Annual Report for the year ended
30 June 2022
InvestSMART Group Limited
ABN 62 111 772 359
www.investsmart.com.au
1300 880 160
SECTION HEADING?? OUR VISION
To help all
Australians
grow and
protect their
wealth.
WHY?
Because we believe people
should be able to take
control of their financial
future. And it shouldn’t be
hard or expensive to do so.
HOW?
By providing innovative
tools, research and advice
that people can trust,
empowering them to make
better investing decisions.
Research & Advice
Investment
Advice
Investment
Portfolios
Investment
Tools
SECTION HEADING?? COMPANY ADVANTAGE
UNIQUE PRODUCTS & ECOSYSTEM
Our proprietary wealth platform operates within
a content and tools ecosystem
Platform
One Digital Platform
• Self-select, transact and manage multiple products and services
• Product and service delivery
• Administration and tax reporting
Investment
product
InvestSMART
Professionally managed accounts
Capped fees
Intelligent Investor
Active ETFs – ASX-listed
Variable fees
Eureka
Variable fees
Diversified ETF portfolios
• Australian Equity Income Fund (INIF)
• Eureka Asset-backed Loan Fund
• Australian Equity Growth Fund (IIGF)
• Ethical Share Fund (INES)
Content
Content
• Conservative
• Balanced
• Growth
• Ethical Growth
• High Growth
Single asset class ETF portfolios
• International Equities
• Interest Income
• Property and Infrastructure
• Hybrid Income
Lending
service
Fundlater
Backed by Eureka Asset-backed Loan Fund
Fundlater lending service available for our
diversified ETF portfolios with a maximum
loan value of $6,000 per user.
Tools
InvestSMART
Bootcamp
Ambassadors
Paul Clitheroe, AM
Chairman
Effie Zahos
Non-Executive
Director
Alan Kohler, AM
Editor-in-Chief
ANNUAL REPORT 2022 CONTENTS
Chairman and Managing Director’s Report
Corporate Governance Statement
Directors' Report
Auditor’s Independence Declaration
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors' Declaration
Independent Audit Report to the Members
Additional Information
Directory
CONTENTS
PAGE
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19
20
21
22
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24
48
49
53
55
ANNUAL REPORT 2022
1
CHAIRMAN AND MANAGING DIRECTORS REPORT
CHAIRMAN AND MANAGING DIRECTOR’S REPORT
Dear Shareholders,
Reflecting on the last few years of InvestSMART’s transformation, financial year 2022 should be viewed with great
satisfaction. Commissions on funds managements products ceased from 1 January 2021 and we forecast FY22 to
be our toughest year yet. To add to our challenges the macroeconomic environment significantly deteriorated in
the second half of the year. Yet we managed to produce an operating profit and significant growth in our total
operating income. FY22 will be remembered by our Board, management and staff as the year our strategic plan
continued to deliver solid results.
On behalf of the Directors we are pleased to announce the results for InvestSMART Group (The Group) for the
financial year ended 30 June 2022.
Funds management fees
Subscription income
Commissions income - Insurance
Commissions income - Fund Managers
Other Income
Total Operating Income
Rebates paid
Employee costs
Marketing costs
Other operating expenses
Total Operating Expenses
Operating Profit/(Loss)
2022
$
2,690,468
5,278,786
1,439,998
-
34,984
9,444,236
452,369
4,944,787
1,004,236
2,939,478
9,340,870
2021
$
1,456,246
4,883,208
1,477,055
594,225
45,772
8,456,506
482,337
4,923,956
720,026
2,869,802
8,996,121
103,366
(539,615)
In addition to the pleasing operating results we are well capitalised and debt free with $8.1m in cash at bank at 30
June 2022. The increase in the cash balance is due to the sale of our AWI Ventures portfolio. This portfolio has
been liquidated in a disciplined manner since 2015 when the portfolio was deemed as non-core to our future.
Instead, we focussed on integrating several distinct yet complimentary businesses into one platform. The results
in FY22 of this decision are pleasing, with several highlights:
Total operating income growth of 12%
Funds under management grew by 42% to $470m
Professionally Managed Accounts (PMA) grew by 60% to 2,513 accounts
Funds management fees grew 85% to $2.69m
•
•
•
•
• Content-based subscription income grew 8% to $5.3m
•
The launch of Fundlater – a product designed for younger investors
Growth in our two key focus areas of business, Funds Management and Subscriptions, was achieved against a
significant deterioration in the macroeconomic environment in the second half of the year. The market (measured
by the ASX All Ordinaries) declined by 11% over the financial year with the second half of the year particularly
challenging (decline of 13%). At year end significant market uncertainty remains led by inflation and conflict.
Despite this market decline we produced growth in funds under management and product innovation. Our listed
Intelligent Investor Active Exchange Traded Fund product suite generated above market returns and significant
distributions of realised gains in June 2022.
ANNUAL REPORT 2022
2
CHAIRMAN AND MANAGING DIRECTORS REPORT
STRATEGIC GOAL
The vision of the Company is to “help all Australians grow and protect their wealth.” The key strategic goal to
achieve this vision is to be Australia’s #1 digital wealth platform. The building blocks of this goal are in place with
the infrastructure for a larger funds management business within our ecosystem. InvestSMART has built Australia’s
premier direct investor wealth platform focused on digital investment advice with over 720,000 members. Further
growth will be driven by our Professionally Managed Accounts investment platform underpinned by Australia’s
first capped fee funds, and our bespoke ASX-listed Intelligent Investor fund products.
With a fully developed product suite and a unique ecosystem, our focus is to accelerate the growth of funds
management income. Making it easier for our clients to invest with us by providing better online experiences with
fewer manual processes is central to that goal. We are also keen to provide products and tools which are accessible
and relevant to younger demographics, such as InvestSMART Fundlater which was launched in September
2021. Fundlater is a savings plan allowing investors with a $4k deposit to invest the minimum amount of $10,000
into an InvestSMART Professionally Managed Account. This is facilitated by a low-cost loan of $6,000 provided
by InvestSMART. Also servicing young investors is Bootcamp launched in July 2020, designed by our experts to
educate and help less experienced investors make good investment decisions.
We remain confident
in InvestSMART’s long term strategy. Ongoing regulatory oversight on financial
institutions, especially financial planners, will continue to drive up the cost of personal specific advice, putting it
out of reach for most Australians. InvestSMART provides ideal low-cost solutions for many of these people.
GROWING FUNDS UNDER MANAGEMENT
Our digital wealth platform is delivering strong annual growth, achieved through trust, high quality content,
technology and innovative products. FUM has grown at a 70% 5 year Compound Annual Growth Rate (CAGR) since
30 June 2017.
InvestSMART FUM
42% FY22 growth
70% 5 year CAGR
)
m
$
(
M
U
F
500
400
300
200
100
0
Active Growth
Active Income
Active Ethical
Capped Fee/Passive
The InvestSMART Professionally Managed Accounts investment platform (PMA) was launched in 2018 and contains
many innovative features. PMA investment accounts focus on investing into our selection of preferred ETFs which
provide a balance between performance returns, cost efficiency and risk diversification. The investor portfolio is
ANNUAL REPORT 2022
3
CHAIRMAN AND MANAGING DIRECTORS REPORT
registered under the investor’s name in a unique HIN, giving the investor legal and beneficial ownership of the
underlying securities. The number of PMA accounts increased by 60% over the year to 2,513 as we see the
validation of our investment solution. Fundlater is an important part of the acceleration of the growth in PMA
accounts as we seek to help a younger audience safely invest in a diversified portfolio of assets to achieve their
financial goals.
Rounding out our offering we have Australian active funds managed by Intelligent Investor including Income,
Growth and Ethical Funds. These funds are offered as active exchange traded funds on the ASX and provide low-
cost access to managed funds for investors on the ASX CHESS platform with low minimum investment
requirements, enhanced transparency (ongoing quotation) and simplicity (application and redemption process is
through the ASX CHESS platform). We conduct secondary offerings for each fund on an annual basis to our
growing community of investors. Total Funds Under Management for these funds was $231m at 30 June 2022, 40%
higher than a year earlier.
SUBSCRIPTIONS
Intelligent Investor and Eureka Report subscription products continue to deliver relevant, expert, timely
commentary and financial recommendations. They are an important element in the InvestSMART ecosystem,
generating valuable cash flow, search engine optimisation and, critically, trust. We increased the prices for our
subscription products for the first time in many years in FY22. Subscription income increased by 8% to $5.3m during
FY22 whilst total subscribers declined 3% to 10,464 subscribers.
UNIQUE ECOSYSTEM
Over several years we have worked hard to integrate several assets into one unique ecosystem. A digital ecosystem
is complex, however we believe that we provide the expertise, user experience, products, tools and ambassadors
to simplify the complex.
The Covid-19 pandemic accelerated the use of digital tools and solutions. We believe that this will continue over
time. In addition the Hayne Royal Commission galvanised the finance industry to restructure to deliver what
millions of investors want but haven’t previously been able to get - independent, low cost financial advice and
products. The new environment will deliver better outcomes for investors and is laden with opportunity for
companies positioned to service them as they deserve to be.
As a digital-first company with a unique, developed ecosystem and hundreds of thousands of do-it-yourself
investors, we have a head start in the race. In FY22 we had over 15.8 million website pageviews with 7 million visits.
Each non-bounce visit spent 6.8 minutes on the website on average (non-bounce average visit duration). Servicing
over 720,000 prospective members, 10,464 subscribers, 10,763 FUM accounts and more than 136,000 free
portfolio manager accounts monitoring close to $32billion in assets, InvestSMART is at the forefront of digital
advice.
Free Active
Database
546,980
586,309
637,024
692,812
677,514
704,030
728,397
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
Jun-21
Jun-22
Total Member
Portfolios
63,014
88,892
109,472
118,506
123,930
130,471
136,825
Value of assets held
on Portfolio Manager
($bn)
$12.61
$20.09
$26.46
$28.56
$30.56
$31.65
$31.71
ANNUAL REPORT 2022
4
CHAIRMAN AND MANAGING DIRECTORS REPORT
OUTLOOK
We recorded an operating profit of $103k in FY22. The business is well capitalised with $8.1m of cash at bank and
revenue in our funds management products is growing. Whilst uncertainties remain with regards to inflation, we
are comfortable with our operating cost base and process of leveraging up and down marketing expenditure as
opportunities arise to accelerate growth. With an experienced team and a suite of innovative products and services
we are well positioned to grow the number of clients and profits.
The Board remains confident in InvestSMART’s long term strategy to be Australia’s #1 digital wealth platform for
all Australians looking to take control of their investments to meet their financial goals.
Ongoing regulatory oversight on financial institutions, especially financial planners, will continue to drive up the
cost of personal specific advice, putting it out of reach for most Australians. InvestSMART’s now fully developed
suite is an ideal low-cost solution for many of these people.
Our job now is to make it simple for new members to engage with us and our products. This, we believe, will lead
to higher conversions and more paying customers. Our low cost, capped fee PMAs are a good example of how this
strategy is playing out. There is a far larger market for these products, which we have only just begun to address.
The Board would like to thank our staff, shareholders, and clients for their continued contribution to the ongoing
success of our business. We look forward to realising the full potential of our business over coming years and
celebrating with you our future success.
Paul Clitheroe
Chairman
Ron Hodge
Managing Director
ANNUAL REPORT 2022
5
CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE STATEMENT
The InvestSMART Board is committed to achieving and demonstrating best practice standards of corporate
governance with the Australian Stock Exchange (ASX) regulations. Our goal is to ensure we protect the rights
and interests of all stakeholders and ensure the company is properly managed through the implementation of
sound strategies and action plans.
We achieve this through good management and by supervising an integrated framework of controls over the
company’s resources to ensure our commitment to high standards of ethical behaviour. In developing corporate
governance policies and practices for the Group, the Company takes into account the Constitution of the
Company (Constitution) and applicable legislation and standards, including:
•
•
•
•
Corporations Act 2001 (Cth) (Corporations Act);
Australian Securities Exchange Listing Rules (Listing Rules);
Corporate Governance Principles and Recommendations, 4th Edition published by the ASX Corporate
Governance Council (ASXCGC); and
legislation governing Australian Financial Services Licences and other licences held by members of the
Group.
A description of the company’s corporate governance practices is set out in the Company’s corporate
governance
at https://www.investsmart.com.au/shareholder-
centre/governance. The 2022 corporate governance statement is dated 24 August 2022 and is approved by the
Board. The statement reflects the corporate governance practices in place throughout the 2022 financial year.
statement which
can be
viewed
Our remuneration report is enclosed in the annual report and outlines group remuneration policies, Board
performance and the senior executive remuneration policies and compensation.
ANNUAL REPORT 2022
6
DIRECTOR’S REPORT
DIRECTORS’ REPORT
The Directors present their report on InvestSMART Group Limited (the Company) and its subsidiaries
(collectively the Group) for the financial year ended 30 June 2022.
Review of operations
The table below shows the consolidated performance of the Group for the years ended 30 June 2022 and 30
June 2021. This information is presented to show the relative changes in operating income over the period.
