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N1 Holdings Limited
Corporate directory
30 June 2020
Directors
Company secretary
Registered office
Share register
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Solicitors
Stock exchange listing
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Corporate Governance
Statement
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Ren Hor Wong Executive Chairman, CEO
Jia Penny He Executive Director, CFO
Frank Ganis Non-Executive Director
David Holmes Non-Executive Director
Anand Sundaraj
Suite 502, 77 King Street Sydney NSW 2000
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
Crowe Sydney
Level 15, 1 O’Connell Street
Sydney NSW 2000
Sundaraj & Ker
Level 36, 264 George Street
Sydney NSW 2000
N1 Holdings Limited shares are listed on the Australian Securities Exchange
(ASX code: N1H)
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 2020 corporate governance
statement reflects the corporate governance practices in place during the
financial year ended 30 June 2020. The 2020 corporate governance statement
was approved by the board on 28 September 2020. A description of the
Group's current corporate governance practices is set out in the Group's
corporate governance statement which can be viewed at:
http://www.n1holdings.com.au/
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N1 Holdings Limited
Contents
30 June 2020
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N1 Holdings Limited
Contents
30 June 2020
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N1 Holdings Limited
Contents
30 June 2020
Directors' report
Auditor's independence declaration
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors' declaration
Independent auditor's report to the members of N1 Holdings Limited
Shareholder information
General information
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69
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
registered office and 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
2020. The directors have the power to amend and reissue the financial statements.
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N1 Holdings Limited
Directors' report
30 June 2020
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 2020.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Principal activities
During the financial year the principal continuing activities of the 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 FY20, the Company generated revenue of $4.14m (FY19: $4.06m) delivering a net loss of $1.82m (FY19:
loss $2.57m). Normalised EBITDA with trailbook retainer write offs and other once off costs, has improved to a
loss of $299,309 (FY19: loss of $628,683). During the financial year the company adopted the new accounting
standard of AASB 16, as such the below table has been adjusted to reflect the impact of AASB 16 relating to its
2019 comparatives of depreciation and interest. No dividend was declared during FY20 (FY19: Nil).
Loss before income tax
Add: Depreciation and amortisation
Add: Interest expense – Corporate*
EBITDA
Add: Once off legal fee
Add: Once off capital raising cost
Add: Once off loan early repayment cost
Add: AASB16 Impact on lease
Add: Loss for assets classified as held for sale
Add: Loss from write-off of other financial assets
Normalised EBITDA
Consolidated
2020
$
2019
$
(1,850,718)
632,915
341,589
(2,605,372)
774,240
252,050
Consolidated
2020
2019
(876,214)
35,902
60,000
136,756
-
-
344,248
(1,579,082)
-
-
-
357,967
592,432
-
(299,308)
(628,683)
* Interest expense and interest income from commercial loan receivable are still included in the EBITDA. The
EBITDA takes out only the interest expense relating to the corporate, and bank loan for realty rent roll.
During FY20, the Company’s financial services business continued to be the group’s major revenue generator,
accounting for 85.51% of the total revenue of the group. It is worth noting that 55.28% of the revenue comes from
SME lending including management fees from the Fund.
The real estate business generated revenue of $443,074 representing 10.70% of the group’s total revenue and a
reduction of 17% compared to FY19. Realty income has declined due to a downturn in the property market
triggered by the unprecedented COVID-19 health crisis and increased regulatory intervention in credit provision
within the real estate market. Management continues to track the market swiftly, exercising extensive costs
management.
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N1 Holdings Limited
Directors' report
30 June 2020
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N1 Migration generated $57,880 in revenue representing 1.4% of the group’s total revenue. The segment of this
business, although miniature, serves as an indirect marketing tool to potential investors seeking yield in AUD
denominated assets, such as the mortgage fund managed by N1 Asset Management – One Lending Fund, which
further contributes to Company’s SME lending growth.
SME lending has brought in the most significant uplift in revenue for the group and has become a major revenue
driver for the Company. Total commercial loan origination commissions and SME lending revenue, including
interest from loans in the current reporting period, amounted to $2.29m (FY19: $1.04m), which represents an
increase of 120% on the previous financial year (FY19). The management fees received from One Lending Fund
has increased by 389% to $898,455 in FY20 (FY19: $183,796).
It is important to note the growth trajectory between the first half of FY20 compared to the second half of FY20,
which shows the Company’s new core business growth, being SME lending. This also indicates the scalability of
the business, which is possible through expanding the Company’s lending capacity or increasing its funding size
to cater for ever-increasing SME financing demand.
The second half of FY20 has demonstrated the Company’s achievement of positive normalised EBITDA. As
previously announced on ASX, the Company has committed up to AUD$25mil into SME lending capital since
March 2020 which enabled revenue generation to propel the Company to achieve positive normalised EBITDA.
The promising results in the second half of FY20 demonstrate the potential of SME lending to scale the
Company’s cashflow, profitability, and revenue growth. It is important that the Company continues its growth
through further capital raisings to fulfil the rise in demand of SME debt financing. The Company’s core business
now stays on course on an easily understood business model while, at the same time, exercising caution, such as
requiring borrowers to provide safer forms of collateral, such as first-ranking mortgages over Australian real
property.
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
COVID-19, which is a respiratory illness was declared a world-wide pandemic by the World Health Organisation in
March 2020 and it has had a significant impact on the global and Australian economies. The dynamic and
evolving nature of COVID-19 has also placed significant uncertainty to the broader economy including the
financial market. The impact of COVID-19 pandemic is ongoing and it is not practicable to estimate the potential
impact, positive or negative, after the reporting date. The situation is continuing and is dependent on measures
imposed by the Australian Government.
On 1 July 2020, the associate owned by the Group N1X Capital Pty Ltd has been put under voluntary
deregistration due to consolidation of business.
On 20 May 2020, the Group entered into an agreement to purchase 1 of 12 shares in Vaikuntha Pty Ltd (ACN 114
847 291) at a price of $8,335 and paid $5,000 as consideration for the grant of the Remaining Shares Call Option
to purchase the remaining 11 shares at $86,665 by 31 July 2020. The Group subsequently exercised the call
option and the entire transaction has been completed on 31 July 2020 with a total cost of $100,000. Vaikuntha Pty
Ltd holds an Australia Credit License (ACL) with both broking and lending authorisations.
On 13 August 2020, the joint venture owned by the Group RN2 Pty Ltd has been put under voluntary
deregistration due to consolidation of business.
Paul Jensen has resigned as Non-Executive Director of the Group effective 31 August 2020. Frank Ganis has
been appointed as Non-Executive Director of the Group effective 1 September 2020.
No other matter or circumstance has arisen since 30 June 2020 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.
6
N1 Holdings Limited
Directors' report
30 June 2020
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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 2020 and up to the date of this report.
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as
a director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and
executives of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of
insurance prohibits disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor
of the Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the
Company or any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings
on behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of
taking responsibility on behalf of the Company for all or part of those proceedings.
Non-audit services
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 the whole of the financial year and up to the
date of this report, unless otherwise stated:
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 resigned on 18 November 2019);
Mr David Holmes (Non-executive Director, appointed 15 January 2019);
Mr Paul Jensen (Non-executive Director, appointed 18 November 2019 and resigned on 31 August 2020); and
Mr Frank Ganis (Non-executive Director, appointed 1 September 2020).
Company Secretary
Mr Anand Sundaraj (Company Secretary, appointed 24 November 2015)
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N1 Holdings Limited
Directors' report
30 June 2020
Information relating to Directors and Company Secretary
Mr Ren Hor Wong (Executive Chairman, CEO)
Qualifications, experience and
special responsibilities
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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
Ms Jia Penny He (Executive Director, CFO)
Qualifications, experience and
special responsibilities
Interest in Shares and Options
Directorships held in other
listed entities during the three
years prior to the current year
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.
50,024,000 Shares
None
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
financial
management, tax and reporting functions of the business.
the Company
includes all
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.
250,000 Shares and 750,000 Options
None
8
N1 Holdings Limited
Directors' report
30 June 2020
Mr Paul Jensen (Non-Executive Director)
Qualifications, experience and
special responsibilities
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Mr Jensen is an experienced Director with over 30 years of commercial, corporate,
governance and finance experience. Paul worked for the Lloyds Bank Group in New
Zealand, Australia and the United Kingdom prior to holding several senior executive roles in
the funds management sector.
Mr Jensen is now a professional non-executive director. He holds a commerce degree in
Accounting and Commercial Law from Victoria University of Wellington and is a Fellow of
the Australian Institute of Company Directors.
Interest in Shares and Options
Nil
Directorships held in other listed
entities during the three years
prior to the current year
None
Mr David Holmes (Non-Executive Director)
Qualifications, experience and
special responsibilities
Interest in Shares and Options
Directorships held in other listed
entities during the three years
prior to the current year
Mr Frank Ganis (Non-Executive Director)
Qualifications, experience and
special responsibilities
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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.
