Page | 1
For personal use only
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
Sundaraj & Ker
Level 13, St James Centre
111 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
Stock Listing
Corporate Governance Statement
N1 Holdings Limited is listed on Australian
Securities Exchange (ASX) under the code
N1H.
Principles
Governance
N1 Holdings Limited and its subsidiaries (Group)
and the board are committed to achieving and
demonstrating the highest standards of corporate
governance. N1 Holdings Limited has reviewed its
the
corporate governance practices against
and
Corporate
Recommendations (3rd edition) published by the
ASX Corporate Governance Council. The 2018
corporate governance statement
the
corporate governance practices in place during the
financial year ended 30 June 2018. The 2018
corporate governance statement was approved by
the board on 27 August 2018. Governance
practices is set out in the Group's corporate
governance statement which can be viewed at:
http://www.n1holdings.com.au/.
reflects
Page | 2
For personal use only Dear fellow
shareholder,
Limited
to the N1 Holdings
2018 (FY18).
year ended 30 June
on ASX in March
listing
are critical
three years after
direc
strategic
planned
(Company or N1)
The Compa
and steer into the
year since
listing
for the com
its second full financial
I am pleased
to welcome you
Annual Report for the financial
ny has completed
the first
believe
2016. I always
build a strong
pany to
foundation
tion. At
the time of our IPO, we emphasised
drives our business to
growth.
the agile organisation
thrives.
continuing
As many of us appreciate, the
growth and, more importantly, sustainable
ever-changing,
world is
business
and
one keyword:
Diversification; that
credit
year, N1
tightening
successfully
policy
the challenges
During the financial
lenders
ing market,
tial property investors' appetites. The Company recorded a
$4.30m)
to $4.11 m (FY17: $3.56m).
expenses
operating
and waning residen
of 16.43% to $3.60m (FY17:
however N 1 achieved
achieve
from regulatory
on home financing
weathered
by banks and
from customers
coupled
increased cash receipts
record cash receipts
with a decrease in
revenue decline
pressure on the
Q4 FY18 saw N1
FY18 quarters.
from previous
challenges
amid these
non-bank
by 15.61 %
hous
$1.24m in billed
trail income during
and retention via its PAYG consultant
operating
of N1 's business
in the market in
significant
operating
June 2018 and generated
acquisition
talent
to N1 from both an
or a licensing
Our loan book value was at $783m as at 30
FY18. N1 is uniquely
positioned
benefit
model, which provides a
franchises
competitors
Unlike many
trail
86% of recurring
of their brokers' commissions, N1 retains
model was
The success
Australian
in FY18 with the
N1 Loans at #46 on the
Fast 100, a list
was recognised
Australian
tor business
success of N1 's commercial
congratulating our
Women in Finance
tinued hard
CFO, Penny He, for her nomination
Awards.
work and dedication
by the Australian
Broking Awards as a
as a finalist
for the Commercial Business
loans business. On the subject
more than
recognised
of Australia's
Awards as a finalist
for the Diversification
We are tremendously
in service to N1.
as Chief Financial
proud of Penny's
achievement
finalist
Mortgage
Business
Finsure
growing
fastest
revenue
model who take a minor clip
perspective.
costs and
of as low as 5%
June 2018).
income (as at 30
Review ranking
Financial
for the Brokerage
companies.
In addition,
of the Year Award,
of the Year Award and by
aggrega
the growing
N1 Loans
the
of the Year Award, evidencing
of awards, I hope you
will join with me in
Officer of the year
and grateful
at the 2018
for her con
During FY17, N1 's revenues were dominated by
residential
increases cross-selling
opportunities
acquisition
average
client
across N1 's business
cost and
increases
mortgage broking revenue.
commercial loan broking, com
streams
of income,
the synergy
broaden
strategy aims to increase our
acquisitions.
Diversification
of reduced
Our diversification
and drive
customer
units and, as such, directly
creates
revenue per client.
However during FY18 other
mercial
continue to evolve towards our
the new stream
(FY17: $99,755)
among N1 's group
for 10.24% of overall
businesses.
financial
of revenue, commercial broking
and accounted
of complementing
non-mortgage
originated
lending,
property
goal of becoming an integrated
(including
revenue
and lending revenue
increased to
revenue, representing
$368,283
growth
the most significant
and property services
firm. Among
in FY18
sales and property management) grew materially to
35.91 % of total revenue.
We
channels
of lead generation
Page | 3
For personal use only was at 247 properties-under-management
in FY18. N1 Realty managed modest growth
(PUM) as at June 2018. N1 Realty has
clear
while auction
by 8.78% to $805,845
N1 Realty's rent roll size
grown its revenue
ance rates
declined
coming years based
prices
after an
tivity
hedge against
the recurring
activity.
income.
forced investors
has in fact
initial
dip in FY17.
Property management
buy/sell
slowing property
is another
adds to our recurring
business
And it
viable
revenue,
revenue from our loan trail
across the market significantly
pipeline
on our current
to liquidate investment
year. We remain optimistic
and value of property listings.
Downward
resulting in an
positions,
over the
for growth over
pressure on property
level of
ac
increasing
which I see as a
for N1,
further
diversifying
great opportunities
in commercial
connections
to venture into the
As announced
of Business
capacity. Initial execution of this
its
with
has
strategy
leverage
(B2B) services,
in 2017, N1 will
to Business
enhance N1 's revenue
lending.
provision
generation
and lending
amazing growth in commercial
commercial
It also
by N1 Venture.
led us to launch our own
Fund is
One Lending
Fund managed
revenue.
broking
of business
In FY17, we saw
network
the expectation to
produced
short-term
a wholesale
on-lending
fund which
that capital
further
fund -One Lending
lending
has been established
to commercial
borrowers
to raise capital
basis.
on a short-term
from wholesale
investors for
the purpose of
manager of One Lending
itself into an entrant in the funds
industry. I foresee N1 Venture and funds management as a new growth opportunity for N1
transforming
Fund, is
N1 Venture, as the
management
Holdings.
particular
Shanghai,
Other new complementary B2B services and strategies are
we are looking
network
on our international
Kuala Lumpur and Singapore.
being considered
of offices and alliances
to capitalise
and pursued.
from Sydney,
In
we will aim to
build shareholder
value through
continued
growth in diversi
from complementary business, improved margins
via focusing resources on
B2B services,
increased
and rent roll management revenue and
flow via recurring
loan book trail income
ahead to the future,
Looking
fied revenue
improved cash
cross-sell
provides
activities.
a quality
N1 also aims to be a
market innovator through its one-stop-shop model that
holistic approach
of financial
and property services to retail
clients.
leading
to the provision
I would like to thank our shareholders
business
challenging
the current
through
for their continued
trust in the
for the
market conditions
financial
and property services industry.
management
of N1 as we steer the
Yours sincerely,
Ren Hor Wong
Chairman
Executive
27 September
2018
Sydney
and Chief Executive
Officer
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For personal use only Page | 5
For personal use only Annual Report for the year ended 30 June 2018
Report from Directors and Management
Directors’ Report
Auditor’s Independence Declaration
Consolidated Financial Statements for The Year Ended 30 June 2018
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 Short-term loan receivables
2.4 Plant and equipment
2.5 Intangible assets
2.6 Trade and other payables
2.7 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
23
23
25
27
27
28
28
29
31
31
32
32
33
36
38
7
18
19
20
21
22
40
40
43
44
44
45
45
48
49
50
55
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For personal use only N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2018
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 2018. 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
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For personal use only
N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2018
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 12 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
technology company, focused on the US market. He has held and holds
a range of governance roles including:
•
•
•
•
•
•
Independent Director - Tikitere Holdings Limited & PowerShield
Limited
Trustee / Deputy Chairman - Auckland War memorial Museum
Former Independent Chairman of Tomizone Limited (ASX: TOM)
Former Chairman - Bank of India, (New Zealand) Limited (a
subsidiary of the Bank of India)
Former Member - Portfolio Governance Authority (a committee of
New Zealand’s department of Inland Revenue)
Former Chairman - Noske-Kaeser Rail & Vehicles New Zealand
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
Nil
Directorships held in other listed
entities during the three years
prior to the current year
Former Independent Chairman – Tomizone Limited (ASX: TOM)
Page | 8
For personal use only
N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2018
Mr Anand Sundaraj (Company Secretary)
Qualifications, experience and
special responsibilities
Anand Sundaraj is a corporate lawyer with over 18 years’ experience.
