Praemium
Annual Report
2021
Praemium Limited ACN: 098 405 826
the
PLATFORM
of
EVERYTHING
One platform. For every advice business. For
every asset. For every client.
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Contents
Praemium grows strongly in a changing advice landscape
Chairman’s Report
CEO’s Report
Corporate Highlights
Directors’ Report
Key Facts & Figures
Overview of 2021 Financial Position
Board of Directors
Disclosures relating to Directors and Senior Management
Remuneration Report
Corporate Governance Statement
Financial Report For The Year Ended 30 June 2021
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 2021
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Praemium grows
strongly in a changing
advice landscape
With increasing education
standards, regulatory
changes and advice business
transformation, the trend of
adviser consolidation has
continued over the last year.
Yet despite this backdrop
Praemium strengthened its
position in the two primary advice
growth markets, retail IFA and
wholesale/sophisticated private
wealth.
While overall adviser numbers continue
to fall, particularly in the retail IFA sector,
much of the attrition has occurred
within sub-scale businesses who remain
outside Praemium’s target client base.
Praemium’s historical strength has
been serving the Private Wealth market
and their High Net Worth (HNW) client
segment with its non-custodial Virtual
Managed Accounts (VMA) software as a
service solution.
With the addition of an outsourced VMA
Administration Service (VMAAS) and the
successful acquisition of Powerwrap,
which has expanded its Ultra High Net
Worth addressable market, Praemium
has further enhanced its ability to cater
to the needs of this market.
As a result, Praemium has arguably
the greatest reach and penetration in
the $600bn+ advised Private Wealth
market already, with more than 25%
of the market’s FUM . This includes its
VMA solution ($130bn), VMAAS solution
($18bn) and Powerwrap ($11bn).
Praemium has also significantly
increased its footprint in the $340bn
retail IFA platform market with net
inflows to the Praemium Managed
Account platform of $2.6bn, up 149%
compared to last year.
PRIVATE WEALTH MARKET
Stockbroking, family offices & bank
owned & independent Private Wealth
firms
Advised Market:
$600bn*
Praemium serves:
25% + of FUMA
IFA MARKET
Advised
Market:
$340bn**
Praemium share:
10% of Managed
Accounts FUM
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*Source: Investment Trends HNW Report 2019
**Source: Rainmaker December 2020
Praemium:
The Platform of Everything
One platform for all advice business models – all clients, managed
accounts and investments.
HIGH NET WORTH/
ULTRA HIGH NET WORTH/SMSF
Private Wealth Advice Firms
Primary market:
Wholesale/Sophisticated Investors
Praemium solutions:
IMA & VMAAS or VMA
Advice landscape
Converging needs:
Intergenerational wealth
transfer
Total family wealth reporting
view
Super & non-super
Custody & non-custody
Managed portfolios
& individual assets
SMA, IMA, VMA,
UMA, MDA
And future
regulatory focus
INVESTORS/ACCUMULATORS &
RETIREES
IFA Advice Firms
Primary Market:
Retail Investors
Praemium solutions:
SMA & Super
Over the last few years the needs of
investors in the two primary market
segments are converging. There is a
growing demand for managed accounts
from HNW and retail investors and an
increasing requirement for total family
wealth reporting across custodial and
non-custodial assets to support the
intergenerational transfer of wealth.
This coupled with regulatory tail winds,
including the Product Design and
Distribution Obligations (DDO) which
focus on clearer investor segmentation
and associated product distribution puts
Praemium in a very strong position to
support the needs of both investor and
adviser segments via its Platform of
Everything.
“With the combined
strengths of both
Praemium &
Powerwrap the
Company has increased
both its addressable
market and its market
share in key growth
target segments.”
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Praemium Annual Report 2021 Chairman’s Report
Barry Lewin
Chairman
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I’m very pleased to report to shareholders a
year of significant change, and acceleration of
our growth strategy at Praemium.
On 9 July 2020, Praemium announced a
transformational off-market takeover for all
of the issued shares of Powerwrap Limited.
This transaction, which was completed on 6
November, created one of Australia’s largest
independent specialist platform providers on a
combined funds under administration basis.
Upon completion of the acquisition, FUA was over $27
billion, and delivered potentially significant synergies.
I was also very pleased to welcome the previous
Powerwrap chairman Anthony Wamsteker to the
Praemium Board.
In our December 2020 quarterly update, we advised
that global FUA increased to $34.3 billion with record
FUA in all segments and as at 30 June 2021, global
FUA is now $41.7 billion, reflecting the step change in
the growth of the business.
On 20 May 2021, the Board announced the departure of
Michael Ohanessian, who had been the CEO for almost
10 years. During his tenure, Michael built a solid and
profitable foundation and positioned the business for
continued strong growth. I was delighted that Anthony
Wamsteker agreed to step into the interim CEO role and
from today has accepted the permanent role of CEO.
Anthony brings over 30 years’ experience in financial
services including nine years as the founding CEO of
ME Bank, 12 years in funds management with National
Mutual/AXA and 3 years as chairman of Powerwrap.
Concurrently with the commencement of the process
for generational succession and new leadership,
the Board appointed Deloitte Corporate Finance to
undertake a strategic review of Praemium’s international
business. Subsequent to the reporting date, this review
recommended the divestment of the international
business through a formal sale process.
Global FUA is now $41.7 billion,
a 105% increase on last year,
reflecting the step change in the
growth of the business”
The Praemium Board supports this recommendation.
The proposed divestment will allow Praemium to
focus its financial and leadership resources on further
accelerating its growth trajectory in the Australian
platform market, for the benefit of all shareholders.
Further updates will be provided to shareholders as the
process progresses.
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.
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.
Key financial highlights for the year included:
Financial Results
Revenue & other income*
Earnings before interest, tax,
depreciation and amortisation
(underlying EBITDA*)
Cash balances
Platform Funds Under Administration (FUA)
Australia
International
VMAAS
Total
*Underlying EBITDA is detailed in Note 20
$m
65.8
14.0
26.7
18.4
5.0
18.3
41.7
Change
on FY20
+28%
-1%
+68%
Barry Lewin
Chairman
+223%
+55%
+61%
+105%
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Praemium Annual Report 2021
CEO’s Report
Anthony Wamsteker
Executive Director & CEO
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I am pleased to report that FY21 was an
excellent year for Praemium. The highlights
included the successful acquisition of
Powerwrap and the outstanding growth
achieved in each of our major operating
segments.
The financial and operating results achieved reflect
the tremendous foundation that has been built over
many years. That foundation includes our proprietary
technology, a client base of market leading financial
advisors and our highly skilled and passionate staff.
These three elements – staff, clients and technology –
have allowed the business to have a transformational
year.
Praemium’s growth over the past year saw funds
under administration (FUA) more than double to $41.7
billion. The takeover of Powerwrap early in the financial
year was a key contributor to this growth. Each of the
other three major segments – Australian platform,
international platform and our VMA administration
service (VMAAS) – delivered outstanding growth.
The strong growth in FUA saw Praemium achieve
revenue growth of 28%. The revenue growth was driven
primarily by the Australian segment with a 37% increase
on the previous year.
Revenue growth would have been even stronger except
for two major detractors: the ongoing ANZ transition off
the Praemium platform (impact $3.4 million); and the
UK Smartfund cessation (impact $1.4 million).
The Powerwrap acquisition led to the replacement of
contract VMA revenue with platform revenue direct from
clients. This component of the business saw revenue as
a percentage of FUA significantly lower in the second
half than the first half, which had benefited from record
cash holdings and trading volumes in the early phase of
the pandemic.
The international segment saw strong growth in
platform revenue, offset by the decline in the Smartfund
business. The international platform benefits from
strong synergies with the planning software and the
combination is well placed to continue its rapid growth
rate. Most likely that growth could be even faster under
alternative ownership, hence the recent decision to
divest that part of our business.
Praemium’s growth over the past year
saw funds under administration more
than double to $41.7 billion. ”
Whilst the growth rate was encouraging, the profitability
achieved in this transitional year was also pleasing.
Underlying EBITDA was very similar to last year in both
the Australian and international segments. This result
was achieved despite a significant increase in the
expense base of the company. Some of this growth in
expense was due to bringing in Powerwrap, with the
balance attributable to an investment in the capacity
needed not only to manage a larger business, but also
to facilitate the faster growth rate that we are now
starting to see.
The cost of operations increased from $10.6 million
to $19.7 million. Most of this increase reflected the
inclusion of Powerwrap from early in the financial year.
Despite the increase, gross margin increased by $5.8
million, or 15% on last year. Other expenses grew by
23% which was below the rate of revenue growth.
Within the Australian business, underlying EBITDA at
36% of revenue reflected the combination of the higher
margin Praemium component (50% in the previous
year) and the lower margin Powerwrap component. The
increase in scale from combining the two entities has
seen around $3 million in annualised cost synergies
achieved to date. This helped cushion the impact of
the ANZ transition and the resumption of more typical
revenue levels from the Powerwrap business.
The year also saw a continuation of Praemium’s
commitment to providing market leading financial
technology. The core of the technology remains a tax
and managed account engine that has proven to be a
source of durable competitive advantage in Australia
and overseas. In recent years, Praemium has not only
maintained this core, but has greatly enhanced the
user experience for financial advisors and their clients
with innovative front-end portals. The quality of the
experience for our clients is reflected in our ongoing
success in several independent technology and
platform surveys.
Praemium’s people are the real difference that makes
it a great business. It’s not possible to describe the
culture in a single word or sentence, but if one was to
try, it might be that there is a high care factor in all that
we do. Staff are passionate about doing things right for
our clients and their clients. This commitment to quality
and accuracy reflects in a drive to continually improve
the technology, products and services we offer.