Nil
None
Mr Ganis has over 38 years’ domestic and international experience in banking and finance
with an extensive background and deep knowledge of financial services. He is recognised as
a pioneer and influential industry leader in Australia.
Prior to retirement from full time executive work in 2017, Mr Ganis spent 28 years at
Macquarie Group including 17 years as an Executive Director. In addition to his executive
responsibilities, Mr Ganis also fulfilled a broad range of board and chair roles for a number of
Macquarie’s domestic and international subsidiaries and was a member of various regulatory
and credit committees.
Frank currently services as a board member for several public and private companies and
various industry advisory roles.
Frank is a Fellow of the Australian Property Institute (FAPI) and a Graduate of the Australian
Institute of Company Directors (GAICD).
Interest in Shares and Options
Nil
Directorships held in other listed
entities during the three years
prior to the current year
Former Non-Executive Director – Yellow Brick Road Holdings Limited (ASX: YBR)
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N1 Holdings Limited
Directors' report
30 June 2020
Mr Anand Sundaraj (Company Secretary)
Qualifications, experience and
special responsibilities
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Interest in Shares and Options
Directorships held in other listed
entities during the three years
prior to the current year
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.
10,000 Shares
None
Meetings of directors
The number of meetings of the Company's Board of Directors ('the Board') held during the year ended 30 June 2020,
and the number of meetings attended by each director were:
Ren Hor Wong
Jia Penny He
Tarun Kanji (resigned on 18 November 2019)
David Holmes
Paul Jensen (appointed on 18 November 2019 and resigned on 31 August 2020)
Number
eligible to
attend
Number
attended
10
10
5
10
6
10
10
5
10
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Remuneration report
Remuneration policy
The remuneration policy of the Company has been designed to align key management personnel (KMP) objectives
with shareholder and business objectives by providing a fixed remuneration component and offering specific long-
term incentives based on key performance in areas affecting the Group‘s financial results. The Board believes the
remuneration policy to be appropriate and effective in its ability to attract and retain the high-quality KMP to run and
manage the Group, as well as create goal congruence between Directors, executives and Shareholders.
The Board’s policy for determining the nature and amount of remuneration for KMP of the Group is as follows:
— The remuneration policy is to be developed by the Board (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.
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N1 Holdings Limited
Directors' report
30 June 2020
—
Incentives paid in the form of options or rights are intended to align the interests of the Directors and the
Company with those of the Shareholders. In this regard, KMP are prohibited from limiting the risk attached to
those instruments by use of derivatives or other means.
— The Board reviews KMP packages annually by reference to the Group’s performance, executive
performance and comparable information from industry sectors.
The performance of KMP is measured against criteria agreed annually with each executive and is based
predominantly on the forecast growth of the Group’s profits and Shareholders’ value. All bonuses and incentives
must be linked to predetermined performance criteria. The Board may, however, exercise its discretion in relation to
approving incentives, bonuses and options, and can recommend changes. Any change must be justified by
reference to measurable performance criteria. The policy is designed to attract the highest calibre of executives
and reward them for performance results leading to long-term growth in Shareholder wealth.
KMP receive, at a minimum, the superannuation guarantee contribution required by law, which is currently 9.5% of
the individual's ordinary earnings. Some individuals, however, have chosen to sacrifice part of their salary to
increase payments towards superannuation.
The Board's policy is to remunerate non-executive Directors at market rates for time, commitment and
responsibilities. The Board determines payments to the non-executive Directors and reviews their remuneration
annually, based on market practice, duties and accountability. Independent external advice is sought when
required. Fees that can be paid to a non-executive Director is contained in that Directors’ consultancy service
agreement.
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.
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N1 Holdings Limited
Directors' report
30 June 2020
Relationship between remuneration policy and Company performance
The remuneration policy has been tailored to increase goal congruence between Shareholders, Directors and
executives. Two methods have been applied to achieve this aim, the first being a performance-based bonus (i.e.
based on KPI), and the second being the issue of options to the majority of Directors and executives to encourage
the alignment of personal and shareholder interests. The Company believes this policy has been effective in
increasing shareholder value over the past years.
Performance conditions linked to remuneration
The Group seeks to emphasise reward incentives for results and continued commitment to the Group through the
provision of various cash bonus reward schemes, specifically the incorporation of incentive payments based on the
achievement of revenue targets, return on equity ratios, and continued employment with the Group.
The performance-related proportions of remuneration (based on KPI targets) are included in the following table.
The objective of the reward schemes is to both reinforce the short and long-term goals of the Group and provide a
common interest between Management and Shareholders. There has been no alteration to the terms of the
bonuses paid since the grant date.
The satisfaction of the performance conditions is based on a review of the audited financial statements of the
Group and publicly available market indices and as such these figures reduce any risk of contention relating to
payment eligibility. The Board does not believe that performance conditions should include a comparison with any
other measures or factors external to the Group at this time.
The performance-based bonus schedule is detailed below, which has only available to executive Directors since 1
July 2016. No bonuses were paid to executive Directors during FY2020.
Minimum revenue achieved by the
Company for a financial year
$5 million
$5.5 million
$6 million +
Bonus
Ren Hor Wong
$10,000
$16,000
$20,000
Bonus
Jia Penny He
$5,000
$8,000
$10,000
Maximum achievable bonus is used in below calculation.
Fixed remuneration
Remuneration linked to performance
2020
2019
2020
2019
Directors and secretaries
Ren Hor Wong
Jia Penny He
Tarun Kanji
David Holmes
Paul Jensen
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94.74%
94.74%
100%
100%
100%
94.74%
94.74%
100%
100%
-
5.26%
5.26%
0%
0%
0%
5.26%
5.26%
0%
0%
-
The following tables provide employment details of persons who were, during FY2020, members of KMP of the
Group. The table also illustrates the proportion of remuneration that was performance and non-performance based.
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N1 Holdings Limited
Directors' report
30 June 2020
Positions of KMPs and their employment details
Ren Hor Wong
Jia Penny He
Tarun Kanji
Jacqueline Wang
David Holmes
Paul Jensen
Position held
Contract duration
Employment
type
Termination
notice period
Chairman, CEO
18/03/2016 - Ongoing
Permanent
Executive
Director, CFO
Independent
Director
COO
Independent
Director
Independent
Director
18/03/2016 - Ongoing
Permanent
18/03/2016 – 18/11/2019
Consultancy
agreement
01/08/2014 - Ongoing
Permanent
15/01/2019 - Ongoing
18/11/2019 – 31/08/2020
Consultancy
agreement
Consultancy
agreement
3 months
3 months
3 months
3 weeks
3 months
10 business
days
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.
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N1 Holdings Limited
Directors' report
30 June 2020
Non-Executive Director – Tarun Kanji (resigned on 18 November 2019)
— 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.
Non-Executive Director – David Holmes
Superannuation.
— The remuneration (Service Fee) of the Non-Executive Director is $66,000 per annum including
— 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.
Non-Executive Director – Paul Jensen
— The remuneration (Service Fee) of the Non-Executive Director is $65,700 per annum.
— The Service Fee will be reviewed and determined annually.
— Termination notice period is 10 business days or immediately in the event of breach of services agreement
between the relevant Non-Executive Director and the Company or serious misconduct.
Remuneration of KMP
2020
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
$17,700
$368,030
$175,512
Directors and Secretaries
Ren Hor
Wong
Jia Penny
He
Tarun
Kanji*
David
Holmes
Paul
Jensen*
Other KMP
Jacqueline
Wang
$60,274
$40,515
$99,495
-
-
-
-
-
-
$15,609
$22,753
$17,100
-
$5,726
-
-
-
-
-
-
$7,704
$3,728
-
-
-
-
-
-
-
-
-
$414,096
$196,340
$17,700
$66,000
$40,515
$111,150
$9,048
$2,607
* Representing remuneration from 1 July 2019 to 18 November 2019 for Tarun Kanji and remuneration from 18 November 2019
to 30 June 2020 for Paul Jensen.
14
N1 Holdings Limited
Directors' report
30 June 2020
2019
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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
Salaries
$177,842
$374,675
Directors and Secretaries
Ren Hor
Wong
Jia Penny
He
Tarun
Kanji
David
Holmes*
Other KMP
Jacqueline
Wang
$87,564
$24,142
$59,000
-
-
-
-
-
$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
* Representing remuneration from 15 January 2019 to 30 June 2019 for David Holmes.
Note: 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:
Number of
options
beginning
of the year
-
750,000
-
1,200,000
-
Granted
No.
Exercised
during the
year
Lapsed
during the
year
Number of
options at
the end of
the year
Vested
Unvested
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
750,000
750,000
-
-
1,200,000
1,200,000
-
-
-
-
-
-
-
Ren Hor Wong
Jia Penny He
Tarun Kanji
Jacqueline
Wang
David Holmes
Note: The option expiry date is 14 December 2020. Options for Tarun Kanji expired in FY2017.
