N1 Holdings Limited
Corporate directory
30 June 2019
Directors
Ren Hor Wong Executive Chairman, CEO
Jia Penny He Executive Director, CFO
Tarun Kanji Non-Executive Director
David Holmes Non-Executive Director
Company secretary
Anand Sundaraj
Corporate office
Share register
Auditor
Solicitors
Suite 502, 77 King Street Sydney NSW 2000
Telephone: +61 2 9262 6262
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
Telephone: +61 1300 554 474
Crowe Sydney
Level 15, 1 O’Connell Street
Sydney NSW 2000
Sundaraj & Ker
Level 36, 264 George Street
Sydney NSW 2000
Stock exchange listing
N1 Holdings Limited shares are listed on the Australian Securities Exchange (ASX
code: N1H)
Corporate Governance Statement
N1 Holdings Limited and the board are committed to achieving and demonstrating the
highest standards of corporate governance. N1 Holdings Limited has reviewed its
corporate governance practices against the Corporate Governance Principles and
Recommendations (3rd edition) published by the ASX Corporate Governance
Council. The 2019 corporate governance statement reflects the corporate governance
practices in place during the financial year ended 30 June 2019. The 2019 corporate
governance statement was approved by the board on 27 September 2019. A
description of the Group's current corporate governance practices is set out in the
at:
corporate
Group's
http://www.n1holdings.com.au/
statement which
governance
viewed
can
be
1 2
N1 Holdings Limited
Contents
30 June 2019
3
N1 Holdings Limited
Contents
30 June 2019
4
N1 Holdings Limited
Contents
30 June 2019
Director's report
Auditor's independence declaration
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors' declaration
Independent auditor's report to the members of N1 Holdings Limited
Shareholder information
General information
6
18
19
20
21
22
23
58
59
64
The financial statements cover N1 Holdings Limited as a Group consisting of N1 Holdings Limited and the entities it
controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is N1
Holdings Limited's functional and presentation currency.
N1 Holdings Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its principal
place of business is:
Suite 502, 77 King Street
Sydney NSW 2000
A description of the nature of the Group's operations and its principal activities are included in the directors' report, which is
not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 27 September 2019.
The directors have the power to amend and reissue the financial statements.
5
N1 Holdings Limited
Director’s report
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'Group') consisting of N1 Holdings Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it
controlled at the end of, or during, the year ended 30 June 2019.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Principal activities
During the FY2019, 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.
Review of operations
During FY19, the Group generated revenue of $4.06m (FY18: $3.60m) delivering a net loss of $2.57m (FY18: loss
$1.85m). Normalised EBIDTA with non-cashflow loss related to trail book being adjusted, has improved by $626,494 to a
loss of $674,607 (FY18: loss of $1.3m).
The increased net loss is mainly due to the following non-cash expenses totalling $1,024,207.
• In August 2019, the Company committed to selling its Finsure aggregated mortgage trail commissions book. As a
result, the contract assets and related contract liabilities for the trail book were reclassified as assets held for sale as at 30
June 2019. This has created a non-cash loss of $592,432.
• Increased depreciation and amortisation cost of $166,419
• Reduced deferred tax benefit of $265,356
During FY19, the Group’s financial services business continued to be the major revenue generator, accounting for 80.24%
of the total revenue of the group. It is worth noting that 25.68% of the revenue comes from commercial lending including
management fee from One Lending Fund (the Fund). The real estate business generated revenue of $531,524
representing 13.1% of the Group’s total revenue and a reduction of 34% compared to FY18. Realty income has declined
due to a downturn in the property market and increased regulatory intervention. Persisting decline of market activity and
falling auction clearance rates during the year, have undeniably had an adverse effect on the industry in general. A flood of
new entrants into property management industry due to falling sales activity has also contributed to squeezing profit on
margin property management revenue. In response to this, the management of the Group has reacted swiftly to optimise
the operational cost during the financial year by merging of offices, service accounts and sales team. N1 Realty also has
attached focus to commercial properties and large acquisitions transactions by utilising its strong network in the local Asian
business community. N1 Migration generated $145,117 in revenue representing 3.58% of the Group’s total revenue.
The launch of the Fund in the second half of FY19 has brought in the most significant uplift in revenue for the Group and
has become a major revenue driver for the Group. Total commercial loan origination commission and lending revenue
including interest from loans in the current reporting period amounted to $1.04m (FY18: $144,321), which represents an
increase of over 622%.
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
In July 2019, the Company has made a strategic investment in Stropro Technologies, a fintech start-up founded in 2017.
The investment has been structured as a SAFE (Simple Agreement for Future Equity) pursuant to which the Company has
agreed to make cash payment to Stropro Technologies in exchange for a contractual right to convert that investment into
shares at a later date.
6
N1 Holdings Limited
Director’s report
In July 2019, the Company's subsidiary N1 Loans has entered into a joint venture with Smartkey Property to form Loan 77
Pty Ltd. The joint venture company, Loan 77, will refer mortgage brokering opportunities to N1 Loans from Smartkey
Property's current pipelines of over 2,000 property settlements.
In August 2019, One Lending Fund, which is managed by N1 Venture Pty Ltd (AFSL 477879) issued original units of $2.1
million. Total funds under management has amounted to $7.9 million as at the date of this report.
In August 2019, the Company sold the trail book for a consideration of $2.38 million. The contract assets and related
contract liabilities for the trail book have been reclassified as assets held for sale as at 30 June 2019.
In August 2019, the Company established Yizhihao (Shanghai) Business Consultation Co. Ltd in China to replace its
Shanghai representative office under N1 Loans. The company will serve as a pilot of its business consultation services in
China.
In July 2019, the Company launches suite of self-branded home lending products. The new product suite, named “N1
Plus”, includes a range of prime, specialist and “low doc” loans.
No other matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect
the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
Likely developments and expected results of operations
Information on likely developments in the operations of the Group and the expected results of operations have not been
included in this report because the directors believe it would be likely to result in unreasonable prejudice to the Group.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
Shares under option
There were no unissued ordinary shares of N1 Holdings Limited under option outstanding at the date of this report.
Shares issued on the exercise of options
There were no ordinary shares of N1 Holdings Limited issued on the exercise of options during the year ended 30 June
2019 and up to the date of this report.
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a
director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of
the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the
Company or any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
7
N1 Holdings Limited
Director’s report
Non-audit services
There were no non-audit services provided during the financial year by the auditor.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors' report.
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);
Mr Tarun Kanji (Non-executive Director, appointed 18 March 2016); and
Mr David Holmes (Non-executive Director, appointed 15 January 2019).
Company Secretary
Mr Anand Sundaraj (Company Secretary, appointed 24 November 2015)
8
N1 Holdings Limited
Director’s report
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
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 13
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
9
N1 Holdings Limited
Director’s report
Mr Tarun Kanji (Non-Executive Director)
Qualifications, experience and
special responsibilities
Mr Kanji has nearly 26 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 international accounting 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 11 years with
Fosters Group.
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
Non-Executive Director – Tomizone Limited (ASX: TOM)
Mr David Holmes (Non-Executive Director)
Qualifications, experience and
special responsibilities
Mr Holmes has over 30 years’ experience in the financial services industry having held senior
roles in the UK and Australia. He was Head of Mortgage Credit for Citibank UK before
becoming COO at Preferred Mortgages, one of the first non-conforming lenders in the UK. In
August 2000 David moved to Australia and was one of the founding Executives at Pepper
Money. While at Pepper Money he served as COO and Global Head of Credit with
responsibility for the establishment and maintenance of credit polices throughout Australia,
Ireland and South Korea. David was instrumental in Pepper Money gaining warehouse
funding facilities from three of the major banks in Australia.
Mr Holmes holds a Bachelor of Arts (with Honours) from University of Warwick.
Interest in Shares and Options
Directorships held in other listed
entities during the three years
prior to the current year
Nil
None
10
N1 Holdings Limited
Director’s report
Mr Anand Sundaraj (Company Secretary)
Qualifications, experience and
special responsibilities
Anand Sundaraj is a corporate lawyer with over 19 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
Meetings of directors
The number of meetings of the Company's Board of Directors ('the Board') held during the year ended 30 June 2019, and
the number of meetings attended by each director were:
Ren Hor Wong
Jia Penny He
Tarun Kanji
David Holmes (appointed in January 2019)
Remuneration report
Remuneration policy
Number
eligible to
attend
Number
attended
11
11
11
6
11
11
11
6
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 (having regard to the Company’s earnings and the
consequences of the Company’s performance on shareholder wealth, in each case in the most recent financial year
and previous 4 financial years) 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.
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N1 Holdings Limited
Director’s report
— 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.
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.
Remuneration
component
Fixed
remuneration
Short-term
incentive
Long-term
incentive
Reward Type
Purpose
Link to performance
Salaries,
superannuation
and other fixed
benefits
Bonus paid in
cash
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.
12
N1 Holdings Limited
Director’s report
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 FY2019.
