through the
platform with FUA growth in this investment type
exceeding overall FUA growth
• Advisers now actively using the platform has increased
by 109 to 345 during the financial year
• Revenue has increased by 161%.
• The capitalisation of platform development costs of
$0.3 million ($0.9 million: prior corresponding period)
for product features to support additional revenue
streams
FINANCIAL RESOURCES
• HUB24 has a strong balance sheet with cash and cash
equivalents of $13.8 million
• Share based payments expense of $0.4 million relating
to the issue of options to staff, executives and a director
in August 2013
• The company is able to take advantage of its listed
status and strong financial position in order to position
itself for growth by acquisition.
• An R&D incentive of $0.4 million (credit to income tax
expense) relating to the ongoing investment in platform
development.
The result for Discontinued Operations contained the
following significant items:
• Insurance premiums of $0.4 million associated with run-
off cover for the discontinued stockbroking business
• General claims provision expense of $0.2 million
associated with an increase in the estimate of future
general claim payments relating to former stockbroking
activities.
REVIEW OF OPERATIONS
During the financial year the Board invested in the business
teams in order to accelerate the growth of the company and
funds onto the platform including the commencement of
Andrew Alcock as Chief Executive Officer and appointment
of Jason Entwistle as Director, Strategic Developments
effective 29 July 2013. The continued investment in
technology, FUA transition and operational efficiency has
begun to bring results as evidenced by:
GROWTH
• FUA has grown to $991 million as at the date of this
report
• The number of superannuation client accounts on the
platform now exceeds those of IDPS accounts with
HUBSuper only having commenced in June 2012
PLATFORM DEVELOPMENT
• HUB24 now ranks in the top 5 platforms in the market
in terms of overall functionality1
• The company has further strengthened the platform
development team throughout the year.
The company held an Extraordinary General Meeting on
7 August 2013 whereupon the name of the company was
approved and changed to HUB24 Limited from Investorfirst
Ltd. This was an important step to reflect the single focus
of the business and align our company name with our
product and brand.
1,440,000 share options were issued to executives,
1,010,000 share options were issued to staff together
with a share issue (tax exempt plan) so that all qualifying
employees are now shareholders of the company.
New white label agreements were announced and
delivered during the year ended 30 June 2014 for Interprac,
Premium and Total Financial Solutions. It is the first
time HUB24 has accomplished the launch of white label
offerings simultaneously which is testament to HUB24’s
white labelling capability. These white labels have
contributed to the accelerated FUA growth experienced
in the second half of the year.
In November we relocated the Sydney office to the ASX
building in Bridge St Sydney and in the process improved
our security, while reducing our tenancy expenses.
1. Investment Trends December 2013 Platform Benchmarking Report, based
on extensive analyst reviews of 25 platforms across 454 functional points.
HUB24 ANNUAL REPORT 2014
DIRECTORS’ REPORT
17
DIRECTORS’
REPORT
Continued
SIGNIFICANT CHANGES IN THE
STATE OF AFFAIRS
There have been no significant changes in the nature or
state of affairs of the consolidated entity.
SIGNIFICANT EVENTS AFTER THE
REPORTING DATE
Since 30 June 2014 HUB24 Limited has agreed to
acquire 100% of the issued shares in Paragem Pty Ltd,
a boutique AFSL provider, for upfront cash consideration
of $1.0 million, deferred cash consideration of up to a
further $1.0 million and capped earnout consideration
of up to $6.0 million subject to financial performance
measured over 3 years and paid in HUB24 ordinary
shares no later than 30 September 2017. The acquisition
is subject to conditions precedent in favour of HUB24
Limited.
Paragem is a leading boutique dealer group, founded
by Ian Knox and Charlie Haynes that has grown strongly
to license 20 high quality financial advisory practices
across Australia, which advise on more than $2.5 billion
of client funds.
The acquisition of Paragem is consistent with HUB24’s
strategy to pursue significant growth by partnering with
quality independently minded financial advisers (IFAs).
We will be working together with Paragem and HUB24’s
existing highly valued advice licensees with the company
continuing to develop solutions for the benefit of the
IFA market and consumers. Together we will provide
a compelling home for like-minded financial advisers
who value choice and the ability to freely run their own
business, while working with HUB24 to develop better,
more cost effective client outcomes.
Both HUB24 and Paragem will retain their existing
business and brands and will continue to operate
independently. Importantly, Paragem will retain its open
architecture approach to approved products and platforms
and HUB24 will maintain its focus on supporting the
growth and prosperity of its existing licensee clients and
pursuing new client opportunities with its market-leading
platform solution.
This acquisition is consistent with HUB24’s core
proposition of providing high value services to licensees
and advisers. This entry into the advice space is expected
to result in a further enhancement
of HUB24’s rapid growth, diversification of the
company’s revenue streams and continued improvements
to platform functionality, which will be highly valued
by the broader IFA market. In addition to providing our
HUB24 retail products to advisers, we will continue to
focus on our core business providing white labels to
financial planning groups, accountants and stockbrokers
whilst also developing and supporting the Paragem
business.
HUB24’s platform will enable Paragem advisers to
act in the best interests of their clients. We will offer a
pathway to a broad investment universe, free of product
issuer conflict, utilising direct securities, managed
accounts, traditional managed funds as well as multiple
term deposit and insurance providers. Our competitive
advantage is that we are not aligned with product
manufacturers and therefore not constrained in the
products we offer.
The Directors also wish to announce the appointment
of Andrew Alcock to the Board of the company and the
position of Managing Director effective today.
No other matter or circumstance has arisen
since 30 June 2014 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.
LIKELY DEVELOPMENTS AND
EXPECTED RESULTS
Rapid growth in FUA to the investment and superannuation
platform and significant platform development over
the past two years see the company approaching the
significant milestone of $1billion in FUA. The company’s
operations have coped well with this rapid growth and
the benefits of scale have begun to emerge during the
financial year.
Subject to the completion of the acquisition of Paragem
Pty Ltd, the company will commence transitioning this
entity during September 2014 and anticipates that it
will contribute to earnings growth within the first
12 months.
Management and the Board are confident the prospects of
the company will continue to improve into the foreseeable
future.
18
HUB24 ANNUAL REPORT 2014
DIRECTORS’ REPORT
DIRECTORS’
REPORT
Continued
ENVIRONMENTAL REGULATION
AND PERFORMANCE
arrangements for the consolidated entity, in accordance
with the requirements of Section 300A of the Corporations
Act 2001 and its Regulations.
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 2014 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.
ROUNDING OF AMOUNTS
The company is of 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
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
F – Additional disclosures relating to key management
personnel
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.
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:
Director
Bruce Higgins
Ian Litster
Hugh Robertson
Vaughan Webber
Board
Meetings
Audit, Risk & Compliance
Committee Meetings
Remuneration & Nomination
Committee
Attended
Held*
Attended*
Held
Attended
Held*
10
10
8
10
10
10
10
10
2
2
-
2
2
2
-
2
1
1
-
1
1
1
-
1
*Number of meetings held during the time the Director held office or was a member of the committee.
HUB24 ANNUAL REPORT 2014
DIRECTORS’ REPORT
19
DIRECTORS’
REPORT
Continued
• 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 and
Nomination 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.
Remuneration Structure
In accordance with best practice corporate governance,
the structure of Non-Executive Director and other Key
Management Personnel remuneration is separate and distinct.
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 2014 and 30 June 2013
respectively are detailed in the Remuneration of Key
Management Personnel section of this Remuneration
Report.
Directors’ compensation on a monthly basis increased by
2.75% per month in the last 5 months of the financial year
and on a full year basis was less than the average staff
increase.
Executive Remuneration
Objective
The consolidated entity aims to reward executives with a
level and mix of remuneration commensurate with their
position and responsibilities to:
Non-Executive Director Remuneration
• Align the interests of executives with those of
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-
shareholders
• Link reward with the strategic goals and performance of
the consolidated entity
• Ensure total remuneration is competitive by market
standards.
Structure
The Remuneration and Nomination Committee may
from time to time receive advice from independent
20
HUB24 ANNUAL REPORT 2014
DIRECTORS’ REPORT
DIRECTORS’
REPORT
Continued
remuneration consultants to ensure executive
remuneration is appropriate and in line with market.
Remuneration may consist of the following key elements:
• Fixed salary
• Short term incentives (STIs)
• Long term Incentives (LTIs)
• Share based incentives.
Fixed Salary
Objective and Structure
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.
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.
Share Based Incentives
Objective
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
(where appropriate), external advice on policies and
practices. Key Management Personnel receive their fixed
remuneration in cash.
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.
Short term incentives (STIs)
Objective and Structure
The objective of STIs 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.
STI payments are granted to executives based upon
specific annual financial and business plan targets being
achieved as determined by the Board.
The STI facilitates annual cash/equity opportunities that
reflect performance. Details of the STI bonuses earned for
each executive are detailed in Part C of this report.
Long term incentives (LTIs)
Objective and Structure
Key Management Personnel may be eligible to participate
as recipients in the Employee Share Option Plan (ESOP) of
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 executives is directly linked
to performance of the consolidated entity. 50% of the
amount potentially payable under the STI is based on
the performance of the executive against KPIs relating
to the Company’s business plan, while 50% of the
amount potentially payable under the STI is based on the
performance of the executive against KPIs relating to
stretch objectives associated with profitability and margin
objectives.
HUB24 ANNUAL REPORT 2014
DIRECTORS’ REPORT
21
DIRECTORS’
REPORT
Continued
Use of Remuneration Consultants
During the financial year ended 30 June 2014 the company
did not use the services of remuneration consultants.
Voting and Comments Made at the Company’s 2013
Annual General Meeting
At the 2013 AGM, 98.91% of votes received supported the
adoption of the remuneration report for the year ended
30 June 2013. The company did not receive any specific
feedback at the AGM regarding its remuneration practices.
B. DETAILS OF REMUNERATION
Summary of Key Terms of Chief Executive Officer’s
Employment Agreement
Andrew Alcock was appointed to the role of Chief Executive
Officer of the company on 7 May 2014, and commenced with
the company on 29 July 2014. The details of Mr Alcock’s
service agreement are set out in Part C of this report.
Remuneration of Key Management Personnel
Details of the nature and amount of each element of
the emolument of Key Management Personnel of the
consolidated entity for the financial year are set out in Part
C of this report. 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).
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.
Executives have the opportunity to earn an annual
STI if predefined targets are achieved. The CEO has a
target STI opportunity of 100% of fixed remuneration
and other members of the executive team have an
STI opportunity ranging from 0% to 100% of fixed
remuneration. 50% of the STI is for meeting base
case objectives, while 50% is for meeting stretch case
objectives. 50% of the STI may be paid in cash and 50%
by way of issue of shares in HUB.
STI awards for the executive team in the 2014 financial
year were based upon scorecard measures and
weightings as disclosed below. These targets were set
by the Remuneration and Nomination Committee at the
beginning of the financial year and align to the Company’s
strategic and business objectives.
Performance
category
Metrics
Financial
Growth
Strategy
Net profit after
tax
FUA, development
targets
Deliver strategic
opportunities
Base
case
weighting
Stretch
case
weighting
30%
45%
60%
40%
Compliance
&
operations
Client transition
and system
improvements
25%
For each STI the percentage of the available bonus that
was awarded in relation to the 2014 financial year and the
percentage that was forfeited because the person did not
meet the service and performance criteria is set out below.
