2018
ANNUAL
REPORT
NobleOak Life Limited
For the year ended 30 June 2018
The Noble Oak Tree
The oak tree is the symbol of our company
and we use it in our name and logo.
It embodies many of the principles that
underpin our values, such as strength,
wisdom and nobility, and links to our heritage
with the Ancient Order of Druids.
The Druids of Ancient Britain revered nature
and the oak tree was held sacred to them.
They believed that eating acorns would give
them prophetic powers. The meaning of Druid
is thought to relate to the Celtic word for
‘knowledge or wisdom of the oak’.
These majestic trees can live up to 1,000
years and reach heights of 25m or more.
In a world of ongoing change and instability
within the Australian financial services
industry, NobleOak is proud that after
140 years, we are standing tall and delivering
the protection Australians deserve.
WHO
WE ARE
We are an independent life insurer, and
public unlisted Australian company.
We do not own any distribution
channels or adviser networks.
NobleOak was established in 1877
as The Druids Friendly Society of
NSW. We are a demutualised friendly
society regulated by APRA, and
our products are backed by global
reinsurers for extra security. In 2012
NobleOak rebranded and launched
its new direct strategy to become
a leading provider of direct (non-
advised) better value Life insurance,
with excellent client service and high
quality comprehensive products.
At NobleOak we predominately
target self-directed mass-affluent
Australians. We also partner with a
few organisations and white-label
our products for an ongoing fee to
diversify our revenue. We select
these partners carefully to ensure they
are delivering unique value to their
members or clients.
WHAT WE
BELIEVE
At NobleOak, we truly believe in
providing the best for our clients and
being the trusted insurer they need.
Our strategy has been built on the
four core beliefs below:
WE BELIEVE
AUSTRALIANS
DESERVE BETTER
We believe Life insurance is a need,
not a want. For too long Australians
have had to pay too much for the
quality Life insurance they need to
protect themselves and their family.
NobleOak strips out unnecessary
costs to provide more affordable
cover backed with personal service.
At NobleOak, our
vision is to help
Australians protect
themselves and
their loved ones
by providing the
best value Life and
Income Protection
insurance available.
2
Annual Report 2018
WE BELIEVE
AUSTRALIANS
SHOULD FEEL
CONFIDENT AT
CLAIM TIME
We believe Life insurance should be
done right from the start, and clients
should know what they are covered
for. We ask a few more health and
lifestyle questions at application time,
so clients have greater certainty at
claim time.
WE BELIEVE IN
KEEPING OUR
CLIENTS HAPPY
We focus on exceeding customer
expectations and limiting our
marketing costs, so we can
provide better personal service,
award-winning cover and lower
premiums. It’s not rhetoric. We really
do put clients first.
WE BELIEVE IN
A GOOD NIGHT’S
SLEEP
Our products have no hidden clauses
or tricks. We simply provide great
value, comprehensive Life insurance
so our clients can sleep more
comfortably at night.
3
NobleOak Life Limited OUR
VALUES
ADAPTABILITY
We are responsive to and drive
positive change continually to ensure
our clients get the best service and
products they can. We continually
improve and learn.
DELIVERY
We deliver results, not excuses. This
includes both to our clients and to
each other. When we say we are
going to do something, we do it. Our
Australian based service team is highly
accessible to our clients.
Each person at NobleOak lives by
these values:
NOBILITY
We put our clients first at all
times. We act with integrity. We are
here to protect Australians with better
cover, by making Life insurance more
accessible and affordable.
SIMPLICITY
We use simple, clear communication
and avoid jargon. We aim to make
getting Life insurance and Income
Protection easier and explain the
process clearly to our clients.
Our PDSs (Product Disclosure
Statements) are written clearly with no
fine print so clients know exactly what
they are covered for. We provide
professional, friendly, and fast service.
NobleOak recruits
high performers with
a genuine desire to
make a difference
and provide better
protection to
Australians.
4
Annual Report 2018 5
NobleOak Life Limited 6
Annual Report 2018 OUR
PRODUCTS
We continue to provide
comprehensive cover at a lower cost,
with award winning personal service.
As we do not pay large upfront
commissions to advisers, we pass
savings to our clients through lower
premiums and invest in better service.
We offer a range of cover types to
protect clients against the financial
impacts of accidents, death and
sickness without the need for
financial advice.
Life Cover
Death and terminal illness cover
up to $15 million of cover.
Trauma (Critical Illness)
Insurance
Cover for 38 conditions
up to $2 million of cover.
Total & Permanent
Disability Insurance
Lump sum payment in the event
of disablement due to sickness
or injury up to $5 million of cover.
Income Protection
Insurance
Provides up to 75% of income
(up to $25,000 per month).
Business Expenses
Insurance
Provides protection for fixed business
expenses up to $25,000 per month.
SMSF Insurance
Life Cover up to $15 million
and TPD Insurance up to $5 million
of cover.
7
NobleOak Life Limited
OUR RECENT
ACHIEVEMENTS
>120%
Number of Policies (Core)
>110%
Inforce Annual Gross Premium (Core)
>105%
Sales (Core)
>90%
Profit before Tax
>220%
Net Assets
*Growth from 2016 to 2018
8
Annual Report 2018 Satisfaction
96.4%
Service
95.8%
Recommendation
>90%
Of our clients felt that the service
provided during the quotation and
application was ‘good’ or ‘excellent’
Of our clients felt that
the service provided to date
was ‘good’ or ‘excellent’
Of our clients would recommend
NobleOak’s products and services
to others
Feefo Customer
ratings website
‘Gold Trusted
Service Award’
Strategic Insights
Strategic Insights
‘2017 Direct Life Insurance
Customer Service Award Finalist’
‘2017 Direct Life Insurance
Term Life Award Finalist’
Direct Life Insurance
Excellence Awards
Direct Life Insurance
Excellence Awards
NobleOak Direct Life Insurance
Awarded Canstar for
NobleOak Direct Income Protection
Awarded Canstar for
‘2018 Outstanding Value Award’
‘2018 Outstanding Value Award’
T A NDING VA
L
U
E
S
O U T
2018
D
I
R
E
RUSNI EFIL TC
ECN
A
Net Promoter Score (NPS)
27%
Market leading loyalty
and advocacy score
Website Traffic
>86%
Increase in website
users YOY
Growth in Digital
>200%
Revenue growth through Digital
YOY (excluding Online Partners)
Digital
New Online Quote
Tool launch
Real time quotes for customers
Systemisation
New Cloud Contact
Centre launch
Improve call flows and customer
service
Product
Launch of new
NEOS product range
To target NEOS members
9
20182018NobleOak Life Limited 10
Annual Report 2018 CONTENTS
Chairman’s Letter
Board of Directors
CEO’S Report
Leadership Team
Directors’ Report
Directors’ Declaration
Auditor’s Independence Declaration
Independent Auditor’s Report
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Financial Statements
11
12
14
16
20
21
29
30
31
34
35
36
37
38
NobleOak Life Limited CHAIRMAN’S
LETTER
This Report provides an overview of
our performance in the 2018 financial
year, another pivotal year in the
growth of our business.
This year will undoubtedly be looked
back on as transformational for
financial services and in particular, the
life insurance industry.
REGULATORY
ENVIRONMENT
The financial services industry saw
unprecedented levels of change and
review throughout the year. This
was driven largely through the Royal
Commission into Financial Services and
ASIC’s review of Direct Life Insurance.
Royal Commission into
Misconduct in the Banking,
Superannuation and
Financial Services Industry
The Royal Commission hearings
commenced in February 2018,
following several instances of
misconduct in the banking and financial
advice sectors. Revelations during
the hearings indicate a failure in the
implementation of past reforms and
underpinning company cultures that
do not always put their customers’
interests first.
While I believe this environment
validates NobleOak’s positioning in
the Australian market place, as well
as our focus on corporate culture and
conduct, we will carefully monitor the
findings and manage our reputation
risk. While NobleOak has not been
asked to participate in the Royal
Commission investigation at this stage,
we continue to work with our team
and business partners to ensure we
limit our exposure and risk.
On behalf of the
Board, I am pleased
to present the
2018 NobleOak
Life Limited
Annual Report.
12
Annual Report 2018 ASIC Review of Direct
Life Insurance
On 30 August 2018, ASIC released
findings from its investigation into direct
life insurance. This review looked at
sales practice, including outbound
selling, claims experiences, lapse rates,
product design, policy documentation,
procedures, and sales incentives.
NobleOak participated in this review
and has provided ASIC with all
requirements. NobleOak continues
to reply to all of ASIC’s requests.
Their key industry findings appear to
have limited impact on NobleOak, as
we do not outbound call or offer the
types of products highlighted as poor
value in their review.
We will of course, continue to
respond to any requests or changes
required from this review, and
continue to support any initiatives that
will ultimately benefit our customers.
CONSOLIDATION
The landscape of life insurance
continues to change with several
major institutions deciding to exit
their life insurance business. The
industry is unquestionably moving
away from vertically integrated
arrangements. Our direct to customer
model continues to be validated
by these changes and the potential
for scaling further remains as many
competitors are distracted with large
integration projects.
IMPLEMENTATION
OF STRATEGY FOR
GROWTH
Our strategy this year has been
to focus on delivering growth and
building scale for the business. I am
pleased to advise that we achieved a
significant increase in sales delivered
from both our Core (NobleOak
branded direct business) and
Partnership business.
In 2018, in-force premium for our “core”
(NobleOak branded) life insurance
offering, increased to $27 million. This
represents an increase of 45% from 2017.
Total gross in-force premium including
our “active partnership” business (PPS,
Avant and new partnership NEOS),
increased from $22 million in July 2017
to $37 million as at 30 June 2018.
This represents an increase of 65% as
Avant and PPS started to accelerate
their distribution.
CAPITAL
In March 2018, NobleOak raised
$12 million in capital from existing
investors and a new strategic investor,
Private Portfolio Managers. The funds
raised will continue to be deployed
to drive growth and invest in scalable
business systems.
OUR PARTNERS
In early 2018, we entered into an
arrangement with NEOS Life, an
Australian Life Insurance business
focused solely on distribution through
the adviser/retail market. This strategic
partnership, whereby NobleOak
underwrites life insurance, TPD, Trauma
and Income Protection cover, further
broadens our distribution footprint,
providing greater top line diversification.
Our other partnerships, Avant and
PPS, continue to build and deliver on
their growth ambitions and I would
like to thank their teams for their
ongoing commitment and contribution
to our growth.
FINANCIAL
PERFORMANCE
In 2018, we returned a profit before
tax of $4.3 million. This represents
an increase of 55% from 2017. This
is a very pleasing result and reflects
the significant growth for the business
during the year and our relentless
focus on implementing on our core
strategy to build shareholder value.
RISK MANAGEMENT
FRAMEWORK
The Royal Commission and ASIC
Direct Life Insurance Review have
reaffirmed our decision to strengthen
our focus on our regulatory, strategic
and operational risk management
framework. The NobleOak
Management Team and Board believe
ongoing investment in managing
risk is critical to our longer term
growth aspirations. To that end, we
will continue to foster a culture that
proactively addresses risks to ensure
the sustainability of the business.
LOOKING AHEAD
In 2018, NobleOak delivered growth
in a low growth market environment
that has seen widespread disintegration
of trust within the community.
NobleOak is well positioned to
take advantage of this disruption
and further grow our business. No
doubt more industry head winds
may emerge in the coming year, but
the Board believes we are very well
placed to deal with these while further
building shareholder value.
Paul Sampson
Chairman
13
NobleOak Life Limited BOARD OF
DIRECTORS
PAUL SAMPSON
Chairman and Non-Executive Director
Paul has over 28 years of experience in Life Insurance and wealth management.
He was previously CEO of AXA Life Insurance Co. Japan, Non-Executive
Director of AXA Asia Pacific Holdings, and Chairman of National Mutual
Funds Management. Paul is currently a Non-Executive Director of SouthPeak
Investment Management Pty Ltd and Adam Smith Asset Management. Paul has
been successful in turnaround management, implementing customer-centric
strategies, and developing alternate distribution channels. He holds a Bachelor of
Business Degree from NSW Institute of Technology and has been a member of
the Certified Practicing Accountant (CPA)
EMERY FEYZENY
Non-Executive Director
Emery has over 44 years of experience in the superannuation industry,
including 15 years as a partner at KPMG. He established and headed KPMG
Superannuation Services Pty Ltd for 18 years and advised the Superannuation
Senate Select committee on the taxation of superannuation funds in Australia.
He is currently a Director of REI Superannuation Fund and Chair of the Fund’s
Investment Committee. He holds a Bachelor of Science and is a Senior Associate
of the Australian and New Zealand Institute of Insurance and Finance, a member
of the Institute and Faculty of Actuaries and a member of the Australian Institute
of Company Directors.
14
Annual Report 2018 KEVIN HAMMAN
Non-Executive Director
Kevin has over 30 years of experience in the financial services industry including
senior management and Director roles in investment and private banking.
Kevin currently holds several executive directorships in private companies in the
financial services, property development and investment industries. Kevin holds
a Bachelor of Commerce Degree, a Diploma in Financial Services and Finance,
and the Associate Diploma with The Institute of Bankers. He is a Member of the
Australian Institute of Company Directors.
ANTHONY R BROWN
Chief Executive Officer and Director
Anthony has been CEO of NobleOak for over 6 years. He has over 27 years
of experience in marketing, strategy, operations and distribution. He was
previously COO at AMP Capital, Head of Strategy and Marketing at AMP, Head
of Commercial Insurance Marketing at Suncorp, and Manager at KPMG. Anthony
has completed the General Management Program at Harvard Business School,
Boston, has an MBA from the AGSM, and is a Chartered Accountant. He also
holds a Bachelor of Economics degree (University of Sydney) and a Master of
Commerce degree (University of NSW).
STEPHEN HARRISON
Deputy Chairman and Non-Executive Director
Stephen has over 35 years of experience in financial services, funds management
and private equity and accounting fields. He has held Director positions with
Investec Funds Management and the Australian subsidiary of US-based fund
manager Sanford C Bernstein. Stephen has been a founder and has held
directorships in a number of listed companies, both in Australia and overseas. He
was previously Director Financial Services for BDO Nelson Parkhill, Chartered
Accountants. Stephen is currently Chairman and Director of Sinetech Limited and
Chairman of Conscious Capital Funds Management.
MARTIN EDWARDS
Non-Executive Director
Martin is the General Manager – New Ventures, Avant Mutual Group and a
Director of Doctors Financial Services Pty Limited, MyPracticeManual Limited,
and Hoxton MPM Pty Ltd. Martin has over 22 years’ of experience holding
multiple General Manager roles in Treasury, capital, strategy and insurance.
Martin is a fellow of the Institute of Actuaries of Australia. Other previous
positions include MBF’s Group Treasurer and leadership roles at Commonwealth
Bank and Trowbridge Consulting. Martin attended the General Management
Program at Harvard Business School and holds a Bachelor of Science.
15
NobleOak Life Limited CEO’S
REPORT
I am pleased to
report that 2018
was another year
of strong growth
for NobleOak. The
results reflect the
commitment and
focus on meeting our
customers’ needs
in a market marred
by the revelations
from the Royal
Commission and
falling consumer
confidence in the
financial services
industry.
GROWTH
NobleOak continues to grow strongly.
Throughout 2018, the in-force
premium of our “core” (NobleOak
branded) direct business increased by
45%. This represented an increase
in sales of 43% year on year, through
focusing on providing quality and
affordable cover.
Our relatively new “active partnership”
business (PPS, Avant and new
partnership NEOS) increased by
165%. This “active partnership”
business now excludes Freedom
Insurance (Freedom) and Freedom
was discontinued by NobleOak in July
2017 as shown in last year’s Annual
Report. All of Freedom’s new business
was transferred to and is now issued
directly by Swiss Re. The premium
from Freedom Insurance shown in
these accounts is in run off, reducing
each year.