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
2019
2018
2019
2018
Directors and secretaries
Ren Hor Wong
Jia Penny He
Tarun Kanji
David Holmes
94.74%
94.74%
100%
100%
94.74%
94.74%
100%
-
5.26%
5.26%
0%
0%
5.26%
5.26%
0%
-
Employment Details of members of KMP
The following tables provide employment details of persons who were, during FY2019, 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
Ren Hor Wong
Chairman, CEO
18/03/2016 - Ongoing
Permanent
18/03/2016 - Ongoing
Permanent
Termination
notice
period
3 months
3 months
Jia Penny He
Tarun Kanji
Executive
Director, CFO
Independent
Director
18/03/2016 - Ongoing
Consultancy
agreement
3 months
Jacqueline Wang
COO
01/08/2014 - Ongoing
Permanent
3 weeks
David Holmes
Independent
Director
15/01/2019 - Ongoing
Consultancy
agreement
3 months
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N1 Holdings Limited
Director’s report
Key terms of KMP contract
Chief Executive Officer
— The CEO receives fixed remuneration of $360,000 per annum plus superannuation contributions under the
Superannuation Guarantee (Administration) Act 1992 (Cth) and the Superannuation Guarantee Charge Act 1992
(Cth).
—
In addition to the fixed remuneration, the CEO will be entitled to a bonus on the following terms:
Minimum revenue achieved by the
Company for a financial year
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.
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
Bonus
Jia Penny He
$5 million
$5.5 million
$6 million +
$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 – Tarun Kanji
— The remuneration (Service Fee) of the Non-Executive Director is $59,000 per annum.
— 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 $120,000 per annum plus superannuation contributions under the Superannuation
Guarantee (Administration) Act 1992 (Cth) and the Superannuation Guarantee Charge Act 1992 (Cth).
— 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.
14
N1 Holdings Limited
Director’s report
Non-Executive Director – David Holmes
— The remuneration (Service Fee) of the Non-Executive Director is $66,000 per annum including Superannuation.
— 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.
Remuneration of KMP
2019
Short term employee benefits
Salaries
Bonus Other
(note 1)
Post-
employment
benefits
Superannuation
Long term
employee
benefits
Long service
leave
Share
based
payments
Options
Total
$11,530
$20,531
$17,100
-
$2,293
$6,518
$3,001
-
-
$413,254
$6,180
$204,123
-
$59,000
$26,435
$8,550
$307
$11,613
$108,034
$374,675
$177,842
Directors and Secretaries
Ren Hor
Wong
Jia Penny
He
Tarun
Kanji
David
Holmes
Other KMP
Jacqueline
Wang
$87,564
$24,142
$59,000
-
-
-
-
-
$178,533
$361,741
Directors and Secretaries
Ren Hor
Wong
Jia Penny
He
Tarun
Kanji
Other KMP
Jacqueline
Wang
$186,262
$59,000
-
-
-
-
-
-
-
-
-
-
-
2018
Short term employee benefits
Salaries
Bonus Other
(note 1)
Post-
employment
benefits
Superannuation
Long term
employee
benefits
Long service
leave
Share
based
payments
Options
Total
$14,257
$25,000
$17,100
-
$4,643
$2,249
-
-
$405,641
$6,874
$204,756
-
$59,000
$17,100
$2,428
$11,416
$217,206
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:
2019
Unvested
Vested
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
Ren Hor Wong
-
Jia Penny He
750,000
Tarun Kanji
-
Jacqueline
Wang
1,200,000
David Holmes
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
750,000
750,000
-
-
1,200,000
1,200,000
-
-
-
-
-
-
-
15
N1 Holdings Limited
Director’s report
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
-
-
-
-
-
-
-
-
Number of
options at
the end of
the year
-
750,000
-
-
1,000,000
-
-
1,200,000
Vested
Unvested
-
-
-
-
-
750,000
-
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
Exercising
value
Exercising
price
Vesting
date
Reason for
grant
Jia Penny
He
Jacqueline
Wang
Tarun
Kanji
Jacqueline
Wang
1
1
2
3
14/12/2015 750,000
$150,000
$0.2
14/12/2018
14/12/2015 750,000
$150,000
$0.2
14/12/2018
Employee
share option
Employee
share option
18/03/2016 1,000,000
$200,000
$0.2
18/03/2016
Director option
01/03/2017 450,000
$90,000
$0.2
14/12/2018
Employee
share option
Tranche
Fair value per option at
granting date
Vesting conditions
Jia Penny He
Jacqueline
Wang
Jacqueline
Wang
1
1
3
$0.0544
$0.0544
$0.0475
Continuous employment with the Group
from 14/12/2015 to 14/12/2018
Continuous employment with the Group
from 14/12/2015 to 14/12/2018
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:
2019
Ren Hor Wong
(Note 1)
Jia Penny He
(Note 2)
Number of
Shares
beginning
of the year
50,024,000
250,000
Received as
remuneration
during year
Received
on
exercising
Options
Disposed
-
-
-
-
-
-
Number of
Shares at
the end of
the year
50,024,000
250,000
16
N1 Holdings Limited
Director’s report
Tarun Kanji
-
Jacqueline
Wang
125,000
David Holmes
-
-
-
-
-
-
-
-
-
-
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
Received as
remuneration
during year
Received
on
exercising
Options
Disposed
-
-
-
-
-
-
-
-
-
-
-
-
-
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 2019.
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2019.
Options
There were no options over ordinary shares issued to directors and other key management personnel as part of
compensation that were outstanding as at 30 June 2019.
There were no options over ordinary shares granted to directors and other key management personnel as part of
compensation during the year ended 30 June 2019.
Auditor
Crowe continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
Ren Hor Wong
Executive Chairman and CEO
27 September 2019
17
Crowe Sydney
ABN 97 895 683 573
Member of Crowe Global
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.crowe.com.au
27 September 2019
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 2019, 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 Sydney
Suwarti Asmono
Partner
The title ‘Partner’ conveys that the person is a senior member within their respective division, and is among the group of persons who hold an
equity interest (shareholder) in its parent entity, Findex Group Limited. The only professional service offering which is conducted by a partnership
is the Crowe Australasia external audit division. All other professional services offered by Findex Group Limited are conducted by a privately
owned organisation and/or its subsidiaries.
Findex (Aust) Pty Ltd, trading as Crowe Australasia is a member of Crowe Global, a Swiss verein. Each member firm of Crowe Global is a
separate and independent legal entity. Findex (Aust) Pty Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe
Global or any other member of Crowe Global. Crowe Global does not render any professional services and does not have an ownership or
partnership interest in Findex (Aust) Pty Ltd. Services are provided by Crowe Sydney, an affiliate of Findex (Aust) Pty Ltd. Liability limited by a
scheme approved under Professional Standards Legislation. Liability limited other than for acts or omissions of financial services licensees.
