Praemium
Annual Report
2019
Praemium Limited ACN: 098 405 826
Ride the new
wave of technology.
Welcome to the
upgrade.
Contents
The Changing Face of Advice
Chairman’s Report
CEO’s Report
Corporate Highlights
Directors’ Report
Key Facts & Figures
Overview of 2019 Financial Position
Board of Directors
Remuneration Report
Corporate Governance Statement
Financial Report For The Year Ended 30 June 2019
Consolidated Statement of Profit & Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes In Equity
Consolidated Statement of Cash Flows
Notes To The Financial Statements
Directors’ Declaration
Auditor’s Independence Declaration
Independent Audit Report
Additional Disclosure required or recommended by the listing rules and Corporations Act
Corporate Information
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Praemium Annual Report 2019
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With change comes opportunity
The changing face of advice
Advisers in Australia are continuing to assess new business model options post the Royal Commission
with a continued shift of the advice market towards a non-aligned approach.
270% in advisers leaving the major banks in 2019
33%
in licensees over the last 3 years1
A$860b AUM on retail platforms2
Managed account growth in Australia set to continue
The number of financial advisers who recommend managed accounts has almost doubled in
the last 5 years, with new client inflows into managed accounts having tripled on average.
$62.2b in managed accounts as at 31 March 20193
200% growth in FUA in managed accounts in 2 years4
35% of advisers use managed accounts and intend to continue 5
31% of advisers not currently using managed accounts plan to in future5
46% of advisers implement managed accounts5
Whatever type of adviser
business you have, whatever
your client base looks like,
Praemium’s integrated
Managed Accounts Platform
can offer a solution.”
1 Source: Adviser Ratings
2 Source: Strategic Insight March 2019
3 Source: IMAP
4 Source: Morgan Stanley June 12 2019
5 Source: Investment Trends
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Praemium Annual Report 2019
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Praemium Annual Report 2019
The next generation platform
Well positioned for change
On February 4th 2019 Praemium released its next
generation integrated Managed Accounts platform to
the market. Under the banner, ‘Welcome to the Upgrade’,
the fully integrated Managed Accounts platform
provides advisers and wealth managers with the ability
to construct the full breadth of managed accounts
solutions for their clients via a seamless digital platform
experience.
The digital platform includes investor and adviser portals
that provide rich insights into portfolio information and
advice firm analytics across all managed accounts. In a
world where investor expectations are changing rapidly
the portals are also important tools to underpin high-
quality client engagement.
Another great benefit for advisers is that they can now
hold all their clients’ portfolios on a single platform
under a managed account structure, rather than needing
multiple platforms to meet specific client needs, which
creates both initial and ongoing inefficiencies.
Well positioned for future growth
» Australian market leader in managed accounts and only Australian domiciled global platform
» Custodial and non-custodial managed accounts solutions to suit existing, new and emerging business models on
the one integrated platform
» Can enable almost every kind of investor and investment for every kind of advice business (eg. IFA, Private Wealth,
Stockbroking, Family Office, Institutional)
» $860bn market opportunity to tap for managed accounts solutions.
Industry
recognition
The winner has shown persistence over a long period in developing
a service that meets the needs of its clients and their clients for a
solution which is flexible and able to be used by a range of investors.
In a competitive environment the solution needed to support a
wide range of business models and the winner achieves that.”
-IMAP judging panel
Winner
Innovation Category
IMAP Managed Accounts Awards
Winner
Global Investment Platform of the Year
Investment Adviser Awards
Winner
City of London Wealth Management Awards
Best Fund Platform
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Praemium Annual Report 2019
7
Chairman’s Report
Barry Lewin
Chairman
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I’m very pleased to report to shareholders
following another busy and highly productive
year for all at Praemium.
Your company is a global leader in
the provision of technology platforms
for managed accounts, investment
administration and financial planning.
Praemium administers in excess of 500,000 investor
accounts covering over $140 billion in funds globally.
The Company currently provides services to more than
1,000 financial institutions and intermediaries, including
some of the world’s largest financial institutions. All
of this is achieved with a team of 265 people, across
offices in Australia, UK, Jersey, Hong Kong, China,
Armenia and the UAE. Praemium is the only truly
international managed accounts provider.
The past year can be characterised as one where the
company has achieved very solid progress across
a number of growth-focused initiatives. Further
diversification of our business and the significant
broadening of our addressable market and product
offering have contributed to strong growth in our
international business, which is rapidly approaching
profitability and should be a growing contributor to the
business over many years.
The major rebranding and upgrade in February
2019 expanded Praemium’s range of single assets,
and created a comprehensive Individual Managed
Accounts (IMA) service. The IMA significantly increases
Praemium’s Australian addressable market, from the
$21 billion SMA platform segment (as at the end of
2018) to the $858 billion overall platform market today.
Praemium’s unique integrated platform now delivers
an integrated Managed Accounts solution, through the
combination of its existing market-leading Separately
Managed Accounts (SMA), the significant expansion of
the Individually Managed Account (IMA) across a wide
range of investment assets, and Praemium’s Virtual
Managed Accounts (VMA) reporting for non-custodial
holdings.
Major achievements for the year included:
» Record annual gross inflows across Australia and
International markets of $3 billion
» Platform Funds under Administration (FUA) of $9.5
billion
» IMA contributed a rapidly growing 8% of overall FUA
growth since its launch in February
Praemium is the only truly
international managed
accounts provider.”
» With the inclusion of the VMA Administration Service
(VMAAS) for the first time, total FUM is $16.1 billion.
Based on the experience thus far, we expect VMAAS to
be an important driver of future growth.
Key financial highlights for the year included:
Financial Results
Revenue & other income
Earnings before interest, tax,
depreciation and amortisation
(underlying EBITDA)
Cash balances
Platform Funds Under Administration (FUA)
Australia
International
VMAAS
Total
$m
45.1
11.4
13.7
6.9
2.6
6.6
Change
on FY18
+5%
+29%
+13%
+24%
+29%
+4330%
16.1
+108%
In my Chairman’s report last year, I commented on the
impact of the Financial Services Royal Commission.
The reputational damage to the big players has
continued along with the winding back of the vertical
model (where firms offer both product and advice).
There has been further disruption to the industry, with
plans being progressed among the banks to divest their
wealth businesses and a continued trend of inflows
being diverted away from the big 4 domestic banks and
major integrated players to the non-aligned platforms,
including Praemium. Whilst platform fees have become
more competitive, Praemium has always ensured that
the pricing of our managed accounts solutions is very
competitive in the industry for advisers and their clients.
I should not let the opportunity pass to say how
disappointed we were to see a major Australian client
make the decision to leave the platform.
While it is of course disappointing to have a valued
client choose to go in a different direction, it is important
not to overstate the reliance of our business on any
one client. Moreover, several major new agreements
executed during the financial year will exceed the lost
revenue once fully transitioned, including:
» The renewal of our contact with Asgard Capital
Management from November 2019 for up to 6 years,
with a minimum contract value of $3 million per year;
» Morgan Stanley Wealth Management Australia now
utilising all of the products and services available
through our fully Integrated Managed Accounts
Platform, with a contract expansion in April 2019 of
approximately $1 million per annum; and
» Shaw and Partners now utilising all of the products
and services available through our fully Integrated
Managed Accounts Platform, with a contract
expansion in April 2019 of approximately $1 million
per annum.
These contract wins demonstrate just how diversified
and robust our business has become, and this is a great
credit to Michael and his team.
On behalf of the Board, I extend sincere thanks to our
dedicated staff and management around the world
for delivering another strong financial result. They are
working hard to assure our continued success.
My fellow Directors and I also wish to express our
sincere appreciation to all shareholders, and we
are confident you will continue to benefit from your
investment in the Company in the years ahead.
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 2019
CEO’s Report
Michael Ohanessian
CEO
FY2019 was a transformative year for
Praemium. Several key strategic initiatives
worked in combination to deliver strong
financial results.
We ended the year with $16 billion of assets
under administration, a 108% increase over
last year. We also received several industry
awards, which is a gratifying confirmation of
our strategy.
A full-service managed accounts platform
February’s major upgrade created a full-service
Integrated Managed Accounts Platform with more than
2,000 single assets. The upgrade enables advisers to
create bespoke Individually Managed Accounts (IMAs)
in addition to using model portfolios in a Separately
Managed Accounts (SMA) structure.
The IMA significantly expands our addressable markets
globally. In Australia alone our market has expanded
from the $21 billion SMA platform segment (as at
end 2018) to the $858 billion overall platform market.
Although it is early days, we are very encouraged by the
strong client interest in Australia and internationally for
our new IMA capability.
Finally, recent financial press coverage has suggested
that some Australian investment platforms are
providing low or negative interest rates on platform
cash. Praemium has always ensured that the pricing
of our managed accounts solutions is competitive
for advisers and their clients. As such, the Praemium
platform continues to deliver an attractive interest rate
net of fees despite a reducing RBA rate. We also offer
highly competitive brokerage rates and provide clients
the benefits that accrue from the aggregation and
netting of trades. In the June quarter, for instance, the
netting benefit represented an average 20% reduction in
brokerage costs for investors.
Non-custodial administration service
Also contributing to this strong result is the significant
expansion of our Virtual Managed Accounts
Administration Service (VMAAS), launched in December
2017. VMAAS has grown to $6.6 billion in FUA across
more than 4,000 investor portfolios as at the end of
FY2019.
VMAAS is an important addition to Praemium’s
Integrated Managed Accounts Platform. SMA and
IMA are both custodial solutions, whereas Virtually
Managed Accounts (VMA) enable advisers to manage
clients’ off-platform assets directly with the ASX in a
HIN-based structure and use the platform for reporting
In Australia alone our market has
expanded from the $21 billion SMA
platform segment to the $858 billion
overall platform market.”
and administration purposes. This is a popular option
for advisers, especially with higher-value clients, but it
still requires advice businesses to carry out a variety of
administrative tasks. Adding full administration support
– from mail house, portfolio management, account
reconciliation, corporate action election processing
through to full annual reporting – makes the HIN-based
managed account a much more attractive option. It
enables advisers to efficiently cater for their entire client
base, in both custodial and non-custodial accounts, on a
single platform.
VMAAS also rounds out the comprehensive and
complex year-end tax reporting process. With the ATO
expected to capture many billions of digital transactions,
making easy work of complexity is more important than
ever before.
From a revenue perspective, the VMAAS is based on a
flat fee per account. Based on our experience thus far,
we expect VMAAS to deliver an average revenue per
client similar to that of our custodial platform and hence
will be an important driver of future growth.
Growth of the international business
I’m delighted to say that our international business is
now growing very strongly and is on target to reach
profitability next year. We had hoped to achieve this
milestone sooner, but challenging trading conditions in
the UK interrupted our momentum in the early part of
the financial year.
Our momentum in the second half of the financial year
has been very strong. We delivered a record $521 million
of inflows in the second half versus $328 million in
the first. Gross inflows were up 62% from the previous
year and momentum has continued. The international
platform’s huge uplift is due in part to the impact of
regulation in offshore markets such as the Middle
East and Asia, where advice practices are being driven
to adopt platform technology as they transition from
front-loaded commissions to a more transparent fee-for-
service model.
Expanding the footprint of financial
planning software
This year also saw a considerable increase in
international sales of our financial planning software,
WealthCraft, with the addition of 22 new firms. The
release of digital fact-find and risk profiling functionality
has garnered positive feedback, and this in turn has led
to a high proportion of WealthCraft users also adopting
our next-generation platform, demonstrating that
advisers clearly appreciate the merits of an integrated
solution.
Our longer-term vision
We see our new upgraded platform as the 5th
generation in platform technology. This new tech leaps
ahead of traditional wrap platforms that have attempted
to bolt on a managed accounts capability. Our ability to
provide discretionary SMA model portfolios alongside
stock picks within the same account structure is a game
changer.
Our next major program is to fully integrate the platform
and our WealthCraft financial planning system. The
global reach of our combined platform and financial
planning system puts us in a unique competitive
position and helps us support adviser firms to deliver
excellence in management of client wealth.
Praemium as a company is evolving very quickly into a
special business with superior technology and a huge
addressable market. I want to thank our shareholders
and our board for their support. And most importantly, I
want to thank our incredible employees for all their hard
work and dedication. I am terribly proud of them all.
Michael Ohanessian
CEO
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Praemium Annual Report 2019 Michael Ohanessian
Continued growth:
Funds on
platform reached
$9.5 billion
Corporate Highlights
$3.0b
record gross annual inflows
$777m
managed by Smartim
$6.6bn
25%
FUA on VMA administration
service in 18 mths
increase in funds under
administration
29%
increase in underlying
EBITDA
1,638
new model portfolios and single
assets added to the platform
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Praemium Annual Report 2019
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Praemium Annual Report 2019 Directors’ Report
Review of operations
Managed Accounts Platform
Praemium’s proprietary Managed Accounts Platform is
the only Australian platform to serve Australia, UK and
International markets.
