Microequities Asset Management Group Limited
ABN 17 110 777 056
Annual Report - 30 June 2021
Microequities Asset Management Group Limited
Contents
30 June 2021
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
4
14
15
16
17
18
19
44
45
49
50
1
Microequities Asset Management Group Limited
Chief Executive Officer's report
30 June 2021
Dear Fellow Shareholders,
On behalf of the entire team at Microequities Asset Management Group Limited (‘Microequities’ or the ‘Company’) I am
pleased to provide a set of financial results that represent a record for the Company. Additionally, we have made significant
progress bedding down a platform that will set the course for us to achieve our medium-term objectives. The market volatility
over the last 24 months has been extraordinary but our focussed commitment to the tenets of our investment doctrine have
throughout that extraordinary period remained unshaken and resolute. That discipline has afforded our most important
stakeholders, our clients, with a commendable set of long-term returns. In turn the investment performance has provided our
shareholders with the self-evident gains below.
Summary of operating and financial results are provided below:
Summary Profit or Loss Statement ($000’s unless stated)
30 Jun 2021
30 Jun 2020
% change
Funds Under Management (‘FUM’) ($m)
497.1
341.4
+46%
Recurring Revenue1
Ongoing Operating Expenses2
Operating profit from recurring revenue
Performance fee Income
Operating profit from investment management
Interest revenue and other income
Other income and gains/(loss) on investments
Employee share-based payment expense
Tax expense
Profit attributable to non-controlling interests
7,190.5
-3,189.6
4,000.9
12,919.9
16,920.8
559.0
2,552.9
-676.6
-5,090.1
-253.2
5,842.0
-2,567.1
3,274.8
1,469.6
4,744.4
439.7
93.1
-346.3
-1,320.7
-265.9
+23%
-24%
+22%
+779%
+257%
+27%
+2642%
-95%
-285%
+5%
Profit from ordinary activities after tax attributable to the
owners of Microequities Asset Management Group Limited
14,012.7
3,344.4
+319%
Client Numbers (units)
Ongoing operating expenses to recurring revenue
765
44.36%
734
43.94%
+4%
-42bps
(1) Represents management fees
(2) Excludes costs related to the employee share based payment expense
Financial Year 2021 (‘FY21’) in review
FY21 saw many of our highly undervalued mark to market investments become the subject of takeovers from both industrial
competitors and private equity entities. This crystalised segments of the latent value across our investment offering. The
unprecedented intensity of takeover activity drove our investment performance which delivered our clients superb
investment performance across our funds. The direct nexus of that investment performance in our operating results is
obvious even to the most casual reader. The Company has delivered record results, propelled by performance fees which
are unpredictable and non-recurring in nature. Pleasingly however, management fees from our investment funds, which are
recurring in nature, rose by +23% Year on Year (‘YoY’). That increase was a result of our Funds Under Management rising
by +46% YoY due to both investment performance and positive net inflows.
Microequities Pure Microcap Value Fund*
ASX All Ordinaries Accumulation Index
ASX Small Ordinaries Accumulation Index
* Microequities Pure Microcap Value Fund FY21 return net of all fees
FY21 Total Return
+72.35%
+30.24%
+33.23%
Outperformance
+42.11%
+39.22%
During FY21 we also increased our team, adding two new members to our investment management team. Additionally, our
distribution capability was strengthened with the hire of a senior Chief Relationship Manager to provide added distribution
reach for our investment offering. These investments in personnel are expected to deliver well into the future, as both
investment management capability and distribution reach are critical to our long-term success.
2
Microequities Asset Management Group Limited
Chief Executive Officer's report
30 June 2021
FY21 Financial performance, record NPAT, record FUM, strong investment performance
Record financial results across all important financial metrics. Our FUM closed FY21 at a Company record $497.1 million,
whilst operating profit from investment management grew by +257% to $16.9 million, also a Company record. The strong
investment performance of our Funds helped drive Performance fee income which grew to $12.9 million. The NPAT for the
Group grew by +319% to $14.0 million, a superb result for the business. Pleasingly, despite the sizeable increase in
personnel and investment to capture further growth we have maintained our operational efficiency relatively flat with
operating expenses to recurring revenue only growing slightly to 44.36%.
Dividends
The Board of Microequities Asset Management Group Limited is pleased to declare a five cent per share fully franked final
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 strengthened, $20 million in Net Assets
The strong FY21 operating result as well as strong investment performance from investments has seen the Group’s balance
sheet further strengthened during FY21 with Net Tangible Assets rising from $9.6 million in FY20 to $20.0 million as at the
close of FY21. The business remains free of financial debt and has recently deployed balance sheet capital to take
advantage of the strong return opportunities available within the Microequities Funds.
FY22 Outlook & Successful launch of new Private Equity Fund
The business has had a strong start to FY22, delivering an operating profit for the month of July of $2.79 million boosted by
continued takeover activity within our investment Funds. While our FY21 results were largely driven by non-recurring
performance-based revenue, we are pleased that we have made progress in boosting the recurring revenue base of our
business and this puts us in a good position to deliver growth from that source in FY22.
We have been humbled by the strong interest for our new Private to Beyond the IPO Fund which has resonated with both
existing clients and new clients alike. The theorised industrial synergies of running both public and private equity strategies
in unison are already coming to the fore. The investment performance of this Fund will be critical to setting forward a
trajectory where Microequities can become a meaningful constructive partner in Australian private companies that can
discern the benefits of a long-term friendly partner like us can bring to the table. In both our private and public companies,
we are committed, constructive long-term allies that build enduring partnerships with businesses. We have long term
ambitions for our private equity strategy but our right of entry to those ambitions will be based on achieving investment
success in this first Fund. The investment performance during July plus the successful launch of the Private to Beyond the
IPO Fund has seen our FUM rise to a new record $549.8 million as of 31 July 2021.
In FY22 we will continue to review and optimise our marketing efforts, improve the distribution reach of Microequities’ Funds,
and build on brand awareness and recognition within the high-net-worth client segment that we focus on. We believe we
continue to be underrepresented in several segments of the Australian wealth market and we will look to improve our
presence there.
