Page | 1
Corporate Directory
Directors
Ren Hor Wong Executive Chairman, CEO
Jia Penny He Executive Director, CFO
Tarun Kanji Non-Executive Director
Corporate Office
Suite 502, 77 King Street
Sydney NSW 2000
Company Secretary
Solicitors
Anand Sundaraj
Whittens McKeough & Sundaraj Pty Ltd
Level 29, 201 Elizabeth Street
Sydney NSW 2000
Auditors
Share Registry
Crowe Horwath Sydney
Level 15, 1 O’Connell Street
Sydney NSW 2000
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
Notice of Annual General Meeting
Corporate Governance Statement
Annual General Meeting of N1 Holdings Limited
will be held at:
Whittens McKeough & Sundaraj Pty Ltd
Level 29, 201 Elizabeth Street
Sydney NSW 2000
Time: 10:00 am
Date: 17 November 2017
Stock Listing
N1 Holdings Limited is listed on Australian
Securities Exchange (ASX) under the code
N1H.
N1 Holdings Limited and the board are committed
the highest
to achieving and demonstrating
standards of corporate governance. N1 Holdings
Limited has reviewed its corporate governance
practices against
the Corporate Governance
Principles and Recommendations (3rd edition)
the ASX Corporate Governance
published by
Council. The 2017 corporate governance statement
reflects the corporate governance practices during
the financial year ended 30 June 2017. The 2017
corporate governance statement was approved by
the board on 20 September 2017. A description of
the Group's current corporate governance practices
is set out in the Group's corporate governance
statement
at:
be
can
which
http://www.n1holdings.com.au/.
viewed
Page | 2
Page | 3
Page | 4
Page | 5
Annual Report for the year ended 30 June 2017
Report from Directors and Management
Directors’ Report
Auditor’s Independence Declaration
Consolidated Financial Statements for The Year Ended 30 June 2017
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
Section 4:
Business portfolio
4.1 Businesses combination
4.2 Related party transactions
Section 5:
Other disclosures
5.1 Basis of preparation and compliance
5.2 Auditors’ remuneration
5.3 Lease commitments
5.4 Contingencies liabilities and Contingent
assets
5.5 Taxation
5.6 Events after the reporting period
Notes to the Financial Statements
Section 1:
Key performance metrics
1.1 Earnings per share
1.2 Segment information
1.3 Revenue and other income
Section 2:
Operating assets and liabilities
2.1 Cash and cash equivalents
2.2 Trade and other receivables
2.3 Plant and equipment
2.4 Intangible assets
2.5 Trade and other payables
2.6 Provisions
Section 3:
Group’s capital and risks
3.1 Contributed equity
3.2 Share based payments
3.3 Net debt
3.4 Financial risk management
3.5 Fair value measurement
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
24
24
25
28
28
29
30
31
31
33
33
35
37
39
7
19
20
21
22
23
40
41
43
45
45
46
46
48
49
50
54
Page | 6
N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2017
Directors’ Report
The directors of the Company (Directors) present their report on the consolidated entity consisting of the
Company and its controlled entities (the Group) for the financial year ended 30 June 2017. The information in the
Chairman’s Letter forms part of this Directors’ Report and is to be read in conjunction with the following
information:
Directors
The following persons were directors of N1 Holdings Limited during or since the end of the financial year up to the
date of this report:
• Mr Ren Hor Wong (Executive Chairman, CEO, appointed 24 November 2015);
• Ms Jia Penny He (Executive Director, CFO, appointed 24 November 2015); and
• Mr Tarun Kanji (Non-executive Director, appointed 18 March 2016).
Company Secretary
Mr Anand Sundaraj (Company Secretary, appointed 24 November 2015)
Information relating to Directors and Company Secretary
Mr Ren Hor Wong (Executive Chairman, CEO)
Qualifications, experience and
special responsibilities
Mr Wong is the founder, Executive Chairman and Chief Executive
Officer of the Company.
Mr Wong has been responsible for developing the Company’s business
strategy and expanding its business into Asia Pacific.
Prior to establishing the Company, Mr Wong had, over a span of 6
years, applied his entrepreneurial and management skills in industries
ranging from courier services, printing services and real estate. He has
previously founded and successfully exited various businesses including
Copiko Printing, Sydneymove.com.au and Packers Unpackers.
Mr Wong is a licensed mortgage broker and fluent in both spoken and
written Mandarin and Cantonese.
Mr Wong conducts regular seminars and provides topical discussions
across Asia in relation to Australian property investments and financing.
Mr Wong has also published multiple guides and learner books for
release in China.
Mr Wong holds a Bachelor of Engineering with Honours from University
of New South Wales.
Interest in shares and options in
the Company (Shares and
Options, respectively)
Directorships held in other listed
entities during the three years
prior to the current year
50,024,000 Shares
None
Page | 7
N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2017
Ms Jia Penny He (Executive Director, CFO)
Qualifications, experience and
special responsibilities
Ms He is a Certified Practising Accountant and a licenced financial
adviser. She has over 10 years combined industry experience in
accounting, financial planning and mortgage broking.
Ms He joined the Group in May 2014 as the Accounting and Tax Adviser
and Principal Financial Planner. Ms He was subsequently appointed as
the Company’s Chief Financial Officer. Her current role within the
Company includes all financial management, tax and reporting functions
of the business.
Prior to joining the Company, Ms He served as an executive for Cabot
Square Chartered Accountants from July 2006 to May 2014.
Ms He holds a Master of Accounting degree from Macquarie University
and is also an ATO registered tax agent holding a Public Practice
Certificate.
Interest in Shares and Options
250,000 Shares and 750,000 Options
Directorships held in other listed
entities during the three years
prior to the current year
None
Mr Tarun Kanji (Non-Executive Director)
Qualifications, experience and
special responsibilities
Mr Kanji has nearly 25 years corporate and consulting experience
spanning the US, Europe, Asia, Australia and New Zealand. After
completing a Commerce Degree at Auckland University he spent over
10 years with
firms spanning corporate
advisory, valuation, finance, litigation support, recovery and audit
disciplines in New Zealand and Europe. Thereafter Mr Kanji held a
number of senior executive roles over 10 years with Fosters Group.
international accounting
The roles covered a range of disciplines including finance (as a CFO),
commercial management, business development, mergers &
acquisitions, governance, and strategic development roles.
Mr Kanji currently is involved in a number of internationally focused
ventures which includes the commercial globalisation of an evolutionary
search technology software company, focused on the US and Asian
markets. He has held and holds a range of governance roles including:
• Former Independent Chairman of Tomizone Limited (ASX: TOM)
• Former Chairman - Bank of India, (New Zealand) Limited (a
subsidiary of the Bank of India)
• Member - Portfolio Governance Authority (a committee of New
Zealand’s department of Inland Revenue)
• Former Chairman - Noske-Kaeser Rail & Vehicles New Zealand
Limited
•
Independent Director - Biolytix Limited & PowerShield Limited
Mr Kanji is a Fellow of The NZ Institute of Chartered Accountants
Australia and New Zealand as well as a member of the New Zealand
Institute of Directors, Certified Practicing Accountant of Australia, New
Zealand Institute of Directors, Australian Institute.
Interest in Shares and Options
1,000,000 Options
Page | 8
N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2017
Mr Anand Sundaraj (Company Secretary)
Qualifications, experience and
special responsibilities
Mr Sundaraj is a principal of Whittens McKeough & Sundaraj, a
commercial law firm based in Sydney. Prior to joining Whittens, Mr
Sundaraj worked at international law firms Allen & Overy, King & Wood
Mallesons and Herbert Smith Freehills, as well as for global investment
bank Credit Suisse.
Mr Sundaraj specialises in providing legal advice on mergers &
acquisitions and capital raisings for both publicly listed and privately held
entities. He also advises on funds management and general securities
law matters including ASX Listing Rules compliance.
In addition to acting as company secretary to N1 Holdings, Mr Sundaraj
is currently the company secretary of Catapult Group International (ASX:
CAT), Freedom Insurance (ASX: FIG), DroneShield (ASX: DRO), UUV
Aquabotix (ASX: UUV), Tinybeans Group (ASX: TNY), Reddam House
(operator of independent, co-educational, non-denominational schools)
and Lille Fro Foundation (an Australian-based charity which operates in
India).
Mr Sundaraj holds a Bachelor of Laws (with Honours) and a Bachelor of
Science from Monash University and is admitted as a solicitor of the
Supreme Courts of New South Wales and Victoria.
Interest in Shares and Options
10,000 Shares
Directorships held in other listed
entities during the three years
prior to the current year
None
Dividends paid or recommended
Dividends paid or declared for payment during the financial year are $nil (2016: $nil).
Changes in state of affairs
New business and acquisitions
The company launched N1 Realty business in July 2016 and acquired Sydney Boutique Property Pty Ltd ACN
105 656 442, a Sydney based real estate agency business, on 21 October 2016 for consideration of $1,940,000.
The Company borrowed $1,000,000 to fund this acquisition. The Company subsequently acquired 3 additional
property management rent rolls for a total consideration of $191,645 excluding GST.
On 17 August 2016, N1 Loans Pty Ltd acquired loan trail book from Aura Private Wealth Pty Ltd ACN 158 184
000 for a total consideration of $336,661.50 excluding GST.
New capital raise and borrowings
On 12 May 2017, the Company issued 1.85 million unlisted unsecured convertible notes with total value of
$370,000. Each convertible note had a face value of $0.20 with 7% pa interest and 2-year term. The convertible
notes can be converted at any time prior to the date of maturity at the request of the noteholder, or they will
automatically be redeemed on the maturity. If the noteholders convert the maximum number of convertible notes,
then 1,850,000 new shares would be issued. This is based on a conversion price of $0.20 and does not account
for any accrued interest.
In May 2017, the Company borrowed $180,000 at 10% pa interest for a 2-year term. In June 2017, the Company
borrowed $200,000 at 7% pa interest for a 2-year term. Both amounts are borrowed from non-related parties.
The purpose of issuing convertible notes and loans was to fund acquisitions and to provide general working
capital.
Employee share incentive plan
On 1 March 2017, the Company issued total 4,791,000 options at an exercise price of $0.20 to employees with
total value of $958,200 in accordance to its Employee share incentive plan. The options are issued on the same
terms, with the same vesting dates, at the “Consideration Options” described in the Company’s IPO prospectus.
Page | 9
N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2017
Principal activities
During the FY2017, the continuing principal activities of the consolidated group consisted of:
•
•
•
•
mortgage broking services;
financial planning services;
migration services; and
real estate property sale and management services.
Review of operations
Review of operating results
During FY17, the Group generated revenue of $4.30m (FY16: $3.39m) delivering a net loss of $1.20m (FY16:
loss $1.30m).
Increased group revenue is mainly from the newly established N1 Realty business as well as increased loan trail
commission.
During FY17, N1 Loans (the Group’s mortgage broking business) continued to be the major revenue generator,
accounting for 78.22% of the total revenue of the group. N1 Realty started its first-year operation in FY17 and
Sydney Boutique Property was acquired during the year. N1 Realty generated $740,799 in revenue during FY17
representing 17.21% of the Group’s total revenue. N1 Migration generated $174,407 in revenue representing
4.05% of the group’s total revenue. Diversification Revenue (“DR”), being revenue that is not related to residential
mortgage broking, is growing in line with the Company’s strategic plan. Total DR during FY17 was $1,107,155
(FY16: $121,056) representing an increase of 815%.
FY17 has seen the positive results of the N1 Loans PAYG consultant model initiated during FY16 with improved
client retention rates and profitability for the business. As at 30 June 2017, 87% of trail commissions were
retained by N1 Loans compared to 84% for the same period last year.
Company’s loan trail book valuation as at 30 June 2017 was $2.20m (FY2016: $1.53m). The Company
anticipates increased estimated future trail commissions as a result of the growth of its loan book of $238m from
$561m to $799m, which represents an increase of 42.42% during FY17. Among the $238m increase, $62.6
million was from loan book acquisition from Aura Private Wealth Pty Ltd ACN 158 184 000 and the balance of
175.4 million is from the Company’s organic growth.
Key features of underlying operating result are summarised below:
•
•
•
•
Increase in revenue by 27.04% to $4,303,727 (FY16: $3,387,683)
Reduction in direct cost to commission-based brokers and referrers, FY17 $1,090,146 (FY16:
$1,463,949)
Increase in operational expenses which are predominantly expansion expenditures
o
o
Employee cost in FY17 is $3,031,056 (FY16: $1,834,280)
Professional fee in FY17 is $388,319 (FY16: $184,782)
o Rent and Office expenses in FY17 is $672,812 (FY16: $394,871)
o Depreciation and amortisation expenses has increased to $371,106 (FY16: $80,887)
Reduction in finance cost to $68,343 (FY16: $282,873)
During the financial year ended 30 June 2017, the Company used cash and its assets in a form readily
convertible to cash that it received under its initial public offering in a way consistent with its business objectives.