On February 4th, 2019 Praemium released its next-
generation Integrated Managed Accounts Platform to
the market. Launched under the banner ‘Welcome to
the Upgrade’, the fully integrated Managed Accounts
Platform provides advisers and wealth managers with
the ability to construct the full breadth of managed
accounts solutions for their clients via a seamless
digital platform experience. The integrated platform
includes: the custodial Separately Managed Accounts
(SMA) and Individually Managed Accounts (IMA);
non-custodial Virtual Managed Accounts (VMA) to
underpin Managed Discretionary Accounts (MDA),
Investor Directed Portfolio Services (IDPS) and similar
structures; and Unified Managed Accounts (UMAs) that
enable a consolidated view of custody and non-custody
investment assets.
The Integrated Managed Accounts Platform represents
a full business model transition for Praemium,
incorporating a technology, process and client
engagement upgrade that brings together our well-
regarded non-custodial platform (VMA) with our
custodial SMA platform under an efficient single
platform structure suitable for Independent Financial
Advisers (IFAs), stockbrokers, private wealth managers,
family offices and institutional clients both domestically
and globally, for our clients who access the platform via
their local jurisdictions.
To support the launch of the new integrated Managed
Accounts Platform, Praemium initiated the ‘Welcome to
the Upgrade’ marketing campaign with a brand re-fresh
and new website. A measure of the success of the
campaign was indicated by our selection as a finalist for
Financial Standard’s MAX Marketing Campaign of the
Year Award - with Praemium being the only investment
platform nominated in this category.
Praemium’s Australian platform has again set records
this year with FUA up 24% to $6.9 billion, from net
inflows of $1 billion.
Praemium has continued to develop a range of product
and technology solutions that provide significant
improvements to the way advisers deliver advice to their
clients. Throughout the financial year, we delivered:
» A major expansion of available platform custodial
assets with the addition of ASX 300 & MSCI 200
equities along with a broad range of managed funds,
hybrids, XTBs and local and international ETFs
» Launch of an intuitive Adviser Portal and dashboard
with individual adviser customisation
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» Addition of new investment managers and model
portfolios, with Praemium the first to offer SMA
models for Magellan, Russell and State Street
» A new term deposit facility via Praemium’s integration
with Cashwerkz, where advisers can now access
a range of multiple-term and interest-rate options
across 21 approved deposit institutions
» A new ‘Data Exchange’ facility, providing advisers with
a streamlined way to manage integrations with cash
providers, financial planning and accounting software
providers and other financial institutions
» A range of new and innovative cash management
features that will assist advisers with targeted cash
flow management to better manage sequencing risk
» Richer platform reporting for advisers and clients,
with the addition of an innovative range of interactive
charting tools
» Release of Praemium’s first AI app, ‘Insights’ which
integrates machine-learning artificial intelligence
technology to help advisers better engage with
clients.
Praemium continues to pioneer R&D advancement
that can support advisers in their understanding and
awareness of client satisfaction. This commitment was
recognised during the year with Praemium winning
the Innovation Award for our Integrated Managed
Accounts Platform at the Institute of Managed Accounts
Professionals (IMAP Awards) in June 2019.
Our International platform also delivered a strong
performance this year, with record gross inflows of
$849 million, up 62% on the prior comparable period.
International platform FUA closed at $2.6 billion at 30
June 2019, a 29% improvement over last year.
During the year The Enhance Group (a specialist
investment reporting and advice provider for UK and
international trustees, family offices and charities with
over $3 billion under administration) and The Fry Group’s
Hong Kong, Singapore, Dubai and UK offices chose
Praemium as their platform.
Our pension offering achieved a significant boost in the
past 12 months, with 1,088 schemes at 30 June 2019, a
141% increase. This included the launch of Praemium’s
Expatriate Retirement Account in 2019, which is a UK
Self-Invested Personal Pension designed to help UK
expatriates across the globe plan and save for their
retirement.
Praemium’s unique platform continued to win accolades
during the year, receiving two international major
awards. Praemium won “International Platform of the
Year” at International Adviser Global Financial Services
Awards and “Best Fund Platform” at the City of London
Wealth Management Awards (COLWMA) against a large
field of UK nominees.
Virtual Managed Accounts (VMA)
Praemium’s Virtual Managed Accounts is a non-
custodial solution for investment and SMSF portfolios,
with first-class reporting, performance analysis and a
digital Investor Portal.
Using our proprietary technology, VMA manages
complex corporate actions, performance analytics, asset
allocation, tax and multi-asset investment reporting.
Investment asset coverage includes all ASX-listed
securities, more than 5,000 international securities on
40 exchanges and many types of unlisted investments,
bonds, managed funds and cash management accounts
(CMAs). VMA provides the broadest range of investment
data feeds in the market with high-quality client and
business reporting tools, accessible through our Investor
Portal, Report Publisher or Export Centre.
Praemium VMA has continued its positive momentum,
with 4% growth in billable portfolios across FY2019 and
the extension of the Asgard contract for a further 3 to 6
years from November 2019.
Major enhancements to VMA in the reporting period
include:
» A new validation dashboard for non-custodial
reporting that identifies at a glance the source of any
portfolio reconciliation breaks, thus helping to ensure
portfolios are always fully up to date.
» A suite of new report options that includes the ability
to calculate performance on externally held cash
accounts as well as enabling advisers to split out FX
gains/losses.
» A range of new options for performance reporting and
reporting on advice fees.
VMA Administration Service (VMAAS)
The VMA Administration Service is an add-on to
the Praemium VMA that enables financial planning
practices to outsource the administration of their client
portfolios to Praemium, freeing up advisers from the
time-consuming tasks associated with managing clients’
investment portfolios.
Managing client assets directly with the ASX in a
HIN-based structure is a popular option for advisers,
especially for their higher-value clients, but can become
a substantial administration burden. Adding full
administration support – from mail house, portfolio
management, account reconciliation, corporate action
election processing through to full annual reporting
– makes the HIN-based managed account a more
Praemium Annual Report 2019
attractive option. VMAAS can also be combined
with Praemium’s Managed Accounts platform for
professional investment management and reporting.
VMAAS is an important addition to Praemium’s
Integrated Managed Accounts Platform as it enables
advisers to serve their clients’ administration and
investment needs from a single platform.
The reporting period saw a significant expansion of
VMAAS with both Morgan Stanley Wealth Management
Australia and Shaw and Partners signing up to the
service. At 30 June 2019, VMAAS FUA had reached $6.6
billion across 4,421 portfolios, compared to $148 million
12 months ago.
CRM and Financial Planning
Praemium’s CRM and financial planning solution,
WealthCraft, offers a complete back-office service to
reduce data input, spend less time on administration,
increase efficiency and better serve clients. WealthCraft
provides a single view of clients, efficient practice
management tools, integrated client communication,
adviser remuneration, portfolio valuation and a suite of
professional reporting tools. WealthCraft is Microsoft
O365-based so integrates with Outlook, Word and Excel
for a seamless solution accessible from most devices.
The reporting period saw a rollout of new fact find and
risk assessment tools that have been well received by
clients and prospects. Additionally, ongoing regulatory
changes in the European and Middle East markets,
such as the General Data Protection Regulation (GDPR),
continue to drive interest in WealthCraft’s CRM and
financial planning software.
WealthCraft has grown strongly in the UK and
international markets, with users increasing 33% over
the past 12 months.
Investment management
Smart Investment Management (Smartim) is an FCA-
authorised investment management business that
provides a range of innovative model portfolios and
funds for the UK and international adviser markets. The
London-based in-house team provides a range of multi-
asset and multi-currency portfolios, available in GBP,
USD and EUR. Assets can include equities, property,
fixed interest, absolute return and cash.
During the financial year, Model Portfolios FUA increased
9% to $358 million from improving platform flows.
Market declines and lower flows into the Smartfund
impacted overall FUM, which declined 39% to $419 million.
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Praemium Annual Report 2019 The year ahead
February 2019’s upgrade to a full-service integrated Managed Accounts Platform marked an
important milestone in Praemium’s history. In particular, the significant expansion of our
Individually Managed Account (IMA) solution, with an investment universe of over 2,000
single investment assets, has seen strong client interest in Australia and internationally and
we expect this continue.
The competitive landscape for the Australia platform
market continues to change to favour independent,
nimble and technically advanced players like Praemium,
and we will invest in capitalising on this change over
the next few years. There has been a marked shift in
adviser intentions with more than two thirds of advisers
in Australia using or intending to use managed accounts
in the near future and a high percentage of asset flows
being directed to them. This shift is essentially due to
the inherent investment, transparency and cost benefits
for investors as well as for the business efficiency gains
for advice businesses. Our appeal to the broader advice
segment is expected to increase, following the release
in August 2019 of new Praemium SMA and SuperSMA
pricing structures that are highly competitive for all client
segments.
To ensure we capture new business in the coming year,
Praemium launched a competitive new pricing strategy
for SMA and SuperSMA. These changes came about on
1 August and have been well received by clients.
Also in Australia, our VMA Administration Service
(VMAAS) is an important addition to Praemium’s
Integrated Managed Accounts Platform. Based on
our experience thus far, we expect VMAAS to deliver
an average revenue per client similar to that of our
Managed Accounts Platform and hence will be an
important driver of future growth.
We also saw considerable take-up of WealthCraft CRM
internationally, often in conjunction with the platform as
advisers appreciate the merits of an integrated solution.
Implementation of the International version of the
innovative Adviser Portal, ready for client beta testing in
the September quarter, will save advice businesses time
on implementation and administration. It will also enable
higher quality client engagement through easy access to
rich client portfolio and adviser business information.
Our global focus on retirement solutions continues to
gather momentum. We believe that our presence in
Australia and the UK gives us the requisite technical,
regulatory and platform expertise to meet the needs of
UK and Australian expats, whose retirement accounts
represent a large and underserved market. Praemium’s
strategy is to be the destination of choice for investors
looking to maximise the benefits of their savings for
retirement.
We also remain committed to pension portability,
especially for UK expats moving to Australia. With
Australian platforms no longer deemed to be compliant
as qualifying UK pension scheme operators, a
substantial segment of the market has been left without
a satisfactory solution. Praemium, with its expertise in
retirement solutions in both Australia and the UK, is well
placed to find viable and compelling solutions for this
market gap.
.
Looking internationally, the UK platform market has
seen disruption due to consolidation of underlying
platform technology, which has increased the currency
of platforms like Praemium that have control over
their technology. We remain focused on accelerating
the strong performance of our International business,
which has seen record platforms inflows this year.
Furthermore, although the UK is well advanced in
creating model portfolio solutions for its clients, it lags
behind managed accounts technology in effective
execution. For this reason, Praemium has great potential
in the UK and we will look to increasing our distribution
efforts for the year ahead.
Continued
innovation
Launch of insights
Future positioning
Praemium is proud to have launched an innovative
artificial intelligence function, Insights. The application is
designed to enhance client engagement and strengthen
the adviser-client relationship.
Insights uses data science and technology to examine
client behavioural patterns that may indicate a need
for additional advice or guidance. Whether patterns are
driven by investment/market performance or a change
in a client’s personal circumstances, the adviser will be
equipped with the knowledge and insight to engage with
their client at a time when they most need it.
» New pricing strategy for SMA, SuperSMA and SMSF
» Targeting future growth in investment choices with
500 managed funds
» Further platform functionality updates on data feeds,
adviser resources, reporting and performance
» Launch of expatriate managed account solutions and
SIPP to support growing expat requirements
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Praemium Annual Report 2019
17
Key facts and figures
Overview of 2019 financial position
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
FY2019
FY2018
Change
Change
$000
45,141
33,759
11,382
5,439
2,889
2,550
0.6
13,748
23,573
6,193
$000
43,182
34,340
8,842
4,903
3,488
1,415
0.4
12,121
20,280
5,412
$000
1,959
(581)
2,540
536
(599)
1,135
0.2
1,627
3,293
781
%
5%
(2%)
29%
11%
(17%)
80%
78%
13%
16%
14%
^Other income as outlined in Note 4 of the financial statements
*Underlying EBITDA excludes restructure, arbitration and acquisitions costs of -$1.6 million (2018: -$1.8 million), share based payments of -$2.0 million (2018: -$1.1 million) and
foreign exchange movements of currencies held on deposit of $0.0 million (2018: $0.0 million), as detailed in Note 20 of the attached annual report
Service Metrics
FUA
FY2019
FY2018
Change
Change
Managed Account Platform (Australia)
A$6.96bn
A$5.61bn
$1.35bn
Managed Account Platform (International)
A$2.57bn
A$2.00bn
$0.58bn
24%
29%
Virtual Managed Account Administration Service
A$6.56bn
A$0.15bn
$6.41bn
4,330%
International funds based on closing FX rate 0.5535 (2018: 0.5634)
Results
The consolidated profit attributable to the members
of the Group was $2,549,883. This was from a 5%
increase in revenue and other income, compared to a
2% reduction in expenses, resulting in a 29% increase in
underlying earnings before interest, tax, depreciation and
amortisation (EBITDA) to $11.4 million. The company’s
net profit before tax was $5,438,859, 11% higher than
the prior year, while the current year’s tax expense of
$2,888,976 was 17% lower than the prior financial year
due to a reduction in the company tax rate from 30% to
27.5%.