Name
A. Alcock
J. Entwistle
W. Gillett
M. Ballinger
J. Gioffre
M. Haes
Current Year STI entitlement
Awarded
59.4%
Forfeited
40.6%
52.5%
41.0%
30.3%
8.5%
14.6%
47.5%
59.0%
69.7%
-
-
22
HUB24 ANNUAL REPORT 2014
DIRECTORS’ REPORT
DIRECTORS’
REPORT
Continued
REMUNERATION OF KEY MANAGEMENT PERSONNEL
2014
$
Short
Term
Benefits
Post
Employment
Benefits
Salary
and Fees
Bonus
Non-
monetary
Super-
annuation
Long
Term
Benefits
Long
Service
Share Based
Payments
Leave Shares Options
Total
Performance
Related %
Non-Executive Directors
Bruce Higgins
Vaughan Webber
Ian Litster
Hugh Robertson1
Sub-total Non-Executive
Directors
Key management personnel
Andrew Alcock2 –
Chief Executive Officer
Jason Entwistle3 –
Head of Strategic Developments
Wes Gillett –
Head of Product and Distribution
Mark Ballinger4 –
Head of Business Development
Joseph Gioffre –
Head of Operations
Matthew Haes –
CFO and Company Secretary
Sub-total
key management personnel
101,724
58,300
58,300
58,300
276,624
-
-
-
-
-
351,293
219,688
294,204
157,500
249,167
102,800
158,923
20,000
210,748
19,040
216,949
33,000
1,481,284 552,028
Total
1,757,908 552,028
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
76,289
178,013
-
-
-
58,300
58,300
58,300
76,289
352,913
16,294
636
1,000
80,404
669,315
16,294
491
1,000
64,323
533,811
18,062
949
1,000
48,242
420,220
13,340
312
-
-
192,575
17,874
825
1,000
11,599
261,086
17,888
669
1,000
16,674
286,180
99,752
3,882
5,000 221,242 2,363,188
99,752
3,882
5,000 297,531 2,716,101
0%
0%
0%
0%
-
33%
29%
24%
10%
7%
11%
-
-
1. Hugh Robertson currently acts in a Non-Executive Director capacity, however, was classified as an Exective Director as at 30 June 2013
2. Andrew Alcock was appointed Chief Executive Officer on 31 July 2013
3. Jason Entwistle resigned as Acting Chief Exective Officer and was appointed Head of Strategic Development on 1 August 2013
4. Mark Ballinger was appointed Head of Business Programs on 16 August 2013
HUB24 ANNUAL REPORT 2014
DIRECTORS’ REPORT
23
DIRECTORS’
REPORT
Continued
REMUNERATION OF KEY MANAGEMENT PERSONNEL
2013*
$
Non-Executive Directors
Bruce Higgins1
Vaughan Webber2
Jason Entwistle3
Robert Bishop4
Darren Pettiona5
Robert Spano6
Ian Litster7
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
70,560
40,376
19,383
3,058
9,534
20,000
64,259
778,124
6,815
74,529
859,468
-
-
-
-
-
-
-
-
-
-
-
-
207,581
60,000
44,705
-
Sub-total Non-Executive Directors
227,170
Joseph Gioffre – Head of Operations
200,000
10,000
Matthew Haes – CFO and Company
Secretary
205,262
15,000
Neil Sheather12 – Head of Stockbroking
Andrea Steele13 – Company Secretary
126,519
72,348
-
-
Sub-total key management personnel
856,415 85,000
Total
1,943,053 85,000
62,500
Short
Term
Benefits
Post
Employment
Benefits
Share Based
Payments
Salary
and Fees
Cash
Bonus
Termination
Payment
Super-
annuation
Shares
Options
Total
Performance
Related %
-
-
-
-
-
-
-
-
-
-
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
0%
0%
0%
0%
0%
0%
0%
-
453,540
1,231,664
100%
-
-
6,815
149,361
453,540
1,387,840
0%
0%
-
267,581
22%
-
-
-
-
48,712
228,000
238,735
13,668
149,485
-
76,858
13,668
1,009,371
467,208
2,624,656
0%
0%
0%
0%
0%
*2013 remuneration does not include Annual Leave or Long Service Leave.
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 October 2012
7.
8. Hugh Robertson currently acts in a Non-Executive Director capacity, however, is classified as an Executive Director as at 30 June 2013
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
Ian Litster appointed 26 September 2012
24
HUB24 ANNUAL REPORT 2014
DIRECTORS’ REPORT
DIRECTORS’
REPORT
Continued
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
2014
2013
2014
2013
2014
2013
Fixed remuneration
At risk – STI
At risk – LTI
Non-Executive Directors
Bruce Higgins
Ian Litster
Hugh Robertson
Vaughan Webber
Other Key Management Personnel
Andrew Alcock
Mark Ballinger
Jason Entwistle
Joseph Gioffre
Matthew Haes
Wes Gillett
C. SERVICE AGREEMENTS
57%
100%
100%
100%
38%
77%
38%
88%
84%
39%
100%
100%
100%
100%
n/a
n/a
100%
91%
88%
91%
-
-
-
-
38%
23%
38%
-
-
39%
-
-
-
-
n/a
n/a
-
9%
12%
-
43%
-
-
-
24%
-
23%
12%
16%
21%
-
-
-
-
n/a
n/a
-
-
-
-
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
Andrew Alcock –
Chief Executive Officer
Jason Entwistle –
Director, Strategic Development
Wesley Gillett –
Head of Product and Distribution
Matthew Haes – Chief Financial
Officer and Company Secretary
Joseph Gioffre –
Head of Operations
Mark Ballinger –
Head of Business Program
Base Salary (inc.
superannuation)
STI
$370,000 Up to 100% of
base salary1
LTI
600,000
options2
Term of
agreement
Unspecified –commenced
29 July 2013
Notice period
– either party
6 months
$300,000 Up to 100% of
base salary1
480,000
options2
Unspecified – commenced
1 August 2013
$250,700 Up to 100% of
base salary1
360,000
options2
Unspecified – commenced
19 April 2013
$226,050
$223,995
$220,000
Nil
Nil
115,000
options3
Unspecified – commenced
26 June 2012
80,000
options3
Unspecified – commenced
3 July 2012
Up to 30% of
base salary
Nil Unspecified – commenced
16 September 2013
6 months
6 months
1 month
1 month
3 months
1. 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.
2. Options for Andrew Alcock, Jason Entwistle and Wesley Gillett have a 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.
3. Options for Matthew Haes and Joseph Gioffre have a 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.
Management personnel have no entitlement to termination payments in the event of removal for misconduct.
HUB24 ANNUAL REPORT 2014
DIRECTORS’ REPORT
25
DIRECTORS’
REPORT
Continued
D. SHARE BASED COMPENSATION
Options
The terms and conditions of each grant of options affecting remuneration in the current or a future reporting period are as follows:
Grant Date
7 August 2013
8 August 2013
8 August 2013
Expiry
Date
Exercise
Price
Value per option
at grant date
Performance
achieved
% Vested
14 October 2017
8 August 2017
8 August 2017
$0.8424
$0.8438
$0.8438
$0.38
$0.38
$0.37
No
No
No
Nil
Nil
Nil
Options granted carry no dividends or voting rights.
Options granted 7 August 2013 under the HUB Employee
Share Option Plan vest subject to the following share price
hurdle:
• The closing sale price of the Shares traded on the
Australian Securities Exchange must have increased
by at least 20% of the Exercise Price of the Options
for each day in any 20 consecutive trading day period
starting on or after the 1st anniversary of the date of
issue of the Options. These options can be exercised,
subject to satisfaction of vesting conditions, after the
2nd anniversary of the date of issue.
Options granted 8 August 2013 to executives vest subject to
the following:
These options may be exercised upon vesting. Sale of
shares are restricted for a period of 2 years after issue,
with the exception that the sale of a portion of shares
to fund taxation obligations directly arising from the
exercise of the Options will be permitted, subject to
compliance with legal obligations in respect of the sale
of Company shares.
Options granted 8 August 2013 to the Chairman vest
subject to the following:
• One third of the Options subject to, and vesting on,
performance of a hurdle of a 30% share price increase
(on the Exercise Price) in any consecutive 20 day period
occurring at any time after the date that is 12 months
after the date of issue of the Options and before the
expiry of the term of the Options
• One third of the Options subject to, and vesting on,
performance of a hurdle of a 20% share price increase
(on the Exercise Price) in any consecutive 20 day period
occurring at any time after the date that is 12 months
after the date of issue of the Options and before the
expiry of the term of the Options
• A further one third of the Options subject to, and
vesting on, a hurdle of a 60% share price increase (on
the Exercise Price) in any consecutive 20 day period
occurring at any time after the date that is 24 months
after the date of issue of the Options and before the
expiry of the term of the Options
• A further one third of the Options subject to, and
vesting on, a hurdle of a 40% share price increase (on
the Exercise Price) in any consecutive 20 day period
occurring at any time after the date that is 24 months
after the date of issue of the Options and before the
expiry of the term of the Options
• The remaining one third of the Options subject to, and
vesting on, a hurdle of a 60% share price increase (on
the Exercise Price) in any consecutive 20 day period
occurring at any time after the date that is 36 months
after the date of issue of the Options and before the
expiry of the term of the Options.
• The remaining one third of the Options subject to, and
vesting on, a hurdle of a 90% share price increase (on
the Exercise Price) in any consecutive 20 day period
occurring at any time after the date that is 36 months
after the date of issue of the Options and before the
expiry of the term of the Options.
These options may be exercised upon vesting. Sale of
shares are restricted for a period of 2 years after issue, with
the exception that the sale of a portion of shares to fund
taxation obligations directly arising from the exercise of the
Options will be permitted, subject to compliance with legal
obligations in respect of the sale of Company shares.
26
HUB24 ANNUAL REPORT 2014
DIRECTORS’ REPORT
DIRECTORS’
REPORT
Continued
Details of options over ordinary shares in the company provided as remuneration to key management personnel are shown
below. When exercisable, each option is convertible into one ordinary share of HUB24 Limited between either 1 October to
14 October or 1 April to 14 April. The vesting conditions are set out above.
The exercise price of options is based upon the volume weighted average price of the company’s shares traded on the ASX
during the 20 days prior to date of grant.
Name
Financial
Year of
grant
Financial Years
in which options
may vest
Number
of options
granted
Value of
options at
grant date
Number of
options vested
during the year
Number of options
lapsed/forfeited
during the year
Bruce Higgins
2014
Hugh Robertson*
Andrew Alcock
2011
2014
Jason Entwistle
2014
Wes Gillett
2014
Matthew Haes
Joseph Gioffre
2014
2014
2017
2016
2015
2013
2017
2016
2015
2017
2016
2015
2017
2016
2015
2015
2015
510,000
$188,700
750,000
600,000
$393,000
$228,000
480,000
$182,400
360,000
$136,800
115,000
80,000
$43,700
$30,400
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
*Options vested in February 2013 with an exercise price of $5.20 and expiry date of 31 January 2015.
The assessed fair value at grant date of the options granted to individuals is allocated equally over the period from grant
date to expected vesting date and the amount is included in the remuneration tables in Part C. Fair values at grant date
are independently determined using a Black Scholes option pricing model that takes into account the exercise price, term
of the option, share price at grant date, expected price volatility of the underlying share price and the risk free rate for the
term of the option.
No options have been exercised during the financial year ended 30 June 2014.