© 2019 Findex (Aust) Pty Ltd
18
N1 Holdings Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2019
Revenue
Other income
Expenses
Consulting and referral fees
Employee cost
IT and technology
Sales and marketing
Rent and utilities
Professional fee
Office and administrative expense
Finance cost
Travel cost
Depreciation and amortisation
Other operation cost
Loss for non-current assets classified as held for sale
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Basic earnings per share
Diluted earnings per share
Consolidated
Note
2019
$
2018
$
3
4
4,057,306
3,596,657
35,712
62,939
(913,577)
(2,503,698)
(11,010)
(99,682)
(487,747)
(374,717)
(238,869)
(564,093)
(102,702)
(774,240)
(35,623)
(592,432)
(813,792)
(2,811,083)
(23,741)
(121,912)
(479,161)
(368,063)
(240,879)
(242,494)
(90,109)
(607,821)
(11,957)
-
(2,605,372)
(2,151,416)
35
34,032
299,388
(2,571,340)
(1,852,028)
-
-
(2,571,340)
(1,852,028)
Cents
Cents
1
1
(3.2)
(3.2)
(2.3)
(2.3)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
19
N1 Holdings Limited
Consolidated statement of financial position
As at 30 June 2019
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Short-term loan receivables
Other financial assets
Non-current assets held for sale
Other current assets
Total current assets
Non-current assets
Trade and other receivables
Contract assets
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
Contract liabilities
Loan and borrowings
Deferred income
Provisions
Total current liabilities
Non-current liabilities
Contract liabilities
Loan and borrowings
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
Consolidated
Note
2019
$
2018
$
5
7
8
10
9
11
12
7
8
13
36
14
15
16
17
18
19
20
17
18
36
20
919,532
283,585
91,566
2,752,500
421,507
2,384,525
54,650
6,907,865
-
121,273
293,354
839,775
1,591,185
236,823
3,082,410
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
9,990,275
9,100,008
409,764
216,248
3,770,103
172,845
150,697
4,719,657
727,715
-
1,462,272
158,567
215,490
2,564,044
53,483
4,091,681
839,775
52,159
5,037,098
-
3,295,411
943,641
34,274
4,273,326
9,756,755
6,837,370
233,520
2,262,638
21
22
5,688,093
206,524
(5,661,097)
5,722,125
206,884
(3,666,371)
233,520
2,262,638
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
20
N1 Holdings Limited
Consolidated statement of changes in equity
For the year ended 30 June 2019
Consolidated
Balance at 1 July 2017
Loss after income tax benefit for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Share-based payments
Recovery of deferred tax on IPO cost
Issued
capital
$
Reserves
$
Retained
profits
$
Total equity
$
5,756,156
155,610
(1,814,343)
4,097,423
-
-
-
-
(34,031)
-
-
-
(1,852,028)
-
(1,852,028)
-
(1,852,028)
(1,852,028)
51,274
-
-
-
51,274
(34,031)
Balance at 30 June 2018
5,722,125
206,884
(3,666,371)
2,262,638
Consolidated
Balance at 1 July 2018
Issued
capital
$
Reserves
$
Retained
profits
$
Total equity
$
5,722,125
206,884
(3,666,371)
2,262,638
Impact of adoption of AASB 15
-
-
576,614
576,614
Balance at 1 July 2018 - restated
5,722,125
206,884
(3,089,757)
2,839,252
Loss after income tax benefit for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Share-based payments
Recovery of deferred tax on IPO cost
-
-
-
-
(34,032)
-
-
-
(2,571,340)
-
(2,571,340)
-
(2,571,340)
(2,571,340)
(360)
-
-
-
(360)
(34,032)
Balance at 30 June 2019
5,688,093
206,524
(5,661,097)
233,520
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
21
N1 Holdings Limited
Consolidated statement of cash flows
For the year ended 30 June 2019
Cash flows from operating activities
Receipts from customers
Interest received from bank deposit
Payments to suppliers and employees
Net increase in fund lent as commercial loans
Net Increase in fund received for commercial loans
Interest and other finance costs paid for commercial loans
Net cash from/(used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of Intangible assets
Investment in other financial assets
Cash received on disposal of plants and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings and loans
Proceeds from issuance of convertible notes
Repayment of borrowings and loans
Payment of finance cost and interest
Repayment of other financial liability
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Consolidated
Note
2019
$
2018
$
4,437,516
9,126
(5,534,531)
(1,058,500)
2,843,452
(312,043)
4,111,860
17,117
(5,112,773)
(1,694,000)
1,606,740
-
385,020
(1,071,056)
13
14
(10,524)
(72,178)
(421,507)
-
(23,616)
(34,553)
-
48,000
(504,209)
(10,169)
530,000
-
(256,410)
(230,801)
(12,942)
470,297
1,000,000
-
(207,165)
(85,465)
29,847
1,177,667
(89,342)
1,008,874
96,442
912,432
Cash and cash equivalents at the end of the financial year
5
919,532
1,008,874
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
22
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 1. Earnings per share
Loss after income tax
Consolidated
2019
$
2018
$
(2,571,340)
(1,852,028)
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
81,555,573 81,555,573
Weighted average number of ordinary shares used in calculating diluted earnings per share 81,555,573 81,555,573
Basic earnings per share
Diluted earnings per share
Note 2. Operating segments
Cents
Cents
(3.2)
(3.2)
(2.3)
(2.3)
Identification of reportable operating segments
The Group is organised into four operating segments: financial services, real estate services, migration services and other.
These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are
identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of
resources. There is no aggregation of operating segments.
Financial services
This segment refers to the operating activities in the area of financial service business mainly including:
- Mortgage broking
- Commercial loan lending
The Group acts as a mortgage broker that provides its customer with advice and support and receives commission
payments on loans originated through its network of customers.
The Group lends the privately raised funds to commercial borrowers and earns a loan fee and interest from those lending
activities.
Real estate services
The Group conducts real estate services through N1 Realty Pty Ltd and Sydney Boutique Properties Pty Ltd. The services
currently are focused on rental property management and property sales agent service.
Migration services
The Group provides migration services to its customers through N1 Migration Pty Ltd which holds a migration agent
licence.
Other segments represent the services provided by the Group other than the above three categories.
The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies
adopted for internal reporting to the CODM are consistent with those adopted in the financial statements.
23
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 2. Operating segments (continued)
Operating segment information
Consolidated - 2019
$
$
$
$
Total
$
Financial
services
Real estate
services
Migration
services
Other
Revenue
Revenue
Interest
Other revenue
Total revenue
3,255,665
6,457
11,766
3,273,888
531,524
-
21
531,545
145,117
148
-
145,265
125,000
2,520
14,800
142,320
4,057,306
9,125
26,587
4,093,018
Loss for non-current assets classified as held
for sale
Segment operating profit/(loss) before income
tax
Profit/(loss) before income tax benefit
Income tax benefit
Loss after income tax benefit
Material items include:
Depreciation and amortisation expense
Interest expense
(592,432)
-
-
-
(592,432)
(357,736)
(950,168)
(834,438)
(834,438)
12,643
12,643
(833,409)
(833,409)
(2,012,940)
(2,605,372)
34,032
(2,571,340)
42,575
108,568
664,261
56,566
-
78
67,404
398,881
774,240
564,093
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
6,995,506
1,044,737
53,208
1,896,824
9,249,051
2,997,457
69,986
(2,559,739)
9,990,275
9,990,275
9,756,755
9,756,755
24
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 2. Operating segments (continued)
Consolidated - 2018
$
$
$
Other
$
Total
$
Real estate
services
Migration
services
Financial
services
Revenue
Revenue
Interest
Other revenue
Total revenue
2,673,257
5,631
44,343
2,723,231
805,845
327
1,479
807,651
111,055
214
-
111,269
6,500
10,945
-
17,445
3,596,657
17,117
45,822
3,659,596
Segment profit/(loss) before income tax
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit
Material items include:
Depreciation and amortisation
Interest expense
(155,885)
(155,885)
(660,935)
(660,935)
(50,374)
(50,374)
(1,284,222)
(1,284,222)
(2,151,416)
(2,151,416)
299,388
(1,852,028)
66,456
66,213
466,607
50,277
-
-
74,758
100,498
607,821
216,988
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
Note 3. Revenue
5,664,255
949,650
44,448
2,441,655
2,874,229
246,380
18,869
3,697,892
9,100,008
9,100,008
6,837,370
6,837,370
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Mortgage broking origination commission
Mortgage broking trail commission
Net movement in trail commission asset valuation
Commercial lending fee and interest
Real estate service
Migration service
Other service
Geographical regions
Australia
International
Timing of revenue recognition
Consolidated
2019
$
2018
$
915,793
1,297,972
-
1,041,900
531,524
145,117
125,000
1,168,395
1,244,395
116,146
144,321
805,845
111,055
6,500
4,057,306
3,596,657
4,057,306
-
3,596,657
-
4,057,306
3,596,657
Revenue is recognised either at a point in time or over time, when (or as) the Group satisfies performance obligations by
transferring the promised goods or services to its customers. The analysis of the revenue recognition point is as below:
25
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 3. Revenue (continued)
Mortgage origination commission
Trail commission
Commercial lending fee and interest
Real Estate service
Migration service
Other service
2019
2019
2018
2018
At point in
At point in
time
$
Over time
$
time
$
Over time
$
915,793
1,297,972
512,618
132,018
145,117
125,000
-
-
529,282
399,506
-
-
1,168,395
1,360,541
-
301,774
111,055
6,500
-
-
144,321
504,071
-
-
3,128,518
928,788
2,948,265
648,392
New Accounting Policy - AASB 15 Revenue from Contracts with Customers
The Group has adopted AASB 15: Revenue from Contracts with Customers since 1 July 2018. The standard supersedes
the previous revenue recognition guidance including AASB 118 Revenue and the related interpretations.
The standard has introduced a single, principle-based five- step recognition and measurement model for revenue
recognition. The five steps are:
1. Identify the contract with a customer;
2. Identify the separate performance obligations;
3. Determine the transaction price;
4. Allocate the transaction price to each performance obligation identified in Step 2; and
5. Recognise revenue when a performance obligation is satisfied.
The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised goods or
services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for
those goods or services.
Where there is variable consideration in calculating a transaction price, revenue will only be recognised if it is highly
probable that a significant revenue reversal will not subsequently occur.
26
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 3. Revenue (continued)
Mortgage broking
The Group provides a service of introducing applicants to lenders as part of the process to originate a loan and receive
commissions for the service provided. The service activities that form part of this process are interrelated and
interdependent of each other and form a single performance obligation. The Group recognise commission as revenue upon
the settlement of loans when the performance obligation is completed.
The deferral of some of the commission as a trailing commission is a mechanism by which the lender is incentivising the
broker to introduce quality applicants that will not refinance their loans and therefore maximise the life of the loan. This
mechanism affects the transaction price, but it does not give rise to a separate performance obligation. As a result, a
trailing commission is also recognised as revenue upon settlement of loans and at the same time, the right to trailing
commissions is now recognised as a contract asset on balance sheet (where it was classified under trade and other
receivable in reports from prior period). The contract asset will only become a financial asset (i.e. a receivable) when the
right to the consideration is unconditional. This is expected to be as each month’s entitlement to the trailing commission is
established when an invoice is raised to the aggregator.
