Praemium
Annual Report
2020
Praemium Limited ACN: 098 405 826
The platform for where
you’re going next.
Welcome to the upgrade.
Contents
The new world of advice
Chairman’s Report
CEO’s Report
Corporate Highlights
Directors’ Report
Key Facts & Figures
Overview of 2020 Financial Position
Board of Directors
Remuneration Report
Corporate Governance Statement
Financial Report For The Year Ended 30 June 2020
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 2020
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The new world
of advice
01
Transition to a digital advice model
Over the last year, with significantly changing economic conditions the
need for financial advice has increased considerably in Australia and
globally. Concurrently, financial adviser numbers have been consolidating
in many countries, however higher quality advice businesses with
sound advice value propositions and more modern and personalised
service models are becoming the beneficiaries of this and are expected
to grow strongly in the years ahead. In Australia for example, small,
independently owned advice businesses with experienced financial
advisers now comprise the largest and fastest growing segment of
the market with bank-aligned advisers joining these businesses or
establishing their own.
The shift to remote working and online client meetings in response to
COVID-19 has highlighted the importance of a modern and personalised
digital advice model and the need for an investment platform partner
that can support it with innovative technology designed to deliver
business efficiency and high quality client engagement.
Four key trends are set to continue shaping the advice industry and the
adoption of investment platforms.
As technology advances and investors’ demand for a more personalised and tailored service increases,
advisers are increasingly moving to digital solutions that drive business efficiency and increase the
opportunity for client engagement. The right technology and technology partner can help advisers
provide advice to clients more efficiently and offer a range of tools for delivering a more engaged
service in a scalable way.
Digital signatures
Online portals and reporting
Online meetings
» Gaining authority to proceed
with advice recommendations
via secure email speeds up
processing times and decreases
the time spent out of the market,
ensuring the investor is invested
in line with their financial
requirements sooner.
» Statistics on Praemium’s online
applications show, that after one
month the client is 33% more
likely to fund a new application
via digital acceptance, achieving
efficiencies for the adviser
with less time spent chasing
paperwork.
» Digital client portals enable
advisers to provide detailed,
tailored reporting with the most
up-to-date portfolio information.
» Available 24/7 investors have
continuous access to their
portfolio on any smart device
ensuring clients are more
informed about their wealth
management.
» Meetings or calls are less
focused on portfolio updates
and more on strategy, life event
planning and progress to lifestyle
plans, enhancing overall client
satisfaction.
» Whilst video or virtual meetings
have significantly increased in
recent months in response to the
global pandemic, it is likely these
will continue long after.
» Video conference provides
advisers with the ability to
connect with clients on any
device and hold review or strategy
discussions. It has the potential
to enhance the adviser-client
relationship with the annual face
to face meeting replaced with
more frequent, shorter virtual
meetings.
» With the ability to record the video
and discussion, and append it
as a file note in their financial
advice software it easily allows
advisers to meet compliance and
regulatory obligations.
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Praemium Annual Report 2020 02
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Managed accounts leading the way
Data driven decisions
Integrated Platforms
Managed accounts and the technology that underpins them is helping advisers transform
their businesses through increased efficiencies that significantly reduce the time spent on
administration to allow for greater focus on client relationships.
The popularity of managed accounts with
advice firms continues to grow
Managed accounts support advisers
in the key objectives
$79.3bn
in managed accounts as at
31 December 20191
40%
of financial planners are using
managed accounts up 5% from 20192
18%
of financial planners intend to starting
using managed accounts for the first
time at some point in the future2
86%
of advisers reported a reduction
in administration time and effort3
47%
spent more time with clients3
Advisers embracing managed accounts as
a business solution are reaping the rewards
85%
uplift in profits for practices using
managed accounts for all their clients3
25%
increase in revenue per adviser for
managed accounts users vs firms
not using managed accounts3
As more advisers move to a digital advice model,
data will play a critical role in driving this digital
transformation.
» Open Banking creates the possibility for a single,
consolidated source of wealth information and the
opportunity for advisers to create holistic wealth
management services.
» Artificial intelligence and machine learning are driving
more personalised, tailored solutions and creating
valuable insights into client sentiment around their
wealth management. Making use of data analytic
strategies provides advisers with the opportunity to
build a picture of client requirements and pre-empt
client needs.
» Creating a process for gathering, managing, storing
and protecting data will be an increasing focus for
advisers.
As advisers look to offer increasingly digitised
services and provide a complete wealth
management service, they will demand
functionality from their platform provider that
allows them to achieve this efficiently and at scale.
» The ability to access the full suite of investment
solutions on a single platform and allow for a holistic
wealth management service.
» The provision of a consolidated view of custody and
non-custody assets to meet their clients’ needs
» Complete outsourcing of administration services to
allow for greater focus on advice provision.
» Integrated technology solutions with data feeds from
various providers and a single source of data.
Praemium with its fully integrated managed account
platform is well positioned for the new world of advice.
We continue to innovate and enhance our functionality
to provide advisers with the ability to manage all their
clients, all their portfolios and all their investments
on a single platform. Our market-leading investor
portal allows advisers to deliver tailored reporting
and information to their clients in an innovative and
intuitive interface, accessible on any device. Our unique
Virtual Managed Account Administration Service
(VMAAS) is also catering to the growing segment of
advice businesses looking for a complete outsourced
administration solution.
We continue to leverage our global experience and
expertise across key financial markets to the benefit
of all our clients, ensuring we are able to respond to
changing markets and regulations quickly.
In this new and ever changing world, Praemium is well
positioned to take full advantage of these changing
market dynamics.
Welcome to the upgrade
1. Institute of Managed Account Professionals Census December 2019
2. Investment Trends 2020 Managed Account Survey, based on a
survey of 960 financial planners
3. Business Health/ Praemium ‘The real truth about managed accounts’
September 2019
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Praemium Annual Report 2020 Chairman’s Report
Barry Lewin
Chairman
I’m very pleased to report to shareholders
following another year of achievement and
growth for Praemium.
In a turbulent year, management delivered a
very creditable result with revenue up 14% to
$51.2 million and underlying EBITDA up 25%
to $14.2 million*. The Company’s financial
performance reflects strong underlying
growth for our global managed account
platforms and financial software solutions.
This result was also achieved despite a number of
challenging headwinds, namely heightened market
volatility as a result of the COVID-19 crisis, a key
Australian institutional client (ANZ Private) transitioning
to a new supplier (with the majority of the funds now
transitioned) and the loss of the high margin Smartfund
Protected range in the UK (now complete).
Praemium’s resilient business model, including
diversified revenue streams, a strong balance sheet and
solid cash flows have provided the Company with the
financial strength to continue to focus on both organic
growth and seek strategic acquisition opportunities.
Against this backdrop, on 9 July 2020 Praemium
announced it had entered into a bid implementation
agreement, under which it is proposed to make an
off-market conditional takeover bid for ASX listed
Powerwrap, for the remaining issued fully paid ordinary
shares it does not currently own. The acquisition
of Powerwrap would be a complementary addition
to Praemium’s growth strategy and product suite.
Praemium’s technological capabilities and operating
experience means it is well equipped to realise value
from Powerwrap’s platform assets and established
customer network. The transaction, if completed, is
expected to deliver significant synergies and will be
Praemium’s most important acquisition in its 20 year
history.
Praemium’s resilient business
model has provided the financial
strenghth to focus on organic
growth and strategic acquisition
opportunities.”
Key financial highlights for the year included:
Financial Results
Revenue & other income*
Earnings before interest, tax,
depreciation and amortisation
(underlying EBITDA*)
Cash balances
$m
51.2
14.2
15.9
Platform Funds Under Administration (FUA)
Australia
International
VMAAS
Total
5.7
3.2
11.4
20.3
With COVID-19 continuing to impact all 6 countries
in which we are located, Praemium continues to
operate normally and has maintained work from home
requirements across our 10 offices. The Company is
continuing to meet the challenges of this volatile and
uncertain time.
On behalf of the Board I wish to extend our sincere
thanks to our dedicated staff and management around
the world for delivering another strong financial result.
Despite the challenging environment, they are working
hard to assure our continued success.
My fellow Directors and I also wish to express our
sincere appreciation to all shareholders for your support,
and we are confident you will continue to benefit from
your investment in the Company in the years ahead.
Change
on FY19
+14%
+25%
+16%
-18%
+25%
+73%
+26%
*Underlying EBITDA is detailed in Note 20
In addition to these financial highlights, as evidence of
its strengthening competitive position among its peers,
Praemium was ranked in the top 5 of platforms in both
Australia and the UK. The Company ranked 4th place
out of 20 in Australian 2019 Investment Trends Platform
Benchmarking Report and 2nd out of 19 in the lang
cat 2020 Platform Market Scorecard in the UK. These
improved rankings will play an important role in driving
our continued growth and profitability.
Barry Lewin
Chairman
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Praemium Annual Report 2020
CEO’s Report
Michael Ohanessian
CEO & Managing Director
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What a year 2020 is turning out to be. We are
all grappling with new ways of conducting
business in the shadow of the Covid-19
pandemic, and first and foremost I want
to extend my sincere hope that you all
are healthy and adapting well to this new
environment.
We care about the safety of our clients, employees,
and members of the public above everything else. With
the presence of COVID-19 worldwide, Praemium has
implemented our Groupwide Response Plan and has
carried out successful BCP (business continuity plan)
tests across our global network. We continue to operate
effectively while our staff are working from home.
Our global IT and infrastructure teams are working
around the clock to maintain our daily protocols and
high standards of service wherever our clients are.
Praemium systems provide follow-the-sun, 24x7 support,
and our operations are underpinned by top-tier global
infrastructure firms.
Our technology infrastructure is a source of great
strength, as evidenced by our recent listing in the
inaugural S&P/ASX All Technology index (out of the
46 technology companies in the index, we are the only
platform to be included). We were also recognised
this year for our innovative approach by winning some
important global awards:
» Best Innovation at the City of London Wealth
Management Awards;
» Winner of the Innovation Category at the IMAP
Managed Accounts Awards; and
» Selected as Leading Platform for Discretionary
Management at the prestigious Schroders UK
Platform Awards.
Several key strategic initiatives introduced in 2019 began
to deliver results in 2020, and despite some tailwinds
we ended the year with $20.3 billion of assets under
administration, a 26% increase over last year.
Several key strategic initiatives
introduced in 2019 began to deliver
results in 2020.”
An integrated managed account platform
Our integrated Managed Accounts platform enables
advisers to create bespoke Individually Managed
Accounts (IMAs) from more than 2,000 single assets
in addition to using model portfolios in a Separately
Managed Accounts (SMA) structure. The Australia
upgrade was supported by a brand refresh and
campaign titled “Welcome to the Upgrade”. This
successful campaign was capped by Praemium winning
Financial Standard’s 2020 MAX Digital Campaign of the
Year Award.
With a full-service platform now on offer, we built
functionality that demonstrates the capabilities of the
upgraded platform. We set ourselves the objective of top
5 in the Investment Trends platform ratings, and were
pleased to have debuted at 4th place, a great result from
the team at Praemium!
This year we significantly enhanced our environmental,
social and governance (ESG) approach by adding the
Australian Ethical Australian Shares Portfolio to the
Praemium SMA and providing ESG research from
Sustainalytics. Most exciting is the ability to customise
an investor’s portfolio with a filter for specific ESG
themes, combining a professionally run managed
account with securities screening based on an investor’s
ethical values.
Having launched a highly competitive full-service
platform, we took the next logical step and grew our
sales team. While still early, having a larger team
covering all of Australia’s key markets showed results in
the later part of the financial year.
In the UK, we upgraded our UK-based international
platform to the new architecture and launched our
innovative new Adviser Portal with Insights artificial
intelligence feature. Shortly thereafter, respected UK
platform ratings agency the lang cat debuted Praemium
at second-highest overall in its Platform Market
Scorecard (PMS). Praemium placed second overall,
second in support, third in proposition, and took first
place in value for fees charged.
Non-custodial growth
Our non-custodial reporting solution, VMA, saw a 10%
increase in billable portfolios through the year. We also
released several enhancements to improve the adviser
experience, such as multi-account reconciliation screens
and a what-if analysis that can help advisers assess the
impact of portfolio changes in terms of asset allocation,
income and CGT.
Our Virtual Managed Accounts Administration Service
(VMAAS), launched in December 2017, continues to
perform well. I am pleased to report that VMAAS has
grown to $11.4 billion in FUA across more than 5,000
investor portfolios as at the end of FY2020.
