2015
CORPORATE
DIRECTORY
DIRECTORS
COMPANY SECRETARY
BANKERS
Bruce Higgins (Chairman)
Appointed 19 October 2012
Matthew Haes
Appointed 10 September 2012
Australia and New Zealand Banking
Group Limited
20 Martin Place
Sydney NSW 2000
Andrew Alcock (Managing Director)
Appointed 29 August 2014
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
SOLICITORS
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
REGISTERED OFFICE
AND PRINCIPAL
PLACE OF BUSINESS
Level 8
20 Bridge St
Sydney NSW 2000
Tel: (02) 8274 6000
2
HUB24 ANNUAL REPORT 2015
CORPORATE DIRECTORY
CONTENTS
4
5
11
RESULTS FOR ANNOUNCEMENT
TO THE MARKET (APPENDIX 4E)
CHAIRMAN & MANAGING Director’s
REPORT
BUSINESS
OVERVIEW
39
AUDITOR’S INDEPENDENCE
DECLARATION
41
FINANCIAL
STATEMENTS
100
INDEPENDENT AUDITOR’S
REPORT
15
Director’s
REPORT
99
Director’s
DECLARATION
102
ASX ADDITIONAL
INFORMATION
CORPORATE GOVERNANCE
The Board is committed to achieving and demonstrating the highest standards of corporate governance. As
such, HUB24 Limited and its Controlled entities (‘the Group’) have adopted the third edition of the Corporate
Governance Principles and Recommendations which was released by the ASX Corporate Governance
Council on 27 March 2014 and became effective for financial years beginning on or after 1 July 2014.
The Group’s Corporate Governance Statement for the financial year ending 30 June 2015 is dated as at 30 June
2015 and was approved by the Board on 28 August 2015. The Corporate Governance Statement is available on
HUB24 Limited’s website at http://www.hub24.com.au/AboutUs/Corporate-Governance-Statement.
3
CONTENTS
HUB24 ANNUAL REPORT 2015 RESULTS FOR ANNOUNCEMENT
TO THE MARKET
APPENDIX 4E
From continuing operations
Year ended
30 June 2015
$’000
Restated
Year ended
30 June 20141
$’000
% change
Revenue from ordinary activities
29,304
From
4,034
Increase
Net loss for the year attributable to members
(5,350)
From
(7,868)
Decrease
From discontinued operations
Revenue from ordinary activities
-
From
-
Decrease
Net loss for the year attributable to members
(1,107)
From
(680)
Increase
From continuing and discontinued operations
Revenue from ordinary activities
29,304
From
4,034
Increase
Net loss for the year attributable to members
(6,457)
From
(8,548)
Decrease
626%
-32%
-
63%
626%
-24%
DIVIDENDS
The directors have not declared a final dividend for the year
ended 30 June 2015 ( 2014: Nil).
EXPLANATION OF RESULT
Refer to the attached Director’s Report and review of
operations for further explanation.
Net tangible assets per fully paid
ordinary share 30 June 2015
Net tangible assets per fully paid
ordinary share 30 June 2014
$0.095
$0.257
ENTITIES OVER WHICH CONTROL HAS BEEN
GAINED OR LOST DURING THE PERIOD
HUB24 Limited gained control over Paragem Pty Limited
during the reporting period on 3 September 2014. Paragem
Pty Limited contributed revenue of $20,235,321 and profit
from ordinary activities of $6,845 to the results of the group
during the period.
HUB24 Limited has not lost control over any entity during
the reporting period.
AUDITOR REVIEW
The report is based on accounts that have been audited by
the company’s auditors, BDO East Coast Partnership.
1The net loss for 2014 increased by $124,776, due to a change in accounting policy relating to the research and development rebate.
Refer to Note 31 of the Financial Statement for further information.
4
RESULTS FOR ANNOUNCEMENT TO THE MARKET
HUB24 ANNUAL REPORT 2015 CHAIRMAN AND MANAGING DIRECTOR’S
REPORT
BRUCE HIGGINS
ANDREW ALCOCK
DEAR SHAREHOLDERS
On behalf of the Directors we are pleased to announce the
results for HUB24 for the financial year ended 30 June 2015.
This year was a period of significance for the company. Our
focus on marketing the leading capabilities of the HUB24
platform and continuing to invest in product and technology
features, has resulted in strong growth for the business.
Our Funds Under Administration (FUA) increased 100%
over the year with significantly improved financial results at
increased margins. Additionally, we have received welcome
industry recognition of both our innovative platform
technology and our service proposition as one of the leading
wrap platforms in the industry.
We continue to have high expectations of HUB24’s growth
prospects in an environment where we have a strong
pipeline of interest by potential clients in a market that
exceeds over $500 billion1 on Wraps and Platforms in one of
the fastest growing sectors.
In our last annual report we were pleased to advise the group
had achieved positive monthly Gross Profit from March 2014.
In this report, we are equally happy to advise that HUB24
recorded positive monthly Operating EBITDA2 from the March
2015 quarter during the financial year and platform revenues
increased by 151% while direct costs increased by only
45%. This is a strong validation of HUB24’s highly scalable
business model.
In September 2014, HUB24 completed the acquisition
of Paragem Pty Limited, a leading advice licensee for
independently minded financial advisers, and reached
agreement with two other licensees to launch new white
label platform offers. The company also released a new
online user interface to become fully transaction capable
across all popular mobile devices as well as extending
HUB24’s online capability to support self-directed investors
to transact and manage their own portfolios.
We will continue to invest in the core business of the HUB24
platform and its technology to remain at the forefront of the
market and to ensure that our business continues to prove
highly scalable with the growing momentum of inflows.
1Source: Plan For Life. Analysis of Wrap, Platform and Master Trust Managed Funds at March 2015
2Operating EBITDA represents Revenue less all Operating Expenses incurred in servicing the current FUA. It excludes Growth Investment
expenses and other significant items.
CHAIRMAN AND MANAGING DIRECTOR’S REPORT
5
HUB24 ANNUAL REPORT 2015 CHAIRMAN AND MANAGING DIRECTOR’S
REPORT
COMPANY SUCCESSES
Positive monthly
Operating
EBITDA*
recorded from March 2015
FUA growth
of 100% to
$1.7bn
Now $1.9bn
Cash and cash
equivalents of
$12.1m
and no corporate debt
HUB24
awarded**
3rd
in overall platform functionality
217
Managed Portfolios offered with
FUA in these increasing 103%
Growth in
active advisers
of 139 to
484
Increase in
platform
revenue of
151%
serving 49 active financial
planning groups with 6 white
label agreements
achieved through growing Funds
Under Administration with
consistent gross profit margins
HUB24
awarded***
1st
Value for Money and Ease
of Use in the Investment
Trends 2015 Planner
Technology Report
*Operating EBITDA represents revenue less all operating expenses incurred in servicing the
current FUA, it excludes growth investment expenses and other significant items.
**Investment Trends December 2014 Platform Benchmarking Report based upon extensive
analyst reviews of 22 Platforms across 466 functional points.
***Results from Investment Trends 2015 Planner Technology Report,
based on an online survey of over 890 financial planners.
6
6
HUB24 ANNUAL REPORT 2015
CHAIRMAN AND MANAGING DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 CHAIRMAN AND MANAGING DIRECTOR’S
REPORT
FINANCIAL PERFORMANCE
Revenue from ordinary activities increased by 626% to
$29.304 million including the results from the acquisition
of Paragem Pty Ltd on 3 September 2014. In our Platform
segment revenue increased to $8.1 million for the financial
year, an increase of 151% over the prior corresponding
period (PCP) which was driven by an increase in Funds
Under Administration (FUA) of 100% to $1.704 billion as
at 30 June 2015. This Platform revenue was on average 63
basis points of FUA (52 basis point PCP) driven by increasing
transaction activity across the platform.
PLATFORM REVENUE - HALF YEAR
$’M
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
PLATFORM GROSS PROFIT & OPERATING
EBITDA TRENDS - HALF YEAR
$’M
3.0
2.0
1.0
0.0
(1.0)
(2.0)
(3.0)
1H13
2H13
1H14
2H14
1H15
2H15
Gross profit Operating EBITDA
HUB24 carefully manages the timing and extent of further
investment in resources to provide a stable platform to
support our clients and our rapid growth. This includes
ongoing review of platform administration, client service and
transition functions for further efficiencies and continuous
improvement program to deliver value to our clients.
Continued investment to both maintain and increase FUA
growth and financial performance will improve HUB24
financial performance.
1H13
2H13
1H14
2H14
1H15
2H15
GROWTH
During the same period, direct platform costs increased by
45% as a result of increased transaction volumes and were
at an average of 38 basis points of FUA. This is a decrease
from 57 basis points of FUA for the prior corresponding
period demonstrating that scale benefits are accelerating
with growing FUA and revenues.
Having achieved positive gross profits during FY2014 the
business has now achieved its maiden quarter of positive
Operating EBITDA* in the third quarter of the financial year,
which represents profit before growth investment expenses
and other significant items. This performance continued
in the fourth quarter with further growth in FUA adding
additional revenue.
We have delivered a growth in FUA of 100% to $1.704 billion
to 30 June 2015 and we now service over 484 financial
advisers. Further growth in fund inflows since the end of the
period has increased FUA at 27 August 2015 to $1.9 billion.
Monthly average net inflows on an historical basis are
continuing to rise with the average for FY2015 being $66
million per month compared to $34 million in FY2014
and $19 million in FY2013. The last quarter of FY2015
experienced further growth with an average monthly net
inflow of $91million.
HUB24 has recorded three quarters of record gross and net
inflows during the 2015 financial year and the number of
*Operating EBITDA represents revenue less all operating expenses incurred in servicing the current FUA, it excludes growth investment expenses and other
significant items.
CHAIRMAN AND MANAGING DIRECTOR’S REPORT
7
HUB24 ANNUAL REPORT 2015 CHAIRMAN AND MANAGING DIRECTOR’S
REPORT
SCALE EFFICIENCIES AND MARGIN EXPANSION
Monthly gross
profits emmerged
from 3QFY14
Positive monthly
operating EBITDA*
from 3QFY15
$ per Month
$1,000,000
$500,000
$0
1H FY14
2H FY14
1H FY15
2H FY15
Revenue Direct Expenses
Direct and Operating Expenses
AVERAGE MONTHLY NET INFLOWS
advisers using the platform has increased by 40.3%. Given
that many of the advisers are relatively new to using the
HUB24 platform, we expect significant upside in both the
level of usage in advisers’ businesses leading to an increase
in the average FUA per adviser. The company continues
to focus an securing new adviser relationships to further
increase the momentum in FUA growth.
Two new white label agreements were signed during the
financial year and new online functionality developed
allowing self directed investors to transact and manage
their own portfolios.
*Operating EBITDA represents Revenue less all Operating Expenses incurred
in servicing the current FUA. It excludes Growth Investment expenses and
other significant items.
8
CHAIRMAN AND MANAGING DIRECTOR’S REPORT
$‘M
100
90
80
70
60
50
40
30
20
10
0
FY12
FY13
FY14
FY15
4Q FY15
HUB24 ANNUAL REPORT 2015 CHAIRMAN AND MANAGING DIRECTOR’S
REPORT
KEY PLATFORM STATISTICS
Platform statistics*
JUN ‘14
SEPT ‘14
DEC ‘14
MAR ‘15
JUN ‘15
Growth**
FUA – total
Net fund inflows (Qtr)
Gross inflows (Qtr)
Number of active Advisers
$854m
$118m
$167m
345
$1,031m
$1,251m
$1,493m
$1,704m
$171m
$199m
383
$190m
$226m
420
$163m
$204m
449
$273m
$325m
484
99.5%
131.4%
94.6%
40.3%
*Statistics are for each quarter, have been rounded and are not audited. Net inflows represent gross inflows less outflows and do not include market movement.
** Growth is the percentage increase on prior year corresponding quarter.
OPERATIONS
During the financial year HUB24 developed a non-custody
solution allowing advisers to consolidate the reporting of
clients assets held outside of the HUB24 platform such
as cash and shares through integrated data feeds from
stockbrokers and other industry participants. This new
development supports the company’s strategic intent
to secure further relationships with stockbroking based
licensees and their clients who value holding their own
assets while still receiving the benefits of a Wrap platform.
HUB24 also released a new streamlined, intuitive user
interface which enables access to our entire service from
all popular mobile devices for both advisers and their
clients. This new development was implemented after
having already been awarded Best Tablet/Smartphone
Access in the Investment Trends December 2014 Platform
Benchmarking Report1. In addition, HUB24 delivered new
functionality to support self-directed investors ability to
manage and transact their own portfolios and undertook a
transition of an existing $29 million client book from another
industry participant to this new service which completed on
1 July 2015.
To support the company’s growth, improve service levels and
adviser experience, HUB24 has implemented SupportHub
which offers full transparency for clients and advisers
to monitor progress of enquiries through to completion.
This initiative was implemented during a year in which the
business doubled in size and also provides workflow and
efficiency benefits for our client services staff which will
support further growth. Our recognition as the industry
leader for new application processing and administration
accuracy in the Investment Trends 2015 Planner Technology
Report demonstrates our ability to significantly grow whilst
improving underlying service levels at the same time.
The company has undertaken substantial effort to incorporate
the introduction of significant new regulatory requirements
during the financial year including AML/CTF, ASIC RG133
for Managed Investments and Custodial Services (IDPS) and
Stronger Super.
ACQUISITION
The acquisition of leading boutique dealer group Paragem
Pty Ltd has delivered a business with a strong growth
track record as a licensee with 20 high quality financial
advisory practices across Australia advising 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.
The integration of the Paragem business into HUB24’s
operations was completed seamlessly during the period
bringing $2.5 billion in funds under advice to the group. The
Paragem executives have worked closely with their new
HUB24 colleagues on a range of initiatives including the
introduction of new investment options to the platform for
Paragem advisers, marketing collateral and FUA transition
services which are all of strategic benefit for HUB24’s wider
client base.
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 independently minded
financial advice market.
1Investment Trends December 2014 Platform Benchmarking Report based
upon extensive analyst reviews of 22 Platforms across 466 functional points.
CHAIRMAN AND MANAGING DIRECTOR’S REPORT
9
HUB24 ANNUAL REPORT 2015 CHAIRMAN AND MANAGING DIRECTOR’S
REPORT
CORPORATE
OUTLOOK
During the period, shareholders have continued to
be supportive of the company with the capital raising
completed in March 2015 raising $5.25 million. This was a
placement of five million ordinary shares to sophisticated
and professional investors at $1.05 per share, representing
a premium of 2.6 cents per share over the 30 day VWAP
at the time of raising. At 30 June 2015 HUB24 had $12.1
million in cash and cash equivalents and is well resourced
to meet the company’s operating requirements.
The Chief Executive Officer of the company, Andrew Alcock,
was appointed to the Board and position of Managing
Director on 29 August 2014.
CORPORATE GOVERNANCE
The Board of HUB24 is committed to achieving and
demonstrating standards of corporate governance that
are best practice consistent with the size and scale of the
company 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.
We have an exciting opportunity to build a leadership
position in a sector where superannuation assets are
projected to double over the next 10 years, and Wrap
Platforms are projected as one of the fastest growing
segments. HUB24 has a market share of less than 1% as
a Wrap Platform while being ranked as one of the market
leaders. Management within the company believe this to be
an opportunity for continued strong growth.
HUB24 aims to continue to build a profitable and scalable
business aligned with our vision to be the leading
independent platform provider, revolutionising the way
people manage their investments. The company plans to
achieve this through innovative investment administration,
portfolio management, reporting and support services that
deliver superior outcomes for advisers, licensees, investors
and our shareholders. We are expecting that HUB24 will
transition to be cashflow positive on a monthly basis within
the next two quarters, presuming the continuation of normal
market conditions.
Our leading platform features, unique in-house technology
and service proposition is being validated by increasing
industry recognition and support from existing and new
clients. We will continue to invest in platform development,
operational efficiency and in accelerating FUA to the
platform to take advantage of favourable market conditions
which support the growth and success of an innovative and
independent platform provider that offers real choice to
advisers and investors.
We look forward to updating shareholders on our progress
at the AGM in November.
On behalf of 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
28 August 2015
10
CHAIRMAN AND MANAGING DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015
BUSINESS OVERVIEW
HUB24 operates in a market where strong growth in
investment and superannuation continues supported by a
backdrop of legislated increases in superannuation, a rising
trend towards personal investments including directly held
assets and managed portfolios, and underpinned by a growing
population. Against this industry expansion Australia has been
through a period of unprecedented regulatory change including
reforms to superannuation and financial advice laws which
present favourable conditions for HUB24’s continued success.
KEY MARKET TRENDS
STRONG PROJECTED GROWTH IN PERSONAL
INVESTMENTS, WRAP PLATFORMS AND EQUITY
HOLDINGS
According to Rice Warner’s Personal Investment Market
Projections Report 2014, over the next 15 years:
• The personal investments market is expected to grow at a
rate of 4.6% per annum in real terms (7.7% per annum in
future dollars) over the next 15 years. The total personal
investments market at 30 June 2014 was $2,490 billion.
This compares with the superannuation market which had
assets of an additional $1,837 billion at the same date.
• Wrap platforms, including separately managed accounts
and model portfolio products, will be the fastest growing
segment, with its market share growing from 2.6% to
7.6% over the 15 years to 30 June 2029.
• By 30 June 2029, total cash and term deposits are
estimated to reduce from 35% to 30%, as a proportion of
overall personal investments while total equity holdings
(including ETFs) will increase from 14.4% to 21.7% of
overall personal investments.
AUSTRALIAN SUPER ASSETS WILL MORE THAN
DOUBLE IN NEXT 10 YEARS, SMSFS NOW A THIRD
OF ALL SUPER ASSETS
• The Deloittes Dynamics of Superannuation report 2013
projects the total pool of Australian super assets to grow
to $4 trillion in the next 10 years and $7.6 trillion by 2033.
• The growth is based on the Superannuation Guarantee
of 9.25% rising to 12%, on gradual population growth,
and the significant contribution of investment returns,
cementing Australia as the fourth largest superannuation
system in the world.
BUSINESS
OVERVIEW
• Meanwhile the latest data on superannuation funds
issued by the Australian Prudential Regulation Authority
(APRA), reports that the average balance of an SMSF
fund now exceeds $1 million with the average account
balance for an SMSF member just over $525,000.
• Individuals running SMSFs control $520.5 billion
or nearly a third of the total invested via Australian
superannuation funds compared to 10% ten years ago.
PERSONAL INVESTMENT MARKET PROJECTIONS
11
BUSINESS OVERVIEW
HUB24 ANNUAL REPORT 2015 BUSINESS
OVERVIEW
HUB24’S MAJOR ACHIEVEMENTS
AND PROSPECTS
Within this environment, we believe HUB24 is well
positioned to take advantage of these key industry trends,
both now and into the future. As a next generation platform
leveraging modern technology, HUB24 is also able to meet
the rapidly changing expectations of financial advisers
and investors. HUB24 has achieved a number of major
milestones over the past financial year.
100% GROWTH IN FUNDS UNDER ADMINISTRATION,
HIGHEST INDUSTRY NET INFLOWS GROWTH RATE
FOR WRAP PLATFORMS ACCORDING TO PLAN FOR
LIFE DATA1, ADVISER USAGE UP BY 40%.
• Over the financial year, HUB24 grew funds under
administration to $1,704m as at 30 June 2015,
representing an increase of 100%. With record inflows
during the fourth quarter of the 2015 financial year, growth
momentum is continuing into FY16 with funds under
administration standing at $1,900m as at 27 August 2015.
• According to Plan for Life1 data HUB24 has the sixth
highest net inflow growth across wrap providers in
Australia and in percentage terms of FUA, has the
INFLOWS QUARTERLY
FUA BALANCE
$‘M
2,000
1,600
1,200
800
400
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$‘M
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Net Inflows (LHS) Gross Inflows (LHS)
1Source: Plan For Life. Analysis of Wrap, Platform and Master Trust Managed Funds at March 2015
12
BUSINESS OVERVIEW
HUB24 ANNUAL REPORT 2015
BUSINESS
OVERVIEW
highest growth rate across Wraps, Platforms and Master
Trusts in the market for the 12 months to 31 March
2015. As a newer market participant this growth rate
is a significant achievement which is challenging the
distribution arrangements that have been previously
tightly held by traditional providers.