He is a principal of Sydney-based law firm, Sundaraj & Ker. Mr
Sundaraj specialises in advising on mergers and acquisitions and capital
raisings for both publicly listed and privately held entities. He also
advises on funds management and general securities law matters
including listing rule compliance and corporate governance. Mr
Sundaraj has worked for a number of pre-eminent law firms including
Herbert Smith Freehills, King & Wood Mallesons, and Allen & Overy, as
well as global investment bank, Credit Suisse AG.
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 (2017: $nil).
Changes in state of affairs
New business
In December 2017, the Company commenced commercial lending to small and medium enterprises. The
commercial loans are secured against Australian property and further backed by personal guarantees.
New capital raise and borrowings
On 28 September 2017, the Company issued 5 million unlisted unsecured convertible notes with a total value of
$1 million. Each convertible note had a face value of $0.20 with 7% pa interest and 2 years 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 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. The purpose of issuing convertible notes was to fund acquisitions and to provide general
working capital.
During FY18, the Company borrowed $1,000,000 from unrelated private lenders and $150,000 from related
parties each at a 10% per annum interest rate. The purpose of these loans is to fund acquisitions, provide general
working capital and to provide commercial loans. Please refer to Note 3.3 for further details of the loans.
In May 2018 the Company borrowed $900,000 at a 10% per annum interest rate for 3 years from BBBSA
Finance. The loan is secured by the Company’s loan book. The purpose of the loan is to fund commercial lending.
Employee share incentive plan
Not applicable.
Principal activities
During the FY2018, the principal activities of the consolidated group consisted of:
— mortgage broking services;
—
financial planning services;
—
commercial lending business;
— migration services; and
—
real estate property sale and management services.
Page | 9
For personal use only
N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2018
Review of operations
Review of operating results
During FY18, the Group generated revenue of $3.60m (FY17: $4.30m) delivering a net loss of $1.85m (FY17:
loss $1.20m).
During FY18, N1 Loans continued to be the group’s major revenue generator, accounting for 74.33% of the total
revenue of the group. The real estate business via N1 Realty and Sydney Boutique Property generated $805,845
representing 22.41% of the group’s total revenue. N1 Migration generated $111,055 in revenue representing
3.09% of the group’s total revenue.
Commercial loans revenue in the second half of FY18 recorded the most uplift and is expected to become a
greater source of growth for the group, offsetting the decline in residential home loan broking revenue
experienced in FY18. Total commercial loan origination commission and lending revenue including interest from
loans in the current reporting period amounted to $368,283 (FY17: $99,755), which represents an increase of
269%. Meanwhile, recurring trail commission income continues to be an important source of revenue for N1. The
group’s loan book value as at 30 June 2018 was $783m (FY17: $799m). Despite a slight reduction in the loan
book balance, billed trail commission has steadily increased by 14.18% to $1.24m in FY18 (FY17: $1.09m) this is
due to a large number of loans entering a stage in their terms associated with higher commission brackets. 86%
of trail revenue (based on June 2018 figures) is retained by the Company (rather than paid away to commission-
based brokers) due to the Company’s PAYG mortgage consultants model.
N1 Realty’s revenue grew to $805,845 in FY18 (FY17: $740,799), representing a modest increase of 8.78%.
Declining market activity and falling auction clearance rates, particularly in Sydney, have undeniably had an
adverse effect on the industry in general. N1 Realty, however, experienced stable performance in property
management, both in terms of properties under management and recurring revenue. N1 manages 247 properties
in Sydney as at June 2018, with a high concentration of those properties in Sydney’s North Shore, due to the
operating activities of N1 Centres at both Chatswood and McMahons Point. Management believes the rebranding
of Sydney Boutique Property at McMahons Point to “N1 Centre” Lower North Shore will bring greater awareness
of N1’s brand to the local community.
Key features of underlying operating result are summarised below:
— Reduction in revenue in FY18 by 16.43% to $3,596,657 (FY17: $4,303,727) was primarily the result of a
reduction in residential home loan upfront brokerage fees of $830,748 and a reduction in the recognition of
net present value of future trail commission income of $220,320 during FY18.
— Reduction in direct cost to commission-based brokers and referrers
in FY18 to $813,792 (FY17:
$1,090,146).
— Reduction in employee cost in FY18 to $2,811,083 (FY17: $3,031,056).
— Reduction in sales and marketing cost in FY18 to $121,912 (FY17: $242,609).
—
—
Increased depreciation and amortisation expenses in FY18 to $607,821 (FY17: $371,106).
Increased finance cost in FY18 to $242,494 (FY17: $68,343).
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 $4,097,423 as at 30 June 2017 to $2,262,638 as at 30 June
2018. Current liabilities have increased from $998,210 to $2,564,044 in FY18. The Group’s working capital, being
current assets less current liabilities, has increased from $1,242,468 in 2017 to $1,344,031 in 2018. The Directors
believe the Group is in a stable financial position to expand and grow their current operations.
Prospects for future financial years
Over the coming financial year, N1 will continue its diversification strategy and will seek to capitalise on the B2B
market by tapping into N1’s extensive business network and relationships. The encouraging results from FY18,
especially in the commercial broking and lending space, pave the way for N1 to improve its financial performance
in the coming year. N1 has identified three critical principles to grow its business.
— Targeting increased revenue per head – N1 aims to reduce employee expenses and increase productivity
while seeking growth opportunities.
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N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2018
— Seeking recurring revenue from diverse sources – N1 has commenced its evolution from a single source
of recurring revenue (broking commissions) to multiple sources (including property management, fees and
interest income from commercial lending and, potentially, funds management). It is anticipated that
scaling the revenue from these sources will lead to higher margin businesses.
— Higher value transactions – targeting transactions with higher value revenue opportunities (such as
residential property sales, commercial lending and commercial loan broking) and funds management
(focusing on opportunities unique to the local Australian Asian community).
Based on our growth over the past six months, N1’s management team sees an exciting future for the group.
Events after the reporting period
On 1 August 2018, Company entered into 2 unsecured loan agreement with non-related lenders for $500,000 at
10% interest only repayment for 2 years. Loan purpose is to provide commercial loans.
On 5 September 2018, N1 Venture Pty Ltd issued its first unregistered managed scheme - One Lending Fund
through a licensed intermediary agreement with Lanterne Fund Services Pty Ltd (ABN 49 098 472 587, AFSL
238198). N1 Venture holds an AFSL 477879 and is acting as Trustee and Manager of One Lending Fund.
Other than above mentioned event, 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 $25,000. 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
There were no non-audit services provided by the Crowe Horwath during the year ended 30 June 2018.
Auditor’s independence declaration
The lead auditors’ independence declaration for the year ended 30 June 2018 has been received and can be
found following the Directors’ Report.
Options
As at 30 June 2018, the number of unissued ordinary shares in the Company under option are 5,991,250. For
details of Options issued to Directors and executives as remuneration, please refer to the Remuneration Report.
Page | 11
For personal use only
N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2018
Meetings of directors
During the financial year, ten 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
10
10
10
10
10
10
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.