Financial planning and CRM
This year we launched WealthCraft in the UK, with
more than a dozen Plum Software clients choosing
to make the switch. We are now working on digital
account opening of Praemium platform accounts via
WealthCraft. Adviser interest in WealthCraft is also
growing in offshore markets, driven by the potential
efficiency gains from an integrated client experience.
Overall, FY2020 has been a year of investment in our
capabilities, people and technology infrastructure across
all our offices and products. FY2020 was arguably our
most productive in terms of technology and product
development.
Praemium is a special business with innovative
technology, great people 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 the way they have stepped
up during this difficult time and continued to provide
high standards for service and products. I feel very lucky
to be working with such a great team.
Michael Ohanessian
CEO & Managing Director
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Praemium Annual Report 2020 Michael Ohanessian
Corporate Highlights
91%
increase in net profit
1,670
UK pension schemes, a 53%
increase on the previous year
$11.4bn
26%
FUA on VMA administration
across 5,000 investor portfolios
increase in funds under
administration
25%
increase in EBITDA
4o9
new model portfolios and single
assets added to the platform
Continued
innovation
Launch of customised ESG screening
Future positioning
Praemium has integrated environmental, social
and governance (ESG) research and analysis into
its integrated Managed Accounts Platform to allow
advisers to tailor their clients’ portfolios and align their
investments with their unique ethical beliefs and values.
The platform functionality works by integrating data
from Sustainalytics research, covering over 15,000
companies globally and screening portfolios from
exposure to companies involved in one of nine ESG
categories. This saves advisers working out which
companies to exclude now and into the future and
offers a scalable way for advisers to satisfy their clients’
ESG preferences.
» Enhanced retail unified managed account (UMA)
offering
» Further platform functionality updates to deliver an
enhanced digital/customer engagement experience
» Launch of expatriate managed account solutions
including SIPP to support growing expat
requirements
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Praemium Annual Report 2020
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Praemium Annual Report 2020 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.
In February last year Praemium launched its next-
generation fully integrated Managed Accounts Platform,
which 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 brings
together our non-custodial platform (VMA) with our
custodial SMA platform under an efficient single 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.
Praemium’s Australian platform was impacted by a
significant client transition this year with FUA down 18% to
$5.7 billion. Outside the client transition, net inflows were
$1 billion, up 68% compared to the prior year. Praemium
continued to invest in developing its range of product and
technology solutions. This year we:
» Launched the Adviser Portal to the UK and
international clients in September;
» Added new and improved reporting, including:
» Investment Summary Report, with this useful short-
form report combining performance, additions and
withdrawals, expenses and asset allocation for
client portfolios. The report also includes a QR code
to provide clients with quick access to the investor
portal;
» Expanded options for Asset Allocation and
Performance reports and added a new Infographic
client report designed to assist advisers in delivering
portfolio outcomes to their clients in a simple and
effective way;
» A new report pack for Managed Discretionary
Account (MDA) clients via our Investor Portal,
covering portfolio valuation, income and expenses,
transactions and cash statements;
» A range of new reports and data exports via our
export centre, including SMA customisations, FUM by
security, DRP related corporate actions by portfolio,
securities excluded from billing and export centre
usage audits;
» A range of expanded reporting and governance
features suitable for the growing number of MDA
Operators using our services;
» A new suite of investor and business reports and
functionality, including: a first-to-market infographic
overview; simple consolidated investor report by
valuation, model portfolios and asset allocation; and
enhancements to bespoke reporting;
» Launched a unique functionality for mFund
distributions including the breakdown of tax
components which will significantly enhance the
investment experience to advisers and clients
accessing managed funds via the ASX;
» Enhanced Praemium’s AI app, Insights, to include
periodic summaries, client & data highlights and
reminders for client birthday milestones;
» Enhanced the Year End Distribution screen for
trust securities and managed funds allows tax
components to be applied across multiple portfolios,
providing a significant time saving for firms with
managed funds;
» Added a retirement calculator to assist advisers to
help investors plan for a comfortable retirement. The
calculator allows advisers to input details about the
investor such as age, income, monthly expenditure
and retirement age, and accounts for factors such
as inflation and estimated annual return, to calculate
monthly pension payments at retirement age and
overall balances over time;
» Added Australian Government Bonds to our
Australian licence for custodial platform assets;
» Launched a new range of multi-asset index models
managed by Morgan Stanley;
» Provided access to an additional 50+ global Exchange
Traded Funds (ETFs) on the New York and London
stock exchanges that can be held in and have income
settled in their native currency;
» Introduced electronic asset re-registration to speed
up transitions from other UK platforms;
» Added a new account type, the Praemium JISA
(Junior ISA) to the UK platform. JISA is a UK tax-
effective structure to encourage savings for young
people;
» Added a new account type to the International
platform, with Onshore Bonds providing a UK tax-
effective structure through our partnership with
Sanlam;
» Launched the first ESG model with Australian
Ethical to allow investment in an actively managed,
diversified Australian share portfolio of companies
selected for their ESG credentials;
» Launched new platform screening functionality
for environmental, social and governance (ESG)
assessments, enabling advisers to customise
investment portfolios across several different ESG
categories such as fossil fuels, alcohol, tobacco,
gambling, adult entertainment and animal testing;
» Added additional API integrations for Advisers using
Super Concepts and Financial Simplicity;
» Created a fully digital application process for the UK,
with the addition of paperless direct debits;
» Launched new business-level dashboards, giving
oversight of advisers and clients;
Virtual Managed Accounts (VMA) and
VMA Administration Service (VMAAS)
Available via the market’s only fully integrated managed
accounts platform, our non-custodial solutions enable
advisers and firms to serve their clients’ administration and
investment needs, whether under custody or not, on one
single platform.
Praemium’s Virtual Managed Accounts (VMA) 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.
» Added Microsoft Power BI dashboard integration, new
adviser tools including modelling and calculators;
Major enhancements to VMA in the reporting period
include:
» Simplified document sharing with investors;
» A new multi-account reconciliation screen to compare
the holdings from multiple brokers and financial
institutions to the portfolio holdings being reported
on, with a feature to go back in time to show any
holding mismatches.
» Further development in our reporting, releasing
the first-to-market infographic summary report, an
investment summary report, and data library so the
adviser can create their own reports style using our
data fields. Also new Asset Class Target Allocation
report & Asset allocation performance report.
» 12 new data exports available in our data export
centre.
The VMA Administration Service (VMAAS) is an add-on
to the Praemium VMA that enables financial planning
practices and stockbrokers to outsource the administration
of their client portfolios to Praemium, freeing up advisers
from the time-consuming tasks associated with managing
clients’ investment portfolios.
» Continued to invest in platform security with a range
of new encryption measures to further protect data.
Our International platform also grew strongly this year, with
record gross inflows of $1.2 billion, up 41% on the prior
comparable period. International platform FUA closed at
$3.2 billion at 30 June 2020, a 25% improvement over last
year.
Our UK pension offering achieved a significant boost in the
past 12 months, with 1,670 schemes at 30 June 2020, a
53% increase.
Praemium’s unique platform continued to win accolades
during the year, receiving three international major awards.
Praemium won “International Platform of the Year” at
International Adviser Global Financial Services Awards,
“Leading Platform for Discretionary Management” at
the Schroders UK Platform Awards, and “Best Fund
Platform” at the City of London Wealth Management
Awards (COLWMA) against a large field of UK nominees.
Our “Welcome to the Upgrade” campaign, supporting the
launch of our integrated Managed Accounts platform, won
the Financial Standard Marketing and Advertising Award
(MAX) for Digital Marketing Campaign of the Year. The UK
platform also achieved a maximum possible 5-star Defaqto
rating.
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Praemium Annual Report 2020 Directors’ Report
Review of operations
The year ahead
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 attractive option. VMAAS can also be
combined with Praemium’s Managed Accounts platform
for professional investment management and reporting.
Encouragingly, we are seeing FUM growth on the
Praemium platform from WealthCraft clients, proving the
synergy of the two in providing value to our clients. FUM
grew from £50 million across 12 clients to greater than
£100 million across 18 clients:
» Internationally 45% of WealthCraft clients are also
Platform clients now (18 out of 40)
» In Australia 100% of WealthCraft clients are also
Platform clients (6 out of 6).
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 decreased
4% to $352 million from flat platform flows. Market
declines and lower flows into the Smartfund managed
funds impacted overall Managed Funds FUM, which
declined 38% to $258 million.
VMAAS was launched in December 2017 and has
continued its strong growth this financial year. As at the
end of FY2020, the service has grown to $11.4 billion
from $6.6 billion in FUA the previous year (up 73%), across
5,074 portfolios, up 15% on the previous year. This year we
added:
» A corporate action/election/notification centre for
VMAAS administration clients applicable to all Rights
issues, Share Purchase Plans, Buy Backs, Scheme
Election, Scheme of Arrangement and Class Actions
» New online access for VMAAS clients, allowing
corporate actions notification and election services
for share buy backs, share purchase plans, scheme
elections and class actions.
With VMAAS, Praemium now offers the full spectrum
of non-custodial services. Whether advisers or firms are
looking purely to access market-leading reporting or wish
to fully outsource their administration and reporting, the
Praemium platform offers a solution.
CRM and Financial Planning
Praemium’s CRM and financial planning software,
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.
WealthCraft UK was officially launched in January
and more than a dozen Plum clients have upgraded to
WealthCraft with more to come. WealthCraft has continued
to grow strongly with 21% revenue growth over the prior
financial year.
The 2020 financial year has been a challenging time for many businesses due to the
uncertainty and volatility caused by the COVID-19 pandemic. The impacts of COVID-19 are
expected to continue into the 2021 financial year. Despite this unprecedented time, Praemium
continues to operate normally and remains committed to maintaining our high levels of
service to clients.
Internationally, the UK platform market continues
to see disruption due to consolidation of underlying
platform technology, which has increased the currency
of platforms like Praemium that have control over
their technology. With growing adoption of Managed
Accounts technology, Praemium has great potential in
the UK. We are also seeing the evolution of offshore
markets such as the Middle East, South Africa and Asia,
where regulation is driving advice practices to adopt
platform technology. We remain focused on accelerating
the strong performance of our International business,
which has seen record platform inflows this year, by
increasing our distribution efforts in the year ahead.
International markets are also an important growth
prospect for Praemium’s WealthCraft CRM and financial
planning solutions, often in conjunction with the platform
as advisers appreciate the merits of an integrated
solution. Further enhancements and product modules
planned for release will enable WealthCraft users to save
time on implementation and administration and facilitate
higher quality client engagement.
In July 2020, the Company also announced an off-
market takeover bid for Powerwrap, with the support of
the Powerwrap board. This is an exciting opportunity,
as the merger of these two companies will create a
financial platform business with combined FUA of over
$28 billion and will put the Company in a strong position
to accelerate our challenge of the sector’s incumbents.
Further updates will be provided to shareholders as the
offer process progresses.
Our resilient business model, including diversified
revenue streams across both products and regions, a
strong balance sheet and solid cash flows, provide the
financial strength to withstand any future volatility and
support the business for the long term. The Company
will also review initiatives in the event of more significant
economic conditions to manage our cost base, while
supporting our global team.
With wealth management and financial advisory
businesses navigating these difficult times, Praemium’s
next-gen technological solutions are ideally suited to
support their needs. Our digital technology and capability
enable advisers to interact with clients completely
remotely, to create applications and complete digital
acceptance online, provide client reporting and important
documentation, while also monitoring investor sentiment
and activity.
Praemium’s strength in providing technology solutions
in this new environment will underpin our continued
growth. With our next phase of development to focus
on further improving the customer experience, we
intend to capitalise on the large addressable markets for
Praemium across Australia and the International regions
in which we serve.
The competitive landscape for the Australian platform
market continues to change, benefitting independent,
nimble and technically advanced players like Praemium,
and we will invest in capitalising on this change over the
next few years. In addition to our continued investment
in R&D and product development, the 2020 financial year
saw a significant investment in sales & marketing, the
impact of which we expect to see in future periods.
Also in Australia, growth in our non-custodial capabilities
VMA and VMAAS continues to diversify our non-asset-
based revenue. Our strength in portfolio administration
and reporting is a unique and long-term competitive
advantage and an important driver of future growth.
16
Praemium Annual Report 2020
17
Key facts and figures
Overview of 2020 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
FY2020
FY2019
Change
Change
$000
51,244
37,071
14,173
7,726
2,863
4,863
1.2
15,915
30,587
12,063
$000
45,054
33,672
11,382
5,439
2,889
2,550
0.6
13,748
23,573
6,193
$000
6,190
3,399
2,791
2,287
(26)
2,313
0.6
2,167
7,014
5,870
%
14
10
25
42
(1)
91
89
16
30
95
^ Other income as outlined in Note 4 of the financial statements
* Underlying EBITDA excludes restructure, arbitration and acquisitions costs of -$1.3 million (2019: -$1.6 million), share based payments of -$2.0 million (2019: -$2.0 million) and
foreign exchange movements of currencies held on deposit of $0.0 million (2019: $0.0 million), as detailed in Note 20 of the attached annual report.