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
20 August 2021
3
Microequities Asset Management Group Limited
Directors' report
30 June 2021
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 2021.
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
Carlos Gil
Samuel Gutman
Dr Alexander Abrahams
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
2021
$
2020
$
Final dividend for the year ended 30 June 2020 of 1 cent per ordinary share (2020: 1 cent)
1,326,713
1,330,369
Interim dividend for the year ended 30 June 2021 of 2 cents per ordinary share (2020: 1
cent)
2,641,457
1,329,740
3,968,170
2,660,109
On 20 August 2021, the directors declared a fully franked final dividend for the year ended 30 June 2021 of 5.0 cents per
ordinary share, to be paid on 8 September 2021 to eligible shareholders on the register as at 25 August 2021. This
equates to a total estimated dividend of $6,594,951, based on the number of ordinary shares on issue as at 30 June 2021.
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 $14,012,711 (30 June
2020: $3,344,099).
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
The consequences of the Coronavirus (COVID-19) pandemic are continuing to be felt around the world, and its impact on
the Group, if any, has been reflected in its published results to date. Whilst it would appear that control measures and
related government policies have started to mitigate the risks caused by COVID-19, it is not possible at this time to state
that the pandemic will not subsequently impact the Group's operations going forward. The Group now has experience in
the swift implementation of business continuation processes should future lockdowns of the population occur, and these
processes continue to evolve to minimise any operational disruption. Management continues to monitor the situation both
locally and internationally.
Apart from the dividend declared as discussed above, no other matter or circumstance has arisen since 30 June 2021 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.
4
Microequities Asset Management Group Limited
Directors' report
30 June 2021
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.
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.
No other listed entity directorships
Other current 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
18,947,357 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)
Other current directorships:
Former directorships (last 3 years): None
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
Interests in shares:
Interests in options:
Interests in rights:
Name:
Title:
Qualifications:
Experience and expertise:
5
Microequities Asset Management Group Limited
Directors' report
30 June 2021
Experience and expertise:
Name:
Title:
Qualifications:
Samuel Gutman
Executive Director and Company Secretary
Bachelor of Arts from the University of Newcastle (Australia) and 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 through a successful career in 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
23,000,000 ordinary shares
None
None
Name:
Title:
Experience and expertise:
Dr Alexander Abrahams
Independent Non-Executive Director
Dr Abrahams is the founder of the ASX listed Pacific Smiles Group (ASX: PSQ). Dr
Abrahams is also a director of several other private healthcare businesses including
Haemokinesis Ltd, an innovative immunohaematology business and Chair of Group
Homes Australia Pty Limited. He and his family co-founded the Chair of Lifespan Oral
Health at the University of Sydney. Dr Abrahams brings considerable business
development expertise and commercial business acumen to the board. Dr Abrahams
is a value investor, with long term horizons, focusing on innovative business models
with a strong owner/manager mentality. Dr Abrahams is focused on building
intergenerational wealth and security and being able to give back.
None
Other current directorships:
Former directorships (last 3 years): Non-executive director Pacific Smiles Group (ASX: PSQ) - resigned on 23 July 2020
Special responsibilities:
Chairman of the Audit and Risk Management Committee and Member of the
Nomination and Remuneration Committee
266,008 ordinary shares
None
Interests in shares:
Interests in options:
'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 2021, and the number of meetings attended by each director were:
Full Board
Nomination and
Remuneration Committee
Audit and Risk Management
Committee
Attended
Held
Attended
Held
Attended
Held
Leslie Szekely
Carlos Gil
Samuel Gutman
Dr Alexander Abrahams
11
11
11
11
11
11
11
11
2
2
-
2
2
2
-
2
2
-
2
2
2
-
2
2
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
6
Microequities Asset Management Group Limited
Directors' report
30 June 2021
Remuneration report (audited)
The remuneration report details the key management personnel ('KMP') remuneration 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:
●
●
●
●
●
●
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
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 Nomination and Remuneration Committee ('NRC') ensures that executive reward satisfies the following key
criteria for good reward governance practices:
competitiveness and reasonableness;
●
acceptability to shareholders;
●
performance linkage/alignment of executive compensation; and
●
transparency.
●
The NRC 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 NRC 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 NRC has considered that it
should seek to enhance shareholders' interests by:
●
●
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.
●
Additionally, the reward framework should seek to enhance executives' interests by:
●
●
●
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 NRC. The NRC 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.
7
Microequities Asset Management Group Limited
Directors' report
30 June 2021
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 the 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:
●
●
●
●
base pay and non-monetary benefits;
short-term performance incentives;
share-based payments; and
other remuneration such as superannuation and long service leave.
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
NRC 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 NRC reviewed the long-term equity-linked performance incentives specifically for executives during the financial year
ended 30 June 2021. Refer to the '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 2021, the Group did not engage any remuneration consultants.
Voting and comments made at the Company's 2020 Annual General Meeting ('AGM')
At the 2020 AGM, shareholders voted to approve the adoption of the remuneration report for the year ended 30 June 2020.
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 KMP of the Group are set out in the following tables. The KMP of the Group consisted of the
directors of Microequities Asset Management Group Limited.
