‘22
ANNUAL REPORT
for the year ended 30 June 2022
1
CONTENTS
3
4
5
12
25
26
47
48
49
Appendix 4E – Year Ended 30 June 2022
Financial Highlights FY22
Chairman and Managing Director’s report
50
51
52
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
Directors’ report
109 Glossary
Auditor’s independence declaration
110 Directors’ declaration
Remuneration report
Financial statements
111 Independent auditor’s report
115 Additional information
Consolidated statement of profit or loss
and other comprehensive income
117 Corporate information
Consolidated statement of financial position
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 fourth edition of the Corporate Governance Principles
and Recommendations which was released by the ASX Corporate Governance Council on 27 February 2019, effective for
the financial years beginning on or after 1 January 2020.
The Group’s Corporate Governance Statement for the financial year ending 30 June 2022 is dated as at 30 June 2022
and was approved by the Board on 23 August 2022. The Corporate Governance Statement is available on HUB24
Limited’s website at www.hub24.com.au/corporate-governance-statement.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 2
HUB24 has delivered strong growth
during FY22 whilst remaining
focussed on enhancing value for
our customers and delivering on our
strategic objectives and our purpose
to empower better financial futures
together.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
3
APPENDIX 4E – YEAR ENDED 30 JUNE 2022
UNDER ASX LISTING RULE 4.3A
RESULTS FOR ANNOUNCEMENT TO THE MARKET
Current period
Prior corresponding period
KEY INFORMATION
Income from ordinary activities
Net profit/(loss) after tax for the period attributable to equity holders
Basic earnings per share
Diluted earnings per share
DIVIDENDS
Interim dividend (per share)
Final dividend (per share)
1 July 2021 to 30 June 2022
1 July 2020 to 30 June 2021
Year ended
30 June 2022
$’000
192,525
14,662
Cents
20.18
19.53
Year ended
30 June 2021
$’000
110,853
9,769
Cents
14.83
14.28
%
change
74%
50%
36%
37%
Amount
per security (cents)
7.50
12.50
Franked
per security (%)
100
100
Subsequent to year ended 30 June 2022 the directors have determined a fully franked final dividend of 12.5 cents per
share (a fully franked 5.5 cents per share final dividend was paid following the year ended June 2021).
Dates for the dividend are as follows:
Ex-date
Record date
Dividend payment date
EXPLANATION OF RESULTS
Refer to the attached Directors’ Report and review of operations for further explanation.
Net tangible assets (per fully paid ordinary share)1
12 September 2022
13 September 2022
14 October 2022
Year ended
30 June 2022
$0.33
Year ended
30 June 2021
$1.13
1 Net tangible assets (NTA) used for the calculation of NTA per fully paid ordinary share are inclusive of both right of use asset and lease liabilities.
ENTITIES OVER WHICH CONTROL HAS BEEN GAINED OR LOST DURING THE PERIOD
HUB24 Limited completed the acquisition of Class Limited and its wholly owned subsidiaries effective 16 February 2022.
Please refer to note 6.2 for more information
AUDIT0R REVIEW
The Report is based on the consolidated year end report that has been audited by the Group’s auditors,
Deloitte Touche Tohmatsu.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 4
FINANCIAL HIGHLIGHTS FY22
GROUP
TOTAL REVENUE
$192.5m
£76%
UNDERLYING EBITDA1
$70.4m
£94%
UNDERLYING NPAT2
$35.9m
£133%
COST TO INCOME RATIO
63.4%
FY21: 66.3%
FULLY FRANKED FINAL DIVIDEND
12.5 cents per share
Interim dividend was 7.5 cents per share,
taking the total FY22 dividend to 20 cents per share
FY21 DIVIDEND: 5.5 CENTS PER SHARE £127%
DILUTED EARNINGS PER SHARE
19.5 cents
£37%
PLATFORM KEY METRICS
PLATFORM NET INFLOWS
$49.7b £20%3
PLATFORM FUA OF
$11.7b 32%3
PARS FUA OF
$15.9b 8%4
NUMBER OF ADVISORS
NUMBER OF PARS ACCOUNTS
PLATFORM SEGMENT REVENUE
3,486
£14%
CLASS NUMBER
OF ACCOUNTS5
198,397
8,341
£11%
TECH SOLUTIONS KEY METRICS
CLASS
DOCUMENT ORDERS6
171,309
$160.5m
£59%
COMPANIES ON CLASS
CORPORATE MESSENGER7
597,989
All percentage changes shown above are relative to FY21.
1. Group Underlying EBITDA from continuing operations up 92% to $70.4 million (FY21: $36.7 million). Refer to Note 2.1 for more information.
2. Refer to Directors Report for more information on Group Underlying NPAT.
3. Custodial FUA Administration Services.
4. Non-custodial FUA as Portfolio Administration and Reporting Services (PARS).
5. Number of Class accounts consists of Class Super, Class Portfolio and Class Trust licenses.
6. Documents paid for by PAYG and subscription customers.
7. Number of active companies.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
5
CHAIRMAN
AND MANAGING
DIRECTOR’S
REPORT
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
6
1. INTRODUCTION
Dear Shareholders,
On behalf of the Board, we are pleased to present you
with this Annual Report for HUB24.
HUB24 has delivered strong growth during FY22 whilst
remaining focussed on enhancing value for our customers
and delivering on our strategic objectives and our purpose
to empower better financial futures together.
Our customers, team and community have experienced
challenges throughout the year with the ongoing impacts
of the COVID-19 pandemic, as well as market volatility
and macroeconomic events.
While continuing to support our customers throughout
these ongoing challenges, HUB24 has achieved record
platform net inflows, a significant increase in revenue
and profitability, and further consolidated our market-
leadership position.
As market dynamics continue to transform the
wealth management industry, HUB24’s strong market
leadership position, together with continued focus on
innovation and customer service excellence has ensured
our position as a financial services and product provider
of choice. This has resulted in strong organic growth
which is reflected in our key financial metrics.
Given these strong financial results the Company
announced a fully franked full year dividend of
KEY FINANCIAL METRICS
Total Group Revenue $192.5 million
up 76% on FY21
Group Underlying EBITDA $70.4 million
up 92% on FY21
Total FUA $65.6 billion Platform FUA up 20%
to $49.7 billion including record net inflows
of $11.7 billion
PARS FUA $15.9 billion, down 8% on FY21
due to negative market movements
12.5 cents, this brings the full year dividend to 20 cents,
an increase of 100% on the prior year.
HUB24’s business footprint has continued to evolve with
the acquisition of Class Limited (Class), a leading SMSF
administration software provider which was completed
in February 2022. The acquisition provided further
opportunities to leverage collective capabilities across
the HUB24 Group to deliver products and solutions that
enhance value for existing and new customers whilst
increasing market share and growing the SMSF market.
Following a full quarter of ownership, the Class business
unit’s key statistics are reported as part of this Annual
Report. HUB24’s financial report begins on page 47.
At our inaugural investor day held in June 2022, HUB24
announced the first joint product development initiative
with HUB24, Class and NowInfinity. The new SMSF
product solution will enable advisers to access new
customer segments and is designed to meet the needs
of clients who are keen to access the benefits of a cost-
effective SMSF solution. The pilot will launch during the
first half of FY23.
HUB24 continues to be recognised by advisers and the
industry for delivering market-leading products and
services. During FY22 the HUB24 platform was awarded:
• No. 1 for Value for Money1
• No. 1 Platform Managed Accounts functionality for
the 6th year running2
• No. 1 Product Offer2
• Best Platform, Best Investment Options and Best
Adviser Experience3
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 7
PLATFORM FUA AND UNDERLYING EBITDA TRENDS
SHARE PRICE AND DIVIDEND TRENDS
FUA ($b)
UEBITDA ($m)
Cents per share
Share price ($)
Platform FUA
4 year CAGR 56%
70
60
50
40
30
20
10
0
80
70
60
50
40
30
20
10
0
20
15
5
0
COVID-19
market impact
10.0
5.5
4.5
7.0
3.5
3.5
3.5
4.6
2.6
2.0
20.0
12.5
7.5
30
25
20
15
10
5
0
FY18
FY19
FY20
FY21
FY22
FY18
FY19
FY20
FY21
FY22
Platform FUA (LHS)
UEBITDA (RHS)
Final dividend
Interim dividend
Share price ($)
Underpinned by our strong market leadership position,
focus on customer service excellence, and continued
investment in innovation, HUB24 remains well placed to
continue to grow market share. Our acquisition of Xplore
Wealth (in FY21) and now Class will also provide further
opportunities to expand into new customer segments
and broaden our existing capabilities.
As the wealth management industry continues to
transform and large financial institutions divest or
re-evaluate their strategies, specialist platforms (such
as HUB24), have continued to grow, now representing
14% of the Australian investment platform market and
accounting for over $30 billion in annual net inflows. In
addition, specialist platforms have grown at a CAGR of
41% over the last ten years).⁴
During FY22 the HUB24 platform experienced net
inflows at a level not seen in the industry for many years,
and as a recognised market-leader in the platform space
with continued focus on delivering innovative solutions
that enhance outcomes for clients, HUB24 is well-
positioned to continue to benefit from the trend towards
specialist platforms.
The growing trend for advisers to leverage managed
portfolios to deliver value for their clients and
efficiencies in their business has continued during
FY22 as adoption rates continue to accelerate with
53% of advisers now using them to manage client
portfolios and funds under management in managed
portfolios in Australia have grown to more than
$131 billion.6,8
HUB24 continues to lead the market in this growing
segment having been awarded Best Platform Managed
Accounts solution for the 6th year running.2
The financial adviser landscape is dominated by
advisers who are part of privately owned and self-
licensed businesses, representing 61% of the adviser
market and a cohort who are increasingly embracing
the use of specialist platforms. HUB24 has built strong
relationships in this segment and continues to work with
large national licensees who are keen to collaborate with
platform, data and technology providers on solutions
that solve key challenges in advice delivery.⁵
Managing increasing regulatory obligations has continued
to be a challenge for advisers and licensees. During FY22
new Design and Distribution and Advice Fee Consent
regulatory obligations came into force. In this environment,
HUB24’s approach to supporting advisers with enhanced
product disclosure and flexible, digital solutions to manage
regulatory requirements was well-received by advisers has
delivered a key competitive advantage.
As for consumers, the demand for financial advice
continues to grow with 29% of unadvised Australians
looking to seek help from an adviser. However, cost
remains the main barrier to accessibility, with the
median advice fee per client at $3,529.⁵
Collaborating with licensees and advisers to solve key
industry challenges and enable the delivery of cost-effective
advice remains a priority. Over the reporting period, we
continued to work with licensee ‘Think Tank’ participants
to develop and deliver solutions that reduce friction in the
advice delivery process. This included leveraging machine
learning and artificial intelligence to create solutions that
support licensees with their compliance obligations and
improve efficiencies in their advice practices.
During FY22 HUB24 continued to advocate on behalf
of our customers to help shape the future of the advice
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 8
industry, including contributing to the FSC’s submission
for the Quality of Advice Review and also making
an independent submission outlining key areas for
consideration, including the need for the government, the
regulators and the industry to work together to create a
blueprint for a sustainable financial advice industry.
To raise awareness of this key issue, in June 2022 HUB24
co-produced a documentary with XY Adviser, ‘Solving
Wealth’s Greatest Challenge’ which featured industry
leaders discussing their views on potential go-forward
solutions to ensure more Australian’s get access to
professional advice.
2. FINANCIAL PERFORMANCE
The Group’s preferred measure of profitability, which is
Underlying Earnings Before Interest, Tax, Depreciation,
Amortisation and Notable items (Underlying EBITDA),
increased 92% to $70.4 million for FY22 ($36.2 million in
FY21), with Underlying Net profit After Tax (Underlying NPAT)
up 144% to $37.5 million for FY22 ($15.0 million in FY21).
The key drivers of the HUB24’s financial performance for
FY22 were:
• Platform FUA increased from $41.4 billion as at
30 June 2021 to $49.7 billion as at 30 June 2022,
an increase of 20% with record net inflows of
$11.7 billion achieved during FY22 ($8.9 billion in FY21⁷
• Platform Revenue increased by 59% to $160.5 million for
FY22 ($101.1 million for FY21) while platform expenses
grew by 55% to $98.2 million ($63.2 million in FY21)
• Platform underlying EBITDA increased by 64% to
$62.3 million
Tech Solutions segment performance (with Class
consolidated for four and half months of FY22)
• Technology Solutions revenue increased by 339%
to $29.0m ($6.6m in FY21), benefitting from the
acquisition of Class. Class contributed $23.9 million
of revenue in FY22
• Tech Solutions expenses grew by 259% to
$17.6 million with Class adding 211 FTE at 30 June
2022 and $14.4 million of expenses in FY22
• Tech Solutions underlying EBITDA increased by 671%
to $11.4 million, with Class contributing $9.5 million of
the uplift
Group performance
GROWTH
• Total Group Revenue increased by 76% to
$192.5 million which includes the Platform, Tech
Solutions and Corporate segments.
• Expenses increased by 69% to $122.1 million with
total headcount increasing 78% to 697 (391 in FY21)
from the acquisition of Class and further investment
in distribution, technology, and operations staff
to support growth in FUA, expand our reach, and
continue product and technology innovation
• The Group’s underlying EBITDA margin improved from
33.7% FY21 to 36.6% in FY22 reflecting strong revenue
growth from the increasing platform scale, partially
offset by investment costs and investment in people
• The Group’s UNPAT, being the NPAT before
notable items, forms the basis of HUB24’s dividend
determination. UNPAT increased by 133% to
$35.9 million in FY22
• Statutory NPAT of $14.7 million was recorded in FY22
following $21.2 million of notable items post tax
($5.6 million in FY21)
Platform segment performance
• Total Funds Under Administration (FUA) increased
from $58.6 billion at 30 June 2021 to $65.6 billion as
at30 June 2022, an increase of 12%
During FY22, the Company delivered significant growth
achieving record platform net inflows of $11.7 billion up
32% and overall platform FUA of $49.7 billion up 20% .
According to the latest available market share data, HUB24
maintained second place for annual net inflows, increasing
market share to 5.1%, and is ranked in 7th place up from
8th place at the same time last year. HUB24 was the fastest
growing platform in percentage terms year on year.⁴
HUB24 has delivered a compound annual growth rate
of 56% in platform FUA over the last four years and this
record organic FUA growth is a result of our increased
distribution footprint, product innovation and customer
service excellence.
The composition of platform FUA in FY22 has remained
the same as FY21 with 81% in Retail, 16% Institutional
and 3% in Xplore Super Admin, the outsourced super
administration business which will be discontinued with
customers moving to alternative solutions during FY23.
In FY22, 112 new distribution agreements were signed
and the total number of advisers using the platform at
the end of the reporting period was 3,486 up 14%.
From a Portfolio, Administration and Reporting Services
(PARS) perspective, FUA of $15.9 billion was down 8%,
impacted by negative market movements. The total number
of PARS accounts increased to 8,341 (7,538 in FY21).
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 9
Following a full quarter of ownership of Class (acquired
in February 2022) the business delivered its strongest
June quarter since 2019, with growth in total net accounts
across Class Super, Class Portfolio and Class Trust
products. As we continue to integrate the business and
leverage the combined capabilities of Class and HUB24,
we expect this growth momentum to continue in FY23.
HUB24 Group’s market-leadership and flexible approach
to supporting our customers to create efficiencies in
their businesses continues to result in a strong pipeline
of new opportunities across all customer segments. This
includes large licensee clients, brokers, boutique advice
practices, self-licensed advisers and accountants.
Overall, market conditions for the Group’s value
proposition continue to present significant opportunity
for growth, as a result we will continue to invest
appropriately to take advantage of these opportunities.
3. OPERATIONS
Throughout FY22 we continued to invest in capability,
provide advisers and their clients with choice and flexibility
and enable advisers to deliver advice more efficiently.
This included the development of a market-leading digital
reporting feature, HUB24 Present, which enables advisers
to customise client presentations in real time and deliver
engaging and efficient client reviews. Advisers who took
part in the pilot program during the reporting period, cited
a reduction in time spent consolidating data and increased
client engagement. Since the end of the reporting period,
the solution has been launched on the HUB24 platform
and is now available to all users.
HUB24 is committed to ensuring advisers and their clients
have access to a broad range of investment options and
during Q4 FY22 a range of ETFs and listed managed funds
available on CBOE Australia (formerly Chi-X) were also
added as investment options on HUB24 Invest, and an
additional international markets trade processing window
was implemented providing advisers with more flexibility
in accessing US and European markets.
HUB24 is committed to supporting licensees and advisers
through ongoing regulatory change and during the year
we launched a digital advice fee consent tool on our
platform. This provided advisers with choice and flexibility
to create, renew or revise client consents online, enabling
them to meet their compliance obligations efficiently.
The acquisition of Class was completed in February
2022, Class now operates as a business unit under
HUB24’s corporate governance structure. In Q4 FY22
a new operating model was finalised for Class with
business lines now aligned to client propositions, and
the responsibility for supporting HUBconnect offers in
market also now transitioning into the Class business unit,
centralising the Group’s software and data solutions. The
Class technology, marketing, HR, legal and finance teams
now report into the relevant HUB24 Group Executives.
Throughout the year, the integration of Xplore Wealth
(acquired FY21) has progressed with the first product
migration from Xplore Wealth to HUB24 completed on
1 July 2022. Future product migrations and successor
fund transfers are expected to continue over FY23.
Continuing to collaborate with licensees to develop
solutions that reduce friction in the advice process remains
a priority for HUB24. By leveraging the Group’s data and
technology expertise to access and structure large sets of
data, HUBconnect Licensee has been developed, which
supports licensees to proactively monitor their compliance
obligations and delivers real-time alerts and insights to a
consolidated dashboard for reporting. The solution is now
being rolled out to licensees.
Overall, our combined Group capabilities, market-
leadership position and customer focus have ensured
HUB24 is well-positioned to continue to leverage market
dynamics and emerging opportunities for continued
growth. By realigning our capabilities and leveraging
scale and expertise across the HUB24 Group, we
expect to enhance our customer propositions, improve
customer engagement, and increase market share.
4. PEOPLE
Investment in attracting, retaining and developing
talented people continued to be a focus during FY22
through initiatives aimed at leadership and career
development, supporting a diverse and inclusive
workplace and enhancing our client focussed culture.
During FY22, HUB24 continued to develop our ‘future-
fit’ workplace to support future growth and ensure the
wellbeing of our people. This included the establishment
of a dedicated team to design and implement our future
workplace initiatives which are focused on improving the
employee experience, while maintaining business continuity.
With the acquisition of Class there are now
approximately 700 employees across the HUB24 Group.
In line with the Group’s growth and expansion into new
customer segments, four strategic appointments were made
to the HUB24 Executive team. In August 2021, Mr Darren
Stevens joined as Chief Product Officer to lead HUB24’s
product development functions. In March 2022, Ms Deborah
Latimer was appointed as Chief Risk Officer to lead the risk
and compliance function, while Ms Chesne Stafford was
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 10
appointed as Chief Growth Officer (joined July 2022) to lead
the Company’s distribution and marketing functions.
Following the acquisition of Class, the appointment of
Mr Tim Steele as Chief Executive Officer of Class was
announced (joined August 2022). All four Executives
report to the Group’s Chief Executive Officer and
Managing Director, Andrew Alcock.
Their skillsets and experience will add significant value
to our leadership team and position the Group well for
future growth. Recruitment is currently underway for a
Chief People Officer.
5. CORPORATE SUSTAINABILITY
HUB24 recognises the importance of ESG for the long-
term prosperity of our customers, people, shareholders
and the broader community. Throughout FY22 we
have supported advisers with ESG education and the
availability of over 150 ESG investment options on the
HUB24 platform to support client ESG preferences.
HUB24 is committed to reducing our environmental
impact by ensuring a digital first approach to customer
engagement and communications.
As part of our community and philanthropy initiatives, the
HUB24 Group provided support for the Pro Bono Financial
Advice Network, Save a Child’s Heart, the Red Cross, the
Cancer Council, Jawun Cape York and Solar Buddy.
To further support the delivery of the Group strategy,
HUB24 engaged KPMG to undertake an ESG materiality
assessment during the year and HUB24’s inaugural
Sustainability Report is being developed, which will
reflect material social, environmental and governance
opportunities, and align to HUB24’s purpose of
‘empowering better financial futures, together’. The project
is well advanced, and the report will be released prior to
our Annual General Meeting held in November 2022.
As part of the assessment process HUB24 have outlined
seven ESG key focus areas.
Climate
risks and
opportunities
Business
ethics and
integrity
Customer
experience
ESG KEY
FOCUS AREAS
Community
contribution
and investment
Employee
engagement
Diversity
and
inclusion
Data
privacy and
security
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 6. CORPORATE GOVERNANCE
Throughout FY22, HUB24’s Board of Directors and
Management remained committed to the ongoing
review and improvement of corporate governance
practices and processes.
During the year we undertook a HUB24 Group Culture
and Conduct Survey which seeks direct feedback from
staff to the Board regarding their experiences working
with the HUB24 Group, and formally seeking input
regarding the day-to-day conduct and culture of our
business.
Under its Charter, the Audit, Risk & Compliance
Committee is required to review the Group Risk
Management Framework at least annually to seek
assurance that it is both sound and effective.
Management undertook a review of the Group Risk
Management Framework during FY22 and confirmed
that it is operating effectively with due regard to the Risk
Appetite Statement set by the Board. The HUB24 Group
Risk Management Framework was reviewed in FY22
and adjusted to align risk management with the HUB24
FY22–23 strategy.
During July 2021 Ms Catherine Kovacs joined the Board
as Non-Executive Director, bringing a broad skillset and
experience to expand and complement the other Board
members.
7. OUTLOOK
HUB24 is proud to have delivered solid FY22 results,
achieving record levels of platform net inflows and
FUA growth as well as the completion of the strategic
acquisition of Class. We continue to be recognised as
a market leader in both the platform and managed
portfolios space by our customers and the industry.
The Group’s strong financial and operating performance
has delivered further value to our shareholders with
increased profits allowing us to determine our highest
dividend to date. This has been achieved in a year where
advisers and their clients have experienced ongoing
market volatility and advisers have been challenged with
further regulatory obligations.
These results are underpinned by the continued
investment in innovation, the strength of our product
offer and the expertise and commitment of our team
to continue to deliver outcomes for our customers and
shareholders.
11
of solutions that support financial professionals to
implement strategic, investment and tax advice.
The business remains focussed on our key strategic
pillars to deliver on our purpose to continue to lead
the wealth industry as the best provider of integrated
platform, technology and data solutions by developing
innovative products and solutions that enhance
customer value, deliver opportunities for growth, and
executing our vision for the platform of the future.
As the wealth industry continues to transform HUB24
is committed to collaborating with the government, the
regulators and other industry participants to build a
blueprint for a sustainable financial advice industry and
enable the delivery of cost-effective financial advice.
Moving forward we expect ongoing strong net inflows
to the platform and increasing profitability. We have
revised our Platform FUA target range to $80–$89 billion
by 30 June 2024 due to the impacts of negative market
movements experienced during the year.
We look forward to speaking with shareholders at the
Annual General Meeting and on behalf of the Directors
wish to thank our customers for their support as well
as our talented and focussed team for their ongoing
commitment to both our customers and HUB24.
Yours sincerely,
Bruce Higgins
Chairman
Andrew Alcock
Managing Director
1.
Investment Trends Adviser Technology Needs Report 2022.
2.
Investment Trends Platform Competitive Analysis and Benchmarking
Report 2021.
3. Adviser Ratings Financial Advice Landscape Report 2022.
4. Strategic Insights analysis of Wrap, Platform and Master Trust
Managed Funds at March 2022.
5. Adviser Ratings Musical Chairs Report Q1 2022.
6.
IMAP Milliman FUM Census Dec 2021.
The acquisition of Class has brought together two highly
complementary businesses focussed on the delivery
7. Platform FUA refers to custodial administration services.
8.
Investment Trends Managed Accounts Report 2022.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
12
DIRECTORS’
REPORT
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 Your Directors present their
report together with the
financials statements, on the
Consolidated Group (referred
to hereafter as “the Group” or
“HUB24”) consisting of HUB24
Limited (referred to hereafter as
“the Company”) and the entities
it controlled for the full year
ended 30 June 2022 (“FY22”) and
the Auditor’s Report thereon.
13
The Directors’ Report has been prepared in accordance
with requirements of the Corporations Act 2001, the
information below forms part of this Directors’ Report:
• Directors interest in shares of the Company on page 43
• Remuneration Report on pages 26 to 46
• Auditor’s Independence Declaration on page 25.
DIRECTORS
The following persons were Directors of the Company,
from the beginning of the financial year and up to the
date of this report, unless otherwise stated:
Mr Bruce Higgins (Chairman)
Mr Andrew Alcock (Managing Director)
Mr Anthony McDonald
Mr Paul Rogan
Ms Ruth Stringer
Ms Catherine Kovacs (appointed 19 July 2021)
JOINT COMPANY SECRETARIES
Ms Kitrina Shanahan
Mr Andrew Brown
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 14
14
BRUCE HIGGINS
MIEAust CPEng, MBA, FAICD
ANDREW ALCOCK
B Bus, GAICD
CHAIRMAN AND INDEPENDENT NON-EXECUTIVE DIRECTOR
MANAGING DIRECTOR EXECUTIVE DIRECTOR
Skills, Experience & Qualifications
Skills, Experience & Qualifications
Bruce has more than 20 years’ experience as a senior
executive or CEO, with companies such as Honeywell,
Raytheon and listed technology companies. He is a
specialist in rapid growth entrepreneurial companies,
financial and software services companies, M&A and
corporate governance and has also served on ASX
boards as a Non-Executive Director or Chairman for
more than 15 years. 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.
Term
Bruce was appointed as Chairman of the Board on
19 October 2012.
Listed Company Directorships (within the last 3 years)
Andrew has more than 25 years’ experience across
wealth management encompassing advice, platforms,
industry superannuation, insurance and information
technology. He holds a Bachelor of Business, Accounting
from the University of Technology, Sydney.
After a successful career as a senior executive in
information technology , Andrew held various executive
roles within the Wealth Management sector including
with Genesys Wealth Advisers, Tyndall and Asteron.
In these roles Andrew worked closely with financial
advisers, including holding board director roles for over
20 advice practices, and was responsible for the design
and delivery of financial products for the wealth market.
He was also the CEO of Australian Administration
Services, a subsidiary of Link Market Services, providing
superannuation administration and technology services
for some of Australia’s largest superannuation funds.
• Legend Corporation Limited (resigned 30 August 2019)
Term
Board Committee Memberships
• Member of the Audit, Risk and Compliance Committee
• Member of the Remuneration and Nomination
Committee
Andrew was appointed to the HUB24 Board on
29 August 2014 as Managing Director.
Listed Company Directorships (within the last 3 years)
• Nil
Board Committee Membership
• Nil
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 15
RUTH STRINGER
B Sc, LLM, GAICD
ANTHONY MCDONALD
B Comm LLB
INDEPENDENT NON-EXECUTIVE DIRECTOR
INDEPENDENT NON-EXECUTIVE DIRECTOR
Skills, Experience & Qualifications
Skills, Experience & Qualifications
Ruth is an experienced financial services lawyer with
particular expertise in funds management, superannuation,
life insurance and financial planning. Her diverse career has
included working in significant national and international
law firms, as well as serving as in-house counsel with
various financial institutions and as a superannuation
specialist with ASIC. Ruth will join MinterEllison as a partner
in September.
Ruth has served on a number of boards and committees
during her career, including the Board of Taxation’s Advisory
Panel and the Steering Committee of the International
Pension and Employee Benefit Lawyers Association. Ruth’s
passion for improving the superannuation system resulted
in her appointment to the CIPR (Comprehensive Income
Products for Retirement) Framework Advisory Group,
formed to advise Treasury on aspects of the legislative
framework for new retirement income products.
Anthony (Tony) McDonald co-founded financial planning
firm Snowball Group Limited in 2000, which merged with
Shadforth in 2011 to become ASX-listed SFG Australia
Limited.
Tony is a director of Diverger Limited (formerly Easton
Investments Limited). He is also a former Director of
The Investment Funds Association of Australia (now
Financial Services Council) and currently Chairman of a
leading not-for-profit organisation and a private RegTech
company, Fourth Line Pty Ltd.
As a financial services executive, Tony worked in a variety
of senior roles with the Snowball Group, SFG, Jardine
Fleming Holdings Limited (Hong Kong), and Pacific Mutual
Australia Limited. Prior to entering the financial services
industry, Tony worked as a solicitor with two global law
firms. He holds a Bachelor of Laws (LLB) and a Bachelor of
Commerce (Marketing) from the University of NSW.