Service Metrics
FUA $billion
FY2020
FY2019
Change
Change
Managed Account Platform (Australia)
Managed Account Platform (International)
Total Platform FUA
Virtual Managed Account Administration Service
Total FUA
International funds based on closing FX rate 0.5586 (2019: 0.5535)
$B
5.7
3.2
8.9
11.4
20.3
$B
6.9
2.6
9.5
6.6
16.1
$B
(1.2)
0.6
(0.6)
4.8
4.2
%
(18)
25
(6)
73
26
Results
After reporting date events
The consolidated profit attributable to the members of
the Group was $4,863,366, 91% higher than the prior
year. This was from a 14% increase in revenue and other
income, offset by a 10% increase in operating expenses,
resulting in a 25% increase in underlying earnings before
interest, tax, depreciation and amortisation (EBITDA) to
$14.2 million.
The Group’s net profit before tax was $7,726,161, 42%
higher than the prior year, while the current year’s tax
expense of $2,862,795 was 1% lower than the prior
financial year due to a change in the tax treatment of
research and development costs, resulting in a revision
of the 2018 and 2019 income tax returns.
The Group’s net asset position at 30 June 2020 was
$30,587,055 with $15,914,653 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.
On 9 July 2020, the Company also announced an off-
market takeover bid for Powerwrap, with the support of
the Powerwrap board. With the offer period open until
31 August 2020, further updates will be provided to
shareholders as the offer process progresses.
Other than the above, Directors have not become
aware of any other matter or circumstance not
otherwise dealt with in the financial statements that
since 30 June 2020 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 2020
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 enjoyed
many years as an entrepreneur
and company director, with more
than 20 years’ experience as
CEO of larger listed and smaller
private corporations. Daniel is an
experienced executive and non-
executive director, with extensive
dealings at all levels of government
and the corporate sector. His
background spans a range of
corporate, commercial and board
roles including international trade,
government liaison, defence
acquisition, communications
strategy, sales/marketing, M & A,
Corporate Governance, REM/NOM,
and an understanding of strategic
business development. Daniel has
managed a public listed technical
services company (ASX:BSA), held
board positions in commercial and
not for profit organisations and sits
on several boards applying expertise
in tech innovation.
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 BS 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, supply chain 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, most
recently with Boeing. 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 2020 Remuneration
Report 2020
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
12 Meetings
Audit, Risk & Compliance
Committee
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
12
12
12
12
12
12
12
12
12
12
-
6
6
6
-
-
6
6
6
-
-
2
2
2
-
-
2
2
2
-
Further disclosures
No performance rights have been issued 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.
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 Directors and Executive 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 $77,500 (ex GST).
22
Praemium Annual Report 2020
23
Remuneration Report
During the financial year the following people served as
Directors of the Company:
» Barry Lewin
» Stuart Robertson
» Daniel Lipshut
» Claire Willette
» Michael Ohanessian
Remuneration philosophy and principles
The Company’s performance is dependent upon the
quality of its people. To this end, the Company applies
the following principles in its remuneration framework:
No external remuneration consultant was used during
the financial year for bench-marking of non-executive
and senior executive roles.
The Remuneration Committee is authorised by the
Board to investigate any activity within its charter. It is
authorised to seek any information it requires from any
employee and all employees are directed to cooperate
with any request made by the Remuneration Committee.
In considering the Company’s performance and benefits
for shareholder wealth, the Board has regard to the
following with respect to the current year and the
previous three financial years:
2020
2019
2018
2017
» Provide competitive rewards to attract high-calibre
EBITDA^ ($m)
14.2
11.4
NPAT($m)
EPS (cents)
4.9
1.2
2.5
0.6
8.8
1.4
0.4
6.3
0.8
0.2
^ 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
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 2019 AGM
the members approved the aggregate remuneration for
Directors as $750,000.
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 20-21.
Key management personnel
Key management personnel (KMP) are the individuals
who have the authority and responsibility for planning,
directing and controlling the activities of the Company,
as defined under AASB 124 Related Party Disclosures.
In addition to Company’s Non-Executive Directors noted
earlier, the following Executives are also disclosed within
this report as Key Management Personnel:
» Michael Ohanessian – CEO & Managing Director
» Paul Gutteridge - Chief Financial Officer & Company
Secretary
KMP disclosed in the 2019 financial year were Christine
Silcox - Director, Business Improvements (who retired
from the Company on 1 July 2019), Anna Itsiopoulos -
General Manager, Australia and Adam Pointon - Chief
Technology Officer (no longer defined as KMP from
1 July 2019). Remuneration for these executives are
shown as comparatives in the 2019 financial year
disclosure.
The remuneration of Key Management Personnel
comprises:
» Fixed Remuneration;
» Variable remuneration: short-term incentives; and
» Variable remuneration: long-term incentives.
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
Company 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.
Despite financial targets being achieved for the 2020
financial year, Board and management agreed not to
reward any short-term incentive for this relevant year,
as part of cost management initiatives implemented in
response to the COVID-19 pandemic.
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 Company’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.
Unless otherwise stated, under Praemium’s Director
& Employee Benefits Plan the Board has discretion to
vest all outstanding LTI’s in the event of a change of
control of the Company. Individual incentives limits are
assessed in line with regulatory guidelines where the
Company operates and offers LTI incentives.
24
25
Praemium Annual Report 2020 Remuneration Report (continued)
LTI measures – Staff
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 for staff are based and weighted
100% on Company profitability (EBITDA) targets set
by the Board over the LTI cycle. The test of Company
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.
An individual’s annual performance is based on rating
measures, applied consistently across the Company.
The Board, on the recommendations of the CEO and
the Remuneration Committee, considers the individual
performance of the Executives and their contributions to
the Company’s performance.
Provided LTI measures are met, firstly for Company
performance and then for individual performance,
entitlements then vest over 3 years based on 15% in
year one, 25% in year two and 60% in year three.
LTI measures – Executives
LTI measures for key Executives are based on the
same entitlements as outlined for staff. However, for
key Executives vesting hurdles are based on Company
profitability (EBITDA) targets set by the Board and Total
Shareholder Return (TSR) measurement over the LTI
cycle. Vesting hurdles are weighted 50% for Company
profitability targets and 50% for achievement of TSR
targets.
The test of Company 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.
26
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.
For the 2020 financial year, the Executive Leadership
Team (direct reports to the CEO) were offered an LTI
based on the achievement of vesting hurdles over a
fixed 3-year period. LTI measures are consistent with
previous plans, being Company profitability (EBITDA),
Total Shareholder Return (TSR) and employee eligibility,
with 100% of entitlements based on measures at the
end of the 3-year period.
Executive remuneration policies and contracts
All Company 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
Company’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 2020 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,
with a maximum entitlement on termination in lieu of
notice equal to the value of 9 month’s total employment
package (TEP).
Paul Gutteridge, Chief Financial Officer & Company
Secretary is employed on an ongoing basis, with 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 95.5% of ‘yes’ votes on its Remuneration Report for the financial year ended 30 June
2019. The Company received no specific feedback on its Remuneration Report at the Annual General Meeting.
Detail of key management personnel remuneration - 2020
2020
Short-Term
Employee
Benefits
Salary fees &
commissions
Parent entity directors
Barry Lewin
170,776
Stuart Robertson
105,000
Daniel Lipshut
Claire Willette
92,237
77,626
Michael Ohanessian
510,000
Key Management Personnel
Share Based Payments
Post-
Employment
Benefits
Other
Long-Term
Benefits
Total Performance
related
%
Bonus by
way of
shares 1
Performance
rights 2
Superannuation
Long
service
leave
-
-
-
-
-
-
-
-
-
16,224
-
8,763
7,374
-
-
-
-
187,000
105,000
101,000
85,000
0%
0%
0%
0%
222,039
25,000
10,448
767,487
29%
Paul Gutteridge
305,520
-
136,380
29,024
7,481
478,405
29%
-
2020 total
1,261,159
-
358,419
86,385
17,929
1,723,892
21%
1. Bonus by way of shares relates to FY2020’s STI for key executives that were not awarded despite being achieved, in response to the COVID-19 pandemic.
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.
27
Praemium Annual Report 2020 Remuneration Report (continued)
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.
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
Bonuses Included In Remuneration
Details of the short-term incentive bonuses awarded as remuneration to each Key Management Personnel, the
percentage of the available bonus that was vested in the financial year and the percentage that was forfeited
because the person did not meet the service and performance criteria is set out below.
Parent entity directors
Michael Ohanessian
Key management personnel
Paul Gutteridge
Percentage vested in year
Percentage forfeited in year
0%
0%
100%
100%
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
01-July-19
30-Sep-22
2,000,000
780,000
-
(12,379)
767,621
Key management personnel
Paul Gutteridge
01-July-19
30-Sep-22
1,500,000
585,000
-
(5,675)
579,325
28
29
Praemium Annual Report 2020 Remuneration Report (continued)
Other Information
A) Performance rights holdings
Allotted Date
Balance
1 July 2019
Granted as
compensation
Vested/
Exercised
Forfeited/
lapsed during
the year
Balance
30 June 2020
Parent entity directors
Michael Ohanessian
01-Jul-19
629,620
2,000,000
(137,146)
(14,650)
2,477,824
Key management personnel
Paul Gutteridge
01-Jul-19
418,899
1,500,000
(192,738)
(6,716)
1,719,445
1,048,519
3,500,000
(329,884)
(21,366)
4,197,269
B) Shareholdings directly and indirectly beneficially held
2020
Balance
1 July 2019
Received as
Compensation
Received on the
exercise of share
schemes
Other changes
during the year
Balance
30 June 2020
Parent entity directors
Barry Lewin
Stuart Robertson
Daniel Lipshut
Claire Willette
465,000
385,000
250,000
-
Michael Ohanessian
15,523,054
Key management personnel
-
-
-
-
-
-
-
-
-
60,700
525,700
100,000
485,000
200,000
450,000
-
-
137,146
214,499
15,874,699
Paul Gutteridge
2,001,426
93,379
192,738
(106,000)
2,181,543
18,624,480
93,379
329,884
469,199
19,516,942
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 Company is Grant
Thornton. Non-audit services of approximately $185,273
have been provided by the Company’s Parent Entity
audit firm for income tax compliance and internal
audit 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
14 August 2020
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 Company’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 2020 FY2020 Corporate Governance Statement
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 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. For the 2021 financial year,
the Company will adopt the 4th Edition of the ASX
Guidelines, in line with the implementation timing.
A summary of the key disclosures required under the
Corporate Governance Principles and Recommendations
is provided in the Company’s Appendix 4G, which
has been released together with this Annual Report.
Disclosures are included either in this Corporate
Governance Statement or on the Company’s website
(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).
32
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 fulltime
equivalent basis on the Board and in Executive
management positions and the entire Group at 30
June 2020;
» 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.
Praemium Limited and its Australian subsidiary is
deemed a “relevant employer” under the Workplace
Gender Equality Act (WEGA). Gender Equality Indicators
for the Australian entities have been reported to the
Workplace Gender Equality Agency, with publicly
available reports available on its website www.wgea.gov.
au.
Including Australian and all global subsidiaries, the
Company’s current performance against its diversity
policy objectives is as follows:
Gender
representation
%
30 June 2020
30 June 2019
Female
Male
Female
Male
Board
20%
80%
20%
80%
Senior Executive
25%
75%
33%
67%
Group
41%
59%
39%
61%
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.
Principle 2 – Structure the board to
add value
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
Barry Lewin
(Chairman)
From
May 2017
BCom, BLaw,
MBA,
Independent
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
33
Praemium Annual Report 2020 FY2020 Corporate Governance Statement
(continued)
Table 2 - Areas of competence and skills of the
Board of Directors
Area
Competence
Corporate leadership
Business leadership, public listed
company experience
Company experience
Executive leadership
Executive or CEO,
assesing senior
management
Strategy
Financial acumen
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
Market & Industry
Financial services expertise,
commercial and business experience
Technology
Sustainability
& stakeholder
management
International
Technology, infrastructure, product
development, product life cycle
management
Corporate governance
International business management,
geographical experience
Director independence (Principle 2.4)
Using the criteria recommended by the ASX Guidelines,
all 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.