Number of
options
beginning
of the year
-
750,000
-
1,200,000
Granted
No.
Exercised
during the
year
Lapsed
during the
year
Number of
options at
the end of
the year
Vested
Unvested
-
-
-
-
-
-
-
-
-
-
-
-
-
-
750,000
750,000
-
-
1,200,000
1,200,000
-
-
-
-
Ren Hor Wong
Jia Penny He
Tarun Kanji
Jacqueline
Wang
Note: The option expiry date is 14 December 2020. Options for Tarun Kanji expired in FY2017.
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.
15
N1 Holdings Limited
Directors' report
30 June 2020
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Ren Hor Wong
(Note 1)
Jia Penny He
(Note 2)
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Tarun Kanji
Jacqueline
Wang
David Holmes
Paul Jensen
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
1
1
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
01/03/2017 450,000
$90,000
$0.2
14/12/2018
Employee
share option
Employee
share option
Employee
share option
Tranche
Fair value per option at
granting date
Vesting conditions
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
Jia Penny
He
Jacqueline
Wang
Jacqueline
Wang
Jia Penny He
Jacqueline
Wang
Jacqueline
Wang
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:
Number of
Shares at
the end of
the year
50,024,000
250,000
-
125,000
-
-
Number of
Shares
beginning
of the year
50,024,000
250,000
-
125,000
-
-
Received as
remuneration
during year
Received
on
exercising
Options
Disposed
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16
N1 Holdings Limited
Directors' report
30 June 2020
2019
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Ren Hor Wong
(Note 1)
Jia Penny He
(Note 2)
Tarun Kanji
Jacqueline
Wang
David Holmes
Number of
Shares
beginning
of the year
50,024,000
250,000
-
125,000
-
Received as
remuneration
during year
Received
on
exercising
Options
Disposed
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Number of
Shares at
the end of
the year
50,024,000
250,000
-
125,000
-
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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 2020.
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 2020.
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 2020.
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 2020.
This is the end of remuneration report.
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
29 September 2020
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Crowe Sydney
ABN 97 895 683 573
Level 15 1 O’Connell Street
Sydney NSW 2000
Australia
Tel +61 2 9262 2155
Fax +61 2 9262 2190
www.crowe.com.au
29 September 2020
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 2020, I declare that to the best of my knowledge and belief, that there have been no
contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(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.
© 2020 Findex (Aust) Pty Ltd.
18
N1 Holdings Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2020
Revenue from continuing operation
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 assets classified as held for sale
Loss from write-off of other financial assets
l
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
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Consolidated
Note
2020
$
2019
$
3
4
4,139,470
4,061,475
347,459
31,542
(922,239)
(2,474,296)
(6,092)
(111,846)
(108,538)
(394,474)
(231,478)
(1,040,081)
(46,746)
(632,915)
(24,694)
-
(344,248)
(913,576)
(2,503,698)
(11,010)
(99,682)
(487,747)
(374,717)
(238,869)
(564,093)
(102,702)
(774,240)
(35,623)
(592,432)
-
(1,850,718)
(2,605,372)
5
11
11
42
34,033
34,032
26
(1,816,685)
(2,571,340)
-
-
(1,816,685)
(2,571,340)
Cents
Cents
1
1
(2.2)
(2.2)
(3.2)
(3.2)
r
o
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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 2020
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Short-term loan receivables
Other financial assets
Assets held for sale
Other current assets
Total current assets
Non-current assets
Contract assets
Investments in associate and joint venture
Other investments
Property, plant and equipment
Deferred tax assets
Intangible assets
Other non-current assets
Total non-current assets
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Total assets
Liabilities
Current liabilities
Trade and other payables
Contract liabilities
Loan and borrowings
Lease liabilities
Deferred income
Provisions
Total current liabilities
Non-current liabilities
Contract liabilities
Loan and borrowings
Lease liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets/(liabilities)
Equity
Issued capital
Reserves
Retained earnings
Total equity/(deficiency)
Note
Consolidated
2020
$
2019
$
6
7
8
10
9
11
12
8
13
14
15
43
16
17
18
19
20
21
22
23
19
20
21
43
23
2,781,579
474,423
116,141
5,478,000
421,507
-
81,491
9,353,141
919,532
283,585
91,566
2,752,500
421,507
2,384,525
54,650
6,907,865
181,948
150
172,048
2,024,254
163,185
1,340,100
247,357
4,129,042
121,273
40
-
293,354
839,775
1,591,185
236,783
3,082,410
13,482,183
9,990,275
499,173
6,196
6,439,930
332,254
67,618
121,970
7,467,141
409,764
216,248
3,770,103
-
172,845
150,697
4,719,657
9,706
5,965,853
1,410,984
163,185
82,511
7,632,239
53,483
4,091,681
-
839,775
52,159
5,037,098
15,099,380
9,756,755
(1,617,197)
233,520
24
25
26
5,654,061
206,524
(7,477,782)
5,688,093
206,524
(5,661,097)
(1,617,197)
233,520
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 2020
Consolidated
Balance at 1 July 2018
Impact of adoption of AASB 15
Balance at 1 July 2018 - restated
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
Balance at 30 June 2019
Consolidated
Balance at 1 July 2019
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:
Recovery of deferred tax on IPO cost
Balance at 30 June 2020
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Issued
capital
$
Reserves
$
Retained
profits
$
Total equity
$
5,722,125
206,884
(3,666,371)
2,262,638
-
-
576,614
576,614
5,722,125
206,884
(3,089,757)
2,839,252
-
-
-
-
-
(2,571,340)
-
(2,571,340)
-
-
(2,571,340)
(2,571,340)
-
(34,032)
(360)
-
-
-
(360)
(34,032)
5,688,093
206,524
(5,661,097)
233,520
Issued
capital
$
Retained
Reserves
$
profits
$
Total
deficiency
in equity
$
5,688,093
206,524
(5,661,097)
233,520
-
-
-
-
-
(1,816,685)
-
(1,816,685)
-
-
(1,816,685)
(1,816,685)
(34,032)
-
-
(34,032)
5,654,061
206,524
(7,477,782)
(1,617,197)
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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 2020
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n
o
Cash flows from operating activities
Receipts from customers
Receipt of government incentive for COVID-19
Interest received from bank deposit
Net proceeds from disposal of trail book
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 operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of Intangible assets
Investment in other financial assets
Investment in associates and joint ventures
Loans to related parties
l
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings and loans
Repayment of borrowings and loans
Payment of finance cost and interest
Repayment of other financial liability
Repayment of lease liabilities and interest expense
Net cash from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
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Note
Consolidated
2020
$
2019
$
4,237,433
252,246
13,880
1,790,887
(4,741,486)
(2,725,500)
5,070,000
(530,397)
4,437,516
-
9,126
-
(5,534,531)
(1,058,500)
2,843,452
(312,043)
44
3,367,063
385,020
15
16
(76,526)
-
(113,335)
(110)
(1,085)
(10,524)
(72,178)
(421,507)
-
-
(191,056)
(504,209)
1,261,262
(1,773,762)
(468,592)
(15,387)
(317,481)
530,000
(256,410)
(230,801)
(12,942)
-
(1,313,960)
29,847
1,862,047
919,532
(89,342)
1,008,874
6
2,781,579
919,532
r
o
F
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 2020
Note 1. Earnings per share
Loss after income tax
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Consolidated
2020
$
2019
$
(1,816,685)
(2,571,340)
Number
Number
81,555,573
81,555,573
81,555,573
81,555,573
Cents
Cents
(2.2)
(2.2)
(3.2)
(3.2)
Weighted average number of ordinary shares used in calculating basic earnings per
share
Weighted average number of ordinary shares used in calculating diluted earnings per
share
Basic earnings per share
Diluted earnings per share
Note 2. Operating segments
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
- Fund trustee and management services
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
Migration 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.
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, like revenue
from investment activities.