KMP receive, at a minimum, the superannuation guarantee contribution required by law, which is currently 9.5%
of the individual's ordinary earnings. Some individuals, however, have chosen 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.
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N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2018
Remuneration structure
There have been no significant changes after the Company’s listing on ASX. The table below summarises the
remuneration components of KMP of the Group.
Reward Type
Purpose
Link to performance
Remuneration
component
Fixed remuneration
Short-term incentive
Salaries,
superannuation
and other fixed
benefits
Bonus paid in
cash
Long-term incentive
Share options
To provide competitive fixed
remuneration set with
reference to role, market and
experience
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
Company and individual
performance are considered
during the annual review
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.
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 FY2018.
Page | 13
For personal use only
N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2018
Minimum revenue achieved by the Company
for a financial year
Bonus
Ren Hor Wong
$5 million
$5.5 million
$6 million +
$10,000
$16,000
$20,000
Maximum achievable bonus is used in below calculation.
Bonus
Jia Penny He
$5,000
$8,000
$10,000
Fixed remuneration
Remuneration linked to performance
2018
2017
2018
2017
Directors and secretaries
Ren Hor Wong
Jia Penny He
Tarun Kanji
94.74%
94.74%
100%
94.74%
94.74%
100%
5.26%
5.26%
0%
5.26%
5.26%
0%
Employment Details of members of KMP
The following tables provide employment details of persons who were, during FY2018, members of KMP of the
Group. The table also illustrates the proportion of remuneration that was performance and non-performance
based.
Positions of KMPs and their employment details
Position held
Contract duration
Employment
type
Termination
notice period
Ren Hor Wong
Chairman, CEO
18/03/2016 - Ongoing
Permanent
Jia Penny He
Executive Director,
CFO
18/03/2016 - Ongoing
Permanent
Tarun Kanji
Independent Director
18/03/2016 - Ongoing
Consultancy
agreement
3 months
3 months
3 months
Jacqueline Wang
COO
01/08/2014 - Ongoing
Permanent
3 weeks
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). Superannuation is capped at maximum deductible contribution cap for individual which is
$25,000 in FY18.
—
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
Bonus
Ren Hor Wong
$5 million
$5.5 million
$6 million +
$10,000
$16,000
$20,000
— The Company provide a car benefit to the CEO and a car allowance of $1,000 pm.
— 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.
Page | 14
For personal use only
N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2018
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 and expired on 18 March 2018.
— 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 reimbursed based on actual work-related travel expenses. Total car
allowance paid to the COO in FY2018 is $3,500.
— 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.
Remuneration of KMP
2018
Short term employee benefits
Post-employment
benefits
Salaries
Bonus Other
Superannuation
(note 1)
$361,741
Directors and Secretaries
Ren Hor
Wong
Jia Penny
He
Tarun Kanji
$178,533
$59,000
Other KMP
Jacqueline
Wang
$186,262
-
-
-
-
$14,257
$ 25,000
$ 17,100
-
-
-
-
Long term
employee
benefits
Long service
leave
Share based
payments
Total
Options
$4,643
$2,249
-
-
$405,641
$6,874
$204,756
-
$ 59,000
$17,100
$2,428
$11,416
$217,206
2017
Short term employee benefits
Post-employment
benefits
Salaries
Bonus Other
Superannuation
(note 1)
Long term
employee
benefits
Long service
leave
Share based
payments
Total
Options
Directors and Secretaries
Ren Hor
Wong
$338,604
-
$13,877
$30,000
$3,914
-
$386,395
Page | 15
For personal use only
N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2018
Jia Penny
He
Tarun Kanji
Other KMP
Jacqueline
Wang
$155,904
$44,795
$152,763
-
-
-
-
-
-
$14,251
$1,929
$13,588
$185,672
-
-
-
$44,795
$14,250
$2,232
$17,581
$186,826
Note1: 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:
2018
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
1,200,000
-
-
-
-
-
-
-
-
-
-
1,000,000
-
-
1,200,000
Number of
options at the
end of the
year
-
750,000
2017
Number of
options
beginning
of the year
Granted
No.
Exercised
during the
year
Lapsed
during the
year
Number of
options at the
end of the
year
Vested
Unvested
-
-
-
-
-
750,000
-
1,200,000
Vested
Unvested
Ren Hor Wong
-
Jia Penny He
750,000
Tarun Kanji
1,000,000
-
-
-
Jacqueline Wang
750,000
450,000
-
-
-
-
-
-
-
-
-
750,000
-
-
-
750,000
1,000,000
1,000,000
-
1,200,000
-
1,200,000
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.
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
Jia Penny
He
Jacqueline
Wang
1
1
14/12/2015
750,000
$150,000
$0.2
14/12/2018
14/12/2015
750,000
$150,000
$0.2
14/12/2018
Tarun Kanji
2
18/03/2016
1,000,000
$200,000
$0.2
18/03/2016
Jacqueline
Wang
3
01/03/2017
450,000
$90,000
$0.2
14/12/2018
Reason for
grant
Employee
share option
Employee
share option
Director
option
Employee
share option
Tranche
Fair value per option at
granting date
Vesting conditions
Jia Penny He
Jacqueline Wang
1
1
$0.0544
$0.0544
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
Page | 16
For personal use only
N1 HOLDINGS LIMITED
DIRECTORS’ REPORT
30 JUNE 2018
Tarun Kanji
Jacqueline Wang
2
3
$0.0385
$0.0475
Expired on 18 March 2018
Continuous employment with the Group
from 14/12/2015 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:
2018
Ren Hor Wong
(Note 1)
Jia Penny He
(Note 2)
Number of
Shares
beginning
of the year
50,024,000
250,000
Tarun Kanji
-
Jacqueline Wang
125,000
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
Received as
remuneration
during year
Received
on
exercising
Options
Disposed
-
-
-
-
-
-
-
-
-
-
-
-
Received as
remuneration
during year
Received
on
exercising
Options
Disposed
-
-
-
-
-
-
-
-
-
-
-
-
Number of
Shares at the
end of the year
50,024,000
250,000
-
125,000
Number of
Shares at the
end of the year
50,024,000
250,000
-
125,000
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.
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 2018.
On behalf of the Board
Ren Hor Wong
Executive Chairman and CEO
27 September 2018
Sydney
Page | 17
For personal use only
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
27 September 2018
The Board of Directors
N1 Holdings Limited
Suite 502, 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 2018, I declare that to the best of my knowledge and belief, that there have been no
contraventions of:
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(i)
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
CROWE HORWATH SYDNEY
SUWARTI ASMONO
Partner
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. Liability limited other than for the acts or
omissions of financial services licensees.
Page | 18
For personal use only N1 HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
30 JUNE 2018
For the year ended 30 June 2018
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
Note
2018
$
2017
$
1.3
3,596,657
4,303,727
(813,792)
(1,090,146)
2,782,865
3,213,581
1.3
62,939
110,795
(2,811,083)
(3,031,056)
(23,741)
(121,912)
(479,161)
(368,063)
(240,879)
(242,494)
(90,109)
(11,957)
(97,392)
(242,609)
(429,982)
(388,319)
(242,830)
(68,343)
(75,368)
(20,377)
(607,821)
(371,106)
(2,151,416)
(1,643,006)
299,388
445,453
(1,852,028)
(1,197,553)
-
-
(1,852,028)
(1,197,553)
cents
(2.3)
(2.3)
cents
(1.5)
(1.5)
5.5
1.1
1.1
1.1
The accompanying notes form part of these financial statements.