• Net inflows onto the HUB24 platform for FY2015 were
$797m at an average of $66m per month and averaging
$91m per month for the last quarter. By comparison,
average monthly net inflows for FY2014 were $34m. 52%
of net inflows were driven by HUB24’s seven white label
products while the remainder were driven by 42 active
dealer groups which increased in number by 12 during the
financial year.
The number of advisers using the platform has increased
by 40% over the financial year, with average FUA per a
dviser increasing by 42% over that time. Given that many of
the advisers are relatively new to using the HUB24 platform,
we expect significant upside in the level of usage in advisers’
businesses leading to an increase in the average FUA
per adviser.
CONTINUING INVESTMENT IN CLIENT-DRIVEN
TECHNOLOGY
While many platforms have been diverting significant
resources to changing legacy systems to comply with new
regulations and to support the rapidly changing approaches
to investment management, HUB24 has been able to focus
on the continued development of the company’s in-house
proprietary technology to truly address the needs of advisers
and clients. We are in the unique position of providing
both market leading managed account functionality and
market leading Wrap functionality with exceptional user
experiences and recognised high levels of service. Some of
the developments undertaken during the last year include:
• A new reporting solution allowing advisers to consolidate
the reporting of client assets that are held outside the
HUB24 platform such as external cash accounts and
individual stock holdings. This is achieved through
integrated data feeds from stockbrokers and other market
participants and supports the provision of a holistic view of
a clients investments. This new development is attractive to
several market segments and particularly to stockbroking
licensees and their clients who value holding their own
assets while still receiving the benefits of a Wrap platform.
• The release of a new streamlined and intuitive user
interface which is available across all popular mobile
devices. HUB24’s investment, super and pension platform
is now fully compatible and dynamically responsive to how
advisers and clients choose to access the platform and will
resize to fit screens of varying sizes on desktops or mobile
devices. Our industry leading functionality is now fully
portable and has extended our lead in this space having
been awarded the best Tablet/Smartphone access by
Investment Trends in their 2014 Platform Benchmarking
Report, prior to release of this new capability.
• Launch of SupportHUB offering full transparency for
registered clients and advisers to monitor progress of
enquiries through to completion. This unique service
provides certainty on activities yet to complete without
the need to make enquiries or follow-up contact.
SupportHUB also offers a knowledge base of online
forms, user guides, enriched search capability, online
tutorials and interactive tools for advisers.
• More recently, HUB24 has developed an initial service
for self directed investors which came into effect 1 July
2015. Future enhancements to this will support changing
advice models where advisers may wish to offer their
clients additional access to manage their portfolios as
well as position HUB24 as a leading platform provider for
SMSF trustees who choose to be self advised.
INDUSTRY-RECOGNISED AND AWARDED
HUB24 has now established its position as one of the top
tier full function platforms in the market today evidencing
the company’s ability to grow and innovate at the same time.
Our overall market position improved in the Investment
Trends Platform Benchmarking Report December 2014
moving from 5th to 3rd place, ranking ahead of most major
institutionally-owned Wrap providers; and ranking first for
Best Tablet/Smartphone Access2.
HUB24 also performed well in adviser satisfaction ratings
as indicated in the Investment Trends 2015 Planner
Technology Report. HUB24 placed:
• 2nd overall for Platform Satisfaction3;
• Award Winner – Ease of Use2;
• Award Winner – Value for Money, Platform2.
1Source: Plan For Life. Analysis of Wrap, Platform and Master Trust Managed Funds at March 2015
2Investment Trends December 2014 Platform Benchmarking Report, based on extensive analyst reviews of 22 platforms across 466 functional points.
3Results from Investment Trends 2015 Planner Technology Report, based on an online survey of over 890 financial planners.
13
BUSINESS OVERVIEW
HUB24 ANNUAL REPORT 2015 BUSINESS
OVERVIEW
The awards top a number of excellent results from the report
including achieving the highest user satisfaction for online
functionality, the user interface experience, turnaround
times for applications, administrative accuracy and pricing
flexibility. HUB24 also came in the top three for many other
features such as online transaction capabilities, direct
equities handling, and client review and reporting tools.
HUB24’S KEY STRENGTHS
a structure with potentially lower fees and tax effective
strategies, transparency of underlying holdings and online
tax optimisation tools.
Managed portfolios represented 42% of HUB24 platform
FUA at 30 June 2015 demonstrating that advisers and their
clients are increasingly comfortable with HUB24’s managed
portfolio solution now having been on the market for the
past 5 years.
Advantages of managed portfolios include:
AN INDEPENDENT PRODUCT OFFERING WITH
EXTENSIVE CHOICE
• tax effectiveness with no inheritance of the underlying
capital gains that can arise in managed funds
HUB24’s independence from product manufacturers
ensures we are able to objectively offer the best choice of
service providers for advisers and investors. This includes
• transparency of individual assets traditionally held in a
hidden managed fund structure
• Over 1,000 ASX listed securities, including shares,
ETFs, LICs and hybrids
• Over 214 managed portfolios
• 0ver 900 managed funds
• no buy/sell differential charged on entry
• beneficial ownership of underlying investments
• potential benefit of netting transactions within an
account, saving trading costs and taxes
• flexibility with online capital gains modelling tools that
• 15 different term deposits across five different providers
can assist in decision making
• 3 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.
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.
MARKET LEADING MANAGED PORTFOLIOS
HUB24 combines all the features of a traditional Wrap with
the largest array of single sector and diversified managed
portfolios available in the market. HUB24’s managed
portfolio capability enables dealer groups to create and
implement their own unique managed portfolios and
subsequently participate in the value chain as a product
manufacturer. Investors using managed portfolios are able
to benefit from professional investment management in
14
BUSINESS OVERVIEW
FLEXIBLE TECHNOLOGY WITH AWARD-WINNING
ONLINE AND MOBILE INTERFACES
HUB24’s purpose-built proprietary technology platform
allows the company full control over development priorities
to provide compelling and tailored solutions for our clients.
The company is unconstrained by external vendors, and is
well known for delivering platform enhancements at a more
rapid rate than most, if not all, of our competitors, providing
a significant competitive advantage.
HUB24’s clients, including advisers, fund managers and
investors enjoy real-time access to investment and account
information through 24/7 web and mobile device access via our
award-wining online and mobile interfaces. Our technology
incorporates electronic account opening, trading, reports,
statements and communications, which enable HUB24 to
deliver efficient and cost-effective services to all clients.
HUB24 also promotes the ability to brand or ‘white label’
our platform for licensees who want to tailor their platform
solution to suit the individual needs of their business model,
advisers and clients. 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.
HUB24 ANNUAL REPORT 2015 DIRECTOR’S
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 2015.
BRUCE HIGGINS
ANDREW ALCOCK
BRUCE HIGGINS B ENG CP ENG, MBA, FAICD
ANDREW ALCOCK B BUS, GAICD
CHAIRMAN AND NON-EXECUTIVE DIRECTOR
MANAGING DIRECTOR
Bruce is currently Chairman and Non-Executive Director
of Legend Corporation 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.
Andrew has over 20 years experience across wealth
management encompassing advice, platforms, industry
superannuation, insurance and information technology.
Andrew was formerly Chief Operating Officer of Genesys
Wealth Advisers and Head of the Genesys Equity Program,
where he was a director of over 20 financial planning
practices across Australia.
Bruce was appointed as Chairman of the Board on 19
October 2012.
Previous listed company directorships held in the last
three years:
His previous executive roles include General Manager
for Asteron’s wealth management business, where he
was responsible for a broad range of superannuation and
investment solutions for investors, employers, licensees and
advisers.
•
Feore Limited (resigned August 2013)
• Q Technology consolidated entity (resigned December
Andrew’s extensive financial services experience solidly
underpins his role as Managing Director of HUB24 Limited.
2014)
Andrew was appointed to the company’s Board on 29 August
2014 as Managing Director.
Previous listed company directorships held in the last three
years: Nil.
15
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 DIRECTOR’S
REPORT
VAUGHAN WEBBER
HUGH ROBERTSON
VAUGHAN WEBBER B EC
HUGH ROBERTSON
NON-EXECUTIVE DIRECTOR
NON-EXECUTIVE DIRECTOR
Vaughan Webber is an experienced finance professional
with a background in chartered accounting at a major
international accountancy firm. Recently, Vaughan has had
extensive financial public markets experience, having spent
over 13 years in corporate finance at leading Australian
mid-sized stockbrokers 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).
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 and AMA Group 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).
16
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 DIRECTOR’S
REPORT
IAN LISTER
MATTHEW HAES
IAN LITSTER B SC (HONS)
COMPANY SECRETARY
NON-EXECUTIVE DIRECTOR
Ian Litster has over 10 years experience in designing and
developing software for the financial services industries,
particularly in the area of financial planning. He has been
the founder of the companies behind the VisiPlan and COIN
software packages, two of the leading financial planning
systems in Australia. His main areas of expertise are the
management of information technology organisations
and software development. Ian has a Bachelor Degree in
Science (Honours in Mathematics).
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 that were not company directors at the date of
this report.
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 19
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.
17
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 DIRECTOR’S
REPORT
DIRECTOR’S INTERESTS
CAPITAL RAISING
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
Andrew Alcock
Number of
ordinary shares
566,811
86,500
3,588,751
Nil
31,387
CONSOLIDATED ENTITY OVERVIEW
HUB24 Limited operates the HUB24 investment and
superannuation platform and provides financial advice to
clients through financial advisers authorised by Paragem
Pty Ltd.
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 investments including market leading managed portfolio
functionality, efficient and cost effective trading, insurance
and comprehensive reporting for all types of investors –
individuals, companies, trusts or self-managed super funds.
HUB24 was established in 2007 by a team with a very strong
track record of delivering market-leading solutions in the
financial services industry.
Paragem Pty Ltd is a wholly owned subsidiary and boutique
dealer group. It comprises a network of 20 independently
minded financial advice businesses that deliver cost
effective, high quality advice. It provides compliance,
systems and support to the practice enabling advisers
to provide clients with financial advice over a range of
products. Paragem Pty Ltd was acquired by HUB24 Limited
on 3 September 2014.
PRINCIPAL ACTIVITIES
The principal activities during the year of the company were
the provision of investment and superannuation portfolio
administration services and the provision of financial
advisory services.
The company conducted a capital raising during the year
ended 30 June 2015 to further strengthen its balance sheet,
support the implementation of recently announced white
label agreements and to maintain sufficient flexibility to
pursue additional strategic opportunities as they arise.
$5.25 million in capital was raised from a placement of
5,000,000 ordinary shares at $1.05 on 24 March 2015.
REVIEW OF FINANCIAL RESULTS
The Consolidated entity recorded revenue from ordinary
activities of $29.304 million for the year ended 30 June 2015
(revenue from ordinary activities of $4.034 million for the
year ended 30 June 2014) an increase of 626%.
A loss of $6.457 million was recorded for the year ended 30
June 2015 (loss of $8.548 million for the year ended 30 June
2014) an improvement of 24%.
Included in this result were the following significant items:
• Platform revenue increased by 151% to $8.057 million
for the year ($3.209 million for the year ended 30 June
2014) and direct costs increased by 45% to $4.899 million
($3.376 million for the year ended 30 June 2014);
• The acquisition of Paragem Pty Ltd on 3 September 2014
contributing $20.235million to the increase in revenue for
the period and $0.389 million in legal and due diligence
costs associated with the transaction were expensed;
• Platform recurring revenue of $0.639 million and non-
recurring revenue of $0.377 million relating to a tax
ruling received by the group during the period enabling
it to claim the benefit of Reduced Input Tax Credits
(“RITCs”) relating to the IDPS product;
• Development expenditure of $0.781 million was
capitalised during the year ($0.328 million for the prior
corresponding period).
The following representation of the financial performance
of the consolidated entity is based upon the internal reports
that are reviewed and used by management and the board
in assessing performance and determining the allocation
of resources. Management and the board review Earnings
before Interest, Tax, Depreciation and Amortisation (EBITDA)
from continuing operations before material non-recurring
and non-cash items.
18
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 DIRECTOR’S
REPORT
FY14
% VAR
$
3,209,190
151%
-
3,209,190
(3,376,016)
-
782%
45%
(166,826)
3003%
(3,516,234)
(3,683,060)
(3,552,845)
(7,235,905)
535,391
289,361
(427,895)
-
(1,028,915)
(7,867,963)
-
50%
89%
12%
39%
(23%)
106%
111%
100%
(39%)
32%
FY15
$
8,056,796
20,235,321
28,292,117
(4,898,589)
(18,550,883)
4,842,644
(5,260,676)
(418,032)
(3,967,117)
(4,385,149)
414,636
597,429
(902,513)
(448,109)
(626,655)
(5,350,361)
-
FINANCIAL PERFORMANCE
Income
Recurring Revenue - Platform
Recurring Revenue - Licensee
Total Revenue
Direct costs - Platform
Direct costs - Licensee
Gross Profit
Operating expenses
Operating EBITDA
Growth Investment expenses
EBITDA
Other significant items:
Interest revenue
Non-recurring revenue
Share based payment expense
Transaction costs
Depreciation and amortisation
Profit before income tax
Income tax
Profit after income tax from continuing operations
(5,350,361)
(7,867,963)
32%
Discontinued operations
(1,106,537)
(679,825)
63%
Profit after income tax
(6,456,898)
(8,547,788)
24%
Recurring Revenue
Non-recurring revenue
Interest revenue
Revenue from ordinary activities
28,292,117
597,429
414,636
29,304,182
3,209,190
289,361
535,391
4,033,942
782%
106%
(23%)
626%
Revenue due to ordinary activities from continuing operations comprises Recurring revenue, Non-recurring revenue and interest revenue.
19
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015
DIRECTOR’S
REPORT
REVENUE
OTHER SIGNIFICANT ITEMS
Strong FUA inflows into the HUB24 platform, increased
platform transaction activity and the acquisition of Paragem
Pty Ltd on 3 September 2014 have resulted in recurring
revenue of $28.292 million for the year ended 30 June
2015. Paragem Pty Ltd has contributed $20.235 million in
revenue for the ten months ended 30 June 2015. Revenue is
sensitive to movements in equity markets given a significant
proportion of client funds are in either directly held or
managed assets with equity market exposure.
GROSS PROFIT
Strong FUA inflows and increased trading activity at
improved margins have driven a strong gross profit result
for the year ended 30 June 2015 demonstrating the benefits
of increasing scale.
Direct costs include custody, trustee, superannuation
administration and headcount resources to service current
client accounts together with payments to advisers and
suppliers of compliance, software and training services.
OPERATING EBITDA
Operating EBITDA is a representation of the EBITDA result
the company would record if it were to service only the
current amount of FUA and associated client accounts. It
assumes no expenses are invested to bring additional FUA
onto the platform and develop new platform features. While
HUB24 will continue to invest in the expansion of FUA and
further development, Operating EBITDA is an important
internal measure and milestone for the company as it
continues its pathway to profitability.
The Operating EBITDA result for the year ended 30 June 2015
has improved by 89% over the previous corresponding period.
GROWTH INVESTMENT EXPENSES
Growth investment expenses are predominantly headcount
resources dedicated to future platform development,
business strategy (inclusive of M&A activity) and to
accelerate additional FUA onto the platform. It includes
resources across sales, development and transition
functions.
Non-recurring revenue of $0.377 million was recorded
during the period from Reduced Input Tax Credits received
by the company relating to the period to 30 June 2014. A
further $0.220 million of non-recurring other income has
resulted from the change in accounting policy relating to
Research & Development rebates.
Share based payment expenses for the year of $0.903
million was inclusive of $0.465 million relating to the
acquisition of Paragem Pty Ltd (Refer note 30) and $0.438
million due to the issue of options to executives, the
Chairman and staff during the past two financial years
ended 30 June 2015.
Transaction costs of $0.448 million are legal and due
diligence costs associated with the acquisition of Paragem
Pty Ltd and the acquisition of a book of self directed clients
that transferred to the HUB24 platform on 1 July 2015.
Amortisation of the platform intangible has reduced
significantly during the period due to the useful life of
the platform being reassessed to November 2030 from
November 2020.
DISCONTINUED OPERATIONS
EXPENSE
During the year ended 30 June 2015 the company
changed its methodology in provisioning for adviser client
claims arising from financial advice provided under the
discontinued stockbroking operation prior to 1 March 2013.
Reported claims during the year and an estimate of future
claims and associated legal costs have resulted in an
increase in the provision of $0.742 million during the year
ended 30 June 2015.
Discontinued operations expense also includes $0.234
million provided against the sale of trading software to BBY
(in liquidation).
CASH FLOWS
The Group held $12.1m in cash and cash equivalents as at
30 June 2015. Cash outflows from operating activities were
$1.772 million for the second half of the financial year ended
30 June 2015 significantly reduced from $3.584 million in
the first half.
20
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 DIRECTOR’S
REPORT
OPERATING SEGMENTS
FINANCIAL PERFORMANCE -
SEGMENTS
Investment
Platform
$
Licensee
Services
$
Corporate
$
FY15
$
FY14
$
VAR
%
Income
Recurring Revenue - Platform
8,056,796
8,056,796
3,209,190
151%
Recurring Revenue - Licensee
20,235,321
20,235,321
-
Total Revenue
8,056,796
20,235,321
28,292,117
3,209,190
Direct costs - Platform
(4,898,589)
(4,898,589)
(3,376,016)
Direct costs - Licensee
(18,550,883)
(18,550,883)
-
782%
45%
Gross Profit
3,158,207
1,684,437
4,842,644
(166,826)
3003%
Operating expenses
(3,358,855)
(1,623,751)
(278,071)
(5,260,676)
(3,516,234)
Segment Operating EBITDA
(200,648)
60,687
(278,071)
(418,032)
(3,683,060)
Growth Investment expenses
(3,868,680)
(98,438)
(3,967,117)
(3,552,845)
Segment EBITDA
(4,069,328)
60,687
(376,508)
(4,385,149)
(7,235,905)
50%
89%
12%
39%
The principal products and services for each of the operating segments are as follows:
Platform
Licensee
Development and provision of investment and superannuation platform services to financial advisers,
stockbrokers, accountants and their clients.
Provision of financial advice to clients through financial advisers authorised by Paragem Pty Ltd. The
Licensee provides compliance, systems and support to adviser practices enabling advisers to provide
clients with financial advice over a range of products.
Corporate
Provision of corporate services to the operating segments including allocation of costs of the Managing
Director, Finance & compliance and strategic support.
21
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015
DIRECTOR’S
REPORT
PLATFORM SEGMENT
The results for the Platform segment shown as a percentage of
average FUA for the year demonstrate margin improvements
at each level for the financial year ended 30 June 2015.
Platform
FY15
$
Restated
FY141
$
VAR
%
Platform
FUA (as at 30 June)
1,704m
854m
100%
Recurring Revenue
8,056,796
3,209,190
151%
Recurring Revenue
Total Revenue
8,056,796
3,209,190
151%
Direct costs
FY15
Basis points
of FUA
FY14
Basis points
of FUA
VAR
%
22%
30%
0.52%
0.55%
0.63%
0.38%
0.25%
Direct costs
Gross Profit
(4,898,589)
(3,376,016)
45%
Gross Profit
(0.03%) 1016%
3,158,207
(166,826)
1993%
Operating expenses
(0.26%)
(0.57%)
50%
Operating expenses
(3,358,855)
(3,235,049)
4%
(200,648)
(3,401,875)
94%
Segment Operating
EBITDA
Growth Investment
Expenses
Segment Operating
EBITDA
Growth Investment
Expenses
(0.01%)
(0.60%)
97%
(0.30%)
(0.57%)
45%
(3,868,680)
(3,434,720)
13%
Segment EBITDA
(0.32%)
(1.17%)
71%
In addition to significant improvements in financial
performance year on year, the second half recorded
positive Operating EBITDA. Further scale benefits were
realised during the second half of the year with Gross Profit
increasing to 0.29% from 0.20%, Operating EBITDA to 0.05%
from (0.11%) and EBITDA of (0.23%) from (0.45%) of average
FUA for the period.