8
Microequities Asset Management Group Limited
Directors' report
30 June 2021
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
Cash salary
and fees
$
Cash
bonus
$
Non-
Super-
monetary annuation
$
$
Long
service
leave
$
Equity-
settled
$
Total
$
41,096
36,530
539,466
166,235
783,327
-
-
-
-
-
-
-
-
-
-
3,904
3,470
-
-
-
-
45,000
40,000
21,690
15,290
44,354
30,988
2,627
33,615
396,651
-
988,795
184,152
396,651 1,257,947
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
Cash salary
and fees
$
Cash
bonus
$
Non-
Super-
monetary annuation
$
$
Long
service
leave
$
Equity-
settled
$
Total
$
40,572
24,353
7,306
446,102
122,878
84,804
726,015
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,709
2,314
694
-
-
-
-
-
-
44,281
26,667
8,000
21,002
13,065
(22,679)
3,695
239,836
-
684,261
139,638
6,921
47,705
-
(18,984)
(26,035)
213,801
65,690
968,537
2021
Non-Executive Directors:
Leslie Szekely - Chairman
Dr Alexander Abrahams
Executive Directors:
Carlos Gil
Samuel Gutman
2020
Non-Executive Directors:
Leslie Szekely - Chairman
Craig Shapiro*
Dr Alexander Abrahams**
Executive Directors:
Carlos Gil
Samuel Gutman
Other KMP:
Paul Kaplan***
Represents remuneration from 1 July 2019 to 12 March 2020
*
**
Represents remuneration from 12 March 2020 to 30 June 2020
*** Represents remuneration from 1 July 2019 to 24 October 2019
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 KMP:
Paul Kaplan
Fixed remuneration
2020
2021
At risk - STI
At risk - LTI
2021
2020
2021
2020
60%
100%
65%
100%
-
140%
-
-
-
-
-
-
40%
-
35%
-
-
(40%)
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.
9
Microequities Asset Management Group Limited
Directors' report
30 June 2021
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 KMP as part of compensation during the year ended 30 June 2021.
Options
There were no options over ordinary shares issued to directors and other KMP as part of compensation that were
outstanding as at 30 June 2021.
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:
Expiry date
Fair value
per right
at grant date
28/02/2022
$0.581
Grant date
Particulars
28/02/2018
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
NRC has reviewed the historical performance of the funds which
have at least 2 years track record. Based on the review, the NRC
has applied an 85% probability of meeting the performance
conditions.
Performance rights granted carry no dividend or voting rights.
There were no performance rights over ordinary shares granted to or vested in directors and other key management
personnel as part of compensation during the year ended 30 June 2021.
Additional information
The earnings of the Group for the four years to 30 June 2021 are summarised below:
Sales revenue*
Profit after income tax
20,251,529
14,012,711
7,590,841
3,344,099
7,855,401 10,965,756
5,214,479
2,532,958
*
Sales revenue includes revenue from contracts with customers and interest revenue.
2021
$
2020
$
2019
$
2018
$
10
Microequities Asset Management Group Limited
Directors' report
30 June 2021
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
2021
2020
2019
2018
0.70
3.00
10.76
10.53
0.30
2.00
2.56
2.52
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:
Balance at Received
as part of
the start of
the year
remuneration Additions
Disposals/
other
Balance at
the end of
the year
Ordinary shares
Leslie Szekely*
Carlos Gil
Samuel Gutman
Dr Alexander Abrahams
18,717,357
53,634,560
22,955,539
266,008
95,573,464
-
-
-
-
-
230,000
-
44,461
-
274,461
- 18,947,357
- 53,634,560
- 23,000,000
-
266,008
- 95,847,925
*
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.
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
Balance at
the start of
the year
Granted
Expired/
forfeited/
other
Balance at
the end of
the year
Vested
1,905,516
1,905,516
-
-
-
-
-
-
1,905,516
1,905,516
This concludes the remuneration report, which has been audited.
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
There were no ordinary shares of Microequities Asset Management Group Limited issued on the exercise of options during
the year ended 30 June 2021 and up to the date of this report.
Shares under performance rights
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
Expiry date
28/02/2022
11
Exercise
price
Number
under rights
$0.000
1,905,516
Microequities Asset Management Group Limited
Directors' report
30 June 2021
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 2021 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.
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 21 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 21 to the financial statements do not compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
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 (including Independence Standards) 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.
●
Officers of the Company who are former partners of BDO Audit Pty Ltd
There are no officers of the Company who are former partners of BDO Audit Pty Ltd.
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.
12
Microequities Asset Management Group Limited
Directors' report
30 June 2021
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
20 August 2021
___________________________
Carlos Gil
Chief Executive Officer
13
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
DECLARATION OF INDEPENDENCE BY TIM AMAN TO THE DIRECTORS OF MICROEQUITIES ASSET
MANAGEMENT GROUP LIMITED
As lead auditor of Microequities Asset Management Group Limited for the year ended 30 June
2021, I declare that, to the best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Microequities Asset Management Group Limited and the entities
it controlled during the period.
Tim Aman
Director
BDO Audit Pty Ltd
Sydney, 20 August 2021
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members
of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent
member firms. Liability limited by a scheme approved under Professional Standards Legislation.
