Annual Report
2017
Praemium Limited
ACN: 098 405 826
1
Praemium Annual Report 2017 Contents
OUR BUSINESS
CHAIRMAN’S REPORT
CEO’S REPORT
THE INTEGRATED SUITE
IMPORTANT MILESTONES
Review of operations
DIRECTORS’ REPORT
The year ahead
Key facts & figures
Overview of 2017 financial position
Praemium’s Board of Directors
Disclosures relating to Directors & Senior Management
Remuneration Report
Praemium FY2017 Corporate Governance Statement
Financial Report
Consolidated Statement of Profit & Loss
and Other Comprehensive Income
Statement of Financial Position
Statement of changes in equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Auditor’s Independence Declaration
Independent Audit Report
Additional disclosures required or recommended by
the listing rules & Corporations Act
CORPORATE INFORMATION
NOTES
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Praemium Annual Report 2017
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OUR BUSINESS
Praemium Limited is a leading provider of portfolio administration, investment
platforms and financial planning tools to the wealth management industry.
Our clients are predominantly firms that provide financial advice to investors, namely financial
advisers, brokers, accountants, investment managers, banks and other financial providers such as
superannuation administrators.
Founded in 2001 and listed on the ASX in 2006, the business is operated in Australia from our
head office in Melbourne and internationally with offices in London, Jersey, Hong Kong, Shenzhen,
Coventry, Yerevan and Dubai.
Praemium supports over 700 corporate firms, from small businesses up to large institutional clients.
We manage or administer over 300,000 investor accounts covering over $100 billion in funds
globally.
Wealth professionals are continually seeking to improve productivity to address lower margins
driven by regulatory change and consumer demand. Praemium helps with this journey by
providing leading-edge technology to automate many routine, time-consuming activities
coupled with innovative scalable investment solutions and industry-leading reporting.
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Praemium Annual Report 2017 CHAIRMAN’S REPORT
Dear Praemium Shareholder,
I am delighted to be reporting to you as your new
Chairman, along with my new fellow Directors Stuart
Robertson and Daniel Lipshut. I am also pleased that
the new Board was able to re-appoint the Company’s
high performing CEO Michael Ohanessian back into the
role. I will not dwell on the circumstances that gave rise
to Michael’s dismissal and subsequent re-appointment
under the newly appointed Board, which I understand
may be unprecedented in Australian corporate history.
Suffice it to say that, despite the upheaval of the past year,
financial performance has continued to show significant
improvement and to validate the strategies previously put
in place by Michael and his team, as highlighted in the
following summary for the year ended 30 June 2017:
Barry Lewin
Chairman
FINANCIAL RESULTS
Revenue & other income
Earnings before interest, tax and
depreciation (underlying EBITDA)
Cash balances
Staff levels
SMA FUM
Australia
International
Total
A$m
Change on
FY16
35.4
+17%
6.3
9.0
215
$b
3.9
2.2
6.1
+54%
-14%
+13%
+29%
+27%
+28%
The Company’s key financial metrics of funds under
administration, revenue and EBITDA all improved this year.
The reduction in the cash balance year on year was due
to the acquisition of Wensley Mackay, the catch-up in
Australian company tax, and from the campaign undertaken
by the previous Board for May’s shareholder meeting.
Board introduction
The appointment of the new Board by shareholders during
the year brings a fresh perspective to the Company. I am
pleased with the mix of skills and experience, with Directors
bringing broad-based experience across financial services,
technology, corporate & executive leadership, strategy,
business advisory and corporate governance.
By way of introduction, Daniel Lipshut spent 5 years as a
Director of listed services company BSA Limited, where he
chaired the Governance Committee and served for 3 years
as joint managing director. He is an experienced sales and
marketing professional and sits on the advisory boards of a
number of emerging high tech ventures.
4
Praemium Annual Report 2017 “Praemium is a profitable, cashflow positive and growing
business built on a sound platform.”
Stuart Robertson is engaged by Ellerston Capital, where
he is responsible for deal origination, structuring and
execution primarily in the unlisted market. He gained
broad experience in both Australia and the UK in the funds
management and capital markets industry, holding senior
roles at BT Funds Management, Zurich Australia and KBC
Financial Products, including responsibility for the operation
of their platform offerings. Stuart has several non-executive
director appointments in the financial services sector.
I myself have had significant experience as a financial and
strategic advisor to public and private companies over many
years. I am the founder of SLM Corporate, a mid-market
corporate advisory firm, and I have also served as a Director
of both public and private companies. From 1994 to 1999,
I was General Counsel and Company Secretary of the
international resources company North Limited.
The Board is also seeking to strengthen its skills and to add
further diversity. I look forward to updating shareholders on
this in due course.
Industry and Company growth opportunity
The industry growth opportunity is very exciting. Australian
and international platform markets continue to transform.
Increasing regulation, firstly in Australia and the UK and
now across Europe and offshore markets, is driving financial
advisers to seek new revenue sources and evolve into
wealth managers. Customer demands for transparency
are resulting in more platforms offering professional
investment management, beneficial ownership of assets
and tax advantages. Global markets are seeing expanding
retirement savings, with mandated superannuation and
pension contributions likely to sustain long-term industry
growth. New entrants, particularly in Australia with the
emergence of independent financial adviser networks,
are driving a considerable shift away from institutional
platforms, with technology disrupting incumbent business
models.
These market forces are generating significant opportunities
for Praemium, with the Company’s strategic focus to
provide fully integrated and value-enhancing solutions to
financial advice businesses. In particular, with Praemium’s
SMA technology allowing businesses to drive substantial
efficiencies at scale, the Company is well placed to
accelerate its momentum as the financial services markets
continue to evolve.
Conclusion
Your new Board is committed to an unrelenting focus on the
following key objectives:
Continued growth in shareholder value;
Preserving the cost-conscious culture inherent in the
business;
Retaining an absolute focus on executing the
international growth strategies; and
Ensuring that Praemium retains its status as an industry
leader through its market-leading products and
outstanding people.
Praemium is a profitable, cashflow positive and growing
business built on a sound platform. As a new Board, we
have been particularly impressed by Praemium’s dedicated,
experienced and focused management team, the sound
strategies underpinning the business, and the significant
growth opportunities ahead of it.
I fully believe that shareholders who have shown support
to the Company over the past few years, including during
the challenging year now behind us, will benefit from their
investment in the Company in the years ahead.
On behalf of the Board, I extend sincere thanks to our staff
and management for delivering an outstanding financial
result during a difficult and uncertain year. The Directors
and I look forward to meeting as many shareholders as
possible at our Annual General Meeting later this year.
Barry Lewin
Chairman
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Praemium Annual Report 2017
CEO’S REPORT
Michael
Ohanessian
CEO
Dear Praemium Shareholder,
There is no denying that this year has been one of the most
dramatic in Praemium’s history! I would like to express my
sincere gratitude to our shareholders, who in May voted
their confidence in Praemium’s strategy by bringing about
Board renewal. I would also like to thank our clients, whose
continued support kept our business growing strongly and
enabled us to post record inflows and FUA for the year. And
most of all I thank our staff, whose dedication and hard work
kept the Company on course during a time of disruption and
uncertainty. I was gratified that the business continued to thrive
throughout, a testament to our people and the strength of our
vision.
I also want to welcome our new Directors, each of whom brings
unique and valuable skills to Praemium.
Now for the results. I am pleased to say that we have again
delivered solid financial performance in both our Australian and
International businesses. Our track record of strong year-on-
year growth has continued uninterrupted for the past 5 years.
Some key financial highlights:
FUA surpassed $6 billion
Asset inflows increased 24% to $1.9 billion
Achieved over $200 million of inflows into Smartfund 80%
Protected in its second year
Revenue up 17% to $35.4 million
Underlying EBITDA up 54% to $6.3 million.
Our strategic accomplishments:
Entered the UK pension market by acquiring a SIPP
business (Self-Invested Personal Pension)
Subsequently launched a Praemium SIPP on the
International platform
Launched an IMA (Individually Managed Account) service in
the UK
Successfully transitioned a major institution’s clients to the
Praemium Portfolio service
Piloted a full SMSF portfolio service for SMA clients.
Our strategic focus on managed accounts (both SMA and
IMA) is bearing fruit as financial advisers adapt to evolving
investor and business requirements. Clients who have adopted
our SMA platform are seeing greater productivity (and hence
profitability) and are delivering a better and more cost-effective
investor experience.
Our ability to deliver best-in-breed managed accounts platform
technology in Australia, the UK and to the international ex-pat
market places us in a unique and strong competitive position, a
position we intend to build upon.
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Praemium Annual Report 2017 “FY2017 has been a great year in terms of our financial
performance, new sales and new product development.”
Australia
In Australia we continued to invest in sales, marketing
and implementation resources to accelerate new business
on-boarding for the SMA platform. This has resulted in strong
growth momentum, with record inflows this year of $1.3 billion.
FUA was up 29% to $3.9 billion, with a 41% increase in the
number of SMA investor accounts to almost 13,000.
The Australian market is seeing a dramatic increase in SMA
adoption, a trend we have long believed was inevitable. Many
new suppliers have entered the space and so to ensure we
stay at the forefront, we have continued to enhance our SMA
platform with several key initiatives:
Added a further 71 model portfolios
Introduced 5 new investment managers
Developed a complete digital solution for Praemium’s robo-
advice clients
Enhanced the blended model portfolio capabilities with
targeted cash flows
Launched a new digital account opening portal
Progressed the development of an international SMA
service for launch in FY2018.
Praemium’s innovative retail superannuation solution,
SuperSMA, continues to grow strongly. It is up 127% to $657
million and now comprises 17% of total platform FUA, due
in no small part to its unrivalled menu of over 300 model
portfolios.
FY2017 saw continued investment in Praemium Portfolio
(formerly V-Wrap) to ensure we retain leadership in the
portfolio reporting market. This year we:
solution offered in partnership with PortfolioMetrix since its
launch in October 2016. Advisers are attracted by the ability
to tailor a unique managed account solution based on very
specific investor preferences. Praemium’s highly scalable
platform technology is ideally suited for this application given
its leading capabilities in portfolio rebalancing and reporting.
Our CRM and financial planning suite is also making strong
strides, with a new online fact find facility and several new key
reports. We are seeing increasing take-up in the international
market and expect this trend to continue as we add further
important functionality.
Smart Investment Management (Smartim)
Our in-house investment management team, Smartim, has
achieved high growth this year. FUA is up 62% to £407 million
and investment performance has been excellent.
We are particularly pleased with the performance of the
Smartfund 80% Protected Fund, which protects 80% of fund
value daily – a high water mark strategy. The Growth fund is up
20% since launch in September 2015, so anyone who invested
on day one is now at 120% of their original investment and
hence is protected to 96% of the original investment amount
(120% x 80% = 96%). Should we experience a big fall in markets
today, those initial investors will see their investment drop by
no more than 4% no matter how low the markets fall*. It is
this ability to invest in higher risk, higher growth asset classes
without the attendant risk that makes Smartfund 80% Protected
highly appealing in this low-yield environment.
In addition to stellar investment performance, our team has
been recognised by their peers this year, having been invited
to be Category Judges for the prestigious Investment Week
UK Fund Manager of the Year Awards. This is a great honour
and we are exceedingly proud of what they have accomplished
since they began operating in 2014.
Increased our menu to 31 standard reports with over 150
Summary
customisation options
Automated periodic reporting, with the ability to deliver
reports directly to the client’s Investor Portal
Improved the efficiency of daily reconciliations through a
new sophisticated transaction matching facility
Developed a new tool for uploading of large data sets with
improved mismatch management.
International
It has been a record year for the International business as well.
Platform FUA was up 43% to £1.3 billion with record annual
inflows of £383 million.
We also filled an important strategic gap in our international
strategy. The International platform has always offered 2 of
the 3 key account types, the General Investment Account
(GIA) and Individual Savings Account (ISA), but was missing
the third key account type, the Self-Invested Personal Pension
(SIPP). This year we acquired UK SIPP provider Wensley Mackay
and launched the Praemium Retirement Account. We will be
looking to grow our platform SIPP in the coming year.
The International platform has seen strong uptake of the IMA
Praemium’s greatest asset is its highly professional, talented
and dedicated employees. They have worked hard to maintain
our high levels of service and the quality of our investment
offerings, and continued to improve on the core technical
advantages that help deliver excellence in reporting and
portfolio management.
Our strong and supportive client base and diverse revenue
stream (in both product and geographic terms) is a great
strength of our business. The Australian business is growing
and profitable. The international business is also growing
strongly and continues to improve its financials year on year.
I again thank our shareholders for your support as we work to
realise the tremendous potential of our global business.
Michael Ohanessian
Michael Ohanessian
CEO
*subject to counterparty risk.
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Praemium Annual Report 2017
THE INTEGRATED SUITE
PORTFOLIO ADMINISTRATION &
REPORTING
FINANCIAL PLANNING &
CRM
Praemium Portfolio (formerly V-Wrap) has at its
core a powerful portfolio reconstruction engine
with a vast database of historic corporate actions
across all ASX-listed equities and over 2,000
international equities. This engine also enables
Praemium Portfolio to accurately and seamlessly
update investor accounts with even the most
complex of corporate actions, particularly stapled
securities, and accurately handles post-corporate
action events (such as an ATO ruling) that require
backdating. This functionality and the ability to
automatically maximise or minimise capital gains
and perform “what-if” scenarios give clients
confidence when preparing CGT and tax reports.
Praemium Portfolio provides accountant-strength
reporting capabilities across a wide range of
reports and for any date or range of dates. Report
packs can be customised and stylised to match a
business’s brand.
Praemium Portfolio powers the administration of
equities in portfolios for a number of important
institutional clients in Australia, provides tax tools
for ANZ Share Investing (formerly E*TRADE), and
provides a CGT reporting tool for a major UK
platform operator.
Praemium Portfolio now also includes functionality
to provide SMSF monitoring and processing to
support the day-to-day activity for compliance
and reporting requirements. Praemium Portfolio,
with SMSF inside, is a leading-edge solution for
financial advisers.
Serving our international market, WealthCraft
supports the entire advice process in a single web-
based system, giving financial professionals the
efficiency and scalability to develop and expand
their wealth management business,
improve
client service levels and remain compliant. Built
on cloud-based Microsoft Dynamics CRM and
Office 365, its key modules include CRM, fact find,
financial planning administration, commissions
management, investment research, and portfolio
management with automated valuation updates
using secure data feeds from a broad range of
third-party data providers.
In the UK, Plum Software is an established software
business serving financial planners with front-end
client management and back-office systems. Plum
Software has an extensive range of UK-based
third-party data feeds and interfaces as well as
a robust back-office system with fund valuation,
remuneration
compliance
computations,
monitoring and reporting.
WealthCraft and Plum Software financial planning
tools are naturally client-centric, creating a
compelling proposition that inherently mirrors
wealth managers’ business processes. Client
communications integrate with the client’s record,
which in its turn holds all prior communications, risk
assessments, previous statements of advice as well
as live portfolio valuations. Advisers can seamlessly
manage their client, practice and campaign data
and meet regulatory compliance requirements.
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Praemium Annual Report 2017 4
“Praemium’s comprehensive and integrated
suite gives advisers the flexibility to create
their ideal business”
INVESTMENT PLATFORM
Built around Praemium Portfolio’s unique CGT
reconstruction engine, Praemium’s SMA
is a
modern investment platform solution providing a
scalable proposition for wealth professionals. The
SMA platform is the next generation technology
to the traditional “wrap” service provided by many
platforms.
SMAs provide clients with professionally managed
portfolios that are aligned to an investment
strategy, or “model portfolio”. Praemium’s SMA
allows a model manager
to simultaneously
implement investment changes across a number
of client accounts, thus reducing administrative
burden as well as ensuring that all investor accounts
are automatically in line with the model manager’s
thinking.
Praemium’s SMA offsets buy and sell transactions
and then aggregates the trades. The resulting low
transaction costs are highly competitive compared
to industry brokerage rates.
The Praemium SMA is the market leader in the
Australian SMA market and is available in both retail
super (SuperSMA) and non-super. After more than
10 years of operation, it has earned a reputation for
reliability, scalability and high performance.
core proprietary SMA
Internationally, our
technology enables financial advisers to select
third-party
investment models provided by
in-
investment managers or by Praemium’s
house investment management solution, Smart
Investment Management (Smartim). Praemium’s
dynamic modelling capability ensures all client
portfolios are automatically rebalanced to remain
in sync with the investment strategy.
Why SMA is the future
LOWER COST
The investor doesn’t have to pay
the administration costs of a
managed fund if they invest in an
equivalent equities model portfolio.
TAILORED STRATEGIES
By investing in a model portfolio,
advisers can craft
investment
strategies with an asset allocation
that matches the risk profile and
financial objectives of the investor.
VIEWABLE TRANSACTIONS
Investors can view the complete
transaction history of all stock trades
as the model portfolio changes or
as money is invested or withdrawn.
EASY TO SWITCH
As
investor needs or market
conditions change, advisers can easily
switch from one model portfolio
to another online. The switch is
typically executed the next day.
VISIBLE HOLDINGS
The investor has complete visibility on
the underlying stocks (unlike the rather
opaque view for managed funds).
BENEFICIAL OWNERSHIP
beneficial
has
The
investor
ownership of
the underlying
assets, not just units in a fund.
TAX EFFECTIVE
Investors have more control over
the realisation of capital gains.
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Praemium Annual Report 2017 4
IMPORTANT MILESTONES
17%
INCREASE IN
REVENUE
28%
INCREASE IN
FUNDS UNDER
ADMINISTRATION
$1.9BN
RECORD
ANNUAL
INFLOWS
$689M
MANAGED BY
Smartim
71 NEW
MODEL
PORTFOLIOS
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Praemium Annual Report 2017 4
54%
INCREASE
IN UNDERLYING EBITDA
FUNDS ON PLATFORM
REACHED
$6.1
BILLION
FUA, platform & funds
($m)
6,500
Aust
Int
3,250
-
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2014
2015
2016
2017
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Praemium Annual Report 2017 DIRECTORS’ REPORT
Review of operations
Portfolio Administration (Praemium
Portfolio)
The focus for Praemium Portfolio (formerly V-Wrap) this
year has been on improving scalability for clients that
administer very large numbers of portfolios, which had a
flow-on benefit to clients of all sizes. Close engagement
with our user base has been the key to getting this right –
our investment in enhancements has converted to both user
satisfaction and growing portfolio numbers.
Major enhancements:
Upload centre – an important new bulk data
management framework enables high-volume updates
across the entire system. Clients can now load new
portfolios onto Praemium much faster, can manage
exceptions in bulk, and can deliver accurate data to
advisers sooner. The uptake was immediate, with
positive feedback being received within five minutes
of the software update notification. The upload centre
framework has also been leveraged for more rapid
implementation of automated data feeds from third-
party providers (e.g. banks and brokers).
Core system changes in response to major regulatory
changes – Praemium, as with the entire industry, faced
challenges following superannuation reforms and a new
tax reporting regime for managed investment trusts.
We made necessary changes to our reconstruction
technology and tax reports and used this opportunity to
update some of the older areas of our code base. These
changes have resulted in significant system efficiency
gains, both for our clients and Praemium internally.
Report publisher – this new feature was a joint effort
between our Melbourne and Yerevan teams and
provides another edge over competitors when it comes
to our reporting capability. Our client base requires the
ability to deliver customised reports on a large scale
and in a timely manner. Report publisher provides
an end-to-end process entirely managed from within
the platform, from report design and creation, quality
assurance, tracking and finally distribution to the end
investor. Importantly, end-of-period reports (e.g.
quarterly statements) can be delivered directly to clients
via the Investor Portal. We expect this to be a significant
time and cost saving for administrators, with the added
benefit of increased engagement with Investor Portal.
CRM and Financial Planning
In FY2017 financial advisers are preparing for upcoming
regulatory changes in the European and Middle East
markets similar to Retail Distribution Review (RDR) in the
UK and Future of Financial Advice (FoFA) in Australia. This
means advice businesses will soon require a software CRM/
back-office solution to fulfil their compliance requirements.
Regulatory changes and WealthCraft’s integration with
third-party providers as well as the Praemium platform
has translated into a healthy pipeline for the coming year.
Praemium has been actively building our implementation
and transition teams to maximise this opportunity.
In the UK, Plum’s FY2017 consolidated its work on client
engagement, training, and targeted enhancements. The
team created sophisticated e-learning tools and conducted
regular user groups and webinars to help new clients
successfully onboard the software, to keep old clients
engaged and enthusiastic, and to ensure that product
enhancements were of maximum benefit to clients.
SMA Platform
Praemium’s SMA platform has set new records this year
across both the Australian and International platforms. The
Australian SMA grew strongly through the year, with record
inflows of $1.3 billion. FUA was up 29% to $3.9 billion, with
a 41% increase in the number of SMA investor accounts to
almost 13,000. We continue to attract new model managers,
adding 5 new managers and a further 71 model portfolios.