Term
Term
Ruth was appointed to the HUB24 Board on
1 February 2020.
Anthony was appointed to the HUB24 Board on
1 September 2015.
Listed Company Directorships (within the last 3 years)
Listed Company Directorships (within the last 3 years)
• Nil
Board Committee Membership
• Member of the Audit, Risk and Compliance Committee
• 8IP Emerging Companies Limited (appointed 24
September 2015, resigned 1 April 2021)
• URB Investments Limited (appointed 13 October
2016, resigned 23 December 2019)
• Diverger Limited (formerly Easton Investments Ltd)
(appointed 1 February 2021).
Board Committee Membership
• Chair of the Remuneration and Nomination Committee
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 16
PAUL ROGAN
FAICD, FCPA, B Bus
CATHERINE KOVACS
B.Comm , MAppFin, GAICD
INDEPENDENT NON-EXECUTIVE DIRECTOR
INDEPENDENT NON-EXECUTIVE DIRECTOR
Skills, Experience & Qualifications
Paul is a senior financial services professional with
qualifications and experience in accounting and finance.
Paul has a proven track record for delivering results in
different regions and markets. In his executive career
he successfully drove businesses through rapid growth
phases including with Challenger, NAB, and MLC. His
experience spans diverse executive roles including as
CFO of an ASX 200 company, CEO of UK subsidiaries of
MLC/NAB, CEO of a building society as well as leading
both the capital, risk and strategy, and distribution,
product and marketing functions at Challenger.
Paul has more than 27 years’ experience serving on
entity boards and industry groups, including 13 years in
the not-for-profit sector.
Term
Paul was appointed to the HUB24 Board on
20 December 2017.
Listed Company Directorships (within the last 3 years)
• Nil
Board Committee Memberships
Catherine is an experienced Non-Executive Director,
serving on the Board of OFX Group Limited (ASX listed),
Universities Admission Centre, and Grapple Holding
Pty Ltd. Catherine has over 30 years’ experience in the
financial services industry, having held senior executive
leadership roles at Westpac Banking Group, Ellerston
Capital, Macquarie Group and BT Financial Group.
Catherine’s most recent executive role was as Group
Head of Business Development at Westpac until March
2019, where she was responsible for advising the
Westpac Executive Committee and Board on business
disruption and the future of banking and wealth strategy,
as well as managing strategic partnerships. Prior to
that Catherine held executive roles at BT Financial
Group as Head of Equities where her responsibilities
included product development and distribution of equity
products to licensees, advisers and retail investors;
Ellerston Capital where she was Head of Investor
Relations, Sales & Marketing; and Macquarie Group
as Divisions Director, Equity Markets Group.
Catherine is a Graduate of the Australian Institute of
Company Directors and a Member of the Association of
Superannuation Funds of Australia. She holds a Bachelor
of Commerce (University of NSW) and a Master of
Applied Finance (Macquarie University).
• Chair of the Audit, Risk and Compliance Committee
Term
• Member of the Remuneration and Nomination
Catherine was appointed to the Board on 19 July 2021.
Committee
Listed Company Directorships (within the last 3 years)
• OFX Group Limited (appointed 22 February 2021)
Board Committee Membership
• Member of the Audit, Risk and Compliance Committee
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 17
JOINT COMPANY SECRETARIES
The name and details of the Company Secretaries in
office during the 2022 financial year and at the date of
this report are as follows:
KITRINA SHANAHAN
CIMA, CPA, AGSM MBA
ANDREW BROWN
Diploma in Law, FCG, MAICD
COMPANY SECRETARY AND CHIEF FINANCIAL OFFICER
COMPANY SECRETARY
Kitrina has over 20 years of experience in finance,
governance and risk. Prior to HUB24, Kitrina was Chief
Financial Officer Insurance at Westpac. She has also held
roles across BTFG as Deputy Chief Financial Officer and
as Group Financial Controller at Westpac. With deep
experience in platforms, advice and broader financial
services, Kitrina has executive leadership experience
delivering large strategic transformation projects.
Kitrina was appointed Company Secretary and Chief
Financial Officer on 7 September 2020.
Andrew has extensive experience in the financial services
industry and was appointed to the position of Company
Secretary on 30 April 2021. Prior to joining the Company,
Andrew held senior governance and compliance
management positions at Challenger Limited.
Andrew was appointed Company Secretary on
30 April 2021.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 18
OPERATING AND FINANCIAL REVIEW
GROUP OVERVIEW
HUB24 Limited (HUB24, the Group or the Company)
is a financial services company that was established in
2007 and is a leading provider of integrated platform,
technology and data solutions to the Australian wealth
industry. HUB24 is listed on the Australian Securities
Exchange (ASX) under the code ‘HUB’ and includes the
award-winning HUB24 platform, the Xplore platform,
the newly acquired Class business, and HUBconnect.
As at 19 August 2022, HUB24’s market capitalisation
was approximately $2.0 billion.
HUB24’s purpose is to empower better financial
futures, together. To fulfil this purpose, HUB24 delivers
platform and technology solutions that empower
financial professionals to deliver better financial futures
for their clients.
HUB24’s head office is based in Sydney and it provides
its products and services across all Australian states and
territories. The Group employed 697 people on a full-
time equivalent (FTE) basis as at 30 June 2022.
PRINCIPAL ACTIVITIES
HUB24 operates two core revenue generating
segments and a Corporate segment as shown in the
diagram below:
HUB24 Limited
(ASX: HUB)
Platform
Tech Solutions
Corporate
Class
HUBconnect
Group support
functions
Strategic
investments
Treasury
HUB24
platform
Xplore
platform
Portfolio
Administration
& Reporting
Services (PARS)
PLATFORM
The Platform segment comprises the HUB24 investment
and superannuation platform (HUB24 platform), the
Xplore Wealth investment and superannuation platform
(Xplore Wealth platform) and Portfolio Administration &
Reporting Services (PARS).
The HUB24 and Xplore platforms are used by financial
professionals to efficiently administer their clients’
investments held through a superannuation and
investment product under custodial arrangements.
As one of the fastest growing platform providers in the
market, the HUB24 platform is recognised for providing
choice and innovative product solutions. It offers
financial professionals and their clients a comprehensive
range of investment options, including market-leading
managed portfolio solutions, and enhanced transaction
and reporting functionality.
The Xplore platform provides complementary capabilities
including managed accounts, superannuation services
and PARS capability. Xplore’s products and services are
used by financial advisers, boutique financial advice
businesses, stockbrokers, and institutional clients to look
after their clients’ investment needs.
In addition, HUB24 also offers PARS, a non-custody
portfolio service which provides administration,
corporate action management and tax reporting services
for financial professionals and their clients.
TECH SOLUTIONS
The Tech Solutions segment comprises Class and
HUBconnect.
Class
Class is a pioneer in cloud-based wealth accounting
and is recognised as one of Australia’s most innovative
technology companies.
Class delivers trust accounting, portfolio management,
legal documentation, corporate compliance and SMSF
administration solutions to over 7,000 customers1
across Australia who depend on Class to drive business
automation, increase profitability and deliver better
client service.
Class’s core offer is self-managed superannuation
fund (SMSF) administration software. Its solutions have
gained industry recognition for product innovation and
customer service excellence. Class currently holds a 30%
share of the addressable market2.
Customers using the Class Super, Class Portfolio
and Class Trust solutions represented over 198,000
portfolios and accounts as at 30 June 2022.
1 Class customer base represents practices of accountants,
administrators and advisers as at 30 June 2022.
2 Class SMSF market share as at 31 March 2022. Based on latest
confirmed ATO figures for March 2022, raw SMSF fund numbers, total
members of SMSFs and total Australian and overseas assets.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 19
Class also operates in the document and corporate
compliance segment through the service offerings
provided under the NowInfinity brand.3 NowInfinity is a
leading cloud-based entity management and corporate
compliance solution. In the Investment Trends 2022
SMSF Adviser & Accountant Report, NowInfinity was
recognised as the most used legal document provider
for SMSF related legal compliance.
HUBconnect
HUBconnect provides technology and data services to
the wealth industry, delivering innovative solutions to
enable financial professionals to efficiently run their
businesses and service their clients.
HUBconnect leverages data and technology capability to
provide solutions that solve common challenges faced
by stockbrokers, licensees and professional advisers in
the delivery of financial advice.
Through innovative technology such as machine
learning, artificial intelligence, and natural language
processing HUBconnect integrates, refines, stores and
supplies structured and unstructured data. Through
integrated data feeds, automated reporting and
analytics, HUBconnect delivers efficiencies for some of
the time-consuming and costly processes that increase
the cost of delivering advice. HUBconnect serves a
growing number of respected and high-profile financial
services companies and their clients.
HUBconnect Broker (formerly known as Agility
Applications) has a long history of working with
stockbrokers to deliver innovative business reporting
and support tools. HUBconnect Broker streamlines and
integrates client data and connects to a range of broking
business reporting and back-office support tools that
provide key insights and enable the efficient delivery
of stockbroking operations. These HUBconnect Broker
relationships are of strategic importance as HUB24
seeks to expands its share of the PARS market.
HUB24 is a strategic shareholder in Diverger Limited
(Diverger), which is a diversified financial services
business servicing the needs of financial professionals
and their clients. Under a Technology Partnership and
Distribution agreement Diverger is a cornerstone client
for HUBconnect’s data and technology services.
REVIEW AND RESULTS OF OPERATIONS
The key items regarding the Group’s performance for
FY22 were:
FUNDS UNDER ADMINISTRATION4
• Total Funds Under Administration (FUA) increased
by 12% to $65.6 billion (FY21: $58.6 billion).
• Platform5 FUA increased by 20% to $49.7 billion
(FY21: $41.4 billion).
• PARS6 FUA decreased by 8% to $15.9 billion
(FY21: $17.2 billion).
REVENUE
• Group operating revenue increased by 76% to
$192.5 million (FY21: $109.1 million).
• Platform segment revenue increased by 59% to
$160.5 million (FY21: $101.1 million).
EBITDA
• The Group’s preferred measure of profitability is
Underlying Earnings Before Interest, Tax, Depreciation
and Amortisation (EBITDA) before Notable items
(refer to note 2.1), increased by 94% to $70.4 million
(FY21: $36.2 million).
• Underlying EBITDA performance included Group
expenses increased by 62% to $141.1 million
(FY21: $86.8 million).
UNDERLYING NET PROFIT AFTER TAX
• Underlying Net Profit After Tax represents NPAT
before Notable Items. Underlying NPAT increased by
133% to $35.9 million (FY21: $15.4 million).
• Strategic transactions and project costs7 of
$17.9 million have been recognised in FY22
(FY21: $8.1 million). This includes strategic transaction,
due diligence and implementation costs related to
the Class transaction of $11.0 million, Xplore and
Ord Minnett implementation related costs of
$5.0 million and $1.9 million for other projects
(including regulatory change and one-off client
transition projects).
3 NowInfinity is a wholly owned subsidiary of Class.
4 Non-IFRS measure.
5 Platform FUA refers to the custodial portfolio.
6 PARS FUA refers to the non-custodial portfolio.
7
Includes administrative and resourcing costs related to strategic
transactions and project costs.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 20
Reconciliation of Underlying NPAT to Statutory NPAT
Underlying NPAT
Strategic transactions and project costs
Acquisition Amortisation
Tax effect on notable items
Fair value gain on contingent consideration
Agility consideration share based payment expense
Gain on Sale of Investment
Statutory NPAT
Year ended
30 June 2022
$ million
Year ended
30 June 2021
$ million
35.9
(17.9)
(12.3)
9.0
-
-
14.7
15.4
(8.1)
(0.6)
1.6
1.6
(1.5)
1.4
9.8
STATUTORY NPAT
• Statutory Net Profit After Tax (NPAT) increased by
50% to $14.7 million (FY21: $9.8 million).
CASH FLOWS
• The Group generated strong operating cashflows of
$36.9 million ($53.7 million before strategic transaction
costs), 92% up from $19.2 million ($26.4 million before
strategic transaction costs).
STRATEGIC TRANSACTIONS AND INTEGRATION UPDATE
Class
In October 2021, HUB24 announced it had entered
into an agreement to acquire Class, a leading SMSF
administration software provider. The acquisition of
Class was completed in February 2022.
Class provides HUB24 with an opportunity to accelerate
its platform of the future strategy and data services
market leadership strategy.
In June 2022 the Class operating model was finalised
with business lines now aligned to Class and NowInfinity
client propositions, and responsibility for distribution
of HUBconnect offers transitioning into the Class
business unit, centralising the Group’s software and data
solutions. The Class technology, marketing, HR, legal
and finance teams now report into the relevant HUB24
Group Executives. The new structure is expected to
deliver greater focus on customer propositions, enhance
engagement and leverage scale and expertise across
HUB24 Group, to enable us to better deliver on our
growth strategy.
As announced as part of the acquisition, Class will
continue to operate as a business unit within the HUB24
Group with its own brand and leadership team.
Class has been incorporated into HUB24 Group financial
results for four and half months of FY22.
Since completion, HUB24 and Class have been working
together to create strategies that leverage the combined
capabilities of the Group to provide compelling, efficient,
and valuable solutions for new and existing customers
and deliver enhanced growth for HUB24 shareholders.
Work on the delivery of a combined HUB24 and Class
product initiative is well underway with a new SMSF
service expected to be piloted in Q1 FY23.This service
will bring together SMSF establishment, administration
and investment administration leveraging the combined
capabilities of HUB24, Class and NowInfinity.
The service is designed for clients who are keen to
access the benefits of a cost-effective SMSF solution.
The solution provides advised clients with a cost-
effective, fully integrated end-to-end service bringing
together SMSF establishment, administration and
investment administration.
The service is designed to act as an incubator and will
facilitate the transition to traditional SMSF services when
appropriate, and provides financial professionals with a
new solution for their superannuation clients and enable
them to service new customer segments.
Furthermore, a preliminary review of Class’s extensive
data capabilities has been undertaken and plans
are progressing to integrate Class and HUB24’s data
capabilities to further extend the Group’s data-as-a-
service capabilities.
Xplore
The Xplore integration is well progressed with the
successful migration of the Xplore Wrap product to the
HUB24 platform in July 2022. The remaining successor
fund transfers and migrations from the Xplore platform
to the HUB24 platform are scheduled throughout FY23.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 21
Consistent with our strategy, the superannuation
administration services provided through DIY Master
Pty Ltd (acquired through the Xplore acquisition) will
be discontinued with customers moving to alternative
solutions during FY23. This represents 3% of Platform
FUA as of 30 June 2022 and does not impact the
achievement of the previously disclosed synergies
arising from the Xplore acquisition.
Financial Impacts of the Strategic Transactions
The purchase price accounting (PPA) for the Xplore
portfolio was completed in 1HFY22 with the $58.4
million consideration paid representing the fair value
of the separately identifiable assets and liabilities of the
transaction. The Class PPA will be completed in FY23, within
twelve months of the acquisition date. For FY22 provisional
fair value balances have been recognised on the balance
sheet for the Class acquisition (refer to the HUB24 Annual
Report for the year ended 30 June 2022 for further details).
Total implementation costs, including the Class acquisition,
to be incurred between FY23 and FY24 are forecast to
be $6–11 million, with annual synergies expected to be
approximately $12–14 million by FY24 onwards.
CAPITAL MANAGEMENT
The Class acquisition completed 16 February 2022 and
was funded through a combination of HUB24 shares
($268 million) and cash ($16 million).
Post the completion of the acquisition, the Class assets
and liabilities have been consolidated into the HUB24
balance sheet. This included $30 million of bank
borrowings as outlined in the Financial Statements.
• 271,870 shares were issued for options exercised by
staff and executives in the financial year ended
30 June 2022 (FY21: 531,519)
• 19,570 shares were issued for performance award
rights exercised by staff and executives in the financial
year ended 30 June 2022 (FY21: 65,296)
• No share options were issued to staff and
executives in the financial year ended 30 June 2022
(FY21: 91,384).
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Apart from the Class strategic transaction mentioned
previously, there have been no other significant changes
in the nature or state of affairs of the consolidated group.
DIVIDENDS
Subsequent to 30 June 2022, the Directors have
determined a final dividend of 12.5 cents per share fully
franked to be paid on 14 October 2022.
Together with the fully franked interim dividend of 7.5
cents per share, the fully franked full year dividend of 20.0
cents per share represents a 100% increase in dividends
for shareholders (FY21: 10.0 cents per share) and a
payout ratio of 45% of Underlying NPAT (FY21: 44%).
The Board’s dividend policy targets a payout ratio
between 40% and 60% of the Group’s annual underlying
net profit after tax over the medium term subject to
prevailing market conditions and alternate uses of capital.
SIGNIFICANT EVENTS OCCURRING AFTER BALANCE SHEET DATE
The Group has access to a $5 million working capital
facility, which remained undrawn during the year.
As disclosed above, subsequent to year end, the
following items have occurred:
During FY22, the Group purchased $10 million of
treasury shares on market to service the Group’s
Employee Share Plans.
OPTIONS AND PERFORMANCE RIGHTS
The following options, performance rights and shares
were issued in accordance with schemes approved by
shareholders. These schemes contain ambitious targets,
including Group FUA targets of greater than $100
billion by FY24, in order to incentivise and align key staff
towards HUB24 achieving its strategic objectives:
• 207,894 performance rights were issued to staff, and
executives in the financial year ended 30 June 2022
(FY21: 1,130,667)
• Directors have determined a fully franked final dividend
of 12.5 cents per share (a fully franked dividend of 5.5
cents per share final dividend was determined in FY21).
No other significant matter or circumstance has arisen
since 30 June 2022 that has notably affected, or may
notably affect the Group’s operations, the results of
those operations, or the Group’s state of affairs in future
financial years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
With the continued growth in FUA onto the HUB24
investment and superannuation platform and continuing
success of its supporting businesses, the Group expects
its financial results to continue improving with scale.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 22
The strategic acquisition of Class is expected to
accelerate HUB24’s platform of the future strategy,
consolidating the Group’s position as a leading provider
of integrated platforms, technology and data solutions
for financial advisers, accountants, private banks,
licensees, stockbrokers and their clients. The combined
business will provide a compelling and unique
competitive advantage and diversification of revenue.
GLOBAL ECONOMIC AND PEOPLE AND CULTURE IMPACTS
The Directors continue to assess potential financial
and other impacts of the coronavirus (COVID-19)
outbreak and the geopolitical impacts on the economy
and workforce. The current high-level of uncertainty
regarding the global economy has impacted investment
outcomes and increased volatility in investment
performance during the period.
At the date of signing, the future impacts of these risks
on global and domestic economies and investment
market indices, and their resulting impact on the Group
are uncertain. The Directors and management will
continue to monitor this situation.
Further to this, the current geopolitical events have also
had a global market impact and uncertainty exists as to
their implications. Such disruptions can adversely affect
the assets, performance and liquidity.
Recognising the rising Russia/Ukraine conflict as well
as Australia’s broadening of its existing autonomous
sanctions, the Directors and management continue
to remain abreast of developments in this area and
monitor the potential impacts across the Group.
RISK MANAGEMENT
HUB24 has adopted the ASX Corporate Governance
Principles and Recommendations (4th Edition)
and is committed to recognising and managing
risk. We recognise risk as the effect of uncertainty,
both positive and negative, on our objectives and
we manage risk to create and sustain value for
shareholders and other stakeholders. We foster a risk
aware culture with consideration of risk supporting
our formulation of strategy and informing business
decision-making.
Our Board-approved Risk Appetite Statement and Risk
Management Framework considers the full scope of
risks we face, including emerging risks. These have been
organised into the following seven risk categories with
a description of the risk and the assessment of the
risk exposures assessed. This is not intended to be a
comprehensive or exhaustive list of all risks the business
is exposed to and investors should form their own
assessment and conclusions.
Risk Category
Risk Summary De-scription
Key risk exposures assessed
Reputational, brand, & conduct risk
Strategic & Product Risk
The risk of erosion or other damage
to our brand or reputation resulting
from inappropriate or failed actions,
partnerships, or other behaviours.
The risk of failure to achieve strategic
objectives and/or respond to changes
in our competitive landscape with
competitive products.
• ESG
• Conduct and culture of workforce
• Fraud
•
Impacts of the RBA cash rate
• Other economic and market
developments
• Geopolitical risk including the war in
Ukraine
• Government commitments and policies
on climate and carbon emissions
• Future/changing regulatory
environment
• Competitive environment
• Changes in consumer and customer
preferences including online
purchasing trends
• Technological changes and innovation
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 23
Risk Category
Operational risk
Distribution risk
Technology & Cyber risk
Risk Summary De-scription
Key risk exposures assessed
The risk of loss resulting from inadequate
or failed internal processes, people, and
systems or from external events.
The risk of loss resulting from
inappropriate or failed sales and
distribution strategies, channels, and
customer relationships.
• People: workforce including COVID
19 conditions and restrictions, use of
flexible/virtual working arrangements,
availability of skilled staff and expertise
• Process: third party arrangements,
project portfolio, change management,
business continuity
• Systems: data security and
management, technology vulnerabilities
• Attraction/retention of key clients
• Advice licensee oversight
The risk of loss or other damage resulting
from our failure to appropriately respond
to our technology, physical security, or
cybersecurity being compromised.
• Platform vulnerabilities
• Data security and access
• Data management and control
Regulatory, legal & Compliance risk
The risk of legal or regulatory sanctions or
loss resulting from failure to comply with
laws, regulations, licensing, or contractual
requirements.
• Privacy
• Legislative and regulatory changes
• Changing regulatory footprint of our
business operations
• Data and privacy
• Financial crime compliance
Financial performance, governance,
and market risk
The risk of loss resulting from our failure
to meet financial obligations and/or the
impact of movements in the value of
equity and other investments correlated
with our financial performance.
• Financial performance, profit margins,
capital and liquidity management
• Financial performance and the impacts
of the economic environment
• Financial benefits of strategic transactions
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group’s operations are not subject to significant
environmental regulations under either Commonwealth
or State legislation and the Directors are not aware
of any material non compliance with environmental
regulations pertaining to the operations or activities
during the period covered by this report.
NON-AUDIT SERVICES
During the year Deloitte Touche Tohmatsu (Deloitte),
the Group’s auditor (Auditor) provided other services in
addition to their statutory duties.
In accordance with advice received from the Audit, Risk
and Compliance Committee, the Directors are satisfied
that the provision of non-audit services during FY22 by
the Auditor is compatible with and did not compromise
the general standard of auditor independence
requirements of the Corporations Act 2001 for the
following reasons:
impact the integrity and objectivity of the Auditor and
are of the view that they do not impact the integrity
and objectivity of Deloitte; and
• the fact that none of the non-audit services provided
by Deloitte during the financial year had the
characteristics of acting in a management or
decision-making capacity for the Company, acting
as advocate for the Company or jointly sharing
economic risks and rewards.
Details of the amounts paid to the Auditor, which
includes amounts paid for non-audit services and
other assurance services, are set out in note 8.3 to the
Financial Statements.
A copy of the Auditor’s Independence Declaration, as
required under Section 307C of the Corporations Act
2001, is included at the end of the Directors’ Report.
OFFICERS OF THE GROUP WHO ARE FORMER DIRECTORS OF
DELOITTE TOUCHE TOHMATSU
• The Audit, Risk and Compliance Committee reviewed
the non-audit services to ensure that they do not
There are no officers of the Company who are former
Directors of Deloitte Touche Tohmatsu.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 24
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.
ROUNDING OF AMOUNTS
In accordance with ASIC Corporations (Rounding in
Financial/Directors’ Reports) Instrument 2016/191,
amounts have been rounded off in the Directors’ Report
and the Interim Financial Report to the nearest thousand
dollars or, in certain cases, to dollars where indicated.
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 and the nature of the liabilities
covered by the insurance policy has not been disclosed.
The Group has indemnified officers and directors to the
extent permitted by law against any liability that arises
as a result of actions as an officer or director and has
not otherwise, during or since the end of FY22, except
to the extent permitted by law, indemnified or agreed
to indemnify an officer or auditor of the Group or of any
related body corporate against a liability incurred as
such an officer or auditor.
MEETING OF DIRECTORS
DIRECTORS’, OFFICERS’, AND AUDITORS’ INDEMNITY
During FY22 the Group paid a premium in respect of
insuring all directors and officers against liability, except
The numbers of meetings of the Group’s Board of
Directors and of each Board Committee held during the
year ended 30 June 2022, and the numbers of meetings
attended by each Director were as per the table below:
Board
meetings
Audit, Risk & Compliance
Committee meetings
Remuneration &
Nomination Committee
meetings
(Chairman
Mr Bruce Higgins)
(Chairman
Mr Paul Rogan)
(Chairman
Mr Anthony McDonald)
Director
Attended
Held
Attended
Held
Attended
Held
Mr Bruce Higgins (Chairman)
Mr Andrew Alcock (Managing Director)
Mr Anthony McDonald
Mr Paul Rogan
Ms Ruth Stringer
Ms Catherine Kovacs
12
12
12
12
12
12
12
12
12
12
12
12
7
*
*
7
7
7
7
*
*
7
7
7
6
*
6
6
*
5*
6
*
6
6
*
6
*Not a member of committee. All Non-Executive Directors have standing invitations to all committee meetings.
This report is made in accordance with a resolution of Directors.
Mr Bruce Higgins (Chairman)
Director
Sydney
23 August 2022
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 25
AUDITOR’S INDEPENDENCE DECLARATION
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
Board of Directors
HUB24 Limited
Level 2, 7 Macquarie Place
Sydney NSW 2000
23 August 2022
Board of Directors
Dear Board Members,
HUB24 Limited
Level 2, 7 Macquarie Place
Auditor’s Independence Declaration to HUB24 Limited
Sydney NSW 2000
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration
of independence to the directors of HUB24 Limited.
23 August 2022
As lead audit partner for the audit of the financial report of HUB24 Limited for the year ended 30 June 2022, I
declare that to the best of my knowledge and belief, there have been no contraventions of:
Dear Board Members,
•
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
Auditor’s Independence Declaration to HUB24 Limited
• any applicable code of professional conduct in relation to the audit.
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration
Yours faithfully
of independence to the directors of HUB24 Limited.
As lead audit partner for the audit of the financial report of HUB24 Limited for the year ended 30 June 2022, I
declare that to the best of my knowledge and belief, there have been no contraventions of:
DELOITTE TOUCHE TOHMATSU
•
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
• any applicable code of professional conduct in relation to the audit.
Yours faithfully
SSttuuaarrtt AAlleexxaannddeerr
Partner
Chartered Accountants
DELOITTE TOUCHE TOHMATSU
SSttuuaarrtt AAlleexxaannddeerr
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
26
REMUNERATION
REPORT
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 27
CONTENTS OF THE REMUNERATION REPORT
1
2
3
4
5
6
7
8
9
Key Management Personnel (KMP)
Remuneration snapshot
Business performance in FY22
Executive KMP remuneration outcomes
31
31
33
34
Executive KMP remuneration structure
39
KMP service agreements
NED remuneration
Remuneration governance
Other statutory disclosures
41
41
43
44
This Remuneration Report (on pages 28 to 46) sets out HUB24’s remuneration framework and details of remuneration
outcomes for key management personnel (KMP) for the year ended 30 June 2022 (FY22).
Accounting Standards define KMP as those executives and non-executive directors with the authority and
responsibility for planning, directing and controlling the activities of HUB24, either directly or indirectly, being the Non-
Executive Directors (NEDs), Managing Director and Chief Executive Officer (MD), Chief Financial Officer (CFO), Director,
Strategic Development and the Chief Operating Officer (COO).
The FY22 Remuneration Report has been prepared and audited in accordance with the disclosure requirements of the
Corporations Act 2001.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 28
REMUNERATION REPORT
TO OUR SHAREHOLDERS
On behalf of the Board and its Remuneration and
Nomination Committee, I am pleased to present
HUB24’s FY22 Remuneration Report.
We have built on the enhanced Remuneration
Report structure introduced in FY21 to improve
overall disclosure and to ensure shareholders can
clearly evaluate the links between performance
and remuneration outcomes for our KMPs across a
mix of financial, strategic, operational and personal
performance objectives.
HUB24’s remuneration approach continues to focus on
aligning challenging, personalised individual targets to
our Company’s strategic objectives, to align executives to
deliver strong performance and deliver short, medium
and longer-term outcomes.
We remain committed to providing market competitive
remuneration to attract and retain high calibre talent
who are critical to HUB24’s continued success, and
consistently review appropriate benchmark data to
ensure that our knowledge of trends in remuneration
structures, pay mix and market relativities are current.
RESPONDING TO EVOLVING MARKET CONDITIONS
HUB24 has continued to undertake rapid organic growth
in FY22, alongside strategic M&A activity. This approach
continues to deliver enhanced shareholder returns
and create a strong foundation for future growth and
diversification.
Throughout FY22 HUB24 has continued to support our
customers to manage the ongoing challenges of the
pandemic, market volatility and macroeconomic events,
as well as providing advisers with solutions to manage
increasing compliance obligations.