The foundation mentioned above, which delivered such
strong growth over the past year, has proven robust
through the COVID-19 period. Praemium’s technology
has been enhanced over the year with a fortnightly
release cycle delivered under the agile development
framework. Praemium’s clients have almost universally
seen strong growth. Our staff have demonstrated an
amazing commitment to delivering on our clients’
expectations throughout the various lockdowns that
have occurred in Australia and internationally.
Based on our recent changes and market
announcements, we anticipate the coming year
will once again produce some dramatic positive
changes in our business. I believe that the steps we
are taking will build on a proud heritage and ensure
that we are positioned to realise the potential of the
business that is just starting to take advantage of the
wonderful opportunity presented by the investment
platform market segment. There are some exciting
improvements in the works which should further
enhance Praemium’s competitiveness over the coming
year.
Anthony Wamsteker
Executive Director & CEO
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Praemium Annual Report 2021
Corporate Highlights
28%
increase in revenue to $65.8 million
Powerwrap
Limited
Our most significant acquisition
$45.8m
Gross margin, up 15%
$3.8bn*
Record platform inflows
* Net flows exclude a client transition of
$1.1 billion
$41.7bn
A record total funds under
administration
3rd
Overall in Australia’s Investment
Trends 2020 Platform Competitive
Analysys and Benchmark Reporting
430
new model portfolios and single
assets added to the platform
21%
EBITDA margin
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Continued
innovation
Digital workflows
Machine Learning
As the digitisation of advice continues Praemium
continues to enhance our digital acceptance
experience. Advisers can now obtain digital signatures
for many regularly used forms and send any advice
document directly to their clients’ Investor Portal for
online digital consent.
New regulations effective from 1 July 2021
require advisers to obtain consent for ongoing fee
arrangements. Praemium has expanded its digital
acceptance functionality to allow advisers to notify
their clients that their consent is required. The
client can provide consent via their Investor Portal,
which registers an approval receipt with the adviser.
The functionality also allows advisers to create
an audit trail of which clients have and haven’t
provided consent creating a seamless and paperless
compliance workflow which reduces the administrative
burden of obtaining client consent, and helps support
advisers with a complete end-to-end digital process.
Praemium has expanded its machine learning and
artificial intelligence capabilities to benefit users of
its non-custodial Virtual Managed Account solution,
by reducing human errors in data entry and improving
data integrity.
Using machine learning across a range of data sets,
Praemium has been able to identify transactions that
may have been incorrectly entered or categorised by
administrators. These errors could provide incorrect
portfolio performance information or have tax
implications for investors. This latest functionality
allows for errors to be detected at scale and rectified
quickly and is already being used successfully with
several of Praemium’s institutional clients.
Praemium Annual Report 2020
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Praemium Annual Report 2021
Directors’ Report
Review of operations
Managed Accounts Platform
Praemium’s proprietary Managed Accounts Platform
currently serves Australian, UK and International
markets, across Asia, Middle East, Europe and Africa.
Praemium operates a 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.
In October 2020, Praemium completed the off-market
takeover of Powerwrap Limited, one of Australia’s
leading wealth management platforms. Powerwrap
offers a comprehensive suite of investment,
administration and shared services to high-net-worth
investors, with a broad range of investments and
comprehensive set of administration and reporting
tools for portfolio management. The addition of
Powerwrap, which already utilises Praemium’s core
technology, positions Praemium to deliver a holistic
wealth management solution on a single platform.
Further verification of the quality of our current,
comprehensive offering is that over 40% of the
advisors named in Barron’s Top 100 Financial Advisors
utilise some combination of Praemium’s technology,
administration service and platform to manage their
clients’ portfolios. The list is dominated by high
net wealth advisors for whom Praemium offers a
comprehensive solution.
With the inclusion of Powerwrap’s platform FUA,
Praemium’s Australian platform FUA reached a record
$18.4 billion in the 2021 financial year, a 223% increase
on reported FUA and an increase of 30% for the
consolidated Praemium and Powerwrap compared to
30 June 2020. Outside the client transition, net inflows
for the Australian platforms were $2.6 billion, up 149%
compared to reported net inflows in the prior year.
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Praemium Australia continued its strong momentum in
innovation, placing 3rd overall in Investment Trends 2020
Platform Competitive Analysis and Benchmarking Report.
Praemium was winner across 9 categories, including
Managed Accounts (Product Offering), Business
Reporting, Online Business Management, Integration and
Non-Custodial Assets.
Praemium’s investment in sales and marketing was
also acknowledged this year at the Financial Standard
Marketing & Advertising Excellence (MAX) awards.
‘The Platform of Everything’ campaign won the Digital
Marketing Campaign of the Year and Praemium’s Head
of Marketing, Adele Welsh, was named the Marketing
Executive of the Year. These awards provide independent
confirmation that our efforts to raise our profile amongst
independent financial advisors and to be seen as a
thought leader in the industry are bearing fruit.
Praemium continued to invest in developing its range
of product and technology solutions. Development of
our Australian platform, as well as the newly acquired
Powerwrap platform, continued at a significant pace
during the financial year. This financial year we:
» Launched an alternative investments platform for
Qualis Capital, offering a menu of hedge funds,
private equity, real estate and private credit funds
for sophisticated investors. Platform functionality
includes trade execution facilities for advisers with
full transaction and audit trails, together with multi-
factor authentication for users of the platform to
ensure the strongest security protocols are in place;
» Launched margin lending for international SMAs in
partnership with Leveraged Equities;
» Rolled out significant new digital functionality that
will assist advice groups in meeting their new client
consent obligations covering their ongoing fee
arrangements;
» Rolled out a suite of digital solutions, including
on-line forms and a new dealer communication
solution that can be customised to specific advice
groups;
» Provided new digital capability for model managers,
including online compliance attestations, expanded
API capability for model managers to access their
model data, and the ability to customise buy lists for
special securities;
» Released ‘Live Chat’ to advisers, who now have
online access via the portal to the Praemium service
teams;
» Enhanced our superannuation services including
expanded on-line reporting, together with a number
of additional cash targeting options;
» Extended our data feeds and API services, including
the launch of the epi 4.3 protocol which provides
third parties with access to Praemium data;
platform payments functionality, giving International
advisers real time visibility and control of platform
payments.
» Launched Microsoft 365 integration available for
larger advice groups, which allows them to maintain
a centralised permissions management capability
within their business, effectively removing the
overhead in maintaining many different passwords
across multiple advice technologies;
» Rolled out ‘e’Apps functionality enabling advisers
to establish new Praemium client accounts directly
from their Xplan software to improve integration &
onboarding;
» Launched a new dollar-based option for account
establishment, providing advisers with a streamlined
approach to onboarding and transition into a
managed account structure; and
» Launched a new compliance tool for advice groups
who require secondary authorisation before
submitting a new client account application.
Praemium’s International Platform also
grew strongly this year, with record gross inflows of
$1.6 billion, up 37% on the prior comparable period. Net
inflows also achieved a record of $1.2 billion, up 59%
on the prior comparable period. International platform
FUA closed to a new high at $5.0 billion at 30 June
2021, a 55% improvement over last year.
Praemium’s unique platform continued to win
accolades during the year. Praemium was awarded
the winner of Best International Platform at the
International Adviser Awards in London for the 3rd
consecutive year. Praemium was also awarded winner
of Best Platform for Discretionary Fund Management
at London’s Professional Adviser awards in March
2021. Further recognition of our International platform
was provided with Praemium ranking 3rd of 22
platforms in the UK’s The Lang Cat Platform Market
Scorecard: March 2021.
Our International platform also continued to enhance
its functionality during the year with:
» Rollout of our new API Centre for UK, international
and offshore clients which provides deeper access
to key data. We have also progressed rollout of the
new EPI 4.3 data feeds following successful beta
testing with a number of key clients;
» Expanded API functionality to support international
and offshore robo-advice partners; and
» Significant enhancements to our International
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.
Major enhancements to VMA in the reporting period
include:
» The development of a second-generation machine
learning and artificial intelligence solution that
benefits users of our non-custodial solutions. Using
machine learning across a range of data sets,
transactions that may have been incorrectly entered
or categorised can be identified. This functionality
has been utilised by several of our institutional
clients to quickly detect and rectify manual
processing errors at scale;
» Continued expansion of our market-leading reporting
capability, with a range of new asset allocation
benchmark settings for performance, expanded
range of asset classes, and a new exclusion report
that helps advisers track their clients’ managed
account substitutions, exclusions and/or ESG
restrictions;
» The release of a new Currency Exposure Report
that recognises the increasing use of international
investments and multi-currency holdings by our
clients;
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Praemium Annual Report 2021 WealthCraft in the International markets continues
to grow from the additional of new clients and the
upgrading of Plum clients to WealthCraft in the
UK. This saw WealthCraft revenue increase by 14%
compared the prior financial year. WealthCraft also
provides strong cross-sell opportunities to our
International platform, proving the synergy of the two
in providing value to our clients. FUA relating to this
complementary offer of WealthCraft and International
platform increased by 121% to $451 million during the
2021 financial year.
Major enhancements to WealthCraft in the reporting
period include:
» Launch of an integrated account opening
experience; and
» Release of a digital fact find expanded to include
universal questionnaire capability, allowing any
document to be converted to a Q&A format that is
digitally accepted.
Investment management
Smart Investment Management (Smartim) is an FCA-
authorised investment management business that
provides a range of innovative model portfolios and
funds for the UK and international adviser markets. The
London based in-house team provides a range of multi-
asset and multi-currency portfolios, available in GBP,
USD and EUR. Assets can include equities, property,
fixed interest, absolute return and cash.
During the financial year, Model Portfolios FUA
increased 9% to $372 million. Declines in the
Smartfund managed funds impacted overall Managed
Funds FUM, which remained flat across the year at
$258 million.
Directors’ Report
Review of operations
» A range of new report exports and charting,
providing access to greater levels of information,
including fees and asset allocation details; and
» Non-concessional managed investment trust
income (NCMI) changes to embed this new ruling
for Tax Trust income which came into effect 1 July
2020.