The Group recognises a trailing commission as revenue only if it is highly probable that a change in the estimate of the
variable consideration would not result in a significant reversal of the cumulative revenue already recognised.
The upfront origination commission was recognised at its transactions price and the trailing commission is recognised by
using expected value approach constrained by avoiding possible future downward revenue adjustments (i.e., revenue
reversals).
The Group is a principal because it controls its service activities during the loan application process and entitled to gross
commissions from lenders/aggregators. As a result the revenue for commissions earned is presented on a gross basis.
The portion payable to commission-based brokers is recorded separately and recognised as trail commission liabilities at
reporting date.
Real estate service
The Group enters into contracts with its customers to manage and/or sell, on their behalf, of properties. Under these
contracts, the Group provides rental management and/or selling agent services (i.e., coordinating the selection of suitable
tenants/purchasers and managing the rental and selling of the properties).
As a result, the Group 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. In terms of the real estate selling agent
services, 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 is a principal because it controls its service activities during the property management and real estate sales
process and entitled to gross commissions from landlords/sellers. Therefore, the revenue for commission earned is
presented on a gross basis.
Commercial loan lending service
The Group enters into contracts to lend the privately raised fund to commercial borrowers. Under these contracts, the
Group provides loan services and earns a commercial lending fee and interest from those lending activities. Commercial
lending fees are recognised as revenue upon the obligation of establishing the loan for a customer being completed.
Interest income generated from the commercial lending is recognised when it is earned from the loan lent to customers.
The Group is a principal because it controls its service activities during the lending process and entitled to gross
commissions from borrowers. Therefore, the revenue for lending fees and interest earned are presented on a gross basis.
27
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 3. Revenue (continued)
Render of other service (including migration service)
Revenue from the rendering of services is recognised in the accounting period in which the services are rendered. For
fixed-price services, revenue is recognised based on the actual service provided to the end of the reporting period as a
proportion of the total services to be provided.
Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting
increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the
circumstances that give rise to the revision become known by management.
The Group controls its services during the service rendering process and is a principal. It is entitled to gross commissions
from applicants. Therefore, the revenue for commissions earned is presented on a gross basis.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest
rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset
to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Impact of adoption of AASB 15
The Group has selected to use the modified retrospective approach in adopting AASB 15 which recognises the cumulative
effect of initial application through opening retained earnings as at 1 July 2018. The Group will not restate the comparative
period financial statements. The modified retrospective approach applied to contracts not completed at 30 June
2018. Other than the impact for measurement of mortgage brokering revenue and related contract assets as disclosed
below, there is no significant impact over revenue transactions.
Upon adoption of AASB 15, expected value approach is used to replace the net present value approach for recognition and
subsequent measurement of revenue and assets in relation with trailing commission from mortgage brokering.
Comparison of financial performance and balances of each relevant account is shown below to disclose the impact of the
adoption of AASB 15.
Contract assets as at 30 June 2018*
Trade and other receivables as at 30 June 2018 *
Trail commission liabilities as at 30 June 2018
Retained earnings as at 30 June 2018
Under AASB
15
$
Under old
standard
$
3,387,542
304,868
(490,652)
(3,089,757)
-
2,625,145
-
(3,666,371)
* Contract assets and trade receivable: the change is mainly due to the reclassification of “trailing commission” from trade
receivable to contract assets as well as the different valuation approach used.
Critical accounting estimates and judgements – expected value of trailing income contract assets
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 future trailing commissions without having to perform further services and
recognise this as a contract asset in accordance with AASB 15. The value of trailing commission is determined by using
expected value approach being the sum of probability-weighted amounts for various possible future trailing commission
generated from existing loan portfolios as at reporting date in accordance with AASB 15. These calculations require the
use of following assumptions which are determined by management with the assistance of external valuation specialist:
- Weighted average loan life (WAL) of 3.7 years
- Loan atrophy rate of 15.95% p.a.
28
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 4. Other income
Net foreign exchange gain
Other income
Interest
Other income
Note 5. Cash and cash equivalents
Cash and cash equivalents
Note 6. Financial assets
Consolidated
2019
$
2018
$
71
26,516
9,125
-
45,822
17,117
35,712
62,939
Consolidated
2019
$
2018
$
919,532
1,008,874
AASB 9 Financial Instruments becomes applicable for the current reporting period and the Group had to change its
accounting policies as a result of adopting it.
The adoption of AASB 9 requires the group change its accounting policies but did not require retrospective adjustments.
The new accounting policies and related impact are assessed as below.
Recognition and measurement of financial assets under AASB 9
Contract assets (previously trailing income receivable)
Contract assets are recognised and measured by constrained expected value approach (as defined in AASB 15).
Trade and other receivables
Trade and other receivables are initially recognised at their transaction price (as defined in AASB 15) and subsequently
measured at amortised cost (on the basis that the Group's business model is to hold and collect contractual cash flow and
solely for payments of trade and other receivables).
Loan receivables
Loan receivables are initially recognised at fair value plus or minus transaction costs that are directly attributable to the
acquisition or issue of the loan (as defined in para 5.1.1 in AASB 9) and subsequently measured at amortised cost (on the
basis that the Group's business model is to hold and collect contractual cash flow and solely for payments of principals and
interest on principal amount outstanding (as defined in para 4.1.2 in AASB 9).
Impairment of financial assets
The impairment assessment required by AASB 9 for financial assets are based on a forward-looking expected credit loss
('ECL') model (changed from incurred loss model under old standard of AASB 139). The group determined that there is no
financial impact from the adoption of ECL model under AASB 9 and determined that the impairment loss was immaterial.
Appropriate impairment assessment approach for its relevant assets as below:
Contract assets
29
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 6. Financial assets (continued)
Simplified approach is adopted to assess the impairment of contract assets and trade and other receivables.
Under simplified approach, life time expected credit loss estimated based on historical incurred and forward expected
credit loss will both be examined and assessed to determine the amount of impairment as at reporting date. Specifically,
the Group will apply credit loss factors determined from estimation of customer default probability and loss percentage on
current observable data which may include:
• forecasts of economic conditions such as unemployment, interest rates, gross domestic product and inflation;
• financial difficulties of a counterparty or probability that a counterparty will enter bankruptcy; and
• conditions specific to the asset to which the receivable relates.
Financial assets carried at amortised cost (Loan receivables/ trade and other receivables)
The general approach is adopted to assess the impairment of loan receivables.
Under the general approach, 12 month’s credit losses or life time credit losses are estimated based on whether the credit
risk on that financial instrument (loan receivables) has increased significantly since initial recognition to determine the
amount of impairment as at reporting date. Specifically, if the credit risk has not increased significantly since initial
recognition, then a loss allowance equal to 12 month’s credit losses should be measured and recognised otherwise life
time expected credit losses should be measured and recognised. The group will apply credit loss factors determined from
estimation of customer default probability and loss percentage.
At each reporting date, the Group assesses whether financial assets carried at amortised cost are ‘credit-impaired’. A
financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash
flows of the financial asset have occurred.
The Group recognises loss allowances at an amount equal to lifetime (normally less than 12 months) ECL on trade and
loan receivables. Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying
amount of the assets.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of the trade receivable and
are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls
(i.e. the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the
Consolidated Entity expects to receive.
The Group analyses the age of outstanding receivable balances and applies historical default percentages adjusted for
other current observable data as a means to estimate ECL. Other current observable data may include:
• forecasts of economic conditions such as unemployment, interest rates, gross domestic product and inflation;
• financial difficulties of a counterparty or probability that a counterparty will enter bankruptcy; and
• conditions specific to the asset to which the receivable relates.
Debts that are known to be uncollectable are written off when identified.
Note 7. Trade and other receivables
Commission receivables
Agent commission clawback receivable
NPV of future trailing income receivable*
Consolidated
2019
$
2018
$
231,015
52,570
-
258,988
45,881
882,795
283,585
1,187,664
30
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 7. Trade and other receivables (continued)
Non-current
NPV of future trailing income receivable*
Credit risk
Consolidated
2019
$
2018
$
-
1,437,481
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 2018: nil). As
at 30 June 2019, the amount of all trade and other receivables past due is $39,654 (2018: $36,597).
* The balance was reconciled to contract assets as a result of adopting AASB 15.
Note 8. Contract assets
Contract assets - current
Contract assets - non-current
Consolidated
2019
$
2018
$
91,566
-
Consolidated
2019
$
2018
$
121,273
-
The contract asset relates to future trailing income recognised as a result of current adopting AASB 15 Revenue from
Contracts with Customers. The contract asset for trailing income is recognised and measured by using expected value
approach. The contract asset will only become a financial asset (i.e. a receivable) when the right to the consideration is
unconditional. This is expected to be as each month’s entitlement to the trailing commission is established when an invoice
is raised to the aggregator.