34
Director induction & training (Principle 2.6)
New Directors receive a letter of appointment and a
deed of access and indemnity. The letter of appointment
outlines ASX’s expectations of Directors with respect to
their participation, time commitment and compliance
with ASX policies and regulatory requirements. An
induction process for incoming Directors is coordinated
by the Company Secretary.
The Board receives regular updates at Board meetings,
meetings with shareholders and site visits. These assist
Directors to keep up-to-date with relevant market and
industry developments.
Principle 3 – Act ethically and responsibly
Code of conduct (Principle 3.1)
The Company has a code of conduct which is published
on its website. The Code is reviewed annually and
updated where appropriate.
Principle 4 – Safeguard integrity in
corporate reporting
Audit committee (Principle 4.1)
The role of the Audit, Risk & Compliance Committee is to
assist the Board to meet its oversight responsibilities in
relation to the Company’s financial reporting, compliance
with legal and regulatory requirements, internal control
structure, risk management procedures and the external
audit function.
It is intended that the members of the Audit, Risk &
Compliance Committee between them should have
the accounting and financial expertise, and a sufficient
understanding of the industry in which Praemium
operates, to be able to effectively discharge the
committee’s responsibilities.
The Company’s Audit, Risk & Compliance Committee
comprises Stuart Robertson (Chairman), 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.
CEO & CFO assurance (Principle 4.2)
Principle 7 – Recognise and Manage Risk
Risk committee (Principle 7.1)
The Company’s Audit, Risk & Compliance Committee
is responsible for internal control, risk oversight and
risk management for the Company. The Company’s
Audit, Risk & Compliance Committee comprises Stuart
Robertson (Chairman), 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.
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.
Principle 5 – Make timely and balanced
disclosure
The Company has established written policies designed
to ensure compliance with ASX Listing Rule disclosure
requirements and to ensure accountability at a senior
Executive level for that compliance. The key policy,
Praemium’s Continuous Market Disclosure Policy,
and corresponding procedures are published on the
Company’s website.
Principle 6 – Respect the rights of
shareholders
Investor relations (Principles 6.1 – 6.4)
The Company has developed a framework for
communicating with shareholders which has been
followed during the financial year, as outlined in
Praemium’s Shareholder Communications Policy, as
disclosed on the Company’s website.
Where possible and practical, the Company
communicates with Shareholders using its website and
email. For this purpose, our share registry maintains
a list of email addresses for shareholders of the
Company and provides updates by email – such as,
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.
35
Praemium Annual Report 2020 Financial Report
2020
FY2020 Corporate Governance Statement
(continued)
Principle 8 – Remunerate Fairly and
Responsibly
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.
36
37
Praemium Annual Report 2020 Consolidated Statement of Profit & Loss
and Other Comprehensive Income
For the year ended 30 June 2020
Revenue from contracts with customers
Other income
Platform trading & recovery
Employee costs
Depreciation, amortisation and impairments
Legal, professional, advertising and insurance expense
IT support
Commissions expense
Travel expenses
Occupancy costs
Net foreign exchange gains / (losses)
Telecommunication costs
Interest on lease liabilities
Other expenses
Share based payments
Restructure, Arbitration and Acquisition costs
Withholding tax not recoverable
Unrealised gain/(loss) on financial instruments
Profit before income tax expense
Income tax expense
Profit attributable to members of the Group
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
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
Note
2020
$
2019
$
3
4
5
5
5
5
5
6
50,153,964
44,141,093
1,090,444
912,723
1,488,680
3,281,786
(26,851,649)
(23,883,127)
(4,669,919)
(1,861,302)
(5,797,106)
(5,041,981)
(2,379,285)
(1,998,412)
(1,379,194)
(2,417,653)
(985,715)
(1,283,306)
(672,860)
(2,037,174)
39,078
8,033
(390,869)
(374,404)
(186,506)
(72,112)
-
31,940
(2,050,286)
(1,968,101)
(1,331,761)
(1,636,668)
(277,944)
(520,728)
1,999,201
86,140
7,726,161
5,438,859
(2,862,795)
(2,888,976)
4,863,366
2,549,883
(175,601)
(175,601)
(175,601)
142,754
142,754
142,754
Total comprehensive income attributable to Owners of the parent
4,687,765
2,692,637
Profit for the year attributable to Owners of the parent
4,687,765
2,692,637
Total comprehensive income attributable to Owners of the parent
4,687,765
2,692,637
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
1.2
1.2
0.6
0.6
Consolidated Statement of Financial Position
As at 30 June 2020
Current assets
Cash and cash equivalents
Contract assets
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
Lease liabilities
Deferred income
Income tax payable
Total current liabilities
Non-current liabilities
Provisions
Lease Liabilities
Deferred tax liability
Total non-current liabilities
Note
2020
$
2019
$
7
8
9
10
11
12
13
14
15
10
15
10
13
15,914,653
13,748,441
2,573,040
1,825,897
3,885,841
3,901,355
2,047,856
1,908,442
24,421,390
21,384,135
6,496,793
1,363,476
5,050,139
1,302,725
2,810,853
2,810,502
9,217,618
1,233,401
7,118,779
1,398,641
24,808,804
13,994,123
49,230,194
35,378,258
6,653,332
6,013,280
1,258,069
1,492,999
3,202,173
-
3,787,821
2,395,444
1,322,920
1,669,012
16,224,315
11,570,735
200,902
128,721
1,024,360
1,193,562
2,418,824
-
105,907
234,628
TOTAL LIABILITIES
18,643,139
11,805,363
NET ASSETS
Equity
Share capital
Reserves
Accumulated losses
TOTAL EQUITY
The accompanying notes form part of the financial statements.
30,587,055
23,572,895
16
17
68,402,062
67,019,085
2,097,133
1,329,317
(39,912,140)
(44,775,507)
30,587,055
23,572,895
39
Praemium Annual Report 2020
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
For year ended 30 June 2020
Ordinary
Shares
Accumulated
Losses
$
$
Foreign
Currency
Translation
Reserve
$
$
$
$
Share Based
Payments
Reserve
Revaluation
Reserve
Total
For year ended 30 June 2020
Note
2020
$
2019
$
Equity as at beginning of period
67,019,085 (44,775,507)
(450,548)
1,779,865
Profit attributable to members of the
parent entity
Other comprehensive income/(loss)
Total comprehensive income/(loss)
for the year
-
-
-
4,863,366
-
-
(175,601)
4,863,366
(175,601)
Transactions with owners in their capacity as owners
Issue of shares
Option expense
Exchange difference on option reserve
282,093
-
-
Transfer on exercise of options
1,100,884
1,382,977
-
-
1
-
1
-
-
-
-
-
-
-
-
-
2,044,301
-
(1,100,884)
943,417
Equity as at 30 June 2020
68,402,062 (39,912,140)
(626,149)
2,723,282
-
-
-
-
-
-
-
-
-
-
For year ended 30 June 2019
Ordinary
Shares
Accumulated
Losses
$
$
Foreign
Currency
Translation
Reserve
$
Share Based
Payments
Reserve
Revaluation
Reserve
23,572,895
4,863,366
(175,601)
4,687,765
282,093
2,044,301
1
-
2,326,395
30,587,055
Total
Cash flows from operating activities:
Receipts from customers
47,402,594
44,930,666
Payments to suppliers and employees
(33,388,300)
(35,733,191)
Interest received
Unit trust distributions received
Income tax paid
25,458
2,450
25,110
4,142
(1,979,641)
(3,034,049)
Net cash provided by operating activities
22
12,062,561
6,192,678
Cash flows from investing activities:
Payments for property, plant and equipment
(Payments)/proceeds from Investments
Payments for intangible assets
Net cash used in investing activities
Cash flows from financing activities:
Principal elements of lease payments
(345,582)
(3,134,298)
(490,588)
879,826
(4,915,487)
(4,716,687)
(8,395,367)
(4,327,449)
(1,274,134)
(1,274,134)
-
-
$
$
$
Net cash provided by financing activities
Equity as at beginning of period
65,371,547 (46,292,755)
(593,302)
1,743,038
51,415
20,279,943
Net increase in cash and cash equivalents
2,393,060
1,865,229
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
The accompanying notes form part of the financial statements.
40
-
-
-
-
-
-
-
-
-
-
19,195,836
2,549,883
142,754
2,692,637
21,501
1,662,864
57
-
1,684,422
23,572,895
Cash and cash equivalents at beginning of year
13,748,441
12,120,879
Effect of exchange rates on cash holdings in foreign currencies
(226,848)
(237,667)
Cash and cash equivalents at end of year
7
15,914,653
13,748,441
The accompanying notes form part of the financial statements.
41
Praemium Annual Report 2020
Notes to the Financial Statements
1. Notes to the financial statements
(c) Principles of consolidation
(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 16 Leases
» Interpretation 23 Uncertainty over Income Tax
Treatments
The Group had to change its accounting policies as a
result of adopting AASB 16. This is disclosed in note
1(w).
(ii) New standards and interpretations not yet adopted
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,
certain classes of property, plant and equipment and
investment property.
The consolidated financial statements incorporate the
assets and liabilities of all subsidiaries of Praemium
Limited (“parent entity”) as at 30 June 2020 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.
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 equipment
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.
(f) Intangible assets
Customer contracts and databases acquired in
a business combination that qualify for separate
recognition are recognised as intangible assets
at their fair values. All intangible assets, including
customer contracts and databases, are accounted
for using the fair value model whereby capitalised
costs are amortised on a straight-line basis over their
estimated useful lives, as these assets are considered
finite. Residual values and useful lives are reviewed
at each reporting date. In addition, they are subject to
impairment testing as described in Note 1(g).
The following useful lives are applied:
» Customer contracts: 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
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.
42
43
Praemium Annual Report 2020 (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. 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.
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”.
44
(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)
Classification and initial measurement of financial assets
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, shares
in the listed entity, 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
financial assets.
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.
(i) Employee benefits
Provision is made for the Group’s liability for employee
benefits arising from services rendered by employees to
reporting date. Employee benefits that are expected to
be settled within one year have been measured at the
amounts expected to be paid when the liability is settled,
plus related on costs. Employee benefits payable later
than one year have been measured at the present value
of the estimated future cash outflows to be made for
those benefits.
(i) Equity-settled compensation
The Group operates a share-based compensation
scheme.
Equity-settled share-based payments are measured at
fair value at the date of grant. The fair value determined
at the grant date is expensed on a straight-line basis
over the vesting period, based on the Group’s estimate
of shares that will eventually vest.
Fair value is measured by use of a Black-Scholes model.
The expected life used in the model has been adjusted,
based on management’s estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations.
(j) Provisions
Provisions are recognised when the Group has a legal
or constructive obligation, as a result of past events,
for which it is probable that an outflow of economic
benefits will result and that the outflow can be reliably
measured.
(k) Income tax
The charge for current income-tax expense is based on
the profit for the year adjusted for any non-assessable
or disallowed items. It is calculated using the tax rates
that have been enacted or are substantially enacted by
reporting date.
Deferred tax assets and liabilities are recognised using
the balance sheet liability method with respect to
temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in
the financial statements, and on unused tax losses. No
deferred tax assets or liabilities will be recognised from
the initial recognition of an asset or liability excluding
a business combination, which at the time of the
transaction did not affect either accounting or taxable
profit or loss.
Deferred tax is calculated at the tax rates that are
expected to apply to the period when the asset is
realised or liability is settled. Deferred tax is recognised
in the statement of profit & loss and comprehensive
income except where it relates to items that are
recognised directly in equity, in which case the deferred
tax is recognised directly in equity.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.
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) Government grants
Grants from the government are recognised at their fair
value where there is a reasonable assurance that the
grant will be received and the Group will comply with all
attached conditions. Note 5 provides further information
on how the Group accounts for government grants.
(m) Revenue recognition
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 derived from operating the Managed Account
include platform administration fees, model manager
fees, cash administration fees, brokerage recovery and
recovery of input tax credits from Praemium’s Managed
Account scheme.
Administration fees are 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.
Model manager fees are determined yearly, based on
the volume of models maintained by the model manager
and the revenue is recognised in the accounting period
in which the services are rendered. Cash administration
fees are determined monthly, based on cash held by
investors in the Praemium Managed Account multiplied
by the rate as set in the product disclosure statement
of the Praemium Managed Account. The revenue is
recognised in the accounting period in which Praemium
effected the transactions relating to cash holdings.
Brokerage recovery is determined daily, based on the
value of the trades in the Praemium Managed Account,
45
Praemium Annual Report 2020 and the revenue is recognised in the accounting period
in which the trades were placed. Recovery of input tax
credits from Praemium’s Managed Account scheme are
determined monthly in arrears based on the refund from
the prior month and the revenue is recognised in the
accounting period in which the payments for services
were made.