» The VMA Administration Service (VMAAS) is
a complementary offering to 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.
» 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.
» VMAAS continued its strong growth this financial
year. As at the end of FY2021, the service has grown
to $18.3 billion from $11.4 billion in FUA the previous
year (up 61%), across 6,231 portfolios, up 23% on
the previous year. With VMAAS, Praemium 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.
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The year ahead
Wealth management and financial advisory businesses continue to navigate challenging
times, with Praemium’s next-gen technological solutions ideally suited to support their
needs. With an increasing importance on connectivity, our digital technology and capability
enables advisers to interact with clients remotely, create applications and complete digital
acceptance online and provide client reporting and important documentation, while also
monitoring investor sentiment and activity.
Praemium’s strength in providing technology solutions
will underpin our continued growth. Our next phase
of development will focus on delivering functionality
to support advisers and further improve the customer
experience, to capitalise on the large addressable
markets for Praemium in which we serve.
The competitive landscape for the Australian platform
market continues to evolve, benefitting independent,
nimble and technically advanced players like
Praemium. 2020 saw consolidation within the platform
market, including Praemum’s off-market takeover
of Powerwrap. The merger of these two companies
creates a financial platform business with combined
FUA of over $41 billion at 30 June 2021 and puts
the Company in a strong position to accelerate our
challenge against the sector’s incumbents. Leveraging
the strengths of both groups will allow Praemium to
be one of the few platforms to deliver a holistic wealth
management solution on a single platform.
Integration of both businesses will continue into the
year ahead. With a common underlying technology, our
focus is to unlock opportunities for a more efficient
operating environment as well as a better client
experience. We are also well progressed on delivering
full year EBITDA operating cost synergies of $6.0
million by the end of FY2022.
The year ahead will see Praemium’s Australian platform
release functionality to meet upcoming regulatory
requirements for our financial advice clients. This
functionality includes support to advisers as they
prepare for the new advice fee regulatory obligations
that became effective from 1 July 2021.
In addition, Praemium is well progressed with
enhancements to be rolled out in FY2022, including
expanded digital forms capability and preparation for
the new Design and Distribution Obligations which will
be effective from October 2021.
Also in Australia, we will continue to invest in R&D,
product development and sales & marketing, with the
impact of future growth we expect to see in future
periods. In addition to our expanded platform capability,
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.
Internationally, the Board appointed Deloitte Corporate
Finance in May 2021 to undertake a strategic review
of Praemium’s international business. Subsequent
to the reporting date, this review recommended the
divestment of the international business through a
formal sale process. The Praemium Board supports
this recommendation. The proposed divestment will
allow Praemium to focus its financial and leadership
resources on further accelerating its growth trajectory
in the Australian platform market, for the benefit of
all shareholders. Further updates will be provided to
shareholders as the process progresses.
Praemium Annual Report 2021
15
Key facts and figures
Financial Metrics
Revenue and other income^
Expenses
EBITDA (underlying)*
Profit before tax
Tax (expense)
Net profit after tax
Earnings per share
Cash
Net Assets
Operating cashflow
FY2021
FY2020
Change
Change
$000
65,803
51,825
13,978
3,332
1,796
1,536
0.3
26,737
80,107
5,901
$000
51,244
37,071
14,173
8,004
3,141
4,863
1.2
15,915
30,587
12,249
$000
14,559
14,754
(195)
(4,672)
(1,345)
(3,327)
(0.9)
10,822
49,520
(6,348)
%
28.4%
39.8%
(1.4%)
(58.4%)
(42.8%)
(68.4%)
(73.0%)
68.0%
161.9%
(51.8%)
^ Other income as outlined in Note 4 of the financial statements
* Underlying EBITDA excludes restructure, arbitration and acquisitions costs of -$3.4 million (2020: -$1.3 million), share based payments of -$3.4 million (2020: -$2.0 million)
and unrealised gain on financial instruments of $4.6 million (2020: $2.0 million), as detailed in Note 20 of the attached annual report.
Service Metrics
FUA $billion
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 0.5429 (2020: 0.5586)
FY2021
FY2020
Change
Change
$B
18.4
5.0
23.4
18.3
41.7
$B
5.7
3.2
8.9
11.4
20.3
$B
12.7
1.8
14.5
6.9
21.4
%
223.0%
56.0%
163.0%
61.0%
105.0%
16
Overview of 2021 financial position
Results
After reporting date events
The consolidated profit attributable to the members
of the Group was $1,536,087. This was from a 28%
increase in revenue and other income, offset by a 40%
increase in operating expenses, resulting in a 1% decline
in underlying earnings before interest, tax, depreciation
and amortisation (EBITDA) to $13,977,985.
The Group’s net profit before tax was $3,332,032, 58%
lower than the prior year, while the current year’s tax
expense of $1,795,945 was 43% lower than the prior
financial year due to the utilisation of tax losses. Net
profit after tax was $1,536,087, 68% lower than the prior
year.
The Group’s net asset position at 30 June 2021 was
$80,107,270 with $26,737,473 held in cash or cash
equivalents. The Group has borrowings of $13,607,085.
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 20 May 2021, the Board had appointed Deloitte
Corporate Finance to undertake a strategic review
of Praemium’s international business. On 13 July
2021, the Board approved the recommendation of the
divestment of the international business through a
formal sale process and made the announcement to
the market on 14 July 2021.
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 2021 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.
Praemium Annual Report 2021
17
Board of Directors
Barry Lewin
Non-executive Chairman
Stuart Robertson
Non-executive director
Daniel Lipshut
Non-executive director
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 &
Nomination 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 & Nomination
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.
18
Claire Willette
Non-executive director/advisor
Anthony Wamsteker
Executive Director/CEO
Paul Gutteridge
CFO/Company Secretary
Paul Gutteridge joined Praemium
in 2011 and brings significant
experience from finance roles
across Australia, UK and Canada
over the past 20 years. Following
his early career at Ernst & Young,
he has held senior finance roles
at Damovo (Australia), Telstra
Business Systems and Netspace,
where he led the company’s
divestment to iiNet Limited in 2010.
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.
Anthony Wamsteker was appointed
as a non-executive director on 23
November 2020. From 20 May
2021, Anthony assumed the role
of Executive Director and Interim
CEO. On 16 August 2021 Anthony
was appointed into the permanent
role of CEO. Anthony brings over
30 years’ experience in financial
services, including nine years as
the founding CEO of ME Bank and
12 years in the Funds Management
division of National Mutual/AXA.
Anthony also brings extensive board
experience, most recently as the
Chairman of Powerwrap Limited
from January 2018 to October
2020. Anthony has been Chairman
of IBA Group Pty Ltd since January
2020.
Anthony is a member the
Group’s Audit, Risk & Compliance
Committee and the Group’s
Remuneration & Nomination
Committee. Anthony received
a Bachelor of Economics from
Macquarie University and qualified
as an Associate of the Institute of
Actuaries of Australia.
Claire Willette was appointed as
a non-executive director on 28
August 2017. From 23 November
2020, Claire has performed an
advisory role to the Board and
will seek re-election as a non-
executive director at 2021’s AGM.
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.
During the financial year, Claire has
been a member of the Group’s Audit,
Risk & Compliance Committee
and Remuneration & Nomination
Committee. She has a BA from
George Mason University (US) and
a Masters of International Relations
from Cambridge University (UK).
19
Praemium Annual Report 2021 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
10 Meetings
Audit, Risk &
Compliance Committee
6 Meetings
Remuneration Committee
2 Meetings
Eligible To
Attend
Attended
Eligible To
Attend
Attended
Eligible To
Attend
Attended
10
10
10
5
9
5
10
10
10
5
9
5
1
6
6
2
-
3
1
6
6
2
-
3
-
2
2
1
-
1
-
2
2
1
-
1
Barry Lewin
Stuart Robertson
Daniel Lipshut
Claire Willette
Michael Ohanessian
Anthony Wamsteker
Directors’ & Executives’ relevant interests in
shares, options and performance rights
respect to all Directors’ and Officers’ liability insurance in
this reporting period was $110,000 (ex GST).
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.
Details of the interests of the Company’s Directors and
senior Executives in the shares of the Company are set
out in the Remuneration Report. The long-term incentive
for the Company’s Executive Directors is membership
of the Praemium Directors & Employees Benefits Plan,
which was initially approved by shareholders on 11
November 2008 (the “Current Plan”). An updated and
amended Plan was approved at the Company’s 2020
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. 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.
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
20
Remuneration
Report 2021
Praemium Annual Report 2021
21
» Ensuring that any equity-based Executive
remuneration is made in accordance with the
thresholds set in plans approved by shareholders.
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 Group’s performance and benefits
for shareholder wealth, the Board has regard to the
following with respect to the current year and the
previous three financial years:
2021
2020
2019
2018
EBITDA^ ($m)
14.0
14.2
11.4
NPAT($m)
EPS (cents)
1.5
0.3
4.9
1.2
2.5
0.6
8.8
1.4
0.4
^ 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.
Remuneration Report
During the financial year the following people served as
Directors of the Company:
» Barry Lewin
» Stuart Robertson
» Daniel Lipshut
» Anthony Wamsteker (appointed 23 November 2020)
» Claire Willette (1 July 2020 to 23 November 2020)
» Michael Ohanessian (1 July 2020 to 31 May 2021)
Remuneration philosophy and principles
The Company’s performance is dependent upon the
quality of its people. To this end, the Company applies
the following principles in its remuneration framework:
» Provide competitive rewards to attract high-calibre
executives;
» Link Executive rewards to shareholder value; and
» Provide for a significant proportion of the Executive
remuneration to be ‘at risk’ – that is, dependent
upon meeting predetermined performance
indicators.