Our retail superannuation solution, SuperSMA, is up 127%
to $657 million, now comprising 17% of total platform
FUA. SuperSMA now offers over 300 model portfolios.
The international SMA also had record inflows this year of
£383 million, taking international FUA to £1.3 billion, a 43%
improvement over last year, and the addition of the IMA is
expected to contribute significantly to platform growth.
Smart Investment Management (Smartim)
Praemium’s London-based in-house investment
management team Smartim has had another strong year of
performance and FUM growth.
According to the Smartim team, “The period to 30 June
2017 was dominated by political uncertainty. In the UK,
The Conservative Party called a snap General Election;
however, the subsequent lacklustre campaign failed to
capture the imagination of voters and resulted in a minority
Government which led to uncertainty regarding the potential
‘hard’ or ‘soft’ Brexit. Elsewhere, Donald Trump won the US
Presidential Election, Emmanuel Macron survived a strong
challenge from the far right to win the French general and
Turkey witnessed a failed coup. To add to this, both Brazil
and South Korea impeached their presidents and North Korea
carried our further nuclear missile tests. Volatility increased
around these events but as political risk subdued markets
continued to reach new highs.
12
Praemium Annual Report 2017 Despite, these uncertainties, global markets rallied and in
many cases, reached new highs. Investors shrugged off
worries about political uncertainty and flashpoints such
as North Korea, and instead focused on fundamentals
like company earnings and employment numbers. Over
the period, we traded around these events but remained
underweight UK equities as uncertainty over Brexit
negotiations continued. We reduced our exposure to Europe
due to political uncertainty and increased North American,
Asian and Emerging Markets equities. We remained broadly
neutral within equities as a whole but maintained our
underweight to fixed income and overweight to cash.”
In summary, Smartim navigated through a period of extreme
uncertainty by taking sensible, risk-adjusted positions which
added solid value to the portfolios.
The Smartim team delivered strong returns during FY2017
when compared to their peers. The following table
compares the performance of Smartim model portfolios
relative to that delivered by 332 multi-asset funds across
similar asset mix categories. The team continue to deliver
good strong risk adjusted returns navigating sensible
through these uncertain market conditions. It is this
effective stewardship of client wealth that is helping drive
the Smartim proposition forward.
PERFORMANCE OF MULTI-ASSET STRATEGIES
1 JULY 2016 TO 30 JUNE 2017
Smartim model portfolios
IA average multi-asset
funds
Cautious Balanced Growth
11.80%
7.94%
16.22%
22.36%
16.53% 18.10%
Smartim ranking
top 2% top 52% top 13%
Smartfund 80% Protected
- Balanced GBP
Smartfund 80% Protected
- Growth GBP
9.10%
14.30%
*IA: The Investment Association UK Source: Lippe
Example performance of SmartFund 80% Protected
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Praemium Annual Report 2017
The year ahead
Significant market forces are driving disruption
and opportunity across global wealth
management markets.
These include mandated growth from compulsory
superannuation and pension contributions, financial
advisers facing increasing regulation, and importantly for
Praemium, technology disruption as financial advisers seek
improved efficiency to increase their productivity and firm
profitability.
Following a record year for platform inflows in FY2017,
the new year has started strongly both in Australia and
internationally. With an expanding client base from a
strong global pipeline and enhanced product range, we
believe that Praemium as the SMA leader with the best
reporting and rebalancing capability is ideally placed, and,
based on the pipeline of new business, we expect our SMA
to accelerate.
In Australia, Praemium’s innovative retail superannuation
solution, SuperSMA, has continued to grow strongly with
FUA increasing to 17% of total platform FUA by June 2017.
We expect this trend to continue as advisers manage a
growing book of retail superannuation funds. A key focus
in the year to come is to provide the ability for international
equities to be traded via our SMA platform.
Given a long track record of managing corporate actions
for thousands of offshore equities, investors will retain
all the benefits from Praemium’s extensive reporting
capabilities. Further, their international investments will be
included in their Investor Portal platform for a complete
picture of their financial position.
Internationally, the launch of the Praemium Retirement
Account, based on the Wensley Mackay SIPP, will enhance
the platform proposition.
Praemium’s in-house investment management solution,
Smart Investment Management (Smartim), continues to see
healthy growth and a solid pipeline of new business. We
expect uptake to continue given the investment returns
achieved over the last 18 months, where Smartim has
exceeded the performance of many of its better- known
rivals. Following the success of Smartfund 80% Protected
in the UK and internationally, Praemium will be launching
an Australian dollar version for the Australian market in the
year ahead.
Praemium’s investment in technology will continue in
FY2018, including:
Extension of Praemium Portfolio with SMSF
administration;
A new digital fact find system for use in our CRM and
financial planning suite;
Improving the client user experience, with new digital
on-boarding tools and enhancements to the Investor
and Adviser portals; and
Bundling of WealthCraft and Smartim in international
markets.
In terms of capital management, the Company continues
to record positive operating cashflows, and will utilise its
free cashflow to re-invest in product delivery and expand its
sales and marketing footprint.
In summary, we will continue to grow funds under
administration, with accelerating inflows from existing and
new SMA clients and growth of the portfolio administration
business. We will continue to invest in product innovation
and in expanding our distribution footprint globally.
Praemium will continue to focus on its strategy of delivering
a fully integrated and value-enhancing solution to financial
advice businesses.
14
Praemium Annual Report 2017 Key facts & figures
FINANCIAL METRICS
Revenue and other income^
Expenses
EBITDA (underlying)*
Profit before tax
Tax (expense)
Net profit/(loss) after tax
Earnings per share
Cash
Net Assets
Operating cashflow
^Other income as outlined in Note 4 of the financial statements
FY2017
FY2016
Change
Change
$000
35,398
29,061
6,337
2,219
1,531
688
0.2
8,983
17,093
1,538
$000
30,219
26,107
4,112
1,563
784
779
0.2
$000
5,179
2,954
2,255
656
747
(91)
-
10,426
16,240
(1,443)
853
%
17%
11%
54%
42%
95%
(12%)
(5%)
(14%)
5%
978
560
57%
*Underlying EBITDA excludes restructure and acquisition costs of -$2.1 million (2016: -$0.7 million), share based payments of -$0.6 million (2016: -$0.4 million) and foreign
exchange movements of currencies held on deposit of -$0.5 million (2016: -$0.6 million), as detailed in Note 20 of the attached annual report.
SERVICE METRICS
RESULTS SUMMARY
FY2017
FY2016
CHANGE
CHANGE
Separately Managed Account (Australia)
Separately Managed Account (International)
A$3.87bn
A$2.24bn
A$3.01bn
A$1.76bn
$0.86bn
$0.48bn
International funds based on closing FX rate 0.595 (2016:0.52)
Overview of 2017 financial position
%
29%
27%
Results
The consolidated profit attributable to the members of
the Group was $688,269. This was from a 17% increase in
revenue and other income, compared to a 11% increase
in operating expenses, resulting in a 54% increase in
underlying earnings before interest, tax, depreciation and
amortisation (EBITDA) to $6.3 million. The Company’s net
profit before tax was $2,219,102, 42% higher than the prior
year, while the current year’s tax expense of $1,530,833 was
95% higher than the prior financial year.
The Group’s net asset position at 30 June 2017 was
$17,093,257 with $8,983,491 held in cash or cash equivalents.
The Group is debt free.
Significant change in the state of affairs
Other than noted in this report, there were no other
significant changes in the state of affairs during the year.
After reporting date events
Directors have not become aware of any other matter
or circumstance not otherwise dealt with in the financial
statements that since 30 June 2017 has significantly affected
or may significantly affect the operations of the Company
or the consolidated entity, the results of those operations or
the state of affairs in subsequent financial years.
Future developments
A detailed review of the Group’s activities and prospects is
contained within the Directors’ Report. The Company will
continue its activities as outlined in its initial prospectus
and subsequent disclosures to the ASX, including a detailed
investor presentation on this year’s results. In the opinion
of the Directors, disclosure of any further information
would be likely to result in unreasonable prejudice to the
consolidated entity.
Dividend recommended, declared or paid
The Company has not recommended, declared or paid a
dividend with respect to the full-year result.
15
Praemium Annual Report 2017 Praemium’s Board of Directors
extensive commercial and personal network in business and
government and delivering front-end customer services, sales
marketing and contracts to large multinational companies.
Daniel is also the Managing Director of Israel Aerospace
Systems Limited, and a Director of Sunnyvale Ventures
Australia and Positively Buoyant Consulting. He is also an
advisory board member of Tomcar Australia.
Daniel is a graduate of the AICD and Defence Industry Study
Course (DISC), and hold an MBA from the University of
Technology Sydney.
Daniel chairs the Group’s Remuneration Committee and is
also a member of the Audit, Risk & Compliance Committee.
Michael Ohanessian — CEO
Michael Ohanessian was appointed as Chief Executive
Officer in August 2011. Michael’s executive experience
in technology-related businesses brings a mixture of
operational, strategic and leadership capabilities to this role.
Following a ten-year career at Mobil Oil, Michael joined the
Boston Consulting Group where he consulted to clients in
industries such as banking, airlines, mining, packaging, sports,
oil and gas, retailing and biotechnology.
As the CEO of Vision BioSystems, a division of the publicly
listed Vision Systems, he transformed the business over
seven years from a small unprofitable contract manufacturer
into a vertically integrated, profitable and growing medical
diagnostics business with distribution to over 60 countries. He
holds a BS and MBA from Melbourne University.
Paul Gutteridge — CFO/Company Secretary
Paul Gutteridge joined Praemium in 2011 and brings
significant experience from finance roles across Australia, UK
and Canada over the past 20 years. Following his early career
at Ernst & Young, he has held senior finance roles at Damovo
(Australia), Telstra Business Systems and Netspace, where he
led the company’s divestment to iiNet Limited in 2010.
Within Praemium, Paul’s responsibilities include overseeing
the financial strategies of the Group and managing the areas
of accounting, tax, corporate governance, compliance,
investor relations, company secretary and treasury. Paul is a
Chartered Accountant and holds a Bachelor of Commerce
from the University of Melbourne.
Barry Lewin — Non-executive Chairman
Barry Lewin was appointed as a non-executive director on 12
May 2017. Barry has significant experience advising public and
private companies in transaction structuring, debt and equity
issues, mergers, acquisitions, business sales and public floats.
Prior to establishing SLM Corporate Pty Ltd in 1999, Barry
spent twelve years as in-house counsel to leading Australian
public companies, managing their legal and commercial
Australian and international interests. From 1994-1999 Barry
served as General Counsel, Company Secretary and Executive
Committee member at diversified international resource
company North Limited.
Barry has previous experience as Director of ASX-listed
companies Senetas Corporation Limited (1999-2001) and Clean
TeQ Holdings Limited (2007-2011), where he also served as
Chairman of the Audit Committee. He is currently a Director of
a number of private companies, including in the not-for-profit
sector.
He has degrees in Commerce and Law and holds an MBA
from Swinburne University, Melbourne. Barry is also a member
of the Group’s Audit, Risk & Compliance and Remuneration
Committees.
Stuart Robertson — Non-executive director
Stuart Robertson was appointed as a non-executive director
on 12 May 2017. Stuart has broad experience in business
advisory, investment banking, wrap platforms, alternative
investments and funds management. He held senior roles at
BT Funds Management, KBC Investments Limited and Zurich
Financial Services in Australia, London and New York.
He currently provides consulting services on deal origination
and structuring primarily in the unlisted market. He has
extensive experience working with listed and unlisted
vehicles.
Stuart is a Non-executive director of Ellerston Global
Investments Limited (since June 2014), Ellerston Asian
Investments Limited (since July 2015) and Money3
Corporation Limited (since January 2016).
Stuart is a Chartered Accountant, Fellow of FINSIA, Member
of the Australian Institute of Company Directors and holds
an MBA from the MGSM.
Stuart chairs the Group’s Audit, Risk & Compliance
Committee and is a member of the Group’s Remuneration
Committee.
Daniel Lipshut — Non-executive director
Daniel Lipshut was appointed as a non-executive director
on 12 May 2017. Daniel has over 25 years' experience as a
company director, including more than 15 years as CEO of
both large listed and small private corporations.
Daniel spent 5 years as a Director of listed services company
BSA Limited (2002-2007), including 3 years as joint Managing
Director. He co-owns and runs Intercorp Pty Ltd, utilising an
16
Praemium Annual Report 2017
Disclosures relating to Directors & Senior
Management
The number of Board Meetings and number of meetings of each Board committee held during the financial year, and the
number of meetings attended by each of the Company’s Directors were:
BOARD OF DIRECTORS
10 MEETINGS
AUDIT, RISK & COMPLIANCE
COMMITEE
5 MEETINGS
REMUNERATION
COMMITTEE
2 MEETINGS
ELIGIBLE TO
ATTEND AS
MEMBER
ELIGIBLE TO
ATTEND AS
MEMBER
ATTENDED
ELIGIBLE TO
ATTEND AS
MEMBER
ATTENDED
ATTENDED
2
2
2
6
5
8
8
8
5
2
2
2
6
5
8
8
8
5
1
1
1
-
-
4
4
4
-
1
1
1
-
-
4
3
4
-
1
1
1
1
1
1
-
-
-
-
-
1
1
1
1
-
-
-
Barry Lewin
Stuart Robertson
Daniel Lipshut
Michael Ohanessian
Bruce Loveday
Robert Edgley
Peter Mahler
Andre Carstens
Greg Camm
Directors’ & Executives’ relevant interests in
shares, options and performance rights
Details of the interests of the Company’s Directors and
senior Executives in the shares of the Company are set
out in the Remuneration Report. The long-term incentive
for the Company’s Executive Directors is membership of
the Praemium Directors & Employees Benefits Plan, which
was initially approved by shareholders on 11 November
2008 (the “Current Plan”) An updated and amended Plan
was approved at the Company’s 2015 AGM. Details of the
securities issued under the Current Plan and shares issued
on the exercise of options or vesting of performance rights
are set out in the Remuneration Report and 23(a) and (b) of
the Financial Statements.
Indemnification and insurance of Directors,
officers and auditors
The Company has executed a deed of access, indemnity
and insurance in favour of each officer of the Company,
including current and past Directors, in accordance with
applicable laws. Under the deeds, Praemium indemnifies
the officers and previous officers with respect to liabilities
incurred in connection with holding office, to the extent
permitted by the Corporations Act (or, where relevant, the
UK Companies law). The Company is also obliged to carry
insurance cover for current and past Directors and provide
them with access to Board and Committee papers. Such
insurance also extends to cover Directors and officers of the
group subsidiaries.
Under its Constitution, Praemium must, subject to certain
exceptions, indemnify each of its Directors to the extent
permitted by law against liability that did not arise out of a
lack of good faith. Total premiums paid with respect to all
Directors’ and Officers’ liability insurance in this reporting
period was $33,488 (ex GST).
Further disclosures
No performance rights have been issued under the Current
Plan since the end of the financial year. Other than as set
out in this report:
No Directors have any other rights or options over
shares in, debentures of, or interests in a registered
scheme made available by the Company or a related
body corporate;
There are no contracts to which any Director is a party
or under which any Director is entitled to a benefit;
and
There are no contracts that confer a right to call for
or deliver shares in, or debentures of or interests in a
registered scheme made available by the Company or
a related body corporate.
17
Praemium Annual Report 2017 Remuneration Report
During the financial year the following people served as
Directors of the Company:
Barry Lewin (appointed 12 May 2017)
Stuart Robertson (appointed 12 May 2017)
Daniel Lipshut (appointed 12 May 2017)
Michael Ohanessian (resigned 21 February 2017)
Bruce Loveday (resigned 22 November 2016)
Robert Edgley (removed 12 May 2017)
Peter Mahler (removed 12 May 2017)
Andre Carstens (removed 12 May 2017)
Greg Camm (removed 12 May 2017)
Remuneration philosophy and principles
The Company’s performance is dependent upon the
quality of its people. To this end, the Company applies the
following principles in its remuneration framework:
Provide competitive rewards to attract high-calibre
executives;
Link Executive rewards to shareholder value; and
Provide for a significant proportion of the Executive
remuneration to be ‘at risk’ – that is, dependent upon
meeting predetermined performance indicators.
Remuneration policies
The Board has established a Remuneration Committee,
which is currently chaired by non-executive director Daniel
Lipshut. The current members of the committee are non-
executive directors Barry Lewin and Stuart Robertson. The
Remuneration Committee was established to review the
remuneration policies and practices of the Company to
ensure that it remunerates fairly and responsibly.
The Company’s Remuneration Policy, which is reviewed
annually, is available from the Company’s website. The
policy is designed to ensure that the level and composition
of remuneration is competitive, reasonable and appropriate
for the results delivered and to attract and maintain talented
and motivated Directors and employees. The policy is
designed for:
Decisions in relation to executive and non-executive
remuneration policy;
Decisions in relation to remuneration packages for
Executive Directors and senior management;
Decisions in relation to merit recognition arrangements
and termination arrangements; and
Ensuring that any equity-based Executive remuneration
is made in accordance with the thresholds set in plans
approved by shareholders.
seek any information it requires from any employee and all
employees are directed to cooperate with any request made
by the Remuneration Committee.
In considering the Group’s performance and benefits for
shareholder wealth, the Board has regard to the following
with respect to the current year and the previous three
financial years:
EBITDA^ ($m)
NPAT($m)
EPS (cents)
2017
2016
2015
2014
6.3
0.8
0.2
4.1
0.8
0.2
2.6
(2.1)
(0.5)
(0.2)
(3.5)
(0.9)
^ EBITDA excludes one-off costs, unrealised FX movements and share based payments.
The Remuneration Committee is authorised by the Board
to obtain outside legal or other independent professional
advice and to secure the attendance of outsiders with
relevant experience and expertise at meetings of the
Remuneration Committee if it considers this necessary.
It has exercised this right when it has considered it
appropriate to do so.
The Remuneration Committee is required to make
recommendations to the Board on all matters within the
Remuneration Committee’s Charter. A copy of the Charter
can be found on the Company’s website. No remuneration
consultant has been used during the financial year.
In accordance with best practice corporate governance,
the structure of non-executive director and Executive
remuneration is separate and distinct.
Non-executive director remuneration
The Board seeks to set aggregate remuneration at a level
that provides the Company with the ability to attract and
retain Directors of the highest calibre, whilst incurring a cost
that is acceptable to shareholders.
The non-executive directors are paid fixed fees in
accordance with a determination of the Board but within
an aggregate limit fixed by the Shareholders. The ASX
Listing Rules specify that the aggregate remuneration of
non-executive directors shall be determined from time to
time by a general meeting. At the 2016 AGM the members
approved the aggregate remuneration for Directors as
$450,000.
During the year the first and final tranche of securities
were issued to a non-executive director who joined the
Board in 2016. This issue is detailed within the Director’s
Remuneration table of this report.
The Company does not operate any schemes for retirement
benefits for any non-executive director other than the
contributions that it makes to superannuation in accordance
with statutory requirements.
The Remuneration Committee is authorised by the Board to
investigate any activity within its charter. It is authorised to
The names and positions of each person who held the
position of Director of Praemium Limited at any time during
18
Praemium Annual Report 2017 the financial year is provided within the Remuneration
Report and information about each of those persons
(including their qualifications and experience) is set out on
page 16.
Key management personnel
In addition to group Directors noted earlier, the details of
the following Executives are disclosed within this report as
Key Management Personnel:
Michael Ohanessian - Chief Executive Officer
Paul Gutteridge - Chief Financial Officer &
A copy of the plan can be found on the Company’s website.
LTI measures – Executive & key contributors
Rules for Executives or key staff contributors to achieve
entitlements (currently the issue of performance rights)
under the Praemium Directors & Employee Benefits Plan are
such that:
Vesting hurdles are based on group profitability (EBITDA)
targets set by the Board and Total Shareholder Return (TSR)
measurement over the LTI cycle;
Entitlements issued are based on individual
Company Secretary
annual performance;
Anna Itsiopoulos - General Manager, Australia
Adam Pointon - Chief Technology Officer
Christine Silcox - Director, Business Improvements.
The remuneration of Key Management Personnel
comprises:
Fixed Remuneration;
Variable remuneration: short-term incentives; and
Variable remuneration: long-term incentives.
Fixed remuneration
Total fixed remuneration comprises base salary, any
relevant allowances and statutory superannuation
guarantee contributions. Fixed remuneration is set with
reference to market data, reflecting the scope of the role,
skills, qualifications and experience of the relevant Executive
and the performance of the employee in the role.
Remuneration is reviewed annually, with recommendations
made to the Remuneration Committee. Annual reviews
include using market surveys as benchmarks to ensure
competitive remuneration is set to reflect the market for
comparable roles.
Short-term incentives
A short-term incentive (STI) is currently only applicable to
a number of senior Executives. Achievement of this annual
STI is directly linked to the performance of the Group
against the Board’s budgets and plans. Unless Board-set
budgets are achieved, no bonus payment will be made.
Over-achievement of budgets will result in an increase to
the amount of the bonus payable, subject to capped levels.
At the discretion of the Board the STI may be paid in cash
or by the issue of securities.