Platform
Recurring
Revenue
Direct costs
Gross Profit
Operating
expenses
Segment Operating
EBITDA
Growth Investment
Expenses
1H
FY14
2H
FY14
1H
FY15
2H
FY15
0.55%
0.50%
0.62%
0.65%
0.66%
0.47%
0.42%
0.37%
(0.11%)
0.03%
0.20%
0.29%
0.64%
0.45%
0.31%
0.24%
(0.74%)
(0.42%)
(0.11%)
0.05%
0.62%
0.51%
0.35%
0.28%
Segment EBITDA
(1.36%)
(0.93%)
(0.45%)
(0.23%)
Segment EBITDA
(4,069,328)
(6,836,595)
40%
1Restated to recognise corporate segment in for FY2014
The platform segment recorded significant improvements
in Revenue, Gross Profit, Operating EBITDA and EBITDA for
the year ended 30 June 2015 due to increases in FUA and
increases in transaction volumes at improved in margins.
Positive quarterly operating EBITDA has been recorded
since the third quarter of FY2015.
While recurring revenue increased by 151%, direct costs
increased by only 45% and operating expenses increased by
4% demonstrating the continued benefits of scale.
Included in the result for the platform segment was the
following:
• Platform FUA based fees increasing by 119% for the year
ended 30 June 2015 compared to the prior corresponding
period derived from an FUA increase of 100%
• Platform transaction fees increasing 223% for the year
ended 30 June 2015 compared to the prior corresponding
period driven by increased volumes for platform trading,
managed funds and insurance
• Platform recurring revenue of $0.639 million and non-
recurring revenue of $0.377 million relating to a tax
ruling received by the group during the period enabling
it to claim the benefit of Reduced Input Tax Credits
(“RITCs”) relating to the IDPS product
22
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015
DIRECTOR’S
REPORT
PLATFORM SEGMENT - 2HFY2015 VS 1HFY2015
LICENSEE SEGMENT
$’M
6.0
5.0
4.0
3.0
2.0
1.0
0
(1.0)
(2.0)
(3.0)
Revenue
Gross
Profit
Operating
EBITDA
EBITDA
1HFY15 2HFY15
Chart above demonstrates the dual impact of increasing
volumes and increasing margins on revenue, Gross Profit,
Operating EBITDA and EBITDA when comparing 2HFY2015
to 1HFY2015.
Paragem provides licensing for financial planning practices
with above average funds under advice. The practices
typically seek the freedom to exert their independence
through non conflicted investment and insurance options
and they embrace the changing shape of the advice industry
toward managed accounts with superior portfolio reporting
and investment flexibility. While Paragem advisers continue
to be free to choose whichever platform best suits their
clients’ needs, the take-up of HUB24 has been strong due
to the ability of the platform to cater for both traditional
managed fund investments as well as the emerging breed of
managed portfolios and SMAs typically expected in the high
net worth investor and SMSF sectors.
Paragem provides assistance to practices wishing to
implement managed accounts for their clients, assisting
them to deliver contemporary investment solutions
and improving the efficiency of their business such that
operational scale and professional fees are the primary
drivers of profitability. This philosophy is aligned with best of
breed advisers in the financial planning industry.
Licensee
Recurring Revenue
Total Revenue
Direct costs
Gross Profit
Operating expenses
Segment Operating EBITDA
Segment EBITDA
10 Months ending
30 June 2015
$
20,235,321
20,235,321
(18,550,883)
1,684,437
(1,623,751)
60,687
60,687
The licensee segment has contributed to ten months earnings
for the period. Revenue is generated from 20 practices
with 50 licensed advisers and is 19% greater than the prior
corresponding period (10 months ended 30 June 2014).
The segment has made a positive contribution to EBITDA for
the period.
23
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 DIRECTOR’S
REPORT
PARAGEM PTY LTD REVENUE
CORPORATE SEGMENT
$’M
30
25
20
15
10
5
0
2010
2011
2012
2013
2014
2015
Note: acquired by HUB24 on 3 September 2014.
Revenue growth
The Paragem business has grown revenues strongly over
the past 5 years with growth continuing during the period.
Integration of the business
Corporate and financial integration of the Paragem business
into HUB24 was completed seamlessly within the first half
of the financial year and the two groups have begun working
proactively together.
This acquisition of Paragem 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 independently minded
financial advice market.
CORPORATE
Restated
FY141
$
FY15
$
VAR
%
Operating expenses
(278,071)
(281,185)
(1%)
Growth resources
expensed
(98,438)
(118,125)
(17%)
Segment EBITDA
(376,508)
(399,310)
(6%)
1Restated to recognise corporate segment in for FY2014
A portion of operating expenses and growth resources
were allocated to the Corporate segment in the 10 months
to 30 June 2015. These expenses predominantly relate to
corporate headcount overheads that cannot be directly
attributed to either operating segment.
REVIEW OF OPERATIONS
HUB24 Limited completed the acquisition of 100% of the
issued shares in Paragem Pty Ltd on 3 September 2014.
The Company paid $0.905 million as upfront consideration
net of cash acquired, is due to make a deferred cash
consideration payment of $1.0 million on 3 September 2015
and capped earnout consideration of up to $6.0 million
subject to financial performance measured over three years
and payable in HUB24 ordinary shares.
The deferred purchase consideration (including contingent
consideration) to the vendor is $2.967 million and contingent
consideration to the option holders is $4.0 million which
assumes 100% of performance criteria are met. The contingent
consideration to the option holders comprises purchase
consideration of $2.327 million, recorded as a liability, and
a share based payments expense of $1.673 million which is
expensed over three years from completion date.
24
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015
DIRECTOR’S
REPORT
760,000 share options were issued to staff and executives
on 17 October 2014 under the HUB24 Share Option plan.
1,200,000 options were issued to executives on 4 December
2014 after being approved by shareholders at the Annual
General Meeting of the Company held 27 November 2014.
operations have scaled well with this rapid growth and the
benefits of scale have emerged during the financial year.
Management and the Board are confident the company will
continue to grow into the foreseeable future.
Andrew Alcock was appointed to the position of Managing
Director effective 29 August 2014.
Refer to the Chairman and Managing Director’s report for
further details.
SIGNIFICANT CHANGES IN THE
STATE OF AFFAIRS
Other than the acquisition of Paragem Pty Ltd on
3 September 2014, there have been no significant changes
in the nature or state of affairs of the consolidated entity.
SIGNIFICANT EVENTS AFTER THE
REPORTING DATE
No matters or circumstances have arisen since 30 June
2015 that have 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.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The consolidated entity’s operations are not subject to
significant environmental regulations under Australian
legislation in relation to the conduct of its operations.
DIRECTORS INDEMNITY
During the 2015 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 Director’s report. 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.
LIKELY DEVELOPMENTS AND
EXPECTED RESULTS
MEETINGS OF DIRECTORS
Continuing rapid growth in FUA to the investment and
superannuation platform and significant platform development
over the past three years see the company approaching the
significant milestone of $2 billion in FUA. The company’s
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.
Director
Bruce Higgins
Andrew Alcock
Ian Litster
Hugh Robertson
Vaughan Webber
Board Meetings
Audit, Risk & Compliance
Committee Meetings
Remuneration & Nomination
Committee
Attended
Held*
Attended
Held*
Attended
Held*
14
14
13
11
13
14
14
14
14
14
3
3
2
-
3
3
3
3
-
3
3
3
3
-
3
3
3
3
-
3
*Number of meetings held during the time the Director held office or was a member of the committee.
25
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 DIRECTOR’S
REPORT
REMUNERATION REPORT – AUDITED
• Focus the executive on key drivers of value including
capital management
This remuneration report, which has been audited,
outlines the key management personnel remuneration
arrangements for the consolidated entity, in accordance
with the requirements of Section 300A of the Corporations
Act 2001 and its Regulations.
The remuneration report is set out under the following main
headings:
• A – Principles used to determine the nature and amount
of remuneration
• B – Details of remuneration
• C – Service agreements
• D – Share based compensation
• E – Additional information
• 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.
• Transparency and acceptability to shareholders.
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 KMP
remuneration is separate and distinct.
REMUNERATION PHILOSOPHY
NON-EXECUTIVE DIRECTOR REMUNERATION
The performance of the consolidated entity depends upon
the quality of its Directors and Executives (collectively
hereafter KMP). To prosper, the consolidated entity must
attract, motivate and retain highly skilled KMPs and
to ensure reward for performance is competitive and
appropriate for the results achieved.
To this end, the consolidated entity embodies the following
principles in its remuneration framework:
• Focus on sustained growth in shareholder wealth,
consisting of share price growth
• Provide competitive and reasonable rewards to attract
high calibre individuals
Objective and Structure
The Board seeks to set aggregate remuneration at a level
which provides the company with the ability to attract and
retain Directors of the highest calibre, whilst incurring a
cost which is acceptable to shareholders.
The amount of fixed remuneration is established for
individual Non-Executive Directors by resolution of the full
Board, at its discretion. The annual aggregate non-executive
remuneration may not exceed the amount fixed by the
company in General Meeting for that purpose (currently
fixed at a maximum of $400,000 per annum as approved
by shareholders at the Annual General Meeting held on 26
November 2010).
26
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 DIRECTOR’S
REPORT
The following base fees including superannuation apply
for Non-Executive directors:
Structure
Chairman
Other Non-Executive Directors
$103,572 p.a.
$59,359 p.a.
The Remuneration and Nomination Committee may from
time to time receive advice from independent remuneration
consultants to ensure executive remuneration is appropriate
and in line with market.
Remuneration may consist of the following key elements:
RETIREMENT ALLOWANCES FOR DIRECTORS
There are no retirement schemes or retirement benefits
other than statutory benefits for Non-Executive Directors.
The Remuneration and Nomination Committee may from
time to time receive advice from independent remuneration
consultants to ensure Non-Executive Director’s 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.
• Fixed salary
• Short term incentives (STIs)
• Long term Incentives (LTIs)
• Share based incentives
FIXED SALARY
Objective and Structure
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 2015 and 30 June 2014
respectively are detailed in the Remuneration of KMP
section of this Remuneration Report.
Director’s compensation increased by 1.8% over the prior
financial year.
EXECUTIVE REMUNERATION
Objective
The consolidated entity aims to reward executives with a
level and mix of remuneration commensurate with their
position and responsibilities to:
• align the interests of executives with those of
shareholders
• link reward with the strategic goals and performance of
the consolidated entity
• ensure total remuneration is competitive by market
standards.
The level of fixed remuneration is set in order to provide a
base level of remuneration, which is both appropriate to the
position and is competitive in the market.
Fixed salaries are reviewed annually by the Board of
Directors and the process consists of a review of company-
wide business unit and individual performances, relevant
comparative remuneration in the market and internal and,
where appropriate, external advice on policies and practices.
KMPs receive their fixed remuneration in cash.
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.
27
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 DIRECTOR’S
REPORT
LONG TERM INCENTIVES (LTIS)
Objective and Structure
KMPs may be eligible to participate in the Employee Share
Option Plan (ESOP) of the company, which was approved
at the Annual General Meeting of the company on 27
November 2014 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 KMPs 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.
SHARE BASED INCENTIVES
Objective
The objective of share based remuneration is to reward
KMPs 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 KMPs who are able to
influence the generation of shareholder wealth and thus
have an impact on the company’s performance.
Structure
Share based remuneration to KMPs 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.
USE OF REMUNERATION CONSULTANTS
During the financial year ended 30 June 2015 the company
did not use the services of remuneration consultants.
VOTING AND COMMENTS MADE AT THE COMPANY’S
2014 ANNUAL GENERAL MEETING
At the 2014 AGM, 98.73% of votes received supported the
adoption of the remuneration report for the year ended
30 June 2014. The company did not receive any specific
feedback at the AGM regarding its remuneration practices.
B. DETAILS OF REMUNERATION
Summary of Key Terms of Managing Director’s
Employment Agreement
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
remuneration of KMP 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).
28
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 DIRECTOR’S
REPORT
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 Managing Director 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.
Up to 70% of the STI may be paid in shares in HUB24.
STI awards for the executive team in the 2015 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
Base case weighting
Stretch case weighting
Financial
Growth
Strategy
Net Profit after Tax
FUA, development targets
Deliver strategic opportunities
Compliance & Operations
Fraud prevention & system improvements
Leadership
Organisational development
29%
27%
15%
19%
10%
-
75%
25%
-
-
For each STI the percentage of the available bonus that was awarded in relation to the 2015 financial year and the percentage
that was forfeited because the person did not meet the service and performance criteria is set out below.
STI ENTITLEMENT
Name
Entitlement
Current Year
Awarded
STI entitlement
Forfeited
Andrew Alcock
Mark Ballinger
Jason Entwistle
Wes Gillett
Joseph Gioffre
Matthew Haes
100%
30%
100%
100%
Discretionary
Discretionary
77.9%
80.6%
79.2%
64.9%
% of Salary
15.2%
19.0%
22.1%
19.4%
20.8%
35.1%
-
-
29
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 DIRECTOR’S
REPORT
REMUNERATION EXPENSES FOR KEY MANAGEMENT PERSONNEL
2015
$
Short
Term
Benefits
Post
Employment
Benefits
Long Term
Benefits
Share Based
Payments
Salary
and Fees
Bonus
Non-
monetary
Super-
annuation
Long
Service
Leave
Shares Options
Total
Performance
Related %
Non-Executive Directors
Bruce Higgins
Ian Litster
Hugh Robertson
Vaughan Webber
103,572
59,359
59,359
59,359
Subtotal Non-Executive Directors
281,649
-
-
-
-
-
Key Management Personnel
Andrew Alcock
Managing Director
Mark Ballinger
Head of Business Program
Jason Entwistle
Head of Strategic Developments
Wes Gillett
Head of Product and Distribution
Joseph Gioffre
Head of Operations
Matthew Haes
CFO & Company Secretary
Subtotal
Key Management Personnel
Total
378,709 295,000
186,116
45,000
302,860 240,000
231,111 150,000
216,886
45,000
224,943
62,000
1,540,625 837,000
1,822,274 837,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
53,443
157,015
-
-
-
59,359
59,359
59,359
53,443
335,092
18,784
1,973
-
77,073
771,539
18,784
1,094
1,000
3,287
255,281
18,784
1,568
1,000
62,620
626,832
18,784
1,960
1,000
46,965
449,820
18,784
2,702
1,000
10,981
295,353
18,784
4,109
1,000
15,949
326,785
112,704
13,406
5,000
216,875 2,725,610
112,704
13,406
5,000
270,318
3,060,702
0%
0%
0%
0%
38%
18%
38%
33%
15%
19%
30
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 DIRECTOR’S
REPORT
2014
$
Short
Term
Benefits
Post
Employment
Benefits
Long Term
Benefits
Share Based
Payments
Salary
and Fees
Bonus
Non-
monetary
Super-
annuation
Long
Service
Leave
Shares Options
Total
Performance
Related %
Non-Executive Directors
Bruce Higgins
Ian Litster
Hugh Robertson
Vaughan Webber
101,724
58,300
58,300
58,300
Subtotal Non-Executive Directors
276,624
-
-
-
-
-
Key Management Personnel
Andrew Alcock1
Chief Executive Officer
Mark Ballinger2
Head of Business Program
Jason Entwistle3
Head of Strategic Developments
Wes Gillett
Head of Product and Distribution
Joseph Gioffre
Head of Operations
Matthew Haes
CFO and Company Secretary
Subtotal
Key Management Personnel
Total
351,293
219,688
158,923
20,000
294,204
157,500
249,167
102,800
210,748
19,040
216,949
33,000
1,481,284 552,028
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
13,340
312
-
-
192,575
16,294
491
1,000
64,323
533,811
18,062
949
1,000
48,242
420,220
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%
10%
29%
24%
7%
11%
1. A. Alcock was appointed Chief Executive Officer on 29 July 2013
2. M. Ballinger was appointed Head of Business Program on 16 August 2013.
3. J. Entwistle resigned as Acting Chief Executive Officer and was appointed Head of Strategic Developments on 1 August 2013
31
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 DIRECTOR’S
REPORT
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors
Bruce Higgins
Ian Litster
Hugh Robertson
Vaughan Webber
Other Key Management Personnel
Andrew Alcock
Mark Ballinger
Jason Entwistle
Wes Gillett
Joseph Gioffre
Matthew Haes
C.
SERVICE AGREEMENTS
Fixed remuneration
At risk - STI
At risk - LTI
2015
2014
2015
2014
2015
2014
66%
100%
100%
100%
47%
78%
47%
48%
81%
80%
57%
100%
100%
100%
38%
77%
38%
39%
88%
84%
-
-
-
-
44%
21%
44%
44%
-
-
-
-
-
-
38%
23%
38%
39%
-
-
34%
43%
-
-
-
9%
1%
9%
9%
19%
20%
-
-
-
24%
-
23%
21%
12%
16%
On appointment to the Board, all Non-Executive Directors enter into a service agreement with the company in the form of a letter
of appointment. The letter summarises the Board policies and terms, including compensation relevant to the office of Director.
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 2015 and are subject
to review annually by the Remuneration and Nominations Committee. There are no termination payment benefits other than
the contracted notice periods.
32
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 DIRECTOR’S
REPORT
Notice period
– either party
6 months
3 months
6 months
6 months
1 month
1 month
Unspecified –
commenced
29 July 2013
Unspecified –
commenced
10 September 2013
Unspecified –
commenced
1 August 2013
Unspecified –
Commenced
19 April 2013
Unspecified –
commenced
3 July 2012
Unspecified –
commenced
26 June 2012
Name
Andrew Alcock
Chief Executive Officer
Base Salary
(including
superannuation)
$379,118
Up to 100% of
base salary1
200,000
options2
STI
LTI
Term of agreement
Mark Ballinger
Head of Business Program
$225,449
Up to 30% of
base salary
100,000
options3
Jason Entwistle
Director, Strategic Development
$308,307
Up to 100% of
base salary1
160,000
options3
Wesley Gillett
Head of Product & Distribution
$259,100
Up to 100% of
base salary1
120,000
options3
Joseph Gioffre
Head of Operations
Matthew Haes
Chief Financial Officer and
Company Secretary
$230,781
Discretionary
$236,557
Discretionary
80,000
options3
120,000
options3
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, have a one year sale restriction after vesting and exercise. Vesting no earlier than 36 months from date of issue subject to
achieving share price hurdles.
3. Options for Jason Entwistle, Wesley Gillett, Matthew Haes, Joseph Gioffre and Mark Ballinger have a one year sale restriction after vesting and exercise.
Vesting no earlier than 36 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.
33
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 DIRECTOR’S
REPORT
D.
SHARE BASED COMPENSATION
Options
The terms and conditions of each grant of options affecting remuneration of KMP in the current or a future reporting period
are as follows:
Grant Date
Expiry
Date
Exercise
Price
Value per
option
at grant
date
Performance
achieved
%
Vested
Balance
at start
of Year
Issued
during
year
Exercised/
Cancelled
during year
Balance
at end of
year
$0.8424
$0.38
yes
100%
195,000
7 August
2013
8 August
2013
8 August
2013
14 October
2017
8 August
2017
8 August
2017
17 October
2014
17 October
2019
2 December
2014
17 October
2019
$0.8438
$0.38
$0.8438
$0.37
$0.98
$0.14
$0.98
$0.14
One third
achieved
One third
achieved
33.3% 1,440,000
33.3%
510,000
Nil
Nil
Nil
Nil
195,000
Nil
1,440,000
Nil
510,000
No
No
Nil
Nil
Nil
580,000
Nil
580,000
Nil
200,000
Nil
200,000
Options granted carry no dividends or voting rights.
Options granted 7 August 2013 under the HUB Employee Share Option Plan have vested during the reporting period. These
option can be exercised after the 2nd anniversary of the date of issue.
Options granted 8 August 2013 to executives vest subject to the following:
• 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. These options have vested during the reporting period.
• 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
• 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.
34
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 DIRECTOR’S
REPORT
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.
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. This tranche vested
during the current financial year. These options have
vested during the reporting period.
• 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
• 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.
Options granted 17 October 2014 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 60% of the Exercise Price of the Options
for each day in any 20 consecutive trading day period
starting on or after the 3rd anniversary of the date of
issue of the Options. These option can be exercised,
subject to satisfaction of vesting conditions, after the 3rd
anniversary of the date of issue.