E. ADDITIONAL INFORMATION
The earnings of the consolidated entity for the five years ended 30 June 2014 are summarised below:
EBITDA
EBIT
Profit/(Loss) after income tax
2014
$’000
(8,344)
(9,373)
(8,423)
2013
$’000
(10,504)
(11,534)
(9,783)
2012
$’000
(12,677)
(29,847)
(30,516)
2011
$’000
(3,464)
(5,235)
(4,451)
2010
$’000
(1,901)
(2,204)
(1,068)
HUB24 ANNUAL REPORT 2014
DIRECTORS’ REPORT
27
DIRECTORS’
REPORT
Continued
The factors that are considered to affect shareholder value are summarised below:
Share price at financial year end
Basic earnings per share
2014
$’000
$0.82
(0.197)
2013
$’000
$0.75
(0.320)
2012
$’000
$0.95
(1.760)
2011
$’000
$2.78
(0.360)
2010
$’000
$1.58
(0.200)
F. ADDITIONAL DISCLOSURES RELATING TO KEY MANAGEMENT PERSONNEL
Shares
The number of shares in the company held during the financial year by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Balance at start
of the year
Received due Tax Exempt
share plan issue
Other changes
during the year
Balance at end
of the year
410,000
173,000
3,588,751
-
937,715
-
12,896
8,010
-
-
-
1,187
1,187
1,187
1,187
1,187
100,000
(86,500)
-
20,000
-
-
6,825
2,356
510,000
86,500
3,588,751
21,187
938,902
1,187
20,908
11,553
Name
Bruce Higgins
Hugh Robertson
Ian Litster
Andrew Alcock
Jason Entwistle
Wes Gillett
Matthew Haes
Joseph Gioffre
Options
The number of options over ordinary shares in the company held during the financial year by each director and other members
of key management personnel of the consolidated entity, including their personally related parties, is set out below:
Name
Bruce Higgins
Andrew Alcock
Jason Entwistle
Wes Gillett
Matthew Haes
Joseph Gioffre
Balance at start
of the year
Granted
Exercised
Expired/
forfeited/other
Balance at end
of the year
-
-
-
-
-
-
510,000
600,000
480,000
360,000
115,000
80,000
-
-
-
-
-
-
-
-
-
-
-
-
510,000
600,000
480,000
360,000
115,000
80,000
This concludes the remuneration report which has been audited.
28
HUB24 ANNUAL REPORT 2014
DIRECTORS’ REPORT
DIRECTORS’
REPORT
Continued
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 $64,802 were
paid to BDO (2013: $81,000). 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 2014
HUB24 ANNUAL REPORT 2014
DIRECTORS’ REPORT
29
AUDITOR’S INDEPENDENCE
DECLARATION
30
HUB24 ANNUAL REPORT 2014
AUDITOR’S INDEPENDENCE DECLARATION
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
Yes/No
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
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.
2.2
2.3
2.4
2.5
2.6
Companies should provide the information indicated in the guide to reporting on Principle 2.
Principle 3 – Promote ethical and responsible decision-making
3.1
Companies should establish a code of conduct and disclose the code or a summary of the code as to:
• 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.
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)
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
No
No
HUB24 ANNUAL REPORT 2014
CORPORATE GOVERNANCE
31
CORPORATE
GOVERNANCE
Continued
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: 30% (9.8 of 39.8), women in senior executive
positions: 0% (0 of 6), 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 size
of the Board. (The Chair of the Board is a regular invitee to committee meetings)
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.
7.4
Companies should provide the information indicated in the guide to reporting on Principle 7.
Comply
Yes/No
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
32
HUB24 ANNUAL REPORT 2014
CORPORATE GOVERNANCE
CORPORATE
GOVERNANCE
Continued
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/No
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.
Committee, chaired by Ian Litster, a Non-Executive
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
To this end the Board has established an Audit, Risk and
Compliance Committee, chaired by Vaughan Webber, an
independent Director and a Remuneration and Nomination
• Ensuring that any significant risks that arise are
identified, assessed, appropriately managed and
monitored
HUB24 ANNUAL REPORT 2014
CORPORATE GOVERNANCE
33
CORPORATE
GOVERNANCE
Continued
• Reporting to shareholders
• Determining board size and composition
VAUGHAN WEBBER
Non-Executive Director
(appointed 19 October 2012)
• Determining terms of reference and scope of Board
committees
• Approving the terms and conditions of the appointment
of the CEO
• Reviewing the annual performance and progress of
HUB24 and the Board in meeting the mission and
objectives of HUB24
• Entering into borrowing arrangements.
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)
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.
A review of the performance of the Board and its
committees was undertaken during the financial year
ended 30 June 2014. The board has considered the
outcomes of the review and where appropriate will
undertake measures to improve the performance of
directors and the board as a whole.
The annual review of the performance of the executive
team is scheduled to take place during August 2014.
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:
– Attracts and retains talent
– Motivates the CEO and direct reports
– Links remuneration with performance and the
creation of value for shareholders
– Is appropriate compared to the market practice.
34
HUB24 ANNUAL REPORT 2014
CORPORATE GOVERNANCE
CORPORATE
GOVERNANCE
Continued
• Recommending the appropriate size and composition of
MEETINGS AND QUORUM
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
• 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 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.
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
• Ensuring that shareholder approval is sought for
remuneration matters which require it eg shares to
executive Directors.
• All members of the Committee shall be non-executive
Directors
CHARTER AND PERFORMANCE REVIEW
• 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.
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
in conjunction with the review of the performance of
the Board.
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:
HUB24 ANNUAL REPORT 2014
CORPORATE GOVERNANCE
35
CORPORATE
GOVERNANCE
Continued
• Integrity of the financial statements of the consolidated
entity, including:
– Reviewing and reporting to the Board on the half
yearly and annual reports and financial statements of
the company and associated entities
– Monitoring and reviewing the reliability of financial
reporting
– Monitoring and reviewing mandatory statutory
requirements
• External auditor’s qualifications, performance and
independence, including:
– Nominating the external auditor
– 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:
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.
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
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.
– Effectiveness of the consolidated entity’s internal
control systems
MEETINGS
– Business Continuity and Risk Plan and Disaster
Recovery Plan
– Consolidated entity’s insurance policy and coverage
• Consolidated entity’s compliance with legal and
regulatory requirements:
– Work, Health and Safety
– 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.
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:
36
HUB24 ANNUAL REPORT 2014
CORPORATE GOVERNANCE
CORPORATE
GOVERNANCE
Continued
• Have unlimited access to both internal and external
auditors and to all senior management and all
employees
• Providing direction to management and staff on
strategic and policy matters
• Identifying and evaluating new business opportunities.
• Have available to it resources sufficient to engage
outside expertise if needed i.e., legal and technical
consultants
RISK
• Be provided with a status report for all
recommendations provided by the auditors for which
agreed action is required, which reports include
accountable officers and implementation dates.
LIMITATION OF AUDIT, RISK AND COMPLIANCE
COMMITTEE’S ROLE
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 in conjunction with the review of the
performance of the Board.
The current members of the ARCC are Vaughan Webber
and Ian Litster. Their qualifications and experience are set
out earlier in this report.
EXECUTIVE COMMITTEE
The HUB24 Executive Committee meets monthly, and its
main functions include:
• Ensuring the company is managed in a commercial and
legal manner
Risk is inherent in all of the day-to-day activities of the
HUB24 Limited consolidated entity.
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 management
framework will need to adapt as the business develops.
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
• Encouraging a proactive approach to issues likely to
impact on the company’s strategic and operational
objectives
• 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:
• Ensuring the company adopts, maintains and applies
• Communicating, mitigating and escalating major
appropriate business policies and procedures
risk issues
HUB24 ANNUAL REPORT 2014
CORPORATE GOVERNANCE
37
CORPORATE
GOVERNANCE
Continued
• Incorporating risk management principles and
objectives into strategic, operational and resource
planning activities.
RISK MANAGEMENT FRAMEWORK
Board delegation
The company Board sets the organisational appetite for
risk and has delegated oversight of the company’s risk
management function to the ARCC.
Design of framework for managing risk
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.
Continual improvement of the framework
There is an expectation that the framework will develop
over time, particularly as the organisation changes size
and direction.
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.
TRADING DURING BLACKOUT
PERIOD
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.
STAFF TRADING APPROVAL
REQUIRED FOR ALL STAFF
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.
CONTINUOUS DISCLOSURE POLICY
GUIDING PRINCIPLE
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
All Directors and Staff are prohibited from trading in the
company’s securities in the eight week period prior to
Disclosure is not required where one or more of the
following requirements apply (LR 3.1A.1):
38
HUB24 ANNUAL REPORT 2014
CORPORATE GOVERNANCE
CORPORATE
GOVERNANCE
Continued
• It would be a breach of a law to disclose the information
• 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:
– The information is confidential and the ASX has not
formed the view that the information has ceased to
be confidential
– 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.
WHAT IS ‘MARKET SENSITIVE’
INFORMATION?
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 Market Disclosure Committee
or the Chairman or the Chief Executive Officer.
MARKET COMMUNICATION
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 January to 28 February each year (half yearly
reporting period)
• 1 July to market release of full year results (31 August
each year) (full year reporting period)
HUB24 ANNUAL REPORT 2014
CORPORATE GOVERNANCE
39
CORPORATE
GOVERNANCE
Continued
• Any period announced by the company, which may
include briefings with Institutional 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
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.
• 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.
MAKE TIMELY AND BALANCED
DISCLOSURE AND RESPECT THE
RIGHTS OF 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:
• 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.
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.
40
HUB24 ANNUAL REPORT 2014
CORPORATE GOVERNANCE
FINANCIAL
STATEMENTS
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
41
HUB24
LIMITED
–
2014
ANNUAL
REPORT
STATEMENT OF PROFIT OR LOSS AND
STATEMENT
OF
PROFIT
OR
LOSS
AND
OTHER
COMPREHENSIVE
OTHER COMPREHENSIVE INCOME
INCOME
FOR THE YEAR ENDED 30 JUNE 2014
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
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
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
HUB24
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
Note
6(a)
6(b)
6(c)
6(d)
6(e)
7
8
CONSOLIDATED
2013
$
2014
$
3,209,190
535,391
3,744,581
(1,383,665)
(6,896,617)
(372,666)
(1,028,915)
(2,220,042)
(11,901,905)
(8,157,324)
414,137
(7,743,187)
1,228,366
577,771
1,806,137
(838,661)
(4,374,859)
(354,115)
(1,029,775)
(2,180,967)
(8,778,377)
(6,972,240)
1,173,832
(5,798,408)
(679,825)
(8,423,012)
(3,984,560)
(9,782,968)
-‐
(8,423,012)
-‐
(9,782,968)
(8,423,012)
(9,782,968)
Cents
Cents
(18.10)
(18.10)
(1.59)
(1.59)
(18.65)
(18.65)
(12.82)
(12.82)
(19.69)
(19.69)
(31.47)
(31.47)
The
above
Statement
of
Profit
or
Loss
and
Other
Comprehensive
Income
should
be
read
in
conjunction
with
the
accompanying
notes.
42
P A G E | 4 4
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
STATEMENT
OF
FINANCIAL
POSITION
STATEMENT OF
FINANCIAL POSITION
A T
3 0
J U N E
2 0 1 4
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
FOR THE YEAR ENDED 30 JUNE 2014
Note
20(b)
9
10
11
12
13
14
15
16
CONSOLIDATED
2013
$
2014
$
13,779,844
405,986
419,044
14,604,874
9,542,846
1,383,130
343,868
11,269,844
93,561
6,322,423
656,096
7,072,080
54,929
7,409,144
460,339
7,924,412
21,676,954
19,194,256
662,230
1,389,653
2,051,883
741,399
1,068,411
1,809,810
184,654
184,654
62,318
62,318
2,236,537
1,872,128
19,440,417
17,322,128
17
18
76,988,017
2,275,332
(59,822,932)
66,843,612
1,878,436
(51,399,920)
19,440,417
17,322,128
The
above
Statement
of
Financial
Position
should
be
read
in
conjunction
with
the
accompanying
notes.