Remuneration policies
The Board has established a Remuneration Committee,
which is currently chaired by non-executive director
Daniel Lipshut and comprised during the year non-
executive directors Stuart Robertson, Claire Willette and
Anthony Wamsteker. 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
22
Non-executive director remuneration
The Board seeks to set aggregate remuneration
at a level that provides the Company with the
ability to attract and retain Directors of the highest
calibre, whilst incurring a cost that is acceptable to
shareholders.
The non-executive directors are paid fixed fees in
accordance with a determination of the Board but
within an aggregate limit fixed by the Shareholders.
The ASX Listing Rules specify that the aggregate
remuneration of non-executive directors shall be
determined from time to time by a general meeting. At
the 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 18-19.
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 Group’s Non-Executive Directors noted
earlier, the following Executives are also disclosed
within this report as Key Management Personnel:
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
the majority of staff, subject to tenure and satisfactory
performance requirements. Achievement of this
annual STI is directly linked to the performance of the
Group against the Board’s budgets and key business
drivers. Unless Board-set budgets are achieved, no
bonus payment will be made. Overachievement of
key business drivers may result in an increase to the
amount of the bonus payable for specific executives,
subject to capped levels. At the discretion of the
Board the STI may be paid in cash or by the issue of
securities.
Long-term incentives
Long-term incentives (LTI) are based on participation
within Praemium’s Directors & Employee Benefits Plan.
LTI incentives, based on equity remuneration (being
either the issue of securities, issue of performance
rights or issue of options), are made in accordance
with thresholds set out in this plan. By using the
Group’s Directors & Employees Benefits Plan to offer
shares and options to employees, the interests of
employees are aligned with shareholder wealth. A copy
of the plan can be found on the Company’s website.
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.
LTI measures –Staff
» Michael Ohanessian – CEO & Managing Director
(from 1 July 2020 to 20 May 2021)
Rules for all staff to achieve LTI entitlements (currently
the issue of performance rights) are such that:
» Anthony Wamsteker – Interim CEO & Executive
» Entitlements issued are based on achieving
Director (from 21 May 2021)
» Paul Gutteridge - Chief Financial Officer & Company
Secretary
Fixed remuneration
Total fixed remuneration comprises base salary, any
relevant allowances and statutory superannuation
guarantee contributions. Fixed remuneration is set with
reference to market data, reflecting the scope of the
role, skills, qualifications and experience of the relevant
Executive and the performance of the employee in the
role.
Remuneration is reviewed annually, with
recommendations made to the Remuneration
Committee. Annual reviews include using market
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 Group profitability (EBITDA) targets set by the
Board over the LTI cycle. The test of Group profitability
is based on a 3-year EBITDA target, as set by the
Board at the start of the LTI cycle and measured on a
cumulative basis over the LTI period. Achievement of
entitlements is based on actual performance relative
to target, with no entitlements achieved below 80% of
target and up to 100% of entitlements achieved upon
full achievement of target.
23
Praemium Annual Report 2021 Remuneration Report (continued)
Executive remuneration policies and contracts
All Group Executives are employed under employment
contracts. Those contracts do not have a fixed
term and are terminable on between one and three
months’ notice (as set out below) by the Executive
or by the Company or, in the event that the Executive
materially breaches the contract of employment in a
way that involves dishonesty, fraud, a breach of any
law affecting the Company or a breach of certain of
the Group’s policies, the Executive may be summarily
dismissed.
To the extent that elements of the remuneration of key
Executives consists of securities in the Company, the
Board, in considering whether to grant those securities
and negotiating the terms of remuneration with the
key Executive, requires the key Executive to obtain
their own advice in respect to their exposure to risk in
relation to the securities and relies on the undertakings
of the key Executives that they have obtained such
advice prior to accepting the offer of securities.
No securities were issued to new employees as an
incentive or sign on bonus during the 2021 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:
Anthony Wamsteker, Interim CEO and Executive
Director, during the financial year was employed
pursuant to an ongoing contract, with a maximum
entitlement on termination in lieu of notice would be
equal to the value of one 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.
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 Group
profitability (EBITDA) targets set by the Board and
Total Shareholder Return (TSR) measurement over the
LTI cycle. Vesting hurdles are weighted 50% for Group
profitability targets and 50% for achievement of TSR
targets.
The test of Group profitability is based on a 3-year
EBITDA target, as set by the Board at the start of the
LTI cycle and measured on a cumulative basis over
the LTI period. Achievement of entitlements is based
on actual performance relative to target, with no
entitlements achieved below 80% of target and up to
100% of entitlements achieved upon full achievement
of target.
The test of Total Shareholder Return is performance of
Praemium’s share price relative to the performance of a
comparable peer group of companies (Peer Group) over
the LTI period, as approved by the Board. Achievement
of entitlements is based on actual performance relative
to the Peer Group, with no entitlements achieved
below 80% of the Peer Group’s TSR and up to 100% of
entitlements achieved upon full achievement of the
Peer Group’s TSR.
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 Group profitability (EBITDA), Total
Shareholder Return (TSR) and employee eligibility, with
100% of entitlements based on measures at the end of
the 3-year period.
24
Voting and comments made at the Company’s last annual general meeting
Praemium Limited received 95.6% of ‘yes’ votes on its Remuneration Report for the financial year ended 30 June
2020. The Company received no specific feedback on its Remuneration Report at the Annual General Meeting.
Detail of key management personnel remuneration - 2021
2021
Short-Term Employee Benefits
Share Based
Payments
Post-
Employment
Benefits
Other Long-
Term Benefits
Total Performance
related
%
Salary fees &
commissions
Bonus by
way of
cash1
Separation2 Performance
rights3
Superannuation
Long
service
leave
Parent entity directors
Barry
Lewin
Stuart
Robertson
Daniel
Lipshut
Claire
Willette*
Michael
Ohanessian*
Anthony
Wamsteker*
170,776
105,000
92,237
32,344
505,417
98,929
-
-
-
-
-
-
Key management personnel
Paul
Gutteridge
314,498
211,840
-
-
-
-
-
-
-
-
16,224
-
8,763
3,073
-
-
-
-
187,000
105,000
101,000
35,417
0%
0%
0%
0%
604,158
(109,203)
25,000
-
1,025,372
(11%)
-
-
-
9,398
-
108,327
0%
298,906
21,694
5,931
852,869
60%
2021 total
1,319,201
211,840
604,158
189,703
84,152
5,931
2,414,985
17%
1. Bonus by way of cash relates to cash bonuses paid during the year and FY2021’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 FY2021’s financial results, but not yet paid at the date of this report.
2. Separation comprises payments for notice in lieu and employee entitlements (annual leave and long service leave where applicable) following the CEO’s departure on 31
May 2021. All STI and LTI’s were also reversed at this date.
3. 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.
4. Director fees for Stuart Robertson and Daniel Lipshut include chair fees for the Audit, Risk and Compliance Committee and Remuneration & Nomination Committee
respectively.
25
Praemium Annual Report 2021 Remuneration Report (continued)
Detail of key management personnel remuneration - 2020
2020
Short-Term
Employee
Benefits
Salary fees &
commissions
Parent entity directors
Barry Lewin
Stuart Robertson
Daniel Lipshut
Claire Willette
170,776
105,000
92,237
77,626
Michael Ohanessian
510,000
Key Management Personnel
Paul Gutteridge
305,520
2020 total
1,261,159
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%
136,380
29,024
7,481
478,405
358,419
86,385
17,929
1,723,892
29%
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.
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%
100%
100%
0%
26
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
Parent entity directors
Michael Ohanessian
24-Sep-20
30-Sep-23
500,000
257,500
-
(257,500)
Key management personnel
Number
$
$
$
$
-
Paul Gutteridge
24-Sep-20
30-Sep-23
245,620
126,494
-
-
126,494
Other Information
A) Performance rights holdings
Allotted Date
Balance
1 July 2020
Granted as
compensation
Vested/
Exercised
Lapsed during
the year
Balance
30 June 2021
Parent entity directors
Michael Ohanessian
24-Sep-20
2,477,824
500,000
(332,110)
(2,645,714)
-
Key management personnel
Paul Gutteridge
24-Sep-20
1,719,445
245,620
(159,363)
-
1,805,702
4,197,269
745,620
(491,473)
(2,645,714)
1,805,702
B) Shareholdings directly and indirectly beneficially held
Balance
1 July 2020
Received as
Compensation
Received on the
exercise of share
schemes
Other changes
during the year
Balance
30 June 2021
2021
Parent entity directors
Barry Lewin
Stuart Robertson
Daniel Lipshut
Claire Willette
525,700
485,000
450,000
-
Michael Ohanessian
15,874,699
Anthony Wamsteker
-
Key management personnel
Paul Gutteridge
2,181,543
19,516,942
-
-
-
-
-
-
-
-
-
-
-
-
332,110
-
-
-
-
-
525,700
485,000
450,000
-
16,206,809
-
1,370,002
1,370,002
159,363
-
2,340,906
491,473
1,370,002
21,378,417
27
Praemium Annual Report 2021 Remuneration Report (continued)
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 29-33 of this document.
Environmental issues
The Group’s operations are not presently subject to significant environmental regulations under the law of the
Commonwealth or State.
Proceedings on behalf of the consolidated entity
No person has applied for leave of Court to bring proceedings on behalf of the consolidated entity. The Company
was not a party to any such proceedings during the year.
Non-audit services/auditor’s independence declaration
A copy of the Auditor’s Independence declaration in relation to the audit for the financial year is provided with this
report. The auditor of the Group is Grant Thornton. Non-audit services of approximately $90,850 have been provided
by the Group’s Parent Entity audit firm for income tax compliance services. The Directors are satisfied that the
provision of non-audit services is compatible with the general standard of independence for auditors, and that the
nature of non-audit services means that auditor independence was not compromised.
Signed in accordance with a resolution of Directors.