Virtual Managed Accounts and Virtual Managed
Accounts Administration Service– 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
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.
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
2. Identifying the performance obligations
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
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.
(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.
(r) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of
the amount of goods and services tax (GST), except:
1. Where the amount of the GST incurred is not
recoverable from the taxation authority, it is recognised
as part of the cost of acquisition of an asset or as part
of an item of expense; or
2. For receivables and payables which are recognised
inclusive of GST.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables
or payables. Cash flows are included in the statement
of cash flows on a gross basis. The GST component of
cash flows arising from investing and financing activities
which is recoverable from, or payable to, the taxation
authority is classified as operating cash flows.
(s) Comparatives
Where necessary, comparative figures have been
adjusted to conform to changes in presentation in the
current year.
(t) Going concern
The financial report has been prepared on a going
concern basis. This contemplates continuity of normal
business activities and the realisation of assets and
settlement of liabilities in the ordinary course of
business. The Company has recorded an operating profit
before tax of $7,726,161 during the financial year ended
30 June 2020 (June 2019 $5,438,859) with accumulated
losses amounting to $39,912,140 as at 30 June 2020.
Cash reserves were $15,914,653 at 30 June 2020.
The spread of novel coronavirus (COVID-19) was
declared a public health emergency by the World Health
Organisation on 31 January 2020 and upgraded to a
global pandemic on 11 March 2020. During this time,
the Group continues to operate normally and has
successfully completed business continuity plan (BCP)
transitions across the global network, with all staff
across the 10 offices now required to work from home.
The Group continues to follow the relevant advice and
guidance issued by governmental health authorities.
Operations are supported by experienced global IT
and infrastructure teams, who are working around the
clock to maintain daily protocols and high standards of
service. Praemium systems continue to provide follow-
the-sun, 24x7 support, and operations are underpinned
by top-tier global infrastructure providers who have
enacted their BCPs successfully.
Though the market correction has impacted the level of
funds under administration, revenue is highly diversified
with nearly half coming from non-FUA sources. This
includes subscription-based VMA, VMAAS, WealthCraft
and Plum Software products. The Group’s revenue
base is also geographically diverse, with clients in
Australia, the UK, Dubai, Singapore, Hong Kong, the
Channel Islands and South Africa, and product diversity
across the UK and Australia platforms. Praemium has
a strong balance sheet, solid cash flows and no debt.
While market volatility creates challenges, revenues
and profitability continue to be largely resilient as the
company has responded quickly to manage costs and to
preserve the global team. The board is comfortable that
the Company has the financial strength and capabilities
to ensure its continued viability and operations.
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 2020. Accordingly, no adjustments
have been made to the financial report relating to the
46
47
Praemium Annual Report 2020 recoverability and classification of the asset-carrying
amounts and classification of liabilities that might be
necessary.
(u) Critical accounting estimates and judgments
The Directors evaluate estimates and judgments
incorporated into the financial report based on historical
knowledge and best available current information.
Estimates assume a reasonable expectation of future
events and are based on current trends and economic
data, obtained both externally and within the Group.
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.
Trade and other receivables and contract assets
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.
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.
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
The Group has adopted AASB 16 Leases retrospectively
from 1 July 2019 but has not restated comparatives
for the 2019 reporting period, as permitted under the
specific transition provisions in the standard. The
reclassifications and the adjustments arising from the
new lease accounting standard are therefore recognised
in the opening balance sheet on 1 July 2019.
Right-of-use assets for property leases were measured
on a retrospective basis as if the new rules had always
been applied and other right-of use assets were
measured at the amount equal to the lease liability.
Lease liabilities in relation to leases which had previously
been classified as ‘operating leases’ under the principles
of AASB 117 Leases were recognised under AASB 16.
These liabilities were measured at the present value of
the remaining lease payments, discounted using the
incremental borrowing rate appropriate to the underlying
term and security of each lease as of 1 July 2019.
The weighted average lessee’s incremental borrowing
rate applied to the lease liabilities on 1 July 2019 was
4.91% for leases in Australia, between 1.8% to 3% for
leases in the United Kindgom and 5% for leases in China
(including Hong Kong).
During the reporting period the Group amended the
recognition of brokerage recovery and recovery of input
tax credits from Praemium’s Managed Account scheme
from platform recoveries to revenue. This change in
recognition more appropriately aligns with the criteria
set out in AASB 15 Revenue from Contracts with
Customers for these income items. Had the change in
recognition been implemented on 1 July 2018, revenue
from contracts with customers would be $47,723,618
and platform trading and recovery would be $346,741.
In addition, during the reporting period the recognition
of interest income from other parties and unit trust
distributions was amended from revenue to other
income.
(i) Practical expedients applied
In applying AASB 16 for the first time, the Group has
used the following practical expedients permitted by the
standard:
» relying on previous assessments on whether leases
are onerous as an alternative to performing an
impairment review – there were no onerous contracts
as at 30 June 2020
» accounting for operating leases with a remaining
lease term of less than 12 months as at 1 July 2019
as short-term leases
» The Group has also elected not to reassess whether
a contract is, or contains a lease at the date of initial
application. Instead, for contracts entered into before
the transition date the Group relied on its assessment
made applying AASB 117 and Interpretation 4
Determining whether an arrangement contains a
lease.
Between March and June 2020, the London office
received rent relief as a result of COVID-19. The rent
relief met the conditions in AASB 2020-4 (Amendment to
AASB 16: Covid-10-Related Rent Concessions) and the
Group has elected to account for the discount using the
practical expedient. As a result of applying the practical
expedient, $65,206 was recognised under occupancy
costs in the Consolidated Statement of Profit and Loss
and Other Comprehensive income.
(ii) Adjustments recognised in the balance sheet on 1
July 2019
The change in accounting policy affected the following
items in the balance sheet on 1 July 2019:
» right-of-use assets – increase by $5,253,303
» lease liabilities – increase by $5,346,512
In periods ending 1 July 2019 and earlier, the Group
recognised the lease incentive for the London lease and
the straight-line adjustment for the Melbourne lease
as lease liabilities. The benefit was straight-lined and
recognised in proportion to the duration of the lease. On
the adoption of AASB 16 Leases on 1 July 2019, these
amounts were offset against the right-of-use asset and
the lease liability was determined to be the present value
of the lease payments unpaid at that date, discounted
using the incremental borrowing rate appropriate to the
underlying term and security of each lease. There was
no impact to retained earnings.
(iii) Measurement of lease liabilities
Total operating lease commitments
disclosed as at 30 June 2019
Recognition exemptions
Consolidated
5,878,472
Leases with remaining lease team less
(92,434)
than 12 months
Operating lease liabilities before
discounting
Discounted using incremental borrowing
rate
Operating lease liabilities as at 1 July
2019
5,786,038
(514,953)
5,271,085
48
49
Praemium Annual Report 2020 (iv) Measurement of right-of-use assets
The associated right-of-use assets for all leases were
measured on a retrospective basis as if the new rules
had always been applied.
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
» Investments in unlisted unit trusts
General objectives, policies and processes
The Board has overall responsibility for the
determination of the Group’s risk management
objectives and policies and, whilst retaining ultimate
responsibility for them, has delegated the authority
for designing and operating processes that ensure the
effective implementation of the objectives and policies
to the Group’s finance function. The Board receives
monthly reports from the Chief Financial Officer through
which it reviews the effectiveness of the processes put
in place and the appropriateness of the objectives and
policies it sets.
The overall objective of the Board is to set policies that
seek to reduce risk as far as possible without unduly
affecting the Group’s competitiveness and flexibility.
Further details regarding these policies are set out
below.
Credit risk
Credit risk arises from the Group’s trade receivables,
other receivables, receivables from subsidiaries and
cash at bank and on deposit. The maximum amount of
credit risk is the statement of financial position carrying
values.
Trade receivables
Clients of the Group range from financial advisers and
brokers to accountants. In the majority of new client
“sign- ons”, clients are required to prepay their first
years’ service before they can start utilising the Group’s
products. The reduction of risk concentration is due
principally to the number of independent operators who
have entrenched the Praemium system within their
everyday business process.
Clients who subsequently fail to meet their credit
terms are at risk of having their services “switched off”.
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.
As at 30 June 2020, financial liabilities have contractual
maturities, which are summarised below:
Consolidated
2020
Current
Non-current
Within 6
months
$
6-12
Months
$
1-5
Years
$
Later than
5 years
$
Trade payables
1,118,926
Accrued
expenses
3,003,063
Other payables
334,550
-
-
-
-
-
-
Lease
Liabilities
3,202,173
- 1,024,360
Total
7,658,712
- 1,024,360
-
-
-
-
-
Consolidated
2019
Current
Non-current
Within 6
months
$
6-12
Months
$
1-5
Years
$
Later than
5 years
$
Trade payables
638,673
Accrued
expenses
2,950,617
Other payables
1,738,667
Total
5,327,957
-
-
-
-
-
-
-
-
-
-
-
-
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.
The Group’s interest rate risk arises from:
» Bank balances which give rise to interest at floating
rates; and
» Cash on term deposit, which are at floating rates.
The amounts subject to cash flow interest rate risk are
in the statement of financial position carrying amounts
of these items.
The Group’s policy is to minimise cash flow interest rate
risk exposures on surplus funds by ensuring deposits
attract the best available rate. There have been no
changes from previous periods.
Cash flow interest rate sensitivity
The following table illustrates the sensitivity of the net
result for the year and equity to a reasonably possible
change in interest rates of +/-100 basis points (2019:
+/-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.
Consolidated
2020
$
-100
basis
pts
+100
basis
pts
2019
$
-100
basis
pts
+100
basis
pts
159,147
(159,147)
137,484
(137,484)
Cash
and cash
equivalents
Net result
159,147 (159,147)
137,484 (137,484)
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.
50
51
Praemium Annual Report 2020 Exposure to currency risk
Foreign currency denominated financial assets and
liabilities, translated into Australian Dollars at the closing
rate, are as follows:
Currency risk sensitivity analysis – Other currencies
(USD)
Foreign currency denominated financial assets and
liabilities, translated into Australian Dollars at the closing
rate, are as follows:
Nominal amounts
Cash at bank and on
term deposit
Consolidated
2020
GBP
2019
GBP
595,537
1,366,320
Nominal amounts
Cash at bank and on
term deposit
Consolidated
2020
USD
9,019
2019
USD
15,494
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 2020
(2019: 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 2020 and 2019.
If the Australian dollar had strengthened against the
GBP sterling by 5% (2019: 5%) then this would have had
the following impact on profit and other equity:
Consolidated
2020
$
2019
$
(28,359)
(65,063)
-
-
Profit after tax
Other equity
If the Australian dollar had weakened against the GBP
by 5% (2019: 5%) then this would have had the following
impact on profit and other equity:
Consolidated
2020
$
2019
$
31,344
71,912
-
-
Profit after tax
Other equity
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 2020 (2019: 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 2020 and 2019.
If the Australian dollar had strengthened against the
USD by 5% (2019: 5%) then this would have had the
following impact on profit and other equity:
Consolidated
2020
$
(429)
-
2019
$
(738)
-
Profit after tax
Other equity
If the Australian dollar had weakened against the USD
by 5% (2019: 5%) then this would have had the following
impact on profit and other equity:
Consolidated
2020
$
475
2019
$
815
-
-
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.
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.
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% (2019: 10%) this would have increased other
income for both the Company and Group by $649,679
(2019: $136,348) 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;
Level 2 – a valuation technique is applied using
inputs other than quoted prices within Level 1 that are
observable for the financial instrument, either directly
(i.e. as prices), or indirectly (i.e. derived from prices); or
Level 3 – a valuation technique is applied using
inputs that are not based on observable market data
(unobservable inputs).