Funds management fees
Subscription income
Commissions income - Insurance
Commissions income - Fund Managers
Other Income
Total Operating Income
Rebates paid
Employee costs
Marketing costs
Other operating expenses
Total Operating Expenses
Operating Profit/(Loss)
Gain/(loss) on ventures investments and call option
Sale of subsidiary and government grants
Employee benefit expense and contingent payments
Amortisation of intangibles
Profit/(loss) before income tax
Income tax benefit
Profit/(loss) for the period
2022
$
2,690,468
5,278,786
1,439,998
-
34,984
9,444,236
452,369
4,944,787
1,004,236
2,939,478
9,340,870
2021
$
1,456,246
4,883,208
1,477,055
594,225
45,772
8,456,506
482,337
4,923,956
720,026
2,869,802
8,996,121
103,366
(539,615)
(141,000)
257,131
(513,308)
(570,688)
(864,499)
124,323
(740,176)
1,241,713
238,025
(341,763)
(867,241)
(268,880)
304,658
35,778
Total operating income increased by 12% compared to the prior year. Funds management fees increased by 85%
compared to the prior year. Total funds under management increased from $330 million at 30 June 2021 to $470
million at 30 June 2022. Funds under management consists of Professionally Managed Accounts (portfolios of
exchange traded funds under a capped fee model on the InvestSMART platform) and Intelligent Investor ASX
listed Active Exchange Traded Funds. Subscription income from Intelligent Investor and Eureka Report grew 8%
compared to the prior year. The increase is due to an increase in prices for our subscription products from 1 July
2021. Funds management fees and subscription income are the focus areas of the business moving forward.
Commissions income from fund managers decreased due to the cessation grandfathered commissions.
Legislation removed grandfathering arrangements for commissions on funds management products and default
insurance within superannuation from 1 January 2021. Insurance commissions are not similarly affected as the
majority of policies are outside superannuation.
Marketing expenses increased due to an increase in volume of digital, search engine and brand expenditure.
Gain on ventures investments and call option is higher in the prior year due to a revaluation of a venture capital
investment during the year ended 30 June 2021.
ANNUAL REPORT 2022
7
DIRECTOR’S REPORT
Cash and cash equivalents increased to $8.08 million at 30 June 2022 compared to $6.48 million at 30 June 2021.
AWI Ventures Pty Ltd, the subsidiary which held the remaining three ventures investments, was sold in May 2022
for a cash consideration of $3.2 million. The Net Tangible Assets of the Group is largely unchanged compared to
the prior year at 4.33c (2021: 4.37c).
The Group has substantial realised capital tax losses that have not been recognised in the financial statements
as the Directors believe there are negligible opportunities to utilise those losses in the medium term.
Dividends
No dividend has been declared, recommended or paid for the financial year ended 30 June 2022 (2021: nil).
Earnings/loss per share
Basic loss per share was 0.67 cents (2021: earnings per share 0.03c), and diluted loss per share was 0.67 cents
(2021: earnings per share 0.00c).
Significant Changes in State of Affairs
There were no significant changes in the Group’s state of affairs during the period.
AWI Ventures Pty Ltd, a subsidiary of InvestSMART Group Ltd, was disposed during the period. The activities
of this subsidiary were not part of the principal activities of the Group. Refer to Annual Financial Report attached
for further information.
Principal Activities
The principal activities of the Group during the year was the provision of financial services and products to retail
investors in particular in the areas of funds management, wealth management and personal insurance.
Events Subsequent to Balance Date
There have been no significant events since 30 June 2022 up to the date of this report.
Business strategies and prospects
The Group will continue to focus on increasing the conversion of users of free products on its website and mobile
application to new subscribers and investors in its fund management products. The Group continues to offer
free portfolio management services, free content, calculators, education and tools as part of the conversion and
trust building process. The Group will continue to focus marketing efforts on our products through targeted
campaigns, digital advertising, search engine optimisation and media coverage.
Attrition rates for insurance commissions are expected to continue with a small portion affected by cessation of
grandfathered commissions.
Business Risks
The Group accepts that it is exposed to risks inherent in the services provided. The Group has adopted an
enterprise risk management model to mitigate the likelihood of these risks occurring. The Audit, Risk and
Compliance Committee appointed by the Board of InvestSMART Group Limited has oversight of the Risk
Management Policy, Risk Register and the risk management process. In summary The Group is exposed to the
following risks:
• Market and Investment – market conditions, volatility and counterparty risk
• Operational – Outsourcing, fraud and valuation of assets
•
•
• Human Resources – loss of key personnel and employee misconduct
Financial – capital management and liquidity
Technology – data, cyber security and malicious activity
ANNUAL REPORT 2022
8
DIRECTOR’S REPORT
•
Strategic – execution of strategy and competition
•
Regulatory – adverse regulatory change and non-compliance with laws and regulations
•
Reputational
• Governance
Directors
The names and details of the Directors of the Company who held office during the year and at the date of this
report (unless otherwise specified) are:
Paul Clitheroe AM (Appointed Non-Executive Chairman 26 November 2014, appointed Executive Chairman
31 March 2015, reappointed Non-Executive Chairman 24 February 2016)
Non-executive Chairman
Bachelor of Arts (UNSW), SNF Fin, CFP
Age 67
Paul Clitheroe was a founding director of leading financial planning firm ipac and has been involved in the
investment industry since he graduated from the University of New South Wales in the late 1970s. From 1993 to
2002 Paul hosted the popular Channel 9 program Money. Since 1999 he has been the chairman and chief
commentator of Money magazine. He writes personal finance columns for metropolitan, suburban and regional
newspapers across Australia. Paul has been a media commentator and conference speaker for more than 30
years and is regarded as one of Australia's leading experts in the field of personal investment strategies and
advice.
Paul is Chairman of Monash Absolute Investment Company Ltd (commenced: 20/01/2016) and previously a
Director of Wealth Defender Equities Ltd, both ASX-listed investment companies. He is also Chairman of the
Ensemble Theatre Foundation, Chairman of Ecstra (formerly Financial Literacy Australia) and Chairman of the
youth anti-drink driving body, RADD. In 2012, Macquarie University appointed Mr Clitheroe as Chair of Financial
Literacy. He is a Professor with the School of Business and Economics.
Michael Shepherd AO (Appointed 1 March 2014)
Lead Independent Non-Executive Director
Chairman of the Audit, Risk and Compliance Committee
Chairman of the Nomination and Remuneration Committee
SF Fin, MAICD
Age 72
Michael Shepherd has had a successful career in financial services over more than 40 years. He was a director
of ASX Limited and group between 1988 and 2007, including a term as Vice-Chairman between 1993 and 2007.
Michael was also Chairman of the ASX Derivatives Board and Chairman of the ASX Market Rules Committee.
Michael is currently Chairman of Navigator Global Investments Limited (a listed investment management
company, commenced 16/12/2009) and a member of the Responsible Entity Compliance Committee of UBS
Global Asset Management (Australia) Limited. He is also a Senior Fellow and Life Member, Financial Services
Institute of Australasia, after being a director of that body between 2001 and 2009, including 2 years as National
President.
ANNUAL REPORT 2022
9
DIRECTOR’S REPORT
Peter Ronald Hodge (Appointed 1 September 2015, appointed Managing Director 24 February 2016)
Managing Director
BCom, BEcon, MSc, FFin, GAICD
Age 52
Ron Hodge was the founder of InvestSMART in 1999. Mr Hodge later sold this business to Fairfax Media in
October 2007 where he continued as General Manager. He has worked in financial services for over 25 years,
including at UBS in Singapore and Bell Commodities in Sydney. Ron holds a Masters degree in Computer
Science, Bachelors Degree in Commerce, Bachelors Degree in Economics, a Graduate Diploma in Applied
Finance and Investments and is a Graduate of the Australian Institute of Company Directors.
Effie Zahos (Appointed 11 November 2020)
Independent Non-executive Director
BEcon
Age 52
Effie Zahos is one of Australia’s leading personal finance commentators with more than two decades of
experience helping Australians make the most of their money. A regular money expert on Channel 9’s Today
Show and on radio around Australia, Effie is also the author of The Great $20 Adventure, A Real Girl’s Guide to
Money and Ditch the Debt and Get Rich.
Effie was editor of Money magazine until 2019, having helped establish it in 1999 and is now Editor-at-Large of
Canstar. Passionate about financial literacy, Effie sits on the board of directors for Ecstra, a not-for-profit
organisation committed to building the financial capability of all Australians.
Effie holds a Bachelor of Economics Degree from the University of Queensland.
Company Secretary
Catherine Teo was appointed Company Secretary and General Counsel on 12 February 2019. Catherine is a
qualified lawyer, admitted in the Supreme Court of New South Wales and the High Court of Australia and has
over ten years’ experience as a corporate lawyer. Catherine resigned as Company Secretary on 25 February 2021
to commence maternity leave. Catherine was reappointed as company secretary on 31 January 2022.
Martin Conley was appointed Company Secretary on 24 February 2021. Martin has over 20 years of experience
as a company secretary and corporate governance professional across large, dynamic and complex
organisations. Martin resigned as company secretary on 31 January 2022.
Meetings of Directors
The number of Directors’ Meetings (including Meetings of Committees of Directors) and number of Meetings
attended by each of the Directors of the Company during the 2022 financial year were:
Directors’ Meetings
Meetings of Audit,
Risk and Compliance
Committee
Meetings of
Nomination and
Remuneration
Committee
Meetings of
Investment
Committee
Meetings
eligible
to attend
Meetings
attended
Meetings
eligible
to attend
Meetings
attended
Meetings
eligible
to attend
Meetings
attended
Meetings
eligible
to attend
Meetings
attended
Paul Clitheroe
Ron Hodge
Michael Shepherd
Effie Zahos
10
10
10
10
10
10
9
10
5
-
5
-
4
-
5
-
1
-
1
-
1
-
1
-
4
4
-
4
4
4
-
4
ANNUAL REPORT 2022
10
Interests in the Securities of the Company
The relevant interests of each Director in the securities of the Company shown in the Register of Directors’
Shareholdings as at the date of this report are:
DIRECTOR’S REPORT
Director
Paul Clitheroe
Michael Shepherd
Peter Ronald Hodge
Effie Zahos
Ordinary Shares
5,000,000
600,000
14,415,093
Nil
Directors are not required under the Company's constitution to hold any shares, options or any other securities
in the Company. A portion of the shares held by Paul Clitheroe (1,333,334) and Ron Hodge (1,522,223) are subject
to vesting conditions.
Unitholdings in Funds
The number of units held during the year by each Director in funds for which InvestSMART Funds Management
Ltd acts as Responsible Entity:
Intelligent Investor Australian Equity Growth Fund
Paul Clitheroe
Michael Shepherd
Ron Hodge
Intelligent Investor Australian Equity Income Fund
Ron Hodge
Intelligent Investor Ethical Share Fund
Ron Hodge
Professionally Managed Accounts
Ron Hodge
Eureka Asset-Backed Loan Fund
Ron Hodge
Balance at
30 June
2021
Units
acquired
Balance at
30 June
2022
42,389
10,790
8,000
-
-
6,233
42,389
10,790
14,233
-
-
2
-
17,293
17,293
14,423
14,423
2
4
540,000
540,000
Interests in Contracts or Proposed Contracts with the Company
Paul Clitheroe and Ron Hodge have received loans from the company as part of the Employee and Directors
Share Plan (EDSP) as detailed below. Ron Hodge received a loan of $6,000 as a Fundlater client during the year.
A related party of Ron Hodge received a loan of $6,000 during the year as a Fundlater client. The Fundlater loans
were issued by InvestSMART Financial Services Pty Ltd. The loans were sold to Eureka Asset-Backed Loan Fund,
a Fund issued by InvestSMART Funds Management Limited, during the year.
Other than as noted above, none of the Directors have an interest in, or proposed interests in, contracts with the
Group.
Remuneration Report (Audited)
The Group’s remuneration policy is designed to offer a remuneration structure that aligns management
incentives with the interests of shareholders and attracts and retains employees and Directors who have
extensive experience in the financial services industry and are knowledgeable in investment management best
practice. Remuneration is reviewed at least annually by the Nomination and Remuneration committee, which
consists of non-executive directors.
ANNUAL REPORT 2022
11
DIRECTOR’S REPORT
All Directors must have a commitment to good corporate governance. The primary role of the non-executive
Directors is the protection and enhancement of sustainable shareholder value through:
(a) ensuring the control and accountability framework is in place so that all significant issues relating to the
operation and performance of the Company and its subsidiary entities are brought to the attention of the
Board;
(b) monitoring governance policies, practices and systems to ensure they are effective and appropriate; and
(c) monitoring risk policies, practices and systems to ensure they are effective and appropriate.
The Directors agree the remuneration each Director receives (other than any Managing Director or Director who
is a salaried officer), subject to the sum determined by the Company in general meeting. No option or bonus
plans are in place for Directors other than those listed below.
Under ASX Listing Rule 10.17, the maximum fees payable to Directors may not be increased without prior
approval from the Company at a general meeting. Directors will seek approval from time to time as deemed
appropriate.
The Directors will be entitled to receive the following benefits:
(a)
the maximum total remuneration of the Directors of the Company (excluding the Managing Director) has
been approved by shareholders at $400,000 per annum to be divided amongst them in such proportions
as they agree. Directors are not required to allocate the entire amount.
(b) Paul Clitheroe is eligible to participate in the EDSP and received 4,000,000 shares divided into three equal
tranches and a corresponding limited recourse loan on 9 December 2020, as approved by shareholders at
the Annual General Meeting on 11 November 2020. The EDSP shares replaced the 4,000,000 LTIP shares
previously issued. Paul’s shares have no performance conditions. The first tranche is issued at 15 cents and
vested immediately. The second tranche is issued at 20 cents and vested on 30 November 2021. The third
tranche is issued at 30 cents and vests on 30 November 2022. The loan relating to each tranche is repayable
5 years after each tranche vests.