Barry Lewin,
Chairman
16 August 2021
28
FY2021 Corporate Governance Statement
The policies and practices of the Company are in
accordance with the ASX Corporate Governance
Council’s “Corporate Governance Principles and
Recommendations (4th Edition)” (ASX Guidelines)
unless otherwise stated.
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. The Charter makes it clear that it is the role of
the Board to govern the Company, and in particular to
set policy direction, whilst it is the role of the Executive
to manage the Company’s operations. Newly appointed
Directors are also advised of their responsibilities in
their letter of appointment.
Directors’ appointment (Principle 1.2)
The term of appointment for each non-executive
director of the Company shall be the period
commencing on appointment and expiring when the
Director is next required to stand for election by the
shareholders or a period of 3 years, whichever is the
lesser. At each AGM of the Company, subject to ASX
Listing Rule 14.4, at least one Director must retire
from office, excluding 1) a Director who is a managing
director; and 2) a Director appointed by the Directors
under rule 9.1 (b) of the Company’s Constitution and is
standing for election.
Board support for a Director’s re-election is not
automatic and is subject to satisfactory Director
performance (in accordance with the evaluation
process described for Principle 1.6).
Praemium undertakes appropriate background and
screening checks prior to nominating a Director for
election by shareholders, and provides to shareholders
all material information in its possession concerning
the Director standing for election or re-election in
the explanatory notes accompanying the notice of
meeting.
Terms of appointment (Principle 1.3)
The Company has a written agreement with each
Director and senior Executive setting out the terms
of their appointment. Further details of key executive
terms are outlined in the Remuneration Report.
Company Secretary (Principle 1.4)
The Company Secretary is accountable directly to the
Board, through the Chairman, on all matters to do with
the proper functioning of the Board. The Company
Secretary is responsible for ensuring that Board
procedures are complied with and that governance
matters are addressed. All Directors have direct
access to the Company Secretary. The appointment
and removal of the Company Secretary is a matter for
decision by the Board.
Diversity policy (Principle 1.5)
The Company is required to report on matters relating
to diversity, in particular board diversity. The Company
has a formal diversity policy, located on the Company’s
website, setting out a number of broad objectives:
» Introduce processes to ensure that diversity
commitments are implemented appropriately;
» Implement processes to ensure transparency
in the selection of qualified employees, senior
management and Board candidates with regard to
Company’s diversity profile and objectives;
» Ensure that recruitment strategies allow the
Company to maximise its opportunities to target
diverse and appropriately qualified employees;
» Develop clear criteria on behavioural expectations in
relation to promoting diversity;
» Recognise and cater for employees that may have
special requirements (such as family member
responsibilities) as part of the Company’s overall
diversity objectives;
» Consider whether the work environment is likely to
attract a diversity of individuals; and
» Facilitate a corporate culture that embraces
diversity and recognises that employees at all levels
have responsibilities outside of the workplace.
The Board has set the following measurable objectives
for achieving gender diversity:
» Increase gender diversity on the Board and senior
Executive positions and throughout the Group, aiming
for at least 20% female representation on a full-
time equivalent basis on the Board and in Executive
management positions and the entire Group;
29
Praemium Annual Report 2021 FY2021 Corporate Governance Statement
(continued)
Female
Male
Female
Male
Board composition (Principles 2.2 & 2.3)
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 & Nomination
Committee Charter, with a copy of the Charter published
on the Company’s website.
The Committee comprised during the financial year
Daniel Lipshut (Chairman), Stuart Robertson, Claire
Willette and Anthony Wamsteker, with the majority
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 currently comprises three non-
executive directors and one executive director (CEO). In
addition to the information outlined on page 18, 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)
Stuart
Robertson
Daniel
Lipshut
Claire
Willette
Michael
Ohanessian
From
May 2017
BCom, LLB,
MBA,
Independent
From
May 2017
From
May 2017
From
August 2017
to 23 November
2020
From
May 2018 to
May 2021
CA, MBA, AICD
Independent
MBA, AICD
Independent
BA, IR
(Masters)
Independent
Advisory
BE, MBA
Executive
Anthony
Wamsteker
From
November 2020
BE
Executive
» 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 subsidiaries 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
%
Board
Senior Executive
Group
30 June 2021
30 June 2020
0%
100%
14%
45%
86%
55%
20%
25%
41%
80%
75%
59%
Claire Willette was a non-executive director for part of the financial year but not at 30 June 2021. Claire will
seek re-election as a non-executive director at 2021’s AGM
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.
30
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
Statement of Values (principle 3.1)
The Company’s Statement of Values are outlined within
our code of conduct which is published on our website.
The entity’s statement of values have been reviewed
and approved by the Board, including overseeing
management’s responsibility and efforts to instil these
values across the organisation.
Code of conduct (principle 3.2)
The Company has a code of conduct which is
published on its website. The Code includes a
requirement that the board or a committee of the board
is informed of any material breaches of the Code.
The Code is reviewed annually and updated where
appropriate.
Whistle-blower policy (principle 3.3)
The Company has a Whistle-blower policy which
is published on its website. The policy includes a
requirement that the board or a committee of the
board is informed of any material incidents reported
under that policy. The policy is reviewed annually and
updated where appropriate.
Anti-bribery and corruption policy (principle 3.4)
The Company has an anti-bribery and corruption policy
which is published on its website. The policy includes a
requirement that the board or a committee of the board
is informed of any material incidents reported under
that policy. The policy is reviewed annually and updated
where appropriate.
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 three of the Company’s non-executive directors
(Barry Lewin, Stuart Robertson and Daniel Lipshut) 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.
31
Praemium Annual Report 2021 FY2021 Corporate Governance Statement
(continued)
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
comprised during the financial year Stuart Robertson
(Chairman), Daniel Lipshut, Claire Willette, Anthony
Wamsteker and Barry Lewin. At their time of inclusion
each member is 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)
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.
Periodic corporate reports (principle 4.3)
The Company issues limited periodic unaudited reports,
including quarterly updates on business performance.
Prior to release, the integrity of these reports are
reviewed internally through relevant departments
as required by subject matter and then by senior
management, including the CFO and CEO. The Board
also approves periodic corporate reports prior to
release and is satisfied that these reports are materially
accurate and provide a balanced view of information
contained within these reports.
32
Principle 5 – Make timely and balanced
disclosure
Continuous disclosure obligations (principle 5.1)
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.
ASX market announcements (principles 5.2 &
5.3)
The Company ensures that its Board receives copies of
all material market announcements promptly after they
have been made. The Company also ensures that any
new and substantive investor or analyst presentation is
released via the ASX Market Announcements Platform
ahead of the presentation.
Principle 6 – Respect the rights of
shareholders
Investor relations (Principles 6.1 – 6.4)
The Company provides information about itself and its
governance to investors via its website.
The Company has developed a framework for
communicating with shareholders which has been
followed during the financial year, as outlined in
Praemium’s Shareholder Communications Policy, as
disclosed on the Company’s website. Where possible
and practical, the Company communicates with
Shareholders using its website and email. For this
purpose, it maintains a list of email addresses for
shareholders and others interested in hearing from the
Company and provides regular updates– in particular,
links to market sensitive announcements and financial
filings are posted on its website.
Praemium commits to facilitating shareholder
participation in shareholder meetings, and dealing with
shareholder inquiries. At the Company’s Annual General
Meeting in November 2020, all substantive resolutions
were decided by a poll rather than by a show of hands.
Praemium strongly encourages all shareholders
to assist it to reduce costs and be mindful of the
environment by opting to receive annual reports,
notices of meeting, proxy forms and other formal
communications electronically. Praemium’s constitution
allows for direct online voting.
Principle 8 – Remunerate Fairly and
Responsibly
Remuneration committee (Principle 8.1)
The Company’s Remuneration Committee comprised
during the year Daniel Lipshut (Chairman), Stuart
Robertson, Anthony Wamsteker and Claire Willette.
All members are independent, with the majority
independent non-executive directors and the Chair an
independent director.
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
22-28. 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.
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 comprised during
the year Stuart Robertson (Chairman), Daniel Lipshut,
Anthony Wamsteker and Claire Willette.
All members are independent, with the majority
independent non-executive directors and the Chair an
independent director. 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 the financial year to
satisfy itself that the framework continues to be sound
and that the entity is operating with due regard to the
risk appetite set by the Board
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.
33
Praemium Annual Report 2021 Financial Report
2021
34
Consolidated Statement of Profit & Loss
and Other Comprehensive Income
For the year ended 30 June 2021
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 (losses) / gains
Telecommunication costs
Finance costs
Other expenses
Share based payments
Restructure, arbitration and acquisition costs
Unrealised gain on financial instruments
Profit before income tax expense
Income tax expense
Profit attributable to members of the Group
Other comprehensive income / (loss):
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 / (loss) for the year, net of tax
Total comprehensive income attributable to Owners of the parent
Profit for the year attributable to Owners of the parent
Total comprehensive income attributable to Owners of the parent
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.