The Group’s net asset position at 30 June 2019 was
$23,572,895 with $13,748,441 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 2019 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.
18
Praemium Annual Report 2019
19
Board of Directors
Barry Lewin
Non-executive Chairman
Stuart Robertson
Non-executive director
Daniel Lipshut
Non-executive director
Claire Willette
Non-executive director
Michael Ohanessian
CEO/Managing Director
Paul Gutteridge
CFO/Company Secretary
Barry Lewin was appointed as a
non-executive chairman 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, including diversified
international resource company
North Limited, managing their legal
and commercial Australian and
international interests.
Barry is currently non-executive
chairman for ASX-listed entities
Elmo Software (ELO) and QuickFee
(QFE). He 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. Barry has degrees in
Commerce and Law and holds an
MBA from Swinburne University,
Melbourne.
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 and is
currently the head of private assets
and distribution at Ellerston Capital
Limited.
Stuart is non-executive chairman of
Money3 Corporation Limited (since
November 2018, director since
January 2016). Stuart chairs the
Group’s Audit, Risk & Compliance
Committee and is a member of the
Group’s Remuneration Committee.
Stuart is a Chartered Accountant,
Fellow of FINSIA, Member of the
Australian Institute of Company
Directors and holds an MBA from
the MGSM.
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.
Daniel is currently co-owner and
Managing Director of Intercorp Pty
Ltd, which provides international
trade, advice and representation
to large multinational companies.
Daniel is also the Managing
Director of Israel Aerospace
Systems Limited, co-founder of
One Atmosphere Pty. Limited, a
Tasmanian start up developing
helicopter safety systems and a
Director of Sunnyvale Ventures
Australia and Positively Buoyant
Consulting.
Daniel chairs the Group’s
Remuneration Committee and is
also a member of the Audit, Risk &
Compliance Committee. Daniel is a
graduate of the AICD and Defence
Industry Study Course (DISC), and
holds an MBA from the University of
Technology Sydney.
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.
At Praemium, Paul’s responsibilities
include overseeing the financial
strategies of the Group and
managing the areas of accounting,
tax, corporate governance,
compliance, investor relations,
human resources, company
secretary and treasury. Paul is a
Chartered Accountant and holds
a Bachelor of Commerce from the
University of Melbourne.
Michael Ohanessian was appointed
as Chief Executive Officer in
August 2011, and re-appointed as
Managing Director in May 2018.
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 is also currently non-executive
director at Bluechiip Limited, and
holds a Bachelor of Engineering and
MBA from Melbourne University.
Claire Willette was appointed
as a non-executive director on
28 August 2017. Her career
has spanned national security,
emerging technologies and critical
infrastructure sectors, with a
focus on developing governance
frameworks, planning, risk
management and performance/
program management. Claire
brings a wealth of experience as
a senior executive in the United
States Department of Defense, the
Australian Department of Defence
and in the private sector. Claire has
managed a wide variety of projects
both in scale and complexity,
including whole-of-government
initiatives and national projects.
Claire is an Associate of, and sat
on the Board of Directors for, the
Australian Risk Policy Institute and
is a Senior Expert Advisor to the
International Standards Committee
in the areas of Risk, Resilience and
Business Continuity.
Claire is a member of the Group’s
Audit, Risk & Compliance Committee
and Remuneration Committee.
She has a BA from George Mason
University (US) and a Masters
of International Relations from
Cambridge University (UK).
20
21
Praemium Annual Report 2019 Remuneration
Report 2019
Disclosures relating to Directors
and 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
11 Meetings
Audit, Risk & Compliance
Commitee
6 Meetings
Remuneration Committee
2 Meetings
Eligible To
Attend
Attended
Eligible To
Attend
Attended
Eligible To
Attend
Attended
Barry Lewin
Stuart Robertson
Daniel Lipshut
Claire Willette
Michael Ohanessian
11
11
11
11
11
11
10
11
10
11
-
6
6
6
-
-
6
5
5
-
-
2
2
2
-
-
2
2
1
-
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 2017
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 Note 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 $62,000 (ex GST).
Further disclosures
11 million performance rights, based on achievement of
vesting hurdles after 3 years, have been issued to senior
executives under the Current Plan since the end of the
financial year. Other than as set out in this report:
» No Directors have any other rights or options over
shares in, debentures of, or interests in a registered
scheme made available by the Company or a related
body corporate;
» There are no contracts to which any Director is a
party or under which any Director is entitled to a
benefit; and
» There are no contracts that confer a right to call for
or deliver shares in, or debentures of or interests in a
registered scheme made available by the Company or
a related body corporate.
22
Praemium Annual Report 2019
23
Remuneration Report
During the financial year the following people served as
Directors of the Company:
» Barry Lewin
» Stuart Robertson
» Daniel Lipshut
» Claire Willette
» Michael Ohanessian
Remuneration philosophy and principles
The Company’s performance is dependent upon the
quality of its people. To this end, the Company applies
the following principles in its remuneration framework:
An external remuneration consultant was used during
the financial year for bench-marking of non-executive
and senior executive roles.
The Remuneration Committee is authorised by the
Board to investigate any activity within its charter. It is
authorised to seek any information it requires from any
employee and all employees are directed to cooperate
with any request made by the Remuneration Committee.
In considering the Group’s performance and benefits
for shareholder wealth, the Board has regard to the
following with respect to the current year and the
previous three financial years:
2019
2018
2017
2016
» Provide competitive rewards to attract high-calibre
EBITDA^ ($m)
11.4
NPAT($m)
EPS (cents)
2.5
0.6
8.8
1.4
0.4
6.3
0.8
0.2
2.6
(2.1)
(0.5)
^ 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.
In accordance with best practice corporate governance,
the structure of non-executive director and executive
remuneration is separate and distinct.
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 and includes non- executive directors
Stuart Robertson and Claire Willette. 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 Charter, which is
reviewed annually, is available from the Company’s
website. The Remuneration Committee is required to
make recommendations to the Board on all matters
within the Remuneration Committee’s Charter.
The Company’s remuneration framework 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 framework 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.
Non-executive director remuneration
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 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 key business
drivers. Unless Board-set budgets are achieved, no
bonus payment will be made. Overachievement of key
business drivers may 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. A copy of the plan can
be found on the Company’s website.
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.
No securities were issued to non-executive directors
during the financial year. 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 names and positions of each person who held
the position of Director of Praemium Limited at any
time during 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 20.
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 &
Company Secretary
» 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.
24
25
Praemium Annual Report 2019 Remuneration Report (continued)
LTI measures – Executive & key contributors
Rules for all staff to achieve LTI entitlements (currently
the issue of performance rights) are such that:
» Entitlements issued are based on achieving specified
company targets and individual annual performance;
» Entitlements vest over 3 years; and
» Entitlements expire upon cessation of employment.
Vesting hurdles are based on Group profitability
(EBITDA) targets set by the Board and Total Shareholder
Return (TSR) measurement over the LTI cycle. For
key Executives, vesting hurdles are weighted 50% for
Group profitability targets and 50% for achievement of
TSR targets. For Praemium staff, vesting hurdles are
weighted 100% for Group profitability targets.
The test of Group profitability is based on a 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 performance of a
comparable peer group of companies (Peer Group) over
the LTI period, as approved by the Board. Achievement
of entitlements is based on actual performance relative
to the Peer Group, with no entitlements achieved
below 80% of the Peer Group’s TSR and up to 100% of
entitlements achieved upon full achievement of the Peer
Group’s TSR.
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.
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 2019 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 and Managing Director, 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 9 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.
Voting and comments made at the Company’s
last annual general meeting
Praemium Limited received 95.0% of ‘yes’ votes on its
Remuneration Report for the financial year ended 30
June 2018. The Company received no specific feedback
on its Remuneration Report at the Annual General
Meeting.
Detail of key management personnel remuneration - 2019
2019
Short-Term
Employee
Benefits
Salary fees &
commissions
Parent entity directors
Barry Lewin
124,886
Stuart Robertson
Daniel Lipshut
Claire Willette
86,250
71,005
60,502
Michael Ohanessian
510,000
Key management personnel
Share Based Payments
Post-
Employment
Benefits
Other
Long-Term
Benefits
Bonus by
way of
shares 1
Performance
rights 2
Superannuation
Long
service
leave
Total Performance
related
%
-
-
-
-
-
-
-
-
-
11,864
-
6,745
5,748
-
-
-
-
136,750
86,250
77,750
66,250
0%
0%
0%
0%
121,881
25,000
22,531
679,412
18%
Paul Gutteridge
298,813
44,822
118,091
28,387
13,023
503,136
Anna Itsiopoulos
266,775
40,620
96,972
25,344
4,803
434,514
Adam Pointon
242,785
36,418
109,100
23,065
14,158
425,526
Christine Silcox
199,639
29,946
82,286
18,966
8,108
338,945
2019 total
1,860,655
151,806
528,330
145,119
62,623
2,748,533
32%
32%
34%
33%
25%
1. Bonus by way of shares relates to FY2019’s STI for key executives, with annual results achieving target. Achievement of STI is calculated as a percentage of base salary,
with amounts accrued into FY2019’s financial results, but not yet issued/paid at the date of this 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.
3. Director fees for Stuart Robertson and Daniel Lipshut include chair fees for the Audit, Risk and Compliance Committee and Remuneration & Nomination Committee
respectively
26
27
Praemium Annual Report 2019 Remuneration Report (continued)
Detail of key management personnel remuneration - 2018
Bonuses Included In Remuneration
2018
Short-Term
Employee
Benefits
Salary fees &
commissions
Parent entity directors
Barry Lewin
109,589
Stuart Robertson
Daniel Lipshut
Claire Willette*
80,000
63,927
46,505
Share Based Payments
Post-
Employment
Benefits
Other
Long-Term
Benefits
Bonus by
way of
shares 1
Performance
rights 2
Superannuation
Long
service
leave
Total Performance
related
%
-
-
-
-
-
-
-
-
10,411
-
6,073
4,417
-
-
-
-
120,000
80,000
70,000
50,992
0%
0%
0%
0%
Michael Ohanessian
443,333
130,000
34,058
25,000
17,769
650,160
25%
Key management personnel
Paul Gutteridge
273,378
152,711
132,726
25,971
8,878
593,664
Anna Itsiopoulos
255,705
147,942
77,630
24,292
1,906
507,475
Adam Pointon
231,869
135,693
125,573
22,028
733
515,896
Christine Silcox
174,016
-
80,385
16,532
1,739
272,672
2018 total
1,678,322
566,346
450,372
134,724
31,025
2,860,789
48%
44%
51%
29%
36%
1. Bonus by way of shares relates to:
a) achievement of FY2018 STI for key executives, with annual results exceeding target by 10%. Achievement of STI is calculated as 30% of base salary, with amounts accrued
into FY2018’s financial results and
b) achievement of the FY2017 STI for key executives, as approved by the Board in September 2017.
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.
* Claire Willette joined the Board on 28 August 2017.
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
Parent entity directors
Michael Ohanessian
Key management personnel
Paul Gutteridge
Anna Itsiopoulos
Adam Pointon
Christine Silcox
0%
21%
21%
21%
21%
100%
79%
79%
79%
79%
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
Forfeited/
lapsed
During the
year
Total fair
value in
year
Number
$
$
$
$
Parent entity directors
Michael Ohanessian
16-Oct-18
30-Sep-21
278,614
235,429
-
(15,607)
219,822
Key management personnel
Paul Gutteridge
16-Oct-18
30-Sep-21
111,329
94,073
Anna Itsiopoulos
16-Oct-18
30-Sep-21
100,891
85,253
Adam Pointon
16-Oct-18
30-Sep-21
90,454
76,434
Christine Silcox
16-Oct-18
30-Sep-21
13,578
11,473
-
-
-
-
(7,154)
86,919
(6,484)
78,769
(5,813)
70,621
(5,817)
5,656
28
29
Praemium Annual Report 2019 Remuneration Report (continued)
Other Information
A) Performance rights holdings
Alloted Date
Balance
1 July 2018
Granted as
compensation
Vested/
Exercised
Forfeited/
lapsed during
the year
Balance
30 June 2019
Parent entity directors
Michael Ohanessian
16-Oct-18
476,744
278,614
(107,268)
(18,470)
629,620
Key management personnel
Paul Gutteridge
16-Oct-18
800,000
111,329
(471,945)
(20,485)
418,899
Anna Itsiopoulos
16-Oct-18
533,326
100,891
(195,616)
(20,420)
418,181
Adam Pointon
16-Oct-18
749,490
90,454
(448,523)
(17,641)
373,780
Christine Silcox
16-Oct-18
508,503
13,578
(219,882)
(109,935)
192,264
3,068,063
594,866
(1,443,234)
(186,951)
2,032,744
B) Shareholdings directly and indirectly beneficially held
Balance
1 July 2018
Received as
Compensation
Received on the
exercise of share
schemes
Other changes
during the year
Balance
30 June 2019
2019
Parent entity directors
Barry Lewin
Stuart Robertson
Daniel Lipshut
Claire Willette
215,000
220,000
-
-
Michael Ohanessian
15,119,786
Key management personnel
Paul Gutteridge
2,093,703
Anna Itsiopoulos
Adam Pointon
53,992
777,358
Christine Silcox
4,003,386
22,483,225
-
-
-
-
-
-
-
-
-
-
-
-
-
-
250,000
465,000
165,000
385,000
250,000
250,000
-
-
107,268
296,000
15,523,054
471,945
(564,222)
2,001,426
195,616
(99,999)
149,609
448,523
(132,282)
1,093,599
219,882
-
4,223,268
1,443,234
164,497
24,090,956
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 $123,000
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.