14
Microequities Asset Management Group Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2021
Consolidated
Note
2021
$
2020
$
Revenue from contracts with customers
5
20,239,662
7,546,969
Other income and gain/(loss) on investments
Interest revenue calculated using the effective interest method
Expenses
Employee benefits expenses
Depreciation and amortisation expense
Legal and professional expenses
Advertising expenses
Occupancy expenses
Other expenses
Interest expense
Profit before income tax expense
Income tax expense
6
7
7
2,701,447
11,867
253,091
43,872
(2,550,173)
(254,702)
(105,000)
(103,395)
(56,735)
(520,318)
(6,559)
(1,985,843)
(264,142)
(42,788)
(63,958)
(64,035)
(483,727)
(8,829)
19,356,094
4,930,610
8
(5,090,138)
(1,320,651)
Profit after income tax expense for the year
14,265,956
3,609,959
Other comprehensive income for the year, net of tax
-
-
Total comprehensive income for the year
14,265,956
3,609,959
Profit for the year is attributable to:
Non-controlling interest
Owners of Microequities Asset Management Group Limited
Total comprehensive income for the year is attributable to:
Non-controlling interest
Owners of Microequities Asset Management Group Limited
253,245
14,012,711
265,860
3,344,099
14,265,956
3,609,959
253,245
14,012,711
265,860
3,344,099
14,265,956
3,609,959
Cents
Cents
Basic earnings per share
Diluted earnings per share
27
27
10.76
10.53
2.56
2.52
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
15
Microequities Asset Management Group Limited
Consolidated statement of financial position
As at 30 June 2021
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total current assets
Non-current assets
Financial assets at fair value through profit or loss
Right-of-use assets
Deferred tax assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liabilities
Income tax payable
Employee benefits
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Consolidated
Note
2021
$
2020
$
9
10
11
11,816,005
2,885,110
390,568
15,091,683
3,448,021
635,186
381,443
4,464,650
12
13
8
8,999,874
87,594
-
9,087,468
5,883,985
132,071
189,531
6,205,587
24,179,151 10,670,237
14
15
8
1,317,672
88,597
2,096,845
264,757
3,767,871
431,265
134,308
263,337
201,053
1,029,963
8
403,003
34,245
437,248
-
23,962
23,962
4,205,119
1,053,925
19,974,032
9,616,312
Equity
Issued capital
Reserves
Retained earnings
Equity attributable to the owners of Microequities Asset Management Group Limited
Non-controlling interest
16
17
Total equity
2,269,844
1,343,807
16,360,371
19,974,022
10
2,633,246
667,226
6,315,830
9,616,302
10
19,974,032
9,616,312
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
16
Microequities Asset Management Group Limited
Consolidated statement of changes in equity
For the year ended 30 June 2021
Consolidated
Issued
capital
$
Reserves
$
Retained
earnings
$
Non-
controlling
interest
$
Total equity
$
Balance at 1 July 2019
2,645,634
320,960
5,631,840
10
8,598,444
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:
Share-based payments (note 28)
Repayments under loan funded share plan
(note 16)
Share buy-back (note 16)
Dividends paid (note 18)
Distribution of profits to non-controlling interest
-
-
-
-
-
-
3,344,099
265,860
3,609,959
-
-
-
3,344,099
265,860
3,609,959
-
346,266
-
-
346,266
123,960
(136,348)
-
-
-
-
-
-
-
-
(2,660,109)
-
-
-
-
(265,860)
123,960
(136,348)
(2,660,109)
(265,860)
Balance at 30 June 2020
2,633,246
667,226
6,315,830
10
9,616,312
Consolidated
Issued
capital
$
Reserves
$
Retained
earnings
$
Non-
controlling
interest
$
Total equity
$
Balance at 1 July 2020
2,633,246
667,226
6,315,830
10
9,616,312
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:
Share-based payments (note 28)
Repayments under loan funded share plan
(note 16)
Share buy-back (note 16)
Dividends paid (note 18)
Distribution of profits to non-controlling interest
-
-
-
- 14,012,711
253,245 14,265,956
-
-
-
-
- 14,012,711
253,245 14,265,956
-
676,581
-
-
676,581
29,979
(393,381)
-
-
-
-
-
-
-
-
(3,968,170)
-
-
-
-
(253,245)
29,979
(393,381)
(3,968,170)
(253,245)
Balance at 30 June 2021
2,269,844
1,343,807 16,360,371
10 19,974,032
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
17
Microequities Asset Management Group Limited
Consolidated statement of cash flows
For the year ended 30 June 2021
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
Government grant received
Interest and other finance costs paid
Income taxes paid
Consolidated
Note
2021
$
2020
$
20,229,134
(3,731,737)
21,125
12,370
148,500
(6,559)
(2,664,096)
8,330,277
(3,080,124)
18,652
48,509
113,000
(8,829)
(1,363,371)
Net cash from operating activities
26
14,008,737
4,058,114
Cash flows from investing activities
Payments for investments
Net cash used in investing activities
Cash flows from financing activities
Repayments under loan funded share plan
Payments for share buy-backs
Repayment of lease liabilities
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
16
16
26
18
(800,000)
(1,850,000)
(800,000)
(1,850,000)
29,979
(393,381)
(255,936)
(3,968,170)
(253,245)
123,960
(136,348)
(261,905)
(2,660,109)
(265,860)
(4,840,753)
(3,200,262)
8,367,984
3,448,021
(992,148)
4,440,169
Cash and cash equivalents at the end of the financial year
9
11,816,005
3,448,021
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
18
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
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 20 August 2021. 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:
Conceptual Framework for Financial Reporting (Conceptual Framework)
The Group has adopted the revised Conceptual Framework from 1 July 2020. The Conceptual Framework contains new
definition and recognition criteria as well as new guidance on measurement that affects several Accounting Standards, but
it has not had a material impact on the Group's financial statements.
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 29.
19
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
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 2021 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.
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.
Management fees
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.
20
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Performance fees
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.
Government grants
Grants from the government are recognised at their fair value when there is reasonable assurance that the grant will be
received and the Group will comply with all attached conditions.
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.
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:
●
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
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.
21
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
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.
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, its 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.
22
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
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.
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and an estimate of costs
expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful
life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of
the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted
for any remeasurement of lease liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with
terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss
as incurred.
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.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease
or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Lease payments comprise of fixed
payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts
expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option
is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend
on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured
if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual
guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an
adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use
asset is fully written down.
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.
23
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
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.
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.
24
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
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.
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.
Comparatives
Comparatives in the financial statements have been realigned to the current year presentation. There was no effect on the
results of operations for the year.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2021. The adoption
of these Accounting Standards and Interpretations is not expected to have any significant impact on the Group’s financial
statements.
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.
25
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 3. Critical accounting judgements, estimates and assumptions (continued)
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may
have, on the Group based on known information. This consideration extends to the nature of the products and services
offered, customers, staffing and geographic regions in which the Group operates. Other than as addressed in specific
notes, there does not currently appear to be either any significant impact upon the financial statements or any significant
uncertainties with respect to events or conditions which may impact the Group unfavourably as at the reporting date or
subsequently as a result of the Coronavirus (COVID-19) pandemic.
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.
Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement
is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the
underlying asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods
to be included in the lease term. In determining the lease term, all facts and circumstances that create an economical
incentive to exercise an extension option, or not to exercise a termination option, are considered at the lease
commencement date. Factors considered may include the importance of the asset to the Group's operations; comparison
of terms and conditions to prevailing market rates; incurrence of significant penalties; existence of significant leasehold
improvements; and the costs and disruption to replace the asset. The Group reassesses whether it is reasonably certain to
exercise an extension option, or not exercise a termination option, if there is a significant event or significant change in
circumstances.