(c) Ronald Hodge, as Managing Director, is eligible to participate in the EDSP and received 4,566,665 shares
divided into three equal tranches and a corresponding limited recourse loan on 9 December 2020, as
approved by shareholders at the Annual General Meeting on 11 November 2020. The EDSP shares replaced
the 4,566,665 LTIP and ESOP shares previously issued. Ron’s shares have no performance conditions. The
first tranche is issued at 15 cents and vested immediately. The second tranche is issued at 20 cents and
vestsed on 30 November 2021. The third tranche is issued at 30 cents and vests on 30 November 2022. On
8 December 2021 Ron received 210,000 EDSP shares at a price 25c in lieu of cash as part of the Group’s
short-term incentive plan (STI) as approved by shareholders at the Annual General Meeting on 17 November
2021. The loan relating to each tranche of shares is repayable 5 years after each tranche vests.
Key management personnel may receive fixed remuneration as cash, shares through the Group’s EDSP and cash
or shares through the Group’s short-term incentive plan (STI). Fixed remuneration is reviewed at least annually.
The Group aims to position executives and staff at or near the median for comparable roles in a similar industry.
Consideration is also given to capability, experience, performance and other elements of remuneration.
All staff and executives are entitled to participate in the STI scheme as part of their total remuneration subject
to Group and employee specific indicators. The Group performance indicator is budgeted revenue for the
financial year. The total STI pool is determined by the Group’s relative performance against budget. The total
value of the STI pool increases at a predetermined rate as outperformance against budget increases. Executives
and employees receive an STI from this bonus pool where they achieve individual key performance indicators.
The STI may be received in cash or shares, subject to restrictions of a cap on cash amount and availability of
shares to be issued. The performance conditions were chosen to incorporate overall performance of the
company against budget and individual qualitative and quantitative assessments.
ANNUAL REPORT 2022
12
DIRECTOR’S REPORT
The Group has linked performance with compensation in relation to the performance of the InvestSMART Group
share price through the Group’s Employee and Director Share Plan (EDSP), which is an equity-settled share-
based payment to employees and Directors. On 9 December 2020 all shares issued under the company’s
previous equity-settled share-based payment plans, the Long-Term Incentive Plan (LTIP) and the Employee
Share Ownership Plan (ESOP) were bought back and new shares issued under the new EDSP plan. The market
price of InvestSMART Group on this date was 9.1 cents. The value of any benefits given to Directors or key
management personnel (KMP) is detailed below.
The table below reflects results and measurements recommended by the Corporations Act for discussion of the
relationship between company performance and remuneration.
Revenue ($)
Total comprehensive profit/(loss) ($)
Share price ($)
Dividends declared and paid ($)
Shares bought back on market
2022
9,702,468
(740,176)
0.240
-
-
2021
8,680,504
35,778
0.215
-
377,823
2020
10,613,052
(1,335,658)
0.074
-
-
2019
11,987,384
(1,770,852)
0.062
-
-
2018
13,453,823
230,284
0.190
-
-
The Group continues to focus on consistently growing revenue in funds management and subscriptions to add
further shareholder value. The Group’s Revenue declined from 2018 to 2021 and earnings have been negative in
some years due to the nature of the business. Funds management commissions on new products were abolished
in 2014 with existing commissions arrangements grandfathered. This meant that this revenue source would
decline consistently. This revenue source was permanently banned from 1 January 2021. The table below shows
the decline in commissions revenue and progress growing funds management and subscriptions revenue:
Funds management fees ($)
Subscription revenue ($)
Commissions on funds management
and insurance ($)
2022
2,690,468
5,278,786
2021
1,456,246
4,883,208
2020
900,213
4,350,653
2019
764,953
4,235,400
2018
347,667
5,005,675
1,439,998
2,071,280
5,295,069
6,398,769
6,869,238
The Directors’ remuneration for the year ended 30 June 2022 is detailed in the following table:
Name of Director
Short-term benefits
Base
remuneration
Cash
bonus
Ron Hodge
Paul Clitheroe
FY22
FY21
Michael Shepherd FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
Kevin Moore#
Effie Zahos
TOTAL
$
82,192
78,082
82,192
78,082
271,348
248,566
60,000
38,333
-
21,000
495,732
464,063
$
-
-
-
-
-
-
-
-
-
-
-
-
Post-
employment
benefits
Super-
annuation
$
8,219
7,418
8,219
7,418
27,135
23,614
-
-
-
-
43,573
38,450
Long-
term
benefits
Long
Service
Leave+
$
-
-
-
-
5,612
4,406
-
-
-
-
5,612
4,406
Annual
Leave+
$
-
-
-
-
1,242
(4,805)
-
-
-
-
1,242
(4,805)
Share
based
payments^
Equity
settled
$
19,670
26,813
-
-
41,113
30,612
-
-
-
-
60,783
57,425
Total
$
110,081
112,313
90,411
85,500
346,450
302,393
60,000
38,333
-
21,000
606,942
559,539
ANNUAL REPORT 2022
13
DIRECTOR’S REPORT
^ Share-based payments consists of apportioned expense under AASB 2 – Share-based payments for EDSP shares issued
+ The movement in Annual leave and long service leave entitlements accrued during the year
# Kevin Moore was appointed on 1 December 2017 and resigned on 1 December 2020
No Director of the Company has received or become entitled to receive a benefit, other than a remuneration
benefit as disclosed in the notes to the financial statements, by reason of a contract made by the Company or a
related entity with the Director or with a firm of which they are a member, or with a Company in which they have
a substantial interest. Ron Hodge received a loan of $6,000 as a Fundlater client during the year. A related party
of Ron Hodge received a loan of $6,000 during the year as a Fundlater client. The Fundlater loans were issued
by InvestSMART Financial Services Pty Ltd. The loans were sold to Eureka Asset-Backed Loan Fund, a Fund
issued by InvestSMART Funds Management Limited, during the year.
Key Management Personnel
Ron Hodge (Managing Director), Nigel Poole (Chief Technology Officer) and Alastair Davidson (Head of Funds
Management) were considered to be Key Management Personnel (“KMP”) for the year ended 30 June 2022. All
of the KMP are on ongoing contracts which require from the KMP 3 months’ written notice of intention to
terminate employment. The Board may terminate the employment of a KMP with 6 months’ written notice, if
without cause.
The remuneration of the key management personnel who were not Directors for the year to 30 June 2022 is
shown below.
Name of KMP
Nigel Poole
Alastair Davidson
FY22
FY21
FY22
FY21
Short-term benefits
Base
remuneration
$
229,429
213,341
210,095
210,485
Cash
bonus
$
15,455
-
-
-
Annual
Leave+
$
165
2,079
(2,276)
(822)
Post-
employment
benefits
Super-
annuation
$
24,488
20,267
21,009
19,996
Long-
term
benefits
Long
Service
Leave+
$
5,723
10,161
4,065
8,964
Share
based
payments^
Equity
settled
$
21,964
29,942
37,068
29,942
Total
$
297,224
275,790
269,961
268,565
^ Share-based payments consists of apportioned expense under AASB 2 – Share-based payments for EDSP shares issued
+ The movement in Annual leave and long service leave entitlements accrued during the year
ANNUAL REPORT 2022
14
Shares held by Key Management Personnel and Directors
DIRECTOR’S REPORT
Balance at
30 June
2020
Shares
acquired
during the
year
Shares
cancelled
during the
year
Balance at
30 June
2021
Shares
acquired
during the
year
Balance at
30 June
2022
Approval
or issue
date
Value
at
issue
date
Estimated
or actual
vesting
date
Vested
balance at
30 June
2020
Shares
vested
during
the year
Vested
Balance at
30 June
2021
Shares
vested
during
the year
Vested
balance at
30 June
2022
Security
Paul Clitheroe
5,000,000 4,000,000 (4,000,000) 5,000,000
- 5,000,000
1,333,333
-
1,333,333
-
2,666,666
Fully Paid Issued Capital 1,000,000
-
EDSP Tranche 1
EDSP Tranche 2
EDSP Tranche 3
LTIP Tranche 1
LTIP Tranche 2
LTIP Tranche 3
Michael Shepherd
-
-
-
1,333,333
1,333,333
1,333,334
-
-
-
-
1,000,000
1,333,333
1,333,333
1,333,334
1,333,333
1,333,333
1,333,334
600,000
-
-
-
-
-
(1,333,333)
(1,333,333)
(1,333,334)
-
-
-
-
-
600,000
600,000
-
-
-
-
-
-
-
-
-
1,000,000
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
1,333,333
9/12/2020 0.019 9/12/2020
n/a 1,333,333
1,333,333
-
1,333,333
1,333,333
9/12/2020 0.018 30/11/2021
1,333,334
9/12/2020 0.014 30/11/2022
n/a
n/a
-
-
-
26/11/2014 0.054
Note 1
1,333,333
26/11/2014 0.066
26/11/2014 0.073
Note 1
Note 1
-
-
-
-
n/a
n/a
n/a
-
n/a
n/a
n/a
-
n/a
n/a
n/a
- 1,333,333
1,333,333
-
n/a
n/a
n/a
n/a
Fully Paid Issued Capital
600,000
n/a
n/a
n/a
n/a
Ron Hodge
8,496,666 10,068,668 (4,566,665)
13,998,669
416,424 14,415,093
4,566,665 1,522,221
1,522,221
1,732,221 3,254,442
Fully Paid Issued Capital 3,930,001 5,502,003
EDSP Tranche 1
EDSP Tranche 2
EDSP Tranche 3
EDSP Tranche 4
LTIP Tranche 1
LTIP Tranche 2
LTIP Tranche 3
ESOP Tranche 1
ESOP Tranche 2
ESOP Tranche 3
-
-
-
-
1,388,888
1,388,888
1,388,889
133,333
133,333
133,334
1,522,221
1,522,221
1,522,223
-
-
-
-
-
-
-
-
-
-
-
-
(1,388,888)
(1,388,888)
(1,388,889)
(133,333)
(133,333)
(133,334)
-
-
-
-
-
-
-
600,000
600,000
n/a
n/a
n/a
n/a
9,432,004
206,424
9,638,428
n/a
n/a
1,522,221
1,522,221
1,522,223
-
-
-
1,522,221
9/12/2020 0.019 9/12/2020
1,522,221
9/12/2020 0.018 30/11/2021
1,522,223
9/12/2020 0.014 30/11/2022
210,000
210,000
8/12/2021 0.089 8/12/2021
n/a
n/a
n/a
n/a
n/a
-
-
-
-
-
-
-
-
-
17/06/2015 0.077 8/09/2016 1,388,888
17/06/2015 0.083 8/09/2017
1,388,888
17/06/2015 0.088 8/09/2018
1,388,889
- 28/12/2016 0.050 28/12/2017
133,333
- 28/12/2016 0.057 28/12/2018
133,333
- 28/12/2016 0.063 28/12/2019
133,334
n/a
n/a
n/a
n/a
1,522,221
1,522,221
-
1,522,221
-
-
n/a
n/a
n/a
n/a
n/a
n/a
n/a
-
-
n/a
n/a
n/a
n/a
n/a
n/a
n/a
1,522,221
1,522,221
-
-
210,000
210,000
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Note 1: The LTIP shares issued to Paul Clitheroe were cancelled on 8 December 2020 and replaced with EDSP shares as approved by shareholders at the Annual General
Meeting on 11 November 2020. The LTIP shares issued to Paul Clitheroe vested in three equal tranches on the later of the first, second and third anniversary of the grant date,
or the date the share price was at or above $0.33, $0.42 or $0.50 respectively for each tranche. The first tranche vested on 30 May 2016 and had a maturity date of 30 May
2021. The remaining two tranches remained unvested and had a maturity date of 5 years post vesting. The EDSP shares have maturity dates of 30 November 2025 for tranche
1, 30 November 2026 for tranche 2 and 30 November 2027 for tranche 3.
ANNUAL REPORT 2022
15
DIRECTOR’S REPORT
Balance at
30 June
2020
Shares
acquired
during the
year
Shares
cancelled
during the
year
Balance at
30 June
2021
Shares
acquired
during the
year
4,466,666 4,466,666 (4,466,666)
4,466,666
-
-
-
1,488,888
1,488,889
1,488,889
-
-
-
1,488,888
1,488,889
1,488,889
1,388,888
1,388,889
1,388,889
100,000
100,000
100,000
-
-
-
-
-
-
(1,388,888)
(1,388,889)
(1,388,889)
(100,000)
(100,000)
(100,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
30 June
2022
4,466,666
Approval
or issue
date
Value
at
issue
date
Estimated
or actual
vesting
date
Vested
balance at
30 June
2020
Shares
vested
during
the year
Vested
Balance at
30 June
2021
Shares
vested
during
the year
Vested
balance at
30 June
2022
4,466,666 1,488,888
1,488,888 1,488,889
2,977,777
1,488,888
9/12/2020 0.019 9/12/2020
n/a 1,488,888
1,488,888
-
1,488,888
1,488,889
9/12/2020 0.018 30/11/2021
1,488,889
9/12/2020 0.014 30/11/2022
n/a
n/a
-
-
-
17/06/2015 0.077 8/09/2016 1,388,888
17/06/2015 0.083 8/09/2017
1,388,889
17/06/2015 0.088 8/09/2018
1,388,889
- 28/12/2016 0.050 28/12/2017
100,000
- 28/12/2016 0.057 28/12/2018
100,000
- 28/12/2016 0.063 28/12/2019
100,000
-
-
n/a
n/a
n/a
n/a
n/a
n/a
- 1,488,889
1,488,889
-
n/a
n/a
n/a
n/a
n/a
n/a
-
n/a
n/a
n/a
n/a
n/a
n/a
-
n/a
n/a
n/a
n/a
n/a
n/a
Security
Nigel Poole
EDSP Tranche 1
EDSP Tranche 2
EDSP Tranche 3
LTIP Tranche 1
LTIP Tranche 2
LTIP Tranche 3
ESOP Tranche 1
ESOP Tranche 2
ESOP Tranche 3
Alastair Davidson
5,248,059
4,841,210 (4,466,665)
5,622,604
170,000
5,792,604
4,466,665 1,488,888
1,488,888 1,658,889
3,147,777
Fully Paid Issued Capital
781,394
374,544
EDSP Tranche 1
EDSP Tranche 2
EDSP Tranche 3
EDSP Tranche 4
LTIP Tranche 1
LTIP Tranche 2
LTIP Tranche 3
ESOP Tranche 1
ESOP Tranche 2
ESOP Tranche 3
-
-
-
-
1,388,888
1,388,888
1,388,889
100,000
100,000
100,000
1,488,888
1,488,889
1,488,889
-
-
-
-
-
-
-
-
-
-
-
-
(1,388,888)
(1,388,888)
(1,388,889)
(100,000)
(100,000)
(100,000)
1,155,938
1,488,888
1,488,889
1,488,889
-
-
-
-
1,155,938
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
1,488,888
9/12/2020 0.019 9/12/2020
n/a 1,488,888
1,488,888
-
1,488,888
1,488,889
9/12/2020 0.018 30/11/2021
1,488,889
9/12/2020 0.014 30/11/2022
170,000
170,000
1/09/2021 0.089 1/09/2021
n/a
n/a
n/a
-
-
-
-
-
-
-
-
-
17/06/2015 0.077 8/09/2016 1,388,888
17/06/2015 0.083 8/09/2017
1,388,888
17/06/2015 0.088 8/09/2018
1,388,889
- 28/12/2016 0.050 28/12/2017
100,000
- 28/12/2016 0.057 28/12/2018
100,000
- 28/12/2016 0.063 28/12/2019
100,000
-
-
-
-
-
-
-
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
- 1,488,889
1,488,889
-
-
n/a
n/a
n/a
n/a
n/a
n/a
-
-
170,000
170,000
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
ANNUAL REPORT 2022
16
DIRECTOR’S REPORT
The EDSP shares have no performance conditions in order to vest. The directors believed that the issue prices
for the EDSP shares better aligned the interests of Paul Clitheroe and key management personnel with the
shareholders.