Upon initial application of AASB 15 in 2019, the Group selected the cumulative approach in an accordance with paragraph
c3(b) of AASB15. The required disclosure of the related impact in this reporting period is presented in Note 3 to this
financial report.
Reconciliation of the contract assets at the beginning and end of the current financial year are set
out below:
Opening balance
Expected trail commission from new loans since 1 July 2018 and commissions step up
Trail commission received
Trail commission assets classified as held for sale
Loss for non-current assets classified as held for sale
2019
$
3,387,542
1,276,386
(1,297,972)
(2,384,525)
(768,592)
212,839
31
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 9. Other financial assets
Short-term financial assets investment
Note 10. Short-term loan receivables
Short-term loan receivables
Consolidated
2019
$
2018
$
421,507
-
Consolidated
2019
$
2018
$
2,752,500
1,694,000
The Group raised funds to lend money to commercial entities on a short-term basis and earns the interest as income. More
detailed information regarding these loans is disclosed in Note 24 Financial Risk Management.
The short-term loan balance represented the outstanding amounts owed from commercial borrowing customers. The
Group hold collateral for short term loan receivables. In the event of default, the Group will be able to call on the securities
held under such circumstances. The Group estimate that the expected realisable value of these securities will be higher
than the carrying value of the short-term loan receivables. For this reason, no expected credit losses have been recognised
at the reporting date.
Note 11. Non-current assets held for sale
Non-current assets held for sale
Consolidated
2019
$
2018
$
2,384,525
-
Non-current assets held for sale relate to contract assets that generate trail commissions for the Group. The Group plans
to sell this trail book within the next twelve months to focus more on their long-term strategic developments such as the
commercial loan lending business.
The estimated net loss on sale of the trail book is $592,432. This includes the loss of $768,592 on non-current assets
classified as held for sale from contract assets and the gain of $176,160 on non-current assets classified as held for sale
from contract liabilities.
Note 12. Other current assets
Prepayments
Consolidated
2019
$
2018
$
54,650
17,537
32
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 13. Property, plant and equipment
Office equipment
Less: Accumulated depreciation
Motor vehicles
Less: Accumulated depreciation
Furniture & fittings
Less: Accumulated depreciation
Consolidated
2019
$
2018
$
74,283
(55,027)
19,256
74,329
(45,113)
29,216
63,759
(44,548)
19,211
74,329
(35,375)
38,954
530,109
(285,227)
244,882
530,109
(222,230)
307,879
293,354
366,044
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.
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2017
Additions
Disposals
Depreciation expense
Accumulated depreciation on disposal
Balance at 30 June 2018
Additions
Depreciation expense
Balance at 30 June 2019
Office
Equipment
$
Motor
Vehicles
$
Furniture &
Fittings
$
24,033
8,732
-
(13,554)
-
19,211
10,524
(10,479)
99,312
-
(67,795)
(19,993)
27,430
38,954
-
(9,738)
371,833
14,884
-
(78,838)
-
307,879
-
(62,997)
Total
$
495,178
23,616
(67,795)
(112,385)
27,430
366,044
10,524
(83,214)
19,256
29,216
244,882
293,354
The motor vehicles were acquired via finance lease.
Refer to note 33 for further information on property, plant and equipment secured under finance leases.
33
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 14. Intangible assets
Goodwill
Rent roll
Less: Accumulated amortisation
Website and IT system
Less: Accumulated amortisation
Consolidated
2019
$
2018
$
536,216
536,216
2,217,048
(1,240,377)
976,671
2,155,370
(597,695)
1,557,675
328,957
(250,659)
78,298
318,457
(202,316)
116,141
1,591,185
2,210,032
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2017
Additions
Amortisation/written-down
Balance at 30 June 2018
Additions
Amortisation/written-down
Balance at 30 June 2019
Goodwill (b)
$
Rent Roll (c)
$
Website and
IT system (d)
$
Total
$
536,216
-
-
1,975,193
-
(417,518)
142,394
34,553
(60,806)
2,653,803
34,553
(478,324)
536,216
-
-
1,557,675
61,678
(642,682)
116,141
10,500
(48,343)
2,210,032
72,178
(691,025)
536,216
976,671
78,298
1,591,185
b) Goodwill
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.
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%
Pre-tax discount rate: 8%
Terminal value:
Growth rate is based on management’s estimated inflation rate.
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%.
34
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 14. Intangible assets (continued)
c) Rent Roll Assets
Rent Roll – Cost
Rent Roll – Written-down
Rent Roll – Net
Consolidated
2019
$
2018
$
2,217,048
(1,240,377)
2,155,370
(597,695)
976,671
1,557,675
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
2019
$
2018
$
328,957
(250,659)
318,457
(202,316)
78,298
116,141
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.
Note 15. Other non-current assets
Other non-current assets
Consolidated
2019
$
2018
$
236,823
234,735
35
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 16. Trade and other payables
Trade payables
Employee payables
Other creditors and accruals
Consolidated
2019
$
2018
$
103,245
98,341
208,178
122,661
235,293
369,761
409,764
727,715
Refer to note 25 for further information on specific financial risk exposures and management.
Trade and other payable are recognised at fair value initially and subsequently measured at amortised cost.
Note 17. Contract liabilities
Contract liabilities - current
Contract liabilities - non-current
Note 18. Loan and borrowings
Current
Bank loan (i)
Loan received for commercial lending (ii)
Convertible debt (iii)
Loan from other lenders (iv)
Finance lease payable - current
Non-current
Bank loan (i)
Loan received for commercial lending (ii)
Convertible debt (iii)
Loan from other lenders (iv)
Finance lease payable - non-current
Consolidated
2019
$
2018
$
216,248
-
Consolidated
2019
$
2018
$
53,483
-
Consolidated
2019
$
2018
$
56,410
2,820,192
-
880,000
13,501
56,410
1,022,921
370,000
-
12,941
3,770,103
1,462,272
Consolidated
2019
$
2018
$
824,141
1,630,000
1,370,000
230,000
37,540
880,551
583,819
1,000,000
780,000
51,041
4,091,681
3,295,411
36
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 18. Loan and borrowings (continued)
i) The bank loan was borrowed from National Australia Bank and consisted of two loan drawdowns.
Drawdown of $1,000,000 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 5.905% 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 2019 is $655,551 (30 June 2018: $711,961).
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 2019 is $225,000 (30 June 2018: $225,000).
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 information of these loans are
detailed in the table below.
Repayment term
amount
Drawdown date
Drawdown
Balance at
30/06/2019
Interest rate
(per annum)
BBBSA
Private loan batch#1
Private loan batch#2
Private loan batch#3
Private loan batch#4
Private loan batch#5
Private loan batch#6
Private loan batch#7
Private loan batch#8
Private loan batch#9
Private loan batch#10
3 years *
3 months rolling **
3 months rolling **
2 years **
3 months rolling **
2 years **
2 years **
1 year **
3 months rolling **
2 year **
2 years **
1,000,000 31/01/2019
100,000 16/04/2018
500,000 01/06/2018
500,000 01/08/2018
800,000 01/11/2018
230,000 01/11/2018
400,000 23/11/2018
100,000 01/03/2019
650,000 19/03/2019
100,000 01/04/2019
400,000 09/05/2019
870,192
100,000
500,000
500,000
600,000
230,000
400,000
100,000
650,000
100,000
400,000
10.50%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
8.00%
10.00%
10.00%
10.00%
4,780,000
4,450,192
* Principal and Interest, as per management, the balance shall be settled within the next twelve months ** Interest only
iii) Convertible debt
As at the beginning of the period
Borrowed
Derivative expense
Settled
As at end of the period
Consolidated
2019
$
2018
$
1,370,000
-
-
-
370,000
1,000,000
79,023
(79,023)
1,370,000
1,370,000
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, which was extended to 12 May 2021.
On 27 September 2017, the Company issued 5 million unlisted unsecured convertible notes with a total value of
$1,000,000. 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, which was extended to 27 September 2021.
The Company and the relevant holders of the Convertible Bonds have agreed to extend the maturity date for the
Convertible Bonds by 24 months to 11 May 2021. In addition, the interest rate has been amended from 7% to 10% pa
which will take effect on and from the original maturity date, being 12 May 2019.
37
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 18. Loan and borrowings (continued)
iv) Loan from other lenders consists of seven loans from non-related parties. The first loan has a principal 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 principal 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 principal 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 principal amount of $200,000. The repayment term is 1 year and the interest rate is 8%
per annum in accordance with the loan agreement. The fifth loan has a principal amount of $130,000. The repayment term
is 2 years and the interest rate is 10% per annum in accordance with the loan agreement. The sixth loan has a principal
amount of $100,000. The repayment term is 1 year and the interest rate is 8% per annum in accordance with the loan
agreement. The seventh loan has a principal amount of $130,000. The repayment term is 2 years and the interest rate is
10% per annum in accordance with the loan agreement.