In this environment HUB24 delivered record annual
net inflows, net profits and dividends and continued to
deliver on our strategic objectives, including developing
innovative product solutions and building the platform of
the future, whilst also leveraging emerging opportunities
for growth through strategic acquisitions and developing
customer propositions for new segments.
“During FY22 the HUB24
Group has grown significantly
both organically and through
strategic acquisition. Now with a
talented team including Class of
700 people, we are continuing to
invest to support further growth
and to deliver increasing returns
for our shareholders.”
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 29
INVESTING IN OUR PEOPLE
The COVID-19 pandemic continued to impact our team,
our customers and the broader community during FY22.
In the post-lockdown environment HUB24 has continued
to support flexible work arrangements which has been
highly valued by the HUB24 team who ranked HUB24’s
support for wellbeing and flexibility highly in recent staff
engagement surveys.
HUB24 recognises our people are critical to
delivering on our strategy and growing our business.
As part of our focus on attracting, retaining and
developing talent HUB24 has invested in leadership &
development initiatives whilst continuing to support a
diverse and inclusive workplace and creating a strong
client-focused culture.
PERFORMANCE DURING FY22
HUB24 delivered another year of growth in FY22,
achieving record platform net inflows of $11.7 billion
and finishing the year with total FUA of $65.6 billion
consisting of $49.7 billion of platform FUA and
$15.9 billion of PARS FUA.
Our performance has translated to strong outcomes
for our shareholders, delivering full year dividends of
$0.20 up 100% on FY21. Our underlying profit after
tax was $35.9 million (up 133%).
In February 2022 the acquisition of Class was
completed bringing together two highly complementary
businesses focussed on the delivery of solutions that
support financial professionals to implement strategic,
investment and tax advice. The acquisition has provided
further opportunities to leverage collective capabilities
across the HUB24 Group to enhance value for current
customers, provide growth opportunities across both
businesses and continue to lead transformation in
financial services.
Additionally, HUB24 continues to be recognised by
advisers and the industry as a market-leader in terms
of innovative product solutions, customer service
excellence and value.1
Looking ahead to FY23, the business remains committed
to achieving sustainable growth for our shareholders by
focussing on our key strategic pillars to deliver on our
purpose to continue to lead the wealth industry as the
best provider of integrated platform, technology and
data solutions and empower better financial futures,
together.
During FY22 the Board engaged external advisers
to undertake a benchmark review of key executive
remuneration, in the context of the ongoing growth
and the increasing demands on executives based on
the scale and complexity of HUB24. Benchmark data
was assessed across both financial services and fintech
industry sectors to ensure a rigorous approach to this
aspect of managing key person risk. Remuneration
changes for KMP were awarded in September 2021
to ensure that HUB24’s remuneration remained
competitive and supported the ongoing retention of key
executives.
Short Term Incentive (STI) targets for the year were
designed to foster operational excellence, financial
performance, customer outcomes and the strategic
development of HUB24 in order to maximise
shareholder value. Specific FY22 STI performance
measures included a range of financial, strategy
and growth, cultural leadership and operational and
measures, based on the key metrics used to assess
HUB24’s success over the short-term. For the Managing
Director, all base targets were largely met in FY22, with
significant stretch target achievement in particular
across the areas of strategy and growth, customer
and service delivery, people, compliance and business
operations. KMP performance outcomes against
scorecard deliverables ranged from 81% to 89%,
reflecting a very strong performance year.
The outcomes of the 2019 Long Term Incentive (LTI)
grants offered to Executive KMP (outlined on page
39) and other key senior leaders reflected our strong
business performance, critical retention priorities and
recognition of unique functional expertise or knowledge.
This LTI grant was offered to Executive KMP as a mix
of options (40%) and performance rights (60%) with a
3-year performance period.
An LTI grant was offered to the Managing Director,
KMPs, and other key employees following approval by
shareholders at the 2021 Annual General Meeting. The
offer was for performance rights only and had a three
year vesting period with performance conditions based
on FUA and Absolute Total Shareholder Return (ATSR).
BOARD AND EXECUTIVE KMP CHANGES
1 Best platform managed accounts functionality and Best Product Offer
(Investment Trends Platform Competitive Analysis and Benchmarking
Report 2021). Best platform, Best Investment Options, Best Adviser
Experience (Adviser Ratings Financial Advice Landscape Report 2022)
No.1 Value (Investment Trends Adviser Technological Needs Report 2022)
Effective 19 July 2021, HUB24 welcomed the
appointment of Catherine Kovacs to HUB24’s Board.
Catherine has brought a deep understanding of financial
services having significant relevant executive experience
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 30
and furthers our aspiration to increase female
representation on the Board.
There have been no other changes to the composition
of KMP for the year ended 30 June 2022.
LOOKING AHEAD TO FY23
philosophy, framework, and alignment with outcomes.
We remain committed to continuous evolution in
our reward structure and our communication to
shareholders as the financial services industry continues
to undergo significant change and remuneration
practices evolve.
The Board continues to consider external information
around current trends in remuneration practices,
particularly with regard to ongoing evolution of the
regulatory landscape in the financial services sector, to
ensure that HUB24’s executive remuneration framework
remains relevant and effective in attracting and retaining
talented leaders for our business as it continues to grow.
The FY22 Remuneration Report is intended to assist
shareholders to clearly understand our remuneration
Regards,
Anthony (Tony) McDonald
Chair, Remuneration and Nomination Committee
23 August 2022
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
31
1. KEY MANAGEMENT PERSONNEL
The KMP for FY22 were:
Name
Role in FY22
Term as KMP in FY22
Independent Non-executive Directors (NEDs)
Bruce Higgins
Independent Non-Executive Director, Chairman
Anthony McDonald
Independent Non-Executive Director
Paul Rogan
Independent Non-Executive Director
Ruth Stringer
Independent Non-Executive Director
Full year
Full year
Full year
Full year
Catherine Kovacs
Independent Non-Executive Director
Commenced 19 July 2021
Executive KMP
Andrew Alcock
Managing Director
Jason Entwistle
Director, Strategic Development
Craig Lawrenson
Chief Operating Officer
Kitrina Shanahan
Chief Financial Officer and Joint Company Secretary
Full year
Full year
Full year
Full year
2. REMUNERATION SNAPSHOT
Our remuneration framework is designed to support HUB24’s objectives by engaging exceptional people to deliver
strong customer value and growth in an innovative and collaborative manner. Our remuneration principles outlined
below continue to shape our remuneration framework.
OUR REMUNERATION PRINCIPLES
Remuneration Principles
Provide
competitive and
reasonable rewards
to attract, motivate
and retain high
calibre individuals to
drive the success of
HUB24
Ensure our people
are rewarded via
market competitive
remuneration
structures and
practices
Our incentive
schemes are
designed to reward
achievement of
targets aligned to
HUB24’s strategy
Ensure key people
are aligned to
shareholder interest
via appropriate
long-term equity
incentives
Align incentives
to cultural and
compliance
outcomes, subject
to deductions for
significant non-
compliance
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 32
EXECUTIVE KMP REMUNERATION FRAMEWORK
HUB24’s Executive KMP Remuneration Framework is made up of three components that when combined create the
total remuneration opportunity for Executive KMP and senior leadership team members.
Fixed Remuneration (FR)
Short Term Incentive (STI)
Long Term Incentive (LTI)
FR consists of Base Salary,
Superannuation and Benefits.
FR is set to attract and retain
Executive KMP with the right
capability and experience.
FR is reviewed annually, and the
process consists of a review of
company-wide, functional portfolio
and individual performance,
relevant comparative
remuneration in the market,
and where appropriate, external
advice on practices and market
comparisons.
STI is paid in three equal
instalments, with one third paid
at the end of the performance
year, one third after 6 months
and the remaining third, 12
months after the end of the
performance period.
STI rewards Executive KMP based
on structured qualitative and
quantitative scorecard measures
being achieved as determined
by the Board. The scorecard
measures include ‘target’ and
‘stretch’ Key Performance
Indicators (KPIs).
Executive KMP are kept
accountable through deferral
periods that act as malus and
clawback mechanisms intended to
protect shareholder interests.
LTI has historically been
delivered in a mixture of
Options and/or Performance
Award Rights (PARS), recently
switching to 100% PARS awards
that are performance-tested
over a 3 or 5 year period.
LTI rewards Executive KMP
for long-term performance,
encourages shareholding and
delivers long-term value creation
for shareholders based on:
• Compound Annual Growth
Rate (CAGR) in FUA; and
• Absolute Total Shareholder
Return (ATSR) performance.
Special awards of PARS under
different terms & conditions may
be granted to Executives in limited
circumstances to recognise their
additional contribution in the
growth of HUB24.
FY22 EXECUTIVE KMP REMUNERATION MIX
The weighting of each remuneration component of an executive’s total remuneration opportunity is aligned to
the executive remuneration framework outlined in section 5. The following diagrams set out the weighting of each
remuneration component for the Managing Director and other Executive KMP based on their maximum potential STI
and LTI opportunities and does not represent actual remuneration received for FY22.
Base salary,
superannuation and
other benefits
Assessed over a
1-year performance
period against
a mixture of
financial, strategic
and individual
performance metrics
FR
STI
LTI
33%
STI is paid in 3 equal instalments, with one
third paid at the end of the performance
year, one third after 6 months and the
remaining third 12 months after the end of
the reporting period. 50% of the total STI
can be delivered in Shares
33%
33%
Delivered in Options and/or Performance Award Rights (PARS)
and assessed against:
• Funds Under Administration Compound Annual Growth Rate
(50% weighting)
• Absolute Total Shareholder Return (50% weighting)
12 month disposal
restriction applies to
any Shares acquired
from the exercise of
vested Options and
vested PARS
FY22
FY23
FY24
FY25
FY26
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 33
Managing Director Pay Mix at
Maximum for FY22
Other Executive KMP Pay Mix at
Maximum for FY22 (average)
FR
33.33%
LTI
33.33%
STI
33.33%
3. BUSINESS PERFORMANCE IN FY22
FR
42.02%
LTI
26.47%
STI
31.51%
£
$65.6b
Total
FUA
£
$11.7b
Net
Flows
£
$70.4m
Underlying
EBITDA
£
$35.9m
Underlying
NPAT
£
20%
3 Year Total
Shareholder Return
The graph below shows HUB24’s Underlying EBITDA outcomes over the last five years compared to the Managing
Director’s STI outcomes over the same period. The graph shows that STI outcomes have been fair in comparison to
Company performance against one of our key financial metrics.
Underlying EBITDA v Managing Director’s STI outcome
)
m
$
(
A
D
T
I
B
E
U
75
65
55
45
35
25
15
5
-5
100%
75%
50%
25%
0
m
e
R
d
e
x
i
F
f
o
%
s
a
s
e
m
o
c
t
u
o
I
T
S
FY18
FY19
FY20
FY21
FY22
Maximum STI (%) (RHS)
Awarded STI (%) (RHS)
UEBITDA ($m)
The Managing Director’s maximum STI opportunity was increased from 75% to 100% of fixed remuneration in FY22
following a remuneration review, for details please refer to page 38.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
34
The table below details HUB24’s performance against key financial and operational metrics for the five-year period
ended 30 June 2022.
PARS FUA ($b)
Platform FUA ($b)
Revenue ($m)
Underlying EBITDA ($m)
Underlying Profit/(Loss) after income tax ($m)
Earnings per share (statutory basic) ($)
Dividends per share (cents per share $)
Total dividends paid and payable ($m)
Share price at financial year end ($)
TSR in the financial year1
FY22
15.9
49.7
192.5
70.4
35.9
20.18
0.20
16.0
20.27
-29%
FY21
17.2
41.4
110.9
36.2
15.4
14.83
0.10
6.8
28.51
208%
FY20
FY19
FY18
0.2
17.2
82.5
24.7
9.8
13.13
0.07
4.4
9.30
-21%
-
13.1
98.7
15.4
6.5
11.54
0.046
2.9
11.88
3%
-
8.3
87.0
11.4
5.4
12.27
0.035
2.2
11.55
86%
1 TSR is calculated using the closing and opening share price and dividends for the financial year.
4. EXECUTIVE KMP REMUNERATION OUTCOMES
Executives delivered strong results against their KPIs for FY22. Our Company performance and the resulting
shareholder value creation over the longer-term leads us to expect that the LTI issued in 2019 will vest at 100% once
tested on 17 October 2022 using the 40 day volume weighted average price (VWAP) following our financial reporting.
FIXED REMUNERATION
To ensure fixed remuneration continues to be both appropriate and aligned with shareholder interests in the face of
an increasingly competitive market, the Board sought advice from external advisers and benchmarked Executive KMP
remuneration against a financial services, and fintech company comparator group with similar scale, revenue and
market capitalisation, recognising that start-up fintech experience is a sought after skill set. A secondary comparator
group of wealth management businesses within larger institutions was also considered. This detailed market data
ensured that we were able to adjust fixed remuneration against comparable market conditions relative to our current
size and scale, to continue to attract and retain the highest calibre of Executive KMP.
In September 2021 the Board made fixed remuneration adjustments to Executive KMP of between 4.5% and 28.9%,
with higher increases awarded to the Managing Director and Director, Strategic Development to align their total
remuneration position to the market reflecting HUB24’s growth. The range for other KMP increases was from 4.5% to
8.2% based on their respective roles and responsibilities relative to external market benchmarks obtained in August
2021. These FY22 fixed remuneration adjustments ensured that the executive remuneration framework continues
to support the achievement of our strategy and the future needs of our business by attracting and retaining key
executive talent. Adjustments to fixed remuneration were effective from the standard date of 1 September 2021,
after a 3 month deferral was made the previous year due to market condition uncertainty around COVID-19.
Name
A. Alcock – Managing Director
J. Entwistle – Director, Strategic Development
K. Shanahan – Chief Financial Officer and
Joint Company Secretary
C. Lawrenson – Chief Operating Officer
Fixed Remuneration
(including superannuation)
effective 1 December 2020
Fixed Remuneration
(including superannuation)
effective 1 September 2021
$520,000
$425,000
$425,000
$402,000
$670,000
$525,000
$460,000
$420,000
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 35
STI OUTCOMES – LINK TO PERFORMANCE
Following the market benchmark review of remuneration completed in August 2021, STI opportunity levels were
reviewed and adjusted for the Managing Director, Director, Strategic Development and Chief Financial Officer. These
changes aligned the Executives to a more competitive remuneration package across fixed and variable elements. The
STI opportunity for the Managing Director and Director, Strategic Development were increased from 75% to 100%
of fixed remuneration, and the Chief Financial Officer from 40% to 60%. At the same time, the remuneration mix for
the Chief Operating Officer was adjusted with the STI opportunity reduced from 70% to 65% offset by a larger LTI
opportunity. The Managing Director’s FY22 scorecard capturing corporate and individual goals, their weighting and the
performance level achieved are summarised below. Further detail on the STI structure is provided in section 5.
FY22 STI
Measure
FY22 outcome
Commentary
Financial Performance – 33% weighting
Result – 28.38%
Profitability
Group profitability
• Group underlying EBITDA up $34.2 million (94%) year on year.
Base Platform profitability
• Platform underlying EBTDA up $24.4 million (64%) year on year
Stretch Platform profitability
measure partially met.
• The base Platform profitability measure was met, with the stretch
Cost to income ratio
• Cost to Income ratio of 63.4%.
Operating Cashflow
• Positive operating cashflow outcome of $53.7million (excluding
strategic transaction costs).
Strategy & Growth – 35% weighting
Result – 31.25%
Platform net inflows
• Record platform annual net flows of $11.7 billion up 32% on FY21.
Xplore integration and
non-custody development
Mergers & Acquisitions
•
Integration of Xplore Wealth into HUB24 is continuing to progress
with foundational integration complete and first product
migration completed.
• Acquisition synergies are on track to plan with additional revenue
synergies achieved.
• Separation of Ord Minnett PARS is in final stages albeit later than
originally planned.
• PARS growth to 8,341 account.
• Completed strategic transaction acquiring Class Limited to create
additional strategic opportunities for HUB24 and diversified revenue.
•
Initial joint HUB24/Class product development well progressed.
• Achievement of planned synergies exceeded with additional
opportunities identified.
•
Integration well progressed with go-forward Class operating model
and leadership team in place.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
36
FY22 STI
Measure
Current and future growth
initiatives
FY22 outcome
Commentary
• Signed distribution agreements with pipeline clients with
expected FUA net inflows over the following 3 years.
• Development of strategies and alliances to create significant
future growth opportunities.
• Continued evolution of Tech Solutions business including
ongoing development and adoption of HUBConnect proposition,
commercialisation of new products, new client opportunities and
enhanced client proposition.
Customer and Service Delivery – 17% weighting
Result – 14.88%
Delivery and governance of
strategic and operational
work programs
Customer experience and
market leadership
Product and service
development
Industry innovation and
market leadership
Ongoing delivery of enterprise project portfolio across:
• Regulatory change projects
• Product and service enhancements
• Operational efficiency
• Technology scale and security
• Client migrations
• Customer satisfaction: High satisfaction rate maintained.
• Various awards and industry recognition including:
– 1st place for client advocacy from Adviser Ratings;
• Best Overall Product, Best Managed Accounts and 2nd place
for overall functionality from Investment Trends; and
• Equal 2nd place for overall adviser satisfaction from
Wealth Insights.
• Average HUB24 platform usage across advisers and licensees
increased year-on-year, with industry leading FUA retention rate.
• Expansion of our product and service offerings including:
– •
Launch of new market leading real-time dynamic reporting
capability to support adviser and client engagement.
•
Increased investment choice and execution flexibility
providing advice efficiency tools, functionality to support client
preferences, additional security exchanges and flexibility for
access to international markets.
• Development of industry leading SMSF offer utilising Class and
HUB24 capabilities to provide additional solution for advisers
aiming to grow the SMSF and platform market.
• Progress on market leading data services that support the
adviser market including HUBconnect and integrations with third
party wealth management providers.
•
Increasing collaboration with industry participants aiming to
build foundations for the future of wealth management and
financial advice.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 37
FY22 STI
Measure
FY22 outcome
Commentary
People, Compliance and Business Operations –
15% weighting
People and Culture
Result – 14.50%
• Favourable employee engagement evidenced by employee
survey conducted by third party expert and staff retention
measures.
• Positive and open culture with strong measures for integrity,
company values alignment, Board and leadership effectiveness
as measured by third party culture survey conducted on behalf of
the Board of Directors.
• Strong focus on employee development, leadership
development, talent recognition and succession planning.
Risk & Compliance
• Appointment of Chief Risk Officer appropriate for enterprise scale
Group Operating
Model evolution
and future growth aspirations.
• Effective operation of risk and compliance framework with
continuing maturation of people, system, processes and culture
to support robust risk and compliance outcomes. Risk focus
supported by internal and external auditors.
• Responded effectively to the changing COVID-19 risk continuing
to deliver high quality service to our clients, employee welfare
support and establishment of a flexible hybrid working model.
• Maintained HUB24 ISO 27001 accreditation.
• Continued investment in cyber resilience aiming to protect all
stakeholders and respond to the evolving environment and
emerging threats.
• Significant investment in executive leadership team to support
future growth aspiration including the appointment of Chief
Growth Officer, Chief Risk Officer, Class Chief Executive Officer.
• Progressing with recruitment of Chief People Officer to support
future talent acquisition, organisational development and
‘employer of choice’ aspirations.
• Significant investment in systems and processes to ensure
operational continuity, scalability and provide foundations for
future growth.
• Ongoing core system architecture and performance
improvements creating operational efficiencies and improved
customer service outcomes.
Total Overall Outcome – 89%
Outcome
Base and stretch targets apply
Base target only
Stretch target only
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 38
The STI outcomes for Executive KMP against their maximum opportunities are disclosed below.
Name
A. Alcock – Managing Director
J. Entwistle – Director, Strategic Development
K. Shanahan – Chief Financial Officer and Joint Company Secretary
C. Lawrenson – Chief Operating Officer
STI maximum
opportunity
% of maximum
STI earned
%of maximum STI
forfeited
$670,000
$525,000
$276,000
$273,000
89%
88%
89%
81%
11%
12%
11%
19%
LTI OUTCOMES – LINK TO PERFORMANCE
The FY19 LTI is tested over a 3-year period from 1 July
2019 to 30 June 2022, with the ATSR hurdle tested
using the 40 day VWAP following the FY22 full year
results announcement (being 17 October 2022).
Executive KMP have achieved the FUA hurdle (which
is 50% of the performance measures). The remaining
50% of Options and PARS that relates to the ATSR
hurdle requires final performance testing on 17
October 2022. If tested as at the date of this report
the ATSR stretch target would have been achieved. The
following graphs also show TSR and FUA performance
over the FY19 LTI performance period.
The FY18 Special PARS are tested over a 4-year period
from 1 July 2018 to 20 June 2022, with 100 per cent of
PARS vesting based on the FUA performance over the
period. The following graph shows the FUA performance
over the FY18 Special PARS performance period.
HUB24 v S&P/ASX200 3-year TSR
HUB24 FUA
200%
150%
100%
50%
0%
-50%
3 year FUA growth: 260%
CAGR: 53% p.a.
Minimum vesting
level – 2019 Options
and Rights
Minimum vesting
level – Special LTI
3 year TSR: 73%
CAGR: 20% p.a.
3 year TSR: 10%
CAGR: 3% p.a.
)
b
$
(
A
U
F
l
a
t
o
T
50
45
40
35
30
25
20
15
10
5
0
Jun 2019
Jun 2020
Jun 2021
Jun 2022
FY19
FY20
FY21
FY22
HUB24
S&P/ASX200
Custodial FUA
Non-custodial FUA
*TSR data sourced from Thomson Reuters’ Eikon Refinitiv platform
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
FY19 LTI GRANT PERFORMANCE CONDITIONS
Measure Weighting
Vesting criteria
ATSR
50%
The CAGR in the ATSR over the three-year period until 17 October 2022 is assessed as follows:
• Threshold: 12.5% ATSR CAGR – 25% vesting; and
• Stretch: 17.5% ATSR CAGR – 100% vesting.
Straight-line vesting will occur between threshold and stretch.
39
Result
(% vested)
To be tested
17 October
2022
Growth
in FUA
50%
The growth in FUA over the three-year period until 30 June 2022 is assessed as follows:
100%
• Zero vesting if the FUA did not exceed $27 billion by 30 June 2022;
• 25% vesting if the FUA reached $27 billion by 30 June 2022;
• 80% vesting if the FUA reached $29 billion by 30 June 2022;
• 100% vesting if the FUA reached $32 billion by 30 June 2022;
• Straight-line vesting will occur between $29 billion and $32 billion
(for between 80% and 100% vesting).
5. EXECUTIVE KMP REMUNERATION STRUCTURE
STI
The objective of the STI is to reward Executive KMP for delivery against tailored KPI’s aligned to key strategic goals and
creation of shareholder value. Below we have set out the key terms of the STI for FY22:
Element
Opportunity
Delivery
Description
Managing Director: 100% of Fixed Remuneration at maximum.
Other Executive KMP: 60–100% of Fixed Remuneration at maximum.
STI is paid in three equal instalments, with one third paid at the end of the performance year, one third
after 6 months and the remaining third 12 months after the end of the performance period.
These deferral periods are intended to enhance malus and clawback mechanisms and mitigate risk.
STI is offered in cash, however, at the election of Executive KMP, 50% of the total STI earned can be
delivered in Shares.
Performance period
1 year (i.e. 1 July to 30 June).
Performance measures HUB24’s STI strategy aims to focus Executive KMPs on a balance of financial, operational and strategic targets.
This ensures Executive KMPs are rewarded for achieving objectives that are fundamental to the success of
HUB24. The weightings for each category in the Managing Director’s FY22 scorecard are outlined below.
Financial Performance – 33% weighting
Strategy & Growth – 35% weighting
Customer & Service Delivery – 17% weighting
People, Compliance & Business Operations – 15% weighting
• The financial measures were chosen as they represent key drivers of HUB24’s financial performance
Underlying EBITDA, Operating Cashflow and Cost to Income aimed at protecting revenue margins
and profitability from the impact of price cutting), while also providing a framework for delivering
shareholder returns.
• Growth and strategic measures were chosen as they represent HUB24’s go-forward strategy and
assess progress against new initiatives that ensure HUB24’s longevity and success. This may involve
(not intended to be exhaustive) assessments against any mergers and acquisitions which occur,
customer acquisitions and development of new target markets.
• Customer & Service Delivery measures represent key metrics related to HUB24’s interactions with
customers (service and experience), rollout of new products and new product offerings, the progress
of strategic innovation and the delivery of strategic projects.
• People, Compliance & Business Operations measures focus on critical objectives related to improvements
to our risk framework, our regulatory compliance and our progress in building HUB24’s sustainable
scalability and growth. Most importantly it drives our cultural framework and employee engagement.
The Board determines the relative weighting and mix of performance measures for Executive KMP in
order to deliver long-term sustainable shareholder value.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 40
LTI
The objective of the LTI Plan is to reward Executive KMP for delivering sustained growth in shareholder value and to
provide HUB24 with the ability to attract, motivate and retain high calibre senior leaders in a competitive market.
Below we have set out the key terms of the LTI issued in FY22:
Element
Opportunity
Description
Managing Director: 100% of Fixed Remuneration.
Other Executive KMP: 40–100% of Fixed Remuneration.
Delivery
PARS (100%).
Performance period
3 years. A further 12-month disposal restriction applies to Shares issued upon the exercise of vested PARS.
Exercise price
Expiry period
No exercise price will be payable in respect of the exercise of vested Performance Rights.
PARS: 15 years from the date of issue.
Performance measures 50% of the Performance Rights will be subject to and will vest based on a calculated score (Score) that
measures the achievement of a funds under administration (FUA) target that has been set for the three
years ending on 30 June 2024.
The Score will have regard to the relative growth in Platform (Custody) FUA and Portfolio Administration
and Reporting Services (Non-Custody) FUA as well as the relative financial contribution of Custody FUA
and Non-Custody FUA to HUB24’s financial results.
The PC1 hurdle has been set at a Score of between 88.5 and 100 which represents a three year CAGR of FUA
between 19.5% and 24.8% p.a., and a FUA growth of between 70.6% and 94.5%, over three years to 30 June
2024. Based on data at 30 June 2021 this would equate to total FUA of $100-$114bn by 30 June 2024.
50% of the Performance Rights will be subject to, and will vest on, the achievement of a hurdle
measuring the absolute total Shareholder return (ATSR) of 10% to 15% per annum over the next three
years. The vesting is calibrated as follows:
• 25% vesting of PC2 =Performance Rights occurs when a threshold vesting of 10% ATSR compounded
annually is achieved;
• 100% vesting of PC2 Performance Rights occurs when a threshold vesting of 15% ATSR compounded
annually is achieved; and
• vesting between 10% and 15% ATSR will be on a straight-line basis between these two levels
GENERAL TERMS APPLYING TO VARIABLE AWARDS
The occurrence of particular events may affect the grant and vesting of the STI and LTI. The table below outlines how
these awards may be treated, noting that the Board retains absolute discretion with respect to the incentive plans.
Element
STI
LTI
Treatment on cessation
of employment
Change of Control
The Board has discretion to determine how to
treat an executive’s STI in the case of cessation
of employment, taking into account the
circumstances of the executive’s departure. This
applies to in-year STI as well as deferred STI.
Unless the Board exercises its discretion, vested
Options and PARS will remain on-foot and
unvested Options and PARS will remain on-foot to
be tested in the ordinary course.
The Board has discretion to determine how STI
will be treated in the event of a change of control
(CoC) event, depending on the circumstances of
the transaction.
Upon a change of control (CoC) event, LTI grants
will vest on a pro rata “period of time” basis unless
the Board exercises discretion to allow the grant to
vest in full, dependent upon circumstances.
Clawback and Malus
The Board has the discretion to reduce, cancel or recover any and all awards in ‘for cause’
circumstances including serious misconduct.
Board discretion
Awards under the STI and LTI are subject to Board discretion at all times.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 41
6. KMP SERVICE AGREEMENTS
Remuneration and other terms of employment for Executive KMP are formalised in employment agreements.
All Executive KMP have ongoing employment agreements. HUB24 may terminate the employment agreement by
providing 12 months written notice or providing payment in lieu of the notice period (based on the fixed component of
the relevant KMPs remuneration).
The major provisions of the Executive KMP agreements relating to remuneration are set out below. Salaries set out
below are for FY22 and are subject to review by the Remuneration and Nomination Committee.
Name
A. Alcock – Managing Director
J. Entwistle – Director, Strategic Development
K. Shanahan – Chief Financial Officer and Joint Company Secretary
C. Lawrenson – Chief Operating Officer
Fixed
Remuneration
(including
superannuation)
Notice period –
either party
Contractual
Termination
payments
$670,000
$525,000
$460,000
$420,000
12 months
12 months
12 months
12 months
Nil
Nil
Nil
Nil
KMP have no entitlement to termination payments in the event of termination for misconduct.