Page | 19
For personal use only
N1 HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 JUNE 2018
As at 30 June 2018
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Short-term loan receivables
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Property, plant and equipment
Deferred tax assets
Intangible assets
Other non-current assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Loan and borrowings
Deferred income
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Loan and borrowings
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
2.3
3.3 (b)
2.2
2.4
5.5 (d)
2.5
3.3 (b)
2.6
3.3 (c)
2.7
3.3 (c)
5.5 (c)
2.7
3.1
3.1
The accompanying notes form part of these financial statements.
2018
$
2017
$
1,008,874
1,187,664
1,694,000
17,537
3,908,075
1,437,481
366,044
943,641
2,210,032
234,735
5,191,933
912,432
1,317,026
-
11,220
2,240,678
1,302,252
495,178
772,511
2,653,803
230,946
5,454,690
9,100,008
7,695,368
727,715
1,462,272
158,567
215,490
2,564,044
3,295,411
943,641
34,274
4,273,326
445,153
224,531
-
328,526
998,210
1,541,581
1,037,877
20,277
2,599,735
6,837,370
2,262,638
3,597,945
4,097,423
5,722,125
206,884
(3,666,371)
2,262,638
5,756,156
155,610
(1,814,343)
4,097,423
Page | 20
For personal use only
N1 HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
30 JUNE 2018
For the year ended 30 June 2018
Note
Share
Capital
$
Option
Reserve
$
Retained
Earning
$
Total
$
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
Total transactions with
owners and other transfers
Share based payment
Recovery of deferred tax on
IPO cost
-
-
3.1
63,977
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)
Balance at 30 June 2017 / 1 July 2017
5,756,156
155,610
(1,814,343)
4,097,423
Comprehensive income
Profit/(loss) for the year
Total comprehensive
income for the year
Transactions with owners, in
their capacity as owners, and
other transfers
Total transactions with
owners and other transfers
Recovery of deferred tax on
IPO cost
Balance at 30 June 2018
-
-
(1,852,028)
(1,852,028)
-
-
-
-
-
-
(1,852,028)
(1,852,028)
-
-
-
-
-
-
51,274
(34,031)
(34,031)
-
5,722,125
206,884
(3,666,371)
2,262,638
Share based payment
3.1
51,274
The accompanying notes form part of these financial statements.
Page | 21
For personal use only
N1 HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
30 JUNE 2018
For the year ended 30 June 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Interest received from bank deposit
Payments to suppliers and employees
Net increase in commercial loans
Net Increase in fund received from investor
Income tax refund/(paid)
Note
2018
$
2017
$
4,111,860
17,117
3,557,212
28,863
(5,112,773)
(5,469,227)
(1,694,000)
1,606,740
-
-
-
19,667
Net cash provided by (used in) operating activities
2.1
(1,071,056)
(1,863,485)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Purchase of Intangible assets
Acquisition of subsidiary
Loans recovered from related parties
Cash received on disposal of plants and equipment
Net cash provided by /(used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
Proceeds from issuance of convertible notes
Payment of finance cost and interest
Repayment of other finance liability
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
1,008,874
The accompanying notes form part of these financial statements.
(23,616)
(34,553)
(436,556)
(269,096)
-
(1,940,000)
-
48,000
50,000
-
(10,169)
(2,595,652)
470,297
1,000,000
(207,165)
(85,465)
1,177,667
96,442
912,432
1,246,300
370,000
(68,343)
(33,334)
1,514,623
(2,944,514)
3,856,946
912,432
Page | 22
For personal use only
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 1: KEY PERFORMANCE METRICS
30 JUNE 2018
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
2017
$
2018
$
(1,852,028)
(1,852,028)
(1,197,553)
(1,197,553)
81,555,573
81,045,248
-
-
81,555,573
81,045,248
(2.3)
(2.3)
(1.5)
(1.5)
Segment information
1.2
The group has identified three reportable segments based on the nature of the products and services offered, the
type of customers for those products and services 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
This segment refers to the operating activities in the financial services business including:
• Mortgage broking: the group acts as a mortgage broker that provides its customers with advice and
support. the group receives commission payments on loans originated through its network of customers.
• Commercial loan lending: The group lends privately raised funds to commercial borrowers and earns
loan fees and interest from this lending.
Real estate services
The group established a real estate service which operates through N1 Realty that acquired Sydney Boutique
Property and other rent roll assets. The services are currently focused on rental property management and
property sales agent services.
Migration services
The group provides migration services to its customers through N1 Migration which holds a migration agent
licence.
Page | 23
For personal use only
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 1: KEY PERFORMANCE METRICS
30 JUNE 2018
(b) Segment performance and financial position
Year ended 30 June
2018
Revenue
Loan brokerage
and other
financial
service
$
2,673,257
Real estate
service
Migration
service
Other
Total
$
805,845
$
111,055
$
6,500
$
3,596,657
Interest income
5,631
Other income
44,343
327
1,479
214
10,945
17,117
-
-
45,822
Total segment revenue
and other income
Results
Segment profit/(loss)
before income tax
Income tax
benefit/(expense)
Net profit/(loss) after
tax
Assets and liabilities
Total segment assets
Total segment liabilities
Other segment information
Depreciation and
amortisation
Interest expense
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
benefit/(expense)
Net profit/(loss) after
tax
Assets and liabilities
2,723,231
807,651
111,269
17,445
3,659,596
(155,885)
(660,935)
(50,374)
(1,284,222)
(2,151,416)
-
(155,885)
-
(660,935)
-
299,388
299,388
(50,374)
(984,834)
(1,852,028)
5,664,255
949,650
44,448
2,441,655
9,100,008
2,874,229
246,380
18,869
3,697,892
6,837,370
66,456
466,607
66,213
50,277
-
-
74,758
607,821
100,498
216,988
Loan brokerage
and other
financial
service
$
Real estate
service
Migration
service
Other
Total
$
$
3,366,449
740,799
174,407
4,673
42,330
48
22,454
227
10
$
22,072
23,915
17,138
$
4,303,727
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
(811,137)
(401,970)
37,302
(21,748)
(1,197,553)
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
Interest expense
92,609
205,338
513
25,796
-
3
73,159
371,106
6,310
32,623
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N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 1: KEY PERFORMANCE METRICS
30 JUNE 2018
1.3
Revenue and other income
(a)
Revenue
Origination commission
Trail commission billed
Net increase in the NPV of trail commission
Commercial lending fee and interest
Real estate service
Migration service
Other service
(b)
Other income
Bank interest
Other
Consolidated Group
2017
2018
1,168,395
1,940,101
1,244,395
1,089,882
116,146
144,321
805,845
111,055
6,500
3,596,657
336,466
-
740,799
174,407
22,072
4,303,727
17,117
45,822
62,939
28,863
81,932
110,795
Revenue recognition and measurement
Mortgage broker 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.
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 are 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) Commercial lending fee and interest
Commercial lending fee is recognised in revenue when the obligation of establishing the loan for customer is
completed.
Interest income generated from the commercial lending is recognised when it is earned from the loan lent to
customers.
(iv) 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 receives 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.
Render of other service (including migration service)
(v)
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.
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N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 1: KEY PERFORMANCE METRICS
30 JUNE 2018
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 is assessed at 17.0% in FY18 (FY17: 18.7%).
New accounting standards for application in future periods
AASB 15: Revenue from Contracts with customers will be mandatory for the financial year ended 30
June 2019.
AASB 15 establishes a single comprehensive model for entities to use in accounting for revenue arising
from contracts with customers and will supersede the current revenue recognition guidance including
AASB 118 Revenue and the related Interpretations when it becomes effective.
Under AASB 15, an entity recognises revenue when that service (performance obligation) is satisfied.
The group recognises revenue from the following major sources:
• Origination commissions arising from mortgage broking activities, and
•
Trailing commissions arising from mortgage broking activities.
