Microequities Asset Management Group Limited
Annual Report 2019

Plain-text annual report

Microequities Asset Management Group Limited ABN 17 110 777 056 Annual Report - 30 June 2019 Microequities Asset Management Group Limited Contents 30 June 2019 Chief Executive Officer’s report Directors' report Auditor's independence declaration Consolidated statement of profit or loss and other 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 auditor's report to the members of Microequities Asset Management Group Limited Corporate directory Shareholder information 2(cid:1) 4(cid:1) 15(cid:1) 16(cid:1) 17(cid:1) 18(cid:1) 19(cid:1) 20(cid:1) 44(cid:1) 45(cid:1) 48(cid:1) 49(cid:1) 1 Microequities Asset Management Group Limited Chief Executive Officer’s report 30 June 2019 Dear Fellow Shareholders, Summary of operating and financial results are provided below: Summary Profit or Loss Statement ($000's unless stated) Funds Under Management ($m) 2019 340.1 2018 % change 432.4 -21.3% Operating profit from investment management Recurring revenue (1) Ongoing operating expenses(2) Operating profit from management fees Reconciliation to reported net profit after tax Performance fee income Interest & other revenue Other income and gains/(loss) on investments Initial public offering costs Employee share based payment expense Tax expense Profit attributable to non-controlling interests 6,438.3 -3,078.7 3,359.6 960.4 456.7 -387.2 0.0 -563.9 -999.9 -292.7 7,014.4 -3,160.1 3,854.3 3,503.2 448.1 254.3 -8.2% -2.6% -12.8% -72.6% 1.9% -252.2% -447.7 - -327.6 1 -1,804.0 -266.1 Profit from ordinary activities after tax attributable to the owners of Microequities Asset Management Group Limited Client Numbers (units) Ongoing operating expenses to recurring revenue 2,533.0 5,214.5 764 47.8% 839 45.1% (1) Represents m anagement fees (2) Excludes costs related to the initial public offering and em ployee share based payment expense -44.6% 10.0% -51.4% -8.9% 6.1% (cid:1) In the 2019 financial year (FY19), the business experienced challenging conditions created by the bifurcation of market values that has seen extremely inflated valuations for some speculative and fast-growing businesses, whilst another segment of the microcap and small cap asset classes faces highly depressed market valuations, which are at or near GFC levels. Many of our investee companies lie within the latter category. The consequent dichotomy of these two valuation extremes has led to short term marked-to-market underperformance of our domestic investment funds, with a consequent negative effect on our funds under management and business. We know from many decades of investing that the current value bifurcation is not only completely irrational but, more importantly, inevitably correct. The present underperformance is simply laying the foundation for future periods of strong outperformance. totally unsustainable and these extreme valuation imbalances will Despite a challenging year, the business maintained operational profitability and generated free cash flow. Whilst a decline in year on year earnings should never be celebrated, the strong fiscal discipline and robustness of the business model allowed the business to endure a difficult external environment within a climate of stability and confidence. Operationally, FY19 marked the launch of the Value Income Fund, our fund for retail investors which is based on the strategy of our High Income Value Microcap Fund. The Value Income Fund has received a favourable investment research rating from SQM Research and posted strong returns. The 2020 financial year (FY20) will see the fund become available on multiple investment platforms as we seek to expand our distribution reach and scale the fund. Early interest from financial advisors has been positive and, with the RBA undertaking two consecutive interest rate cuts, the need for investors to find alternative quality, high income investments is greater than ever. 2 Microequities Asset Management Group Limited Chief Executive Officer’s report 30 June 2019 Industry dynamics This year has seen many of our competitors close their businesses. We have counted that at least 14 fund managers, many of those in the microcap and small cap space, that have recently shut their businesses for various reasons. These generally include a combination of industry superfunds insourcing asset class capability, fund managers being sub scale, prolonged poor investment performance and continued growth of index investing. The forced selling from a number of these exiting fund managers as well as the reduced number of competitors in our asset class has exacerbated pricing dislocation and market inefficiency. Pricing inefficiency may have affected our FY19 investment performance but, as value-based investors, we are not going to complain one iota about industry conditions that have only accentuated market pricing inefficiency and obfuscated price discovery. The seeds of our future investment performance have been truly planted on highly fertile soil. Strong start to FY20 We are pleased to note that our domestic funds recorded strong performance for the month of July, with our flagship Deep Value Fund returning 8.6%, our High-Income Value Income Fund returning 8.1% and our Pure Microcap Value Fund returning 4.9%. The returns are a pleasing start to FY20 and, with many of investee companies at highly depressed market prices, there is strong return potential across all our Funds. Dividends The board of Microequities Asset Management Group Ltd is pleased to declare a one cent per share fully franked dividend. The dividend payment is consistent with the dividend policy of the company, which is to pay between 70% to 100% of the cash operating profit from the investment management operations. Balance Sheet The Group’s balance sheet remains extremely solid with Net Tangible Assets of $8.6million and a high Current Ratio. The business remains free of financial debt. After paying the announced one cent per share dividend, the Group will have excess cash which it will look deploy within the investment products of the Group. Looking ahead The growing market share of passive index funds has seen many commentators question the viability of active fund managers. We can only speak with respect to the asset classes that we manage; microcaps and small caps. The increase in index funds has exacerbated the very conditions that make value investors get up feeling excited about the asset class each morning, namely: indiscriminate capital allocation accentuating severe pricing inefficiency. Our job and task for FY20 is to articulate the tremendous investment opportunity we see ahead of us to those investors that are not cognisant of it, and to point them towards our undervalued investment funds. This will require a communications and marketing strategy to narrate and articulate the opportunity. Some of our investors are already demonstrating the sophistication to understand that the opportunity is compelling, it behoves us to capture it by articulating it to those that do not. FY20 will also see our Wholesale High Income Value Microcap Fund move to monthly cash distributions allowing improved cash flow management and high cash returns in a prolonged low interest rate environment. The Fund has some unique features and, with a strong track record of generating income and capital growth, we will increase our marketing efforts to build further scale. We take this occasion to thank our clients, shareholders and colleagues who work tirelessly alongside us as we endeavour to achieve our objectives. __________________________ Carlos Gil Chief Executive Officer, Chief Investment Officer 15 August 2019 3 Microequities Asset Management Group Limited Directors' report 30 June 2019 The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'Group') consisting of Microequities Asset Management Group Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2019. Directors The following persons were directors of Microequities Asset Management Group Limited during the whole of the financial year and up to the date of this report, unless otherwise stated: Leslie Szekely - Chairman Craig Shapiro Carlos Gil Samuel Gutman Principal activities During the financial year the principal continuing activities of the Group consisted of the management of investment funds. Dividends Dividends paid/payable during the financial year were as follows: Consolidated 2019 $ 2018 $ Final dividend for the year ended 30 June 2018 of 1 cent per ordinary share 1,315,706 - Interim dividend for the year ended 30 June 2019 of 1 cent per ordinary share (2018: 2.009 cents) 1,332,510 2,645,000 2,648,216 2,645,000 On 15 August 2019, the Directors declared a fully franked final dividend for the year ended 30 June 2019 of 1 cent per ordinary share, to be paid on 5 September 2019 to eligible shareholders on the register as at 21 August 2019. This equates to a total estimated dividend of $1,330,369, based on the number of ordinary shares on issue as at 30 June 2019. The financial effect of dividends declared after the reporting date are not reflected in the financial statements and will be recognised in subsequent financial statements. Review of operations The profit for the Group after providing for income tax and non-controlling interest amounted to $2,532,958 (30 June 2018: $5,214,479). Refer to Chief Executive Officer's report for further commentary on the review of operations. Significant changes in the state of affairs There were no significant changes in the state of affairs of the Group during the financial year. Matters subsequent to the end of the financial year Apart from the dividend declared as discussed above, no other matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years. Likely developments and expected results of operations Likely developments in the operations of the Group and the expected results of those operations are contained in the Chief Executive Officer's report. Environmental regulation The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law. 4 Microequities Asset Management Group Limited Directors' report 30 June 2019 Information on directors Name: Title: Qualifications: Experience and expertise: Leslie Szekely Non-Executive Director and Chairman Bachelor of Arts, Bachelor of Law from the University of New South Wales and Master of Law from Sydney University Leslie worked as a solicitor before teaching commercial and revenue law at the University of New South Wales, and Sydney University. He was a tax consulting partner with Horwath Chartered Accountants for 20 years, until Horwath merged with Deloitte, when he became Director of Taxation in Deloitte Growth Solutions. Leslie has authored numerous books and articles on taxation law. Since leaving Deloitte in 2008 Leslie has dedicated his time to angel and venture capital ('VC') investing. He is Chairman of the Investment Committee for the Microequities VC Fund and sits on the Boards of several unlisted companies. His focus is the development of business strategy in sectors undergoing digital disruption. Other current directorships: No other listed entity directorships Former directorships (last 3 years): No other listed entity directorships Special responsibilities: Chairperson of the Nomination and Remuneration Committee and Member of the Audit and Risk Management Committee 18,317,357 ordinary shares None None Interests in shares: Interests in options: Interests in rights: Experience and expertise: Name: Title: Qualifications: Craig Shapiro Independent Non-Executive Director Bachelor of Science from the University of Sydney, a Diploma from the Securities Institute of Australia and is a member of the Australian Institute of Company Directors Craig is a financial services expert with more than 30 years of experience. He spent 22 years at Macquarie Group where he was the Global Group Treasurer and Executive Director. Prior to joining Macquarie, Craig worked for the State Bank of NSW and Mitsui Trust Finance Australia. In 2015 he co-founded and is currently the Co-Chief Executive Officer of Blue River Group Pty Limited, an impact investment services firm based in Sydney. Craig is a current director of The Jewish Care Foundation and is a past director and honorary treasurer of The Sydney Institute. Other current directorships: No other listed entity directorships Former directorships (last 3 years): No other listed entity directorships Special responsibilities: Chairperson of the Audit and Risk Management Committee and Member of the Nomination and Remuneration Committee 2,662,376 ordinary shares None None Carlos Gil Managing Director, Chief Executive Officer and Chief Investment Officer Bachelor of Economics from Sydney University, a Graduate Diploma in Applied Finance and Investment Analysis from the Australian Securities Institute and a Master's in Applied Finance and Investment Analysis from the Financial Services Institute of Australia. Carlos has worked in stockbroking, funds management, and investment research for over 20 years and has been an individual investor in Australian Microcaps since he was a teenager. Carlos has held various senior management positions in Europe, including roles as Head of International Securities at BM Securities, and at Banesto Bank (Santander Group). Upon his return to Australia, he founded the Company with a long-term vision of creating a value-driven specialist Microcap and Small Cap Fund Manager. Smartpay Holdings Limited (ASX: SMP) - appointed on 5 December 2018 Interests in shares: Interests in options: Interests in rights: Name: Title: Qualifications: Experience and expertise: Other current directorships: Former directorships (last 3 years): No other listed entity directorships Special responsibilities: Interests in shares: Interests in options: Interests in rights: Member of the Nomination and Remuneration Committee 53,634,560 ordinary shares None 1,905,516 performance rights 5 Microequities Asset Management Group Limited Directors' report 30 June 2019 Experience and expertise: Name: Title: Qualifications: Samuel Gutman Executive Director and Company Secretary Bachelor of Arts from the University of Newcastle (Australia) and has a Graduate Diploma of Applied Finance and Investments from the Financial Services Institute of Australia Samuel brings a wealth of invaluable pragmatic business experience to the management team obtained the Information Technology industry. Samuel has been a long time personal investor in the Microcap asset class and adamantly shares the investment philosophy of the Microequities team. Other current directorships: No other listed entity directorships Former directorships (last 3 years): No other listed entity directorships Special responsibilities: Interests in shares: Interests in options: Interests in rights: Member of the Audit and Risk Management Committee 22,955,539 ordinary shares inclusive of 580,232 loan funded shares None None through a successful career in 'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. 'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. Company secretary Samuel Gutman is the company secretary. Samuel's experience is detailed in the 'Information on directors' section above. Meetings of directors The number of meetings of the Company's Board of Directors ('the Board') and of each Board committee held during the year ended 30 June 2019, and the number of meetings attended by each director were: Full Board Attended Held Nomination and Remuneration Committee Attended Held Audit and Risk Management Committee Attended Held Leslie Szekely Craig Shapiro Carlos Gil Samuel Gutman 11 11 12 12 12 12 12 12 3 3 3 - 3 3 3 - 5 5 - 5 5 5 - 5 Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee. Remuneration report (audited) The remuneration report details the key management personnel remuneration ('KMP') arrangements for the Group, in accordance with the requirements of the Corporations Act 2001 and its Regulations. KMP are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors. The remuneration report is set out under the following main headings: (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) Principles used to determine the nature and amount of remuneration Details of remuneration Service agreements Share-based compensation Additional information Additional disclosures relating to KMP 6 Microequities Asset Management Group Limited Directors' report 30 June 2019 Principles used to determine the nature and amount of remuneration The objective of the Group's executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward governance practices: (cid:1) (cid:1) (cid:1) (cid:1) competitiveness and reasonableness; acceptability to shareholders; performance linkage / alignment of executive compensation; and transparency. The Board is responsible for determining and reviewing remuneration arrangements for its directors and executives. The performance of the Group depends on the quality of its directors and executives. The remuneration philosophy is to attract, motivate and retain high performance and high quality personnel. The Board has structured an executive remuneration framework that is market competitive and complementary to the reward strategy of the Group. The reward framework is designed to align executive reward to shareholders' interests. The Board have considered that it should seek to enhance shareholders' interests by: (cid:1) (cid:1) having economic profit as a core component of plan design; focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value; and attracting and retaining high calibre executives. (cid:1) Additionally, the reward framework should seek to enhance executives' interests by: (cid:1) (cid:1) (cid:1) rewarding capability and experience; reflecting competitive reward for contribution to growth in shareholder wealth; and providing a clear structure for earning rewards. In accordance with best practice corporate governance, the structure of non-executive director and executive director remuneration is separate. Non-Executive directors' remuneration Non-Executive directors each have a letter of appointment with the Group. Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors' fees and payments are reviewed annually by the Board. The Board may, from time to time, receive advice from independent remuneration consultants to ensure non- executive directors' fees and payments are appropriate and in line with the market. The chairman's fees are determined independently to the fees of other non-executive directors based on comparative roles in the external market. The chairman is not present at any discussions relating to the determination of his own remuneration. Non-executive directors do not receive share options or other incentives. As prescribed by the Listing Rules of the ASX, the aggregate remuneration of non-executive directors is determined from time to time by shareholders at general meeting. Non-executive directors’ fees (including statutory superannuation) are determined within an aggregate directors’ fee pool limit. The pool currently stands at a maximum of $300,000 per annum in total, which was approved by shareholders on 16 February 2018. The annual base non-executive director fees payable by the Group are $45,000 to the Chairman and $40,000 to other non- executive directors, including for any committee roles. These amounts comprise fees paid in cash and are inclusive of statutory superannuation contributions. Executive remuneration The Group aims to reward executives based on their position and responsibility, with a level and mix of remuneration which has both fixed and variable components. The executive remuneration and reward framework has four components: (cid:1) (cid:1) (cid:1) (cid:1) base pay and non-monetary benefits; short-term performance incentives; share-based payments; and other remuneration such as superannuation and long service leave. 7 Microequities Asset Management Group Limited Directors' report 30 June 2019 The combination of these comprises the executive's total remuneration. Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the Board based on individual and business unit performance, the overall performance of the Group and comparable market remunerations. Executives may receive their fixed remuneration in the form of cash or other fringe benefits. No short-term incentive (‘STI’) payments were made during the year. The long-term incentives ('LTI') include long service leave and share-based payments. Shares, options or performance rights are awarded to executives over a period of 3 to 4 years based on long-term incentive measures. These include increase in shareholder value, increase in funds under management, performance of the funds and financial performance of the business. The options, performance rights and loan shares vest between 3 and 4 years and are contingent upon employment or service with the Group on the vesting date and the satisfaction of certain vesting conditions. The Board reviewed the long-term equity-linked performance incentives specifically for executives during the financial year ended 30 June 2019. Refer to 'share-based compensation' section below for further details of LTI awards issued by the Group. Group performance and link to remuneration LTI comprising of share-based payments are directly linked to the performance of the Group. Performance rights, loan shares and options have various vesting conditions including a continuous period of service with the Group and performance of underlying Funds and the business. Use of remuneration consultants During the financial year ended 30 June 2019, the Group did not engage any remuneration consultants. Voting and comments made at the Company's 2018 Annual General Meeting ('AGM') At the 2018 AGM, shareholders voted to approve the adoption of the remuneration report for the year ended 30 June 2018. The Company did not receive any specific feedback at the AGM regarding its remuneration practices. Details of remuneration Amounts of remuneration Details of the remuneration of key management personnel of the Group are set out in the following tables. The key management personnel of the Group consisted of the directors of Microequities Asset Management Group Limited and the following person: (cid:1) Paul Kaplan - Chief Operating Officer 8 Microequities Asset Management Group Limited Directors' report 30 June 2019 Short-term benefits Post- employment benefits Long-term benefits Share- based payments Cash salary and fees $ Cash bonus $ Non- monetary $ Super- annuation $ Long service leave $ Equity- settled $ Total $ 41,096 36,530 485,559 132,479 306,759 1,002,423 - - - - - - - - - - - - 3,904 3,470 - - - - 45,000 40,000 20,049 13,014 17,986 3,806 73,796 5,663 597,390 154,962 20,049 60,486 6,139 27,931 427,530 506,989 760,477 1,597,829 Short-term benefits Post- employment benefits Long-term benefits Share- based payments Cash salary and fees $ Cash bonus $ Non- monetary $ Super- annuation $ Long service leave $ Equity- settled $ Total $ 6,849 19,818 464,404 141,583 - - - - 281,007 913,661 90,000 90,000 - - - - - - 651 1,883 - - - - 7,500 21,701 20,049 13,014 9,046 2,602 73,796 15,103 567,295 172,302 20,049 55,646 - 11,648 169,012 257,911 560,068 1,328,866 2019 Non-Executive Directors: Leslie Szekely - Chairman Craig Shapiro Executive Directors: Carlos Gil Samuel Gutman Other Key Management Personnel: Paul Kaplan 2018 Non-Executive Directors: Leslie Szekely - Chairman Craig Shapiro Executive Directors: Carlos Gil Samuel Gutman Other Key Management Personnel: Paul Kaplan Non-Executive Directors' salaries are 100% fixed. The fixed proportion and the proportion of remuneration linked to performance of Executive Directors and KMP are as follows: Name Executive Directors: Carlos Gil Samuel Gutman Other Key Management Personnel: Paul Kaplan Fixed remuneration 2019 2018 At risk - STI 2019 2018 At risk - LTI 2019 2018 88% 96% 87% 91% 44% 54% - - - - - 12% 4% 13% 9% 16% 56% 30% 9 Microequities Asset Management Group Limited Directors' report 30 June 2019 Service agreements The Group enters into employment agreements with its executives. The agreements are continuous, that is, not of a fixed duration, and includes notice period ranging from four weeks to three months on the part of the employee and the Group. The employment agreements contain substantially the same terms which include usual statutory entitlements, typical confidentiality and intellectual property provisions intended to protect the Group’s intellectual property rights and other proprietary information and non-compete clauses. Share-based compensation Issue of shares There were no shares issued to directors and other key management personnel as part of compensation during the year ended 30 June 2019. Options The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows: Grant date and expiry date Particulars 09/11/2015 and 09/10/2020 Paul Kaplan: 2,713,022 options which vest on 36 months of continuous service with the Group. The vesting of the options is conditional on Paul being employed by the Group on the vesting date. There are no performance conditions in relation to the options. On 19 November 2018, all the options were exercised by way of cashless exercise in terms of which shares to the value of the surplus over the exercise price were issued. Exercise price Fair value per option at grant date $0.267 $0.070 The number of options over ordinary shares granted to and vested by directors and other key management personnel as part of compensation during the year ended 30 June 2019 are set out below: Name Paul Kaplan: Number of options granted during the year 2019 Number of options granted during the year 2018 Number of options vested during the year 2019 Number of options vested during the year 2018 - - 2,713,022 - Loan Funded Share Plan ('LFSP') The Group has an equity scheme pursuant to which certain KMP's may access a LFSP. On 26 November 2015, in accordance with the terms of the plan Samuel Gutman was issued 580,232 shares. The acquisition of shares under this LFSP is fully funded by the Company through the granting of a limited recourse loan. The LFSP shares are restricted until the loan is repaid. Interest is charged on the outstanding amount of the loan at the Benchmark Interest Rate as defined in section 109N(2) of the Income Tax Assessment Act 1936. The loan together with interest must be repaid in full on the date that is two years after Listing. The issue of share with the limited recourse loan is deemed to be an option for accounting purposes. Options issued to Samuel Gutman under LFSP have fully vested, the option holder will have unrestricted access to the underlying shares upon settlement of the loan. Performance rights The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of directors and other KMP in this financial year or future reporting years are as follows: 10 Microequities Asset Management Group Limited Directors' report 30 June 2019 Grant date Particulars 28/02/2018 09/11/2018 Carlos Gil 1,905,516 rights: The Group has agreed to pay Carlos Gil a bonus in February 2022 if certain performance hurdles relating to the Funds are met and he is still employed by the Group. The Group can elect to settle the bonus in cash or by way of an issue of shares. The amount of the bonus will be calculated in accordance with a formula based on the market price of the shares at the time the bonus is payable multiplied by the vesting percentage (which will range from 0% to 100% depending on the number of Funds that meet the performance hurdle). Each Fund has its own performance hurdles which are all 5% above the compound annual return of the relevant benchmark. In calculating the share-based payment expense for performance rights, the Board has reviewed the historical performance of the funds which have at least 2 years track record. Based on the review, the Board has applied a 40% probability of meeting the performance conditions. Paul Kaplan 1,223,550 rights: The Group granted performance rights to pay a bonus in November 2021 if certain performance hurdles relating to the Group and service conditions of the employee are met. The Group can elect to settle the bonus in cash or by way of an issue of shares. The amount of the bonus will be calculated in accordance with a formula based on the market price of the shares at the time the bonus is payable multiplied by the vesting percentage (which will range from 0% to 100% depending on the achievement of the various performance hurdles). The Board has applied a 22.25% probability of meeting the performance conditions. Expiry date Fair value per right at grant date 28/02/2022 $0.581 28/02/2021 $0.430 Performance rights granted carry no dividend or voting rights. The number of performance rights over ordinary shares granted to and vested in directors and other key management personnel as part of compensation during the year ended 30 June 2019 are set out below: Name Carlos Gil Paul Kaplan Number of rights granted during the year 2019 Number of rights granted during the year 2018 Number of rights vested during the year 2019 Number of rights vested during the year 2018 - 1,223,550 1,905,516 - - - - - Additional information The earnings of the Group for the two years to 30 June 2019 are summarised below: Sales revenue Profit after income tax 2019 $ 2018 $ 7,855,401 2,532,958 10,965,756 5,214,479 11 Microequities Asset Management Group Limited Directors' report 30 June 2019 The factors that are considered to affect total shareholders return ('TSR') are summarised below: Share price at financial year end ($) Total dividends declared (cents per share) Basic earnings per share (cents per share) Diluted earnings per share (cents per share) Additional disclosures relating to KMP 2019 2018 0.26 2.00 1.94 1.94 0.71 2.00 4.00 3.90 Shareholding The number of shares in the Company held during the financial year by each director and other members of KMP of the Group, including their personally related parties, is set out below: Ordinary shares Leslie Szekely* Craig Shapiro Carlos Gil Samuel Gutman** Paul Kaplan Balance at the start of the year Received as part of remuneration Additions Disposals/ other 18,317,357 2,662,376 53,634,560 22,955,539 - 97,569,832 - - - - 759,161 759,161 - - - - - - - - - - - - Balance at the end of the year 18,317,357 2,662,376 53,634,560 22,955,539 759,161 98,328,993 * Leslie Szekely, the Chairman, holds 50% of the shares in Equity Venture Partners Pty Ltd ACN 600 735 626 ('EVP') through Bellite Pty Ltd ACN 056 441 386, a company controlled by him. EVP (as trustee for the EVP Trust) is a limited partner of Microequities Venture Capital Managing Partnership LP which acts as general partner of the Microequities Venture Capital Fund LP. ** Samuel Gutman's shareholding above includes 580,232 shares issued under the LFSP. Option holding The number of options over ordinary shares in the Company held during the financial year by each director and other members of KMP of the Group, including their personally related parties, is set out below: Options over ordinary shares Paul Kaplan Balance at the start of the year 2,713,022 2,713,022 Granted Exercised Expired/ forfeited/ other Balance at the end of the year - - (2,713,022) (2,713,022) - - - - Performance rights holding The number of performance rights over ordinary shares in the Company held during the financial year by each director and other members of KMP of the Group, including their personally related parties, is set out below: Performance rights over ordinary shares Carlos Gil Paul Kaplan Balance at the start of the year Granted Vested Expired/ forfeited/ other Balance at the end of the year 1,905,516 - 1,905,516 - 1,223,550 1,223,550 - - - - - - 1,905,516 1,223,550 3,129,066 Loans to key management personnel and their related parties Loans attached to the LFSP total $93,762 (2018: $114,736) and are reported as a reduction in issued capital, due to the operability of the LFSP being accounted for as share-based payments, similar in nature to options. This concludes the remuneration report, which has been audited. 