Long-term incentives
Long-term incentives (LTI) are based on participation
within Praemium’s Directors & Employee Benefits Plan. LTI
incentives, based on equity remuneration (being either the
issue of securities, issue of performance rights or issue of
options), are made in accordance with thresholds set out
in this plan. By using the Group’s Directors & Employees
Benefits Plan to offer shares and options to employees, the
interests of employees are aligned with shareholder wealth.
Entitlements vest over 3 years; and
Entitlements expire upon cessation of employment.
Vesting hurdles are weighted 50% for group profitability
targets and 50% for achievement of TSR targets. The test
of group profitability is based on 3 year EBITDA target, as
set by the Board at the start of the LTI cycle and measured
on a cumulative basis over the LTI period. Achievement
of entitlements is based on actual performance relative
to target, with no entitlements achieved below 80% of
target and up to 100% of entitlements achieved upon full
achievement of target.
The test of Total Shareholder Return is performance of
Praemium’s share price relative to the change of the
All Ordinaries Accumulation Index (AORD) over the LTI
period. Achievement of entitlements is based on actual
performance relative to target, with no entitlements
achieved below 100% of target and up to 100% of
entitlements achieved upon Praemium’s share price
performance being greater than 110% of AORD.
An individual’s annual performance is based on rating
measures, applied consistently across the Company.
The Board, on the recommendations of the CEO and
the Remuneration Committee, considers the individuaL
performance of the Executives and their contributions to the
Company’s performance.
Provided LTI measures are met, firstly for Company
performance and then for individual performance,
entitlements then vest over 3 years based on 15% in year
one, 25% in year two and 60% in year three.
LTI measures - prior to 2016
Prior to the 2016 financial year, the rules for LTI plans were
consistent with the above other than the following: vesting
hurdles were based on group profitability targets only.
The test of group financial performance was absolute and
therefore 100% of entitlements were either achieved or not
achieved and LTI offers vested over 3 years based on 30%
in year one, 30% in year two and 40% in year three.
19
Praemium Annual Report 2017
Voting and comments made at the
Company’s last annual general meeting
Praemium Limited received 93.3% of ‘yes’ votes on its
Remuneration Report for the financial year ended 30 June
2016. The Company received no specific feedback on its
Remuneration Report at the Annual General Meeting.
Executive remuneration policies and
contracts
All Group Executives are employed under employment
contracts. Those contracts do not have a fixed term and are
terminable on between one and three months’ notice (as set
out below) by the Executive or by the Company or, in the
event that the Executive materially breaches the contract of
employment in a way that involves dishonesty, fraud, a breach
of any law affecting the Company or a breach of certain of the
Group’s policies, the Executive may be summarily dismissed.
To the extent that elements of the remuneration of key
Executives consists of securities in the Company, the Board, in
considering whether to grant those securities and negotiating
the terms of remuneration with the key Executive, requires
the key Executive to obtain their own advice in respect
to their exposure to risk in relation to the securities and
relies on the undertakings of the key Executives that they
have obtained such advice prior to accepting the offer of
securities. No securities were issued to new employees as
an incentive or sign on bonus during the 2017 financial year.
The Company may elect, on the giving or receipt of notice
from any Executive, to pay out the balance of the term with or
without requiring the Executive to ‘go on garden leave’ for the
remaining term. The notice periods and amounts payable in
lieu of notice for each of the Key Management Personnel are:
Michael Ohanessian, CEO, is currently employed pursuant
to an ongoing contract. Mr Ohanessian’s maximum
entitlement on termination in lieu of notice would be equal
to the value of 1 month’s total employment package (TEP).
Paul Gutteridge, Chief Financial Officer & Company Secretary,
Anna Itsiopoulos, General Manager Australia, Chris Silcox,
Director, Business Improvements, and Adam Pointon,
Chief Technology Officer are all employed on an ongoing
basis. Each has a maximum entitlement on termination
in lieu of notice equal to the value of 3 months TEP.
20
Praemium Annual Report 2017 DETAIL OF KEY MANAGEMENT PERSONNEL REMUNERATION
2017
SHORT-TERM
EMPLOYEE
BENEFITS
SHARE-
BASED
PAYMENTS
SALARY FEES&
COMMISSIONS
PERFORMANCE
RIGHTS1
Non-executive directors
Barry Lewin*
Stuart Robertson*
Daniel Lipshut*
Bruce Loveday*
Robert Edgley^
Peter Mahler^
Andre Carstens^
Greg Camm^
15,034
10,968
8,770
29,375
43,989
39,809
47,770
59,918
-
-
-
-
-
-
-
35,000
Key management personnel
Michael Ohanessian
Paul Gutteridge
Anna Itsiopoulos
Adam Pointon
Christine Silcox
329,429
232,854
235,912
203,626
165,081
(10,068)
335,484
56,156
15,861
52,509
23,461
-
-
-
-
TERMINATION2
POST-
EMPLOYMENT
BENEFITS
OTHER
LONG-TERM
BENEFITS
SUPERANNUATION
LONG SERVICE
LEAVE
TOTAL
PERFORMANCE
RELATED
-
-
-
-
-
-
-
-
1,428
-
833
-
4,179
3,782
4,538
5,692
35,000
22,121
22,412
19,344
15,683
-
-
-
-
-
-
-
-
16,343
11,520
828
5,186
1,479
16,462
10,968
9,603
29,375
48,168
43,591
52,308
100,610
706,188
322,651
275,013
280,665
205,704
0%
0%
0%
0%
0%
0%
0%
0%
0%
17%
6%
19%
11%
8%
2017 total
1,422,535
172,919
335,484
135,012
35,356
2,101,306
1.Performance rights relates to entitlements under the Praemium Directors & Employee Benefits Plan, with amounts recognised over the life of the vesting period in
accordance with AASB 2: Share Based Payments, and does not reflect actual remuneration received within the year.
2.Termination comprises payments for notice in lieu and employee entitlements (annual leave where applicable) following the CEO’s departure on 21 February 2017. All STI
and LTI’s were also reversed at this date. Michael Ohanessian was re-appointed at the Company’s general meeting on 12 May 2017.
* Barry Lewin, Stuart Robertson and Daniel Lipshut joined the Board on 12 May 2017, with Bruce Loveday resigning from the Board on 22 November 2016.
^ Greg Camm, Robert Edgley, Peter Mahler and Andre Carstens were removed from the Board, following the Company’s general meeting on 12 May 2017.
21
Praemium Annual Report 2017 DETAIL OF KEY MANAGEMENT PERSONNEL REMUNERATION
2016
SHORT-TERM
EMPLOYEE
BENEFITS
SALARY FEES&
COMMISSIONS
SHARE BASED PAYMENTS
POST-
EMPLOYMENT
BENEFITS
OTHER
LONG-TERM
BENEFITS
BONUS BY
WAY OF
SHARES1
PERFORMANCE
RIGHTS2
SUPERANNUATION
LONG
SERVICE
LEAVE
TOTAL
PERFORMANCE
RELATED
%
Non-executive directors
Bruce Loveday
Robert Edgley
Peter Mahler
Andre Carstens
Executive directors
70,000
50,459
45,662
54,795
-
-
-
-
-
-
-
15,000
-
4,793
4,338
5,205
-
-
-
-
70,000
55,252
50,000
75,000
0%
0%
0%
0%
Michael Ohanessian
397,500
132,000
32,748
35,000
8,542
605,790
27%
Key management personnel
Paul Gutteridge
Anna Itsiopoulos*
William Brewis**
Christine Silcox
Andrew Varlamos
221,764
67,331
37,171
94,977
340,087
124,904
210,525
-
-
-
-
-
(37,070)
8,950
14,668
71,467
21,068
9,023
30,608
11,866
20,000
6,370
353,704
-
-
104,000
333,625
(17,058)
128,662
2,807
248,000
141,901
661 2,024,033
30%
0%
(11%)
7%
6%
13%
2016 total
1,610,673
199,331
1.Bonus by way of shares relates to achievement of the CEO’s short-term incentive, with FY16’s annual result exceeding target by 16% with achievement based on 33% of
base salary. Achievement of CFO’s STI is based on 30% of base salary. These amounts have been accrued in FY16’s financial results, but not yet issued at the date of the
report.
2.Performance rights relates to entitlements under the Praemium Directors & Employee Benefits Plan, with amounts recognised over the life of the vesting period in
accordance with AASB 2: Share Based Payments, and does not reflect actual remuneration received within the year.
* Anna Itsiopoulos joined the Company on 9 February 2016.
**William Brewis is an employee of Praemium’s UK subsidiary. The exchange rate of 0.4951 was used for the purpose of this table.
BONUSES INCLUDED IN REMUNERATION
Details of the short-term incentive bonuses awarded as remuneration to each Key Management Personnel, the percentage
of the available bonus that was vested in the financial year and the percentage that was forfeited because the person did
not meet the service and performance criteria is set out below.
PERCENTAGE VESTED IN YEAR
PERCENTAGE FORFEITED IN YEAR
Key management personnel
Michael Ohanessian
Paul Gutteridge
Anna Itsiopoulos
Adam Pointon
0%
0%
0%
0%
100%
100%
100%
100%
22
Praemium Annual Report 2017 SHARE-BASED REMUNERATION
LTI Allocations To Key Management Personnel
The following tables detail the movement during the reporting period of performance rights granted over issued ordinary
shares in Praemium held directly, indirectly or beneficially by Key Management Personnel:
GRANT DATE
EXPIRY
DATE
GRANTED
DURING THE
YEAR
GRANTED
DURING
THE YEAR
EXERCISED
DURING THE
YEAR
Number
$
$
Parent entity directors
Greg Camm
22-Nov-16
30-Nov-17
74,468
35,000
35,000
Key management personnel
Michael Ohanessian
20-Sep-16
30-Sep-19
526,316
200,000
Paul Gutteridge
Anna Itsiopoulos
Adam Pointon
Christine Silcox
20-Sep-16
30-Sep-19
20-Sep-16
30-Sep-19
20-Sep-16
30-Sep-19
232,250
249,940
211,016
89,775
94,977
80,186
20-Sep-16
30-Sep-19
270,263
102,700
-
-
-
-
-
FORFEITED/
LAPSED
DURING THE
YEAR
TOTAL
FAIR
VALUE IN
YEAR
$
-
(200,000)
(1,347)
(1,425)
(1,203)
$
35,000
-
88,428
93,552
78,983
(1,541)
101,159
OTHER INFORMATION
A) Performance rights holdings
ALLOTED
DATE
BALANCE
1 JULY 2016
GRANTED AS
COMPENSATION
VESTED/
EXERCISED
FORFEITED/
LAPSED
DURING THE
YEAR
BALANCE 30
JUNE 2017
Parent entity directors
Greg Camm
26-Sep-16
-
74,468
(74,468)
-
Key management personnel
Michael Ohanessian
Paul Gutteridge
Anna Itsiopoulos
Adam Pointon
Christine Silcox
20-Sep-16
20-Sep-16
20-Sep-16
20-Sep-16
20-Sep-16
647,667
521,450
526,316
(81,000)
(1,092,983)
236,250
(186,450)
-
249,940
-
527,163
138,575
211,016
(213,413)
270,263
(96,075)
(5,419)
(3,749)
(4,884)
(4,366)
-
-
565,831
246,191
519,882
308,397
1,834,855
1,568,253
(651,406)
(1,111,401)
1,640,301
23
Praemium Annual Report 2017 B) Shareholdings directly and indirectly beneficially held
2017
Parent entity directors
Barry Lewin
Stuart Robertson
Daniel Lipshut
Bruce Loveday*
Robert Edgley^
Peter Mahler^
Andre Carstens^
Greg Camm^
Key management personnel
Michael Ohanessian
Paul Gutteridge
Anna Itsiopoulos
Adam Pointon
Christine Silcox
BALANCE
1 JULY 2016
RECEIVED AS
COMPENSATION1
RECEIVED ON
THE EXERCISE OF
SHARE SCHEMES
OTHER CHANGES
DURING THE
YEAR
BALANCE
30 JUNE 2017
-
-
-
2,341,667
5,375,000
2,352,981
124,402
-
14,766,446
2,381,568
-
579,045
3,858,233
-
-
-
-
-
-
-
-
115,000
115,000
-
-
-
-
-
-
-
-
-
-
(1,675,000)
-
-
74,468
350,000
-
-
2,341,667
3,700,000
2,352,981
124,402
424,468
272,340
177,189
-
-
-
81,000
186,450
-
213,413
96,075
-
15,119,786
(600,000)
2,145,207
-
-
(250,000)
542,458
-
3,954,308
31,779,342
449,529
651,406
(2,060,000)
30,820,277
* Bruce Loveday resigned from the Board on 26 November 2016, with the final director’s notice issued to the ASX at this date.
^ Greg Camm, Robert Edgley, Peter Mahler and Andre Carstens were removed from the Board on 12 May 2017, with the final director’s notice issued to the ASX at this
date.
1 Relates to FY2016 STI, with remuneration recognised in the 2016 year.
24
Praemium Annual Report 2017 Non-audit services/auditor’s independence
declaration
A copy of the Auditor’s Independence declaration in
relation to the audit for the financial year is provided with
this report. The auditor of the group is Grant Thornton.
Non-audit services of approximately $137,070 have
been provided by the Group’s Parent Entity audit firm
for internal controls review and income tax compliance
services. The Directors are satisfied that the provision of
non-audit services is compatible with the general standard
of independence for auditors, and that the nature of non-
audit services means that auditor independence was not
compromised.
Signed in accordance with a resolution of Directors.
Barry Lewin
Chairman
14 August 2017
ASX listed company
As at the date of this report, the Company’s securities are
not quoted on any stock exchange other than the ASX.
There is not currently any on-market buy back in progress.
Unquoted securities
The only unquoted securities in the capital of the Company
currently on issue are Enterprise Management Incentives
(EMI) options and performance rights referred to above.
All unquoted securities were issued or acquired under an
employee incentive scheme.
Use of cash and assets readily convertible to
cash since admission to asx official list
In accordance with Listing Rule 4.10.19 the Company
confirms that the Group has been utilising the cash and
assets in a form readily convertible to cash that it held at
the time of its admission to the Official List of ASX since its
admission to the end of the reporting period in a way that
is consistent with its business objectives.
Corporate governance
A corporate governance statement is set out on pages
26-30 of this document.
Environmental issues
The Group’s operations are not presently subject to
significant environmental regulations under the law of the
Commonwealth or State.
Proceedings on behalf of the consolidated
entity
No person has applied for leave of Court to bring
proceedings on behalf of the consolidated entity. The
Company was not a party to any such proceedings during
the year.
25
Praemium Annual Report 2017 Praemium FY2017 Corporate Governance
Statement
The policies and practices of the Company are in
accordance with the ASX Corporate Governance Council’s
“Corporate Governance Principles and Recommendations
(3rd Edition)” (ASX Guidelines) unless otherwise stated.
Key disclosures as required under the Corporate
Governance Principles and Recommendations are outlined
in the Company’s Appendix 4G, which has been released
together with this Annual Report, with disclosures included
either in this Corporate Governance Statement or on the
Company’s website. These documents are linked to this
page: http:// www.praemium.com.au/who-we-are/investor-
relations/ corporate-governance or are otherwise available
under the “Investor Relations” section (under “Who we are”)
of the Praemium website.
The Corporate Governance Statement below has been set
out using the same headings used in the ASX Guidelines.
The Corporate Governance Statement is current at the date
of approval of this annual report and has been approved by
the Board.
PRINCIPLE 1 – LAY SOLID FOUNDATIONS
FOR MANAGEMENT AND OVERSIGHT
Board role & responsibilities (principle 1.1)
Principle 1.1 recommends that listed entities should disclose
the respective roles and responsibilities of its Board and
management, including matters expressly reserved to the
Board and those delegated to management.
The Company has adopted a Board Charter, a copy of
which it makes publicly available on its website, which
outlines the principle functions of the Company’s Board
(see Principle 2). The Charter makes it clear that it is the
role of the Board to govern the Company, and in particular
to set policy direction, whilst it is the role of the Executive
to manage the Company’s operations. Newly appointed
Directors are also advised of their responsibilities in their
letter of appointment.
Directors’ appointment (principle 1.2)
The term of appointment for each non-executive director
of the Company shall be the period commencing on
appointment and expiring when the Director is next
required to stand for election by the shareholders or a
period of 3 years, whichever is the lesser. At each AGM of
the Company, subject to ASX Listing Rule 14.4, at least one
Director must retire from office, excluding 1) a Director who
is a managing director; and 2) a Director appointed by the
Directors under rule 9.1 (b) of the Company’s Constitution
and is standing for election.
Board support for a Director’s re-election is not automatic
and is subject to satisfactory Director performance (in
accordance with the evaluation process described for
Principle 1.6).
Praemium undertakes appropriate background and
screening checks prior to nominating a Director for election
by shareholders, and provides to shareholders all material
information in its possession concerning the Director
standing for election or re-election in the explanatory notes
accompanying the notice of meeting.
Terms of appointment (principle 1.3)
The Company has a written agreement with each Director
and senior Executive setting out the terms of their
appointment. Further details of key executive terms are
outlined in the Remuneration Report.
Company Secretary (principle 1.4)
The Company Secretary is accountable directly to the
Board, through the Chairman, on all matters to do with the
proper functioning of the Board. The Company Secretary
is responsible for ensuring that Board procedures are
complied with and that governance matters are addressed.
All Directors have direct access to the Company Secretary.
The appointment and removal of the Company Secretary is
a matter for decision by the Board.
Diversity policy (principle 1.5)
The Company is required to report on matters relating to
diversity, in particular board diversity. The Company has a
formal diversity policy, located on the Company’s website,
setting out a number of broad objectives:
Introduce processes to ensure that diversity
commitments are implemented appropriately;
Implement processes to ensure transparency in the
selection of qualified employees, senior management
and Board candidates with regard to Company’s
diversity profile and objectives;
Ensure that recruitment strategies allow the Company
to maximise its opportunities to target diverse and
appropriately qualified employees;
Develop clear criteria on behavioural expectations in
relation to promoting diversity;
Recognise and cater for employees that may have
special requirements (such as family member
responsibilities) as part of the Company’s overall
diversity objectives;
Consider whether the work environment is likely to
attract a diversity of individuals; and
Facilitate a corporate culture that embraces diversity
and recognises that employees at all levels have
responsibilities outside of the workplace.
26
Praemium Annual Report 2017 The Board has set the following measurable objectives for
achieving gender diversity:
Increase gender diversity on the Board and senior
Executive positions and throughout the Group, aiming
for at least 20% female representation on a full-
time equivalent basis on the Board and in Executive
management positions and the entire group by 30 June
2018;
Promote flexible work practices to provide managers
and staff with the tools to tailor flexible work options
that suit both the business and the individual’s personal
requirements;
Select new staff, development, promotion and
remuneration based solely on performance and
capability; and
Annually assess gender diversity performance against
objectives set by the Remuneration Committee.
The Company’s current performance against its diversity
policy objectives is as follows:
PRINCIPLE 2 – STRUCTURE THE BOARD TO ADD
VALUE
Nomination committee (principle 2.1)
For the 2017 financial year, the Board did not have a
separate nomination committee, recognising that selection
and appointment of Directors is ultimately the responsibility
of the Board as a whole.
The procedure for the selection and appointment of new
Directors or the re-election of incumbent Directors, other
than as outlined in the Company’s Constitution is detailed at
Principle 1.2.
The Board may seek independent external advice in regard
to its composition, when there is a required change (such as
retirement or resignation).
For the 2018 financial year, the Company’s Remuneration
Committee Charter has been expanded to include the
functions of a Nomination Committee.
Board composition (principles 2.2 & 2.3)
Gender
representation %
30 June 2017
30 June 2016
Female Male
Female Male
The Company’s Board comprises only non-executive
directors.
Board
Senior Executive
Group
0% 100%
0% 100%
38%
34%
62%
66%
38%
35%
62%
65%
In addition to the information outlined on page 16, Tables
1 and 2 below set out specific details of the Company’s
Directors and the relevant skills and experience of the Board
collectively.
Table 1 - Details of Directors
Term in office
Director
as Director Qualifications
Status
Barry Lewin
(Chairman)
Stuart
Robertson
Daniel
Lipshut
From May 2017
MBA, AICD Independent
BCom, BLaw,
From May 2017
AICD Independent
CA, MBA,
From May 2017
MBA, AICD Independent
Board & committee performance (principle 1.6)
The Chairman conducts a review of Board and Committee
performance at least once each calendar year, however
due to the changeover of Chairman (with Bruce Loveday
resigning in November 2016 and Greg Camm removed in
May 2017), this process was not concluded this year. The
process usually involves the preparation of a questionnaire,
to which Directors and nominated senior Executives
respond anonymously, addressing matters relating to the
conduct of meeting, the content of Board/Committee
papers and other matters relevant to Board/Committee
performance.