Options granted 2 December 2014 to A. Alcock vest subject
to the following:
• The closing sale price of the Shares traded on the
Australian Securities Exchange must have increased by
at least 60% of the Exercise Price of the Options for each
day in any 20 consecutive trading day period starting on or
after 36 months after the date of issue of the Options. These
option can be exercised, subject to satisfaction of vesting
conditions, after the 3rd anniversary of the date of issue.
35
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 DIRECTOR’S
REPORT
Name
Financial
Year of grant
Financial
Years in
which options
may vest
Andrew Alcock
Andrew Alcock
Mark Ballinger
Jason Entwistle
Jason Entwistle
Wes Gillett
Wes Gillett
Joseph Gioffre
Joseph Gioffre
Matthew Haes
Matthew Haes
Bruce Higgins
2015
2014
2015
2015
2014
2015
2014
2015
2014
2015
2014
2014
2018
2017
2016
2015
2018
2018
2017
2016
2015
2018
2017
2016
2015
2018
2015
2018
2015
2017
2016
2015
Number
of options
granted
200,000
600,000
Value of
options at
grant date
$40,800
$228,000
100,000
160,000
480,000
$20,500
$32,800
$182,400
120,000
360,000
$24,600
$136,800
80,000
80,000
120,000
115,000
510,000
$16,400
$30,400
$24,600
$43,700
$188,700
Number
of options
vested during
the year
Number of
options lapsed /
forfeited during
the year
Nil
200,000
Nil
Nil
160,000
Nil
120,000
Nil
80,000
Nil
115,000
170,000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
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 2015.
E.
ADDITIONAL INFORMATION
The earnings of the consolidated entity for the five years ended 30 June 2015 are summarised below:
EBITDA
EBIT
Profit /(Loss) after income tax
2015
2014 Restated
$’000
(6,245)
(6,872)
(6,457)
$’000
(8,054)
(9,083)
(8,548)
2013
$’000
(10,504)
(11,534)
(9,783)
2012
$’000
(12,677)
(29,847)
(30,516)
2011
$’000
(3,464)
(5,235)
(4,451)
The factors that are considered to affect shareholder value are summarised below:
36
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 DIRECTOR’S
REPORT
Share price at financial year end
Basic earnings per share
2015
$’000
$1.20
(0.154)
2014
$’000
$0.82
(0.196)
2013
$’000
$0.75
(0.320)
2012
$’000
$0.95
(1.760)
2011
$’000
$2.78
(0.360)
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 KMP 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
21,187
-
938,902
1,187
11,553
20,908
510,000
3,588,751
86,500
-
1,000
1,000
1,000
1,000
1,000
-
-
-
10,200
3,638
-
-
-
-
56,811
-
-
31,387
4,638
939,902
2,187
12,553
21,908
566,811
3,588,751
86,500
Name
Andrew Alcock
Mark Ballinger
Jason Entwistle
Wes Gillett
Joseph Gioffre
Matthew Haes
Bruce Higgins
Ian Litster
Hugh Robertson
Options
The number of options over ordinary shares in the company held during the financial year by each director and other
members of KMP of the consolidated entity, including their personally related parties, is set out below:
Options over
ordinary shares
Balance at start
of the year
Granted
Exercised
Expired /
forfeited /other
Balance at end of
the year
Andrew Alcock
Mark Ballinger
Jason Entwistle
Wes Gillett
Joseph Gioffre
Matthew Haes
Bruce Higgins
600,000
-
480,000
360,000
80,000
115,000
510,000
200,000
100,000
160,000
120,000
80,000
120,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
800,000
100,000
640,000
480,000
160,000
235,000
510,000
37
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 DIRECTOR’S
REPORT
This concludes the remuneration report which has been
audited.
NON-AUDIT SERVICES
Tax, compliance and consulting services of $103,149 were
paid to BDO (2014: $64,802). 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.
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.
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.
Bruce Higgins
Chairman
Sydney, 28 August 2015
38
DIRECTOR’S REPORT
HUB24 ANNUAL REPORT 2015 AUDITOR’S DECLARATION
AUDITOR’S DECLARATION
OF INDEPENDENCE
OF INDEPENDENCE
Tel: +61 2 9251 4100
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
Fax: +61 2 9240 9821
www.bdo.com.au
www.bdo.com.au
Level 11, 1 Margaret St
Level 11, 1 Margaret St
Sydney NSW 2000
Sydney NSW 2000
Australia
Australia
DECLARATION OF INDEPENDENCE BY PAUL BULL TO THE DIRECTORS OF HUB24 LIMITED
DECLARATION OF INDEPENDENCE BY PAUL BULL TO THE DIRECTORS OF HUB24 LIMITED
As lead auditor of HUB24 Limited for the year ended 30 June 2015, I declare that, to the best of my
As lead auditor of HUB24 Limited for the year ended 30 June 2015, I declare that, to the best of my
knowledge and belief, there have been:
knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of HUB24 Limited and the entities it controlled during the period.
This declaration is in respect of HUB24 Limited and the entities it controlled during the period.
Paul Bull
Paul Bull
Partner
Partner
BDO East Coast Partnership
BDO East Coast Partnership
Sydney, 28 August 2015
Sydney, 28 August 2015
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO International Ltd,
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
AUDITOR’S DECLARATION OF INDEPENDENCE
39
HUB24 ANNUAL REPORT 2015
40
HUB24 ANNUAL REPORT 2015 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
FINANCIAL STATEMENTS
HUB24 ANNUAL REPORT 2015 STATEMENT OF PROFIT OR LOSS
HUB24
LIMITED
–
2015
ANNUAL
REPORT
AND OTHER COMPREHENSIVE INCOME
STATEMENT
OF
PROFIT
OR
LOSS
AND
OTHER
COMPREHENSIVE
INCOME
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 5
Revenue
from
continuing
operations
Revenue
Interest
and
other
income
Expenses
Platform
and
custody
fees
Licensee
fees
Employee
benefits
expenses
Property
and
occupancy
costs
Depreciation,
amortisation
and
impairment
Administrative
expenses
Loss
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
Restated
2014
$
2015
$
28,669,253
634,929
29,304,182
3,209,190
824,752
4,033,942
(2,093,746)
(19,459,724)
(8,883,841)
(488,432)
(617,288)
(3,111,514)
(34,654,545)
(1,383,665)
-‐
(6,896,617)
(372,666)
(1,028,915)
(2,220,042)
(11,901,905)
(5,350,363)
-‐
(5,350,363)
(7,867,963)
-‐
(7,867,963)
(1,106,537)
(6,456,900)
(679,825)
(8,547,788)
-‐
(6,456,900)
-‐
(8,547,788)
(6,456,900)
(8,547,788)
Cents
Cents
(11.05)
(11.05)
(18.39)
(18.39)
(2.29)
(2.29)
(1.59)
(1.59)
(13.34)
(13.34)
(19.98)
(19.98)
The
above
Statement
of
Profit
or
Loss
and
Other
Comprehensive
Income
should
be
read
in
conjunction
with
the
accompanying
notes.
Refer
to
note
31
for
the
prior
year
restatement
details.
42
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
P A G E | 3 8
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
ANNUAL
REPORT
STATEMENT
OF
FINANCIAL
POSITION
STATEMENT OF
FINANCIAL POSITON
A T
3 0
J U N E
2 0 1 5
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
Current
provisions
Other
current
liabilities
Total
Current
Liabilities
Non-‐Current
Liabilities
Non-‐current
provisions
Other
non-‐current
liabilities
Total
Non-‐Current
Liabilities
Total
Liabilities
Net
Assets
EQUITY
Issued
capital
Reserves
Accumulated
losses
Total
Equity
Note
20(b)
9
10
11
12
13
14
15
(a)
15
(b)
16
(a)
16
(b)
CONSOLIDATED
Restated
2014
$
2015
$
12,108,825
2,192,379
413,798
14,715,002
13,779,844
405,986
419,044
14,604,874
128,602
12,972,181
256,454
13,357,237
93,561
6,322,423
656,096
7,072,080
28,072,239
21,676,954
2,247,321
2,192,478
88,897
4,528,696
662,230
1,389,653
74,147
2,126,030
287,624
5,358,563
5,646,187
184,654
972,962
1,157,616
10,174,883
3,283,646
17,897,356
18,393,308
17
18
82,090,454
3,133,845
(67,326,943)
76,988,017
2,275,332
(60,870,041)
17,897,356
18,393,308
The
above
Statement
of
Financial
Position
should
be
read
in
conjunction
with
the
accompanying
notes.
Refer
to
note
31
for
the
prior
year
restatement
details.
STATEMENT OF FINANCIAL POSITION
43
P A G E | 3 9
HUB24 ANNUAL REPORT 2015
STATEMENT OF CHANGES
IN EQUITY
HUB24
LIMITED
–
2015
ANNUAL
REPORT
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 5
CONSOLIDATED
As
at
1
July
2014
Total
comprehensive
loss
for
the
year
Transactions
with
equity
members
in
their
capacity
as
equity
members
Capital
raising
Employee
options
granted
Employee
share
issue
Adviser
options
granted
As
at
30
June
2015
Restated
As
at
1
July
2013
Total
comprehensive
loss
for
the
year
Transactions
with
equity
members
in
their
capacity
as
equity
members
Capital
raising
Employee
options
granted
Employee
share
issue
As
at
30
June
2014
Issued
Capital
$
Reserves
$
Accumulated
Losses
$
Total
$
76,988,017
-‐
2,275,332
-‐
(60,870,041)
(6,456,900)
18,393,308
(6,456,900)
5,058,436
-‐
44,000
-‐
82,090,453
-‐
393,791
-‐
464,722
3,133,845
-‐
-‐
-‐
-‐
(67,326,941)
5,058,436
393,791
44,000
464,722
17,897,357
66,843,612
-‐
1,878,436
-‐
(52,322,253)
(8,547,788)
16,399,795
(8,547,788)
10,113,405
-‐
31,000
76,988,017
-‐
396,896
-‐
2,275,332
-‐
-‐
-‐
(60,870,041)
10,113,405
396,896
31,000
18,393,308
The
above
Statement
of
Changes
in
Equity
should
be
read
in
conjunction
with
the
accompanying
notes.
Refer
to
note
31
for
the
prior
year
restatement
details.
44
STATEMENT OF CHANGES IN EQUITY
P A G E | 4 0
HUB24 ANNUAL REPORT 2015
HUB24 LIMITED – 2015 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 01 5
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 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 acquisition of shares in subsidiary, net of cash
acquired
Payments for intangible assets
Payments for security deposits
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Proceeds from capital raising
Payment for subordinated loan
Payments for capital raising costs
Net cash inflow/(outflow) from financing activities
STATEMENT OF
CASH FLOWS
CONSOLIDATED
2015
$
2014
$
30,875,855
(36,493,694)
386,320
28,328
(5,203,193)
3,530,109
(11,255,534)
478,200
1,588,298
(5,658,928)
Note
20(a)
293,443
125,000
(81,020)
(941,091)
(770,004)
(2,590)
(1,376,262)
330,403
122,500
(92,349)
-
(360,727)
(217,307)
(217,479)
5,250,000
(150,000)
(191,565)
4,908,435
10,588,126
-
(474,721)
10,113,405
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
(1,671,019)
13,779,844
12,108,825
4,236,998
9,542,846
13,779,844
20(b)
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
45
STATEMENT OF CASH FLOWS
P AG E | 4 1
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24 LIMITED – 2015 ANNUAL REPORT
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 30 J U N E 2 01 5
1.
CORPORATE INFORMATION
The Annual Report of HUB24 Limited (the company or parent entity) for the year ended 30 June 2015 was authorised
for issue in accordance with a resolution of the Directors on 28 August 2015 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 , revised or amending Accounting Standards and Interpretations adopted
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.
AASB 2013-3 Amendments to AASB 136 - Recoverable Amount Disclosures for Non-Financial Assets
The consolidated entity has applied AASB 2013-3 from 1 July 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.
46
NOTES TO THE FINANCIAL STATEMENTS
P AG E | 4 2
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
AASB
2014-‐1
Amendments
to
Australian
Accounting
Standards
(Parts
A
to
C)
The
consolidated
entity
has
applied
Parts
A
to
C
of
AASB
2014-‐1
from
1
July
2014.
These
amendments
affect
the
following
standards:
AASB
2
'Share-‐based
Payment':
clarifies
the
definition
of
'vesting
condition'
by
separately
defining
a
'performance
condition'
and
a
'service
condition'
and
amends
the
definition
of
'market
condition';
AASB
3
'Business
Combinations':
clarifies
that
contingent
consideration
in
a
business
combination
is
subsequently
measured
at
fair
value
with
changes
in
fair
value
recognised
in
profit
or
loss
irrespective
of
whether
the
contingent
consideration
is
within
the
scope
of
AASB
9;
AASB
8
'Operating
Segments':
amended
to
require
disclosures
of
judgements
made
in
applying
the
aggregation
criteria
and
clarifies
that
a
reconciliation
of
the
total
reportable
segment
assets
to
the
entity's
assets
is
required
only
if
segment
assets
are
reported
regularly
to
the
chief
operating
decision
maker;
AASB
13
'Fair
Value
Measurement':
clarifies
that
the
portfolio
exemption
applies
to
the
valuation
of
contracts
within
the
scope
of
AASB
9
and
AASB
139;
AASB
116
'Property,
Plant
and
Equipment'
and
AASB
138
'Intangible
Assets':
clarifies
that
on
revaluation,
restatement
of
accumulated
depreciation
will
not
necessarily
be
in
the
same
proportion
to
the
change
in
the
gross
carrying
value
of
the
asset;
AASB
124
'Related
Party
Disclosures':
extends
the
definition
of
'related
party'
to
include
a
management
entity
that
provides
KMP
services
to
the
entity
or
its
parent
and
requires
disclosure
of
the
fees
paid
to
the
management
entity;
AASB
140
'Investment
Property':
clarifies
that
the
acquisition
of
an
investment
property
may
constitute
a
business
combination.
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.
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
P A G E | 4 3
NOTES TO THE FINANCIAL STATEMENTS
47
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
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.
Operating
segments
Operating
segments
are
presented
using
the
'management
approach',
where
the
information
presented
is
on
the
same
basis
as
the
internal
reports
provided
to
the
Chief
Operating
Decision
Makers
('CODM').
The
CODM
is
responsible
for
the
allocation
of
resources
to
operating
segments
and
assessing
their
performance.
Identification
of
reportable
operating
segments
The
consolidated
entity
is
organised
into
two
operating
segments:
platform
and
licensee.
These
operating
segments
are
based
on
the
internal
reports
that
are
reviewed
and
used
by
the
executive
management
team
(identified
as
the
chief
operating
decision
makers)
in
assessing
performance
and
in
determining
the
allocation
of
resources.
The
financial
performance
of
each
operating
segment
is
reported
to
the
executive
management
team
on
a
monthly
basis.
There
is
no
aggregation
of
operating
segments.
The
accounting
policies
adopted
for
internal
reporting
to
the
executive
management
team
are
consistent
with
those
adopted
in
the
financial
statements.
Types
of
products
and
services
Platform
The
platform
segment
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,
exchange
traded
funds,
managed
portfolios,
term
deposits,
bonds,
cash
and
margin
lending.
Licensee
The
licensee
segment
provide
independent
financial
advice
to
clients
through
financial
advisers
authorised
by
Paragem
Pty
Ltd.
The
Licensee
provides
compliance,
systems
and
support
to
the
practice
enabling
advisers
to
provide
clients
with
financial
advice
over
a
range
of
products.
Intersegment
transactions
There
are
no
intersegment
transactions.
Intersegment
receivables,
payables
and
loans
Intersegment
loans
are
initially
recognised
at
the
consideration
received
and
are
eliminated
on
consolidation.
P A G E | 4 4
48
NOTES TO THE FINANCIAL STATEMENTS
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
Foreign
currency
translation
Functional
and
presentation
currency
Both
the
functional
and
presentation
currency
of
the
consolidated
entity
is
Australian
dollars.
Revenue
and
income
recognition
Revenue
is
measured
at
the
fair
value
of
the
consideration
received
or
receivable.
The
consolidated
entity
recognises
revenue
when
the
amount
can
be
reliably
measured,
it
is
probable
that
future
economic
benefits
will
flow
to
the
consolidated
entity
and
specific
criteria
have
been
met
for
each
of
the
activities.
Revenue
is
recognised
for
the
major
business
activities
as
follows:
Platform
revenue
•
•
•
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.
Licensee
fees
• Licensee
revenue
is
measured
at
the
fair
value
of
the
consideration
received
or
receivable
on
advice
provided
to
clients
and
payments
from
product
providers.
Finance
income
Finance
income
comprises
interest
income
on
funds
invested.
Interest
income
is
recognised
as
it
accrues
in
profit
using
the
effective
interest
method.
Government
grants
Government
grants
are
recognised
in
profit
and
loss
on
a
systematic
basis
over
the
useful
life
of
the
asset
as
other
income.
Grants
are
receieved
in
relation
to
Research
and
Development
activities
undertaken
by
the
consolidated
entity
and
are
recognised
in
accordance
with
AASB120.
Refer
to
note
31
for
further
information.
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.
P A G E | 4 5
49
NOTES TO THE FINANCIAL STATEMENTS
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
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.
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.
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:
• 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
• 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
P A G E | 4 6
50
NOTES TO THE FINANCIAL STATEMENTS
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
deductible
temporary
differences
and
the
carry-‐forward
of
unused
tax
credits
and
unused
tax
losses
can
be
utilised,
except:
• 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
• When
the
deductible
temporary
difference
is
associated
with
investments
in
subsidiaries,
associates
or
interests
in
joint
ventures,
in
which
case
a
deferred
tax
asset
is
only
recognised
to
the
extent
that
it
is
probable
that
the
temporary
difference
will
reverse
in
the
foreseeable
future
and
taxable
profit
will
be
available
against
which
the
temporary
difference
can
be
utilised.
The
carrying
amount
of
deferred
income
tax
assets
is
reviewed
at
each
reporting
date
and
reduced
to
the
extent
that
it
is
no
longer
probable
that
sufficient
taxable
profit
will
be
available
to
allow
all
or
part
of
the
deferred
income
tax
asset
to
be
utilised.
Unrecognised
deferred
income
tax
assets
are
reassessed
at
each
reporting
date
and
are
recognised
to
the
extent
that
it
has
become
probable
that
future
taxable
profit
will
allow
the
deferred
tax
asset
to
be
recovered.
Deferred
income
tax
assets
and
liabilities
are
measured
at
the
tax
rates
that
are
expected
to
apply
to
the
year
when
the
asset
is
realised
or
the
liability
is
settled,
based
on
tax
rates
(and
tax
laws)
that
have
been
enacted
or
substantively
enacted
at
the
reporting
date.
Deferred
tax
assets
and
deferred
tax
liabilities
are
offset
only
if
a
legally
enforceable
right
exists
to
set
off
current
tax
assets
against
current
tax
liabilities
and
the
deferred
tax
assets
and
liabilities
relate
to
the
same
taxable
entity
and
the
same
taxation
authority.
Other
taxes
Revenues,
expenses
and
assets
are
recognised
net
of
the
amount
of
GST
except:
• 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
•
•
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.
P A G E | 4 7
51
NOTES TO THE FINANCIAL STATEMENTS
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
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:
•
•
•
Office
furniture
and
fittings
-‐
over
2.5
to
5
years
Computer
equipment
-‐
3
years
Leased
assets
-‐
over
the
term
of
the
lease
Impairment
The
carrying
values
of
office
equipment
are
reviewed
for
impairment
when
events
or
changes
in
circumstances
indicate
the
carrying
value
may
not
be
recoverable.
For
an
asset
that
does
not
generate
largely
independent
cash
inflows,
the
recoverable
amount
is
determined
for
the
cash
generating
unit
to
which
the
asset
belongs.
If
any
such
indication
exists
and
where
the
carrying
values
exceed
the
estimated
recoverable
amount,
the
assets
or
cash
generating
units
are
written
down
to
their
recoverable
amount.
The
recoverable
amount
of
office
equipment
is
the
greater
of
fair
value
less
costs
to
sell
and
value
in
use.
In
assessing
value
in
use,
the
estimated
future
cash
flows
are
discounted
to
their
present
value
using
a
pre-‐tax
discount
rate
that
reflects
current
market
assessments
of
the
time
value
of
money
and
risks
specific
to
the
asset.