Note 19. Deferred income
Interest advanced from borrower
Deferred performance fee
Note 20. Provisions
Employee provision - current
Refund liabilities
Employee provision - non-current
Movement of provision for refunds
Beginning of the year
Additions/(Reductions) during the year
Payment of clawbacks during the year
Ending of the year
Consolidated
2019
$
2018
$
37,406
135,439
158,567
-
172,845
158,567
Consolidated
2019
$
2018
$
79,693
71,004
78,100
137,390
150,697
215,490
Consolidated
2019
$
2018
$
52,159
34,274
2019
$
2018
$
137,390
(66,386)
-
235,402
27,160
(125,172)
71,004
137,390
Refund liabilities
In adopting AASB 15, the Group reclassified provision for clawbacks as refund liabilities. Refund liabilities represent the
estimated commission to be clawed back by the lenders after loans are terminated before 24 months.
Critical accounting estimates and Judgements - Clawback Receivable and Provision
38
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 20. Provisions (continued)
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 11.3% (FY18: 11.39%).
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.
Note 21. Issued capital
Fully paid ordinary shares
Consolidated
2019
$
2018
$
5,688,093
5,722,125
Consolidated
2019
Shares
2018
Shares
2019
$
2018
$
Issued capital
81,555,573 81,555,573
5,688,093
5,722,125
Movements in ordinary share capital
Details
Date
Shares
$
Balance
Recovery of deferred tax on IPO cost
Balance
Recovery of deferred tax on IPO cost
1 July 2017
81,555,573
5,756,156
(34,031)
30 June 2018
81,555,573
-
5,722,125
(34,032)
Balance
30 June 2019
81,555,573
5,688,093
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the
Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
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.
39
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 21. Issued capital (continued)
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.
Note 22. Reserves
Options reserve
As at beginning of the year
(Reversal of expired share options) / Share based payment
Details in relation to the options are disclosed below.
Share-based payments reserve
The Group operates an employee share and option plan.
Consolidated
2019
$
2018
$
206,524
206,884
Consolidated
2019
$
2018
$
206,884
(360)
155,610
51,274
206,524
206,884
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.
(a) Employee Option Plan
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:
40
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 22. Reserves (continued)
As at beginning of the year
Forfeited during the year
As at end of the year
2019
Average
exercise price
per Option $
2019
Number of
Options
2018
Average
exercise price
per Option $
2018
Number of
Options
0.20
0.20
5,991,250
(587,500)
0.20
0.20
8,738,750
(2,747,500)
0.20
5,403,750
0.20
5,991,250
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
Options 30
June 19
June 18
14/12/2015
18/03/2016
01/03/2017
14/12/2020
18/03/2018
14/12/2020
$0.20
$0.20
$0.20
0.0540
0.0385
0.0475
3,710,000
-
1,693,750
3,710,000
-
2,281,250
Average remaining contractual life of options outstanding at end of period 1.46 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 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%
Risk-free interest rate: 1.99%
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.
Note 23. Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 24. Financial risk management
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 AASB 9 financial instruments:
recognition and measurement as detailed in the accounting policies to these financial statements, are as follows:
41
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 24. Financial risk management (continued)
Financial Assets - Current
Cash and cash equivalents
Trade and other receivables
Short-term loan receivables
Other financial assets
Financial Liabilities - Current
Trade and other payables
Finance lease payables
Bank loans
Loan received for commercial lending
Convertible debt
Other loan
Financial Assets - Non-current
Trade and other receivables
Financial Liabilities - Non-current
Bank loans
Finance lease payables
Convertible debt
Other Loan
Loan received for commercial lending
Note
2019
$
2018
$
5
7
10
9
16
18
18
18
18
18
919,532
283,585
2,752,500
421,507
1,008,874
1,187,664
1,694,000
-
4,377,124
3,890,538
409,764
13,501
56,410
2,820,192
-
880,000
727,715
12,941
56,410
1,022,921
370,000
-
4,179,867
2,189,987
Note
2019
$
2018
$
7
18
18
18
18
18
-
1,437,481
824,141
37,540
1,370,000
230,000
1,630,000
880,551
51,041
1,000,000
780,000
583,819
4,091,681
3,295,411
Note 25. Specific financial risk exposures and management
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and
interest rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the
Group. The Group uses derivative financial instruments such as forward foreign exchange contracts to hedge certain risk
exposures. Derivatives are exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The
Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity
analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for credit risk and beta analysis
in respect of investment portfolios to determine market risk.
Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors
('the Board'). These policies include identification and analysis of the risk exposure of the Group and appropriate
procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the Group's operating
units. Finance reports to the Board on a monthly basis.
Market risk
Foreign currency risk
The Group is not exposed to any significant foreign currency risk.
42
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 25. Specific financial risk exposures and management (continued)
Price risk
The Group is not exposed to any significant price 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
2019
$
2018
$
880,551
936,961
For the Group, the bank loans outstanding, totalling $880,551 (2018: $936,961), among which $655,551 (2018: $711,961)
are principal and interest payment loans. Monthly cash outlays of approximately $2,672 (2018: $2,672) per month are
required to service the interest payments. An official increase/decrease in interest rates of 100 basis points would have an
adverse/favourable effect on profit before tax of $8,806 per annum. The percentage change is based on the expected
volatility of interest rates using market data and analysts forecasts. In addition, minimum principal repayments of $56,410
(2018: $56,410) are due during the year ending 30 June 2019. (2018: 30 June).
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has a strict code of credit, including obtaining agency credit information, confirming references and
setting appropriate credit limits. The Group obtains guarantees where appropriate to mitigate credit risk. The maximum
exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for
impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The
Group does not hold any collateral for trade and other receivables, but it holds the Australian properties and other
properties as collateral for commercial loan receivables and other investment.
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables
through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered
representative across all customers of the Group based on recent sales experience, historical collection rates and forward-
looking information that is available.
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 contract assets) 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 intermediate 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+.
The Group has a credit risk exposure with trade and other receivables ($283,585 as at 30 June 2019 and $2,625,145 as at
30 June 2018), commercial loan receivable ($2,751,500 as at 30 June 2019 and $1,694,000 as at 30 June 2018), and
other investment ($421,507 as at 30 June 2019 and nil as at 30 June 2018). These balances were within its terms of trade
and no impairment was made as at 30 June 2019. There are no guarantees against trade and other receivables but
management closely monitors the receivable balance on a monthly basis and is in regular contact with this customer to
mitigate risk. Collateral have been taken for commercial loan receivable and other investment to mitigate risk.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual
payments for a period greater than 1 year.
43
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 25. Specific financial risk exposures and management (continued)
Liquidity risk
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously
monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
The table below reflects an undiscounted contractual maturity analysis for financial liabilities. Cash flows realised from
financial assets reflect Management’s expectation as to the timing of realisation. Actual timing may therefore differ from
that disclosed.
Financial liability maturity analysis
2019
Trade and other payables
Convertible debts
Finance lease liabilities
Bank loan and other borrowings
2018
Trade and other payables
Convertible debts
Finance lease liabilities
Bank loan and other borrowings
Total
contractual
cash flows
No more than
1 year
1-2 years
2-5 years
More than 5
years
409,764
1,370,000
51,041
6,440,743
409,764
-
13,501
3,756,602
-
1,370,000
37,540
1,916,410
-
-
-
169,230
-
-
-
598,501
8,271,548
4,179,867
3,323,950
169,230
598,501
Total
contractual
cash flows
$
No more than
1 year
$
1-2 years
$
2-5 years
$
More than 5
years
$
727,715
1,370,000
63,982
3,323,701
727,715
370,000
12,941
1,079,331
-
1,000,000
13,501
1,137,911
-
-
37,540
451,547
-
-
-
654,912
5,485,398
2,189,987
2,151,412
489,087
654,912
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Note 26. Fair value measurement
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:
44
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 26. Fair value measurement (continued)
Level 1
Level 2
Level 3
Measurements based on quoted prices
(unadjusted) in active markets for
identical assets or liabilities that the
entity can access at the measurement
date.
Measurements based on inputs other
than quoted prices included in Level 1
that are observable for the asset or
liability, either directly or indirectly.
Measurements based on unobservable
inputs for the asset or liability.
Fair value of assets and liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending
on the requirements of the applicable accounting standard.
Fair value is the price the group would receive to sell an asset or would have to pay to transfer a liability in an orderly ( i.e.
Unforced) transaction between independent, knowledgeable and willing market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine
fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation
techniques. These valuation techniques maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the
market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most
advantageous market available to the entity at the end of the reporting period (i.e. the market that maximises the receipts
from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction
costs and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant’s ability to use the asset
in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use.
The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based payment
arrangements) maybe valued, where there is no observable market price in relation to the transfer of such financial
instruments, by reference to observable market information where such instruments are held as assets. Where this
information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective
note to the financial statements.
Fair value of financial assets and liabilities that are measured at fair value on a recurring basis.