Senior Executive performance (principle 1.7)
Praemium’s processes require that reviews be undertaken
in respect to all staff at least annually for the purpose
of reviewing activities and setting key focus areas, goals
and targets for the coming year. All senior Executives
participated in the review process in the financial year
in accordance with the process. Evaluation of the CEO’s
performance is a specific function under the Company’s
Board charter, which is also performed annually.
27
Praemium Annual Report 2017 Table 2 - Areas of competence and skills of the Board
of Directors
Area
Competence
Corporate leadership Business leadership, public listed
Executive leadership
Strategy
Financial acumen
Market & Industry
Technology
Sustainability
& stakeholder
management
International
company experience
Successful career as a senior
Executive or CEO, assessing senior
management
Define strategic objectives,
constructively question business
plans and implement strategy
Accounting, business strategy,
competitive business analysis,
corporate financing, legal, mergers
& acquisitions, commercial
agreements, risk management
Financial services expertise,
commercial and business
experience
Technology, infrastructure, product
development, product life cycle
management
Corporate governance
International business
management, geographical
experience
Director independence (principle 2.4)
Using the criteria recommended by the ASX Guidelines,
all three of the Company’s non-executive directors
(Barry Lewin, Stuart Robertson and Daniel Lipshut) are
independent Directors.
One current Director is a shareholder in the Company,
however is not a substantial shareholder. Any change in
Director’s interest is disclosed in accordance with ASX
Listing Rules. The Company’s policies allow Directors to seek
independent advice at the Company’s expense.
The Board receives regular updates at Board meetings,
meetings with customers, shareholders and site visits. These
assist Directors to keep up-to-date with relevant market and
industry developments.
PRINCIPLE 3 – ACT ETHICALLY AND
RESPONSIBLY
Code of conduct (principle 3.1)
The Company has a code of conduct which is published
on its website. The Code is reviewed annually and updated
where appropriate.
PRINCIPLE 4 – SAFEGUARD INTEGRITY IN
CORPORATE REPORTING
Audit committee (principle 4.1)
The role of the Audit, Risk & Compliance Committee is to
assist the Board to meet its oversight responsibilities in
relation to the Company’s financial reporting, compliance
with legal and regulatory requirements, internal control
structure, risk management procedures and the external
audit function.
It is intended that the members of the Audit, Risk &
Compliance Committee between them should have
the accounting and financial expertise, and a sufficient
understanding of the industry in which Praemium operates,
to be able to effectively discharge the committee’s
responsibilities.
The Company’s Audit, Risk & Compliance Committee
comprises Stuart Robertson (Chairman), Barry Lewin and
Daniel Lipshut, following the removal of Andre Carstens,
Robert Edgley and Peter Mahler on 12 May 2017.
All members are independent and non-executive. Five
Committee meetings were held during the financial year
with meetings attended by Committee members (as
disclosed in the Directors Report) and on two occasions
by the Company’s Auditor. The Audit, Risk & Compliance
Committee has a formal charter, a copy of which is available
on the Company’s website. The Charter is reviewed annually
and updated where appropriate.
Independence of chairman (principle 2.5)
CEO & CFO assurance (principle 4.2)
The Chairman of the Board, Barry Lewin who has held the
role of Chairman since May 2017, is an independent non-
executive director. The Chairman of each Board Committee
is an independent non-executive director and there is a
clear division of responsibility between the Chairman and
the CEO.
Director induction & training (principle 2.6)
New Directors receive a letter of appointment and a
deed of access and indemnity. The letter of appointment
outlines ASX’s expectations of Directors with respect to their
participation, time commitment and compliance with ASX
policies and regulatory requirements. An induction process
for incoming Directors is coordinated by the Company
Secretary.
The Board has received declarations from the CEO and CFO
that the financial records of the entity have been properly
maintained and that the financial statements comply with
the appropriate accounting standards and give a true and
fair view of the financial position and performance of the
entity and that the opinion has been formed on the basis
of a sound system of risk management and internal control
which is operating effectively.
28
Praemium Annual Report 2017 Auditor attendance (principle 4.3)
Risk management framework (principle 7.2)
The Company’s external auditor, Grant Thornton, has and
will continue to attend our Annual General Meeting in order
to be available to answer questions from security holders
relevant to the audit.
PRINCIPLE 5 – MAKE TIMELY AND
BALANCED DISCLOSURE
The Company has established written policies designed
to ensure compliance with ASX Listing Rule disclosure
requirements and to ensure accountability at a senior
Executive level for that compliance. The key policy,
Praemium’s Continuous Market Disclosure Policy, and
corresponding procedures are published on the Company’s
website.
PRINCIPLE 6 – RESPECT THE RIGHTS OF
SHAREHOLDERS
Investor relations (principles 6.1 – 6.4)
The Company has developed a framework for
communicating with shareholders which has been followed
during the financial year, as outlined in Praemium’s
Shareholder Communications Policy, as disclosed on the
Company’s website.
Where possible and practical, the Company communicates
with Shareholders using its website and email. For
this purpose, it maintains a list of email addresses for
shareholders and others interested in hearing from the
Company and provides regular updates by email – in
particular, links to market sensitive announcements
and financial filings. Praemium commits to facilitating
shareholder participation in shareholder meetings, and
dealing with shareholder inquiries.
Praemium strongly encourages all shareholders to assist
it to reduce costs and be mindful of the environment by
opting to receive annual reports, notices of meeting, proxy
forms and other formal communications electronically.
Praemium’s constitution allows for direct online voting.
PRINCIPLE 7 – RECOGNISE AND MANAGE RISK
Risk commitee (principle 7.1)
The Company’s Audit, Risk & Compliance Committee is
responsible for internal control, risk oversight and risk
management for the Company. The Company’s Audit, Risk
& Compliance Committee comprises Stuart Robertson
(Chairman), Barry Lewin and Daniel Lipshut, following the
removal of Andre Carstens, Robert Edgley and Peter Mahler
on 12 May 2017.
All members are independent and non-executive. Three
Committee meetings were held during the financial
year, with meetings attended by Committee members
as disclosed in the Directors Report. The Audit, Risk &
Compliance Committee has a formal charter, a copy of
which is available on the Company’s website. The Charter is
reviewed annually and updated where appropriate.
The Audit, Risk & Compliance Committee has required
management to design and implement a risk management
and internal control system to identify and manage the
Group’s material business risks and to report to it on
whether those risks are being managed effectively. The
Committee reviewed the Company’s risk management
framework in this financial year to satisfy itself that the
framework continues to be sound.
Internal audit (principle 7.3)
The Group does not currently have any internal audit
function. The Board considers that at the Company’s current
stage of growth and size there is no particular benefit
to appointing internal audit and in the alternative seeks
independent advice as it considers appropriate. In all other
respects, the Company complies with the recommendations
set out in Principle 7.
Risk management (principle 7.4)
The Company monitors its exposure to all risks, including
economic, environmental and social sustainability risks.
Material business risks are described in the annual report,
which also outlines the Company’s activities, performance
during the year, financial position and main business
strategies. This specific report and the Annual Report overall
provide further details about how Praemium manages its
economic, environmental and social sustainability risks.
PRINCIPLE 8 – REMUNERATE FAIRLY AND
RESPONSIBLY
Remuneration committee (principle 8.1)
The Company’s Remuneration Committee comprises Daniel
Lipshut (Chairman), Barry Lewin and Stuart Robertson. Bruce
Loveday, Michael Ohanessian and Robert Edgley were also
members during the financial year. The Committee consists
of independent Directors.
The Committee met twice during the financial year, with
meetings attended by Committee members as disclosed
in the Directors Report. A copy of the Remuneration
Committee Charter is published on the Company’s website.
Remuneration policies (principles 8.2 – 8.3)
The Company’s approach to remuneration and this
principle is set out in its Remuneration Report on
page 18 and following. The Company’s approach to
the remuneration of non-executive directors is clearly
distinguished from that of Executive Directors and senior
Executives.
The Company does offer an equity based remuneration
scheme to Executives and staff, under Praemium’s
Directors & Employee Benefits Plan, which is published on
the Company’s website. Participants of this Plan are not
permitted to enter into transactions (whether through the
use of derivatives, hedging or otherwise) which limit the
economic risk of participating in this Plan.
29
Praemium Annual Report 2017 30
Praemium Annual Report 2017 Annual Report
Financial Report
2017
Praemium Limited ACN: 098 405 826
31
Praemium Annual Report 2017 Consolidated Statement of Profit & Loss and
Other Comprehensive Income
NOTE
3
4
5
5
5
6
FOR THE YEAR ENDED 30 JUNE 2017
Revenue
Other income
Employee costs
Legal, professional, advertising and insurance expense
IT support
Commissions expense
Travel expenses
Occupancy costs
Telecommunication costs
Other expenses
Share based payments
Restructure and acquisition costs
Depreciation, amortisation and impairments
Net foreign exchange gains / (losses)
Withholding tax not recoverable
Profit before income tax expense
Income tax expense
Profit/(Loss) for the year
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Changes in the fair value of available-for-sale financial assets
Exchange differences on translation of foreign operations
Tax on items that may be reclassified subsequently to profit or loss
Total items that may be reclassified subsequently to profit or loss
Other comprehensive income/(loss) for the period, net of tax
Total comprehensive profit/(loss) for the period
Profit/(loss) for the year attributable to Owners of the parent
Total comprehensive profit/(loss) attributable to Owners of the
parent
2017
$
34,083,109
1,314,755
2016
$
28,387,629
1,831,649
(19,645,831)
(19,597,939)
(3,462,860)
(1,057,403)
(2,895,888)
(1,129,002)
(1,434,588)
(266,473)
788,118
(576,917)
(2,080,592)
(939,852)
(362,558)
(114,916)
2,219,102
(1,530,833)
688,269
(5,150)
(636,152)
-
(641,302)
(641,302)
46,967
46,967
(2,865,474)
(1,066,374)
(166,702)
(873,215)
(1,308,261)
(293,973)
173,749
(341,059)
(725,219)
(856,485)
(606,361)
(129,427)
1,562,538
(783,620)
778,918
(26,522)
(896,696)
-
(923,218)
(923,218)
(144,300)
(144,300)
46,967
(144,300)
Earnings per share
Basic earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share (cents per share)
24
24
0.2
0.2
0.2
0.2
The accompanying notes from part of the financial statements.
32
Praemium Annual Report 2017 Statement of Financial Position
AS AT 30 JUNE 2017
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Other financial assets
Property, plant and equipment
Goodwill
Intangible assets
Deferred tax assets
Total non-current assets
TOTAL ASSETS
Current liabilities
Trade and other payables
Provisions
Income tax payable
Total current liabilities
Non-current liabilities
Provisions
Deferred tax liability
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Reserves
Accumulated losses
TOTAL EQUITY
The accompanying notes from part of the financial statements.
NOTE
2017
$
2016
$
7
8
9
10
11
12
13
14
15
15
13
16
17
8,983,491
6,694,113
15,677,604
10,425,973
5,339,209
15,765,182
2,242,399
1,239,391
2,946,235
1,435,292
629,139
8,492,456
1,783,975
903,533
2,880,411
1,426,347
616,135
7,610,401
24,170,060
23,375,583
5,359,987
1,055,558
304,416
6,719,961
76,375
280,467
356,842
3,809,161
963,683
2,022,202
6,795,046
76,200
264,312
340,512
7,076,803
7,135,558
17,093,257
16,240,025
64,840,789
64,098,522
(40,201)
537,098
(47,707,331)
(48,395,595)
17,093,257
16,240,025
33
Praemium Annual Report 2017
Statement of changes in equity
FOR YEAR ENDED 30 JUNE 2017
ORDINARY
SHARES
$
ACCUMMULATED
LOSSES
$
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$
OPTION
RESERVE
S
REVALUATION
RESERVE
$
TOTAL
$
Equity as at beginning of period
64,098,522
(48,395,595)
(214,104)
740,820
10,382
16,240,025
Profit attributable to members of the
parent entity
Other comprehensive income/(loss)
Total comprehensive income/(loss)
for the year
-
-
-
688,269
-
-
(636,152)
688,269
(636,152)
Transactions with owners in their capacity as owners
Issue of shares
Performance rights expense
Exchange difference on performance
rights reserve
Transfer on exercise of performance
rights
223,386
-
-
518,881
742,267
-
-
(5)
-
(5)
-
-
-
-
-
-
-
-
-
582,884
-
(518,881)
64,003
-
688,269
(5,150)
(641,302)
(5,150)
46,967
-
-
-
-
-
223,386
582,884
(5)
-
806,265
Equity as at 30 June 2017
64,840,789
(47,707,331)
(850,256)
804,823
5,232
17,093,257
FOR YEAR ENDED 30 JUNE 2016
ORDINARY
SHARES
$
ACCUMMULATED
LOSSES
$
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$
OPTION
RESERVE
S
REVALUATION
RESERVE
$
TOTAL
$
Equity as at beginning of period
63,474,502
(49,174,516)
682,592
744,407
36,904
15,763,889
Loss attributable to members of the
parent entity
Other comprehensive income/loss
Total comprehensive income/(loss)
for the year
-
-
-
778,918
-
-
(896,696)
778,918
(896,696)
Transactions with owners in their capacity as owners
Issue of shares
273,948
Performance rights expense
Exchange difference on performance
rights reserve
Transfer on exercise of performance
rights
-
-
350,072
624,020
-
-
3
-
3
-
-
-
-
-
-
-
-
-
341,059
5,426
(350,072)
(3,587)
-
778,918
(26,522)
(923,218)
(26,522)
(144,300)
-
-
-
-
-
273,948
341,059
5,429
-
620,436
Equity as at 30 June 2016
The accompanying notes from part of the financial statements.
64,098,522
(48,395,595)
(214,104)
740,820
10,382
16,240,025
34
Praemium Annual Report 2017 Statement of Cash Flows
FOR YEAR ENDED 30 JUNE 2017
Cash from operating activities:
Receipts from customers
Payments to suppliers and employees
Interest received
Unit trust distributions received
Income tax paid and R&D incentive received
Net cash (used by)/provided from operating activities
22
Cash flows from investing activities:
Payments for property, plant and equipment
Proceeds/(payment) from available-for-sale of financial assets
Acquisition of subsidiaries, net of cash
Net cash used in investing activities
28
Cash flows from financing activities:
Net cash provided by financing activities
NOTE
2017
$
2016
$
34,871,970
(30,114,558)
8,957
5,519
(3,233,770)
1,538,118
28,237,036
(27,400,098)
75,299
34,105
31,266
977,608
(872,576)
(460,000)
(790,673)
(461,637)
(506,741)
-
(2,123,249)
(968,378)
-
-
Net cash increase/(decrease) in cash and cash equivalents
(585,131)
9,230
Cash and cash equivalents at beginning of year
Effect of exchange rates on cash holdings in foreign currencies
Cash and cash equivalents at end of year
The accompanying notes from part of the financial statements.
7
10,425,973
(857,351)
8,983,491
11,477,322
(1,060,579)
10,425,973
35
Praemium Annual Report 2017 Notes to the Financial Statements
1. NOTES TO THE FINANCIAL STATEMENTS
(a)
General information
The financial report is a general-purpose financial report
that covers the consolidated entity consisting of Praemium
Limited and its subsidiaries. Praemium Limited is a listed
public company, incorporated and domiciled in Australia.
Separate financial statements for Praemium Limited as an
individual entity are no longer presented as a consequence
of a change to the Corporations Act 2001; however, limited
financial information for Praemium Limited as an individual
entity are included in Note 25. The Group is a for-profit
entity for the purpose of preparing the financial statements.
The following is a summary of the material accounting
policies adopted by the Group in the preparation of
the financial report. The accounting policies have been
consistently applied, unless otherwise stated.
(b)
Basis of preparation
The financial report of Praemium Limited and controlled
entities has been prepared in accordance with Australian
Accounting Standards (including Australian Accounting
Interpretations), other authoritative pronouncements
of the Australian Accounting Standards Board and the
Corporations Act 2001.
Australian Accounting Standards include International
Financial Reporting Standards as adopted in Australia.
Compliance with Australian Accounting Standards ensures
that the financial report complies with International Financial
Reporting Standards (IFRS).
(i)
Reporting basis and conventions
The financial report has been prepared on an accruals
basis and is based on historical costs as modified by the
revaluation of available-for-sale financial assets, financial
assets and liabilities at fair value through profit or loss,
certain classes of property, plant and equipment and
investment property.
(c)
Principles of consolidation
The consolidated financial statements incorporate the
assets and liabilities of all subsidiaries of Praemium Limited
(“parent entity”) as at 30 June 2017 and the results of all
subsidiaries for the year then ended. Praemium Limited and
its subsidiaries are referred to in this financial report as the
“Group” or the “consolidated entity”.
The parent controls a subsidiary if it is exposed, or has
rights, to variable returns from its involvement with the
subsidiary and has the ability to affect those returns through
its power over the subsidiary.
All inter-company balances and transactions between
entities in the Group, including any unrealised profits or
losses, have been eliminated on consolidation. Accounting
policies of subsidiaries have been changed where necessary
to ensure consistency with those policies adopted by the
Group.
Subsidiaries are fully consolidated from the date
which control is transferred to the Group. They are
de-consolidated from the date control ceases.
(d)
Segment reporting
Operating segments are identified and segment information
disclosed on the basis of internal reports that are regularly
provided to, or reviewed by, the Group’s chief operating
decision maker which, for the Group, is the Board of
Directors. In this regard, such information is provided using
different measures to those used in preparing the statement
of profit & loss and other comprehensive income and
statement of financial position.
(e)
Property, plant and equipment
Each class of property, plant and equipment is carried at
cost, where applicable, any accumulated depreciation and
impairment losses.
(i)
Plant and equipment
Plant and equipment is measured on the cost basis less
depreciation and impairment losses.
The carrying amount of plant and equipment is reviewed
annually by Directors for indications of impairment. If any
such indications exist, an impairment test is carried out,
and any impairment losses on the assets recognised in the
statement of profit & loss and other comprehensive income.
To ensure that costs are not recognised in the statement
of financial position in excess of their recoverable amounts,
the recoverable amount is assessed on the basis of the
expected net cash flows that will be received from the assets
employed and subsequent disposals discounted to their net
present value.
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 group and the
cost of the item can be measured reliably. All other repairs
and maintenance are charged to the statement of profit &
loss and other comprehensive income during the financial
period in which they are incurred.
Plant and equipment is measured initially at cost. Cost
includes all directly attributable expenditure incurred
including costs to get the asset ready for its use as
intended by management. Costs include an estimate of
any expenditure expected to be incurred at the end of the
asset’s useful life, including restoration, rehabilitation and
decommissioning costs.
(ii)
Depreciation
The depreciable amount of all fixed assets, including
capitalised lease assets, is depreciated on a straight-line
basis over their useful lives (commencing from the time
the asset is ready for use). Leasehold improvements are
depreciated over the shorter of either the unexpired
period of the lease or the estimated useful lives of the
improvements.
The depreciable amount is the carrying value of the asset
less estimated residual amounts. The residual amount is
based on what a similar asset of the expected condition of
the asset at the end of its useful life could be sold for.
36
Praemium Annual Report 2017 The depreciation rates used for each class of depreciable
assets are:
CLASS OF FIXED ASSET
Plant, furniture and
equipment
Computer equiment
Buildings & leasehold
improvements
DEPRECIATION
RATE
METHOD
10-20%
Straight-line
20-33%
Straight-line
15%
Straight-line
The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at each reporting date.
Gains and losses on disposals are determined by comparing
proceeds with the carrying amount. These are included in
the statement of profit & loss and other comprehensive
income.
(f)
Intangible assets
Customer lists and databases acquired in a business
combination that qualify for separate recognition are
recognised as intangible assets at their fair values. All
intangible assets, including customer contracts and
databases, are accounted for using the fair value model
whereby capitalised costs are amortised on a straight-
line basis over their estimated useful lives, as these assets
are considered finite. Residual values and useful lives are
reviewed at each reporting date. In addition, they are
subject to impairment testing as described in Note 1(g).
The following useful lives are applied:
Customer lists: 5 years
Databases: 5 years
Amortisation has been included within depreciation
and amortisation of non-financial assets.
(g) Impairment testing of goodwill, other intangible
assets and property, plant and equipment
For impairment assessment purposes, assets are grouped
at the lowest levels for which there are largely independent
cash inflows (cash-generating units). As a result, some assets
are tested individually for impairment and some are tested
at cash-generating unit level. Goodwill is allocated to those
cash-generating units that are expected to benefit from
synergies of the related business combination and represent
the lowest level within the Group at which management
monitors goodwill.
Cash-generating units to which goodwill has been allocated
(determined by the Group’s management as equivalent to
its operating segments) are tested for impairment at least
annually. All other individual assets or cash-generating units
are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable.
An impairment loss is recognised for the amount by which
the asset’s or cash-generating unit’s carrying amount
exceeds its recoverable amount, which is the higher of
fair value less costs to sell and value-in-use. To determine
the value-in-use, management estimates expected future
cash flows from each cash-generating unit and determines
a suitable interest rate in order to calculate the present
value of those cash flows. The data used for impairment
testing procedures are directly linked to the Group’s latest
approved budget, adjusted as necessary to exclude the
effects of future reorganisations and asset enhancements.