7. NED REMUNERATION
On appointment to the Board, all Non-Executive Directors enter into an agreement with HUB24 in the form of a letter
of appointment. The letter summarises the Board’s policies and terms, including compensation relevant to the office of
Non-Executive Director.
REMUNERATION POLICY AND ARRANGEMENTS
The objective of HUB24’s policy regarding NED fees is below:
• to set aggregate remuneration at a level which provides HUB24 with the ability to attract, motivate and retain NEDs
of the highest calibre whilst incurring a cost which is acceptable to shareholders; and
• the Remuneration and Nomination Committee may from time to time receive advice from independent
remuneration consultants or utilise market base comparative data to ensure NED fees and payments are
appropriate and in line with the market.
NED fees (including superannuation) are limited to a maximum aggregate amount approved by shareholders. The
current limit of $900,000 per financial year was approved by HUB24 shareholders at the 2020 AGM.
NED remuneration comprises Board fees, Committee fees and superannuation contributions at the statutory
superannuation guarantee contribution rate. The payment of additional fees for serving on a Committee recognises
the additional time commitment required by NEDs who serve on a Committee.
HUB24 also requires Non-Executive Directors to be shareholders in the Company. NEDs must hold either directly or
indirectly at least 1,000 HUB24 shares as soon as practical and permissible following their appointment or election.
As a result of COVID-19, the Board determined to freeze NED fees at the October 2019 level until October 2021.
During FY22 the Board engaged an external adviser to undertake an independent benchmarking review of market rates
for NED fees taking into account the increased scale, complexity and time commitment required of HUB24 NEDs so as to
ensure we remain competitive in attracting and retaining NEDs with the right skills and experience. For FY22, the Board
made the decision to increase the NED Board and Committee fees effective 1 October 2021 based on this market review.
HUB24’s current Board and Committee fees are as per the table below (inclusive of superannuation).
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 42
The Chairman of the Board receives a higher fee to reflect the additional time commitment and responsibilities of the
role and does not receive any additional fees for participation in Board Committees.
Paul Rogan receives a Special Fee of $10,000 for the additional work he undertakes in considering growth
opportunities with the Chairman and management.
Board and Committee Fees
(inclusive of superannuation)
Chairman
Member Fee
Member Fee
(Anthony McDonald Only)
Committee Chair Fee
Board Fee
$257,500
$220,000
$100,000
$85,000
$100,000
$75,000
Year
2022
2021
2022
2021
2022
2021
2022
2021
ADDITIONAL FEES AND RETIREMENT ALLOWANCES
Audit Risk and
Compliance
Committee
Remuneration
and Nomination
Committee
Special Fee
$15,000
$10,000
$30,000
$20,000
$15,000
$10,000
$10,000
$Nil
$30,000
$20,000
No additional amounts are paid to each NED other than reimbursements 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. NEDs do not participate in any short-term or long term incentive arrangements and are not entitled
to any retirement schemes or retirement benefits other than statutory superannuation benefits.
NED STATUTORY REMUNERATION
The remuneration of NEDs for the year ended 30 June 2022 and 30 June 2021 is detailed below.
Non-
Executive
Directors
B. Higgins
FY22
FY21
A .McDonald
FY22
P. Rogan
R. Stringer
C. Kovacs2
I. Litster3
Total
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
Cash
Salary
and fees
$
225,568
107,033
110,228
56,489
131,818
82,192
100,033
86,758
96,125
-
-
23,028
663,772
355,500
Short-term benefits
Non-
monetary
benefits
$
Bonus
$
Post
Employment
Benefits
Super-
annuation1
$
End of
service
Long
Service
Leave
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,557
106,537
11,023
42,696
13,182
30,270
10,003
8,242
9,612
-
-
36,334
66,377
224,079
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Share-based
payments
Total
remuneration
Shares
$
Options &
PARS
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
89,587
-
-
-
-
-
-
-
-
-
89,587
Total
$
248,125
213,570
121,251
188,772
145,000
112,462
110,036
95,000
105,737
-
-
59,362
730,149
669,166
1 During FY21, the Company revised its assessment of the obligation to pay Superannuation Guarantee Charges (SGC) to NEDs. Following the review,
SGC for the period from 2013 to 2020 was paid in FY2021. Additionally, in FY2021 all relevant NED’s received a reduction in their current year fee.
The cumulative NED fees and SGC to date represents the fees agreed.
2 Appointed 19 July 2021.
3 Resigned 5 March 2021.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 43
NED SHAREHOLDINGS
The number of shares in HUB24 held during the financial year by each NED, including their personally related parties,
is set out below.
Ordinary Shares
Balance at the beginning of
the financial year
Other changes
during the year
Balance at the end of
the financial year
B. Higgins
A. McDonald
P. Rogan
R. Stringer
C. Kovacs
8. REMUNERATION GOVERNANCE
808,311
18,874
40,000
3,070
0
(269,700)
22,770
5,000
2,500
3,750
538,611
41,644
45,000
5,570
3,750
HUB24’s remuneration governance structure provides oversight over HUB24’s remuneration practices and policies.
Activities of the Remuneration and Nomination Committee are governed by its Charter, which is available on HUB24’s
website at www.HUB24.com.au
The following diagram illustrates HUB24’s remuneration governance framework. The Board has the ultimate
responsibility for the oversight of the executive remuneration framework including variable pay outcomes, policies and
processes, informed by the Remuneration & Nomination Committee’s recommendations.
HUB24 Board
The Remuneration and Nomination Committee
The Remuneration and Nomination Committee is delegated responsibility by the
Board for reviewing and making recommendations on remuneration policies for
HUB24, including policies governing the remuneration of executives and NEDs.
The Remuneration and Nomination Committee assists the Board in its oversight of:
• remuneration policy for Executive KMP;
•
• HUB24’s compliance with applicable legal and regulatory requirements in
the remuneration framework for Executive KMP, including STI and LTI plans;
respect of remuneration matters; and
• approval of the allocation of shares and incentives under HUB24’s schemes.
Management
Management provides relevant information to the Remuneration and
Nomination Committee to assist with its decision-making and advises the
Remuneration and Nomination Committee of statutory requirements.
Management may also seek advice from external advisors as required.
The Managing Director is responsible for reviewing the performance of
HUB24’s Executive KMP and the Remuneration and Nomination Committee
reviews the Managing Director’s performance.
External advisors
External advisors may be engaged
directly by the Remuneration and
Nomination Committee to provide
advice or information relating to
KMP that is free from the influence
of management.
During FY22, the Committee sought
advice from KPMG, Deloitte Touche
Tohmatsu and Aon Hewitt and Egan
Associates.
The Egan Associates engagement
was the only engagement that
involved providing remuneration
recommendations as defined by the
Corporations Act 2001.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 44
SECURITIES DEALING POLICY
All staff are required to comply with HUB24’s Securities Dealing Policy (Group Securities Trading Policy) at all times
and in respect of all HUB24 shares held. Trading is subject to pre-clearance and is not permitted during designated
blackout periods unless there are exceptional circumstances.
LOANS AND TRANSACTIONS
HUB24 has not provided any loans or entered into transactions with any KMP and/or related parties in FY22.
9. OTHER STATUTORY DISCLOSURES
Statutory remuneration disclosures are prepared in accordance with Australian Accounting Standards and include share-
based payments expensed during the financial year, calculated in accordance with AASB 2 Share-based Payments.
EXECUTIVE KMP REMUNERATION
The following table includes statutory remuneration disclosures for FY22 and FY21.
Cash
Salary and
fees1
$
Short-term benefits
Non-
monetary
benefits
$
Bonus
$
Post
Employment
Benefits
Super-
annuation1
$
End of
service
Long
Service
Leave
$
Share-based
payments
Total
remuneration
Shares
$
Options
& PARS
$
Performance
related
%
Total
$
AUD
Executive KMP
A. Alcock
J. Entwistle
FY22
FY21
FY22
FY21
621,744
336,987
506,116
370,481
485,078
276,208
3,290
4,955
5,226
23,568 34,345
- 2,490,348
3,510,282
21,694 10,077 25,862
886,619
1,825,804
23,568 25,160
1,000 2,492,747
3,308,987
380,956
302,813
-
21,694
8,118
1,000
759,396
1,473,977
C. Lawrenson FY22
381,102
227,855
5,578
FY21
363,427
237,783
K. Shanahan2 FY22
430,911
104,947
D. Last3
FY21
FY22
FY21
360,009
207,420
-
284,477
-
-
-
-
-
-
-
23,568
21,694
23,568
17,773
-
-
-
1,000
726,474
1,365,577
1,000
280,165
904,069
-
1,000
687,884
1,248,310
-
-
-
-
-
-
39,264
624,466
-
-
-
284,477
Total
FY22 1,918,835
945,997
14.094
94,272 59,505
3,000 6,397,453
9,433,156
FY21 1,894,985 1,118,497
4,955
82,855 18,195 27,862 1,965,444
5,112,793
1
Includes movements in annual leave balances.
2 K. Shanahan received $50,000 signing bonus during FY21.
3 Resigned 6 September 2020.
5%
20%
8%
21%
17%
26%
8%
25%
-
-
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 45
KMPS’ INTERESTS IN OPTIONS AND PARS
We have detailed beneficial interests in Options and PARS granted as at 30 June 2022 in the table below. We discuss
the service and performance criteria for the equity awards vesting in FY22 in section 4.
Name
Type
Balance at
1 July 2021
Granted
Exercised
Lapsed/
Forfeited
Other
transactions
Balance at
30 June 2022
Non-Executive Directors
A. McDonald
PARS
20,000
Nil
20,000
Executive KMP
A. Alcock
Options
324,049
Nil
184,541
PARS
486,147
35,901
Nil
J. Entwistle
Options
263,552
Nil
87,329
PARS
434,184
28,132
19,570
C. Lawrenson
Options
39,170
Nil
K. Shanahan
PARS
119,309
9,002
Options
PARS
10,974
Nil
75,261
29,574
Nil
Nil
Nil
Nil
Total
Options
637,745
Nil
271,870
PARS
1,134,901
102,609
39,570
KMP OPTIONS
KMP hold the following Options:
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
-
139,508
522,048
176,223
442,746
39,170
128,311
10,974
104,835
Nil
365,875
Nil
1,197,940
Financial year
of grant
Financial
year in which
Options
may vest
Number of
Options
granted
Value of
Options at
grant
$
Number of
Options vested
during the year
Number of
Options lapsed/
forfeited
during the year
2021
2020
2019
2021
2020
2019
2018
2021
2020
2019
2021
2024
2023
2022
2024
2023
2022
2021
2024
2023
2022
2024
33,558
54,764
51,186
27,435
44,848
40,000
63,940
10,380
13,438
15,352
10,974
371,990
208,083
215,994
304,117
170,406
142,880
191,580
115,062
51,059
54,808
121,647
Nil
Nil
51,186
Nil
Nil
40,000
Nil
Nil
Nil
15,352
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Name
Executive KMP
A. Alcock
J. Entwistle
C. Lawrenson
K. Shanahan
The assessed fair value at grant date of the Options granted to individuals is allocated over the period from grant date
to expected vesting date and the amount is included in the remuneration tables in this section of this Remuneration
Report. Fair values at grant date are independently determined using the Black Scholes and the Hoadleys 1 Hybrid ESO
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.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 46
KMP PARS
KMP hold the following PARS:
Name
Executive KMP
A. Alcock
J. Entwistle
C. Lawrenson
K. Shanahan
Financial
year of grant
Financial year
in which PARS
may vest
Number of
PARS granted
Value of PARS
at grant
$
Number of PARS
vested during
the year
Number of PARS
lapsed/forfeited
during the year
2022
2021
2020
2019
2019
2018
2017
2022
2021
2020
2019
2019
2018
2017
2022
2021
2020
2019
2019
2018
2022
2021
2025
2024
2023
2023
2022
2021
2020
2025
2024
2023
2023
2022
2021
2020
2025
2024
2023
2023
2022
2021
2025
2024
35,901
800,882
301,395
21,932
90,000
14,072
23,897
34,851
6,078,887
206,507
1,142,224
157,034
166,129
113,475
28,132
658,538
295,653
17,961
90,000
11,000
19,570
28,587
5,978,919
169,117
1,142,224
117,852
107,966
93,079
9,002
210,732
74,706
5,382
35,000
4,221
11,211
29,574
75,261
1,500,831
50,676
444,198
45,219
71,212
804,450
1,510,494
Nil
Nil
Nil
Nil
14,072
Nil
Nil
Nil
Nil
Nil
Nil
11,000
Nil
Nil
Nil
Nil
Nil
Nil
4,221
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
The assessed fair value at grant date of the PARS granted to individuals is allocated over the period from grant date
to expected vesting date and the amount is included in the remuneration tables in this section of this Remuneration
Report. Fair values at grant date are independently determined using the Black Scholes and the Hoadleys 1 Hybrid ESO
model that takes into account the term of the PAR, share price at grant date, probability of service condition being met,
expected volatility of the underlying share price and risk free rate.
PARS granted carry no dividend or voting rights.
EXECUTIVE KMP SHAREHOLDINGS
The number of shares held in HUB24 during the financial year by each Executive KMP, including their personally
related parties, is set out below.
Ordinary Shares
A. Alcock
J. Entwistle
C. Lawrenson
K. Shanahan
Balance at the
start of the year
Received due to tax
exempt share plan issue
Other changes
during the year
Balance at the
end of the year
1,061,383
820,897
66,321
-
-
34
34
34
20,641
1,082,024
(142,209)
678,722
(8,802)
57,553
-
34
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 47
FINANCIAL
STATEMENTS
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
48
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2022
Income
Revenue
Fair value gain on contingent consideration
Interest and other income
Share of profit from associates
Total income
Expenses1
Platform and custody fees1
Employee related expenses
Depreciation and amortisation expense
Administrative expenses1
Share based payments expense
Interest expense – lease liability
Interest expense – other
Total expenses
Profit/(loss) before income tax from continuing operations
Profit/(loss) before income tax from discontinued operations
Income tax expense
Profit after income tax for the year
Total comprehensive income for the year attributable to ordinary equity holders
of HUB24 Limited
2.3
6.4
2.4
2.4
2.4
7.1
3.4.2
6.1
5.1
Notes
2022
$’000
2.1, 2.2
189,508
-
1,895
1,122
2021
$’000
107,957
1,568
856
472
192,525
110,853
(21,408)
(80,348)
(19,831)
(38,246)
(10,783)
(254)
(524)
(171,394)
21,131
-
(6,469)
14,662
14,662
(14,057)
(47,096)
(6,957)
(19,345)
(7,747)
(303)
-
(95,505)
15,348
823
(6,402)
9,769
9,769
Earnings per share, attributable to ordinary equity holders of HUB24 Limited
Basic earnings per share
Diluted earnings per share
2.5
2.5
20.18
19.53
Earnings per share from continuing operations, attributable to ordinary equity holders of HUB24 Limited
Basic earnings per share – continuing operations
Diluted earnings per share – continuing operations
2.5
2.5
20.18
19.53
14.83
14.28
13.58
13.07
Cents
Cents
1. Prior period comparatives have been reclassified for presentation and consistency purposes with the current period disclosures between platform
and custody fees and administrative expenses, employee related expenses, share based payments expense, interest expense on lease liability, and
property and occupancy costs.
The consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
AS AT 30 JUNE 2022
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non-Current assets
Investment in associates
Intangible assets
Loans
Right of use assets
Deferred tax assets (net of deferred tax liabilities)
Property, plant and equipment
Total non-current assets
Total assets
Liabilities
Current liabilities
Provisions
Trade and other payables
Borrowings
Lease liabilities
Deferred tax liabilities (net of deferred tax assets)
Other current liabilities
Total current liabilities
Non-current liabilities
Lease liabilities
Provisions
Borrowings
Deferred income
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Profit reserve
Reserves
Retained earnings
Total equity
49
Notes
2022
$’000
2021
$’000
3.1
6.4
3.5
4.2
3.4.1
5.2
3.6
3.3
3.2
4.1
3.4.2
5.2
3.4.2
3.3
4.1
4.3.1
4.3.3
4.3.2
43,454
26,306
5,283
75,043
15,167
429,372
15,655
9,525
-
2,956
472,675
547,718
23,858
13,945
10,059
3,253
725
283
52,123
6,931
3,252
29,236
492
24
39,935
92,058
455,660
460,447
50,231
19,975
(74,993)
455,660
63,461
16,633
2,570
82,664
14,519
103,976
7,550
6,093
12,761
1,455
146,354
229,018
16,118
9,095
3,125
2,204
-
316
30,858
4,550
2,348
9,375
776
41
17,090
47,948
181,070
199,214
45,342
11,507
(74,993)
181,070
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
50
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2022
Consolidated 2022 $’000
Notes
Issued
capital
Reserves
Profit
reserves
Retained
earnings
Total
Opening balance as at 1 July 2021
199,214
11,507
45,342
(74,993)
181,070
Total comprehensive income for the year
Transfer to profit reserves
Transactions with owners in their capacity as owners:
Dividends paid on ordinary shares
Shares issued transaction costs
Shares issued
Xplore settlement consideration adjustment
Options and rights exercised
Options and rights granted – employees
Class settlement consideration
Treasury shares purchased on-market
4.3.1
6.2
4.3.1
-
-
-
(162)
1,418
(1,503)
3,489
-
268,003
(10,012)
-
-
-
-
-
-
(2,056)
10,524
-
-
-
14,662
14,662
14,662
(14,662)
-
(9,773)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(9,773)
(162)
1,418
(1,503)
1,433
10,524
268,003
(10,012)
Balance as at 30 June 2022
460,447
19,975
50,231
(74,993)
455,660
Consolidated 2021 $’000
Notes
Issued
capital
Reserves
Profit
reserves
Retained
earnings
Opening balance as at 1 July 2020
100,146
8,823
40,848
(74,993)
Total comprehensive income for the year
Transfer to profit reserves
Transactions with owners in their capacity as owners:
Dividends paid on ordinary shares
Capital raising costs
Options and rights exercised
4.3.1
Options and rights granted – employees
Share based payments – Agility
Capital raise
Xplore settlement
Treasury shares purchased on-market
Issue of treasury shares to employees
4.3.1
4.3.2
-
-
-
(1,315)
3,820
-
1,568
70,000
29,753
(4,986)
228
-
-
-
-
(1,604)
4,516
-
-
-
-
(228)
-
9,769
9,769
(9,769)
(5,275)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
74,824
9,769
-
(5,275)
(1,315)
2,216
4,516
1,568
70,000
29,753
(4,986)
-
Balance as at 30 June 2021
199,214
11,507
45,342
(74,993)
181,070
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 51
CONSOLIDATED STATEMENT OF
CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2022
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid on lease liability
Short-term lease payments
Strategic transactions and project costs
Income tax payment
Net cash inflow from operating activities
Cash flows from investing activities
Payments for acquisitions net of cash acquired
Payments for office equipment
Payments for intangible assets
Proceeds from disposal of controlled entities, net of cash disposed
Dividends received from investment in associate
Net cash outflow from investing activities
Cash flows from financing activities
ORFR loan facility advance
Payments for capital raising costs
Proceeds from capital raising
Proceeds from issues of shares and other equity securities
Proceeds from borrowings
Repayment of borrowings
Payments for treasury share buy-backs
Principal elements of lease payments
Dividends paid
Net cash (outflow) from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Notes
2022
$’000
2021
$’000
182,193
(121,959)
1,618
(254)
(310)
(16,822)
(7,535)
36,931
(12,452)
(591)
(12,000)
-
474
129,176
(101,034)
850
(211)
(187)
(7,167)
(2,262)
19,165
(47,730)
(588)
(5,458)
(1,332)
-
(24,569)
(55,108)
(8,105)
(232)
-
2,552
-
(4,125)
(10,012)
(2,674)
(9,773)
(32,369)
(20,007)
63,461
43,454
(7,550)
(1,315)
70,000
3,635
13,200
-
(5,012)
(2,088)
(5,275)
65,595
29,652
33,809
63,461
3.4.2
3.4.2
4.6
6.2
4.6
4.3.1
4.6
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
52
CONTENTS OF THE NOTES
TO THE FINANCIAL STATEMENTS
53
53
53
55
56
56
58
59
59
60
61
61
61
62
63
67
70
72
73
74
74
76
1. OVERVIEW
1.1 Corporate information
1.2 Basis of preparation
1.3 Critical accounting judgements and estimates
2. GROUP PERFORMANCE
2.1 Operating segments
2.2 Revenue from continuing operations
2.3 Other income
2.4 Expenses from continuing operations
2.5 Earnings per share
3.
FINANCIAL POSITION
3.1 Trade and other receivables
3.2 Trade and other payables
3.3 Provisions
3.4 Right of use assets and lease liabilities
3.5
Intangible assets
3.6 Property, plant and equipment
4. CAPITAL STRUCTURE AND FINANCING
4.1 Borrowings
4.2 Loans
4.3 Contributed Equity & reserves
4.4 Dividends
77
80
81
82
82
83
85
86
86
87
89
91
91
93
93
107
108
108
108
108
4.5 Financial instruments
4.6 Reconciliation of cash flows
4.7 Commmitments and contingencies
5.
INCOME TAX
5.1 Reconciliation of prima facie tax to income
tax expense
5.2 Deferred taxes
5.3 Other taxes
6. GROUP STRUCTURE
6.1 Discontinued operations
6.2 Business combinations
6.3 Controlled entities
6.4 Associated entities
6.5 Parent entity financial information
7. EMPLOYEE REMUNERATION
7.1 Share based payments
7.2 Key management personnel
8. OTHER INFORMATION
8.1 New and amended accounting standards
adoption by the Group
8.2 Significant events after the reporting date
8.3 Remuneration of auditors
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 53
1. OVERVIEW
1.1 CORPORATE INFORMATION
The Annual Report of HUB24 Limited and its controlled entities (‘the Group or HUB24’) for the year ended 30 June
2022 was authorised for issue in accordance with a resolution of the Board of Directors on 22 August 2022 and covers
the company as an individual entity as well as the Group consisting of the company and its subsidiaries as required by
the Corporations Act 2001.
HUB24 is a public company limited by shares. It was incorporated and is domiciled in Australia. Its shares are publicly
traded on the Australian Securities Exchange (ASX:HUB).
The nature of the operations and principal activities of the Group are described in the Directors’ report.
1.2 BASIS OF PREPARATION
This general purpose consolidated financial report for the year ended 30 June 2022 has been prepared in accordance
with Australian Accounting Standards (AAS) as issued by the Australian Accounting Standards Board and the Corporations
Act 2001, as appropriate for profit orientated companies. 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 Report includes the four primary statements, namely the consolidated statement of profit and loss, consolidated
statement of financial position, consolidated statement of changes in equity and consolidated statement of cash
flows as well as associated notes which the directors believe is required to understand the financial statements and is
material and relevant to the performance and results of the Group. Disclosures have been grouped into the following
categories in order to assist users in their understanding of the financial statements:
1. Overview contains information that impacts the Annual Report as a whole;
2. Group Performance brings together the results and operating segment disclosures relevant to the Group’s activities;
3. Financial Position provides disclosure on the Group’s assets and liabilities;
4. Capital structure and financing provides information about the debt and equity components of the Group’s
capital, and commentary on the Group’s exposure to various financial and capital risks, including the potential
impact on the results and how the Group manages these risks;
5. Income Tax includes disclosures relating to the Group’s tax expense and balances;
6. Group structure includes disclosures in relation to transactions impacting the Group structure;
7. Employee remuneration provides commentary on the Group’s share based payment expenses;
8. Other includes additional disclosures required to comply with AAS.
Where applicable within each note, disclosures are further analysed as follows:
• Overview provides some context to assist users in understanding the disclosures
• Disclosures (both numbers and commentary) provide analysis of balances as required by AAS
• Accounting policies summarises the accounting policies relevant to an understanding of the numbers
• Critical accounting judgements and estimates explains the key estimates and judgements applied by HUB24 in
determining the numbers.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in Note 6.5.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 54
Compliance with IFRS
The financial report complies with AAS and International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
New and amended Accounting Standards and Interpretations
New and amended Accounting Standards and Interpretations issued by the AASB that are now effective are detailed
in note 8.1. These Accounting Standards and Interpretations did not have any notable impact on the financial
performance or position of the Group. The Group has not adopted any Accounting Standards and Interpretations that
have been issued or amended but are not yet effective.
Rounding
The group is of a kind referred to in the ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191. The
Group has elected to round off amounts in the Annual Report (and subsequent reports) for the current period and prior
comparative period to the nearest thousand dollars or, in certain cases, to dollars in accordance with that instrument.
Going concern
The financial report has been prepared on a going concern basis. The directors have, at the time of approving the
financial statements, a reasonable expectation that the Group have adequate resources to continue in operational
existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing
the financial statements.
Principles of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by
the Company and its subsidiaries. Control is achieved when the Company:
• Has the power over the investee
•
• Has the ability to use its power to affect its returns
Is exposed, or has rights, to variable returns from its involvement with the investee
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the
Company loses control of the subsidiary.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies
used into line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between the
members of the Group are eliminated on consolidation.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company.
When the Group loses control of a subsidiary, the gain or loss on disposal recognised in profit or loss is calculated
as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any
retained interest and (ii) the previous carrying amount of the assets (including goodwill), less liabilities of the subsidiary
and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that
subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary
(i.e. reclassified to profit or loss or transferred to another category of equity as required/permitted by applicable
Accounting Standards). The fair value of any investment retained in the former subsidiary at the date when control is
lost is regarded as the fair value on initial recognition for subsequent accounting under AASB 9 when applicable, or the
cost on initial recognition of an investment in an associate or a joint venture.
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial
statements are presented in Australian dollars ($), which is HUB24 Limited’s functional and presentation currency.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 55
Comparatives
Where required by the Accounting Standards and/or for improved presentation purposes, certain comparative figures
have been adjusted to conform to changes in presentation for the current year.
1.3 CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements. Management regularly 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 Directors continue to assess the potential financial and other impacts of the coronavirus (“COVID-19”) outbreak to
the Group. The current high-level of uncertainty regarding the severity and length of COVID-19 on investment markets
has impacted investment outcomes and increased volatility in investment performance during the year.
At the date of signing, the future impacts of COVID-19 on global and domestic economies and investment market
indices, and their resulting impact on the Group are uncertain. The Directors and management will continue to
monitor this situation.
Further to this, the current geopolitical events and global inflation concerns have also had a global market impact and
uncertainty exists as to their implications. Such disruptions can adversely affect the assets, performance and liquidity.
Recognising the Russia/Ukraine conflict as well as Australia’s broadening of its existing autonomous sanctions, the
Directors and management continue to remain abreast of developments in this area and monitor the potential
impacts across the Group.
Market volatility may impact Funds Under Administration (FUA) and trading based fees, and any movement in the RBA
Official Cash Rate may impact cash account fee income. Net inflows have proven to be resilient, our new business
pipeline remains strong and assisted FUA transitions are continuing.
HUB24’s priority has been, and remains, ensuring the health and safety of the team whilst continuing to operate our
business to meet the needs of licensees, advisers and their clients as well as other key stakeholders.
Our estimates and assumptions have been prepared based upon conditions existing at the date of this report.
The key areas in which critical estimates and judgements are applied are as follows:
• recognition of intangible assets and impairment testing (note 3.5.2).
• recoverability of deferred tax assets (note 5.2); and
• valuation of share based payments (note 7.1).
• valuation and impairment testing of investment in associates (note 6.4)
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 56
2. GROUP PERFORMANCE
OVERVIEW
This section provides analysis and commentary on the Group’s operating activities.
The HUB24 and Xplore Wealth platforms are used by financial advisers to efficiently administer their clients’
investments held through a custodial agreement, and PARS is a non-custody portfolio service which provides
administration, corporate action management and tax reporting services for stockbrokers and financial advisers.
HUB24 provides technology and data services to the wealth industry, bringing innovative solutions to support
licensees, advisers and stockbrokers to deliver services to their clients, these services are provided through
HUBconnect Pty Ltd (HUBconnect) and Agility Applications Pty Ltd (Agility).
On 16 February 2022, HUB24 acquired 100 per cent of the issued share capital of Class Limited (Class), obtaining control
of Class Limited and it’s wholly owned subsidiaries (Class). Class is a market-leading SMSF administration software provider.
Their customers include Accountants, SMSF Administrators, Investment Advisors, Financial Planners and Lawyers. Class’s
revenue comprises both subscription and recurring PAYG transactional revenue.