12 Microequities Asset Management Group Limited Directors' report 30 June 2019 Shares under option There were no unissued ordinary shares of Microequities Asset Management Group Limited under option outstanding at the date of this report. Shares issued on the exercise of options The following ordinary shares of Microequities Asset Management Group Limited were issued during the year ended 30 June 2019 and up to the date of this report on the exercise of options granted: Date options granted 09/11/2015 Exercise price Number of shares issued $0.000 759,161 Shares under performance rights and loan funded share plan Ordinary shares of Microequities Asset Management Group Limited under performance rights at the date of this report are as follows: Grant date 28/02/2018 28/02/2018 09/11/2018 Expiry date 28/02/2022 28/02/2022 09/11/2021 Exercise price Number under rights $0.000 $0.000 $0.000 1,905,516 1,270,344 1,223,550 4,399,410 No person entitled to exercise the performance rights had or has any right by virtue of the performance right to participate in any share issue of the Company or of any other body corporate. Shares issued on the exercise of performance rights There were no ordinary shares of Microequities Asset Management Group Limited issued on the exercise of performance rights during the year ended 30 June 2019 and up to the date of this report. Indemnity and insurance of officers The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith. During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. Indemnity and insurance of auditor The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Company or any related entity against a liability incurred by the auditor. During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity. Proceedings on behalf of the Company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. 13 Microequities Asset Management Group Limited Directors' report 30 June 2019 Non-audit services Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 19 to the financial statements. The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are of the opinion that the services as disclosed in note 19 to the financial statements do not compromise the external auditor's independence requirements of the Corporations Act 2001 for the following reasons: (cid:1) all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards. (cid:1) Officers of the Company who are former partners of BDO East Coast Partnership There are no officers of the Company who are former partners of BDO East Coast Partnership. Auditor's independence declaration A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors' report. Auditor BDO East Coast Partnership continues in office in accordance with section 327 of the Corporations Act 2001. This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001. On behalf of the directors ___________________________ Leslie Szekely Chairman 15 August 2019 ___________________________ Carlos Gil Chief Executive Officer 14 (cid:25)(cid:3)(cid:5)(cid:26)(cid:1)(cid:27)(cid:28)(cid:6)(cid:1)(cid:19)(cid:1)(cid:29)(cid:19)(cid:30)(cid:6)(cid:1)(cid:31)(cid:6)(cid:20)(cid:20)(cid:1) (cid:9)!(cid:26)(cid:1)(cid:27)(cid:28)(cid:6)(cid:1)(cid:19)(cid:1)(cid:29)(cid:19)(cid:31)(cid:20)(cid:1)(cid:29)"(cid:19)(cid:6)(cid:1) (cid:1)(cid:1)(cid:1)(cid:2)(cid:3)(cid:4)(cid:5)(cid:2)(cid:6)(cid:5)(cid:7)(cid:2)(cid:8)(cid:9)(cid:10) (cid:10) (cid:2)(cid:3)(cid:4)(cid:3)(cid:5)(cid:1)(cid:6)(cid:6)(cid:7)(cid:1)(cid:6)(cid:1)(cid:8)(cid:9)(cid:10)(cid:11)(cid:9)(cid:10)(cid:3)(cid:12)(cid:1)(cid:13)(cid:12)(cid:1)(cid:1) (cid:13)(cid:14)(cid:15)(cid:16)(cid:3)(cid:14)(cid:1)(cid:17)(cid:13)(cid:18)(cid:1)(cid:19)(cid:20)(cid:20)(cid:20)(cid:1) (cid:21)(cid:22)(cid:23)(cid:12)(cid:10)(cid:9)(cid:5)(cid:24)(cid:9)(cid:1) (cid:1) (cid:1)(cid:1) (cid:1) (cid:10) 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(403,729) (2,518,191) (120,624) (257,347) (288,924) (447,735) (302,569) 3,825,612 7,284,618 8 (999,905) (1,804,019) 2,825,707 5,480,599 - - 2,825,707 5,480,599 292,749 2,532,958 266,120 5,214,479 2,825,707 5,480,599 292,749 2,532,958 266,120 5,214,479 2,825,707 5,480,599 Cents Cents Basic earnings per share Diluted earnings per share 26 26 1.94 1.94 4.00 3.90 The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 16 Microequities Asset Management Group Limited Consolidated statement of financial position As at 30 June 2019 Assets Current assets Cash and cash equivalents Trade and other receivables Other Total current assets Non-current assets Financial assets at fair value through profit or loss Deferred tax Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Income tax Employee benefits Total current liabilities Non-current liabilities Employee benefits Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Retained earnings Equity attributable to the owners of Microequities Asset Management Group Limited Non-controlling interest 14 15 Total equity Consolidated Note 2019 $ 2018 $ 9 10 11 12 8 13 8 4,680,498 673,955 114,968 5,469,421 6,562,576 784,866 82,182 7,429,624 3,907,025 216,804 4,123,829 2,876,277 92,730 2,969,007 9,593,250 10,398,631 409,518 333,330 229,282 972,130 634,886 766,409 205,274 1,606,569 22,676 22,676 11,312 11,312 994,806 1,617,881 8,598,444 8,780,750 2,645,634 320,960 5,631,840 8,598,434 10 2,706,045 327,597 5,747,098 8,780,740 10 8,598,444 8,780,750 The above consolidated statement of financial position should be read in conjunction with the accompanying notes 17 Microequities Asset Management Group Limited Consolidated statement of changes in equity For the year ended 30 June 2019 Consolidated Balance at 1 July 2017 Profit after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 14) Share-based payments (note 27) Repayments under loan funded share plan (note 14) Distribution of profits to non-controlling interest Dividends paid (note 16) Issued capital $ 2,655,669 - - - 1 - Reserves $ Retained earnings $ Non- controlling interest $ Total equity $ - - - - 3,177,619 10 5,833,298 5,214,479 266,120 5,480,599 - - - 5,214,479 266,120 5,480,599 - 327,597 - - - - 1 327,597 50,375 - - - - - - - (2,645,000) - (266,120) - 50,375 (266,120) (2,645,000) Balance at 30 June 2018 2,706,045 327,597 5,747,098 10 8,780,750 Consolidated Issued capital $ Reserves $ Retained earnings $ Non- controlling interest $ Total equity $ Balance at 1 July 2018 2,706,045 327,597 5,747,098 10 8,780,750 Profit after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 14) Share-based payments (note 27) Transfer on exercise of options Repayments under loan funded share plan (note 14) Share buy-back Distribution of profits to non-controlling interest Dividends paid (note 16) - - - - - - 2,532,958 292,749 2,825,707 - - - 2,532,958 292,749 2,825,707 28,680 - 190,139 53,658 (332,888) - - - 183,502 (190,139) - - - - - - 28,680 183,502 - - - - - - - - (2,648,216) - - (292,749) - 53,658 (332,888) (292,749) (2,648,216) Balance at 30 June 2019 2,645,634 320,960 5,631,840 10 8,598,444 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes 18 Microequities Asset Management Group Limited Consolidated statement of cash flows For the year ended 30 June 2019 Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Dividends and distributions received Interest received Income taxes paid Net cash from operating activities Cash flows from investing activities Payments for investments Proceeds from disposal of investments Net cash from/(used in) investing activities Cash flows from financing activities Proceeds from issue of shares Repayments under loan funded share plan Payments for share buy-backs Dividends paid Distribution of profits to non-controlling entity Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Consolidated Note 2019 $ 2018 $ 8,689,808 (4,427,845) 14,962,395 (4,746,431) 4,261,963 18,277 114,935 (1,557,058) 10,215,964 41,966 151,981 (2,531,604) 25 2,838,117 7,878,307 14 14 (1,500,000) - (1,000,000) 1,129,875 (1,500,000) 129,875 - 53,658 (332,888) (2,648,216) (292,749) 1 50,375 - (4,945,000) (266,120) (3,220,195) (5,160,744) (1,882,078) 6,562,576 2,847,438 3,715,138 Cash and cash equivalents at the end of the financial year 9 4,680,498 6,562,576 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes 19 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 1. General information The financial statements cover Microequities Asset Management Group Limited as a Group consisting of Microequities Asset Management Group Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Microequities Asset Management Group Limited's functional and presentation currency. Microequities Asset Management Group Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Suite 3105, Level 31 Governor Macquarie Tower 1 Farrer Place Sydney NSW 2000 A description of the nature of the Group's operations and its principal activities are included in the directors' report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of directors, on 15 August 2019. The directors have the power to amend and reissue the financial statements. Note 2. Significant accounting policies The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. New or amended Accounting Standards and Interpretations adopted The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The following Accounting Standards and Interpretations adopted during the year are most relevant to the Group: AASB 9 Financial Instruments The Group has adopted AASB 9 from 1 July 2018. The standard introduced new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows which arise on specified dates and that are solely principal and interest. A debt investment shall be measured at fair value through other comprehensive income if it is held within a business model whose objective is to both hold assets in order to collect contractual cash flows which arise on specified dates that are solely principal and interest as well as selling the asset on the basis of its fair value. All other financial assets are classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading or contingent consideration recognised in a business combination) in other comprehensive income ('OCI'). Despite these requirements, a financial asset may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounting mismatch. New impairment requirements use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment is measured using a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. For receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available. AASB 15 Revenue from Contracts with Customers The Group has adopted AASB 15 from 1 July 2018. The standard provides a single comprehensive model for revenue recognition. The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard introduced a new contract-based revenue recognition model with a measurement approach that is based on an allocation of the transaction price. This is described further in the accounting policies below. Credit risk is presented separately as an expense rather than adjusted against revenue. Contracts with customers are presented in an entity's statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Customer acquisition costs and costs to fulfil a contract can, subject to certain criteria, be capitalised as an asset and amortised over the contract period. 20 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 2. Significant accounting policies (continued) Impact of adoption The Group has adopted AASB 9 and AASB 15 for the financial year ended 30 June 2019. The Accounting Standards were adopted using the transitional rules that allow for comparatives not to be restated. The adoption of AASB 9 and AASB 15 did not result in any change to the opening net assets or the opening retained earnings as at 1 July 2018. The adoption of these Accounting Standards and Interpretations resulted in the following disclosure changes: (cid:1) interest revenue is now shown separately on the face of the statement of profit or loss and other comprehensive income; and additional disclosures relating to disaggregation of revenue which is included in note 5. (cid:1) Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB'). Historical cost convention The financial statements have been prepared under the historical cost convention, except for, financial assets at fair value through profit or loss. Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3. Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supplementary information about the parent entity is disclosed in note 28. Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Microequities Asset Management Group Limited ('Company' or 'parent entity') as at 30 June 2019 and the results of all subsidiaries for the year then ended. Microequities Asset Management Group Limited and its subsidiaries together are referred to in these financial statements as the 'Group'. Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. 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. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity of the Group. Losses incurred by the Group are attributed to the non-controlling interest in full, even if that results in a deficit balance. 21 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 2. Significant accounting policies (continued) Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non- controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. Operating segments Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance. Revenue recognition The Group recognises revenue as follows: Revenue from contracts with customers Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised. The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are recognised as a refund liability. Fees from management services are recognised over time when the services are provided. The measurement of the management fee component of revenue is based on the portfolio managed, net of any fund manager rebates. The performance fee component of revenue is recognised at the time when the right to receive payment has been established. Performance fees which are contingent upon performance to be determined at future dates have not been recognised as revenue or as a receivable at the reporting date as they are not able to be estimated or measured reliably and may change significantly. Dividends and distributions Dividends and distributions are recognised when received or when the right to receive payment is established. Interest Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Other revenue Other revenue is recognised when it is received or when the right to receive payment is established. Income tax The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. 22 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 2. Significant accounting policies (continued) Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: (cid:1) When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or (cid:1) When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously. Microequities Asset Management Group Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group. In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax consolidated group. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity. Current and non-current classification Assets and liabilities are presented in the statement of financial position based on current and non-current classification. An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current. A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current. Deferred tax assets and liabilities are always classified as non-current. Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 23 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 2. Significant accounting policies (continued) Trade and other receivables Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 7 days. The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. Investments and other financial assets Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless, an accounting mismatch is being avoided. Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off. Financial assets at fair value through profit or loss Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss. Impairment of financial assets The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the Group's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. Leases The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset. A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits. Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability. Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease term. 24 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 2. Significant accounting policies (continued) Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease. Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition. Employee benefits Short-term employee benefits Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled. Long-term employee benefits The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Defined contribution superannuation expense Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred. Share-based payments Equity-settled share-based compensation benefits are provided to employees. Equity-settled transactions are awards of shares, or options over shares (including performance rights and loan funded shares), that are provided to employees in exchange for the rendering of services. The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions. The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods. Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied. If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification. If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited. 25 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 2. Significant accounting policies (continued) If equity-settled awards are cancelled, they are treated as if they had vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification. Fair value measurement When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market. Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement. For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data. Issued 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. Dividends Dividends are recognised when declared during the financial year and no longer at the discretion of the Company. Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of Microequities Asset Management Group Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. Goods and Services Tax ('GST') and other similar taxes Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position. 26 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 2. Significant accounting policies (continued) Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2019. The Group's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set out below. AASB 16 Leases This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB 117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease, the expense associated with the lease under AASB 16 will be higher when compared to lease expense under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation in profit or loss under AASB 16. For classification within the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either operating or financing activities) component. For lessor accounting, the standard does not substantially change how a lessor accounts for leases. The impact of adoption of this standard as at 1 July 2019, using the modified retrospective approach, will result in the recognition of a right-of-use asset of $396,218 with a corresponding increase in lease liability, in respect of the Group’s operating leases over premises. Refer to note 21 for undiscounted commitments in relation to non-cancellable operating leases as at 30 June 2019. New Conceptual Framework for Financial Reporting A revised Conceptual Framework for Financial Reporting has been issued by the AASB and is applicable for annual reporting periods beginning on or after 1 January 2020. This release impacts for-profit private sector entities that have public accountability that are required by legislation to comply with Australian Accounting Standards and other for-profit entities that voluntarily elect to apply the Conceptual Framework. Phase 2 of the framework is yet to be released which will impact for-profit private sector entities. The application of new definition and recognition criteria as well as new guidance on measurement will result in amendments to several accounting standards. The issue of AASB 2019-1 Amendments to Australian Accounting Standards – References to the Conceptual Framework, also applicable from 1 January 2020, includes such amendments. Where the Group has relied on the conceptual framework in determining its accounting policies for transactions, events or conditions that are not otherwise dealt with under Australian Accounting Standards, the Group may need to revisit such policies. The Group will apply the revised conceptual framework from 1 July 2020 and is yet to assess its impact Note 3. Critical accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below. 27 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 3. Critical accounting judgements, estimates and assumptions (continued) Share-based payment transactions The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black- Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. The Group can elect to settle performance rights in the form of a bonus in cash or by way of an issue of shares. The fair value of such performance rights are accounted over the vesting period as an equity settled share-based payment based on the current expectation of settlement. Fair value measurement hierarchy The Group is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant to fair value and therefore which category the asset or liability is placed in can be subjective. Note 4. Operating segments The main business activities of the Group are the provision of funds management services. The Board of Directors are identified as the Chief Operating Decision Makers ('CODM'), and they consider the performance of the main business activities on an aggregated basis to determine the allocation of resources. Other activities undertaken by the Group, including investing activities, are incidental to the main business activities. Based on the internal reports that are used by the CODM the Group has one operating segment being the provision of funds management services with the objective of offering investment funds to wholesale and sophisticated investors. There is no aggregation of operating segments. The operating segment information is the same information as provided throughout the financial statements and are therefore not duplicated. The information reported to the CODM is on a monthly basis. Note 5. Revenue from contracts with customers Management fees Performance fees Other revenue Revenue from contracts with customers Disaggregation of revenue Consolidated 2019 $ 2018 $ 6,438,289 960,403 347,409 7,014,414 3,503,215 289,357 7,746,101 10,806,986 There is no disaggregation of revenue provided, as all revenue is generated in Australia and revenue is recognised over time. 28 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 6. Other income and gain/(loss) on investments Dividends and distributions Realised gain on investments Unrealised gain/(loss) on investments Other income and gain/(loss) on investments Note 7. Expenses Profit before income tax includes the following specific expenses: Rental expense relating to operating leases Minimum lease payments Superannuation expense Defined contribution superannuation expense Consolidated 2019 $ 2018 $ 121,051 - (508,205) 55,423 55,848 142,981 (387,154) 254,252 Consolidated 2019 $ 2018 $ 315,238 288,924 145,028 144,384 29 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 8. Income tax Income tax expense Current tax Deferred tax - origination and reversal of temporary differences Aggregate income tax expense Deferred tax included in income tax expense comprises: Increase in deferred tax assets Numerical reconciliation of income tax expense and tax at the statutory rate Profit before income tax expense Tax at the statutory tax rate of 27.5% Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Share-based payments Contributions to employee share scheme Taxable distributions Tax impact of franked dividends received Non-taxable income attributable to non-controlling interest Sundry items Income tax expense Deferred tax asset Deferred tax asset comprises temporary differences attributable to: Amounts recognised in profit or loss: Employee benefits Accrued expenses Listing expenses Unrealised loss/(gain) on investments Deferred tax asset Movements: Opening balance Credited to profit or loss Closing balance Provision for income tax Provision for income tax 30 Consolidated 2019 $ 2018 $ 1,123,979 (124,074) 1,863,925 (59,906) 999,905 1,804,019 (124,074) (59,906) 3,825,612 7,284,618 1,052,043 2,003,270 54,223 - - (25,855) (80,506) - 90,089 (264,000) 68,838 (21,132) (73,183) 137 999,905 1,804,019 Consolidated 2019 $ 2018 $ 69,289 7,686 - 139,829 59,740 9,034 95,532 (71,576) 216,804 92,730 92,730 124,074 32,824 59,906 216,804 92,730 Consolidated 2019 $ 2018 $ 333,330 766,409 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 9. Current assets - cash and cash equivalents Cash at bank and on hand Cash on deposits Note 10. Current assets - trade and other receivables Trade receivables Other receivable Trust distribution receivable Interest receivable Consolidated 2019 $ 2018 $ 4,440,169 240,329 4,472,042 2,090,534 4,680,498 6,562,576 Consolidated 2019 $ 2018 $ 574,269 4,167 89,472 6,047 743,912 3,621 25,651 11,682 673,955 784,866 Allowance for expected credit losses The Group has recognised a loss of $nil (2018: $nil) in profit or loss in respect of the expected credit losses for the year ended 30 June 2019. The ageing of the receivables and allowance for expected credit losses provided for above are as follows: Consolidated Not overdue Note 11. Current assets - other Prepayments Other assets Expected credit loss rate 2019 % Carrying amount 2019 $ Allowance for expected credit losses 2019 $ - 574,269 - Consolidated 2019 $ 2018 $ 65,877 49,091 33,091 49,091 114,968 82,182 Consolidated 2019 $ 2018 $ Note 12. Non-current assets - financial assets at fair value through profit or loss Investment in unlisted Australian unit trusts - designated at fair value through profit or loss 3,907,025 2,876,277 Refer to note 18 for further information on fair value measurement. 31 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 13. Current liabilities - trade and other payables Trade payables Accruals and other payables Refer to note 17 for further information on financial instruments. Note 14. Equity - issued capital Ordinary shares - fully paid Less: Treasury shares Movements in ordinary share capital Consolidated 2019 $ 2018 $ 73,453 336,065 92,575 542,311 409,518 634,886 Consolidated 2019 Shares 2018 Shares 2019 $ 2018 $ 133,036,934 132,938,073 (2,637,776) (2,637,776) 3,816,577 (1,170,943) 3,930,646 (1,224,601) 130,399,158 130,300,297 2,645,634 2,706,045 Details Date Shares $ Balance Share-split Issue of shares under employee share trust plan Issue of shares Balance Share buy-back Shares issued on exercise of options Issue of shares Share buy-back Share buy-back Share buy-back Transfer from share-based payment reserve on exercise of options 1 July 2017 16 February 2018 28 February 2018 24 April 2018 30 June 2018 9 October 2018 19 November 2018 19 November 2018 21 November 2018 22 February 2019 21 March 2019 401,426 131,266,302 1,270,344 1 132,938,073 (216,076) 759,161 50,760 (6,445) (274,540) (213,999) - 2,970,645 - 960,000 1 3,930,646 (125,232) - 28,680 (3,646) (117,050) (86,960) 190,139 Balance 30 June 2019 133,036,934 3,816,577 Movements in Treasury shares Details Date Shares $ Balance Share-split Issue of shares under employee share trust plan Repayment of loan Balance Repayment of loan Balance 1 July 2017 16 February 2018 28 February 2018 30 June 2018 (4,169) (1,363,263) (1,270,344) - (314,976) - (960,000) 50,375 (2,637,776) - (1,224,601) 53,658 30 June 2019 (2,637,776) (1,170,943) 32 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 14. Equity - issued capital (continued) Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital. On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Treasury shares Treasury shares comprise of 1,367,432 shares issued under a Loan Funded Share Plan and 1,270,344 shares issued under an Employee Share Trust Plan. Loan Funded Share Plan ('LFSP') The Company has an equity scheme pursuant to which certain employees may access a LFSP. The acquisition of shares under this LFSP is fully funded by the Company through the granting of a limited recourse loan. The LFSP shares are restricted until the loan is repaid. These shares are recorded as treasury shares representing a deduction against issued capital. These have been accounted for as a share-based payment. Refer to note 27 for further details. When the loans are settled, the treasury shares are reclassified as ordinary shares and the equity will increase by the amount of the loan repaid. Employee Share Trust Plan ('ESTP'). The Company has established the ESTP to deliver long-term incentives to eligible employees. The trustee of the Share Trust is a wholly owned subsidiary of the Company. The acquisition of the shares under the ESTP is fully funded by the Company. These shares are recorded as treasury shares representing a deduction against issued capital. The eligible employees are issued with units in the Share Trust. Each unit in the Share Trust is converted to one share in the Company upon satisfaction of the relevant vesting conditions. The issue of units in the Share Trust have been accounted for as a share-based payment. Refer to note 27 for further details. Share buy-back During the financial year, the Company bought back 711,060 shares at a cost of $332,888. The buy-back program is expected to expire on 12 September 2019. Capital risk management The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital. Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group holds an Australian Financial Services License and is subject to regulatory financial requirements that include maintaining a minimum level of net tangible assets. The directors believe the Group has adequate capital as at 30 June 2019 to maintain the Group's existing business activities and facilitate growth. The capital risk management policy remains unchanged from the 30 June 2018 Annual Report. Note 15. Equity - reserves Share-based payments reserve Consolidated 2019 $ 2018 $ 320,960 327,597 33 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 15. Equity - reserves (continued) Share-based payments reserve The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and other parties as part of their compensation for services. Movements in reserves Movements in each class of reserve during the current and previous financial year are set out below: Consolidated Balance at 1 July 2017 Share-based payments Balance at 30 June 2018 Share-based payments Transfer to issued capital on exercise of options Balance at 30 June 2019 Note 16. Equity - dividends Dividends Dividends paid/payable during the financial year were as follows: Share-based payments $ - 327,597 327,597 183,502 (190,139) 320,960 Consolidated 2019 $ 2018 $ Final dividend for the year ended 30 June 2018 of 1 cent per ordinary share 1,315,706 - Interim dividend for the year ended 30 June 2019 of 1 cent per ordinary share (2018: 2.009 cents) 1,332,510 2,645,000 2,648,216 2,645,000 On 15 August 2019, the Directors declared a fully franked final dividend for the year ended 30 June 2019 of 1 cent per ordinary share, to be paid on 5 September 2019 to eligible shareholders on the register as at 21 August 2019. This equates to a total estimated dividend of $1,330,369, based on the number of ordinary shares on issue as at 30 June 2019. The financial effect of dividends declared after the reporting date are not reflected in the financial statements and will be recognised in subsequent financial statements. Franking credits Franking credits available for subsequent financial years based on a tax rate of 27.5% 2,156,751 1,503,314 The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for: (cid:1) (cid:1) (cid:1) franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date franking debits that will arise from the payment of dividends recognised as a liability at the reporting date franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date Consolidated 2019 $ 2018 $ 34 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 17. Financial instruments Financial risk management objectives The Group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. Given the long-term nature of the investments, the Group’s overall risk management program focuses on the underlying value of the investments rather than short-term fluctuations in market price. The Group regularly reviews the investment case and performance of the investments as well as other different methods to measure different types of risk to which it is exposed, including sensitivity analysis. In particular, the Group manages the investments of certain funds where it is entitled to receive management fees and fees contingent upon performance of the portfolio managed. These fees are exposed to significant risk associated with the funds’ performance, including market risks and liquidity risk as detailed below. Risk management is carried out by the investment management team in accordance with the investment mandate of each fund. Market risk Foreign currency risk Foreign exchange risk arises from recognised financial assets and financial liabilities denominated in a currency that is not the entity’s functional currency. The Group is not exposed to any significant foreign currency risk. Price risk Price risk is the risk that the fair value of investments decreases as a result of changes in market prices, whether those changes are caused by factors specific to the individual equity securities or managed investment funds or factors affecting all financial instruments in the market. Price risk exposure arises from the Group's investment portfolio. Price risk is managed by monitoring the underlying value of the investments in relation to the price of the investments and also taking a long-term investment time frame into account. The Group is exposed to direct equity price risk on its financial assets that are at fair value. The table below summarises the impact of a 10% movement in the market value of these assets: Consolidated - 2019 Investment in unlisted Australian unit trusts Consolidated - 2018 Investment in unlisted Australian unit trusts Average price increase Effect on profit before tax Effect on equity % change Average price decrease Effect on profit before tax Effect on equity % change 10% 390,703 283,260 (10%) (390,703) (283,260) Average price increase Effect on profit before tax Effect on equity % change Average price decrease Effect on profit before tax Effect on equity % change 10% 287,628 208,530 (10%) (287,628) (208,530) Interest rate risk The Group’s exposure to interest rate risk is not significant and limited to interest on cash at bank. Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The maximum exposure to credit risk at the reporting 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. The Group does not hold any collateral. 35 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 17. Financial instruments (continued) The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative across all customers of the Group based on recent sales experience, historical collection rates and forward- looking information that is available. The Group has a credit risk exposure with the cash at bank, trade and distribution receivable from funds under management. The funds under management as at 30 June 2019 owed the Group 96% (2018: 94%) of trade receivables and accrued income. The balance was within its terms of trade and no impairment was made as at the reporting date. These receivables represent management fees and performance fees that are accrued and paid monthly by the Funds. Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater than 1 year. Liquidity risk Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents) to be able to pay debts as and when they become due and payable. The Group manages liquidity risk by maintaining adequate cash reserves by monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities. Remaining contractual maturities The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position. Consolidated - 2019 Non-derivatives Non-interest bearing Trade payables Total non-derivatives Consolidated - 2018 Non-derivatives Non-interest bearing Trade payables Total non-derivatives Weighted average interest rate 1 year or less % $ Between 1 and 2 years $ Between 2 and 5 years Over 5 years $ $ Remaining contractual maturities $ - 73,453 73,453 - - - - - - 73,453 73,453 Weighted average interest rate 1 year or less % $ Between 1 and 2 years $ Between 2 and 5 years Over 5 years $ $ Remaining contractual maturities $ - 92,575 92,575 - - - - - - 92,575 92,575 The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above. 36 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 18. Fair value measurement Fair value hierarchy The following tables detail the Group's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: Unobservable inputs for the asset or liability Consolidated - 2019 Assets Investment in unlisted Australian unit trusts Total assets Consolidated - 2018 Assets Investment in unlisted Australian unit trusts Total assets Level 1 $ Level 2 $ Level 3 $ Total $ Level 1 $ - - - - 3,907,025 3,907,025 Level 2 $ Level 3 $ 2,876,277 2,876,277 - - - - 3,907,025 3,907,025 Total $ 2,876,277 2,876,277 There were no transfers between levels during the financial year. The carrying amounts of trade and other receivables and trade and other payables approximate their fair values due to their short-term nature. Valuation techniques for fair value measurements categorised within level 2 and level 3 Investments in unlisted Australian unit trusts The investments are recorded at fair value determined on the basis of the published unit prices of those unlisted managed investment funds at the reporting date, adjusted where deemed appropriate, to reflect values based on recent actual market transactions. Note 19. Remuneration of auditors During the financial year the following fees were paid or payable for services provided by BDO East Coast Partnership, the auditor of the Company, and its network firms: Consolidated 2019 $ 2018 $ Audit services - BDO East Coast Partnership (2018: Prosperity Advisers Audit Services Pty Ltd) Audit or review of the financial statements 36,500 32,500 Other services - network firm BDO East Coast Partnership (2018: Prosperity Advisers Audit Services Pty Ltd) Tax compilation and related services Other compliance services 5,000 - 5,000 6,400 1,200 7,600 Note 20. Contingent liabilities The Group had no contingent liabilities as at 30 June 2019 and 30 June 2018. 37 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 21. Commitments Lease commitments - operating Committed at the reporting date but not recognised as liabilities, payable: Within one year One to five years Consolidated 2019 $ 2018 $ 270,733 138,021 282,783 408,754 408,754 691,537 Operating lease commitments includes contracted amounts for office premises under non-cancellable operating leases expiring within 1 to 2 years. Note 22. Key management personnel disclosures Compensation The aggregate compensation made to directors and other members of key management personnel of the Group is set out below: Short-term employee benefits Post-employment benefits Long-term benefits Share-based payments Note 23. Related party transactions Parent entity Microequities Asset Management Group Limited is the parent entity. Subsidiaries Interests in subsidiaries are set out in note 24. Consolidated 2019 $ 2018 $ 1,002,423 60,486 27,931 506,989 1,003,661 55,646 11,648 257,911 1,597,829 1,328,866 Key management personnel Disclosures relating to key management personnel are set out in note 22 and the remuneration report included in the directors' report. Transactions with related parties Management fees and performance fees disclosed in note 5 are from Funds for which the Group is a Trustee. Receivable from and payable to related parties Trade receivables disclosed in note 10 are predominantly from Funds for which the Group is a Trustee. Loans to/from related parties There were no loans to or from related parties at the current and previous reporting date. Terms and conditions All transactions were made on normal commercial terms and conditions and at market rates. 38 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 24. Interests in subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 2: Name Principal place of business / Country of incorporation Microequities Asset Management Pty Ltd Microequities Venture Capital Pty Ltd Microequities Venture Capital Fund Managing Partnership LP* Australia Australia Australia Ownership interest 2018 2019 % % 100% 100% 50% 100% 100% 50% * Leslie Szekely, the Chairman, holds 50% of the shares in Equity Venture Partners Pty Ltd ACN 600 735 626 ('EVP') through Bellite Pty Ltd ACN 056 441 386, a company controlled by him. EVP (as trustee for the EVP Trust) is a limited partner of Microequities Venture Capital Managing Partnership LP which acts as general partner of the Microequities Venture Capital Fund LP. Note 25. Cash flow information Reconciliation of profit after income tax to net cash from operating activities Profit after income tax expense for the year Adjustments for: Net fair value loss/(gain) on other financial assets Share-based payments Dividend income- non-cash Share issued under employee share plan Change in operating assets and liabilities: Decrease in trade and other receivables Increase in deferred tax assets Decrease/(increase) in prepayments Increase in other assets Decrease in trade and other payables Decrease in provision for income tax Increase in employee benefits Net cash from operating activities Non-cash investing and financing activities Shares issued under employee share plan Additions to investment by reinvestment of dividends 39 Consolidated 2019 $ 2018 $ 2,825,707 5,480,599 508,205 183,502 (38,953) 28,680 (182,106) 327,597 (30,180) - 110,911 (124,074) (32,786) - (225,369) (433,079) 35,373 3,067,921 (59,906) 20,510 (49,091) (35,563) (667,679) 6,205 2,838,117 7,878,307 Consolidated 2019 $ 2018 $ 28,680 38,953 - 30,180 67,633 30,180 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 26. Earnings per share Profit after income tax Non-controlling interest Consolidated 2019 $ 2018 $ 2,825,707 (292,749) 5,480,599 (266,120) Profit after income tax attributable to the owners of Microequities Asset Management Group Limited 2,532,958 5,214,479 Weighted average number of ordinary shares used in calculating basic earnings per share Adjustments for calculation of diluted earnings per share: Options over ordinary shares Performance rights over ordinary shares Number Number 130,477,940 130,300,296 - - 2,513,759 794,037 Weighted average number of ordinary shares used in calculating diluted earnings per share 130,477,940 133,608,092 Basic earnings per share Diluted earnings per share Cents Cents 1.94 1.94 4.00 3.90 The weighted average number of ordinary shares for year ended 30 June 2019 does not include 2,637,776 treasury shares (2018: 2,637,776). Note 27. Share-based payments The share-based payment expense for the year was $563,870 (2018: $327,597), including cash settled share-based payment expense of $380,368. Options On 9 November 2015, the Group issued 2,713,022 options for $nil. Each option is exercisable for one share in the Company. The options vest on the earlier of the sale of 100% of the Company or its business or 36 months from the date of issue (being 9 November 2018). The exercise price for the options is $0.267 per share, being the market value of a share at the time of issue of the options. On 19 November 2018, all the options were exercised by way of cashless exercise in terms of which shares to the value of the surplus over the exercise price were issued. Loan Funded Share Plan ('LFSP') As detailed in note 14, the Group has an equity scheme pursuant to which certain employees may access a LFSP. On 26 November 2015, the Group granted limited recourse loans to certain employees to enable them to subscribe 1,367,432 shares in the Company. The LFSP shares are restricted until the loan is repaid. These shares are recorded as treasury shares representing a deduction against issued capital. These have been accounted for as a share-based payment. Set out below are summaries of options and loan funded shares granted under the plan: 2019 Grant date Expiry date Exercise price 09/11/2015 26/11/2015 09/10/2020 26/11/2022 $0.267 $0.267 Balance at the start of the year 2,713,022 1,367,432 4,080,454 Granted Exercised Expired/ forfeited/ other Balance at the end of the year - - - (2,713,022) - (2,713,022) - - - - 1,367,432 1,367,432 Weighted average exercise price $0.267 $0.000 $0.267 $0.000 $0.267 40 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 27. Share-based payments (continued) 2018 Grant date Expiry date Exercise price 09/11/2015 26/11/2015 09/10/2020 26/11/2022 $0.267 $0.267 Balance at the start of the year 2,713,022 1,367,432 4,080,454 Granted Exercised Expired/ forfeited/ other Balance at the end of the year - - - - - - - - - 2,713,022 1,367,432 4,080,454 Weighted average exercise price $0.267 $0.000 $0.000 $0.000 $0.267 The weighted average share price during the financial year was $0.455 (2018: $0.749). The weighted average remaining contractual life of options outstanding at the end of the financial year was nil years (2018: 0.33 years). Whilst 1,367,432 shares under LFSP have fully vested, the holder does not have unrestricted access to the underlying shares until settlement of the loan. Performance rights On 28 February 2018, the Group granted 1,905,516 performance rights to pay a bonus in February 2022 if certain performance hurdles relating to the Funds and service conditions of the employee are met. The Group can elect to settle the bonus in cash or by way of an issue of shares. The amount of the bonus will be calculated in accordance with a formula based on the market price of the shares at the time the bonus is payable multiplied by the vesting percentage (which will range from 0% to 100% depending on the number of Funds that meet the performance hurdle). Each Fund has its own performance hurdles which are all 5% above the compound annual return of the relevant benchmark. On 9 November 2018, the Group granted 1,223,550 performance rights to pay a bonus in November 2021 if certain performance hurdles relating to