Discount factors are determined individually for each cash-
generating unit and reflect management’s assessment of
respective risk profiles, such as market and asset-specific
risks factors.
Impairment losses for cash-generating units reduce first
the carrying amount of any goodwill allocated to that cash-
generating unit. Any remaining impairment loss is charged
pro rata to the other assets in the cash-generating unit.
With the exception of goodwill, all assets are subsequently
reassessed for indications that an impairment loss previously
recognised may no longer exist. An impairment charge is
reversed if the cash-generating unit’s recoverable amount
exceeds its carrying amount.
(h)
Financial instruments
Financial assets and financial liabilities are recognised on
the Group’s statement of financial position when the Group
becomes a party to the contractual provisions of the
instrument.
(i)
Trade receivables
Trade receivables are measured at initial recognition at
fair value, and are subsequently measured at amortised
cost using the effective interest rate method less provision
for impairment. Appropriate allowances for estimated
irrecoverable amounts are recognised in profit or losswhen
there is objective evidence that the asset is impaired.
The allowance recognised is measured as the difference
between the asset’s carrying amount and the present value
of estimated future cash flows discounted at the effective
interest rate computed at initial recognition. Collectability of
trade receivables is reviewed on an ongoing basis and debts
which are known to be uncollectible are written off. Trade
receivables are generally due for settlement within 30 days.
(ii)
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand
deposits and other short-term highly liquid investments that
are readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value.
Financial assets and financial liabilities are recognised
on the Group’s statement of financial position when the
Group becomes a party to the contractual provisions of the
instrument.
(iii)
Financial liabilities and equity
Financial liabilities and equity instruments issued by the
Group are classified according to the substance of the
contractual arrangements entered into and the definitions
of a financial liability and an equity instrument. An equity
instrument is any contract that evidences a residual interest
in the assets of the Group after deducting all of its liabilities.
37
Praemium Annual Report 2017 The accounting policies adopted for specific financial
liabilities and equity instruments are set out below.
Financial liabilities are classified as either financial liabilities
“at fair value through profit or loss” or other financial
liabilities depended on the purpose for which the liability
was acquired. The Group’s financial liabilities include trade
and other payables.
Financial liabilities are recognized when the Group becomes
a party to the contractual agreements of the instrument.
All interest-related charges and, if applicable, changes in
an instrument’s fair value that are reported in profit or
loss are included in the statement of profit & loss and
comprehensive income line items “finance costs” or “finance
income”.
(iv)
Fair Value
The net fair value of financial assets and financial liabilities
approximates their carrying amounts as disclosed in the
statement of financial position and notes to the financial
statements. Fair value is defined as the price that would
be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the
measurement date.
(v)
Available-for-sale financial assets
Available-for-sale financial assets, comprising principally
units in unlisted registered schemes, are non-derivatives
that are either designated in this category or not classified
in any of the other categories. They are included as
non-current assets unless management intends to dispose
of the investment within 12 months of reporting date.
Available-for-sale financial assets are initially recognised
at fair value plus transaction costs and are subsequently
measured at fair value. Changes in fair value are recognised
directly in equity in an available-for-sale assets revaluation
reserve.
When securities classified as available-for-sale are sold
or impaired, the accumulated fair value adjustments
recognised in equity are included in the statement of profit
& loss and comprehensive income as gains and losses.
The group assesses at each reporting date whether there
is objective evidence that a financial asset is impaired. In
the case of equity securities classified as available-for-sale,
a significant or prolonged decline in the fair value of a
security below its cost is considered in determining whether
the security is impaired. If such evidence exists for available-
for-sale financial assets, the cumulative loss–measured as
the difference between the acquisition cost and the current
fair value, less any impairment loss on that financial asset
previously recognised in profit or loss – is removed from
equity and recognised in the statement of profit & loss and
other comprehensive income. Impairment losses recognised
in the statement of profit & loss and other comprehensive
income on equity instruments classified as available-for-sale
are not reversed through the statement of profit & loss and
other comprehensive income.
(i)
Employee benefits
Provision is made for the Group’s liability for employee
benefits arising from services rendered by employees to
reporting 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, plus related
on costs. 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..
(i) Equity-settled compensation
The Group operates a share-based compensation scheme.
Equity-settled share-based payments are measured at fair
value at the date of grant. The fair value determined at the
grant date is expensed on a straight-line basis over the
vesting period, based on the Group’s estimate of shares that
will eventually vest.
Fair value is measured by use of a Black-Scholes model.
The expected life used in the model has been adjusted,
based on management’s estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations.
(j)
Provisions
Provisions are recognised when the Group 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 the outflow can be reliably measured.
(k)
Income tax
The charge for current income-tax expense is based on
the profit for the year adjusted for any non-assessable or
disallowed items. It is calculated using the tax rates that
have been enacted or are substantially enacted by reporting
date.
Deferred tax assets and liabilities are recognised using the
balance sheet liability method with respect to temporary
differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial
statements, and on unused tax losses. No deferred tax
assets or liabilities will be recognised from the initial
recognition of an asset or liability excluding a business
combination, which at the time of the transaction did not
affect either accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected
to apply to the period when the asset is realised or liability
is settled. Deferred tax is recognised in the statement of
profit & loss and comprehensive income except where it
relates to items that are recognised directly in equity, in
which case the deferred tax is recognised directly in equity.
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those
temporary differences and losses.
38
Praemium Annual Report 2017 Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount and tax
bases of investments in controlled entities where the parent
entity is able to control the timing of the reversal of the
temporary differences and it is probable that the differences
will not reverse in the foreseeable future.
The Directors have elected for those entities within the
consolidated entity that are wholly-owned Australian
resident entities to be taxed as a single entity from July 1
2005. The head entity within the tax-consolidated group for
the purposes of tax consolidation is Praemium Limited.
Praemium Limited and its wholly-owned Australian
controlled entities have implemented the tax consolidation
legislation. Praemium Limited and each of the entities within
the tax consolidated group account for their own current
and deferred tax amounts. These amounts are measuredas
if each entity in the group continues to be a stand-alone
taxpayer in its own right.In addition to its own current and
deferred tax amounts, Praemium Limited also recognises
the current tax liabilities (or assets) and the deferred tax
assets arising from unused tax losses and unused tax credits
assumed from controlled entities in the tax-consolidated
group.
Entities within the tax-consolidated group have entered into
a tax funding agreement with the head entity. Under the
terms of this agreement, each of the wholly-ownedentities
within the tax consolidated group has agreed to fully
compensate Praemium Limited for any current tax payable
assumed and are compensated by Praemium Limited for
any current tax receivable and deferred tax assets relating to
unused tax losses or unused tax credits that are transferred
to Praemium Limited under the tax consolidation legislation.
The funding amounts are determined by reference to
the amounts recognised in the wholly-owned entities’
financial statements. Such amounts are reflected in amounts
receivable from or payable to other entities in the tax-
consolidated group.
Any difference between the amounts assumed and amounts
receivable or payable under the tax funding agreement
are recognised as a contribution to (or distribution from)
wholly-owned tax consolidated entities.
(l)
Leases
Leases of fixed assets where substantially all the risks and
rewards incidental to the ownership of the asset, but not the
legal ownership, that are transferred to entities in the Group
are classified as finance leases.
Finance leases are capitalised at the inception of the lease
by recording an asset and a liability at the lower of the
amounts equal to the fair value of the leased property
and 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.
The interest expense is recognised in the statement of profit
& loss and other comprehensive income so as to achieve a
constant periodic rate of interest on the remaining balance
of the liability outstanding.
Leased assets are depreciated on a straight-line basis over
the shorter of the asset’s useful life and the lease term.
Lease payments for operating leases, where substantially all
the risks and benefits remain with the lessor, are charged
to the statement of profit & loss and other comprehensive
income on a straight line basis over the lease term.
Lease incentives under operating leases are recognised as a
liability and amortised on a straight-line basis over the lease
term.
(m)
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable. Revenue from the rendering of
services is recognised in the accounting period in which
the services are rendered. When revenue is received but
services are not rendered at reporting date, the receipt is
recorded in the statement of financial position as unearned
income.
Interest revenue is recognised on a proportional basis using
the effective interest rate in relation to the outstanding
financial asset. Dividends are recognised as revenue when
the right to receive payment is established.
All revenue is stated net of the amount of goods and
services tax (GST), returns, trade allowances and other
duties and taxes paid. Revenue in the form of grant income
is recognised when earned and receivable.
(n)
Foreign currency translation
(i)
Functional and presentation currency
The functional currency of each of the Group’s entities
is identified as the currency of the primary economic
environment in which that entity operates, and is used in
the recognition of transactions and balances for that entity.
Where the functional currency of a group entity is different
from the parent’s functional currency, the entity has been
translated for consolidation using the method described
below for ‘Group entities’.
The United Kingdom subsidiaries’ functional currency is GBP
which is translated to the presentation currency at the end
of each reporting period.
The Hong Kong and Shenzhen (China) subsidiaries’
functional currency are HKD and CNY respectively, which
are translated to the presentation currency at the end of
each reporting period.
The Armenian subsidiary’s functional currency is AMD which
is translated to the presentation currency at the end of each
reporting report.
The consolidated financial statements are presented in
Australian dollars which is the parent’s functional and
presentation currency.
39
Praemium Annual Report 2017 (ii)
Group entities
The financial results and position of all Group entities
whose functional currency is different from the group’s
presentation currency are translated as follows:
Assets and liabilities are translated at year-end exchange
rates prevailing at reporting date;
Income and expenses are translated at the rate on the
date of the transaction, or an average exchange rate
for the period (if the average approximates the actual
rate for that period); and
Retained earnings are translated at the respective
historical exchange rate.
Exchange differences arising on translation of Group entities
from a different functional currency are recognised directly
in a foreign currency translation reserve in the statement of
financial position. These differences are recognised in the
statement of profit & loss and other comprehensive income
in the period in which the entity is disposed. Goodwill and
fair-value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign
entity and translated at the closing rate.
(iii)
Transactions and balances
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing
at the date of the transaction. Foreign currency monetary
items are translated at the spot rate on reporting date.
Non-monetary items measured at historical cost are not
retranslated. Non-monetary items measured at fair value are
reported at the exchange rate at the date when fair values
were determined.
Exchange differences arising on the translation of monetary
items are recognised in the statement of profit & loss and
other comprehensive income. Exchange differences on
translation of non-monetary items are recognised directly in
equity.
(o)
Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction,
net of tax, from the proceeds. Incremental costs directly
attributable to the issue of new shares or options for the
acquisition of a business are not included in the cost of the
acquisition as part of the purchase consideration.
(p)
Dividends
Provision is made for the amount of any dividend declared,
being appropriately authorised and no longer at the
discretion of the entity, on or before the end of the financial
year but not distributed at reporting date.
(q)
(i)
Earnings per share
Basic earnings per share
costs of servicing equity other than ordinary shares, by the
weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in
ordinary shares issued during the year.
(ii)
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into
account the after-income-tax effect of interest and other
financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares
assumed to have been issued for no consideration in
relation to dilutive potential ordinary shares.
(r)
Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the
amount of goods and services tax (GST), except:
1. Where the amount of the GST incurred is not recoverable
from the taxation authority, it is recognised as part of the
cost of acquisition of an asset or as part of an item of
expense; or
2. For receivables and payables which are recognised
inclusive of GST.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables or
payables. Cash flows are included in the statement of cash
flows on a gross basis. The GST component of cash flows
arising from investing and financing activities which
is recoverable from, or payable to, the taxation authority is
classified as operating cash flows.
(s)
Comparatives
Where necessary, comparative figures have been adjusted
to conform to changes in presentation in the current year.
(t)
Going concern
The financial report has been prepared on a going concern
basis. This contemplates continuity of normal business
activities and the realisation of assets and settlement of
liabilities in the ordinary course of business. The Company
has recorded an operating profit before tax of $2,219,102
during the financial year ended 30 June 2017 (June
2016 $1,562,538) with accumulated losses amounting
to $47,707,331 as at 30 June 2017. Cash reserves were
$8,983,491 at 30 June 2017.
The Directors are of the opinion that the existing cash
reserves will provide the Company with adequate funds to
ensure its continued viability and operations.
The Company is actively enhancing its profile in the
Australian, Europe and Asian markets. Moreover, internal
control processes in place will facilitate close monitoring
of expenditure, and the Board is confident that it will be
able to manage its cash resources appropriately without
negatively impacting upon product development or revenue
opportunities.
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the Group, excluding any
At this time, the Directors are of the opinion that no asset
is likely to be realised for an amount less than the amount
40
Praemium Annual Report 2017 at which it is recognised in the financial report as at 30
June 2017. Accordingly, no adjustments have been made
to the financial report relating to the recoverability and
classification of the asset-carrying amounts and classification
of liabilities that might be necessary.
(u)
issued but not yet effective and not yet adopted
Accounting standards and interpretations
The following new accounting standards, amendments to
standards and interpretations have been issued, but are
not mandatory as at 30 June 2017. They may impact the
Consolidated Entity in the period of initial application. They
are available for early adoption, but have not been applied
in preparing this financial report:
AASB 9 Financial Instruments
AASB 9 introduces new requirements for the classification
and measurement of financial assets and liabilities and
includes a forward-looking ‘expected loss’ impairment
model and a substantially-changed approach to hedge
accounting. These requirements improve and simplify the
approach for classification and measurement of financial
assets compared with the requirements of AASB 139.
Based on the entity’s preliminary assessment, there will
be no material impact on the transactions and balances
recognised in the financial statements when this standard is
first adopted for the year ending 30 June 2019.
AASB 15 Revenue from Contracts with Customers
AASB 15 replaces AASB 118 Revenue, AASB 111 Construction
Contracts and some revenue related Interpretations and:
Establishes a new revenue recognition model
Changes the basis for deciding whether revenue is to be
recognised over time or at a point in time
Provides new and more detailed guidance on specific
topics (e.g. multiple element arrangements, variable
pricing, rights of return, warranties and licensing)
Expands and improves disclosures about revenue.
The entity is yet to undertake a detailed assessment of
the impact of AASB 15. However, based on the entity’s
preliminary assessment, the Standard is not expected to
have a material impact on the transactions and balances in
the financial statements when it is first adopted for the year
ending 30 June 2019.
AASB 16 Leases
AASB 16 replaces AASB 117 Leases and some lease-
related interpretation requires all leases to be accounted
for ‘on-balance sheet’ by lessees, other than short-term
and low value asset leases provides new guidance on
the application of the definition of lease and on sale and
lease back accounting largely retains the existing lessor
accounting requirements in AASB 117 requires new and
different disclosures about leases
This standard is applicable to annual reporting periods
beginning on or after 1 January 2019. The standard replaces
AASB 117 “Leases” and for lessees will eliminate the
classification of operating leases and finance leases. Subject
to exceptions, a ‘right-of-use’ asset will be capitalised in the
statement of financial position, measured at the present
value of the unavoidable future lease payments to be made
over the lease term. The exceptions relate to short-term
leases of 12 months or less and leases of low-value assets
(such as printers) where an accounting policy choice exists
whereby either a ‘right-of-use’ assets is recognised or lease
payments are expensed to profit or loss as incurred. A
liability corresponding to the capitalised lease will also be
recognised, adjusted for lease prepayments, lease incentives
received, initial direct costs incurred and an estimate of any
future restoration, removal or dismantling costs. Straight-
line operating lease expense recognition will be replaced
with a depreciation charge for the leased asset (included
in operating costs). In the earlier periods of the lease, the
expenses associated with the lease under AASB 16 will be
higher when compared to lease expenses under AASB 117.
However EBITDA (Earnings Before Interest, Tax, Depreciation
and Amortisation) results will be improved as the operating
expense is replaced by depreciation in profit or loss under
AASB 16. The consolidated entity will adopt this standard
from 1 July 2019, and the impact on gross assets and gross
liabilities is estimated to be approximately $4.1 million per
Note 19.
(v)
Critical accounting estimates and judgments
The Directors evaluate estimates and judgments
incorporated into the financial report based on historical
knowledge and best available current information. Estimates
assume a reasonable expectation of future events and are
based on current trends and economic data, obtained both
externally and within the group.
Impairment of available-for-sale financial assets
The Group follows the guidance of AASB 139 Financial
Instruments: Recognition and Measurement in determining
when an available-for-sale financial asset is impaired. This
determination requires significant judgment. In making this
judgment, the Group evaluates, among other factors, the
duration and extent to which the fair value of an investment
is less than its cost and the financial health of and near-term
business outlook for the investee, including factors such as
industry and sector performance, changes in technology,
and operational and financing cash flows.
Share-based payment transactions
The consolidated entity measures the cost of equity-settled
transactions with employees by reference to the fair value
of the equity instruments at the date at which they are
granted. The fair value is determined using either the
Binomial or Black-Scholes model taking into account the
terms and conditions upon which the instruments were
granted. The accounting estimates and assumptions relating
to equity- settled share-based payments would have no
impact on the carrying amounts of assets and liabilities
within the next annual reporting period but may impact
profit or loss and equity.
41
Praemium Annual Report 2017 Fair value and hierarchy of financial instruments
The consolidated entity is required to classify financial
instruments, measured at fair value, using a three-level
hierarchy, being: Level 1: Quoted prices (unadjusted) in
active markets for identical assets and liabilities; Level 2:
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); and Level 3: Inputs
for the asset and liability that are not based on observable
market data (unobservable inputs). An instrument is
required to be classified in its entirety on the basis of the
lowest level of valuation inputs that is significant to fair
value. Considerable judgement is required to determine
what is significant to fair value and therefore the category in
which the financial instrument is placed can be subjective.
The fair value of financial instruments classified as Level 3 is
determined by the use of valuation models. These include
discounted cash flow analysis or the use of observable
inputs that require significant adjustments based on
unobservable inputs.
Provision for impairment of receivables
The provision for impairment of receivables assessment
requires a degree of estimation and judgement. The level of
provision is assessed by taking into account the recent sales
experience, the aging of receivables, historical collection
rates and specific knowledge of the individual debtor’s
financial position.
Estimation of useful lives of assets
The consolidated entity determines the estimated useful
lives and related depreciation and amortisation charges
for its property, plant and equipment and definitive life
intangible assets. The useful lives could change significantly
as a result of technical innovations or some other event. The
depreciation and amortisation charge will increase where
the useful lives are less than previously estimated lives, or
technically obsolete or non-strategic assets that have been
abandoned or sold will be written off or written down.
(w)
Business combinations
The acquisition method of accounting is used to account for
business combinations.
The consideration transferred is the sum of the acquisition-
date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former
owners of the acquiree and the amount of any non-
controlling interest in the acquire. For each business
combination, the non-controlling interest in the acquiree is
measured at either fair value or at the proportionate share
of the acquiree’s identifiable net assets. All acquisition costs
are expensed as incurred to the profit or loss.
On the acquisition of the business, the consolidated entity
assesses the financial assets acquired and liabilities assumed
for appropriate classification and designation in accordance
with the contractual terms, economic conditions, the
consolidated entity’s operating or accounting policies and
other pertinent conditions in the existence at the acquisition
date.
Where the business combination is achieved in stages, the
consolidated entity re-measures its previously held equity
interest in the acquiree at the acquisition-date fair value
and the difference between the fair value and the previous
carrying amount is recognised in the profit or loss.
Contingent consideration to be transferred by the acquirer
is recognised at the acquisition date fair value. Subsequent
changes in the fair value of contingent consideration
classified as an asset or liability is recognised in profit or
loss. Contingent consideration classified as equity is not
re-measured and its subsequent settlement is accounted for
within equity.
The difference between the acquisition date fair value
of assets acquired, liabilities assumed and any non-
controlling interest in the acquiree and the fair value of
the consideration transferred and the fair value of any pre-
existing investment in the acquire is recognised as goodwill.
If the consideration transferred and the pre-existing fair
value is less than the fair value of the identifiable net assets
acquired, being a bargain purchase to the acquirer, the
difference is recognised as a gain directly in profit or loss
by the acquirer on the acquisition date, but only after a
reassessment of the identification and measurement of
the net assets acquired, the non-controlling interest in
the acquiree, if any, the consideration transferred and the
acquirer’s previously held equity interest in the acquirer.
Business combinations are initially accounted for on a
provisional basis. The acquirer retrospectively adjusts
the provisional amounts recognised and also recognises
additional assets and liabilities during the period, based
on new information obtained about the facts and
circumstances that existed at the acquisition date. The
measurement period ends on the earlier of either (i)
12 months from the date of acquisition or (ii) when the
acquirer receives all the information possible to determine
fair value.
(x)
Change in Accounting Policies
A number of new and revised standards are effective for
annual periods beginning on or after 1 July 2016. However,
there has not been any significant impact upon the
application of these standards.
42
Praemium Annual Report 2017 FINANCIAL RISK MANAGEMENT
2.
The Praemium Group is exposed to risks that arise from
the use of its financial instruments. This note describes the
Group’s objectives, policies and processes for managing
those risks and the methods used to measure them.