CANSTAR
OUTSTANDING
VALUE AWARDS
In March, we were again awarded the
Canstar Outstanding Value Award for
Direct Income Protection for 2018.
This is our third award for Income
Protection. In June we also won the
Canstar Outstanding Value Award for
Direct Life cover, again, the third such
award in a row.
NobleOak is the only life insurer to
win three consecutive awards for
outstanding value for Direct Life
Insurance and Income Protection.
These six awards secure NobleOak’s
position as the pre-eminent direct
insurer in providing outstanding value
to clients, and provide us with valuable
marketing opportunities.
16
Annual Report 2018 17
NobleOak Life Limited FEEFO GOLD
TRUSTED SERVICE
AWARD
We also received the Gold Trusted
Service Award from Feefo for the
second year in a row. This award
is only provided to companies that
have received consistent ratings
for exceptional service from our
customers.
GROWTH WITH
PARTNERS
Our established partnerships with PPS
and Avant delivered growth in sales
in their respective target segments.
We are also pleased to welcome our
new partnership with NEOS Life.
NobleOak ceased to be the issuer for
Freedom policies in 2017 with new
business transferring to Swiss Re from
1 July 2017.
PPS
Our relationship with PPS
commenced in 2013 and since the
launch of PPS Professional Choice
portfolio of Life products in mid-2016,
sales growth continues as their unique
product offering builds momentum.
The PPS in-force premium has now
grown to $7.8 million.
Avant
Avant specialises in providing a
range of insurances to medical
professionals. Avant is also a
major equity partner. The Avant
membership is continuing to show
support for the range of specialised
Life insurance products including Life,
TPD, Income Protection. The Avant
in-force premium has now grown
to $1.9 million.
NEOS
In early 2018, we entered into
an agreement with NEOS Life to
underwrite the NEOS Protection
suite of life insurance cover types
which was launched in June.
NEOS sells exclusively through
financial advisers and manages the
entire value chain. The NEOS
portfolio is now being marketed
through independent financial advisers
with positive early signs.
CAPITAL GROWTH
In 2018, we raised $12 million from
our existing shareholders and a new
strategic shareholder, Private Portfolio
Managers. The strong support
from our investor base has further
confirmed their support for the vision
and strategic direction for NobleOak.
A proportion of this capital has been
used to fund the execution of a new
multi-channel marketing campaign to
further drive growth and start to build
a more recognisable brand.
GROWTH OF
MARKETING
INVESTMENT
A new pilot advertising campaign was
developed by Young and Rubicam
(Y&R) advertising agency in June 2017
promoting our “a smarter way to
insure your life’’ tagline. This tagline
is designed to position NobleOak as
a challenger brand with our unique
business model and strong value
proposition of quality, affordable cover.
Learnings from this pilot have been
incorporated into our new “No Bull”
advertising campaign which launched
in August 2018. This is the most
significant “above the line” advertising
campaign NobleOak has invested in
to boost our brand recognition and
generate further leads and sales. The
initial response from this campaign is
pleasing, and results will be closely
monitored on an ongoing basis.
“NobleOak continues
to grow strongly.
Throughout 2018,
the in-force premium
of our “core”
(NobleOak branded)
direct business
increased by 45%.
This represented an
increase in sales of
43% year on year,
through focusing on
providing quality and
affordable cover.”
18
Annual Report 2018 GROWTH IN
DIGITAL
GROWTH
OF STAFF
Over the course of the past year we
have accelerated our investment and
expansion of our digital marketing
channels to support the growth of
the business. Our continued focus
on Paid Search and Organic Search
combined with the introduction of
Programmatic, Display and Social
channels has seen an 86% increase
in web users from 72,000 (FY17) to
134,000 (FY18).
In October 2017, NobleOak launched
our online quote tool. Customers are
now able to obtain a live quote for all
our covers with just a few clicks. Since
then 19,000 online quotes have been
completed, streamlining the customer
experience and improving contact
rates for all digital channels.
As a result of the above initiatives,
sales from our digital channels
increased by over 200%, representing
22% of sales for the financial year. By
June 2018, digital share of sales for the
month had increased to 35% and we
expect this trend to continue
INFRASTRUCTURE
As the business grew in 2018, it
was necessary to invest in more
scalable infrastructure. This included
investment in additional functionality
in our workflow and CRM systems as
well as the implementation of a more
robust management reporting system
that provides better metrics across
the business.
We also invested in a new telephone
auto dialler to streamline processes
within our sales team by automatically
contacting customers who have
requested call backs for quotes. The
auto dialler integrates with our CRM
system for a more seamless customer
experience.
Our workforce grew by 35% during
the year.
We continue to recruit people that
not only have the necessary skills
and experience to deliver on their
role, but also fit with our “customer-
first” philosophy and can contribute
to a high performance culture. The
increase in the number of full-time
staff was driven by the growth in our
business especially within our Sales
and Service, Quality Assurance and
Digital Marking teams.
The NobleOak team is diverse,
representing many nationalities,
cultures, ages and genders.
During 2018, our strategy to develop
a high performance team was
implemented with key highlights
as follows:
˚ Workshops with staff to identify
areas of improvement in service
delivery.
˚ Regular product training for all staff.
Leadership training across all
people leaders.
˚
˚ Refinement of our performance
management and career
development process.
˚ Refinement of our reward and
recognition programmes, linked to
our values of Nobility, Simplicity,
Adaptability and Delivery.
CLAIMS
The key to our business is paying
claims. In 2018 we paid 100% of
genuine claims. At a time of great
emotional and financial distress, we
strive to ensure we pay these claims
as quickly as possible. Our published
service standards have been set
higher than those required under the
FSC Code of Practice to ensure we
provide the best service possible.
SUMMARY
The last 12 months have seen
significant growth in our business, in
line with our strategic intent. This has
been across all areas of our business:
customers, distribution, infrastructure
and our people.
While we expect further regulatory
change in 2019, we are confident we
will continue our growth trajectory
and build a more valuable business
with the customer at the centre of
everything we do.
I hope you are pleased with progress.
Anthony R Brown
Chief Executive Officer
19
NobleOak Life Limited
LEADERSHIP
TEAM
ANTHONY R BROWN Chief Executive Officer and Director
Anthony has been CEO of NobleOak for over 6 years. He has over 27 years of experience in
marketing, strategy, operations and distribution. He was previously COO at AMP Capital, Head of
Strategy and Marketing at AMP, Head of Commercial Insurance Marketing at Suncorp, and Manager
at KPMG. Anthony has completed the General Management Program at Harvard Business School,
Boston, has an MBA from the AGSM, and is a Chartered Accountant. He also holds a Bachelor of
Economics degree (University of Sydney) and a Master of Commerce degree (University of NSW).
PATRICIA PRIEST Chief Financial Officer
Patricia has worked in senior finance and strategy roles within the insurance industry across the
world. Most recently Patricia was CFO of Munich Re based in Spain and Portugal. She also led
finance teams in Zurich Australia and Aon in the UK. She is a Canadian Chartered Accountant,
who commenced her career at Deloitte in Toronto. She holds the Diploma in Insurance from the
Chartered Insurance Institute in the UK.
MATTHEW WILSON Chief Risk Officer
Matthew is an experienced corporate lawyer and risk governance practitioner with diverse corporate
experience across financial services businesses in Australia and New Zealand. Matthew is a NSW
legal practitioner and holder of an unrestricted practising certificate. He holds a Bachelor of Laws and
Graduate Diploma of Legal Practice from UTS Sydney, and is a member of the Law Society of NSW
and the Risk Management Institute of Australia. He is a Senior Associate of the Australian and New
Zealand Institute of Insurance and Finance and has a Diploma of Financial Planning.
PHIL HILL Chief Underwriter
Phil has worked in the Life Insurance industry in Australia for over 40 years, both in reinsurance
and with a number of major life offices including CommInsure and Tower. He has worked in
Senior Management positions in all areas of risk insurance including Underwriting, Claims, Product
Development and Risk Management. His primary area of responsibility has involved Underwriting
and he has held Chief Underwriter roles with various Life offices over the past 30 years. He joined
NobleOak in 2014 as Chief Underwriter and Claims Manager and was appointed as NobleOak’s
Head of Underwriting in 2016. He is a Senior Associate with the Australian and New Zealand
Insurance Institute and holds a Diploma in Business Management. He is also a Senior Associate of the
Australian Life Underwriters and Claims Association.
20
Annual Report 2018 DIRECTORS’
REPORT
The Directors of NobleOak Life Limited
(the Company) present their report,
together with the Financial Statements
of the Consolidated Group,
being the Company and its controlled entity,
for the financial year ended 30 June 2018.
21
NobleOak Life Limited NAMES, PARTICULARS AND EXPERIENCE OF DIRECTORS
i)
Particulars of the qualifications and experience of each Director as at the date of this report are as follows:
Paul Sampson
Non-Executive Director appointed on 6 February 2013.
Appointed as Chairman on 27 February 2013.
Over 28 years’ experience in the Life Insurance and Wealth Management
industry as CEO, Non-Executive Director and consultant.
Currently a Non-Executive Director of SouthPeak Investment Management Pty
Ltd and Non-Executive Director of Adam Smith Asset Management.
Chairman of Board of Directors
Member of the Board Audit and
Risk Management Committees
and Remuneration & Nominations
Committee
Member of the Finance &
Investment Committee
Previously Non-Executive Director of AXA Asia Pacific Holdings and Chairman
of National Mutual Funds Management.
Age 62.
Formerly President and CEO of AXA Life Insurance Co. Japan.
Holds a Bachelor of Business Degree from NSW Institute of Technology and
has been a member of the Certified Practicing Accountants (CPA)
Emery Feyzeny
Non-Executive Director appointed on 24 February 2011. Appointed as Chairman on 1
July 2011. Resigned as Chairman on 27 February 2013.
Chairman of the Risk Management
Committee
Over 44 years’ experience in the superannuation industry including 15 years as a
partner at KPMG. He established and headed KPMG Superannuation Services Pty Ltd
for 18 years.
Appointed by APRA to undertake remediation process for members superannuation
under the trusteeship of Commercial Nominees and has advised the Superannuation
Senate Select Committee on the taxation of superannuation funds.
Member of the Board Audit
Committee.
Chairman of the Remuneration &
Nominations Committee
Age 68.
Currently a Director of REI Superannuation Pty Ltd a $1.5 billion industry
Superannuation Fund and Chair of the Fund’s Investment Committee.
Bachelor of Science, Senior Associate of the Australian and New Zealand Institute
of Insurance and Finance, a member of the Institute and Faculty of Actuaries and a
member of the Australian Institute of Company Directors.
Anthony R Brown
Executive Director appointed on 31 July 2013.
Over 27 years’ experience in marketing, strategy, operations and distribution
specialising in financial services.
Previously COO at AMP Capital, Head of Strategy and Marketing at Hillross (AMP);
Head of Marketing and Product Development at Promina insurance; Head of
Commercial Insurance Marketing at Suncorp and Manager at KPMG.
Chief Executive Officer of the
Company.
Responsible Officer for the
Company.
Chairman of the Product &
Appraisal Committee
Completed the General Management Program at Harvard Business School (Boston),
Holds a Masters of Business Administration (from the AGSM), is a Chartered
Accountant and holds a Bachelor of Economics from the University of Sydney.
Age 51.
22
Annual Report 2018 NAMES, PARTICULARS AND EXPERIENCE OF DIRECTORS (CONT.)
Deputy Chairman of the Board of
Directors. Chairman of the Board
Audit Committee and Member of
the Risk Management Committee.
Age 61.
Stephen J Harrison
Non-Executive Director appointed on 27 January 2011. Appointed as
Deputy Chairman on 1 July 2011.
Over 35 years’ experience in the financial services, funds management,
private equity and accounting fields.
Has held Director positions with Investec Funds Management and the Australian
subsidiary of US based fund manager Sanford C. Bernstein. Has been a founder
and held directorships in a number of listed companies both in Australia and
overseas. Previously was National Director, Financial Services for BDO Nelson Parkhill,
Chartered Accountants. Was a non-executive Director of Blue Energy Limited, an ASX
listed entity and Power Air Corporation, a US listed renewable energy company.
Former Director of Exoma Energy Limited, an ASX listed entity, and current Chairman
and Director of Sinetech Limited, an ASX listed entity. Current Chairman of Conscious
Capital Funds Management.
Certified Practicing Accountant, Bachelor of Economics, PS146 qualifications.
Kevin Hamman
Non-Executive Director appointed on 27 January 2011.
Over 30 years’ of experience in Financial Services industry including senior
management and director roles in Investment and Private Banking.
Currently holds several executive directorships in private companies in both the
financial services industry and property development and investment industry.
Holds a Bachelor of Commerce Degree, a Diploma in Financial Services and Finance,
and the Associate Diploma with The Institute of Bankers.
Member of the Australian Institute of Company Directors.
Chairman of the Finance &
Investment Committee.
Member of the Remuneration
& Nominations Committee and
Product & Appraisal Committee
Age 57.
Martin Edwards
Non-Executive Director appointed on 26 October 2016.
Over 22 years’ of experience holding multiple General Manager roles in Treasury,
capital, strategy and insurance.
Is currently the General Manager of New Ventures of the Avant Mutual Group and
is a Director of Doctors Financial Services Pty Ltd, My Practice Manual Limited, and
Hoxton MPM Pty Ltd.
Previously he has held leadership roles with Commonwealth Bank, MBF Group and
Trowbridge Consulting.
Holds a Bachelor of Science Degree from the University of Sydney, attended the
General Management Program at Harvard Business School and is a Fellow of the
Institute of Actuaries of Australia.
Member of the Finance &
Investment Committee and
Product & Appraisal Committee
Age 42.
ii) Directors that retired during the year: Mr K C Cohen, appointed 24 February 2016, resigned 12 September 2017.
Directors that were appointed during the year: There were no new directors appointed during the year.
All Directors have been in office since the start of the financial year to the date of this report unless otherwise indicated above.
23
NobleOak Life Limited
iii) During the financial year, 12 Directors’ meetings, 4 Risk Management Committee meetings, 4 Board Audit
Committee meetings, 4 Finance & Investment Committee meetings, 5 Remuneration & Nominations Committee
meetings and 2 Product Appraisal Committee meetings were held. Attendances were as follows:
Directors’
Meetings
Risk
Management
Committee
Board Audit
Committee
Finance &
Investment
Committee
Meeting
Remuneration
& Nominations
Committee
Meeting
Product &
Appraisal
Committee
Meeting8
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Mr EA Feyzeny3
Mr K Hamman6
Mr SJ Harrison1
Mr P Sampson2
Mr A R Brown7
Mr K C Cohen5
Mr M Edwards4
12
12
12
12
12
1
12
12
11
10
12
12
1
12
4
-
4
4
-
-
-
4
-
3
4
-
-
-
5
-
5
5
-
-
-
5
-
4
5
-
-
-
-
4
-
4
-
-
4
-
4
-
4
-
-
4
5
5
-
5
-
-
5
5
-
5
-
-
2
2
2
2
2
2
Note
1.
2.
3.
4.
5.
6.
7.
8.
Mr S J Harrison was Deputy Chairman of the Board of Directors, Chairman of the Board Audit Committee and member of the Risk Management Committee
for the entire year.
Mr P Sampson was Chairman of the Board of Directors and a member of the Board Audit Committee, Risk Management Committee, Finance & Investment
Committee and Remuneration & Nominations Committee for the entire year.
Mr E Feyzeny was Chairman of the Risk Management Committee and member of the Board Audit Committee and Remuneration & Nominations Committee
for the entire year.
Mr M Edwards was a member of the Finance and Investment Committee for the entire year and was appointed to the Product & Appraisal Committee on the
25 October 2017 when it was formed.
Mr K C Cohen resigned as a Non-Executive Director on 12 September 2017.
Mr K Hamman was Chairman of the Finance & Investment Committee and a member of the Remuneration & Nominations Committee for the entire year.
He was appointed to the Product & Appraisal Committee on 25 October 2017 when it was formed.