Review of financial position
The net assets of the Group have decreased from $5,216,244 as at 30 June 2016 to $4,097,423 as at 30 June
2017. Current financial liabilities increased slightly by $4,858 from $993,352 to $998,210 during FY17. The
Group’s working capital, being current assets less current liabilities, has reduced from $4,018,691 in 2016 to
$1,242,468 in 2017, which is mainly due to the various acquisitions undertaken during FY17 and growth of the
Company’s infrastructure base in anticipation of business expansion. The Directors believe the Group is in a
stable financial position to expand and grow its operations.
Prospects for future financial years
The Group will continue its successful diversification strategy initiated during FY17. Being an integrated financial
and property services firm, N1 will ensure its consistent approach of growth via acquisitions and to continue
acquiring positive cash flow asset such as rent roll and loan trail book to achieve significant economies of scale.
Page | 10
N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2017
The Company has gained sufficient capacity both in terms of team capacity and infrastructure capacity to
continue growing rent roll cash flow with minimal cost increment to strong marginal product.
In addition, the Company will keep diversifying into commercial lending, car and equipment finance and financial
planning via N1 Loans in the coming financial year, and currently have extensive pipeline in commercial lending
revenue. The Company intends to leverage its vast network of business connections and deepen its engagement
with the B2B market via various business services.
with a quarter of revenue being deriving from businesses other than traditional residential mortgage broking, the
Company expects to continue this momentum via commercial lending, property sales and management as well as
expansion of its migration business. The Company possesses the unique strength of creating synergies between
its complimentary business units - N1 Loans, N1 Realty, N1 Migration and N1 Venture.
Events after the reporting period
On 21 July 2017, TACQ International Pty Ltd, a fully owned subsidiary of N1 Holdings Limited was established
focusing on recruitment business.
On 15 August 2017, Company entered into an unsecured loan agreement with an individual lender for $200,000
at 10% interest only repayment for 2 years. Loan was settled on 1 September 2017. Purpose of the loan is to fund
potential acquisitions.
On 7 September 2017, Company received application from an individual investor to acquire $1,000,000 worth of
Convertible Notes with face value of $0.20 each and 7% pa interest and 2 years term. The Company expects to
issue the Convertible Notes after releasing its Annual Report. The resultant Convertible Notes will be convertible
at any time prior to the date of maturity at the request of the Noteholder, or they will automatically be redeemed
on the Maturity. If the Noteholders convert the maximum number of Convertible Notes, then 5,000,000 new
Shares would be issued. This is based on a price of $0.20 and does not account for any accrued interest.
Expected issue date of the Convertible Notes is 27 September 2017.
Other than events mentioned above, there has been no matters or events since the end of the financial year
which may significantly affect the operation of the Group, the results of those operations or the state of affairs of
the Group in the future financial years.
Environmental issues
The Group’s operations are not subject to significant environmental regulation under the law of the
Commonwealth and State.
Indemnifying officers or auditor
During or since the end of the financial year, the group has paid premiums to insure each of the directors (as
named above) against liabilities for costs and expenses incurred by the defending legal proceedings arising from
their conduct while acting in the capacity of directors of the group, other than conduct involving a wilful breach of
duty in relation to the group. The premiums for the directors amounted to $17,651.90. The group has not
indemnified the auditors.
Proceedings on behalf of company
No person has applied for leave of Court to bring proceedings on behalf of the company or 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 any part of those proceedings.
The company was not a party to any such proceedings during the year.
Non-audit services
The Board of Directors, in accordance with advice from the audit committee, is satisfied that the provision of non-
audit services during the year is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the
external auditors’ independence for the following reasons:
•
•
all non-audit services are reviewed and approved prior to commencement to ensure they do not
adversely affect the integrity and objectivity of the auditor and
the nature of the services provided does not compromise the general principles relating to auditor
independence in accordance with APES110: Code of Ethics for Professional Accountants set by the
Accounting Professional and Ethical Standards Board.
Page | 11
N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2017
The following fees were paid or payable to Crowe Horwath for non-audit services provided during the Year ended
30 June 2017:
Taxation services
$
8,000
8,000
Auditor’s independence declaration
The lead auditors’ independence declaration for the year ended 30 June 2017 has been received and can be
found following the Directors’ Report.
Options
As at 30 June 2017, the number of unissued ordinary shares in the Company under option are 10,738,750. For
details of Options issued to Directors and executives as remuneration, please refer to the Remuneration Report.
Meetings of directors
During the financial year, thirteen meetings of Directors were held. Attendance by each director during the year
was as follows:
Directors' meetings
Directors
Number eligible to attend
Number attended
Ren Hor Wong
Jia Penny He
Tarun Kanji
13
13
13
13
13
13
Remuneration policy
Remuneration report
Remuneration policy
The remuneration policy of the Company has been designed to align key management personnel (KMP)
objectives with shareholder and business objectives by providing a fixed remuneration component and offering
specific long-term incentives based on key performance in areas affecting the Group’s financial results. The
Board believes the remuneration policy to be appropriate and effective in its ability to attract and retain the high-
quality KMP to run and manage the Group, as well as create goal congruence between Directors, executives and
Shareholders.
The Board’s policy for determining the nature and amount of remuneration for KMP of the Group is as follows:
•
•
•
•
•
The remuneration policy is to be developed by the Board and the Board may seek advice on the policy
from independent external consultants at its discretion.
All KMP receive a base salary (which is based on factors such as length of service and experience),
superannuation, fringe benefits options and performance incentives.
Performance incentives are generally only paid once and conditional on key performance indicators
(KPIs) having been met.
Incentives paid in the form of Options or rights are intended to align the interests of the Directors and the
Company with those of the Shareholders. In this regard, KMP are prohibited from limiting the risk
attached to those instruments by use of derivatives or other means.
The Board reviews KMP packages annually by reference to the Group’s performance, executive
performance and comparable information from industry sectors.
The performance of KMP is measured against criteria agreed annually with each executive and is based
predominantly on the forecast growth of the Group’s profits and Shareholders’ value. All bonuses and incentives
must be linked to predetermined performance criteria. The Board may, however, exercise its discretion in relation
to approving incentives, bonuses and options, and can recommend changes. Any change must be justified by
reference to measurable performance criteria. The policy is designed to attract the highest calibre of executives
and reward them for performance results leading to long-term growth in Shareholder wealth.
Page | 12
N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2017
KMP receives, at a minimum, the superannuation guarantee contribution required by law, which is currently 9.5%
of the individual's ordinary earnings. Superannuation guarantee contribution is capped at maximum concessional
contribution limit of each financial year. Some individuals, however, may choose to sacrifice part of their salary to
increase payments towards superannuation.
The Board's policy is to remunerate non-executive Directors at market rates for time, commitment and
responsibilities. The Board determines payments to the non-executive Directors and reviews their remuneration
annually, based on market practice, duties and accountability. Independent external advice is sought when
required. Fees that can be paid to a non-executive Director is contained in that Directors’ consultancy service
agreement.
Remuneration structure
There have been no significant changes after the Company’s listing on ASX. The table below summarises the
remuneration components of KPM of the Group.
Remuneration
component
Fixed
remuneration
Reward Type
Purpose
Link to performance
Salaries,
superannuation
and other fixed
benefits
To provide competitive fixed
remuneration set with
reference to role, market
and experience
Company and individual
performance are
considered during the
annual review
Short-term
incentive
Bonus paid in
cash
Long-term
incentive
Share options
Rewards executives for their
contribution to achievement
of Group outcome
Rewards executives for their
contribution to the creation
of shareholder value over
the longer term
Revenue of the Group
Vesting of the awards is
dependent on absolute
total Shareholder return
in addition to continuous
service vesting
conditions.
Performance-based Remuneration
The KPIs are set annually, with a certain level of consultation with KMP. The measures are specifically tailored to
the area each individual involved is in and has a level of control over. The KPIs target areas that the Board
believes hold greater potential for Group expansion and profit covering financial and non-financial as well as short
and long-term goals. The level set for each KPI is based on budgeted figures for the Group and respective
industry standards.
Performance in relation to the KPIs is assessed annually, with bonuses being awarded depending on the number
and deemed difficulty of the KPIs achieved. Following the assessment, the KPIs are reviewed by the
remuneration committee in light of the desired and actual outcomes, and their efficiency is assessed in relation to
achieving the Group’s goals and shareholder value, before the KPIs are set for the following year.
In determining whether or not a KPI has been achieved, the Company bases the assessment on audited figures,
however, where the KPI involves comparison of the Group or a division within the Group to the market,
independent reports are obtained from other research organisations.
Relationship between remuneration policy and Company performance
The remuneration policy has been tailored to increase goal congruence between Shareholders, Directors and
executives. Two methods have been applied to achieve this aim, the first being a performance-based bonus (i.e.
based on KPI), and the second being the issue of options to the majority of Directors and executives to encourage
the alignment of personal and Shareholder interests. The Company believes this policy has been effective in
increasing shareholder value over the past years.
Performance conditions linked to remuneration
The Group seeks to emphasise reward incentives for results and continued commitment to the Group through the
provision of various cash bonus reward schemes, specifically the incorporation of incentive payments based on
the achievement of revenue targets, return on equity ratios, and continued employment with the Group.
Page | 13
N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2017
The performance-related proportions of remuneration (based on KPI targets) are included in the following table.
The objective of the reward schemes is to both reinforce the short and long-term goals of the Group and provide a
common interest between Management and Shareholders. There has been no alteration to the terms of the
bonuses paid since the grant date.
The satisfaction of the performance conditions is based on a review of the audited financial statements of the
Group and publicly available market indices and as such these figures reduce any risk of contention relating to
payment eligibility. The Board does not believe that performance conditions should include a comparison with any
other measures or factors external to the Group at this time.
The performance-based bonus schedule is detailed below, which has only available to executive Directors since 1
July 2016. No bonuses were paid to executive Directors during FY2017.
Minimum revenue achieved by the
Company for a financial year
Bonus
Bonus
Ren Hor Wong
Jia Penny He
$5 million
$5.5 million
$6 million +
$10,000
$16,000
$20,000
$5,000
$8,000
$10,000
The below table illustrates the proportion of remuneration that was performance and non-performance based.
Maximum achievable bonus is used in the calculation.
Fixed Remuneration
Remuneration linked to Performance
2017
2016
2017
2016
Directors
Ren Hor Wong
94.74%
93.75%
Jia Penny He
94.74%
Tarun Kanji
100%
92.3%
100%
5.26%
5.26%
0%
6.25%
7.7%
0%
Employment Details of members of KMP
The following tables provide employment details of persons who were, during FY2017, members of KMP of the
Group.
Positions of KMPs and their employment details
Position Held
Ren Hor Wong
Chairman, CEO
Jia Penny He
Executive Director,
CFO
Tarun Kanji
Independent Director
Jacqueline Wang
COO
Contract
Duration
18/03/2016 -
Ongoing
18/03/2016 -
Ongoing
18/03/2016 -
Ongoing
08/08/2016 -
Ongoing
Employment
Type
Termination
Notice Period
Permanent
3 months
Permanent
3 months
Consultancy
agreement
3 months
Permanent
3 weeks
Page | 14
N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2017
Key terms of KMP contract
Chief Executive Officer
•
•
•
•
•
•
The CEO receives fixed remuneration of $360,000 per annum plus superannuation contributions under
the Superannuation Guarantee (Administration) Act 1992 (Cth) and the Superannuation Guarantee
Charge Act 1992 (Cth).
In addition to the fixed remuneration, the CEO will be entitled to a bonus on the following terms:
Minimum revenue achieved by the
Company for a financial year
$5 million
$5.5 million
$6 million +
Bonus
Ren Hor Wong
$10,000
$16,000
$20,000
The Company provide a car benefit to the CEO till 30 April 2017. Company paid total car allowance of
$1,904 to the CEO from 1 May 2017 to 30 June 2017. The car allowance is changed to $1,000 pm from
1 July 2017.
Fixed and incentive remuneration is reviewed and determined annually.
Termination notice period is 3 months or without notice in the event of breach of services agreement
between Mr Wong and the Company or serious misconduct.
Restraint period being up to 24 months.
Chief Financial Officer
•
•
•
•
•
The CFO receives fixed remuneration of $180,000 per annum plus superannuation contributions under
the Superannuation Guarantee (Administration) Act 1992 (Cth) and the Superannuation Guarantee
Charge Act 1992 (Cth).
In addition to the fixed remuneration, the CFO will be entitled to a bonus on the following terms:
Minimum revenue achieved by the
Company for a financial year
$5 million
$5.5 million
$6 million +
Bonus
Jia Penny He
$5,000
$8,000
$10,000
Fixed and incentive remuneration will be reviewed and determined annually.