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 2020
Note 2. Operating segments (continued)
Operating segment information
Financial
services
Real estate
services
Migration
services
Other
Total
$
$
$
$
$
3,539,465
11,434
233,579
3,784,478
443,073
1,212
11,615
455,900
57,880
30
19,000
76,910
99,051
1,204
69,386
169,641
4,139,469
13,880
333,580
4,486,929
(413,924)
(413,924)
(76,502)
(76,502)
(51,524)
(51,524)
(1,308,768)
(1,308,768)
(1,850,718)
(1,850,718)
34,033
(1,816,685)
260,895
700,866
232,751
46,977
-
139
139,269
292,099
632,915
1,040,081
10,765,150
2,481,283
29,945
205,805 13,482,183
13,482,183
13,166,042
4,510,506
98,246
(2,675,414) 15,099,380
15,099,380
Consolidated - 2020
Revenue
Revenue
Interest
Other income
Total revenue
Segment operating profit/(loss) before
income tax
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit
Material items include:
Depreciation and amortisation expense
Interest expense
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
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24
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 2. Operating segments (continued)
Consolidated - 2019
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Revenue
Revenue
Interest
Other income
Total revenue
e
s
u
Loss for 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
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
Financial
services
Real estate
services
Migration
services
Other
Total
$
$
$
$
$
3,380,665
6,457
11,766
3,398,888
531,524
-
21
531,545
145,117
148
-
145,265
4,169
2,520
10,630
17,319
4,061,475
9,125
22,417
4,093,017
(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
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
Note 3. Revenue from continuing operation
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Mortgage brokering and commercial lending origination commission
Mortgage brokering 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
25
Consolidated
2020
$
2019
$
1,023,021
155,256
72,740
2,288,449
443,074
57,880
99,050
915,793
1,274,798
23,174
1,041,900
531,524
145,117
129,169
4,139,470
4,061,475
4,139,470
-
4,061,475
-
4,139,470
4,061,475
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N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 3. Revenue from continuing operation (continued)
Timing of revenue recognition
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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:
2020
2020
2019
2019
At point in
At point in
time
$
Over time
$
time
$
Over time
$
Mortgage brokering and commercial lending origination
commission
Trail commission
Commercial lending fee and interest
Real Estate service
Migration service
Other service
e
s
u
1,023,021
227,996
1,504,595
62,629
57,880
99,050
-
-
783,854
380,445
-
-
915,793
1,297,972
512,618
132,018
145,117
129,169
-
-
529,282
399,506
-
-
2,975,171
1,164,299
3,132,687
928,788
AASB 15 Revenue from Contracts with Customers
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, trailing commission is also recognised as revenue upon settlement of loans
and at the same time, the right to trailing commission is now recognised as a contract asset on balance sheet
(where it was classified under trade and other receivable in prior period report). 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 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 commission 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.
26
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 3. Revenue from continuing operation (continued)
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 commercial lending fee and interest from those lending activities.
Commercial lending fee is recognised in revenue upon the obligation of establishing the loan for customer is
completed. Interest income generated from the commercial lending is recognised when it is earned from the loan
lent to customers.
Management fee received by N1 Venture is recognised when derived.
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 fee and interest earned is presented on a gross
basis.
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 of 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.
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 commission 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.
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27
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 4. Other income
FOREX gain from revaluation of financial asset
Receipt of government incentive for COVID-19
Other income
Interest
Other income
Note 5. Finance cost
Interest expense in relation with AASB 16
Interest expense in relation with finance lease
Interest expense from borrowings and loans
Bank fees
Note 6. Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
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Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-
term, highly liquid investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value. For the statement of cash flows
presentation purposes, cash and cash equivalents also includes bank overdrafts, which are shown within
borrowings in current liabilities on the statement of financial position.
Note 7. Trade and other receivables
Commission receivables
Agent commission clawback receivable
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).
The impairment assessment required by AASB 9 for financial assets are based on a forward-looking expected
credit loss ('ECL') model.
28
Consolidated
2020
$
2019
$
58,713
252,246
22,620
13,880
-
-
22,417
9,125
347,459
31,542
Consolidated
2020
$
2019
$
24,515
1,886
999,664
14,016
-
2,445
540,399
21,249
1,040,081
564,093
Consolidated
2020
$
2019
$
2,781,579
919,532
Consolidated
2020
$
2019
$
453,433
20,990
231,015
52,570
474,423
283,585
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 7. Trade and other receivables (continued)
Simplified approach is adopted to assess the impairment of 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.
Debts that are known to be uncollectable are written off when identified.
Credit risk
The group has no significant concentration of credit risk with respect to any single counter party or group of
counter parties. On a geographic basis, the group has significant credit risk exposures in Australia only.
The group has assessed that there are no trade and other receivables that are impaired at year end (30 June
2019: nil). As at 30 June 2020, the amount of all trade and other receivables past due is $208,420 (2019:
$39,654).
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Note 8. Contract assets
Contract assets - current
Contract assets - non-current
The contract asset relates to future trailing income. It 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.
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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 2019 and commissions step up
Trail commission received
2020
$
212,839
313,246
(227,996)
298,089
29
Consolidated
2020
$
2019
$
116,141
91,566
Consolidated
2020
$
2019
$
181,948
121,273
2019
3,387,542
1,276,386
(1,297,972)
(2,384,525)
(768,592)
212,839
Consolidated
2020
$
2019
$
421,507
421,507
Consolidated
2020
$
2019
$
5,478,000
2,752,500
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 8. Contract assets (continued)
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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 assets classified as held for sale
Note 9. Other financial assets
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Short-term financial assets investment
Other financial assets represents investment loan receivable and they 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).
Note 10. Short-term loan receivables
Short-term loan receivables
The Group raised funds to lend money to commercial entities on a short-term basis and earns the interest as
income. N1 Loans take established real property or land as security according to its lending guidelines. More
detailed information regarding these loans is disclosed in Note 28 Financial Risk Management.
The short-term loan balance represented the outstanding amounts owed from commercial borrowing customers.
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).
The impairment assessment required by AASB 9 for financial assets are based on a forward-looking expected
credit loss ('ECL') model.
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.
30
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 10. Short-term loan receivables (continued)
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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 takes into consideration the collateral
in making credit risk assessment.
The Group recognises loss allowances at an amount equal to lifetime (normally less than 12 months) ECL on 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 loan
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 11. Assets held for sale
Consolidated
2020
$
2019
$
-
2,384,525
Assets held for sale
Assets held for sale relate to contract assets that generate trail commission for the Group. The Group sold the trail
book in August 2019 to focus more on their long-term strategic developments such as the commercial loan
lending business.
The total net loss on sale of the trail book is $936,680. This includes the loss of $592,432 on assets classified as
held for sale which was recognised in 2019 financial year, as well as $344,248 loss on receivable write-off for the
15% retention on sales of trail book which is recognised in current year.
Note 12. Other current assets
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Prepayments
Consolidated
2020
$
2019
$
81,491
54,650
31
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 13. Investments in associate and joint venture
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Investment in associate 1573 Pty Ltd
Investment in associate N1X Capital Pty. Ltd.
Investment in joint venture Loan 77 Pty Ltd
Investment in joint venture RN2 Pty Ltd
Consolidated
2020
$
2019
$
10
40
50
50
150
-
40
-
-
40
Refer to note 34 for further information on interests in associates.
Refer to note 35 for further information on interests in joint ventures.
Investment in associates and joint ventures are accounted for using the equity method. Under the equity method,
on initial recognition the investment in an associate or a joint venture is recognised at cost, and the carrying
amount is increased or decreased to recognise the Group’s share of the profit or loss of the investee after the date
of acquisition. The Group’s share of the investee’s profit or loss is recognised in the Group’s profit or loss.
Distributions received from an investee reduce the carrying amount of the investment. Adjustments to the carrying
amount may also be necessary for changes in the Group’s proportionate interest in the investee arising from
changes in the investee’s other comprehensive income. Such changes include those arising from the revaluation
of property, plant and equipment and from foreign exchange translation differences. The Group’s share of those
changes is recognised in other comprehensive income.
Note 14. Other investments
Investment in Stropro Technologies Pty Ltd
Investment in Vaikuntha Pty Ltd
Refer to note 30 for further information on fair value measurement.
Other investments are financial assets at fair value through profit or loss which are equity interests owned by the
Group. They are initially measured at fair value with subsequent changes in fair value recognised in profit or loss.
Consolidated
2020
$
2019
$
158,713
13,335
172,048
-
-
-
e
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p
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32
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N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 15. Property, plant and equipment
Office equipment
Less: Accumulated depreciation
Motor vehicles
Less: Accumulated depreciation
Furniture & fittings
Less: Accumulated depreciation
Office - right-of-use
Less: Accumulated depreciation
Consolidated
2020
$
2019
$
94,879
(71,431)
23,448
74,329
(52,417)
21,912
74,283
(55,027)
19,256
74,329
(45,113)
29,216
586,041
(335,820)
250,221
530,109
(285,227)
244,882
2,036,204
(307,531)
1,728,673
-
-
-
2,024,254
293,354
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.
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at
cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments
made at or before the commencement date net of any lease incentives received, any initial direct costs incurred,
and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling
and removing the underlying asset, and restoring the site or asset.
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%.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the
leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are
subject to impairment or adjusted for any remeasurement of lease liabilities. The range of lease terms for current
leases are between 1 to 5 years.
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.