Barry Lewin,
Chairman
12 August 2019
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
32-36 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.
30
31
Praemium Annual Report 2019 FY2019 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:
https://www.praemium.com/au/about-us/shareholders/
corporate-governance/ or are otherwise available under
the “Shareholders” section
(under “About Us”) 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.
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 2019;
» 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:
Gender
representation
%
Board
30 June 2019
30 June 2018
Female
Male
Female
Male
20%
80%
20%
80%
Senior Executive
33%
67%
47%
53%
Group
39%
61%
37%
63%
Board & committee performance (Principle 1.6)
The Chairman conducts a review of Board and
Committee performance at least once each calendar
year, with this process conducted in this financial
year. The process usually involves the preparation of
a questionnaire, to which Directors and Committee
members 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.
32
33
Praemium Annual Report 2019 FY2019 Corporate Governance Statement
(continued)
Principle 2 – Structure the board to
add value
Table 2 - Areas of competence and skills of the
Board of Directors
Nomination committee (Principle 2.1)
The functions of a Nomination Committee are outlined
in the Company’s Remuneration Committee Charter,
with a copy of the Charter published on the Company’s
website.
The Committee comprises Daniel Lipshut (Chairman),
Stuart Robertson and Claire Willette, whom are
independent directors. The Committee met twice during
the financial year, with meetings attended by Committee
members as disclosed in the Directors Report.
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).
Board composition (Principles 2.2 & 2.3)
The Company’s Board comprises four non-executive
directors and one executive director (Managing
Director). In addition to the information outlined on
page 20, 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
Director
Term in office
as Director
Qualifications
Status
Area
Competence
Corporate leadership
Business leadership, public listed
company experience
Company experience
Executive leadership
Executive or CEO,
assesing senior
management
Strategy
Financial acumen
Market & Industry
Technology
Successful career as a senior
Executive or CEO, assessing
senior management
Successful career as a senior
Executive or CEO, assessing
senior management
Accounting, business strategy,
competitive business analysis,
corporate financing, legal, mergers
& acquisitions, commercial
agreements, risk 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
Sustainability &
stakeholder management
Corporate governance
From
May 2017
BCom, BLaw,
MBA, AICD
Independent
International
International business
management, geographical
experience
Barry Lewin
(Chairman)
Stuart
Robertson
Daniel
Lipshut
Claire
Willette
From
May 2017
From
May 2017
CA, MBA, AICD
Independent
MBA, AICD
Independent
From
August 2017
BA, IR
(Masters)
Independent
Michael
Ohanessian
From
May 2018
BE, MBA
Executive
Director independence (Principle 2.4)
Using the criteria recommended by the ASX Guidelines,
all four of the Company’s non-executive directors (Barry
Lewin, Stuart Robertson, Daniel Lipshut and Claire
Willette) are independent Directors.
Three non-executive Directors are shareholders in the
Company, however are not substantial shareholders.
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.
Independence of chairman (Principle 2.5)
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)
CEO & CFO assurance (Principle 4.2)
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 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 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.
Auditor attendance (Principle 4.3)
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.
The Company has a code of conduct which is published
on its website. The Code is reviewed annually and
updated where appropriate.
Principle 5 – Make timely and balanced
disclosure
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), Daniel Lipshut
and Claire Willette. All members are independent
and non-executive. The relevant qualifications and
experience of the members of the committee are
outlined in Table 1 of principle 2.2.
Six 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.
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.
34
35
Praemium Annual Report 2019 Financial Report
2019
FY2019 Corporate Governance Statement
(continued)
Principle 7 – Recognise and
Manage Risk
Principle 8 – Remunerate Fairly and
Responsibly
Risk commitee (Principle 7.1)
Remuneration committee (Principle 8.1)
The Company’s Remuneration Committee comprises
Daniel Lipshut (Chairman), Stuart Robertson and
Claire Willette. All members are independent and non-
executive.
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 pages
24-31 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.
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), Daniel Lipshut and Claire Willette.
All members are independent and non-executive. Four
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.
Risk management framework (Principle 7.2)
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.
36
37
Praemium Annual Report 2019 Consolidated Statement of Profit & Loss
and Other Comprehensive Income
Statement of Financial Position
For the year ended 30 June 2019
Revenue from contracts with customers
Other income
Employee costs
Depreciation, amortisation and impairments
Legal, professional, advertising and insurance expense
IT support
Commissions expense
Travel expenses
Occupancy costs
Net foreign exchange gains
Telecommunication costs
Platform trading & recovery
Other expenses
Share based payments
Restructure, arbitration and acquisition costs
Withholding tax not recoverable
Profit before income tax expense
Income tax expense
Note
2019
$
2018
$
3
4
5
5
5
44,177,663
42,193,434
962,850
988,617
(23,883,127)
(21,797,153)
(1,861,302)
(1,047,478)
(5,041,981)
(4,222,271)
(1,998,412)
(1,705,565)
(2,417,653)
(5,091,862)
(1,283,306)
(1,138,123)
(2,037,174)
(1,907,365)
8,033
123,932
(374,404)
(310,108)
3,281,786
1,915,665
31,383
(59,086)
(1,968,101)
(1,060,002)
(1,636,668)
(1,829,168)
(520,728)
(150,850)
5,438,859
4,902,617
6
(2,888,976)
(3,488,076)
Profit attributable to members of the Group
2,549,883
1,414,541
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Changes in the fair value of other financial assets
Exchange differences on translation of foreign operations
Total items that may be reclassified subsequently to profit or loss
Other comprehensive income for the year, net of tax
-
142,754
142,754
142,754
46,183
256,954
303,137
303,137
Total comprehensive income attributable to owners of the parent
2,692,637
1,717,678
Profit for the year attributable to owners of the parent
2,692,637
1,717,678
Total comprehensive income attributable to owners of the parent
2,692,637
1,717,678
Earnings per share
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
The accompanying notes form part of the financial statements.
38
24
24
0.6
0.6
0.4
0.4
As at 30 June 2019
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
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
Unearned income
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 form part of the financial statements.
Note
2019
$
2018
$
7
8
9
10
11
12
13
14
15
15
13
16
17
13,748,441
12,120,879
5,727,252
5,397,901
1,908,442
1,936,860
21,384,135
19,455,640
1,363,476
2,287,113
1,302,725
1,316,010
2,810,502
3,207,751
7,118,779
3,245,328
1,398,641
807,144
13,994,123
10,863,346
35,378,258
30,318,986
6,013,280
6,117,932
1,492,999
1,333,384
2,395,444
7781,528
1,669,012
1,543,770
11,570,735
9,776,614
128,721
105,907
234,628
62,647
199,782
262,429
11,805,363
10,039,043
23,572,895
20,279,943
67,019,085
65,371,547
1,329,317
1,201,151
(44,775,507)
(46,292,755)
23,572,895
20,279,943
39
Praemium Annual Report 2019
Statement of Changes in Equity
Statement of Cash Flows
For year ended 30 June 2019
Ordinary
Shares
$
Accumulated
Losses
$
Foreign
Currency
Translation
Reserve
$
Share Based
Payments
Reserve
$
Revaluation
Reserve
$
Total
$
Equity as at beginning of period
65,371,547 (46,292,755)
(593,302)
1,743,038
51,415
20,279,943
Change in accounting policy
-
(1,032,692)
-
-
(51,415)
(1,084,107)
65,371,547 (47,325,447)
(593,302)
1,743,038
Restated total equity at the beginning
of the financial year
Profit attributable to members of the
parent entity
Other comprehensive income/(loss)
Total comprehensive income/(loss)
for the year
-
-
-
2,549,883
-
-
142,754
2,549,883
142,754
Transactions with owners in their capacity as owners
Issue of shares
Option expense
Exchange difference on option reserve
21,501
-
-
Transfer on exercise of options
1,626,037
1,647,538
-
-
57
-
57
-
-
-
-
-
-
-
-
-
1,662,864
-
(1,626,037)
36,827
Equity as at 30 June 2019
67,019,085 (44,775,507)
(450,548)
1,779,865
-
-
-
-
-
-
-
-
-
-
19,195,836
2,549,883
142,754
2,692,637
21,501
1,662,864
57
-
1,684,422
23,572,895
For year ended 30 June 2019
Cash flows from operating activities:
Receipts from customers
Note
2019
$
2018
$
44,930,666
43,110,132
Payments to suppliers and employees
(35,733,191)
(34,987,033)
Interest received
Unit trust distributions received
Income tax paid
25,110
4,142
21,501
2,881
(3,034,049)
(2,735,705)
Net cash provided by operating activities
22
6,192,678
5,411,776
Cash flows from investing activities:
Payments for property, plant and equipment
Proceeds from Investments
Payment for intangible assets
Net cash used in investing activities
Cash flows from financing activities:
(490,588)
879,826
(522,461)
5,000
(4,716,687)
(2,317,645)
(4,327,449)
(2,835,106)
Net cash provided by financing activities
-
-
For year ended 30 June 2018
Ordinary
Shares
$
Accumulated
Losses
$
Foreign
Currency
Translation
Reserve
$
Share Based
Payments
Reserve
$
Revaluation
Reserve
$
Total
$
Net cash increase in cash and cash equivalents
1,865,229
2,576,670
Cash and cash equivalents at beginning of year
12,120,879
8,983,491
Equity as at beginning of period
64,840,789
(47,707,331)
(850,256)
804,823
5,232
17,093,257
Effect of exchange rates on cash holdings in foreign currencies
(237,667)
560,718
Profit attributable to members of the
parent entity
Other comprehensive income
Total comprehensive income/(loss)
for the year
-
-
-
1,414,541
-
-
256,954
1,414,541
256,954
Transactions with owners in their capacity as owners
Issue of shares
Option expense
Exchange difference on option reserve
Transfer on exercise of options
95,102
-
-
435,656
530,758
-
-
35
-
35
-
-
-
-
-
-
-
-
-
1,373,871
-
(435,656)
938,215
-
1,414,541
Cash and cash equivalents at end of year
7
13,748,441
12,120,879
The accompanying notes form part of the financial statements.
46,183
303,137
46,183
1,717,678
-
-
-
-
-
95,102
1,373,871
35
-
1,469,008
Equity as at 30 June 2018
65,371,547 (46,292,755)
(593,302)
1,743,038
51,415
20,279,943
The accompanying notes form part of the financial statements.
40
41
Praemium Annual Report 2019
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.
(i) New standards adopted by the Group
» AASB 9 Financial Instruments
» AASB 15 Revenue from Contracts with Customers
The Group had to change its accounting policies and
make certain retrospective adjustments following the
adoption of AASB 9 and AASB 15. This is disclosed in
note 1(w).
(ii) New standards and interpretations not yet adopted
Certain new accounting standards and interpretations
have been published that are not mandatory for 30 June
2019 reporting periods and have not been early adopted
by the Group. The Group’s assessment of the impact
of these new standards and interpretations is set out
below.
AASB 16 Leases
AASB 16 was issued in February 2016. It will result in
almost all leases being recognised on the balance sheet
by lessees, as the distinction between operating and
finance leases is removed. Under the new standard,
an asset (the right to use the leased item) and a
financial liability to pay rentals are recognised. The only
exceptions are short-term and low-value leases.
Based on the Group’s assessment, it is expected that
the first-time adoption of AASB 16 for the year ending
31 December 2019 will have a material impact on the
transactions and balances recognised in the financial
statements, in particular:
» lease assets and financial liabilities on the balance
sheet will increase by $4,974,052 and $4,673,477
respectively (based on the facts at the date of the
assessment)
» earnings before income tax in the statement of profit
or loss and other comprehensive income will be
higher as the implicit interest in lease payments for
former off balance sheet leases will be presented as
part of finance costs rather than being included in
operating expenses
» operating cash outflows will be lower and financing
cash flows will be higher in the statement of cash
flows as principal repayments on all lease liabilities
will now be included in financing activities rather than
operating activities. Interest can also be included
within financing activities
The Group will apply the standard from its mandatory
adoption date of 1 January 2019. The Group intends
to apply the simplified transition approach and will
not restate comparative amounts for the year prior to
first adoption. Right-of-use assets for property leases
will be measured on transition as if the new rules had
always been applied. All other right-of-use assets will
be measured at the amount of the lease liability on
adoption (adjusted for any prepaid or accrued lease
expenses).