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 Group operates only in Australia and information of revenue from products and services is included in note 5 'Revenue
from contracts with customers'. Credit risk exposure is included in note 19 'Financial instruments'.
The information reported to the CODM is on a monthly basis.
26
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 5. Revenue from contracts with customers
Management fees
Performance fees
Other revenue
Revenue from contracts with customers
Disaggregation of revenue
All revenue is generated in Australia and revenue is recognised over time.
Note 6. Other income and gain/(loss) on investments
Government grants (Covid-19)
Dividends and distributions
Unrealised gain/(loss) on investments
Other income and gain/(loss) on investments
Consolidated
2021
$
2020
$
7,190,465
12,919,876
129,321
5,841,958
1,469,568
235,443
20,239,662
7,546,969
Consolidated
2021
$
2020
$
148,500
294,632
2,258,315
160,000
85,126
7,965
2,701,447
253,091
During the Coronavirus (‘COVID-19’) pandemic, the Group has received JobKeeper support payments amounting to
$111,000 (2020: $97,500) from the Australian Government which are passed on to eligible employees. These have been
recognised as government grants in the financial statements and recorded as other income over the periods in which the
related employee benefits are recognised as an expense. The Group is eligible for JobKeeper support from the
government on the condition that employee benefits continue to be paid.
During the year the Group received payments from the Australian Government amounting to $37,500 (2020: $62,500) as
part of its ‘Boosting Cash Flow for Employers’ scheme in response to the Coronavirus (‘COVID-19’) pandemic. These non-
tax amounts have been recognised as government grants and recognised as income once there is reasonable assurance
that the Group will comply with any conditions attached.
Note 7. Expenses
Profit before income tax includes the following specific expenses:
Depreciation
Office premises right-of-use assets
Finance costs
Interest and finance charges paid/payable on lease liabilities
Superannuation expense
Defined contribution superannuation expense
27
Consolidated
2021
$
2020
$
254,702
264,142
6,559
8,829
124,291
118,028
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 8. Income tax
Income tax expense
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustment recognised for prior periods
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
Decrease in deferred tax assets
Consolidated
2021
$
2020
$
4,501,431
592,534
(3,827)
1,300,557
27,273
(7,179)
5,090,138
1,320,651
592,534
27,273
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
Tax at the statutory tax rate of 26% (2020: 27.5%)
19,356,094
4,930,610
5,032,584
1,355,918
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Share-based payments
Tax impact of franked dividends received
Tax on government subsidy
Non-taxable income attributable to non-controlling interest
Sundry items
Adjustment recognised for prior periods
Income tax expense
Deferred tax asset/(liability)
Deferred tax asset/(liability) comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Employee benefits
Accrued expenses
Blackhole expenditure
Unrealised loss/(gain) on investments
Other changes
Deferred tax asset/(liability)
Movements:
Opening balance
Charged to profit or loss
Closing balance
175,911
(38,938)
(9,750)
(65,844)
2
95,223
(31,324)
(17,188)
(73,112)
(1,687)
5,093,965
(3,827)
1,327,830
(7,179)
5,090,138
1,320,651
Consolidated
2021
$
2020
$
77,740
9,559
(22,580)
(467,722)
-
58,880
11,274
(22,580)
137,758
4,199
(403,003)
189,531
189,531
(592,534)
216,804
(27,273)
(403,003)
189,531
28
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 8. Income tax (continued)
Provision for income tax
Provision for income tax
Note 9. Cash and cash equivalents
Current assets
Cash at bank and on hand
Note 10. Trade and other receivables
Current assets
Trade receivables
Other receivable
Trust distribution receivable
Interest receivable
Consolidated
2021
$
2020
$
2,096,845
263,337
Consolidated
2021
$
2020
$
11,816,005
3,448,021
Consolidated
2021
$
2020
$
2,627,152
4,167
252,884
907
546,492
50,333
36,951
1,410
2,885,110
635,186
Allowance for expected credit losses
The Group has recognised a loss of $nil (2020: $nil) in profit or loss in respect of the expected credit losses for the year
ended 30 June 2021.
The Group has increased its monitoring of debt recovery as there is an increased probability of customers delaying
payment or being unable to pay, due to the Coronavirus (COVID-19) pandemic. There has been no change to the
allowance for expected credit losses as at 30 June 2021 as a result of this.
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Consolidated
Not overdue
Expected credit loss rate
2021
%
2020
%
Carrying amount
2020
$
2021
$
Allowance for expected
credit losses
2021
$
2020
$
-
-
2,627,152
546,492
-
-
29
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 11. Other assets
Current assets
Prepayments
Term deposits
Other current assets
Note 12. Financial assets at fair value through profit or loss
Consolidated
2021
$
2020
$
101,148
240,329
49,091
92,023
240,329
49,091
390,568
381,443
Consolidated
2021
$
2020
$
Non-current assets
Investment in unlisted Australian unit trusts - designated at fair value through profit or loss
8,999,874
5,883,985
Refer to note 20 for further information on fair value measurement.
Note 13. Right-of-use assets
Non-current assets
Right-of-use assets
Less: Accumulated depreciation
Consolidated
2021
$
2020
$
606,438
(518,844)
396,213
(264,142)
87,594
132,071
The Group leases office premises under an operating lease expiring in December 2021. The lease has various escalation
clauses. On renewal, the terms of the lease are renegotiated.
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2019
Adoption of AASB 16 on 1 July 2019
Depreciation expense
Balance at 30 June 2020
Additions
Depreciation expense
Balance at 30 June 2021
30
Office
Premises
$
-
396,213
(264,142)
132,071
210,225
(254,702)
87,594
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 13. Right-of-use assets (continued)
For other AASB 16 lease-related disclosures refer to the following:
●
●
●
●
Refer note 7 for details of interest on lease liabilities and other lease expenses;
Refer note 15 and note 26 for details of lease liabilities at the beginning and end of the reporting period; and
Refer note 19 for the maturity analysis of lease liabilities; and
Refer consolidated statement of cash flows for repayment of lease liabilities.