The LTIP and ESOP shares issued to Ron Hodge, Alastair Davidson and Nigel Poole were cancelled on 8
December 2020 and replaced with EDSP shares as approved by shareholders at the Annual General Meeting on
11 November 2020. The LTIP shares had maturity dates of 8 September 2021 for tranche 1, 8 September 2022
for tranche 2 and 8 September 2023 for tranche 3. The ESOP shares had maturity dates of 28 December 2022
for tranche 1, 28 December 2023 for tranche 2 and 28 December 2024 for tranche 3. The EDSP shares have
maturity dates and issue prices of 30 November 2025 for tranche 1 (issue price 15c), 30 November 2026 for
tranche 2 (issue price 20c) and 30 November 2027 for tranche 3 (issue price 30c). EDSP4 shares were issued to
Alastair Davidson on 1 September 2021 and Ron Hodge on 8 December 2021. The shares were issued in lieu of a
cash bonus under the Company’s STI plan. Ron Hodge’s issue of shares was approved by shareholders at the
Annual General Meeting on 17 November 2021. EDSP4 shares vest immediately, have a maturity date of 1
September 2026 and an issue price of 25c.
The EDSP shares issued are dependent on the relevant director or employee not resigning or being dismissed
for cause before each tranche vests.
Key management personnel transactions concerning dividends and ordinary shares are on the same terms and
conditions applicable to ordinary shareholders.
This concludes the Remuneration Report which has been audited.
Environmental regulation
The Group is not subject to any particular or significant environmental regulation under Australian
Commonwealth or State Law.
Insurance of Directors
During the financial year, the Company has given indemnity and paid insurance premiums to insure Directors
and officers against liabilities for costs and expenses incurred by them in defending any legal proceedings arising
out of their conduct while acting in the capacity of Directors or officers of the Company or subsidiaries, other
than conduct involving a wilful breach of duty in relation to the Company or subsidiaries. Details of the nature
of the liabilities covered and the amount of premiums paid have not been disclosed as disclosure is prohibited
under the terms of the contract.
Indemnification of auditors
The company has not otherwise, during or since the end of the financial year, except to the extent permitted by
law, indemnified or agreed to indemnify an auditor of the company or of any related body corporate against a
liability incurred as such auditor.
Non-Audit Services
A network firm, BDO Services Pty Ltd, received $59,307 for non-audit services (taxation services). The Directors
are satisfied that the provision of non-audit services is compatible with the general standard of independence
for auditors imposed by the Corporations Act. No other non-audit services have been provided by the auditor or
by another person on the auditor’s behalf during the year. This statement has been made in accordance with
advice provided by the Company’s audit committee and has been endorsed by a resolution of that committee.
Proceedings on behalf of the Group
No proceedings have been brought or intervened in on behalf of the Group with leave of the Court under section
237 of the Corporations Act 2001.
ANNUAL REPORT 2022
17
Auditor’s Independence Declaration
The auditor’s independence declaration for the year ended 30 June 2022 has been received and can be found
on page 19.
The annual directors’ report is signed in accordance with a resolution of the Directors.
DIRECTOR’S REPORT
Paul Clitheroe
Chairman
Dated this 24th day of August 2022 at Sydney
ANNUAL REPORT 2022
18
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
DECLARATATION OF INDEPENDENCE BY TIM AMAN TO THE DIRECTORS OF INVESTSMART GROUP
LIMITED
As lead auditor of InvestSMART Group Limited for the year ended 30 June 2022, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of InvestSMART Group Limited and the entities it controlled during the
period.
Tim Aman
Director
BDO Audit Pty Ltd
Sydney
24 August 2022
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members
of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent
member firms. Liability limited by a scheme approved under Professional Standards Legislation.
19
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Consolidated Statement of Comprehensive Income
Funds management fees
Subscription income
Commission income - insurance
Commission income - funds
Other income
Total Income
Net loss/(gain) on financial instruments at fair value through profit
and loss
Accounting and administrative costs
Audit fees
Business insurance
Commission rebates
Directors’ fees
Employee costs
Legal and statutory expenses
Marketing and advertising
Other expenses
Software and website costs
Travel and accommodation
Depreciation and amortisation
Employee benefit expense
Total expenses
Notes
3
4
23
16
2022
$
2,690,468
5,278,786
1,439,998
-
293,216
9,702,468
2021
$
1,456,246
4,883,208
1,477,055
594,225
269,770
8,680,504
142,102
(1,255,740)
568,828
147,985
292,912
452,369
240,823
5,243,470
93,949
1,004,236
405,994
928,475
15,376
815,823
214,625
10,566,967
553,863
140,422
242,819
482,337
230,334
5,050,554
120,398
720,026
423,969
796,722
21,277
1,207,238
215,165
8,949,384
Profit/(loss) before income tax
(864,499)
(268,880)
Income tax benefit
Profit/(loss) for the year
7
124,323
304,658
(740,176)
35,778
Other comprehensive income, net of income tax
-
-
Total comprehensive profit/(loss) for the year
(740,176)
35,778
Basic earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share (cents per share)
20
20
(0.67)
(0.67)
0.03
0.00
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2022
20
Consolidated Statement of Financial Position
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
ASSETS
Cash and cash equivalents
Trade and other receivables
Prepayments and deposits
Financial assets at fair value through profit and loss
Loans receivable
Fixed assets, including software
Right of use asset
Deferred tax asset
Intangibles
Total assets
LIABILITIES
Trade and other payables
Subscriptions received in advance
Trail commissions to rebate
Provisions
Lease liability
Deferred tax liability
Total liabilities
Net assets
EQUITY
Issued capital
Employee Benefit reserve
Retained losses
Total equity
Notes
19
8
5
6
12
9
7
11
13
14
9
7
17
16
2022
$
8,080,119
590,241
256,365
8,899
6,210
90,253
797,289
435,579
1,372,868
11,637,823
723,415
2,470,118
283,395
723,132
828,722
542,539
5,571,321
2021
$
6,483,167
439,776
259,603
3,185,701
-
92,275
274,398
323,206
1,943,556
13,001,682
791,730
3,722,362
306,902
792,329
288,067
554,489
6,455,879
6,066,502
6,545,803
58,541,495
2,234,594
(54,709,587)
6,066,502
58,495,245
2,019,969
(53,969,411)
6,545,803
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2022
21
Consolidated Statement of Changes in Equity
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Notes
Issued
Capital
$
Retained
losses
$
Employee
Benefit
Reserve
$
Total Equity
$
Balance at 30 June 2020
Comprehensive income for the
year
Employee benefit share reserve
Buyback of issued capital - on
market
Balance at 30 June 2021
Comprehensive loss for the
year
Employee benefit share reserve
Payment of Employee Share
Plan Loans
Balance at 30 June 2022
16
16
58,522,441
(54,005,189)
1,804,804
6,322,056
-
-
(27,196)
35,778
-
-
-
215,165
-
35,778
215,165
(27,196)
58,495,245
(53,969,411)
2,019,969
6,545,803
-
-
46,250
(740,176)
-
(740,176)
-
-
214,625
-
214,625
46,250
58,541,495
(54,709,587)
2,234,594
6,066,502
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2022
22
CONSOLIDATED STATEMENT OF CASH FLOWS
Consolidated Statement of Cash Flows
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Government grants and tax incentives
Net cash (used in)/provided by operating activities
Notes
19(a)
Cash flows from investing activities
Sale of subsidiary
Proceeds from sale of investments
Purchase of investments
Issue of Fundlater loans
Receipts from repayments of Fundlater loans
Sale of Fundlater loans
Purchase of fixed assets
Net cash provided by investing activities
Cash flows from financing activities
Principal payments for leases
Share buy-back
Proceeds from employee share plan loans
Net cash used in financing activities
2022
$
8,040,797
(9,552,198)
1,831
101,832
(1,407,738)
3,200,000
-
(10,000)
(1,216,695)
389,721
820,764
(30,550)
3,153,240
(194,800)
-
46,250
(148,550)
2021
$
10,165,596
(8,950,177)
4,664
168,025
1,388,108
70,000
249,332
-
-
-
-
(23,059)
296,273
(291,923)
(27,196)
-
(319,119)
Net increase in cash and cash equivalents
1,596,952
1,365,262
Cash and cash equivalents at beginning of the year
6,483,167
5,117,905
Cash and cash equivalents at the end of the year
19(b)
8,080,119
6,483,167
The above Consolidated Statement of Cash flows should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2022
23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
1.
Reporting Entity
InvestSMART Group Limited (the “Company”) is domiciled in Australia and is the parent entity of the group
which includes the entities listed in Note 10 (the “Group”) and is a for profit company limited by shares
incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. The
consolidated financial statements of the Group are presented for the year ended 30 June 2022. The Group is
primarily involved in operating businesses delivering financial services to retail investors in Australia, primarily
in wealth and funds management.
2. Summary of significant accounting policies
Basis of Preparation
This general purpose financial report has been prepared in accordance with Australian Accounting Standards,
including Australian Accounting Interpretations, other authoritative pronouncements of the Australian
Accounting Standards Board (AASB) and the Corporations Act 2001.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a
financial report containing relevant and reliable information about transactions, events and conditions to which
they apply. Compliance with Australian Accounting Standards ensures that the financial statements and notes
also comply with International Financial Reporting Standards as issued by the International Accounting
Standards Board.
The financial report has been prepared on an accruals basis, and is based on historical cost, with the exception
of the valuation of financial assets as described below.
The financial statements were authorised for issue by the Directors on the date the Directors’ declaration was
signed. The directors and shareholders have the power to amend these financial statements after issue.
The following significant accounting policies have been adopted in the preparation and presentation of the
financial report. The accounting policies have been consistently applied, unless otherwise stated.
Adoption of New a nd Revised Accounting Standards
The Group has adopted all of the new and revised standards and interpretations issued by the Australian
Accounting Standards Board that are relevant to its operations and effective for the current reporting period.
The adoption of these did not have a material impact on the financial statements of the Group. Any other new,
revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
Current versus non-current classification
The Group presents assets and liabilities in the Statement of Financial Position based on liquidity and not on a
current versus non-current classification. The expected period of recovery or settlement of amounts are
disclosed in the relevant notes.
ANNUAL REPORT 2022
24
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Revenue Recognition
Revenue from contracts with customers
Under AASB 15 Revenue from Contracts with Customers an entity recognises revenue by applying the following
steps:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
The Group derives revenue from retail customers in Australia. Contract duration is long-term except for
subscription revenue which is typically between one month and one year.
The Group has a performance obligation to service customers who have purchased subscriptions in advance and
recognises revenue when that subscription service has been delivered. Where a transfer of services has not
occurred a contract liability is recognised for subscriptions in advance.
Commission income is derived from trailing commissions on funds management and insurance products under
a contract to distribute products to the InvestSMART client base. Commissions are recognised when the Group
has satisfied its performance obligations, which occurs when control of the goods or services are transferred to
the customer. When the performance obligation has been satisfied, the Group will recognise as revenue the
amount of the transaction price that is allocated to the performance obligation after excluding any estimates of
variable consideration that are constrained.
Funds management fees are recognised based on net assets under management at the end of each day. Revenue
is recognised as the performance obligation is satisfied. Performance fees are recognised when the right to
receive payment has been established. Management and performance fees are variable consideration and are
not recognised unless the Group assesses it is probable that a significant reversal in the cumulative amount of
revenue will not occur. There were no performance fees received or receivable at year end.
Investment and interest revenue
Fundlater fees are recognised in the Consolidated Statement of Comprehensive Income using the effective
interest method. Fundlater clients are provided with a non-recourse loan repayable over a fixed period at fixed
rate instalments. An effective interest method adjustment is calculated to recognise fees from the date a
Fundlater loan is granted to the final instalment at the rate that discounts estimated future cash receipts.