There have been no substantive changes in the Group’s
exposure to financial instrument risks, its objectives, policies
and processes for managing those risks or the methods
used to measure them from previous periods unless
otherwise stated in this note.
The Group’s Audit, Risk & Compliance Committee oversees
how management monitors compliance with the Group’s
risk management policies and procedures and reviews the
adequacy of the risk management framework in relation to
the risks faced by the Group.
Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument risk arises, are as follows:
Trade receivables
Cash at bank and on deposit
Trade and other payables
Intercompany receivables
Investments in unlisted unit trusts
General objectives, policies and processes
The Board has overall responsibility for the determination
of the Group’s risk management objectives and policies
and, whilst retaining ultimate responsibility for them,
has delegated the authority for designing and operating
processes that ensure the effective implementation of the
objectives and policies to the Group’s finance function. The
Board receives monthly reports from the Chief Financial
Officer through which it reviews the effectiveness of the
processes put in place and the appropriateness of the
objectives and policies it sets.
The overall objective of the Board is to set policies that seek
to reduce risk as far as possible without unduly affecting
the Group’s competitiveness and flexibility. Further details
regarding these policies are set out below.
Credit risk
Credit risk arises from the Group’s trade receivables, other
receivables, receivables from subsidiaries and cash at bank
and on deposit. The maximum amount of credit risk is the
statement of financial position carrying values.
Trade receivables
Clients of the Group range from financial advisers and
brokers to accountants. In the majority of new client “sign-
ons”, clients are required to prepay their first years’ service
before they can start utilising the Group’s products. The
reduction of risk concentration is due principally to the
number of independent operators who have entrenched the
Praemium system within their everyday business process.
Clients who subsequently fail to meet their credit terms are
at risk of having their services “switched off”. The Board
receives monthly reports summarising trade receivables
balances, and aging profiles of the total trade receivables.
There have been no changes from previous periods.
Liquidity risk
Liquidity risk arises from the Group’s management of
working capital. It is the risk that the Group will encounter
difficulty in meeting its financial obligations as they fall due.
The Group’s policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they
become due. To achieve this aim, it seeks to maintain cash
balances to meet expected requirements for a period of at
least three months. The Group also seeks to reduce liquidity
risk by ensuring that its cash deposits are earning interest at
the best rates.
At reporting date, these reports indicate that the Group
is expected to have sufficient liquid resources to meet its
obligations under all reasonably expected circumstances.
There have been no changes from previous periods.
As at 30 June 2017, financial liabilities have contractual
maturities, which are summarised below:
2017
CURRENT NON-CURRENT
WITHIN 6
MONTHS
$
6-12
MONTHS
$
1-5
YEARS
$
LATER
THAN 5
YEARS
$
Trade payables
734,740
Accrued expenses
2,477,740
Other payables
984,255
Total
4,196,735
-
-
-
-
-
-
-
-
-
-
-
-
2016
CURRENT
NON-CURRENT
WITHIN 6
MONTHS
$
6-12
MONTHS
$
1-5
YEARS
$
LATER
THAN 5
YEARS
$
Trade payables
369,008
Accrued expenses
1,923,574
Other payables
594,450
Total
2,887,032
-
-
-
-
-
-
-
-
-
-
-
-
The contractual amounts of financial liabilities in the
tables above are equal to their carrying values. Differences
from the statement of financial position amounts reflect
the exclusion of statutory charges from the definition of
financial liabilities.
43
Praemium Annual Report 2017 In order to monitor the continuing effectiveness of this
policy, the Board receives a monthly forecast, analysed by
the geographical region’s cash balances, commitments and
receipts, converted to the Group’s main functional currency,
Australian Dollars (AUD).
The Group is exposed to currency risk on cash at bank and
on deposit in British Pound (GBP) to fund its UK operations
and US Dollars (USD); Hong Kong dollars (HKD) and
Chinese Yuan (CNY) for its Asian operations and Armenian
dram (AMD) in its Armenian operations. The Group is also
exposed to currency risk on sterling denominated loans to
its UK entities.
Exposure to currency risk
Foreign currency denominated financial assets and liabilities,
translated into Australian Dollars at the closing rate, are as
follows:
Nominal amounts
Consolidated
2017
GBP
2016
GBP
Cash at bank and on term
deposit
2,971,055
5,478,960
The following table illustrates the sensitivity of the net
result for the year and equity in regards to the Group’s
financial assets and financial liabilities and the GBP and AUD
exchange rate.
It assumes a +/- 5% change in the AUD/GBP sterling
exchange rate for the year ended at 30 June 2017 (2016:
5%). This percentage has been determined based on
average market volatility in exchange rates in the previous
12 months.
The sensitivity analysis is based on the Group’s foreign
currency financial instruments held at each reporting date.
This assumes that other variables, in particular interest rates,
remain constant. The analysis is performed on the same
basis for 2017 and 2016.
If the Australian dollar had strengthened against the GBP
sterling by 5% (2016: 5%) then this would have had the
following impact on profit and other equity:
Consolidated
2017
$
2016
$
(141,479)
(260,903)
-
-
Profit after tax
Other equity
Market risk
Market risk arises from the Group’s use of financial
instruments, including interest bearing and foreign currency
financial deposits and investment in unlisted trusts. It is the
risk that the fair value or future cash flows of the financial
instruments will fluctuate as a result of changes in interest
rates (interest rate risk), foreign exchange rates (currency
risk) or other market factors (other price risk).
Interest rate risk
The Group invests surplus cash in major Australian and UK
banks and in doing so is exposed to fluctuations in interest
rates that are inherent in such a market. The Company and
Group have no borrowings.
The Group’s interest rate risk arises from:
Bank balances which give rise to interest at floating
rates; and
Cash on term deposit, which are at floating rates.
The amounts subject to cash flow interest rate risk are in the
statement of financial position carrying amounts of these
items.
The Group’s policy is to minimise cash flow interest rate risk
exposures on surplus funds by ensuring deposits attract
the best available rate. There have been no changes from
previous periods.
Cash flow interest rate sensitivity
The following table illustrates the sensitivity of the net result
for the year and equity to a reasonably possible change
in interest rates of +/-100 basis points (2016: +/-100 basis
points), with effect from the beginning of the year. These
changes are considered reasonably possible based on
observation of current market conditions.
The calculations are based on the Group’s financial
instruments held at each reporting date.
2017
$
-100
BASIS
PTS
+100
BASIS
PTS
2016
$
-100
BASIS
PTS
+100
BASIS
PTS
Cash and cash
equivalents
89,835
(89,835)
104,260
(104,260)
Net result
89,835
(89,835)
104,260
(104,260)
Currency risk
The Group’s policy is, where possible, to allow group entities
to settle liabilities denominated in their functional currency
with the cash generated from their own operations in that
currency. Where group entities have liabilities denominated
in a currency (and have insufficient reserves of that currency
to settle them), cash already denominated in that currency
will, where possible, be transferred from elsewhere within
the Group.
44
Praemium Annual Report 2017
Profit after tax
Other equity
Consolidated
2017
$
391
-
2016
$
574
-
Exposures to foreign exchange rates vary during the
year depended on the volume of overseas transactions.
Nonetheless, the analysis above is considered to be
representative of the Group’s exposure to foreign currency
risk.
Other price risk
The Group is exposed to other price risk on its investments
in listed unit trusts. These investments are classified on the
statement of financial position as available-for-sale financial
assets. As these investments are carried at fair value with
changes in fair value recognised in equity, all changes in
market conditions, except for impairment, will directly affect
equity, but have no effect on profit.
The investments are in a number of different unit trusts
with a dominant emphasis on balanced funds that have
exposures to a wide range of asset classes and geographical
locations. The assets and liabilities within these unit trusts
indirectly expose the Company and Group to interest rate
risk, currency risk and equity price risks. It is not considered
practicable to ‘look through’ the unit trusts to analyse these
risks in detail. There have been no changes from previous
periods.
Other price risk sensitivity analysis
If the fair value of investments in unit trusts increased by
10% (2016: 10%) this would have increased equity for both
the Company and Group by $13,453 (2016: $13,425) A
decrease of 10% would have reduced equity by the same
amount.
If the Australian dollar had weakened against the GBP
by 5% (2016: 5%) then this would have had the following
impact on profit and other equity:
Profit after tax
Other equity
Consolidated
2017
$
156,371
-
2016
$
288,366
-
Exposures to foreign exchange rates vary during the year
depended on the volume of overseas transactions.
Nonetheless, the analysis above is considered to be
representative of the Group’s exposure to foreign currency
risk.
Currency risk sensitivity analysis – Other currencies (USD)
Foreign currency denominated financial assets and liabilities,
translated into Australian Dollars at the closing rate, are as
follows:
Nominal amounts
Cash at bank and on term
deposit
Consolidated
2017
USD
2016
USD
7,424
10,907
The following table illustrates the sensitivity of the net
result for the year and equity in regards to the Group’s
financial assets and financial liabilities and the USD and AUD
exchange rate.
It assumes a +/- 5% change in the AUD/USD exchange
rate for the year ended at 30 June 2017 (2016: 5%). This
percentage has been determined based on average market
volatility in exchange rates in the previous 12 months.
The sensitivity analysis is based on the Group’s foreign
currency financial instruments held at each reporting date.
This assumes that other variables, in particular interest rates,
remain constant. The analysis is performed on the same
basis for 2017 and 2016.
If the Australian dollar had strengthened against the USD
by 5 % (2016: 5%) then this would have had the following
impact on profit and other equity:
Profit after tax
Other equity
Consolidated
2017
$
(354)
-
2016
$
(519)
-
If the Australian dollar had weakened against the USD
by 5% (2016: 5%) then this would have had the following
impact on profit and other equity:
45
Praemium Annual Report 2017 There would be no effect on profit.
Fair value hierarchy
Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three
levels of a fair value hierarchy:
Level 1 - the instrument has quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 - a valuation technique is applied using inputs other than quoted prices within Level 1 that are observable for the
financial instrument, either directly (i.e. as prices), or indirectly (i.e. derived from prices); or
Level 3 - a valuation technique is applied using inputs that are not based on observable market data (unobservable inputs).
The following table shows the levels within the hierarchy of financial assets and liabilities measured at fair value on a
recurring basis at 30 June 2017 and 30 June 2016.
2017
Assets
Available-for-sale financial assets:
- Listed unit trusts
- Shares in unlisted entity
- Regulatory reserve
Level 1
$
Level 2
$
Level 3
$
TOTAL
$
134,533
-
1,107,866
1,242,399
-
-
-
-
-
1,000,000
-
134,533
1,000,000
1,107,866
1,000,000
2,242,399
2016
Assets
Available-for-sale financial assets:
- Listed unit trusts
- Shares in unlisted entity
- Regulatory reserve
Level 1
$
Level 2
$
Level 3
$
TOTAL
$
134,254
-
649,721
783,975
-
-
-
-
-
1,000,000
-
1,000,000
134,254
1,000,000
649,721
1,783,975
46
Praemium Annual Report 2017 3. REVENUE
REVENUE FROM
Sales of services
Interest income from other parties
Unit trust distributions
Total revenue
4. OTHER INCOME
Rental Income
Commissions
Fund recoveries
R&D incentive received
Other
Total other income
5. EXPENSES
Defined contribution superannuation expense
Net foreign exchange (gains)/losses
Depreciation of plant and equipment
Amortisation of intangible assets
Other expenses*
Rental expense relating to operating leases – minimum lease payments
Impairment losses – trade receivables
Consolidated
2017
2016
34,064,059
28,278,225
8,957
10,093
75,299
34,105
34,083,109
28,387,629
Consolidated
2017
100,927
303,007
19,822
790,779
100,220
1,314,755
Consolidated
2017
1,285,926
362,558
460,508
479,344
(788,118)
1,048,428
63,759
2016
127,742
100,194
149,724
1,262,599
191,390
1,831,649
2016
1,307,442
606,361
383,709
472,776
(173,749)
844,729
(4,946)
*Other expenses comprise costs and expense recoveries relating to the operation of a managed investment scheme, which is held by a subsidiary company of the Group
and loss on disposal of fixed assets
47
Praemium Annual Report 2017 6. INCOME TAX EXPENSE
a) Numerical reconciliation of income tax expense to prima facie tax payable
Consolidated
Profit before tax
Prima facie tax expense on profit before income tax at 30% (2016: 30%)
Expenditure not allowable for income tax purposes1
R&D incentive tax offsets
Tax effect of:
Difference in overseas tax rates
Current year tax losses not brought to account for overseas entities
Current year temporary differences not brought to account
Income tax expense
Tax expense comprises:
Current tax expense
Deferred tax expense/(income):
Origination and reversal of temporary differences
Tax expense
2017
$
2,219,102
665,731
985,678
2016
$
1,562,538
468,761
1,788,701
(1,697,812)
(3,424,867)
511,556
1,068,399
(2,719)
1,530,833
717,213
1,231,437
2,374
783,620
1,412,803
748,975
118,030
1,530,833
34,645
783,620
1: Non allowable expenditure includes R&D incurred for accounting purposes, share based payments and non-deductible entertainment,
b) Deferred tax assets not brought to account
2017
$
2016
$
Unused tax losses for which no deferred tax asset has been recognised
32,583,683
31,861,673
Deductible temporary differences for which no deferred tax asset has been
recognised
Potential tax benefit @ 30%
191,301
32,774,984
9,832,495
200,363
32,062,036
9,618,611
The benefit of the tax losses, which relate to the Company’s UK and Asian operations, will only be realised if:
(i)
(ii)
(iii)
The Group derive future assessable income of a nature and amount sufficient to enable the benefit of the
taxation deductions to be realised;
The Group continue to comply with the conditions for deductibility imposed by law; and
There are no changes in taxation legislation adversely affecting the Group in realising the benefit.
c) Franking credits
The amount of the franking credits available for subsequent reporting periods are:
Balance at the end of the reporting period
Franking credits that will arise from the payment of the amount of provision for
income tax
Total franking credits
Parent
2017
$
2,240,885
501,000
2,741,885
2016
$
1,000
333,000
334,000
48
Praemium Annual Report 2017
7. CASH AND CASH EQUIVALENTS
Cash on hand
Term deposit
Bank balances
Consolidated
2017
$
1,644
499,657
8,482,190
2016
$
1,352
575,048
9,849,573
10,425,973
Bank balances include a cash management account held in Australia which earns a weighted average effective interest rate of 1.3% (2016: 2.4%), and deposits on call held
in Australia and denominated in GBP, CNY, HKD, USD and AMD, which bears a weighted average effective interest rate of nil% (2016: nil%). Cash on term deposit matures
on an annual basis. Cash on hand is non-interest bearing.
8,983,491
.
RECONCILIATION OF CASH
Cash at the end of the financial year as shown in the statement of cash flows is
reconciled to items in the statement of financial position as follows:
Cash and cash equivalents
8. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Allowance for impairment of receivables
Prepayments
Deposits receivable
Other receivables
2017
$
2016
$
8,983,491
8,983,491
10,425,973
10,425,973
Consolidated
2017
$
2016
$
4,118,986
(99,440)
4,019,546
1,463,733
414,934
795,900
2,674,567
6,694,113
3,603,259
(38,682)
3,564,577
905,008
318,768
550,856
1,774,632
5,339,209
The carrying value of trade receivables is considered a reasonable approximation of fair value due to the short-term nature of the balances.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable in the financial
statements. The Group does not hold any collateral as security over any receivable balance. Refer to Note 2 for the
policies and processes for credit risk on trade receivables.
The average credit period on trade receivables is 30 days. No interest is charged on trade or other receivables.
49
Praemium Annual Report 2017 Impaired receivables
The Group’s trade and other receivables have been reviewed for indicators of impairment. Certain trade receivables were
found to be impaired and a provision of $99,440 (2016: $38,682) has been recorded accordingly. The impaired trade
receivables are mostly due from Praemium Australia Limited. There are no other impaired trade receivables in any of the
Group’s subsidiaries.
The aging of these impaired receivables is:
Not more than 3 months
More than 3 months but not more than 6 months
More than 6 months but not more than 1 year
More than one year
Total
Consolidated
2017
$
6,708
11,328
46,381
35,023
99,440
2016
$
9,284
29,398
-
-
38,682
In addition, some of the unimpaired trade receivables are past due as at the reporting date. These relate to clients who
have a good credit history with Praemium Australia Ltd.
The age of trade receivables past due but not impaired is as follows:
Not more than 3 months
More than 3 months but not more than 6 months
More than 6 months but not more than 1 year
More than one year
Total
Consolidated
2017
$
2016
$
3,827,168
2,210,628
-
178,221
-
-
-
-
4,005,389
2,210,628
A reconciliation of the movement in the provision for impairment of receivables is shown below:
At 1 July 2016
Provision for impairment recognised in the year
Receivables written off as uncollectible
Balance at 30 June 2017
Consolidated
2017
$
38,682
63,759
(3,001)
99,440
2016
$
129,137
(4,946)
(85,509)
38,682
There are no other impaired assets within other receivables and it is expected that other receivable balances will be received when
due.
50
Praemium Annual Report 2017 9. FINANCIAL ASSETS
Available-for-sale financial assets
a)
Available-for-sale financial assets comprise
Listed Investments
Units in unit trust
Regulatory reserve
Unlisted Investments
Shares in unlisted entity
Consolidated
2017
$
2,242,399
2,242,399
2017
$
134,533
1,107,866
2016
$
1,783,975
1,783,975
2016
$
134,254
649,721
1,000,000
1,000,000
Total available-for-sale financial assets
2,242,399
1,783,975
10. PROPERTY, PLANT AND EQUIPMENT
Consolidated
Buildings & leasehold improvements at cost
Accumulated depreciation
Total buildings and improvement
Furniture, fixtures and fittings at cost
Accumulated depreciation
Total furniture and equipment
Computer equipment at cost
Accumulated depreciation
Total computer equipment
Total property, plant and equipment
2017
$
481,864
(96,861)
385,003
968,809
(760,819)
207,990
4,374,181
(3,727,783)
646,398
1,239,391
30 JUNE 2017
Balance at 1 July 2016
Additions
Acquired through business combination
Disposals
Depreciation expense
Exchange differences
Balance at 30 June 2017
FURNITURE,
FIXTURES AND
FITTINGS
$
COMPUTER
EQUIPMENT
$
BUILDINGS &
LEASEHOLD
IMPROVEMENTS
$
230,878
84,312
9,865
(44,271)
(63,160)
(9,634)
207,990
620,347
300,752
-
(1,472)
(256,888)
(16,341)
646,398
52,308
487,512
-
(65,598)
(140,460)
51,241
385,003
2016
$
207,042
(154,734)
52,308
1,077,403
(846,525)
230,878
4,219,390
(3,599,043)
620,347
903,533
TOTAL
$
903,533
872,576
9,865
(111,341)
(460,508)
25,266
1,239,391
51
Praemium Annual Report 2017 10. PROPERTY, PLANT AND EQUIPMENT
30 JUNE 2016
Balance at 1 July 2015
Additions
Acquired through business combination
Disposals
Depreciation expense
Exchange differences
Balance at 30 June 2016
11. GOODWILL
FURNITURE,
FIXTURES AND
FITTINGS
$
COMPUTER
EQUIPMENT
$
BUILDINGS &
LEASEHOLD
IMPROVEMENTS
$
298,984
50,766
-
-
(100,118)
(18,754)
230,878
468,613
410,071
-
-
(242,319)
(16,018)
620,347
92,779
800
-
-
(41,272)
1
52,308
TOTAL
$
860,376
461,637
-
-
(383,709)
(34,771)
903,533
The movements in the net carrying amount of goodwill are as follows:
Gross carrying amount
Balance at 1 July 2016
Acquisition through business combination
Net exchange differences
Balance at 30 June 2017
Accumulated impairment
Balance at 1 July 2016
Impairment loss recognised
Net exchange differences
Balance at 30 June 2017
Carrying amount 30 June 2017
Consolidated
2017
$
2,903,411
222,023
(156,199)
2,969,235
2016
$
3,180,996
-
(277,585)
2,903,411
(23,000)
(23,000)
-
-
(23,000)
2,946,235
-
-
(23,000)
2,880,411
Impairment testing
(a)
For the purpose of annual impairment testing goodwill is allocated to the following cash-generating unit, which is the unit
expected to benefit from the synergies of the business combination in which the goodwill arises.
Praemium Asia Limited (formerly WealthCraft Systems Limited)
Plum Software Limited
Wensley Mackay Limited
2017
$
635,768
2,075,153
235,314
2016
$
662,405
2,218,006
-
Goodwill allocation at 30 June 2017
2,946,235
2,880,411
52
Praemium Annual Report 2017 The recoverable amounts of the cash-generating units were determined based on value-in-use calculations, covering a
detailed five-year forecast, followed by an extrapolation of expected cash flows for the unit’s remaining useful life using the
growth rate determined by management. The present value of the expected cash flows of each segment is determined by
using a suitable discount rate.