There are no other standards that are not yet effective
and that would be expected to have a material impact
on the entity in the current or future reporting periods
and on foreseeable future transactions.
(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 financial assets through profit or loss,
financial assets and liabilities at fair value through profit
or loss, certain classes of property, plant and equipment
and investment property.
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.
The depreciation rates used for each class of
depreciable assets are:
Class of fixed asset
Depreciation
rate
Method
Plant, furniture and
equipment
10-20%
Straight-line
Computer equiment
20-33%
Straight-line
Buildings & leasehold
improvements
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.
(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 2019 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 intercompany 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.
42
43
Praemium Annual Report 2019 (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:
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.
» Customer lists: 5 years
» Databases: 5 years
» Software: 3 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
44
(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 loss when 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. 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) Financial assets at fair value through profit or loss
(FVTPL) (Adopted on 1 July 2018)
Financial assets that are held within a different business
model other than ‘hold to collect’ or ‘hold to collect and
sell’ are categorised at fair value through profit and
loss. Further, irrespective of business model financial
assets whose contractual cash flows are not solely
payments of principal and interest are accounted for at
FVTPL. All derivative financial instruments fall into this
category, except for those designated and effective as
hedging instruments, for which the hedge accounting
requirements apply (see below).
(vi) Available-for-sale financial assets (applicable to
periods ending 30 June 2018 and earlier)
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.
45
Praemium Annual Report 2019 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.
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 1
July 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 measured as 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-owned
entities 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 (applicable to periods
ending 30 June 2018 and earlier)
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.
(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) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing
the profit attributable to equity holders of the Group,
excluding any 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.
46
47
Praemium Annual Report 2019 (r) Goods and services tax (GST)
(u) Critical accounting estimates and judgments
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 $5,438,859 during the financial year ended
30 June 2019 (June 2018 $4,902,617) with accumulated
losses amounting to $44,775,507 as at 30 June 2019.
Cash reserves were $13,748,441 at 30 June 2019.
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, European 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.
At this time, the Directors are of the opinion that no
asset is likely to be realised for an amount less than
the amount at which it is recognised in the financial
report as at 30 June 2019. 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.
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
(applicable to periods ending 30 June 2018 and earlier)
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.
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.
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.
(w) Change in Accounting Policies
A number of new and revised standards are effective for
annual periods beginning on or after 1 July 2018.
The Group has adopted all of the new and revised
standards and Interpretations issued by the Australian
Accounting Standards Board (the AASB) which are
mandatory to apply to the current reporting period.
Disclosures required by these standards that are
deemed material have been included in the financial
statements on the basis that they represent a significant
change in information from that previously made
available.
AASB 15 and AASB 9 became mandatorily effective on
1 January 2018. Accordingly, these standards apply
for the first time to this set of financial statements.
The nature and effect of changes arising from these
standards are summarised in the section below.
Provision for impairment of receivables (applicable to
30 June 2018 and earlier)
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.
(v) 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.
48
49
Praemium Annual Report 2019 New standards adopted as at 1 July 2018:
AASB 9 Financial Instruments
AASB 9 Financial Instruments replaces AASB 139
Financial Instruments: Recognition and Measurement
requirements. It makes major changes to the previous
guidance on the classification and measurement of
financial assets and introduces an ‘expected credit loss’
model for impairment of financial assets.
While this represents significant new guidance, the
implementation of the new guidance did not have a
material impact on trade receivables and any gain
and loss from changes in market value of financial
instruments held. As such, the Group has applied
transitional relief, elected not to restate prior periods
and have not recognised differences in opening retained
earnings as at 1 July 2018.
The adoption of AASB 9 has mostly impacted the
following areas:
Classification and measurement of the Group’s
financial assets
» Listed financial assets - Available for sale financial
assets under AASB 139 included listed equity
investments of $1,287,113 at 30 June 2018. These
were reclassified to fair value through profit or loss
(FVPL) under AASB 9.
» $51,415 was transferred from the revaluation reserve
to retained earnings on 1 July 2018.
Impairment of financial assets
For trade receivables and contract assets under
AASB 15 the Group applies a simplified approach of
recognising lifetime expected credit losses as these
items do not have a significant financing component.
Reconciliation of financial instruments on adoption of AASB 9 - 1 July 2018
Measurement category
Carrying amount
Original AASB 139
classification
New AASB 9
classification
Closing balance
30 June 2018
(AASB 139)
Adoption of
AASB 9
Opening balance
1 July 2018
(AASB 9)
Financial Assets
Trade and other receivables
Loans and
receivables
Amortised
cost
83,325
Listed equities
Available for Sale
FVPL
1,287,113
-
-
83,325
1,287,113
AASB 15 Revenue from Contracts with Customers
AASB 15 replaces AASB 118 Revenue, AASB 111
Construction Contracts and several revenue-related
Interpretations. The new Standard has been applied
as at 1 July 2018 using the modified retrospective
approach. Under this method, the cumulative effect of
initial application is recognised as an adjustment to the
opening balance of retained earnings at 1 July 2018 and
comparatives are not restated. In accordance with the
transition guidance, AASB 15 has only been applied to
contracts that are incomplete as at 1 July 2018.
The adoption of AASB 15 has affected Virtual Managed
Accounts revenue. VMA revenue is billed either yearly
or quarterly depending on the terms of the service
agreement. Under AASB 118, certain revenues were
recognised at the time of delivery of the risks and
rewards of the product(s) in question to customers of
the Group. Upon application of AASB 15 and a transfer
to the requisite “control” model – where revenue is
recognised as and when control of a good or service is
transferred – revenue for these product(s) is changed to
an over-time model of revenue recognition.
The tables below highlight the impact of AASB 15
on the Group’s statement of profit or loss and other
comprehensive income and the statement of financial
position for the period ending 30 June 2019. The
adoption of AASB 15 did not have a material impact on
the Group’s statement of cash flows
Statement of Profit or Loss and Other Comprehensive
Income (Extract)
Amounts under
AASB 118
Adjustments
Amounts
under AASB
15
Revenue
43,962,525
215,138
44,177,663
Statement of Financial Position (Extract)
Amounts under
AASB 118
$
Adjustments
$
Amounts under
AASB 15
$
Non-current assets
Deferred tax
asset
934,023
464,618
1,398,641
Total assets
934,023
464,618
1,398,641
Current liabilities
Unearned
income
Total
liabilities
Equity
Retained
earnings
908,817
1,486,627
2,395,444
908,817
1,486,627
2,395,444
46,292,755
1,084,107
47,376,862
On the date of the initial application of AASB 9 and AASB
15, 1 July 2018, the impact to retained earnings of the
Group is as follows:
Equity as at 1 July 2018
Recognition of contract liability for
portfolio administration and reporting
Permanent tax difference from
recognition of contract liability for
portfolio administration and reporting
Transfer of (gain)/loss on equity
investments at fair value through other
comprehensive income to retained
earnings
$
46,292,755
1,548,725
(464,618)
(51,415)
Adjustment to retained earnings
1,032,692
Restated equity as at 1 July 2018
47,325,447
Note that the changes in accounting policies specified
below only apply to the current period. The accounting
policies included in the Group’s last annual financial
statements for the year ended 30 June 2018 are the
relevant policies for the purposes of comparatives.
AASB 15 and AASB 9 became mandatorily effective
for periods beginning on or after 1 January 2018.
Accordingly, the Group applied AASB 15 and AASB 9 for
the period ended 30 June 2019. Changes to the Group’s
accounting policies arising from these standards are
summarised below:
(i) Revenue
Revenue arises mainly from the provision of Managed
Accounts Platform services, investment management,
portfolio administration and reporting and financial
planning software.
Managed Accounts Platform and Investment
Management – The Group provides platform
administration and/or investment management services
for investments held on our custodial platforms.
Revenue is determined monthly in arrears based on
the value of investor portfolios, or transaction costs
relating to the buying and selling investments in
investor portfolios and the revenue is recognised in the
accounting period in which the services are rendered.
This method best depicts the transfer of services to
the customer because the entire benefit has been
transferred to the customer in the accounting period.
Portfolio Administration – The Group enters into
contracts with its customers based on provision of
technology services for terms between one and five
years in length. Contract values are determined based
on the usage of technology licences and investor
portfolios. Customers are required to pay in advance
for each quarterly or annual service period as specified
50
51
Praemium Annual Report 2019 performance obligations based on their relative stand-
alone selling prices. The transaction price for a contract
excludes any amounts collected on behalf of third
parties.
(ii) Financial Instruments
Recognition and derecognition
Financial assets are recognised when the Group becomes
a party to the contractual provisions of the financial
instrument and are measured initially at fair value adjusted
by transactions costs, except for those carried at fair value
through profit or loss, which are measured initially at fair
value. Subsequent measurement of financial assets and
financial liabilities are described below.
trade and most other receivables fall into this category
of financial instruments.
Financial assets at fair value through profit or loss
(FVPL)
Financial assets that are held within a business model
other than ‘hold to collect’ or ‘hold to collect and sell’ are
categorised at fair value through profit and loss.
Further, irrespective of business model, financial assets
whose contractual cash flows are not solely payments
of principal and interest are accounted for at FVPL.
Financial assets at FVTPL include listed equity securities
and listed unit trusts.
Classification and initial measurement of financial assets
Impairment of financial assets
in each contract. Revenue is recognised over time on a
straight-line basis over the term of each contract in the
accounting period in which the services are rendered.
As the amount of work required to perform under these
contracts does not vary significantly from month-to-
month, the straight-line method provides a faithful
depiction of the transfer of the services.
Virtual Managed Accounts Administration Service
– The Group enters into contracts with its customers
based on provision of administration of client portfolios
for terms between 1 and 5 years in length. Revenue
is determined monthly in arrears based on the asset
classes held in the portfolio and is recognised in the
accounting period in which the services are rendered.
This method best depicts the transfer of services to
the customer because the entire benefit has been
transferred to the customer in the accounting period.
Financial Planning Software – The Group enters into
contracts with its customers based on provision of
technology services up to 1 year in length. Contract
values are determined based on the usage of technology
licences and revenue is recognised in the accounting
period in which the services are rendered and the total
benefit has been transferred to the customer in the
accounting period. Customers are required to pay in
advance for each monthly or annual service period as
specified in each contract.
To determine whether to recognise revenue, the Group
follows a 5-step process:
1. Identifying the contract with a customer
Except for those trade receivables that do not contain
a significant financing component and are measured
at the transaction price in accordance with AASB 15,
all financial assets are initially measured at fair value
adjusted for transaction costs (where applicable).
Subsequent measurement of financial assets
For the purpose of subsequent measurement, financial
assets in the unit trust and regulatory reserve are
classified as financial assets at fair value through profit
or loss (FVPL) upon initial recognition.
Classifications are determined by both:
» the entity’s business model for managing the
financial asset
» the contractual cash flow characteristics of the
2. Identifying the performance obligations
financial assets.
3. Determining the transaction price
4. Allocating the transaction price to the performance
obligations
5. Recognising revenue when/as performance obligation(s)
are satisfied.
The Group recognises contract liabilities for consideration
received in respect of unsatisfied performance obligations
and reports these amounts as other liabilities in the
statement of financial position. Similarly, if the Group
satisfies a performance obligation before it receives the
consideration, the Group recognises either a contract
asset or a receivable in its statement of financial
position, depending on whether something other than
the passage of time is required before the consideration
is due.
The Group may enter into transactions involving a range
of the Group’s products and services, for example for the
delivery of SMA and portfolio administration or financial
planning software. In all cases, the total transaction
price for a contract is allocated amongst the various
All income and expenses relating to financial assets
that are recognised in profit or loss are presented within
finance costs, finance income or other financial items,
except for impairment of trade receivables which is
presented within other expenses.
Financial assets at amortised cost
Financial assets are measured at amortised cost if
the assets meet the following conditions (and are not
designated as FVPL):
» they are held within a business model whose
objective is to hold the financial assets and collect its
contractual cash flows
» the contractual terms of the financial assets give rise
to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
After initial recognition, these are measured at amortised
cost using the effective interest method.
Discounting is omitted where the effect of discounting
is immaterial. The Group’s cash and cash equivalents,
2. Financial risk management
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
AASB 9’s new impairment model use more forward
looking information to recognize expected credit losses -
the ‘expected credit losses (ECL) model’. The application
of the new impairment model depends on whether there
has been a significant increase in credit risk.
The Group considers a broader range of information
when assessing credit risk and measuring expected
credit losses, including past events, current conditions,
reasonable and supportable forecasts that affect the
expected collectability of the future cash flows of the
instrument.
Trade and other receivables and contract assets
» Investments in unlisted unit trusts
The Group makes use of a simplified approach in
accounting for trade and other receivables as well as
contract assets and records the loss allowance at the
amount equal to the expected lifetime credit losses.