The following table shows the levels within the hierarchy of financial assets and liabilities measured at fair value
on a recurring basis at 30 June 2020 and 30 June 2019
2020
Assets
Financial assets at fair value through profit or loss:
- Listed unit trusts
- Shares in listed entity
- Regulatory reserve
2019
Assets
Financial assets at fair value through profit or loss:
- Listed unit trusts
- Shares in unlisted entity
- Regulatory reserve
Consolidated
Level 1
Level 2
Level 3
Total
140,893
5,128,575
1,227,325
6,496,793
-
-
-
-
-
-
-
-
140,893
5,128,575
1,227,325
6,496,793
Consolidated
Level 1
Level 2
Level 3
Total
130,415
-
1,233,061
1,363,476
-
-
-
-
-
-
-
-
130,415
-
1,233,061
1,363,476
52
53
Praemium Annual Report 2020 3. Revenue from contracts with customers
6. Income Tax Expense
a) Numerical reconciliation of income tax expense to prima facie tax payable
Revenue from contracts with customers:
Virtual Managed Accounts
17,669,321
15,933,586
Managed accounts platform and investment management
30,123,980
25,950,715
Consolidated
2020
$
2019
$
Financial planning software
Total revenue
4. Other Income
R&D Incentive Received (UK)
Lease revenue
Commissions
Interest income from other parties
Unit trust distributions
Other
5. Expenses
Defined contribution superannuation expense
Net foreign exchange losses
Depreciation of plant and equipment
Amortisation of intangible assets
Depreciation on right-of-use assets
Impairment losses – trade receivables
Unrealised gain/(loss) on financial instruments
Employee costs
2,360,663
2,256,792
50,153,964
44,141,093
Consolidated
2020
$
2019
$
983,111
875,366
63,150
12,531
25,458
6,136
58
86,737
747
25,110
(74,680)
(557)
1,090,444
912,723
Consolidated
2020
$
2019
$
2,185,867
1,887,712
(39,078)
602,408
(8,033)
514,908
2,788,081
1,346,394
1,279,430
72,112
1,999,201
-
(31,940)
86,140
26,851,649
23,883,127
Profit before tax
Consolidated
2020
$
2019
$
7,726,161
5,438,859
Prima facie tax expense on earnings before income tax at 30% (2019: 27.5%)
2,317,848
1,495,686
Permanent tax differences1
Tax effect of:
Difference in overseas tax rates
(1,631,618)
(429,226)
859,198
623,526
Current year tax losses not brought to account for overseas entities
1,294,308
1,196,230
Current year temporary differences not brought to account
23,059
2,760
Tax Expense
Tax expense comprises:
Current tax expense
Deferred tax expense:
Origination and reversal of temporary differences
Income Tax Expense
2,862,795
2,888,976
1,702,701
2,818,128
1,160,094
70,848
2,862,795
2,888,976
1 Permanent tax differences include recognising capitalised research and development costs of $1.1m (2019: $nil) as a tax deduction and removing
the effect of unrealised gain on financial instruments $0.6m (2019: $0.02m) for tax purposes.
b) Deferred tax assets not brought to account
Consolidated
2020
$
2019
$
Unused tax losses for which no deferred tax asset has been recognised
61,027,283
55,561,453
Deductible temporary differences for which no deferred tax asset has been recognised
311,225
234,360
Potential tax benefit @ 30% (2019: 27.5%)
61,338,508
55,795,813
18,401,552
15,343,849
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
Consolidated
2020
$
2019
$
$1,988,340 of the unrealised gain on financial instruments relate to the revaluations of shares in listed entity Powerwrap (ASX:PWL).
The Hong Kong Special Administrative Region launched the Employment Support Scheme under the second round of the Anti-epidemic Fund to
provide time-limited financial support to employers. The Group received $5,158 (2019: $nil) and this is included in employee costs. There are no
unfulfilled conditions or other contingencies attaching to these grants.
The amount of the franking credits available for subsequent reporting periods are:
Balance at the end of the reporting period
10,187,811
4,927,437
54
Franking credits that will arise from the payment of the amount of provision for
income tax
Total franking credits
1,322,920
1,228,022
11,510,731
6,155,459
55
Praemium Annual Report 2020
7. Cash and Cash Equivalents
Impaired receivables
Cash on hand
Term deposit
Bank balances
Consolidated
2020
$
2,061
2019
$
1,380
387,499
388,965
15,525,093
13,358,096
15,914,653
13,748,441
Bank balances include a cash management account held in Australia which earns a weighted average effective
interest rate of 0.11% (2019: 0.4%), and deposits on call held in Australia and denominated in GBP and USD, which
bears a weighted average effective interest rate of nil% (2019: nil%). Cash on term deposit matures on an annual
basis. Cash on hand is non-interest bearing.
Certain trade receivables were found to be impaired and a provision of $70,187 (2019: $5,555) has been recorded
accordingly. The impaired trade receivables are mostly due from Praemium Australia Limited. Refer to Note 1 (u) for
the Group’s policy on accounting for trade receivables.
The aging of these impaired receivables is:
Not more than 3 months
More than 3 months but not more than 6 months
More than 6 months but not more than 1 year
More than one year
Total
Consolidated
2020
$
15,976
40,700
13,511
-
70,187
2019
$
2,640
330
2,585
-
5,555
8. Trade and Other 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.
Current
Trade receivables
Allowance for credit losses
Deposits receivable
Other receivables
Consolidated
2020
$
2019
$
3,465,394
2,722,370
(70,187)
(5,555)
3,395,207
2,716,815
464,196
26,438
454,557
729,983
490,634
1,184,540
3,885,841
3,901,355
The carrying value of trade receivables is considered a reasonable approximation of fair value due to the short-term
nature of the balances.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable in the
financial statements. The Group does not hold any collateral as security over any receivable balance. Refer to Note 2
for the policies and processes for credit risk on trade receivables.
The average credit period on trade receivables is 30 days. No interest is charged on trade or other receivables.
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
2020
$
2019
$
3,185,116
2,280,435
-
-
97,290
112,801
326,815
109,565
3,395,207
2,716,815
A reconciliation of the movement in the provision for impairment of receivables is shown below:
At 1 July 2019
Provision for impairment recognised in the year
Receivables written off as uncollectible
Balance at 30 June 2020
Consolidated
2020
$
5,555
72,112
(7,480)
70,187
2019
$
83,325
(31,940)
(45,830)
5,555
There are no other impaired assets within other receivables and it is expected that other receivable balances will be
received when due.
56
57
Praemium Annual Report 2020
9. Financial Assets
Financial assets at fair value through profit or loss
Listed Investments
Units in unit trust
Regulatory reserve
Shares in listed entities
Consolidated
2020
$
2019
$
140,893
130,415
1,227,325
1,233,061
5,128,575
-
Total financial assets of fair value through profit or loss
6,496,793
1,363,476
10. Property, Plant and Equipment
30 June 2019
Balance at 1 July 2018
Additions
Disposals
Depreciation expense
Exchange differences
Consolidated
Furniture, fixtures
and fittings
Computer
equipment
$
261,461
132,508
(1,168)
$
746,269
354,711
(2,214)
Buildings and
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
10. Property, Plant and Equipment
Balance at 30 June 2019
323,100
767,008
212,617
1,302,725
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
30 June 2020
Consolidated
2020
$
2019
$
5,738,577
525,565
(1,657,859)
(312,948)
4,080,718
212,617
1,230,353
1,219,435
(969,604)
(896,335)
260,749
323,100
5,619,164
5,269,968
(4,910,492)
(4,502,960)
708,672
767,008
5,050,139
1,302,725
Included in the above line items are right-of-use assets over the following:
Right-of-use assets
Consolidated
Initial
recognition
$
Additions
Depreciation
$
$
Exchange
differences
$
Net carrying
value
$
5,245,601
75,427
(1,264,468)
(78,538)
3,978,022
25,484
10,530
(14,962)
(369)
20,683
Consolidated
2020
$
3,202,173
1,024,360
2019
$
-
-
Office building
IT equipment
Lease liabilities
Current
Non-current
Consolidated
Furniture, fixtures
and fittings
Computer
equipment
$
$
Buildings and
leasehold
improvements
$
Total
$
Lease liabilities not recognised as a liability
The Group has elected not to recognise a lease liability for short term leases (leases with an expected term of 12
months or less). Payments made under such leases are expensed on a straight-line basis.
Balance at 1 July 2019
323,100
767,008
212,617
1,302,725
Adjustment on transition to AASB 16
-
25,484
5,245,601
5,271,085
Additions
Disposals
Depreciation expense
Exchange differences
26,446
(6,093)
313,095
(7,411)
91,531
-
431,072
(13,504)
(82,877)
(427,641)
(1,371,320)
(1,881,838)
173
38,137
(97,711)
(59,401)
Balance at 30 June 2020
260,749
708,672
4,080,718
5,050,139
Short-term leases
Consolidated
2020
$
195,971
2019
$
-
58
59
Praemium Annual Report 2020 (b) Leases
To determine the incremental borrowing rate, the
Group used third-party financing to provide lending
rate for loans with adjustments specific to the lease,
eg that security would be provided, at amounts equal
to the value of the right-of-use asset, loan duration
corresponding to the length of the lease and the
duration that the Group has been trading for.
Lease payments are allocated between principal and
finance cost. The finance cost is charged to profit or
loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the
liability for each period.
Right-of-use assets are measured at cost comprising
the following:
» the amount of the initial measurement of lease
liability
» any lease payments made at or before the
commencement date less any lease incentives
received
Right-of-use assets are depreciated over the lease term
on a straight-line basis.
Payments associated with short-term leases of property
and equipment are recognised on a straight-line basis
as an expense in profit or loss. Short-term leases are
leases with a lease term of 12 months or less.
(iii) The Group’s leasing activities and how these are
accounted for
The Group leases offices in Australia, the UK, Jersey,
UAE, Armenia, China (including Hong Kong). Rental
contracts are typically made for fixed periods of 1 year
to 10 years, with an extension option available for the
London office. The measure of the Right-of-use asset
for the London lease includes payments to be made in
optional periods as management is reasonably certain
to exercise the option to extend the lease to 2026.
Contracts may contain both lease and non-lease
components. The Group allocates the consideration in
the contract to the lease and non-lease components
based on their relative stand-alone prices. However, for
leases of real estate for which the Group is a lessee,
it has elected not to separate lease and non-lease
components and instead accounts for these as a single
lease component. Lease terms are negotiated on an
individual basis and contain a wide range of different
terms and conditions. The lease agreements do not
impose any covenants other than the security interests
in the leased assets that are held by the lessor. Leased
assets may not be used as security for borrowing
purposes.
Until the 2019 financial year, leases of property, plant
and equipment were classified as operating leases.
From 1 July 2019, leases are recognised as a right-
of-use asset and a corresponding liability using the
modified retrospective approach.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities
include the net present value of the following lease
payments:
» fixed payments (including in-substance fixed
payments), less any lease incentives receivable
The lease payments are discounted using the lessee’s
incremental borrowing rate, being the rate that the
individual lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value to the
right-of-use asset in a similar economic environment
with similar terms, security and conditions.
60
11. Goodwill
The movements in the net carrying amount of goodwill are as follows:
Gross carrying amount
Balance at 1 July 2019
Transfer to intangible asset
Net exchange differences
Balance at 30 June 2020
Accumulated impairment
Balance at 1 July 2019
Impairment loss recognised
Balance at 30 June 2020
Carrying amount 30 June 2020
Consolidated
2020
$
2019
$
2,833,502
3,230,751
-
351
(450,485)
53,236
2,833,853
2,833,502
(23,000)
(23,000)
-
-
(23,000)
(23,000)
2,810,853
2,810,502
(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.
Consolidated
2020
$
2019
$
Praemium Asia Limited (formerly WealthCraft Systems Limited)
717,523
696,939
Plum Software Limited
1,844,597
1,862,539
Praemium Retirement Services Ltd (formerly Wensley Mackay Limited)
248,733
251,024
Goodwill allocation at 30 June 2020
2,810,853
2,810,502
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% (2019: 3.0%), for Plum Software
is 2.0% (2019: 2.0%) and for Praemium Retirement
Services is 2.0% (2019: 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 12.32%
(2019: 12.40%), for Plum Software is 8.10% (2019: 9.56%)
and for Praemium Retirement Services is 8.10% (2019:
9.56%).
(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.
61
Praemium Annual Report 2020 12. Other Intangible Assets
13. Deferred Tax Assets and Liabilities
Deferred taxes arising from temporary differences and unused tax losses can be summarised as follows:
Consolidated
Customer
Contracts
$
Databases
$
Total
$
Deferred tax assets/(liabilities) 2020
Consolidated
1 July
2019
$
Recognised in
Profit and Loss
$
30 June 2020
$
2,142,332
8,139,005
10,281,337
Current assets
-
4,915,487
4,915,487
Trade and other receivables
1,528
19,528
21,056
Intangible Assets 2020
Gross carrying amount
Balance at 1 July 2019
Additions
Net exchange differences
Balance at 30 June 2020
Amortisation and Impairment
Balance at 1 July 2019
Amortisation
Impairment losses
Net exchange differences
Balance at 30 June 2020
(1,508)
(63,720)
(65,228)
2,140,824
12,990,772
15,131,596
(1,431,040)
(1,731,518)
(3,162,558)
(253,859)
(2,534,222)
(2,788,081)
-
6,285
-
-
30,376
36,661
(1,678,614)
(4,235,364)
(5,913,978)
Carrying amount 30 June 2020
462,210
8,755,408
9,217,618
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
Consolidated
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
Database assets includes Plum’s technical database and capitalised software costs. As at 30 June 2020, we had
software assets under development amounting to $2,856,384 (2019: $3,436,619). As these assets were not installed
and ready for use, no amortisation has been charged on the amounts.