the Group and service conditions of the employee are met. The Group can elect to settle the bonus in cash or by way of an issue of shares. The amount of the bonus will be calculated in accordance with a formula based on the market price of the shares at the time the bonus is payable multiplied by the vesting percentage (which will range from 0% to 100% depending on the achievement of the various performance hurdles). Units under the Employee Share Trust Plan ('ESTP') On 28 February 2018, the Group granted 1,270,344 share units (unvested) under the ESTP. The units vest if certain performance hurdles relating to the Funds and service conditions of the employees are met. The number of shares that will vest will be calculated based on the vesting percentage (which will range from 0% to 100% depending on the number of Funds that meet the performance hurdle). Each Fund has its own performance hurdles which are all 5% above the compound annual return of the relevant benchmark. Set out below are summaries of performance rights and share units granted under the plan: 2019 Grant date Expiry date 28/02/2018 28/02/2018 09/11/2018 28/02/2022 28/02/2022 09/11/2021 Exercise price Balance at the start of the year Granted Exercised Expired/ forfeited/ other Balance at the end of the year $0.000 $0.000 $0.000 1,905,516 1,270,344 - 3,175,860 - - 1,223,550 1,223,550 - - - - - - - - 1,905,516 1,270,344 1,223,550 4,399,410 41 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 27. Share-based payments (continued) 2018 Grant date Expiry date Exercise price Balance at the start of the year Granted Exercised Expired/ forfeited/ other Balance at the end of the year 28/02/2018 28/02/2018 28/02/2022 28/02/2022 $0.000 $0.000 - - - 1,905,516 1,270,344 3,175,860 - - - - - - 1,905,516 1,270,344 3,175,860 The weighted average remaining contractual life of performance rights outstanding at the end of the financial year was 2.58 years (2018: 3.67 years). For the performance rights and share units under ESTP granted during the current financial year, the valuation model inputs used in the Black-Scholes option pricing model to determine the fair value at the grant date, are as follows: Grant date Expiry date Share price at grant date Exercise price Expected volatility Dividend yield Risk-free interest rate Fair value at grant date 09/11/2018 09/11/2021 $0.500 $0.000 56.80% 5.00% 3.25% $0.430 Note 28. Parent entity information Set out below is the supplementary information about the parent entity. Statement of profit or loss and other comprehensive income Profit after income tax Total comprehensive income Statement of financial position Total current assets Total assets Total current liabilities Total liabilities Equity Issued capital Retained earnings/(accumulated losses) Total equity 42 Parent 2019 $ 2018 $ 5,368,850 153,067 5,368,850 153,067 Parent 2019 $ 2018 $ 2,156,509 4,509,547 6,131,824 7,314,358 11,334 3,854,091 11,334 3,854,091 3,605,634 2,514,856 3,666,045 (205,778) 6,120,490 3,460,267 Microequities Asset Management Group Limited Notes to the consolidated financial statements 30 June 2019 Note 28. Parent entity information (continued) Issued capital Issued capital disclosed above includes $960,000 (2018: $960,000) issue of shares under employee share trust plan that was funded by another Group entity. Guarantees entered into by the parent entity in relation to the debts of its subsidiaries The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2019 and 30 June 2018. Contingent liabilities The parent entity had no contingent liabilities as at 30 June 2019 and 30 June 2018. Capital commitments - Property, plant and equipment The parent entity had no capital commitments for property, plant and equipment as at 30 June 2019 and 30 June 2018. Significant accounting policies The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the following: (cid:1) (cid:1) Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of an impairment of the investment. Note 29. Events after the reporting period Apart from the dividend declared as disclosed in note 16, no other matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years. 43 Microequities Asset Management Group Limited Directors' declaration 30 June 2019 In the directors' opinion: (cid:1) (cid:1) (cid:1) (cid:1) the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 2 to the financial statements; the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June 2019 and of its performance for the financial year ended on that date; and there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. The directors have been given the declarations required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the directors ___________________________ Leslie Szekely Chairman 15 August 2019 ___________________________ Carlos Gil Chief Executive Officer 44 (cid:25)(cid:3)(cid:5)(cid:26)(cid:1)(cid:27)(cid:28)(cid:6)(cid:1)(cid:19)(cid:1)(cid:29)(cid:19)(cid:30)(cid:6)(cid:1)(cid:31)(cid:6)(cid:20)(cid:20)(cid:1) (cid:9)!(cid:26)(cid:1)(cid:27)(cid:28)(cid:6)(cid:1)(cid:19)(cid:1)(cid:29)(cid:19)(cid:31)(cid:20)(cid:1)(cid:29)"(cid:19)(cid:6)(cid:1) (cid:1)(cid:1)(cid:1)(cid:2)(cid:3)(cid:4)(cid:5)(cid:2)(cid:6)(cid:5)(cid:7)(cid:2)(cid:8)(cid:9)(cid:10) (cid:10) (cid:2)(cid:3)(cid:4)(cid:3)(cid:5)(cid:1)(cid:6)(cid:6)(cid:7)(cid:1)(cid:6)(cid:1)(cid:8)(cid:9)(cid:10)(cid:11)(cid:9)(cid:10)(cid:3)(cid:12)(cid:1)(cid:13)(cid:12)(cid:1)(cid:1) (cid:13)(cid:14)(cid:15)(cid:16)(cid:3)(cid:14)(cid:1)(cid:17)(cid:13)(cid:18)(cid:1)(cid:19)(cid:20)(cid:20)(cid:20)(cid:1) (cid:21)(cid:22)(cid:23)(cid:12)(cid:10)(cid:9)(cid:5)(cid:24)(cid:9)(cid:1) (cid:1) (cid:1) (cid:10) 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(cid:9)(cid:16)(cid:15)(cid:1)(cid:24)(cid:12)(cid:23)(cid:1)(cid:23)(cid:22)/(cid:23)(cid:24)(cid:15)(cid:24)(cid:9)(cid:10)(cid:24)(cid:3)(cid:23)(cid:1):(cid:12)*(cid:3)(cid:1)9(cid:10)((cid:22)+;(cid:7)(cid:1)2*(cid:24)1*(cid:1)1(.+(cid:10)(cid:24)(cid:23)(cid:3)(cid:23)(cid:1)(cid:12)*(cid:3)(cid:1)1((cid:16)(cid:23)((cid:5)(cid:24)(cid:15)(cid:9)(cid:12)(cid:3)(cid:15)(cid:1)(cid:23)(cid:12)(cid:9)(cid:12)(cid:3).(cid:3)(cid:16)(cid:12)(cid:1)(0(cid:1)0(cid:24)(cid:16)(cid:9)(cid:16)1(cid:24)(cid:9)(cid:5)(cid:1)+((cid:23)(cid:24)(cid:12)(cid:24)((cid:16)(cid:1)(cid:9)(cid:23)(cid:1)(cid:9)(cid:12)(cid:1) 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1((cid:16)(cid:23)((cid:5)(cid:24)(cid:15)(cid:9)(cid:12)(cid:3)(cid:15)(cid:1)(cid:23)(cid:12)(cid:9)(cid:12)(cid:3).(cid:3)(cid:16)(cid:12)(cid:1)(0(cid:1)1*(cid:9)(cid:16)(cid:11)(cid:3)(cid:23)(cid:1)(cid:24)(cid:16)(cid:1)(cid:3)8(cid:22)(cid:24)(cid:12)(cid:14)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)(cid:12)*(cid:3)(cid:1)1((cid:16)(cid:23)((cid:5)(cid:24)(cid:15)(cid:9)(cid:12)(cid:3)(cid:15)(cid:1)(cid:23)(cid:12)(cid:9)(cid:12)(cid:3).(cid:3)(cid:16)(cid:12)(cid:1)(0(cid:1)1(cid:9)(cid:23)*(cid:1)0(cid:5)(2(cid:23)(cid:1)0((cid:10)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:14)(cid:3)(cid:9)(cid:10)(cid:1) (cid:12)*(cid:3)(cid:16)(cid:1)(cid:3)(cid:16)(cid:15)(cid:3)(cid:15)(cid:7)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)(cid:16)((cid:12)(cid:3)(cid:23)(cid:1)(cid:12)((cid:1)(cid:12)*(cid:3)(cid:1)0(cid:24)(cid:16)(cid:9)(cid:16)1(cid:24)(cid:9)(cid:5)(cid:1)(cid:10)(cid:3)+((cid:10)(cid:12)(cid:7)(cid:1)(cid:24)(cid:16)1(cid:5)(cid:22)(cid:15)(cid:24)(cid:16)(cid:11)(cid:1)(cid:9)(cid:1)(cid:23)(cid:22)..(cid:9)(cid:10)(cid:14)(cid:1)(0(cid:1)(cid:23)(cid:24)(cid:11)(cid:16)(cid:24)0(cid:24)1(cid:9)(cid:16)(cid:12)(cid:1)(cid:9)11((cid:22)(cid:16)(cid:12)(cid:24)(cid:16)(cid:11)(cid:1)+((cid:5)(cid:24)1(cid:24)(cid:3)(cid:23)(cid:1) (cid:9)(cid:16)(cid:15)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:15)(cid:24)(cid:10)(cid:3)1(cid:12)((cid:10)(cid:23)=(cid:1)(cid:15)(cid:3)1(cid:5)(cid:9)(cid:10)(cid:9)(cid:12)(cid:24)((cid:16)3(cid:1) 4(cid:16)(cid:1)((cid:22)(cid:10)(cid:1)(+(cid:24)(cid:16)(cid:24)((cid:16)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:9)11(.+(cid:9)(cid:16)(cid:14)(cid:24)(cid:16)(cid:11)(cid:1)0(cid:24)(cid:16)(cid:9)(cid:16)1(cid:24)(cid:9)(cid:5)(cid:1)(cid:10)(cid:3)+((cid:10)(cid:12)(cid:1)(0(cid:1)(cid:12)*(cid:3)(cid:1)9(cid:10)((cid:22)+(cid:7)(cid:1)(cid:24)(cid:23)(cid:1)(cid:24)(cid:16)(cid:1)(cid:9)11((cid:10)(cid:15)(cid:9)(cid:16)1(cid:3)(cid:1)2(cid:24)(cid:12)*(cid:1)(cid:12)*(cid:3)(cid:1)(cid:1)(cid:2)(cid:3)(cid:4)(cid:2)(cid:3)(cid:5)(cid:6)(cid:7)(cid:2)(cid:8)(cid:9)(cid:10) (cid:11)(cid:12)(cid:6)(cid:10)(cid:13)(cid:14)(cid:14)(cid:15)(cid:7)(cid:1)(cid:24)(cid:16)1(cid:5)(cid:22)(cid:15)(cid:24)(cid:16)(cid:11)(cid:26)(cid:1)(cid:1) :(cid:24); 9(cid:24)(cid:4)(cid:24)(cid:16)(cid:11)(cid:1)(cid:9)(cid:1)(cid:12)(cid:10)(cid:22)(cid:3)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)0(cid:9)(cid:24)(cid:10)(cid:1)(cid:4)(cid:24)(cid:3)2(cid:1)(0(cid:1)(cid:12)*(cid:3)(cid:1)9(cid:10)((cid:22)+=(cid:23)(cid:1)0(cid:24)(cid:16)(cid:9)(cid:16)1(cid:24)(cid:9)(cid:5)(cid:1)+((cid:23)(cid:24)(cid:12)(cid:24)((cid:16)(cid:1)(cid:9)(cid:23)(cid:1)(cid:9)(cid:12)(cid:1),(cid:20)(cid:1)<(cid:22)(cid:16)(cid:3)(cid:1)(cid:19)(cid:20)(cid:6)(cid:29)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)(0(cid:1)(cid:24)(cid:12)(cid:23)(cid:1) 0(cid:24)(cid:16)(cid:9)(cid:16)1(cid:24)(cid:9)(cid:5)(cid:1)+(cid:3)(cid:10)0((cid:10).(cid:9)(cid:16)1(cid:3)(cid:1)0((cid:10)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:14)(cid:3)(cid:9)(cid:10)(cid:1)(cid:3)(cid:16)(cid:15)(cid:3)(cid:15)(cid:1)((cid:16)(cid:1)(cid:12)*(cid:9)(cid:12)(cid:1)(cid:15)(cid:9)(cid:12)(cid:3)>(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)(cid:1) :(cid:24)(cid:24); ’(.+(cid:5)(cid:14)(cid:24)(cid:16)(cid:11)(cid:1)2(cid:24)(cid:12)*(cid:1)(cid:21)(cid:22)(cid:23)(cid:12)(cid:10)(cid:9)(cid:5)(cid:24)(cid:9)(cid:16)(cid:1)(cid:21)11((cid:22)(cid:16)(cid:12)(cid:24)(cid:16)(cid:11)(cid:1)(cid:13)(cid:12)(cid:9)(cid:16)(cid:15)(cid:9)(cid:10)(cid:15)(cid:23)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:1)(cid:2)(cid:3)(cid:4)(cid:2)(cid:3)(cid:5)(cid:6)(cid:7)(cid:2)(cid:8)(cid:9)(cid:10)(cid:16)(cid:17)(cid:18)(cid:19)(cid:20)(cid:5)(cid:6)(cid:7)(cid:2)(cid:8)(cid:9)(cid:10)(cid:13)(cid:14)(cid:14)(cid:15)3(cid:1)(cid:1) !(cid:8)"(cid:29)"(cid:10)(cid:30)(cid:5)(cid:25)(cid:10)(cid:5)(cid:24)(cid:29)(cid:27)(cid:29)(cid:5)(cid:27)(cid:10)(cid:10) (cid:18)(cid:3)(cid:1)1((cid:16)(cid:15)(cid:22)1(cid:12)(cid:3)(cid:15)(cid:1)((cid:22)(cid:10)(cid:1)(cid:9)(cid:22)(cid:15)(cid:24)(cid:12)(cid:1)(cid:24)(cid:16)(cid:1)(cid:9)11((cid:10)(cid:15)(cid:9)(cid:16)1(cid:3)(cid:1)2(cid:24)(cid:12)*(cid:1)(cid:21)(cid:22)(cid:23)(cid:12)(cid:10)(cid:9)(cid:5)(cid:24)(cid:9)(cid:16)(cid:1)(cid:21)(cid:22)(cid:15)(cid:24)(cid:12)(cid:24)(cid:16)(cid:11)(cid:1)(cid:13)(cid:12)(cid:9)(cid:16)(cid:15)(cid:9)(cid:10)(cid:15)(cid:23)3(cid:1)(cid:1)%(cid:22)(cid:10)(cid:1)(cid:10)(cid:3)(cid:23)+((cid:16)(cid:23)(cid:24)/(cid:24)(cid:5)(cid:24)(cid:12)(cid:24)(cid:3)(cid:23)(cid:1)(cid:22)(cid:16)(cid:15)(cid:3)(cid:10)(cid:1) 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(cid:16)(cid:17)(cid:4)(cid:2)(cid:3)(cid:6)(cid:1)(cid:23)(cid:3)1(cid:12)(cid:24)((cid:16)(cid:1)(0(cid:1)((cid:22)(cid:10)(cid:1)(cid:10)(cid:3)+((cid:10)(cid:12)3(cid:1)(cid:1)(cid:18)(cid:3)(cid:1)(cid:9)(cid:10)(cid:3)(cid:1)(cid:24)(cid:16)(cid:15)(cid:3)+(cid:3)(cid:16)(cid:15)(cid:3)(cid:16)(cid:12)(cid:1)(0(cid:1)(cid:12)*(cid:3)(cid:1)9(cid:10)((cid:22)+(cid:1)(cid:24)(cid:16)(cid:1)(cid:9)11((cid:10)(cid:15)(cid:9)(cid:16)1(cid:3)(cid:1)2(cid:24)(cid:12)*(cid:1)(cid:12)*(cid:3)(cid:1)(cid:1)(cid:2)(cid:3)(cid:4)(cid:2)(cid:3)(cid:5)(cid:6)(cid:7)(cid:2)(cid:8)(cid:9)(cid:10) (cid:11)(cid:12)(cid:6)(cid:10)(cid:13)(cid:14)(cid:14)(cid:15)(cid:10)(cid:9)(cid:16)(cid:15)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:3)(cid:12)*(cid:24)1(cid:9)(cid:5)(cid:1)(cid:10)(cid:3)8(cid:22)(cid:24)(cid:10)(cid:3).(cid:3)(cid:16)(cid:12)(cid:23)(cid:1)(0(cid:1)(cid:12)*(cid:3)(cid:1)(cid:21)11((cid:22)(cid:16)(cid:12)(cid:24)(cid:16)(cid:11)(cid:1))(cid:10)(0(cid:3)(cid:23)(cid:23)(cid:24)((cid:16)(cid:9)(cid:5)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)&(cid:12)*(cid:24)1(cid:9)(cid:5)(cid:1)(cid:13)(cid:12)(cid:9)(cid:16)(cid:15)(cid:9)(cid:10)(cid:15)(cid:23)(cid:1)#((cid:9)(cid:10)(cid:15)=(cid:23)(cid:1) 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0(cid:24)(cid:16)(cid:9)(cid:16)1(cid:24)(cid:9)(cid:5)(cid:1)(cid:10)(cid:3)+((cid:10)(cid:12)(cid:1)(cid:24)(cid:16)(cid:1)(cid:21)(cid:22)(cid:23)(cid:12)(cid:10)(cid:9)(cid:5)(cid:24)(cid:9)3(cid:1)(cid:1)(cid:18)(cid:3)(cid:1)*(cid:9)(cid:4)(cid:3)(cid:1)(cid:9)(cid:5)(cid:23)((cid:1)0(cid:22)(cid:5)0(cid:24)(cid:5)(cid:5)(cid:3)(cid:15)(cid:1)((cid:22)(cid:10)(cid:1)((cid:12)*(cid:3)(cid:10)(cid:1)(cid:3)(cid:12)*(cid:24)1(cid:9)(cid:5)(cid:1)(cid:10)(cid:3)(cid:23)+((cid:16)(cid:23)(cid:24)/(cid:24)(cid:5)(cid:24)(cid:12)(cid:24)(cid:3)(cid:23)(cid:1)(cid:24)(cid:16)(cid:1)(cid:9)11((cid:10)(cid:15)(cid:9)(cid:16)1(cid:3)(cid:1) 2(cid:24)(cid:12)*(cid:1)(cid:12)*(cid:3)(cid:1)’((cid:15)(cid:3)3(cid:1) (cid:18)(cid:3)(cid:1)1((cid:16)0(cid:24)(cid:10).(cid:1)(cid:12)*(cid:9)(cid:12)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:24)(cid:16)(cid:15)(cid:3)+(cid:3)(cid:16)(cid:15)(cid:3)(cid:16)1(cid:3)(cid:1)(cid:15)(cid:3)1(cid:5)(cid:9)(cid:10)(cid:9)(cid:12)(cid:24)((cid:16)(cid:1)(cid:10)(cid:3)8(cid:22)(cid:24)(cid:10)(cid:3)(cid:15)(cid:1)/(cid:14)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:1)(cid:2)(cid:3)(cid:4)(cid:2)(cid:3)(cid:5)(cid:6)(cid:7)(cid:2)(cid:8)(cid:9)(cid:10)(cid:11)(cid:12)(cid:6)(cid:10)(cid:13)(cid:14)(cid:14)(cid:15)(cid:7)(cid:1)2*(cid:24)1*(cid:1)*(cid:9)(cid:23)(cid:1)/(cid:3)(cid:3)(cid:16)(cid:1) (cid:11)(cid:24)(cid:4)(cid:3)(cid:16)(cid:1)(cid:12)((cid:1)(cid:12)*(cid:3)(cid:1)(cid:15)(cid:24)(cid:10)(cid:3)1(cid:12)((cid:10)(cid:23)(cid:1)(0(cid:1)(cid:12)*(cid:3)(cid:1)’(.+(cid:9)(cid:16)(cid:14)(cid:7)(cid:1)2((cid:22)(cid:5)(cid:15)(cid:1)/(cid:3)(cid:1)(cid:24)(cid:16)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:23)(cid:9).(cid:3)(cid:1)(cid:12)(cid:3)(cid:10).(cid:23)(cid:1)(cid:24)0(cid:1)(cid:11)(cid:24)(cid:4)(cid:3)(cid:16)(cid:1)(cid:12)((cid:1)(cid:12)*(cid:3)(cid:1)(cid:15)(cid:24)(cid:10)(cid:3)1(cid:12)((cid:10)(cid:23)(cid:1)(cid:9)(cid:23)(cid:1)(cid:9)(cid:12)(cid:1)(cid:12)*(cid:3)(cid:1) (cid:12)(cid:24).(cid:3)(cid:1)(0(cid:1)(cid:12)*(cid:24)(cid:23)(cid:1)(cid:9)(cid:22)(cid:15)(cid:24)(cid:12)((cid:10)=(cid:23)(cid:1)(cid:10)(cid:3)+((cid:10)(cid:12)3(cid:1) (cid:18)(cid:3)(cid:1)/(cid:3)(cid:5)(cid:24)(cid:3)(cid:4)(cid:3)(cid:1)(cid:12)*(cid:9)(cid:12)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:9)(cid:22)(cid:15)(cid:24)(cid:12)(cid:1)(cid:3)(cid:4)(cid:24)(cid:15)(cid:3)(cid:16)1(cid:3)(cid:1)2(cid:3)(cid:1)*(cid:9)(cid:4)(cid:3)(cid:1)(/(cid:12)(cid:9)(cid:24)(cid:16)(cid:3)(cid:15)(cid:1)(cid:24)(cid:23)(cid:1)(cid:23)(cid:22)00(cid:24)1(cid:24)(cid:3)(cid:16)(cid:12)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)(cid:9)++(cid:10)(+(cid:10)(cid:24)(cid:9)(cid:12)(cid:3)(cid:1)(cid:12)((cid:1)+(cid:10)((cid:4)(cid:24)(cid:15)(cid:3)(cid:1)(cid:9)(cid:1)/(cid:9)(cid:23)(cid:24)(cid:23)(cid:1) 0((cid:10)(cid:1)((cid:22)(cid:10)(cid:1)(+(cid:24)(cid:16)(cid:24)((cid:16)3(cid:1)(cid:1) (cid:10) #(cid:23)$(cid:10)(cid:8)(cid:9)(cid:4)(cid:29)(cid:26)(cid:10)(cid:7)(cid:8)(cid:26)(cid:26)(cid:23)(cid:25)"(cid:10) 6(cid:3)(cid:14)(cid:1)(cid:9)(cid:22)(cid:15)(cid:24)(cid:12)(cid:1).(cid:9)(cid:12)(cid:12)(cid:3)(cid:10)(cid:23)(cid:1)(cid:9)(cid:10)(cid:3)(cid:1)(cid:12)*((cid:23)(cid:3)(cid:1).(cid:9)(cid:12)(cid:12)(cid:3)(cid:10)(cid:23)(cid:1)(cid:12)*(cid:9)(cid:12)(cid:7)(cid:1)(cid:24)(cid:16)(cid:1)((cid:22)(cid:10)(cid:1)+(cid:10)(0(cid:3)(cid:23)(cid:23)(cid:24)((cid:16)(cid:9)(cid:5)(cid:1)?