In using this practical expedient, the Group uses its
historical experience, external indicators and forward-
looking information to calculate the expected credit
losses using a provision matrix.
All financial assets, except for those at fair value through
profit or loss (FVPL) and equity investments at fair value
through other comprehensive income (equity FVOCI),
are subject to review for impairment at least at each
reporting date to identify whether there is any objective
evidence that a financial asset or a group of financial
assets is impaired.
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.
52
53
Praemium Annual Report 2019 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”.
Management reviews trade receivables balances, and
aging profiles of the total trade receivables on a monthly
basis.
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.
2018
Current
Non-current
Within 6
months
$
6-12
Months
$
1-5
Years
$
Later than
5 years
$
Trade payables
831,070
Accrued
expenses
3,277,041
Other payables
1,434,220
Total
5,542,331
-
-
-
-
-
-
-
-
-
-
-
-
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.
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.
As at 30 June 2019, financial liabilities have contractual
maturities, which are summarised below:
The Group’s interest rate risk arises from:
» Bank balances which give rise to interest at floating
rates; and
2019
Current
Non-current
» Cash on term deposit, which are at floating rates.
Within 6
months
$
6-12
Months
$
1-5
Years
$
Later than
5 years
$
The amounts subject to cash flow interest rate risk are
in the statement of financial position carrying amounts
of these items.
Trade payables
638,673
Accrued
expenses
2,950,617
Other payables
1,738,667
Total
5,327,957
-
-
-
-
-
-
-
-
-
-
-
-
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.
54
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 (2018:
+/-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.
2019
$
-100
basis
pts
+100
basis
pts
+100
basis
pts
2018
$
-100
vasis
pts
137,484
(137,484)
121,209
(121,209)
Cash
and cash
equivalents
Net result
137,484 (137,484)
121,209 (121,209)
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.
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
Cash at bank and on
term deposit
Consolidated
2019
GBP
2018
GBP
1,366,320
2,876,182
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 2019
(2018: 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 2019 and 2018.
If the Australian dollar had strengthened against the
GBP sterling by 5% (2018: 5%) then this would have had
the following impact on profit and other equity:
Consolidated
2019
$
2018
$
(65,063)
(136,961)
-
-
Profit after tax
Other equity
If the Australian dollar had weakened against the GBP
by 5% (2018: 5%) then this would have had the following
impact on profit and other equity:
Consolidated
2019
$
2018
$
71,912
151,378
-
-
Profit after tax
Other equity
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.
55
Praemium Annual Report 2019 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:
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.
Nominal amounts
Cash at bank and on
term deposit
Consolidated
2019
USD
2018
USD
15,494
8,499
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 2019 (2018: 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 2019 and 2018.
If the Australian dollar had strengthened against the
USD by 5% (2018: 5%) then this would have had the
following impact on profit and other equity:
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
financial assets at fair value through profit or loss.
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% (2018: 10%) this would have increased other
income for both the Company and Group by $136,348
(2018: $13,317) A decrease of 10% would have reduced
other income by the same amount.
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;
Profit after tax
Other equity
Consolidated
2019
$
(738)
-
2018
$
(405)
-
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).
If the Australian dollar had weakened against the USD
by 5% (2018: 5%) then this would have had the following
impact on profit and other equity:
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 2019 and 30 June 2018.
Consolidated
2019
$
815
2018
$
447
-
-
Profit after tax
Other equity
56
2019
Assets
Financial assets at fair value through profit or loss:
Level 1
Level 2
Level 3
Total
- Listed unit trusts
- Shares in unlisted entity
- Regulatory reserve
2018
Assets
130,415
-
1,233,061
1,363,476
-
-
-
-
-
-
-
-
130,415
-
1,233,061
1,363,476
Level 1
Level 2
Level 3
Total
Financial assets at fair value through profit or loss:
- Listed unit trusts
- Shares in unlisted entity
- Regulatory reserve
133,166
-
1,153,947
1,287,113
-
-
-
-
-
133,166
1,000,000
1,000,000
-
1,153,947
1,000,000
2,287,113
57
Praemium Annual Report 2019 3. Revenue from contracts with customers
6. Income Tax Expense
a) Numerical reconciliation of income tax expense to prima facie tax payable
Revenue From
Portfolio services and administration
Managed accounts and investment management
Financial planning software
Interest income from other parties
Unit trust distributions
Total revenue
4. Other Income
R&D Incentive Received (UK)
Lease revenue
Fund Recoveries
Commissions
Other
5. Expenses
Defined contribution superannuation expense
Net foreign exchange gains
Depreciation of plant and equipment
Amortisation of intangible assets
Other expenses
Consolidated
2019
$
2018
$
15,933,586
15,434,505
25,950,715
24,496,151
2,256,792
2,235,620
25,110
11,460
21,501
5,657
44,177,663
42,193,434
Consolidated
2019
$
875,366
86,737
-
747
-
962,850
2018
$
662,506
57,177
13,857
213,432
41,645
988,617
Consolidated
2019
$
2018
$
1,887,712
1,554,820
(8,033)
(123,932)
514,908
1,346,394
(31,383)
474,610
572,868
59,086
Rental expense relating to operating leases – straight line expense
1,636,248
1,504,026
Impairment losses - trade receivables
(31,940)
56,120
Profit before tax
Consolidated
2019
$
2018
$
5,438,859
4,902,617
Prima facie tax expense on loss before income tax at 27.5% (2018: 30%)
1,495,686
1,470,785
Non-deductible expenses
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:
Origination and reversal of temporary differences
Tax expense
(429,226)
827,057
-
(260,233)
623,526
1,196,230
2,760
647,734
792,575
10,158
2,888,976
3,488,076
2,818,128
3,402,954
70,848
85,122
2,888,976
3,488,076
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
2019
$
2018
$
Unused tax losses for which no deferred tax asset has been recognised
55,561,453
56,463,920
Deductible temporary differences for which no deferred tax asset has been recognised
234,360
225,160
Potential tax benefit @ 27.5% (2018: 30%)
55,795,813
56,689,080
15,343,849
17,006,724
The benefit of the tax losses, which relate to the Company’s UK and Asian operations, will only be realised if:
(i) The Group derive future assessable income of a nature and amount sufficient to enable the benefit of the unused tax losses and deductible
temporary differences to be realised.
(ii) The Group continue to comply with the conditions for deductibility imposed by law; and
(iii) There are no changes in taxation legislation which adversely affect the Group’s ability to realise 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
4,927,437
4,137,182
Franking credits that will arise from the payment of the amount of provision for
income tax
Total franking credits
1,228,022
172,404
6,155,459
4,309,586
2019
$
2018
$
58
59
Praemium Annual Report 2019
7. Cash and Cash Equivalents
Impaired receivables
Cash on hand
Term deposit
Bank balances
Consolidated
2019
$
1,380
2018
$
1,748
388,965
388,577
13,358,096
11,730,554
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 $5,555 (2018: $83,325) 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:
Bank balances include a cash management account held in Australia which earns a weighted average effective interest rate of 0.4% (2018: 1.3%), 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%
(2018: nil%). Cash on term deposit matures on an annual basis. Cash on hand is non-interest bearing.
8. Trade, Other Receivables and Contract Assets
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
13,748,441
12,120,879
Not more than 3 months
Current
Trade receivables
Allowance for credit losses
Contract assets
Deposits receivable
Other receivables
Consolidated
2019
$
2018
$
2,722,370
3,181,412
(5,555)
(83,325)
2,716,815
3,098,087
1,825,897
1,411,797
454,557
729,983
434,556
453,461
3,010,437
2,299,814
5,727,252
5,397,901
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.
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
2019
$
2018
$
2,280,435
2,890,751
-
326,815
109,565
-
207,336
-
2,716,815
3,098,087
A reconciliation of the movement in the provision for impairment of receivables is shown below:
The average credit period on trade receivables is 30 days. No interest is charged on trade or other receivables.
At 1 July 2018
Provision for impairment recognised in the year
Receivables written off as uncollectible
Balance at 30 June 2019
60
61
There are no other impaired assets within other receivables and it is expected that other receivable balances will be
received when due.
Consolidated
2019
$
2,640
330
2,585
-
2018
$
7,961
6,391
68,973
-
5,555
83,325
Consolidated
2019
$
83,325
(31,940)
(45,830)
5,555
2018
$
99,440
56,120
(72,235)
83,325
Praemium Annual Report 2019
9. Financial Assets
Financial assets at fair value through profit or loss
Listed Investments
Units in unit trust
Regulatory reserve
Unlisted Investments
Shares in unlisted entity
2019
$
2018
$
130,415
133,166
1,233,061
1,153,947
-
1,000,000
Total financial assets of fair value through profit or loss
1,363,476
2,287,113
Shares in the unlisted entity were disposed of during the reporting period.
10. Property, Plant and Equipment
Consolidated
2019
$
2018
$
525,565
512,931
(312,948)
(204,651)
212,617
308,280
1,219,435
1,077,818
(896,335)
(816,357)
323,100
261,461
5,269,968
4,864,387
(4,502,960)
(4,118,118)
767,008
746,269
1,302,725
1,316,010
Buildings and leasehold improvements at cost
Accumulated depreciation
Total buildings and leasehold improvements
Furniture, fixtures and fittings at cost
Accumulated depreciation
Total furniture, fixtures and fittings
Computer equipment at cost
Accumulated depreciation
Total computer equipment
Total property, plant and equipment
62
10. Property, Plant and Equipment
30 June 2019
Furniture, fixtures
and fittings
Computer
Equipment
Balance at 30 June 2019
323,100
767,008
212,617
1,302,725
30 June 2018
Furniture, Fixtures
And Fittings
Computer
Equipment
$
261,461
132,508
(1,168)
$
746,269
354,711
(2,214)
Buildings &
leasehold
improvements
$
Total
$
308,280
1,316,010
3,369
-
490,588
(3,382)
(70,964)
(339,297)
(104,647)
(514,908)
1,263
7,539
5,615
14,417
Buildings &
Leasehold
Improvements
$
Total
$
385,003
1,239,391
7,101
522,461
$
646,398
411,031
-
-
(2,966)
$
207,990
104,329
(2,966)
(55,361)
(318,086)
(101,163)
(474,610)
7,469
6,926
17,339
31,734
Balance at 1 July 2018
Additions
Disposals
Depreciation expense
Exchange differences
Balance at 1 July 2017
Additions
Disposals
Depreciation expense
Exchange differences
Balance at 30 June 2018
261,461
746,269
308,280
1,316,010
11. Goodwill
The movements in the net carrying amount of goodwill are as follows:
Gross carrying amount
Balance at 1 July 2018
Transfer to intangible asset
Net exchange differences
Balance at 30 June 2019
Accumulated impairment
Balance at 1 July 2018
Balance at 30 June 2019
Carrying amount 30 June 2019
Consolidated
2019
$
2018
$
3,230,751
2,969,235
(450,485)
-
53,236
261,516
2,833,502
3,230,751
(23,000)
(23,000)
(23,000)
(23,000)
2,810,502
3,207,751
63
Praemium Annual Report 2019 (a) Impairment testing
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)
696,939
657,997
Plum Software Limited
1,862,539
2,182,995
Praemium Retirement Services Ltd (formerly Wensley Mackay Limited)
251,024
366,759
Goodwill allocation at 30 June 2019
2,810,502
3,207,751
2019
$
2018
$
(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.
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 3.0% (2018: 3.0%), for Plum Software
is 2.0% (2018: 2.0%) and for Praemium Retirement
Services is 2.0% (2018: 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 12.40%
(2018: 12.37%), for Plum Software is 9.56% (2018:
9.49%) and for Praemium Retirement Services is 9.56%
(2018: 9.49%).
64
12. Other Intangible Assets
Intangible Assets 2019
Gross carrying amount
Balance at 1 July 2018
Additions
Net exchange differences
Balance at 30 June 2019
Amortisation and Impairment
Balance at 1 July 2018
Amortisation
Net exchange differences
Balance at 30 June 2019
Customer
Contracts
$
Databases
$
Total
$
1,812,751
3,222,662
5,035,413
302,963
4,896,494
5,199,457
26,618
19,849
46,467
2,142,332
8,139,005
10,281,337
(1,114,055)
(676,030)
(1,790,085)
(302,952)
(1,043,442)
(1,346,394)
(14,033)
(12,046)
(26,079)
(1,431,040)
(1,731,518)
(3,162,558)
Carrying amount 30 June 2019
711,292
6,407,487
7,118,779
Intangible Assets 2018
Gross carrying amount
Balance at 1 July 2017
Additions
Balance at 30 June 2018
Amortisation and Impairment
Balance at 1 July 2017
Amortisation
Net exchange differences
Balance at 30 June 2018
Customer
Contracts
$
Databases
$
Total
$
1,812,751
901,063
2,713,814
-
2,321,599
2,321,599
1,812,751
3,222,662
5,035,413
(829,894)
(448,628)
(1,278,522)
(326,216)
(246,652)
(572,868)
42,055
19,250
61,305
(1,114,055)
(676,030)
(1,790,085)
Carrying amount 30 June 2018
698,696
2,546,632
3,245,328
Database assets includes Plum’s technical database and capitalised software costs. As at 30 June 2019, we had
software assets under development amounting to $3,436,319 (2018: $1,562,344). As these assets were not installed
and ready for use, no amortisation has been charged on the amounts.