33
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 15. Property, plant and equipment (continued)
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 2018
Additions
Depreciation expense
Balance at 30 June 2019
Additions by application of AASB16
Additions
Depreciation expense
Balance at 30 June 2020
Office
Equipment
$
Motor
Vehicles
$
Furniture &
Fittings
$
Office - right-
of-use
$
Total
$
19,211
10,524
(10,479)
19,256
-
20,596
(16,404)
38,954
-
(9,738)
29,216
-
-
(7,304)
307,879
-
(62,997)
-
-
-
366,044
10,524
(83,214)
244,882
-
55,931
(50,592)
-
657,552
1,378,652
(307,531)
293,354
657,552
1,455,179
(381,831)
23,448
21,912
250,221
1,728,673
2,024,254
The motor vehicles were acquired via finance lease.
The Group entered into a new 5 year office lease with ARE Noble Pty Ltd starting from 15 September 2020. The
rental premises is at 77 King Street, Sydney, 2000.
AASB 16 Lease - Adoption of new accounting standards
The Group has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and for lessees
eliminates the classifications of operating leases and finance leases. Except for short-term leases and leases of
low-value assets, right-of-use assets and corresponding lease liabilities are recognised in the statement of
financial position. Straight-line operating lease expense recognition is replaced with a depreciation charge for the
right-of-use assets (included in operating costs) and an interest expense on the recognised lease liabilities
(included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB
16 will be higher when compared to lease expenses under AASB 117. However, EBITDA (Earnings Before
Interest, Tax, Depreciation and Amortisation) results improve as the operating expense is now replaced by
interest expense and depreciation in profit or loss. For classification within the statement of cash flows, the
interest portion is disclosed in operating activities and the principal portion of the lease payments are separately
disclosed in financing activities.
Impact of adoption
AASB 16 was adopted using the modified retrospective approach and as such the comparatives have not been
restated. The impact of adoption on opening retained profits was $nil. A reconciliation from lease commitments as
reported in prior year financial report to balances of lease liabilities and right of use assets as at 1 July 2019 upon
initial application of AASB 16 is as below:
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Operating lease commitments as at 1 July 2019 (AASB 117)
True-up of variable lease payment in relation with indexation
Discount (based on the incremental borrowing rate)
Right-of-use assets (AASB 16)
Lease liabilities - current (AASB 16)
Lease liabilities - non-current (AASB 16)
34
1 July 2019
635,669
72,554
(50,671)
657,552
292,965
364,587
657,552
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 15. Property, plant and equipment (continued)
The weighted average lessee’s incremental borrowing rate applied to lease liabilities recognised in the statement
of financial position at the date of initial application is 4.765%. The rate is determined by referring to the interest
rate of the group's existing loan and for similar terms. Lease terms are based on signed agreement.
Note 16. Intangible assets
Goodwill
Rent roll
Less: Accumulated amortisation
Website and IT system
Less: Accumulated amortisation
Consolidated
Balance at 1 July 2018
Additions
Amortisation/written-down
Balance at 30 June 2019
Amortisation/written-down
Balance at 30 June 2020
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Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are
set out below:
Consolidated
2020
$
2019
$
536,216
536,216
2,217,048
(1,460,142)
756,906
2,217,048
(1,240,377)
976,671
328,957
(281,979)
46,978
328,957
(250,659)
78,298
1,340,100
1,591,185
Goodwill (a)
$
Rent Roll (b)
$
Website and
IT system (c)
$
Total
$
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
(219,765)
78,298
(31,320)
1,591,185
(251,085)
536,216
756,906
46,978
1,340,100
a) 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.
35
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 16. Intangible assets (continued)
Growth rate: 3%
Pre-tax discount rate: 8%
Terminal value:
b) Rent Roll Assets
Rent Roll – Cost
Rent Roll – Written-down
Rent Roll – Net
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%.
Consolidated
2020
$
2019
$
2,217,048
(1,460,142)
2,217,048
(1,240,377)
756,906
976,671
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.
c) Website and IT System
Website and IT system – Cost
Website and IT system – Accumulated amortisation
Website and IT system – Net
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 17. Other non-current assets
Consolidated
2020
$
2019
$
328,957
(281,979)
328,957
(250,659)
46,978
78,298
Consolidated
2020
$
2019
$
367
718
246,272
-
-
236,783
247,357
236,783
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
Loan - 1573 Pty Ltd
Loan - RN2 Pty Ltd
Other non-current assets
The other non-current assets are mainly bond deposit paid by the group.
36
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 18. Trade and other payables
l
y
n
o
Trade payables
Employee payables
Other creditors and accruals
Consolidated
2020
$
2019
$
129,592
199,285
170,296
103,245
98,341
208,178
499,173
409,764
Refer to note 29 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 19. Contract liabilities
Contract liabilities - current
l
Contract liabilities - non-current
Note 20. Loan and borrowings
e
s
u
a
n
o
s
r
e
p
Current
Bank loan (i)
Loan received for commercial lending (ii)
Convertible debt (iii)
Loan from other lenders (iv)
Finance lease payable - current
r
o
F
Non-current
Bank loan (i)
Loan received for commercial lending (ii)
Convertible debt (iii)
Loan from other lenders (iv)
Finance lease payable - non-current
37
Consolidated
2020
$
2019
$
6,196
216,248
Consolidated
2020
$
2019
$
9,706
53,483
Consolidated Consolidated
2020
$
2019
$
52,390
5,450,000
370,000
530,000
37,540
56,410
2,820,192
-
880,000
13,501
6,439,930
3,770,103
Consolidated Consolidated
2020
$
2019
$
785,853
3,400,000
1,000,000
780,000
-
824,141
1,630,000
1,370,000
230,000
37,540
5,965,853
4,091,681
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 20. Loan and borrowings (continued)
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
i) The bank loan borrowed from National Australia Bank was renewed in May 2020. The repayment term of the
loan is 3 years expiring 31 March 2023. Due to COVID-19, the repayment has been stopped and is to re-
commence from February 2021. The interest is 3.8% 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 2020 is $838,243 (30 June 2019: $880,551).
ii) Loan received for commercial lending is the funds being raised for commercial loan lending to customers. They
are unsecured. Key information of these loans are detailed in the table below.
Repayment term
Drawdown
amount
Drawdown date
Balance at
30/06/2020
Interest rate
(per annum)
Private loan batch#1
Private loan batch#2
Private loan batch#3
Private loan batch#4
1 year **
6 months rolling **
6 months rolling **
3 months rolling **
2 years and 4 months
**
Private loan batch#5
2 years **
Private loan batch#6
4 months**
Private loan batch#7
6 months**
Private loan batch#8
Private loan batch#9
4 years **
Private loan batch#10 4 years **
Private loan batch#11 3 years **
Private loan batch#12 2 years **
Private loan batch#13 2 years **
Private loan batch#14 3 years **
Private loan batch#15 2 years **
Private loan batch#16 2 years **
Private loan batch#17 2 years **
Private loan batch#18 1.5 years **
Private loan batch#19 2 years **
** Interest only
iii) Convertible debt
As at the beginning of the period
As at end of the period
100,000 21/10/2019
2,000,000 01/10/2019
1,000,000 15/11/2019
500,000 01/11/2019
300,000
01/11/2018
100,000 01/04/2019
800,000 27/03/2020
250,000 04/06/2020
200,000 01/08/2018
300,000 01/08/2018
300,000 23/11/2018
300,000 09/05/2019
100,000 09/05/2019
1,100,000 01/11/2018
200,000 22/11/2019
300,000 03/12/2019
600,000 01/12/2019
100,000 16/03/2020
300,000 01/04/2020
8,850,000
100,000
2,000,000
1,000,000
500,000
300,000
100,000
800,000
250,000
200,000
300,000
300,000
300,000
100,000
1,100,000
200,000
300,000
600,000
100,000
300,000
8,850,000
8.00%
6.00%
6.00%
10.00%
10.00%
10.00%
10.00%
6.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
8.00%
8.00%
Consolidated Consolidated
2020
$
2019
$
1,370,000
1,370,000
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 11 May 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.
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.
38
Repayment term
Drawdown
amount
Drawdown date
6 months**
2 years**
2 years**
2 years**
4 years**
2 years**
4 years**
5 years**
200,000 01/06/2020
100,000 10/06/2019
130,000 01/06/2019
100,000 10/06/2019
200,000 01/01/2018
200,000 01/05/2020
200,000 01/09/2017
180,000 26/05/2017
Balance at
30/06/2020
Interest rate
(per annum)
%
200,000
100,000
130,000
100,000
200,000
200,000
200,000
180,000
6.00%
8.00%
10.00%
10.00%
10.00%
8.00%
10.00%
10.00%
1,310,000
1,310,000
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 20. Loan and borrowings (continued)
iv) Loan from other lenders
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
** Interest only
Note 21. Lease liabilities
Lease liability - current portion
Lease liability - non-current portion
Lease liabilities
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
Consolidated
2020
$
2019
$
332,254
-
Consolidated
2020
$
2019
$
1,410,984
-
Refer to note 29 for further information on specific financial risk exposures and management.