2.1. OPERATING SEGMENTS
OVERVIEW
Information is provided by operating segment to assist the understanding of the Group’s performance. The operating
segments are consistent with the basis on which information is provided to the Group Executive (identified as the
Chief Operating Decision Maker (“CODM”)) for measuring performance, being the basis upon which the Group’s
operating activities are managed within the various markets in which HUB24 operates. The Board and Group
Executive reviews segment revenues and profits (Underlying EBITDA) on a monthly basis.
No single customer contributed 10 per cent or more to the Group’s income in either 2022 or 2021.
This note presents the results of continuing operations only. The results of discontinued operations are presented in
note 6.1. The Group’s operating segments are as follows:
Platform
Platform operating segment comprises the Platform and PARS businesses. The segment provides development of investment
and superannuation platform services to financial advisers, stockbrokers, accountants and their clients. This segment includes
both custody and non-custody products, and as noted above, incorporates the HUB24, Xplore and PARS businesses.
Tech Solutions
Tech Solutions segment comprises Class, HUBconnect and Agility. Class provides cloud-based wealth accounting and
corporate compliance services to its clients. Fees are generated via licensing, subscription and PAYG fees.
HUBconnect and Agility provide application and technology products for the financial services sector. Fees are
generated from license and consulting services relating to data management, software and infrastructure.
Corporate
Provision of support services to the two operating segments which includes property, strategy, finance, risk and
compliance, legal, human resources, and other corporate services. Investments in associates are also recognised
within this segment.
Prior period comparative segment impacts
The sale of Paragem Pty Ltd (Paragem) has led to the discontinuation of the Licensee segment, with the transfer of
control of Paragem to Diverger occurring on 1 February 2021. The results of Paragem are disclosed in note 6.1.
The changes to operating segments in the prior period reflect Paragem as a discontinued business.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 Year ended 30 June 2022 ($’000)
Sales to external customers
Share of profit from associates
Interest and other income
Total income
Expenses
Underlying EBITDA
Share based payment expense
Strategic transactions and project costs1
Depreciation and amortisation
Interest expense
Profit/(loss) before income tax
Income tax expense
Profit/(loss) after income tax
Reconciliation of income from ordinary activities
Sales to external customers
Interest and other income
Share of profit from associates
Income from ordinary activities
Platform
160,466
-
Tech
Solutions
29,042
-
160,466
(98,211)
62,255
-
(6,485)
(15,240)
(199)
40,331
-
40,331
29,042
(17,662)
11,380
-
(11,249)
(4,591)
(340)
(4,800)
-
(4,800)
Corporate
-
1,122
1,895
3,017
(6,277)
(3,260)
(10,783)
(118)
-
(239)
(14,400)
(6,469)
(20,869)
57
Total
189,508
1,122
1,895
192,525
(122,150)
70,375
(10,783)
(17,852)
(19,831)
(778)
21,131
(6,469)
14,662
189,508
1,895
1,122
192,525
1. Strategic transactions and project costs of $17.9 million. Costs related to the Class transaction of $11.0 million, Xplore and Ord Minnett
implementation related costs of $5.0 million and $1.9 million for other projects (including regulatory change and one-off client transition projects).
Refer to page 19 within the Directors’ report for more information.
Year ended 30 June 2021 ($’000)
Platform
101,149
2
101,151
(63,210)
37,941
174
-
Sales to external customers
Share of profit from associates
Interest and other income
Total income
Expenses
Underlying EBITDA
Non-recurring revenue
Fair value gain – contingent consideration
Agility consideration share based payments expense
-
Share based payments
Strategic transactions and project costs1
(8,129)
(6,703)
Depreciation and amortisation
(210)
Interest expense
23,073
Profit/(loss) before income tax
-
Profit before income tax on discontinued operations
-
Income tax expense
Profit/(loss) after income tax
23,073
Reconciliation of income from ordinary activities from continuing operations
Sales to external customers
Interest and other income
Share of profit from associates
Non-recurring revenue
Fair value gain – contingent consideration
Income from ordinary activities from continuing operations
Tech
Solutions
6,634
-
6,634
(4,845)
1,789
-
-
-
-
(254)
(1)
1,534
-
-
1,534
Corporate
-
472
854
1,326
(4,314)
(2,988)
-
1,568
(1,568)
(6,179)
-
-
(92)
(9,259)
823
(6,402)
(14,838)
Total
107,783
472
856
109,111
(72,369)
36,742
174
1,568
(1,568)
(6,179)
(8,129)
(6,957)
(303)
15,348
823
(6,402)
9,769
107,783
856
472
174
1,568
110,853
1. Strategic transaction due diligence and implementation costs of $7.5 million and $0.6 million in relation to the implementation of Private Label
capability for both ClearView and IOOF and finalising the transfer of the Group’s management portfolio into a Management Investment Scheme (MIS).
Refer to page 19 within the Directors’ report for more information.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 58
2.2. REVENUE FROM CONTINUING OPERATIONS
OVERVIEW
Platform revenue comprises fees (both FUA and transaction fees) charged for providing custodial and non-custodial
wealth management services to customers. Such services include:
• Custodial platform services via superannuation, MIS, and IDPS products;
• Managed Discretionary Account solutions that incorporate specific requirements of advisory firms, wealth
managers and stockbrokers into a private label service;
• Superannuation administration services through DIY Master Pty Ltd; and
• Non-custodial portfolio administration and reporting services.
Tech Solutions revenue comprises fees (license and transaction fees) and commissions from services that include:
• Class develops and distributes cloud-based accounting, investment reporting, document and corporate
compliance and administration solutions.
• HUBconnect and Agility – Provision of application and technology products for the financial services sector. Fees
are generated from license and consulting services relating to data management, software and infrastructure as
well as fees charged for the provision and maintenance of existing licenses.
Platform fees
License fees
Transaction fees
Commissions
Tech Solutions fees
Total
ACCOUNTING POLICIES
2022
$’000
160,466
24,377
3,667
998
29,042
189,508
2021
$’000
101,323
6,118
516
-
6,634
107,957
Revenue is measured by reviewing each revenue contract and its respective services to customers to determine its
performance obligation while allocating the transaction price to each performance obligation either over time or at a
point in time.
Platform fees
• FUA fee revenue is recognised over time which include tiered administration fees and fees on client funds held as
cash. FUA fees are accrued daily, paid monthly in arrears for the ongoing provision for agreed services.
• Transaction fees are recognised at a point in time when platform trading for equities, managed funds and
insurance occurs.
Tech Solutions fees
Class
• License fee revenue is recognised over time over the duration of the agreement or for as long as the customer has
been provided access, the fee is fixed or determinable and collectability is probable.
• Transaction revenue is recognised at a point in time when the documents are sold to customers on a pay per use
basis (PAYG).
• Commissions revenue is recognised commission and partner fees at the point in time of sale of a third party’s
products to customers which provides these customers with a right to access such products.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 59
HUBconnect and Agility
• Licence fee revenue is recognised over time in accordance with the performance delivery of agreed services,
within a period of 1–6 months.
• Consulting and transaction fee revenue is recognised at a point in time when advice provided to clients on a time
and materials basis.
2.3. OTHER INCOME
Interest Income
Other Income
ACCOUNTING POLICIES
2022
$’000
1,472
423
1,895
2021
$’000
856
-
856
Interest revenue is accrued on a time basis, by reference to the principal outstanding and the effective interest
rate applicable, which is the rate that discounts the estimated future cash receipt thorough the expected life of the
financial asset to that asset’s net carrying amount on initial recognition.
2.4. EXPENSES FROM CONTINUING OPERATIONS
(a) Employee benefits expenses
Wages and salaries (including superannuation and payroll tax)
Other employee benefits expenses
Travel and entertainment
(b) Depreciation and amortisation
Depreciation of right-of-use assets
Depreciation of office equipment
Amortisation of intangible assets
(c) Administrative expenses
Corporate fees
Professional and consultancy fees
Information services and communication
Property and occupancy costs
Strategic transactions and project costs2
Other administrative expenses
1 Prior comparatives have been reclassified for presentation purposes and consistency with the current period.
2
Includes administrative and resourcing costs related to strategic transactions and project costs.
2022
$’000
20211
$’000
59,490
19,991
867
80,348
2,671
1,428
15,732
19,831
2,770
4,994
9,630
631
17,962
2,259
38,246
34,450
12,030
616
47,096
2,057
793
4,107
6,957
1,958
3,079
4,754
311
8,129
1,114
19,345
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 60
2.5. EARNINGS PER SHARE
OVERVIEW
Earnings per share (EPS) is the amount of profit or loss after income tax attributable to each share. Diluted EPS
adjusts the EPS for the impact of shares that are not yet issued but which may be in the future, such as shares
potentially issuable from rights, options and employee share-based payments plans.
2022
Cents
2021
Cents
Earnings per share, attributable to ordinary equity holders of HUB24 Limited
Basic earnings per share
Diluted earnings per share
20.18
19.53
Earnings per share from continuing operations, attributable to ordinary equity holders of HUB24 Limited
Basic earnings per share from continuing operations
Diluted earnings per share from continuing operations
20.18
19.53
14.83
14.28
13.58
13.07
2.5.1 Reconciliation of earnings used for earnings per share measures
Earnings per share is based on profit or loss after income tax attributable to ordinary equity holders of the Company,
as follows:
Profit after income tax attributable to the owners of HUB24 Ltd used in calculating basic and diluted
earnings per share from continuing operations
Profit after tax from continuing operations
2.5.2 Reconciliation of weighted average number of ordinary shares
2022
$’000
14,662
14,662
2021
$’000
9,769
9,769
2022
Number
2021
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
72,674,651
65,865,008
Weighted average number of ordinary shares used in calculating diluted earnings per share
75,087,748
68,433,859
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 61
3. FINANCIAL POSITION
3.1 TRADE AND OTHER RECEIVABLES
OVERVIEW
Trade and other receivables are principally amounts owed to HUB24 by Platform or Tech Solutions customers. Due
to the short-term nature of these receivables, their carrying value is assumed to approximate their fair value.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables.
Collectability of trade receivables is reviewed on an ongoing basis at an operating unit level.
Trade receivables1
Other receivables
1 Net of a provision of doubtful debts of $237 thousand (FY21: $38 thousand).
ACCOUNTING POLICIES
2022
$’000
23,688
2,618
26,306
2021
$’000
14,877
1,756
16,633
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less an allowance for impairment.
The Group’s impairment model calculates expected credit losses on trade receivables using a provision matrix. Under
the model, historic provision rates with current and forward looking estimates are used.
The Group always measures the loss allowance for trade receivables at an amount equal to lifetime expected credit
losses (ECL). The ECL on trade receivables are estimated using a provision matrix by reference to past default
experience of the debtor and an analysis of the debtor’s current financial position, adjusted for factors that are
specific to the debtors, general economic conditions of the industry in which the debtors operate and an assessment
of both the current as well as the forecast direction of conditions at the reporting date.
3.2 TRADE AND OTHER PAYABLES
OVERVIEW
Trade payables, deferred consideration and other payables are carried at amortised cost and represent liabilities for
goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the
Group becomes obliged to make future payments in respect of the purchase of these goods and services.
Trade payables
Other payables1
Total trade and other payables
1 Other payables includes accruals, deferred revenue and other payables due.
ACCOUNTING POLICIES
2022
$’000
3,889
10,056
13,945
2021
$’000
685
8,410
9,095
Trade and other payables are carried at amortised cost and represent liabilities for goods and services provided to the
Group prior to the end of the period that are unpaid and arise when the Group becomes obliged to make future payments
in respect of the purchase of these goods and services.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 62
3.3 PROVISIONS
OVERVIEW
Provisions are recognised when the Group 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 and long-term benefits
Liabilities for wages and salaries, short term incentives, including non-monetary benefits and annual leave expected
to be settled within 12 months (short term) and long service leave after 12 months (long term) 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.
Deferred short term incentive
The provision represents the deferred portion of STI bonus of senior staff members relating to the financial year.
2022 deferred short term incentive is payable September 2023 (FY21: Payable September 2022).
Lease make good
The provision represents the present value of estimated costs of improvements to the leased premises of the Group
at the end of the respective lease term.
Third party claims
The estimate of ongoing claims made by third parties in respect of Platform services.
Restructuring Provision
The Group has recognised $649 thousand in FY22 for redundancy and retention obligations primarily related to the
Class acquisition. (FY21: $725 thousand related to the review of Xplore products and compliance obligations).
Current Liabilities
Employee benefits – annual leave
Employee benefits – other
Tax provision
Restructuring provision
Third party claims
Lease make good provision
Current Liabilities
Non-current Liabilities
Employee benefits – long service leave
Employee benefits – deferred short term incentive
Lease make good provision
Non-current liabilities
Total Provisions
2022
$’000
5,976
13,277
2,694
649
704
558
2021
$’000
3,772
6,012
5,241
725
317
51
23,858
16,118
2,342
440
470
3,252
27,110
1,882
401
65
2,348
18,466
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 63
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
Consolidated $’000
2022
Carrying amount at the start of the year
Additional provisions recognised/(released)
Carrying amount at the end of the year
2021
Carrying amount at the start of the year
Additional provisions recognised/(released)
Additional provisions recognised
Carrying amount at the end of the year
ACCOUNTING POLICIES
Tax
provision
Third party
claims
Restructuring
provision
Lease make
good provision
5,241
(2,547)
2,694
-
5,241
-
5,241
317
387
704
300
17
-
317
725
(76)
649
-
725
725
51
507
558
25
26
-
51
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event,
it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the
amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the
obligation. When the effect of the time value of money is material, provision is discounted using the current pre-tax
rate that reflects the risks specific to the liability.
3.4 RIGHT OF USE ASSETS AND LEASE LIABILITIES
OVERVIEW
The Group leases various property and equipment. Lease agreements are negotiated on an individual basis with bespoke
terms and conditions and are typically made for fixed periods of 2 years to 7 years.
Under AASB 16 Leases, the Group will recognise for all leases with a term of more than 12 months except for those leases
where the underlying asset is deemed to be of a low-value:
• a right-of-use asset representing its right to use the underlying asset; and
• a lease liability.
3.4.1 Right of use assets
Total right-of-use assets
2022
$’000
9,525
2021
$’000
6,093
The additions to right of use assets during FY22 were $6.1 million (FY21 $2.66 million). These relate to the following:
• Acquisition of the Class business;
• An extension of a three year property lease was signed in November 2021, while related lease incentives began in
December 2021;
• An extension of a one year property lease was signed in February 2022; and
• A new three year property lease was signed by Class in April 2022.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 64
Right of Use
Cost
Accumulated Depreciation
Net Book amount
Reconciliations of the carrying amounts at the beginning and end of the year:
Opening net book
Additions
Disposals
Depreciation charge
Closing net book amount
3.4.2 Lease liabilities
Current
Non-current
Reconciliations of the carrying amounts at the beginning and end of the year:
2022
$’000
15,464
(5,939)
9,525
6,093
6,103
-
(2,671)
9,525
2022
$’000
3,253
6,931
10,184
6,754
6,075
(2,899)
254
10,184
2021
$’000
9,838
(3,745)
6,093
5,437
2,713
-
(2,057)
6,093
2021
$’000
2,204
4.550
6,754
6,056
2,695
(2,300)
303
6,754
Opening net book amount
Additions
Lease payments
Interest payments
Closing net book amount
30 June 2022 ($’000)
Within 1 year
After 1 year and less than 5 years
More than 5 years
Total
30 June 2021 ($’000)
Within 1 year
After 1 year and less than 5 years
More than 5 years
Total
Future value of
minimum lease
payments
3,487
7,198
-
10,685
Future value of
minimum lease
payments
2,383
4,715
-
7,098
Interest
(234)
(267)
-
(501)
Interest
(179)
(165)
-
(344)
Present value of
minimum lease
payments
3,253
6,931
-
10,184
Present value of
minimum lease
payments
2,204
4,550
-
6,754
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
65
ACCOUNTING POLICIES
Under AASB 16, as a lessee the Group recognises a right-of-use asset, representing its right to use the underlying
asset, and a lease liability, for all leases with a term of more than 12 months, exempting those leases where the
underlying asset is deemed to be of a low-value.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date, i.e. when the
underlying asset is first available for use.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments
made at or before the commencement day, less any lease incentives received and any initial direct costs. They are
subsequently measured at cost less accumulated depreciation and impairment losses.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate, being the rate that the lessee would pay to borrow the funds
necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease
payments made. It is remeasured when there is a change in future lease payments arising from a change in an index
or rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or as
appropriate, changes in the assessment of whether purchase; renewal or termination options are reasonably certain
to be exercised.
The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that includes
purchase, renewal, or termination options. The assessment of whether the Group is reasonably certain to exercise such
options impacts the lease term, which affects the value of lease liabilities and right-of-use assets recognised.
The Consolidated statement of profit or loss and the related Notes to the Financial Statements show the following
amounts relating to leases:
Depreciation charge on right-of-use assets
Interest expense on lease liabilities
Expenses relating to short-term leases
2022
$’000
2,671
254
310
3,235
2021
$’000
2,057
303
187
2,547
The total cash outflow for leases in the year ended 30 June 2022 was $2.9 million (FY21: $2.3 million).
3.5 INTANGIBLE ASSETS
OVERVIEW
Intangible assets are assets with no physical substance. The most significant classes of intangible assets of the Group by
cash generating unit are detailed below:
Platforms Segment
Technology Solutions Segment
Investment Platform CGU
PARS CGU
HUB Connect CGU
Class CGU
Investment Platform (Software) PARS customer relationships
Agility connect software
Software
Customer Relationship
Software
Goodwill on acquisitions
Agility customer relationship
Customer Relationship
HUBconnect software
Brand
Goodwill on acquisitions
Goodwill on acquisitions
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 66
Consolidated
Year ended 30 June 2022
Computer
Software
$’000
Customer
Relationship
$’000
Brand
$’000
Goodwill
$’000
Other1
$’000
Total
$’000
At cost
129,662
103,102
8,761
221,630
Accumulated amortisation and
impairment
Net carrying amount
(27,861)
101,801
(5,922)
97,180
-
-
8,761
221,630
Reconciliations of the carrying amount at the beginning and end of the financial year:
Opening carrying amount
Other additions2
Addition through acquisition3,4
Amortisation from acquisition
Amortisation and impairment5
28,651
12,000
72,845
(8,360)
(3,335)
Closing carrying amount
101,801
11,557
-
89,660
(3,952)
(85)
97,180
-
-
63,768
-
8,761
157,862
-
-
-
-
8,761
221,630
-
-
-
-
-
-
-
-
463,155
(33,783)
429,372
103,976
12,000
329,128
(12,312)
(3,420)
429,372
1 Other is comprised of Paragem intangibles.
2 Other additions relate to internally generated software across the platform and tech solutions segments.
3 Addition through acquisition relates to finalisation of the Purchase Price Accounting (PPA) for the Xplore businesses acquired (1HFY22 $21.2 million
decrease in goodwill | Final goodwill balance $27.3 million).
4 Addition through acquisition relates to the provisional PPA for the Class businesses acquired. (Provisional goodwill balance $178 miilion).
5 No impairment was recognised in the year.
Consolidated
Year ended 30 June 2021
Computer
Software
$’000
Customer
Relationship
$’000
Brand
$’000
Goodwill
$’000
Other1
$’000
Total
$’000
At cost
44,818
13,441
Accumulated amortisation and
impairment
Net carrying amount
(16,166)
28,652
(1,885)
11,556
-
-
-
63,768
-
63,768
Reconciliations of the carrying amount at the beginning and end of the financial year:
Opening carrying amount
Other additions2
Addition through acquisition3
Disposals through business sale
Amortisation and impairment from
acquisition
Amortisation and impairment
Closing carrying amount
22,998
5,693
3,042
-
(255)
(2,826)
28,652
384
-
12,157
-
(900)
(85)
11,556
-
-
-
-
-
-
-
16,325
-
47,443
-
-
-
63,768
122,027
(18,051)
103,976
39,963
5,693
62,642
(216)
(1,155)
(2,951)
103,976
-
256
-
-
(216)
-
(40)
-
1 Other is comprised of Paragem intangibles.
2 Other additions relate to internally generated software across the platform and tech solutions segments.
3 Addition through acquisition relates to the Provisional Purchase Price Accounting (PPA) for the Xplore businesses acquired.
The classes of asset used in the disclosure have been enhanced from the prior year to improve the users
understanding of the various categories of Intangible assets held.
For FY21, this includes the following reclassifications:
• $736 million movement from ‘Other’ to ‘Software’. This relates to Xplore and Agility related software intangibles.
• $1.1 million movement from ‘Other’ to Customer relationships. This relates to Xplore customer relationship intangibles.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 67
ACCOUNTING POLICIES
Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the
business combination over the Group’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 Group’s cash-generating units that are expected to benefit from the synergies of the
combination, irrespective of whether other assets or liabilities of the Group 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 below, Investment Platform estimate of useful life, for detailed
information.
Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-
generating unit level consistent with the methodology outlined for goodwill above, such intangibles are not
amortised. The useful life of an intangible asset with an indefinite life is reviewed each reporting period to determine
whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from
indefinite to finite is accounted for as a change in an accounting estimate and is thus accounted for on a prospective
basis. The Group has acquired a new indefinite life intangible asset through the Class acquisition in FY22 (FY21: nil).
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 68
3.5.2 Impairment testing of intangible assets
OVERVIEW
An intangible asset’s recoverable value is the greater of its value in use and its fair value less cost to sell.
For intangible assets with a finite life, if there are indicators that the intangible asset’s recoverable value has fallen
below its carrying value (e.g. due to changing market conditions), an impairment test is performed and a loss is
recognised for the amount by which the carrying value exceeds the asset’s recoverable value.
Intangible assets that have an indefinite useful life, such as goodwill, are tested annually for impairment or more
frequently where there is an indication that the carrying amount may not be recoverable.
Goodwill is allocated to operating segments and are expected to benefit from synergies arising from the acquisition
giving rise to the goodwill. Operating segments reflect the level at which goodwill is monitored for impairment by
management. As the Group acquires or disposes of operations, or reorganises the way that operations are managed,
reporting structures may change, giving rise to a reassessment of operating segments and the allocation of goodwill
to those operating segments.
ACCOUNTING POLICIES
Impairment testing of goodwill and intangible assets
The recoverable amount of goodwill and other intangible assets with an indefinite useful life have been determined
based on a value-in-use calculation derived from cash flow forecasts for each group of CGU’s, which make up the
HUB24 operating segments. Cash flow forecasts are based on a combination of extrapolated performance to
date and management’s expectations of future performance based on prevailing and anticipated market factors.
Cash flows beyond the forecasting period are extrapolated using a terminal value. The cash flows are then used to
calculate the Net Present Value and compared to the carrying value.
Key assumptions by each operating segment are detailed below:
Investment Platform
Cash generated by the Investment Platform segment has been used to assess the recoverable amount for all
intangible assets associated with the Investment Platforms.
Assumptions
1. Growth in FUA on the platform – Growth in the number of client accounts and consequently FUA. Management
have estimated future FUA on the platform at a 5 year CAGR of 20% (FY21: 22%) with reference to current client
transition rates, industry data and pipeline monitoring.
2. Post-tax discount rate – 10.5% (FY21: 10%) which approximates the weighted average cost of capital of the
Investment Platform
3. Terminal growth rate – 2.5% (FY21: 2.5%).
4. Capital expenditure has been held consistent with current expenditure across the 5 years that have been modelled.
5. Tax rate (effective) – 31%
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 in FY22 (FY21: nil).
Sensitivities of assumptions
If the post- tax discount rate was 24.5% higher (35% instead of 10.5%), there would be nil headroom.
If there were a 110% decrease in the terminal growth rate (-107.5% instead of +2.5%) there would be nil headroom.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 69
CGU PARS Customer Relationships
The PARS Customer Relationship CGU forms part of the Investment Platform segment. No impairment indicators
were identified for the PARS Customer relationship.
Technology Solutions Segment (HUBconnect and Class CGUs)
Assumptions
1. Growth in revenue. Management have estimated revenue growth of the Tech Solutions segment as a 7 year CAGR
of 10% with reference to current client rates, industry data and pipeline monitoring.
1a. Growth in HUBconnect CGU customer base – Growth in licensees, practice groups, advisors and vendors.
Management have estimated future 7 year CAGR of 40%.
1b. Growth in Class CGU customer base – Growth in the number of accounts, customers and documents ordered.
Management have estimated future 7 year CAGR of 8%.
2. Post-tax discount rate – 12% (FY21: 12%). This has been determined based on the weighted average cost of capital
for the Tech Solutions segment.
3. Terminal growth rate – 2.5%. (FY21: 1.5%, HUBconnect only).
4. Period over which cashflows have been discounted – 7 years.
5. Tax rates:
5a. HUBconnect CGU tax rate (effective) – 31%
5b. Class CGU tax rate adopted – 30%
Based on the above assessment there was no impairment of the Technology Solutions segment intangibles in FY22 (FY21:nil).
Sensitivities of assumptions
If the post-tax discount rate was 1.8% higher (13.8% instead of 12.0%), there would be nil headroom.
If there were a 3% decrease in the terminal growth rate (-0.7% instead of +2.5%) there would be nil headroom.
CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
Estimate of useful life
Management have assessed the remaining useful life of the investment platform and applications based upon the
separate platform components. The four components useful lives are:
• Core database with a useful life of 20 years;
• Applications with a useful life of 10 years;
• User Interface with a useful life of 5 years.
• Product Development with a useful life of 3 years.
The assessment of useful life is a key management judgement and the useful life adopted could change significantly
as a result of technical innovations or some other event. The amortisation charge will increase where the useful
lives are deemed shorter than previously estimated, or technically obsolete or non-strategic assets that have been
abandoned or sold will be written down or off.
Goodwill and other indefinite life intangible assets
The carrying value of intangible assets with an indefinite life (including goodwill) are tested annually for impairment.
Other intangible assets with a finite life are assessed for indicators of impairment and tested in accordance with
AASB136 should indicators arise. The recoverable amounts of cash generating units and segments 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. Details of these
assumptions and the potential impact of changes to these assumptions can be found above this note.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 70
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The Group 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 Group 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.
Capitalisation of development costs
The Group capitalises project development costs eligible for capitalisation in relation to the Platform and Tech
Solutions. The capitalised costs are all directly attributable costs necessary to create, produce, and prepare assets to
be capable of operating in the manner intended and are amortised over the asset’s useful life.
3.6 PROPERTY, PLANT AND EQUIPMENT
OVERVIEW
Property, plant and 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.
Computer
equipment
$’000
Office
furniture
and fittings
$’000
Year ended 30 June 2022
Cost or fair value
Accumulated depreciation
Net book amount
Reconciliations of the carrying amounts at the beginning and end of the financial year:
Opening net book amount
Acquisitions through business combinations
Other Additions
Disposals
Depreciation charge
Closing net book amount
721
1,012
718
(12)
(646)
1,793
6,099
(4,306)
1,793
4,117
(2,954)
1,163
734
414
801
(4)
(782)
1,163
Computer
equipment
$’000
Office
furniture
and fittings
$’000
Year ended 30 June 2021
Cost or fair value
Accumulated depreciation
Net book amount
Reconciliations of the carrying amounts at the beginning and end of the financial year:
Opening net book amount
Acquisitions through business combinations
Additions
Disposals
Depreciation charge
Closing net book amount
499
-
(405)
721
2,837
(2,116)
721
2,086
(1,352)
734
627
1,026
1,653
96
-
(388)
734
595
-
(793)
1,455
Total
$’000
10,216
(7,260)
2,956
1,455
1,426
1,519
(16)
(1,428)
2,956
Total
$’000
4,923
(3,468)
1,455
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 71
ACCOUNTING POLICIES
Property, plant and equipment is carried at cost less, any accumulated depreciation and impairment losses.
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.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or
losses are included in profit or loss in the period in which they arise.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 72
4. CAPITAL STRUCTURE AND FINANCING
OVERVIEW
Risk management policies are established to identify and analyse the risks faced by the Group, 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 Group’s activities. The Group, through training
and management standards and procedures, aims to develop a disciplined and constructive control environment in
which all employees and consultants understand their roles and obligations.
The Audit, Risk and Compliance Committee (ARCC) oversees how management monitors compliance with the Group’s
risk management policies, procedures and reviews the adequacy of the risk management framework in relation to
risks faced. The ARCC is assisted by external professional advisors from time to time.
Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations, and arises from the financial assets of the Group, which comprise cash and cash
equivalents and principally, trade and loan receivables.
Exposure at reporting date is addressed at each particular note. The Group does not hold any credit derivatives to
offset its credit exposure.
It is the Group’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. In addition, credit risk exposures and receivable balances are monitored on an ongoing basis
with the objective that the Group’s exposure to bad debts is not significant. Management has assessed the expected
credit losses on trade receivables and have used a provision matrix to measure the Group’s impairment losses.