Note 14. Trade and other payables
Current liabilities
Trade payables
Accruals and other payables
Refer to note 19 for further information on financial instruments.
Note 15. Lease liabilities
Current liabilities
Lease liability
Refer to note 19 for further information on financial instruments.
Refer to note 13 for details of lease maturity and other terms.
Note 16. Issued capital
Consolidated
2021
$
2020
$
280,124
1,037,548
150,841
280,424
1,317,672
431,265
Consolidated
2021
$
2020
$
88,597
134,308
Consolidated
2021
Shares
2020
Shares
2021
$
2020
$
Ordinary shares - fully paid
Less: Treasury shares
131,899,017 132,671,252
(2,057,544)
(2,057,544)
3,286,848
(1,017,004)
3,680,229
(1,046,983)
129,841,473 130,613,708
2,269,844
2,633,246
31
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 16. Issued capital (continued)
Movements in ordinary share capital
Details
Balance
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Balance
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Balance
Date
Shares
$
1 July 2019
18 December 2019
19 December 2019
25 February 2020
26 February 2020
22 June 2020
24 June 2020
30 June 2020
1 September 2020
5 October 2020
19 November 2020
24 November 2020
26 November 2020
15 December 2020
16 December 2020
17 December 2020
18 December 2020
21 December 2020
4 January 2021
12 March 2021
29 April 2021
11 May 2021
19 May 2021
25 June 2021
133,036,934
(25,000)
(38,000)
(34,737)
(47,945)
(120,000)
(100,000)
132,671,252
(31,581)
(88,988)
(10,000)
(89,762)
(98,920)
(70,023)
(12,665)
(10,000)
(36,500)
(32,482)
(117,435)
(88,268)
(11,191)
(64,244)
(361)
(9,815)
3,816,577
(11,220)
(17,679)
(17,389)
(23,994)
(36,036)
(30,030)
3,680,229
(12,021)
(40,285)
(4,920)
(44,911)
(51,490)
(36,448)
(6,592)
(5,020)
(18,253)
(16,257)
(58,776)
(44,178)
(6,158)
(41,158)
(220)
(6,694)
30 June 2021
131,899,017
3,286,848
Movements in Treasury shares
Details
Date
Shares
$
Balance
Repayment of loan and settlement of treasury shares
Repayment of loan
Balance
Repayment of loan
Balance
1 July 2019
16 January 2020
30 June 2020
(2,637,776)
580,232
-
(1,170,943)
96,439
27,521
(2,057,544)
-
(1,046,983)
29,979
30 June 2021
(2,057,544)
(1,017,004)
Ordinary shares
Ordinary shares entitle the holder to participate in any dividends declared and any proceeds attributable to shareholders
should the Company be wound up, in proportions that consider both the number of shares held and the extent to which
those shares are paid up. 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 787,200 (2020: 787,200) shares issued under a Loan Funded Share Plan and 1,270,344
(2020: 1,270,344) shares issued under an Employee Share Trust Plan.
32
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 16. Issued capital (continued)
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 28 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 28 for further details.
Share buy-back
During the financial year, the Company bought back 772,235 shares at a cost of $393,381. The buy-back program is
expected to expire on 24 September 2021.
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 Company 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 2021 to maintain the Group's existing business activities and facilitate growth.
The capital risk management policy remains unchanged from the 30 June 2020 Annual Report.
Note 17. Reserves
Share-based payments reserve
Consolidated
2021
$
2020
$
1,343,807
667,226
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.
33
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 18. Dividends
Dividends
Dividends paid/payable during the financial year were as follows:
Consolidated
2021
$
2020
$
Final dividend for the year ended 30 June 2020 of 1 cent per ordinary share (2020: 1 cent)
1,326,713
1,330,369
Interim dividend for the year ended 30 June 2021 of 2 cents per ordinary share (2020: 1
cent)
2,641,457
1,329,740
3,968,170
2,660,109
On 20 August 2021, the directors declared a fully franked final dividend for the year ended 30 June 2021 of 5.0 cents per
ordinary share, to be paid on 8 September 2021 to eligible shareholders on the register as at 25 August 2021. This
equates to a total estimated dividend of $6,594,951, based on the number of ordinary shares on issue as at 30 June 2021.
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
Consolidated
2021
$
2020
$
Franking credits available for subsequent financial years based on a tax rate of 26% (2020:
27.5%)
4,078,603
2,519,091
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
●
●
●
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
Note 19. 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.
34
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 19. Financial instruments (continued)
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 - 2021
% change
profit before
tax
Effect on
equity
% change
profit before
tax
Effect on
equity
Average price increase
Effect on
Average price decrease
Effect on
Investment in unlisted
Australian unit trusts
10%
899,987
665,990
(10%)
(899,987)
(665,990)
Consolidated - 2020
% change
profit before
tax
Effect on
equity
% change
profit before
tax
Effect on
equity
Average price increase
Effect on
Average price decrease
Effect on
Investment in unlisted
Australian unit trusts
10%
588,399
426,589
(10%)
588,399
(426,589)
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.
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 2021 owed the Group 89% (2020: 92%) of trade receivables.
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.
35
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 19. Financial instruments (continued)
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 - 2021
Non-derivatives
Non-interest bearing
Trade payables
Interest-bearing - fixed rate
Lease liability
Total non-derivatives
Consolidated - 2020
Non-derivatives
Non-interest bearing
Trade payables
Interest-bearing - fixed rate
Lease liability
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
$
-
280,124
4.00%
89,469
369,593
-
-
-
-
-
-
-
-
-
280,124
89,469
369,593
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
150,841
4.00%
138,021
288,862
-
-
-
-
-
-
-
-
-
150,841
138,021
288,862
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Note 20. 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 - 2021
Assets
Investment in unlisted Australian unit trusts
Total assets
Level 1
$
Level 2
$
Level 3
$
Total
$
-
-
8,999,874
8,999,874
-
-
8,999,874
8,999,874
36
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 20. Fair value measurement (continued)
Consolidated - 2020
Assets
Investment in unlisted Australian unit trusts
Total assets
Level 1
$
Level 2
$
Level 3
$
Total
$
-
-
5,883,985
5,883,985
-
-
5,883,985
5,883,985
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 21. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by BDO Audit Pty Ltd, the auditor of
the Company, and its network firms:
Audit services - BDO Audit Pty Ltd
Audit or review of the financial statements
Other services - network firm of BDO Audit Pty Ltd
Tax compilation and related services
Note 22. Contingent liabilities
Consolidated
2021
$
2020
$
40,400
37,300
-
4,000
The Group had no contingent liabilities as at 30 June 2021 and 30 June 2020.