(cid:22)(cid:15)(cid:11)(cid:3).(cid:3)(cid:16)(cid:12)(cid:7)(cid:1)2(cid:3)(cid:10)(cid:3)(cid:1)(0(cid:1).((cid:23)(cid:12)(cid:1)(cid:23)(cid:24)(cid:11)(cid:16)(cid:24)0(cid:24)1(cid:9)(cid:16)1(cid:3)(cid:1)(cid:24)(cid:16)(cid:1) ((cid:22)(cid:10)(cid:1)(cid:9)(cid:22)(cid:15)(cid:24)(cid:12)(cid:1)(0(cid:1)(cid:12)*(cid:3)(cid:1)0(cid:24)(cid:16)(cid:9)(cid:16)1(cid:24)(cid:9)(cid:5)(cid:1)(cid:10)(cid:3)+((cid:10)(cid:12)(cid:1)(0(cid:1)(cid:12)*(cid:3)(cid:1)1(cid:22)(cid:10)(cid:10)(cid:3)(cid:16)(cid:12)(cid:1)+(cid:3)(cid:10)(cid:24)((cid:15)3(cid:1)(cid:1)(cid:25)*(cid:3)(cid:23)(cid:3)(cid:1).(cid:9)(cid:12)(cid:12)(cid:3)(cid:10)(cid:23)(cid:1)2(cid:3)(cid:10)(cid:3)(cid:1)(cid:9)(cid:15)(cid:15)(cid:10)(cid:3)(cid:23)(cid:23)(cid:3)(cid:15)(cid:1)(cid:24)(cid:16)(cid:1)(cid:12)*(cid:3)(cid:1)1((cid:16)(cid:12)(cid:3)!(cid:12)(cid:1)(0(cid:1) #$%(cid:1)&(cid:9)(cid:23)(cid:12)(cid:1)’((cid:9)(cid:23)(cid:12)(cid:1))(cid:9)(cid:10)(cid:12)(cid:16)(cid:3)(cid:10)(cid:23)*(cid:24)+(cid:1)(cid:1)(cid:21)#(cid:17)(cid:1)",(cid:1)(cid:19),(cid:28)(cid:1)(cid:29)"(cid:30)(cid:1)-(cid:19)(cid:28)(cid:1)(cid:24)(cid:23)(cid:1)(cid:9)(cid:1).(cid:3)./(cid:3)(cid:10)(cid:1)(0(cid:1)(cid:9)(cid:1)(cid:16)(cid:9)(cid:12)(cid:24)((cid:16)(cid:9)(cid:5)(cid:1)(cid:9)(cid:23)(cid:23)(1(cid:24)(cid:9)(cid:12)(cid:24)((cid:16)(cid:1)(0(cid:1)(cid:24)(cid:16)(cid:15)(cid:3)+(cid:3)(cid:16)(cid:15)(cid:3)(cid:16)(cid:12)(cid:1)(cid:3)(cid:16)(cid:12)(cid:24)(cid:12)(cid:24)(cid:3)(cid:23)(cid:1)2*(cid:24)1*(cid:1)(cid:9)(cid:10)(cid:3)(cid:1)(cid:9)(cid:5)(cid:5)(cid:1).(cid:3)./(cid:3)(cid:10)(cid:23)(cid:1)(0(cid:1)#$%(cid:1)(cid:21)(cid:22)(cid:23)(cid:12)(cid:10)(cid:9)(cid:5)(cid:24)(cid:9)(cid:1)(cid:2)(cid:12)(cid:15)(cid:1) (cid:1) (cid:21)#(cid:17)(cid:1)--(cid:1)(cid:20)(cid:30)(cid:20)(cid:1)(cid:6)(cid:6)(cid:20)(cid:1)(cid:19)-(cid:30)(cid:7)(cid:1)(cid:9)(cid:16)(cid:1)(cid:21)(cid:22)(cid:23)(cid:12)(cid:10)(cid:9)(cid:5)(cid:24)(cid:9)(cid:16)(cid:1)1(.+(cid:9)(cid:16)(cid:14)(cid:1)(cid:5)(cid:24).(cid:24)(cid:12)(cid:3)(cid:15)(cid:1)/(cid:14)(cid:1)(cid:11)(cid:22)(cid:9)(cid:10)(cid:9)(cid:16)(cid:12)(cid:3)(cid:3)3(cid:1)#$%(cid:1)&(cid:9)(cid:23)(cid:12)(cid:1)’((cid:9)(cid:23)(cid:12)(cid:1))(cid:9)(cid:10)(cid:12)(cid:16)(cid:3)(cid:10)(cid:23)*(cid:24)+(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)#$%(cid:1)(cid:21)(cid:22)(cid:23)(cid:12)(cid:10)(cid:9)(cid:5)(cid:24)(cid:9)(cid:1)(cid:2)(cid:12)(cid:15)(cid:1)(cid:9)(cid:10)(cid:3)(cid:1).(cid:3)./(cid:3)(cid:10)(cid:23)(cid:1)(0(cid:1)#$%(cid:1)4(cid:16)(cid:12)(cid:3)(cid:10)(cid:16)(cid:9)(cid:12)(cid:24)((cid:16)(cid:9)(cid:5)(cid:1)(cid:2)(cid:12)(cid:15)(cid:7)(cid:1) (cid:9)(cid:1)56(cid:1)1(.+(cid:9)(cid:16)(cid:14)(cid:1)(cid:5)(cid:24).(cid:24)(cid:12)(cid:3)(cid:15)(cid:1)/(cid:14)(cid:1)(cid:11)(cid:22)(cid:9)(cid:10)(cid:9)(cid:16)(cid:12)(cid:3)(cid:3)(cid:7)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)0((cid:10).(cid:1)+(cid:9)(cid:10)(cid:12)(cid:1)(0(cid:1)(cid:12)*(cid:3)(cid:1)(cid:24)(cid:16)(cid:12)(cid:3)(cid:10)(cid:16)(cid:9)(cid:12)(cid:24)((cid:16)(cid:9)(cid:5)(cid:1)#$%(cid:1)(cid:16)(cid:3)(cid:12)2((cid:10)7(cid:1)(0(cid:1)(cid:24)(cid:16)(cid:15)(cid:3)+(cid:3)(cid:16)(cid:15)(cid:3)(cid:16)(cid:12)(cid:1).(cid:3)./(cid:3)(cid:10)(cid:1)0(cid:24)(cid:10).(cid:23)3(cid:1)(cid:2)(cid:24)(cid:9)/(cid:24)(cid:5)(cid:24)(cid:12)(cid:14)(cid:1)(cid:5)(cid:24).(cid:24)(cid:12)(cid:3)(cid:15)(cid:1)/(cid:14)(cid:1)(cid:9)(cid:1)(cid:23)1*(cid:3).(cid:3)(cid:1)(cid:9)++(cid:10)((cid:4)(cid:3)(cid:15)(cid:1) 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%(cid:22)(cid:10)(cid:1)(cid:9)(cid:22)(cid:15)(cid:24)(cid:12)(cid:1)+(cid:10)(1(cid:3)(cid:15)(cid:22)(cid:10)(cid:3)(cid:23)(cid:1)(cid:24)(cid:16)1(cid:5)(cid:22)(cid:15)(cid:3)(cid:15)(cid:1)(cid:12)*(cid:3)(cid:1)0((cid:5)(cid:5)(2(cid:24)(cid:16)(cid:11)(cid:26)(cid:1) (cid:9)(cid:16)(cid:15)(cid:1)(cid:3).+(cid:5)((cid:14)(cid:3)(cid:3)(cid:23)(cid:1)(cid:12)*(cid:10)((cid:22)(cid:11)*(cid:1)(cid:12)*(cid:3)(cid:1)(cid:24)(cid:23)(cid:23)(cid:22)(cid:3)(cid:1)(0(cid:1) (+(cid:12)(cid:24)((cid:16)(cid:23)(cid:7)(cid:1)+(cid:3)(cid:10)0((cid:10).(cid:9)(cid:16)1(cid:3)(cid:1)(cid:10)(cid:24)(cid:11)*(cid:12)(cid:23)(cid:7)(cid:1)(cid:5)((cid:9)(cid:16)(cid:1)0(cid:22)(cid:16)(cid:15)(cid:3)(cid:15)(cid:1) (cid:23)*(cid:9)(cid:10)(cid:3)(cid:1)+(cid:5)(cid:9)(cid:16)(cid:23)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)(cid:9)(cid:16)(cid:1)(cid:3).+(cid:5)((cid:14)(cid:3)(cid:3)(cid:1)(cid:23)*(cid:9)(cid:10)(cid:3)(cid:1)(cid:12)(cid:10)(cid:22)(cid:23)(cid:12)(cid:1) +(cid:5)(cid:9)(cid:16)3(cid:1)(cid:25)*(cid:3)(cid:1)(cid:9)11((cid:22)(cid:16)(cid:12)(cid:24)(cid:16)(cid:11)(cid:1)0((cid:10)(cid:1)(cid:12)*(cid:3)(cid:23)(cid:3)(cid:1)(cid:23)*(cid:9)(cid:10)(cid:3)@ /(cid:9)(cid:23)(cid:3)(cid:15)(cid:1)+(cid:9)(cid:14).(cid:3)(cid:16)(cid:12)(cid:1)(cid:12)(cid:10)(cid:9)(cid:16)(cid:23)(cid:9)1(cid:12)(cid:24)((cid:16)(cid:23)(cid:1)(cid:24)(cid:23)(cid:1)(cid:15)(cid:3)(cid:23)1(cid:10)(cid:24)/(cid:3)(cid:15)(cid:1) (cid:24)(cid:16)(cid:1)(cid:16)((cid:12)(cid:3)(cid:1)(cid:19)(cid:1)(cid:12)((cid:1)(cid:12)*(cid:3)(cid:1)0(cid:24)(cid:16)(cid:9)(cid:16)1(cid:24)(cid:9)(cid:5)(cid:1)(cid:23)(cid:12)(cid:9)(cid:12)(cid:3).(cid:3)(cid:16)(cid:12)(cid:23)3(cid:1) (cid:21)(cid:23)(cid:1)(cid:15)(cid:24)(cid:23)1(cid:5)((cid:23)(cid:3)(cid:15)(cid:1)(cid:24)(cid:16)(cid:1)(cid:16)((cid:12)(cid:3)(cid:1)(cid:19)-(cid:7)(cid:1)(cid:12)*(cid:3)(cid:1)9(cid:10)((cid:22)+(cid:1) (cid:10)(cid:3)1((cid:11)(cid:16)(cid:24)(cid:23)(cid:3)(cid:15)(cid:1)(cid:23)*(cid:9)(cid:10)(cid:3)(cid:1)/(cid:9)(cid:23)(cid:3)(cid:15)(cid:1)+(cid:9)(cid:14).(cid:3)(cid:16)(cid:12)(cid:1)(cid:3)!+(cid:3)(cid:16)(cid:23)(cid:3)(cid:23)(cid:1) 0((cid:10)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:14)(cid:3)(cid:9)(cid:10)(cid:1)(cid:10)(cid:3)(cid:5)(cid:9)(cid:12)(cid:24)(cid:16)(cid:11)(cid:1)(cid:12)((cid:1)(cid:3)8(cid:22)(cid:24)(cid:12)(cid:14)(cid:1)(cid:24)(cid:16)(cid:23)(cid:12)(cid:10)(cid:22).(cid:3)(cid:16)(cid:12)(cid:23)(cid:1) (cid:24)(cid:23)(cid:23)(cid:22)(cid:3)(cid:15)3(cid:1)(cid:1) (cid:25)*(cid:3)(cid:1)1(cid:9)(cid:5)1(cid:22)(cid:5)(cid:9)(cid:12)(cid:24)((cid:16)(cid:1)(0(cid:1)(cid:23)*(cid:9)(cid:10)(cid:3)@/(cid:9)(cid:23)(cid:3)(cid:15)(cid:1)+(cid:9)(cid:14).(cid:3)(cid:16)(cid:12)(cid:23)(cid:1) (cid:24)(cid:23)(cid:1)1(.+(cid:5)(cid:3)!(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)(cid:10)(cid:3)8(cid:22)(cid:24)(cid:10)(cid:3)(cid:23)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:9)++(cid:5)(cid:24)1(cid:9)(cid:12)(cid:24)((cid:16)(cid:1)(0(cid:1) • • • • • A(cid:3)(cid:4)(cid:24)(cid:3)2(cid:3)(cid:15)(cid:1)(cid:10)(cid:3)(cid:5)(cid:3)(cid:4)(cid:9)(cid:16)(cid:12)(cid:1)(cid:23)(cid:22)++((cid:10)(cid:12)(cid:24)(cid:16)(cid:11)(cid:1)(cid:15)(1(cid:22).(cid:3)(cid:16)(cid:12)(cid:9)(cid:12)(cid:24)((cid:16)(cid:1)(cid:12)((cid:1)(/(cid:12)(cid:9)(cid:24)(cid:16)(cid:1)(cid:9)(cid:16)(cid:1) (cid:22)(cid:16)(cid:15)(cid:3)(cid:10)(cid:23)(cid:12)(cid:9)(cid:16)(cid:15)(cid:24)(cid:16)(cid:11)(cid:1)(0(cid:1)(cid:12)*(cid:3)(cid:1)1((cid:16)(cid:12)(cid:10)(cid:9)1(cid:12)(cid:22)(cid:9)(cid:5)(cid:1)(cid:16)(cid:9)(cid:12)(cid:22)(cid:10)(cid:3)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)(cid:12)(cid:3)(cid:10).(cid:23)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1) 1((cid:16)(cid:15)(cid:24)(cid:12)(cid:24)((cid:16)(cid:23)(cid:1)(0(cid:1)(cid:12)*(cid:3)(cid:1)(cid:23)*(cid:9)(cid:10)(cid:3)@/(cid:9)(cid:23)(cid:3)(cid:15)(cid:1)+(cid:9)(cid:14).(cid:3)(cid:16)(cid:12)(cid:1)(cid:12)(cid:10)(cid:9)(cid:16)(cid:23)(cid:9)1(cid:12)(cid:24)((cid:16)(cid:23)>(cid:1) (cid:21)(cid:23)(cid:23)(cid:3)(cid:23)(cid:23)(cid:3)(cid:15)(cid:1)2*(cid:3)(cid:12)*(cid:3)(cid:10)(cid:1)(cid:12)*(cid:3)(cid:1).(cid:3)(cid:12)*((cid:15)((cid:5)((cid:11)(cid:14)(cid:1)(cid:22)(cid:23)(cid:3)(cid:15)(cid:1)(cid:24)(cid:16)(cid:1)(cid:4)(cid:9)(cid:5)(cid:22)(cid:24)(cid:16)(cid:11)(cid:1)(cid:12)*(cid:3)(cid:1) (cid:23)*(cid:9)(cid:10)(cid:3)@/(cid:9)(cid:23)(cid:3)(cid:15)(cid:1)+(cid:9)(cid:14).(cid:3)(cid:16)(cid:12)(cid:23)(cid:1)2(cid:9)(cid:23)(cid:1)(cid:9)++(cid:10)(+(cid:10)(cid:24)(cid:9)(cid:12)(cid:3)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)(cid:24)(cid:16)(cid:1)(cid:9)11((cid:10)(cid:15)(cid:9)(cid:16)1(cid:3)(cid:1) 2(cid:24)(cid:12)*(cid:1)(cid:21)(cid:22)(cid:23)(cid:12)(cid:10)(cid:9)(cid:5)(cid:24)(cid:9)(cid:16)(cid:1)(cid:21)11((cid:22)(cid:16)(cid:12)(cid:24)(cid:16)(cid:11)(cid:1)(cid:13)(cid:12)(cid:9)(cid:16)(cid:15)(cid:9)(cid:10)(cid:15)(cid:23)>(cid:1) &(cid:4)(cid:9)(cid:5)(cid:22)(cid:9)(cid:12)(cid:3)(cid:15)(cid:1)(cid:12)*(cid:3)(cid:1)7(cid:3)(cid:14)(cid:1)(cid:24)(cid:16)+(cid:22)(cid:12)(cid:23)(cid:1)(cid:22)(cid:23)(cid:3)(cid:15)(cid:1)(cid:24)(cid:16)(cid:1)(cid:12)*(cid:3)(cid:1)1(cid:9)(cid:5)1(cid:22)(cid:5)(cid:9)(cid:12)(cid:24)((cid:16)(cid:1)(0(cid:1)(cid:12)*(cid:3)(cid:1)0(cid:9)(cid:24)(cid:10)(cid:1) (cid:4)(cid:9)(cid:5)(cid:22)(cid:3)(cid:1)(cid:24)(cid:16)1(cid:5)(cid:22)(cid:15)(cid:24)(cid:16)(cid:11)(cid:1)(cid:10)(cid:24)(cid:23)7@0(cid:10)(cid:3)(cid:3)(cid:1)(cid:24)(cid:16)(cid:12)(cid:3)(cid:10)(cid:3)(cid:23)(cid:12)(cid:1)(cid:10)(cid:9)(cid:12)(cid:3)(cid:7)(cid:1)(cid:4)((cid:5)(cid:9)(cid:12)(cid:24)(cid:5)(cid:24)(cid:12)(cid:14)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)(cid:14)(cid:24)(cid:3)(cid:5)(cid:15)(cid:23)>(cid:1)(cid:1) &(cid:4)(cid:9)(cid:5)(cid:22)(cid:9)(cid:12)(cid:3)(cid:15)(cid:1).(cid:9)(cid:16)(cid:9)(cid:11)(cid:3).(cid:3)(cid:16)(cid:12)=(cid:23)(cid:1)(cid:9)(cid:23)(cid:23)(cid:3)(cid:23)(cid:23).(cid:3)(cid:16)(cid:12)(cid:1)(0(cid:1)(cid:12)*(cid:3)(cid:1)(cid:5)(cid:24)7(cid:3)(cid:5)(cid:24)*(((cid:15)(cid:1)(0(cid:1) (cid:12)*(cid:3)(cid:1)(cid:4)(cid:3)(cid:23)(cid:12)(cid:24)(cid:16)(cid:11)(cid:1)1((cid:16)(cid:15)(cid:24)(cid:12)(cid:24)((cid:16)(cid:23)(cid:1)/(cid:3)(cid:24)(cid:16)(cid:11)(cid:1).(cid:3)(cid:12)>(cid:1)(cid:9)(cid:16)(cid:15)(cid:1) &(cid:4)(cid:9)(cid:5)(cid:22)(cid:9)(cid:12)(cid:3)(cid:15)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:9)(cid:15)(cid:3)8(cid:22)(cid:9)1(cid:14)(cid:1)(0(cid:1)(cid:15)(cid:24)(cid:23)1(cid:5)((cid:23)(cid:22)(cid:10)(cid:3)(cid:1).(cid:9)(cid:15)(cid:3)(cid:1)(cid:24)(cid:16)(cid:1)(cid:12)*(cid:3)(cid:1)0(cid:24)(cid:16)(cid:9)(cid:16)1(cid:24)(cid:9)(cid:5)(cid:1) (cid:23)(cid:24)(cid:11)(cid:16)(cid:24)0(cid:24)1(cid:9)(cid:16)(cid:12)(cid:1)(cid:24)(cid:16)1(cid:5)(cid:22)(cid:15)(cid:3)(cid:23)(cid:1)(cid:3)(cid:23)(cid:12)(cid:24).(cid:9)(cid:12)(cid:24)((cid:16)(cid:23)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1) (cid:10)(cid:3)+((cid:10)(cid:12)(cid:1)(cid:10)(cid:3)(cid:5)(cid:9)(cid:12)(cid:24)(cid:16)(cid:11)(cid:1)(cid:12)((cid:1)(cid:23)*(cid:9)(cid:10)(cid:3)(cid:1)/(cid:9)(cid:23)(cid:3)(cid:15)(cid:1)+(cid:9)(cid:14).(cid:3)(cid:16)(cid:12)(cid:23)(cid:1)(cid:24)(cid:16)1(cid:5)(cid:22)(cid:15)(cid:24)(cid:16)(cid:11)(cid:1)(cid:12)*((cid:23)(cid:3)(cid:1) ?(cid:22)(cid:15)(cid:11)(cid:3).(cid:3)(cid:16)(cid:12)(cid:23)(cid:1)(cid:24)(cid:16)(cid:1)1(cid:9)(cid:5)1(cid:22)(cid:5)(cid:9)(cid:12)(cid:24)(cid:16)(cid:11)(cid:1)(cid:12)*(cid:3)(cid:1)0(cid:9)(cid:24)(cid:10)(cid:1)(cid:4)(cid:9)(cid:5)(cid:22)(cid:3)(cid:1)(0(cid:1) .(cid:9)(cid:15)(cid:3)(cid:1)2(cid:24)(cid:12)*(cid:1)(cid:10)(cid:3)(cid:23)+(cid:3)1(cid:12)(cid:1)(cid:12)((cid:1)?(cid:22)(cid:15)(cid:11)(cid:3).(cid:3)(cid:16)(cid:12)(cid:23)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)(cid:3)(cid:23)(cid:12)(cid:24).(cid:9)(cid:12)(cid:3)(cid:23)3(cid:1) (cid:12)*(cid:3)(cid:1)(cid:3)8(cid:22)(cid:24)(cid:12)(cid:14)(cid:1)(cid:24)(cid:16)(cid:23)(cid:12)(cid:10)(cid:22).(cid:3)(cid:16)(cid:12)(cid:23)(cid:1)(cid:24)(cid:23)(cid:23)(cid:22)(cid:3)(cid:15)3(cid:1) ’((cid:16)(cid:23)(cid:3)8(cid:22)(cid:3)(cid:16)(cid:12)(cid:5)(cid:14)(cid:7)(cid:1)(cid:24)(cid:12)(cid:1)2(cid:9)(cid:23)(cid:1)1((cid:16)(cid:23)(cid:24)(cid:15)(cid:3)(cid:10)(cid:3)(cid:15)(cid:1)(cid:9)(cid:1)7(cid:3)(cid:14)(cid:1) (cid:9)(cid:22)(cid:15)(cid:24)(cid:12)(cid:1).(cid:9)(cid:12)(cid:12)(cid:3)(cid:10)3(cid:1) (cid:1) (cid:10) (cid:19)(cid:26)(cid:28)(cid:23)(cid:25)(cid:10)(cid:29)(cid:27)(cid:30)(cid:5)(cid:25)(cid:7)(cid:8)(cid:26)(cid:29)(cid:5)(cid:27)(cid:10)(cid:10) (cid:25)*(cid:3)(cid:1)(cid:15)(cid:24)(cid:10)(cid:3)1(cid:12)((cid:10)(cid:23)(cid:1)(cid:9)(cid:10)(cid:3)(cid:1)(cid:10)(cid:3)(cid:23)+((cid:16)(cid:23)(cid:24)/(cid:5)(cid:3)(cid:1)0((cid:10)(cid:1)(cid:12)*(cid:3)(cid:1)((cid:12)*(cid:3)(cid:10)(cid:1)(cid:24)(cid:16)0((cid:10).(cid:9)(cid:12)(cid:24)((cid:16)3(cid:1)(cid:1)(cid:25)*(cid:3)(cid:1)((cid:12)*(cid:3)(cid:10)(cid:1)(cid:24)(cid:16)0((cid:10).(cid:9)(cid:12)(cid:24)((cid:16)(cid:1)1(.+(cid:10)(cid:24)(cid:23)(cid:3)(cid:23)(cid:1)(cid:12)*(cid:3)(cid:1) (cid:24)(cid:16)0((cid:10).(cid:9)(cid:12)(cid:24)((cid:16)(cid:1)(cid:24)(cid:16)(cid:1)(cid:12)*(cid:3)(cid:1)$(cid:24)(cid:10)(cid:3)1(cid:12)((cid:10)=(cid:23)(cid:1)(cid:10)(cid:3)+((cid:10)(cid:12)(cid:1)0((cid:10)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:14)(cid:3)(cid:9)(cid:10)(cid:1)(cid:3)(cid:16)(cid:15)(cid:3)(cid:15)(cid:1),(cid:20)(cid:1)<(cid:22)(cid:16)(cid:3)(cid:1)(cid:19)(cid:20)(cid:6)(cid:29)(cid:7)(cid:1)/(cid:22)(cid:12)(cid:1)(cid:15)((cid:3)(cid:23)(cid:1)(cid:16)((cid:12)(cid:1)(cid:24)(cid:16)1(cid:5)(cid:22)(cid:15)(cid:3)(cid:1)(cid:12)*(cid:3)(cid:1)0(cid:24)(cid:16)(cid:9)(cid:16)1(cid:24)(cid:9)(cid:5)(cid:1) (cid:10)(cid:3)+((cid:10)(cid:12)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:9)(cid:22)(cid:15)(cid:24)(cid:12)((cid:10)=(cid:23)(cid:1)(cid:10)(cid:3)+((cid:10)(cid:12)(cid:1)(cid:12)*(cid:3)(cid:10)(cid:3)((cid:16)3(cid:1)(cid:1) %(cid:22)(cid:10)(cid:1)(+(cid:24)(cid:16)(cid:24)((cid:16)(cid:1)((cid:16)(cid:1)(cid:12)*(cid:3)(cid:1)0(cid:24)(cid:16)(cid:9)(cid:16)1(cid:24)(cid:9)(cid:5)(cid:1)(cid:10)(cid:3)+((cid:10)(cid:12)(cid:1)(cid:15)((cid:3)(cid:23)(cid:1)(cid:16)((cid:12)(cid:1)1((cid:4)(cid:3)(cid:10)(cid:1)(cid:12)*(cid:3)(cid:1)((cid:12)*(cid:3)(cid:10)(cid:1)(cid:24)(cid:16)0((cid:10).(cid:9)(cid:12)(cid:24)((cid:16)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)2(cid:3)(cid:1)(cid:15)((cid:1)(cid:16)((cid:12)(cid:1)(cid:3)!+(cid:10)(cid:3)(cid:23)(cid:23)(cid:1)(cid:9)(cid:16)(cid:14)(cid:1) 0((cid:10).(cid:1)(0(cid:1)(cid:9)(cid:23)(cid:23)(cid:22)(cid:10)(cid:9)(cid:16)1(cid:3)(cid:1)1((cid:16)1(cid:5)(cid:22)(cid:23)(cid:24)((cid:16)(cid:1)(cid:12)*(cid:3)(cid:10)(cid:3)((cid:16)3(cid:1)(cid:1) 4(cid:16)(cid:1)1((cid:16)(cid:16)(cid:3)1(cid:12)(cid:24)((cid:16)(cid:1)2(cid:24)(cid:12)*(cid:1)((cid:22)(cid:10)(cid:1)(cid:9)(cid:22)(cid:15)(cid:24)(cid:12)(cid:1)(0(cid:1)(cid:12)*(cid:3)(cid:1)0(cid:24)(cid:16)(cid:9)(cid:16)1(cid:24)(cid:9)(cid:5)(cid:1)(cid:10)(cid:3)+((cid:10)(cid:12)(cid:7)(cid:1)((cid:22)(cid:10)(cid:1)(cid:10)(cid:3)(cid:23)+((cid:16)(cid:23)(cid:24)/(cid:24)(cid:5)(cid:24)(cid:12)(cid:14)(cid:1)(cid:24)(cid:23)(cid:1)(cid:12)((cid:1)(cid:10)(cid:3)(cid:9)(cid:15)(cid:1)(cid:12)*(cid:3)(cid:1)((cid:12)*(cid:3)(cid:10)(cid:1)(cid:24)(cid:16)0((cid:10).(cid:9)(cid:12)(cid:24)((cid:16)(cid:1) (cid:9)(cid:16)(cid:15)(cid:7)(cid:1)(cid:24)(cid:16)(cid:1)(cid:15)((cid:24)(cid:16)(cid:11)(cid:1)(cid:23)((cid:7)(cid:1)1((cid:16)(cid:23)(cid:24)(cid:15)(cid:3)(cid:10)(cid:1)2*(cid:3)(cid:12)*(cid:3)(cid:10)(cid:1)(cid:12)*(cid:3)(cid:1)((cid:12)*(cid:3)(cid:10)(cid:1)(cid:24)(cid:16)0((cid:10).(cid:9)(cid:12)(cid:24)((cid:16)(cid:1)(cid:24)(cid:23)(cid:1).