43
P A G E | 4 5
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
STATEMENT OF
HUB24
LIMITED
–
2014
ANNUAL
REPORT
CHANGES IN EQUITY
STATEMENT
OF
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 4
FOR THE YEAR ENDED 30 JUNE 2014
CONSOLIDATED
As
at
1
July
2013
Total
comprehensive
loss
for
the
year
Transactions
with
equity
members
in
their
capacity
as
equity
members
Capital
raising
Employee
and
Chairman
options
granted
Employee
share
issue
As
at
30
June
2014
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
Issued
Capital
$
Reserves
$
Accumulated
Losses
$
Total
$
66,843,612
-‐
1,878,436
-‐
(51,399,920)
(8,423,012)
17,322,128
(8,423,012)
10,113,405
-‐
31,000
76,988,017
54,151,655
-‐
-‐
396,896
-‐
2,275,332
-‐
-‐
-‐
(59,822,932)
10,113,405
396,896
31,000
19,440,417
907,352
-‐
(41,616,952)
(9,782,968)
13,442,055
(9,782,968)
12,691,957
-‐
66,843,612
-‐
971,084
1,878,436
-‐
-‐
(51,399,920)
12,691,957
971,084
17,322,128
The
above
Statement
of
Changes
in
Equity
should
be
read
in
conjunction
with
the
accompanying
notes.
44
P A G E | 4 6
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 4
Cash
flows
from
operating
activities
Receipts
from
customers
(inclusive
of
GST)
Payments
to
suppliers
and
employees
(inclusive
of
GST)
Interest
received
Receipt
from
research
and
development
incentive
Net
movement
from
client
and
dealer
balances
Net
cash
inflow/(outflow)
from
operating
activities
Cash
flows
from
investing
activities
Receipts
from
return
of
security
deposits
Receipts
from
sale
of
intangible
asset
Payments
for
office
equipment
Payments
for
intangible
assets
Payments
for
security
deposits
Net
cash
inflow/(outflow)
from
investing
activities
Cash
flows
from
financing
activities
Proceeds
from
capital
raising
Payments
for
capital
raising
costs
Net
cash
inflow/(outflow)
from
financing
activities
STATEMENT OF
CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2014
Note
2014
$
3,530,109
(11,255,535)
478,200
1,588,298
-‐
(5,658,928)
20(a)
CONSOLIDATED
2013
$
7,056,326
(17,270,607)
362,860
-‐
567,882
(9,283,539)
330,403
122,500
(92,349)
(360,726)
(217,307)
(217,479)
10,588,126
(474,721)
10,113,405
4,236,998
9,542,846
13,779,844
-‐
-‐
-‐
(927,825)
-‐
(927,825)
13,049,466
(357,509)
12,691,957
2,480,592
7,062,254
9,542,846
Net
increase/(decrease)
in
cash
and
cash
equivalents
Cash
and
cash
equivalents
at
beginning
of
year
Cash
and
cash
equivalents
at
end
of
year
20(b)
The
above
Statement
of
Cash
Flows
should
be
read
in
conjunction
with
the
accompanying
notes.
45
P A G E | 4 7
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
NOTES TO THE
HUB24
LIMITED
–
2014
ANNUAL
REPORT
FINANCIAL STATEMENTS
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 1 4
FOR THE YEAR ENDED 30 JUNE 2014
1.
CORPORATE
INFORMATION
The
Annual
Report
of
HUB24
Limited
(the
company
or
parent
entity)
for
the
year
ended
30
June
2014
was
authorised
for
issue
in
accordance
with
a
resolution
of
the
Directors
on
29
August
2014
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
statements
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.
Any
new,
revised
or
amended
Accounting
Standards
or
interpretations
that
are
not
yet
mandatory
have
not
been
early
adopted.
Any
significant
impact
on
the
accounting
policies
of
the
consolidated
entity
from
the
adoption
of
these
Accounting
Standards
and
Interpretations
are
disclosed
below.
The
adoption
of
these
Accounting
Standards
and
Interpretations
did
not
have
any
significant
impact
on
the
financial
performance
or
position
of
the
consolidated
entity.
The
following
Accounting
Standards
and
Interpretations
are
most
relevant
to
the
consolidated
entity:
AASB
10
Consolidated
Financial
Statements
The
consolidated
entity
has
applied
AASB
10
from
1
July
2013,
which
has
a
new
definition
of
'control'.
Control
exists
when
the
reporting
entity
is
exposed,
or
has
the
rights,
to
variable
returns
from
its
involvement
with
another
entity
and
has
the
ability
to
affect
those
returns
through
its
'power'
over
that
other
entity.
A
reporting
entity
has
power
when
it
has
rights
that
give
it
the
current
ability
to
direct
the
activities
that
significantly
affect
the
investee's
returns.
The
consolidated
entity
not
only
has
to
consider
its
holdings
and
rights
but
also
the
holdings
and
rights
of
other
shareholders
in
order
to
determine
whether
it
has
the
necessary
power
for
consolidation
purposes.
46
P A G E | 4 8
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
AASB
13
Fair
Value
Measurement
and
AASB
2011-‐8
Amendments
to
Australian
Accounting
Standards
arising
from
AASB
13
The
consolidated
entity
has
applied
AASB
13
and
its
consequential
amendments
from
1
July
2013.
The
standard
provides
a
single
robust
measurement
framework,
with
clear
measurement
objectives,
for
measuring
fair
value
using
the
'exit
price'
and
provides
guidance
on
measuring
fair
value
when
a
market
becomes
less
active.
The
'highest
and
best
use'
approach
is
used
to
measure
non-‐financial
assets
whereas
liabilities
are
based
on
transfer
value.
The
standard
requires
increased
disclosures
where
fair
value
is
used.
AASB
119
Employee
Benefits
(September
2011)
and
AASB
2011-‐10
Amendments
to
Australian
Accounting
Standards
arising
from
AASB
119
(September
2011)
The
consolidated
entity
has
applied
AASB
119
and
its
consequential
amendments
from
1
July
2013.
The
standard
eliminates
the
corridor
approach
for
the
deferral
of
gains
and
losses;
streamlines
the
presentation
of
changes
in
assets
and
liabilities
arising
from
defined
benefit
plans,
including
requiring
remeasurements
to
be
presented
in
other
comprehensive
income;
and
enhances
the
disclosure
requirements
for
defined
benefit
plans.
The
standard
also
changed
the
definition
of
short-‐term
employee
benefits,
from
'due
to'
to
'expected
to'
be
settled
within
12
months.
Annual
leave
that
is
not
expected
to
be
wholly
settled
within
12
months
is
now
discounted
allowing
for
expected
salary
levels
in
the
future
period
when
the
leave
is
expected
to
be
taken.
AASB
2012-‐5
Amendments
to
Australian
Accounting
Standards
arising
from
Annual
Improvements
2009-‐2011
Cycle
The
consolidated
entity
has
applied
AASB
2012-‐5
from
1
July
2013.
The
amendments
affect
five
Australian
Accounting
Standards
as
follows:
Confirmation
that
repeat
application
of
AASB
1
'First-‐time
Adoption
of
Australian
Accounting
Standards'
is
permitted;
Clarification
of
borrowing
cost
exemption
in
AASB
1;
Clarification
of
the
comparative
information
requirements
when
an
entity
provides
an
optional
third
column
or
is
required
to
present
a
third
statement
of
financial
position
in
accordance
with
AASB
101
'Presentation
of
Financial
Statements';
Clarification
that
servicing
of
equipment
is
covered
by
AASB
116
'Property,
Plant
and
Equipment',
if
such
equipment
is
used
for
more
than
one
period;
clarification
that
the
tax
effect
of
distributions
to
holders
of
equity
instruments
and
equity
transaction
costs
in
AASB
132
'Financial
Instruments:
Presentation'
should
be
accounted
for
in
accordance
with
AASB
112
'Income
Taxes';
and
clarification
of
the
financial
reporting
requirements
in
AASB
134
'Interim
Financial
Reporting'
and
the
disclosure
requirements
of
segment
assets
and
liabilities.
AASB
2012-‐10
Amendments
to
Australian
Accounting
Standards
-‐
Transition
Guidance
and
Other
Amendments
The
consolidated
entity
has
applied
AASB
2012-‐10
amendments
from
1
July
2013,
which
amends
AASB
10
and
related
standards
for
the
transition
guidance
relevant
to
the
initial
application
of
those
standards.
The
amendments
clarify
the
circumstances
in
which
adjustments
to
an
entity's
previous
accounting
for
its
involvement
with
other
entities
are
required
and
the
timing
of
such
adjustments.
AASB
2011-‐4
Amendments
to
Australian
Accounting
Standards
to
Remove
Individual
Key
Management
Personnel
Disclosure
Requirement
The
consolidated
entity
has
applied
2011-‐4
from
1
July
2013,
which
amends
AASB
124
'Related
Party
Disclosures'
by
removing
the
disclosure
requirements
for
individual
key
management
personnel
('KMP').
Corporations
and
Related
Legislation
Amendment
Regulations
2013
and
Corporations
and
Australian
Securities
and
Investments
Commission
Amendment
Regulation
2013
(No.1)
now
specify
the
KMP
disclosure
requirements
to
be
included
within
the
directors'
report.
Going
concern
The
financial
report
has
been
prepared
on
a
going
concern
basis.
The
consolidated
entity
has
raised
capital
in
the
current
and
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.
P A G E | 4 9
47
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
Continued
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
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.
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.
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.
48
P A G E | 5 0
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
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
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.
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.
P A G E | 5 1
49
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
Continued
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
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.
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.
50
P A G E | 5 2
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
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.
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.
P A G E | 5 3
51
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
Continued
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
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.
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.
52
P A G E | 5 4
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
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.
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.
P A G E | 5 5
53
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
Continued
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
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.
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.
54
P A G E | 5 6
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
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.
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.
P A G E | 5 7
55
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
Continued
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
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.
Earnings
Per
Share
(EPS)
Basic
EPS
is
calculated
by
dividing
the
result
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.
New
Accounting
Standards
and
Interpretations
not
yet
Mandatory
or
Early
Adopted
Australian
Accounting
Standards
and
Interpretations
that
have
recently
been
issued
or
amended
but
are
not
yet
mandatory,
have
not
been
early
adopted
by
the
consolidated
entity
for
the
annual
reporting
period
ended
30
June
2014.
The
consolidated
entity's
assessment
of
the
impact
of
these
new
or
amended
Accounting
Standards
and
Interpretations,
most
relevant
to
the
consolidated
entity,
are
set
out
below.
AASB
9
Financial
Instruments
and
its
consequential
amendments
This
standard
and
its
consequential
amendments
are
applicable
to
annual
reporting
periods
beginning
on
or
after
1
January
2017
and
completes
phases
I
and
III
of
the
IASB's
project
to
replace
IAS
39
(AASB
139)
'Financial
Instruments:
Recognition
and
Measurement'.
This
standard
introduces
new
classification
and
measurement
models
for
financial
assets,
using
a
single
approach
to
determine
whether
a
financial
asset
is
measured
at
amortised
cost
or
fair
value.
The
accounting
for
financial
liabilities
continues
to
be
classified
and
measured
in
accordance
with
AASB
139,
with
one
exception,
being
that
the
portion
of
a
change
of
fair
value
relating
to
the
entity's
own
credit
risk
is
to
be
presented
in
other
comprehensive
income
unless
it
would
create
an
accounting
mismatch.
Chapter
6
'Hedge
Accounting'
supersedes
the
general
hedge
accounting
requirements
in
AASB
139
and
provides
a
new
simpler
approach
to
hedge
accounting
that
is
intended
to
more
closely
align
with
risk
management
activities
undertaken
by
entities
when
hedging
financial
and
non-‐financial
risks.
The
consolidated
entity
will
adopt
this
standard
and
the
amendments
from
1
July
2017
but
the
impact
of
its
adoption
is
yet
to
be
assessed
by
the
consolidated
entity.
AASB
2013-‐3
Amendments
to
AASB
136
-‐
Recoverable
Amount
Disclosures
for
Non-‐Financial
Assets
These
amendments
are
applicable
to
annual
reporting
periods
beginning
on
or
after
1
January
2014.
The
disclosure
requirements
of
AASB
136
'Impairment
of
Assets'
have
been
enhanced
to
require
additional
information
about
the
fair
value
measurement
when
the
recoverable
amount
of
impaired
assets
is
based
on
fair
value
less
costs
of
disposals.