Mr A R Brown was appointed Chairman of the Product & Appraisal Committees on the 25 October 2017 when it was formed.
The Product & Appraisal Committee was formed on the 25 October 2017. Its objective is to review, assess and approve key product development initiatives
with the authorisation of the Board.
24
Annual Report 2018
iv)
The Company keeps a register containing information about the Directors including each Director’s or related entity
of the Director’s interest in securities issued by the Company or in a benefit fund of the Company.
Name
Number of
Ordinary
Shares
Number
of
Options
Related entity holding the security
(Where applicable)
Mr P Sampson
733,979
Sampson Family Holdings Pty Ltd ATF Sampson Superannuation Fund
Mr P Sampson
80,000
40,000
Mr K Hamman
437,002
TK Consulting (Aust) Pty Ltd ATF The Hamman Family Trust
Mr K Hamman
136,364
KH Investments Pty Ltd ATF KH Development Trust
Mr K Hamman
227,273
Future Super KH Custodian Pty Ltd ATF Future Super Fund
Mr K Hamman
172,727
Future Super KH Pty Ltd ATF Future Super Fund
Mr K Hamman
113,000
40,000
Mr E A Feyzeny
150,000
Emery and Judy Feyzeny ATF Pluvial Superannuation Fund
Mr E A Feyzeny
120,000
120,000
Mr S J Harrison
148,667
Julie McConaghy, S J Harrison’s wife
Mr S J Harrison
30,454
120,000
Mr S J Harrison
635,579
Jasmah Investments Pty Limited ATF The Jasmah Investments Trust
(Julie McConaghy, S J Harrison’s wife)
Mr S J Harrison
38,000
MSJ Capital Pty Ltd ATF Harrison Superannuation Fund
Mr A R Brown *
330,000
922,000
Mr A R Brown
3,532,073
Brohok Investment Co Pty Ltd
Mr M Edwards
12,105,711
Representative of Avant Group Holdings Limited
* Anthony Brown is a participant in the Performance Rights Plan (refer note 20d), in the current year 29,262 shares have
been accrued in the share based payment reserve based on current year performance. These shares will vest in 2020 if
conditions are met over the full measurement period up to 30 June 2020.
(v)
The following Directors have in the normal course of business, an interest in the Company as set out below:
Mr P Sampson
Insurance cover in Risk Fund No. 1.
Mr M Edwards
Board representative of Avant. Avant is a white label partner of NobleOak and all
transactions are carried out under normal commercial terms.
25
NobleOak Life Limited COMPANY SECRETARY
Ms Kiran Gill was company Secretary from 29 June 2016. Ms Gill resigned as Company Secretary on 11 August 2017 and
Mr Anthony Brown was appointed Company Secretary on 8 September 2017.
PRINCIPAL ACTIVITIES
The principal activities of the Consolidated Group during the year were life insurance products including death, disability,
trauma, income protection and business expenses insurance.
DIRECTORS & KEY PERSONNEL REMUNERATION
The Directors and Key personnel of NobleOak Life Limited during the year were:
Non Executive Directors
Executive Directors and Key Personnel
Mr E A Feyzeny, appointed 24 February 2011
Mr A R Brown – Chief Executive Officer and Company Secretary,
appointed 23 July 2012 and 8 August 2017 respectively
Mr P Sampson, appointed 6 February 2013
Mrs P Priest – Chief Financial Officer, appointed 25 September 2017
Mr K Hamman, appointed 27 January 2011
Ms K Gill – Company Secretary, appointed 29 June 2016,
resigned 11 August 2017
Mr S J Harrison, appointed 27 January 2011
Mr S Hitchcock – Chief Operating Officer, appointed 24 October
2016, resigned 25 January 2018
Mr A R Brown, appointed 31 July 2013
Mr S Balakrishnan – Chief Marketing Officer, appointed 5 June 2017
Mr K C Cohen, appointed 24 February 2016,
resigned 12 September 2017
Mr M Edwards, appointed 26 October 2016
Mr M Wilson – Chief Risk Officer, appointed 1 October 2014
The compensation of the Directors and Key Personnel is set out below:
Non Executive Directors*
Short-term employee benefits
Post-employment benefits
Executive Directors and Key Personnel
Short-term employee benefits
Post-employment benefits
Consolidated
The Company
2018
$
2017
$
2018
$
2017
$
265,360
25,170
317,930
28,385
265,360
25,170
317,930
28,385
290,530
346,315
290,530
346,315
1,501,940
71,707
911,354
43,566
1,501,940
71,707
911,354
43,566
1,573,647
954,920
1,573,647
954,920
1,864,177
1,301,235
1,864,177
1,301,235
*M Edwards is the Avant representative on the Board and does not receive director remuneration from NobleOak.
26
Annual Report 2018
OPERATING RESULTS AND REVIEW OF OPERATIONS
The Statement of Comprehensive Income of the Consolidated Group shows a profit for the current year before income tax
of $4,300,164. ($2,775,658 for 2017 financial year)
In comparing the 2018 and 2017 results, the following is noted:
˚
˚
˚
˚
˚
˚
The Company has continued to invest in order to deliver the growth in new sales premiums through its direct
marketing and promotion activities, increased personnel to support the direct sales strategy and systemisation across
all areas of the business. Reflective of the financial discipline, NobleOak has maintained very strong growth while
maintaining profitability.
The investment in sales and marketing efforts along with personnel has seen in-force premiums of the Company
grow over $14m (gross premiums), an increase of 65% above the 2017 year end in-force premiums in the open
benefit funds.
The gross profit from sales of insurance products, net of direct costs generated during the 2018 financial year has
increased by over $7.8m, representing a 59% increase on the 2017 results. This is the 5th year of continued growth
in gross profit inline with the growth from sales of insurance products.
Our partnerships continue to grow in the current year:
˚
˚
˚
We have seen growing success from PPS life insurance and Income protection products called Professionals
Choice, which launched in June 2016. This product suit has generated over $6.3m in gross premiums
collections during 2018 with in force premiums growing by over 160%.
The Company in partnership with Avant established a new benefit fund for the distribution of Life insurance
products in January 2017. This fund generated over $1.5m in gross premium collections during the year with
in-force premiums growing by over 170%.
In the current year, a new partnership was established the NEOS Life Benefit Fund. This product launched
in June 2018 and to date is meeting expected launch growth rates. We are looking forward to this fund’s
contributions to our insurance product pool in the future.
Earnings reflect that NobleOak secured a payment of $2,000,000 from Swiss Re as part of the finalisation of the
Freedom alliance partnership in March 2017, of which $500,000 was realised as revenue in 2017, and $1,500,000
was realised in 2018.
During the year, the company secured additional capital of over $12m. This capital is being used to fund the significant
marketing and promotion investment in 2019.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
Other than the matters disclosed, there were no significant changes in the state of affairs of the Consolidated Group during
the financial year.
AFTER BALANCE DATE EVENTS
No matters or circumstances, other than that referred to in the financial statements or notes thereto, have arisen since the
end of the financial year, that has significantly affected, or may significantly affect, the operations of the Consolidated Group,
the results of those operations, or the state of affairs of the Consolidated Group in future financial years.
FUTURE DEVELOPMENTS
Disclosure of information regarding the likely developments in the operations of the Company in future financial years and
the expected results of those operations is likely to result in unreasonable prejudice to the Company. Accordingly, this
information has not been disclosed in this report.
27
NobleOak Life Limited
REGULATORY CHANGE IMPACTS
During the year there have been no regulatory changes that have impacted on the preparation and presentation of financial
information or the capital structure of the company.
DIVIDEND PAYMENTS
No dividends have been paid or declared during the financial year.
INDEMNIFICATION OF OFFICERS AND AUDITORS
During the financial year, the Company paid insurance premiums to insure the Directors and Officers of the Company, and
its related entities against any liability which may be incurred by the Directors or Officers in carrying out their duties in good
faith, to the extent permitted by the Corporations Act 2001.
The company has not otherwise, during or since the end of the financial year, except to the extent permitted by law,
indemnified or agreed to indemnify an officer or auditor of the company or of any related entities against a liability incurred
as such an officer or auditor.
ENVIRONMENTAL ISSUES
The Consolidated Group’s operations are not regulated by any significant environmental regulations under a law of the
Commonwealth or of a state or territory.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company 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 any part of those
proceedings. The Company was not a party to any such proceedings during the year.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is included in the financial report.
This report is made in accordance with the resolution of the Board of Directors.
On behalf of the Directors
Paul Sampson
Director
Stephen Harrison
Director
Sydney, 6 September 2018
28
Annual Report 2018 DIRECTORS’ DECLARATION
The Directors of the Company declare that the attached financial statements and notes are in accordance with the
Corporations Act 2001 and:
comply with Accounting Standards and other mandatory professional reporting requirements, the Corporations Regulations
2001 and as stated in note 1 to the financial statements, compliance with International Financial Reporting Standards (IFRS);
give a true and fair view of the financial position as at 30 June 2018 and the performance for the year ended on that date;
in the opinion of the Directors 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 allocation and distribution of the surplus of the Benefit Funds of the Company have been made in accordance with
Division 5 of Part 4 of the Life Insurance Act 1995 and the Benefit Fund Rules of each Benefit Fund; and
no assets of the Benefit Funds of the Company have been applied or invested in contravention of any relevant laws.
This declaration is made in accordance with a resolution of the Board of Directors.
On behalf of the Directors
Paul Sampson
Director
Stephen Harrison
Director
Sydney, 6 September 2018
29
NobleOak Life Limited AUDITOR’S INDEPENDENCE DECLARATION
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
The Board of Directors
NobleOak Life Limited
66 Clarence Street
SYDNEY NSW 2000
6 September 2018
Dear Directors
NobleOak Life Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to
provide the following declaration of independence to the Board of Directors of
NobleOak Life Limited.
As audit partner for the audit of the financial statements of NobleOak Life Limited
for the financial year ended 30 June 2018, I declare that to the best of my
knowledge and belief, 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
DELOITTE TOUCHE TOHMATSU
Stuart Alexander
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
30
Annual Report 2018
INDEPENDENT AUDITOR’S REPORT
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1219 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
Independent Auditor’s Report
to the Members of NobleOak Life Limited
Opinion
We have audited the financial report of NobleOak Life Limited (the “Company”) and its
subsidiary (the “Group”) which comprises the consolidated statement of financial position
as at 30 June 2018, the consolidated statement of profit or loss and other comprehensive
income, the consolidated statement of changes in equity and consolidated statement of
cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies and the Directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the
Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the Company and Group’s financial position as at 30
June 2018 and of their financial performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations
2001.
Basis for opinion
those standards are
We conducted our audit in accordance with Australian Auditing Standards. Our
responsibilities under
the Auditor’s
Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of
the Corporations Act 2001 and the ethical requirements of the Accounting Professional
and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
“Code”) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
further described
in
We confirm that the independence declaration required by the Corporations Act 2001,
which has been given to the Board of Directors of the Company, would be in the same
terms if given to the Board of Directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
31
NobleOak Life Limited
INDEPENDENT AUDITOR’S REPORT
Other information
The Board of Directors is responsible for the other information. The other information
comprises the information included in the Annual Report, 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 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.
The Board of Directors’ responsibilities for the financial report
The Board of Directors is 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 Board of 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 Board of Directors is responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless the Board of
Directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a
whole is free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with the
Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise
professional judgement and maintain professional scepticism throughout the audit. We
also:
Identify and assess the risks of material misstatement of the financial report,
whether due to fraud or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
32
Annual Report 2018
INDEPENDENT AUDITOR’S REPORT
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 Board of Directors.
Conclude on the appropriateness of the Board of 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
financial report. We are responsible for the direction, supervision and performance
of the Group’s audit. We remain solely responsible for our audit opinion.
We communicate with the Board of 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 our audit.
DELOITTE TOUCHE TOHMATSU
Stuart Alexander
Partner
Chartered Accountants
Sydney, 6 September 2018
33
NobleOak Life Limited
Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2018
Continuing Operations
Insurance premium revenue
Reinsurance expenses
Net insurance premium revenue
Investment income
Net commissions from reinsurers
Fees & other revenue
Claims expense - net of reinsurance recoveries
Policy acquisition costs
Members liability revaluation
Salary & employee benefits
Administration expenses
Other expenses
Profit Before Tax
Income tax expense
Profit After Tax
Consolidated
The Company
Note
2018
$
2017
$
2018
$
2017
$
3(a)
3(a)
3(a)
3(a)
3(a)
3(b)
3(b)
55,083,632
33,119,511
50,048,131
29,585,273
(34,112,917)
(19,948,234)
(34,112,917)
(19,948,234)
20,970,715
13,171,277
15,935,214
9,637,039
629,696
114,768
624,086
107,936
1,161,234
2,901,247
1,161,234
2,901,247
1,740,031
562,498
4,631,666
2,465,469
(1,144,975)
(579,090)
(1,144,975)
(579,090)
(12,365,807)
(7,533,873)
(10,395,630)
(6,010,065)
16
(736,929)
279,267
(736,929)
279,267
(2,702,114)
(2,869,926)
(2,702,114)
(2,869,926)
3(b)
(2,410,452)
(2,615,010)
(2,386,452)
(2,591,010)
(841,235)
(655,195)
(686,421)
(495,351)
4,300,164
2,775,658
4,299,679
2,845,516
4
(1,044,274)
(1,117,493)
(1,044,129)
(1,139,041)
3,255,890
1,658,165
3,255,550
1,706,475
Other Comprehensive Income
-
-
-
-
Total Comprehensive income
attributable to Owners of the Company
3,255,890
1,658,165
3,255,550
1,706,475
Earnings per share
Basic (cents per share)
Diluted (cents per share)
6
6
7.17
7.01
4.07
4.01
The above Statement of Profit or Loss and Other Comprehensive Income
should be read in conjunction with the accompanying notes to the financial statements.
34
Annual Report 2018 Statement of Financial Position
As at 30 June 2018
Assets
Cash and cash equivalents
Receivables
Financial assets
Gross policy liabilities ceded under reinsurance
Other assets
Plant and equipment
Deferred tax asset
Intangibles
Total assets
Liabilities
Payables
Deferred revenue
Provisions
Gross policy liabilities
Total liabilities
Net assets
Equity
Issued share capital
Accumulated profits
Share based payment reserve
Consolidated
The Company
Note
2018
$
2017
$
2018
$
2017
$
22
7
8
16
9
10
11
12
13
14
15
16
8,191,586
9,699,182
7,333,460
8,609,987
3,189,088
21,825,054
2,612,488
21,570,728
20,754,758
16,262,175
20,904,758
16,412,175
15,547,998
13,788,856
15,547,998
13,788,856
459,369
219,383
305,276
113,950
259,455
219,383
157,271
113,950
2,688,304
3,732,578
2,640,602
3,683,945
769,109
952,501
619,109
802,501
51,819,595
66,679,572
50,137,253
65,139,413
8,556,799
30,167,014
7,025,671
28,777,729
-
1,500,000
-
1,500,000
376,807
248,786
376,807
248,786
2,982,965
10,119,695
2,982,965
10,119,695
11,916,571
42,035,495
10,385,443
40,646,210
39,903,024
24,644,077
39,751,810
24,493,203
18(a)
36,301,200
24,373,143
36,301,200
24,373,143
17
18(b)
3,525,134
269,244
3,373,920
118,370
76,690
1,690
76,690
1,690
Total equity
39,903,024
24,644,077
39,751,810
24,493,203
The above Statement of Financial Position
should be read in conjunction with the accompanying notes to the financial statements.