Termination notice period is 3 months or without notice in the event of breach of services agreement
between Ms He and the Company or serious misconduct.
Restraint period being up to 24 months.
Non-Executive Director
•
•
•
•
•
The remuneration (Service Fee) of the Non-Executive Director is $59,000 per annum.
1,000,000 options exercisable at $0.20 issued on 18 March 2016 expiring 2 years after the date of issue.
The Service Fee will be reviewed and determined annually.
Termination notice period is 3 months or 1 month in the event of breach of services agreement between
the relevant Non-Executive Director and the Company or serious misconduct.
Restraint period being up to 24 months.
Chief Operation Officer
•
•
•
•
The COO receives fixed remuneration of $180,000 per annum plus superannuation contributions under
the Superannuation Guarantee (Administration) Act 1992 (Cth) and the Superannuation Guarantee
Charge Act 1992 (Cth).
COO is entitled to car allowance. Total car allowance paid to the COO in FY2017 is $3,729.
Fixed and incentive remuneration will be reviewed and determined annually.
Termination notice period is 3 weeks or without notice in the event of breach of services agreement
between Ms Wang and the Company or serious misconduct.
Page | 15
N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2017
Remuneration of KMP
2017
Short term employee benefits Post-employment
benefits
Salaries
Bonus
Other
(note 1)
Superannuation
Long term
employee
benefits
Long service
leave
Share
based
payments
Options
Total
Directors
Ren Hor
Wong
Jia Penny
He
$338,604
$155,904
Tarun Kanji
$44,795
Other KMP
Jacqueline
Wang
$152,763
-
-
-
-
$13,877
$30,000
$3,914
$0
$386,395
-
-
-
$14,251
$1,929
$13,588
$185,672
-
-
$0
$44,795
$14,250
$2,232
$17,581
$186,826
2016
Short term employee benefits Post-employment
benefits
Salaries
Bonus
Other
Superannuation
Long term
employee
benefits
Long service
leave
Share
based
payments
Options
Total
Directors
Ren Hor
Wong
Jia Penny
He
$145,451
$105,453
Tarun Kanji
$27,526
-
-
-
$3,783
$13,713
$889
-
$163,836
-
-
$10,044
$491
$7,445
$123,433
-
-
$38,500
$66,026
Note 1: The Company provides car benefits to the CEO.
Options and rights granted as remuneration
The terms and conditions relating to Options granted as remuneration during the year to KMP are as follows:
750,000
450,000
1,200,000
-
1,200,000
2017
Number of
Options
beginning
of the year
Granted
No.
Exercised
during the
year
Lapsed
during the
year
Ren Hor Wong
-
Jia Penny He
750,000
Tarun Kanji
1,000,000
-
-
-
-
-
-
-
-
-
-
-
Jacqueline
Wang
2016
Number of
Options
beginning
of the year
Granted
No.
Exercised
during the
year
Lapsed
during the
year
1,000,000
1,000,000
Number of
options at the
end of the
year
-
750,000
Number of
options at the
end of the
year
-
750,000
Vested
Unvested
-
-
-
-
-
750,000
-
-
750,000
-
Vested
Unvested
Ren Hor Wong
Jia Penny He
Tarun Kanji
-
-
-
-
750,000
1,000,000
-
-
-
-
-
-
1,000,000
1,000,000
The fair value of Options granted as remuneration and as shown in the above table has been determined in
accordance with Australian accounting standards and will be recognised as an expense over the relevant vesting
period to the extent that conditions for vesting are satisfied.
Page | 16
N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2017
Description of Options/rights issued as remuneration
Details of the Options granted as remuneration to those KMP and executives listed in the previous table are as
follows:
Tranche Grant date
Number of
options
granted
Grant Value
Exercising
Price
Vesting date
Reason for
grant
Jia Penny
He
Jacqueline
Wang
Tarun
Kanji
Jacqueline
Wang
1
1
2
3
14/12/2015
750,000
$150,000
$0.2
14/12/2018
14/12/2015
750,000
$150,000
$0.2
14/12/2018
Employee share
option
Employee share
option
18/03/2016
1,000,000
$200,000
$0.2
18/03/2016
Director option
01/03/2017
450,000
$90,000
$0.2
14/12/2018
Employee share
option
Tranche
Fair value per option at
Granting date
Vesting conditions
Jia Penny He
Jacqueline
Wang
Tarun Kanji
Jacqueline
Wang
1
1
2
3
$0.0544
$0.0544
$0.0385
$0.0475
Continuous employment with the Group from
14/12/2015 to 14/12/2018
Continuous employment with the Group from
14/12/2015 to 14/12/2018
Vested
Continuous employment with the Group from
01/03/2017 to 14/12/2018
Option values at grant date were determined by applying the Binomial Approximation valuation methodology.
KMP shareholdings
The number of ordinary shares in the Company held by each KMP of the Group during the financial year is as
follows:
2017
Ren Hor Wong
(Note 1)
Jia Penny He
(Note 2)
Number of
Shares
beginning of
the year
50,000,000
250,000
Tarun Kanji
-
Jacqueline
Wang
125,000
2016
Ren Hor Wong
(Note 1)
Jia Penny He
(Note 2)
Tarun Kanji
Number of
Shares
beginning
of the year
100
-
-
Received
as
remunerat
ion during
year
-
-
-
-
Received on
exercising
Options
Disposed
Number of
Shares at the
end of the year
-
-
-
-
-
-
-
-
50,024,000
250,000
-
125,000
Received as
remuneration
during year
Received on
exercising
Options
Disposed
Number of
Shares at the
end of the year
-
-
-
-
-
-
-
-
-
50,000,000
250,000
-
Note 1: Mr Ren Hor Wong received 50,000,000 Shares in the Company in exchange of his shares in N1 Loans during the IPO.
Mr Ren Hor Wong acquired 24,000 Shares in the Company from the market during FY2017
Note 2: Ms Jia Penny He was issued 187,500 Shares from settlement of convertible notes and acquired 62,500 Shares during
the IPO.
Page | 17
N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2017
Other equity-related KMP transactions
There have been no other transactions involving equity instruments apart from those described in the tables
above relating to Options, rights and Shares.
Loans to KMP
There are no loans from the Company to KMP as at 30 June 2017.
On behalf of the Board
Ren Hor Wong
Executive Chairman and CEO
27 September 2017
Sydney
Page | 18
Crowe Horwath Sydney
ABN 97 895 683 573
Member Crowe Horwath International
Level 15 1 O’Connell Street
Sydney NSW 2000 Australia
Tel +61 2 9262 2155
Fax +61 2 9262 2190
www.crowehorwath.com.au
The Board of Directors
N1 Holdings Limited
77 King Street
Sydney NSW 2000
Dear Board Members
N1 Holdings Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the Directors of N1 Holdings Limited.
As lead audit partner for the audit of the financial report of N1 Holdings Limited for the financial year
ended 30 June 2017, I declare that to the best of my knowledge and belief, that there have been no
contraventions of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
any applicable code of professional conduct in relation to the audit.
Yours sincerely
CROWE HORWATH SYDNEY
LEAH RUSSELL
Senior Partner
Date this 27th day of September 2017
Page | 19
N1 HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
30 JUNE 2017
For the year ended 30 June 2017
Continuing operations
Revenue
Consulting and referral fees
Gross profit
Other income
Employee cost
IT and technology
Sales and marketing
Rent and utilities
Professional fee
Office and administrative expense
Finance cost
Travel cost
Other operation cost
Depreciation and amortisation
Profit/(Loss) before income tax
Income tax benefit/(expense)
Net profit/(loss) from continuing operations
Other comprehensive income
Total comprehensive income/(loss) for the year
Earnings per share
Basic earnings per share
Diluted earnings per share
2017
$
2016
$
Note
1.3
4,303,727
3,387,683
1.3
5.5
1.1
(1,090,146)
(1,463,949)
3,213,581
110,795
1,923,734
70,829
(3,031,056)
(1,834,280)
(97,392)
(242,609)
(429,982)
(388,319)
(242,830)
(68,343)
(75,368)
(20,377)
(371,106)
(59,034)
(301,658)
(254,099)
(184,782)
(140,772)
(282,873)
(124,754)
(26,700)
(80,887)
(1,643,006)
(1,295,276)
445,453
(10,124)
(1,197,553)
(1,305,400)
-
-
(1,197,553)
(1,305,400)
cents
cents
(1.5)
(1.5)
(5)
(5)
The accompanying notes form part of these financial statements.
Page | 20
N1 HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 JUNE 2017
As at 30 June 2017
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Other financial assets
Property, plant and equipment
Deferred tax assets
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Other financial liabilities
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Other financial liabilities
Deferred tax liabilities
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained earnings
TOTAL EQUITY
Note
2.1
2.2
3.3 (b)
2.2
3.3 (b)
2.3
5.5 (d)
2.4
2.5
3.3 (c)
2.6
3.3 (c)
5.5 (c)
2.6
3.1
3.1
2017
$
2016
$
912,432
1,317,026
11,220
2,240,678
1,302,252
230,946
495,178
772,511
2,653,803
5,454,690
3,856,946
1,060,440
94,657
5,012,043
949,010
195,097
182,508
349,246
155,750
1,831,611
7,695,368
6,843,654
445,153
224,531
328,526
998,210
1,541,581
1,037,877
20,277
2,599,735
462,769
33,698
496,885
993,352
149,448
477,443
7,167
634,058
3,597,945
4,097,423
1,627,410
5,216,244
5,756,156
155,610
(1,814,343)
4,097,423
5,738,586
94,448
(616,790)
5,216,244
The accompanying notes form part of these financial statements.
Page | 21
N1 HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
30 JUNE 2017
For the year ended 30 June 2017
Note
Share
Capital
$
Option
Reserve
$
Retained
Earning
$
Total
$
Balance at 30 June 2015 / 1 July 2015
Comprehensive income
Profit/(loss) for the year
Total comprehensive
income for the year
Transactions with owners, in
their capacity as owners, and
other transfers
Shares issued during the
year
Total transactions with
owners and other transfers
Share based payment
100
-
-
3.1
5,738,486
5,738,486
-
-
-
-
-
3.1
-
94,448
688,610
688,710
(1,305,400)
(1,305,400)
(1,305,400)
(1,305,400)
-
-
-
5,738,486
5,738,486
94,448
Balance at 30 June 2016 / 1 July 2016
5,738,586
94,448
(616,790)
5,216,244
Comprehensive income
Profit/(loss) for the year
Total comprehensive
income for the year
Transactions with owners, in
their capacity as owners, and
other transfers
-
-
Shares issued during the year
3.1
63,977
Total transactions with
owners and other transfers
Share based payment
Recovery of deferred tax on
IPO cost
Balance at 30 June 2017
63,977
3.1
-
61,162
(46,407)
-
-
-
-
-
(1,197,553)
(1,197,553)
(1,197,553)
(1,197,553)
-
-
-
-
63,977
63,977
61,162
(46,407)
5,756,156
155,610
(1,814,343)
4,097,423
The accompanying notes form part of these financial statements.
Page | 22
N1 HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
30 JUNE 2017
For the year ended 30 June 2017
Note
2017
$
2016
$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Interest received
Payments to suppliers and employees
Income tax refund/(paid)
3,557,212
28,863
3,113,072
26,359
(5,469,227)
(4,378,927)
19,667
(74,160)
Net cash provided by (used in) operating activities
2.1
(1,863,485)
(1,313,656)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Purchase of Intangible assets
Acquisition of subsidiary
Loans to related party
Loans recovered from related parties
Cash received on disposal of plants and equipment
(436,556)
(269,096)
(1,940,000)
-
50,000
-
Net cash provided by /(used in) investing activities
(2,595,652)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of shares
Cash paid for capital raising in IPO
Proceeds from borrowings
Convertible notes issued
Finance Cost
Other Finance liability repaid
Net cash provided by (used in) financing activities
Net increase/(decrease) in cash held
Cash and cash equivalents at beginning of financial year
Cash and cash equivalents at end of financial year
2.1
The accompanying notes form part of these financial statements.
-
-
1,246,300
370,000
(68,343)
(33,334)
1,514,623
(2,944,514)
3,856,946
912,432
(47,241)
(131,578)
-
(41,000)
162,996
105,419
48,596
5,000,000
(618,768)
200,000
-
-
(107,083)
4,474,149
3,209,089
647,857
3,856,946
Page | 23
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 1: KEY PERFORMANCE METRICS
30 JUNE 2017
These consolidated financial statements and notes represent those of N1 Holdings Limited and its
controlled entities (the “Consolidated Group” or “Group”).