De-‐recognition
and
disposal
An
item
of
office
equipment
is
derecognised
upon
disposal
or
when
no
further
future
economic
benefits
are
expected
from
its
use.
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.
P A G E | 4 8
52
NOTES TO THE FINANCIAL STATEMENTS
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
Other
Other
non-‐derivative
financial
instruments
are
measured
at
amortised
cost
using
the
effective
interest
rate
method,
less
any
impairment
losses.
The
fair
values
of
investments
that
are
actively
traded
in
organised
financial
markets
are
determined
by
reference
to
quoted
market
bid
prices
at
the
close
of
business
on
the
reporting
date.
For
investments
with
no
active
market,
fair
values
are
determined
using
valuation
techniques.
Such
techniques
include:
using
recent
arm’s
length
market
transactions;
reference
to
the
current
market
value
of
another
instrument
that
is
substantially
the
same;
discounted
cash
flow
analysis
and
option
pricing
models
making
as
much
use
of
available
and
supportable
market
data
as
possible
and
keeping
judgemental
inputs
to
a
minimum.
Goodwill
and
Intangibles
Goodwill
Goodwill
acquired
in
a
business
combination
is
initially
measured
at
cost
being
the
excess
of
the
cost
of
the
business
combination
over
the
consolidated
entity's
interest
in
the
net
fair
value
of
the
acquirer’s
identifiable
assets,
liabilities
and
contingent
liabilities.
Following
initial
recognition,
goodwill
is
measured
at
cost
less
any
accumulated
impairment
losses.
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.
Refer
to
note
4
-‐
Investment
Platform
estimate
of
useful
life.
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
P A G E | 4 9
53
NOTES TO THE FINANCIAL STATEMENTS
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
whether
indefinite
life
assessment
continues
to
be
supportable.
If
not,
the
change
in
the
useful
life
assessment
from
indefinite
to
finite
is
accounted
for
as
a
change
in
an
accounting
estimate
and
is
thus
accounted
for
on
a
prospective
basis.
Trade
and
other
payables
Trade
and
other
payables
are
carried
at
amortised
cost
and
represent
liabilities
for
goods
and
services
provided
to
the
consolidated
entity
prior
to
the
end
of
the
financial
year
that
are
unpaid
and
arise
when
the
consolidated
entity
becomes
obliged
to
make
future
payments
in
respect
of
the
purchase
of
these
goods
and
services.
Provisions
Provisions
are
recognised
when
the
consolidated
entity
has
a
present
obligation
(legal
or
constructive)
as
a
result
of
a
past
event,
it
is
probable
that
an
outflow
of
resources
embodying
economic
benefits
will
be
required
to
settle
the
obligation
and
a
reliable
estimate
can
be
made
of
the
amount
of
the
obligation.
Provisions
are
measured
at
the
present
value
of
management’s
best
estimate
of
the
expenditure
required
to
settle
the
present
obligation
at
the
reporting
date.
If
the
effect
of
the
time
value
of
money
is
material,
provisions
are
discounted
using
a
current
pre-‐tax
rate
that
reflects
the
risks
specific
to
the
liability.
When
discounting
is
used,
the
increase
in
the
provision
due
to
the
passage
of
time
is
recognised
as
a
borrowing
cost.
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:
•
The
Employee
Share
Option
Plan
(ESOP);
and
P A G E | 5 0
54
NOTES TO THE FINANCIAL STATEMENTS
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
•
The
Employee
Share
Plan
(ESP).
The
cost
of
these
equity-‐settled
transactions
with
employees
is
measured
by
reference
to
the
fair
value
of
the
equity
instruments
at
the
date
at
which
they
are
granted.
The
fair
value
is
determined
by
reference
to
the
active
market
for
the
shares
which
trade
on
the
Australian
Securities
Exchange,
at
grant
date.
In
valuing
equity
settled
transactions,
no
account
is
taken
of
any
vesting
conditions,
other
than
(if
applicable):
•
•
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:
•
•
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
•
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
P A G E | 5 1
55
NOTES TO THE FINANCIAL STATEMENTS
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
share-‐based
payment
arrangement,
or
is
otherwise
beneficial
to
the
employee,
as
measured
at
the
date
of
modification.
If
an
equity-‐settled
award
is
cancelled,
it
is
treated
as
if
it
had
vested
on
the
date
of
cancellation,
and
any
expense
not
yet
recognised
for
the
award
is
recognised
immediately.
However,
if
a
new
award
is
substituted
for
the
cancelled
award
and
designed
as
a
replacement
award
on
the
date
that
it
is
granted,
the
cancelled
and
new
award
are
treated
as
if
they
were
a
modification
of
the
original
award,
as
described
in
the
previous
paragraph.
The
dilutive
effect,
if
any,
of
outstanding
options
is
reflected
as
additional
share
dilution
in
the
computation
of
diluted
earnings
per
share.
Issued
Capital
Ordinary
shares
are
classified
as
equity.
Incremental
costs
directly
attributable
to
the
issue
of
new
equity
instruments
are
shown
in
equity
as
a
deduction,
net
of
GST,
from
the
proceeds.
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.
Business
combinations
The
acquisition
method
of
accounting
is
used
to
account
for
business
combinations
regardless
of
whether
equity
instruments
or
other
assets
are
acquired.
The
consideration
transferred
is
the
sum
of
the
acquisition-‐date
fair
values
of
the
assets
transferred,
equity
instruments
issued
or
liabilities
incurred
by
the
acquirer
to
former
owners
of
the
acquiree
and
the
amount
of
any
non-‐
controlling
interest
in
the
acquiree.
For
each
business
combination,
the
non-‐controlling
interest
in
the
acquiree
is
measured
at
either
fair
value
or
at
the
proportionate
share
of
the
acquiree's
identifiable
net
assets.
All
acquisition
costs
are
expensed
as
incurred
to
profit
or
loss.
On
the
acquisition
of
a
business,
the
consolidated
entity
assesses
the
financial
assets
acquired
and
liabilities
assumed
for
appropriate
classification
and
designation
in
accordance
with
the
contractual
terms,
economic
conditions,
the
consolidated
entity's
operating
or
accounting
policies
and
other
pertinent
conditions
in
existence
at
the
acquisition-‐
date.
Where
the
business
combination
is
achieved
in
stages,
the
consolidated
entity
remeasures
its
previously
held
equity
interest
in
the
acquiree
at
the
acquisition-‐date
fair
value
and
the
difference
between
the
fair
value
and
the
previous
carrying
amount
is
recognised
in
profit
or
loss.
Contingent
consideration
to
be
transferred
by
the
acquirer
is
recognised
at
the
acquisition-‐date
fair
value.
Subsequent
changes
in
the
fair
value
of
the
contingent
consideration
classified
as
an
asset
or
liability
is
recognised
in
profit
or
loss.
Contingent
consideration
classified
as
equity
is
not
remeasured
and
its
subsequent
settlement
is
accounted
for
within
equity.
P A G E | 5 2
56
NOTES TO THE FINANCIAL STATEMENTS
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
The
difference
between
the
acquisition-‐date
fair
value
of
assets
acquired,
liabilities
assumed
and
any
non-‐controlling
interest
in
the
acquiree
and
the
fair
value
of
the
consideration
transferred
and
the
fair
value
of
any
pre-‐existing
investment
in
the
acquiree
is
recognised
as
goodwill.
If
the
consideration
transferred
and
the
pre-‐existing
fair
value
is
less
than
the
fair
value
of
the
identifiable
net
assets
acquired,
being
a
bargain
purchase
to
the
acquirer,
the
difference
is
recognised
as
a
gain
directly
in
profit
or
loss
by
the
acquirer
on
the
acquisition-‐date,
but
only
after
a
reassessment
of
the
identification
and
measurement
of
the
net
assets
acquired,
the
non-‐controlling
interest
in
the
acquiree,
if
any,
the
consideration
transferred
and
the
acquirer's
previously
held
equity
interest
in
the
acquirer.
Business
combinations
are
initially
accounted
for
on
a
provisional
basis.
The
acquirer
retrospectively
adjusts
the
provisional
amounts
recognised
and
also
recognises
additional
assets
or
liabilities
during
the
measurement
period,
based
on
new
information
obtained
about
the
facts
and
circumstances
that
existed
at
the
acquisition-‐date.
The
measurement
period
ends
on
either
the
earlier
of
(i)
12
months
from
the
date
of
the
acquisition
or
(ii)
when
the
acquirer
receives
all
the
information
possible
to
determine
fair
value.
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
2015.
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
is
applicable
to
annual
reporting
periods
beginning
on
or
after
1
January
2018.
The
standard
replaces
all
previous
versions
of
AASB
9
and
completes
the
project
to
replace
IAS
39
'Financial
Instruments:
Recognition
and
Measurement'.
AASB
9
introduces
new
classification
and
measurement
models
for
financial
assets.
A
financial
asset
shall
be
measured
at
amortised
cost,
if
it
is
held
within
a
business
model
whose
objective
is
to
hold
assets
in
order
to
collect
contractual
cash
flows,
which
arise
on
specified
dates
and
solely
principal
and
interest.
All
other
financial
instrument
assets
are
to
be
classified
and
measured
at
fair
value
through
profit
or
loss
unless
the
entity
makes
an
irrevocable
election
on
initial
recognition
to
present
gains
and
losses
on
equity
instruments
(that
are
not
held-‐for-‐
trading)
in
other
comprehensive
income
('OCI').
For
financial
liabilities,
the
standard
requires
the
portion
of
the
change
in
fair
value
that
relates
to
the
entity's
own
credit
risk
to
be
presented
in
OCI
(unless
it
would
create
an
accounting
mismatch).
New
simpler
hedge
accounting
requirements
are
intended
to
more
closely
align
the
accounting
treatment
with
the
risk
management
activities
of
the
entity.
New
impairment
requirements
will
use
an
'expected
credit
loss'
('ECL')
model
to
recognise
an
allowance.
Impairment
will
be
measured
under
a
12-‐month
ECL
method
unless
the
credit
risk
on
a
financial
instrument
has
increased
significantly
since
initial
recognition
in
which
case
the
lifetime
ECL
method
is
adopted.
The
standard
introduces
additional
new
disclosures.
The
consolidated
entity
will
adopt
this
standard
from
1
July
2018
but
the
impact
of
its
adoption
is
yet
to
be
assessed
by
the
consolidated
entity.
P A G E | 5 3
57
NOTES TO THE FINANCIAL STATEMENTS
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(CONT’D)
AASB
15
Revenue
from
Contracts
with
Customers
This
standard
is
applicable
to
annual
reporting
periods
beginning
on
or
after
1
January
2017.
The
standard
provides
a
single
standard
for
revenue
recognition.
The
core
principle
of
the
standard
is
that
an
entity
will
recognise
revenue
to
depict
the
transfer
of
promised
goods
or
services
to
customers
in
an
amount
that
reflects
the
consideration
to
which
the
entity
expects
to
be
entitled
in
exchange
for
those
goods
or
services.
The
standard
will
require:
contracts
(either
written,
verbal
or
implied)
to
be
identified,
together
with
the
separate
performance
obligations
within
the
contract;
determine
the
transaction
price,
adjusted
for
the
time
value
of
money
excluding
credit
risk;
allocation
of
the
transaction
price
to
the
separate
performance
obligations
on
a
basis
of
relative
stand-‐alone
selling
price
of
each
distinct
good
or
service,
or
estimation
approach
if
no
distinct
observable
prices
exist;
and
recognition
of
revenue
when
each
performance
obligation
is
satisfied.
Credit
risk
will
be
presented
separately
as
an
expense
rather
than
adjusted
to
revenue.
For
goods,
the
performance
obligation
would
be
satisfied
when
the
customer
obtains
control
of
the
goods.
For
services,
the
performance
obligation
is
satisfied
when
the
service
has
been
provided,
typically
for
promises
to
transfer
services
to
customers.
For
performance
obligations
satisfied
over
time,
an
entity
would
select
an
appropriate
measure
of
progress
to
determine
how
much
revenue
should
be
recognised
as
the
performance
obligation
is
satisfied.
Contracts
with
customers
will
be
presented
in
an
entity's
statement
of
financial
position
as
a
contract
liability,
a
contract
asset,
or
a
receivable,
depending
on
the
relationship
between
the
entity's
performance
and
the
customer's
payment.
Sufficient
quantitative
and
qualitative
disclosure
is
required
to
enable
users
to
understand
the
contracts
with
customers;
the
significant
judgments
made
in
applying
the
guidance
to
those
contracts;
and
any
assets
recognised
from
the
costs
to
obtain
or
fulfil
a
contract
with
a
customer.
The
consolidated
entity
will
adopt
this
standard
from
1
July
2017
but
the
impact
of
its
adoption
is
yet
to
be
assessed
by
the
consolidated
entity.
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:
•
•
Credit
risk
Liquidity
risk
• Market
risk.
This
note
presents
information
about
the
company’s
and
the
consolidated
entity’s
exposure
to
each
of
the
above
risks,
their
objectives,
policies
and
processes
for
measuring
and
managing
risk,
and
the
management
of
capital.
Further
quantitative
disclosures
are
included
throughout
this
financial
report.
The
Board
of
Directors
has
overall
responsibility
for
the
establishment
and
oversight
of
the
risk
management
framework.
Risk
management
policies
are
established
to
identify
and
analyse
the
risks
faced
by
the
company
and
the
consolidated
entity,
to
set
appropriate
risk
limits
and
controls,
and
to
monitor
risks
and
adherence
to
limits.
Risk
management
policies
and
systems
are
reviewed
regularly
to
reflect
changes
in
market
conditions
and
the
company’s
and
consolidated
entity’s
activities.
The
company
and
consolidated
entity,
through
their
training
and
management
standards
and
procedures,
aim
to
develop
a
disciplined
and
constructive
control
environment
in
which
all
employees
and
consultants
understand
their
roles
and
obligations.
58
NOTES TO THE FINANCIAL STATEMENTS
P A G E | 5 4
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
3.
FINANCIAL
RISK
MANAGEMENT
OBJECTIVES
AND
POLICIES
(CONT’D)
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.
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
P A G E | 5 5
59
NOTES TO THE FINANCIAL STATEMENTS
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
3.
FINANCIAL
RISK
MANAGEMENT
OBJECTIVES
AND
POLICIES
(CONT’D)
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.
CRITICAL
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
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.
Paragem
fair
value
estimate
The
consideration
for
Paragem
has
been
estimated
to
be
$7.975
million,
comprising
$6.302
million
of
purchase
consideration
and
$1.673
million
of
share
based
payment
expense.
Of
the
total
purchase
consideration,
$1.008
million
was
paid
upfront
in
cash,
$0.967
million
is
payable
in
cash
on
3
September
2015
and
$4.327
million
is
contingent
upon
performance
criteria
which
management
estimates
will
be
fully
met
(100%)
over
the
three
years
to
30
September
2017.
The
impact
of
meeting
90%
of
the
performance
criteria
associated
with
the
contingent
consideration
of
$4.327
million
is
:
•
•
a
reduction
in
contingent
purchase
consideration
of
$317,200;
and
a
reduction
in
the
share
based
payment
expense
of
$282,893.
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.
P A G E | 5 6
60
NOTES TO THE FINANCIAL STATEMENTS
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
4.
CRITICAL
ACCOUNTING
JUDGEMENTS,
ESTIMATES
AND
ASSUMPTIONS
(CONT’D)
Investment
Platform
estimate
of
useful
life
Management
have
reassessed
the
remaining
useful
life
of
the
investment
platform.
The
useful
life
of
the
investment
platform
upon
acquisition
of
this
asset
in
November
2010
was
estimated
to
be
ten
years.
Management
have
reassessed
that
the
useful
life
be
extended
based
upon
the
useful
life
of
separate
platform
components.
The
three
components
with
different
useful
lives
are:
Core
database
with
a
useful
life
of
20
years;
Applications
with
a
useful
life
of
circa
10
years;
User
Interface
with
a
useful
life
of
circa
5
years.
The
impact
of
this
change
is
that
the
closing
carrying
amount
of
the
investment
platform
as
at
30
June
2014
of
$6.290
million
will
be
amortised
up
to
November
2030,
depending
on
the
component
classification.
The
impact
of
this
change
for
the
year
ended
30
June
2015
is
a
reduction
in
amortisation
expense
of
$453,442.
Goodwill
and
other
indefinite
life
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
including
estimated
discount
rates
based
on
the
current
cost
of
capital
and
growth
rates
of
the
estimated
future
cash
flows.
Refer
to
Note
12
for
details
of
these
assumptions
and
the
potential
impact
of
changes
to
these
assumptions.
Impairment
of
non-‐financial
assets
other
than
goodwill
and
other
indefinite
life
intangible
assets
The
consolidated
entity
assesses
impairment
of
non-‐financial
assets
other
than
goodwill
and
other
indefinite
life
intangible
assets
at
each
reporting
date
by
evaluating
conditions
specific
to
the
consolidated
entity
and
to
the
particular
asset
that
may
lead
to
impairment.
If
an
impairment
trigger
exists,
the
recoverable
amount
of
the
asset
is
determined.
This
involves
fair
value
less
costs
of
disposal
or
value-‐in-‐use
calculations,
which
incorporate
a
number
of
key
estimates
and
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
provision
for
adviser
client
claims
arising
from
financial
advice
provided
before
1
March
2013
from
the
discontinued
stockbroking
business
as
being
claims
reported
during
the
year
and
an
estimate
of
future
claims
and
associated
legal
costs.
P A G E | 5 7
61
NOTES TO THE FINANCIAL STATEMENTS
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
5.
OPERATING
SEGMENTS
Identification
of
reportable
segments
The
consolidated
entity
is
organised
into
two
operating
segments:
platform
and
licensee.
These
operating
segments
are
based
on
the
internal
reports
that
are
reviewed
and
used
by
the
executive
management
team
(identified
as
the
Chief
Operating
Decision
Makers
hereafter
CODM)
in
assessing
performance
and
in
determining
the
allocation
of
resources.
The
CODM
reviews
segment
profits
(Segment
EBITDA)
on
a
monthly
basis.
The
accounting
policies
adopted
for
internal
reporting
to
the
CODM
are
consistent
with
those
adopted
in
the
financial
statements.
The
principal
products
and
services
for
each
of
the
operating
segments
are
as
follows:
Platform
Development
and
provision
of
investment
and
superannuation
platform
services
to
financial
advisers,
stockbrokers,
accountants
and
their
clients.
Licensee
Provision
of
financial
advice
to
clients
through
financial
advisers
authorised
by
Paragem
Pty
Ltd.
The
Licensee
provides
compliance,
systems
and
support
to
adviser
practices
enabling
advisers
to
provide
clients
with
financial
advice
over
a
range
of
products.
Intersegment
transactions
There
are
no
intersegment
transactions.
Intersegment
receivables,
payables
and
loans
Intersegment
loans
are
initially
recognised
at
the
consideration
received
and
are
eliminated
on
consolidation.
The
provision
of
corporate
services
supports
these
two
operating
segments
and
includes
an
allocation
of
executive
headcount
costs.
CONSOLIDATED
31-‐Dec-‐14
Revenue
Platform
Services
$
Licensee
Services
$
Intersegment
eliminations/
Corporate
$
Total
$
Sales
to
external
customers
8,056,796
20,235,321
-‐
28,292,117
Total
sales
revenue
Total
revenue
8,056,796
20,235,321
-‐
28,292,117
8,056,796
20,235,321
-‐
28,292,117
Segment
Result
(4,069,328)
60,687
(376,508)
(4,385,149)
62
NOTES TO THE FINANCIAL STATEMENTS
P A G E | 5 8
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
5.
OPERATING
SEGMENTS
(CONT’D)
CONSOLIDATED
31-‐Dec-‐14
Other
non-‐operating
items:
Interest
revenue
Non-‐recurring
revenue
Share
based
payment
expense
Transaction
costs
Depreciation
and
amortisation
Profit
before
income
tax
Income
tax
expense
Profit
after
income
tax
from
continuing
operations
Platform
Services
$
Licensee
Services
$
Intersegment
eliminations/
Corporate
$
89,516
597,429
-‐
-‐
(572,813)
(3,955,196)
-‐
-‐
-‐
-‐
-‐
(53,842)
6,845
-‐
325,120
-‐
(902,513)
(448,109)
-‐
(1,402,010)
-‐
Total
$
414,636
597,429
(902,513)
(448,109)
(626,655)
(5,350,362)
-‐
(5,350,362)
Discontinued
operations
expense
-‐
-‐
(1,106,537)
(1,106,537)
Profit
after
income
tax
(3,955,196)
6,845
(2,508,547)
(6,456,900)
The
operating
performance
for
Licensee
segment
reflects
the
result
from
the
date
of
acquisition,
3
September
2014.