Note 23. 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
37
Consolidated
2021
$
2020
$
783,327
44,354
33,615
396,651
726,015
47,705
(18,984)
213,801
1,257,947
968,537
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 24. Related party transactions
Parent entity
Microequities Asset Management Group Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 25.
Key management personnel
Disclosures relating to key management personnel are set out in note 23 and the remuneration report included in the
directors' report.
Transactions with related parties
The following transactions occurred with related parties:
Sale of goods and services:
Management fees from Funds for which the Group is a Trustee
Performance fees from Funds for which the Group is a Trustee
Consolidated
2021
$
2020
$
7,141,393
12,919,876
5,816,071
1,469,548
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.
Note 25. 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
2020
2021
%
%
100%
100%
100%
100%
50%
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.
38
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 26. Cash flow information
Reconciliation of profit after income tax to net cash from operating activities
Profit after income tax expense for the year
14,265,956
3,609,959
Consolidated
2021
$
2020
$
Adjustments for:
Depreciation and amortisation
Net fair value gain on other financial assets
Share-based payments
Dividend income- non-cash
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease in deferred tax assets
Increase in prepayments
Increase in trade and other payables
Increase/(decrease) in provision for income tax
Increase in deferred tax liabilities
Increase/(decrease) in employee benefits
254,702
(2,258,315)
676,581
(57,574)
264,142
(7,965)
346,266
(118,995)
(2,249,924)
189,531
(9,125)
886,407
2,071,084
165,427
73,987
38,769
27,273
(26,146)
21,747
(69,993)
-
(26,943)
Net cash from operating activities
14,008,737
4,058,114
Non-cash investing and financing activities
Consolidated
2021
$
2020
$
210,225
57,574
396,213
118,995
267,799
515,208
Lease
liabilities
$
-
396,213
(261,905)
134,308
210,225
(255,936)
88,597
Additions to the right-of-use assets
Additions to investment by reinvestment of dividends
Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2019
Adoption of AASB 16 on 1 July 2019
Net cash used in financing activities
Balance at 30 June 2020
Acquisition of leases
Net cash used in financing activities
Balance at 30 June 2021
39
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 27. Earnings per share
Profit after income tax
Non-controlling interest
Consolidated
2021
$
2020
$
14,265,956
(253,245)
3,609,959
(265,860)
Profit after income tax attributable to the owners of Microequities Asset Management Group
Limited
14,012,711
3,344,099
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
130,221,102 130,596,853
Options over ordinary shares
Performance rights over ordinary shares
387,441
2,514,950
193,464
1,824,042
Weighted average number of ordinary shares used in calculating diluted earnings per share 133,123,493 132,614,359
Number
Number
Basic earnings per share
Diluted earnings per share
Cents
Cents
10.76
10.53
2.56
2.52
The weighted average number of ordinary shares for year ended 30 June 2021 does not include 2,057,544 treasury shares
(2020: 2,057,544).
Note 28. Share-based payments
The share-based payment expense for the year was $676,581 (2020: $346,266).
Loan Funded Share Plan ('LFSP')
As detailed in note 16, 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:
2021
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
26/11/2015
26/11/2022
$0.267
787,200
787,200
-
-
-
-
-
-
787,200
787,200
Weighted average exercise price
$0.267
$0.000
$0.000
$0.000
$0.267
2020
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
26/11/2015
26/11/2022
$0.267
1,367,432
1,367,432
40
Exercised
-
-
(580,232)
(580,232)
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
787,200
787,200
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 28. Share-based payments (continued)
Weighted average exercise price
$0.267
$0.000
$0.267
$0.000
$0.267
The weighted average share price during the financial year was $0.526 (2020: $0.354).
The weighted average remaining contractual life of options outstanding at the end of the financial year was nil years (2020:
nil years).
Whilst 787,200 shares (2020: 787,200) 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.
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:
2021
Grant date
Expiry date
price
Exercise
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
2020
Grant date
Expiry date
price
Exercise
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
09/11/2018
28/02/2022
28/02/2022
09/11/2021
$0.000
$0.000
$0.000
1,905,516
1,270,344
1,223,550
4,399,410
-
-
-
-
-
-
-
-
-
-
(1,223,550)
(1,223,550)
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 0.67
years (2020: 1.58 years).
41
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 29. 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
Total equity
Parent
2021
$
2020
$
18,079,232
2,559,573
18,079,232
2,559,573
Parent
2021
$
2020
$
13,373,139
1,761,472
22,373,123
7,711,676
2,096,844
1,704,110
2,617,897
1,704,110
3,229,844
16,525,382
3,593,246
2,414,320
19,755,226
6,007,566
Issued capital
Issued capital disclosed above includes $960,000 (2020: $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 2021 and 30 June 2020.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2021 and 30 June 2020.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021 and 30 June 2020.
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:
●
●
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.
42
Microequities Asset Management Group Limited
Notes to the consolidated financial statements
30 June 2021
Note 30. Events after the reporting period
The consequences of the Coronavirus (COVID-19) pandemic are continuing to be felt around the world, and its impact on
the Group, if any, has been reflected in its published results to date. Whilst it would appear that control measures and
related government policies have started to mitigate the risks caused by COVID-19, it is not possible at this time to state
that the pandemic will not subsequently impact the Group's operations going forward. The Group now has experience in
the swift implementation of business continuation processes should future lockdowns of the population occur, and these
processes continue to evolve to minimise any operational disruption. Management continues to monitor the situation both
locally and internationally.