Note
2021
$
2020
$
3
4
5
5
5
5
6
64,869,420
50,166,495
933,402
(2,542,773)
1,077,913
1,488,680
(35,565,951)
(26,851,649)
(8,021,374)
(4,669,919)
(6,708,026)
(5,797,106)
(4,249,973)
(2,379,285)
(1,312,644)
(1,379,194)
(159,731)
(764,589)
(65,518)
(307,413)
(546,441)
(74,727)
(985,715)
(672,860)
39,078
(390,869)
(186,506)
(72,112)
(3,385,216)
(2,050,286)
(3,396,126)
(1,331,761)
4,629,712
3,332,032
1,999,201
8,004,105
(1,795,945)
(3,140,739)
1,536,087
4,863,366
111,802
111,802
111,802
1,647,889
1,647,889
1,647,889
(175,601)
(175,601)
(175,601)
4,687,765
4,687,765
4,687,765
24
24
0.3
0.3
1.2
1.2
35
Praemium Annual Report 2021
Consolidated Statement of Financial Position
Note
2021
$
2020
$
7
19
8
9
10
11
12
13
14
15
10
19
9
15
9
10
13
16
17
26,737,473
15,914,653
4,367,489
4,628,503
3,119,478
2,573,040
3,885,841
2,047,856
38,852,943
24,421,390
2,142,760
3,817,995
49,891,015
13,756,166
3,316,972
6,496,793
5,050,139
2,810,853
9,217,618
1,233,401
72,924,908
24,808,804
111,777,851
49,230,194
9,360,868
2,887,487
1,860,067
2,433,908
3,107,085
5,233,379
1,258,069
3,202,173
3,787,821
-
161,974
2,742,873
19,811,389
16,224,315
447,847
10,500,000
902,942
8,403
11,859,192
200,902
-
1,024,360
1,193,562
2,418,824
31,670,581
18,643,139
80,107,270
30,587,055
116,065,309
68,402,062
2,418,014
2,097,133
(38,376,053)
(39,912,140)
80,107,270
30,587,055
As at 30 June 2021
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
Contract liabilities
Borrowings
Income tax payable
Total current liabilities
Non-current liabilities
Provisions
Borrowings
Lease Liabilities
Deferred tax liability
Total non‑current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Share capital
Reserves
Accumulated losses
TOTAL EQUITY
The accompanying notes form part of the financial statements.
36
Consolidated Statement of Changes in Equity
For year ended 30 June 2021
Ordinary
Shares
Accumulated
Losses
$
$
Foreign
Currency
Translation
Reserve
$
Share Based
Payments
Reserve
Total
$
$
Equity as at beginning of period
68,402,062 (39,912,140)
(626,149)
2,723,282
30,587,055
Profit attributable to members of the parent entity
Other comprehensive income
Amounts attributed to post combination services
Total comprehensive income/(loss) for the year
-
-
-
‑
Transactions with owners in their capacity as owners
Issue of share capital on acquisition of Powerwrap Ltd
46,032,252
Employee share-based compensation
(9,914)
Option expense
Exchange difference on option reserve
Transfer on exercise of rights
-
-
1,640,909
47,663,247
1,536,087
-
111,802
-
-
-
-
1,536,087
111,802
-
(1,514,360)
(1,514,360)
1,536,087
111,802
(1,514,360)
133,529
-
-
-
-
-
‑
-
-
-
-
-
‑
-
-
46,032,252
(9,914)
3,364,348
3,364,348
-
(1,640,909)
-
-
1,723,439
49,386,686
Equity as at 30 June 2021
116,065,309 (38,376,053)
(514,347)
2,932,361
80,107,270
For year ended 30 June 2020
Ordinary
Shares
Accumulated
Losses
$
$
Foreign
Currency
Translation
Reserve
$
Share Based
Payments
Reserve
Total
$
$
Equity as at beginning of period
67,019,085 (44,775,507)
(450,548)
1,779,865
23,572,895
Profit attributable to members of the parent entity
Other comprehensive (loss)
Total comprehensive income/(loss) for the year
Transactions with owners in their capacity as owners
-
-
‑
4,863,366
-
-
(175,601)
4,863,366
(175,601)
Employee share-based compensation
282,093
Option expense
Exchange difference on option reserve
Transfer on exercise of options
-
-
1,100,884
1,382,977
-
-
1
-
1
-
-
-
-
‑
-
-
‑
-
4,863,366
(175,601)
4,687,765
282,093
2,044,301
2,044,301
-
(1,100,884)
1
-
943,417
2,326,395
Equity as at 30 June 2020
68,402,062 (39,912,140)
(626,149)
2,723,282
30,587,055
The accompanying notes form part of the financial statements.
37
Praemium Annual Report 2021 Consolidated Statement of Cash Flows
For year ended 30 June 2021
Cash flows from operating activities:
Receipts from customers
Payments to suppliers and employees
Interest received
Transaction costs relating to acquisition of subsidiary
Unit trust distributions received
Income tax paid
Note
2021
$
2020
$
65,355,881
47,402,594
(54,147,337)
(33,201,795)
137,359
(1,252,365)
1,666
25,458
-
2,450
(4,194,184)
(1,979,641)
Net cash provided by operating activities
22
5,901,020
12,249,066
Cash flows from investing activities:
Payments for property, plant and equipment
Payments for Investments
Payments for intangible assets
Payment for acquisition of subsidiary
Cash acquired through business combination
(434,731)
(463,467)
(345,582)
(3,134,298)
(6,809,052)
(4,915,487)
(13,417,889)
14,644,463
-
-
Net cash used in investing activities
(6,480,676)
(8,395,367)
Cash flows from financing activities:
Proceeds from borrowings
Repayments of borrowings
Finance costs paid
Principal elements of lease payments
15,000,000
(1,500,000)
-
-
(439,357)
(186,505)
(1,719,915)
(1,274,134)
Net cash provided by / (used in) financing activities
11,340,728
(1,460,639)
Net increase in cash and cash equivalents
10,761,072
2,393,060
Cash and cash equivalents at beginning of year
15,914,653
13,748,441
Effect of exchange rates on cash holdings in foreign currencies
61,748
(226,848)
Cash and cash equivalents at end of year
7
26,737,473
15,914,653
The accompanying notes form part of the financial statements.
38
Notes to the Financial Statements
1. Summary of significant accounting
policies
(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 not presented
as a consequence of a change to the Corporations
Act 2001; however, limited financial information for
Praemium Limited as an individual entity are included
in Note 25. The Group is a for-profit entity for the
purpose of preparing the financial statements.
The following is a summary of the material accounting
policies adopted by the Group in the preparation of the
financial report. The accounting policies have been
consistently applied, unless otherwise stated.
(b) Basis of preparation
The financial report of Praemium Limited and
controlled entities has been prepared in accordance
with Australian Accounting Standards (including
Australian Accounting Interpretations), other
authoritative pronouncements of the Australian
Accounting Standards Board and the Corporations Act
2001.
Australian Accounting Standards include International
Financial Reporting Standards as adopted in Australia.
Compliance with Australian Accounting Standards
ensures that the financial report complies with
International Financial Reporting Standards (IFRS).
(i) Reporting basis and conventions
The financial report has been prepared on an accruals
basis and is based on historical costs as modified by
the revaluation of financial assets through profit or loss,
certain classes of property, plant and equipment and
investment property.
(ii) New standards and interpretations not yet adopted
During the financial year, the International Financial
Reporting Interpretations Committee (IFRIC) identified
that various approaches to customisation and
configuration costs for cloud computing arrangements
were utilised by companies depending on internal
policy. These policies varied from expensing all costs
in full to capitalisation of all costs in full, with most
entities taking a more nuanced approach in their
capitalisation policy and differentiating between
expenditure with different underlying fact patterns.
The Agenda Decision requires that management
capitalise those elements of expenditure that meet the
definition of an “Intangible Asset” as defined by AASB
138 Intangible Assets and recognise any additional
amounts as an expense as the entity benefits from the
expenditure – either by applying AASB 138 or applying
another accounting standard.
The impact of this decision has not had a material
impact on the consolidated entity’s financial
statements. 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.
(c) Principles of consolidation
The consolidated financial statements incorporate the
assets and liabilities of all subsidiaries of Praemium
Limited (“parent entity”) as at 30 June 2021 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.
39
Praemium Annual Report 2021 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
40
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.
(h) Financial instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised
when the Group becomes a party to the contractual
provisions of the financial instrument.
Financial assets are derecognised when the
contractual rights to the cash flows from the
financial asset expire, or when the financial asset and
substantially all the risks and rewards are transferred.
A financial liability is derecognised when it is
extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial
assets
All financial assets are initially measured at fair
value net of transaction costs (where applicable).
Transaction costs are recognised in profit or loss.
Financial assets are classified into one of the following
categories:
» amortised cost
» fair value through profit or loss (FVTPL), or
» fair value through other comprehensive income
(FVOCI)
In the periods presented the Group does not have any
financial assets categorised as FVOCI.
The classification is determined by both:
» the entity’s business model for managing the
financial asset, and
» the contractual cash flow characteristics of the
financial asset.
All revenue 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.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if
the assets meet the following conditions (and are not
designated as FVTPL):
» they are held within a business model whose
objective is to hold the financial assets and collect
its contractual cash flows, and
» the contractual terms of the financial assets
give rise to cash flows that are solely payments
of principal and interest on the principal amount
outstanding
After initial recognition, these are measured at
amortised cost using the effective interest method.
Discounting is omitted where the effect of discounting
is immaterial.
Financial assets at fair value through profit or loss
(FVTPL)
Financial assets that are held within a different
business model other than ‘hold to collect’ or ‘hold
to collect and sell’ are categorised at FVTPL. Further,
irrespective of business model financial assets whose
contractual cash flows are not solely payments of
principal and interest are accounted for at FVTPL.
The category also contains equity investments. The
Group accounts for the investment at FVTPL and did
not make the irrevocable election to account for the
investment in listed and unlisted equity securities
at fair value through other comprehensive income
(FVOCI). The fair value was determined in line with the
requirements of IFRS 9 ’Financial Instruments’, which
does not allow for measurement at cost.
Assets in this category are measured at fair value
with gains or losses recognised in profit or loss. The
fair values of financial assets in this category are
determined by reference to active market transactions
or using a valuation technique where no active market
exists.
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.
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.
Classification and measurement of financial liabilities
The Group’s financial liabilities include borrowings
and trade and other payables. Financial liabilities are
initially measured at fair value net of transaction costs.
Transaction costs are expensed in the period in which
they are incurred and reported in finance costs and
Restructure, arbitration and acquisition costs.
Subsequently, financial liabilities are measured at
amortised cost using the effective interest method.
All interest-related charges and, if applicable, changes
in an instrument’s fair value that are reported in profit
or loss are included within finance costs or finance
income.