Management has assessed the effects of applying the new standard on the group’s financial statements
and has identified the following areas that will be affected:
Measurement of trailing income asset
Under AASB 15, the future trailing commissions will be recognised and measured by expected value
approach in comparison with net present value of the trailing income (initially recognised at fair value)
under current accounting policy. The group estimate that the trailing commission asset would have
been $3,387,541 as at 30 June 2018 had AASB 15 been applied in the current financial year.
Presentation of contract assets
Based on the group’s preliminary assessment, it is expected that the associated future trail commission
receivable would be accounted for as a contract asset, and the provision for clawback would be
accounted for as a refund liability.
The contract asset will become a financial asset, i.e. a receivable, when the right to the consideration is
unconditional. Contract assets are subject to the impairment requirements of AASB 9. The origination
commission receivable is a short-term receivable recognised in accordance with AASB 9.
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N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 2: OPERATING ASSETS AND LIABILITIES
30 JUNE 2018
Section 2: Operating assets and liabilities
2.1 Cash and cash equivalents
Cash at bank and on hand
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
Net increase in commercial loans
Net fund received from commercial loan investor
Net increase in deferred income
Cash flows from operating activities
2.2 Trade and other receivables
Current
Commission receivables
Agent commission clawback receivable
NPV of future trailing income receivable
Non-Current
NPV of future trailing income receivable
Consolidated Group
2018
$
1,008,874
1,008,874
2017
$
912,432
912,432
Consolidated Group
2017
2018
$
$
(1,852,028)
(1,197,553)
590,709
(7,636)
207,165
51,274
(5,867)
(6,317)
(3,789)
282,562
(99,039)
(265,366)
(34,031)
(1,694,000)
1,606,740
158,567
371,106
-
68,343
125,139
(609,828)
13,770
(35,809)
(17,616)
(155,249)
(399,047)
(26,741)
-
-
-
(1,071,056)
(1,863,485)
Consolidated Group
2018
$
2017
$
258,988
45,881
882,795
338,580
76,566
901,880
1,187,664
1,317,026
1,437,481
1,302,252
1,437,481
1,302,252
Page | 27
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N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 2: OPERATING ASSETS AND LIABILITIES
30 JUNE 2018
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 2017:
nil). As at 30 June 2018, the amount of all trade and other receivables past due is $36,597 (2017: $12,704).
2.3 Short-term loan receivables
Current
Short-term commercial loan receivable
Consolidated Group
2018
$
1,694,000
1,694,000
2017
$
-
-
The group raised funds to lend money to commercial entities on a short-term basis and earns the interest as
income. More detail information regarding these loans is disclosed in Note 3.3 (c).
2.4 Property, 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
2018
$
63,759
(44,548)
19,211
74,329
(35,375)
38,954
2017
$
55,028
(30,995)
24,033
142,123
(42,811)
99,312
530,109
515,225
(222,230)
(143,392)
307,879
366,044
371,833
495,178
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.
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N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 2: OPERATING ASSETS AND LIABILITIES
30 JUNE 2018
Balance at 30 June 2016
Additions
Disposals
Depreciation expense
Office
Equipment
Motor
Vehicles
Furniture &
Fittings
14,291
23,193
132,416
35,801
-
469,473
Total
182,508
492,666
(13,451)
(33,104)
(77,332)
(123,887)
(56,109)
(56,109)
Balance at 30 June 2017
24,033
99,312
371,833
495,178
Additions
Disposals
Depreciation expense
Accumulated depreciation on
disposal
Balance at 30 June 2018
8,732
-
14,884
23,616
-
(13,554)
-
19,211
(67,795)
(19,993)
27,430
38,954
-
(78,838)
-
307,879
(67,795)
(112,385)
27,430
366,044
The motor vehicles were acquired via finance lease.
2.5 Intangibles Assets
a) Movement schedule of intangible assets
Balance at 1 July 2016
Additions
Amortisation
Balance at 30 June 2017
Additions
Amortisation/written-down
Balance at 30 June 2018
b) Goodwill
Goodwill
Goodwill (b) Rent Roll (c)
Website and
IT system (d)
$
$
$
Total
$
-
536,216
-
536,216
-
-
2,155,370
(180,177)
1,975,193
-
(417,518)
155,750
70,798
(84,154)
142,394
34,553
155,750
2,762,384
(264,331)
2,653,803
34,553
(60,806)
(478,324)
536,216
1,557,675
116,141
2,210,032
Consolidated Group
2018
$
536,216
2017
$
536,216
The goodwill resulted from the group’s acquisition of Sydney Boutique Property in 2016. The details of the
transaction and related calculation is disclosed in last year’s financial annual report. 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 the formerly described 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.
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N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 2: OPERATING ASSETS AND LIABILITIES
30 JUNE 2018
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 testing of the goodwill. The goodwill balance at
the reporting date only relates the real estate services segment.
Growth rate: 3%
Growth rate is based on management’s estimated inflation rate.
Pre-tax discount rate: 8%
Terminal value:
Pre-tax discount rate reflects the specific risks relating to the real
estate agency industry in Australia.
Terminal value is based on the third year budgeted net cash flow,
the pre-tax discount rate of 8% and the growth rate of 3%.
c) Rent Roll Assets
Rent Roll – Cost
Rent Roll – Written-down
Rent Roll – Net
Consolidated Group
2018
$
2017
$
2,155,370
2,155,370
(597,695)
(180,177)
1,557,675
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.
d) Website and IT System
Website and IT system – Cost
Website and IT system – Accumulated amortisation
Website and IT system – Net
Consolidated Group
2017
2018
$
$
283,904
318,457
(202,316)
(141,510)
116,141
142,394
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 statement on a diminishing basis over the estimated useful life of
the intangible assets from the date that they are considered 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 expenses.
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N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 2: OPERATING ASSETS AND LIABILITIES
30 JUNE 2018
2.6 Trade and other payables
Trade payables
Employee payables
Other creditors and accruals
Consolidated Group
2017
2018
$
$
101,705
122,661
235,293
369,761
727,715
161,644
181,804
445,153
Trade and other payable are recognised at fair value initially and subsequently measured at amortised cost.
2.7 Provisions
Current
Employee provision
Provisions for Clawback
Non-Current
Employee provision
Movement of provision for clawback
Beginning of the year
Additions (Reductions) during the year
Payment of clawbacks during the year
Ending of the year
Consolidated Group
2017
2018
$
$
78,100
137,390
215,490
34,274
34,274
93,124
235,402
328,526
20,277
20,277
2018
$
235,402
2017
$
454,022
27,160
(61,973)
(125,172)
(156,647)
137,390
235,402
Clawback
Provision for clawback represented 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
11.39% (FY17: 11.35%).
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 | 31
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N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 3: GROUP’S CAPITAL AND RISKS
30 JUNE 2018
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
2018
$
5,756,156
-
-
Deferred tax benefit for capital raising cost
(34,031)
5,722,125
Consolidated Group
2017
2018
$
$
5,756,156
5,722,125
206,884
155,610
Consolidated Group
2018
Number of
Shares
81,555,573
2017
$
5,738,586
2017
Number of
Shares
81,043,750
-
-
-
81,555,573
63,977
511,823
-
(46,407)
-
-
5,756,156
81,555,573
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
2018
$
155,610
51,274
206,884
2017
$
94,448
61,162
155,610
Details in relation to the options 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.
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N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 3: GROUP’S CAPITAL AND RISKS
30 JUNE 2018
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 exercised,
each Option is convertible into one ordinary Share.