Apart from the dividend declared as disclosed in note 18, no other matter or circumstance has arisen since 30 June 2021
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 2021
In the directors' opinion:
●
●
●
●
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
2021 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
20 August 2021
___________________________
Carlos Gil
Chief Executive Officer
44
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Microequities Asset Management Group Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Microequities Asset Management Group Limited (“the
Company”) and its subsidiaries (the Group), which comprises the consolidated statement of
financial position as at 30 June 2021, the consolidated statement of profit or loss and other
comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, and notes to the financial report, including a
summary of significant accounting policies and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the
Corporations Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the directors of the Company, would be in the same terms if given to the directors
as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
45
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report of the current period. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Revenue recognition
Key audit matter
How the matter was addressed in our audit
Revenue from contracts with customers is a
Our procedures in relation to revenue from contracts
material balance for the Group. There is a
with customers included, but were not limited to the
significant increase in the balance in this
following:
financial year primarily attributable to
performance fees. Performance fees are
subject to performance hurdles as
stipulated within the product disclosure
statements of the funds under management.
The increase, together with the
consideration of COVID-19 implications,
required additional audit attention.
Furthermore, majority of the balance is
received from related party funds which the
Group manages.
There is also a presumed risk of fraud with
respect to revenue in accordance with ASA
240 The Auditor's Responsibilities Relating
to Fraud in an Audit of a Financial Report.
Consequently, this is a key audit matter for
our audit.
Valuation of unlisted unit trusts
Reviewed revenue recognition policy for all
material income streams to identify whether it
is in accordance with AASB 15 Revenue from
Contracts with Customers and consistent with
the Group’s accounting policies.
Performed analytical procedures to confirm the
completeness and accuracy of revenue.
Re-performance of management’s calculation of
the revenue recognised in relation to
performance fees and management fees and
vouched to underlying contracts and source
documentation.
Performed substantive detailed testing on all
other material streams of revenue.
Key audit matter
How the matter was addressed in our audit
The Group holds material investments in a
Our audit procedures over the valuation of unlisted unit
number of unlisted unit trusts which a
trusts and their disclosures included, but were not
majority of these unit trusts are also related
limited to, the following:
parties to the Group.
Obtained management’s valuation basis of
We consider the valuation of these financial
valuation of the investments held at period end
assets as a key audit matter as the valuation
and assessed against recognition principles in
is subject to management’s judgement and
the accounting standard AASB 9.
estimation due to use of non-market
observable inputs.
Obtained and agreed the investment schedule
to the general ledger and financial report.
46
Key audit matter
How the matter was addressed in our audit
In addition, fair valuation hierarchy
Obtained the financial statements of the
disclosure in the financial statements can
underlying funds, and assessed whether the Net
be subjective.
Tangible Assets (NTA) of the funds approximate
fair value.
Recalculated the unit prices based on
confirmation of unit prices received from fund
managers.
Confirmed directly with the respective fund
managers if the funds were frozen for
redemption as at 30 June 2021.
Assessed the fair value hierarchy disclosures
and performed a look-through analysis to
confirm that the fair value hierarchy
assessment of Level 2 for these assets are
appropriate.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2021, but does not include
the financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report in this
regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary to
enable the preparation of the financial report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the
group to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate
the Group or to cease operations, or has no realistic alternative but to do so.
47
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole
is free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with the Australian Auditing Standards will
always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 7 to 11 of the directors’ report for
the year ended 30 June 2021.
In our opinion, the Remuneration Report of Microequities Asset Management Group Limited, for
the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
BDO Audit Pty Ltd
Tim Aman
Director
Sydney, 20 August 2021
48
Microequities Asset Management Group Limited
Corporate directory
30 June 2021
Directors
Leslie Szekely - Non-Executive Chairman
Carlos Gil - Executive Director, Chief Executive Officer and Chief Investment Officer
Samuel Gutman - Executive Director and Company Secretary
Dr Alexander Abrahams - Non-Executive Director
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 Audit Pty Ltd
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 (Fourth 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/
49
Microequities Asset Management Group Limited
Shareholder information
30 June 2021
The shareholder information set out below was applicable as at 2 August 2021.
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 Employee Share Trust
Andansa Pty Limited
Mr Shuo Yang
IME Holdings Pty Ltd
Mr Alan Geoffrey Blackburn
Ozsun Investments Pty Ltd
I M E Investments Pty Ltd
GA Pease Holdings Pty Ltd
Portland 41 Pty Limited
BNP Paribas Nominees Pty Ltd
Mann Superannuation Fund Pty Ltd
Elysium Family Super Pty Limited
JMAS Pty Ltd
BCDO Pty Limited
C & M Lavers Pty Ltd
50
Ordinary shares
Number
of holders
of ordinary
shares
% of total
shares
issued
23
103
60
225
93
504
16
0.01
0.25
0.36
6.60
92.78
100.00
-
Ordinary shares
% of total
shares
issued
Number held
53,634,560
23,000,000
12,991,949
5,955,408
2,662,376
1,270,344
1,250,000
787,200
770,000
690,335
645,000
630,000
625,000
604,272
568,510
532,672
532,672
532,016
502,252
479,017
40.66
17.44
9.85
4.52
2.02
0.96
0.95
0.60
0.58
0.52
0.49
0.48
0.47
0.46
0.43
0.40
0.40
0.40
0.38
0.36
108,663,583
82.37
Microequities Asset Management Group Limited
Shareholder information
30 June 2021
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 and Bellite Pty Ltd
Voting rights
The voting rights attached to ordinary shares are set out below:
Number
on issue
Number
of holders
787,200
1,905,516
1,270,344
1
1
2
Ordinary shares
% of total
shares
issued
Number held
53,634,560
23,000,000
18,947,357
40.66
17.44
14.37
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
Number
of shares
Share issued under Loan Funded Share Plan
restricted until the related loan has been repaid
787,200
51