41
Praemium Annual Report 2021 (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.
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.
For the year ending 30 June 2021, withholding tax
not recoverable has been combined with income tax
expense on the Consolidated Statement of Profit
and loss and Other Comprehensive income. For the
year ending 30 June 2021, withholding tax was an
expense of $245,118 (2020: $277,944). The Group
further determined that the withholding tax payable
on intercompany loans included as trade and other
payables on the Consolidated Statement of Financial
Position in the prior year are more accurately
classified as income taxes payable . For the year
ending 30 June 2021, the withholding tax payable on
intercompany loans was $1,611,537 (2020: $1,419,956).
The prior year comparative has been adjusted for
both reclassifications to conform to changes in the
presentation in the current year.
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
42
(l) Leases
The Group’s leasing activities and how these are
accounted for
The Group leases various offices and equipment in
Australia, the UK, Jersey, UAE, Armenia and China
(including Hong Kong). Rental contracts are typically
made for fixed periods of 2 months to 7 years but may
have extension options as described below.
the group. These are used to maximise operational
flexibility in terms of managing the assets used in
the group’s operations. All extension and termination
options held are exercisable only by the group and not
by the respective lessor.
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.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities
include the net present value of the fixed payments
less any lease incentives receivable.
Lease payments to be made under reasonably certain
extension options are also included in the measurement
of the liability.
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.
To determine the incremental borrowing rate, the
group:
» uses a build-up approach that starts with a risk-free
interest rate adjusted for credit risk for leases held by
the Group,
» and makes adjustments specific to the lease, eg
term, country, currency and security.
If a readily observable amortising loan rate is available
to the individual lessee (through market data) which
has a similar payment profile to the lease, then the
group entities use that rate as a starting point to
determine the incremental borrowing rate.
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 offices
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.
Extension and termination options
Extension and termination options are included in
a number of property and equipment leases across
(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 offers platform
administration, investment management services for
investments held on our custodial platforms, turnkey
services and back office services. 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
and recognised at a point in time 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 and recognised over time,
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 recognised at a point in
time and 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 and recognised
at a point in time, based on the value of the trades
in the Praemium Managed Account, 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 and recognised at a point in time
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.
Some shared service clients are charged monthly and
recognised at a point in time, and some are changed
annual pro-rated agreed charges in arrears and are
recognised over time.
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.
43
Praemium Annual Report 2021 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
44
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) Dividend
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 $3,332,032 during the financial
year ended 30 June 2021 (June 2020 $8,004,105) with
accumulated losses amounting to $38,376,053 as at
30 June 2021 (June 2020 $39,912,140). Cash reserves
were $26,737,473 at 30 June 2021 (30 June 2020
$15,914,653).
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 30% 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 with solid cash flows. 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 2021. Accordingly, no adjustments
have been made to the financial report relating to the
recoverability and classification of the asset-carrying
amounts and classification of liabilities that might be
necessary.
(u) 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
45
Praemium Annual Report 2021 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.
46
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 all of the new and revised
standards and Interpretations issued by the Australian
Accounting Standards Board (the AASB) which are
mandatory to apply to the current interim period.
Disclosures required by these standards that are
deemed material have been included in this financial
report on the basis that they represent a significant
change in information from that previously made
available.
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 2021, financial liabilities have contractual
maturities, which are summarised below:
Consolidated
2021
Current
6-12
Months
$
Non-current
1-5
Years
$
Later than
5 years
$
Within 6
months
$
Trade payables
1,796,985
Accrued
expenses
6,557,599
Other payables
252,187
-
-
-
-
-
-
Borrowings
3,107,085
- 10,500,000
Total
11,713,856
‑ 10,500,000
-
-
-
-
‑
47
Praemium Annual Report 2021 Consolidated
2020
Current
Non-current
Within 6
months
$
6-12
Months
$
1-5
Years
$
Later than
5 years
$
Trade payables
1,118,928
Accrued
expenses
3,003,063
Other payables
334,550
Total
4,456,541
-
-
-
‑
-
-
-
‑
-
-
-
‑
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
Interest rate risk arises from changes in market
interest rates. The Group’s interest rate risk arises
from:
» Surplus cash in major Australian and UK banks
» Cash on term deposit, which are at floating rates
» Bank borrowings
We manage interest rate risk by:
» ensuring deposits attract the best available rate.
» setting a fixed percentage on the margin component
with the lender.
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 (2020:
+/-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
2021
$
-100
basis
pts
2020
$
-100
basis
pts
+100
basis
pts
+100
basis
pts
267,375
(267,375)
159,147
(159,147)
Cash
and cash
equivalents
Borrowings
136,071
(136,071)
-
-
Net result
403,446 (403,446)
159,147 (159,147)
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.
48
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
2021
GBP
2020
GBP
1,284,866
595,537
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 2021
(2020: 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 2021 and 2020.
If the Australian dollar had strengthened against the
GBP sterling by 5% (2020: 5%) then this would have had
the following impact on profit and other equity:
Nominal amounts
Cash at bank and on
term deposit
Consolidated
2021
USD
123,514
2020
USD
9,019
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 2021 (2020: 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 2021 and 2020.
If the Australian dollar had strengthened against the
USD by 5% (2020: 5%) then this would have had the
following impact on profit and other equity:
Profit after tax
Other equity
Consolidated
2021
$
2020
$
(61,184)
(28,359)
-
-
Profit after tax
Other equity
Consolidated
2021
$
(5,882)
-
2020
$
(429)
-
If the Australian dollar had weakened against the
GBP by 5% (2020: 5%) then this would have had the
following impact on profit and other equity:
If the Australian dollar had weakened against the
USD by 5% (2020: 5%) then this would have had the
following impact on profit and other equity:
Profit after tax
Other equity
Consolidated
2021
$
2020
$
67,625
31,344
-
-
Profit after tax
Other equity
Consolidated
2021
$
6,501
-
2020
$
475
-
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.
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.
49
Praemium Annual Report 2021 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% (2020: 10%) this would have increased other
income for both the Company and Group by $214,276
(2020: $649,679) 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 tables show the levels within the hierarchy of financial assets and liabilities measured at fair value
on a recurring basis at 30 June 2021 and 30 June 2020:
2021
Assets
Financial assets at fair value through profit or loss:
- Listed unit trusts
- Shares in unlisted entity
- Regulatory reserve
2020
Assets
Financial assets at fair value through profit or loss:
- Listed unit trusts
- Shares in listed entity
- Regulatory reserve
Consolidated
Level 1
Level 2
Level 3
Total
165,054
-
1,326,935
1,491,989
-
-
-
‑
-
650,771
165,054
650,771
-
1,326,935
650,771
2,142,760
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
50
3. Revenue from contracts with customers
Revenue from contracts with customers:
Virtual Managed Accounts
Managed accounts platform and investment management
Financial planning software
Total revenue
4. Other Income
R&D Incentive Received (UK)¹
Lease revenue
Interest income from other parties
Unit trust distributions
Other
Consolidated
2021
$
2020
$
16,564,527
17,669,321
45,966,360
30,136,511
2,338,533
2,360,663
64,869,420
50,166,495
Consolidated
2021
$
2020
$
794,377
983,111
-
137,359
1,666
-
63,150
25,458
6,136
58
933,402
1,077,913
¹ Praemium UK applies for Research and Development relief on an annual basis to claim a tax incentive relating to the work completed by the UK
technology team.
5. Expenses
Consolidated
2021
$
2020
$
Defined contribution superannuation expense
2,760,777
2,185,867
Net foreign exchange (gains) / losses
Depreciation of plant and equipment
Amortisation of intangible assets
Depreciation on right-of-use assets
Impairment losses – trade receivables
Unrealised (gain) on financial instruments
Employee costs
65,518
628,611
5,785,037
1,607,726
74,727
(39,078)
602,408
2,788,081
1,279,430
72,112
(4,629,712)
(1,999,201)
35,565,951
26,851,649
$4,506,929 (2020: $1,988,340) of the unrealised gain on financial instruments relate to the revaluations of previously listed entity Powerwrap Limited.
51
Praemium Annual Report 2021 6. Income Tax Expense
a) Numerical reconciliation of income tax expense to prima facie tax payable
Profit before tax
Consolidated
2021
$
2020
$
3,332,032
8,004,105
Prima facie tax expense on earnings before income tax at 30% (2020: 30%)
999,610
2,401,232
Tax effect of:
Entertainment
Director and employee option expense
UK & HK witholding tax
Acquisition costs
25,163
1,052,579
73,535
440,161
40,835
615,833
83,383
-
Capitalised research and development costs
(1,384,152)
(1,156,996)
Unrealised gain on financial assets
Recovery of reduced input tax credits
Other
Permanent tax differences
Difference in overseas tax rates
Current year tax losses not brought to account
Current year temporary differences not brought to account
Withholding tax not recoverable
Income Tax Expense
Tax expense comprises:
Current tax expense
Withholding tax not recoverable
Deferred tax expense:
Origination and reversal of temporary differences
Income Tax Expense
b) Deferred tax assets not brought to account
Unused tax losses for which no deferred tax asset has been recognised
United Kingdom
Hong Kong
(1,388,913)
(823,936)
34,768
(591,622)
(985,004)
361,953
(1,970,795)
(1,631,618)
965,259
859,198
1,566,939
1,210,925
(10,186)
245,118
23,059
277,943
1,795,945
3,140,739
447,652
245,118
1,702,702
277,943
1,103,175
1,160,094
1,795,945
3,104,739
Consolidated
2021
$
2020
$
60,236,409
48,842,868
10,680,170
12,184,415
Deductible temporary differences for which no deferred tax asset has been recognised
277,273
311,225
Total unused tax losses
Potential tax benefit @ 30% (2020: 30%)
71,193,852
61,338,508
21,358,156
18,401,552
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.