(b)
Growth rates
The growth rates reflect the long-term average growth rates for the product lines and industries of the segments (all
publicly available). The growth rate for Praemium Asia is 2.0% (2016: 3.0%) and for Plum is 2.0%.
(c)
Discount rates
The discount rates reflect appropriate adjustments relating to market risk and specific risk factors of each unit. The discount
rate for Praemium Asia is 12.38% (2016: 11.28%) and for Plum is 9.66% (2016: 10.00%)
(d)
Cash flow assumptions
Management’s key assumptions include stable profit margins, based on past experience in this market. The Group’s
management believes that this is the best available input for forecasting. Cash flow projections reflect stable profit margins
achieved immediately before the budget period. No expected efficiency improvements have been taken into account and
prices and wages reflect publicly available forecasts of inflation for the industry.
Apart from the considerations described in determining the value-in-use of the cash-generating units described above,
management is not currently aware of any other probable changes that would necessitate changes in its key estimates.
12. OTHER INTANGIBLE ASSETS
INTANGIBLE ASSETS 2017
Gross carrying amount
Balance at 1 July 2016
Additions
Acquisition through business combination
Net exchange differences
Balance at 30 June 2017
Amortisation and Impairment
Balance at 1 July 2016
Amortisation
Impairment losses
Net exchange differences
Balance at 30 June 2017
Carrying amount 30 June 2017
CUSTOMER
CONTACTS
$
DISCLOSURES
$
TOTAL
$
1,240,706
901,063
2,141,769
-
540,828
31,217
1,812,751
(476,585)
(311,228)
-
(42,081)
(829,894)
982,857
-
-
-
-
540,828
31,217
901,063
2,713,814
(238,837)
(168,116)
-
(715,422)
(479,344)
-
(41,675)
(83,756)
(448,628)
(1,278,522)
452,435
1,435,292
53
Praemium Annual Report 2017 INTANGIBLE ASSETS 2016
Gross carrying amount
Balance at 1 July 2015
Acquisition through business combination
Net exchange differences
Balance at 30 June 2016
Amortisation and Impairment
Balance at 1 July 2015
Amortisation
Impairment losses
Net exchange differences
Balance at 30 June 2016
Carrying amount 30 June 2016
CUSTOMER
CONTACTS
$
DISCLOSURES
$
TOTAL
$
1,363,184
1,023,541
2,386,725
-
(122,478)
1,240,706
(235,966)
(270,354)
-
29,735
(476,585)
764,121
-
(122,478)
901,063
(66,142)
(202,422)
-
29,727
(238,837)
662,226
-
(244,956)
2,141,769
(302,108)
(472,776)
-
59,462
(715,422)
1,426,347
Praemium has assessed that the customer contracts and technical databases intangibles have a finite useful period of 5
years. This is based on a conservative estimate of customers’ future term using Praemium’s services. The customer contracts
and technical databases intangibles are amortised on a straight-line basis over 5 years (2016: 5 years). All amortisation
charges are included within depreciation and amortisation of non-financial assets.
13. DEFERRED TAX ASSETS AND LIABILITIES
Deferred taxes arising from temporary differences and unused tax losses can be summarised as follows:
DEFERRED TAX ASSETS/(LIABILITIES) 2017
1 JULY
2016
$
RECOGNISED
IN OCI*
$
RECOGNISED
IN BUSINESS
COMBINATION
$
RECOGNISED
IN PROFIT
AND LOSS
$
30 JUNE
2017
$
Current assets
Trade and other receivables
Non-current assets
Intangible assets
Non-current liabilities
11,605
(264,312)
Pension and other employee obligations
360,116
Current liabilities
Provisions
Unused tax losses
Net Deferred Tax Assets/(Liabilities)
173,765
70,649
351,823
Deferred tax asset as represented on the Statement of Financial Position
Deferred tax liability as represented on the Statement of Financial Position
Total
-
-
-
-
-
-
-
18,227
29,832
(114,477)
98,322
(280,467)
-
-
-
(114,477)
(9,885)
350,231
8,353
(3,691)
111,326
182,118
66,958
348,672
629,139
(280,467)
348,672
54
Praemium Annual Report 2017 DEFERRED TAX ASSETS/(LIABILITIES) 2016
1 JULY
2015
$
RECOGNISED
IN OCI*
$
RECOGNISED
IN BUSINESS
COMBINATION
$
RECOGNISED
IN PROFIT
AND LOSS
$
30 JUNE
2016
$
Current assets
Trade and other receivables
Non-current assets
Intangible assets
Non-current liabilities
16,086
(392,923)
Pension and other employee obligations
325,199
Current liabilities
Provisions
Related parties
Unused tax losses
Net Deferred Tax Assets/(Liabilities)
127,671
-
90,710
166,743
Deferred tax asset as represented on the Statement of Financial Position
Deferred tax liability as represented on the Statement of Financial Position
Total
-
-
-
-
-
-
-
14. TRADE AND OTHER PAYABLES
Unsecured liabilities
Trade payables
Accrued expenses
Good and services tax
Other payables
Unearned income
-
-
-
-
-
-
-
(4,481)
11,605
128,611
(264,312)
34,917
360,116
46,094
173,765
-
-
(20,061)
70,649
185,080
351,823
616,135
(264,312)
351,823
Consolidated
2017
$
2016
$
734,740
2,477,740
476,563
984,255
686,689
369,008
1,923,574
455,039
594,450
467,090
5,359,987
3,809,161
All amounts are short term and the carrying values are considered to be a reasonable approximation of fair value.
15. PROVISIONS
Current
Employee benefits
Non-current
Employee benefits
Consolidated
2017
$
2016
$
1,055,558
1,055,558
76,375
76,375
963,683
963,683
76,200
76,200
55
Praemium Annual Report 2017
16. ISSUED CAPITAL
Consolidated
2017
$
2016
$
2017: 398,536,797 (2016: 394,742,296) fully paid ordinary shares
64,840,789
64,098,522
Movement in ordinary share capital
DATE
01-July-2016
28-July-2016
30-September-2016
30-September-2016
30-November-2016
30-November-2016
30-November-2016
31-December-2016
30-January-2017
28-February-2017
31-March-2017
30-June-2017
30-June-2017
DETAILS
NUMBER OF
SHARES
ISSUE PRICE
Balance
394,742,296
Share issue costs
Issue under employee share plan
1,394,699
Issue under employee STI bonus
Issue under employee share plan
Issue under employee STI bonus
Issue from AGM approval
Issue under employee share plan
Share issue costs
Issue under employee share plan
Issue under employee share plan
Issue under employee share plan
177,189
81,000
272,340
74,468
398,533
780,000
104,300
511,972
0.163
0.380
0.280
0.470
0.470
0.154
0.131
0.197
0.165
TOTAL
$
64,098,522
(1,841)
227,588
67,332
22,680
128,000
35,000
61,427
(5,104)
102,000
20,504
84,681
Balance
398,536,797
64,840,789
(a)
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion
to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a
meeting in person or by proxy is entitled to one vote, and upon a poll each share is entitled to one vote.
(b)
Capital management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to
sustain future development of the business. The Group considers its capital to be total equity, which comprises ordinary
share capital, available-for-sale financial assets revaluation reserve, foreign currency translation reserve, option reserve and
accumulated retained earnings/losses.
In managing its capital, the Group’s primary objective is to ensure its continued ability to provide a consistent return for its
equity shareholders through capital growth. In making decisions to adjust its capital structure, for instance by issuing new
shares, the Group considers not only its short-term position but also its long-range operational and strategic objectives.
Share capital
Available-for-sale financial assets revaluation reserve
Foreign currency translation reserve
Option reserve
Accumulated losses
Total equity
Consolidated
2017
$
2016
$
64,840,789
64,098,522
5,232
(850,256)
804,823
10,382
(214,104)
740,820
(47,707,331)
(48,395,595)
17,093,257
16,240,025
56
Praemium Annual Report 2017
17. RESERVES
Reserves
Available-for-sale financial assets revaluation reserve
Foreign currency translation reserve
Option reserve
Total
Consolidated
2017
$
2016
$
5,232
(850,256)
804,823
(40,201)
10,382
(214,104)
740,820
537,098
(a)
Movement in reserves
Movements in reserves are detailed in the statement of changes in equity.
(b)
Nature and purpose of reserves
Foreign Currency Translation Reserve - Exchange differences arising on translation of the foreign-controlled entity are taken
to the foreign currency translation reserve, as described in note 1(n). The reserve is recognised in profit and loss when the
net investment is disposed of.
Option Reserve - The option reserve records the fair value of options issued.
Revaluation Reserve - The revaluation reserve records the revaluation of available-for-sale financial assets.
18. AUDITOR’S REMUNERATION
Remuneration of the auditor of the consolidated entity for:
Grant Thorton
- Audit and review of financial reports
Non-Grant Thornton firm
- Audit and review of financial reports
Audit services remuneration
Other Services
Auditors of Praemium Limited: Grant Thornton
- Internal controls review
- Taxation services
- Other services
Overseas non-Grant Thornton firm
- Taxation services
Total other services remuneration
Total Auditors’ remuneration
2017
$
2016
$
88,700
85,400
154,267
242,967
164,176
249,576
71,500
48,749
16,821
52,770
189,840
432,807
69,427
25,800
9,912
27,599
132,738
382,314
57
Praemium Annual Report 2017
19. CAPITAL AND LEASING COMMITTMENTS
(a)
Operating lease commitments
Non-cancellable operating leases contracted for but not capitalised in the financial statements.
PAYABLE-MINIMUM LEASE PAYMENTS
Not later than 12 months
Between 12 months and 5 years
Total
Consolidated
2017
$
1,285,247
4,094,661
5,379,908
2016
$
1,150,427
2,462,873
3,613,300
Operating lease commitments relate to rental commitments for office premises in Melbourne, London, Coventry, Jersey,
Shenzhen, Yerevan, Hong Kong and Dubai expiring within one to five years. The leases have varying terms, escalation
clauses and renewal rights. On renewal, the terms of the leases are renegotiated.
20. SEGMENT INFORMATION
(a)
Description of segments
Management has determined the operating segments that are used to make strategic decisions. It considers performance
on a geographic basis and has identified 3 reportable segments, being Australia, the United Kingdom and Asia.
(b)
Segment information provided to the Board of Directors
The segment information provided to the Board of Directors for the reportable segments for the year ended 30 June 2017 is
as follows:
2017
Total segment revenue
Inter-segment revenue
AUSTRALIA
UNITED
KINGDOM
ASIA
TOTAL
23,209,310
10,381,845
472,904
34,064,059
-
-
-
-
Revenue from external customers
23,209,310
10,381,845
472,904
34,064,059
EBITDA profit/(loss)
Interest
Interest intercompany and margin
Depreciation and amortisation
Unrealised FX
Unit trust income
Restructure and acquisition costs
Withholding tax not recoverable
Share based payments
Profit/(Loss) on disposal of fixed assets
Net (profit/(loss) before tax
Segment assets
Segment liabilities
Employee benefits expense
9,759,270
(2,225,658)
(1,196,531)
6,337,081
8,911
-
399,827
(458,203)
(304,518)
(357,202)
10,093
(613,092)
(1,718)
-
46
58,376
(22,242)
(3,638)
-
8,957
-
(939,852)
(362,558)
10,093
(1,765,492)
(255,921)
(59,179)
(2,080,592)
(114,916)
(535,311)
(63,091)
-
(52,070)
757
-
10,464
140
(114,916)
(576,917)
(62,194)
7,037,571
(3,605,905)
(1,212,564)
2,219,102
12,954,252
10,004,197
1,211,611
24,170,060
(3,640,519)
(3,421,975)
(14,309)
(7,076,803)
10,775,169
7,545,454
1,325,208
19,645,831
Additions to non-current assets (other than financial assets, deferred
tax, post-employment benefit assets, rights arising under insurance
contracts)
333,898
534,669
4,009
872,576
58
Praemium Annual Report 2017 The segment information provided to the Board of Directors for the reportable segments for the year ended 30 June 2016 is
as follows:
2016
Total segment revenue
Inter-segment revenue
AUSTRALIA
UNITED
KINGDOM
ASIA
TOTAL
20,189,048
7,526,371
562,806
28,278,225
-
-
-
-
Revenue from external customers
20,189,048
7,526,371
562,806
28,278,225
EBITDA profit/(loss)
Interest
Interest intercompany and margin
Depreciation and amortisation
Unrealised FX
Unit trust income
Restructure and acquisition costs
Withholding tax not recoverable
Share based payments
Net profit/(loss) before tax
Segment assets
Segment liabilities
9,200,325
(3,338,317)
(1,750,323)
4,111,685
75,192
50
57
75,299
1,294,268
(1,203,835)
(267,931)
(642,110)
1,580
(554,964)
(129)
32,525
(90,433)
(33,590)
35,878
-
(339,779)
(258,844)
(126,596)
(129,427)
(267,612)
-
-
(64,963)
(8,484)
-
(856,485)
(606,361)
34,105
(725,219)
(129,427)
(341,059)
8,924,506
(5,388,477)
(1,973,491)
1,562,538
13,990,093
8,185,221
1,200,269
23,375,583
(4,953,424)
(2,169,413)
(12,721)
(7,135,558)
Employee benefits expense
8,447,803
9,219,678
1,930,458
19,597,939
Additions to non-current assets (other than financial assets,
deferred tax, post-employment benefit assets, rights arising under
insurance contracts)
317,913
138,127
5,597
461,637
(c) Reconciliation
(i) Revenue
A reconciliation of segment revenue to entity revenue is provided as follows:
Segment revenue
Interest income from other parties
Unit trust distributions
Total revenue
Consolidated
2017
$
2016
$
34,064,059
28,278,225
8,957
10,093
75,299
34,105
34,083,109
28,387,629
59
Praemium Annual Report 2017 20. SEGMENT INFORMATION Continued
(ii)
EBITDA
A reconciliation of EBITDA to operating profit before income tax is provided as follows:
EBITDA
Depreciation and amortisation
Interest revenue
Unrealised FX
Unit trust income
Once-off costs
Share based payments
Withholding tax
Profit/(Loss) on disposal of fixed assets
Net profit/(loss) before tax
(iii)
Segment assets
Consolidated
2017
$
6,337,081
(939,852)
8,957
(362,558)
10,093
(2,080,592)
(576,917)
(114,916)
(62,194)
2,219,102
2016
$
4,111,685
(856,485)
75,299
(606,361)
34,105
(725,219)
(341,059)
(129,427)
-
1,562,538
The amounts provided to the Board of Directors with respect to total assets are measured in a manner consistent with that
of the financial statements. These assets are allocated based on the operations of the segment.
Reportable segments’ assets are reconciled to total assets as follows:
Segment assets
Total assets as per the statement of financial position
Consolidated
2017
$
24,170,060
24,170,060
2016
$
23,375,583
23,375,583
The total of non-current assets other than financial instruments and deferred tax assets (there are no employment benefit
assets and rights arising under insurance contracts) located in Australia is $502,397 (2016: $517,418) and the total of these
non-current assets located in other countries is $5,118,521 (2016: $4,692,874). Segment assets are allocated to countries
based on where the assets are located.
(iv)
Segment liabilities
The amounts provided to the Board of Directors with respect to total liabilities are measured in a manner consistent with
that of the financial statements. These liabilities are allocated based on the operations of the segment.
Reportable segments’ liabilities are reconciled to total liabilities as follows:
Segment liabilities
Total liabilities as per the statement of financial position
(d)
Entity-wide information
Consolidated
2017
$
7,076,803
7,076,803
2016
$
7,135,558
7,135,558
The entity is domiciled in Australia. The amount of its revenue from external customers in Australia is $23,209,310
(2016:$20,189,048) and the total revenue from external customers in other countries is $10,854,749 (2016: $8,089,177).
Segment revenues are allocated based on the country in which revenue and profit are derived.
Revenues of $3,680,712 (2016: $3,695,166) are derived from a single external customer. These revenues are attributable to the
Australian segment.
60
Praemium Annual Report 2017 21. EVENTS AFTER THE REPORTING DATE
(a)
Directors have not become aware of any other matter or circumstance not otherwise dealt within the financial
statements that since 30 June 2017 has significantly affected or may significantly affect the operations of
the Company or the consolidated entity, the results of those operations or the state of affairs in
subsequent financial years.
(b)
The financial report was authorised for issue on 14 August 2017 by the Board of Directors.
22. CASH FLOW INFORMATION
Net income/(loss) for the period
Non cash flows in profit from ordinary activities
Depreciation and amortisation
Share based payments
Bad debt expense/ (recovery)
Shares issued as employee bonus
Unrealised foreign exchange loss
Loss on disposal of plant and equipment
Withholding tax receivable
Revaluation
Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries
Increase/(decrease) in trade and other receivables
Increase/(decrease) in trade payables and accruals
Increase/(decrease) in employee provisions
Decrease in deferred tax asset / payable
Increase/(decrease) in deferred income
Net cash (used by)/provided from operating activities
Consolidated
2017
$
688,269
939,852
576,917
63,759
97,228
362,558
62,194
114,916
(4,573)
2016
$
778,918
856,485
341,059
(77,480)
15,000
607,235
-
129,427
984
(1,422,985)
(2,409,759)
1,435,881
99,992
(1,702,938)
227,048
1,538,118
718,722
4,375
(94,891)
107,533
977,608
61
Praemium Annual Report 2017
23. SHARE-BASED PAYMENTS
(a)
Performance rights
Performance rights are granted to key employees and will be vested in the respective employee on the vesting date upon
the employee successfully meeting the following criteria: 1) the employee must still be an employee as at the vesting date,
2) the Company’s group EBITDA target (as agreed by the Board) is achieved, 3) the Company’s total shareholder return
(TSR) measure is achieved (for 2017 plans) and 4) the employee must successfully deliver upon certain measurable key
performance indicators.
2017
GRANT DATE
VESTING
DATE
BALANCE AT
START OF
THE YEAR
GRANTED
DURING THE
YEAR
EXERCISED
DURING THE
YEAR
FORFEITED
DURING THE
YEAR
BALANCE AT
END OF THE
YEAR
EXERCISABLE
AT END OF
THE YEAR
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
22 Dec 10
27 Apr 11
6 Sep 12
11 Sep 13
12 Nov 14
15 Sep 15
20 Sep 16
30 Sep 13
30 Sep 14
30 Sep 15
30 Sep 14
30 Sep 15
30 Sep 16
30 Sep 15
30 Sep 16
30 Sep 17
30 Sep 16
30 Sep 17
30 Sep 18
30 Sep 17
30 Sep 18
30 Sep 19
183,333
183,333
150,000
90,000
120,000
360,000
510,000
570,000
1,620,000
2,700,000
246,000
637,500
810,000
1,693,500
466,884
913,167
2,191,600
3,571,651
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
619,114
1,031,858
2,476,458
4,127,430
(150,000)
(150,000)
(90,000)
(90,000)
(120,000)
(300,000)
(430,000)
(365,000)
(1,030,000)
-
-
-
-
-
-
(10,000)
(150,000)
(1,825,000)
(160,000)
(135,750)
(422,250)
(40,000)
(598,000)
(347,504)
(50,000)
-
(12,000)
(45,750)
(74,000)
(131,750)
(8,570)
(228,686)
(629,800)
33,333
33,333
60,000
-
-
60,000
80,000
195,000
440,000
715,000
98,250
169,500
696,000
963,750
110,810
634,481
1,561,800
33,333
33,333
60,000
-
-
60,000
80,000
180,000
420,000
680,000
91,500
162,750
-
254,250
110,810
-
-
(397,504)
(867,056)
2,307,091
110,810
-
-
-
-
(154,684)
(171,802)
(412,324)
464,430
860,056
2,064,134
(738,810)
3,388,620
-
-
-
-
Total
8,508,484
4,127,430
(3,270,504)
(1,897,616)
7,467,794
1,138,393
62
Praemium Annual Report 2017 2016
GRANT DATE
VESTING
DATE
BALANCE AT
START OF
THE YEAR
GRANTED
DURING THE
YEAR
EXERCISED
DURING THE
YEAR
FORFEITED
DURING THE
YEAR
BALANCE AT
END OF THE
YEAR
EXERCISABLE
AT END OF
THE YEAR
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
22 Dec 10
27 Apr 11
Milestone
Milestone
9 Sep 11
30 Sep 15
6 Sep 12
11 Sep 13
30 Sep 13
30 Sep 14
30 Sep 15
30 Sep 14
30 Sep 15
30 Sep 16
20 May 14
30 Nov 15
12 Nov 14
15 Sep 15
30 Sep 15
30 Sep 16
30 Sep 17
30 Sep 16
30 Sep 17
30 Sep 18
400,000
266,666
266,667
933,333
1,250,000
1,250,000
210,000
150,000
880,000
1,240,000
600,000
1,342,500
1,790,000
3,732,500
66,667
66,667
766,125
766,125
1,021,500
2,553,750
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
641,275
1,068,792
2,565,100
4,275,167
(216,667)
-
183,333
183,333
-
-
(216,667)
(625,000)
(266,666)
(266,667)
(533,333)
(625,000)
(625,000)
(625,000)
(60,000)
(60,000)
(760,000)
(880,000)
(90,000)
(727,500)
-
-
-
-
-
-
(45,000)
(170,000)
-
-
-
-
183,333
183,333
-
-
150,000
90,000
120,000
360,000
510,000
570,000
1,620,000
-
-
150,000
90,000
120,000
360,000
510,000
510,000
-
(817,500)
(215,000)
2,700,000
1,020,000
(45,455)
(45,455)
(501,750)
-
-
(21,212)
(21,212)
(18,375)
(128,625)
(211,500)
-
-
246,000
637,500
810,000
-
-
227,250
-
-
(501,750)
(358,500)
1,693,500
227,250
-
-
-
-
(174,391)
(155,625)
(373,500)
466,884
913,167
2,191,600
(703,516)
3,571,651
-
-
-
-
Total
9,776,250
4,275,167
(3,086,372)
(2,456,561)
8,508,484
1,790,583
(b)
Shares issued as employee bonus
Shares issued during the period as an employee bonus were measured at the quoted market price of the shares.