35
NobleOak Life Limited Statement of Cash Flows
For the year ended 30 June 2018
Consolidated
The Company
Note
2018
$
2017
$
2018
$
2017
$
Cash flows from operating activities
Receipts from customers
40,437,205
69,918,123
38,961,885
68,533,789
Payments to suppliers and employees
(40,070,749)
(60,050,420)
(38,358,750)
(58,661,558)
Interest received
410,148
393,010
404,538
386,178
Amounts allocated to members
(9,632,801)
(6,029,936)
(9,632,801)
(6,029,936)
Net cash generated from/(used in)
operating activities
Cash flows from investing activities
Purchase of plant and equipment
Purchase of financial assets
Payment for intangible assets
22(b)
(8,856,197)
4,230,777
(8,625,128)
4,228,473
(158,027)
(82,866)
(158,027)
(82,866)
(4,273,055)
(9,109,733)
(4,273,055)
(9,109,733)
(148,374)
(403,101)
(148,374)
(403,101)
Net cash used in investing activities
(4,579,456)
(9,595,700)
(4,579,456)
(9,595,700)
Cash flows from financing activities
Amounts received from issue of shares
Cost of issue of shares
18(a)
18(a)
12,013,784
10,988,755
12,013,784
10,988,755
(85,727)
(258,837)
(85,727)
(258,837)
Net cash generated from financing activities
11,928,057
10,729,918
11,928,057
10,729,918
Net (decrease)/increase in cash and
cash equivalents held
Cash and cash equivalents at the
beginning of the financial year
Cash and cash equivalents at the
end of the financial year
(1,507,596)
5,364,995
(1,276,527)
5,362,691
9,699,182
4,334,187
8,609,987
3,247,296
22(a)
8,191,586
9,699,182
7,333,460
8,609,987
The above Statement of Cash Flows
should be read in conjunction with the accompanying notes to the financial statements.
36
Annual Report 2018 Statement of Changes in Equity
For the year ended 30 June 2018
The Company
Balance as at 1 July 2016
Share capital issued
Profit for the year
Issued share
capital
Accumulated
profits
Share based
payment
reserve
Total
equity
Note
$
$
$
$
13,643,225
10,729,918
(1,588,105)
1,690
12,056,810
-
-
1,706,475
-
-
10,729,918
1,706,475
Balance at 30 June 2017
24,373,143
118,370
1,690
24,493,203
Share capital net of transaction cost
11,928,057
Profit for the year
Recognition of share based payments
-
-
-
3,255,550
-
-
11,928,057
3,255,550
-
75,000
75,000
Balance at 30 June 2018
18(a)
36,301,200
3,373,920
76,690
39,751,810
Consolidated
Balance as at 1 July 2016
Share capital issued
Profit for the year
Issued share
capital
Accumulated
profits
Share based
payment
reserve
Total
equity
Note
$
$
$
$
(1,388,921)
1,690
12,255,994
13,643,225
10,729,918
-
-
1,658,165
-
-
10,729,918
1,658,165
Balance at 30 June 2017
24,373,143
269,244
1,690
24,644,077
Share capital net of transaction cost
11,928,057
Profit for the year
Recognition of share based payments
-
-
-
3,255,890
-
-
11,928,057
3,255,890
-
75,000
75,000
Balance at 30 June 2018
18(a)
36,301,200
3,525,134
76,690
39,903,024
The above Statement of Changes in Equity
should be read in conjunction with the accompanying notes to the financial statements.
37
NobleOak Life Limited 1
Statement of Significant Accounting Policies
The financial report was authorised for issue on 6 September 2018 by the Board of Directors.
This financial report includes the consolidated financial statements and notes of NobleOak Life Limited and its
controlled entity (“Consolidated Group” or “Group”), and the separate financial statements and notes of NobleOak
Life Limited, the parent entity (“Company”). NobleOak Life Limited is a company limited by shares, incorporated and
domiciled in Australia.
Basis of Preparation
The financial report is a general purpose report that has been prepared in accordance with Australian Accounting
Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting
Standards Board, the Life Insurance Act 1995 (“the Life Act”) and the Corporations Act 2001. For the purpose of
preparing the financial statements, the Company is a for-profit entity.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial
report containing relevant and reliable information about transactions, events and conditions to which they apply.
Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with
International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial
report are presented below. They have been consistently applied unless otherwise stated.
The financial report has been prepared on an accruals basis and is based on historic costs, except financial instruments
that are measured at revalued amounts or fair values at the end of each reporting period. The amounts presented in
the financial report are in Australian dollars and have been rounded to the nearest dollar.
The Company operates predominantly in the financial services industry. As such, the assets and liabilities disclosed in
the statement of financial position are grouped by nature and listed in an order that reflects their relative liquidity.
Going concern
The financial statements have been prepared on a going concern basis, which contemplates continuity of normal
business activities and the realisation of assets and discharge of liabilities in the normal course of business.
38
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018 1
Statement of Significant Accounting Policies (cont.)
Change in accounting policy
At the date of authorisation of the consolidated financial statements, the Standards and Interpretations that were
issued but not yet effective are listed below.
Standard/Interpretation
AASB 15 ‘Revenue from Contracts with Customers’,
AASB 2014-5 ‘Amendments to Australian Accounting
Standards arising from AASB 15’, AASB 2015-8
‘Amendments to Australian Accounting Standards
– Effective Date of AASB 15’, and AASB 2016-3
‘Amendments to Australian Accounting Standards –
Clarifications to AASB 15’
Effective for annual
reporting periods
beginning on or after
Expected to be
initially applied in the
financial year ending
1 January 2018
30 June 2019
AASB 16 ‘Leases’
1 January 2019
30 June 2020
AASB 2016-5 Classification and Measurement of Share-
based Payment Transactions (Amendment to IFRS 2)
1 January 2018
30 June 2019
AASB 2016-6 applying to AASB 9 and AASB 4 so as to
align profit recognition to AASB 139
1 January 2018
30 June 2019
AASB 17 ‘Insurance contracts’ will replace AASB 1038
1 January 2021
30 June 2022
Impact of changes to Australian Accounting Standards and Interpretation
IFRS 17 ‘Insurance Contracts’
IFRS 17 requires insurance liabilities to be measured at a current fulfilment value and provides a more uniform
measurement and presentation approach for all insurance contracts. These requirements are designed to achieve
the goal of a consistent, principle-based accounting for insurance contracts. AASB 17 will supersede AASB 1038
Insurance Contracts as for financial year ends beginning on 1 January 2021. The Directors of the Company
anticipate that the application of IFRS 17 in the future is likely to have a material impact on the amounts reported and
disclosures made in the consolidated financial statements. The Company is currently evaluating the standard and its
impacts to determine the implementation roadmap. It is not possible to provide a reasonable estimate of the effect of
IFRS 17 at this time.
AASB 9 ‘Financial Instruments’
AASB 9 Financial Instruments replaces AASB 139 Financial Recognition and Measurement. AASB 9 includes
revised guidance on the classification and measurement of financial instruments. It also carries forward guidance on
recognition and de-recognition of financial instruments from AASB 139. The application of AASB 9 is not expected
to have a material impact on the results of the Company. The majority of the Company’s assets are assets backing
policyholder liabilities and are currently designated at fair value through the profit or loss. The Company’s other
financial instruments (i.e. receivables and payables) are held at amortised cost. Having met the criteria, the application
of AASB 9 Financial Instruments has been deferred to 1 January 2021 at the latest.
39
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited 1
Statement of Significant Accounting Policies (cont.)
AASB 15 ‘Revenue from Contracts with Customers’
AASB 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts
with customers. The core principle of AASB 15 is that an entity should recognise revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. AASB 15 applies to annual periods beginning on or after 1
January 2018. Revenues derived under the Insurance Contracts standards, which represents bulk of the Company’s
revenue, are excluded from AASB 15. For the balance of revenue, the standard has been considered and does not
have a material impact.
AASB 16 ‘Leases’
AASB 16 provides a comprehensive model for the identification of lease arrangements and their treatment in the
financial statements of both lessees and lessors. The accounting model for lessees will require lessees to recognise
all leases on balance sheet, except for short-term leases and leases of low value assets. AASB 16 applies to annual
periods beginning on or after 1 January 2019. The Company’s only material lease is that of its premises and it will be
treated accordingly, but no material impact is expected to the accounts.
(a) Principles of consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent
(NobleOak Life Limited) and the subsidiary. Subsidiary is an entity the parent controls. The parent controls an
entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity. Details of the subsidiary is provided in note 27.
The assets, liabilities and results of a subsidiary are fully consolidated into the financial statements of the Group
from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued
from the date that control ceases. Intercompany transactions, balances and unrealised gains or losses on
transactions between group entities are fully eliminated on consolidation. Accounting policies of a subsidiary
have been changed and adjustments made where necessary to ensure uniformity of the accounting policies
adopted by the Group.
Business combinations
Business combinations occur where an acquirer obtains control over one or more businesses.
A business combination is accounted for by applying the acquisition method, unless it is a combination involving
entities or businesses under common control. The business combination will be accounted for from the
date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including
contingent liabilities) assumed is recognised (subject to certain limited exemptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting
from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent
consideration classified as equity is not re-measured and its subsequent settlement is accounted for within
equity. Contingent consideration classified as an asset or liability is re-measured each reporting period to fair
value, recognising any change to fair value in profit or loss, unless the change in value can be identified as
existing at acquisition date.
All transaction costs incurred in relation to the business combination are expensed to the statement of
comprehensive income.
The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.
40
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018
1
Statement of Significant Accounting Policies (cont.)
Goodwill
Goodwill is carried at cost less accumulated impairment losses. Goodwill is calculated as the excess of the sum
of:
(i)
(ii)
the consideration transferred;
any non-controlling interest; and
(iii)
the acquisition date fair value of any previously held equity interest;
over the acquisition date fair value of net identifiable assets acquired.
The acquisition date fair value of the consideration transferred for a business combination plus the acquisition
date fair value of any previously held equity interest shall form the cost of the investment in the separate
financial statements.
Goodwill on acquisitions of subsidiaries is included in intangible assets.
Goodwill is tested for impairment annually and is allocated to the Group’s cash-generating units or groups
of cash-generating units, representing the lowest level at which goodwill is monitored not larger than an
operating segment. Gains and losses on the disposal of an entity include the carrying amount of goodwill
related to the entity disposed of.
Changes in the ownership interests in a subsidiary are accounted for as equity transactions and do not affect
the carrying values of goodwill.
(b) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits held at call with banks, other short term highly
liquid investments and bank overdrafts. Bank overdrafts are shown within liabilities on the consolidated
statement of financial position.
(c)
Employee benefits
Provision is made for the Company’s liability for employee benefits arising from services rendered by
employees to balance date. Employee benefits that are expected to be settled within one year have been
measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later
than one year have been measured at the present value of the estimated future cash outflows to be made for
those benefits. Those cashflows are discounted using market yields on high quality corporate bonds with terms
to maturity that match the expected timing of cashflows.
(d) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or
for disclosure purposes.
The fair value of financial instruments are measured by level of the following fair value measurement hierarchy:
(i)
(ii)
quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices) (level 2)
(iii)
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3)
41
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited
1
Statement of Significant Accounting Policies (cont.)
(e)
Financial instruments
A financial instrument is any contract that gives rise to a financial asset in one entity and a financial liability or
equity instrument in another entity and are recognised when the Consolidated Group become a party to the
contractual provisions of the instrument.
Financial assets
The Company has identified the following classes of financial asset: cash and cash equivalents, financial
assets and receivables. Financial assets comprise both assets held to fund policyholder liabilities and excess
shareholder’s assets. Financial assets are measured at fair value through profit or loss and include bank bills and
term deposits, and Australian fixed interest bond.
Financial liabilities
The Company has identified the following classes of financial liability: Payables.
Financial instruments designated as fair value through profit or loss
The policy of management is to designate a group of financial assets or financial liabilities as fair value through
profit or loss when that group is both managed and its performance evaluated on a fair value basis for both
internal and external reporting in accordance with the Company’s documented investment strategy.
(f)
Policyholders’ and members’ funds
Policyholders’ funds are those financial assets which are held to fund the insurance provisions of the Company.
The remaining financial assets, including equities, managed funds and investment in shares represent
Shareholders’ funds.
(g) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Tax Office. In these circumstances, the GST is recognised as
part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the
statement of financial position are shown inclusive of GST.
Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of
investing and financing activities, which are disclosed as operating cash flows.
(h)
Impairment of assets
At each reporting date, the Company reviews the carrying amounts of its tangible and intangible assets to
determine whether there is any indication that those assets have been impaired. If such an indication exists, the
recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is
compared to the asset’s carrying value. An excess of the asset’s carrying value over its recoverable amount is
expensed to the statement of comprehensive income.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
(i)
Receivables
Trade accounts receivable are carried at amounts due and are generally settled within 30 days. A provision
is raised for any doubtful debts based on a review of all outstanding amounts at balance date. Bad debts are
written off in the period in which they are identified.
42
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018 1
Statement of Significant Accounting Policies (cont.)
(j)
Income tax
The Company is subject to income tax on investment income less an appropriate proportion of administration
and overhead expenses. Certain benefits are exempt from income tax under provision of the Income Tax
Assessment Act.
The income tax benefit (expense) for the year comprises current income tax benefit (expense) and deferred
tax benefit (expense).
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated
using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities
(assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation
authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances
during the year as well unused tax losses.
Current and deferred income tax benefit (expense) is charged or credited directly to equity instead of the
profit or loss when the tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also
result where amounts have been fully expensed but future tax deductions are available. No deferred income
tax will be recognised from the initial recognition of an asset or liability, excluding a business combination,
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, based on tax rates enacted or substantively enacted at reporting
date. 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. Even when the deferred tax asset is not shown on the consolidated statement of financial
position, that benefit is still available to the Company and can be re-introduced onto the statement of financial
position when it is probable that future taxable profits will be available.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended
that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur.
Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax
assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable
entity or different taxable entities where it is intended that net settlement or simultaneous realisation and
settlement of the respective asset and liability will occur in future periods in which significant amounts of
deferred tax assets or liabilities are expected to be recovered or settled.
43
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited 1
Statement of Significant Accounting Policies (cont.)
(j)
Income tax (cont.)
Tax Consolidation
NobleOak Life Limited is the head entity of the Tax Consolidated Group comprising of NobleOak Life Limited
and its wholly owned entities. Under tax consolidation, the head entity assumes the following balances from
controlled entities within the Tax Consolidated Group:
(i)
(ii)
current tax balances arising from external transactions recognised by entities in the tax consolidated
group which occurred after implementation date; and
deferred tax assets arising from unused tax losses and unused tax credits recognised by entities in the
Tax Consolidated Group which occurred after implementation date.
Assets and liabilities which arise as a result of balances transferred from entities within the Tax Consolidated
Group to the head entity are recognised as related party balances receivable and payable in the statement of
financial position. The recoverability of balances arising from tax funding arrangements is based on the ability of
the Tax Consolidated Group to utilise the amounts recognised by the head entity.
(k) Payables
Trade payables and other accounts payable are recognised when the Company becomes obliged to make
future payments resulting from the purchase of goods and services.
(l)
Financial statements presentation
The financial statements are prepared by combining the financial statements of the Company’s Benefit Funds
and Management Fund. A list of Benefit Funds appears in notes 28-29 of the financial statements.
(m) Plant and equipment
Plant and equipment is recorded at cost less any accumulated depreciation and impairment losses.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Company and
the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement
of comprehensive income during the financial period in which they are incurred.
Depreciation
Depreciation is calculated using the straight line method over the asset’s useful life to the Consolidated Group
commencing from the time the asset is held ready for use. Useful lives range between 3 to 20 years.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount. The recoverable amount is assessed on the basis of
the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The
expected net cash flows have been discounted to their present values in determining recoverable amounts.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains
and losses are included in the statement of comprehensive income.
(n) Provisions
Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for
which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.
44
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018 1
Statement of Significant Accounting Policies (cont.)
(o) Revenue recognition
Management fee revenue
Management fee revenues are recognised in the period in which the services are performed.
Premium income
Premium income is recognised on a due basis subject to the rules governing each Benefit Fund.
i)
Life insurance contracts
Premiums on life insurance contracts are separated into their revenue and deposit components. Where
it is not practicable to split out the two components, all premiums have been recognised as revenue.