Realised and unrealised gains on investments measured at fair value through profit and loss are recognised in
the Statement of Comprehensive Income. Realised gains and losses are calculated as the difference between
the consideration received and the fair value at the previous period end.
Dividends and distributions are recognised on the applicable ex-dividend date.
Interest income is recognised as it accrues.
Other income
Other income is recognised when it is received or the right to receive payment is established. Government grants
are recognised once all conditions of the grant have been met.
ANNUAL REPORT 2022
25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Investments at Fair Value
The Group’s investments are all measured at fair value in accordance with AASB 13: Fair Value Measurement.
The fair values of the Group’s listed investments are determined from the amount quoted on the primary
exchange of the country of domicile. If a listed investment is measured at fair value and has a bid price and an
ask price, fair value is based on a price within the bid-ask spread that is most representative of fair value and
allows the use of mid-market pricing or other pricing conventions that are used by market participants as a
practical expedient for fair value measurement within a bid-ask spread.
The fair value of the Group’s unlisted ventures investments is determined primarily using the price at which any
recent transaction in the security may have been effected, adjusted for the Directors’ view as to the likely success
of the business model and discounted for the likelihood of a liquidity event occurring in the next 3 years.
Valuation principles are in line with International Private Equity and Venture Capital Valuation (IPEV) Guidelines.
A derivative is a financial contract whose value depends on, or is derived from, underlying assets, liabilities or
indices. Derivative transactions include a wide assortment of instruments, such as forwards, futures, options and
swaps. The fair value of derivatives that are not exchange traded is estimated based on most recent transactions.
Where no recent transactions are available fair value is determined by applying a binomial option pricing model,
which takes into account current market conditions (volatility and interest rates).
Changes in the fair value of investments are recognised in the Statement of Comprehensive Income. Transaction
costs directly attributable to the acquisition of the investments are expensed in the Statement of Comprehensive
Income as incurred.
Loans receivable
Loans receivable consist of Fundlater loans. Fundlater clients are provided with a non-recourse loan repayable
over a fixed period at fixed rate instalments consisting of principal and facility fee payments. At initial
recognition loans are measured at fair value which is the transaction price.
Subsequently loans are measured at fair value through other comprehensive income (FVOCI) where loans are
held within a business model whose objective is achieved by both collecting contractual flows and selling the
assets. Loans are subsequently measured at amortised cost where loans are held solely to collect contractual
cash flows of principal and facility fees. An effective interest method adjustment is calculated to recognise
loans receivable at the rate that discounts estimated future cash receipts. Where loans receivable are
reclassified from amortised cost to FVOCI any gain or loss arising from a difference between amortised cost
and fair value is recognised in other comprehensive income.
Loss allowances under amortised cost and FVOCI are determined using an allowance for expected credit
losses (refer to the accounting policy for impairment of financial assets).
Fundlater fees are recognised in the Consolidated Statement of Comprehensive Income using the effective
interest method under the FVOCI and amortised costs methods.
When loans receivable at FVOCI are derecognised the cumulative gain or loss recognised in other
comprehensive income is reclassified to Other Income in the Statement of Comprehensive Income. Loans
receivable are derecognised only when the Group assess that it has transferred the contractual rights to
receive cash flows for the asset and substantially all the risks and rewards of ownership of the loan have been
transferred.
ANNUAL REPORT 2022
26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Group as at
30 June 2022 and the results of all subsidiaries for the period from 1 July 2021 to 30 June 2022. Control is
achieved when the Company is exposed, or has rights, to variable returns from its involvement with the
subsidiary and has the ability to affect those returns through its power over the subsidiary.
Subsidiaries are all entities (including special purpose entities) over which the Company has the power to govern
the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting
rights and excludes those subsidiaries determined by the Directors to be investments held for resale. The
existence and effect of potential voting rights that are currently exercisable or convertible are considered when
assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which
control is transferred to the Group, or when they are established.
Associates
An associate is an entity over which the Group exercises significant influence. Significant influence is the
power to participate in the financial and operating policy decisions of the investee but is not control or joint
control of those policies. Investments in associates are accounted for using the equity method of accounting.
The equity method is a method of accounting whereby the investment is initially recognised at cost and
adjusted thereafter for the post-acquisition change in the investor’s share of the investee’s net assets. The
investor’s profit or loss includes its share of the investee’s profit or loss and the investor’s other comprehensive
income includes its share of the investee’s other comprehensive income. Dividends or distributions received
or receivable from an associate reduce the carrying value of the investment. Where an associate was
previously a controlled entity of the Group, the deemed cost for applying the equity method is the fair value
on the date that the Group ceased to have a controlling interest.
Intercompany transactions and balances
Intercompany transactions, balances and unrealised gains on transactions between Group companies are
eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of
the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary
to ensure consistency with the policies adopted by the Group.
Where there is a change in ownership interest, there will be an adjustment between the carrying amounts of the
controlling and “non-controlling” interests to reflect their relative interests in the subsidiary. Any difference
between the amount of the adjustment to non-controlling interests and any consideration paid or received is
recognised in a separate reserve within equity attributable to the owners of the Company.
When a Company acquires control through a change in investment policy, the entity is remeasured to its fair
value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount
for the purposes of subsequently accounting for the retained interest as an associate, jointly controlled entity or
financial asset. Any amounts above net tangible assets are held as goodwill or intangibles at that point.
If the ownership interest in a jointly-controlled entity or an associate is reduced but joint control or significant
influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive
income are reclassified to profit or loss where appropriate.
When the Group ceases to have control, joint control or significant influence, any retained interest in the entity
is remeasured to its fair value with the change in carrying amount recognised in profit or loss. The fair value is
the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate,
jointly controlled entity or financial asset. In addition, any amounts previously recognised in other
comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the
related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income
are reclassified to profit or loss.
ANNUAL REPORT 2022
27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Business combinations and Goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured
as the aggregate of the fair value consideration transferred, measured at acquisition date and the amount of any
non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure
the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s
identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative
expenses. When the Group acquires a business, it assesses the financial assets and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic circumstances
and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host
contracts by the acquiree.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the
amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets
acquired and liabilities assumed.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose
of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to
each of the Group’s Cash-Generating Units that are expected to benefit from the combination, irrespective of
whether other assets or liabilities of the acquiree are assigned to those units. The Group has determined that it
operates as one Cash Generating Unit for the purposes of testing goodwill impairment.
Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets
acquired in a business combination is their fair value at the date of acquisition. Following initial recognition,
intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related
expenditure is reflected in the consolidated statement of comprehensive income in the period in which the
expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives
are amortised over the useful economic life and assessed 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 are reviewed at least at the end of each reporting period. Changes in the expected
useful life or the expected pattern of consumption of future economic benefits embodied in the asset are
considered to modify the amortisation period or method, as appropriate, and are treated as changes in
accounting estimates and adjusted on a prospective basis. The amortisation expense on intangible assets with
finite lives is recognised in the statement of profit or loss as the expense category that is consistent with the
function of the intangible assets. Gains or losses arising from derecognition of an intangible asset are measured
as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in
the statement of profit or loss when the asset is derecognised.
Impairment of financial assets
The Group assesses at each reporting date an allowance for expected credit losses (ECLs) for all debt
instruments not held at fair value through profit or loss. ECLs are based on the difference between the
contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to
receive, discounted at an approximation of the original effective interest rate. The expected cash flows will
include cash flows from the sale of collateral held or other credit enhancements that are integral to the
contractual terms.
ANNUAL REPORT 2022
28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Under the general approach for credit exposures for which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses that result from default events that are possible
within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant
increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the
remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs.
Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on
lifetime ECLs at each reporting date. Trade receivables consist of commissions and funds management fees
receivable which are generally received in the month following recognition.
The Group considers a financial asset to be in default when internal or external information indicates that the
Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit
enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of
recovering the contractual cash flows.
Share-based Payments to Employees and Directors
Employees (including executive directors) of the Group may receive remuneration in the form of share-based
payments, where employees render services as consideration for equity
instruments (equity-settled
transactions).
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using
an appropriate valuation model. The cost is recognised, together with a corresponding increase in other capital
reserves in equity, over the period in which the performance and/or service conditions are fulfilled in the
employee benefits reserve.
The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date
reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity
instruments that will ultimately vest. This cost is reversed in the event that an employee forfeits any share-based
payment, when leaving the Group or other circumstances.
The expense in the consolidated statement of comprehensive income for a period represents the movement in
cumulative expense recognised as at the beginning and end of that period and is recognised in employee
benefits expense.
Income Tax
The Group has formed a tax consolidated group and has executed tax-sharing agreements with each controlled
entity. The head entity and the controlled entities in the tax consolidated group continue to account for their
own current and deferred tax amounts. The Group has applied the Group allocation approach in determining
the appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated
group.
In addition to its own current and deferred tax amounts, the Group also recognises the current tax liabilities (or
assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from
controlled entities in the tax consolidated group. The income tax expense (revenue) for the year comprises
current income tax expense and deferred tax expense or benefit.
Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax liabilities
are measured at the amounts expected to be paid to the relevant taxation authority.
ANNUAL REPORT 2022
29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during
the year as well as unused tax losses. Current and deferred income tax expense is charged or credited outside
profit or loss when the tax
relates to items that are recognised outside profit and loss. No deferred income tax is recognised from the initial
recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or
taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when
the asset is realised or the liability is settled and their measurement also reflects the manner in which
management expects to recover or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent
that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset
can be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised only
to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be
recovered.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended
that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur.
Deferred tax assets and liabilities are offset where: (a) a legally enforceable right of set-off exists; (b) the deferred
tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable
entity or different taxable entities where it is intended that net settlement or simultaneous realisation and
settlement of the respective assets and liability will occur in future periods in which significant amounts of
deferred tax assets or liabilities are expected to be recovered or settled.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with bank and term deposits which are
convertible to a known amount of cash within 3 months and subject to insignificant risk of changes in value.
Long service and Annual leave provisions
The Group does not expect its long service leave or annual leave benefits to be settled wholly within 12 months
of each reporting date. The Group recognises a liability for long service leave and annual leave measured as the
present value of expected future payments to be made in respect of services provided by employees up to the
reporting date using the projected unit credit method.
Expenses
The Group records all expenses on an accruals basis. This includes accounting, audit, legal and administrative
fees, management fees, employee costs, marketing and advertising costs, director’s fees, travel and
accommodation expense, rent expenses, commission rebates, other expenses, market data costs, software and
website costs.
Property, Plant and Equipment
All property, plant and equipment is carried at historical cost less accumulated depreciation and accumulated
impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of
the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, when it is probable that the future economic benefits associated with the item will flow to the
Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to
profit or loss during the reporting period in which they are incurred. Depreciation on assets is calculated using
the straight-line method to allocate their cost, net of residual value, over the estimated useful lives as follows:
ANNUAL REPORT 2022
30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Computer and office equipment
Network and production equipment
Leasehold improvements
2-4 years
3-4 years
shorter of the expected fitout life or lease term (approximately 3-5 years)
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part
of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the
Statement of Financial Position are shown inclusive of GST.
Earnings/loss per share
Basic earnings/loss per share is calculated by dividing profit/(loss) attributable to members of the Company by
the weighted average number of ordinary shares outstanding during the year, adjusted for any bonus element.
Diluted earnings/(loss) per share is calculated by dividing profit attributable to members of the Company by the
total number of ordinary shares that would be outstanding if all the EDSP shares had vested.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
Functional and presentation currency
The functional and presentation currency of the Group is Australian dollars.
Leases
At the commencement of a contract, the Group assesses whether the contract conveys the right to control the
use of an identified asset for a period of time in exchange for consideration. For identified leases the Group
recognises a right-of-use asset and a lease liability at the lease commencement date. No assets or liabilities are
recognised if the lease is short term (less than 12 months) or of low value.
Assets and liabilities arising from a lease are initially measured on a present value basis. The measurement
includes non-cancellable lease payments (including inflation-linked payments), and includes payments to be
made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease. Interest
expense on the lease liability and depreciation expense (using the straight-line method) on the right-of-use asset
is recognised in the statement of profit or loss.
Comparatives
Where necessary, comparative information has been reclassified to be consistent with the current reporting
period.
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectation of future events that may have a financial impact on the entity and that are believed to be
reasonable under the circumstances.
The Group has not recognised deferred tax assets relating to carried forward realised capital and revenue losses
on the basis that it does not expect to derive sufficient future capital gains to utilise the current losses within a
3 to 5-year time period.
ANNUAL REPORT 2022
31
3. Other income
Gain on sale of subsidiary
Government grants
Education - Bootcamp
Fundlater Fees
Interest
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2022
$
155,299
101,832
17,659
16,595
1,831
293,216
2021
$
70,000
168,025
26,872
-
4,873
269,770
AWI Ventures Pty Ltd was sold during the year for a gain of $155,299 (2021: InvestSMART Publishing Pty Ltd was
sold for a gain of $70,000). Refer to Note 10 (a) for further information.
Government grants consists of research and development incentives of $101,832 (2021: $118,025 for research
and development incentives and $50,000 for cash flow boost).
4. Change in fair value of financial assets at fair value through profit and loss
Net unrealised (loss)/gain on investments
Net realised (loss)/gain on investments
2022
$
(1,102)
(141,000)
(142,102)
2021
$
1,241,713
14,027
1,255,740
Net realised loss on investments is due to the expiry of a call option. Refer to Note 5 and Note 15 – Fair Value
Hierarchy for further information.