Section 1: Key performance metrics
1.1
Earnings per share
Reconciliation of earnings to profit or loss
Profit/(loss) – from continuing activities
Earnings/(loss) used to calculate basic EPS & dilutive
Weighted average number of ordinary shares
outstanding during the year used in calculating basic
EPS
Weighted average number of dilutive options outstanding
Weighted average number of ordinary shares
outstanding during the year used in calculating dilutive
EPS
Earnings/(loss) per share – basic (cents)
Earnings/(loss) per share – diluted (cents)
Consolidated Group
2016
2017
(1,197,553)
(1,305,400)
(1,197,553)
(1,305,400)
81,045,248
24,253,895
8,276,373
2,988,818
89,321,621
27,242,713
(1.5)
(1.5)
(5)
(5)
Segment information
1.2
The Group has identified three reportable segments based on the nature of the products and services, the type of
customers for those service products and the similarity of their economic characteristics in accordance with the
requirement of AASB 8 Operating Segments.
Description of segments and principal activities
(a)
Mortgage broking and other financial services
The mortgage broking segment refer to the operating activities in which the Group acts as a mortgage broker that
provides its customer with advice and support. The Group receives commission payments on loans
originated through its network of customers. Some other minor financial services in relation to mortgage
products and finance leases are also included in this segment.
Real estate service
The Group established a real estate service
through N1 Realty Pty Ltd which acquired Sydney
Boutique Properties Pty Ltd and other rent roll assets. The services currently are focused on rental property
management and property sales agent service.
Migration service
The Group provides migration services to its customers through N1 Migration Pty Ltd which holds a
migration agent licence. The services have been promoted successfully and the related revenue and profit from
the service have increased significantly.
Page | 24
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 1: KEY PERFORMANCE METRICS
30 JUNE 2017
(b) Segment performance and financial position
Year ended 30 June
2017
Revenue
Interest income
Other income
Total segment revenue
and other income
Results
Segment profit/(loss)
before income tax
income tax expense
Loan
brokerage
and other
financial
service
Real estate
service
Migration
service
Other
Total
3,366,449
740,799
174,407
22,072
4,303,727
4,673
42,330
48
22,454
227
10
23,915
17,138
28,863
81,932
3,413,452
763,301
174,644
63,125
4,414,522
(811,137)
(401,970)
37,302
(467,201)
(1,643,006)
-
-
-
445,453
445,453
Net profit after tax
(811,137)
(401,970)
37,302
(21,748)
(1,197,553)
Assets and liabilities
Total segment assets
3,023,288
2,760,570
91,300
1,820,210
7,695,368
Total segment liabilities
(1,071,421)
(982,356)
(18,544)
(1,525,624)
(3,597,945)
Other segment information
Depreciation and
amortisation
92,609
205,338
Interest expense
513
25,796
-
3
73,159
371,106
6,310
32,623
1.3
Revenue and other income
(a)
Revenue
Origination commission
Fair value of trail commission
Real estate service
Migration service
Other service
(b)
Other income
Bank interest
Other
Consolidated Group
2017
2016
3,029,983
2,945,367
336,466
740,799
174,407
22,072
4,303,727
427,000
-
7,095
8,221
3,387,683
28,863
81,932
110,795
26,359
44,470
70,829
Page | 25
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 1: KEY PERFORMANCE METRICS
30 JUNE 2017
Revenue recognition and measurement
Revenue is measured at the fair value of the consideration received or receivable after taking into account any
trade discounts and volume rebates allowed. When the inflow of consideration is deferred it is treated as the
provision of financing and is discounted at a rate of interest that is generally accepted in the market for similar
arrangements. The difference between the amount initially recognised and the amount ultimately received is
interest revenue。
Origination commission
(i)
The Group provides loan origination services and receives origination commission on the settlement of loans.
Origination commission is recognised upon the loan being settled and measured at fair value of the commission
to be received.
Trailing commissions
(ii)
The Group receives trailing commissions from lenders on loans they have settled that were originated by the
Group. The trailing commissions are received over the life of the loans based on the individual loan balance
outstanding. On initial recognition, trailing commission revenue and receivables are recognised at fair value, being
the expected future trailing commission receivables discounted to their net present value.
Subsequent to initial recognition, the trailing commission assets are measured at amortised cost. The carrying
amount of the trailing commission asset is adjusted to reflect net present value of revised estimated future cash
flows at the original effective interest rate. The resulting adjustment is recognised as income or expense in the
consolidated statement of profit or loss and other comprehensive income.
(iii) Real estate service
The Group receives commissions and fees derived from real estate sales. They are recognised at the time of
unconditional exchange of contracts between vendors and purchasers. The Group also receive property
management fees which are based on a percentage of rental collected on behalf the landlords. Income is
recognised in the period the service has been rendered.
(iv) Render of other service (including migration service)
Revenue from the rendering of services is recognised in the accounting period in which the services are rendered.
For fixed-price services, revenue is recognised based on the actual service provided to the end of the reporting
period as a proportion of the total services to be provided.
Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any
resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in
which the circumstances that give rise to the revision become known by management.
Critical accounting estimates and judgements – NPV of trailing commission receivable
The Group receives trailing commissions from lenders on settled loans over the life of the loan based
on the loan book balance outstanding. The Group is entitled to the trailing commissions without having
to perform further services. The Group also makes trailing commission payments to commission based
consultants when trailing commission is received from lenders. The fair value of trailing commission
receivable from lenders and the corresponding payable to commission based consultants is determined
by using a discounted cash flow valuation. These calculations require the use of assumptions which are
determined by management with the assistance of external valuation specialist. The overall loan
balance run off rate of the Group is assessed at 18.7% in FY17 (FY16: 27%).
New accounting standards for application in future periods
AASB 15: revenue from Contracts with customers (applicable to annual reporting periods beginning on
or after 1 January 2018, as deferred by AASB 2015-8: Amendments to Australian accounting standards
– effective Date of AASB 15).
When effective, this standard will replace the current accounting requirements applicable to revenue
with a single, principles-based model. Except for a limited number of exceptions, including leases, the
new revenue model in AASB 15 will apply to all contracts with customers as well as non-monetary
exchanges between entities in the same line of business to facilitate sales to customers and potential
customers. The core principle of the standard is that an entity will recognise revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to
Page | 26
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 1: KEY PERFORMANCE METRICS
30 JUNE 2017
which the entity expects to be entitled in exchange for the goods or services. To achieve this objective,
AASB 15 provided the following five-step process:
●
●
Identify the contract(s) with a customer;
Identify the performance obligations in the contract(s);
● Determine the transaction price;
● Allocate the transaction price to the performance obligations in the contract(s); and
● Recognise revenue when (or as) the performance obligations are satisfied.
The transitional provisions of this standard permit an entity to either: restate the contracts that existed in
each prior period presented per AASB 108: Accounting Policies, Changes in Accounting Estimates and
Errors (subject to certain practical expedients in AASB 15); or recognise the cumulative effect of
retrospective application to incomplete contracts on the date of initial application. there are also
enhanced disclosure requirements regarding revenue. The Group is still in the process of assessing the
impact of the changes.
Page | 27
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 2: OPERATING ASSETS AND LIABILITIES
30 JUNE 2017
Section 2: Operating assets and liabilities
2.1 Cash and cash equivalents
Cash at bank and on hand
Short-term bank deposits
Cash flow information
Reconciliation of Cash Flows from Operating
Activities with Profit/(Loss) after Income Tax
Profit/(loss) after income tax
Depreciation & amortisation
Gain on disposal of plants and equipment
Finance cost
Share based payments
(Increase)/decrease in trade and other receivables
Increase in other current assets
Increase in other financial assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
Net movement in deferred tax assets or liabilities
(Decrease)/increase in tax payable
Cash flows from operating activities
2.2 Trade and other receivables
Current
Commission receivables
Agent commission clawback receivable
Net present value of future trailing commission
receivable
Non-Current
Net present value of future trailing commission
receivable
Consolidated Group
2017
2016
912,432
2,856,946
-
1,000,000
912,432
3,856,946
Consolidated Group
2016
2017
(1,197,553)
(1,305,400)
371,106
-
68,343
125,139
80,887
(3,703)
241,750
94,448
(609,828)
(439,283)
13,770
26,255
(35,809)
(191,587)
(17,616)
(155,249)
(399,047)
119,554
127,459
10,124
(26,741)
(74,160)
(1,863,485)
(1,313,656)
Consolidated Group
2017
2016
338,580
76,566
285,359
193,091
901,880
581,990
1,317,026
1,060,440
1,302,252
949,010
1,302,252
949,010
Management’s estimation of agent commission clawback and NPV of future trailing commission are detailed in Note
2.6 and 3.5 in this financial report respectively.
Credit risk
The Group has no significant concentration of credit risk with respect to any single counter party or group of counter
parties. On a geographic basis, the Group has significant credit risk exposures in Australia only.
The Group has assessed that there are no trade and other receivables that are impaired at year end (30 June 2016:
nil). As at 30 June 2017, all trade and other receivables but $12,704 are not past due (2016: $19,578).
Page | 28
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 2: OPERATING ASSETS AND LIABILITIES
30 JUNE 2017
2.3 Plant and Equipment
Office equipment
At cost
Accumulated Depreciation on office equipment
Motor vehicles
At cost
Accumulated Depreciation on motor vehicles
Furniture & Fittings
At cost
Accumulated Depreciation on Furniture & Fittings
Total plant and equipment
Consolidated Group
2017
2016
55,028
(30,995)
24,033
142,123
(42,811)
99,312
515,225
(143,392)
371,833
495,178
31,834
(17,543)
14,291
142,123
(9,707)
132,416
45,753
(9,952)
35,801
182,508
Plant and equipment is measured at cost less accumulated depreciation and any accumulated impairment. In the
event that the carrying amount of plant and equipment is greater than the estimated recoverable amount, the
carrying amount is written down immediately to the estimated recoverable amount. Impairment losses are
recognised in profit or loss.
Depreciation
The depreciable amount of all plant and equipment and is depreciated on a diminishing basis over the asset’s
useful life commencing from the time the asset is held ready for use. Leasehold improvements are depreciated
over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.
Currently the depreciation rate is in the range of 10% to 20%.
Movements in Carrying amounts
Movements in carrying amounts for each class of plant and equipment between the beginning and the end of the
current financial year.
Balance at 30 June 2015
Additions
Disposals
Depreciation expense
Balance at 30 June 2016
Additions
Depreciation expense
Accumulated depreciation
transferred from acquired entity
Balance at 30 June 2017
Office
Equipment
Motor
Vehicles
Furniture &
Fittings
Total
8,930
12,977
115,517
142,123
6,873
34,265
131,320
189,365
-
(101,717)
-
(101,717)
(7,616)
14,291
23,193
(13,451)
(23,507)
(5,337)
(36,460)
132,416
35,801
182,508
-
469,473
492,666
(33,104)
(77,332)
(123,887)
(56,109)
(56,109)
24,033
99,312
371,833
495,178
The motor vehicles were acquired via finance lease.
Page | 29
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 2: OPERATING ASSETS AND LIABILITIES
30 JUNE 2017
2.4 Intangibles Assets
a) Movement schedule of intangible assets
Balance at 1 July 2015
Additions
Amortisation
Balance at 30 June 2016
Additions
Amortisation/written-down
Balance at 30 June 2017
b) Goodwill
Goodwill
Goodwill (b) Rent Roll (c)
Website and
IT system (d)
-
-
-
-
-
-
-
536,216
-
-
2,138,258
(163,065)
68,599
131,578
(44,427)
155,750
70,798
(84,154)
Total
68,599
131,578
(44,427)
155,750
2,745,272
(247,219)
536,216
1,975,193
142,394
2,653,803
Consolidated Group
2017
536,216
2016
-
The goodwill resulted from the Group’s acquisition of Sydney Boutique Property Pty Ltd. The details of the
transaction and related calculation is disclosed in note 4.1. The excess of the consideration transferred, amount of
any non-controlling interest in the acquired entity, and acquisition-date fair value of any previous equity interest in
the acquired entity over the fair value of the net identifiable assets acquired is recorded as goodwill. If those
amounts are less than the fair value of the net identifiable assets of the subsidiary acquired, the difference is
recognised directly in profit or loss as a bargain purchase.
Goodwill is not amortised but it is tested for impairment annually, or more frequently if events or changes in
circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to
those cash-generating units or groups of cash-generating units that are expected to benefit from the business
combination in which the goodwill arose. The units or groups of units are identified at the lowest level at which
goodwill is monitored for internal management purposes, being the operating segments (note 1.2).
Critical accounting estimates and Judgements – Key assumptions used for value-in-use
calculations
The Group tests whether goodwill has suffered any impairment on an annual basis. The recoverable
amount of a cash generating unit (CGU) is determined based on value-in-use calculations which require
the use of assumptions. The calculations use cash flow projections based on financial budgets
approved by management covering a three-year period and extrapolated to five years. The following
table sets out the key assumptions for the impairment test of the goodwill. The goodwill balance at
reporting date only relates real estate service segment.