Additions to database include $4,896,494 (2018: $2,321,599) of capitalised software costs for internally generated
assets. Database includes $6,104,624 for capitalised software costs and $302,863 for technical database.
Praemium has assessed that the customer contracts and technical database intangibles are amortised on a straight-
line basis over 5 years (2018: 5 years). The capitalised software costs are amortised on a straight-line basis over
3 years (2018: 3 years). This is based on an estimate of customers’ future term using Praemium’s services. All
amortisation charges are included within depreciation and amortisation on non-financial assets.
Of the $1,043,442 amortisation in databases, $862,873 relates to capitalised software costs, and $180,569 is for
technical databases.
65
Praemium Annual Report 2019 13. Deferred Tax Assets and Liabilities
14. Trade and Other Payables
Deferred taxes arising from temporary differences and unused tax losses can be summarised as follows:
Deferred tax assets/(liabilities) 2019
Current assets
Trade and other receivables
Non-current assets
Intangible assets
Plant, property & equipment
Non-current liabilities
1 July
2018
$
Recognised
In Profit And
Loss
$
30 June
2019
$
17,605
(16,077)
1,528
(199,782)
93,875
(105,907)
82,195
223,983
306,178
Pension and other employee obligations
431,639
40,604
472,243
Current liabilities
Provisions
Unused tax losses
Net deferred tax assets
Deferred tax asset as represented on the Statement of Financial Position
Deferred tax liability as represented on the Statement of Financial Position
Total
Deferred Tax Assets/(Liabilities)
2018
Current assets
Trade and other receivables
Non-current assets
Intangible assets
Plant, property & equipment
Non-current liabilities
204,500
392,947
597,447
71,205
(49,960)
21,245
607,362
685,372
1,292,734
1,398,641
(105,907)
1,292,734
1 July
2017
$
Recognised
In Profit And
Loss
$
30 June
2018
$
29,832
(12,227)
17,605
(280,467)
80,685
(199,782)
-
82,195
82,195
Pension and other employee obligations
350,231
81,408
431,639
Current liabilities
Provisions
Unused tax losses
Net deferred tax assets
Deferred tax asset as represented on the Statement of Financial Position
Deferred tax liability as represented on the Statement of Financial Position
Total
66
182,118
22,382
204,500
66,958
4,247
71,205
348,672
258,690
607,362
807,144
(199,782)
607,362
Unsecured liabilities
Trade payables
Accrued expenses
Good and services tax
Witholding tax on intercompany loan
Other payables
15. Provisions
Consolidated
2019
$
2018
$
638,673
831,070
2,950,617
3,277,041
685,323
575,601
1,267,651
1,080,969
471,016
353,251
6,013,280
6,117,932
All amounts are short term and the carrying values are considered to be a reasonable approximation of fair value.
Current
Employee benefits
Non-current
Employee benefits
Consolidated
2019
$
2018
$
1,492,999
1,333,384
1,492,999
1,333,384
128,721
128,721
62,647
62,647
67
Praemium Annual Report 2019 16. Issued Capital
Consolidated
2019
$
2018
$
2019: 405,285,531 (2018: 400,468,586) fully paid ordinary shares
67,019,085
65,371,547
Movement in ordinary share capital
Date
Details
Number Of
Shares
Issue Price
Total
$
01-July-2018
Opening Balance
400,468,586
30-September-2018
Issue under employee share plan
2,883,719
30-September-2018
Issue under employee STI bonus
34,088
31-October-2018
Issue under employee share plan
1,550,034
30-November-2018
Issue under employee share plan
138,214
65,371,547
1,054,634
34,770
446,760
53,101
0.366
1.020
0.288
0.384
31-January-2019
31-January-2019
31-March-2019
30-June-2019
(a) Ordinary shares
Share issue costs
-
-
(13,269)
Issue under employee share plan
195,790
Issue under employee share plan
15,100
0.345
0.266
67,518
4,024
Closing Balance
405,285,531
67,019,085
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, 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
Revaluation reserve
Foreign currency translation reserve
Option reserve
Accumulated losses
Total equity
68
Consolidated
2019
$
2018
$
67,019,085
65,371,547
-
51,415
(450,548)
1,779,865
(593,302)
1,743,038
(44,775,507)
(46,292,755)
23,572,895
20,279,943
17. Reserve
Reserves
Revaluation reserve
Foreign currency translation reserve
Option reserve
Total
Consolidated
2019
$
2018
$
-
51,415
(450,548)
1,779,865
(593,302)
1,743,038
1,329,317
1,201,151
(a) Movement in reserves
Movements in reserves are detailed in the statement of changes in equity.
(b) Nature and purpose of reserves
Revaluation Reserve – The revaluation reserve records the revaluation of available-for-sale financial assets.
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, not forfeited and not exercised.
18. Auditor’s Remuneration
Remuneration of the auditor of the consolidated entity for:
Grant Thornton
2019
$
2018
$
- Audit and review of financial reports
101,700
98,100
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
- Compliance audit
Total other services remuneration
Total Auditor’s remuneration
187,485
289,185
193,061
291,161
70,000
53,000
-
36,118
34,340
193,458
482,643
70,000
20,500
17,434
33,996
31,381
173,311
464,472
69
Praemium Annual Report 2019
19. Capital And Leasing Committments
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
2018
$
2019
$
1,286,008
1,264,799
3,509,591
4,086,049
4,795,599
5,350,848
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 2 reportable segments, being Australia and International.
(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
2019 is as follows:
2019
Total segment revenue
Australia
International
Total
31,404,068
12,737,025
44,141,093
Revenue from external customers
31,404,068
12,737,025
44,141,093
EBITDA profit/(loss)
Interest
14,050,051
(2,668,415)
11,381,636
25,016
94
25,110
The segment information provided to the Board of Directors for the reportable segments for the year ended 30 June
2018 is as follows:
2018
Total segment revenue
Australia
International
Total
27,599,416
14,566,860
42,166,276
Revenue from external customers
27,599,416
14,566,860
42,166,276
EBITDA profit/(loss)
Interest
11,590,961
(2,748,970)
8,841,991
21,458
43
21,501
Intercompany interest and margin
2,155,358
(2,155,358)
-
Depreciation and amortisation
(366,681)
(680,797)
(1,047,478)
Unrealised FX
Unit trust income
141,120
(17,188)
123,932
5,657
-
5,657
Restructure, arbitration and acquistion costs
(1,381,992)
(447,176)
(1,829,168)
Withholding tax not recoverable
(150,850)
-
(150,850)
Profit/(loss) on disposal of fixed assets
-
(2,966)
(2,966)
Share based payments
Net profit/(loss) before tax
Segment assets
Segment liabilities
(1,049,625)
(10,377)
(1,060,002)
10,965,406
(6,062,789)
4,902,617
17,997,472
12,321,514
30,318,986
(6,141,667)
(3,897,376)
(10,039,043)
Employee benefits expense
12,352,012
9,445,141
21,797,153
Additions to non-current assets (other than financial assets, deferred tax,
post-employment benefit assets, rights arising under insurance contracts)
395,353
127,108
522,461
Intercompany interest and margin
2,547,489
(2,547,489)
-
(c) Reconciliation
Depreciation and amortisation
(1,158,197)
(703,105)
(1,861,302)
Un/Realised FX
Unit trust income
18,459
(10,426)
8,033
181,084
(169,624)
11,460
Restructure, arbitration and acquistion costs
(800,181)
(836,487)
(1,636,668)
(i) Revenue
A reconciliation of segment revenue to entity revenue is provided as follows:
Withholding Tax
Profit/(loss) on disposal of fixed assets
Share based payments
Net Profit/(loss) Before Tax
Segment assets
Segment liabilities
(193,353)
(327,375)
(520,728)
Segment revenue
(581)
(1,968,101)
-
-
(581)
(1,968,101)
12,701,686
(7,262,827)
5,438,859
22,217,199
13,161,059
35,378,258
(8,228,213)
(3,577,150)
(11,805,363)
Interest income from other parties
Unit trust distributions
Total revenue
Employee benefits expense
13,902,939
9,980,188
23,883,127
Additions to non-current assets (other than financial assets, deferred tax,
post-employment benefit assets, rights arising under insurance contracts)
388,990
101,598
490,588
70
Consolidated
2019
$
2018
$
44,141,093
42,166,276
25,110
11,460
21,501
5,657
44,177,663
42,193,434
71
Praemium Annual Report 2019 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
Consolidated
2019
$
2018
$
11,381,636
8,841,991
(1,861,302)
(1,047,478)
25,110
8,033
11,460
21,501
123,932
5,657
(d) Entity-wide information
The entity is domiciled in Australia. The amount of its revenue from external customers in Australia is $31,404,068
(2018: $27,599,416) and the total revenue from external customers in other countries is $12,737,025 (2018:
$14,566,860). Segment revenues are allocated based on the country in which revenue and profit are derived.
Revenues of $4,413,496 (2018: $3,487,905) are derived from a single external customer. These revenues are
attributable to the Australian segment.
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 2019 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 12 August 2019 by the Board of Directors.
Restructure, arbitration and acquistion costs
(1,636,668)
(1,829,168)
22. Cash Flow Information
Withholding tax
Share based payments
Profit/(loss) on disposal of fixed assets
Net profit before tax
(520,728)
(150,850)
(1,968,101)
(1,060,002)
(581)
(2,966)
5,438,859
4,902,617
(iii) Segment assets
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
Consolidated
2019
$
2018
$
35,378,258
30,318,986
Total assets as per the statement of financial position
35,378,258
30,318,986
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 $6,212,800 (2018: $2,599,183) and
the total of these non-current assets located in other countries is $5,019,206 (2018: $5,169,906). 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
(11,805,363)
(10,039,043)
Total liabilities as per the statement of financial position
(11,805,363)
(10,039,043)
Consolidated
2019
$
2018
$
Profit attributable to members of the Group
2,549,883
1,414,541
Consolidated
2019
$
2018
$
Non cash flows in profit from ordinary activities
Depreciation and amortisation
Share based payments
Bad debt expense/(recovery)
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 in employee provisions
Increase/(decrease) in deferred tax asset / payable
Increase in deferred income
1,861,302
1,047,478
1,968,101
1,060,002
(31,940)
(8,033)
(557)
520,728
(7,319)
(189,473)
(606,775)
223,271
(143,499)
56,989
56,120
(123,932)
(2,966)
150,850
(2,777)
(542,697)
1,263,082
258,479
752,371
81,225
Net cash provided by operating activities
6,192,678
5,411,776
72
73
Praemium Annual Report 2019 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 executive plans) and 4) the employee must successfully deliver
upon certain measurable key performance indicators.
2019
Grant date
Vesting date
22-Dec-10
27-Apr-11
6-Sep-12
30-Sep-13
11-Sep-13
30-Sep-15
30-Sep-16
12-Nov-14
30-Sep-15
30-Sep-16
30-Sep-17
15-Sep-15
30-Sep-16
30-Sep-17
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
33,333
33,333
60,000
60,000
95,000
325,000
420,000
78,000
107,250
153,000
338,250
82,256
166,969
-
-
-
-
(95,000)
(240,000)
-
-
33,333
33,333
33,333
33,333
60,000
60,000
60,000
60,000
-
-
85,000
85,000
-
(335,000)
-
85,000
85,000
(61,500)
(61,500)
(92,000)
16,500
16,500
45,750
45,750
61,000
61,000
-
(215,000)
-
123,250
123,250
(50,301)
(102,863)
31,955
31,955
64,106
64,106
30-Sep-18
1,465,800
(1,122,600)
(3,600)
339,600
339,600
1,715,025
-
(1,275,764)
(3,600)
435,661
435,661
20-Sep-16
30-Sep-17
92,983
(43,244)
49,739
49,739
30-Sep-18
789,309
5,750
(621,266)
(7,750)
166,043
166,043
30-Sep-19
1,894,341
(222,455)
(113,182)
1,558,704
-
2,776,633
5,750
(886,965)
(120,932)
1,774,486
215,782
20-Sep-17
30-Sep-18
1,400,000
(1,400,000)
-
-
30-Sep-18
676,522
39,277
(545,762)
(23,183)
146,854
146,854
30-Sep-19
1,127,538
(36,578)
(75,313)
1,015,647
30-Sep-20
2,706,090
(87,788)
(270,017)
2,348,285
-
-
2018
Grant date
Vesting date
22-Dec-10
27-Apr-11
6-Sep-12
30-Sep-13
11-Sep-13
30-Sep-14
30-Sep-15
30-Sep-16
12-Nov-14
30-Sep-15
30-Sep-16
30-Sep-17
15-Sep-15
30-Sep-16
30-Sep-17
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
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
-
-
-
-
(80,000)
(100,000)
(115,000)
-
-
33,333
33,333
33,333
33,333
60,000
60,000
60,000
60,000
-
-
95,000
95,000
325,000
325,000
-
(295,000)
-
420,000
420,000
(20,250)
(62,250)
78,000
78,000
107,250
107,250
(523,000)
(20,000)
153,000
153,000
-
(605,500)
(20,000)
338,250
338,250
(3,038)
(25,516)
82,256
82,256
(449,965)
(17,547)
166,969
166,969
30-Sep-18
1,561,800
(96,000)
1,465,800
-
2,307,091
-
(453,003)
(139,063)
1,715,025
249,225
20-Sep-16
30-Sep-17
30-Sep-18
464,430
860,056
30-Sep-19
2,064,134
(366,983)
(4,464)
92,983
92,983
(70,747)
789,309
(169,793)
1,894,341
-
-
3,388,620
-
(366,983)
(245,004)
2,776,633
92,983
20-Sep-17
30-Sep-18
30-Sep-18
30-Sep-19
30-Sep-20
-
-
-
-
-
1,400,000
719,459
1,199,098
2,877,835
1,400,000
(42,937)
676,522
(71,560)
1,127,538
(171,745)
2,706,090
6,196,392
-
(286,242)
5,910,150
-
-
-
-
-
Total
7,467,794
6,196,392
(1,720,486)
(690,309)
11,253,391
1,193,791
(b) Shares issued as employee bonus
5,910,150
39,277
(2,070,128)
(368,513)
3,510,786
146,854
Shares issued during the period as an employee bonus were measured at the quoted market price of the shares.