5. Financial assets held at fair value
AWI Ventures investee companies
Investments in Professionally Managed Accounts
Call option
2022
$
-
8,899
-
8,899
2021
$
3,044,701
-
141,000
3,185,701
A call option was purchased on 12 June 2018 to acquire 100% of an unlisted company (The Term Deposit Shop)
for $3,750,000 exercisable between the third and fourth anniversary date of entering the share option deed. The
unlisted company was not considered to be a subsidiary as the Group was not exposed, nor had rights, to variable
returns from its involvement with the company and did not have the ability to affect the returns of the company.
The expiry date of the option was 12 June 2022 and the option was not exercised. Further information on the fair
value determination and the risk exposures of financial assets held at fair value is provided in Note 15.
6. Loans receivable
Loans receivable
2022
$
6,210
2021
$
-
Loans receivable consists of Fundlater loans. Subject to a minimum investment of $4,000 a client will receive a
non-recourse loan of up to $6,000 to fund a new Professionally Managed Account (minimum investment is
$10,000). Professionally Managed Accounts is a scheme issued by InvestSMART Funds Management Ltd. A
ANNUAL REPORT 2022
32
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
$6,000 loan is repayable over 20 equal monthly instalments of $325 each. The $325 payments are split into
$300 for principal repayment and $25 for the administration fee.
Loans receivable are measured at fair value through other comprehensive income (FVOCI) at 30 June 2022.
Prior to the establishment of the Eureka Asset-Backed Loan Fund the loans were measured at amortised cost.
The Eureka Asset-Backed Loan Fund (EABL) is issued by InvestSMART Funds Management Limited and
purchases loans from the Group on a regular basis. As such the loans were reclassified from amortised cost to
FVOCI in April 2022 as the loans are now held to collect contractual flows and sell the assets. The fair value of
the loans which were sold to EABL that the Group has derecognised and has continuing involvement in is
$648,140 at 30 June 2022.
The Group may be required to repurchase Fundlater loans where they are delinquent within one month of sale
to EABL. The fair value at 30 June 2022 of loans that were sold within one month of 30 June 2022 is $131,055.
This amount represents the Group’s maximum exposure to loss from its continuing involvement in derecognised
loans and the undiscounted cash flows that would be required to repurchase the loans. The amount was
determined by summing all loans that were sold within one month of 30 June 2022. The maturity of the
undiscounted cash flows that would be required to repurchase the derecognised loans is less than 1 month from
30 June 2022.
The greatest amount of transfers of loans that took place during the reporting period is loans with a fair value
of $684,089 transferred in May 2022. The proceeds from transfers during May 2022 was $684,089.
The Group assesses at each reporting date an allowance for expected credit losses (ECLs). The allowance for
ECLs at origination and at 30 June 2022 is assessed as zero. The equity within client’s accounts (the $4,000
deposit and subsequent principal repayments) is considered adequate to cover outstanding payments if a client
closes their account. Based on a range of possible outcomes the probability that a clients account will be closed
with insufficient equity to cover outstanding repayments is remote.
The $25 administration fee is recognised in the Consolidated Statement of Profit and Loss under Other Income
and within Other Income as Fundlater Fees (Refer Note 3). The $2 5 administration fee is adjusted for the
requirements of AASB 9 to be recognised under the effective interest method.
7. Income tax
(a) Income tax benefit recognised in the S tatement of Comprehensive Income
The components of income tax benefit:
Current income tax expense
Deferred tax income relating to the origination and reversal of temporary
differences
Change in tax rate
Total income tax benefit
2022
$
-
124,323
-
124,323
2021
$
-
295,407
9,251
304,658
ANNUAL REPORT 2022
33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(b) Income tax benefit
A reconciliation of income tax benefit applicable to accounting profit before income tax at the statutory income
tax rate to income tax benefit at the entity’s effective income tax rate for the years ended 30 June 2022 and 30
June 2021 is as follows:
Prima facie income tax benefit calculated at 25% (2021: 26%) on operating
loss
Add/(Less) tax effect of:
Expenditure not deductible in current year
Recognition of previously unused tax losses
Change in tax rate
Income not taxable
Losses carried forward not recognised
Adjustments for prior years
Income tax benefit
(c) Deferred tax assets and liabilities
Deferred tax assets
2022
$
2021
$
216,125
69,909
(127,965)
18,312
-
25,458
-
(7,607)
124,323
(94,273)
-
9,251
388,379
(54,567)
(14,041)
304,658
The deferred tax asset balance comprises temporary differences recognised as follows:
Deferred tax liabilities
Accruals and provisions not deductible in this period
Lease liability
Deductible capital expenditure
Tax losses carried forward
Closing balance
Movements in deferred tax assets
Opening balance
Benefit in the income statement
2022
$
221,711
207,181
2,304
4,384
435,579
323,206
112,373
435,579
The deferred tax liability balance comprises temporary differences recognised as follows:
Future tax expense for intangibles acquired
Right-of-use assets
Movements in deferred tax liabilities
Opening balance
Benefit in the income statement
2022
$
343,217
199,322
542,539
554,489
(11,950)
542,539
2021
$
245,008
72,017
6,181
-
323,206
302,381
20,825
323,206
2021
$
485,889
68,600
554,489
838,322
(283,833)
554,489
A tax rate of 25% was applied for the year ending 30 June 2022 (2021: 26%) as the Group is classified as a small
business for tax purposes. The Group expects to continue to be classified as a small business for tax purposes.
The Group has not recognised deferred tax assets relating to carried forward capital tax losses as it is not
considered probable that future taxable profit will be available against which the unused tax losses can be
ANNUAL REPORT 2022
34
utilised. The potential deferred tax asset that could be realised at 30 June 2022 is $3,916,208 (2021: $4,521,928).
The amount of benefit from previously unrecognised capital tax losses recognised during the year is $738,750
due to the sale of AWI Ventures Pty Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
8. Trade and other receivables
Trade receivables
GST receivable
9. Leases
2022
$
548,798
41,443
590,241
2021
$
401,512
38,264
439,776
The weighted average lessee's incremental borrowing rate applied to lease liabilities recognised in the statement
of financial position at the date of initial application is 4.8%. Leases recognised as right-of-use assets and lease
liabilities consist of office premises.
The total cash outflow for lease payments for the year ended 30 June 2022 is $222,833 (2021: $305,769). The
interest expense on lease liabilities for the year ended 30 June 2022 is $28,707 (2021: $8,248).
Right-of-use assets
Balance at the beginning of the year
Additions
Depreciation charge
Balance at the end of the year
Number of right-of-use assets leased
Range of remaining term
Average remaining lease term
Number of leases with extension options
Number of short-term leases
Expense for short-term leases
Lease liabilities
Maturity analysis of lease liability
Less than 1 year
1 to 3 years
4 - 5 years
Total
2022
$
274,398
738,504
215,613
797,289
2021
$
413,518
156,839
295,959
274,398
2
1.9-4.7 years
3.3 years
1
Nil
$Nil
2
0.7-2.9 years
1.8 years
2
Nil
$Nil
2022
$
189,914
522,708
116,100
828,722
2021
$
166,461
121,606
-
288,067
ANNUAL REPORT 2022
35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10. Controlled entities and investments in associates
(a) Controlled entities
The company exercised control over the below entities during the period:
Intelligent Investor Holdings Pty Ltd
The Intelligent Investor Distribution Pty Ltd
InvestSMART Financial Services Pty Ltd
InvestSMART Funds Management Ltd
InvestSMART Advice Pty Ltd
Yourshare Financial Services Pty Ltd
InvestSMART Insurance Pty Ltd
van Eyck Group Holdings Pty Ltd
AWI Ventures Pty Ltd
Eureka Report Pty Ltd
Kohler and Company Pty Ltd
% owned at
30-Jun-22
100%
100%
100%
100%
100%
100%
100%
100%
0%
100%
100%
30-Jun-21
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
AWI Ventures Pty Ltd (AWIV) was sold during the year for a gain of $155,299. AWIV consisted of investments
in two start-up companies in the financial technology sector, Spriggy and Equitise. The entities had a combined
fair value of $3,044,701 at 31 December 2021. AWIV was disposed for a cash consideration of $3,200,000 in
May 2022. The resultant gain is recognised within Other Income in the Statement of Comprehensive Income.
(b)
Investments in associates
InvestSMART Funds Management Ltd is the Responsible Entity and issuer of Professionally Managed Accounts
and is deemed to have significant influence over the financial and operating policy decisions of the fund. The
fund is domiciled and has its principal place of business in Australia. The Group’s ownership in the fund was
classified as an investment in associate and accounted for using the equity method. The Group held 1 unit in the
fund during the year and has a unitholding of 0.04% of Professionally Managed Accounts at 30 June 2022 (2021:
Nil units, 0.00%).
Summarised financial information for all associates:
Aggregate carrying amount
Aggregate profit/(loss) from continuing operations
Aggregate total comprehensive income
11. Intangible Assets
Balance at 30 June 2020
Amortisation
Balance at 30 June 2021
Amortisation
Balance at 30 June 2022
2022
$
1
-
-
Subscriber
lists
$
169,834
49,707
120,127
49,708
70,419
2021
$
-
-
-
Total
$
2,810,796
867,240
1,943,556
570,688
1,372,868
Fund
distribution
contracts
$
2,640,962
817,533
1,823,429
520,980
1,302,449
ANNUAL REPORT 2022
36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Fund distribution contracts were acquired as intangible assets under a business combination on 1 January 2015.
Whilst they have no expiry date, it is expected that customers on which the distribution fees are earned will
leave over 6 - 10 years.
Subscriber lists were acquired as intangible assets on acquisition of The Constant Investor. Amortisation rates
are based on the Group’s historical experience and are amortised on a straight-line basis. The Constant Investor
subscriber lists are assumed to have a 5-year life.
12. Fixed assets including software
Cost at 30 June 2020
Additions
Disposals
Cost at 30 June 2021
Additions
Disposals
Cost at 30 June 2022
Accumulated depreciation at 30 June 2020
Depreciation charge for the period
Disposals
Accumulated depreciation at 30 June 2021
Depreciation charge for the period
Disposals
Accumulated depreciation at 30 June 2022
Net book value at 30 June 2021
Net book value at 30 June 2022
Plant and
equipment
$
425,664
23,059
143,441
305,282
34,404
5,590
334,096
306,991
49,457
143,441
213,007
33,757
2,921
243,843
92,275
90,253
Fixed assets disposed during the year received zero cash consideration.
13. Trade and other payables
Trade payables and accruals
PAYG and superannuation
GST
Software
$
211,790
-
96,555
115,235
-
-
115,235
211,790
-
96,555
115,235
-
-
115,235
-
-
2022
$
486,841
35,320
201,254
723,415
Trade payables are non-interest bearing and unsecured. Payment duration is disclosed in Note 15.
14. Provisions
Annual leave
Long service leave
Short-term incentive plan
Other
2022
$
226,655
316,706
143,637
36,133
723,132
Total
$
637,454
23,059
239,996
420,517
34,404
5,590
449,331
518,781
49,457
239,996
328,242
33,757
2,921
359,078
92,275
90,253
2021
$
436,475
31,550
323,705
791,730
2021
$
241,423
260,099
234,000
56,807
792,329
ANNUAL REPORT 2022
37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
15. Financial risk management
The Group's financial instruments consist mainly of deposits with banks, accounts receivable and accounts
payable.
AASB 7 Financial Instruments: Disclosures identifies three types of risk associated with financial instruments (i.e.
the Group's investments, receivables and payables).
(i) Credit risk
AASB 7 defines this as the risk that one party to a financial instrument will cause a financial loss for the other
party by failing to discharge an obligation. The maximum exposure to credit risk, excluding the value of any
collateral or other security, at balance date to recognised financial assets, is the carrying amount, net of any
provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the
financial statements. There are no other material amounts of collateral held as security at 30 June 2022.
Receivables are non-interest bearing and unsecured and will be received within 3 months. The credit risk
exposure of the Group in relation to receivables is the carrying amount. The credit risk exposure of the Group in
relation to cash is the carrying amount and any accrued unpaid interest. Cash investments are held with a
number of banks all of which are rated AA- by Standard and Poor's. None of these assets are over-due or
considered to be impaired.
(ii) Liquidity risk
AASB 7 defines this as the risk that an entity will encounter difficulty in meeting obligations associated with
liabilities. Senior management monitors the Group's cash-flow requirements daily taking into account upcoming
dividends, tax payments and investment activity.
The Group's inward cash-flows depend upon the level of trail commission, subscription revenue and funds
management fees received. If these decrease by a material amount, the Group will amend its outward cash-
flows accordingly. As the Group's major cash outflows are the cost of employees and rebates of trail
commissions, the level of both of these is managed by the Board and senior management. The tangible assets
of the Group are largely in the form of cash and short term receivables.
The table below analyses the Group's non-derivative liabilities in relevant maturity groupings based on the
remaining period to the earliest possible contractual maturity date at the year-end date. The amounts in the
table below are contractual undiscounted cash flows, except for subscriptions in advance which represent the
undiscounted value of subscription services to be delivered.