Revenue
from
ordinary
activities
and
revenue
from
continuing
operations
per
the
Statement
of
Financial
Performance
equates
to
$29,304,182
which
comprises
Total
Revenue,
Interest
revenue
and
Non
Recurring
Revenue
in
the
table
above.
P A G E | 5 9
NOTES TO THE FINANCIAL STATEMENTS
63
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
6.
REVENUE
AND
EXPENSES
FROM
CONTINUING
OPERATIONS
Revenue
(a)
Sales
revenue
Portfolio
service
fees
Licensee
fees
Cash
margin
Brokerage
Other
platform
fees
CONSOLIDATED
2014
$
2015
$
3,807,094
20,235,321
1,298,628
1,406,022
1,922,188
28,669,253
1,899,266
-‐
434,553
435,214
440,157
3,209,190
Other
platform
fees
include
an
estimated
refund
from
the
ATO
relating
to
the
Investor
Directed
Portfolio
Service
reduced
input
tax
credit
for
$1,007,844.
The
current
period
recurring
revenue
is
$639,399
and
the
prior
period
non-‐recurring
revenue
is
$368,445.
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
and
impairment
of
office
equipment
Amortisation
of
intangible
assets
(e)
Administrative
expenses
Corporate
fees
Professional
and
consultancy
fees
Information
services
and
communication
Travel
and
entertainment
Other
administrative
expenses
6,670,093
437,791
1,775,957
8,883,841
5,636,421
427,895
832,301
6,896,617
418,096
70,336
488,432
312,971
59,695
372,666
57,016
560,272
617,288
53,718
975,197
1,028,915
244,079
400,167
327,993
252,796
1,886,479
3,111,514
246,131
599,213
363,911
227,495
783,292
2,220,042
The
current
period
administrative
expenses
include
$448,109
relating
to
acquisition
expenses
and
$464,722
adviser
share
based
payments.
64
NOTES TO THE FINANCIAL STATEMENTS
P A G E | 6 0
HUB24 ANNUAL REPORT 2015
HUB24 LIMITED – 2015 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 30 J U N E 2 01 5
NOTES TO THE
FINANCIAL STATEMENTS
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:
Research and development government grant
Share based payments
Entertainment
Penalty
Sundry items
Adjustment to deferred tax asset
Non-recognition of deferred tax asset
Non-recognition of deferred tax liability
Income tax expense/(benefit)
CONSOLIDATED
Restated
2014
$
2015
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5,350,363)
(1,106,537)
(6,456,900)
(7,867,963)
(679,825)
(8,547,788)
(1,937,070)
(2,564,336)
(88,093)
270,754
14,135
1,852
47,086
245,734
-
128,369
4,247
-
26,264
158,880
143,666
1,781,514
(233,844)
1,691,336
330,260
2,075,196
-
2,405,456
-
-
P AG E | 6 1
NOTES TO THE FINANCIAL STATEMENTS
65
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
7.
INCOME
TAX
(CONT’D)
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.
8.
DISCONTINUED
OPERATIONS
During
the
period
the
consolidated
entity
incurred
impairment
charges
of
$0.234
million
relating
to
a
deferred
receivable
from
BBY
Holdings
Ltd
(in
liquidation).
Reported
claims
during
the
year
and
an
estimate
of
future
claims
and
associated
legal
costs
have
resulted
in
a
provision
increase
of
$0.742
million
during
the
year
ended
30
June
2015.
Financial
Performance
Revenue
from
discontinued
operations
Revenue
Interest
and
other
income
Expenses
from
discontinued
operations
Impairment
Insurance
run-‐off
cover
Loss
on
trading
software
disposal
Settlement
and
legal
expenses
Loss
before
income
tax
expense
from
disccontinued
operations
Income
tax
expense
Loss
after
income
tax
Loss
on
disposal
before
income
tax
expense
Income
tax
expense
Loss
on
disposal
after
income
tax
expense
CONSOLIDATED
2014
$
2015
$
-‐
-‐
-‐
233,755
-‐
-‐
872,782
1,106,537
-‐
-‐
-‐
-‐
390,376
57,544
231,905
679,825
(1,106,537)
-‐
(1,106,537)
(679,825)
-‐
(679,825)
-‐
-‐
-‐
-‐
-‐
-‐
Loss
after
income
tax
from
discontinued
operations
(1,106,537)
(679,825)
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
66
NOTES TO THE FINANCIAL STATEMENTS
2015
$
(1,106,537)
-‐
(1,106,537)
CONSOLIDATED
2014
$
(679,825)
-‐
(679,825)
P A G E | 6 3
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
8.
DISCONTINUED
OPERATIONS
(CONT’D)
Carrying
amounts
of
assets
and
liabilities
Total
assets
Provisions
Net
assets
9.
CURRENT
ASSETS
-‐
TRADE
AND
OTHER
RECEIVABLES
Trade
receivables
Allowance
for
impairment
loss
(i)
Other
debtors
(i)
Allowance
for
impairment
loss
CONSOLIDATED
2014
$
2015
$
-‐
-‐
680,219
680,219
445,727
445,727
(680,219)
(445,727)
CONSOLIDATED
2014
$
2015
$
1,701,472
-‐
1,701,472
490,907
2,192,379
306,638
-‐
306,638
99,348
405,986
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
(2014:
$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
The
tax
refund
claimed
for
platform
research
and
development
during
2015
was
$265,316
and
is
included
in
Other
debtors.
P A G E | 6 4
NOTES TO THE FINANCIAL STATEMENTS
67
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
9.
CURRENT
ASSETS
-‐
TRADE
AND
OTHER
RECEIVABLES
(CONT’D)
At
30
June,
the
ageing
analysis
of
receivables
is
as
follows:
2015
Consolidated
2014
Consolidated
*
PDNI
-‐
Past
due
not
impaired
CI
-‐
Considered
impaired
0-‐30
days
31-‐60
days
61-‐90
days
PDNI
*
834,685
349,850
1,007,844
405,987
-‐
-‐
Other
balances
within
trade
and
other
receivables
do
not
contain
impaired
assets
and
are
not
past
due.
It
is
expected
that
these
other
balances
will
be
received
when
due.
(iii)
Fair
value
and
credit
risk
Due
to
the
short
term
nature
of
these
receivables,
their
carrying
value
is
assumed
to
approximate
their
fair
value.
10.
CURRENT
ASSETS
–
OTHER
CURRENT
ASSETS
Prepayments
Other
assets
11.
NON-‐CURRENT
ASSETS
–
OFFICE
EQUIPMENT
Computer
Equipment
At
cost
Accumulated
depreciation
Office
Furniture
and
Fittings
At
cost
Accumulated
depreciation
Total
Office
Equipment
Cost
Accumulated
depreciation
Total
Net
Carrying
Amount
68
NOTES TO THE FINANCIAL STATEMENTS
CONSOLIDATED
2014
$
2015
$
310,432
103,366
413,798
67,184
351,860
419,044
CONSOLIDATED
2014
$
2015
$
178,969
(129,076)
49,893
111,491
(32,782)
78,708
290,460
(161,858)
128,602
136,340
(96,340)
40,000
69,153
(15,592)
53,561
205,493
(111,932)
93,561
P A G E | 6 5
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
11.
NON-‐CURRENT
ASSETS
–
OFFICE
EQUIPMENT
(CONT’D)
Reconciliations
of
the
carrying
amounts
at
the
beginning
and
end
of
the
financial
year:
Computer
Equipment
Carrying
amount
at
beginning
Acquisitions
through
business
combinations
Other
additions
Disposals
Depreciation
expense
Net
Carrying
Amount
Office
Furniture
and
Fittings
Carrying
amount
at
beginning
Acquisitions
through
business
combinations
Other
additions
Disposals
Depreciation
expense
Net
Carrying
Amount
Total
Office
Equipment
Carrying
amount
at
beginning
Acquisitions
through
business
combinations
Other
additions
Disposals
Depreciation
Net
Carrying
Amount
CONSOLIDATED
2014
$
2015
$
40,000
4,009
35,348
-‐
(29,464)
49,893
53,561
12,573
29,090
-‐
(16,516)
78,708
93,561
16,583
64,438
-‐
(45,980)
128,602
30,322
-‐
31,671
-‐
(21,993)
40,000
24,607
-‐
60,678
(6,978)
(24,746)
53,561
54,929
-‐
92,349
(6,978)
(46,739)
93,561
P A G E | 6 6
NOTES TO THE FINANCIAL STATEMENTS
69
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
12.
NON-‐CURRENT
ASSETS
–
INTANGIBLE
ASSETS
Investment
Platform
At
cost
Accumulated
amortisation
and
impairment
Net
carrying
amount
Goodwill
At
cost
Accumulated
amortisation
and
impairment
Net
carrying
amount
Dealer
Network
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
Impairment
charge
Other
disposals
Amortisation
charge
Closing
carrying
amount
Goodwill
Opening
carrying
amount
Acquisitions
through
business
combinations
Impairment
charge
Closing
carrying
amount
Dealer
Network
Opening
carrying
amount
Acquisitions
through
business
combinations
Impairment
charge
Amortisation
charge
Closing
carrying
amount
70
NOTES TO THE FINANCIAL STATEMENTS
CONSOLIDATED
2014
$
2015
$
25,475,151
(18,937,044)
6,538,107
24,717,486
(18,427,125)
6,290,361
5,846,822
-‐
5,846,822
604,244
(50,354)
553,890
45,289
(11,927)
33,362
-‐
-‐
-‐
-‐
-‐
-‐
32,953
(891)
32,062
12,972,181
6,322,423
6,290,361
757,666
-‐
-‐
(509,918)
6,538,107
-‐
5,846,822
-‐
5,846,822
-‐
604,244
(50,354)
-‐
553,890
7,409,144
327,773
-‐
(472,250)
(974,306)
6,290,361
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
P A G E | 6 7
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
12.
NON-‐CURRENT
ASSETS
–
INTANGIBLE
ASSETS
(CONT’D)
Software
Opening
carrying
amount
Other
additions
Amortisation
charge
Closing
carrying
amount
(a)
Impairment
tests
for
intangible
assets
Investment
Platform
Goodwill
Dealer
Network
Software
32,062
12,338
(11,036)
33,362
-‐
32,953
(891)
32,062
6,538,107
5,846,822
553,890
33,362
12,972,181
6,290,361
-‐
-‐
32,062
6,322,423
Intangible
assets
are
allocated
to
the
consolidated
entity's
cash-‐generating
units
(CGUs)
identified
according
to
operating
segments.
Investment
Platform
The
recoverable
amount
of
the
Investment
Platform
is
determined
based
on
a
value-‐in-‐use
calculation.
This
calculation
uses
cash
flow
projections
based
on
financial
budgets
approved
by
directors
covering
a
seven
year
period.
Cash
flows
beyond
the
seven
year
period
are
extrapolated
using
a
terminal
value.
Goodwill
and
Dealer
Network
Goodwill
recognised
as
part
of
the
Paragem
acquisition
was
allocated
to
the
Investment
Platform
CGU,
while
the
Dealer
Network
intangible
was
identified
as
part
of
the
Licensee
CGU
with
a
finite
life.
(see
note
30
for
Paragem
acquisition
details).
The
Dealer
Network
was
recoginsed
at
fair
value
upon
acquisition
and
is
amortised
on
a
straight-‐
line
basis
over
a
useful
life
of
ten
years.
The
recoverable
amount
of
the
goodwill
generated
has
been
determined
based
on
a
value-‐in-‐use
calculation
using
a
discounted
cash
flow
over
a
three
year
projection
period
approved
by
management
for
the
Paragem
dealer
group.
Cash
flows
beyond
the
three
year
period
are
extrapolated
using
a
terminal
value.
The
recoverable
amount
of
the
Dealer
Network
intangible
is
determined
based
on
a
value-‐in-‐use
calculation
using
a
discounted
cash
flow
over
a
five
year
projection
period
approved
by
management
for
the
Paragem
Licensee.
Cash
flows
beyond
the
five
year
period
are
extrapolated
using
a
terminal
value.
Key
assumptions
used
for
value-‐in-‐use
calculations
-‐
Investment
Platform
CGU
The
cash
generated
by
Investment
Platform
CGU
has
been
segregated
between
the
cash
generated
by
the
Paragem
dealer
group
and
the
cash
generated
by
all
other
dealer
groups
on
the
platform,
in
order
to
assess
the
recoverable
amount
associated
with
each
intangible.
The
Investment
Platform
has
been
assessed
based
on
the
cash
generated
by
all
dealer
groups
excluding
the
Paragem
dealer
group.
The
goodwill
recognised
as
a
result
of
the
Paragem
acquisition,
has
been
assessed
based
on
the
cash
generated
by
the
Paragem
dealer
group
on
the
platform.
P A G E | 6 8
NOTES TO THE FINANCIAL STATEMENTS
71
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
12.
NON-‐CURRENT
ASSETS
–
INTANGIBLE
ASSETS
(CONT’D)
Key
assumptions
used
for
value-‐in-‐use
calculations
-‐
Investment
Platform
Intangible
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,
industry
data
and
pipeline
monitoring.
2.
Pre-‐tax
discount
rate
-‐
The
pre-‐tax
discount
rate
used
for
the
company's
value-‐in-‐use
calculations
is
17.0%.
(2014:18.5%).
The
reduction
to
the
discount
rate
is
due
to
the
decline
in
the
risk
free
rate
2015:3.01%;
(2014:3.54%)
and
weighted
average
cost
of
capital
over
the
reporting
period.
The
weighted
average
cost
of
capital
has
declined
by
1%
(2015:
17%;
2014:18%)
as
a
result
of
the
reduced
volatility
of
the
HUB24
share
price
relative
to
market
movements
over
the
current
reporting
reporting
period.
3.
Terminal
growth
rate
-‐
The
terminal
growth
rate
used
for
the
company's
value-‐in-‐use
calculations
is
2.5%.
(2014:2.5%).
Management
believes
the
2.5%
growth
rate
to
be
conservative.
4.
Period
over
which
cashflows
have
been
discounted
-‐
Management
have
used
a
period
of
seven
years
to
discount
projected
cashflows
for
its
value-‐in-‐use
calculations.
This
period
is
considered
reasonable
given
the
stage
of
platform
development
and
the
remaining
useful
life.
(15
years
and
5
months
from
30
June
2015.)
There
were
no
other
key
assumptions
used
for
the
investment
platform
intangible
value
in
use
calculation.
Based
on
the
above
assessment
there
was
no
impairment
of
the
investment
platform
intangible.
Impact
of
possible
changes
in
key
assumptions
-‐
Investment
Platform
Intangible
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
the
intangible
asset.
If
the
pre-‐tax
discount
rate
for
this
intangible
had
been
2%
higher
than
management
estimates,
there
would
be
no
impairment
of
intangible
assets.
Key
assumptions
used
for
value-‐in-‐use
calculations
-‐
Goodwill
Intangible
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.
The
early
transition
stage
of
the
Paragem
dealer
group
and
low
base
of
existing
funds
under
administration,
have
meant
that
assumed
growth
rates
are
significant
in
the
first
year
declining
to
2%
over
the
subsequent
two
year
period.
Management
have
estimated
the
transition
rate
with
reference
to
current
client
transition
rates
and
pipeline
monitoring.
2. Net
Incremental
cashflow
-‐
the
incremental
cash
flow
rate
is
estimated
to
be
10
bps
of
the
fee
derived
from
the
funds
under
administration
of
the
Paragem
dealer
group
on
the
HUB24
platform.
Management
have
estimated
the
incremental
cashflow
rate
based
on
existing
platform
data
and
monitoring
of
the
dealer
group
performance
since
acquisition.
3. Pre-‐tax
discount
rate
-‐
The
pre-‐tax
discount
rate
used
for
the
company's
value-‐in-‐use
calculations
is
17.0%.
(2014:18.5%).
The
reduction
to
the
discount
rate
is
due
to
the
decline
in
the
risk
free
rate
2015:3.01%;
(2014:3.54%)
and
weighted
average
cost
of
capital
over
the
reporting
period.
The
weighted
average
cost
of
capital
has
declined
by
1%
(2015:
17%;
2014:18%)
as
a
result
of
the
reduced
volatility
of
the
HUB24
share
price
relative
to
market
movements
over
the
current
reporting
reporting
period.
P A G E | 6 9
72
NOTES TO THE FINANCIAL STATEMENTS
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
12.
NON-‐CURRENT
ASSETS
–
INTANGIBLE
ASSETS
(CONT’D)
4. Terminal
growth
rate
-‐
The
terminal
growth
rate
used
for
the
company's
value-‐in-‐use
calculations
is
2.5%.
(2014:2.5%).
Management
believes
the
2.5%
growth
rate
to
be
conservative.
5. Period
over
which
cashflows
have
been
discounted
-‐
Management
have
used
a
period
of
three
years
to
discount
projected
cashflows
for
its
value-‐in-‐use
calculations.
This
period
is
considered
reasonable
given
the
early
stage
of
the
Paragem
dealer
group
transition
and
has
been
projected
based
over
the
acquisition
target
period
to
September
2017.
There
were
no
other
key
assumptions
used
for
the
Paragem
goodwill
intangible
value
in
use
calculation.
Based
on
the
above,
there
was
no
impairment
applied
to
the
goodwill
arising
from
the
Paragem
acquisition.
Impact
of
possible
changes
in
key
assumptions
-‐
Goodwill
Intangible
If
the
projected
earnings
on
client
account
balances
used
in
the
value-‐in-‐use
calculation
for
the
goodwill
intangible
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
(19.0%
instead
of
17.0%)
there
would
be
no
impairment
of
intangible
assets.
Key
assumptions
used
for
value-‐in-‐use
calculations
-‐
Dealer
Network
1. Growth
in
revenue
is
estimated
at
3%
for
the
licensee
CGU
and
a
key
assumption
used
in
calculating
future
cashflows.
Management
have
estimated
a
5%
attrition
factor
for
departing
practices
and/or
advisors,
applied
against
the
growth
rateof
3%,
which
is
believed
to
be
conservative
and
appropriate.
Ongoing
monitoring
of
actual
revenue
growth
since
acquisition
(2
September
2014),
has
indicated
growth
in
excess
of
the
projection,
no
practice
attrition
has
taken
place
since
acquisition.
2. An
EBIT
margin
of
1.1%
is
estimated
for
the
licensee
CGU
and
is
also
considered
a
key
assumption
used
incalculating
future
cashflows.
The
rate
has
been
determined
based
upon
the
average
EBIT
margin
on
a
five
year
projection
of
revenue
and
expenses
and
is
considered
by
management
to
be
reasonable
based
upon
the
actual
performance
since
acquisition.
3. Pre-‐tax
discount
rate
-‐
The
pre-‐tax
discount
rate
used
for
the
company's
value-‐in-‐use
calculations
is
17.1%.
This
has
been
determined
based
on
the
weighted
average
cost
of
capital
for
the
licensee.
4. Terminal
growth
rate
-‐
The
terminal
growth
rate
used
for
the
company's
value-‐in-‐use
calculations
is
3.0%.
Management
believes
the
3.0%
growth
rate
to
be
prudent
and
is
consistent
with
the
general
market.
5. Period
over
which
cashflows
have
been
discounted
-‐
Management
have
used
a
period
of
seven
years
to
discount
projected
cashflows
for
its
value-‐in-‐use
calculations.
This
period
is
considered
reasonable
given
the
early
stage
of
the
licensee
CGU.
There
were
no
other
key
assumptions
used
in
the
Dealer
Network
Intangible
value-‐in-‐use
calculation.
Based
on
the
above,
the
value-‐in-‐use
of
the
dealer
network
exceeds
the
carrying
value
and
is
not
considered
impaired.