Consolidated – 2017
Consolidated – 2016
NUMBER ISSUED
449,529
835,079
WEIGHTED
AVERAGE FAIR
VALUE
0.43
0.32
VALUE
195,331
264,125
63
Praemium Annual Report 2017 23. SHARE-BASED PAYMENTS
(c)
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee costs
were as follows:
Shares issued as employee bonus
Performance rights
24. EARNINGS PER SHARE
(a)
Reconciliation of earnings to profit or loss:
Profit/(loss) attributable to the parent entity
Earnings used to calculate basic EPS
Earnings used in calculation of diluted EPS
(b)
Weighted average number of ordinary shares (diluted):
Weighted average number of ordinary shares outstanding during the year:
Number used in calculating basic EPS
Number used in calculating diluted EPS
Consolidated
2017
$
9,700
576,917
586,617
2016
$
199,331
341,059
540,390
Consolidated
2017
$
688,269
688,269
688,269
2016
$
778,918
778,918
778,918
Consolidated
2017
$
2016
$
396,656,050
397,794,443
393,451,526
395,242,109
2017: 6,329,401 (2016: 6,717,901) options/performance rights outstanding are not included in the calculation of diluted
earnings per share because they are anti-dilutive for the years ended 30 June 2017 and 2016.
64
Praemium Annual Report 2017 25. PARENT ENTITY INFORMATION
The following details information related to the parent entity, Praemium Limited, at 30 June 2017. The information presented
here has been prepared using consistent accounting policies as presented in Note 1.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Contributed equity
Accumulated losses
Option reserve
Available-for-sale financial assets revaluation reserve
Total equity
Profit /(loss) for the year
Other comprehensive income/(loss) for the year
Total comprehensive income/(loss) for the year
2017
$
5,539,297
66,459,592
71,998,889
1,517,080
66,327,682
67,844,762
64,840,789
(61,490,114)
804,823
(1,371)
2016
$
3,802,381
61,537,808
65,340,189
3,232,904
51,120,899
54,353,803
64,098,521
(53,856,547)
740,820
3,592
4,154,127
10,986,386
(7,633,566)
(3,423,833)
-
-
(7,633,566)
(3,423,833)
26. GROUP ENTITIES
The consolidated financial statements include the financial statements of Praemium Limited and those entities detailed in
the following table:
OWNERSHIP
INTEREST
% 2017
OWNERSHIP
INTEREST
% 2016
SUBSIDIARIES
Praemium Australia Limited
Praemium Portfolio Services Limited
Praemium (UK) Limited
Praemium Administration Limited (formerly Smartfund
Administration Limited)
Smartfund Nominees Limited
Smart Investment Management Limited
Plum Software Limited
Praemium Trustees Limited
Praemium International Limited
Praemium RA LLC
Praemium Asia Limited
WealthCraft Systems (Shenzhen) Limited
Wensley Mackay Limited
WM Pension Trustee Services Limited
COUNTRY OF
INCORPORATION
Australia
UK
UK
UK
UK
UK
UK
UK
Jersey
Armenia
Hong Kong
China
UK
UK
Praemium Limited is the ultimate Australian parent entity and the ultimate parent entity of the Group.
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
65
Praemium Annual Report 2017 27. RELATED PARTY TRANSACTIONS
The following disclosures should be read in conjunction with Remuneration Report contained in the Directors’ Report.
Details of Key Management Personnel are disclosed in the Remuneration Report.
(a)
Key management personnel compensation (including non-executive directors)
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
28. BUSINESS COMBINATIONS
2017
1,422,535
135,012
35,356
508,403
2016
1,610,673
141,901
661
270,798
2,101,306
2,024,033
On 1 November 2016, Praemium Limited acquired 100 per cent of Wensley Mackay Limited (Wensley Mackay), a pension
provider in the United Kingdom. Wensley Mackay is based in Cumbria, England and is a privately owned Self-Invested
Personal Pension (SIPP) provider authorised by the FCA. Their experienced and skilled team support the pension planning
needs of independent financial advisers and their clients across the UK, providing Praemium with immediate entry to the UK
private pension space and access a significant new source of funds under administration via its existing adviser relationships.
The fair value of the assets acquired and liabilities assumed at the date of acquisition are:.
Purchase consideration
Fair value of identifiable net assets acquired
Goodwill arising on acquisition
Exchange rate at the date of acquisition (0.6258) £GBP to $AUD.
£GBP
600,000
(461,058)
138,942
$AUD
958,773
(736,750)
222,023
The purchase consideration was wholly in cash. Under the terms of the combination Praemium acquired 100 per cent of the
voting shares in Wensley Mackay Limited.
Consideration transferred settled in cash
Cash and cash equivalents acquired
Net cash outflow on acquisition
Acquisition costs charged as expenses
Net cash paid relating to acquisition
£GBP
600,000
(105,197)
494,803
114,166
608,969
$AUD
958,773
(168,100)
790,673
182,432
973,105
66
Praemium Annual Report 2017 The fair value of the identifiable assets and liabilities of Wensley Mackay at the date of acquisition and the cash flow at
acquisition were as follows:
Cash and cash equivalents
Trade and other receivables
Other current assets
Plant, equipment and leasehold improvements
Customer contracts and technical databases
Total
Trade and other payables
Provisions
Total
Fair value of identifiable net assets acquired
RECOGNISED ON
ACQUISITION
$
CARRYING
VALUE
$
168,100
95,267
7,990
9,337
540,828
821,522
(84,097)
(675)
(84,772)
736,750
168,100
95,267
7,990
9,337
-
280,694
(84,097)
(675)
(84,772)
195,922
Direct costs relating to the acquisition were $182,432. These were all expensed through the statement of profit & loss or
comprehensive income.
Key factors contributing to the $0.24 million of goodwill are the synergies existing with the acquired group, and the
synergies expected to be achieved as a result of combining Wensley Mackay with the rest of the Group. The goodwill that
arose from this business combination is not expected to be deductible for tax purposes. Included in the business acquired
were receivables with a gross contractual and fair value of $95,267 resulting from trade sales with customers. Management
expects these amounts to be collected in full and converted to cash consistent with customer terms.
The acquisition of Wensley Mackay Limited was completed in November 2016. For the period from acquisition to 30 June
2017, we incurred a profit of $48,099 before depreciation, amortisation and tax and revenues of $385,605. If the entity had
been acquired on 1 July 2016, the revenue of the group would have been increased by $578,407, and the profit for the year
would have increased by $72,149 on an extrapolated basis.
29. CONTRACTUAL COMMITMENTS AND CONTINGENCIES
Subsequent to 30 June 2016, the Company has made a claim against a customer for additional billing for expense and delay
incurred arising from project scope expansion and rework. Due to uncertainty surrounding this claim, including the potential
of arbitration to finalise a determination, it is difficult to quantify the impact on the Company at this time.
67
Praemium Annual Report 2017 Directors’ Declaration
The Directors of the Company declare that:
1.
The financial statements and notes, as set out on pages 31-67, are in accordance with the Corporations Act 2001
and:
a.
b.
Comply with Australian Accounting Standards (including the Australian Accounting Interpretations) and
the Corporations Regulations 2001; and
Give a true and fair view of the financial position as at 30 June 2017 and of the performance for the year
ended on that date of the consolidated entity.
2.
The Chief Executive Officer and Chief Financial Officer have each declared that:
a.
b.
c.
The financial records of the Company for the financial year have been properly maintained in accordance
with section 286 of the Corporations Act 2001;
The financial statements and notes for the financial year comply with the Accounting Standards; and
The financial statements and notes for the financial year give a true and fair view.
3.
4.
In the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable.
Note 1 confirms that the consolidated financial statements also comply with International Financial Reporting
Standards. This declaration is made in accordance with a resolution of the Board of Directors.
Barry Lewin
Chairman
14 August 2017
68
Praemium Annual Report 2017
Auditor’s Independence Declaration
The Rialto, Level 30
525 Collins St
Melbourne Victoria 3000
Correspondence to:
GPO Box 4736
Melbourne Victoria 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Praemium Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor
for the audit of Praemium Limited for the year ended 30 June 2017, I declare that, to the best of my
knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON
Chartered Accountants
B. L. Taylor
Partner – Audit & Assurance
Melbourne, 14 August 2017
Grant Thornton ABN 13 871 256 387
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
69
Praemium Annual Report 2017
Independent Audit Report
The Rialto, Level 30
525 Collins St
Melbourne Victoria 3000
Correspondence to:
GPO Box 4736
Melbourne Victoria 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
to the Members of Praemium Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Praemium Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2017, the
consolidated statement of profit or loss and other comprehensive income, consolidated statement
of changes in equity and consolidated statement of cash flows for the year then ended, and notes
to the consolidated financial statements, including a summary of significant accounting policies,
and the directors’ declaration.
In our opinion, the accompanying financial report of the Group, is in accordance with the
Corporations Act 2001, including:
a Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
performance for the year ended on that date; and
b Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
70
At 30 June 2017 the Group’s Statement of Financial
Our procedures included, amongst others:
Key audit matter
Revenue recognition
Note 3
The Group derives revenue through the rendering of
services which are performed under a combination of
individual agreements and contractual arrangements.
We have determined the occurrence of revenue to be
a key audit matter due to the inherent audit risk
associated with revenue from multiple different
contractual arrangements.
Impairment of goodwill balances
Note 11
Position includes goodwill amounting to $2,946,235
relating toPraemium Asia Limited, Plum Software
Limited and Wensley Mackay Limited.
We have determined this is a key audit matter due to
the judgement required by management in preparing
a value in use model to satisfy the impairment test as
prescribed in AASB 136 Impairment of Assets,
including the forecasting of future cash flows and
applying an appropriate discount rate which
inherently involved a high degree of estimation and
judgement by management.
How our audit addressed the key audit matter
Our procedures included, amongst others:
• Documenting and testing the operating
effectiveness of the internal controls in respect to
revenue from the rendering of services;
• Testing a sample of revenue recognised during the
year to supporting documentation to verify the
occurrence;
• Reviewing the terms and conditions of individual
agreements and contractual arrangements to test
appropriateness of revenue recognised in line with
AASB 18 Revenue;
• Performance of analytical procedures with
variances from expectations investigated; and
• Assessing the adequacy of the Group’s
disclosures within the financial statements.
• Reviewing the model for compliance with AASB
136 Impairment of Assets;
• Assessing management’s determination of the
Group’s cash generating units based on our
understanding of the nature of the Group’s
business, the economic environment in which the
segments operate and the Group’s internal
reporting structure;
• Analysing the future cash flow forecasts and
understanding the process by which they were
developed, including testing the underlying
calculations of the models;
-
-
-
checking mathematical accuracy;
ensuring they are consistent with Board
approved budgets; and
critically assessing the key assumptions for
long term growth rates in the forecasts by
comparing them to historical results, business
strategies and economic and industry
forecasts;
• Performing sensitivity analysis on the discount rate
and terminal growth assumptions, considering the
likelihood that changes in assumptions, either
individually or collectively, would result in goodwill
to be impaired; and
• Assessing the adequacy of the Group’s
disclosures within the financial statements.
Valuation of shares in unlisted entity
Note 9
As at 30 June 2017 the Company held shares in an
Our procedures included, amongst others:
unlisted Company with a carrying value of $1 million.
• Obtaining information on any additional arms-
In line with AASB 139 Financial Instruments:
Recognition and Measurement, the investment is to
be measured at fair value and we have determined
this is a key risk as the determination of the fair value
of this investment is subject to judgement as the
shares of this Company are not publicly traded.
length transactions in respect to the shares of the
unlisted Company and comparing the price to the
carrying value;
• Comparing the carrying value to publicly listed
Companies that have comparable businesses; and
• Assessing the adequacy of the Group’s
disclosures within the financial statements.
Praemium Annual Report 2017
Key audit matter
Revenue recognition
Note 3
The Group derives revenue through the rendering of
services which are performed under a combination of
individual agreements and contractual arrangements.
We have determined the occurrence of revenue to be
a key audit matter due to the inherent audit risk
associated with revenue from multiple different
contractual arrangements.
Impairment of goodwill balances
Note 11
At 30 June 2017 the Group’s Statement of Financial
Position includes goodwill amounting to $2,946,235
relating toPraemium Asia Limited, Plum Software
Limited and Wensley Mackay Limited.
We have determined this is a key audit matter due to
the judgement required by management in preparing
a value in use model to satisfy the impairment test as
prescribed in AASB 136 Impairment of Assets,
including the forecasting of future cash flows and
applying an appropriate discount rate which
inherently involved a high degree of estimation and
judgement by management.
How our audit addressed the key audit matter
Our procedures included, amongst others:
• Documenting and testing the operating
effectiveness of the internal controls in respect to
revenue from the rendering of services;
• Testing a sample of revenue recognised during the
year to supporting documentation to verify the
occurrence;
• Reviewing the terms and conditions of individual
agreements and contractual arrangements to test
appropriateness of revenue recognised in line with
AASB 18 Revenue;
• Performance of analytical procedures with
variances from expectations investigated; and
• Assessing the adequacy of the Group’s
disclosures within the financial statements.
Our procedures included, amongst others:
• Reviewing the model for compliance with AASB
136 Impairment of Assets;
• Assessing management’s determination of the
Group’s cash generating units based on our
understanding of the nature of the Group’s
business, the economic environment in which the
segments operate and the Group’s internal
reporting structure;
• Analysing the future cash flow forecasts and
understanding the process by which they were
developed, including testing the underlying
calculations of the models;
-
-
checking mathematical accuracy;
ensuring they are consistent with Board
approved budgets; and
critically assessing the key assumptions for
long term growth rates in the forecasts by
comparing them to historical results, business
strategies and economic and industry
forecasts;
-
• Performing sensitivity analysis on the discount rate
and terminal growth assumptions, considering the
likelihood that changes in assumptions, either
individually or collectively, would result in goodwill
to be impaired; and
• Assessing the adequacy of the Group’s
disclosures within the financial statements.
Valuation of shares in unlisted entity
Note 9
As at 30 June 2017 the Company held shares in an
unlisted Company with a carrying value of $1 million.
Our procedures included, amongst others:
• Obtaining information on any additional arms-
In line with AASB 139 Financial Instruments:
Recognition and Measurement, the investment is to
be measured at fair value and we have determined
this is a key risk as the determination of the fair value
of this investment is subject to judgement as the
shares of this Company are not publicly traded.
length transactions in respect to the shares of the
unlisted Company and comparing the price to the
carrying value;
• Comparing the carrying value to publicly listed
Companies that have comparable businesses; and
• Assessing the adequacy of the Group’s
disclosures within the financial statements.
71
Praemium Annual Report 2017
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
B. L. Taylor
Partner - Audit & Assurance
Melbourne, 14 August 2017
Information Other than the Financial Report and Auditor’s Report Thereon
The Directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2017, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard
Responsibilities of the Directors’ for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the Directors determine is necessary to enable the
preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 18 to 25 of the directors’ report for
the year ended 30 June 2017.
In our opinion, the Remuneration Report of Praemium Limited, for the year ended 30 June 2017,
complies with section 300A of the Corporations Act 2001.
72
Praemium Annual Report 2017
Information Other than the Financial Report and Auditor’s Report Thereon
The Directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2017, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard
Responsibilities of the Directors’ for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the Directors determine is necessary to enable the
preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 18 to 25 of the directors’ report for
Opinion on the Remuneration Report
the year ended 30 June 2017.
In our opinion, the Remuneration Report of Praemium Limited, for the year ended 30 June 2017,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
B. L. Taylor
Partner - Audit & Assurance
Melbourne, 14 August 2017
73
Praemium Annual Report 2017
Additional disclosures required or
recommended by the listing rules &
Corporations Act
Top 20 Shareholders
RANK
NAME
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMS PTY LTD
MR MICHAEL BERNARD OHANESSIAN
MR DONALD WILLIAM STAMMER
J P MORGAN NOMINEES AUSTRALIA LIMITED
SUPERTCO PTY LTD
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LTD
MEROMA PTY LIMITED
UBS NOMINEES PTY LTD
COWEN SUPERANNUATION FUND PTY LTD
DCM BLUELAKE PARTNERS PTY LTD
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
EPR SUPERANNUATION FUND PTY LTD
JILLIBY PTY LTD
SUPERFOS PTY LTD
EMHAL PTY LTD
DW & LC STAMMER PTY LTD
20
DAVID SIMMONDS FRANKS
TOTAL
Balance of Register
GRAND TOTAL
31 JULY 2017
67,223,545
26,250,109
23,457,457
14,500,564
14,295,245
11,624,866
7,638,227
7,000,000
6,078,697
5,353,304
5,000,000
4,654,000
3,750,000
3,451,886
3,370,408
3,197,550
3,000,000
2,600,000
2,510,290
2,222,223
%IC
16.9%
6.6%
5.9%
3.6%
3.6%
2.9%
1.9%
1.8%
1.5%
1.3%
1.3%
1.2%
0.9%
0.9%
0.8%
0.8%
0.8%
0.7%
0.6%
0.6%
217,178,371
181,358,426
398,536,797
54.5%
45.5%
100.0%
Substantial Holdings
There are 398,536,797 ordinary shares on issue in the capital of the Company at the date of this report. There are no other
classes of shares currently on issue other than ordinary shares. Each holder of ordinary shares has the right to attend and
vote at general meetings of the Company in person, by representative or by proxy. On a show of hands, each member
entitled to be present has one vote. If the shareholder is represented by more than one person, they will still only have one
vote on a show of hands. On a poll, each ordinary share represents one vote.
Details of all options and performance rights on issue as at the end of the financial year are set out in Note 23 to the
Accounts.
As at the date of this report, the names of the substantial holders in the Company and the number of ordinary shares to
which each substantial holder and its associates have a relevant interest as disclosed in substantial holding notices given to
the Company are set out below:
PARADICE INVESTMENT MANAGEMENT
AUSTRALIAN ETHICAL FUND
32,681,714
21,017,055
8.2%
5.3%
74
Praemium Annual Report 2017 The following table shows the number of holders of each class of equity securities as at the date of this report and how those
holdings are distributed:
Ordinary Shares
RANGE
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
SECURITIES
NO. OF HOLDERS
NUMBER
%
NUMBER
332,843,821
58,343,202
5,124,492
2,157,055
68,227
83.6%
14.6%
1.3%
0.5%
0.0%
330
1,644
619
642
139
%
9.8%
48.8%
18.3%
19.0%
4.1%
398,536,797
100.0%
3,374
100.0%
Performance Rights
(includes EMI Options, including those that have vested but have not yet been exercised)
RANGE
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
SECURITIES
NO. OF HOLDERS
%
NUMBER
NUMBER
5,965,698
1,365,940
78,871
56,535
750
79.9%
18.3%
1.0%
0.8%
0.0%
7,467,794
100.0%
17
48
11
16
1
93
%
18.3%
51.6%
11.8%
17.2%
1.1%
100.0%
75
Praemium Annual Report 2017 CORPORATE INFORMATION
Registered office and principal place of business
The registered office of the Company is Praemium Limited, Level 19, 367 Collins Street, Melbourne, VIC 3000.
Phone: 1800 571 881
Fax:
+613 8622 1200
Website: www.praemium.com.au
Board of Directors
Barry Lewin
Stuart Robertson
Daniel Lipshut
Share Registry
CEO
Michael Ohanessian
Company Secretary
Paul Gutteridge
Link Market Services: Level 12, 680 George Street, Sydney, NSW 2000. Phone: Within Australia: 1300 554 474
Outside Australia: +61 2 8280 7111
Auditor
Grant Thornton: The Rialto, Level 30, 525 Collins St, Melbourne, VIC 3000. Phone: +613 8663 6000
76
Praemium Annual Report 2017
NOTES
77
Praemium Annual Report 2017 PRAEMIUM LIMITED
Head Office
Level 19, 367 Collins St, Melbourne, VIC 3000
T 1800 571 881
E support@praemium.com..au
W www.praemium.com.au
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Praemium Annual Report 2017