Where policies provide for the payment of amounts of premiums on specific due dates, such premiums
are recognised as revenue when due. Unpaid premiums are recognised as revenue only during the
days of grace or where secured by the surrender values of the policies concerned. Other premiums are
recognised as revenue on a due basis.
ii)
Life investment contracts
Under life investment contracts the life companies receive deposits from policyholders which are then
invested on behalf of the policyholders. No premiums are recognised as revenue. Fees deducted
from members accounts are accounted for as fee revenue. Life investment premiums are treated as a
movement in life investment contract liabilities.
Interest revenue
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the
financial asset.
Commission revenue
Commission revenue is recognised when it becomes due.
All revenue is stated net of the amount of goods and services tax (GST).
(p) Loans and receivables
Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in
an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost
using the effective interest method less impairment.
(q)
Intangibles
Goodwill is initially recorded at the amount by which the purchase price for the business combination exceeds
the fair value attributed to the interest in the net fair value of identifiable assets, liabilities and contingent
liabilities at date of acquisition. Goodwill is tested annually for impairment and carried at cost less accumulated
impairment losses.
45
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited 1
Statement of Significant Accounting Policies (cont.)
(r)
Leases
Leases of fixed assets where substantially all risks and benefits incidental to the ownership of the asset, but not
the legal ownership, that are transferred to the Company are classified as finance leases.
Finance leases are capitalised by recording 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.
Leased assets are depreciated on a straight-line basis over their estimated useful lives, where it is likely that the
Company will obtain ownership of the asset, or over the term of the lease.
Lease payments for operating leases, are charged as expenses on a straight line basis in the periods in which
they are incurred.
(s) Claims expense
i)
Life insurance contracts
Claims are recognised when the liability to a policyholder under a life insurance contract has been
established or upon notification of the insured event. Claims are separated into their expense and
withdrawal components. Claims on risk business are treated as an expense and are recognised when a
liability to the policyholder is established.
ii)
Life investment contracts
There is no claims expense in respect of investment contracts. Surrenders and withdrawals which relate
to life investment contracts are treated as a movement in life investment contract liabilities. Other claim
amounts are similar to withdrawals and as such, do not relate to the provision of services or the bearing
of risk. Accordingly, they are not expenses and are treated as movements in life insurance contract
liabilities.
(t) Basis of expense apportionment
All operating expenses in respect of life insurance or life investment contracts have been apportioned between
policy acquisition, policy maintenance and investment management expenses with regard to the objective
when incurring the expense and the outcome achieved.
The apportionment process is adopted by applying the following methodology:
(i)
(ii)
Expenses that can be directly identifiable and attributable to a particular class of business are allocated
directly to that class of business. Expenses directly attributable to the ordinary and superannuation
participating and non-participating classes of business but cannot be directly allocated to a particular class
of business are apportioned based upon the appropriate cost drivers;
Commission expenses that cannot be allocated to a class of business, for example volume bonuses, are
apportioned on the basis of new business and renewal commissions of each class, allowing for limits
implied by the basis of adviser remuneration;
(iii)
Investment expenses are apportioned to the classes of business on the mean balance of assets under
management; and
(iv) Other expenses that cannot be allocated to a particular class of business are apportioned to the classes
of business based on appropriate cost drivers, including number of new policies issued and related
premiums, number of new units issued, mean balance of assets under management, average number of
policies in-force and time and activity based allocations.
46
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018 1
Statement of Significant Accounting Policies (cont.)
(u)
Life investment contract liabilities
Investment contract premiums are separated into their revenue and deposit components.
i)
Deposit component
The deposit element is initially recognised at fair value. Fair value is determined by estimating the
amount payable under the contract for any premiums received less any current or future exit penalties.
The fair value is measured as the higher of the current surrender value and an estimate of the
discounted future maturity benefit payable in respect of that deposit.
The current surrender value is the amount which the contract holder is entitled to receive upon
immediate surrender. This equates to the premiums received less any surrender penalties.
When calculating the discounted future maturity benefit, the surrender penalty is calculated per the
terms of the contract. For regular premium contracts the calculation is based on a discounted cash flow
that incorporates the ultimate total redemption less future deposits receivable. The resulting surrender
penalty differs to the penalty that would be applied if the contract immediately lapsed leading to a
different financial instrument liability.
The deposit element, or financial instrument liability, is subsequently measured at fair value, with any
change in value being recognised in the statement of comprehensive income.
ii)
Revenue component
Accounting standards contemplate a situation where there is a difference between the considerations
(premiums) received from a policyholder and the sum of the fee revenue and financial liability
recognised upon receipt.
Accounting standards define this part as the Management Services Element.
The difference between the consideration received and the fair value of the deposit element relates to
future management services revenue and is initially recognised on the statement of financial position as
Deferred Revenue Liability.
Fees received are deferred and recognised as revenue over the life of the contract.
(v)
Life insurance contract liabilities
The financial reporting methodology used to determine the value of life insurance contract liability is referred
to as Margin on Services (MoS).
Under MoS, the excess of premium received over claims and expenses (‘the profit margin’) is recognised over
the life of the contract in a manner that reflects the pattern of risk accepted from the policyholder as services
are provided (‘the service’), hence the term Margin on Service. The movement in life insurance contract
liability recognised in the statement of comprehensive income reflects the planned release of this margin.
The assumptions used in the calculation of the insurance contract policy liabilities are reviewed at each
reporting date.
47
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited 1
Statement of Significant Accounting Policies (cont.)
(w) Policy acquisition costs
Life insurance contracts
The Appointed Actuary, in determining the life insurance contract liabilities, takes account of the deferral
and future recovery of acquisition costs which are capitalised by way of movement in life insurance contract
liabilities, then amortised over the period in which they will be recovered.
Policy acquisition costs comprise the costs of acquiring new business, including commission, advertising, policy
issue and underwriting costs, agency expenses and direct and indirect other sales costs. Acquisition costs are
initially expensed in the statement of comprehensive income with any amounts to be deferred then taken to
the statement of financial position as an adjustment to policy liabilities.
(x) Outward reinsurance expense
Premiums ceded to reinsurers under reinsurance contracts are recorded as an outward reinsurance expense
and are recognised over the period of indemnity of the reinsurance contract.
(y) Asset backing of policy liabilities
Each Benefit Fund of the Company is accounted for independently. Separate management accounts are
maintained. Each Benefit Fund holds its own assets that provide the financial backing to ensure future policy
liabilities can be met. The appointed actuary regularly reviews each Benefit Fund’s financial information to
ensure that assets are able to meet or exceed the requisite capital adequacy and solvency requirements.
In accordance with AASB 1038 ‘Life Insurance Contracts’, financial assets backing policy liabilities are designated
at fair value through profit or loss. Financial assets backing policy liabilities consist of high quality investments
such as cash and fixed income securities.
(z) Share-based payment arrangements
Equity-settled share-based payments to directors and employees are measured at the fair value of the equity
instruments at the grant date.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Company’s estimate of equity instruments that will
eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company
revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the
original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised
estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
48
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018 2 Critical accounting judgements and estimates
The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities at year end.
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances. The key areas
where critical accounting estimates are applied are noted below.
(a)
Life insurance contract liabilities
Life insurance contract liabilities are computed using statistical or mathematical methods, which are expected
to give approximately the same results as if an individual liability was calculated for each contract. The
computations are made by suitably qualified personnel on the basis of recognised actuarial methods, with
due regard to relevant actuarial principles. The methodology takes into account the risks and uncertainties of
the particular classes of life insurance business written. Deferred policy acquisition costs and present value of
in-force business (PVIF) are connected with the measurement basis of life insurance contract liabilities and are
equally sensitive to the factors that are considered in the liability measurement. The key factors that affect the
estimation of these liabilities and related assets are:
•
•
•
•
The estimated cost of providing benefits and administering these insurance contracts;
Expected mortality and morbidity experience on life insurance products, including enhancements to
policyholder benefits;
Discontinuance experience, which affects the Group’s ability to recover the cost of acquiring new
business over the expected life of the contracts; and
The amounts credited to policyholders’ accounts compared to the returns on invested assets through
asset-liability management and strategic and tactical asset allocation.
In addition, factors such as regulation, competition, interest rates, taxes, securities market conditions and
general economic conditions affect the level of these liabilities. Details of specific actuarial policies and methods
are set out in note 33.
(b) Assets arising from reinsurance contracts
Assets arising from reinsurance contracts are also computed using the above methods. In addition, the
recoverability of these assets is assessed on a periodic basis to ensure that the balance is reflective of the
amounts that will ultimately be received, taking into consideration factors such as counterparty and credit risk.
Impairment is recognised where there is objective evidence that the Group may not receive amounts due to it
and these amounts can be reliably measured.
(c)
Fair value of financial instruments
The fair value of financial instruments that are not traded in an active market is determined by using valuation
techniques. The Group uses its judgement to select a variety of methods and makes assumptions that are
mainly based on market conditions existing at each balance date.
(d) Deferred tax assets
Determining whether deferred tax assets are recognised requires an estimation of future taxable profits against
which the assets can be released. This estimation process is based on relevant available information pertaining
to the business and the exercise of management judgement.
Recognition therefore involves judgements and estimations regarding the future financial performance of
the company and reflects a prudent regard, where considered appropriate, for the inherent uncertainties
associated with making such estimations and judgements in relation to deferred tax assets. Details of the
carrying amount of the deferred tax asset are set out in note 11.
49
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited 3 Profit from continuing operation
Consolidated
The Company
2018
$
2017
$
2018
$
2017
$
The profit from operations includes the
following items of income and expense:
(a)
i) Net Insurance Premium Revenue
Premium revenue from insurance contracts
56,619,910
34,342,075
51,584,409
30,807,837
Less: Deposits recognised as an increase in
policy liabilities
(1,536,278)
(1,222,564)
(1,536,278)
(1,222,564)
Less: Outward reinsurance expense
(34,112,917)
(19,948,234)
(34,112,917)
(19,948,234)
55,083,632
33,119,511
50,048,131
29,585,273
20,970,715
13,171,277
15,935,214
9,637,039
NobleOak’s in-force premium as at 30 June 2018 in active benefit funds was $36,789,245 ($22,306,809 as at
30 June 2017). In-force premiums in closed benefit funds as at 30 June 2018 was $28,015,860 ($52,368,937
as at 30 June 2017). NobleOak does not generate any revenue from these closed benefit funds, as such the
reduction in in-force premiums has no impact on the trading results.
There is a difference between in-force premiums and the revenue recognised in the profit or loss statement
due to timing of policy start dates (earned premium) and sales incentives offered with the policies (premium
free periods). For core life insurance business, the gross premium (including base premium and fees) is
collected by NobleOak Services Limited (the subsidiary company and the administrator). The base premium is
paid to NobleOak Life Limited (the parent company and the insurer) which is recognised as insurance premium
revenue in the company’s profit or loss statement. The fee component of the gross premium retained in the
subsidiary company is recognised within the insurance premium revenue in the consolidated profit or loss
statement.
ii) Investment Revenue
Interest & investment revenue
Increase in market value of investments
410,148
219,548
393,010
(278,242)
404,538
219,548
386,178
(278,242)
629,696
114,768
624,086
107,936
50
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018 3 Profit from continuing operation (cont.)
iii) Net commissions from reinsurers
Commissions received from/(clawback to)
reinsurers
Commissions clawback from/(paid to)
distributors
Consolidated
The Company
2018
$
2017
$
2018
$
2017
$
(30,334,846)
29,367,804
(30,334,846)
29,367,804
31,496,080
(26,466,557)
31,496,080
(26,466,557)
1,161,234
2,901,247
1,161,234
2,901,247
The balances change is as a result of the fact that Freedom arrangement was placed in run off in 2017.
iv) Fees & Other Revenue
Management fees & administration fees
Other
59,847
1,680,184
62,498
500,000
2,951,482
1,680,184
1,965,469
500,000
1,740,031
562,498
4,631,666
2,465,469
Included in Other Revenue is $1.5m from the termination of the Freedom Alliance Partnership in February
2017 (2017: $0.5m).
Expenses
Profit before income tax has been arrived
at after charging the following expenses:
i) Claims Expenses
Claims payments
Claims expense reserve
13,534,065
11,687,780
13,534,065
11,687,780
488,031
32,022
488,031
32,022
Less: Reinsurance claims recovery
(12,877,121)
(11,140,712)
(12,877,121)
(11,140,712)
1,144,975
579,090
1,144,975
579,090
51
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited 3 Profit from continuing operation (cont.)
Consolidated
The Company
2018
$
2017
$
2018
$
2017
$
10,857,487
6,456,307
8,887,310
4,932,194
907,858
1,128,628
5,010,294
4,508,627
640,220
669,704
2,695,806
1,987,226
907,858
1,128,628
5,010,294
4,508,627
640,220
669,704
2,695,806
1,987,226
397,753
210,310
397,753
210,310
117,279
254,934
77,196
120,175
117,279
254,934
77,196
120,175
(10,817,053)
(5,322,766)
(10,817,053)
(5,322,766)
12,365,807
7,534,178
10,395,630
6,010,065
19,192
214,860
491,585
539,317
170,366
20,256
173,417
254,296
603,727
679,390
19,192
214,860
491,585
515,317
170,366
20,256
173,417
254,296
579,727
679,390
591,739
484,984
591,739
484,984
ii) Policy Acquisition Costs
Commission
Stamp duty
Underwriting & medical costs
Marketing & promotion
Salary & employee benefits
Printing, postage, stationery & IT
expenses
Depreciation and amortisation
Other acquisition cost
Deferred acquisition costs
iii) Administration expenses
Administration expenses include the
following expenses:
Depreciation
Amortisation
Payments under operating leases
Professional services & advisers
Marketing & Promotion
Printing, postage, stationery, telephone &
IT expenses
Board & committee costs
Insurance
297,577
85,816
330,871
68,069
297,577
85,816
330,871
68,069
2,410,452
2,615,010
2,410,452
2,615,010
52
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018 4
Income taxes
(a)
The components of tax expense/(benefit) comprise:
Current tax
Deferred tax
(b)
The prima facie tax on profit from operations before
income tax is reconciled to income tax as follows:
Prima facie tax expense on profit from operations
before income tax at 30% (2017: 30%)
Add:
Tax effect of:
Deferred Revenue
Members Liability
Non-deductible depreciation & amortisation
Non-deductible capital loss
Non-deductible expenses
Under provision of prior year income tax
Less
Tax Effect of:
Amortised tax benefits of capital items
Deductible expenses
Non assessable other income/(loss)
Consolidated
The Company
2018
$
2017
$
2018
$
2017
$
-
-
-
-
1,044,274
1,117,493
1,044,129
1,139,041
1,044,274
1,117,493
1,044,129
1,139,041
1,290,049
832,697
1,289,904
853,655
(450,000)
450,000
(450,000)
450,000
221,079
105,399
9,863
12,902
41,393
(83,780)
46,280
13,111
-
221,079
105,399
9,863
12,902
41,393
(83,780)
46,280
13,111
-
(59,364)
425,611
(59,364)
425,611
50,727
60,056
75,628
45,747
166,733
(71,665)
50,727
60,056
75,628
45,157
166,733
(71,665)
186,411
140,815
186,411
140,225
Income tax expense attributable to profit for the year
1,044,274
1,117,493
1,044,129
1,139,041
5 Remuneration of auditors
Consolidated
The Company
2018
$
2017
$
2018
$
2017
$
Audit of the financial report - current year
131,250
99,750
107,250
75,750
The auditor of the Company is Deloitte Touche Tohmatsu.