Additions to database include $4,915,487 (2019: $4,896,494) of capitalised software costs for internally generated
assets. Database includes $8,576,389 for capitalised software costs and $179,019 for technical database.
Praemium has assessed that the customer contracts and technical database intangibles are amortised on a straight-
line basis over 5 years (2019: 5 years). The capitalised software costs are amortised on a straight-line basis over
3 years (2019: 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 $2,534,222 amortisation expense in databases, $2,407,518 relates to capitalised software costs, and $126,704
is for technical databases.
62
Non-current assets
Intangible assets
Right-of-use assets
Plant, property & equipment
Non-current liabilities
(105,907)
(1,458,135)
(1,564,042)
-
(446,302)
(446,302)
306,178
144,172
450,350
Pension and other employee obligations
472,243
43,556
515,799
Current liabilities
Provisions
Unused tax losses
597,447
465,531
1,062,978
21,245
(21,245)
-
Net deferred tax assets/(liabilities)
1,292,734
(1,252,895)
39,839
Deferred tax asset as represented on the Statement of Financial Position
Deferred tax liability as represented on the Statement of Financial Position
Total
1,233,401
(1,193,562)
39,839
Deferred tax assets/(liabilities) 2019
Current assets
Trade and other receivables
Non-current assets
Intangible assets
Plant, property & equipment
Non-current liabilities
Consolidated
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
204,500
71,205
607,362
392,947
597,447
(49,960)
21,245
685,372
1,292,734
1,398,641
(105,907)
1,292,734
63
Praemium Annual Report 2020 14. Trade and Other Payables
16. Issued Capital
Unsecured liabilities
Trade payables
Accrued expenses
Good and services tax
Witholding tax on intercompany loan
Other payables
Consolidated
2020
$
2019
$
Consolidated
2020
$
2019
$
1,118,928
638,673
Movement in ordinary share capital
3,003,063
2,950,617
Date
Details
Number Of
Shares
Issue Price
Total
$
2020: 408,680,474 (2019: 405,285,531) fully paid ordinary shares
68,402,062
67,019,085
01-July-2019
Opening Balance
405,285,531
67,019,085
776,835
685,323
1,419,956
1,267,651
334,550
471,016
6,653,332
6,013,280
15. Provisions
All amounts are short term and the carrying values are considered to be a reasonable approximation of fair value.
Consolidated
2020
$
2019
$
1,258,069
1,492,999
1,258,069
1,492,999
200,902
200,902
128,721
128,721
Current
Employee benefits
Non-current
Employee benefits
64
06-September-2019
Issue under employee share plan
2,086,863
06-September-2019
Issue under employee STI bonus
621,640
26-November-2019
Issue under employee share plan
358,765
26-November-2019
Issue under employee STI bonus
15,000
30-December-2019
Share issue costs
06-March-2020
27-March-2020
17-April-2020
02-June-2020
30-June-2020
30-June-2020
(a) Ordinary shares
Issue under employee share plan
99,576
Issue under employee share plan
129,962
Issue under employee share plan
Issue under employee share plan
41,523
41,614
Share issue costs
0.418
0.455
0.426
0.565
0.215
0.215
0.286
0.366
871,680
282,846
152,698
8,475
(7,096)
21,429
27,969
11,882
15,226
(2,132)
Balance
408,680,474
68,402,062
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
Foreign currency translation reserve
Option reserve
Accumulated losses
Total equity
Consolidated
2020
$
2019
$
68,402,062
67,019,085
(626,149)
2,723,282
(450,548)
1,779,865
(39,912,140)
(44,775,507)
30,587,055
23,572,895
65
Praemium Annual Report 2020 17. Reserve
Foreign currency translation reserve
Option reserve
Total
Consolidated
2020
$
(626,149)
2,723,282
2019
$
(450,548)
1,779,865
2,097,133
1,329,317
(a) Movement in reserves
Movements in reserves are detailed in the statement of changes in equity.
(b) Nature and purpose of reserves
Foreign Currency Translation Reserve - Exchange differences arising on translation of the foreign-controlled entity
are taken to the foreign currency translation reserve, as described in note 1(n). The reserve is recognised in profit and
loss when the net investment is disposed of.
Option Reserve – The option reserve records the fair value of options issued, not forfeited and not exercised.
18. Auditor’s Remuneration
Remuneration of the auditor of the consolidated entity for:
Grant Thornton
- Audit and review of financial reports
88,093
101,700
Consolidated
2020
$
2019
$
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
Overseas non-Grant Thornton firm
- Taxation services
- Compliance audit
Total other services remuneration
Total Auditor’s remuneration
66
222,693
310,786
187,485
289,185
93,500
91,773
34,780
37,776
257,829
568,615
7070,000
53,000
36,118
34,340
193,458
482,643
19. Capital And Leasing Commitments
Operating lease commitments
Contractual commitments for the next 5 years are disclosed in the table below.
Payable-Minimum Lease Payments
Not later than 12 months
Between 12 months and 5 years
Total
Consolidated
2020
$
1,261,182
2,995,868
2019
$
1,286,008
3,509,591
4,257,050
4,795,599
Of the $4,257,050, $26,366 is not capitalised in the financial statements. Operating lease commitments relate
to rental commitments for office premises in Melbourne, Sydney, Brisbane, London, Coventry, Cumbria, 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
2020 is as follows:
2020
Total segment revenue
Consolidated
Australia
International
Total
38,800,594
11,353,370
50,153,964
Revenue from external customers
38,800,594
11,353,370
50,153,964
EBITDA profit/(loss)
Interest
Intercompany interest and margin
Depreciation and amortisation
Un/realised FX
Unit trust income
16,966,973
(2,794,325)
14,172,648
(69,574)
(91,476)
(161,050)
3,114,272
(3,114,272)
-
(3,368,408)
(1,301,511)
(4,669,919)
47,816
2,541
(8,738)
3,595
39,078
6,136
Unrealised gain/(loss) on financial instruments
1,972,073
27,128
1,999,201
Restructure, arbitration and acquisition costs
(1,157,055)
(174,706)
(1,331,761)
Withholding tax
(203,121)
(74,823)
(277,944)
Profit/(loss) on disposal of fixed assets
58
-
58
Share based payments
Net Profit/(loss) Before Tax
Segment assets
Segment liabilities
(2,048,413)
(1,873)
(2,050,286)
15,257,162
(7,531,001)
7,726,161
32,996,051
16,234,143
49,230,194
(12,385,507)
(6,257,632)
(18,643,139)
Employee benefits expense
16,779,696
10,071,953
26,851,649
Additions to non-current assets (other than financial assets, deferred tax,
post-employment benefit assets, rights arising under insurance contracts)
233,240
112,342
345,582
67
Praemium Annual Report 2020 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
Consolidated
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
Intercompany interest and margin
2,547,489
(2,547,489)
-
Depreciation and amortisation
(1,158,197)
(703,105)
(1,861,302)
Un/realised FX
Unit trust income
18,459
(10,426)
8,033
95,166
(169,846)
(74,680)
Unrealised gain on financial instruments
85,918
222
86,140
Restructure, arbitration and acquistion costs
(800,181)
(836,487)
(1,636,668)
Withholding Tax
(193,353)
(327,375)
(520,728)
Profit/(loss) on disposal of fixed assets
Share based payments
Net Profit/(loss) Before Tax
Segment assets
Segment liabilities
(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)
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
Unrealised gain on financial instruments
Consolidated
2020
$
2019
$
14,172,648
11,381,636
(4,669,919)
(1,861,302)
(161,050)
39,078
6,136
1,999,201
25,110
8,033
(74,680)
86,140
Restructure, abitration and acquisition costs
(1,331,761)
(1,636,668)
Withholding tax
Share based payments
Profit/(loss) on disposal of fixed assets
Net profit before tax
(277,944)
(520,728)
(2,050,286)
((1,968,101)
58
(581)
7,726,161
5,438,859
(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
2020
$
2019
$
49,230,194
35,378,258
Employee benefits expense
13,902,939
9,980,188
23,883,127
Total assets as per the statement of financial position
49,230,194
35,378,258
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
(c) Reconciliation
(i) Revenue
A reconciliation of segment revenue to entity revenue is provided as follows:
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 $9,352,553 (2019: $6,212,800) and
the total of these non-current assets located in other countries is $7,726,057 (2019: $5,019,206). 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:
Consolidated
2020
$
2019
$
50,153,964
44,141,093
50,153,964
44,141,093
Segment liabilities
Consolidated
2020
$
2019
$
(18,643,139)
(11,805,363)
Total liabilities as per the statement of financial position
(18,643,139)
(11,805,363)
(d) Entity-wide information
The entity is domiciled in Australia. The amount of its revenue from external customers in Australia is $38,800,594
(2019: $31,404,068). Segment revenues are allocated based on the country in which revenue and profit are derived.
69
Segment revenue
Total revenue
68
Praemium Annual Report 2020 21. Events after The Reporting Date
a) On 9 July 2020, the Company also announced an off-market takeover bid for Powerwrap, with the support of the
Powerwrap board. With the offer period open until 31 August 2020, further updates will be provided to shareholders
as the offer process progresses.
b) Other than the above, Directors have not become aware of any other matter or circumstance not otherwise
dealt within the financial statements that since 30 June 2020 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.
c) The financial report was authorised for issue on 14 August 2020 by the Board of Directors.
22. Cash Flow Information
Consolidated
2020
$
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.