Growth rate: 3%
Growth rate is based on management estimated inflation rate.
Pre-tax discount rate: 10%
Terminal value:
Pre-tax discount rate reflects the specific risks relating to the real
estate agency industry in Australia.
Terminal value is based on third year budgeted net cash flow, pre-
tax discount rate of 10% and growth rate at 3%.
Page | 30
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 2: OPERATING ASSETS AND LIABILITIES
30 JUNE 2017
c) Rent Roll Assets
Rent Roll – Assets
Rent Roll – Written-down
Rent Roll – Net
Consolidated Group
2017
2016
2,138,258
(163,065)
1,975,193
-
-
-
Rent rolls are accounted for as an intangible asset with a finite life in accordance with AASB 138 Intangible
Assets. They are initially recognised at cost and subsequently written down to their recoverable value at each
reporting period, with reference to the reduction in rent under management times industry resale multiple being
2-5 times.
The addition in rent roll assets during the year were directly purchased or acquired through the business
combination.
d) Website and IT System
Website and IT system – Cost
Website and IT system – Accumulated amortisation
Website and IT system – Net
Consolidated Group
2017
283,904
(141,510)
142,394
2016
213,106
(57,356)
155,750
Acquired website and computer software licences are capitalised on the basis of costs incurred to acquire them.
These costs are amortised over their estimated useful lives. Costs associated with maintaining computer
software programs are recognised as an expense as incurred.
Amortisation is recognised in the profit and loss on a diminishing basis over the estimated useful life of the
intangible assets from the date that they are suitable for use. The estimated useful life of website and IT system
is 5 years. The current amortisation charges for Website and IT system are included under depreciation and
amortisation expense.
2.5 Trade and other payables
Trade payables
Employee payables
Other creditors and accruals
Consolidated Group
2016
2017
160,286
101,705
161,644
181,804
445,153
167,405
135,078
462,769
Trade and other payables are recognised at fair value initially and subsequently measured at amortised cost.
2.6 Provisions
Current
Employee provision
Provisions for Clawback
Non-Current
Provision for long service leave
Consolidated Group
2016
2017
93,124
235,402
328,526
42,863
454,022
496,885
20,277
20,277
7,167
7,167
Page | 31
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 2: OPERATING ASSETS AND LIABILITIES
30 JUNE 2017
Beginning of the year
Additions (Reductions) during the year
Payment of clawbacks during the year
Ending of the year
2017
454,022
(61,973)
2016
330,117
375,516
(156,647)
(251,611)
235,402
454,022
Clawback
Provision for clawback represents the estimate of commission to be clawed back by the lenders after loans are
terminated before 24 months.
Critical accounting estimates and Judgements - Clawback Receivable and Provision
There is potential for origination commissions to be clawed back by lenders after loans have settled. In
the event a lender claws back the commission, a corresponding clawback will be deducted from the
authorised brokers contracted by the Group where the clawback relates to a broker derived borrower.
As a result, the Group assess the probability of the clawbacks and determines both provision for
clawbacks and clawback receivable from agents at each reporting date. The provision is based on the
historical record of actual clawback and recovery. The probability used in estimate of the clawbacks is
11.35% (2016: 16.70%).
Provision for employee benefits
Provision for employee benefits represents amounts accrued for annual leave and long service leave.
The current portion for this provision includes the total amount accrued for annual leave entitlements and the
amounts accrued for long service leave entitlements that have vested due to employees having completed the
required period of service. Based on past experience, the Group does not expect the full amount of annual leave
or long service leave balances classified as current liabilities to be settled within the next 12 months. However,
these amounts must be classified as current liabilities since the Group does not have an unconditional right to
defer the settlement of these amounts in the event employees wish to use their leave entitlement.
The non-current portion for this provision includes amounts accrued for long service leave entitlements that have
not yet vested in relation to those employees who have not yet completed the required period of service. The
probability of long service leave being taken is based on historical data.
Page | 32
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 3: GROUP’S CAPITAL AND RISKS
30 JUNE 2017
Section 3: Group’s capital and risks
3.1 Contributed equity
Fully paid ordinary shares
Option reserve
Ordinary Shares
As at beginning of the year
Issuance of new shares
Capital raising costs
Deferred tax benefit for capital raising cost
Consolidated Group
2016
5,738,586
2017
5,756,156
155,610
94,448
2017
$
5,738,586
63,977
-
(46,407)
2017
Number of
Shares
81,043,750
Consolidated Group
2016
$
100
2016
Number of
Shares
100
511,823
6,208,750
81,043,650
-
-
(618,768)
148,504
-
-
5,756,156
81,555,573
5,738,586
81,043,750
On 30 June 2017, the Company issued 511,823 ordinary shares at $0.20 per share (face value) to two senior
managers at N1 Realty Pty Ltd in lieu of their service remuneration. The market value of the shares issued is
$63,977 in accordance with the share price on the grant date 30 June 2017.
Ordinary Shareholders participate in dividends and the proceeds on winding-up of the parent entity in proportion
to the number of shares held. At the shareholders' meeting, each ordinary share is entitled to one vote when a
poll is called; otherwise each shareholder has one vote on a show of hands.
Capital management
Management controls the capital of the Group in order to maintain a sustainable debt to equity ratio, generate
long-term shareholder value and ensure that the Group can fund its operations and continue as a going concern.
The Group’s debt and capital include ordinary share capital, convertible notes and other financial liabilities,
supported by financial assets.
The Group is not subject to any externally imposed capital requirements.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its
capital structure in response to changes in these risks and in the market. These responses include the
management of debt levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since the
prior year. No debt has been retired during the current year.
Option Reserve
As at beginning of the year
Share based payment
Consolidated Group
2017
94,448
61,162
155,610
2016
-
94,448
94,448
Details in relation to the options issued during the year are disclosed in note 3.2 in this financial report.
3.2 Share-based payments
The group operates an employee share and option plan.
Share-based payments to employees are remeasured at the fair value of the instruments issued and amortised
over the vesting periods. Share-based payments to non-employees are remeasured at the fair value of goods or
services received or the fair value of the equity instruments issued, if it is determined that the fair value of the
goods or services cannot be reliably measured, and are recorded at the date that the goods or services are
received. The corresponding amount is recorded to the option reserve. The fair value of options is determined
using the binomial approximation and Black Scholes valuation methodology. The number of shares and options
expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised for
services received as consideration for the equity instruments granted is based on the number of equity
instruments that eventually vest.
Page | 33
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 3: GROUP’S CAPITAL AND RISKS
30 JUNE 2017
Employee Option Plan
(a)
The establishment of the Employee Option Plan was approved by the board of directors in February 2017. The
Employee Option Plan is designed to provide long-term incentives for employees (including executive directors) to
deliver long-term shareholder returns. Under the plan, participants are granted Options which only vest if certain
performance standards are met. Participation in the plan is at the board’s discretion and no individual has a
contractual right to participate in the plan or to receive any guaranteed benefits. Once Options are vested, the
Options remain exercisable for a period of two years.
Options are granted under the plan for no consideration and carry no dividend or voting rights. When exercisable,
each Option is convertible into one ordinary Share.
Options granted under the employee option plan:
2017
2016
Average exercise
price per Option
Number of
Options
Average exercise
price per Option
Number of
Options
As at 30 June 2016
Granted during the year
Exercised during the year
Forfeited during the year
As at 30 June 2017
0.20
0.20
-
0.20
5,962,500
4,791,250
-
(2,015,000)
8,738,750
-
0.20
-
0.20
-
5,977,500
-
(15,000)
5,962,500
Options outstanding under the employee option plan at the end of the year have the following expiry date and
exercise prices:
Grant Date
14 December 2015
18 March 2016
1 March 2017
Expiry Date
14 December 2018
18 March 2018
14 December 2018
Average remaining contractual life of options
outstanding at end of period
(b)
Other share options
Exercise
price
Fair value at
grant date
Options
30 June 17
Options
30 June 16
0.20
0.20
0.20
0.054
0.0385
0.0475
4,535,000
4,962,500
1,000,000
1,000,000
3,203,750
-
8,738,750
5,962,500
1.33 years
2.33 years
On 18 March 2016, the Company granted 1,000,000 options to Bellaire Capital Pty Ltd, an entity controlled by
parties associated with the lead manager of the IPO. Below are its Options outstanding at the end of the year and
their expiry date and exercise prices:
Grant Date
18 March 2016
Expiry Date
18 March 2018
Exercise
price
Fair value at
grant date
Share options
30 June 17
Share options
30 June 16
0.30
0.006685
1,000,000
1,000,000
Weighted average remaining contractual life of
options outstanding at end of period
0.36 years
1.75
No other share opinions were granted during the reporting period.
(c) Fair value of the options granted
The fair value of the options granted is considered to represent the value of the services received over the vesting
period. The weighted average fair value of options granted during the year was $227,584 (2016: 236,819). The
value was calculated using the Black Scholes valuation methodology applying the following inputs:
Weighted average exercise price：
Weighted average life of the Option: 2.79 years
$0.20
Expected share price volatility:
43.19%
1.99%
Risk-free interest rate:
Historical share price volatility has been the basis for determining expected share price volatility as it is assumed
that this is indicative of future volatility. The life of the options is based on the historical exercise patterns, which
Page | 34
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 3: GROUP’S CAPITAL AND RISKS
30 JUNE 2017
may not eventuate in the future. Options included under employee benefits expense in the statement of profit or
loss amount to $61,162 and relate to equity settled share based payment transactions (2016: $66,022).
Net debt
Financial instruments – accounting principles
3.3
(a)
Recognition and initial measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual
provisions to the instrument. For financial assets, this is equivalent to the date that the entity commits itself to
either the purchase or sale of the asset (i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transactions costs except where the instrument is
classified at fair value through profit or loss in which case transaction costs are expensed to profit or loss
immediately.
Classification and subsequent measurement
Financial instruments are subsequently measured at fair value, amortised cost using the effective interest method,
or cost.
Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial
recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative
amortisation of the difference between that initial amount and the maturity amount calculated using the effective
interest method.
The effective interest method is used to allocate interest income or interest expense over the relevant period and
is equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction
costs and other premiums or discounts) over the expected life (or when this cannot be reliably predicted, the
contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability.
Revisions to expected future net cash flows will necessitate an adjustment to the carrying amount with a
consequential recognition of an income or expense item in profit or loss.
Impairment
A financial asset (or a group of financial assets) is deemed to be impaired if, and only if, there is objective
evidence of impairment as a result of one or more events (a loss event) having occurred, which has an impact on
the estimated future cash flows of the financial asset(s).
In the case of available-for-sale financial assets, a significant or prolonged decline in the market value of the
instrument is considered to constitute a loss event. Impairment losses are recognised in profit or loss immediately.
Also, any cumulative decline in fair value previously recognised in other comprehensive income is reclassified into
profit or loss at this point.
In the case of financial assets carried at amortised cost, loss events may include: indications that the debtors or a
group of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal
payments; indications that they will enter bankruptcy or other financial reorganisation; and changes in arrears or
economic conditions that correlate with defaults.
For financial assets carried at amortised cost (including loans and receivables), a separate allowance account is
used to reduce the carrying amount of financial assets impaired by credit losses. After having taken all possible
measures of recovery, if Management establishes that the carrying amount cannot be recovered by any means,
at that point the written-off amounts are charged to the allowance account or the carrying amount of impaired
financial assets is reduced directly if no impairment amount was previously recognised in the allowance account.
When the terms of financial assets that would otherwise have been past due or impaired have been renegotiated,
the Group recognises the impairment for such financial assets by taking into account the original terms as if the
terms have not been renegotiated so that the loss events that have occurred are duly considered.
Derecognition
Financial assets are derecognised when the contractual rights to receipt of cash flows expire or the asset is
transferred to another party where by the entity no longer has any significant continuing involvement in the risks
and benefits associated with the asset. Financial liabilities are derecognised when the related obligations are
discharged, cancelled or have expired. The difference between the carrying amount of the financial liability
extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-
cash assets or liabilities assumed, is recognised in profit or loss.
Page | 35
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 3: GROUP’S CAPITAL AND RISKS
30 JUNE 2017
(b)
Other financial assets
Current
Rental Deposit
Loan receivable – related party
Other
Non-Current
Rental deposit
Available-for-sale investment
Consolidated Group
2017
2016
11,220
24,990
-
-
11,220
50,000
19,667
94,657
230,906
195,097
40
-
230,946
195,097
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market and are subsequently measured at amortised cost.
Gains or losses are recognised in profit or loss through the amortisation process and when the financial asset is
derecognised.
Available-for-sale investments
Available-for-sale investments are non-derivative financial assets that are either not capable of being classified
into other categories of financial assets due to their nature or they are designated as such by management. They
comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or
determinable payments.