53
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited
6 Earnings per share
Earnings per share (cents)
Basic earnings (cents)
Diluted earnings (cents)
Basic earnings per share
Consolidated
2018
2017
7.17
7.01
4.07
4.01
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are
as follows:
Profit for the year attributable to owners of the Company ($)
3,255,890
1,658,165
Earnings used in the calculation of basic earnings per share ($)
3,255,890
1,658,165
Weighted average number of ordinary shares for the purpose
of basic earnings per share
45,393,302
40,767,767
Diluted earnings per share
The earnings used in the calculation of diluted earnings per share are as follows:
Profit for the year attributable to owners of the Company ($)
3,255,890
1,658,165
Earnings used in the calculation of total diluted earnings per share ($)
3,255,890
1,658,165
The weighted average number of ordinary shares for the purposes of diluted earnings per share reconciles to the
average number of ordinary shares used in the calculation of basic earnings per share as follows:
Weighted average number of ordinary shares used in the calculation
of basic earnings per share
Shares deemed to be dilutive in respect of the Premium Option Plan
and Performance Rights Plan
Weighted average number of ordinary shares used in the calculation
of diluted earnings per share (all measures)
45,393,302
40,767,767
1,044,659
600,773
46,437,961
41,368,540
54
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018 7 Receivables
Consolidated
The Company
2018
$
2017
$
2018
$
2017
$
Accrued receivables
GST receivable
Other receivables – Subsidiary (NobleOak
Services Limited)
2,885,374
21,455,075
2,298,255
21,100,443
303,714
369,979
301,020
371,242
-
-
13,213
99,043
Maturity analysis:
Current
Non-current
3,189,088
21,825,054
2,612,488
21,570,728
3,189,088
21,825,054
2,612,488
21,570,728
-
-
-
-
3,189,088
21,825,054
2,612,488
21,570,728
55
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited 8 Financial assets
Financial assets held at cost:
NobleOak Services Limited Shares
Financial assets held at fair value through profit
or loss:
Consolidated
The Company
2018
$
2017
$
2018
$
2017
$
-
-
150,000
150,000
Bank bills and term deposits
17,713,384
13,440,346
17,713,384
13,440,346
Australian fixed interest
3,041,374
2,821,829
3,041,374
2,821,829
Maturity analysis:
Current
Non-current
Level 1
Bank bills and term deposits
Level 2
Australian fixed interest
Level 3
Fair value hierarchy
20,754,758
16,262,175
20,904,758
16,412,175
17,713,384
13,440,346
17,713,384
13,440,346
3,041,374
2,821,829
3,191,374
2,971,829
20,754,758
16,262,175
20,904,758
16,412,175
Consolidated
The Company
2018
$
2017
$
2018
$
2017
$
17,713,384
13,440,346
17,713,384
13,440,346
3,041,374
2,821,829
3,041,374
2,821,829
-
-
-
-
20,754,758
16,262,175
20,754,758
16,262,175
The investments carried at fair value have been classified under the three levels of the fair value hierarchy as follows:
(i)
(ii)
Level 1: quoted prices (unadjusted) in active markets for identical assets
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset, either
directly (as prices) or indirectly (derived from prices)
(iii)
Level 3: inputs for the asset that are not based on observable market data (unobservable inputs)
There have been no movements between levels during the year.
56
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018
9 Other assets
Prepayments
Other
Maturity analysis:
Current
Non-current
10 Plant and equipment
Gross carrying amount
Balance at 1 July 2017
Additions
Disposals
Balance at 30 June 2018
Accumulated depreciation
Balance at 1 July 2017
Disposals
Depreciation expense
Balance at 30 June 2018
Net book value
As at 30 June 2017
As at 30 June 2018
Consolidated
The Company
2018
$
2017
$
2018
$
2017
$
459,169
305,076
259,255
157,071
200
200
200
200
459,369
305,276
259,455
157,271
459,369
305,276
259,455
157,271
-
-
-
-
459,369
305,276
259,455
157,271
Consolidated
The Company
Plant & Equipment
Plant & Equipment
$
$
237,341
158,027
(27,783)
367,585
(123,391)
23,140
(47,951)
(148,202)
113,950
219,383
237,341
158,027
(27,783)
367,585
(123,391)
23,140
(47,951)
(148,202)
113,950
219,383
Depreciation is recognised as an expense during the year and is included in the depreciation expense disclosed in
note 3(b) to the financial statements.
57
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited
11 Deferred tax asset
The balance comprises temporary difference
attributable to:
Amounts recognised in profit & loss:
Asset impairments
Accrued expenses
Employee entitlement provision
Prior year tax losses
Intangibles
Deferred revenue
Share capital issue costs
Consolidated
The Company
2018
$
555,000
130,722
113,042
2017
$
555,000
82,448
74,636
2018
$
555,000
112,249
113,042
2017
$
555,000
63,068
74,636
1,667,132
3,205,035
1,637,903
3,175,782
123,156
140,959
123,156
140,959
-
(450,000)
-
(450,000)
99,252
124,500
99,252
124,500
2,688,304
3,732,578
2,640,602
3,683,945
Movement:
Opening balance as at beginning of year
3,732,578
4,850,136
3,683,945
4,802,103
Charged to income statement
(1,044,274)
(1,117,558)
(1,044,129)
(1,139,041)
Tax loss transferred from subsidiary
-
-
786
20,883
Closing balance as at end of year
2,688,304
3,732,578
2,640,602
3,683,945
58
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018 12
Intangibles
Gross carrying
amount
Consolidated
The Company
Goodwill –
NobleOak
Services
Limited
Product
Development –
NobleOak
Life Limited
Administration
Software
Development
– NobleOak
Life Limited
Total
Intangible
Product
Development
Administration
Software
Development
Total
Intangible
$
$
$
$
$
$
$
Balance at 1 July 2017
150,000 1,205,855
711,835 2,067,690
1,205,855
711,835 1,917,690
Disposals
Additions
-
-
(170,419)
-
(170,419)
(170,419)
-
(170,419)
83,344
65,030
148,374
83,344
65,030
148,374
Balance as at 30
June 2018
Accumulated
amortisation
Balance at 1 July 2017
Disposals
Amortisation expense (a)
Balance at 30 June
2018
Net book value
150,000 1,118,780
776,865 2,045,645
1,118,780
776,865 1,895,645
-
-
-
-
723,395
391,794 1,115,189
723,395
391,794 1,115,189
(142,032)
-
(142,032)
(142,032)
-
(142,032)
155,787
147,592
303,379
155,787
147,592
303,379
737,150
539,386 1,276,536
737,150
539,386 1,276,536
As at 30 June 2017
150,000
482,460
320,041
952,501
482,460
320,041
802,501
As at 30 June 2018
150,000
381,631
237,478
769,109
381,631
237,478
619,109
Goodwill – NobleOak Services Limited
Goodwill relates to the purchase of NobleOak Services Limited on 1 July 2008. The goodwill has been tested for
impairment at 30 June 2018, the Directors have assessed the carrying value of goodwill as unchanged at $150,000.
Product Development and Administration Software Development Costs
Product Development and Administration Software Development Costs relate to capitalised costs incurred to
develop new risk products and the implementation of our Ebix administration platform for Risk Fund No 1. Costs
associated with the development of the NobleOak website and Oakey CRM system designed to help manage the
sales process have also been included.
(a) Amortisation relates to the write-down of cost with regards to the establishment of the new Risk Benefit Fund
No.1, Freedom Benefit Fund, Administration Software Development and Website and CRM Development. The
cost associated with the Freedom Benefit Fund was written off during the year as the fund no longer generates
revenue for NobleOak (write-off net value $28,387). The cost associated with the development of the administration
software is being written off over 7 years. The cost associated with the Website and CRM development is being
written off over 4 years. These periods have been determined based on estimated useful life.
59
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited
13 Payables
Consolidated
The Company
2018
$
2017
$
2018
$
2017
$
Sundry creditors and accruals
8,556,799
30,167,014
7,025,671
28,777,729
Maturity analysis:
Current
Non-current
14 Deferred revenue
Deferred revenue
Maturity analysis:
Current
Non-current
8,556,799
30,167,014
7,025,671
28,777,729
-
-
-
-
8,556,799
30,167,014
7,025,671
28,777,729
Consolidated
The Company
2018
$
2017
$
1,500,000
1,500,000
-
1,500,000
-
-
-
-
2018
$
-
-
-
-
2017
$
1,500,000
1,500,000
-
1,500,000
NobleOak secured a payment of $2,000,000 from Swiss Re as part of the finalisation of the Freedom Alliance
Partnership in March 2017, of which $500,000 was realised as revenue in 2017, and $1,500,000 was realised in 2018.
This treatment reflects the terms of the original Freedom distribution agreement and matches revenue realisation
with future expenditure.
15 Provisions
Employee benefits
Maturity analysis:
Current
Non-current
60
Consolidated
The Company
2018
$
2017
$
2018
$
2017
$
376,807
248,786
376,807
248,786
274,937
101,870
175,823
72,963
274,937
101,870
175,823
72,963
376,807
248,786
376,807
248,786
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018
16 Policy & member liabilities
Consolidated
The Company
2018
$
2017
$
2018
$
2017
$
Balance at beginning of financial year
(3,669,161)
2,640,042
(3,669,161)
2,640,042
Allocations to members
(9,632,801)
(6,029,936)
(9,632,801)
(6,029,936)
(Decrease)/Increase in value expensed in the
financial year (i)
736,929
(279,267)
736,929
(279,267)
Balance at end of financial year
(12,565,033)
(3,669,161)
(12,565,033)
(3,669,161)
(i)
2017 and 2018 increase/(decrease) in value expensed in the financial year relates to bonus and other benefits
allocated to members.
Being:
Gross policy liabilities
2,982,965
10,119,695
2,982,965
10,119,695
Less gross policy liabilities ceded under
reinsurance
(15,547,998)
(13,788,856)
(15,547,998)
(13,788,856)
Net policy & members liability
(12,565,033)
(3,669,161)
(12,565,033)
(3,669,161)
17 Accumulated profits
Consolidated
The Company
2018
$
2017
$
2018
$
2017
$
Balance at beginning of financial year
269,244
(1,388,921)
118,370
(1,588,105)
Net profit from operation after income tax
3,255,890
1,658,165
3,255,550
1,706,475
Balance at end of financial year
3,525,134
269,244
3,373,920
118,370
61
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited 18 Share capital
Consolidated
The Company
2018
$
2017
$
2018
$
2017
$
(a)
Issued share capital
Fully paid ordinary shares
36,301,200
24,373,143
36,301,200
24,373,143
Movement in issued share capital
Company & Consolidated
Ordinary Shares
Opening Balance 1 July 2016
Ordinary Share – Sophisticated Investor –
August 2016 (i)
Number of
Shares
31,820,006
Issue Price
$ Value
13,643,225
5,963,556
1.045
6,231,916
Ordinary Share – Existing Shareholders (ii)
1,338,190
1.045
1,398,409
Ordinary Share – Sophisticated Investors –
August 2016 (iii)
Ordinary Shares - Institutional Investor February
2017 (i)
Ordinary Share – NobleOak Premium Options
Exercised (iv)
661,810
1.10
727,991
2,486,162
1.045
2,598,039
60,000
0.54
32,400
Less Transaction cost
Balance 30 June 2017
42,329,724
(258,837)
24,373,143
Ordinary Share – Sophisticated Investor –
March 2018 (v)
9,241,372
1.30
12,013,784
Less Transaction cost
Balance 30 June 2018
51,571,096
(85,727)
36,301,200
(i)
(ii)
(iii)
(iv)
(v)
Ordinary Shares issued to sophisticated investors under a share purchase memorandum. Share issued in two stages, on signing of the
memorandum (August 2016) and then on APRA approval to hold more than 15% in the company (February 2017).
Ordinary Shares offered and issued to existing shareholders August 2016,
Ordinary Shares issued to sophisticated investors from capital raising activities undertaken in August 2016.
Ordinary Shares issued to Directors in February 2017 on Exercising Vested Option per the NobleOak Premium Option Plan of December 2013.
Ordinary Shares issued to sophisticated investors from capital raising activities undertaken in March 2018.
62
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018 18 Share capital (cont.)
(b) Share based payment reserve
Opening Balance 1 July 2016
NobleOak Premium Option Plan options Exercised by Directors (ii)
NobleOak Premium Option Plan options granted December 2016 (iii)
NobleOak Premium Option Plan options no longer available for vesting (i)
Balance 30 June 2017
NobleOak Premium Option Plan options no longer available for vesting (iv)
NobleOak Premium Option Plan options no longer available for vesting (i)
Ordinary Share – Long Term Incentive Rights (v)
Balance 30 June 2018
Number of
Options/Rights
$ Value
1,528,668
1,690
(60,000)
200,000
(66,251)
-
-
-
1,602,417
1,690
(185,000)
(90,417)
57,692
-
-
75,000
1,384,692
76,690
Options/rights plan
Number Grant date Expiry date
Exercise price
(1) 2013 Premium Option Plan
699,500
19/12/2013
19/12/2018
(2) 2015 Premium Option Plan (CEO)
542,500
18/03/2015
11/03/2019
(3) 2015 Premium Option Plan (Staff)
50,000
18/03/2015
11/03/2020
(4) 2016 Premium Option Plan
35,000
01/12/2016
01/07/2020
(5) 2017 Performance Rights Plan
57,692
03/11/2017
n/a
0.54
0.75
0.75
1.045
nil
(i)
(ii)
(iii)
(iv)
(v)
Vesting of NobleOak Premium Option Plan entitlements are dependant on long term performance. Of the 1,012,417 (2017: 1,078,668) options
available, 90,417 (2017: 66,251) were forfeited and 922,000 (2017: 754,083) have vested to date. There are Nil (2016: 700,001) options that may
vest in the future dependant on performance.
Options that had vested and were exercised by Directors in February 2017.
Additional issue of options under the NobleOak Premium Option Plan granted in December 2016 with a vesting date of July 2018.
Vesting and the ability to exercise vested option is depended being employed at Noble Oak. 185,000 are not longer available due to terminated employment.
A Long-term incentive plan was established for the executives. The plan is based on the outcome of 3 years results ending 30 June 2020. This
reserve is a provision for the potential shares earned to date based on current year’s results.
19 Lease commitments
Operating leases relate to office space at Level 7, 66 Clarence Street Sydney.
Consolidated
The Company
2018
$
2017
$
2018
$
2017
$
Non-cancellable operating lease payments
Not longer than 1 year
Longer than 1 year and not longer than 5 years
618,596
2,404,000
146,400
618,596
146,400
-
2,404,000
-
63
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited 20 Related party disclosures
(a) Key management personnel remuneration
The Directors of NobleOak Life Limited during the year were:
Mr E A Feyzeny, appointed 24 February 2011
Mr P Sampson, appointed 6 February 2013
Mr K Hamman, appointed 27 January 2011
Mr S J Harrison, appointed 27 January 2011
Mr A R Brown, appointed 31 July 2013
Mr K C Cohen, appointed 24 February 2016, resigned 13 September 2017
Mr M Edwards, appointed 26 October 2016
The compensation of the Directors and Key Personnel is set out below:
Non Executive Directors
Short-term employee benefits
Post-employment benefits
Consolidated
The Company
2018
$
2017
$
2018
$
2017
$
265,360
25,170
317,930
28,385
265,360
25,170
317,930
28,385
290,530
346,315
290,530
346,315
Executive Directors and Key Personnel
Short-term employee benefits
Post-employment benefits
1,501,940
71,707
911,354
43,566
1,501,940
71,707
911,354
43,566
1,573,647
954,920
1,573,647
954,920
1,864,177
1,301,235
1,864,177
1,301,235
64
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018 20 Related party disclosures (cont.)
(b) Shares issued to Directors or Associates of Directors
Details of the shares held by Directors or their Associates are included in the 2018 Directors Report.
The following shares were issued during the year to Directors or Associates of Directors:
There was 1 round of capital raising activities seeking new sophisticated investors during the year, being:
March 2018 Ordinary shares were offered at $1.30 each to sophisticated investors.
All shares issued to Directors were issued on the same terms as all other shareholders in each share issue.