The Group also has credit risk in respect of its debtors. In the case of most transactions, revenue is generally earned
over a period of several months due to the complexity and size of the work involved. The Group manages this risk by
entering into contractual agreements with its counterparties, obtaining external legal advice where necessary, at the
start of each transaction.
The Group provides financial guarantees to wholly-owned subsidiaries and has provided a guarantee to ANZ with
regards to the borrowing facilities in operation during the financial year.
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach
to managing liquidity risk is to ensure, as far as possible, that it will always maintain banking/credit facilities and typically
ensures that it has sufficient cash on demand, or access to banking facilities (e.g. overdrafts) to meet operational expenses for
a period of 90 days, excluding the potential impact of extreme circumstances that cannot be reasonably predicted.
Group forecasts and actual cash flows are continuously monitored, matching the maturity of assets and liabilities, to
meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or
risking damage to the Group’s reputation.
Market Risk
Market risk is the risk that changes in market prices will affect the Group’s income and include price risk.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 73
Capital Management
It is noted that the Group, through its licensed subsidiaries, fully complied with the minimum regulatory capital
requirements for IDPS Operators and providers of custodial services for the year ended 30 June 2022 so as to ensure
ongoing capital adequacy. Refer to note 4.2 for information on the Group’s ORFR requirements.
As part of broader capital management plans, the Group has a $39 million amortising bank loan facility (refer to note
4.1) and a $5 million overdraft facility which remained undrawn during the year.
There were no other changes in the Group’s approach to capital management during the year.
Interest Rate Risk
Interest rate risk is the risk that RBA Offical Cash Rate changes potentially affecting the Group’s income and includes price risk.
Foreign Exchange Risk
Foreign currency exchange rate risk is the risk that the fair value or future cash flow of an exposure will fluctuate
because of a change in foreign currency rates. The Group’s exposure to the risk of a change in foreign currency relate
primarily to the Group’s operating activities (when revenue and expenses are denominated in a foreign currency).
4.1 BORROWINGS
OVERVIEW
The Group has in place loan facilities with both The Australia and New Zealand Banking Group Ltd (ANZ) and Westpac
Banking Corporation (Westpac).
A $5 million overdraft facility is available to the Group to assist with working capital requirements.
Amortising Loan Facility
HUB24 – Current
Class – Current
Total Current
HUB24 – Non-current
Class – Non-current
Total Non-current
Total Group Borrowings
Overdraft facility
HUB24
2022
$’000
3,125
6,934
10,059
6,250
22,986
29,236
39,295
2021
$’000
3,125
-
3,125
9,375
-
9,375
12,500
The overdraft facility was undrawn throughout the year. The Group incurs a commitment fee of 0.60% per annum to
maintain the overdraft facility with an interest rate of 1 month BBSY + 1.25% applied to any drawn balances and paid
quarterly.
The loan facility and overdraft facility have common and referrable security charges with each facility.
Refer to note 4.5 for debt maturity profile.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 74
4.2 LOANS RECEIVABLE
ORFR Loan
Other Loans
Non-current
2022
$’000
15,405
250
15,655
2021
$’000
7,550
7,550
The Group advanced a loan to HTFS Holdings Pty Ltd, a wholly owned subsidiary of EQT Holdings Limited, who used
the proceeds to subscribe for capital in HTFS Holdings Nominees Pty Ltd, another wholly owned subsidiary of EQT
Holdings Limited (ASX:EQT), which is the Trustee for the HUB24 Super Fund (“the Fund”).
The loan agreement is entered into on an arm’s length basis and on commercial terms at an interest rate of 10%
per annum. Repayment of the loan is subject to the Trustee continuing to meet its obligations to the Fund, including
making good any losses from operational risk events.
The capital received by the Trustee is reserved for the purpose of meeting the Operational Risk Financial Requirement
(ORFR) for the Fund in accordance with APRA Prudential Standard SPS114.
The Group advanced a $250,000 loan to a FinTech who used the proceeds solely for the purpose of development of
advice production and advice delivery tools.
The loan agreement is entered into on an arm’s length basis and on commercial terms at an interest rate of 4% per
annum from the date the loan is advanced up to and including the date on which the amount of the loan is either
repaid in full or exchanged for Convertible Notes.
ACCOUNTING POLICIES
Loans receivable are financial assets initially measured at fair value. Transaction costs that are directly attributable to the
acquisition or issue of financial instruments are adjusted against the fair value of the financial assets on initial recognition.
Financial assets are measured at Amortised Costs.
Fair value measurement assumes an orderly transaction between market participants at the measurement date
under current market conditions.
4.3 CONTRIBUTED EQUITY AND RESERVES
OVERVIEW
Ordinary shares in the Company rank after all creditors, have no par value and entitle the holder to participate in
dividends and the proceeds on winding up of the Company in proportion to the number of shares held.
During the current year, the Group issued share capital and purchased shares on market (treasury shares) for the
purposes of settling employee share scheme options and performance rights, utilising a share based payments
reserve for this purpose. The Group has discretion in settling employee share scheme options and performance
rights via the issuance of treasury shares or via issuance of new ordinary shares.
Incremental costs directly attributable to the issue of new equity instruments are shown in equity as a deduction, net
of GST from the proceeds.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 75
Issued and paid-up capital
Ordinary shares, fully paid
Treasury shares
2022
Number
2021
Number
2022
$’000
2021
$’000
80,058,178
68,333,179
468,018
204,227
(312,632)
(212,158)
(7,571)
(5,013)
Total issued and paid up capital
79,745,546
68,121,021
460,447
199,214
Movements in issued and paid up capital
Beginning of the financial year
Shares issued
Xplore settlement consideration adjustment
Options and rights exercised
Class settlement consideration
Additional paid up capital
Treasury shares issued from Trust1
Total shares
Shares issued transaction costs
Capital raising costs
End of the financial year
Movement in Treasury shares
Beginning of the financial year
Employee share issue1
Treasury shares purchased on-market
End of the financial year
68,333,179
62,846,130
204,227
291,440
4,988,495
-
-
-
498,554
11,433,559
-
-
-
-
-
1,418
(1,503)
3,489
268,003
-
(7,454)
100,173
103,319
-
1,604
-
447
-
80,058,178
68,333,179
468,180
205,542
-
-
-
-
(162)
-
-
(1,315)
80,058,178
68,333,179
468,018
204,227
212,158
(269,833)
370,307
312,632
39,636
(40,439)
212,961
212,158
5,013
(7,454)
10,012
7,571
27
(26)
5,012
5,013
1 Number of treasury shares transferred from trust to satisfy options and rights exercised was 269,833 in FY22 (40,439 FY21),
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Ordinary shares – for the year ended 30 June 2022
On 30 August 2021, the Group issued 184,541 ordinary shares for options exercised by employees of the Group for
consideration of $1,028,395.37.
On 1 October 2021, the Group issued 106,899 ordinary shares for options and PARS exercised by employees of the
Group for consideration of $389,487.34.
On 16 February 2022, the Group issued 11,433,559 ordinary shares as HUB24 Limited scrip consideration for the
purchase of Class.
Ordinary shares – for the year ended 30 June 2021
On 30 September 2020, the Group issued 68,847 ordinary shares for options exercised by employees of the Group for
consideration of $343,322.
On 15 October 2020, the Group issued 120,000 ordinary shares for options exercised by employees of the Group for
consideration of $295,200.
On 26 October 2020, the Group issued 109,752 ordinary shares relating to the purchase of Agility Applications Pty Ltd.
These shares are restricted for 12 months for 50% of the shares and 24 months for the remaining 50%. Holders of the
shares are entitled to rights and benefits in line with other ordinary shareholders.
On 5 November 2020, the Group issued 2,500,000 ordinary shares under a share purchase plan for consideration of
$50,000,000.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 76
On 30 November 2020, the Group issued 999,999 ordinary shares under a share purchase plan for consideration of
$19,999,980.
On 30 November 2020, the Group issued 309,707 ordinary shares for options and PARS exercised by employees of
the Group for consideration of $1,358,055.
On 2 March 2021, the Group issued 1,378,744 ordinary shares as HUB24 Limited scrip consideration for the purchase
of Xplore.
ACCOUNTING POLICIES
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.
4.3.2 Share based payment reserves
Share based payments share reserve
Movement in reserve
Opening balance
Reserve reclassified to share capital through exercised options and rights
Employee share based payment expense
Shares issued through HUB24 Share Ownership Trust
For accounting policy refer to note 7.1.
4.3.3 Profit reserves
OVERVIEW
2022
$’000
2021
$’000
19,975
11,507
11,507
(2,056)
10,524
-
19,975
8,823
(1,604)
4,516
(228)
11,507
To the extent possible under the Corporations Act 2001 and applicable tax laws, the profits reserve is preserved for
future dividend payments.
Opening balance
Transfer to profit reserves
Dividends paid on ordinary shares
4.4 DIVIDENDS
OVERVIEW
2022
$’000
45,342
14,662
(9,773)
50,231
2021
$’000
40,848
9,769
(5.275)
45,342
The Group’s dividend policy is a target payout ratio of 40% - 60% of the Group’s Underlying Net Profit After Tax.
Our dividend policy is designed to ensure we reward shareholders relative to underlying net profit after tax and
maintain sufficient capital for future investment and growth of the business, subject to market conditions.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 77
Dividend cents per share
Franking percentage
Dividend payout ($’000)
Payout ratio1
Payment Date
2022
Final
12.5
100
10,008
46%
2022
Interim
7.5
100
6,004
42%
2021
Final
5.5
100
3,769
47%
2021
Interim
4.5
100
3,075
40%
14 October 2022
18 April 2022
15 October 2021
19 April 2021
1 The 2022 Interim dividend payout ratio includes Class shareholders as part of the scheme of arrangement terms.
The Board has elected to determine a dividend of 12.5 cents per share franked at 100%.
Franking credits
Franking credits available as at 30 June 2022 to shareholders of the Company amount to $8.7 million (2021:
$30 thousand) at the 30 percent corporate tax rate.
4.5 FINANCIAL INSTRUMENTS
Key accounting policies
Interest rate risk
The Group is not materially exposed to movements in short-term variable interest rates on cash and cash equivalents
and borrowings. All other financial assets and liabilities are non-interest bearing. The Directors believe a 0.5% decrease
is a reasonable sensitivity given current market conditions. A 0.5% increase and a 0.5% decrease in interest rates
would increase/decrease profit and loss in the consolidated entity and the company by:
Consolidated
Cash and cash equivalents at end of period
Loans receivable
Borrowings
Financial Instruments subject to interest rate risk at the end of period
Cash and cash equivalents at end of period
0.5% increase in interest rate
0.5% decrease in interest rate
Borrowings
0.5% increase in interest rate
0.5% decrease in interest rate
Net impact on profit after tax
Profit for the year
0.5% increase in interest rate
0.5% decrease in interest rate
Credit risk
2022
$’000
43,454
15,655
2021
$’000
63,461
7,550
(39,295)
(12,500)
19,814
43,454
217
(217)
58,511
63,461
317
(317)
(39,295)
(12,500)
(196)
196
14,662
14,683
14,642
(63)
63
9,769
10,024
9,514
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of
contract obligations that could lead to a financial loss to the Group. The Group’s objective in managing credit risk is to
minimise the credit losses incurred, mainly on trade and other receivables and loans. There is no significant credit risk
exposure on fair value through profit and loss (FVTPL) financial assets and held to maturity investments.
Credit risk is managed through maintaining procedures ensuring, to the extent possible, that customers and
counterparties to transactions are of sound credit worthiness and the monitoring of the financial stability of significant
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 78
customers and counterparties. Such monitoring is used in assessing receivables for impairment. Credit terms are
generally 30 days from the date of invoice. For fees with longer settlements, terms are specified in the individual client
contracts. In the case of loans advanced, the terms are specific to each loan.
Credit risk exposures
The maximum exposure to credit risk by class of recognised financial assets at the end of the reporting period is equivalent
to the carrying value and classification of those financial assets as presented in the statement of financial position.
The Group advanced a loan to HTFS Holdings Pty Ltd, who used the proceeds to subscribe for capital in HTFS Holdings
Nominees Pty Ltd, a wholly owned subsidiary of EQT Holdings Limited (ASX:EQT), which is the Trustee for the HUB24
Super Fund (the Fund). The loan agreement is entered into on an arm’s length basis and on commercial terms at a
fixed interest rate of 10% per annum.
The capital received by the Trustee is reserved for the purpose of meeting the Operational Risk Financial Requirement
(ORFR) for the Fund in accordance with APRA Prudential Standard SPS114. The credit risk on this facility is low.
The Group advanced a loan to a FinTech who used the proceeds solely for the purpose of development of advice
production and advice delivery tools . The loan agreement is entered into on an arm’s length basis and on commercial
terms at an interest rate of 4% per annum.
The credit risk on this facility is low.
Liquidity risk
Financing arrangements and capital management
The Group had access to the following borrowing facilities during the reporting period:
Consolidated
HUB24 Financial Instruments
Floating rate – Expiring within one year (bank overdraft facility)
Floating rate – 3 year term (loan facility)
Drawn at balance date
Class Financial Instruments
Fixed rate – 3.5 year term (loan facility)
Floating rate – 3 year term (loan facility)
Floating rate – 3 year term (loan facility)
Floating rate – 3 year term (loan facility)
Drawn at balance date
HUB24
2022
$’000
2021
$’000
5,000
12,500
9,375
7,000
1,820
9,100
12,000
29,920
5,000
12,500
12,500
-
-
-
-
-
The $5 million bank overdraft facility may be drawn at any time, and may be cancelled by giving the bank 10 business
days notice. During the year ended and as at 30 June 2022, the overdraft facility was not drawn down. The bank loan
facilities are subject to annual review.
The Group incurs a line fee of 0.60% per annum to maintain the bank overdraft facility with a further rate of BBSY +
1.25% applied to any drawn balances.
The 3 year amortising ANZ bank loan facility was secured specifically for the strategic transactions. The loan has been
fully drawn down on 18 February 2021 with principal repayments of $3.125m payable every calendar year in February.
The bank loan facility may not be redrawn once it has been repaid.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 79
The Group incurs a commitment fee of 0.40% per annum to maintain the loan facility with an interest rate of 1 month
BBSY + 1.95% applied to any drawn balances and paid quarterly.
Both the overdraft and loan facility are guaranteed by HUB24 Limited and its operating subsidiaries: Agility Applications
Pty Ltd; HUB24 Management Services Pty Ltd; HUB24 Administration Pty Ltd; HUB24 Custodial Services Ltd; HUB24
Services Pty Ltd; HUBconnect Pty Ltd. The Group’s regulatory capital requirements have been ring-fenced from the
ANZ security arrangements.
Class
A bank loan facility with a principal balance of $7 million outstanding. The facility is subject to a fixed rate of 2.97% per
annum plus total quarterly principal repayments of $2 million due in the next 12 months with a bullet repayment for
the amount outstanding on expiry of the loan term being 19 August 2023.
A bank loan facility with a principal balance of $1.82 million outstanding. The facility is subject to a variable rate of
1.93% plus BBSY per annum plus total quarterly principal repayments of $0.91 million due in the next 12 months with
a bullet repayment for the amount outstanding on expiry of the loan term being 19 August 2023.
A bank loan facility with a principal balance of $9.1 million outstanding. The facility is subject to a variable rate of 1.93%
plus BBSY per annum plus total quarterly principal repayments of $2.024 million due in the next 12 months with a
bullet repayment for the amount outstanding on expiry of the loan term being 29 February 2024.
During the financial year Class obtained an additional bank loan facility with a principal balance of $12 million.
The facility is subject to a variable rate of 1.93% plus BBSY per annum plus total quarterly principal repayments of
$2 million due in the next 12 months with a bullet repayment for the amount outstanding on expiry of the loan term
being 31 August 2024.
The facilities are secured by fixed and floating charges over the assets of Class Technology Reporter Pty Ltd, Class
Investment Reporter Pty Ltd, Nowinfinity Pty Ltd, Nowinfinity 3505 Pty Ltd, Assuriti Pty Ltd, Company Dynamics Pty Ltd,
Accounting & Legal Dynamics Pty Ltd.
Maturity analysis of financial assets and liabilities
The risk implied from the values shown in the table below is based on best estimates and reflect a balanced view of
cash inflows and outflows, excluding the Groups future cashflow generated from operations. 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 Group’s overall liquidity risk.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 80
Consolidated
30 June 2022
Consolidated financial assets:
Cash and cash equivalents
Trade and other receivables
Consolidated financial liabilities:
Trade and other payables
Borrowings
Lease Liability
Net Maturity
30 June 2021
Consolidated financial assets:
Cash and cash equivalents
Trade and other receivables
Consolidated financial liabilities:
0–1 month
$’000
1–3 months
$’000
4–12 months
$’000
1–5 years
$’000
Total
$’000
42,339
22,845
65,184
70
2,772
2,842
8,959
3,989
-
278
-
552
9,237
4,540
1,025
687
1,712
997
10,059
2,424
13,480
20
2
22
-
29,236
6,930
36,166
55,946
(1,698)
(11,768)
(36,144)
43,454
26,306
69,760
13,945
39,295
10,184
63,423
6,336
63,461
16,633
80,094
9,095
12,500
6,754
28,350
51,744
Trade and other payables
6,610
1,841
Borrowings
Lease Liability
Net Maturity
-
213
6,823
67,473
-
374
2,215
1,659
62,366
11,930
74,296
70
3,804
3,874
1,025
899
1,924
644
3,125
1,633
5,402
-
-
-
-
9,375
4,534
13,909
(3,478)
(13,909)
The Group monitors rolling forecasts of liquidity reserves on the basis of expected cash flow and aims to maintain
a minimum cash contingency above regulatory requirements to be freely available equal to a minimum one-month
average operational cashflow (on a rolling 12-month average basis).
Market risk
The Group balance sheet 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.
Foreign exchange risk
The Group balance sheet is not materially exposed to movements in exchange rates.
Fair value measurement
No other financial instruments for the year ended 30 June 2022 required fair value assessment (FY21: nil).
4.6 RECONCILIATION OF CASH FLOWS
Key accounting policies
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
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 81
which are subject to an insignificant risk of changes in value and bank overdrafts. Bank overdrafts are shown within
borrowings current liabilities in the balance sheet.
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.
Consolidated
(a) Reconciliation of the net profit/(loss) after tax to cash flow from operations
Net profit/(loss) after tax for the year
Non-cash items:
Depreciation and amortisation
Share based payment expense – Employee
Share of profit from associates
Fair value (gains)/losses
Deferred (revenue)/expenses
Gain on sale of Paragem
Changes in operating assets and liabilities
(Increase)/decrease in trade and other receivables
(Increase)/decrease in deferred tax assets
(Increase)/decrease in other assets
Increase/(decrease) in 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
2022
$’000
2021
$’000
14,662
9,769
19,831
10,783
(1,122)
-
-
-
(6,665)
(6,010)
(649)
(4,093)
10,194
36,931
6,971
6,312
-
(1,568)
579
(1,389)
(7,250)
1,161
(6,447)
2,868
8,159
19,165
43,454
63,461
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 fi-nancial 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.
4.7 COMMITMENTS AND CONTINGENCIES
The Group had no commitments or contingencies as at 30 June 2022 (FY21 nil).
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 82
5. INCOME TAX
OVERVIEW
Income tax expense or credit is the accounting tax outcome for the period and is calculated as the tax payable on the
current period taxable income based on the applicable income tax rate for each jurisdiction, adjusted for changes in
deferred tax assets and liabilities attributable to temporary differences and unused tax losses.
The relationship between accounting profit or loss and income tax expense or credit is provided in the reconciliation
of prima facie tax to income tax expense or benefit (refer to note 5.1). Income tax expense does not equate to the
amount of tax actually paid to tax authorities, as it is based upon the accrual accounting concept.
Accounting income and expenses do not always have the same recognition pattern as taxable income and expenses,
creating a timing difference as to when a tax expense or benefit can be recognised. These differences usually reverse over
time but, until they do, a deferred tax asset or liability is recognised on the balance sheet. Note 5.2 details the composition
and movements in deferred tax balances and the key management assumptions applied in recognising tax losses.
5.1 RECONCILIATION OF PRIMA FACIE TAX TO INCOME TAX EXPENSE
(a) Income tax expense
Current tax expense
Decrease/(increase) in deferred tax assets
Prior period deferred tax under/(over) provision
(Decrease)/Increase in deferred tax liabilities
Tax – debited directly to equity
Income Tax Expense/(Benefit)
(b) Reconciliation of income tax expense to pre-tax accounting profit
Profit from continuing operations before income tax expense
Prima facie income tax at 30%
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non-deductible expenses
Non-assessable income
Tax credits (carry forward losses, franking credits and R&D tax credits)
Prior period deferred tax under/(over) provision
Tax on discounted operations
Income tax expense
ACCOUNTING POLICIES
2022
$’000
2021
$’000
10,214
6,891
(2,619)
(8,017)
-
6,469
21,132
6,340
3,017
(127)
(142)
(2,619)
-
6,469
5,241
1,303
(148)
(542)
548
6,402
15,348
4,605
4,590
(662)
(1,825)
(148)
(158)
6,402
Current tax assets and liabilities 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 legislation used to compute the amount
are those that are enacted or substantively enacted by the reporting date.
Tax consolidation
Members of the tax consolidated entity and the tax sharing arrangement
The Group and its 100% owned Australian resident subsidiaries have formed a tax consolidated entity. HUB24 Limited
is the head entity of the tax consolidated entity. Members of the Group have entered into a tax sharing agreement.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 83
Tax effect accounting by members of the tax consolidated Group
The head entity and the controlled entities in the tax consolidated Group continue to account for their own current
and deferred tax amounts as per UIG 1052 Tax Consolidation Accounting. The consolidated Group has applied the
consolidated Group allocation approach in determining the appropriate amount of current taxes and deferred taxes
to allocate to members of the tax consolidated Group. The current and deferred tax amounts are measured in a
systematic manner that is consistent with the broad principles in AASB 112 Income Taxes.
In addition to its own current and deferred tax amounts, the head entity also recognises current tax liabilities (or
assets) and the deferred tax assets and liabilities arising from unused tax losses and unused tax credits (if any)
assumed from controlled entities in the tax consolidated Group.
5.2 DEFERRED TAXES
(a) Deferred tax asset
Deferred tax asset comprises temporary differences attributable to:
Intangibles
Accrued expenses
Provisions
Depreciable assets
Blackhole expenses
Carry forward tax losses
Employee Share Costs
Lease liabilities
Closing Balance
Movements:
Opening balance
Additions acquired through acquisition
Capital raising costs in Equity
Prior period deferred tax provision
Regonised in the Statement of profit or loss
Closing balance
(b) Deferred tax liability
Temporary differences attributable to:
Intangibles
Prepayment Expense
Investments
Depreciable assets
Closing balance
Movements:
Opening balance
Xplore PPA impacts
Additions acquired through acquisition
Recognised in the Statement of profit or loss
Closing balance
Net deferred tax asset/(Net deferred tax liability)
2022
$’000
2021
$’000
-
583
7,396
-
2,060
5,505
1,843
198
1,673
243
3,660
384
-
5,965
-
836
17,584
12,761
12,761
12,349
-
(636)
(6,891)
17,584
17,971
1
74
263
18,309
6,923
8,421
(548)
-
(2,035)
12,761
-
-
-
-
-
-
1,822
3,494
23,880
(9,065)
18,309
(725)
-
-
(1,822)
-
12,761
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 84
CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
Deferred 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 tax liabilities are recognised for all
taxable temporary differences except:
• When the deferred 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; and
• When the 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 tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:
• When the deferred 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; and
• 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 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 tax asset to be utilised.
Unrecognised deferred 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 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.
Recovery of deferred tax assets
Deferred tax assets are recognised for prior periods income tax losses, research and development tax offsets and
deductible temporary differences to the extent that Directors consider that it is probable that future taxable profits will
be available to offset these amounts.
The deferred tax asset continues to be recognised based on the following management judgements:
• The Group continues to generate consistent profitable growth, with improving margins and profit line trends;
• For the year ended 30 June 2022, the Group increased profits and is expected to remain profitable.
Research and development expenditure
The income tax calculation is based upon a number of estimates. A material item relates to the estimate of Research
and Development (R&D) expenditure. Remuneration expenses of the development team are the largest component
of the R&D expenditure, which, comprise 73% of the total estimated R & D claim for the year ended 30 June 2022. This
percentage allocation is broadly consistent with the actual R & D claim for the year ended 30 June 2021.
The Group assumes and will continue to monitor that there will be ongoing compliance with relevant tax legislation.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 85
5.3 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; and
• 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.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 86
6. GROUP STRUCTURE
6.1 DISCONTINUED OPERATIONS
In the financial year ended 30 June 2021, the licensee business Paragem Pty Ltd was classified as a discontinued
operation and was disposed on 1 February 2021. The sale included a capital return of $3.2 million, and an accounting
gain of $1.4 million was recorded in the financial accounts to 30 June 2021. The operating loss before income tax from
discontinued operations was $0.4 million.
Summarised information relating to the year ended 30 June 2022 shown below:
Consolidated
Statement of profit or loss
Revenue
Expenses
Loss before income tax from discontinued operations
Income tax benefit
Loss after income tax from discontinued operations
Details of Paragem assets and liabilities which were disposed of in FY21
Assets
Cash and cash equivalents
Trade and other receivables
Intangibles
Other current assets
Office equipment
Total assets
Liabilities
Provisions
Trade and other payables
Total liabilities
Net assets
Consideration received (net of costs and working capital transferred)
Gain on disposal
Reconciliation of cash proceeds from disposal
Cash proceeds received
Less: Cash deconsolidated
Net cash flow from operating activities
2022
$’000
2021
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17,569
(18,135)
(566)
158
(408)
1,332
52
212
116
7
1,719
(133)
(332)
(465)
1,254
2,643
1,389
-
(1,332)
(1,332)
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 87
6.2 BUSINESS COMBINATIONS
Acquisition of Subsidiaries
Class Limited
On 16 February 2022, the Group acquired 100 per cent of the issued share capital of Class Limited, obtaining control
of Class Limited.
Class Limited is a market-leading SMSF administration software provider. Their customers include Accountants, SMSF
Administrators, Investment Advisors, Financial Planners and Lawyers. Class’s revenue comprises both subscription and
recurring PAYG transactional revenue. Class qualifies as a business as defined in AASB 3.
Class Limited was acquired primarily for the following reasons:
• The combined business will benefit from increased scale, capabilities, product offering, distribution reach and
technology resources;
• Aligns to HUB24 purpose to empower better financial futures together, accelerates our platform of the future and
data services market leadership strategy;
• Delivers growth opportunities by leveraging combined capabilities to increase value & efficiency for existing
customers and new customers;
• Delivers Shareholder value through diversification of revenue, opportunities for growth and a compelling and
unique competitive advantage; and
• Combines market leading businesses and teams with a track record of innovation and capacity for ongoing investment.
Purchase consideration
Cash paid – at completion
Equity instruments (11,433,559 ordinary shares of the Company)
Total purchase consideration
Net cash outflow arising on acquisition
Cash consideration
Less: cash and cash equivalent balances acquired
Net cash outflow arising on acquisition
$’000
15,733
268,003
283,735
$’000
15,733
(8,183)
7,550
The purchase price allocation (PPA) assessment is expected to be finalised during FY23. The fair valuation of assets
acquired, liabilities assumed and intangible assets identified have been measured provisionally, pending finalisation of
the Group’s valuation of Class are set out in the table below.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 88
The provisional fair values of the acquisition are as follows:
Cash & Cash Equivalents
Security Deposits
Trade receivables
Prepayments
Other current assets
Inventory
PP&E
ROU assets
Deferred tax assets/(liabilities)
Total Identifiable assets
Trade & Other payables
Other payables & accruals
Borrowings
Lease Liability
Provisions
Total Liabilities assumed
Brand name acquired
Customer relationships acquired
Software Platform acquired
Intangibles identified
Total identifiable assets acquired and liabilities assumed
Goodwill
Deferred tax on intangible assets identified
Total purchase consideration
Fair value
$’000
8,183
114
2,866
2,017
27
46
1,426
5,067
2,963
14,526
(5,550)
(1,529)
(35,825)
(5,067)
823
(47,148)
8,761
78,667
61,664
149,093
124,654
178,040
(18,959)
283,735
If new information obtained within one year of the date of acquisition about facts and circumstances that existed at
the date of acquisition identifies adjustments to the above amounts, or any additional provisions that existed at the
date of acquisition, then the accounting for the acquisition will be revised.
The fair value of the financial assets includes receivables (Net trade debtors & other receivables) with a fair value of
$2.9 million and a gross contractual value of $3 million.
The goodwill of $178 million represents the profitability of the acquired business and the synergistic opportunities that
will arise from the acquisition. None of the goodwill is expected to be deductible for income tax purposes.
The fair value of the 11,433,559 ordinary shares issued as part of the consideration paid for Class Limited ($268
million) was determined on the basis of the Hub24 Closing Price of $23.44 on acquisition date.