16-Oct-18
30-Sep-19
30-Sep-20
30-Sep-21
Total
74
369,734
616,230
1,478,868
(100,089)
269,645
(37,446)
578,784
(89,870)
1,388,998
-
2,464,832
-
(227,405)
2,237,427
-
-
-
-
11,253,391
2,509,859
(4,782,857)
(720,450)
8,259,943
1,099,880
Consolidated – 2019
Consolidated – 2018
Number issued
Value
Weighted average
fair value
34,088
185,787
34,770
104,041
1.02
0.56
75
Praemium Annual Report 2019
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
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
Weighted average number of ordinary shares outstanding during the year:
Number used in calculating basic EPS
Number used in calculating diluted EPS
Consolidated
2019
$
2018
$
298,387
445,000
1,662,864
1,060,002
1,961,251
1,505,002
Consolidated
2019
$
2,549,883
2,549,883
2,549,883
2018
$
1,414,541
1,414,541
1,414,541
2019
$
2018
$
403,852,414
399,721,311
404,952,294
400,915,102
2019: 7,160,063 (2018: 10,059,600) 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 2019 and 2018.
25. Parent Entity Information
The following details information related to the parent entity, Praemium Limited, at 30 June 2019. 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
2019
$
2018
$
8,589,064
7,378,386
83,778,303
73,032,124
92,367,367
80,410,510
3,767,710
3,581,010
100,063,231
80,327,181
103,830,941
83,908,191
67,019,085
65,371,547
(80,262,524)
(70,610,947)
1,779,865
1,743,038
Available-for-sale financial assets revaluation reserve
-
(1,319)
Total equity
Loss for the year
(11,463,574)
(3,497,681)
(9,650,259)
(9,120,833)
Other comprehensive income/(loss) for the year
-
-
Total comprehensive income/(loss) for the year
(9,650,259)
(9,120,833)
76
77
Praemium Annual Report 2019
Directors’ Declaration
The Directors of the Company declare that:
1. The financial statements and notes, as set out on pages 38-78, are in accordance with the Corporations Act 2001 and:
a. Comply with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001; and
b.Give a true and fair view of the financial position as at 30 June 2019 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.The financial records of the Company for the financial year have been properly maintained in accordance with
section 286 of the Corporations Act 2001;
b.The financial statements and notes for the financial year comply with the Accounting Standards; and
c.The financial statements and notes for the financial year give a true and fair view.
3. 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.
4. 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
12 August 2019
26. Group Entities
The consolidated financial statements include the financial statements of Praemium Limited and those entities
detailed in the following table:
Subsidiaries
Country of
incorporation
Ownership interest
% 2019
Ownership interest
% 2018
Praemium Australia Limited
Australia
Praemium Portfolio Services Limited
Praemium (UK) Limited
Praemium 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
Praemium Retirement Services Ltd
(formerly Wensley Mackay Limited)
WM Pension Trustee Services Limited
UK
UK
UK
UK
UK
UK
UK
Jersey
Armenia
Hong Kong
China
UK
UK
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
100
100
Praemium Limited is the ultimate Australian parent entity and the ultimate parent entity of the Group.
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.
Key management personnel compensation (including non-executive directors)
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
2019
2018
1,860,655
1,678,322
145,119
62,623
134,724
31,025
680,136
1,016,718
2,748,533
2,860,789
28. Contractual commitments and contingencies
Since 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.
78
79
Praemium Annual Report 2019
Auditor’s Independence Declaration
Independent Audit Report
Collins Square, Tower 5
727 Collins Street
Melbourne VIC 3008
Collins Square, Tower 5
727 Collins Street
Melbourne VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 3001
Correspondence to:
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
F +61 3 8320 2200
T +61 3 8320 2222
E info.vic@au.gt.com
F +61 3 8320 2200
W www.grantthornton.com.au
E info.vic@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
Auditor’s Independence Declaration
To the Directors of Praemium Limited
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 2019, I declare that, to the best of my knowledge and belief, there have been:
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 2019, I declare that, to the best of my knowledge and belief, there have been:
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
a
b
no contraventions of any applicable code of professional conduct in relation to the audit.
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
a
b
Collins Square, Tower 5
727 Collins Street
Melbourne VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 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 2019, 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 2019 and of its performance for the year
ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
no contraventions of any applicable code of professional conduct in relation to the audit.
Basis for opinion
Grant Thornton Audit Pty Ltd
Chartered Accountants
Grant Thornton Audit Pty Ltd
Chartered Accountants
B L Taylor
Partner - Audit & Assurance
Melbourne, 12 August 2019
B L Taylor
Partner - Audit & Assurance
Melbourne, 12 August 2019
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘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.
Grant Thornton Audit Pty Ltd ACN 130 913 594
Liability limited by a scheme approved under Professional Standards Legislation.
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘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.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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
www.grantthornton.com.au
‘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.
80
80
80
Praemium Annual Report 2019
81
81
Praemium Annual Report 2019
Insert title
Independent Audit Report
Independent Audit Report
Key audit matter
How our audit addressed the key audit matter
Revenue Recognition Note 3
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 2019, but does not include the financial report and our auditor’s report
thereon.
We determined the Company’s long terms contracts are Key
Audit Matters due to the complexity and variations in terms
and conditions attached to each contract. Revenue
represents a material amount of the Company’s total revenue.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
customer agreements and contractual arrangements to
ensure compliance with AASB 15 Revenue from Contracts
with Customers;
Reviewing revenue recognition policies of individual
Our procedures included, amongst others:
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.
Documenting and testing the operating effectiveness of the
internal controls in respect to revenue from the rendering of
services;
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.
Testing a sample of revenue recognised during the year to
supporting documentation to verify the occurrence;
Responsibilities of the Directors for the financial report
Performance of substantive analytical procedures on
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.
Reviewing relevant disclosures in the financial statements.
revenue balances; and
Capitalised Development Costs Note 12
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Capitalised product development costs had a net carrying
value of $6,104,624 at 30 June 2019.
Our procedures included, amongst others:
Assessing the Group’s accounting policy in respect of
Auditor’s responsibilities for the audit of the financial report
product development costs for adherence to AASB 138;
During the year the Group capitalised $4,896,494 of project
development costs. These intangible assets are being
amortised over a 3 year period, and an amortisation expense
of $862,873 has been included in the statement of profit or
loss and other comprehensive income.
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
AASB 138: Intangible Assets sets out the specific
of users taken on the basis of this financial report.
requirements to be met in order to capitalise development
costs. Intangible assets should be amortised over their useful
economic lives in accordance with AASB 138.
Evaluating management’s assessment of each project for
compliance with the recognition criteria set out in AASB
138, including discussing project plans with management
and project leaders to develop an understanding of the
nature and feasibility of key projects at 30 June 2019;
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.
Testing a sample of costs capitalised by tracing to
underlying support such as vendor invoices and payroll
records in order to understand the nature of the item and
whether the expenditure was attributable to the
development of the related asset, and therefore whether
capitalisation was in accordance with the recognition
criteria of AASB 138;
This area is a key audit matter due to subjectivity and
management judgement applied in the assessment of whether
costs meet the development phase criteria described in AASB
138 and in relation to the estimate of the assets’ useful lives.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 24 to 31 of the Directors’ report for the year ended 30 June
2019.
in future reporting periods; and
Evaluating the reasonableness of useful lives to be applied
In our opinion, the Remuneration Report of Praemium Limited, for the year ended 30 June 2019 complies with section
300A of the Corporations Act 2001.
Assessing the adequacy of related disclosures in the
financial statements.
Recoverable amount of intangible assets Note 12
As at 30 June 2019, the Group’s capitalised software costs
was $6,104,624. Of this amount, $3,436,319 related to
software costs not available for use.
The Group is required to perform an annual impairment test of
software costs not ready for use in accordance with AASB
136: Impairment of Assets.
This area is a key audit matter due to the inherent subjectivity
involved within impairment testing.
Our procedures included, amongst others:
Obtaining an understanding of management’s processes
and controls related to the assessment of impairment;
Obtain management’s assessment of impairment;
Apply professional scepticism around the inputs and
forecast cash flows using historical estimates; and
Assess the disclosures in the financial statements around
impairment.
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 2019, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and 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’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
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 24 to 31 of the Directors’ report for the year ended 30 June
2019.
In our opinion, the Remuneration Report of Praemium Limited, for the year ended 30 June 2019 complies with section
300A of the Corporations Act 2001.
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Praemium Annual Report 2019
Independent Audit Report
Additional disclosures
Required or recommended by the listing rules & Corporations Act
Top 20 Shareholders
Rank
Name
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, 12 August 2019
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
J P Morgan Nominees Australia Pty Limited
HSBC Custody Nominees (Australia) Limited
Mr Michael Ohanessian
Dr Donald Stammer
Citicorp Nominees Pty Limited
Bond Street Custodians Limited
Bnp Paribas Noms Pty Ltd
Supertco Pty Ltd
National Nominees Limited
Mirrabooka Investments Limited
Meroma Pty Limited
Pacific Custodians Pty Limited
Epr Superannuation Fund Pty Ltd
Ecapital Nominees Pty Limited
Ubs Nominees Pty Ltd
Mr David Franks
Mr Paul Gutteridge
Fat Prophets Pty Ltd
Sylvania Pty Ltd
Superfos Pty Ltd
TOTAL
Balance of Register
Grand TOTAL
31 July 2019
38,572,039
16,319,519
14,430,513
11,624,866
11,519,471
10,187,968
8,584,598
7,500,000
6,624,382
5,700,000
5,353,304
3,936,056
3,606,869
3,353,022
2,955,860
2,222,223
2,001,426
2,000,000
2,000,000
1,850,000
%IC
9.5%
4.0%
3.6%
2.9%
2.8%
2.5%
2.1%
1.9%
1.6%
1.4%
1.3%
1.0%
0.9%
0.8%
0.7%
0.5%
0.5%
0.5%
0.5%
0.5%
160,342,116
244,943,415
39.6%
60.4%
405,285,531
100.0%
Substantial Holdings
There are 405,285,531 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:
Blackrock Group
25,713,191
6.3%
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Praemium Annual Report 2019
Corporate Information
Share Registry
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:
Collins Square, 727 Collins Street,
Melbourne, VIC 3008.
Phone: +613 8320 2222
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
Claire Willette
CEO & Managing Director
Michael Ohanessian
Company Secretary
Paul Gutteridge
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
Securities
No. of Holders
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Number
%
Number
273,377,317
112,308,721
12,438,979
6,781,141
379,373
405,285,531
67.5%
27.7%
3.1%
1.7%
0.1%
100%
393
3,419
1,525
2,260
577
8,174
%
4.8%
41.8%
18.7%
27.6%
7.1%
100%
Performance Rights
(includes EMI Options, including those that have vested but have not yet been exercised)
Range
Securities
No. of Holders
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Number
%
Number
16,902,068
2,133,599
126,134
96,196
1,945
87.8%
11.1%
0.7%
0.5%
0.0%
19
73
18
28
4
%
13.4%
51.4%
12.7%
19.7%
2.8%
19,259,943
100.0%
142
100.0%
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Praemium Annual Report 2019 Praemium Limited
Level 19, 367 Collins Street
Melbourne VIC 3000 Australia
Postal address:
PO Box 322 Collins Street West
Victoria 8007 Australia
General enquiries: 1800 571 881
Sales enquiries: 1800 702 488
Email: support@praemium.com.au
praemium.com
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