Directors Name
Related Entity holding the Security
(where applicable)
March 2018 Ordinary shares
purchased at $1.30
Mr P Sampson
Sampson Family Holdings Pty Ltd ATF Sampson
Superannuation Fund
Mr A E Feyzeny
Emery and Judy Feyzeny ATF Pluvial
Superannuation Fund
Mr M Edwards
Avant Group Holdings Pty Ltd
Mr A R Brown
Brohok Investment Pty Ltd
100,000
20,000
2,167,190
368,887
(c) Options issued to Directors and Key Personnel
The NobleOak Premium Option Plan was established in December 2013 to align the interests of Employees and
Directors with that of Shareholders as well as providing a greater incentive for involvement in the long terms goals
of the Company. Options issued are exercisable by the Directors and Employees in tranches over a period of three
years based on their continued involvement with the Company. In the case of Anthony Brown the options are also
subject to meeting performance goals. As at the end of June 2018 all option issued have either vested or expired.
(d) Performance Rights Plan
In November 2017, the Board established a Performance Rights Plan as a long term incentive program to align key
management personnel to the performance of the company. This program is based on achieving the business plan at
the end of a 3 year period in terms of sales and earnings beginning with the financial year 2017/2018.
(e) Other transactions with Directors
There has been no other revenue or expense that has arisen from transactions with any of the Directors or their
related entities.
65
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited 21 After balance date events
There has been no matter or circumstance that has arisen since the end of the financial year that has significantly
affected, or may significantly affect, the operations of the Company, or the state of affairs of the Company in future
financial years.
22 Notes to the statement of cash flow
(a) Reconciliation of cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and in banks and cash
in money market accounts, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the financial
year as shown in the cash flow statement is reconciled to the related items in the statement of financial position as
follows:
Consolidated
The Company
2018
$
2017
$
2018
$
2017
$
Cash and cash equivalents (i)
8,191,586
9,699,182
7,333,460
8,609,987
(i) The Consolidated balance includes restricted cash held in the trust account of the subsidiary, as a Trustee of
My Protection Plan of $531,207 (2017: $673,630)
(b) Reconciliation of profit for the year to net cash flows from operating activities
Profit for the year
Depreciation of non-current assets
Amortisation of intangible assets
Loss on Sale or disposal of Investments
Expense related to Share Based Payment
Reserve
Decrease/(increase) in market value of
investments
(Decrease) in policy liabilities
Decrease in assets:
Receivables
Other assets
Increase in liabilities:
Payables
Deferred revenue
Provisions
3,255,890
1,658,165
3,255,550
1,706,475
47,951
303,379
33,050
75,000
40,546
230,168
-
-
47,951
303,379
33,050
75,000
40,546
230,168
-
-
(219,548)
278,242
(219,548)
278,242
(8,895,872)
(6,309,203)
(8,895,872)
(6,309,203)
18,635,966
2,572,295
18,958,240
890,181
976,882
941,159
2,605,104
1,016,007
(21,610,215)
3,208,806
(21,752,058)
3,086,258
(1,500,000)
1,500,000
(1,500,000)
1,500,000
128,021
74,876
128,021
74,876
Net cash from operating activities
(8,856,197)
4,230,777
(8,625,128)
4,228,473
66
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018 23 Financial risk management
The Board of Directors has established an investment policy to ensure that assets are adequately protected and
invested in accordance with the Group’s primary objectives of safety, liquidity and yield. The principal goal of the
investment policy is to maximise investment returns while growing the Group’s asset base without putting at risk
the capital adequacy and solvency obligation requirements stipulated by relevant laws and standards (such as those
imposed by the Australian Prudential Regulation Authority). To assist with the implementation and management of
the investment policy, the Board has established a Finance and Investment Committee (FIC).
The Group’s financial instruments consist mainly of deposits with banks, fixed interest investments, accounts
receivable and payable.
The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the
accounting policies to these financial statements, are set out below in the interest rate risk note at 23(a).
(a)
Interest rate risk
The following table details the Consolidated Group’s exposure to interest rate risk at 30 June 2018 and 2017:
2018
Financial Assets
Cash and cash equivalents
Cash on term deposit
Fixed interest investments
Trade receivables
Financial Liabilities
Trade payables
Weighted
average
effective
rate
Less than 1
year
Between 1
& 5 years
Over 5
years
Total
%
$
$
$
$
1%
8,191,586
2.5% 17,713,384
5.4%
0%
-
3,189,088
29,094,058
0%
8,556,799
8,556,799
-
-
3,041,374
-
8,191,586
17,713,384
3,041,374
3,189,088
3,041,374
32,135,432
-
-
8,556,799
8,556,799
-
-
-
-
-
-
-
67
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited 23 Financial risk management (cont.)
(a)
Interest rate risk (cont.)
2017
Financial Assets
Cash and cash equivalents
Cash on term deposit
Fixed interest investments
Trade receivables
Financial Liabilities
Trade payables
Weighted
average
effective
rate
Less than 1
year
Between 1
& 5 years
Over 5
years
Total
%
$
$
$
$
1%
2.5%
5.4%
9,699,182
13,440,346
-
0%
21,825,054
44,964,582
0%
30,167,014
30,167,014
-
-
-
-
-
-
-
-
-
9,699,182
13,440,346
2,821,829
2,821,829
-
21,825,054
2,821,829
47,786,411
-
-
30,167,014
30,167,014
(b) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing
to discharge an obligation. The carrying amounts of financial assets recorded in the Group’s financial statements
represent the Group’s maximum exposure to credit risk in relation to these assets.
The Group’s investment policy sets out a minimum investment counter party grade (as measured by Standard &
Poor’s) for fixed interest and cash investments of at least BBB or better. The Group’s Risk Appetite Statement sets out
a minimum Financial Strength Rating (as measured by Standard & Poor’s) for reinsurers of at least A or better.
(c)
Fair value of financial instruments
The net fair value of financial assets and liabilities approximates the amounts recorded in the financial statements.
The fair value has been determined in accordance with the accounting policies disclosed in note 1 to the financial
statements.
The fair value for the government bonds are determined using valuation models based on market observable inputs.
These instruments are included in level 2.
(d) Liquidity risk
The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by
continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
The Funeral Fund holds a 30 year zero coupon bond maturing in 2035. As per the Appointed Actuary’s advice, the
bond will have to be realised before maturity, and this will be done at an opportune time over the next ten years.
68
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018 23 Financial risk management (cont.)
(d) Liquidity risk (cont.)
A maturity analysis for the contractual remaining life of financial liabilities has been included in the interest rate risk
note at 23(a).
(e) Sensitivity analysis – Interest rate risk
The Group has performed sensitivity analysis relating to its exposure to interest rate risk at balance date. This
sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in
this risk.
Interest Rate Sensitivity Analysis
At 30 June 2018, the effect on net profit and equity as a result of changes in the interest rate, with all other variables
remaining constant would be as follows:
Change in net profit
-
-
Increase in interest rate by 2%
Decrease in interest rate by 2%
Change in Equity
-
-
Increase in interest rate by 2%
Decrease in interest rate by 2%
2018
$
207,416
(207,416)
207,416
(207,416)
2017
$
226,183
(226,183)
226,183
(226,183)
The above interest rate sensitivity analysis has been performed on the assumption that all other variables remain
unchanged. The Group has no exposure to fluctuations in foreign currency.
(f) Capital risk management
The Group manages its capital requirements by assessing capital levels on a regular basis. Its objectives are to
maintain an optimal capital structure to reduce the cost of capital whilst providing security, returns and benefits to
policyholders and members.
Life companies are subject to externally imposed minimum capital requirements set and monitored by the Australian
Prudential Regulation Authority. These requirements are in place to ensure sufficient solvency margins for the
protection of policyholders and members.
(g) Life insurance risk
Life insurance risk consists of all aspects of the risk arising from the underwriting of insurance risk. The Group ensures
that the insurance risk is controlled through the use of underwriting procedures, appropriate premium rating methods
and approached, effective claims management procedures and sound product terms and conditions due diligence.
The Group purchases reinsurance to limit its exposure to accepted insurance risk. It cedes to specialist reinsurance
companies a proportion of its portfolio for certain types of insurance risk. This serves primarily to reduce the net
liability on large individual risks and provide protection against large losses. The reinsurers used are regulated by the
Australian Prudential Regulation Authority (APRA) and are members of large international groups with sound credit
ratings.
69
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited
24 Information on the Company’s operations
The Company operates primarily in life insurance industry. The Company’s operations are located in New South
Wales and its customers are located in each State and Territory of Australia.
25 Additional information
NobleOak Life Limited is a public company limited by shares, incorporated in Australia. If the Company is wound up,
shareholders will not be required to contribute further equity other than the balance of any partially paid shares.
Principal Place of Business & Registered Office
Level 7, 66 Clarence Street
SYDNEY, NSW 2000
Tel: 1300 041 494
26 Contingent liabilities
The Company has provided a bank guarantee of $384,931 to support the commercial lease on its office premises at
Level 7, 66 Clarence Street, Sydney NSW 2000.
27
Interests in subsidiaries
The subsidiary listed below has share capital consisting solely of ordinary shares, which are held directly by the
Group. The proportion of ownership interests held equals the voting rights held by the Group. The subsidiary’s
principal place of business is also its country of incorporation or registration.
Name of Subsidiary
Principal Place of Business
Ownership Interest Held by the Group
NobleOak Services Limited
Sydney, Australia
2018
%
100%
2017
%
100%
Subsidiary financial statements used in the preparation of these consolidated financial statements have also been
prepared as at the same reporting date as the Group’s financial statements.
70
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018
28 Details of Benefit Funds’ income statements
for the year ended 30 June 2018
Funeral
Benefit
Fund
Risk Fund
No. 1
Reward
Insurance
Benefit
Fund
Freedom
Insurance
Benefit
Fund
PPS Mutual
Benefit Fund
Avant
Benefit
Fund
Blue Chip
Endowment
Assurance
Fund
NEOS
Benefit
Fund
Total Benefit
Funds
$
$
$
S
$
$
$
$
$
Premium revenue
Insurance premium
revenue
Less reinsurance
payment
Net premium
revenue
-
16,904,342
2,557,909
23,312,294
5,872,550
1,400,979
-
(11,362,619)
(1,737,470)
(16,174,668)
(4,119,535)
(718,585)
-
5,541,723
820,439
7,137,626
1,753,015
682,394
-
-
-
57
50,048,131
(40)
(34,112,917)
17
15,935,214
Investment income
252,092
143,285
1,315
5,552
7,978
17,730
2,999
-
430,951
Net commissions from
reinsurers
Other Revenue
Claim expense – net of
reinsurance recoveries
Acquisition costs
Members liability
revaluation
Fees to management
fund
-
(23,961)
480,741
673,898
- 30,556
1,161,234
-
-
-
-
9,886
(1,1117,420)
-
-
-
-
-
-
-
(12,177)
(15,378)
(710,182)
(783,689)
(7,380,793)
(990,607)
(530,359)
-
-
-
-
-
-
-
-
9,886
(1,144,975)
(10,395,630)
(736,929)
(1,543,697)
(268,816)
-
-
-
(467,982)
(99,995)
(764,253)
10,816
(3,246)
(684,207)
-
-
(131)
(2,812)
Other expenses
(3)
(189)
(23,606)
(234,328)
(57,719)
(11,381)
-
(421)
(327,647)
Profit/(loss) before
tax
(116,722)
3,102,850
1,314
5,552
222,199
143,006
56 30,152
3,388,407
Income tax expense
-
(930,855)
(394)
(1,665)
(207,054)
(42,902)
(56)
(9,045)
(1,191,971)
Profit/(loss) after
tax
Unallocated surplus
at 30 June 2017
Transfer to Benefit
Funds
Unallocated surplus
at 30 June 2018
(116,722)
2,171,995
203,010
6,760,648
-
8,800,000
920
234
-
3,887
15,145
100,104
- 21,107
2,196,436
14,550
279,364
23,948
-
-
-
-
-
-
-
7,281,754
8,800,000
86,288
17,732,643
1,154
18,437
294,509
124,052
- 21,107
18,278,190
71
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited 28 Details of Benefit Funds’ income statements
for the year ended 30 June 2017
Funeral
Benefit Fund
Risk Fund
No. 1
Reward
Insurance
Benefit Fund
Freedom
Insurance
Benefit
Fund
PPS Mutual
Benefit
Fund
Avant
Benefit
Fund
Blue Chip
Endowment
Assurance
Fund
NEOS
Benefit
Fund
Total
Benefit
Funds
$
$
$
S
$
$
$
$
$
Premium
revenue
Insurance premium
revenue
Less reinsurance
payment
Net premium
revenue
- 11,375,739
2,258,822
14,257,471
1,490,527
202,714
-
(8,118,954)
(1,475,618)
(9,285,242)
(1,015,937)
(52,483)
-
3,256,785
783,204
4,972,229
474,590
150,231
-
-
-
Investment income
(238,882)
75,265
334
5,933
2,681
6,678
5,329
Net commissions
from reinsurers
Claim expense –
net of reinsurance
recoveries
Acquisition costs
Members liability
revaluation
Fees to
management fund
-
-
-
-
95,366
2,495,856
310,025
-
(565,294)
-
-
(11,151)
(2,645)
(565,843)
(676,374)
(4,434,468)
(215,520)
(117,860)
387,223
-
-
-
(106,851)
(99,995)
(556,360)
(176,550)
(2,807,863)
(6)
-
-
Other expenses
(1)
(120)
(25,646)
(225,755)
(8,916)
(2,191)
Profit before tax
48,345
1,644,433
334
5,932
444,852
34,213
-
-
-
(1,105)
(3,750)
-
474
Income tax
expense
-
(493,330)
(100)
(1,780)
(165,511)
(10,265)
(474)
Profit after tax
48,345
1,151,103
234
4,152
279,341
23,948
Unallocated
surplus at 30
June 2016
Transfer to Benefit
Funds
Unallocated
surplus at 30
June 2017
154,665
1,609,545
-
4,000,000
-
-
10,398
-
23
-
-
-
203,010
6,760,648
234
14,550
279,364
23,948
-
-
-
-
-
29,585,273
-
(19,948,234)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,637,039
(142,662)
2,901,247
(579,090)
(6,010,065)
279,267
(3,644,524)
(262,629)
2,178,583
(671,460)
1,507,123
1,774,631
4,000,000
7,281,754
72
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018 29 Details of Benefit Funds’ balance sheet
as at 30 June 2018
Funeral
Benefit Fund
Risk Fund
No. 1
Reward
Insurance
Benefit Fund
Freedom
Insurance
Benefit Fund
PPS Mutual
Benefit Fund
Avant Benefit
Fund
Blue Chip
Endowment
Assurance
Fund
NEOS Benefit
Fund
Total
Benefit
Funds
$
$
$
S
$
$
$
$
$
Assets
Cash & liquid
assets
Accrued
receivables
Short term
securities
Long term
securities
Gross policy
liabilities
ceded under
reinsurance
10,273
1,457,923
304,649
818,057
1,637,157
551,371
30,908
224,621
5,034,959
3,690
526,919
158,145
354,459
1,513,845
21,853
225
11
2,579,147
1,232,561
4,500,000
51,306
225,050
160,595
512,830
70,416
3,041,374
-
-
-
-
-
-
6,382,878
359,279
3,607,842
4,842,218
449,790
-
-
-
-
6,752,758
3,041,374
(94,009) 15,547,998
Total assets
4,287,898
12,867,720
873,379
5,005,408
8,153,815
1,535,844
101,549
130,623 32,956,236
Liabilities
Creditors and
other liabilities
Gross policy
liabilities
-
6,227,147
501,252
1,278,332
2,414,578
1,164,638
56
109,078 11,695,081
4,201,610
(11,092,070)
370,973
3,708,639
5,444,728
247,154
101,493
438
2,982,965
Total liabilities
4,201,610
(4,864,923)
872,225
4,986,971
7,859,306
1,411,792
101,549
109,516 14,678,046
Net assets
86,288
17,732,643
1,154
18,437
294,509
124,052
Members’
funds
Unallocated
surplus
Total benefit
members’
funds
86,288
17,732,643
1,154
18,437
294,509
124,052
86,288
17,732,643
1,154
18,437
294,509
124,052
-
-
-
21,107 18,278,190
21,107 18,278,190
21,107 18,278,190
73
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited 29 Details of Benefit Funds’ balance sheet
as at 30 June 2017
Funeral
Benefit Fund
Risk Fund
No. 1
Reward
Insurance
Benefit Fund
Freedom
Insurance
Benefit Fund
PPS Mutual
Benefit Fund
Avant Benefit
Fund
Blue Chip
Endowment
Assurance
Fund
NEOS
Benefit
Fund
Total
Benefit
Funds
$
$
$
S
$
$
$
$
$
Assets
Cash & liquid
assets
Accrued
receivables
Short term
securities
Long term
securities
Gross policy
liabilities
ceded under
reinsurance
17,181
1,470,916
391,987
4,129,112
932,209
438,406
32,153
4,568
351,655
408,415
19,782,364
636,768
12,067
649
1,358,889
2,056,781
50,000
219,556
50,794
503,252
168,071
2,821,829
-
-
-
-
-
-
4,947,228
360,427
4,685,788
3,637,352
158,061
-
-
Total assets
4,202,467
8,826,580
1,210,829
28,816,820
5,257,123
1,111,786
200,873
Liabilities
Creditors and
other liabilities
Gross policy
liabilities
Total
liabilities
334
5,137,377
839,212
24,032,162
1,219,391
996,079
474
3,999,123
(3,071,445)
371,383
4,770,108
3,758,368
91,759
200,399
3,999,457
2,065,932
1,210,595
28,802,270
4,977,759
1,087,838
200,873
Net assets
203,010
6,760,648
234
14,550
279,364
23,948
Members’
funds
Unallocated
surplus
Total benefit
members’
funds
203,010
6,760,648
234
14,550
279,364
23,948
203,010
6,760,648
234
14,550
279,364
23,948
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,411,964
21,196,486
4,407,343
2,821,829
13,788,856
49,626,478
32,225,029
10,119,695
42,344,724
7,281,754
7,281,754
7,281,754
74
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018 30 Segment Information
AASB 8 requires disclosure of operating segments that engage in business activities and whose results are regularly
reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess
performance.