They are subsequently measured at fair value with any re-measurements other than impairment losses and
foreign exchange gains and losses recognised in other comprehensive income. When the financial asset is de
recognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive
income is reclassified into profit or loss.
(c)
Other financial liabilities
Current
Bank Loan
Finance lease payable - current
Non-Current
Bank Loan
Loan from other lenders
Convertible Debt
Finance lease payable - non-current
Consolidated Group
2016
2017
200,004
24,527
224,531
-
33,698
33,698
666,660
380,000
370,000
124,921
1,541,581
-
-
-
149,448
149,448
i) Loan from other lenders consists of two loans from non-related parties. The first loan has a principle amount
of $ 180,000. The repayment term is 2 years and the interest is 10% per annum in accordance with the loan
agreement. The second loan has a principle amount of $200,000. The repayment term is 2 years and the
interest is 7% per annum in accordance with the loan agreement.
ii) Convertible debt movement schedule
As at the beginning of the year
Borrowed
Derivative expense
Settled
As at the end of the year
2017
-
370,000
3,477
(3,477)
370,000
2016
767,000
200,000
241,750
(1,208,750)
-
Page | 36
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 3: GROUP’S CAPITAL AND RISKS
30 JUNE 2017
During the year, N1 Holding Limited issued 1.85 million unlisted convertible notes in exchange of a cost fund of
$370,000. The holders of the convertible notes may choose to convert the notes to shares in the Company at
$0.20 per share at any time before the maturity date (12 May 2019).
The convertible debt in the prior year was originally due to be repaid in April 2016. As a result of successful IPO of
the Group, the convertible notes were converted through issuance of 6,043,750 shares of N1 Holdings Limited
according to the Secured Convertible Note Deed Poll dated 14 April 2015.
iii) The bank loan was drawn down from National Australia Bank in Oct 2016. The repayment term of the loan is 5
years and the interest is 5.415% per annum with principal and interest repayment in accordance with the loan
agreement. The loan is secured by the Sydney Boutique Property rent roll. Outstanding loan balance as at 30
June 2017 is $866,664.
Financial risk management
3.4
The Group’s financial instruments consist mainly of deposits with banks, accounts receivable and payable, other
payables and other financial liabilities.
The totals for each category of financial instruments, measured in accordance with AASB139 Financial
Instruments: Recognition and Measurement as detailed in the accounting policies to these financial statements,
are as follows:
Financial Assets - Current
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial Liabilities - Current
Financial liabilities at amortised cost
Trade and other payables
Finance lease payables
Bank loans and other loans
Financial Assets - Non-current
Trade and other receivables
Rental deposit
Other
Financial Liabilities - Non-current
Bank loans
Finance lease payables
Convertible debt
Other Loan
Note
2.1
2.2
3.3 (b)
2.5
3.3 (c)
3.3 (c)
2.2
3.3 (b)
3.3 (b)
3.3 (c)
3.3 (c)
3.3 (c)
3.3 (c)
Consolidated Group
2017
2016
912,432
1,317,026
11,220
3,856,946
1,060,440
94,657
445,153
24,527
200,004
462,769
33,698
-
Consolidated Group
2016
2017
1,302,252
230,906
40
949,010
195,097
-
666,660
124,921
370,000
380,000
-
149,448
-
-
Specific financial risk exposures and management
The main risks the Group are exposed to through its financial instruments are credit risk, liquidity risk and market
risk consisting of interest rate risk and foreign exchange risk. Financial risks are identified, measured and
managed in accordance with the Group’s policies and risk objectives. The Company has a risk governance
framework which is reviewed and updated by the Board constantly. There have been no substantive changes in
the types of risks the Group is exposed to, how these risks arise, or the Board’s objectives, policies and
processes for managing or measuring the risks from the previous period.
a.
Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of
contract obligations that could lead to a financial loss to the Group.
Credit risk is managed through the maintenance of procedures (such as the utilisation of systems for the
approval, granting and renewal of credit limits, regular monitoring of exposures against such limits and monitoring
of the financial stability of significant customers and counterparties), ensuring to the maximum extent possible that
customers and counter parties to transactions are of sound credit worthiness. Such monitoring is used in
Page | 37
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 3: GROUP’S CAPITAL AND RISKS
30 JUNE 2017
assessing receivables for impairment. Credit terms are generally not more than 60 days from the invoice date.
Credit risk exposures
The maximum exposure to credit risk by class of recognised financial assets at the end of the reporting period, is
the carrying amount and classification of those financial assets (net of any provisions) as presented in the
statement of financial position.
The Group has no significant concentration of credit risk with any single counterparty or Group of counterparties.
However, on a geographic basis, the Group has significant credit risk exposures to Australia given the substantial
operations in those regions. Details with respect to credit risk of trade and other receivables is provided in Note 2.
Trade and other receivables that are neither past due or impaired are considered to be of high credit quality.
Aggregates of such amounts are as detailed at Note 2.2.
Credit risk related to balances with banks and other financial institutions is managed by the Board. All the Group’s
cash assets are deposited with Australian major banks and their credit ratings are between BBB+ to AA- based
on Standard & Poor.
The majority of outstanding receivables are commissions (including fair value of future trailing commissions) owed
from Finsure Finance and Insurance Pty Ltd ABN 72 068 153 926 (Finsure), Accountable Financial Solutions Pty
Ltd ABN 36 146 520 390 (Accountable Financial Solutions) and lenders who make commission payments
directly to the Group. Finsure is an aggregator of retailing loan brokers and acts as an intermedia between the
Group and the lenders (financial institutions) to pass through the commission paid by those lenders to the Group.
Accountable Financial Solutions is a dealer group who pays financial planning commissions to the Group on
behalf of financial institutions. The financial institutions which are owing commissions to the Group through
Finsure and Accountable Financial Solutions are rated between B and AA+.
b.
Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities. The Group managed this risk through maintaining sufficient
liquid assets (mainly cash and cash equivalents and borrowing facilities).
The table below reflects an undiscounted contractual maturity analysis for financial liabilities. Cash flows realised
from financial assets reflect Management’s expectation as to the timing of realisation. Actual timing may therefore
differ from that disclosed.
Financial liability maturity analysis
2017
Trade and other payables
Convertible debts
Finance lease liabilities
Note
2.5
3.3(c)
3.3(c)
Total
contractual
cash flows
445,153
No more
than 1
year
445,153
1-2
years
2-5
years
-
-
-
370,000
- 370,000
149,448
24,527
29,795
95,126
Bank loan and other borrowings
1,246,664
200,004 580,004 466,656
2,211,265
669,684 979,799 561,782
2016
Trade and other payables
Finance lease liabilities
c.
Market risk
Note
2.5
Total
contractual
cash flows
462,769
No more
than 1
year
462,769
1-2
years
2-5
years
-
-
193,808
656,577
29,794
29,795 134,219
492,563
29,795 134,219
More
than 5
years
-
-
-
-
-
More
than 5
years
-
-
-
Interest rate risk
Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the
reporting period where by a future change in interest rates will affect future cash flows or the fair value of fixed
rate financial instruments. The financial instruments that primarily expose the Group to interest rate risk to cash
and cash equivalents.
Page | 38
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 3: GROUP’S CAPITAL AND RISKS
30 JUNE 2017
Term deposit
Consolidated Group
2017
-
2016
1,000,000
Sensitivity Analysis: On the reporting date, the change in interest rate has no impact due to the deposit is nil.
Foreign currency risk
The Group held cash assets dominated in foreign currency from time to time. At the reporting date, the company
held RMB 18,111 (2016: US$738,000). The movement in the exchange rate is not expected to have significant
impact on the value of foreign currency cash assets.
Fair value measurement
3.5
AASB 13: Fair value measurement requires the disclosure of fair value information by level of the fair value
hierarchy, which categorises fair value measurements into one of three possible levels based on the lowest level
that an input which is significant to the measurement can be categorised into as follows:
Level 1
Level 2
Level 3
Measurements based on quoted prices
(unadjusted) in active markets for
identical assets or liabilities that the
entity can access at the measurement
date.
Measurements based on inputs
other than quoted prices included
in Level 1 that are observable for
the asset or liability, either directly
or indirectly.
Measurements based on
unobservable inputs for the
asset or liability.
Fair value of assets and liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis,
depending on the requirements of the applicable accounting standard.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an
orderly (i.e. Unforced) transaction between independent, knowledgeable and willing market participants at the
measurement date.
As fair value is a market- based measure, the closest equivalent observable market pricing information is used to
determine fair value. Adjustments to market values may be made having regard to the characteristics of the
specific asset or liability. The fair values of assets and liabilities that are not traded in an active market are
determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible,
the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability
(i.e. the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a
market, the most advantageous market available to the entity at the end of the reporting period (i.e. the market
that maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability,
after taking into account transaction costs and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant’s ability to use
the asset in its highest and best use or to sell it to another market participant that would use the asset in its
highest and best use.
The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based
payment arrangements) maybe valued, where there is no observable market price in relation to the transfer of
such financial instruments, by reference to observable market information where such instruments are held as
assets. Where this information is not available, other valuation techniques are adopted and, where significant, are
detailed in the respective note to the financial statements.
Fair value of financial assets and liabilities that are measured at fair value on a recurring basis.
The Group does not have any assets or liabilities recognised and subsequently measured at fair value on a
recurring basis.
Fair value of financial assets and liabilities that are not measured at fair value (but fair value disclosures
are required)
Future trailing commission receivables are initially recognised at fair value and subsequently carried at amortised
cost. The carrying amount of the trailing commission asset is adjusted to reflect net present value of revised
estimated future cash flows at the original effective interest rate. The resulting adjustment is recognised as
income or expense in the consolidated statement of profit or loss and other comprehensive income. The overall
loan balance run off rate of the Group is assessed at 18.7% in FY17 (FY16: 27%).
Page | 39
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 4: BUSINESS PORTFOLIO
30 JUNE 2017
Section 4: Business portfolio
Business combination
4.1
On 21 October 2016, the Group acquired 100% of the issued shares in Sydney Boutique Property Pty Ltd, a real
estate agency business, with a cash consideration of $1,940,000. The acquisition is expected to extend the
Group’s business to real estate agency and management industry.
Details of the purchase consideration, the net assets acquired and goodwill are as follows:
Purchase consideration
Cash paid
Total
Sydney Boutique
Property
1,940,000
1,940,000
The assets and liabilities recognised as a result of the acquisition at fair value are as follows:
Prepayment
Other receivable - loan, no provision
Property, plant and equipment
Rent roll
Payables
Employee benefit obligations
Deferred Tax Liabilities
Goodwill
(i) Acquisition-related costs
The acquisition cost in relation to the transaction is $20,461 which is legal cost.
(ii) Revenue and profit contribution
From acquisition date
Revenue contributed by the business acquired
Net profit contributed by the business acquired
From 1 July 2016 (as if)
Revenue contributed by the business acquired
Net profit contributed by the business acquired
Sydney Boutique
Property
2,820
26,150
11,948
1,949,878
(29,451)
(21,345)
(536,216)
536,216
1,940,000
Sydney Boutique
Property
387,386
358,093
Sydney Boutique
Property
678,766
371,845
Business combinations
Business combinations occur where an acquirer obtains control over one or more businesses.
A business combination is accounted for by applying the acquisition method, unless it is a combination involving
entities or businesses under common control. The business combination will be accounted for from the date that
control is obtained, at which point the fair value of the identifiable assets acquired and liabilities (including
contingent liabilities) assumed is recognised (subject to certain limited exemptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting from a
contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration
classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent
consideration is classified as an asset or liability and is remeasured each reporting period to fair value,
recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at
the acquisition date.
All transaction costs incurred in relation to business combinations, other than those associated with the issue of a
financial instrument, are recognised as expenses in profit or loss when incurred.
The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.
Page | 40
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 4: BUSINESS PORTFOLIO
30 JUNE 2017
4.2
Related party transactions
Related Parties
Parent entities
(a)
The Company is the parent entity of the Group. The following information has been extracted from the books and
records of the parent and has been prepared in accordance with Australian Accounting Standards.
STATEMENT OF FINANCIAL POSITION
ASSETS
Current Assets
Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Non-current Liabilities
TOTAL LIABILITIES
EQUITY
Issued Capital
Accumulated loss
Option reserve
TOTAL EQUITY
2017
2016
708,574
15,599,888
16,308,462
3,732,432
12,493,650
16,226,082
68,036
750,000
818,036
15,042
865,676
880,718
15,756,055
(421,239)
155,610
15,490,426
15,725,272
(474,356)
94,448
15,345,364
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Net profit/(loss)
53,118
(112,689)
During the reporting period, N1 Holdings Limited has not entered into any financial guarantee arrangement.
At 30 June 2016 and 30 June 2017, N1 Holdings Limited has no contingent liabilities.