The Group does not have any material assets or liabilities recognised and subsequently measured at fair value on a
recurring basis.
Note 27. Related party transactions
Parent entity
N1 Holdings Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 29.
Key management personnel
Disclosures relating to key management personnel are set out in note 30 and the remuneration report included in the
directors' report.
Other Related Parties
Other related parties include entities controlled by the ultimate parent entity and entities over which key management
personnel have joint control.
45
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 27. Related party transactions (continued)
Transactions with 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:
The following transactions occurred with related parties:
Payment for goods and services:
N1 Consultants Group Sdn Bhd - Malaysia
Consolidated
2019
$
2018
$
138,639
125,071
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current payables:
Ren Hor Wong – (payable)/receivable
Ren Hor Wong Family Trust
Loans to/from related parties
The following transactions occurred in relation to loans with related parties:
Current borrowings:
Ren Hor Wong
Ren Hor Wong Family Trust
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 28. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Consolidated
2019
$
2018
$
-
-
(3,974)
(150,000)
Consolidated
2019
$
2018
$
-
(150,000)
(2,776)
150,000
Parent
2019
$
2018
$
(833,652)
(236,730)
(833,652)
(236,730)
46
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 28. Parent entity information (continued)
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Options reserve
Accumulated losses
Total equity
Parent
2019
$
2018
$
62,237
451,163
20,610,482
18,470,045
2,922,648
1,351,043
6,152,648
3,131,043
15,790,087
206,524
(1,538,777)
15,790,087
206,884
(657,969)
14,457,834
15,339,002
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2019 and 30 June 2018.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2019 and 30 June 2018.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2019 and 30 June 2018.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 31, except for the
following:
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Investments in associates are accounted for at cost, less any impairment, in the parent entity.
Note 29. Interests in 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)
N1 Venture Pty Ltd (v)
Sydney Boutique Property Pty Ltd (vi)
N1 Franchise Pty Ltd (vii)
N1 Capital Singapore Pte. Ltd. (viii)
Borrowing Business Pty Ltd (ix)
Principal place of business /
Country of incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
Australia
Ownership interest
2018
2019
%
%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
-
-
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.
47
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 29. Interests in subsidiaries (continued)
N1 Loans was incorporated on 25 February 2010 and was initially owned by Mr Ren Hor Wong. Upon the completion
(i)
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.
N1 Venture was incorporated on 19 November 2014 and was acquired on 1 September 2016, since then it has been
(v)
fully owned by the Group.
Sydney Boutique Property Pty Ltd was acquired on 21 October 2016. Since then, it has been fully owned by the
(vi)
Group since acquisition.
(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.
(viii) N1 Capital Singapore Pte. Ltd. as incorporated on 1 February 2019, it has been fully owned by the group since
incorporation.
(ix) Borrowing Business Pty Ltd was incorporated on 14 May 2019, it has been fully owned by the group since
incorporation.
Note 30. Key management personnel
Other 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.
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 2019. 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 benefits
Share-based payments
Short-term employee benefits
Consolidated
2019
$
2018
$
734,753
48,474
9,826
17,793
799,793
59,200
9,320
18,290
810,846
886,603
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
48
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 30. Key management personnel (continued)
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.
Note 31. Other principal accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
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.
Basis of preparation
These general-purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as
appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through other
comprehensive income, investment properties, certain classes of property, plant and equipment and derivative financial
instruments.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 28.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of N1 Holdings Limited
('Company' or 'parent entity') as at 30 June 2019 and the results of all subsidiaries for the year then ended. N1 Holdings
Limited and its subsidiaries together are referred to in these financial statements as the 'Group'.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity
attributable to the parent.
49
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 31. Other principal accounting policies (continued)
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-
controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group
recognises the fair value of the consideration received and the fair value of any investment retained together with any gain
or loss in profit or loss.
Foreign currency translation
The financial statements are presented in Australian dollars, which is N1 Holdings Limited's functional and presentation
currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average
exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange
differences are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
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.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to
temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when
the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted,
except for:
●
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting
nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and
the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the
foreseeable future.
●
50
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 31. Other principal accounting policies (continued)
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred
tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for
the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is
probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable
authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months
after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle
a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the
initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured
at either amortised cost or fair value depending on their classification. Classification is determined based on both the
business model within which such assets are held and the contractual cash flow characteristics of the financial asset
unless, an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the
Group has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of
recovering part or all of a financial asset, it's carrying value is written off.
Financial assets at amortised cost
A financial asset is measured at amortised cost only if both of the following conditions are met: (i) it is held within a
business model whose objective is to hold assets in order to collect contractual cash flows; and (ii) the contractual terms of
the financial asset represent contractual cash flows that are solely payments of principal and interest.
Investments
Investments includes non-derivative financial assets with fixed or determinable payments and fixed maturities where the
Group has the positive intention and ability to hold the financial asset to maturity. This category excludes financial assets
that are held for an undefined period. Investments are carried at amortised cost using the effective interest rate method
adjusted for any principal repayments. Gains and losses are recognised in profit or loss when the asset is de-recognised or
impaired.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at
amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon
the Group's assessment at the end of each reporting period as to whether the financial instrument's credit risk has
increased significantly since initial recognition, based on reasonable and supportable information that is available, without
undue cost or effort to obtain.
51
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 31. Other principal accounting policies (continued)
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected
credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable
to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where
it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected
credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present
value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within
other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss.
Contract liabilities
Contract liabilities represent the Group's obligation to transfer goods or services to a customer and are recognised when a
customer pays consideration, or when the Group recognises a receivable to reflect its unconditional right to consideration
(whichever is earlier) before the Group has transferred the goods or services to the customer.
Impairment of assets
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.
Employee benefits
Retirement benefit obligations
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
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.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part
of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
52
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 31. Other principal accounting policies (continued)
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
New Accounting Standards and Interpretations not yet mandatory or early adopted
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, except for the adoption of AASB 15 which detailed analysis of
the impact can be referred to Note 3 for further information. Disclosure of the adoption of AASB 9 can be referred to Note 6
in this report.
The impact of other new accounting standards released but for application in future periods has been disclosed in the
relevant section.
Note 32. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by , the auditor of the Company:
Remuneration of the auditor Crowe Sydney for:
Audit or review of the financial statements
Note 33. Lease commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
More than five years
Lease commitments - finance
Committed at the reporting date and recognised as liabilities, payable:
Within one year
One to five years
Total commitment
Less: Future finance charges
Net commitment recognised as liabilities
Operating Lease
Consolidated
2019
$
2018
$
82,813
91,532
Consolidated
2019
$
2018
$
279,064
356,605
-
316,883
774,625
26,225
635,669
1,117,733
15,387
38,541
53,928
(2,886)
15,387
53,928
69,315
(5,333)
51,042
63,982
The major property lease is a non-cancellable lease with a five-year term, with rent payable monthly in advance.
Finance Lease
53
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 33. Lease commitments (continued)
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.
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 by way of recognising a
right-of-use of assets for current operating leases and a corresponding lease liability.
Capital Expenditure Commitments
There were no capital expenditure commitments as at 30 June 2019 (2018: nil).
Note 34. Contingent liabilities and Contingent assets
There are no contingent liabilities or contingent assets as at 30 June 2019 (2018: nil).
Note 35. Income tax benefit
(a) Income Tax
The income tax expense (benefit) for the year comprises current income tax expense (benefit) and deferred tax expense
(benefit).
Current income tax expense (benefit) 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 (benefit) 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 (benefit) is charged or credited outside profit or loss when the tax relates to
items that are recognised outside profit or loss.
54
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 35. Income tax benefit (continued)
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.
Group
2019
$
Group
2018
$
(546,962)
(149,688)
823,035
(160,417)
(489,372)
(73,921)
262,851
1,054
(34,032)
(299,388)
(2,605,372)
(2,151,416)
(716,478)
(591,639)
19,828
28,346
-
-
823,035
262,851
(160,417)
1,054
(34,032)
(299,388)
(i) The components of tax expense (benefit) 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% (2018: 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
As at 30 June 2019, the tax loss carried forward for the Group is $6,269,163 (2018: $3,696,874).