The principal operating segments within NobleOak are as follows:
Core
Partnership
Closed Funds
(1) Core Book
The term ‘Core’ reflects the life insurance protection products that are sold directly to customers under the
NobleOak brand. This umbrella group also includes the management fund, whose function is to recognise the
expenses incurred in respect to this proposition as well as any fees from partnership funds.
Products sold under the Core branded Premium Life Direct or My Protection Plan include term life, total and
permanent disability, trauma, income protection and business expenses.
(2) Partnerships
The term ‘Partnerships’ reflects the life insurance protection products which are sold to customers primarily through
advisors under our partners brands. At the current date, NobleOak is the issuer of life insurance policies for PPS
Mutual (established 2016), Avant Mutual (established 2017) and NEOS (established 2018). NobleOak retains a small
level of risk as they are largely reinsured.
(3) Closed Funds
The term ‘Closed Funds’ refers to the legacy book of NobleOak where the funds are closed for new members. The
largest and most recent part of the closed funds is in relation to Freedom Insurance where NobleOak ceased being
the issuer of life and funeral insurance protection products in 2017 (Freedom and Reward Funds). In 2018, NobleOak
reflected $1.5m of settlement fees from Swiss Re in respect to the termination of this arrangement. The remaining
two funds are much smaller components which are held for the Druids members (Blue Chip Endowment Assurance
Fund and Funeral Benefit Fund).
Core
Partnership
Closed Funds
Total
2018
$
2017
$
2018
$
2017
$
2018
$
2017
$
2018
$
2017
$
Total
revenue
Total
expenses
Tax
Profit after
tax
11,289,255
9,136,282
3,165,588
944,205
8,676,803
8,119,369
23,131,646
18,199,856
(7,275,131)
(6,824,916)
(2,770,233)
(465,140)
(8,786,603)
(8,064,284)
(18,831,967)
(15,354,340)
(783,013)
(960,911)
(259,001)
(175,776)
(2,115)
(2,354)
(1,044,129)
(1,139,041)
3,231,111
1,350,455
136,354
303,289
(111,915)
52,731
3,255,550
1,706,475
75
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited 31 Capital Adequacy Requirements
(a) Capital Base
(b) Prescribed capital amount (1)
2018
Capital in excess of prescribed capital amount = (a) - (b)
Capital adequacy multiple (%) (a) / (b)
Capital Base comprises:
Common Equity Tier 1 Capital
Regulatory adjustment applied in calculation of Tier 1 capital
(A) Common Equity Tier 1 Capital
Additional Tier 1 Capital
Regulatory adjustment applied in calculation of Additional Tier 1 capital
(B) Total Additional Tier 1 Capital
Tier 2 Capital
Regulatory adjustment applied in calculation of Tier 2 capital
(C) Total Tier 2 Capital
Total capital base
The Company
17,335,459
4,500,000
12,835,459
385.23%
39,751,811
(22,416,352)
17,335,459
-
-
-
-
-
-
17,335,459
Explanatory Notes:
(1) The minimum level of assets required to be held in each statutory fund, prescribed by the solvency standard
referred to in part 5 of the Life Insurance Act 1995.
(a) Capital Base
(b) Prescribed capital amount (1)
2017
Capital in excess of prescribed capital amount = (a) - (b)
Capital adequacy multiple (%) (a) / (b)
Capital Base comprises:
Common Equity Tier 1 Capital
Regulatory adjustment applied in calculation of Tier 1 capital
(A) Common Equity Tier 1 Capital
Additional Tier 1 Capital
Regulatory adjustment applied in calculation of Additional Tier 1 capital
(B) Total Additional Tier 1 Capital
Tier 2 Capital
Regulatory adjustment applied in calculation of Tier 2 capital
(C) Total Tier 2 Capital
Total capital base
The Company
11,206,666
2,500,000
636,681
125.47%
12,056,826
(8,920,145)
3,136,681
-
-
-
-
-
-
11,206,666
Explanatory Notes:
(1)
The minimum level of assets required to be held in each statutory fund, prescribed by the solvency standard
referred to in part 5 of the Life Insurance Act 1995.
76
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018
32 Capital Adequacy Requirements of Benefit Funds
2018
Risk Fund
No. 1
Freedom
Insurance
Benefit
Fund
Reward
Insurance
Benefit
Fund
PPS
Mutual
Benefit
Fund
Avant
Benefit
Fund
Blue Chip
Endowment
Assurance
Fund
NEOS
Benefit
Fund
Funeral
Benefit
Fund
Total
Benefit
Funds
Management
Fund
(a) Capital Base
1,462,180
268,495
51,284
344,763
632,424
(b) Prescribed capital
amount
Capital in excess of
prescribed capital amount
= (a) - (b)
Capital adequacy multiple
(%) = (a) / (b)
Capital Base comprises:
Net Assets (including
Seed Capital)
Regulatory adjustment
applied in calculation of
Tier 1 capital
(A) Net assets after applying
any regulatory adjustments
135,046
59,512
8,635
-
10,796
1,327,134
208,983
42,650
344,763
621,628
1083%
451%
594%
5858%
20,497,643
268,438
51,154
344,509
874,052
19,035,463
(58)
(130)
(254) 241,628
1,462,180
268,495
51,284
344,763
632,424
Tier 2 Capital
Regulatory adjustment
applied in calculation of
Tier 2 capital
(B) Total Tier 2 Capital
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total capital base
1,462,180
268,495
51,284
344,763
632,424
Prescribed capital amount
comprises:
(C) Insurance Risk Charge
-
-
-
(D) Asset Risk Charge
135,046
59,512
8,635
(E) Asset Concentration
Risk Charge
(F) Operational Risk
Charge
(G) Aggregation benefit
(H) Combined scenario
adjustment
(I) APRA approved
transition amount under
capital adequacy standards
Prescribed capital amount
= (C) + (D) + (E) + (F) -
(G) + (H) + (I)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
135,046
59,512
8,635
-
-
-
-
-
-
-
-
-
10,796
-
-
-
-
-
10,796
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
215,550
88,975 3,063,672 14,271,787
950
-
214,937
1,883,511
214,601
88,975
2,848,734 12,388,277
22701%
1425%
758%
121,106
86,288 22,243,190 21,473,621
(94,444)
(2,687) 19,179,518
7,201,834
215,550
88,975
3,063,672 14,271,787
-
-
-
-
-
-
-
-
-
-
-
-
215,550
88,975
3,063,672 14,271,787
-
-
-
-
-
-
-
-
-
-
214,937
153,197
-
-
-
-
-
-
1,730,314
-
-
-
214,937
1,883,511
-
950
-
-
-
-
-
950
77
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited
32 Capital Adequacy Requirements of Benefit Funds (cont.)
2017
Risk Fund
No. 1
Freedom
Insurance
Benefit
Fund
Reward
Insurance
Benefit
Fund
PPS
Mutual
Benefit
Fund
Avant
Benefit
Fund
Blue Chip
Endowment
Assurance
Fund
NEOS
Benefit
Fund
Funeral
Benefit
Fund
Total
Benefit
Funds
Management
Fund
(a) Capital Base
788,167
264,623
50,365
329,388
695,047
(b) Prescribed capital
amount
Capital in excess of
prescribed capital amount
= (a) - (b)
Capital adequacy
multiple (%) = (a) / (b)
Capital Base comprises:
Net Assets (including Seed
Capital)
Regulatory adjustment
applied in calculation of
Tier 1 capital
(A) Net assets after applying
any regulatory adjustments
111,430
77,306
9,365
138,121
224,563
676,737
187,317
41,000
191,267
470,484
707%
342%
538%
238%
310%
9,525,648
264,552
50,234
329,365
773,949
8,737,481
(71)
(131)
(23)
78,902
788,167
264,623
50,365
329,388
695,047
Tier 2 Capital
Regulatory adjustment
applied in calculation of
Tier 2 capital
(B) Total Tier 2 Capital
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total capital base
788,167
264,623
50,365
329,388
695,047
Prescribed capital amount
comprises:
(C) Insurance Risk Charge
-
-
-
22,583
122,913
(D) Asset Risk Charge
111,430
77,306
9,365
(E) Asset Concentration
Risk Charge
(F) Operational Risk
Charge
(G) Aggregation benefit
(H) Combined scenario
adjustment
(I) APRA approved
transition amount under
capital adequacy standards
Prescribed capital amount
= (C) + (D) + (E) + (F) -
(G) + (H) + (I)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,974
-
5,392
115,538
100,068
-
111,430
77,306
9,365
138,121
224,563
78
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
205,511 2,333,101
8,873,563
-
560,785
1,388,321
205,511
1,772,317
7,485,243
416%
639%
203,011 11,146,758 17,661,448
(2,500) 8,813,657
8,787,885
205,511
2,333,101
8,873,563
-
-
-
-
-
-
-
-
-
205,511
2,333,101
8,873,563
-
-
-
-
-
-
-
145,496
-
205,075
134,517
-
-
-
1,253,804
5,392
215,605
-
-
-
-
-
560,785
1,388,321
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018
33 Summary of Significant Actuarial Methods and Assumption
The effective date of the actuarial report on policy liabilities and solvency reserves calculation is 30 June 2018.
The actuarial report was prepared by Ms. B. Cummings BEc (Hons) FIAA. The actuarial report indicates that
Ms B Cummings is satisfied as to the accuracy of the data upon which policy liabilities have been determined.
Valuation of Policy Liabilities
Policy liabilities for life insurance business have been determined in accordance with Life Prudential Standard 340
issued by the Australian Prudential Regulation Authority. The standard requires that the policyholder liabilities be
calculated on the basis of best estimate assumptions and in a way that allows for the systematic release of planned
margins as services are provided to policyholders or premiums are received.
The policy liabilities for Risk Fund No. 1, the PPS Mutual Benefit Fund, the Avant Benefit Fund, the Neos Benefit
Fund, the Freedom Fund and the Reward Fund have been calculated using an accumulation method. Under this
method the policy liability is equal to the policies’ Termination Value.
The Termination Value has been calculated as the sum of the amount of unearned premium and the value of
incurred claim liabilities not recognised elsewhere within the Balance Sheet. No explicit actuarial assumptions are
required for the accumulation method except to estimate a provision for incurred but not reported claims and
outstanding claim payments for Group Salary Continuance. The use of the accumulation method will result in profits
emerging in proportion to premiums.
The policy liabilities for the Blue Chip Endowment Bond Fund have been calculated using the accumulation method.
The policy liabilities are equal to the contributions made by members, net of contribution fees, together with
bonus additions to date and uncredited surplus. The current bonus declaration simply results in a movement from
unvested policyholder benefit liabilities to vested policy liability subject to the amount vesting being no more than the
distributable portion of unvested policyholder benefit liabilities.
The policy liability for the Funeral Fund has been calculated using the projection method. The projection method
uses expected cash flows (premium, investment income, redemptions or benefit payments and expenses) to establish
the value of policy liability. The value of expected future premiums is deducted from the value of expected future
benefit and expense payments to arrive at the net obligation to policy owners.
Disclosure of Assumptions
Required Assumption
Basis of Assumption
Assumption Adopted
Discount rate
– Funeral Fund
Mortality
– Funeral Fund
Yield on Australian Government bonds at the
expected duration of policy liability
3.28%
ALT2010-2012 table adjusted for Funeral Fund
experience
65% of ALT2010-2012
Management Fees
– Risk Fund No. 1
(% of gross premium)
Based on expenses apportioned to Risk Fund, subject
to the Benefit Fund rule that the prudential reserving
requirement of Benefit Fund can be met
3.5%
Management Fees
– other Benefit Funds (%
of net assets)
Based on same dollar management fee charged to
Benefit Fund each year, subject to maximum fee
permissible
Funeral Fund: 3.0%
79
Notes to the Financial StatementsFor the year ended 30 June 2018NobleOak Life Limited 33 Summary of Significant Actuarial Methods and Assumption (cont.)
Sensitivities
NobleOak conducts sensitivity analyses to quantify the exposure to risk of changes in the key underlying variables.
Interest rates sensitivities are discussed in note 23e. The valuations included in the reported results and best estimate
of future performance are calculated using certain assumptions about these variables. The movement in any key
variable may impact the reported results. The table below illustrates how outcomes during the financial year ended
30 June 2018 in respected of the key variables would have impacted on the net profit and shareholders equity.
Gross of
Reinsurance
$
Net of
Reinsurance
$
(957,018)
957,018
(957,018)
957,018
(47,915)
47,915
(47,915)
47,915
Gross of
Reinsurance
$
Net of
Reinsurance
$
(416,766)
416,766
(416,766)
416,766
(416,766)
416,766
(416,766)
416,766
Gross of
Reinsurance
$
Net of
Reinsurance
$
(35,380)
35,380
(35,380)
35,380
(35,380)
35,380
(35,380)
35,380
Change in net profit
-
Increase in claims reserves by 10%
- Decrease in claims reserves by 10%
Change in Equity
-
Increase in claims reserves by 10%
- Decrease in claims reserves by 10%
Change in net profit
-
Increase in maintenance expenses by 10%
- Decrease in maintenance expenses by 10%
Change in Equity
-
Increase in maintenance expenses by 10%
- Decrease in maintenance expenses by 10%
Change in net profit
-
Increase in lapse rate by 10%
- Decrease in lapse rate by 10%
Change in Equity
-
Increase in lapse rate by 10%
- Decrease in lapse rate by 10%
80
Notes to the Financial StatementsFor the year ended 30 June 2018Annual Report 2018 NobleOak Life Limited
ABN 85 087 648 708
AFSL No 247302
Telephone: 1300 041 494
Email enquiries: sales@nobleoak.com.au
Website: www.nobleoak.com.au
Head office address:
Level 7, 66 Clarence Street,
Sydney NSW 2000
GPO Box 4793, Sydney NSW 2001