(b) Options granted under the Employee Option Plan:
As at beginning of the year
Granted during the year
Exercised during the year
Forfeited during the year
As at end of the year
Average
exercise price
per Option
$
0.20
-
-
0.20
2018
Number of
Options
8,738,750
-
-
(2,747,500)
5,991,250
Average
exercise price
per Option
$
0.20
0.20
-
0.20
2017
Number of
Options
5,962,500
4,791,250
-
(2,015,000)
8,738,750
Options outstanding under the Employee Option Plan at the end of the year have the following expiry dates and
exercise prices:
Grant Date
Expiry Date
Exercise
price
$
Fair value at
grant date
$
Options
30 June 18
Options
30 June 17
14 December 2015
18 March 2016
1 March 2017
14 December 2018
18 March 2018
14 December 2018
0.20
0.20
0.20
0.054
0.0385
0.0475
3,710,000
4,535,000
-
1,000,000
2,281,250
3,203,750
5,991,250
8,738,750
Average remaining contractual life of options outstanding at end of period
0.46 years
1.26 years
(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 $nil (2017: $227,584). The value
was calculated using the Black Scholes valuation methodology applying the following inputs:
Weighted average exercise price：
$0.20
Weighted average life of the Option: 2.79 years
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
may not eventuate in the future. Options included under employee benefits expense in the statement of profit or
loss amount to $51,274 (2017: $61,162) and relate to equity settled share based payment transactions.
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 recognised 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.
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N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 3: GROUP’S CAPITAL AND RISKS
30 JUNE 2018
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.
(b)
Other Financial assets
Current
Other current assets
Short-term loan receivables
Non-Current
Other non-current assets
Other investment
Consolidated Group
2018
$
2017
$
17,537
11,220
1,694,000
1,711,537
-
11,220
234,695
230,906
40
40
234,735
230,946
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N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 3: GROUP’S CAPITAL AND RISKS
30 JUNE 2018
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.
Other investment
Other investments are non-derivative financial assets. 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
derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive
income is reclassified into profit or loss.
(c)
Financial liabilities
Current
Bank Loan (i)
Loan received for commercial lending (ii)
Convertible Debt (iii)
Finance lease payable - current
Non-Current
Bank Loan (i)
Loan from other lenders (iv)
Loan received for commercial lending (ii)
Convertible Debt (iii)
Finance lease payable - non-current
Consolidated Group
2017
2018
$
$
56,410
200,004
1,022,921
370,000
12,941
1,462,272
-
-
24,527
224,531
880,551
780,000
583,819
1,000,000
51,041
3,295,411
666,660
380,000
370,000
124,921
1,541,581
i) The bank loan was borrowed from National Australia Bank and consisted of two loan drawdowns.
Drawdown of $900,000 in October 2016: The repayment term of the loan is 5 years expiring 30 November
2021. Principal repayment has been extended in FY18 to be based on a 15-year period. The interest is 5.665%
per annum with principal and interest repayments in accordance with the amended loan agreement. The loan
is secured by the Sydney Boutique Property rent roll. The outstanding loan balance as at 30 June 2018 is
$711,961 (2017: $866,664).
Drawdown of $225,000 in November 2017: The repayment term of the loan is 3 years ending on 30 July 2020.
The interest is 5.6480% per annum with interest repayable in accordance with the loan agreement. The loan is
secured by the N1 Realty rent roll. The outstanding loan balance as at 30 June 2018 is $225,000 (2017: $nil).
ii) Loan received for commercial lending is the funds being raised for commercial loan lending to customers.
The BBBSA loan is secured by the Company’s loan book. The remaining loans are unsecured. Key terms of
these loans are detailed in the table below.
Drawdown
Amount
Drawdown
Date
Balance at
30/06/2018
Interest Rate Repayment term
BBBSA
900,000
01/05/18
856,740
10% p/a
Private loan batch#1
100,000
16/04/18
100,000
10% p/a
Private loan batch#2
500,000
01/06/18
500,000
10% p/a
Ren H Wong Family Trust
150,000
15/06/18
150,000
10% p/a
3 Years Principal
and Interest
3 Months Rolling
Interest only
3 Months Rolling
Interest only
3 Months Rolling
Interest only
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N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 3: GROUP’S CAPITAL AND RISKS
30 JUNE 2018
iii) Convertible debt movement schedule
As at the beginning of the year
Borrowed
Derivative expense
Settled
As at the end of the year
2018
$
370,000
1,000,000
79,023
(79,023)
1,370,000
2017
$
-
370,000
3,477
(3,477)
370,000
In FY17, the Company issued 1.85 million unlisted convertible notes in exchange for 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).
On 27 September 2017, the Company issued 5 million unlisted unsecured convertible notes with a total value of
$1,000,000. Each convertible note had a face value of $0.20 with a 7% per annum interest rate and a 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 date. Following completion of the issue in September
2017, the total number of convertible notes on issue increased from 1.85 million to 6.85 million. If the noteholders
convert the maximum number of convertible notes, then 6,850,000 new shares would be issued. This is based on
a price of $0.20 and does not account for any accrued interest. The proceeds from the issue of convertible notes
were used to fund potential acquisitions and for working capital purposes.
iv) Loan from other lenders consists of four loans from non-related parties. The first loan has a principle amount of
$180,000. The repayment term is 2 years and extended to 3 years in FY18 and the interest rate 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 rate is 10% per annum in accordance with the loan agreement. The
third loan has a principle amount of $200,000. The repayment term is 2 years and the interest rate is 10% per
annum in accordance with the loan agreement. The fourth loan has a principle amount of $200,000. The
repayment term is 2 years and the interest rate is 10% per annum in accordance with the loan agreement.
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
Short-term loan receivables
Other current assets
Financial Liabilities - Current
Financial liabilities at amortised cost
Trade and other payables
Finance lease payables
Bank loans
Loan received for commercial lending
Convertible debt
Note
Consolidated Group
2018
$
2017
$
2.1
2.2
3.3 (b)
1,008,874
1,187,664
1,694,000
17,537
912,432
1,317,026
-
11,220
2.5
3.3 (c)
3.3 (c)
3.3 (c)
3.3 (c)
727,715
12,941
56,410
1,022,921
370,000
445,153
24,527
200,004
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N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 3: GROUP’S CAPITAL AND RISKS
30 JUNE 2018
Financial Assets - Non-current
Trade and other receivables
Other non-current asset
Other investment
Financial Liabilities - Non-current
Bank loans
Finance lease payables
Convertible debt
Other Loan
Loan received for commercial lending
2.2
3.3 (b)
3.3 (c)
3.3 (c)
3.3 (c)
3.3 (c)
Consolidated Group
2017
$
2018
$
1,437,481
234,695
40
880,551
51,041
1,000,000
780,000
583,819
1,302,252
230,906
40
666,660
124,921
370,000
380,000
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
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 1.
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 A-to AA based on
Standard & Poor.
The majority of outstanding receivables are commissions (including expected value of future trailing commissions)
owed from Finsure Finance and Insurance Pty Ltd ABN 72 068 153 926 (Finsure) 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. The financial institutions which are owing commissions to the group through Finsure
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.
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$
-
-
-
-
-
N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 3: GROUP’S CAPITAL AND RISKS
30 JUNE 2018
Financial liability maturity analysis
2018
Trade and other payables
Convertible debts
Finance lease liabilities
Note
2.5
3.3(c)
3.3(c)
Total
contractual
cash flows
$
727,715
No more
than 1
year
$
727,715
1-2 years
2-5 years
$
-
$
-
-
1,370,000
370,000 1,000,000
63,982
12,941
13,501
37,540
More
than 5
years
$
-
-
-
Bank loan and other borrowings
3,323,701
1,079,331 1,137,911
451,547
654,912
5,485,398
2,189,987 2,151,412
489,087
654,912
2017
Trade and other payables
Convertible debts
Finance lease liabilities
1-2
years
2-5
years
More than 5
years
Note
2.5
Total
contractual
cash flows
$
445,153
No more
than 1
year
$
445,153
$
-
$
-
-
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
c.