Impact
of
possible
changes
in
key
assumptions
-‐
Dealer
Network
If
the
projected
revenue
used
in
the
value-‐in-‐use
calculation
for
the
licensee
CGU
were
2%
lower
than
management
estimates
over
the
period
of
the
value-‐in-‐use
calculation,
there
would
be
no
impairment
of
the
intangible
asset.
P A G E | 7 0
NOTES TO THE FINANCIAL STATEMENTS
73
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24 LIMITED – 2015 ANNUAL REPORT
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 30 J U N E 2 01 5
12. NON-CURRENT ASSETS – INTANGIBLE ASSETS (CONT’D)
If the pre-tax discount rate for this CGU had been 2% higher than management estimates (19.1% instead of 17.1%)
there would be no impairment of the intangible asset.
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
15(a) CURRENT LIABILITIES - PROVISIONS
Employee benefits - Annual leave
Employee benefits - Short term incentive
Broking claims – Discontinued stockbroking operation
Lease make good
CONSOLIDATED
2014
$
2015
$
256,454
-
256,454
547,307
108,789
656,096
CONSOLIDATED
2014
$
2015
$
546,200
1,701,121
2,247,321
237,036
425,194
662,230
CONSOLIDATED
2014
$
2015
$
428,381
1,083,878
680,219
-
2,192,478
324,686
599,240
445,727
20,000
1,389,653
Broking claims – discontinued stockbroking operation
The provision represents the reported claims as at 30 June 2015 and an estimate of future claims and associated
legal expenses.
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:
P AG E | 7 1
74
NOTES TO THE FINANCIAL STATEMENTS
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
15(a)
CURRENT
LIABILITIES
–
PROVISIONS
(CONT’D)
Consolidated
-‐
2015
Carrying
amount
at
the
start
of
the
year
Additional
provisions
recognised
Amounts
used
Carrying
amount
at
the
end
of
the
year
15(b)
CURRENT
LIABILITIES
-‐
OTHER
Deferred
revenue
from
research
and
development
claim
16(a)
NON-‐CURRENT
LIABILITIES
–
PROVISIONS
Employee
benefits
-‐
Long
service
leave
Lease
make
good
Lease
liability
Broking
claims
$
Lease
make
good
$
445,727
742,163
(507,671)
680,219
20,000
-‐
(20,000)
-‐
CONSOLIDATED
2014
$
2015
$
88,897
88,897
74,147
74,147
CONSOLIDATED
2014
$
2015
$
153,634
60,384
73,606
287,624
95,212
22,344
67,098
184,654
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
-‐
2015
Carrying
amount
at
the
start
of
the
year
Additional
provisions
recognised
Amounts
used
Carrying
amount
at
the
end
of
the
year
Lease
liability
$
Lease
make
good
$
67,098
15,566
(9,058)
73,606
22,344
38,040
-‐
60,384
P A G E | 7 2
NOTES TO THE FINANCIAL STATEMENTS
75
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
16(b)
NON-‐CURRENT
LIABILITIES
-‐
OTHER
Contingent
consideration
Deferred
revenue
from
research
and
development
claim
CONSOLIDATED
2014
$
2015
$
4,327,000
1,031,563
5,358,563
-‐
972,962
972,962
The
contingent
consideration
refers
to
the
capped
earnout
relating
to
the
Paragem
acquisition.
The
earnout
is
subject
to
financial
performance
to
be
achieved
over
3
years
to
3
October
2017,
and
paid
in
HUB24
ordinary
shares.
Refer
to
note
30
for
further
details.
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
Capital
raising
costs
2015
Number
CONSOLIDATED
2014
Number
CONSOLIDATED
2014
$
2015
$
52,058,181
47,058,181
82,165,453
77,107,017
141,111
52,199,292
185,111
47,243,292
(75,000)
82,090,453
(119,000)
76,988,017
47,058,181
5,000,000
52,058,181
-‐
38,913,469
8,144,712
47,058,181
-‐
77,107,017
5,250,000
66,993,612
10,588,126
(191,564)
(474,721)
End
of
the
financial
year
52,058,181
47,058,181
82,165,453
77,107,017
Movement
in
other
equity
securities
-‐
treasury
shares
Beginning
of
the
financial
year
Employee
share
issue
End
of
the
financial
year
185,111
(44,000)
141,111
221,908
(36,797)
185,111
119,000
(44,000)
75,000
150,000
(31,000)
119,000
Ordinary
shares
Fully
paid
ordinary
shares
carry
one
vote
per
share
and
carry
the
right
to
dividends.
On
24
March
2015
the
company
issued
5,000,000
ordinary
shares
at
$1.05
per
share
raising
total
proceeds
of
$5,250,000.
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
9
September
2014,
the
company
assigned
44,000
shares
to
eligible
employees
under
the
HUB24
Employee
Share
Ownership
Plan.
76
NOTES TO THE FINANCIAL STATEMENTS
P A G E | 7 3
HUB24 ANNUAL REPORT 2015
HUB24 LIMITED – 2015 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 30 J U N E 2 01 5
NOTES TO THE
FINANCIAL STATEMENTS
18. RESERVES
CONSOLIDATED
2014
$
2015
$
Share based payments share reserve
3,133,845
2,275,332
Represents the share based payments expense under the employee and advisor share plans.
19. DIVIDEND FRANKING ACCOUNT
Franking credits available to shareholders of the company for subsequent financial years are $nil (2014: $445,120).
20. RECONCILIATION OF CASHFLOWS
(a) Reconciliation of the net loss after
tax to cash flow from operations
CONSOLIDATED
2014
$
2015
$
Net Loss after tax for the year
(6,456,900)
(8,547,788)
Non-cash items:
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
(c) Terms and conditions
617,288
-
902,513
1,028,915
30,204
427,895
(1,786,393)
5,246
-
618,273
896,780
(5,203,193)
977,144
135,580
(200,063)
45,606
443,578
(5,658,928)
12,108,825
12,108,825
13,779,844
13,779,844
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 AG E | 7 4
NOTES TO THE FINANCIAL STATEMENTS
77
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
21.
COMMITMENTS
AND
CONTINGENCIES
(a) Commitments
Future
minimum
rentals
payable
under
non-‐cancellable
operating
leases:
Within
1
year
After
1
year
but
not
more
than
5
years
Total
minimum
lease
payments
(b)
Contingencies
Contingent
assets
and
Liabilities
Nil
(2014
:
Nil)
Guarantees
Rental
bond
Level
8,
20
Bridge
St,
Sydney
Rental
bond
Level
1,
10
Bridge
St,
Sydney
Security
deposit,
Level
31,
120
Collins
St,
Melbourne
Rental
bond
Level
29,
55
Collins
St,
Melbourne
Trust
Company
security
deposit
CONSOLIDATED
2014
$
2015
$
459,060
688,396
1,147,456
450,063
973,990
1,424,053
CONSOLIDATED
2014
$
2015
$
-‐
-‐
217,307
36,557
2,590
-‐
-‐
256,454
217,307
-‐
-‐
116,600
330,000
663,907
22.
SHARE
BASED
PAYMENTS
PLAN
(a)
Recognised
share-‐based
payment
expenses
The
expense
recognised
from
equity-‐settled
share-‐based
payment
transactions
during
the
year
is
$902,513
(2014:
$427,895).
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
2015
78
NOTES TO THE FINANCIAL STATEMENTS
P A G E | 7 5
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
Share
Option
Plan
-‐
Executive
Number
of
Options
Issued
Expiry
Date
Exercise
Price
Vesting
Conditions
for
All
Options
Voting
Dividends
Specific
Terms
200,000
17
October
2019
The
exercise
price
for
each
Option
(which
is
payable
immediately
upon
exercise)
is
$0.98
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
-‐
Options
subject
to,
and
vesting
on,
performance
of
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
12
months
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.
As
at
30
June
2015,
no
options
have
lapsed
since
issue
nor
have
any
options
vested.
P A G E | 7 6
NOTES TO THE FINANCIAL STATEMENTS
79
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
Share
Option
Plan
-‐
Employees
Number
of
Options
Issued
Expiry
Date
Exercise
Price
Vesting
Conditions
for
All
Options
Voting
Dividends
Specific
Terms
760,000
17
October
2019
The
exercise
price
for
each
Option
(which
is
payable
immediately
upon
exercise)
is
$0.98
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
-‐
Options
subject
to,
and
vesting
on,
performance
of
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
12
months
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.
As
at
30
June
2015,
no
options
have
lapsed
since
issue
nor
have
any
options
vested.
80
NOTES TO THE FINANCIAL STATEMENTS
P A G E | 7 7
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
Share
Option
Plan
–
Paragem
Executives
Number
of
Options
Issued
Expiry
Date
Exercise
Price
Vesting
Conditions
for
All
Options
1,000,000
4
December
2019
The
exercise
price
for
each
Option
(which
is
payable
immediately
upon
exercise)
is
$1.156
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.
Voting
Dividends
Specific
Terms
Paragem
revenue
growth
of
greater
than
15%
er
annum
with
The
Executives
contribution
to
achievement
of
the
Companys
Performance
Hurdle-‐
Subject
to
the
aggregate
performance
and
satisfaction
of
the
following
KPI’s
as
determined
by
the
Board
in
its
sole
discretion:
(i)
strategic
and
operational
plan;
(ii)
accretive
profit
margins;
and
(iii)
and
laws
relevant
to
the
business
conducted
by
the
group.
Option
holders
are
not
entitled
to
vote.
The
options
do
not
provide
any
entitlement
to
dividends
or
other
distributions
paid
to
ordinary
shareholders.
the
compliance
of
the
Executive
with
all
material
regulations
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.
P A G E | 7 8
NOTES TO THE FINANCIAL STATEMENTS
81
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
Tax
Exempt
Share
Plan
-‐
Employees
Number
of
Shares
Issued
Expiry
Date
Issue
Price
Vesting
Conditions
Shares
for
All
Voting
Dividends
Specific
Terms
44,000
Nil
Shares
were
issued
at
$1.00
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.
2. Share
based
payment
plans
issued
prior
to
1
July
2014
Advisor
Plan
1
Number
of
Options
Issued
Expiry
Date
Exercise
Price
Vesting
Conditions
for
All
Options
Voting
Dividends
Specific
Terms
for
625,000
Options
There
are
no
cash-‐settlement
alternatives.
82
NOTES TO THE FINANCIAL STATEMENTS
625,000
31
January
2016
The
exercise
price
for
each
Option
(which
is
payable
immediately
upon
exercise)
is
$4.00
per
Option.
Subject
to
a
determination
of
the
board
of
directors
to
the
contrary,
it
is
a
condition
of
the
exercise
of
an
Option
that
the
Option
Holder
is
an
employee
of
or
engaged
as
a
consultant
to
the
company
unless
the
Option
Holder's
employment
or
consultancy
has
ceased
due
to
permanent
disability,
incapacity,
illness,
redundancy
or
death.
Option
holders
are
not
entitled
to
vote.
The
options
do
not
provide
any
entitlement
to
dividends
or
other
distributions
paid
to
ordinary
shareholders.
Performance-‐based
Component
(375,000
options):
50%
of
the
Performance
based
options
became
fully
vested
upon
the
divestment
of
the
stockbroking
business
in
February
2013
while
the
remaining
50%
have
lapsed.
The
full
exercise
price
of
$4.00
per
option
is
payable
upon
exercise.
Upfront
Component
(250,000
options):
50%
of
the
Upfront
Component
options
are
available
to
be
exercised
at
any
time
after
grant
date
being
29
May
2012,
while
the
remaining
50%
have
lapsed.
The
full
exercise
price
of
$4.00
per
option
will
be
payable
upon
exercise.
P A G E | 7 9
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
Advisor
Plan
2
Number
of
Options
Issued
Expiry
Date
Exercise
Price
Vesting
Conditions
for
All
Options
Voting
Dividends
Specific
Terms
for
187,500
Options
There
are
no
cash-‐settlement
alternatives.
187,500
1
January
2016
The
exercise
price
for
each
Option
(which
is
payable
immediately
upon
exercise)
is
$4.00
per
Option.
Subject
to
a
determination
of
the
board
of
directors
to
the
contrary,
it
is
a
condition
of
the
exercise
of
an
Option
that
the
Option
Holder
is
an
employee
of
or
engaged
as
a
consultant
to
the
company
unless
the
Option
Holder's
employment
or
consultancy
has
ceased
due
to
permanent
disability,
incapacity,
illness,
redundancy
or
death.
Option
holders
are
not
entitled
to
vote.
The
options
do
not
provide
any
entitlement
to
dividends
or
other
distributions
paid
to
ordinary
shareholders.
Performance-‐based
Options
(187,500
options):
50%
of
the
Performance
based
options
became
fully
vested
upon
the
divestment
of
the
stockbroking
business
in
February
2013
while
the
remaining
50%
have
lapsed.
The
full
exercise
price
of
$4.00
per
option
is
payable
upon
exercise.
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
2015,
98,750
options
have
lapsed
and
the
remaining
91,250
options
have
vested.
There
are
no
cash-‐settlement
alternatives.
P A G E | 8 0
NOTES TO THE FINANCIAL STATEMENTS
83
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
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
2015,
53,125
options
have
lapsed
and
the
remaining
21,875
options
have
vested.
There
are
no
cash-‐settlement
alternatives.
Share
Option
Plan
-‐
Employees
Number
of
Options
Issued
Expiry
Date
Exercise
Price
Vesting
Conditions
for
All
Options
Voting
Dividends
Specific
Terms
84
NOTES TO THE FINANCIAL STATEMENTS
1,010,000
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.
As
at
30
June
2015,
170,000
options
have
lapsed
since
issue
and
the
remaining
840,000
options
have
vested.
P A G E | 8 1
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
Share
Option
Plan
-‐
Executives
Number
of
Options
Issued
Expiry
Date
Exercise
Price
Vesting
Conditions
for
All
Options
Voting
Dividends
Specific
Terms
1,440,000
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.
As
at
30
June
2015,
no
options
have
lapsed
since
issue
and
480,000
options
have
vested.
The
remaining
960,000
options
have
not
vested.
P A G E | 8 2
NOTES TO THE FINANCIAL STATEMENTS
85
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
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
Shares
for
All
Voting
Dividends
Specific
Terms
86
NOTES TO THE FINANCIAL STATEMENTS
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
the
remaining
one
third
of
the
Options
subject
to,
and
vesting
(iii)
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.
As
at
30
June
2015,
no
options
have
lapsed
since
issue
and
170,000
options
have
vested.
The
remaining
340,000
options
have
not
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 | 8 3
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
(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
2015
Number
4,959,381
1,960,000
-‐
-‐
1,650,006
5,269,375
1,976,250
2015
WAEP
$
-‐
$1.070
-‐
-‐
$5.20
-‐
$1.65
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
The
outstanding
balance
as
at
30
June
2015
is
represented
by:
•
•
•
•
•
•
406,250
options
over
ordinary
shares
with
an
exercise
price
of
$4.00
each,
fully
vested.
113,125
options
over
ordinary
shares
with
an
exercise
price
of
$3.80
each,
fully
vested.
840,000
options
over
ordinary
shares
with
an
exercise
price
of
$0.8424
each,
fully
vested.
1,950,000
options
over
ordinary
shares
with
an
exercise
price
of
$0.8438
each,
650,000
vested,
1,800,000
yet
to
vest.
960,000
options
over
ordinary
shares
with
an
exercise
price
of
$0.98
each,
yet
to
vest.
1,000,000
options
over
ordinary
shares
with
an
exercise
price
of
$1.156
each,
yet
to
vest.
(d)
Range
of
exercise
price
and
remaining
contractual
life
•
•
•
•
•
•
•
•
•
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.
6,488,591
rights
have
an
exercise
price
of
nil
and
an
expiry
date
of
30
September
2017.
840,000
options
have
an
exercise
price
of
$0.8424
per
share
and
an
expiry
date
of
14
October
2017.
960,000
options
have
an
exercise
price
of
$0.98
per
share
and
an
expiry
date
of
17
October
2019.
1,000,000
options
have
an
exercise
price
of
$1.156
per
share
and
an
expiry
date
of
4
December
2019.
(e)
Option
pricing
model
The
fair
value
of
all
equity-‐settled
options
is
estimated
as
at
the
date
of
grant
using
the
Black-‐Scholes-‐Merton
option
formula.
P A G E | 8 4
NOTES TO THE FINANCIAL STATEMENTS
87
HUB24 ANNUAL REPORT 2015
NOTES TO THE
FINANCIAL STATEMENTS
HUB24
LIMITED
–
2015
ANNUAL
REPORT
NOTES
TO
THE
FINANCIAL
STATEMENTS
F O R
T H E
Y E A R
E N D E D
3 0
J U N E
2 0 1 5
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
The
following
table
lists
the
inputs
to
the
models
used:
1. Share
based
payment
plans
issued
during
the
year
ended
30
June
2015
Dividend
Yield
(%)
Expected
Volatility
(%)
Risk-‐free
Interest
Rate
(%)
Expected
Life
of
Options
(Months)
Option
Exercise
Price
($)
Average
Share
Price
at
Measurement
Date
($)
Model
Used
SOP
-‐
Employees
-‐
35
2.5
36
0.98
0.89
SOP
–
Executives
-‐
35
2.5
36
0.98
0.89
SOP
-‐
Paragem
-‐
33
2.5
12-‐36
1.156
0.89
Black-‐Scholes
Black-‐Scholes
Black-‐Scholes
2. Share
based
payment
plans
issued
prior
to
1
July
2014
Dividend
Yield
(%)
Expected
Volatility
(%)
Risk-‐free
Interest
Rate
(%)
Expected
Life
of
Options
(Months)
Option
Exercise
Price
($)
Average
Share
Price
at
Measurement
Date
($)
Model
Used
Advisor
Plan
1
-‐
Advisor
Plan
2
-‐
Advisor
Plan
3
-‐
Advisor
Plan
4
-‐
SOP
Plan
1
-‐
SOP
Plan
2
-‐
SOP
Employees
-‐
SOP
Executives
-‐
SOP
Chairman
-‐
50
50
35
35
45
45
2.49
2.76
5.02
5.02
3.35
3.27
44
48
45
43
48
48
80
2.4
26
80
2.4
28
80
2.4
28
4.00
4.00
5.20
5.20
3.80
3.80
0.8424
0.8438
0.8438
2.04
2.36
4.40
4.00
3.04
3.04
0.91
0.91
0.91
Black-‐
Scholes
Black-‐
Scholes
Black-‐
Scholes
Black-‐
Scholes
Black-‐
Scholes
Black-‐
Scholes
Black-‐
Scholes
Black-‐
Scholes
Black-‐
Scholes
88
NOTES TO THE FINANCIAL STATEMENTS
P A G E | 8 5
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
22.
SHARE
BASED
PAYMENTS
PLAN
(CONT’D)
(f)
Contingent
consideration
6,488,591
ordinary
shares
with
a
nil
exercise
price
which
are
yet
to
vest,
have
been
deferred
as
part
of
the
contingent
consideration
for
the
Paragem
acquisition.
Refer
to
note
30
for
further
details.
Deferred
Share
Issue
–
Paragem
Vendor
Number
of
Deferred
Shares
Expiry
Date
Exercise
Price
Vesting
Conditions
for
Deferred
Shares
Voting
Dividends
Specific
Terms
2,162,864
30
September
2017
Nil.
Subject
to
Paragem
achieving
the
following
by
30
September
2017
either
(i)
(ii)
The
New
Funds
Target
of
$1.25billion
or
The
Platform
revenue
Target
of
$357.6k
per
month
Peformance
condition-‐Each
Principal
must
not
be
a
bad
leaver
when
the
shares
vest.
Rights
holders
are
not
entitled
to
vote.
The
rights
do
not
provide
any
entitlement
to
dividends
or
other
distributions
paid
to
ordinary
shareholders.
If
at
any
time
before
30
September
2017,
the
Company
achieves
the
New
Funds
Target
or
the
Platform
Revenue
Target
the
rights
will
vest
and
be
paid
within
20
business
days
of
achievement.
50%
of
the
shares
to
be
issued
will
be
escrowed
until
30
September
2017
and
an
escrow
agreement
must
be
issued
subject
to
the
reasonable
terms
as
required
by
HUB24.
If
Paragem
does
not
achieve
the
New
Funds
Target,
the
shares
to
be
issued
will
be
adjusted
to
reflect
the
achieved
percentage
on
September
30,
2017.