Acquisition related costs (included in administrative expenses) amount to $11 million.
If the acquisition of Class Limited had been completed on the first day of the financial year, Group revenues for the
year would have been $63 million.
An additional $4.9m of adviser and transaction related costs were paid by HUB24 on behalf of Class prior to
acquisition.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 89
Xplore
On 2 March 2021 HUB24 Limited completed the acquisition of investment platform provider Xplore Wealth Limited (Xplore).
Xplore brings highly complementary expertise and scale to HUB24 for both high-net worth customers as well as
portfolio administration and reporting services (PARS).
The transaction, which includes the acquisition of an experienced team of 81 employees, software and related intellectual
property, was completed for an upfront cash consideration of $29.8 million and issuance of 1.4 million ordinary shares to
Xplore shareholders plus additional upfront cash consideration of $0.4 million to Xplore Option holders.
A PPA assessment has been completed with the outcomes included in the financial year ended 30 June 2022.
Purchase consideration
Cash paid – at completion
Cash settlement for Xplore options
HUB24 shares issued (scrip issue)
Total purchase consideration
The completed fair values of the acquisition are as follows:
Cash balances acquired
Net operating assets acquired
Computer software
Customer relationships acquired
Net identifiable assets acquired
Goodwill
Deferred tax on intangible assets identified
Net assets acquired
6.3 CONTROLLED ENTITIES
$’000
29,764
412
28,251
58,427
Fair value
$’000
3,175
5,092
14,223
12,388
34,878
27,266
(3,717)
58,427
HUB24 subsidiaries are entities which it controls and consolidates as it is exposed to, or has rights to, variable returns
from the entity, and can affect those returns through its power over the entity.
When the Group ceases to control a subsidiary, any retained interest in the entity is remeasured to fair value, with any
resulting gain or loss recognised in the income statement.
Changes in the Group’s ownership interest in a subsidiary which do not result in a loss of control are accounted for as
transactions with equity holders in their capacity as equity holders.
In the Parent Entity’s financial statements, investments in subsidiaries are initially recorded at cost and are
subsequently held at the lower of cost and recoverable amount.
When the group acquires a subsidiary, the fair value of the consideration transferred and valuation of assets acquired
and liabilities assumed are measured on a provisional basis.
All transactions between Group entities are eliminated on consolidation.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 90
Operating Entities
HUB24 Custodial Services Ltd
HUB24 Share Ownership Trust
HUB24 Management Services Pty Ltd
HUB24 Administration Pty Ltd
HUB24 Services Pty Ltd
Firstfunds Pty Ltd (formerly Firstfunds Limited)
HUBconnect Pty Ltd
Marketsplus Australia Pty Ltd
Agility Applications Pty Ltd
Xplore Wealth Pty Ltd
Xplore Business Services Pty Ltd
Investment Administration Services Pty Limited
Margaret Street Financial Holdings Pty Ltd
Margaret Street Administration Services Pty Ltd
Margaret Street Promoter Services Pty Ltd
Aracon Superannuation Pty Ltd
DIY Master Pty Ltd
HUB24 Limited Employee Share Trust
Class Limited
Class Technology Pty Ltd
Class Investment Reporter Pty Ltd
Nowinfinity Pty Ltd
Non-operating Entities
HUB24 International Nominees Pty Ltd
HUB24 Nominees Pty Ltd
Investorfirst Securities Ltd1
Captain Starlight Nominees Pty Ltd1
ACN 075 059 246 Pty Ltd
Planner Holdings Limited
PHL Securities Pty Ltd
Margaret Street Nominees Pty Ltd
Xplore Equity Finance Pty Ltd
Margaret Street Attorney Services Pty Ltd
Margaret Street Investment Consulting Services Pty Ltd
Nowinfinity 3505 Pty Ltd
Assuriti Pty Ltd
Topdocs Pty Ltd
Topdocs Edge Pty Ltd
Accounting & Legal Dynamics Pty Ltd
Company Dynamics Pty Ltd
1. As at 30 June 2022 a voluntary deregistration application lodged with ASIC.
% Equity Interest
as at
30 June 2022
as at
30 June 2021
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
-
100
100
100
100
100
100
100
100
100
100
100
-
-
-
-
-
-
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 6.4 ASSOCIATED ENTITIES
The Group has a 31.5% investment in Diverger Limited.
Consolidated
Investment in Diverger Reconciliation
Opening investment in Diverger
Add: Share of associate profits
Less: Dividend Received
Closing investment in Diverger
ACCOUNTING POLICIES
91
2022
$’000
2021
$’000
14,519
14,225
1,122
(474)
472
(178)
15,167
14,519
Associates are entities in which the Group has significant influence, but not control, over the operating and financial
policies. The Group accounts for associates using the equity method. The investments are initially recognised at
cost (except where recognised at fair value due to a loss of control of a subsidiary), and increased (or decreased)
each year by the Group’s share of the associate’s profit or loss. Dividends received from the associate reduce the
investment in associate.
The carrying value of the investment in associate, is assessed for indicators of impairment annually.
CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The key judgement relates to the carrying value of the investment in associate, which is assessed for impairment
annually. Whilst Diverger is listed and hence the share price is one indicator of value, other factors need to be
considered including trading volumes and the strategic value of the investment to HUB24. In accordance with AASB
128 Investment in Associates and Joint Ventures, an assessment has been performed, which confirmed in the
Director’s opinion, currently there are no indicators of a prolonged decline in the value of the investment.
The Director’s continue to monitor Diverger’s performance against its strategic objectives.
6.5 PARENT ENTITY FINANCIAL INFORMATION
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group except for investments in
subsidiaries which are accounted for at cost, less any impairment, in the parent entity.
Summary financial information
Set out below is the supplementary information about the parent entity.
Consolidated
Statement of profit or loss and other comprehensive income
Profit after income tax
Total comprehensive income
Statement of financial position
Total assets
Total liabilities
Net assets
2022
$’000
1,461
1,461
2021
$’000
8,972
8,972
468,124
(23,589)
211,483
(29,819)
444,535
181,664
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 92
Contingent liabilities
The parent entity did not have any contingent liabilities as at 30 June 2022 or 30 June 2021.
Capital commitments
The parent entity had no capital commitments as at 30 June 2022 or 30 June 2021.
Deferred tax asset
In addition to its own current and deferred tax amounts, the parent 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 Group. Refer to Note 5 for further details.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 93
7. EMPLOYEE REMUNERATION
7.1 SHARE BASED PAYMENTS
OVERVIEW
Share-based payments are equity-based compensation schemes provided to employees, executives, and directors.
There are currently three plans in place to provide these benefits, collectively known as the Plans:
• The Employee Share Option Plan (ESOP);
• The Performance Rights (PARS); and
• The Employee Share Plan (ESP).
The Group can either issue shares from time to time, or meet any obligation via treasury shares acquired on-market.
Any full-time or part-time employee of the Group or any equally-owned joint venture who is offered shares or options
is eligible to participate in the Plans.
7.1.1 Recognised share-based payment expense
During the year ended 30 June 2022, the consolidated statement of profit and loss recognised $10.8 million of equity-
settled share-based payment transactions (FY21: $7.7 million).
ACCOUNTING POLICIES
The cost of share based payments is recognised by expensing the fair value of options or rights granted, over the
period during which the employees become unconditionally entitled to these benefits. Where the plan will be settled
by issuing equity, the corresponding entry is an increase in the share based payment reserve.
At each subsequent reporting date until vesting, the vesting probability is assessed and upon board approval, the
cumulative charge will be reflected to the statement of profit or loss and other comprehensive income and share
based payment reserve. This takes into account factors such as the likelihood of employee turnover during the
vesting period and the likelihood of non-market performance conditions being met.
CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
Calculating the fair value of share based payments can be complex. Independent consultants use Black-Scholes
or similar option pricing models to value options and rights. This calculation includes any market performance
conditions and the impact of any non-vesting conditions. Once the fair value has been determined at grant date, it is
not revised.
The impact of any service and non-market vesting conditions is excluded from the fair value. Instead, this is included
in assumptions about the number of options that are expected to vest. These assumptions are revised at the
end of each reporting period. The impact of any revision to original estimates is recognised as an expense in the
Consolidated Statement of profit and loss, with a corresponding adjustment to equity.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 94
7.1.2 Types of share-based payment plans
1. Share based payment plans issued during the year ended 30 June 2022
Tax Exempt Share Plan – Employees
Number of Shares Issued
8,806
Issue Date
Issue Price
4 February 2022
$30.12
Vesting Conditions for All
Shares
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
Voting
Dividends
Specific Terms
Rights
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
en-cumbered, on or before the 3rd anniversary of the date employees acquired the Shares or the date
they cease to be employed, whichever occurs first
PARS (Rights)
Issue Date
Number of Options Issued
MD
14 December 2021
KMP (excluding MD)
22 November 2021
Employees
Vesting Terms
Expiry Date
22 November 2021
15 years after date of issue
Expected Vesting Period
3 years
Exercise Price
Nil
35,901
49,458
101,306
Vesting Conditions
I. Service
II. FUA
[I] Must be an employee at date of issue
II] Performance condition (a) 50% of the Performance Rights will be subject to, and will vest based
on a calculated score (Score) that measures the achievement of a funds under administration (FUA)
target that has been set for the three years ending on 30 June 2024. The Score will have regard to
the relative growth in Platform (Custody) FUA and Portfolio Administration and Reporting Services
(Non-Custody) FUA as well as the relative financial contribution of Custody FUA and Non-Custody
FUA to HUB24’s financial results.
The Score is calculated as:
Score = ((PR-PVC)/PFUA) x PFUA + CFUA
((CR-CVC)/CFUA)
Where:
• CFUA = Custodial FUA (divided by 1 billion)
• PFUA = Non-custodial FUA (divided by 1 billion)
• CR = Custodial Revenue
• PR = Non-custodial Revenue
• CVC = Custodial specified variable costs
• PVC = Non-custodial specified variable costs
The vesting is calibrated as follows: zero vesting will occur where the achievement is below a
minimum score of 88.5 (a FUA increase of 70.6% over three years); 50% vesting will occur where the
achievement reaches a score of 88.5 (an increase of 70.6% over three years); 100% vesting will occur
where the achievement reaches a score of 100 (an increase of 94.5% over three years); and vesting
between a score of 88.5 and 100 (for between 50% and 100% vesting) will be on a straight-line basis
between these two levels.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 95
III. Market
[III] Performance condition (b) 50% of the Performance Rights will be subject to, and will vest on, the
achievement of a hurdle measuring the Absolute Total Shareholder return (ATSR) of 10% to 15%
per annum over the next three years. The vesting is calibrated as follows: 25% vesting occurs when
a threshold vesting of 10% ATSR compounded annually is achieved; 100% vesting occurs when a
threshold vesting of 15% ATSR compounded annually is achieved; and vesting between 10% and
15% ATSR will be on a straight-line basis between these two levels.
Thresholds
The determination of the ATSR thresholds will be based upon the 40 trading day VWAP for Shares
spanning the full year results announcement on 24 August 2021 (20 days prior to and 20 days
post results announcement). The 40 trading day VWAP for Shares on that basis (i.e. 27 July 2021 to
20 September 2021 was $27.92, therefore (in the absence of any dividends) the 10% threshold is
$37.16 and the 15% threshold is $42.46, or $40.87 and $48.83 respectively when tested over a four
year period.
Disposal Restrictions
Restriction on sale of shares for 12 months from exercise, except to fund options exercised for
associated tax liabilities.
Rights – General Counsel & Head of Compliance
PARS (Rights)
Issue Date
22 November 2021
Number of Options Issued 3,979
Expiry Date
21 November 2036
Expected Vesting Period
3 years
Exercise Price
nil
Vesting Conditions
I. Service
II. Growth
III. Performance
conditions
Disposal Restrictions
[I] Must be an employee at date of issue
[II] Restriction on sale of shares for 12 months from exercise, except to fund options exercised for
associated tax liabilities
[III] Performance condition (b) Effective protection of the business in relation to key legal, risk and
compliance matters across the HUB24 group.
Restriction on sale of shares for 12 months from exercise, except to fund options exercised for
associated tax liabilities.
Rights – Chief Financial Officer
PARS (Rights)
Issue Date
22 November 2021
Number issued
17,250
Expiry date
21 November 2036
Expected Vesting Period
15 years
Exercise Price
-
Vesting Conditions
I. Service
II. FUA
[I] Must be an employee at date of issue
[II] 100% of the Performance Rights will be subject to, and will vest on, the achievement of a hurdle
measuring Platform (Custody) funds under administration (FUA) over the next two years. The vesting is
calibrated as follows: zero vesting will occur if Custody FUA is below a minimum level of $63 billion by
30 June 2023); 50% vesting will occur if Custody FUA reaches $63 billion by 30 June 2023); 100% vesting
will occur if Custody FUA reaches $70 billion by 30 June 2023); and vesting between $63 billion and $70
billion (between 50% and 100% vesting) will be on a straight-line basis between these two levels.
Disposal Restrictions
Restriction on sale of shares for 12 months from exercise, except to fund options exercised for
associated tax liabilities.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 96
2. Share based payment plans issued during the year ended 30 June 2021.
Tax Exempt Share Plan – Employees
Number of Shares Issued
13,224
Issue Date
Issue Price
21 October 2020
$17.16
Vesting Conditions for
All Shares
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
Voting
Dividends
Specific Terms
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
en-cumbered, on or before the 3rd anniversary of the date employees acquired the Shares or the date
they cease to be employed, whichever occurs first
Tax Exempt Share Plan – Employees
Number of Shares Issued
696
Issue Date
Issue Price
17 December 2020
$17.16
Vesting Conditions for
All Shares
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
Voting
Dividends
Specific Terms
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
en-cumbered, on or before the 3rd anniversary of the date employees acquired the Shares or the date
they cease to be employed, whichever occurs first
Options & Rights – Key Management Personnel (excluding MD)
Issue Date
Options
4 Feb 2021
Number of Options Issued 57,826
Expiry Date
4 February 2026
Expected Vesting Period
Exercise Price
Vesting Conditions
3 years
$14.29
Rights
4 Feb 2021
54,071
4 February 2036
3 years
-
I. Service
II. Market
III. FUA
[I] Must be an employee at date of issue
[II] 50% of the options and 50% of the performance rights will be subject to, and will vest on, the
achievement of a hurdle measuring the Absolute Total Shareholder Return (ATSR) of 11.5% to 16.5%
over the next three years. The vesting is calibrated as follows: 25% vesting occurs when a threshold
of 11.5% ASTR compounded annually is achieved; 100% vesting occurs when a threshold of 16.5%
ASTR compounded annually is achieved; and vesting between 25% and 100% will be on a straight-
line basis between the two levels.
Thresholds
Determination of the TSR thresholds was $14.29, therefore the 11.5% threshold is $19.81 and the
16.5% threshold is $22.59, or $22.09 and $26.32 respectively when tested over a four year periods.
[II] 100% of the performance rights will be subject to, and will vest on, the achievement of a hurdle
measuring the compound annual growth (CAGR) in FUA over the next three years. The vesting
is calibrated as follows: zero vesting will occur if the FUA is below a minimum level of 26.8% (an
increase of 103.9% over three years representing approximately $35 billion by 30 June 2023); 50%
vesting will occur if the FUA reaches 26.8% per annum; 100% vesting will occur if the FUA reaches
35.7% per annum (an increase of 150% over three years representing approximately $43 billion by
30 June 2023); and vesting for between 26.8% and 35.7% per annum (for between 50% and 100%
vesting) will be on a straight-line basis between the two levels.
Disposal Restrictions
Restriction on sale of shares for 12 months from exercise, except to fund options exercised for
associated tax liabilities.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 97
Options & Rights – MD
Options
Issue Date
24 December 2020
Number of Options Issued 33,558
Expiry Date
24 December 2025
Expected Vesting Period
3 years
Exercise Price
$14.29
Rights
24 December 2020
31,395
24 December 2035
3 years
-
Vesting Conditions
I. Service
II. Market
III. FUA
[I] Must be an employee at date of issue
[II] 50% of the options and 50% of the performance rights will be subject to, and will vest on, the
achievement of a hurdle measuring the Absolute Total Shareholder Return (ATSR) of 11.5% to 16.5%
over the next three years. The vesting is calibrated as follows: 25% vesting occurs when a threshold
of 11.5% ASTR compounded annually is achieved; 100% vesting occurs when a threshold of 16.5%
ASTR compounded annually is achieved; and vesting between 25% and 100% will be on a straight-
line basis between the two levels.
Thresholds
Determination of the TSR thresholds was $14.29, therefore the 11.5% threshold is $19.81 and the
16.5% threshold is $22.59, or $22.09 and $26.32 respectively when tested over a four year periods.
[II] 100% of the performance rights will be subject to, and will vest on, the achievement of a hurdle
measuring the compound annual growth (CAGR) in FUA over the next three years. The vesting
is calibrated as follows: zero vesting will occur if the FUA is below a minimum level of 26.8% (an
increase of 103.9% over three years representing approximately $35 billion by 30 June 2023); 50%
vesting will occur if the FUA reaches 26.8% per annum; 100% vesting will occur if the FUA reaches
35.7% per annum (an increase of 150% over three years representing approximately $43 billion by
30 June 2023); and vesting for between 26.8% and 35.7% per annum (for between 50% and 100%
vesting) will be on a straight-line basis between the two levels.
Disposal Restrictions
Restriction on sale of shares for 12 months from exercise, except to fund options exercised for
associated tax liabilities.
Rights – Employees
Issue Date
4 February 2021
Number issued
82,700
Expiry date
4 February 2036
Expected Vesting Period
3 years
Exercise Price
-
I. Service
II. FUA
[I] Must be an employee from date of issue until options are exercised, unless considered a good
leaver (in which case must exercise within 30 days)
[II] 100% of the performance rights will be subject to, and will vest on, the achievement of a hurdle
measuring the compound annual growth (CAGR) in FUA over the next three years. The vesting
is calibrated as follows: zero vesting will occur if the FUA is below a minimum level of 26.8% (an
increase of 103.9% over three years representing approximately $35 billion by 30 June 2023); 50%
vesting will occur if the FUA reaches 26.8% per annum; 100% vesting will occur if the FUA reaches
35.7% per annum (an increase of 150% over three years representing approximately $43 billion by
30 June 2023); and vesting for between 26.8% and 35.7% per annum (for between 50% and 100%
vesting) will be on a straight-line basis between the two levels.
Disposal Restrictions
Restriction on sale of shares for 12 months from exercise, except to fund options exercised for
associated tax liabilities.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 98
Special 5 Year LTI Performance Rights – Employees
Special LTI – Tranche 1
Special LTI – Tranche 2
Issue Date
2 March 2021
Number issued
565,000
Expiry Date
30 June 2025
Expected Vesting Period
5 years
Exercise Price
-
127,500
-
Performance Period
1 July 2020 to 30 June 2025
1 July 2020 to 30 June 2025
Performance Conditions1
Zero vesting will occur if the CAGR in FUA is
below a minimum level of 23.8% per annum (an
increase of 191% over five years representing
approximately $50 billion by 30 June 2025). 50%
vesting will occur if the CAGR in FUA reaches
23.8% per annum. 100% vesting will occur if the
CAGR in FUA reaches 28.4% per annum; and
vesting between 23.8% and 28.4% (representing
approximately $60 billion by 30 June 2025) per
annual CAGR in FUA will be on a straight-line
basis between these two levels
Zero vesting will occur if the CAGR in FUA is
below a minimum level of 32.4% per annum (an
increase of 307% over five years representing
approximately $70 billion by 30 June 2025). 100%
vesting will occur if the CAGR in FUA reaches
32.4% per annum.
1
In measuring the achievement of performance and FUA targets, the Board reserves the right to vary the percentage of options and ordinary
performance rights which may vest as well as the FUA dollar thresholds to account for acquisitions of businesses, assets, companies or other entities
which may be undertaken by the Group during the performance period and adjust for non-custodial FUA on a proportionality basis.
Special 5 Year LTI Performance Rights – MD
Special LTI – Tranche 1
Special LTI – Tranche 2
Issue Date
24 December 2020
Number issued
220,000
Expiry Date
30 June 2025
Expected Vesting Period
5 years
Exercise Price
-
50,000
-
Performance Period
1 July 2020 to 30 June 2025
1 July 2020 to 30 June 2025
Performance Conditions1
Zero vesting will occur if the CAGR in FUA is below
a minimum level of 23.8% per annum (an increase
of 191% over five years representing approximately
$50 billion by 30 June 2025). 50% vesting will occur if
the CAGR in FUA reaches 23.8% per annum. 100%
vesting will occur if the CAGR in FUA reaches 28.4%
per annum; and vesting between 23.8% and 28.4%
(representing approximately $60 billion by 30 June
2025) per annual CAGR in FUA will be on a straight-
line basis between these two levels
Zero vesting will occur if the CAGR in FUA is
below a minimum level of 32.4% per annum (an
increase of 307% over five years representing
approximately $70 billion by 30 June 2025). 100%
vesting will occur if the CAGR in FUA reaches
32.4% per annum.
1
In measuring the achievement of performance and FUA targets, the Board reserves the right to vary the percentage of options and ordinary
performance rights which may vest as well as the FUA dollar thresholds to account for acquisitions of businesses, assets, companies or other entities
which may be undertaken by the Group during the performance period and adjust for non-custodial FUA on a proportionality basis.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 99
3. Share based payment plans issued during the year ended 30 June 2020.
Tax Exempt Share Plan – Employees
Number of Shares Issued
16,960
Issue Date
Issue Price
10 October 2019
$12.50
Vesting Conditions for
All Shares
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.
Voting
Dividends
Specific Terms
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.
Options and Rights – Employees
Share Ownership Plan
Issue Date
25 Nov 2019
Number of Options Issued 323,151
PARS (Rights)
25 Nov 2019
129,404
Expiry Date
25 November 2024
25 November 2034
Expected Vesting Period
3 years
Exercise Price
$12.36
Vesting Conditions
3 years
nil
I. Service
II. Market
III. FUA
[I] Must be an employee from date of issue until options are exercised, unless considered a good
leaver (in which case must exercise within 30 days)
[II] 50% of the options and performance rights will be subject to, and will vest on, the achievement
of a hurdle measuring the Absolute Total Shareholder Return (ATSR) of 12.5% to 17.5% over the
next three years. The vesting is calibrated as follows: 25% vesting occurs when a threshold of 12.5%
ASTR compounded annually is achieved; 100% vesting occurs when a threshold of 17.5% ASTR
compounded annually is achieved; and vesting between 25% and 100% will be on a straight line
basis between the two levels.
[III] 50% of the options and 50% of the performance rights will be subject to, and will vest on, the
achievement of a hurdle measuring the compound annual growth (CAGR) in FUA over the next
three years. The vesting is calibrated as follows: zero vesting will occur if the FUA does not exceed
$27 billion by 30 June 2022; 25% vesting will occur if the FUA reaches $27 billion by 30 June 2022;
80% vesting will occur if the FUA reaches $29 billion by 30 June 2022; 100% vesting will occur if
the FUA reaches $32 billion by 30 June 2022. vesting for between $27 billion and $29 billion (for
between 25% and 80%) will be on a straight line basis between the two levels; and vesting for
between $29 billion and $32 billion (for between 80% and 100%) will be on a straight line basis
between the two levels;
Disposal Restrictions
Restriction on sale of shares for 12 months from exercise, except to fund options exercised for associated
tax liabilities.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 100
Options and Rights – Employees
Share Ownership Plan
Issue Date
25 Nov 2019
Number of Options Issued 8,181
PARS (Rights)
25 Nov 2019
3,276
Expiry Date
25 November 2024
25 November 2034
Expected Vesting Period
3 years
Exercise Price
$12.36
3 years
nil
Vesting Conditions
I. Service
II. Leadership
III. Strategy
[I] Must be an employee from date of issue until options are exercised, unless considered a good
leaver (in which case must exercise within 30 days)
[II] Effective leadership of the Group’s Legal and Compliance functions together with the
development of enhancements to these functions.
[III] Effective leadership and management of key legal and compliance matters across the Group such that
the contribution of the Legal & Compliance team through its management of these matters supports the
Group in achieving is strategic outcomes and priorities.
Disposal Restrictions
Restriction on sale of shares for 12 months from exercise, except to fund options exercised for
associated tax liabilities.
4. Share based payment plans issued during the year ended 30 June 2019.
Tax Exempt Share Plan – Employees
14,193
Number of Shares Issued
7 September 2018
Issue Date
$12.04
Issue Price
Interests held in the shares are not at risk of forfeiture. There is no condition or requirement that
Vesting Conditions for
needs to be satisfied in order to acquire the shares.
All Shares
Shareholders are entitled to vote.
Voting
The shares provide entitlement to dividends or other distributions paid to ordinary shareholders.
Dividends
The shares must not be sold, transferred or otherwise disposed of, or mortgaged, charged or otherwise
Specific Terms
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.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 101
Options and Rights – Employees
Share
Ownership
Plan
PARS
(Rights)
Share
Ownership
Plan –
Paragem
PARS
(Rights) –
Paragem
Share
Ownership
Plan
PARS
(Rights)
Issue Date
7 Sep 2018
7 Sep 2018
7 Sep 2018
7 Sep 2018
7 Sep 2018
7 Sep 2018
Number of Options Issued 257,852
70,888
12,000
4,000
30,000
10,000
Expiry Date
7 Sep 2023
7 Sep 2033
7 Sep 2023
7 Sep 2033
7 Sep 2023
7 Sep 2033
Expected Vesting Period
3 years
3 years
Exercise Price
$12.04
nil
2 years
$12.04
2 years
nil
2 years
$11.73
2 years
nil
Vesting Conditions
I. Service
II. Market
III. FUA
[I] Must be an employee from date of issue until options are exercised, unless considered a good
leaver (in which case must exercise within 30 days)
[II] 50% vesting on the achievement of Performance condition 2. Absolute Total Shareholder Return
(ATSR) CAGR in excess of 17.5% over three years, proportional vesting between 12.5% and 17.5%.
[III] 50% vesting on the
achievement of Performance
condition 1. Growth in FUA
CAGR in excess of 115.8%
over three years, proportional
vesting between 29.23% and
40.23% p.a.
[III] 0% vesting if the CAGR in
FUA was below a minimum
level of 25.88% p.a (99.5%
over three years). 50% vesting
will occur if the CAGR in FUA
reaches 29.58% p.a (117.6%
over three years). 100% vesting
will occur if the CAGR in FUA
reaches 33.09% p.a (135.7%
over three years)
[III] 0% vesting if the CAGR in
FUA was below a minimum
level of 25.88% p.a (99.5%
over three years). 50% vesting
will occur if the CAGR in FUA
reaches 29.58% p.a (117.6%
over three years). 100%
vesting will occur if the CAGR
in FUA reaches 33.09% p.a
(135.7%over three years)
Disposal Restrictions
Restriction on sale of shares for 12 months from exercise, except to fund options exercised for
associated tax liabilities.
Options and Rights – Employees
Share Ownership Plan
– MD
PARS (Rights) –
MD
Share Ownership Plan
– CFO
PARS (Rights) -
CFO
Issue Date
12 Dec 2018
12 Dec 2018
12 Dec 2018
12 Dec 2018
Number of Options Issued 51,186
14,072
24,667
6,981
Expiry Date
12 Dec 2023
12 Dec 2033
12 Dec 2023
12 Dec 2033
Expected Vesting Period
3 years
Exercise Price
$12.04
Vesting Conditions
3 years
nil
3 years
$13.44
3 years
nil
I. Service
II. Market
III. FUA
[I] Must be an employee from date of issue until options are exercised, unless considered a good
leaver (in which case must exercise within 30 days)
[II] 50% vesting on the achievement of Performance condition 2. Absolute Total Shareholder Return
(ATSR) CAGR in excess of 17.5% over three years, proportional vesting between 12.5% and 17.5%.
[III] 50% vesting on the achievement of Performance condition 1. Growth in FUA CAGR in excess of
115.8% over three years, proportional vesting between 29.23% and 40.23% p.a.
Disposal Restrictions
Restriction on sale of shares for 12 months from exercise, except to fund options exercised for
associated tax liabilities.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 102
Options and Rights – Employees
PARS (Rights) – Director
Issue Date
12 Dec 2018
Number of Options Issued 20,000
Expiry Date
12 Dec 2033
Expected Vesting Period
3 years
Exercise Price
nil
Vesting Conditions
I. Service
II. Market
III. Growth
[I] Must be a director from date of issue until options are exercised, unless considered a good leaver
(in which case must exercise within 30 days)
[II] Performance condition (a) stipulates that the director must provide support to the HUB24
Managing Director and KMPs in relation to the securing and maintenance of key accounts over the
period from 1 July 2018 to 30 June 2021.