Market risk
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 primarily exposed the Group to interest rate risk are disclosed
as below:
Bank loans
Consolidated Group
2017
$
866,664
2018
$
936,961
If the interest rate increases or decreases by 1% pa, the future cash flow payment to the bank will be increased or
decreased by $29,079 respectively over the life of the loan.
Foreign currency risk
The group held cash assets dominated in foreign currency from time to time. At the reporting date, the company
held RMB 2,569.37 (2017: RMB 18,111). 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 categorized 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.
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N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 3: GROUP’S CAPITAL AND RISKS
30 JUNE 2018
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 material assets or liabilities recognised and subsequently measured at fair value on
a recurring basis.
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).
AASB 9 addresses the classification, measurement and derecognition of financial assets and financial
liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets.
The group does not expect the new standard to affect the classification and measurement of those
financial assets and liabilities held by the group which are disclosed in note 3.3.
The new impairment model in AASB 9 requires the recognition of impairment provisions based on
expected credit losses (ECL) rather than only incurred credit losses as is the case under AASB 139. It
applies to financial assets classified at amortised cost, debt instruments measured at Fair Value
through Other Comprehensive Income (FVOCI), contract assets under AASB 15 Revenue from
Contracts with Customers, lease receivables, loan commitments and certain financial guarantee
contracts. Based on the assessments undertaken to date, the group does not expect any significant
difference in the loss allowance for the financial assets between AASB 139 and AASB 9.
The new standard also introduces expanded disclosure requirements and changes in presentation.
These are expected to change the nature and extent of the group’s disclosures about its financial
instruments particularly in the year of the adoption of the new standard.
Page | 39
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N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 4: BUSINESS PORTFOLIO
30 JUNE 2018
Section 4: Business portfolio
Business combination
4.1
During the financial year, the group has not entered into any business combination transactions.
In prior financial year 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. Details of this business
combination were disclosed in note 4.1 of the group’s annual financial statements for the year ended 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
2018
2017
$ $
451,163
18,018,882
18,470,045
708,574
15,599,888
16,308,462
1,351,043
1,780,000
3,131,043
68,036
750,000
818,036
15,790,087
(657,969)
206,884
15,339,002
15,756,055
(421,239)
155,610
15,490,426
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Net profit/(loss)
(236,730)
53,118
During the reporting period, N1 Holdings Limited has not entered into any financial guarantee arrangement.
At 30 June 2017 and 30 June 2018, N1 Holdings Limited has no contingent liabilities.
At 30 June 2018, 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)
N1 Realty Pty Ltd (iii)
N1 Project Pty Ltd (iv)
Principal place of
business
Australia
Australia
Australia
Australia
Ownership interest held by the Group
2018 (%)
2017 (%)
100%
100%
100%
100%
100%
100%
100%
100%
Page | 40
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N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 4: BUSINESS PORTFOLIO
30 JUNE 2018
N1 Venture Pty Ltd (v)
Sydney Boutique Property Pty Ltd (vi)
N1 Franchise Pty Ltd (vii)
Australia
Australia
Australia
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 is 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 and, 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
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 since acquisition.
(vii) (vii) TACQ International Pty Ltd was incorporated on 21 July 2017 and renamed to N1 Franchise Pty Ltd on 5
March 2018, it has been fully owned by the group since incorporation.
(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 2018. 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
2018
$
799,793
59,200
9,320
18,290
886,603
2017
$
705,943
58,501
8,075
31,169
803,688
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.
Page | 41
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N1 HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
SECTION 4: BUSINESS PORTFOLIO
30 JUNE 2018
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
N1 Consultants Group Sdn Bhd - Malaysia
N1 Forex Pty Ltd
Loan received/(paid) to related parties
Ren Hor Wong
Ren Hor Wong Family Trust
Balances to/(from) other related parties:
Ren Hor Wong – (payable)/receivable
Ren Hor Wong Family Trust
2018
$
2017
$
125,071
-
108,960
27,600
(2,776)
(150,000)
(234)
-
2018
$
(3,974)
(150,000)
2017
$
(1,198)
-
Page | 42
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N1 HOLDINGS LIMITED
NOTES TO FINANCIAL STATEMENTS
SECTION 5: OTHER DISCLOSURES
30 JUNE 2018
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.
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N1 HOLDINGS LIMITED
NOTES TO FINANCIAL STATEMENTS
SECTION 5: OTHER DISCLOSURES
30 JUNE 2018
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 released but for application in future periods has been disclosed in
the relevant section.
5.2
Auditor’s Remuneration
Remuneration of the auditor Crowe Horwath Sydney for:
auditing or reviewing the financial report
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
2017
2018
$
$
91,532
-
91,532
89,000
1,000
90,000
Consolidated Group
2017
2018
$
$
316,883
774,625
330,891
809,940
26,225
130,118
1,117,733
1,270,949
The major property lease is a non-cancellable lease with a five-year term, with rent payable monthly in advance.
Page | 44
For personal use only
N1 HOLDINGS LIMITED
NOTES TO FINANCIAL STATEMENTS
SECTION 5: OTHER DISCLOSURES
30 JUNE 2018
(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
2018
$
15,387
53,928
69,315
(5,333)
63,982
2017
$
24,527
139,486
164,013
(14,565)
149,448
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
adjustment to opening equity on the date of initial application.
The directors anticipate that the adoption of AASB 16 will impact the group’s financial statements and
lease asset and payable would be recognised on balance sheet as at 30 June 2018 if the new standard
was adopted.
(c)
Capital Expenditure Commitments
There were no capital expenditure commitments as at 30 June 2018 (2017: nil).
5.4
Contingent liabilities and Contingent assets
There are no contingent liabilities or contingent assets as at 30 June 2018 (2017: 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
Page | 45
For personal use only
N1 HOLDINGS LIMITED
NOTES TO FINANCIAL STATEMENTS
SECTION 5: OTHER DISCLOSURES
30 JUNE 2018
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 realised or the liability is settled and their measurement also reflects the manner in which Management
expects to recover or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that
it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be
utilised.
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
Unrecognised tax losses as deferred tax asset in
current year
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% (2017: 27.5%)
Tax effect of:
Permanent differences
Effect of change in income tax rate
Unrecognised tax losses as deferred tax asset in
current year
Deferred tax for tax losses under-recognised in prior
year
Income tax (benefit)/expense
Consolidated Group
2017
$
2018
$
(489,372)
(448,788)
(73,921)
12,282
262,851
-
1,054
(8,947)
(299,388)
(445,453)
(2,151,416)
(1,643,007)
(591,639)
(451,827)
28,346
37,634
-
(22,313)
262,851
-
1,054
(8,947)
(299,388)
(445,453)
As at 30 June 2018, the tax loss carried forward for the company is $3,696,874 (2017: $1,921,172).