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the
present value of the lease payments to be made over the term of the lease, discounted using the interest rate
implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Lease
payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend
on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase
option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties.
The variable lease payments that do not depend on an index or a rate are expensed in the period in which they
are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate
used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease
liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the
carrying amount of the right-of-use asset is fully written down.
39
Consolidated
2020
$
2019
$
67,618
-
37,406
135,439
67,618
172,845
Consolidated
2020
$
2019
$
75,148
46,822
79,693
71,004
121,970
150,697
Consolidated
2020
$
2019
$
82,511
52,159
2019
$
2019
$
71,004
(24,182)
137,390
(66,386)
46,822
71,004
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 22. Deferred income
Interest advanced from borrower
Deferred performance fee
Note 23. Provisions
e
s
u
Employee provision - current
Refund liabilities
l
Employee provision - non-current
Movement of provision for refunds
Beginning of the year
Additions/(Reductions) during the year
Ending of the year
l
y
n
o
a
n
o
s
r
e
p
r
o
F
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
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% (FY19: 11.3%).
Provision for employee benefits
Provision for employee benefits represents amounts accrued for annual leave and long service leave.
40
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 23. Provisions (continued)
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 24. Issued capital
Fully paid ordinary shares
Issued capital
Details
Movements in ordinary share capital
Balance
Recovery of deferred tax on IPO cost
Balance
Recovery of deferred tax on IPO cost
Balance
Consolidated
2020
$
2019
$
5,654,061
5,688,093
Consolidated
2020
2019
Shares
Shares
2020
$
2019
$
81,555,573 81,555,573
5,654,061
5,688,093
Date
Shares
$
1 July 2018
81,555,573 5,722,125
(34,032)
-
30 June 2019
81,555,573 5,688,093
(34,032)
-
30 June 2020
81,555,573 5,654,061
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.
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.
41
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 24. Issued capital (continued)
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 25. Reserves
l
y
n
o
Options reserve
Consolidated
2020
$
2019
$
206,524
206,524
Consolidated
2020
$
2019
$
206,524
-
206,884
(360)
206,524
206,524
e
s
u
As at beginning of the year
(Reversal of expired share options) / Share based payment
l
Details in relation to the options are disclosed below.
The Group operates an employee share and option plan.
a
n
o
s
r
e
p
r
o
F
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:
42
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y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 25. Reserves (continued)
As at beginning of the year
Forfeited during the year
As at end of the year
2020
2020
2019
2019
Average
exercise
price per
Option $
Average
exercise
price per
Option $
Number of
Options
Number of
Options
0.20
0.20
5,403,750
-
0.20
0.20
5,991,250
(587,500)
0.20
5,403,750
0.20
5,403,750
Options outstanding under the Employee Option Plan at the end of the year have the following expiry dates and
exercise prices:
Grant Date
14/12/2015
18/03/2016
01/03/2017
Expiry Date
14/12/2020
18/03/2018
14/12/2020
Exercise
price
$
Fair value at
grant date
$
Options 30
June 20
Options 30
June 19
$0.20
$0.20
$0.20
0.0540
0.0385
0.0475
3,710,000
-
1,693,750
3,710,000
-
1,693,750
Average remaining contractual life of options outstanding at end of period 0.46 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 26. Retained earnings
Consolidated
2020
$
2019
$
(5,661,097)
(1,816,685)
(3,089,757)
(2,571,340)
(7,477,782)
(5,661,097)
Accumulated losses at the beginning of the financial year
Loss after income tax benefit for the year
Accumulated losses at the end of the financial year
Note 27. Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
43
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 28. 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:
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
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
Lease liabilities
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
Lease liabilities
Note
2020
2019
6
7
10
9
2,781,579
474,423
5,478,000
421,507
919,532
283,585
2,752,500
421,507
9,155,509
4,377,124
18
20
20
20
20
20
21
499,173
37,540
52,390
5,450,000
370,000
530,000
332,254
409,764
13,501
56,410
2,820,192
-
880,000
-
7,271,357
4,179,867
Note
2020
$
2019
$
-
-
20
20
20
20
20
21
785,853
-
1,000,000
780,000
3,400,000
1,410,984
824,141
37,540
1,370,000
230,000
1,630,000
-
7,376,837
4,091,681
Note 29. 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. 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.
44
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 29. Specific financial risk exposures and management (continued)
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.
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:
Consolidated
2020
$
2019
$
838,243
880,551
Bank loans
For the Group the bank loans outstanding, totalling $838,243 (2019: $880,551), among which $838,243 (30 June
2019: $655,551) are principal and interest payment loans. Monthly cash outlays of approximately $3,603 (2019:
$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 $8,382 per annum. The
percentage change is based on the expected volatility of interest rates using market data and analysts forecasts.
In addition, no principal repayment (2019: $56,410) are due during the year ended 30 June 2020.
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 of the financial asset at the reporting date 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.
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+.
45
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 29. Specific financial risk exposures and management (continued)
The Group has a credit risk exposure with trade and other receivables ($474,423 as at 30 June 2020 and
$283,585 as at 30 June 2019), commercial loan receivable ($5,478,000 as at 30 June 2020 and $2,752,500 as at
30 June 2019), and other investment ($421,507 as at 30 June 2020 and $421,507 as at 30 June 2019). These
balances were within their terms of trade respectively and no impairment was made as at 30 June 2020. 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 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.
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.
l
y
n
o
e
s
u
l
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
a
n
o
s
2020
Trade and other payables
r
Convertible debts
Finance lease liabilities
e
Bank loan and other borrowings
Lease liabilities
p
r
o
F
2019
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
$
499,173
1,370,000
37,540
10,998,243
1,743,238
499,173
370,000
37,540
6,032,390
332,254
-
1,000,000
-
3,784,781
340,045
-
-
-
1,181,072
1,016,376
-
-
-
-
54,563
14,648,194
7,271,357
5,124,826
2,197,448
54,563
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
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
46
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 30. 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:
Level 1
Measurements based on quoted
prices (unadjusted) in active markets
for identical assets or liabilities that
the entity can access at the
measurement date.
Fair value of assets and liabilities
Level 2
Level 3
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.
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 has equity interests in Stropro Technologies Pty Ltd and Vaikuntha Pty Ltd which are recognised and
subsequently measured at fair value Level 3 on a recurring basis. (Refer to Note 14 Other investments for details)
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Note 31. Related party transactions
Parent entity
N1 Holdings Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 33.
47
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 31. Related party transactions (continued)
Associates
Interests in associates are set out in note 34.
Joint ventures
Interests in joint ventures are set out in note 35.
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Key management personnel
Disclosures relating to key management personnel are set out in note 36 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.
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:
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Payment for goods and services:
N1 Consultants Group Sdn Bhd - Malaysia
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting
date.
Loans to/from related parties
The following transactions occurred in relation to loans with related parties:
Consolidated
2020
$
2019
$
143,923
138,639
Consolidated
2020
$
2019
$
-
(150,000)
Current borrowings:
Ren Hor Wong Family Trust
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
48
Parent
2020
$
2019
$
(1,394,949)
(833,652)
(1,394,949)
(833,652)
Parent
2020
$
2019
$
95,419
62,237
26,239,082 20,610,482
6,535,178
2,922,648
12,783,903
6,152,648
15,824,119 15,790,087
206,524
(1,538,777)
206,524
(2,575,464)
13,455,179 14,457,834
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 32. 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
Statement of financial position
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Total current assets
Total assets
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Total current liabilities
Total liabilities
Equity
Issued capital
Options reserve
Accumulated losses
Total equity
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 2020 and 30 June
2019.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2020 and 30 June 2019.
Capital commitments - Property, plant and equipment
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The parent entity had no capital commitments for property, plant and equipment as at 30 June 2020 and 30 June
2019.
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Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 37, 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.
49
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 33. Interests in subsidiaries
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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)
Everone Consulting Pty Ltd (ix)
Yizhihao (Shanghai) Business Consulting Co.,Ltd
Principal place of business /
Country of incorporation
Ownership interest
2019
%
2020
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
Australia
China
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%
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.
(i) N1 Loans was incorporated on 25 February 2010 and was initially owned by Mr Ren Hor Wong. Upon the
completion of the IPO on 18 March 2016, the company became fully owned by the Company.
(ii) N1 Migration Pty Ltd was incorporated on 14 September 2015 and is fully owned by the Group since 11 April
2016.
(iii) N1 Realty was incorporated on 3 May 2016 and, since then, it has been fully owned by the Group.
(iv) N1 Project was incorporated on 9 December 2016 and, since then, it has been fully owned by the Group.
(v) N1 Venture was incorporated on 19 November 2014 and was acquired on 1 September 2016, since then it has
been fully owned by the Group.
(vi) Sydney Boutique Property Pty Ltd was acquired on 21 October 2016. Since then, it has been fully owned by
the Group since acquisition.