Additionally,
if
measured
using
a
present
value
technique,
the
discount
rate
is
required
to
be
disclosed.
The
adoption
of
these
amendments
from
1
July
2014
may
increase
the
disclosures
by
the
consolidated
entity.
56
P A G E | 5 8
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
Annual
Improvements
to
IFRSs
2010-‐2012
Cycle
These
amendments
are
applicable
to
annual
reporting
periods
beginning
on
or
after
1
July
2014
and
affects
several
Accounting
Standards
as
follows:
Amends
the
definition
of
'vesting
conditions'
and
'market
condition'
and
adds
definitions
for
'performance
condition'
and
'service
condition'
in
AASB
2
'Share-‐based
Payment';
Amends
AASB
3
'Business
Combinations'
to
clarify
that
contingent
consideration
that
is
classified
as
an
asset
or
liability
shall
be
measured
at
fair
value
at
each
reporting
date;
Amends
AASB
8
'Operating
Segments'
to
require
entities
to
disclose
the
judgements
made
by
management
in
applying
the
aggregation
criteria;
Clarifies
that
AASB
8
only
requires
a
reconciliation
of
the
total
reportable
segments
assets
to
the
entity's
assets,
if
the
segment
assets
are
reported
regularly;
Clarifies
that
the
issuance
of
AASB
13
'Fair
Value
Measurement'
and
the
amending
of
AASB
139
'Financial
Instruments:
Recognition
and
Measurement'
and
AASB
9
'Financial
Instruments'
did
not
remove
the
ability
to
measure
short-‐term
receivables
and
payables
with
no
stated
interest
rate
at
their
invoice
amount,
if
the
effect
of
discounting
is
immaterial;
Clarifies
that
in
AASB
116
'Property,
Plant
and
Equipment'
and
AASB
138
'Intangible
Assets',
when
an
asset
is
revalued
the
gross
carrying
amount
is
adjusted
in
a
manner
that
is
consistent
with
the
revaluation
of
the
carrying
amount
(i.e.
proportional
restatement
of
accumulated
amortisation);
and
Amends
AASB
124
'Related
Party
Disclosures'
to
clarify
that
an
entity
providing
key
management
personnel
services
to
the
reporting
entity
or
to
the
parent
of
the
reporting
entity
is
a
'related
party'
of
the
reporting
entity.
The
adoption
of
these
amendments
from
1
July
2014
will
not
have
a
material
impact
on
the
consolidated
entity.
Annual
Improvements
to
IFRSs
2011-‐2013
Cycle
These
amendments
are
applicable
to
annual
reporting
periods
beginning
on
or
after
1
July
2014
and
affects
four
Accounting
Standards
as
follows:
Clarifies
the
'meaning
of
effective
IFRSs'
in
AASB
1
'First-‐time
Adoption
of
Australian
Accounting
Standards';
Clarifies
that
AASB
3
'Business
Combination'
excludes
from
its
scope
the
accounting
for
the
formation
of
a
joint
arrangement
in
the
financial
statements
of
the
joint
arrangement
itself;
Clarifies
that
the
scope
of
the
portfolio
exemption
in
AASB
13
'Fair
Value
Measurement'
includes
all
contracts
accounted
for
within
the
scope
of
AASB
139
'Financial
Instruments:
Recognition
and
Measurement'
or
AASB
9
'Financial
Instruments',
regardless
of
whether
they
meet
the
definitions
of
financial
assets
or
financial
liabilities
as
defined
in
AASB
132
'Financial
Instruments:
Presentation';
and
Clarifies
that
determining
whether
a
specific
transaction
meets
the
definition
of
both
a
business
combination
as
defined
in
AASB
3
'Business
Combinations'
and
investment
property
as
defined
in
AASB
140
'Investment
Property'
requires
the
separate
application
of
both
standards
independently
of
each
other.
The
adoption
of
these
amendments
from
1
July
2014
will
not
have
a
material
impact
on
the
consolidated
entity.
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)
Credit
risk
(cid:127)
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.
P A G E | 5 9
57
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
Continued
3.
FINANCIAL
RISK
MANAGEMENT
OBJECTIVES
AND
POLICIES
(CONT’D)
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.
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.
58
P A G E | 6 0
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
3.
FINANCIAL
RISK
MANAGEMENT
OBJECTIVES
AND
POLICIES
(CONT’D)
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.
4.
SIGNIFICANT
ACCOUNTING
JUDGEMENTS,
ESTIMATES
AND
ASSUMPTIONS
The
preparation
of
the
financial
statements
requires
management
to
make
judgements,
estimates
and
assumptions
that
affect
the
reported
amounts
in
the
financial
statements.
Management
continually
evaluates
its
judgements
and
estimates
in
relation
to
assets,
liabilities,
contingent
liabilities,
revenue
and
expenses.
Management
bases
its
judgements,
estimates
and
assumptions
on
historical
experience
and
on
other
various
factors,
including
expectations
of
future
events,
management
believes
to
be
reasonable
under
the
circumstances.
The
resulting
accounting
judgements
and
estimates
will
seldom
equal
the
related
actual
results.
The
judgements,
estimates
and
assumptions
that
have
a
significant
risk
of
causing
a
material
adjustment
to
the
carrying
amounts
of
assets
and
liabilities
(refer
to
the
respective
notes)
within
the
next
financial
year
are
discussed
below.
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.
P A G E | 6 1
59
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
Continued
4.
SIGNIFICANT
ACCOUNTING
JUDGEMENTS,
ESTIMATES
AND
ASSUMPTIONS
(CONT’D)
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
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.
Broking
Claim
Provision
The
consolidated
entity
estimates
the
expected
potential
broking
claims
based
on
actual
claims
and
costs
incurred
to
defend
claims
that
have
been
made
over
the
previous
5
year
period.
The
estimated
annual
average
over
this
period
is
used
to
project
claims
from
the
discontinued
broking
operation
over
the
next
two
years.
5.
OPERATING
SEGMENTS
Identification
of
reportable
segments
The
consolidated
entity
operates
in
the
single
operating
segment
of
its
investment
and
superannuation
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,
managed
portfolios,
term
deposits,
bonds,
cash
and
margin
lending.
60
P A G E | 6 2
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
6.
REVENUE
AND
EXPENSES
FROM
CONTINUING
OPERATIONS
Revenue
(a)
Sales
revenue
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
(e)
Administrative
expenses
Corporate
fees
Professional
and
consultancy
fees
Information
services
and
communication
Travel
and
entertainment
Other
administrative
expenses
2014
$
1,899,266
434,553
435,214
440,157
3,209,190
6,394,861
427,895
73,861
6,896,617
312,971
59,695
372,666
53,718
975,197
1,028,915
246,131
599,213
363,911
227,495
783,292
2,220,042
CONSOLIDATED
2013
$
756,924
203,678
134,623
133,141
1,228,366
4,084,416
27,761
262,683
4,374,859
335,405
18,710
354,115
111,094
918,681
1,029,775
371,561
682,006
494,908
259,406
373,086
2,180,967
P A G E | 6 3
61
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
Continued
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:
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
CONSOLIDATED
2013
$
2014
$
-‐
(414,137)
-‐
-‐
(1,173,832)
-‐
(414,137)
(1,173,832)
-‐
-‐
-‐
-‐
-‐
-‐
(8,157,324)
(679,825)
(8,837,149)
(6,972,240)
(3,984,559)
(10,956,799)
(2,651,146)
(3,287,040)
-‐
128,369
4,247
26,264
158,880
-‐
(414,137)
330,260
2,162,006
2,078,129
103,860
291,325
4,766
10,548
410,499
-‐
(1,173,832)
103,491
2,773,050
1,702,709
Income
tax
expense/(benefit)
(414,137)
(1,173,832)
62
P A G E | 6 4
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
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
(d) Tax
consolidation
CONSOLIDATED
2013
$
2014
$
118,546
472,293
3,049,026
(172,782)
11,177,160
(14,644,243)
-‐
143,085
339,219
3,237,560
(85,801)
8,848,174
(12,482,237)
-‐
-‐
11,304
(178,284)
2,659,246
(330,260)
(2,162,006)
-‐
(279,729)
(21,450)
3,177,720
(103,491)
(2,773,050)
-‐
-‐
(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.
P A G E | 6 5
63
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
Continued
8.
DISCONTINUED
OPERATIONS
Description
On
February
8
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
Deferred
acquisition
expense
Insurance
run-‐off
cover
Loss
on
trading
software
disposal
Other
expenses
Loss
before
income
tax
expense
from
discontinued
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
2013
$
2014
$
-‐
-‐
-‐
-‐
-‐
-‐
-‐
390,376
57,544
231,905
679,825
5,215,849
61,685
5,277,535
3,914,995
1,810,161
450,838
346,200
-‐
-‐
538,749
7,060,942
(679,825)
-‐
(679,825)
(1,783,408)
-‐
(1,783,408)
-‐
-‐
-‐
(2,201,152)
-‐
(2,201,152)
Loss
after
income
tax
from
discontinued
operations
(679,825)
(3,984,560)
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
Net
assets
64
2014
$
(679,825)
-‐
(679,825)
CONSOLIDATED
2013
$
(3,638,360)
-‐
(3,638,360)
CONSOLIDATED
2013
$
2014
$
-‐
-‐
-‐
-‐
-‐
43,611
43,611
(43,611)
P A G E | 6 6
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
9.
CURRENT
ASSETS
-‐
TRADE
AND
OTHER
RECEIVABLES
Trade
receivables
Allowance
for
impairment
loss
(i)
Other
debtors
(i)
Allowance
for
impairment
loss
CONSOLIDATED
2013
$
2014
$
306,638
-‐
306,638
99,348
405,986
127,031
-‐
127,032
1,256,098
1,383,130
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
(2013:
$Nil)
has
been
recognised
by
the
consolidated
entity
in
the
current
year.
These
amounts
have
been
included
in
the
statement
of
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)
-‐
The
tax
refund
claimed
for
platform
research
and
development
during
2013
was
received
during
the
current
financial
year
($1,178,000).
The
current
year
tax
refund
for
research
and
development
was
$414,679
and
was
also
received
during
the
year.
At
30
June,
the
ageing
analysis
of
receivables
is
as
follows:
2014
Consolidated
2013
Consolidated
*
PDNI
-‐
Past
due
not
impaired
CI
-‐
Considered
impaired
0-‐30
days
31-‐60
days
405,986
1,383,130
-‐
-‐
61-‐90
days
PDNI
*
-‐
-‐
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.
P A G E | 6 7
65
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
Continued
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
Total
Plant
and
Equipment
Cost
Accumulated
depreciation
Total
Net
Carrying
Amount
CONSOLIDATED
2013
$
2014
$
67,184
351,860
419,044
20,100
323,768
343,868
CONSOLIDATED
2013
$
2014
$
136,340
(96,340)
40,000
69,153
(15,592)
53,561
205,493
(111,932)
93,561
104,669
(74,347)
30,322
229,497
(204,890)
24,607
334,166
(279,236)
54,929
66
P A G E | 6 8
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
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
Other
additions
Disposals
Depreciation
expense
Net
Carrying
Amount
Office
Furniture
and
Fittings
Carrying
amount
at
beginning
Other
additions
Disposals
Depreciation
expense
Net
Carrying
Amount
Leased
Assets
Carrying
amount
at
beginning
Disposals
Depreciation
expense
Net
Carrying
Amount
Total
Office
Equipment
Carrying
amount
at
beginning
Other
additions
Disposals
Depreciation
Net
Carrying
Amount
CONSOLIDATED
2013
$
2014
$
30,322
31,671
-‐
(21,993)
40,000
24,607
60,678
(6,978)
(24,746)
53,561
-‐
-‐
-‐
-‐
76,990
-‐
(24,506)
(22,162)
30,322
203,743
-‐
(91,806)
(87,330)
24,607
(10,792)
(9,190)
(1,602)
-‐
54,929
92,349
(6,978)
(46,739)
93,561
291,525
-‐
(125,502)
(111,094)
54,929
P A G E | 6 9
67
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
Continued
12.