[III] Performance condition (b) stipulates that the director must directly liaise with key accounts
to facilitate growth and customer satisfaction as measured by the improvement in the company’s
customer satisfaction service levels over the period from 1 July 2018 to 30 June 2021
Options and Rights – Employees
PARS (Rights) – Head of Legal & Compliance
Issue Date
12 Dec 2018
Number of Options Issued 20,000
Expiry Date
12 Dec 2033
Expected Vesting Period
4 years
Exercise Price
nil
Vesting Conditions
I. Service
II. Market
III. Growth
[I] Must be an employee from date of issue until options are exercised, unless considered a good
leaver (in which case must exercise within 30 days)
[II] Performance condition (a) stipulates that the employee must display effective leadership of the
development and operation of the Group’s risk and compliance framework and policies over the
Performance Period.
[III] Performance condition (b) stipulates that the employee must display effective leadership and
management of key legal, risk and compliance matters across the HUB24 Group.
Options and Rights – Employees
PARS (Rights) – Special LTI
Issue Date
12 Dec 2018
Number of Options Issued 425,000
Expiry Date
12 Dec 2033
Expected Vesting Period
4 years
Exercise Price
nil
Vesting Conditions
I. FUA
[I] Applying to 425,000 performance rights, 100% vesting will occur if the 4 year CAGR in FUA
reaches 33% per annum.
Disposal Restrictions
Restriction on sale of shares for 12 months from exercise, except to fund options exercised for
associated tax liabilities.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 103
5. Share based payment plans issued prior to 1 July 2018.
Tax Exempt Share Plan – Employees
Number of Shares Issued
24,160
Issue Date
Issue Price
1 September 2017
$6.25
Vesting Conditions for
All Shares
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.
Voting
Dividends
Specific Terms
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.
Options and Rights – Employees
Share
Ownership
Plan
PARS
(Rights)
Share
Ownership
Plan
PARS
(Rights)
Share
Ownership
Plan – MD
PARS
(Rights) –
MD
Issue Date
11 Oct 2017
11 Oct 2017
21 Aug 2017
21 Aug 2017
11 Dec 2017
11 Dec 2017
Number of Options Issued 401,686
122,942
34,247
11,211
78,077
23,897
Expiry Date
11 Oct 2022
11 Oct 2032
21 Aug 2022
21 Aug 2032
11 Dec 2022
11 Dec 2032
Expected Vesting Period
3 years
3 years
Exercise Price
$7.09
nil
3 years
$6.25
3 years
nil
3 years
$7.09
3 years
nil
Vesting Conditions
I. Service
II. Market
III. FUA
[I] Must be an employee from date of issue until options are exercised, unless considered a good
leaver (in which case must exercise within 30 days).
[II] 50% vesting on the achievement of Performance condition 2. Absolute Total Shareholder Return
(ATSR) CAGR in excess of 17.5% over three years, proportional vesting between 12.5% and 17.5%.
[III] 50% vesting on the
achievement of Performance
condition 1. Growth in FUA
CAGR in excess of 117.6% over
three years, proportional vesting
between 25.88% and 33.09% p.a.
[III] 50% vesting on the
achievement of Performance
condition 1. Growth in FUA
CAGR in excess of 109.7% over
three years, proportional vesting
between 28% and 45% p.a.
[III] 50% vesting on the
achievement of Performance
condition 1. Growth in FUA
CAGR in excess of 117.6% over
three years, proportional vesting
between 25.88% and 33.09% p.a.
Disposal Restrictions
Restriction on sale of shares for 12 months from exercise, except to fund options exercised for
associated tax liabilities.
6. Share based payment plans issued prior to 1 July 2017.
Tax Exempt Share Plan – Employees
Number of Shares Issued
14,112
Issue Date
Issue Price
1 September 2016
$4.46
Vesting Conditions for All
Shares
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.
Voting
Dividends
Specific Terms
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.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 104
Options and Rights – Employees
FY 2017
Issue Date
29 Nov 2016
Number of Options Issued 418,639
Expiry Date
29 Nov 2021
Expected Vesting Period
3 years
Exercise Price
$4.46
Vesting Conditions
Share Ownership Plan
PARS (Rights)
Share Ownership Plan
29 Nov 2016
137,043
29 Nov 2031
3 years
nil
29 Nov 2016
50,000
29 Nov 2021
3 years
$5.17
I. Service
II. Market
III. FUA
[I] Must be an employee from date of issue until options are exercised, unless considered a good
leaver (in which case must exercise within 30 days)
[II] 50% vesting on the achievement of Performance condition 1.
Absolute Total Shareholder Return (ATSR) CAGR in excess of 17.5%
over three years, proportional vesting between 12.5% and 17.5%.
[II] Achieve share price hurdle
of 52% greater than exercise
price for 20 consecutive days in
the period between 36 months
from the issue date and expiry
of options.
[III] 50% vesting on the achievement of Performance condition
2. Growth in FUA CAGR in excess of 45% over three years,
proportional vesting between 28% and 45%.
N/A
Disposal Restrictions
Restriction on sale of shares for 12 months from exercise, except to fund options exercised for
associated tax liabilities.
Options and Rights – Employees
Share Ownership Plan
PARS (Rights) – MD
Share Ownership Plan
FY 2016
Issue Date
14 Oct 2015
Number of Options Issued 620,000
Expiry Date
14 Oct 2020
Expected Vesting Period
3 years
Exercise Price
$2.46
Vesting Conditions
7 Dec 2015
150,000
7 Dec 2030
3 years
$2.46
30 Mar 2016
50,000
30 Mar 2021
3 years
$3.98
I. Service
II. Market
[I] Must be an employee from date of issue until options are exercised, unless considered a good
leaver (in which case must exercise within 30 days)
[II] Achieve share price hurdle of greater than 52% of exercise price for 20 consecutive days in the
period between 36 months from the issue date and expiry of options.
Disposal Restrictions
Restriction on sale of shares for 12 months from exercise, except to fund options exercised for
associated tax liabilities.
Summary of options and rights granted
The following table illustrates the number, weighted average exercise prices (WAEP) and weighted average share prices
(WASP) of, and movements in, share options issued during the year:
Summaries of options granted
Outstanding at the beginning of the financial year
1,161,128
30 June
2022
Number
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
WAEP
WASP
-
-
-
-
-
30 June
2021
Number
1,633,095
WAEP
WASP
-
-
-
-
91,384
$14.29
(72,029)
-
-
(28,412)
(437,528)
$6.38
$30.02
(491,322)
$4.53
$21.34
-
695,188
251,028
-
-
-
-
-
-
-
1,161,128
426,876
-
-
-
-
-
-
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
105
Summaries of rights granted
30 June
2022
Number
WAEP
WASP
Outstanding at the beginning of the year
1,908,236
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
7.1.3 Option pricing model
207,893
(9,358)
(88,052)
-
2,018,719
135,688
-
-
-
-
-
-
-
-
-
-
-
30 June
2021
Number
864,936
1,130,667
(23,481)
(63,886)
-
1,908,236
131,798
WAEP
WASP
-
-
-
-
-
-
-
-
-
-
-
The fair value of all equity-settled options issued is estimated at the grant date using the Hoadley’s 1 Hybrid ESO model
(monte carlo simulation method).
The following table lists the inputs to the models used:
1. Share based payment plans issued during the year ended 30 June 2022.
Options & Rights
Dividend Yield (%)
Expected Volatility (%)
Risk-free Interest Rate (%)
Average Share price at Measurement Date ($)
Rights – KMP & Employees
Rights – MD
0.23%
46.5%
1.38%
30.17
0.23%
46.5%
1.38%
29.24
Model used
Hoadleys/Black Scholes
Hoadleys/Black Scholes
2. Share based payment plans issued during the year ended 30 June 2021 and modified during the period ended
30 June 2022.
Options & Rights
Dividend Yield (%)
Expected Volatility (%)
Risk-free Interest Rate (%)
Expected Life of Options (Months)
Average Share price at Measurement Date ($)
Model used
Options & Rights – Employee
0.34%
58.8%
0.35%
60
25.37
Hoadleys/Black Scholes
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
106
3. Share based payment plans issued prior to 1 July 2021.
2 Mar
2021
PRP
(Rights)
– Special
LTI
0.34
59
0.35
36
Dividend Yield (%)
Expected Volatility (%)
Risk-free Interest Rate (%)
Expected Life of Options
(Months)
Option Exercise Price ($)
N/A
N/A
20.83
20.83
4 Feb
2021
PRP
(Rights)
25 Nov
2019
SOP
25 Nov
2019
PRP
(Rights)
0.34
59
0.35
60
0.39
44
0.82
36
0.39
47
0.82
36
12.36
11.83
N/A
11.83
7 Sep
2018
SOP
0.54
41
2.17
36
12.04
12.44
7 Sep
2018
PRP
(Rights)
7 Sep
2018
SOP –
Paragem
7 Sep
2018 PRP
(Rights) –
Paragem
0.54
41
2.17
36
0.54
41
2.17
24
0.54
41
2.17
24
N/A
12.44
12.04
12.44
N/A
12.44
7 Sep
2018
SOP
0.54
41
2.17
24
11.73
12.44
7 Sep
2018
PRP
(Rights)
0.54
41
2.17
24
N/A
12.44
Average Share Price at
Measurement Date ($)
Model Used
Dividend Yield (%)
Expected Volatility (%)
Risk-free Interest Rate (%)
Expected Life of Options
(Months)
Option Exercise Price ($)
Average Share Price at
Measurement Date ($)
Model Used
Dividend Yield (%)
Expected Volatility (%)
Risk-free Interest Rate (%)
Expected Life of Options
(Months)
Option Exercise Price ($)
Average Share Price at
Measurement Date ($)
Model Used
Hoadleys/
Black
Scholes
Hoadleys/
Black
Scholes
Hoadleys/
Black
Scholes
Hoadleys/
Black
Scholes
Hoadleys/
Black
Scholes
Hoadleys/
Black
Scholes
Hoadleys/
Black
Scholes
Hoadleys/
Black
Scholes
Hoadleys/
Black
Scholes
Hoadleys/
Black
Scholes
12 Dec 2018
SOP
– MD
12 Dec 2018
PRP (Rights)
– MD
12 Dec 2018
SOP
– CFO
12 Dec 2018
PRP (Rights)
– CFO
12 Dec 2018
PRP (Rights)
– Director
12 Dec 2018
PRP (Rights)
– Special LTI
0.54
45
2.12
36
12.04
12.97
0.54
45
2.12
36
N/A
12.97
0.54
45
2.12
36
13.44
12.97
0.54
45
2.12
36
N/A
12.97
0.54
45
2.12
36
N/A
12.97
0.54
45
2.12
36
N/A
12.97
Hoadleys/
Black Scholes
Hoadleys/
Black Scholes
Hoadleys/
Black Scholes
Hoadleys/
Black Scholes
Hoadleys/
Black Scholes
Hoadleys/
Black Scholes
11 Oct 2017
SOP
11 Oct 2017
PRP (Rights)
21 Aug 2017
SOP
21 Aug 2017
PRP (Rights)
11 Dec 2017
SOP
11 Dec 2017
PRP (Rights)
-
45
2.38
36
7.09
8.18
-
45
2.38
36
N/A
8.18
-
45
2.37
36
6.25
8.18
-
45
2.37
36
N/A
8.18
-
45
2.37
36
7.09
9.68
-
45
2.37
36
N/A
9.68
Hoadleys/
Black Scholes
Hoadleys/
Black Scholes
Hoadleys/
Black Scholes
Hoadleys/
Black Scholes
Hoadleys/
Black Scholes
Hoadleys/
Black Scholes
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 107
Dividend Yield (%)
Expected Volatility (%)
Risk-free Interest Rate (%)
Expected Life of Options (Months)
Option Exercise Price ($)
Average Share Price at
Measurement Date ($)
Model Used
17 Oct
2014
SOP
4 Dec
2014
SOP CEO
4 Dec
2014
SOP
Paragem
14 Oct
2015
SOP
7 Dec
2015
SOP CEO
30 Mar
2016
SOP
29 Nov
2016
SOP
29 Nov
2016
SOP
-
35
2.5
36
0.98
0.89
-
35
2.5
36
0.98
0.89
-
33
2.5
12-36
1.156
0.89
-
48
1.8
36
2.46
2.69
-
48
1.8
36
2.46
3.52
-
50
2.09
36
3.98
4.06
-
45
2.16
36
4.46
5.79
-
45
2.16
36
5.17
5.79
29 Nov
2016
PRP
(Rights)
-
45
2.16
36
N/A
5.79
Black
Scholes
Black
Scholes
Black
Scholes
Hoadleys
Hoadleys Hoadleys Hoadleys/
Black
Scholes
Hoadleys
Hoadleys/
Black
Scholes
7.2 KEY MANAGEMENT PERSONNEL
Key management personnel compensation
Consolidated
Short term employment benefits
Post employment benefits
Share based payments
2022
$’000
3,543
220
6,400
10,163
2021
$’000
3,374
325
2,083
5,782
Key management personnel (KMP) are those who, directly or indirectly, have authority and responsibility for planning,
directing and controlling the activities of HUB24. The KMPs are outlined in the Remuneration Report on page 31.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 108
8. OTHER INFORMATION
8.1 NEW AND AMENDED ACCOUNTING STANDARDS ADOPTED BY THE GROUP
The Group adopted all of the new, revised, or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board (AASB) that are mandatory for the current reporting period. The accounting
standards did not have any significant impact on the financial performance or position of the Group.
8.2 SIGNIFICANT EVENTS AFTER REPORT DATE
Subsequent to year end, the following items have occurred:
• Directors have determined a fully franked final dividend of 12.5 cents per share (a fully franked dividend of 5.5 cents
per share was determined in FY21).
No other significant matter or circumstance has arisen since 30 June 2022 that has notably affected, or may significantly
affect the Group’s operations, the results of those operations, or the Group’s state of affairs in future financial years.
8.3 REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by professional service firms:
Consolidated
Audit and review of financial statements provided by Deloitte Touche Tohmatsu
Other assurance services
Tax and other services
Total audit and other fees
2022
$’000
667
642
288
1,597
2021
$’000
531
203
258
992
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 109
GLOSSARY
EBITDA
Earnings before interest, tax, depreciation, amortisation
Funds under administration (FUA)
The value of customer portfolios invested onto the Platform
IDPS
MDA
MIS
Net Tangible Asset per fully paid ordinary share
Notable items
ORFR
PARS FUA
Platform FUA
PPA
SMSF
STI/LTI
Investor Directed Portfolio Service (description)
Managed Discretionary Account (description)
Managed Investment Scheme (description)
Total Assets less Total Liabilities adjusted for Intangible Assets,
divided by the number of outstanding ordinary paid shares
Includes administrative and resourcing costs related to strategic
transactions and project costs. Amortisation relating to the
acquisition of Xplore, Class and Ords.
Operational Risk Financial Requirement relates to the HUB24
Superannuation Fund’s requirement to hold adequate reserves
against operational losses in accordance with APRA Prudential
Standard SPS114.
Portfolio And Reporting Services – refers to the non-custodial
portfolio
Refers to the custodial portfolio
The final purchase price accounting for the Xplore and Class
acquisitions
Self-managed super fund
Short term incentive/Long term incentive
Underlying EBITDA
Refers to EBITDA excluding notable items
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 110
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2022
IN THE DIRECTORS’ OPINION:
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, and
a. the financial statements and notes set out on pages
d. this declaration has been made after receiving the
47 to 108 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 2022 and
of its performance for the financial year ended on
that date, and
ii. complying with Accounting Standards (including
the Australian Accounting Interpretations), the
Corporations Regulations 2001, and other mandatory
professional reporting requirements; and
b. the financial statements and notes comply with
International Financial Reporting Standards as
disclosed in Note 1, and
declarations by the Chief Executive Officer and Chief
Financial Officer required by section 295A of the
Corporations Act 2001.
Signed in accordance with a resolution of Directors.
Bruce Higgins
Chairman
Sydney
23 August 2022
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 111
INDEPENDENT AUDITOR’S REPORT
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Australia
Deloitte Touche Tohmatsu
Deloitte Touche Tohmatsu
ABN 74 490 121 060
ABN 74 490 121 060
Phone: +61 2 9322 7000
Grosvenor Place
Grosvenor Place
www.deloitte.com.au
225 George Street
225 George Street
Sydney, NSW, 2000
Sydney, NSW, 2000
Deloitte Touche Tohmatsu
Australia
Australia
ABN 74 490 121 060
Deloitte Touche Tohmatsu
Grosvenor Place
Phone: +61 2 9322 7000
Phone: +61 2 9322 7000
ABN 74 490 121 060
225 George Street
www.deloitte.com.au
www.deloitte.com.au
Grosvenor Place
Sydney, NSW, 2000
225 George Street
Australia
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
Phone: +61 2 9322 7000
www.deloitte.com.au
Independent Auditor’s Report to the Members of HUB24
Limited
Opinion
for the year then ended; and
for the year then ended; and
for the year then ended; and
for the year then ended; and
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
Independent Auditor’s Report to the Members of HUB24
Independent Auditor’s Report to the Members of HUB24
Limited
Limited
We have audited the financial report of HUB24 Limited (the “Company”) and its subsidiaries (the “Group”) which
Independent Auditor’s Report to the Members of HUB24
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of
Independent Auditor’s Report to the Members of HUB24
profit or loss and other comprehensive income, the consolidated statement of changes in equity and the
Limited
Opinion
Opinion
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a
Limited
summary of significant accounting policies, and the directors’ declaration.
We have audited the financial report of HUB24 Limited (the “Company”) and its subsidiaries (the “Group”) which
We have audited the financial report of HUB24 Limited (the “Company”) and its subsidiaries (the “Group”) which
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of
comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
profit or loss and other comprehensive income, the consolidated statement of changes in equity and the
profit or loss and other comprehensive income, the consolidated statement of changes in equity and the
Opinion
including:
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a
Opinion
summary of significant accounting policies, and the directors’ declaration.
We have audited the financial report of HUB24 Limited (the “Company”) and its subsidiaries (the “Group”) which
summary of significant accounting policies, and the directors’ declaration.
• giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial performance
comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of
We have audited the financial report of HUB24 Limited (the “Company”) and its subsidiaries (the “Group”) which
profit or loss and other comprehensive income, the consolidated statement of changes in equity and the
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
• complying with Australian Accounting Standards and the Corporations Regulations 2001.
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a
including:
profit or loss and other comprehensive income, the consolidated statement of changes in equity and the
including:
Basis for Opinion
summary of significant accounting policies, and the directors’ declaration.
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a
• giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial performance
• giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial performance
summary of significant accounting policies, and the directors’ declaration.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
• complying with Australian Accounting Standards and the Corporations Regulations 2001.
• complying with Australian Accounting Standards and the Corporations Regulations 2001.
including:
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Basis for Opinion
including:
Basis for Opinion
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s
• giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial performance
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
• giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial performance
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
• complying with Australian Accounting Standards and the Corporations Regulations 2001.
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
accordance with the Code.
our report. We are independent of the Group in accordance with the auditor independence requirements of the
• complying with Australian Accounting Standards and the Corporations Regulations 2001.
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Basis for Opinion
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
report.
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
our report. We are independent of the Group in accordance with the auditor independence requirements of the
accordance with the Code.
accordance with the Code.
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s
our report. We are independent of the Group in accordance with the auditor independence requirements of the
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
opinion.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
report.
Key Audit Matters
report.
accordance with the Code.
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
opinion.
opinion.
the financial report for the current period. These matters were addressed in the context of our audit of the
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
report.
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s
Key Audit Matters
Key Audit Matters
these matters.
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
the financial report for the current period. These matters were addressed in the context of our audit of the
the financial report for the current period. These matters were addressed in the context of our audit of the
opinion.
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
Key Audit Matters
these matters.
these matters.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report for the current period. These matters were addressed in the context of our audit of the
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
Liability limited by a scheme approved under Professional Standards Legislation.
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
the financial report for the current period. These matters were addressed in the context of our audit of the
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
these matters.
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
for the year then ended; and
Liability limited by a scheme approved under Professional Standards Legislation.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
112
KKeeyy AAuuddiitt MMaatttteerr
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy AAuuddiitt MMaatttteerr
AAccqquuiissiittiioonn ooff CCllaassss LLiimmiitteedd ((““CCllaassss””))
Refer to:
• Note 6.2 Business combinations
• Note 3.5 Intangible assets
During the year ended 30 June 2022, the Group
acquired Class by way of a scheme of
arrangement via a combination of cash and
HUB24 shares. Total value of consideration was
$284million at date of completion.
As a result of the transaction, the provisional
purchase price allocation comprising Goodwill
($179million),
relationships
Customer
($79million), Software ($62million) and Brand
name ($9m) intangibles were identified.
Accounting for the transaction is complex and
includes a number of significant judgements in
relation to:
•
•
the purchase price
determination of
allocation and calculation of goodwill; and
initial recognition of deferred tax balances
associated with the acquisition.
In conjunction with our valuation specialists, our procedures
included, but were not limited to:
• Obtaining an understanding of the acquired business;
•
Assessing the design and implementation of relevant
controls in place for the acquisition accounting of Class;
Assessing the competency and objectivity of management’s
external expert and the scope of their work;
•
• Obtaining and reading management’s external expert’s
report
the valuation
methodology and key assumptions used in determining the
fair values, such as:
to understand and challenge
o Cash flow projections;
o Attrition rates;
o
o
Internal rate of return; and
Estimated useful economic lives of the intangible
assets
the
appropriateness of
valuation
Assessing
methodology of the
intangible assets employed by
management’s external expert, and evaluating the key
assumptions used in determining the fair values; and
Assessing the appropriateness of the allocation of goodwill
to the groups of cash generating units.
the
•
•
We have also assessed the adequacy of the disclosures in Note
3.5 and Note 6.2 to the financial statements.
IInnttaannggiibbllee aasssseettss
iinncclluuddiinngg
In conjunction with our valuation specialists, our procedures
included, but were not limited to:
IImmppaaiirrmmeenntt ooff
ggooooddwwiillll
Refer to:
• Note 3.5 Intangible assets
As at 30 June 2022 the carrying value of intangible
totaling $429 million,
assets
the
following as disclosed in Note 3.5:
includes
Computer software
Customer relationships
Brand
Goodwill
Total
$’000
101,801
97,180
8,761
221,630
429,372
the
Evaluation of
recoverable amount of
intangible assets requires significant judgement
due to the estimation of future cash flows,
discount and terminal growth rates, and the
period over which cash
flows have been
discounted.
•
•
•
•
Assessing the design and implementation of relevant
controls in place associated with the preparation of the
value-in-use models;
Assessing the reasonableness of key data inputs in the
models;
• Obtaining and
reading management’s
to
understand and challenge the valuation methodology and
key assumptions used in determining the fair values, such
as:
reports
o Revenue and expenses projections used in the
forecasted cash flows by comparing them to
historical results, and where appropriate, market
evidence;
Long-term growth rates; and
o
o Discount rate applied.
Testing the mathematical accuracy and integrity of the
value-in-use models;
Assessing managements’ consideration of the sensitivity to
a change in key assumptions that both individually or
collectively would be required for assets to be impaired and
considered the likelihood of such a movement in those key
assumptions.
We also assessed the adequacy of the disclosures in Note 3.5 to
the financial statements.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
113
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Group’s annual report for the year ended 30 June 2022, but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of the Directors 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 preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit 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
Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause
the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
114
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the Group’s audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards
applied.
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
RReeppoorrtt oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt
Opinion on the Remuneration Report
We have audited the Remuneration Report included in Pages 26 to 46 of the Directors’ Report for the year ended
30 June 2022.
In our opinion, the Remuneration Report of HUB24 Limited for the year ended 30 June 2022 complies with section
300A of the Corporations Act 2001.
Responsibilities
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.
DELOITTE TOUCHE TOHMATSU
SSttuuaarrtt AAlleexxaannddeerr
Partner
Chartered Accountants
Sydney, 23 August 2022
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022
115
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 1 August 2022.
DISTRIBUTION OF EQUITY SECURITIES
Ordinary share capital – 80,058,178 fully paid ordinary shares are held by 8,628 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 – holding ranges
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
Number of
Shareholders
Total
Number
of Shares
% of Total
Issued
Shares
6,285
1,881
235
190
37
1,947,683
4,130,786
1,644,992
5,217,324
67,117,393
8,628
80,058,178
2.43
5.16
2.05
6.52
83.84
100.00
There were 396 shareholders holding less than a marketable parcel of 21 securities, based on a close price of $24.27
as at 1 August 2022, and they hold 3,134 securities.
OPTIONS
695,188 options and 2,018,719 performance rights are held. Options and performance rights do not carry a right to vote.
SUBSTANTIAL SHAREHOLDERS
As at 1 August 2022 the following substantial shareholdings have been disclosed to the Company via substantial holding
notices provided:
Substantial Holder
Bennelong Funds Management Group Pty Ltd
Thorney Opportunities Ltd (and its associated entities)
TIGA Trading Pty Ltd (and its associated entities)
ECP Asset Management Pty Ltd (and its associated entities)
Hyperion Asset Management Limited
Pinnacle Investment Management Group (and its associated entities)
1 As at the date of the substantial shareholder’s last notice lodged with the ASX.
Number of Ordinary
Shares Held
% of total shares
issued1
6,051,803
5,779,078
5,317,515
5,112,596
4,279,609
4,034,685
8.86%
8.63%
6.64%
6.40%
6.26%
5.90%
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 116
20 LARGEST SHAREHOLDERS AT 01 AUGUST 2022
Citicorp Nominees Pty Ltd
HSBC Custody Nominees (Australia) Ltd
J P Morgan Nominees Australia Pty Ltd
National Nominees Limited
UBS Nominees Pty Ltd
BNP Paribas Noms Pty Ltd
Pacific Custodians Pty Limited
BNP Paribas Nominees Pty Ltd
BNP Paribas Nominees Pty Ltd HUB24 Custodial Serv Ltd
Troncell Pty Ltd
Litster & Associates Pty Ltd – C & C Super Fund A/C
Mrs Jasmin Zheng-Min Zhao Litster
Coscog Pty Ltd
Troncell Pty Ltd
Netwealth Investments Ltd
Firstfunds Pty Limited –
HSBC Custody Nominees (Australia) Limited - A/C 2
Mirrabooka Investments Limited
Mr Ian James Litster
Armelek Pty Ltd
Total of Top 20 Holdings
CORPORATE GOVERNANCE STATEMENT
Number held
17,631,813
12,957,821
10,433,127
5,426,081
4,785,101
4,433,775
1,572,638
1,201,414
848,410
806,449
522,488
516,706
510,000
496,182
423,592
365,827
358,078
352,500
316,293
272,741
%IC
22.04%
16.20%
13.04%
6.78%
5.98%
5.54%
1.97%
1.50%
1.06%
1.01%
0.65%
0.65%
0.64%
0.62%
0.53%
0.46%
0.45%
0.44%
0.40%
0.34%
64,231,036
80.30%
The Board is committed to a high standard of corporate governance, and is responsible for establishing, maintaining
and monitoring the HUB24 Group corporate governance framework.
The Corporate Governance Statement and further details about corporate governance policies, Board and Committee
charters may be accessed via the Company’s website:
https://www.hub24.com.au/shareholder-centre/corporate-governance
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 117
CORPORATE INFORMATION
HUB24 LIMITED
ACN 124 891 685
PRINCIPAL REGISTERED
OFFICE IN AUSTRALIA
Level 2, 7 Macquarie Place
Sydney NSW 2000 Australia
AUDITOR
Deloitte Touche Tohmatsu
Grosvenor Place, 225 George Street
Sydney NSW 2000
SHARE REGISTRY
Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235 Australia
Telephone: +61 1300 554 474
Outside Australia: +61 2 8767 1000
Email: registrars@linkmarketservices.com.au
Website: www.linkmarketservices.com.au
HUB24 Limited shares are listed on the
Australian Securities Exchange (ASX: HUB)
DIRECTORS
Mr Bruce Higgins (Chairman and Independent Non-executive Director)
Mr Andrew Alcock (Managing Director)
Mr Anthony McDonald (Independent Non-executive Director)
Mr Paul Rogan (Independent Non-executive Director)
Ms Ruth Stringer (Independent Non-executive Director)
Ms Catherine Kovacs (Independent Non-executive Director)
COMPANY SECRETARIES
Ms Kitrina Shanahan
Mr Andrew Brown
ELECTRONIC COMMUNICATIONS
HUB24 encourages our shareholders to receive investor
communications electronically, including the Annual Report.
These reports are available on our website at www.HUB24.com.au.
To register for electronic investor communications, please go to
www.linkmarketservices.com.au and register for online services.
WEBSITE
hub24.com.au
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022 118
NOTES
HUB24 ANNUAL REPORT YEAR ENDED 30 JUNE 2022