(vii) 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 22 May 2019 and renamed to Everone Consulting Pty Ltd on
1 August 2019, it has been fully owned by the group since incorporation.
(xi) Yizhihao (Shanghai) Business Consulting Co.,Ltd was incorporated on 8 August 2019, it has been fully owned
by the group since incorporation.
50
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 34. Interests in associates
Interests in associates are accounted for using the equity method of accounting. Information relating to associates
that are material to the Group are set out below:
Name
N1X Capital Pty. Ltd.
1573 Pty Ltd
Principal place of business /
Country of incorporation
Ownership interest
2019
%
2020
%
Australia
Australia
40.00%
33.30%
40.00%
-
N1X Capital Pty. Ltd. was incorporated on 10 May 2017 and it has been the associate to the group since its
incorporation.
1573 Pty Ltd was incorporated on 19 December 2019 and it has been the associate to the group since its
incorporation.
Note 35. Interests in joint ventures
Interests in joint ventures are accounted for using the equity method of accounting. Information relating to joint
ventures that are material to the Group are set out below:
Name
Loan 77 Pty Ltd
RN2 Pty Ltd
Principal place of business /
Country of incorporation
Ownership interest
2019
%
2020
%
Australia
Australia
50.00%
50.00%
-
-
(i) Loan 77 Pty Ltd was incorporated on 12 July 2019, it has been a joint venture of the group since its
incorporation.
(ii) RN2 Pty Ltd was incorporated on 1 August 2019, it has been a joint venture of the group since its
incorporation.
Note 36. 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 2020. The total of remuneration paid to
or payable to KMP of the Group during the year was:
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Consolidated
2020
$
2019
$
777,135
54,627
14,039
-
734,753
48,474
9,826
17,793
845,801
810,846
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments
51
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 36. Key management personnel (continued)
Short-term employee benefits
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●
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.
These amounts are the current year’s estimated costs of provided for the Group’s superannuation contributions
made during the year.
These amounts represent long service leave benefits accruing during the year.
Post-employment benefits
Other long-term benefits
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 37. 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.
Going concern
The financial statements have been prepared on a going concern basis. The Group incurred a net loss of
$1,816,685 for the year ended 30 June 2020 (30 June 2019: Loss of $2,571,340). As at 30 June 2020, the Group
had a net liability position of $1,617,197 (30 June 2019: Net assets $233,520).
The Group has prepared a cash flow forecast which indicates that the Group will be able to settle its liabilities in
the foreseeable future. The following strategy will be implemented, with the objective to continue the transitioning
of the Group’s core operations into a predominantly financial services business.
Continued pursuit of growth in commercial lending business through balance sheet lending and fund
management fee from One Lending Fund.
The Group will contact all existing lenders to extend the private loans that are approaching their expiry date.
Most existing loans have opted to renew or extend as per track record.
The Group will actively pursue the pipeline of mandated development funding projects and commercial
property loans.
The Group will actively pursue new private funding opportunities to fund its expanded commercial lending.
The Group will proactively manage operational expenditures.
Leverage the existing head office infrastructure. No additional operational costs are needed to achieve the
forecast increased revenue in the next 12 months.
The Group has achieved a positive EBITDA in the second half year of FY2020 and up until August 2020. It is
expected to continue this momentum in the future.
●
●
●
●
52
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 37. Other principal accounting policies (continued)
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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.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the Group's accounting policies. The
areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements, are disclosed in note 38.
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 32.
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 2020 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.
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 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.
53
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N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 37. Other principal accounting policies (continued)
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.
●
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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.
Associates
Associates are entities over which the Group has significant influence but not control or joint control. Investments
in associates are accounted for using the equity method. Under the equity method, the share of the profits or
losses of the associate is recognised in profit or loss and the share of the movements in equity is recognised in
other comprehensive income. Investments in associates are carried in the statement of financial position at cost
plus post-acquisition changes in the Group's share of net assets of the associate. Goodwill relating to the
associate is included in the carrying amount of the investment and is neither amortised nor individually tested for
impairment. Dividends received or receivable from associates reduce the carrying amount of the investment.
54
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 37. Other principal accounting policies (continued)
When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any
unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations
or made payments on behalf of the associate.
The Group discontinues the use of the equity method upon the loss of significant influence over the associate and
recognises any retained investment at its fair value. Any difference between the associate's carrying amount, fair
value of the retained investment and proceeds from disposal is recognised in profit or loss.
Joint ventures
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to
the net assets of the arrangement. Investments in joint ventures are accounted for using the equity method. Under
the equity method, the share of the profits or losses of the joint venture is recognised in profit or loss and the
share of the movements in equity is recognised in other comprehensive income. Investments in joint ventures are
carried in the statement of financial position at cost plus post-acquisition changes in the Group's share of net
assets of the joint venture. Goodwill relating to the joint venture is included in the carrying amount of the
investment and is neither amortised nor individually tested for impairment. Income earned from joint venture
entities reduce the carrying amount of the investment.
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.
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Employee benefits
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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.
55
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 37. Other principal accounting policies (continued)
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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.
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 impact of other new accounting standards released but for application in future periods has been disclosed in
the relevant section.
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2020. The
Group's assessment of the impact of these new or amended Accounting Standards and Interpretations, most
relevant to the Group, are set out below.
The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 January 2020
and early adoption is permitted. The Conceptual Framework contains new definition and recognition criteria as
well as new guidance on measurement that affects several Accounting Standards. Where the Group has relied on
the existing framework in determining its accounting policies for transactions, events or conditions that are not
otherwise dealt with under the Australian Accounting Standards, the Group may need to review such policies
under the revised framework. At this time, the application of the Conceptual Framework is not expected to have a
material impact on the Group's financial statements.
Note 38. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements. Management continually evaluates its
judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses.
Management bases its judgements, estimates and assumptions on historical experience and on other various
factors, including expectations of future events, management believes to be reasonable under the circumstances.
The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements,
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities (refer to the respective notes) within the next financial year are discussed below.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or
may have, on the Group based on known information. This consideration extends to the nature of the products
and services offered, customers, supply chain, staffing and geographic regions in which the Group operates.
Other than as addressed in specific notes, there does not currently appear to be either any significant impact upon
the financial statements or any significant uncertainties with respect to events or conditions which may impact the
Group unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic.
56
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 38. Critical accounting judgements, estimates and assumptions (continued)
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Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease liability.
Judgement is exercised in determining whether there is reasonable certainty that an option to extend the lease or
purchase the underlying asset will be exercised, or an option to terminate the lease will not be exercised, when
ascertaining the periods to be included in the lease term. In determining the lease term, all facts and
circumstances that create an economical incentive to exercise an extension option, or not to exercise a
termination option, are considered at the lease commencement date. Factors considered may include the
importance of the asset to the Group's operations; comparison of terms and conditions to prevailing market rates;
incurrence of significant penalties; existence of significant leasehold improvements; and the costs and disruption
to replace the asset. The Group reassesses whether it is reasonably certain to exercise an extension option, or
not exercise a termination option, if there is a significant event or significant change in circumstances.
Note 39. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by , the auditor of the
Company:
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Remuneration of the auditor Crowe Sydney for:
Audit or review of the financial statements
Note 40. Lease commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to 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
2020
$
2019
$
77,003
82,813
Consolidated
2020
$
2019
$
-
-
-
279,064
356,605
635,669
38,541
-
38,541
(1,001)
15,387
38,541
53,928
(2,886)
37,540
51,042
The major property lease is a non-cancellable lease with a five-year term, with rent payable monthly in advance.
The Group has adopted AASB 16 Lease in current financial year and refer to Note 15 Property, Plant and
Equipment for details.
57
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 40. Lease commitments (continued)
Finance Lease
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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.
Capital Expenditure Commitments
There were no capital expenditure commitments as at 30 June 2020 (2019: nil).
Note 41. Contingent liabilities and Contingent assets
There are no contingent liabilities or contingent assets as at 30 June 2020 (2019: nil).
Note 42. Income tax benefit
(a) Income Tax
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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.
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.
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Group
2020
$
Group
2019
$
119,509
(615,959)
512,281
(49,864)
(546,962)
(149,688)
823,035
(160,417)
(34,033)
(34,032)
Group
2020
$
Group
2019
$
(1,850,718)
(2,605,373)
(508,948)
(716,478)
12,498
19,828
512,281
823,035
(49,864)
(160,417)
-
(34,033)
(34,032)
(ii) The prima facie tax on profit from ordinary activities before income tax is reconciled
to income tax as follows:
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 42. Income tax benefit (continued)
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(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
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Profit/(loss) before income tax
At 27.5% (2019: 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
(b) Tax position
The group’s current tax payable is $nil (2019: $nil)
Note 43. Deferred tax assets
Deferred tax liabilities
2020
Trailing income
Assets valued up in business combination
Investment - unrealised capital gain
As at 30 June 2020, the tax loss carried forward for the Group is $6,015,906 (2019: $6,450,485).