NON-‐CURRENT
ASSETS
–
INTANGIBLE
ASSETS
Investment
Platform
At
cost
Accumulated
amortisation
and
impairment
Net
carrying
amount
Software
At
cost
Accumulated
amortisation
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
Other
additions
Other
disposals
Amortisation
charge
Closing
carrying
amount
Software
Opening
carrying
amount
Other
additions
Amortisation
charge
Closing
carrying
amount
Impairment
tests
for
intangible
assets
(a)
Investment
Platform
Software
CONSOLIDATED
2013
$
2014
$
25,820,885
(19,530,524)
6,290,361
25,493,112
(18,083,968)
7,409,144
32,953
(891)
32,062
-‐
-‐
-‐
6,322,423
7,409,144
7,409,144
327,773
(472,250)
(974,306)
6,290,361
7,400,000
927,825
-‐
(918,681)
7,409,144
-‐
32,953
(891)
32,062
-‐
-‐
-‐
-‐
6,290,361
32,062
6,322,423
7,409,144
-‐
7,409,144
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
a
six
year
period.
Cash
flows
beyond
the
six
year
period
are
extrapolated
using
a
terminal
value.
68
P A G E | 7 0
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
12.
NON-‐CURRENT
ASSETS
–
INTANGIBLE
ASSETS
(CONT’D)
(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
six
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
(6.4
years
from
30
June
2014).
(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
no
impairment
of
intangible
assets.
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
no
impairment
of
intangible
assets.
13.
NON-‐CURRENT
ASSETS
–
OTHER
NON-‐CURRENT
ASSETS
Security
deposits
and
guarantees
Other
assets
14.
CURRENT
LIABILITIES
–
TRADE
AND
OTHER
PAYABLES
Trade
creditors
Sundry
creditors
CONSOLIDATED
2013
$
2014
$
547,307
108,789
656,096
460,339
-‐
460,339
CONSOLIDATED
2013
$
2014
$
237,036
425,194
662,230
321,388
420,011
741,399
P A G E | 7 1
69
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
Continued
15.
CURRENT
LIABILITIES
–
PROVISIONS
Employee
benefits
-‐
Annual
leave
Employee
benefits
-‐
Short
term
incentive
Broking
closure
Lease
make
good
Broking
closure
CONSOLIDATED
2013
$
2014
$
324,686
599,240
445,727
20,000
1,389,653
292,532
-‐
687,479
88,400
1,068,411
The
provision
represents
the
estimated
costs
associated
with
exiting
the
stockbroking
business
including
$78,712
relating
to
onerous
rental
contracts
(FY13:
$473,001)
and
a
general
claims
provision
of
$367,015
(FY13:
$214,478).
Lease
make
good
The
provision
represents
the
present
value
of
the
estimated
costs
to
make
good
the
premises
leased
by
the
consolidated
entity
at
the
end
of
the
respective
lease
term.
Movements
in
provisions
Movements
in
each
class
of
provision
during
the
financial
year,
other
than
employee
benefits,
are
set
out
below:
Consolidated
-‐
2014
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
Lease
Make
good
Lease
liability
Broking
Closure
$
Lease
make
good
$
687,479
601,717
(843,469)
445,727
88,400
-‐
(68,400)
20,000
CONSOLIDATED
2013
$
2014
$
95,212
22,344
67,098
184,654
62,318
-‐
-‐
62,318
Lease
make
good
The
provision
represents
the
present
value
of
the
estimated
costs
to
make
good
the
premises
leased
by
the
consolidated
entity
at
the
end
of
the
respective
lease
term.
Movements
in
provisions
Movements
in
each
class
of
provision
during
the
financial
year,
other
than
employee
benefits,
are
set
out
below:
70
P A G E | 7 2
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
16.
NON-‐CURRENT
LIABILITIES
–
PROVISIONS
(CONT’D)
Consolidated
-‐
2014
Carrying
amount
at
the
start
of
the
year
Additional
provisions
recognised
Amounts
used
Carrying
amount
at
the
end
of
the
year
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
Total
shares
pre
consolidation
Share
consolidation
(40
for
1)
Shares
issued
Capital
raising
costs
End
of
the
financial
year
Lease
liability
$
Lease
make
good
$
-‐
67,098
-‐
67,098
-‐
22,344
-‐
22,344
2014
Number
CONSOLIDATED
2013
Number
CONSOLIDATED
2013
$
2014
$
47,058,181
38,913,469
77,107,017
66,993,612
185,111
47,243,292
221,908
39,135,377
(119,000)
76,988,017
(150,000)
66,843,612
38,913,469
-‐
38,913,469
686,544,268
559,786,011
1,246,330,279
66,993,612
-‐
54,301,655
8,396,466
-‐
8,144,712
-‐
47,058,181
31,158,469
7,755,000
-‐
38,913,469
-‐
10,588,126
(474,721)
77,107,017
-‐
4,653,000
(357,509)
66,993,612
Movement
in
other
equity
securities
-‐
treasury
shares
Beginning
of
the
financial
year
Treasury
share
consolidation
(40
for
1)
Employee
share
issue
End
of
the
financial
year
221,908
-‐
(36,797)
185,111
8,876,274
221,908
-‐
221,908
150,000
-‐
(31,000)
119,000
150,000
-‐
-‐
150,000
Ordinary
shares
Fully
paid
ordinary
shares
carry
one
vote
per
share
and
carry
the
right
to
dividends.
On
11
October
2013,
the
company
issued
5,837,020
ordinary
shares
at
$1.30
per
share
raising
$7,588,126.
On
3
December
2013,
the
company
issued
a
further
2,307,692
shares
at
$1.30
per
share
raising
$3,000,000.
Treasury
shares
Treasury
shares
are
shares
in
HUB24
Limited
that
are
held
by
HUB24
Employee
Share
Ownership
Trust
(ESOT)
for
the
purpose
of
issuing
shares
under
HUB24
Employee
Share
Ownership
Plan.
On
7
August
2013,
the
company
assigned
36,797
shares
to
eligible
employees
under
the
HUB24
Employee
Share
Ownership
Plan.
P A G E | 7 3
71
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
Continued
18.
RESERVES
2014
$
CONSOLIDATED
2013
$
Share
based
payments
share
reserve
2,275,332
1,878,436
Represents
the
share
based
payments
expense
under
the
employee
share
and
option
plan.
19.
DIVIDEND
FRANKING
ACCOUNT
Franking
credits
available
to
shareholders
of
the
company
for
subsequent
financial
years
are
$445,120
(2013:
$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.
72
P A G E | 7 4
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
20.
RECONCILIATION
OF
CASHFLOWS
(a)
Reconciliation
of
the
net
loss
after
tax
to
cash
flow
from
operations
CONSOLIDATED
2013
$
2014
$
Net
Loss
after
tax
for
the
year
(8,423,012)
(9,782,968)
Non-‐cash
items:
Bad
and
doubtful
debts
Depreciation
and
amortisation
Disposal/write-‐off
of
office
equipment
Share
based
payments
expense
Changes
in
operating
assets
and
liabilities:
(Increase)/decrease
in
trade
and
other
receivables
(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
on
hand
and
at
bank
(c)
Terms
and
conditions
-‐
1,028,915
30,204
427,895
70,450
1,029,775
125,502
971,084
977,144
135,580
(200,063)
(79,169)
443,578
(5,658,928)
14,165,916
(304,826)
318,523
(16,579,188)
702,193
(9,283,539)
13,779,844
13,779,844
9,542,846
9,542,846
13,779,844
13,779,844
9,542,846
9,542,846
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.
P A G E | 7 5
73
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
Continued
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
CONSOLIDATED
2013
$
2014
$
450,063
973,990
1,424,053
509,879
124,451
634,330
HUB24
Custodial
Services
Ltd,
a
wholly
owned
subsidiary
and
operator
of
the
Investor
Directed
Portfolio
Service
(IDPS),
has
requested
a
tax
ruling
from
the
ATO
regarding
the
separate
registration
of
the
IDPS
for
GST
purposes
and
the
extent
to
which
HUB24
Custodial
Services
Ltd
can
claim
the
benefit
of
Reduced
Input
Tax
Credits
(RITC’s).
If
successful,
HUB24
Custodial
Services
Ltd
will
be
eligible
to
receive
the
benefits
of
RITC’s
for
the
previous
4
years.
No
asset
has
been
recognized
within
these
financial
statements.
Contingent
assets
and
Liabilities
Nil
(2013
:
Nil)
Guarantees
Australian
Securities
and
Investments
Commission
Rental
bond
Level
8,
20
Bridge
St,
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
2013
$
2014
$
-‐
-‐
-‐
217,307
-‐
116,600
-‐
330,000
663,907
20,000
-‐
270,347
116,600
40,056
330,000
777,003
(a)
Recognised
share-‐based
payment
expenses
The
expense
recognised
from
equity-‐settled
share-‐based
payment
transactions
during
the
year
is
$427,895
(2013:
$971,085).
The
share-‐based
payment
plans
are
described
below.
(b)
Types
of
share-‐based
payment
plans
1. Share
based
payment
plans
issued
during
the
year
ended
30
June
2014
74
P A G E | 7 6
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
Share
Option
Plan
-‐
Employees
Number
of
Options
Issued
1,010,000
Expiry
Date
Exercise
Price
Vesting
Conditions
for
All
Options
Voting
Dividends
Specific
Terms
14
October
2017
The
exercise
price
for
each
Option
(which
is
payable
immediately
upon
exercise)
is
$0.8424
per
Option.
Employment
-‐
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
the
company
other
than
by
reason
of
being
a
Good
Leaver;
and
Share
Price
Hurdle
-‐
The
closing
sale
price
of
the
Shares
traded
on
the
Australian
Securities
Exchange
must
have
increased
by
at
least
20%
of
the
Exercise
Price
of
the
Options
for
each
day
in
any
20
consecutive
trading
day
period
starting
on
or
after
the
1st
anniversary
of
the
date
of
issue
of
the
Options.
Option
holders
are
not
entitled
to
vote.
The
options
do
not
provide
any
entitlement
to
dividends
or
other
distributions
paid
to
ordinary
shareholders.
Shares
issued
in
consequence
of
the
exercise
of
any
Options
must
not
be
sold,
transferred
or
otherwise
disposed
of,
or
mortgaged,
charged
or
otherwise
encumbered,
during
the
period
of
12
months
from
the
date
of
issue
of
the
Shares
without
the
prior
approval
of
the
Board.
170,000
options
have
lapsed
since
issue
while
none
have
vested.
P A G E | 7 7
75
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTES
TO
THE
FINANCIAL
STATEMENTS
Continued
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
Share
Option
Plan
-‐
Executives
Number
of
Options
Issued
1,440,000
Expiry
Date
Exercise
Price
Vesting
Conditions
for
All
Options
Voting
Dividends
Specific
Terms
8
August
2017
The
exercise
price
for
each
Option
(which
is
payable
immediately
upon
exercise)
is
$0.8438
per
Option.