ANNUAL REPORT 2022
38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
On-
demand
Less than
3 months
3 to 12
months
$
$
$
622,576
74,594
55,462
752,632
87,312
208,801
168,568
464,681
1 to 5
years
$
13,527
-
697,788
711,315
Total
$
723,415
283,395
921,818
1,928,628
1,029,357
1,436,895
3,866
2,470,118
711,255
134,607
49,679
895,541
66,948
172,295
124,338
363,581
13,527
-
126,166
139,693
791,730
306,902
300,182
1,398,814
1,067,266
2,207,133
447,962
3,722,362
At 30 June 2022:
Undiscounted cash flows
Trade and other payables
Trail commissions due to customers
Lease liabilities
Undiscounted services to be
delivered
Subscriptions received in advance
At 30 June 2021:
Undiscounted cash flows
Trade and other payables
Trail commissions due to customers
Lease liabilities
Undiscounted services to be
delivered
Subscriptions received in advance
(iii) Market risk
-
-
-
-
-
-
-
-
-
-
AASB 7 defines market risk as the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market prices. Movements in the ASX All Ords have been used to calculate a
“reasonably possible” change in market prices as the data is readily observable.
A general fall in market prices of 10 per cent and 20 per cent would lead to a reduction in the Group's equity and
increase the reported loss by $890 and $1,780 respectively (2021: $318,570 and $637,140 respectively). The
sensitivity analysis assumes all investments have a delta of 1 and are spread evenly across all investments.
The Group is not directly exposed to currency risk as all its operations are conducted in Australian dollars. The
Group is engaged in activities conducted solely in Australia.
Interest rate risk
The Group's cash balances and term deposits expose it to risks associated with the effects of fluctuations in the
prevailing levels of market interest rates on its financial position and cash flows.
Sensitivity analysis - interest rate risk
An increase of 75 basis points in interest rates at year end would have increased the Group's profit by $38,427
(2021: $32,887). A decrease of 75 basis points would have an equal but opposite effect.
At 30 June 2022, the Group's exposure to interest rate risk and the effective weighted average interest rate for
each class of financial asset and liability is set out in the table below:
ANNUAL REPORT 2022
39
Financial assets
Cash assets
Trade and other receivables
Prepayments and deposits
Loans receivable
Financial assets at fair value through profit
and loss
Financial liabilities
Trade and other payables
Trail commissions due to customers
Provisions
Lease liabilities
Weighted
average
interest rate
(% pa)
0.0
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Floating
interest
rate
$
6,666,979
-
-
-
Non-
interest
bearing
$
1,413,139
590,241
256,365
6,210
Total
$
8,080,119
590,241
256,365
6,210
-
8,899
8,899
6,666,981
2,274,854
8,941,836
-
-
-
-
-
723,415
283,395
143,637
828,722
1,979,169
723,415
283,395
143,637
828,722
1,979,169
At 30 June 2021, the Group's exposure to interest rate risk and the effective weighted average interest rate for
each class of asset and liability is set out in the table below:
Financial assets
Cash assets
Trade and other receivables
Prepayments and deposits
Financial assets at fair value through profit
and loss
Financial liabilities
Trade and other payables
Trail commissions due to customers
Provisions
Lease liabilities
Weighted
average
interest rate
(% pa)
0.1
Floating
interest
rate
$
5,647,555
-
-
Non-
interest
bearing
$
835,612
439,776
259,603
Total
$
6,483,167
439,776
259,603
-
3,185,701
3,185,701
5,647,554
4,720,692
10,368,246
-
-
-
-
-
791,730
306,902
234,000
288,067
1,620,699
791,730
306,902
234,000
288,067
1,620,699
Fair value hierarchy
AASB 13 requires the Group to classify fair value measurements using a fair value hierarchy that reflects the
subjectivity of the inputs used in making the measurements. The fair value hierarchy has the following levels:
•
•
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
Level 3 - Inputs for the asset or liability that are not based on observable market data (that is,
•
unobservable inputs).
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is
determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety.
For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a
fair value measurement uses observable inputs that require significant adjustment based on unobservable
ANNUAL REPORT 2022
40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
inputs, that measurement is a level 3 measurement. Assessing the significance of a particular input to the fair
value measurement in its entirety requires judgement, considering factors specific to the asset or liability.
The determination of what constitutes ‘observable’ requires significant judgement by the Directors. The
Directors consider observable data to be that market data that is readily available, regularly distributed or
updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved
in the relevant market.
The table below sets out the Group’s financial assets and liabilities (by class) measured at fair value according
to the fair value hierarchy at 30 June 2022. Financial assets are separated between those claissified as Fair Value
through Profit and Loss (FVTPL) and those classified as Fair Value through Other Comprehensive Income
according to AASB 9.
At 30 June 2022
Financial assets held at FVPL
Investment in Professionally Managed Account
Financial assets held at FVTPL
Financial assets held at FVOCI
Loans receivable
At 30 June 2021
Financial assets held at FVTPL
AWI Ventures investee companies
Call option
Financial assets held at FVTPL
Financial assets held at FVOCI
8,899
8,899
-
-
-
-
-
Level 1
$
Level 2
$
Level 3
$
-
-
6,210
-
-
-
Total
$
8,899
8,899
6,210
-
-
-
-
3,044,701
141,000
3,185,701
3,044,701
141,000
3,185,701
-
-
During the reporting period ending 30 June 2022 there were no transfers between Level 1 and Level 2 fair value
measurements.
Financial instruments whose values are based on quoted market prices in active markets, and therefore classified
within level 1, include active listed equities, certain unlisted unit trusts and exchange traded derivatives.
Investments classified within level 2 have inputs based on quoted and unquoted prices. Loans receivable are
classified within level 2. The loans are valued using a discounted cash flow approach which reflects the terms of
the instrument and the timing of cash flows. The rate used to discount future cash flow is derived from
observable data for similar loans.
The Group held investments in two start-up companies in the financial technology sector, Spriggy and Equitise
through AWI Ventures Pty Ltd. The fair value of the investee companies was assessed as the price at which each
investee company raised a material amount of new capital adjusted for the Director’s view of the likely success
of the business. AWI Ventures Pty Ltd was disposed in May 2022 for a cash consideration of $3.2 million. The
gain on disposal of the subsidiary is disclosed within other income in the statement of comprehensive income.
The Group purchased a call option over The Term Deposit Shop, an unlisted online term deposits provider, on
12 June 2018 exercisable between 12 June 2021 and 12 June 2022 for $3.75 million. The option was not exercised
prior to the expiry date.
ANNUAL REPORT 2022
41
The following table shows a reconciliation of the movement in the fair value of financial instruments categorised
within level 3 between the beginning and the end of the reporting period:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Fair Value at the beginning of the year
Unrealised gain on ventures investments
Unrealised loss on call option through profit and loss
Disposal of AWI Ventures Pty Ltd
Realised gain on disposal of AWI Ventures Pty Ltd
Expiry of call option over The Term Deposit Shop
Balance at the end of the year
16. Employee benefit reserve
2022
$
3,185,701
-
-
(3,200,000)
155,299
(141,000)
-
2021
$
1,943,988
1,350,713
(109,000)
-
-
-
3,185,701
The number of shares outstanding and employee benefit reserve at the beginning and the end of the year
ended 30 June 2022 is as follows:
For the year ended 30 June
2022
2021
Balance at the beginning of the year
ESOP and LTIP shares cancelled
EDSP shares granted
EDSP shares cancelled
Payment of employee incentive scheme
loans
Employee benefit expense for the year
Balance at the end of the year
Shares
27,959,998
-
910,000
(233,334)
(245,000)
-
28,391,664
$
2,019,969
-
-
-
Shares
25,304,998
(25,304,998)
28,031,998
(72,000)
$
1,804,804
-
-
-
-
-
-
214,625
2,234,594
-
27,959,998
215,165
2,019,969
All Long-Term Incentive Plan (LTIP) and Employee Share Option Plan (ESOP) shares were cancelled on 9
December 2020 and replaced with an Employee and Director Share Plan (EDSP) as approved at the company’s
AGM on 11 November 2020.
EDSP shares granted on 11 November 2020 were split equally into three tranches (EDSP1, EDSP 2 and EDSP
3). An additional tranche of EDSP shares, EDSP 4, was issued during the year under the employee short-term
incentive plan for shares issued in lieu of a cash bonus. The terms of each tranche of EDSP on issue at year
end are:
Type
EDSP1
EDSP2
EDSP3
EDSP4
Issue date
9/12/2020
9/12/2020
9/12/2020
*
Issue price Vesting date
9/12/2020
9/12/2021
9/12/2022
1/09/2021
$0.15
$0.20
$0.30
$0.25
Maturity
date
30/11/2025
30/11/2026
30/11/2027
1/09/2026
Shares
9,154,999
9,179,999
9,146,666
910,000
28,391,664
*700,000 EDSP shares were issued to employees on 1 September 2021 in lieu of a cash bonus. 210,000 shares were issued
to Ron Hodge in lieu of a cash bonus on 8 December 2021 as approved at the company’s AGM on 17 November 2021.
A non-recourse loan was provided to participants to acquire the shares at the respective prices issued. 245,000
EDSP were converted to fully paid ordinary share capital as the associated loans were paid. The remaining EDSP
loans have not been repaid and have not been included in fully paid ordinary share capital.
ANNUAL REPORT 2022
42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Loans for EDSP shares include 4,000,000 shares issued to Paul Clitheroe (Chairman), 4,776,665 shares issued
to Ron Hodge (Managing Director/member of Key Management Personnel), 4,636,666 shares issued to Alastair
Davidson (member of Key Management Personnel) and 4,466,666 shares issued to Nigel Poole (member of Key
Management Personnel).
The fair value at grant date of EDSP4 shares was determined using a Binomial model. The inputs used include
the share price at grant date, vesting price, vesting period, expected volatility (55%), expected dividends (1%
yield), the risk free interest rate (0.64%) and the expected life of the option. Expected volatility was based on
historic volatility and the implied volatility of comparable exchange traded options. The cost of the EDSP shares
are recognised over the applicable vesting period through the statement of comprehensive income. The
company estimated the fair value of this share benefit was $80,847 at grant date.
The cost of EDSP shares issued are amortised over the applicable vesting period through the statement of
comprehensive income.
17. Issued capital
Fully paid ordinary share capital
Balance at the beginning of the year
Payment of employee incentive scheme
loans
On-market buy-back
Balance at the end of the year
2022
2021
Shares
110,507,537
$
58,495,245
Shares
110,885,360
$
58,522,441
245,000
46,250
-
-
-
110,752,537
-
58,541,495
377,823
110,507,537
27,196
58,495,245
An additional 28,391,664 shares are issued, as part of the EDSP detailed in Note 16 and the Directors Report. The
shares have a non-recourse loan outstanding.
Under the EDSP, the director or employee can repay the loan by forfeiting the shares issued under the plan. The
shares vest after certain time periods and may be forfeited prior to the loan repayment date and have therefore not
been included in the issued share capital total.
All shares have no par value.
(a) Terms and conditions
The Company has ordinary shares on issue. Holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at shareholder meetings.
(b) Capital Management
The Group's policy is to maintain a strong capital base so as to maintain investor and market confidence. To achieve
this the Directors monitor the monthly performance of the operating entities, the Group's management expenses,
and share price movements. Capital relates to equity attributable to investors. The Group maintains liquid capital
to meet its responsibilities as a responsible entity.
The primary objective of the Group’s capital management is to ensure that it maintains healthy capital ratios to
support its business and maximise shareholder value. The Group manages its capital structure and makes
adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the
Company may adjust any dividend payment to investors, capital returns or issue new shares. No changes were
made in the objectives, policies or processes for managing capital during the years ended 30 June 2022 and 30
June 2021.
ANNUAL REPORT 2022
43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
18. Related party information
Aggregate remuneration paid to Directors and other key management personnel by the Group in connection
with the management of the affairs of the Group were:
Short-term
Employee
Benefit
Cash Salary
& Fees
$
950,711
887,889
Employment
Benefit
Superannuation
$
89,070
78,713
Accrued
Annual
Leave
$
(869)
(3,548)
Accrued
Long
Service
Leave
$
15,400
23,531
Employee
Share
Benefit
$
119,815
117,308
Total
$
1,174,127
1,103,893
2022
2021
Detailed remuneration disclosures are provided in the remuneration report contained in the Directors’ Report.
The Directors' remuneration excludes insurance premiums paid and payable by the Group in respect of Directors'
liability insurance. Apart from the details disclosed in this note and the Directors’ Report, no key management
personnel have entered into a material contract with the Group during the financial year.
The Directors of InvestSMART Group Limited are responsible for determining and reviewing compensation
arrangements for the Managing Director and key management personnel. The Directors also assess the
appropriateness of the nature and amount of emoluments of each Director on a periodic basis by reference to
workload and market conditions. The overall objective is to ensure maximum stakeholder benefit from the
retention of a high-quality board whilst constraining costs.
Ron Hodge received a loan of $6,000 as a Fundlater client during the year. A related party of Ron Hodge received
a loan of $6,000 during the year as a Fundlater client. The Fundlater loans were issued by InvestSMART Financial
Services Pty Ltd. The loans were sold to Eureka Asset-Backed Loan Fund, a Fund issued by InvestSMART Funds
Management Limited, during the year. The loans were made on terms equivalent to those that prevail in arm’s
length transactions.
Eureka Asset-Backed Loan Fund commenced operations on 6 April 2022. The Fund is issued by InvestSMART
Funds Management Limited, a subsidiary of InvestSMART Group Ltd. The assets of the Fund consisted of
Fundlater loans receivable at 30 June 2022. During the year Eureka Asset-Backed Loan Fund purchased loans of
$820,764 from the Group at fair value.
Investments in associates are disclosed in Note 10 (b). The Group owned 1 unit in the Professionally Managed
Accounts, a scheme issued by InvestSMART Funds Management Limited, at 30 June 2020. This unit was
redeemed in August 2020. The Group purchased 1 unit in Professionally Managed Accounts in November 2021.
The Group received management fees from managed investment schemes classified as investments in
associates of $367,205 for the year ended 30 June 2022 (2021: $44,462). The Group held receivables for
management fees from managed investment schemes classified as investments in associates at 30 June 2022 of
$48,169 (2021: $nil).