2020
Grant date
Vesting date
22-Dec-10
27-Apr-11
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
Profit attributable to members of the Group
4,863,366
2,549,883
6-Sep-12
30-Sep-13
Non cash flows in profit from ordinary activities
Depreciation and amortisation
Share based payments
Bad debt expense/(recovery)
Unrealised foreign exchange loss
Gain/(loss) on disposal of plant and equipment
Withholding tax receivable
Revaluation on financial instruments
Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries
Increase/(decrease) in trade and other receivables
Increase/(decrease) in trade payables and accruals
Increase/(decrease) in employee provisions
4,669,919
2,050,286
72,112
(39,078)
58
277,944
(2,002,887)
(632,656)
986,473
(163,507)
1,861,302
1,968,101
(31,940)
(8,033)
(557)
520,728
(7,319)
(189,473)
(606,775)
223,271
11-Sep-13
30-Sep-16
12-Nov-14
30-Sep-15
30-Sep-16
30-Sep-17
15-Sep-15
30-Sep-16
30-Sep-17
30-Sep-18
20-Sep-16
30-Sep-17
30-Sep-18
33,333
33,333
60,000
60,000
85,000
85,000
16,500
45,750
61,000
123,250
31,955
64,106
339,600
435,661
49,739
166,043
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(85,000)
(85,000)
(15,750)
(38,970)
(45,000)
(99,720)
(20,291)
(34,571)
(147,600)
-
(202,462)
(15,128)
(74,917)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33,333
33,333
60,000
60,000
-
-
750
6,780
16,000
23,530
11,664
29,535
33,333
33,333
60,000
60,000
-
-
750
6,780
16,000
23,530
11,664
29,535
192,000
192,000
233,199
233,199
34,611
91,126
34,611
91,126
Increase/(decrease) in deferred tax asset / payable
883,154
(143,499)
30-Sep-19
1,558,704
(1,263,993)
(2,400)
292,311
292,311
Increase in deferred income
1,397,377
56,989
1,774,486
-
(1,354,038)
(2,400)
418,048
418,048
Net cash provided by operating activities
12,062,561
6,192,678
20-Sep-17
30-Sep-18
146,854
30-Sep-19
1,015,647
30-Sep-20
2,348,285
16-Oct-18
30-Sep-19
30-Sep-20
3,510,786
269,645
578,784
30-Sep-21
1,388,998
2,237,427
-
-
-
-
-
-
-
(27,052)
-
119,802
119,802
(789,476)
(20,500)
205,671
205,671
-
(79,200)
2,269,085
-
(816,528)
(99,700)
2,594,558
325,473
(200,555)
(677)
68,413
68,413
-
-
(86,421)
492,363
(52,212)
1,336,786
-
-
(200,555)
(139,310)
1,897,562
68,413
70
1-Jul-19
30-Sep-22
16-Sep-19
30-Sep-20
30-Sep-21
30-Sep-22
-
-
-
-
-
11,000,000
605,764
1,009,618
2,423,015
-
-
-
-
11,000,000
(13,524)
592,240
(22,540)
987,078
(54,095)
2,368,920
15,038,397
--
(90,159)
14,948,238
-
-
-
--
-
Total
8,259,943
15,038,397
(2,758,303)
(331,569)
20,208,468
1,161,996
71
Praemium Annual Report 2020 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
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
30-Sep-18
1,465,800
1,715,025
20-Sep-16
30-Sep-17
92,983
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
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:
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(95,000)
(240,000)
(335,000)
(61,500)
(61,500)
(92,000)
(215,000)
(50,301)
(102,863)
-
33,333
33,333
-
-
-
-
-
-
-
-
-
-
-
-
33,333
33,333
60,000
60,000
60,000
60,000
-
-
85,000
85,000
85,000
85,000
16,500
16,500
45,750
45,750
61,000
61,000
123,250
123,250
31,955
31,955
64,106
64,106
(1,122,600)
(3,600)
339,600
339,600
(1,275,764)
(3,600)
435,661
435,661
(43,244)
-
49,739
49,739
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
Consolidated
2020
$
2019
$
(11,844)
298,387
2,052,778
1,662,864
2,040,934
1,961,251
Consolidated
2020
$
4,863,366
4,863,366
4,863,366
2019
$
2,549,883
2,549,883
2,549,883
Consolidated
2020
$
2019
$
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
-
Weighted average number of ordinary shares outstanding during the year:
20-Sep-17
30-Sep-18
1,400,000
-
(1,400,000)
-
-
-
2,776,633
5,750
(886,965)
(120,932)
1,774,486
215,782
Number used in calculating basic EPS
Number used in calculating diluted EPS
407,796,150
403,852,414
408,958,147
404,952,294
30-Sep-18
676,522
39,277
(545,762)
(23,183)
146,854
146,854
30-Sep-19
1,127,538
30-Sep-20
2,706,090
-
-
(36,578)
(75,313)
1,015,647
(87,788)
(270,017)
2,348,285
-
-
5,910,150
39,277
(2,070,128)
(368,513)
3,510,786
146,854
16-Oct-18
30-Sep-19
30-Sep-20
30-Sep-21
-
-
-
369,734
616,230
1,478,868
-
2,464,832
-
-
-
-
(100,089)
269,645
(37,446)
578,784
(89,870)
1,388,998
(227,405)
2,237,427
-
-
-
-
Total
11,253,391
2,509,859
(4,782,857)
(720,450)
8,259,943
1,099,880
(b) Shares issued as employee bonus
Shares issued during the period as an employee bonus were measured at the quoted market price of the shares.
Consolidated – 2020
72
Consolidated – 2019
Number issued
Value
Weighted average
fair value
636,640
34,088
291,321
34,770
0.46
1.02
2020: 19,046,472 (2019: 7,160,063) 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 2020 and 2019.
73
Praemium Annual Report 2020
25. Parent Entity Information
The following details information related to the parent entity, Praemium Limited, at 30 June 2020. The information
presented here has been prepared using consistent accounting policies as presented in Note 1.
26. Group Entities
The consolidated financial statements include the financial statements of Praemium Limited and those entities
detailed in the following table:
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Contributed equity
Accumulated losses
Option reserve
Total equity
Consolidated
2020
$
2019
$
10,278,693
8,589,064
97,649,321
83,778,303
107,928,014
92,367,367
3,819,958
3,767,710
121,947,015
100,063,231
125,766,973
103,830,941
68,402,062
67,019,085
(88,964,303)
(80,262,524)
2,723,282
1,779,865
(17,838,959)
(11,463,574)
Subsidiaries
Country of
incorporation
Ownership interest
% 2020
Ownership interest
% 2019
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
Loss for the year
(8,701,779)
(9,650,259)
Other comprehensive income/(loss) for the year
-
-
Total comprehensive income/(loss) for the year
(8,701,779)
(9,650,259)
Praemium Limited is the ultimate Australian parent entity and the ultimate parent entity of the Group.
74
75
Praemium Annual Report 2020 27. Related party transactions
A subsidary of Praemium Limited, Praemium Australia Limited is the Responsible Entity and receives management
fees for managing the operations of the Separately Managed Accounts managed investment scheme in accordance
with the scheme’s constitution.
ConsoConsolidated
2020
$
2019
$
Management fees:
Directors’ Declaration
The Directors of the Company declare that:
1. The financial statements and notes, as set out on pages 38-76, 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 2020 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
Managed accounts platform revenue
20,975,804
15,271,901
c.The financial statements and notes for the financial year give a true and view of the financial position and
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)
performance of the consolidated entity.
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.
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
ConsoConsolidated
2020
2019
1,261,159
1,860,655
86,385
17,929
358,419
145,119
62,623
680,136
1,723,892
2,748,533
Barry Lewin , Chairman
14 August 2020
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.
76
77
Praemium Annual Report 2020
Auditor’s Independence Declaration
Independent Audit Report
Collins Square, Tower 5
727 Collins Street
Melbourne VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 3001
Grant Thornton Audit Pty Ltd
Level 22 Tower 5
Collins Square
T +61 3 8320 2222
727 Collins Street
F +61 3 8320 2200
E info.vic@au.gt.com
GPO Box 4736
W www.grantthornton.com.au
Melbourne VIC 3008
T +61 3 8320 2222
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 2020, I declare that, to the best of my knowledge and belief, there
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Praemium
have been:
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
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
audit; and
a
a
b
Grant Thornton Audit Pty Ltd
Level 22 Tower 5
Collins Square
727 Collins Street
GPO Box 4736
Melbourne VIC 3008
T +61 3 8320 2222
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 2020, 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.
c
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
no contraventions of any applicable code of professional conduct in relation to the audit.
a giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance for the year
b
no contraventions of any applicable code of professional conduct in relation to the audit.
ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Grant Thornton Audit Pty Ltd
Chartered Accountants
Grant Thornton Audit Pty Ltd
Chartered Accountants
C S Gangemi
B L Taylor
Partner - Audit & Assurance
Partner – Audit & Assurance
Melbourne, 12 August 2019
Melbourne, 14 August 2020
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
Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN
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
41 127 556 389 ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance,
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.
tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant
Thornton Australia Limited 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. Liability limited by a scheme approved under Professional Standards Legislation.
Liability limited by a scheme approved under Professional Standards Legislation.
www.grantthornton.com.au
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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 Limited ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to
their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Limited 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. Liability limited by a scheme approved under Professional Standards Legislation.
www.grantthornton.com.au
78
78
78
Praemium Annual Report 2020
79
79
Praemium Annual Report 2020
Insert title
Independent Audit Report
Independent Audit Report
Key audit matter
How our audit addressed the key audit matter
Revenue Recognition Note 3
Contract revenue of $50,153,964 represents a material amount of the
Group’s total revenue.
Information other than the financial report and auditor’s report thereon
Our procedures included, amongst others:
The Directors are responsible for the other information. The other information comprises the information included in the
We determined the Group’s long term contracts are a key audit matter
Group’s annual report for the year ended 30 June 2019, but does not include the financial report and our auditor’s report
due to the complexity and variations in terms and conditions attached
thereon.
to each contract.
agreements and contractual arrangements to ensure compliance
with AASB 15 Revenue from Contracts with Customers;
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
Documenting and testing the operating effectiveness of the internal
controls in respect to VMA and SMA revenue from the rendering of
services;
Assessing revenue recognition policies of individual customer
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.
supporting documentation to verify the occurrence and accuracy of
the transactions;
Testing a sample of revenue recognised during the year to
Testing a sample of management fees, expenses incurred and
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
recoveries claimed by subsidiary Praemium Australia Limited in
required to report that fact. We have nothing to report in this regard.
their capacity as the Responsible Entity of the Separately
Managed Accounts managed investment scheme in accordance
with the scheme’s constitution; and
Responsibilities of the Directors for the financial report
Capitalised Development Costs Note 12
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in
Assessing relevant disclosures in the financial statements.
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.
Our procedures included, amongst others:
Capitalised product development costs had a net carrying value of
$8,576,389 at 30 June 2020.
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.
Evaluating management’s assessment of each project for
development costs for adherence to AASB 138;
Assessing the Group’s accounting policy in respect of product
During the year the Group capitalised $4,915,487 of project
development costs. These intangible assets are being amortised over
a 3 year period, and an amortisation expense of $2,407,518 has been
included in the statement of profit or loss and other comprehensive
income.
Auditor’s responsibilities for the audit of the financial report
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 2020;
AASB 138 Intangible Assets sets out the specific 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.
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
Testing a sample of costs capitalised to supporting documentation
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing
to understand the nature of the item and whether expenditure was
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
attributable to the development of the related asset and assessing
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
Given the nature of the industry in which the Group operates, there is
compliance with the recognition criteria set out in AASB 138;
of users taken on the basis of this financial report.
also a risk that there could also be a material impairment to
capitalised development costs carried as intangible assets, which
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
needs to be considered under accounting standard AASB 136
Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
Impairment of Assets.
auditor’s report.
Evaluating the appropriateness of the useful economic lives over
which capitalised costs are being amortised;
Assessing the impairment models for compliance with the standard
and evaluating the reasonableness of key assumptions through
sensitivity analysis including the discount rate, terminal growth
rates and forecast growth assumptions;
Report on the remuneration report
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, the estimate of
the assets’ useful lives and consideration of impairment involving
projected future cash flows under accounting standard AASB 136.
Opinion on the remuneration report
Challenging management’s assumptions and estimates including
those relating to forecast revenue, costs, and discount rates by
assessing the reasonableness of the approved cash flow
We have audited the Remuneration Report included in pages 24 to 31 of the Directors’ report for the year ended 30 June
projections as well as the Group’s historical ability to forecast
2019.
accurately; and
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.
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 2020, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and 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: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.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
2020.
In our opinion, the Remuneration Report of Praemium Limited, for the year ended 30 June 2020 complies with section
300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing Standards.
Grant Thornton Audit Pty Ltd
Chartered Accountants
C S Gangemi
Partner – Audit & Assurance
Melbourne, 14 August 2020
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Praemium Annual Report 2020
81
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Praemium Annual Report 2020
Additional disclosures
Required or recommended by the listing rules & Corporations Act
Top 20 Shareholders
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR MICHAEL BERNARD OHANESSIAN
BOND STREET CUSTODIANS LIMITED
MR DONALD WILLIAM STAMMER
BNP PARIBAS NOMS PTY LTD
CITICORP NOMINEES PTY LIMITED
SUPERTCO PTY LTD
MEROMA PTY LIMITED
PACIFIC CUSTODIANS PTY LIMITED
EPR SUPERANNUATION FUND PTY LTD
NATIONAL NOMINEES LIMITED
JAMPLAT PTY LTD
DAVID SIMMONDS FRANKS
MR PAUL DAVID GUTTERIDGE
FAT PROPHETS PTY LTD
CITICORP NOMINEES PTY LIMITED
WELSBY PARK PTY LTD
CAMERON RICHARD PTY LTD
Total
Balance of Register
Grand Total
Substantial Holdings
31 July 2020
37,016,547
21,374,069
14,485,803
14,430,513
11,866,617
11,648,866
9,680,144
7,663,629
7,500,000
5,353,304
4,630,818
3,825,532
3,376,915
2,493,738
2,222,223
2,181,543
2,000,000
1,816,448
1,650,000
1,630,000
%IC
9.1%
5.2%
3.5%
3.5%
2.9%
2.9%
2.4%
1.9%
1.8%
1.3%
1.1%
0.9%
0.8%
0.6%
0.5%
0.5%
0.5%
0.4%
0.4%
0.4%
166,846,709
241,833,765
40.8%
59.2%
408,680,474
100.0%
There are 408,680,474 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%
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
282,074,043
107,374,162
12,050,492
6,841,512
340,265
408,680,474
69.0%
26.3%
2.9%
1.7%
0.1%
100%
416
3,183
1,470
2,369
548
7,986
%
5.2%
39.9%
18.4%
29.7%
6.9%
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
16,853,575
3,203,435
143,384
4,232
3,842
83.4%
15.9%
0.7%
0.0%
0.0%
23
106
19
2
5
%
14.8%
68.4%
12.3%
1.3%
3.2%
20,208,468
100.0%
155
100.0%
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Praemium Annual Report 2020 Corporate Information
Notes
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
84
85
85
Praemium Annual Report 2020 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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