At 30 June 2016, N1 Holdings Limited has no contractual commitments.
Subsidiaries
(b)
Information about principal subsidiaries
The subsidiaries listed below have share capital consisting solely of ordinary shares or ordinary units which are
held directly by the Group. The proportion of ownership interests held equals the voting rights held by Group.
Each subsidiary’s principal place of business is also its country of incorporation.
Name of subsidiary
N1 Loans Pty Ltd (i)
N1 Migration Pty Ltd (ii)
9c
N1 Reality Pty Ltd (iii)
9c
N1 Project Pty Ltd (iv)
0
N1 Venture Pty Ltd (v)
Sydney Boutique Property Pty Ltd (vi)
Principal place of
business
Australia
Australia
Australia
Australia
Australia
Australia
Ownership interest held by the Group
2017 (%)
2016 (%)
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
The financial statements of subsidiaries used in the preparation of these consolidated financial statements were
also prepared as at the same reporting date as the Group’s financial statements.
(i) N1 Loans was incorporated on 25 February 2010 and was initially owned by Mr Ren Hor Wong. Upon the
completion of the IPO on 18 March 2016, the company became fully owned by the Company.
(ii) N1 Migration Pty Ltd was incorporated on 14 September 2015 and has been fully owned by the Group since
11 April 2016.
(iii) N1 Realty was incorporated on 3 May 2016 and, since then, it has been fully owned by the Group.
(iv) N1 Project was incorporated on 9 December 2016, since then, it has been fully owned by the Group.
(v) N1 Venture was incorporated on 19 November 2014 and was acquired on 1 September 2016, since then it
Page | 41
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 4: BUSINESS PORTFOLIO
30 JUNE 2017
has been fully owned by the Group.
(vi) Sydney Boutique Property Pty Ltd was acquired on 21 October 2016. Since then, it has been fully owned by
the Group.
(c)
Key management personnel:
Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity,
directly or indirectly, including any Director (whether executive or otherwise) of that entity are considered KMP.
KMP Compensation
Please refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid or
payable to each member of the Group’s KMP for the year ended 30 June 2017. The total of remuneration paid to
or payable to KMP of the Group during the year was:
Short-term employee benefits
Post-employment benefits
Other long-term benefit
Share-based options
Total KMP compensation
2017
705,943
58,501
8,075
31,169
803,688
2016
282,213
23,757
1,380
45,945
353,295
Short-term employee benefits
These amounts include fees and benefits paid to non-executive directors as well as all salary, paid leave benefits,
fringe benefits and cash bonuses awarded to executive directors and other key management personnel.
Post-employment benefits
These amounts are the current year’s estimated costs of provided for the Group’s superannuation contributions
made during the year.
Other long-term benefits
These amounts represent long service leave benefits accruing during the year.
Share-based payments
These amounts represent the expense related to the participation of KMP in equity-settled benefit schemes as
measured by the fair value of the options granted.
Other Related Parties
(d)
Other related parties include entities controlled by the ultimate parent entity and entities over which key
management personnel have joint control.
Transactions with other related parties:
Transactions between related parties are on normal commercial terms and conditions no more favourable than
those available to other parties unless otherwise stated. The following transactions occurred with other related
parties:
Purchases of services/goods from other related parties
2016
N1 Consultants Group Sdn Bhd - Malaysia
N1 Forex Pty Ltd
V1 Finance Pty Ltd
Seekahome Pty Ltd
Loan to related parties - balance
N1 Venture Pty Ltd – receivable
Ren Hor Wong – (payable)/receivable
As at 1 July 2016
Drawdown
Repayment
As at 30 June 2017
2017
108,960
27,600
-
-
55,542
111,569
64,118
72,000
2017
-
(1,198)
2016
50,000
(964)
Loan to
Ren Hor Wong
(964)
-
(234)
(1,198)
Page | 42
N1 HOLDINGS LIMITED
NOTES TO FINANCIAL STATEMENTS
SECTION 5: OTHER DISCLOSURES
30 JUNE 2017
Section 5: Other disclosures
5.1 Basis of preparation and compliance
Basis of preparation
These general purpose financial statements have been prepared in accordance with the Corporations Act, the
Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board and the
International Financial Reporting Standards as issued by the International Accounting Standards Board. The
Group is a for-profit entity for financial reporting purposes under the Australian Accounting Standards. Material
accounting policies adopted in the preparation of these financial statements are presented below and have been
consistently applied unless stated otherwise. The functional presentation currency is Australian dollars rounded to
the nearest dollar.
Except for cash flow information, the financial statements have been prepared on an accruals basis and are
based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current
assets, financial assets and financial liabilities.
Principles of consolidation
(a)
The consolidated financial statements incorporate all of the assets, liabilities and results of the Company and all
of the subsidiaries. Subsidiaries are entities that the Company controls. The Company controls an entity when it 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 over the entity. A list of the subsidiaries is provided in Note 4.2.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the
Group from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued
from the date that control ceases. Inter-company transactions, balances and unrealised gains or losses on
transactions between Group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have
been changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by
the Group.
Impairment of assets
(b)
At the end of each reporting period, the Group assesses whether there is any indication that an asset may be
impaired. The assessment will include the consideration of external and internal sources of information. If such an
indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset,
being the higher of the asset’ s fair value less costs of disposal and value in use, to the asset’ s carrying amount.
Any excess of the asset’ s carrying amount over its recoverable amount is recognised immediately in profit or
loss, unless the asset is carried at a revalued amount in accordance with another standard (e.g. in accordance
with the revaluation model in AASB 116: Property, Plant and Equipment). Any impairment loss of revalued asset
is treated as a revaluation decrease in accordance with that other standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
Impairment testing is performed annually for intangible assets with indefinite lives and intangible assets not yet
available for use.
(c)
Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary economic
environment in which that entity operates. The consolidated financial statements are presented in Australian
dollars which is the Company’s functional currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the
date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-
monetary items measured at historical cost continue to be carried at the exchange rate at the date of the
transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair
values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where
deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in other
comprehensive income to the maximum extent that the underlying gain or loss can be recognised in other
comprehensive income, otherwise the exchange difference is recognised in the profit or loss.
Page | 43
N1 HOLDINGS LIMITED
NOTES TO FINANCIAL STATEMENTS
SECTION 5: OTHER DISCLOSURES
30 JUNE 2017
Goods and services tax (GST)
(d)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the ATO. 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 ATO is included with other
receivables or 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 ATO are presented as operating cash flows
included in receipts from customers or payments to suppliers.
Retirement benefit obligations
(e)
All employees of the Group other than those that receive defined benefit entitlements receive defined contribution
superannuation entitlements, for which the Group pays the fixed superannuation guarantee contribution (currently
9.5% of the employee’s average ordinary salary) to the employee’s superannuation fund of choice. All
contributions in respect of employees’ defined contribution entitlements are recognised as an expense when they
become payable. The Group’ s obligation with respect to employees’ defined contribution entitlements is limited to
its obligations for any unpaid superannuation guarantee contributions at the end of the reporting period. All
obligations for unpaid superannuation guarantee contributions are remeasured at the (undiscounted) amounts
expected to be paid when the obligation is settled and are presented as current liabilities in the Group’ s
statement of financial position.
Comparative figures
(f)
When required by accounting standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
Where the Group retrospectively applies an accounting policy, makes a retrospective restatement or reclassifies
items in its financial statements, an additional (third) statement of financial position as at the beginning of the
preceding period in addition to the minimum comparative financial statement is presented.
New and amended accounting policies adopted by the Group
(g)
The Group has adopted all of the new and revised standards and interpretations, including amendments to the
existing standards issued by the Australian Accounting Standards Board (the AASB) that are relevant to their
operation and effective for the current reporting period. The adoption of these amendments and new standards
has not resulted in any significant changes to the Group’s accounting policies or any significant effect on the
measurement or disclosure of the amounts reported for the current or prior reporting period.
The impact of other new accounting standards for application in future periods has been disclosed in the relevant
section.
Financial instruments – New accounting standards for application in future periods
AASB 9: Financial instruments and associated amending standards (applicable to annual reporting
periods beginning on or after 1 January 2018).
The standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined
below) and includes revised requirements for the classification and measurement of financial
instruments, revised recognition and de recognition requirements for financial instruments and
simplified requirements for hedge accounting.
The key changes that may affect the Group on initial application include certain simplifications to the
classification of financial assets, simplifications to the accounting of embedded derivatives, upfront
accounting for expected credit loss, and their revocable election to recognise gains and losses on
investments in equity instruments that are not held for trading in other comprehensive income. AASB 9
also introduces a new model for hedge accounting that will allow greater flexibility in the ability to hedge
risk, particularly with respect to hedges of non-financial items.
Should the entity elect to change its hedge policies in line with the new hedge accounting requirements
of the standard, the application of such accounting would be largely prospective.
The directors anticipate that the adoption of AASB 9 will have no significant impact on the Group’s
financial instruments.
Page | 44
N1 HOLDINGS LIMITED
NOTES TO FINANCIAL STATEMENTS
SECTION 5: OTHER DISCLOSURES
30 JUNE 2017
5.2
Auditor’s Remuneration
Remuneration of the auditor Crowe Horwath Sydney for:
auditing or reviewing the financial report
taxation services
due diligence services
5.3
Lease commitments
(a)
Operating Lease Commitments
Payable — minimum lease payments
Not later than 12 months
Between 12 months and 5 years
Later than 5 years
Consolidated Group
2016
2017
89,000
-
1,000
90,000
55,000
7,700
12,000
74,700
Consolidated Group
2016
2017
330,891
809,940
130,118
154,909
472,457
-
1,270,949
627,366
The major property lease is a non-cancellable lease with a five-year term, with rent payable monthly in advance.
(b)
Finance Lease
Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset (but
not the legal ownership) are transferred to entities in the consolidated group, are classified as finance leases.
Finance leases are capitalised by recognising an asset and a liability at the lower of the amounts equal to the fair
value of the leased property or the present value of the minimum lease payments, including any guaranteed
residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest
expense for the period.
Within 12 months
Between 12 months and 5 years
Total
Less: future finance lease charge
Net commitment recognised as a liability
Consolidated Group
2017
24,527
2016
29,795
139,486
164,013
164,013
193,808
(14,565)
(20,749)
149,448
173,059
New accounting standards for application in future periods
AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 January 2019).
When effective, this standard will replace the current accounting requirements applicable to leases in
AASB 117: Leases and related interpretations. AASB 16 introduces a single lessee accounting model
that eliminates the requirement for leases to be classified as operating or finance leases.
The main changes introduced by the new standard include:
●
●
●
●
●
recognition of a right-to-use asset and liability for all leases (excluding short-term leases with
less than 12 months of tenure and leases relating to low-value assets);
depreciation of right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit
or loss and unwinding of the liability in principal and interest components;
variable lease payments that depend on an index or a rate are included in the initial
measurement of the lease liability using the index or rate at the commencement date;
by applying a practical expedient, a lessee is permitted to elect not to separate non- lease
components and instead account for all components as a lease; and
Additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the standard to
comparatives in line with AASB 108 or recognise the cumulative effect of retrospective application as an
Page | 45
N1 HOLDINGS LIMITED
NOTES TO FINANCIAL STATEMENTS
SECTION 5: OTHER DISCLOSURES
30 JUNE 2017
adjustment to opening equity on the date of initial application.
Although the directors anticipate that the adoption of AASB 16 will impact the Group’s financial
statements, it is impracticable at this stage to provide a reasonable estimate of such impact.
(c)
Capital Expenditure Commitments
There were no capital expenditure commitments as at 30 June 2017 (2016: nil)
5.4
Contingent liabilities and Contingent assets
There are no contingent liabilities or contingent assets as at 30 June 2017 (2016: nil).
5.5
Taxation
Income Tax
(a)
The income tax expense (income) for the year comprises current income tax expense (income) and deferred tax
expense (income).
Current income tax expense (income) charged to profit or loss is the tax payable (recoverable) on taxable income
(loss). Current tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the
relevant taxation authority.
Deferred income tax expense (income) reflects movements in deferred tax asset and deferred tax liability
balances during the year as well as unused tax losses.
Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax
relates to items that are recognised outside profit or loss.
Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or
liability, where there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the
asset is realized or the liability is settled and their measurement also reflects the manner in which Management
expects to recover or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that
it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be
utilised.
Where temporary differences exist in relation to investments in subsidiaries, deferred tax assets and liabilities are
not recognised where the timing of the reversal of the temporary difference can be controlled and it is not
probable that the reversal will occur in the foreseeable future.