ANNUAL REPORT 2022
44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19. Statement of Cash Flows
(a) Reconciliation of net profit from ordinary activities after income tax
to net cash used in operating activities
Profit/(Loss) for the year
Adjustments to reconcile profit after tax to net cash flows:
Net loss/(gain) on financial instruments at fair value through profit and loss
Gain on Sale of subsidiary
Employee benefit expense
Depreciation and amortisation
Increase in deferred tax asset
Decrease in deferred tax liability
Change in operating assets and liabilities:
(Increase)/Decrease in trade and other receivables
Decrease/(Increase) in prepayments
(Decrease)/Increase in subscriptions received in advance
Decrease in trade and other payables
Net cash provided by operating activities
2022
$
(740,176)
142,102
(155,299)
214,625
815,823
(112,373)
(11,950)
(150,465)
3,238
(1,252,244)
(161,019)
(1,407,738)
2021
$
35,778
(1,255,740)
(70,000)
215,165
1,207,238
(20,825)
(283,833)
32,012
(14,085)
1,695,769
(153,371)
1,388,108
Cash at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items
in the statement of financial position as follows:
Cash at bank
2022
$
8,080,119
2021
$
6,483,167
The credit risk exposure of the group in relation to cash is the carrying amount and any accrued unpaid interest.
Cash investments are held with a number of banks all of which are rated AA- by Standard and Poor’s.
20.Earnings/(loss) per share
Basic earnings/(loss) per share (cents per share)
Diluted earnings per share (cents per share)
2022
cents
(0.67)
(0.67)
2021
cents
0.03
0.00
Earnings/(loss) as per Statement of Consolidated Income
(740,176)
35,778
Weighted average number of ordinary shares outstanding during the year
used in calculating basic earnings per share
Weighted average number of ordinary shares outstanding during the year
used in calculating diluted earnings per share if all EDSP shares vest and
non-recourse loans are repaid
110,592,688
110,609,690
139,058,622
137,149,660
As the Group is in a loss position in 2022 share based incentive plans do not affect the diluted earnings per share
calculation as potential ordinary shares shall be treated as dilutive when, and only when, their conversion to
ordinary shares would decrease earnings per share or increase loss per share from continuing operations.
ANNUAL REPORT 2022
45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
21. Contingent liabilities and commitments
At 30 June 2022 the Group has the following contingent liabilities:
Guarantees for office rentals
Guarantees for intermediary facilities
2022
$
97,106
601,000
698,106
2021
$
156,624
351,000
507,624
InvestSMART Financial Services Pty Ltd, a subsidiary of InvestSMART Group Ltd, may be required to repurchase
Fundlater loans where they are delinquent within one month of sale to Eureka Asset-Backed Loan Fund. Due to
the formative nature of the loan programme and the Eureka Asset-Backed Loan Fund it is not practicable to
determine an estimate of the financial effect or possibility of any reimbursement. It is noted that any
reimbursement would result in a repurchase of the loan at fair value and closure of the loan account if repayment
terms are not met. The provision for expected credit losses for Fundlater loans has been assessed as $nil.
22. Franking Account
Opening balance of franking account
Adjustment for franking credits received in prior years
Adjustments for tax refundable in respect of the prior year’s profits
Adjusted franking account balance
2022
$
2,931,463
4,083
(219,845)
2,715,701
2021
$
2,931,463
-
-
2,931,463
23.
Auditors Remuneration
BDO Audit Pty Ltd received $147,985 for audit and review fees (2021: $140,422).
Audit and review fees include fees for:
- Auditing and reviewing the statutory financial report of the parent entity covering the group
- Auditing the statutory financial report of Australian Financial Services Licensees which are controlled
entities
- Assurance services required by legislation to be provided by the auditor (reporting to ASIC for the purposes
of Form FS 71 for AFS licensees)
- Auditing and reviewing schemes issued by InvestSMART Funds Management Limited
- Audit of compliance plans of schemes issued by InvestSMART Funds Management Limited
The fees for these services are not broken down as they are bundled.
Fees for other services performed by audit and network firms:
BDO Services Pty Ltd - taxation services
2022
$
59,307
2021
$
78,054
The nature of taxation services comprises:
- Review and lodgement of income tax returns and provisions for the Group and schemes issued by
InvestSMART Funds Management Limited
- Review and lodgement of government grants
- Review of tax sharing agreements and preparation of allocatable cost amount calculations
- Review and liaison with the Australian Taxation Office for the merger of schemes issued by InvestSMART
Funds Management Limited
ANNUAL REPORT 2022
46
24.
Parent Entity Information
Statement of Financial Position
Assets
Current assets
Non-current assets
Total Assets
Liabilities
Current liabilities
Total Liabilities
Net Assets
Equity
Contributed Equity
Employee benefit reserve
Retained earnings
Total Equity
Statement of Profit or Loss and other Comprehensive Income
Net loss for the year after income tax expense
Total Comprehensive loss for the year
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2022
$
2021
$
51,799
5,808,974
5,860,773
80,483
4,234,066
4,314,549
-
-
-
-
5,860,773
4,314,549
58,541,495
2,234,594
(54,915,316)
5,860,773
58,495,245
2,019,969
(56,200,665)
4,314,549
1,880,047
1,880,047
341,520
341,520
At 30 June 2022 InvestSMART Group Ltd has a contingent liability for guarantees for office rentals of $97,106
(2021: $97,106).
The accounting policies of the parent entity, InvestSMART Group Limited, used in determining the financial
information shown above, are the same as those applied in the Group’s consolidated financial statements, as
detailed in Note 2.
25. Segment information
The Group has only one reportable segment. The Group is engaged solely in retail financial services conducted
in Australia, deriving revenue from commissions, subscriptions and funds management fees. The entity’s
operations are merged across subsidiaries, management, location and presentation of reporting. The operating
segment identification is based on the internal reports that are reviewed and used by the Board of Directors in
assessing performance and in determining the allocation of resources.
26.Events occurring after reporting date
There have been no significant events since 30 June 2022 up to the date of this report.
27. Company details
The registered office and principal place of business of the Company and subsidiaries is:
Suite 2, Level 2, 66 Clarence St
Sydney NSW 2000
ANNUAL REPORT 2022
47
Directors' declaration
DIRECTORS’ DECLARATION
In accordance with a resolution of the Directors of InvestSMART Group Limited, I state that:
1.
In the opinion of the Directors:
(a) The financial statements, notes and the additional disclosures included in the Director’s Report
designated as audited, of the Company are in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the financial position of the Company as at 30 June 2022 and of its
performance for the year ended on that date.
(ii) complying with Australian Accounting Standards, International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board, as disclosed in Note 2 and
Corporations Regulations 2001.
(b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
2.
This declaration has been made after receiving the declarations required to be made to the Directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2022.
On behalf of the Board
Paul Clitheroe
Chairman
Dated this 24th day of August 2022 at Sydney
ANNUAL REPORT 2022
48
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret Street
Sydney NSW 2000
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of InvestSMART Group Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of InvestSMART Group Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2022, the
consolidated statement of comprehensive income, the consolidated statement of changes in equity and
the consolidated statement of cash flows for the year then ended, and notes to the financial report,
including a summary of significant accounting policies and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
49
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Loan transfer and derecognition
Key audit matter
How the matter was addressed in our audit
Note 6 to the financial report
discloses transfer and
derecognition of Fundlater loans
during the year under a Loan
Acquisition and Management
Agreement.
This is considered a key audit
matter due to the significance of
the loan transferred and due to
higher assessed risk over the
accounting for the loan
derecognition.
To address the matter, our audit procedures included, amongst
others:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
Reviewed and understood the terms and conditions of
the Loan Acquisition and Management Agreement and
the Fundlater loans;
Agreed the value of transferred loans to supporting
documentation;
Evaluated the impact of the loan transfer to the
accounting treatment of the loans in accordance with
the Australian Accounting Standards; and
Ensured the adequacy of the disclosures relating to the
financial instruments and related party in the financial
report in accordance with the Australian Accounting
Standards.
50
Valuation of share-based payments
Key audit matter
How the matter was addressed in our audit
Note 14 to the financial report
discloses an employee benefits
expense in relation to share-
based payments. The valuation of
the share-based payments is a
key audit matter due to the
complexity in the accounting
treatment and the degree of
judgement and estimation in the
inputs for the fair value of the
option.
To address the matter, our audit procedures included, amongst
others:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
Reviewed the appropriateness of the accounting
treatment in accordance with AASB 2, Share-based
Payment;
Reviewed minutes of meeting, share plan and Group
announcements to ensure completeness of information
considered in the calculations;
Tested the appropriateness of the share-based payment
valuation methodology, calculation and related inputs
for new grants in the period;
Verified instruments to supporting agreements and
contracts, where available; and
Ensured the adequacy of the disclosures relating to the
share-based payments in the financial report and in
accordance with the Australian Accounting Standards.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2022 but does not include the
financial report and the 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.
51
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.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 11 to 17 of the directors’ report for the
year ended 30 June 2022.
In our opinion, the Remuneration Report of InvestSMART Group 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.
BDO Audit Pty Ltd
Tim Aman
Director
Sydney, 24 August 2022
52
ADDITIONAL INFORMATION
ADDITIONAL INFORMATION
Additional information required by the Australian Securities Exchange Listing Rules is set out below.
The security holder information set out below was current as at 1 August 2022.
There were 139,144,201 ordinary shares held by 1,058 shareholders, all of which were quoted on the Australian
Securities Exchange. There are no restricted shares on issue. There are no unquoted shares on issue.
Distribution of shareholders
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Totals
Holders
328
237
147
217
129
1,058
Total Shares
57,511
987,436
1,272,164
8,009,877
128,817,213
139,144,201
%
0.04%
0.71%
0.91%
5.76%
92.58%
100.00%
The number of shareholders holding less than a marketable parcel of fully paid ordinary shares is 342.
Top 20 Shareholders:
Shareholder name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ROBIN ANNE OWLES & RON PETER HODGE
WEBABOUT PTY LTD
MR NIGEL ANDREW POOLE
HARRIETTE & CO PTY LTD
MR PAUL HUGH CLITHEROE
TORONTO COVE PTY LTD
BELIKE NOMINEES PTY LIMITED
MRS ROBIN ANNE OWLES & MR PETER RONALD HODGE
CAMERON RICHARD PTY LTD
MYALL RESOURCES PTY LTD
S M & R W BROWN PTY LTD
MRS ANTONIA CAROLINE COLLOPY
MRS CATHERINE MAREE JORDAN
ALASTAIR JOHN DAVIDSON AND ELIZABETH JANE DENNING
PATCAIELI PTY LTD
PENDEX PTY LTD
FROHSHIBER PTY LTD
MR PETER RAYMOND DAVIES
LEYLAND PRIVATE ASSET MANAGEMENT PTY LTD
ONMELL PTY LTD
VADINA PTY LIMITED
Totals
Total Securities on issue
ANNUAL REPORT 2022
Number of
shares held
17,364,325
4,566,666
4,433,334
4,166,666
4,100,000
4,000,000
4,000,000
3,760,765
3,700,124
3,639,421
3,300,000
3,091,000
3,017,928
3,000,000
3,000,000
2,702,747
2,301,991
2,200,000
2,100,000
2,000,000
1,999,980
1,940,000
84,384,947
139,144,201
%
12.48%
3.28%
3.19%
2.99%
2.95%
2.87%
2.87%
2.70%
2.66%
2.62%
2.37%
2.22%
2.17%
2.16%
2.16%
1.94%
1.65%
1.58%
1.51%
1.44%
1.44%
1.39%
60.65%
100.00%
53
ADDITIONAL INFORMATION
Voting rights
At a general meeting, shareholders are entitled to one vote for each fully paid share held. On a show of hands,
every shareholder present in person or by proxy shall have one vote and upon a poll, every shareholder so
present shall have one vote for every fully paid share held.
Substantial shareholders
The Company has been notified of three shareholders who hold relevant interests of in excess of 5% of the
Company’s ordinary shares:
Name
Date of Interest
No of shares1
Percentage2
Leyland Private Asset Management Pty Ltd
Perpetual Limited
Ron Hodge
15 November 2017 25,138,492
16,276,418
17 November 2021
13,704,969
1 June 2021
18.94%
11.70%
9.898%
1 As disclosed in the last notice lodged with the Australian Securities Exchange by the substantial shareholder.
2 The percentage set out in the notice lodged with the Australian Securities Exchange is based on the total
issued capital of the Company at the date of the interest.
Stock Exchange Listing
Quotation has been granted for all the ordinary shares of the Company on all Member Exchanges of the
Australian Securities Exchange Limited.
On-market buyback
As at 1 August 2022, there is no current on-market buy-back.
ANNUAL REPORT 2022
54
DIRECTORY
Directory
Registered Office
Suite 2, Level 2
66 Clarence Street
Sydney NSW 2000
Telephone: 1300 880 160
Directors
Paul Clitheroe AM (Chairman)
Ron Hodge (Managing Director)
Michael Shepherd AO (Lead Independent Non-Executive Director)
Effie Zahos (Independent Non-executive Director)
Company Secretary
Catherine Teo
Share Registry
Automic Pty Ltd
Level 5
126 Phillip Street,
Sydney NSW 2000
Shareholder Enquiries
Telephone: 1300 288 664 (within Australia); +61 2 9698 5414 (outside Australia)
Email: hello@automicgroup.com.au
Website: https://investor.automic.com.au
Auditors
BDO Pty Ltd
Level 11, 1 Margaret St
Sydney NSW 2000
Telephone: +61 2 9251 4100
ANNUAL REPORT 2022
55
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