Cash
settlement
will
occur
if
the
necessary
shareholder
approvals
are
not
obtained
to
issue
shares
within
three
months
of
the
payment
date.
The
cash
payment
being
equal
to
the
value
of
ahres
calculated
by
reference
to
the
VWAP
of
HUB
shares
in
the
60
days
preceding
the
vesting
date.
No
rights
have
vested
or
lapsed
since
being
issued.
Deferred
Share
Issue
–
Paragem
Advisor
Equity
Scheme
Number
of
Deferred
Shares
Expiry
Date
Exercise
Price
Vesting
Conditions
for
Deferred
Shares
Voting
Dividends
Specific
Terms
4,325,727
30
September
2017
Nil.
Subject
to
Paragem
achieving
by
30
September
2017
either
The
New
Funds
Target
of
$1.25billion
or
(i)
(ii)
The
Platform
revenue
Target
of
$357.6k
per
month
Rights
holders
are
not
entitled
to
vote.
The
rights
do
not
provide
any
entitlement
to
dividends
or
other
distributions
paid
to
ordinary
shareholders.
If
at
any
time
before
30
September
2017,
the
Company
achieves
the
New
Funds
Target
or
the
Platform
Revenue
Target
the
rights
will
vest.
Cash
settlement
will
occur
if
the
necessary
shareholder
approvals
are
not
obtained
to
issue
shares
within
three
months
of
the
payment
date.
The
cash
payment
being
equal
to
the
value
of
ahres
calculated
by
reference
to
the
VWAP
of
HUB
shares
in
the
60
days
preceding
the
vesting
date.
No
rights
have
vested
or
lapsed
since
being
issued.
P A G E | 8 6
NOTES TO THE FINANCIAL STATEMENTS
89
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
23.
SIGNIFICANT
EVENTS
AFTER
THE
REPORTING
DATE
No
significant
matter
or
circumstance
has
arisen
since
30
June
2015
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.
24.
LOSS
PER
SHARE
The
following
reflects
the
income
and
share
data
used
in
the
calculations
of
basic
and
diluted
loss
per
share:
Earnings
per
share
from
continuing
operations
Profit/(Loss)
after
income
tax
Profit
/(Loss)
after
income
tax
attributable
to
the
owners
of
HUB24
Ltd
used
in
calculating
basic
and
diluted
earnings
per
share
Weighted
average
number
of
ordinary
shares
used
in
calculating
basic
and
diluted
earmings
per
share
Basic
earnings
per
share
Diluted
earnings
per
share
CONSOLIDATED
2014
$
2015
$
(5,350,363)
(7,867,963)
(5,350,363)
(7,867,963)
Number
Number
48,414,345
50,931,123
Cents
Cents
(11.05)
(11.05)
(15.45)
(15.45)
Earnings
per
share
from
discontinuing
operations
$
$
Profit/(Loss)
after
income
tax
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
earmings
per
share
Basic
earnings
per
share
Diluted
earnings
per
share
(1,106,537)
(679,825)
(1,106,537)
(679,825)
Number
Number
48,414,345
50,931,123
Cents
Cents
(2.29)
(2.29)
(1.33)
(1.33)
90
NOTES TO THE FINANCIAL STATEMENTS
P A G E | 8 7
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
24.
LOSS
PER
SHARE
(CONT’D)
Earnings
per
share
for
loss
Profit/(Loss)
after
income
tax
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
$
$
(6,456,900)
(8,547,788)
(6,456,900)
(8,547,788)
Number
Number
48,414,345
50,931,123
Cents
Cents
(13.34)
(13.34)
(16.78)
(16.78)
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
2014
$
2015
$
116,383
103,149
219,532
92,500
64,802
157,302
The
consolidated
financial
statements
include
the
financial
statements
of
HUB24
Limited
and
the
Australian
subsidiaries
listed
in
the
following
table.
Name
Hub24
Custodial
Services
Limited
(formerly
ANZIEX
Ltd)
HUB24
International
Nominees
Pty
Ltd
(formerly
ANZIEX
Nominees
Ltd)
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
**
HUB24
Administration
Pty
Ltd
%
Equity
Interest
2015
100
100
100
100
100
100
100
100
100
100
2014
100
100
100
100
100
100
100
100
100
100
P A G E | 8 8
NOTES TO THE FINANCIAL STATEMENTS
91
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
26.
RELATED
PARTY
DISCLOSURES
(CONT’D)
HUB24
Services
Pty
Ltd
Marketsplus
Holdings
Pty
Ltd
Marketsplus
Australia
Pty
Ltd
HTH
Nominees
Pty
Ltd
**
Paragem
Pty
Ltd
100
100
100
100
100
100
100
100
100
-‐
**
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
Restated
2014
$
2015
$
(3,460,600)
(10,072,319)
(3,460,600)
(10,072,319)
268,303
139,054
29,255,578
21,372,060
1,055,715
6,414,278
74,147
1,047,109
82,165,779
77,107,342
2,190,522
1,332,009
(61,515,001)
22,841,300
(58,114,400)
20,324,951
Contingent
liabilities
The
parent
entity
had
no
contingent
liabilities
as
at
30
June
2015
and
30
June
2014.
Capital
commitments
-‐
Office
equipment
The
parent
entity
had
no
capital
commitments
as
at
30
June
2015
and
30
June
2014.
P A G E | 8 9
92
NOTES TO THE FINANCIAL STATEMENTS
HUB24 ANNUAL REPORT 2015
HUB24 LIMITED – 2015 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 30 J U N E 2 01 5
NOTES TO THE
FINANCIAL STATEMENTS
27. PARENT ENTITY FINANCIAL INFORMATION (CONT’D)
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.
28. KEY MANAGEMENT PERSONNEL
Key management personnel compensation
Short term employment benefits
Post employment benefits
Share based payments
Total compensation
29. FINANCIAL INSTRUMENTS
CONSOLIDATED
2015
$
2014
$
2,659,274 2,309,936
126,110
103,634
275,318
302,531
3,060,702 2,716,101
The company’s principal financial instruments comprise cash, receivables, and payables. For the year ended 30 June
2015, the consolidated entity does not utilise derivatives, holds no debt and has not traded in financial instruments
including derivatives other than listed and unlisted securities and options over listed and unlisted securities, where
received as corporate fee income. The company has other financial assets and liabilities such as trade receivables and
trade and other payables, which arise directly from its operations and are non-interest bearing.
Interest rate risk
The consolidated entity is not materially exposed to movements in short-term variable interest rates on cash and cash
equivalents. All other financial assets and liabilities are non-interest bearing. The Directors believe a 50 basis point
decrease is a reasonable sensitivity given current market conditions. A 100 basis point increase and a 50 basis point
decrease in interest rates would increase/decrease profit and loss in the consolidated entity and the company by:
Cash and cash equivalents at end of period
12,108,825
13,779,844
CONSOLIDATED
2014
$
2015
$
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
121,088
(60,544)
137,798
(68,899)
(6,456,900)
(6,335,812)
(6,517,443)
(8,547,788)
(8,409,989)
(8,616,686)
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 AG E | 9 0
NOTES TO THE FINANCIAL STATEMENTS
93
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
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
2014
$
2015
$
875,974
415,375
1,100,849
270,500
-‐
2,247,323
229,271
17,584
-‐
662,230
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
2015
Consolidated
Financial
assets:
Cash
and
cash
equivalents
Trade
and
other
receivables
Consolidated
Financial
liabilities:
Trade
and
other
payables
12,108,825
834,685
12,943,510
-‐
349,850
349,850
-‐
1,007,844
1,007,844
875,972
875,972
1,100,849
1,100,849
270,500
270,500
Net
maturity
12,067,539
(750,999)
737,344
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
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
12,108,825
2,192,379
14,301,204
2,247,321
2,247,321
12,053,884
13,779,844
405,986
14,185,830
662,230
662,230
13,523,600
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 1
94
NOTES TO THE FINANCIAL STATEMENTS
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
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
2015:
Current
Assets
Rental
bonds
and
guarantees
Non-‐Current
Assets
Rental
bonds
and
guarantees
CONSOLIDATED
$
$
Fair
value
Carrying
amount
amount
-‐
-‐
256,454
256,454
256,454
256,454
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.
30.
BUSINESS
COMBINATIONS
On
3
September
2014
HUB24
Limited
acquired
100%
of
the
issued
shares
in
Paragem
Pty
Ltd,
an
Australian
Financial
Services
Licensee,
for
consideration
of
up
to
$8
million
in
cash
and
shares.
The
acquisition
is
consistent
with
HUB24
Limited’s
strategy
to
pursue
significant
growth
by
partnering
with
quality
financial
planning
groups,
stockbrokers
and
accountants.
Details
of
the
purchase
consideration,
the
net
assets
acquired
and
goodwill
are
as
follows:
Purchase
consideration
Cash
paid
-‐
Vendor
Deferred
consideration
-‐
Vendor
Contingent
consideration
-‐
Vendor
Contingent
consideration
-‐
Option
holders
Total
purchase
consideration
Contingent
consideration
-‐
Option
holders
Total
consideration
Vendor
Total
$
1,008,673
966,818
2,000,000
2,327,000
6,302,491
1,673,001
7,975,492
Deferred
consideration
refers
to
cash
payments
of
$1
million
to
be
paid
on
3
September
2015
subject
to
warranty
claims.
Contingent
consideration
refers
to
capped
earnout
consideration
of
up
to
$2
million,
subject
to
financial
performance,
to
be
achieved
over
3
years
to
3
October
2017
and
paid
in
up
to
2,162,864
HUB24
ordinary
shares.
P A G E | 9 2
NOTES TO THE FINANCIAL STATEMENTS
95
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
30.
BUSINESS
COMBINATIONS
(CONT’D)
Option
holders
Contingent
consideration
refers
to
capped
earnout
consideration
of
up
to
$4
million,
subject
to
financial
performance,
to
be
achieved
over
3
years
to
3
October
2017
and
paid
in
up
to
4,325,727
HUB24
ordinary
shares.
The
amount
recognised
as
purchase
consideration
of
$2.327
million
reflects
the
value
attributed
to
the
value
of
the
Paragem
option
scheme
in
place
at
the
date
of
acquisition
of
Paragem
Pty
Ltd.
The
amount
of
contingent
consideration
recognised
as
a
deferred
payment
in
shares
and
to
be
included
in
the
Statement
of
Financial
Performance
over
the
three
years
to
30
September
2017
is
$1.673
million
($464,722
for
the
year
ended
30
June
2015).
Refer
to
note
22
(f)
for
further
information
and
details
as
disclosed
in
contingent
consideration
below.
The
assets
and
liabilities
recognised
as
a
result
of
the
acquisition
are
as
follows:
Cash
and
cash
equivalents
Plant
and
Equipment
Customer
contracts
and
contract
relationships
Receivables
Prepayments
Payables
Employee
benefit
liabilities
Borrowings
Net
identifiable
assets
acquired
Add:
Goodwill
Fair
value
$
104,139
16,582
604,244
25,885
28,278
(164,316)
(9,143)
(150,000)
455,669
5,846,822
6,302,491
The
goodwill
is
attributable
to
value
expected
to
arise
after
the
company’s
acquisition
of
Paragem
Pty
Ltd.
Acquisition
related
costs
Acquisition
related
costs
of
$393,945
are
included
in
administrative
expenses
in
the
profit
or
loss.
Contingent
consideration
The
contingent
consideration
arrangement
relating
to
the
Vendor
and
Option
holders
requires
the
company
to
issue
the
former
equity
owners
of
Paragem
Pty
Ltd
up
to
6,488,591
HUB24
ordinary
shares
subject
to
performance
criteria
being
met
over
the
three
years
to
30
September
2017.
The
fair
value
of
the
contingent
consideration
arrangement
is
estimated
to
be
$4.327
million
in
purchase
consideration
and
$1.673
million
in
share
based
payment
expense
which
assumes
100%
of
performance
criteria
will
be
met.
In
the
circumstances
where
90%
of
performance
criteria
were
to
be
met,
the
following
impact
would
result:
Contingent
purchase
consideration
-‐
Vendor
Contingent
purchase
consideration
-‐
Option
holders
Contingent
consideration
-‐
Option
holders
-‐
Share
based
payment
expense
Goodwill
Decrease
by
Decrease
by
Decrease
by
$200,000
$117,200
$282,893
Increase
by
$317,200
P A G E | 9 3
96
NOTES TO THE FINANCIAL STATEMENTS
HUB24 ANNUAL REPORT 2015
HUB24
LIMITED
–
2015
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 5
NOTES TO THE
FINANCIAL STATEMENTS
30.
BUSINESS
COMBINATIONS
(CONT’D)
Revenue
and
Profit
contribution
The
acquired
business
contributed
revenues
of
$20,235,321
and
EBITDA
of
$60,687
to
the
group
for
the
period
from
4
September
2014
to
30
June
2015.
Movements
in
goodwill
Opening
net
book
amount
Acquisition
of
business
Impairment
charge
Closing
net
book
amount
CONSOLIDATED
2015
$
-‐
5,846,822
-‐
5,846,822
2014
$
-‐
-‐
-‐
-‐
31.
PRIOR
PERIOD
ADJUSTMENTS
AND
RESTATEMENT
OF
COMPARATIVES
The
research
and
development
grant
claimed
from
the
Australian
government
($414,137)
for
the
year
ended
30
June
2014,
was
classified
as
an
income
tax
benefit.
In
the
2015
financial
year,
it
has
been
determined
that
a
more
accurate
application
of
the
relevant
accounting
standard
dictates
that
the
amount
of
the
research
and
development
grant
claimed
in
relation
to
assets
of
the
Company,
be
recognised
against
the
development
costs
and
released
to
other
income
at
the
same
rate
and
timing
of
the
amortisation
of
the
asset
to
which
the
grant
relates
(2014:
$289,361).
In
relation
to
the
above
prior
period
adjustment
and
restatement
of
comparatives,
the
extracts
for
those
items
affected
are
below:
Statement
of
profit
or
loss
and
other
comprehensive
income
Reported
2014
Adjustment
$
$
Restated
2014
$
Interest
and
other
income
Loss
before
income
tax
expense
from
continuing
operations
535,391
289,361
824,752
(8,157,324)
289,361
(7,867,963)
Income
tax
benefit
414,137
(414,137)
-‐
Loss
after
income
tax
from
continuing
operations
(7,743,187)
(124,776)
(7,867,963)
Loss
after
income
tax
from
discontinued
operations
(679,825)
-‐
(679,825)
Loss
after
income
tax
for
the
year
(8,423,012)
(124,776)
(8,547,788)
Total
comprehensive
loss
for
the
year
(8,423,012)
(124,776)
(8,547,788)
P A G E | 9 4
NOTES TO THE FINANCIAL STATEMENTS
97
HUB24 ANNUAL REPORT 2015
NOTES TO THE
HUB24
LIMITED
–
2015
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 5
31.
PRIOR
PERIOD
ADJUSTMENTS
AND
RESTATEMENT
OF
COMPARATIVES
(CONT’D)
Statement
of
financial
position
ASSETS
Total
Assets
LIABILITIES
Other
current
liabilities
Total
Current
Liabilities
Other
non-‐current
liabilities
Total
Non-‐Current
Liabilities
Reported
2014
Adjustment
$
$
Restated
2014
$
21,676,954
-‐
21,676,954
-‐
2,051,883
74,147
74,147
74,147
2,126,030
-‐
184,654
972,962
972,962
972,962
1,157,616
Total
Liabilities
2,236,537
1,047,109
3,283,646
Net
Assets
EQUITY
19,440,417
(1,047,109)
18,393,308
Accummulated
losses
(59,822,932)
(1,047,109)
(60,870,041)
Total
Equity
19,440,417
(1,047,109)
18,393,308
98
NOTES TO THE FINANCIAL STATEMENTS
P A G E | 9 5
HUB24 ANNUAL REPORT 2015
DIRECTOR’S
DECLARATION
In the opinion of the Directors:
(a) the financial statements and notes of the consolidated
entity are in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the consolidated entity’s
financial position as at 30 June 2015 and of its
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards
(including the Australian Accounting Interpretations),
the Corporations Regulations 2001 and other
mandatory professional reporting requirements.
(c) there are reasonable grounds to believe that the
company will be able to pay its debts as and when they
become due and payable.
(d) this declaration has been made after receiving the
declarations by the Chief Executive Officer and Chief
Financial Officer required by section 295A of the
Corporations Act 2001.
Signed in accordance with a resolution of directors.
(b) the financial statements and notes comply with
International Financial Reporting Standards as disclosed
in Note 2.
Bruce Higgins
Chairman
Sydney, 28 August 2015
99
DIRECTOR’S DECLARATION
HUB24 ANNUAL REPORT 2015 INDEPENDENT
AUDITOR’S REPORT
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
INDEPENDENT AUDITOR’S REPORT
To the members of HUB24 Limited
Report on the Financial Report
We have audited the accompanying financial report of HUB24 Limited, which comprises the
consolidated statement of financial position as at 30 June 2015, the consolidated statement of profit or
loss and other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors’ declaration of the
consolidated entity comprising the company and the entities it controlled at the year’s end or from
time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the company’s
preparation of the financial report that gives a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO International Ltd, a
UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under
Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
100
INDPENDENT AUDITOR’S REPORT
HUB24 ANNUAL REPORT 2015
INDEPENDENT
AUDITOR’S REPORT
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the directors of HUB24 Limited, would be in the same terms if given to the directors
as at the time of this auditor’s report.
Opinion
In our opinion:
(a) the financial report of HUB24 Limited is 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 2015
and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in
Note 2.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 26 to 38 of the directors’ report for the
year ended 30 June 2015. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of HUB24 Limited for the year ended 30 June 2015 complies
with section 300A of the Corporations Act 2001.
BDO East Coast Partnership
Paul Bull
Partner
Sydney, 28 August 2015
INDEPENDENT AUDITOR’S REPORT
101
HUB24 ANNUAL REPORT 2015
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 25 August 2015.
DISTRIBUTION OF EQUITY SECURITIES
Ordinary share capital – 52,058,181 fully paid ordinary shares are held by 1,544 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
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-9,999,999,999
Totals
Holders
Total Units
526
540
215
250
44
1,575
242,632
1,465,167
1,692,715
7,475,579
41,182,088
52,058,181
%
0.466
2.814
3.252
14.360
79.108
100.000
Holding less than a marketable parcel of shares, based on the closing price $1.53 on 25 August 2015, are 201 shareholders.
OPTIONS
5,269,375 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
CONTANGO ASSET MANAGEMENT LTD
Number fully paid
10,411,410
5,254,450
3,588,751
2,616,828
%
19.99
14.00
7.60
5.03
102
ASX ADDITIONAL INFORMATION
HUB24 ANNUAL REPORT 2015
ASX ADDITIONAL
INFORMATION
HUB24 LIMITED FULLY PAID ORDINARY SHARES
TOP 20 HOLDINGS AS AT 25-08-2015
Holder Name
Balance at 25-08-2015
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
UBS NOMINEES PTY LTD
NATIONAL NOMINEES LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
LITSTER & ASSOCIATES PTY LTD
CITICORP NOMINEES PTY LIMITED
JASFORCE PTY LTD
FINOOK PTY LTD
RBC INVESTOR SERVICES AUSTRALIA NOMINEES P/L
WEALTHPLAN TECHNOLOGIES PTY LTD
SKYLYX PTY LTD
BNP PARIBAS NOMS PTY LTD
EGG AU PTY LTD
UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD
MR BRUCE HIGGINS & MRS RUTH HIGGINS
LITSTER & ASSOCIATES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
JASFORCE PTY LTD
MATIMO PTY LTD
Total
Total Issued Capital
6,841,977
5,850,914
5,359,319
3,186,224
1,665,177
1,504,911
1,485,172
1,402,001
1,400,000
1,330,638
1,247,545
774,793
746,725
692,715
576,635
566,811
462,000
454,894
427,629
412,769
%
13.161
11.255
10.309
6.129
3.203
2.895
2.857
2.697
2.693
2.560
2.400
1.490
1.436
1.332
1.109
1.089
0.889
0.875
0.823
0.794
36,388,849
69.887
52,058,181
HUB24 ANNUAL REPORT 2015
103
ASX ADDITIONAL INFORMATION
hub24.com.au
104
HUB24 ANNUAL REPORT 2015