Tax expense
(i)
The components of tax expense (income) comprise:
Current tax
Deferred tax
Deferred tax for tax losses under-recognised in prior year
(ii)
The prima facie tax on profit from ordinary activities before
income tax is reconciled to income tax as follows:
Profit/(loss) before income tax
At 27.5% (2016:30%)
Tax effect of:
Permanent differences
Net deferred tax as a result of IPO impact
Tax to equity
Effect of change in income tax rate
Deferred tax for tax losses under-recognised in prior year
Income tax (benefit)/expense
Consolidated Group
2016
2017
(448,788)
(221,779)
12,282
(8,947)
(445,453)
231,903
-
10,124
(1,643,007)
(1,295,276)
(451,827)
(388,583)
37,634
278,891
-
-
156,943
(37,127)
(22,313)
(8,947)
-
-
(445,453)
10,124
As at 30 June 2017, the tax loss carried forward for the company is $1,921,172 (2016: $289,217).
Page | 46
N1 HOLDINGS LIMITED
NOTES TO FINANCIAL STATEMENTS
SECTION 5: OTHER DISCLOSURES
30 JUNE 2017
(b)
Tax position
The group’s current tax payable is $nil (2016: $nil)
(c)
Deferred tax liabilities
2017
Trailing income
Website
Assets valued up in
business combination
Balance at 30 June 2017
Opening
balance
Charged to
income
statement
Charge to
equity
Charge to
other
Closing
balance
459,300
62,088
18,143
(8,164)
-
(29,706)
477,443
24,218
-
-
-
-
521,388
9,979
-
-
536,216
506,510
536,216
1,037,877
2016
Trailing income
Website
Assets valued up in
business combination
Balance at 30 June 2016
(d)
Deferred tax assets
2017
Clawback and accrued
Tax Losses
IPO costs
Other temporary differences
Balance at 30 June 2017
2016
Clawback and accrued
Tax Losses
IPO costs
Other temporary differences
Balance at 30 June 2017
Opening
balance
(restated)
Charged to
income
statement
Charge to
equity
Charge to
other
Closing
balance
331,200
128,100
-
-
18,143
-
331,200
146,243
-
-
-
-
-
459,300
-
-
-
18,143
-
477,443
Opening
balance
Charged to
income
statement
Charged to
equity
Closing
balance
78,280
77,816
148,504
44,646
349,246
(34,599)
450,506
-
53,765
469,672
-
-
(46,407)
-
(46,407)
43,681
528,322
102,097
98,411
772,511
Opening
balance
Charged to
income
statement
Charged to
equity
Closing
balance
50,681
-
-
13,943
64,624
27,598
77,816
-
30,704
136,118
-
-
148,504
-
148,504
78,279
77,816
148,504
44,647
349,246
Page | 47
N1 HOLDINGS LIMITED
NOTES TO FINANCIAL STATEMENTS
SECTION 5: OTHER DISCLOSURES
30 JUNE 2017
Critical accounting estimates and Judgements - Taxation
The income tax expense or credit for the period is the tax payable on the current period’s taxable
income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred
tax assets and liabilities attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively
enacted at the end of the reporting period. Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts expected to be paid to the tax
authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial
statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition
of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset
or liability in a transaction other than a business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantially enacted by the end of the reporting period and are
expected to apply when the related deferred income tax asset is realised or the deferred income tax
liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to
utilise those temporary differences and losses.
5.6
Events after the reporting period
On 21 July 2017, TACQ International Pty Ltd, a fully owned subsidiary of N1 Holdings Limited was established
focusing on recruitment business.
On 15 August 2017, Company entered into an unsecured loan agreement with an individual lender for $200,000
at 10% interest only repayment for 2 years. Loan was settled on 1 September 2017. Purpose of the loan is to fund
potential acquisitions.
On 7 September 2017, Company received application from an individual investor to acquire $1,000,000 worth of
Convertible Notes with face value of $0.20 each and 7% pa interest and 2 years term. The Company expects to
issue the Convertible Notes after releasing its Annual Report. The resultant Convertible Notes will be convertible
at any time prior to the date of maturity at the request of the Noteholder, or they will automatically be redeemed
on the Maturity. If the Noteholders convert the maximum number of Convertible Notes, then 5,000,000 new
Shares would be issued. This is based on a price of $0.20 and does not account for any accrued interest.
Expected issue date of the Convertible Notes is 27 September 2017.
Other than above mentioned events, there has been no matters or events since the end of the financial year
which may significantly affect the operation of the Group, the results of those operations or the state of affairs of
the Group in the future financial years.
Page | 48
N1 HOLDINGS LIMITED
DIRECTORS’ DECLARATION
30 JUNE 2017
Directors’ Declaration
In accordance with a resolution of the Directors of the Company, the Directors of the Company declare that:
1.
2.
3.
The financial statements and notes of the Company, as set out on pages 20 to 48, are in accordance
with the Corporations Act and:
comply with Australian Accounting Standards (including the Australian Accounting Interpretations)
(a)
and the Corporations Regulations 2001 (Cth); and
give a true and fair view of the consolidated entity’s financial position as at 30 June 2017 and of
(b)
the performance for the year ended on that date.
The financial statements and notes also comply with International Financial Reporting Standards as
described in Note 5.1 to the financial statements.
In the Directors' opinion 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 from the
Chief Executive Officer and Chief Financial Officer.
On behalf of the board
Ren Hor Wong
Executive Chairman and CEO
27 September 2017
Sydney
Page | 49
Crowe Horwath Sydney
ABN 97 895 683 573
Member Crowe Horwath International
Audit and Assurance Services
Level 15 1 O'Connell Street
Sydney NSW 2000
Australia
Tel +61 2 9262 2155
Fax +61 2 9262 2190
www.crowehorwath.com.au
INDEPENDENT AUDITOR’S REPORT N1 HOLDINGS LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of N1 Holdings Limited. (the Company and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2017, the
consolidated statement of comprehensive income, the consolidated statement of changes in equity
and the consolidated statement of cash flows for the year then ended, and notes to the financial
statements, 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 2017 and of its financial
performance for the year then ended; 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 auditor
independence requirements of 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 (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.
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.
Crowe Horwath Sydney is a member of Crowe Horwath International, a Swiss verein. Each member of Crowe Horwath is a separate and
independent legal entity. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of
financial services licensees.
Page | 50
Key Audit Matter
How our Audit Addressed the Key Audit
Matter
Valuation of Trail Commission – Refer to Note 2.2
The Group has significant trail commission assets
that are calculated using modelling techniques
that involve the use of forward-looking
assumptions and risk adjustments.
Management have used judgement to establish
the methodology, assumptions and adjustments
used in the model, as described in Notes 2.6 and
3.5.
This matter is a key audit matter because of the
complexity and subjectivity involved in performing
the valuation.
We involved our technical specialists to assess
the appropriateness of the model used for the
valuation.
We performed a retrospective analysis of the
Group’s past estimates against actual
performance and challenged the current period
forecasts in areas where previous forecasts were
not achieved and/or where future uncertainty is
greater or volatility is expected.
We challenged the key assumptions that support
the valuation of the trail commission assets, using
professional scepticism, as follows:
The discount rate was assessed for
consistency within the context of the valuation
and based on our knowledge of the Group
and the industry. The lapse rate was
compared to industry data and historical data
for the Group;
Valuation of Clawback Provision – Refer to Note 2.6
Clawbacks arise when loans are cancelled in the
first two years, the value being dependent on the
timing of cancellation. Management have raised a
provision for these clawbacks, using judgement to
estimate the timing and number of cancellations
expected, as described in Note 2.6.
This matter is a key audit matter because of the
risk that the provision could be misstated due to a
change in volume and timing of clawbacks.
We evaluated the assumptions used by
management when calculating the provision by:
Comparing to historical data for the Group;
Understanding trends in the industry and
challenging management where the
assumptions appeared to be inconsistent; and
Performing sensitivity analysis
We performed a retrospective analysis of the
Group’s past estimates against actual
performance and challenged the current period
forecasts in areas where previous forecasts were
not achieved and/or where future uncertainty is
greater or volatility is expected.
We involved our technical specialists for
assessing the appropriateness of the model used
in the calculation.
Page | 51
Key Audit Matter
How our Audit Addressed the Key Audit
Matter
Business Acquisitions – Refer to Note 4.1
Management were required to assess the fair
value of the assets and liabilities acquired for the
new business acquired. The intangible assets
then need to be assessed for useful life.
This matter is a key audit matter because of the
complexity and subjectivity involved in performing
the fair value, and assessing useful lives of the
assets.
We assessed the key assumptions used by
management for determining fair value against
industry known data.
In addition we have ensured that the useful life is
consistent with current activity.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2017, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
Page | 52
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 at: http://www.auasb.gov.au/Home.aspx. 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 12 to 18 of the directors’ report for the
year ended 30 June 2017.
In our opinion, the Remuneration Report of N1 Holdings Ltd., for the year ended 30 June 2017,
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.
Leah Russell
Senior Partner
Crowe Horwath Sydney
Date 27 September 2017
Level 15, 1 O’Connell Street
Sydney NSW 2000
Page | 53
N1 HOLDINGS LIMITED
SHAREHOLDER INFORMATION
30 JUNE 2017
Additional information required by the Australian Securities Exchange Ltd (ASX) and not disclosed elsewhere in
this report is set out below. The information is current as at 12 September 2017.
1.
a.
b.
c.
Shareholding
Distribution of Shareholders
Category (size of holding)
Number of shares
%
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Total
1,000
45,026
965,608
5,793,378
74,750,561
81,555,573
0.00%
0.06%
1.18%
7.10%
91.66%
The number of shareholdings held in less than marketable parcels is 4.
Number of
holders
1
12
97
178
52
340
%
0.29%
3.53%
28.53%
52.35%
15.30%
The names of the substantial shareholders listed in the holding company’s register are:
Shareholder
REN H WONG PTY LTD
THE THREE HORSESHOES PTY LTD
MR YOKE MENG CHAN
TIN FAMILY SMSF PTY LTD
MR TONG CHAI TAN
Total
d.
20 Largest Shareholders — Ordinary Shares
Shareholder
Number of
Ordinary
Fully Paid
Shares Held
50,000,000
4,200,000
2,775,266
2,450,000
1,498,249
% Held
of Issued
Ordinary Capital
61.31%
5.15%
3.40%
3.00%
1.84%
60,923,515
74.70%
Number of
Ordinary
Fully Paid
Shares Held
% Held
of Issued
Ordinary Capital
REN H WONG PTY LTD
THE THREE HORSESHOES PTY LTD
MR YOKE MENG CHAN
TIN FAMILY SMSF PTY LTD
MR TONG CHAI TAN
BNP PARIBAS NOMS PTY LTD
JIANRONG SUN
MS MUN CHING WANG
MXJ PTY LTD
50,000,000
1.
4,200,000
2.
2,775,266
3.
2,450,000
4
1,498,249
5
1,467,000
6
1,250,000
7
760,470
8
625,000
9
10 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 556,000
AUSTRALIA WIDE DEVELOPMENT GROUP PTY LTD 500,000
11
500,000
LC FAMILY SUPER PTY LTD
12
500,000
VEN TAN PTY LTD
13
496,253
14 MS YUEXIAN ZHAO
487,500
15
425,000
16 MISS ZHAOJIA HE
418,750
17 MRS SILIAN ZHAO
350,000
18 MS HUEY CHARNG WONG
341,115
19. MISS MANNI FU
300,000
20. MR JILIANG ZHANG
IPOH YAP SMSF CO PTY LTD
61.31%
5.15%
3.40%
3.00%
1.84%
1.80%
1.53%
0.93%
0.77%
0.68%
0.61%
0.61%
0.61%
0.61%
0.60%
0.52%
0.51%
0.43%
0.42%
0.37%
Total
69,900,603
85.70%
Page | 54
N1 HOLDINGS LIMITED
SHAREHOLDER INFORMATION
30 JUNE 2017
e.
Escrowed Shares
Name
1.
2.
3.
REN H WONG PTY LTD
JIANRONG SUN
STAR PLUS SUPER PTY LTD
Total
Number of
Escrowed
Fully Paid
Shares Held
50,000,000
1,250,000
187,500
51,437,500
% Held
of Issued
Ordinary Capital
61.31%
1.53%
0.23%
63.07%
f.
Vested Options
1,000,000 options exercisable at $0.20 and expiring on 18 March 2018 are held by Value Creation
Holdings Limited, an entity controlled by Non-Executive Director Tarun Kanji.
1,000,000 options exercisable at $0.30 and expiring on 18 March 2018 are held by Bellaire Capital
Pty Ltd, an entity controlled by parties associated with the lead manager of the IPO.
g.
Voting Rights
The voting rights attached to each class of equity security are as follows:
Ordinary shares
–
Each ordinary share is entitled to one vote when a poll is called, otherwise each member
present at a meeting or by proxy has one vote on a show of hands.
There are no other classes of equity securities.
Page | 55
N1 HOLDINGS LIMITED
SHAREHOLDER INFORMATION
30 JUNE 2017
Page | 56