(cid:9)(cid:12)(cid:3)(cid:10)(cid:24)(cid:9)(cid:5)(cid:5)(cid:14)(cid:1)(cid:24)(cid:16)1((cid:16)(cid:23)(cid:24)(cid:23)(cid:12)(cid:3)(cid:16)(cid:12)(cid:1)2(cid:24)(cid:12)*(cid:1)(cid:12)*(cid:3)(cid:1)0(cid:24)(cid:16)(cid:9)(cid:16)1(cid:24)(cid:9)(cid:5)(cid:1) (cid:10)(cid:3)+((cid:10)(cid:12)(cid:1)((cid:10)(cid:1)((cid:22)(cid:10)(cid:1)7(cid:16)(2(cid:5)(cid:3)(cid:15)(cid:11)(cid:3)(cid:1)(/(cid:12)(cid:9)(cid:24)(cid:16)(cid:3)(cid:15)(cid:1)(cid:24)(cid:16)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:9)(cid:22)(cid:15)(cid:24)(cid:12)(cid:1)((cid:10)(cid:1)((cid:12)*(cid:3)(cid:10)2(cid:24)(cid:23)(cid:3)(cid:1)(cid:9)++(cid:3)(cid:9)(cid:10)(cid:23)(cid:1)(cid:12)((cid:1)/(cid:3)(cid:1).(cid:9)(cid:12)(cid:3)(cid:10)(cid:24)(cid:9)(cid:5)(cid:5)(cid:14)(cid:1).(cid:24)(cid:23)(cid:23)(cid:12)(cid:9)(cid:12)(cid:3)(cid:15)3(cid:1)(cid:1) 40(cid:7)(cid:1)/(cid:9)(cid:23)(cid:3)(cid:15)(cid:1)((cid:16)(cid:1)(cid:12)*(cid:3)(cid:1)2((cid:10)7(cid:1)2(cid:3)(cid:1)*(cid:9)(cid:4)(cid:3)(cid:1)+(cid:3)(cid:10)0((cid:10).(cid:3)(cid:15)(cid:7)(cid:1)2(cid:3)(cid:1)1((cid:16)1(cid:5)(cid:22)(cid:15)(cid:3)(cid:1)(cid:12)*(cid:9)(cid:12)(cid:1)(cid:12)*(cid:3)(cid:10)(cid:3)(cid:1)(cid:24)(cid:23)(cid:1)(cid:9)(cid:1).(cid:9)(cid:12)(cid:3)(cid:10)(cid:24)(cid:9)(cid:5)(cid:1).(cid:24)(cid:23)(cid:23)(cid:12)(cid:9)(cid:12)(cid:3).(cid:3)(cid:16)(cid:12)(cid:1)(0(cid:1)(cid:12)*(cid:24)(cid:23)(cid:1) ((cid:12)*(cid:3)(cid:10)(cid:1)(cid:24)(cid:16)0((cid:10).(cid:9)(cid:12)(cid:24)((cid:16)(cid:7)(cid:1)2(cid:3)(cid:1)(cid:9)(cid:10)(cid:3)(cid:1)(cid:10)(cid:3)8(cid:22)(cid:24)(cid:10)(cid:3)(cid:15)(cid:1)(cid:12)((cid:1)(cid:10)(cid:3)+((cid:10)(cid:12)(cid:1)(cid:12)*(cid:9)(cid:12)(cid:1)0(cid:9)1(cid:12)3(cid:1)(cid:1)(cid:18)(cid:3)(cid:1)*(cid:9)(cid:4)(cid:3)(cid:1)(cid:16)((cid:12)*(cid:24)(cid:16)(cid:11)(cid:1)(cid:12)((cid:1)(cid:10)(cid:3)+((cid:10)(cid:12)(cid:1)(cid:24)(cid:16)(cid:1)(cid:12)*(cid:24)(cid:23)(cid:1)(cid:10)(cid:3)(cid:11)(cid:9)(cid:10)(cid:15)3(cid:1)(cid:1) (cid:1) (cid:20)(cid:23)"(cid:24)(cid:5)(cid:27)"(cid:29)(cid:3)(cid:29) (cid:29)(cid:26)(cid:29)(cid:23)"(cid:10)(cid:5)(cid:30)(cid:10)(cid:26)(cid:28)(cid:23)(cid:10)(cid:4)(cid:29)(cid:25)(cid:23)(cid:6)(cid:26)(cid:5)(cid:25)"(cid:10)(cid:30)(cid:5)(cid:25)(cid:10)(cid:26)(cid:28)(cid:23)(cid:10)(cid:31)(cid:29)(cid:27)(cid:8)(cid:27)(cid:6)(cid:29)(cid:8) (cid:10)(cid:20)(cid:23)(cid:24)(cid:5)(cid:25)(cid:26)(cid:10)(cid:10) (cid:25)*(cid:3)(cid:1)(cid:15)(cid:24)(cid:10)(cid:3)1(cid:12)((cid:10)(cid:23)(cid:1)(0(cid:1)(cid:12)*(cid:3)(cid:1)’(.+(cid:9)(cid:16)(cid:14)(cid:1)(cid:9)(cid:10)(cid:3)(cid:1)(cid:10)(cid:3)(cid:23)+((cid:16)(cid:23)(cid:24)/(cid:5)(cid:3)(cid:1)0((cid:10)(cid:1)(cid:12)*(cid:3)(cid:1)+(cid:10)(cid:3)+(cid:9)(cid:10)(cid:9)(cid:12)(cid:24)((cid:16)(cid:1)(0(cid:1)(cid:12)*(cid:3)(cid:1)0(cid:24)(cid:16)(cid:9)(cid:16)1(cid:24)(cid:9)(cid:5)(cid:1)(cid:10)(cid:3)+((cid:10)(cid:12)(cid:1)(cid:12)*(cid:9)(cid:12)(cid:1)(cid:11)(cid:24)(cid:4)(cid:3)(cid:23)(cid:1)(cid:9)(cid:1) (cid:12)(cid:10)(cid:22)(cid:3)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)0(cid:9)(cid:24)(cid:10)(cid:1)(cid:4)(cid:24)(cid:3)2(cid:1)(cid:24)(cid:16)(cid:1)(cid:9)11((cid:10)(cid:15)(cid:9)(cid:16)1(cid:3)(cid:1)2(cid:24)(cid:12)*(cid:1)(cid:21)(cid:22)(cid:23)(cid:12)(cid:10)(cid:9)(cid:5)(cid:24)(cid:9)(cid:16)(cid:1)(cid:21)11((cid:22)(cid:16)(cid:12)(cid:24)(cid:16)(cid:11)(cid:1)(cid:13)(cid:12)(cid:9)(cid:16)(cid:15)(cid:9)(cid:10)(cid:15)(cid:23)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:1)(cid:2)(cid:3)(cid:4)(cid:2)(cid:3)(cid:5)(cid:6)(cid:7)(cid:2)(cid:8)(cid:9)(cid:10)(cid:11)(cid:12)(cid:6)(cid:10)(cid:13)(cid:14)(cid:14)(cid:15)(cid:1) 46 (cid:1) (cid:9)(cid:16)(cid:15)(cid:1)0((cid:10)(cid:1)(cid:23)(cid:22)1*(cid:1)(cid:24)(cid:16)(cid:12)(cid:3)(cid:10)(cid:16)(cid:9)(cid:5)(cid:1)1((cid:16)(cid:12)(cid:10)((cid:5)(cid:1)(cid:9)(cid:23)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:15)(cid:24)(cid:10)(cid:3)1(cid:12)((cid:10)(cid:23)(cid:1)(cid:15)(cid:3)(cid:12)(cid:3)(cid:10).(cid:24)(cid:16)(cid:3)(cid:1)(cid:24)(cid:23)(cid:1)(cid:16)(cid:3)1(cid:3)(cid:23)(cid:23)(cid:9)(cid:10)(cid:14)(cid:1)(cid:12)((cid:1)(cid:3)(cid:16)(cid:9)/(cid:5)(cid:3)(cid:1)(cid:12)*(cid:3)(cid:1)+(cid:10)(cid:3)+(cid:9)(cid:10)(cid:9)(cid:12)(cid:24)((cid:16)(cid:1)(0(cid:1)(cid:12)*(cid:3)(cid:1) 0(cid:24)(cid:16)(cid:9)(cid:16)1(cid:24)(cid:9)(cid:5)(cid:1)(cid:10)(cid:3)+((cid:10)(cid:12)(cid:1)(cid:12)*(cid:9)(cid:12)(cid:1)(cid:11)(cid:24)(cid:4)(cid:3)(cid:23)(cid:1)(cid:9)(cid:1)(cid:12)(cid:10)(cid:22)(cid:3)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)0(cid:9)(cid:24)(cid:10)(cid:1)(cid:4)(cid:24)(cid:3)2(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)(cid:24)(cid:23)(cid:1)0(cid:10)(cid:3)(cid:3)(cid:1)0(cid:10)(.(cid:1).(cid:9)(cid:12)(cid:3)(cid:10)(cid:24)(cid:9)(cid:5)(cid:1).(cid:24)(cid:23)(cid:23)(cid:12)(cid:9)(cid:12)(cid:3).(cid:3)(cid:16)(cid:12)(cid:7)(cid:1)2*(cid:3)(cid:12)*(cid:3)(cid:10)(cid:1)(cid:15)(cid:22)(cid:3)(cid:1)(cid:12)((cid:1) 0(cid:10)(cid:9)(cid:22)(cid:15)(cid:1)((cid:10)(cid:1)(cid:3)(cid:10)(cid:10)((cid:10)3(cid:1) 4(cid:16)(cid:1)+(cid:10)(cid:3)+(cid:9)(cid:10)(cid:24)(cid:16)(cid:11)(cid:1)(cid:12)*(cid:3)(cid:1)0(cid:24)(cid:16)(cid:9)(cid:16)1(cid:24)(cid:9)(cid:5)(cid:1)(cid:10)(cid:3)+((cid:10)(cid:12)(cid:7)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:15)(cid:24)(cid:10)(cid:3)1(cid:12)((cid:10)(cid:23)(cid:1)(cid:9)(cid:10)(cid:3)(cid:1)(cid:10)(cid:3)(cid:23)+((cid:16)(cid:23)(cid:24)/(cid:5)(cid:3)(cid:1)0((cid:10)(cid:1)(cid:9)(cid:23)(cid:23)(cid:3)(cid:23)(cid:23)(cid:24)(cid:16)(cid:11)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:9)/(cid:24)(cid:5)(cid:24)(cid:12)(cid:14)(cid:1)(0(cid:1)(cid:12)*(cid:3)(cid:1)(cid:11)(cid:10)((cid:22)+(cid:1)(cid:12)((cid:1) 1((cid:16)(cid:12)(cid:24)(cid:16)(cid:22)(cid:3)(cid:1)(cid:9)(cid:23)(cid:1)(cid:9)(cid:1)(cid:11)((cid:24)(cid:16)(cid:11)(cid:1)1((cid:16)1(cid:3)(cid:10)(cid:16)(cid:7)(cid:1)(cid:15)(cid:24)(cid:23)1(cid:5)((cid:23)(cid:24)(cid:16)(cid:11)(cid:7)(cid:1)(cid:9)(cid:23)(cid:1)(cid:9)++(cid:5)(cid:24)1(cid:9)/(cid:5)(cid:3)(cid:7)(cid:1).(cid:9)(cid:12)(cid:12)(cid:3)(cid:10)(cid:23)(cid:1)(cid:10)(cid:3)(cid:5)(cid:9)(cid:12)(cid:3)(cid:15)(cid:1)(cid:12)((cid:1)(cid:11)((cid:24)(cid:16)(cid:11)(cid:1)1((cid:16)1(cid:3)(cid:10)(cid:16)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)(cid:22)(cid:23)(cid:24)(cid:16)(cid:11)(cid:1)(cid:12)*(cid:3)(cid:1) (cid:11)((cid:24)(cid:16)(cid:11)(cid:1)1((cid:16)1(cid:3)(cid:10)(cid:16)(cid:1)/(cid:9)(cid:23)(cid:24)(cid:23)(cid:1)(0(cid:1)(cid:9)11((cid:22)(cid:16)(cid:12)(cid:24)(cid:16)(cid:11)(cid:1)(cid:22)(cid:16)(cid:5)(cid:3)(cid:23)(cid:23)(cid:1)(cid:12)*(cid:3)(cid:1)(cid:15)(cid:24)(cid:10)(cid:3)1(cid:12)((cid:10)(cid:23)(cid:1)(cid:3)(cid:24)(cid:12)*(cid:3)(cid:10)(cid:1)(cid:24)(cid:16)(cid:12)(cid:3)(cid:16)(cid:15)(cid:1)(cid:12)((cid:1)(cid:5)(cid:24)8(cid:22)(cid:24)(cid:15)(cid:9)(cid:12)(cid:3)(cid:1)(cid:12)*(cid:3)(cid:1)9(cid:10)((cid:22)+(cid:1)((cid:10)(cid:1)(cid:12)((cid:1)1(cid:3)(cid:9)(cid:23)(cid:3)(cid:1) (+(cid:3)(cid:10)(cid:9)(cid:12)(cid:24)((cid:16)(cid:23)(cid:7)(cid:1)((cid:10)(cid:1)*(cid:9)(cid:23)(cid:1)(cid:16)((cid:1)(cid:10)(cid:3)(cid:9)(cid:5)(cid:24)(cid:23)(cid:12)(cid:24)1(cid:1)(cid:9)(cid:5)(cid:12)(cid:3)(cid:10)(cid:16)(cid:9)(cid:12)(cid:24)(cid:4)(cid:3)(cid:1)/(cid:22)(cid:12)(cid:1)(cid:12)((cid:1)(cid:15)((cid:1)(cid:23)(3(cid:1)(cid:1) (cid:17)(cid:9)(cid:4)(cid:29)(cid:26)(cid:5)(cid:25)&"(cid:10)(cid:25)(cid:23)"(cid:24)(cid:5)(cid:27)"(cid:29)(cid:3)(cid:29) (cid:29)(cid:26)(cid:29)(cid:23)"(cid:10)(cid:30)(cid:5)(cid:25)(cid:10)(cid:26)(cid:28)(cid:23)(cid:10)(cid:8)(cid:9)(cid:4)(cid:29)(cid:26)(cid:10)(cid:5)(cid:30)(cid:10)(cid:26)(cid:28)(cid:23)(cid:10)(cid:31)(cid:29)(cid:27)(cid:8)(cid:27)(cid:6)(cid:29)(cid:8) (cid:10)(cid:20)(cid:23)(cid:24)(cid:5)(cid:25)(cid:26)(cid:10)(cid:10) %(cid:22)(cid:10)(cid:1)(/?(cid:3)1(cid:12)(cid:24)(cid:4)(cid:3)(cid:23)(cid:1)(cid:9)(cid:10)(cid:3)(cid:1)(cid:12)((cid:1)(/(cid:12)(cid:9)(cid:24)(cid:16)(cid:1)(cid:10)(cid:3)(cid:9)(cid:23)((cid:16)(cid:9)/(cid:5)(cid:3)(cid:1)(cid:9)(cid:23)(cid:23)(cid:22)(cid:10)(cid:9)(cid:16)1(cid:3)(cid:1)(cid:9)/((cid:22)(cid:12)(cid:1)2*(cid:3)(cid:12)*(cid:3)(cid:10)(cid:1)(cid:12)*(cid:3)(cid:1)0(cid:24)(cid:16)(cid:9)(cid:16)1(cid:24)(cid:9)(cid:5)(cid:1)(cid:10)(cid:3)+((cid:10)(cid:12)(cid:1)(cid:9)(cid:23)(cid:1)(cid:9)(cid:1)2*((cid:5)(cid:3)(cid:1)(cid:24)(cid:23)(cid:1)0(cid:10)(cid:3)(cid:3)(cid:1) 0(cid:10)(.(cid:1).(cid:9)(cid:12)(cid:3)(cid:10)(cid:24)(cid:9)(cid:5)(cid:1).(cid:24)(cid:23)(cid:23)(cid:12)(cid:9)(cid:12)(cid:3).(cid:3)(cid:16)(cid:12)(cid:7)(cid:1)2*(cid:3)(cid:12)*(cid:3)(cid:10)(cid:1)(cid:15)(cid:22)(cid:3)(cid:1)(cid:12)((cid:1)0(cid:10)(cid:9)(cid:22)(cid:15)(cid:1)((cid:10)(cid:1)(cid:3)(cid:10)(cid:10)((cid:10)(cid:7)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)(cid:12)((cid:1)(cid:24)(cid:23)(cid:23)(cid:22)(cid:3)(cid:1)(cid:9)(cid:16)(cid:1)(cid:9)(cid:22)(cid:15)(cid:24)(cid:12)((cid:10)=(cid:23)(cid:1)(cid:10)(cid:3)+((cid:10)(cid:12)(cid:1)(cid:12)*(cid:9)(cid:12)(cid:1) (cid:24)(cid:16)1(cid:5)(cid:22)(cid:15)(cid:3)(cid:23)(cid:1)((cid:22)(cid:10)(cid:1)(+(cid:24)(cid:16)(cid:24)((cid:16)3(cid:1)(cid:1)A(cid:3)(cid:9)(cid:23)((cid:16)(cid:9)/(cid:5)(cid:3)(cid:1)(cid:9)(cid:23)(cid:23)(cid:22)(cid:10)(cid:9)(cid:16)1(cid:3)(cid:1)(cid:24)(cid:23)(cid:1)(cid:9)(cid:1)*(cid:24)(cid:11)*(cid:1)(cid:5)(cid:3)(cid:4)(cid:3)(cid:5)(cid:1)(0(cid:1)(cid:9)(cid:23)(cid:23)(cid:22)(cid:10)(cid:9)(cid:16)1(cid:3)(cid:7)(cid:1)/(cid:22)(cid:12)(cid:1)(cid:24)(cid:23)(cid:1)(cid:16)((cid:12)(cid:1)(cid:9)(cid:1)(cid:11)(cid:22)(cid:9)(cid:10)(cid:9)(cid:16)(cid:12)(cid:3)(cid:3)(cid:1)(cid:12)*(cid:9)(cid:12)(cid:1)(cid:9)(cid:16)(cid:1) 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.(cid:24)(cid:23)(cid:23)(cid:12)(cid:9)(cid:12)(cid:3).(cid:3)(cid:16)(cid:12)(cid:1)2*(cid:3)(cid:16)(cid:1)(cid:24)(cid:12)(cid:1)(cid:3)!(cid:24)(cid:23)(cid:12)(cid:23)3(cid:1)(cid:1)(cid:8)(cid:24)(cid:23)(cid:23)(cid:12)(cid:9)(cid:12)(cid:3).(cid:3)(cid:16)(cid:12)(cid:23)(cid:1)1(cid:9)(cid:16)(cid:1)(cid:9)(cid:10)(cid:24)(cid:23)(cid:3)(cid:1)0(cid:10)(.(cid:1)0(cid:10)(cid:9)(cid:22)(cid:15)(cid:1)((cid:10)(cid:1)(cid:3)(cid:10)(cid:10)((cid:10)(cid:1)(cid:9)(cid:16)(cid:15)(cid:1)(cid:9)(cid:10)(cid:3)(cid:1)1((cid:16)(cid:23)(cid:24)(cid:15)(cid:3)(cid:10)(cid:3)(cid:15)(cid:1).(cid:9)(cid:12)(cid:3)(cid:10)(cid:24)(cid:9)(cid:5)(cid:1) 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A(cid:3).(cid:22)(cid:16)(cid:3)(cid:10)(cid:9)(cid:12)(cid:24)((cid:16)(cid:1)A(cid:3)+((cid:10)(cid:12)(cid:1)(cid:24)(cid:16)(cid:1)(cid:9)11((cid:10)(cid:15)(cid:9)(cid:16)1(cid:3)(cid:1)2(cid:24)(cid:12)*(cid:1)(cid:23)(cid:3)1(cid:12)(cid:24)((cid:16)(cid:1),(cid:20)(cid:20)(cid:21)(cid:1)(0(cid:1)(cid:12)*(cid:3)(cid:1)(cid:1)(cid:2)(cid:3)(cid:4)(cid:2)(cid:3)(cid:5)(cid:6)(cid:7)(cid:2)(cid:8)(cid:9)(cid:10)(cid:11)(cid:12)(cid:6)(cid:10)(cid:13)(cid:14)(cid:14)(cid:15)3(cid:1)(cid:1)%(cid:22)(cid:10)(cid:1)(cid:10)(cid:3)(cid:23)+((cid:16)(cid:23)(cid:24)/(cid:24)(cid:5)(cid:24)(cid:12)(cid:14)(cid:1) 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!(cid:13)(cid:19)(cid:10)(cid:14)(cid:8)"(cid:26)(cid:10)’(cid:5)(cid:8)"(cid:26)(cid:10)(cid:15)(cid:8)(cid:25)(cid:26)(cid:27)(cid:23)(cid:25)"(cid:28)(cid:29)(cid:24)(cid:1) (cid:1) (cid:21)(cid:10)(cid:12)*(cid:22)(cid:10)(cid:1)(cid:8)(cid:24)(cid:5)(cid:16)(cid:3)(cid:10)(cid:1) )(cid:9)(cid:10)(cid:12)(cid:16)(cid:3)(cid:10)(cid:1) (cid:13)(cid:14)(cid:15)(cid:16)(cid:3)(cid:14)(cid:7)(cid:1)(cid:6)(cid:30)(cid:1)(cid:21)(cid:22)(cid:11)(cid:22)(cid:23)(cid:12)(cid:1)(cid:19)(cid:20)(cid:6)(cid:29)(cid:1) 47 Microequities Asset Management Group Limited Corporate directory 30 June 2019 Directors Leslie Szekely - Non-Executive Chairman Craig Shapiro - Non-Executive Director Carlos Gil - Executive Director, Chief Executive Officer and Chief Investment Officer Samuel Gutman - Executive Director and Company Secretary Company secretary Samuel Gutman Registered office and Principal place of business Suite 3105, Level 31 Governor Macquarie Tower 1 Farrer Place Sydney NSW 2000 Telephone: +61 2 9009 2900 Share register Auditor Solicitors Link Market Services Limited Level 12, 680 George Street Sydney NSW 2000 Telephone: 1300 554 474 BDO East Coast Partnership Level 11, 1 Margaret Street Sydney NSW 2000 Mills Oakley Level 12, 400 George Street Sydney NSW 2000 Stock exchange listing Microequities Asset Management Group Limited shares are listed on the Australian Securities Exchange (ASX code: MAM) Website http://microequities.com.au/ Corporate Governance Statement The directors and management are committed to conducting the business of Microequities Asset Management Group Limited in an ethical manner and in accordance with the highest standards of corporate governance. Microequities Asset Management Group Limited has adopted and has substantially complied with the ASX Corporate Governance Principles and Recommendations (Third Edition) ('Recommendations') to the extent appropriate to the size and nature of the Group’s operations. The Corporate Governance Statement, which sets out the corporate governance practices that were in operation during the financial year and identifies and explains any Recommendations that have not been followed, which is approved at the same time as the Annual Report can be found at: http://microequities.com.au/governance-policies/ 48 Microequities Asset Management Group Limited Shareholder information 30 June 2019 The shareholder information set out below was applicable as at 19 July 2019. Distribution of equitable securities Analysis of number of equitable security holders by size of holding: 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and over Holding less than a marketable parcel Equity security holders Twenty largest quoted equity security holders The names of the twenty largest security holders of quoted equity securities are listed below: GIL INVESTMENT COMPANY PTY LTD GUTMAN INVESTMENT PARTNERS PTY LTD SZEKELY SMSF PTY LTD BELLITE PTY LTD DESIGN MANGEMENT INVESTMENT PTY LTD MICROEQUITIES VENTURE CAPITAL ANDANSA PTY LIMITED MR SHUO YANG BRENMORE PTY LTD IME HOLDINGS PTY LTD OZSUN INVESTMENTS PTY LTD PORTLAND 41 PTY LIMITED I M E INVESTMENTS PTY LTD TREPLO PTY LIMITED C & M LAVERS PTY LTD ELYSIUM FAMILY SUPER PTY LIMITED MANN SUPERANNUATION FUND PTY LTD JMAS PTY LTD BCDO PTY LIMITED SELLMALL PTY LTD 49 Number of holders of ordinary shares 6 111 51 222 104 494 - Ordinary shares Number held % of total shares issued 53,634,560 22,955,539 12,991,949 5,325,408 2,662,376 1,270,344 1,250,000 787,200 759,161 740,000 645,000 639,272 630,000 625,000 546,040 532,672 532,672 532,016 480,669 479,536 108,019,414 40.32 17.26 9.77 4.00 2.00 0.95 0.94 0.59 0.57 0.56 0.48 0.48 0.47 0.47 0.41 0.40 0.40 0.40 0.36 0.36 81.19 Microequities Asset Management Group Limited Shareholder information 30 June 2019 Unquoted equity securities Rights over ordinary shares issued under loan funded share plan Performance rights over ordinary shares Awards under employee share trust plan Substantial holders Substantial holders in the Company are set out below: GIL INVESTMENT COMPANY PTY LTD GUTMAN INVESTMENT PARTNERS PTY LTD SZEKELY SMSF PTY LTD Voting rights The voting rights attached to ordinary shares are set out below: Number on issue Number of holders 1,367,432 3,129,066 1,270,344 2 2 2 Ordinary shares Number held 53,634,560 22,955,539 12,991,949 % of total shares issued 40.32 17.26 9.77 Ordinary shares On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. There are no other classes of equity securities. Restricted securities Class Ordinary shares Expiry date Share issued under Loan Funded Share Plan restricted until the related loan has been repaid Number of shares 1,367,432 50 

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