Opening
balance
$
Charge to
income
statement
$
Charge to
equity
$
Closing
balance
$
629,526
210,249
-
(632,301)
(60,435)
16,146
839,775
(676,590)
-
-
-
-
(2,775)
149,814
16,146
163,185
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N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 43. Deferred tax assets (continued)
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2019
Trailing income
Website
Assets valued up in business combination
Balance at 30 June 2019
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Clawback and accrued
Tax Losses
IPO costs
Other temporary differences
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Clawback and accrued
Tax Losses
IPO costs
Other temporary differences
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)
-
-
-
-
629,526
-
210,249
839,775
Opening
balance
$
Charge to
income
statement
$
Charge to
equity
$
Closing
balance
$
5,070
638,142
34,032
162,531
-
2,034
(581,926)
-
(66,671)
4,005
-
-
(34,032)
-
-
7,104
56,216
-
95,860
4,005
839,775
(642,558)
(34,032)
163,185
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
Critical accounting estimates and Judgements - Taxation
The income tax expense or credit for the period is the tax payable on the current period’s taxable income based
on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate
on the basis of amounts expected to be paid to the tax authorities.
60
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 43. Deferred tax assets (continued)
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 44. Reconciliation of loss after income tax to net cash from operating activities
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Loss after income tax benefit for the year
Adjustments for:
Depreciation and amortisation
Net fair value gain on financial assets
Interest expense for financing activities
Income tax benefit
Retained earnings impacts for adoption on AASB 16
Employee share scheme
Change in operating assets and liabilities:
Decrease in deferred tax assets
Decrease/(increase) in trade and other receivables
Decrease/(increase) in contract assets
Decrease/(increase) in short-term loan receivables
Decrease/(increase) in assets held for sale
Decrease/(increase) in prepayments
Decrease in deferred tax liabilities
Increase/(decrease) in employee benefits
Increase in other operating assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in contract liabilities
Increase in short-term loans
Increase/(decrease) in other operating liabilities
Net cash from operating activities
Note 45. Events after the reporting period
Consolidated
2020
$
2019
$
(1,816,685)
(2,571,340)
632,915
(58,713)
494,993
(34,033)
-
-
774,240
-
230,801
(34,032)
576,614
(360)
676,591
(190,836)
(85,250)
(2,725,500)
2,384,525
(26,842)
(676,591)
25,808
(9,488)
65,226
(253,829)
5,070,000
(105,228)
103,864
2,128,720
-
(1,058,500)
(2,384,525)
-
(103,864)
(46,909)
(39,198)
(317,952)
269,731
2,843,452
14,278
3,367,063
385,020
COVID-19, which is a respiratory illness was declared a world-wide pandemic by the World Health Organisation in
March 2020 and it has had a significant impact on the global and Australian economies. The dynamic and
evolving nature of COVID-19 has also placed significant uncertainty to the broader economy including the
financial market. The impact of COVID-19 pandemic is ongoing and it is not practicable to estimate the potential
impact, positive or negative, after the reporting date. The situation is continuing and is dependent on measures
imposed by the Australian Government.
On 1 July 2020, the associate owned by the Group N1X Capital Pty Ltd has been put under voluntary
deregistration due to consolidation of business.
61
N1 Holdings Limited
Notes to the consolidated financial statements
30 June 2020
Note 45. Events after the reporting period (continued)
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On 20 May 2020, the Group entered into an agreement to purchase 1 of 12 shares in Vaikuntha Pty Ltd (ACN 114
847 291) at a price of $8,335 and paid $5,000 as consideration for the grant of the Remaining Shares Call Option
to purchase the remaining 11 shares at $86,665 by 31 July 2020. The Group subsequently exercised the call
option and the entire transaction has been completed on 31 July 2020 with a total cost of $100,000. Vaikuntha Pty
Ltd holds an Australia Credit License (ACL) with both broking and lending authorisations.
On 13 August 2020, the joint venture owned by the Group RN2 Pty Ltd has been put under voluntary
deregistration due to consolidation of business.
Paul Jensen has resigned as Non-Executive Director of the Group effective 31 August 2020. Frank Ganis has
been appointed as Non-Executive Director of the Group effective 1 September 2020.
No other matter or circumstance has arisen since 30 June 2020 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.
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N1 Holdings Limited
Directors' declaration
30 June 2020
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 37 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 2020 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
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_________________________
Ren Hor Wong
Executive Chairman and CEO
29 September 2020
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Crowe Sydney
ABN 97 895 683 573
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 2020, 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 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 2020 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
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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 (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
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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.
© 2020 Findex (Aust) Pty Ltd.
64
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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
Recoverability of Short-Term Loan Receivables – Note 10
The Group had short-term loan receivables of
$5,478,000 as at 30 June 2020.
We focused on this area as a key audit matter due to
high degree of estimation and judgement made by
management in assessing expected credit losses.
Our procedures included:
•
•
Checked to loan contracts to identify, among
others, loan repayment date and collateral taken.
Checked repayment of the loans due post
balance date.
Held discussions with management regarding the
loans with extended repayment dates
• Obtained the management assessment on
•
expected credit losses. For collaterals taken, we
checked the estimated fair value to the valuation
reports prepared by management’s experts (third
parties).
Impairment Assessment of Intangible Assets (Goodwill and Rent Roll) – Note 16
The Group had 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:
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:
a) Cash flow projections;
b) Growth rate; and
c) 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 management.
Going Concern Assessment – Note 37
The Group incurred a loss after income tax of
$1,816,685 (2019: $2,571,340) and a deficiency of
net assets of $1,617,197 (2019: $233,520 net asset
position). Notwithstanding the continued losses, and
net asset deficiency, the financial statements have
been prepared on a going concern basis based on
the actions undertaken by management as outlined in
Note 37 of the financial report.
•
•
•
•
Assessed the reasonableness of the cash flow
projections with reference to the last actual
result.
Tested the accuracy of the value in use model
and checking the mathematical calculation.
Assessed the reasonableness of key
assumptions in the value in use model with
reference to market available data and the
Group’s historical data.
Prepared sensitivity analysis of the valuation
model.
We critically analysed the Group’s cashflow forecast,
including the potential impact of COVID-19, that was
used to support the going concern assessment,
including performing the following procedures:
•
•
Interrogated the cashflow forecast using different
inputs as a means to perform a sensitivity
analysis.
Discussed with management the significant
assumptions and inputs used in the cashflow
forecast, comparing the inputs used with
historical results, and obtained reasonable
© 2020 Findex (Aust) Pty Ltd
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Independent Auditor’s Report
N1 Holdings Limited
Key Audit Matter
How we addressed the Key Audit Matter
•
justification for those inputs that differ from
historical results.
Checked post balance date performance of the
entity up to 31 August 2020 to determine if the
business performance was consistent with
management’s expectations.
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 2020 but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
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
© 2020 Findex (Aust) Pty Ltd
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66
Independent Auditor’s Report
N1 Holdings Limited
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.
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, actions
taken to eliminate threats or safeguards applied.
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 10 to 17 of the directors’ report for the
year ended 30 June 2020.
In our opinion, the remuneration report of N1 Holdings Limited., for the year ended 30 June 2020,
complies with section 300A of the Corporations Act 2001.
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Independent Auditor’s Report
N1 Holdings Limited
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
29 September 2020
Sydney
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N1 Holdings Limited
Shareholder information
30 June 2020
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 15 September 2020.
1.
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Shareholding
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
1,087
43,969
867,629
4,779,347
75,863,541
81,555,573
%
0.00%
0.05%
1.06%
5.86%
93.02%
Number of
holders
3
12
88
127
51
281
%
1.07%
4.27%
31.32%
45.20%
18.15%
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
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
2,297,367
% Held
of Issued
Ordinary
Capital
61.31%
5.15%
3.41%
3.00%
2.82%
61,727,633
75.69%
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
2,297,367
1,498,249
1,364,288
1,250,000
843,750
760,470
500,000
500,000
500,000
487,500
389,420
350,000
341,115
312,500
300,000
275,000
71,399,925
61.31%
5.15%
3.41%
3.00%
2.82%
1.84%
1.67%
1.53%
1.03%
0.93%
0.61%
0.61%
0.61%
0.60%
0.48%
0.43%
0.42%
0.38%
0.37%
0.34%
87.55%
69
N1 Holdings Limited
Shareholder information
30 June 2020
e.
Escrowed Shares
f.
l
y
n
o
g.
e
s
u
h.
l
a
n
o
s
r
e
p
r
o
F
No
Vested Options
5,403,750 options exercisable at $0.2 and expiring on 14 December 2020 are held by 13 holders.
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.
Current on-market buy-back
There is no current on-market buy-back in relation to the Company’s ordinary shares.
70
N1 Holdings Limited
Shareholder information
30 June 2020
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
71