(b) Tax position
The group’s current tax payable is $nil (2018: $nil)
Note 36. Deferred tax assets
Deferred tax liabilities
55
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 36. Deferred tax assets (continued)
2019
Trailing income
Website
Assets valued up in business combination
Balance at 30 June 2019
Opening
balance
$
Charge to
income
statement
$
Charge to
equity
$
Closing
balance
$
553,328
3,327
386,986
76,198
(3,327)
(176,737)
943,641
(103,866)
Opening
balance
$
Charged to
income
statement
$
Charge to
equity
$
-
-
-
-
-
-
-
-
629,526
-
210,249
839,775
Closing
balance
$
553,328
3,327
386,986
943,641
2018
Trailing income
Website
Assets valued up in business combination
521,388
9,979
506,510
31,940
(6,652)
(119,524)
Balance at 30 June 2018
1,037,877
(94,236)
Deferred tax assets
2019
Clawback and accrued
Tax Losses
IPO costs
Other temporary differences
Balance at 30 June 2019
2018
Clawback and accrued
Tax Losses
IPO costs
Other temporary differences
Balance at 30 June 2018
Critical accounting estimates and Judgements - Taxation
Opening
balance
$
Charge to
income
statement
$
Charge to
equity
$
Closing
balance
$
25,166
753,798
68,065
96,612
(20,096)
(115,656)
-
65,919
-
-
(34,032)
-
5,070
638,142
34,032
162,531
943,641
(69,833)
(34,032)
839,775
Opening
balance
$
Charge to
income
statement
$
Charge to
equity
$
Closing
balance
$
43,681
528,322
102,097
98,411
(18,515)
225,476
-
(1,799)
-
-
(34,032)
-
25,166
753,798
68,065
96,612
772,511
205,162
(34,032)
943,641
56
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2019
Note 36. Deferred tax assets (continued)
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.
Note 37. Events after the reporting period
In July 2019, the Company has made a strategic investment in Stropro Technologies, a fintech start-up founded in 2017.
The investment has been structured as a SAFE (Simple Agreement for Future Equity) pursuant to which the Company has
agreed to make cash payment to Stropro Technologies in exchange for a contractual right to convert that investment into
shares at a later date.
In July 2019, the Company's subsidiary N1 Loans has entered into a joint venture with Smartkey Property to form Loan 77
Pty Ltd. The joint venture company, Loan 77, will refer mortgage brokering opportunities to N1 Loans from Smartkey
Property's current pipelines of over 2,000 property settlements.
In July 2019, the Company launches suite of self-branded home lending products. The new product suite, named "N1
Plus", includes a range of prime, specialist and "low doc" loans.
In August 2019, One Lending Fund, which is managed by N1 Venture Pty Ltd (AFSL 477879) issued original units of $2.1
million. Total funds under management has amounted to $7.9 million as at the date of this report.
In August 2019, the Company sold the trail book for a consideration of $2.38 million. The contract assets and related
contract liabilities for the trail book have been reclassified as assets held for sale as at 30 June 2019.
In August 2019, the Company established Yizhihao (Shanghai) Business Consultation Co. Ltd in China to replace its
Shanghai representative office under N1 Loans. The company will serve as a pilot of its business consultation services in
China.
No other matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect
the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
57
N1 Holdings Limited
Directors' declaration
30 June 2019
In the directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 31 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June
2019 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Ren Hor Wong
Executive Chairman and CEO
27 September 2019
58
Crowe Sydney
ABN 97 895 683 573
Member of Crowe Global
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.crowe.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 2019, 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 2019 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.
The title ‘Partner’ conveys that the person is a senior member within their respective division, and is among the group of persons who hold an
equity interest (shareholder) in its parent entity, Findex Group Limited. The only professional service offering which is conducted by a partnership
is the Crowe Australasia external audit division. All other professional services offered by Findex Group Limited are conducted by a privately
owned organisation and/or its subsidiaries.
Findex (Aust) Pty Ltd, trading as Crowe Australasia is a member of Crowe Global, a Swiss verein. Each member firm of Crowe Global is a
separate and independent legal entity. Findex (Aust) Pty Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe
Global or any other member of Crowe Global. Crowe Global does not render any professional services and does not have an ownership or
partnership interest in Findex (Aust) Pty Ltd. Services are provided by Crowe Sydney, an affiliate of Findex (Aust) Pty Ltd. Liability limited by a
scheme approved under Professional Standards Legislation. Liability limited other than for acts or omissions of financial services licensees.
© 2019 Findex (Aust) Pty Ltd
59
Independent Auditor’s Report
N1 Holdings Limited
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
Recognition of Non-current Assets Held for Sale – Note 11
Our procedures included:
• Reviewed minutes of directors’ meeting that
discussed the intention to sell the asset.
• Reviewed Deed of Assignment to assign the
contractual right to the buyer for an agreed
consideration value.
• Reviewed the calculation of the lower of the
non-current assets held for sale’s carrying
amount and fair value less costs to sell.
• Reviewed presentation and disclosures in
the financial statements.
The Group has classified contract assets
relating to trail income from its mortgage loan
book as non-current assets held for sale at 30
June 2019.
A non-current asset is classified as non-current
asset held for sale if its carrying amount will be
recovered principally through a sale transaction
rather than through continuing use.
The Group had the intention to sell the asset
and had held discussions with a potential buyer
prior to 30 June 2019. The asset has been
recognised at the lower of its carrying amount
and fair value less costs to sell at 30 June 2019.
We focused on this area as a key audit matter
due to its significant balance and its presentation
effect on the statement of financial position at 30
June 2019.
Recoverability of Short-term Loan Receivables – Note 10
The Group had significant short-term loan
receivables at 30 June 2019.
Our procedures included:
The expected credit losses of the loan
receivables was determined based on default
rate, type and value of collaterals taken.
• Reviewed loan contracts to identify, among
others, loan repayment date and collateral
taken.
• Checked repayment of the loans due post
balance date.
We focused on this area as a key audit matter
due to high degree of estimation and judgement
made by the management.
• Reviewed management’s estimate of the fair
value of the collaterals taken and assessed
adequacy of the collaterals.
© 2019 Findex (Aust) Pty Ltd
60
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Independent Auditor’s Report
N1 Holdings Limited
Key Audit Matter
How we addressed the Key Audit Matter
Impairment assessment of intangibles assets (goodwill and rent roll) – Note 14
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:
• Cash flow projections;
• Growth rate; and
• 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:
• Assessed the reasonableness of the cash
flow projections with reference to the last
actual result.
• Reviewed the accuracy of the value in use
model and checking the mathematical
calculation.
• Reviewed the reasonableness of key
assumptions in the value in use model with
reference to market available data and the
Group’s historical data.
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 2019, 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.
© 2019 Findex (Aust) Pty Ltd
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61
Independent Auditor’s Report
N1 Holdings Limited
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:
•
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.
• 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.
• 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.
• 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.
© 2019 Findex (Aust) Pty Ltd
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Independent Auditor’s Report
N1 Holdings Limited
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 11 to 17 of the directors’ report for the
year ended 30 June 2019.
In our opinion, the remuneration report of N1 Holdings Limited, for the year ended 30 June 2019,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
Crowe Sydney
Suwarti Asmono
Partner
27 September 2019
Sydney
© 2019 Findex (Aust) Pty Ltd
www.crowe.com.au
63
N1 Holdings Limited
Shareholder information
30 June 2019
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 16 September 2019.
1.
a.
Shar eholding
Distribution of Shareholders
Category (size of holding)
Number of shares
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and Over
Total
1,244
45,185
897,767
5,280,109
75,331,268
81,555,573
%
0.00%
0.06%
1.10%
6.47%
92.37%
Number of
holders
3
12
91
161
50
317
%
0.95%
3.79%
28.71%
50.79%
15.77%
b.
c.
The number of shareholdings held in less than marketable parcels is 0.
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
Number of
Ordinary Fully
Paid Shares
Held
50,000,000
4,200,000
2,780,266
2,450,000
2,197,367
61,627,633
% 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
REN H WONG PTY LTD
1.
THE THREE HORSESHOES PTY LTD
2.
MR YOKE MENG CHAN
3.
TIN FAMILY SMSF PTY LTD
4
BNP PARIBAS NOMS PTY LTD
5
MR TONG CHAI TAN
6
JIANRONG SUN
7
MS YUEXIAN ZHAO
8
MISS ZHAOJIA HE
9
10 MS MUN CHING WANG
VEN TAN PTY LTD
11
LC FAMILY SUPER PTY LTD
12
13
AUSTRALIA WIDE DEVELOPMENT GROUP PTY LTD
14 MXJ PTY LTD
15 MS HUEY CHARNG WONG
16 MISS MANNI FU
17
18
19. MR JILIANG ZHANG
20. MR YIK-YEN CHONG
ANZI SUPER FUND PTY LTD
IPOH YAP SMSF CO PTY LTD
Total
50,000,000
4,200,000
2,780,266
2,450,000
2,197,367
1,498,249
1,250,000
1,049,448
843,750
760,470
500,000
500,000
500,000
453,167
350,000
341,115
312,500
300,000
300,000
275,000
70,861,332
61.31%
5.15%
3.41%
3.00%
2.69%
1.84%
1.53%
1.29%
1.03%
0.93%
0.61%
0.61%
0.61%
0.56%
0.43%
0.42%
0.38%
0.37%
0.37%
0.34%
86.89%
64
N1 Holdings Limited
Shareholder information
30 June 2019
e.
Escrowed Shares
No
f. Vested Options
5,403,750 options exercisable at $0.2 and expiring on 14 December 2020 are held by 13 holders.
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.
h.
Current on-market buy-back
There is no current on-market buy-back in relation to the Company’s ordinary shares.
65
N1 Holdings Limited
Shareholder information
30 June 2019