Employment
-‐
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
the
company
other
than
by
reason
of
being
a
Good
Leaver;
and
Share
Price
Hurdle
-‐
(i)
one
third
of
the
Options
subject
to,
and
vesting
on,
performance
of
a
hurdle
of
a
20%
share
price
increase
(on
the
Exercise
Price)
in
any
consecutive
20
day
period
occurring
at
any
time
after
the
date
that
is
12
months
after
the
date
of
issue
of
the
Options
and
before
the
expiry
of
the
term
of
the
Options;
(ii)
a
further
one
third
of
the
Options
subject
to,
and
vesting
on,
a
hurdle
of
a
40%
share
price
increase
(on
the
Exercise
Price)
in
any
consecutive
20
day
period
occurring
at
any
time
after
the
date
that
is
24
months
after
the
date
of
issue
of
the
Options
and
before
the
expiry
of
the
term
of
the
Options;
and
(iii)
the
remaining
one
third
of
the
Options
subject
to,
and
vesting
on,
a
hurdle
of
a
60%
share
price
increase
(on
the
Exercise
Price)
in
any
consecutive
20
day
period
occurring
at
any
time
after
the
date
that
is
36
months
after
the
date
of
issue
of
the
Options
and
before
the
expiry
of
the
term
of
the
Options.
Option
holders
are
not
entitled
to
vote.
The
options
do
not
provide
any
entitlement
to
dividends
or
other
distributions
paid
to
ordinary
shareholders.
Sale
of
the
shares
/
Options
will
be
restricted
for
a
period
of
two
years
after
their
date
of
issue.
However,
the
sale
of
a
portion
of
shares
to
fund
taxation
obligations
directly
arising
from
the
exercise
of
the
Options
will
be
permitted,
subject
to
compliance
with
legal
obligations
in
respect
of
the
sale
of
Company
shares.
No
options
have
lapsed
since
issue
nor
have
any
options
vested.
76
P A G E | 7 8
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
Share
Option
Plan
-‐
Chairman
Number
of
Options
Issued
Expiry
Date
Exercise
Price
Vesting
Conditions
for
All
Options
Voting
Dividends
Specific
Terms
Tax
Exempt
Share
Plan
-‐
Employees
Number
of
Shares
Issued
Expiry
Date
Issue
Price
Vesting
Conditions
for
All
Shares
Voting
Dividends
Specific
Terms
510,000
8
August
2017
The
exercise
price
for
each
Option
(which
is
payable
immediately
upon
exercise)
is
$0.8438
per
Option.
Employment
–
The
options
will
not
be
subject
to
forfeiture
on
Mr
Higgins
ceasing
to
be
Chairman
of
the
Company;
and
Share
Price
Hurdle
-‐
(i)
one
third
of
the
Options
subject
to,
and
vesting
on,
performance
of
a
hurdle
of
a
30%
share
price
increase
(on
the
Exercise
Price)
in
any
consecutive
20
day
period
occurring
at
any
time
after
the
date
that
is
12
months
after
the
date
of
issue
of
the
Options
and
before
the
expiry
of
the
term
of
the
Options;
(ii)
a
further
one
third
of
the
Options
subject
to,
and
vesting
on,
a
hurdle
of
a
60%
share
price
increase
(on
the
Exercise
Price)
in
any
consecutive
20
day
period
occurring
at
any
time
after
the
date
that
is
24
months
after
the
date
of
issue
of
the
Options
and
before
the
expiry
of
the
term
of
the
Options;
and
(iii)
the
remaining
one
third
of
the
Options
subject
to,
and
vesting
on,
a
hurdle
of
a
90%
share
price
increase
(on
the
Exercise
Price)
in
any
consecutive
20
day
period
occurring
at
any
time
after
the
date
that
is
36
months
after
the
date
of
issue
of
the
Options
and
before
the
expiry
of
the
term
of
the
Options.
Option
holders
are
not
entitled
to
vote.
The
options
do
not
provide
any
entitlement
to
dividends
or
other
distributions
paid
to
ordinary
shareholders.
Sale
of
the
shares
/
Options
will
be
restricted
for
a
period
of
two
years
after
their
date
of
issue.
However,
the
sale
of
a
portion
of
shares
to
fund
taxation
obligations
directly
arising
from
the
exercise
of
the
Options
will
be
permitted,
subject
to
compliance
with
legal
obligations
in
respect
of
the
sale
of
Company
shares.
No
options
have
lapsed
since
issue
nor
have
any
options
vested.
36,797
Nil
Shares
were
issued
at
$0.8424
Interests
held
in
the
shares
are
not
at
risk
of
forfeiture.
There
is
no
condition
or
requirement
that
needs
to
be
satisfied
in
order
to
acquire
the
shares.
Shareholders
are
entitled
to
vote.
The
shares
provide
entitlement
to
dividends
or
other
distributions
paid
to
ordinary
shareholders.
The
Shares
must
not
be
sold,
transferred
or
otherwise
disposed
of,
or
mortgaged,
charged
or
otherwise
encumbered,
on
or
before
the
3rd
anniversary
of
the
date
employees
acquired
the
Shares
or
the
date
they
cease
to
be
employed,
whichever
occurs
first.
P A G E | 7 9
77
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
Continued
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
2.
Share
based
payment
plans
issued
prior
to
1
July
2013
Advisor
Plan
1
Number
of
Options
Issued
625,000
Expiry
Date
Exercise
Price
Vesting
Conditions
for
All
Options
Voting
Dividends
Specific
Terms
for
625,000
Options
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.
There
are
no
cash-‐settlement
alternatives.
Advisor
Plan
2
Number
of
Options
Issued
187,500
Expiry
Date
Exercise
Price
Vesting
Conditions
for
All
Options
Voting
Dividends
Specific
Terms
for
187,500
Options
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.
There
are
no
cash-‐settlement
alternatives.
78
P A G E | 8 0
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
Advisor
Plan
3
Number
of
Options
Issued
1,500,006
Expiry
Date
Exercise
Price
Vesting
Conditions
for
All
Options
Voting
Dividends
Specific
Terms
for
1,500,006
Options
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.
There
are
no
cash-‐settlement
alternatives.
Advisor
Plan
4
Number
of
Options
Issued
150,000
Expiry
Date
Exercise
Price
Vesting
Conditions
for
All
Options
Voting
Dividends
Specific
Terms
for
150,000
Options
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.
There
are
no
cash-‐settlement
alternatives.
P A G E | 8 1
79
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
Continued
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.
The
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
(57,000
options)
-‐
the
date
being
the
12
month
anniversary
of
5
December
2011
(‘SOP
Plan
1
Relevant
Date’)
b) Tranche
2
(57,000
options)
-‐
the
date
being
the
24
month
anniversary
of
the
SOP
Plan
1
Relevant
Date
c) Tranche
3
(76,000
options)
-‐
the
date
being
the
36
month
anniversary
of
the
SOP
Plan
1
Relevant
Date.
As
at
30
June
2014,
98,750
options
have
lapsed,
65,750
have
vested
leaving
25,500
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
$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.
The
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
(22,500
options)
-‐
the
date
being
the
12
month
anniversary
of
5
December
2011
(“SOP
Plan
2
Relevant
Date”);
b) Tranche
2
(22,500
options)
-‐
the
date
being
the
24
month
anniversary
of
the
SOP
Plan
2
Relevant
Date;
c) Tranche
3
(30,000
options)
-‐
the
date
being
the
36
month
anniversary
of
the
SOP
Plan
2
Relevant
Date.
As
at
30
June
2014,
53,125
options
have
lapsed,
21,875
have
vested
leaving
25,500
options
yet
to
vest.
There
are
no
cash-‐settlement
alternatives.
80
P A G E | 8 2
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
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
expired
unexercised
on
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
2014
Number
2,515,006
2,960,000
173,125
-‐
312,500
4,959,381
2,143,881
2014
WAEP
$
$4.88
$0.84
$1.41
-‐
$4.80
-‐
$4.92
2013
Number
3,022,500
-‐
507,500
-‐
-‐
2,515,006
2,435,381
2013
WAEP
$
$4.72
-‐
$3.96
-‐
-‐
-‐
$4.88
The
outstanding
balance
as
at
30
June
2014
is
represented
by:
(cid:127)
(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.
113,125
options
over
ordinary
shares
with
an
exercise
price
of
$3.80
each,
65,750
of
which
are
fully
vested
while
25,500
remain
unvested.
840,000
options
over
ordinary
shares
with
an
exercise
price
of
$0.8424
each,
yet
to
vest.
1,950,000
options
over
ordinary
shares
with
an
exercise
price
of
$0.8438
each,
yet
to
vest.
(d)
Range
of
exercise
price
and
remaining
contractual
life
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
1,650,006
options
have
an
exercise
price
of
$5.20
per
share
and
an
expiry
date
of
31
January
2015.
91,250
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.
21,875
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.
1,950,000
options
have
an
exercise
price
of
$0.8438
per
share
and
an
expiry
date
of
8
August
2017.
840,000
options
have
an
exercise
price
of
$0.8424
per
share
and
an
expiry
date
of
14
October
2017.
(e)
Option
pricing
model
The
fair
value
of
all
equity-‐settled
options
is
estimated
as
at
the
date
of
grant
using
the
Black-‐Scholes-‐Merton
option
formula.
P A G E | 8 3
81
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
Continued
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
The
following
table
lists
the
inputs
to
the
models
used:
1.
Share
based
payment
plans
issued
during
the
year
ended
30
June
2014
Dividend
Yield
(%)
Expected
Volatility
(%)
Risk-‐free
Interest
Rate
(%)
Expected
Life
of
Options
(Months)
Option
Exercise
Price
($)
Average
Share
Price
at
Measurement
Date
($)
Model
Used
SOP
-‐
Employees
-‐
80
2.4
26
$0.8424
$0.91
SOP
–
Executives
-‐
80
2.4
28
$0.8438
$0.91
SOP
-‐
Chairman
-‐
80
2.4
28
$0.8438
$0.91
Black-‐Scholes
Black-‐Scholes
Black-‐Scholes
2.
Share
based
payment
plans
issued
prior
to
1
July
2013
Dividend
Yield
(%)
Expected
Volatility
(%)
Risk-‐free
Interest
Rate
(%)
Expected
Life
of
Options
(Months)
Option
Exercise
Price
($)
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
Since
30
June
2014
HUB24
Limited
has
agreed
to
acquire
100%
of
the
issued
shares
in
Paragem
Pty
Ltd,
a
boutique
AFSL
provider,
for
upfront
cash
consideration
of
$1.0
million,
deferred
cash
consideration
of
up
to
a
further
$1.0
million
and
capped
earnout
consideration
of
up
to
$6.0
million
subject
to
financial
performance
measured
over
3
years
and
paid
in
HUB24
ordinary
shares
no
later
than
30
September
2017.
The
acquisition
is
subject
to
conditions
precedent
in
favour
of
HUB24
Limited.
Paragem
is
a
leading
boutique
dealer
group,
founded
by
Ian
Knox
and
Charlie
Haynes
that
has
grown
strongly
to
license
20
high
quality
financial
advisory
practices
across
Australia,
which
advise
on
more
than
$2.5
billion
of
client
funds.
The
acquisition
of
Paragem
is
consistent
with
HUB24’s
strategy
to
pursue
significant
growth
by
partnering
with
quality
independently
minded
financial
advisers
(IFAs).
We
will
be
working
together
with
Paragem
and
HUB24’s
existing
highly
valued
advice
licensees
with
the
company
continuing
to
develop
solutions
for
the
benefit
of
the
IFA
market
and
consumers.
Together
we
will
provide
a
compelling
home
for
like-‐minded
financial
advisers
who
value
choice
and
the
ability
to
freely
run
their
own
business,
while
working
with
HUB24
to
develop
better,
more
cost
effective
client
outcomes.
82
P A G E | 8 4
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
23.
SIGNIFICANT
EVENTS
AFTER
THE
REPORTING
DATE
(CONT’D)
Both
HUB24
and
Paragem
will
retain
their
existing
business
and
brands
and
will
continue
to
operate
independently.
Importantly,
Paragem
will
retain
its
open
architecture
approach
to
approved
products
and
platforms
and
HUB24
will
maintain
its
focus
on
supporting
the
growth
and
prosperity
of
its
existing
licensee
clients
and
pursuing
new
client
opportunities
with
its
market-‐leading
platform
solution.