(b)
Tax position
The group’s current tax payable is $nil (2017: $nil)
(c)
Deferred tax liabilities
Opening
balance
$
Charged to
income
statement
$
Charge to
equity
Charge to
other
Closing
balance
$
$
$
521,388
9,979
31,940
(6,652)
-
-
-
-
553,328
3,327
506,510
(119,524)
-
-
386,986
1,037,877
(94,236)
-
-
943,641
2018
Trailing income
Website
Assets valued up in
business combination
Balance at 30 June 2018
Page | 46
For personal use only
N1 HOLDINGS LIMITED
NOTES TO FINANCIAL STATEMENTS
SECTION 5: OTHER DISCLOSURES
30 JUNE 2018
2017
Trailing income
Website
Assets valued up in
business combination
Balance at 30 June 2017
(d)
Deferred tax assets
Opening
balance
(restated)
$
Charged to
income
statement
$
459,300
18,143
62,088
(8,164)
-
(29,706)
477,443
24,218
Charge to
equity
Charge to
other
Closing
balance
$
-
-
-
-
$
$
-
-
521,388
9,979
536,216
506,510
536,216
1,037,877
2018
Clawback and accrued
Tax Losses
IPO costs
Other temporary differences
Balance at 30 June 2018
2017
Clawback and accrued
Tax Losses
IPO costs
Other temporary differences
Balance at 30 June 2017
Opening
balance
$
Charged to
income
statement
$
Charged to
equity
Closing
balance
$
$
43,681
528,322
102,097
98,411
772,511
(18,515)
225,476
-
(1,799)
-
-
(34,032)
-
205,162
(34,032)
25,166
753,798
68,065
96,612
943,641
Opening
balance
$
78,280
77,816
148,504
44,646
349,246
Charged to
income
statement
$
Charged to
equity
Closing
balance
$
$
(34,599)
450,506
-
53,765
-
-
(46,407)
-
469,672
(46,407)
43,681
528,322
102,097
98,411
772,511
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.
Page | 47
For personal use only
N1 HOLDINGS LIMITED
NOTES TO FINANCIAL STATEMENTS
SECTION 5: OTHER DISCLOSURES
30 JUNE 2018
5.6
Events after the reporting period
On 1 August 2018, Company entered into 2 unsecured loan agreement with non-related lenders for $500,000 at
10% interest only repayment for 2 years. Loan purpose is to provide commercial loans.
On 5 September 2018, N1 Venture Pty Ltd issued its first unregistered managed scheme - One Lending Fund
through a licensed intermediary agreement with Lanterne Fund Services Pty Ltd (ABN 49 098 472 587, AFSL
238198). N1 Venture holds an AFSL 477879 and is acting as Trustee and Manager of One Lending Fund.
Other than the events mentioned above, there have 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 future financial years.
Page | 48
For personal use only
N1 HOLDINGS LIMITED
DIRECTORS’ DECLARATION
30 JUNE 2018
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 19 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 group’s financial position as at 30 June 2018 and of the
(b)
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 2018
Sydney
Page | 49
For personal use only
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 to the Members of 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 2018, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial 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:
(a) giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial
performance for the year then ended; and
(b) 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
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. Liability limited other than for acts or
omissions of financial services licensees.
Page | 50
For personal use only 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.
Key Audit Matter
How we addressed the Key Audit Matter
Valuation of trail commission – Note 2.2
The Group had significant trail commission
assets that were calculated using modelling
technique that involved the use of forward-
looking assumptions and risk adjustments.
Management had used judgment to establish
the methodology, assumptions and adjustments
used in the model, as described in Note 1.3.
We focussed on this area as a key audit matter
due to the complexity and subjectivity involved in
performing the valuation.
Our procedures included, but were not limited to,
assessing the consistency of the model used in
the current year against that used in the prior
year and challenging the key assumptions used
by management in the valuation of the trail
commission assets, as follows:
(cid:131) Assessing the discount rate for relevance
and consistency within the context of the
valuation and based on our knowledge of
the Group and the industry.
(cid:131) Comparing the lapse rate to industry data
and historical data for the Group.
Impairment assessment of intangibles assets (goodwill and rent roll) – Note 2.5
The Group had significant goodwill and rent roll
assets relating to its real-estate business.
The impairment assessment of goodwill involves
significant judgement in respect of factors such
as:
(cid:131) Cash flow projections;
(cid:131) Growth rate; and
(cid:131) Discount rate.
The recoverable value of rent rolls was
determined with reference to the reduction in
rent under management and resale multiple.
We focused on this area as a key audit matter
due to the high degree of estimation and
judgement made by the management.
Our procedures included, but were not limited to,
challenging the assumptions that supported the
directors’ position on impairment and
recoverability of these intangible assets as
follows:
(cid:131) Assessing the reasonableness of the cash
flow projections with reference to the last
actual result.
(cid:131) Reviewing the accuracy of the value in use
model and checking the mathematical
calculation.
(cid:131) Reviewing the reasonableness of key
assumptions in the value in use model with
reference to market available data and the
Group’s historical data.
Page | 51
For personal use only Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s Annual Report for the year ended 30 June 2018, 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 have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
(cid:131)
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
Page | 52
For personal use only (cid:131) Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
(cid:131)
(cid:131) Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves fair presentation.
(cid:131)
(cid:131) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the group financial report. The
auditor is responsible for the direction, supervision and performance of the group audit. The
auditor remains solely responsible for the audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during the audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in the auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in the auditor’s report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the remuneration report included in pages 12 to 17 of the directors’ report for the
year ended 30 June 2018.
In our opinion, the remuneration report of N1 Holdings Limited, for the year ended 30 June 2018,
complies with section 300A of the Corporations Act 2001.
Page | 53
For personal use only 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.
CROWE HORWATH SYDNEY
SUWARTI ASMONO
Partner
27 September 2018
Sydney
Page | 54
For personal use only N1 HOLDINGS LIMITED
SHAREHOLDER INFORMATION
30 JUNE 2018
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 2018.
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
1,244
40,150
907,767
5,800,122
74,806,290
81,555,573
0.00%
0.05%
1.11%
7.11%
91.72%
The number of shareholdings held in less than marketable parcels is 0.
Number of
holders
3
10
92
174
50
329
%
0.91%
3.04%
27.96%
52.89%
15.20%
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
BNP PARIBAS NOMS PTY LTD
Total
d.
20 Largest Shareholders — Ordinary Shares
Shareholder
REN H WONG PTY LTD
THE THREE HORSESHOES PTY LTD
MR YOKE MENG CHAN
TIN FAMILY SMSF PTY LTD
BNP PARIBAS NOMS PTY LTD
MR TONG CHAI TAN
JIANRONG SUN
MS MUN CHING WANG
MS YUEXIAN ZHAO
AUSTRALIA WIDE DEVELOPMENT GROUP PTY LTD
LC FAMILY SUPER PTY LTD
VEN TAN PTY LTD
IPOH YAP SMSF CO PTY LTD
1.
2.
3.
4
5
6
7
8
9
10
11
12
13
14 MXJ PTY LTD
15 MISS ZHAOJIA HE
16 MRS SILIAN ZHAO
17 MS HUEY CHARNG WONG
18 MISS MANNI FU
19.
20. MR JILIANG ZHANG
ANZI SUPER FUND PTY LTD
Total
Number of
Ordinary
Fully Paid
Shares Held
50,000,000
4,200,000
2,780,266
2,450,000
2,197,367
60,923,515
% Held
of Issued
Ordinary Capital
61.31%
5.15%
3.41%
3.00%
2.69%
75.57%
Number of
Ordinary
Fully Paid
Shares Held
% Held
of Issued
Ordinary Capital
50,000,000
4,200,000
2,780,266
2,450,000
2,197,367
1,498,249
1,250,000
760,470
655,833
500,000
500,000
500,000
487,500
453,167
425,000
418,750
350,000
341,115
312,500
300,000
69,900,603
61.31%
5.15%
3.41%
3.00%
2.69%
1.84%
1.53%
0.93%
0.80%
0.61%
0.61%
0.61%
0.65%
0.56%
0.52%
0.51%
0.43%
0.42%
0.38%
0.37%
85.70%
Page | 55
For personal use only
N1 HOLDINGS LIMITED
SHAREHOLDER INFORMATION
30 JUNE 2018
e.
Escrowed Shares
No
f. Vested Options
No
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 | 56
For personal use only
N1 HOLDINGS LIMITED
SHAREHOLDER INFORMATION
30 JUNE 2018
Page | 57
For personal use only