This
acquisition
is
consistent
with
HUB24’s
core
proposition
of
providing
high
value
services
to
licensees
and
advisers.
This
entry
into
the
advice
space
is
expected
to
result
in
a
further
enhancement
of
HUB24’s
rapid
growth,
diversification
of
the
company’s
revenue
streams
and
continued
improvements
to
platform
functionality,
which
will
be
highly
valued
by
the
broader
IFA
market.
In
addition
to
providing
our
HUB24
retail
products
to
advisers,
we
will
continue
to
focus
on
our
core
business
providing
white
labels
to
financial
planning
groups,
accountants
and
stockbrokers
whilst
also
developing
and
supporting
the
Paragem
business.
HUB24’s
platform
will
enable
Paragem
advisers
to
act
in
the
best
interests
of
their
clients.
We
will
offer
a
pathway
to
a
broad
investment
universe,
free
of
product
issuer
conflict,
utilising
direct
securities,
managed
accounts,
traditional
managed
funds
as
well
as
multiple
term
deposit
and
insurance
providers.
Our
competitive
advantage
is
that
we
are
not
aligned
with
product
manufacturers
and
therefore
not
constrained
in
the
products
we
offer.
The
Directors
also
wish
to
announce
the
appointment
of
Andrew
Alcock
to
the
board
of
the
company
and
the
position
of
Managing
Director
effective
today.
No
other
matter
or
circumstance
has
arisen
since
30
June
2014
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.
P A G E | 8 5
83
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTES
TO
THE
FINANCIAL
STATEMENTS
Continued
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
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
(7,743,187)
(5,798,409)
Profit
/(Loss)
after
income
tax
attributable
to
the
owners
of
HUB24
Ltd
used
in
calculating
basic
and
diluted
earnings
per
share
(7,743,187)
(5,798,409)
CONSOLIDATED
2013
$
2014
$
Weighted
average
number
of
ordinary
shares
used
in
calculating
basic
and
diluted
earnings
per
share
Basic
earnings
per
share
Diluted
earnings
per
share
CONSOLIDATED
2013
2014
Number
Number
42,786,411
31,082,524
Cents
Cents
(18.10)
(18.10)
(18.65)
(18.65)
Earnings
per
share
from
discontinuing
operations
$
$
Profit/(Loss)
after
income
tax
(679,825)
(3,984,559)
Profit
/(Loss)
after
income
tax
attributable
to
the
owners
of
HUB24
Ltd
used
in
calculating
basic
and
diluted
earnings
per
share
Weighted
average
number
of
ordinary
shares
used
in
calculating
basic
and
diluted
earnings
per
share
Basic
earnings
per
share
Diluted
earnings
per
share
Earnings
per
share
for
loss
Profit/(Loss)
after
income
tax
(679,825)
(3,984,559)
Number
Number
42,786,411
31,082,524
Cents
(1.59)
(1.59)
Cents
(12.82)
(12.82)
$
$
(8,423,012)
(9,782,968)
Profit/(Loss)
after
income
tax
attributable
to
the
owners
of
HUB24
Ltd
used
in
calculating
basic
and
diluted
earnings
per
share
(8,
423,012)
(9,782,968)
84
P A G E | 8 6
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
24.
LOSS
PER
SHARE
(CONT’D)
Weighted
average
number
of
ordinary
shares
used
in
calculating
basic
and
diluted
earnings
per
share
Basic
earnings
per
share
Diluted
earnings
per
share
Number
Number
42,786,411
31,082,524
Cents
Cents
(19.69)
(19.69)
(31.47)
(31.47)
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
2013
$
2014
$
92,500
64,802
157,302
120,000
81,000
201,000
The
consolidated
financial
statements
include
the
financial
statements
of
HUB24
Limited
and
the
Australian
subsidiaries
listed
in
the
following
table.
%
Equity
Interest
Name
Hub24
Custodial
Services
Limited
(formerly
ANZIEX
Ltd)
HUB24
International
Nominees
Pty
Ltd
(formerly
ANZIEX
Nominees
Ltd)
Firstfunds
Ltd
HUB24
Management
Services
Pty
Ltd
Investorfirst
Securities
Ltd
**
HUB24
Nominees
Pty
Ltd
(formerly
Kardinia
Nominees
Pty
Ltd)
Researchfirst
Pty
Ltd
**
Captain
Starlight
Nominees
Pty
Ltd
**
Findlay
&
Co
Stockbrokers
Ltd
**
Aequs
Capital
Ltd
**
HUB24
Administration
Pty
Ltd
HUB24
Services
Pty
Ltd
Alert
Trader
Pty
Ltd
*
Alert
Trader
Publishing
Pty
Ltd
**
Alert
Trader
Securities
Pty
Ltd
**
Marketsplus
Holdings
Pty
Ltd
Marketsplus
Australia
Pty
Ltd
2014
100
100
100
100
100
100
100
100
100
-‐
100
100
-‐
-‐
-‐
100
100
2013
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
P A G E | 8 7
85
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
Continued
26.
RELATED
PARTY
DISCLOSURES
(CONT’D)
*
This
company
was
deregistered
on
3
July
2014.
**
These
companies
are
no
longer
trading
and
there
is
no
intention
that
they
will
resume
activities.
The
process
to
de-‐
register
these
entities
has
commenced.
(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
CONSOLIDATED
2014
$
2013
$
(9,947,544)
(4,313,539)
(9,947,544)
(4,313,539)
139,054
1,449,263
21,373,186
20,810,430
-‐
-‐
-‐
-‐
77,107,342
66,993,937
1,332,009
935,114
(57,066,165)
21,373,186
(47,118,621)
20,810,430
Contingent
liabilities
The
parent
entity
had
no
contingent
liabilities
as
at
30
June
2014
and
30
June
2013.
Capital
commitments
-‐
Office
equipment
The
parent
entity
had
no
capital
commitments
as
at
30
June
2014
and
30
June
2013.
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.
86
P A G E | 8 8
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
28.
KEY
MANAGEMENT
PERSONNEL
Key
management
personnel
compensation
Short
term
employment
benefits
Post
employment
benefits
Share
based
payments
Total
compensation
29.
FINANCIAL
INSTRUMENTS
CONSOLIDATED
2014
$
2013
$
2,309,934
2,035,553
103,634
66,895
302,531
467,208
2,716,099
2,569,656
The
company’s
principal
financial
instruments
comprise
cash,
receivables,
and
payables.
For
the
year
ended
30
June
2014,
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:
CONSOLIDATED
2013
$
2014
$
Cash
and
cash
equivalents
at
end
of
period
13,779,844
9,542,846
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
137,798
(68,899)
95,428
(47,714)
(8,423,012)
(8,285,214)
(8,491,911)
(9,782,968)
(9,687,539)
(9,830,682)
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:
P A G E | 8 9
87
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
ANNUAL
REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 4
Continued
29.
FINANCIAL
INSTRUMENTS
(CONT’D)
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
Maturity
Analysis
of
Financial
Assets
and
Liabilities
CONSOLIDATED
2013
$
2014
$
415,374
405,452
229,271
17,585
-‐
662,230
333,947
2,000
-‐
741,399
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
2014
Consolidated
Financial
assets:
Cash
and
cash
equivalents
Trade
and
other
receivables
Consolidated
Financial
liabilities:
Trade
and
other
payables
13,779,844
184,093
13,963,937
415,374
415,374
-‐
111,672
111,672
229,271
229,271
-‐
110,221
110,221
17,585
17,585
Net
maturity
13,548,563
(117,599)
92,636
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)
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
13,779,844
405,986
14,185,830
662,230
662,230
13,523,600
9,542,846
1,383,130
10,925,976
741,399
741,399
10,184,577
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.
P A G E | 9 0
88
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
HUB24
LIMITED
–
2014
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 1 4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Continued
29.
FINANCIAL
INSTRUMENTS
(CONT’D)
Fair
value
Measurement
The
consolidated
entity
has
a
number
of
financial
instruments
which
are
not
measured
at
fair
value
in
the
statement
of
financial
position.
These
had
the
following
fair
values
at
30
June
2014:
Current
Assets
Rental
bonds
and
guarantees
Non-‐Current
Assets
Rental
bonds
and
guarantees
CONSOLIDATED
$
$
Fair
value
Carrying
amount
amount
116,600
116,600
547,307
663,907
547,307
663,907
Due
to
their
short
term
nature,
the
carrying
amounts
of
current
trade
and
other
receivables
and
current
trade
and
other
payables
is
assumed
to
approximate
their
fair
value.
P A G E | 9 1
89
HUB24 ANNUAL REPORT 2014 FINANCIAL STATEMENTS
DIRECTORS’
DECLARATION
FOR THE YEAR ENDED 30 JUNE 2014
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 2014 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.
(b) the financial statements and notes comply with
International Financial Reporting Standards as
disclosed in Note 2.
(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.
Bruce Higgins
Chairman
Sydney, 29 August 2014
90
HUB24 ANNUAL REPORT 2014
DIRECTORS’ DECLARATION
INDEPENDENT
AUDITOR’S REPORT
HUB24 ANNUAL REPORT 2014
INDEPENDENT AUDITOR’S REPORT
91
INDEPENDENT
AUDITOR’S REPORT
Continued
92
HUB24 ANNUAL REPORT 2014
INDEPENDENT AUDITOR’S REPORT
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 2014.
DISTRIBUTION OF EQUITY SECURITIES
Ordinary share capital – 47,058,181 fully paid ordinary shares are held by 1,451 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
428
474
210
283
56
1,451
165,191
1,315,184
1,696,221
8,672,363
35,209,222
47,058,181
Holding less than a marketable parcel of shares, based on the closing price $1.14 on 26 August 2014, are 244
shareholders.
OPTIONS
4,959,381 options are held by option holders. Options do not carry a right to vote.
SUBSTANTIAL SHAREHOLDERS – QUOTED ORDINARY SECURITIES
THORNEY HOLDINGS PTY LTD & Related Parties
ACORN CAPITAL LTD
IAN LITSTER & Related Parties
Number fully paid
8,289,012
4,738,278
3,588,751
%
0.4
2.8
3.6
18.4
74.8
100.0
%
17.6
10.1
7.6
HUB24 ANNUAL REPORT 2014
ASX ADDITIONAL INFORMATION
93
ASX ADDITIONAL
INFORMATION
Continued
HUB24 LIMITED FULLY PAID ORDINARY SHARES
TOP 20 HOLDINGS AS AT 26-08-2014
Holder Name
UBS NOMINEES PTY LTD
THORNEY HOLDINGS PTY LTD
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
CS FOURTH NOMINEES PTY LTD
LITSTER & ASSOCIATES PTY LTD
FINOOK PTY LTD
WEALTHPLAN TECHNOLOGIES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
JASFORCE PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
BRISPOT NOMINEES PTY LTD
SKYLYX PTY LTD
EGG AU PTY LTD
MR BRUCE HIGGINS & MRS RUTH HIGGINS
CRX INVESTMENTS PTY LTD
ANZ TRUSTEES LIMITED
LITSTER & ASSOCIATES PTY LTD
RACT SUPER PTY LTD
MR PETER BARRETT CAPP
LITSTER & ASSOCIATES PTY LTD
Total
Total Issued Capital
Balance at 26-08-2014
3,895,896
3,878,000
3,423,322
2,559,468
2,006,260
1,504,911
1,475,000
1,247,545
1,203,496
1,202,001
1,131,531
850,238
774,793
692,715
510,000
500,000
492,125
462,000
400,000
350,000
350,000
%
8.3
8.2
7.3
5.4
4.3
3.2
3.1
2.7
2.6
2.6
2.4
1.8
1.6
1.5
1.1
1.1
1.0
1.0
0.9
0.7
0.7
28,909,301
47,058,181
61.4
94
HUB24 ANNUAL REPORT 2014
ASX ADDITIONAL INFORMATION
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