52
c) Franking credits
The amount of the franking credits available for subsequent reporting periods are:
Balance at the end of the reporting period
13,739,596
10,187,811
Consolidated
2021
$
2020
$
Franking credits that will arise from the payment of the amount of provision for income
tax
Total franking credits
7. Cash and Cash Equivalents
Cash on hand
Term deposit
Bank balances
(1,449,563)
1,322,920
12,290,033
11,510,731
Consolidated
2021
$
1,349
2020
$
2,061
211,473
387,499
26,524,651
15,525,093
26,737,473
15,914,653
Bank balances include a cash management account held in Australia which earns a weighted average effective
interest rate of 0.05% (2020: 0.11%), and deposits on call held in Australia and denominated in GBP and USD, which
bears a weighted average effective interest rate of nil% (2020: nil%). Cash on term deposit matures on an annual
basis. Cash on hand is non-interest bearing.
8. Trade and Other Receivables
Current
Trade receivables
Provision for impairment of recievables
Other receivables
Deposits receivable
Consolidated
2021
$
3,018,377
(144,911)
549,700
1,205,337
2020
$
3,465,394
(70,187)
26,438
464,196
4,628,503
3,885,841
The majority of our receivables are in the form of contracted agreements with our customers. In general, the terms
and conditions of these contracts require settlement between 30 to 180 days from the date of invoice. Credit risk
associated with trade and other receivables and contract assets has been provided for.
Deposits receivable relate to the rental bond of the office leases and other receivables represent an amount held to
meet the cash buffer requirement as determined by the Financial Conduct Authority in the United Kingdom.
(a) Impairment of trade and other receivables and contract assets
Trade and other receivables and contract assets are exposed to customers’ credit risk and are subject to
impairment assessment.
If a credit loss is expected, an allowance for doubtful debt is raised to reduce the carrying amount of trade and
other receivables and contract assets.
53
Praemium Annual Report 2021 A credit loss is a shortfall between the cash flows that are due in accordance with the contract and the cash flows
that we expect to receive, discounted at the original effective interest rate. The estimated expected credit loss is
calculated using an individual account by account assessment.
Contract assets relate to the transferred goods and services where a valid invoice is yet to be issued to the
customer and have substantially the same risk characteristics as the trade receivables for the same types of
contracts. Therefore, the expected loss rates for trade receivables are a reasonable approximation of the loss
rates for the contract assets.
(b) Individual approach
The individual approach is an account by account assessment based on past credit history, knowledge of debtor’s
financial situation, external indicators and forward looking information. This approach is applied to all balances.
The impairment allowance for trade receivables from contracts with customers and contract assets is measured
using a simplified approach (i.e. based on the probability of default over the lifetime of the financial asset and loss
given default). The aging analysis and loss allowance in relation to these are detailed in the following table.
Not past due, including measured at:
Amortised cost
Past due 1 - 30 days
Past due 31 - 60 days
Past due 61 - 90 days
Past 91 days
Consolidated
2021
2020
Gross
$
Allowance
$
Gross
$
Allowance
$
6,372,222
-
4,698,868
306,706
288,922
-
-
1,060,161
102,222
-
-
-
55,124
28,761
25,682
15,976
362,892
116,150
151,501
54,211
Ageing analysis in the table above is based on the original due date of trade receivables, including where repayment
terms for certain long outstanding trade receivables have been renegotiated. Contract assets are not yet due for
collection, thus the entire balance has been included in the ‘not past due’ category.
Movements in the allowance for doubtful debts in respect of all our trade and other receivables and contracts
assets, regardless of the method used in measuring the impairment allowance, are detailed in the following table.
Consolidated
2021
$
70,187
2020
$
5,555
139,827
70,187
(47,350)
(17,753)
144,911
-
(5,555)
70,187
Opening balance 1 July 2020
Additional allowance
Amount used
Amounts reversed
Closing balance 30 June 2021
54
Recognition and measurement
Trade and other receivables and contract assets are financial assets and are initially recorded at fair value and
subsequently measured at amortised cost using the effective interest rate method less provision for impairment.
Contract assets arise from our contracts with customers and are initially recorded at the transaction price allocated
as compensation for goods or services provided to customers for which the right to collect payment is subject
to providing services under the same and/or we are yet to issue a valid invoice. Contract assets are subsequently
measured to reflect relevant transaction price adjustments (where required) and are transferred to trade receivables
when the right to payment becomes unconditional, i.e. when the services under the same contract have been
transferred and/or a valid invoice has been issued.
(a) Impairment of financial assets
We estimate the expected credit losses for our financial assets (including contract assets) measured at amortised
cost on a simplified approach, i.e. lifetime expected credit loss which results from all possible default events over
the expected life of trade receivables from contracts with customer.
The expected credit losses are calculated using a provision matrix and 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.
The loss allowance is recorded at the amount equal to the expected lifetime credit losses when all collection
efforts have been exhausted and the financial asset is considered uncollectable.
Collectability of trade receivables is reviewed on an ongoing basis and factors indicating that there is no
reasonable expectation of recovery include insolvency and significant time period since the last invoice was
issued. Debts which are known to be uncollectible are written off.
9. Financial Assets and Liabilities
Financial assets
Units in unit trust
Regulatory reserve
Shares in unlisted entities
Trades and other receivables
Cash and cash equivalents
Total financial assets
Financial liabilities
Current borrowings
Non-current borrowings
Lease liabilities
Trade and other payables
Total financial liabilities
Consolidated
Amortised
FVTPL
2021
$
-
-
-
165,054
165,054
1,326,935
1,326,935
650,771
650,771
4,628,503
26,737,473
-
-
4,628,503
26,737,473
31,365,976
2,142,760
33,508,736
3,107,085
10,500,000
2,763,009
8,606,771
24,976,865
-
-
-
-
‑
3,107,085
10,500,000
2,763,009
8,606,771
24,976,865
Note 1h provides a description of each category of financial assets and financial liabilities and the related
accounting policies.
A description of the Group’s financial instrument risks, including risk management objectives and policies is given
in Note 2.
55
Praemium Annual Report 2021 Financial assets
Units in unit trust
Regulatory reserve
Shares in listed entities
Trades and other receivables
Cash and cash equivalents
Total financial assets
Financial liabilities
Lease liabilities
Trade and other payables
Total financial liabilities
Borrowings
At amortised cost
Bank borrowings
Total borrowings
Facilities available
Facilities used
Facilities unused
Consolidated
Amortised
FVTPL
2020
$
-
-
-
140,893
140,893
1,227,325
1,227,325
5,128,575
5,128,575
3,885,841
15,914,653
-
-
3,885,841
15,914,653
19,800,494
6,496,793
26,297,287
4,226,533
4,456,541
8,683,074
-
-
‑
4,226,533
4,456,541
8,683,074
Current
2021
$
3,107,085
3,107,085
2020
$
‑
-
‑
Non-current
2021
$
10,500,000
10,500,000
2021
$
15,000,000
(15,000,000)
‑
2020
$
-
‑
2020
$
‑
‑
‑
Bank borrowings are secured by assets owned by Praemium Ltd and by specified material subsidiaries within the
Group. Current interest rates are variable and average 3.17% (2020: nil).
Other financial instruments
The carrying amount of the following financial assets and liabilities is considered a reasonable approximation of
fair value:
» trade and other receivables
» cash and cash equivalents
» trade and other payables
56
Finance costs
Financial costs for the reporting period consist of the following:
Interest expenses for borrowings at amortised cost
Bank borrowings at amortised cost
Interest expense for leasing arrangements
Total interest expense
Total finance costs
10. Property, Plant and Equipment
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 2021
Consolidated
Furniture, fixtures
and fittings
Computer
equipment
Consolidated
2021
$
344,399
202,042
546,441
546,441
2020
$
-
186,506
186,506
186,506
Consolidated
2021
$
2020
$
5,964,105
5,738,577
(3,254,001)
(1,657,859)
2,710,104
4,080,718
1,283,265
(944,345)
338,920
1,230,353
(969,604)
260,749
5,384,875
5,619,164
(4,615,904)
(4,910,492)
768,971
708,672
3,817,995
5,050,139
Buildings and
leasehold
improvements
$
Total
$
4,080,718
5,050,139
972,120
1,482,284
Balance at 1 July 2020
Additions
Acquired through business combination
Disposals
Depreciation expense
Exchange differences
$
708,672
458,733
$
260,749
51,431
137,706
(83,011)
(28,085)
29,478
1,269,502
1,436,686
(649,687)
(1,868,554)
(2,601,252)
157,529
(1,718,813)
(1,589,369)
130
64,246
(24,869)
39,507
Balance at 30 June 2021
338,920
768,971
2,710,104
3,817,995
57
Praemium Annual Report 2021 30 June 2020
Balance at 1 July 2019
Adjustment on transition to AASB 16
Additions
Disposals
Depreciation expense
Exchange differences
Balance at 30 June 2020
Consolidated
Furniture, fixtures
and fittings
Computer
equipment
$
323,100
-
26,446
(6,093)
$
767,008
25,484
313,095
(7,411)
Buildings and
leasehold
improvements
$
212,617
5,245,601
91,531
-
Total
$
1,302,725
5,271,085
431,072
(13,504)
(82,877)
(427,641)
(1,371,320)
(1,881,838)
173
260,749
38,137
708,672
(97,711)
(59,401)
4,080,718
5,050,139
Included in the above line items shows the following amounts related to leases:
Right-of-use assets
Buildings
Equipment
Lease liabilities
Current
Non-current
Consolidated
2021
$
2020
$
2,518,312
3,978,022
75,503
20,683
2,593,815
3,998,705
Consolidated
2021
$
1,860,067
902,942
2020
$
3,202,173
1,024,360
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.
Consolidated
2021
$
2020
$
124,853
195,971
Short-term leases
58
11. Goodwill
The movements in the net carrying amount of goodwill are as follows:
Gross carrying amount
Balance at 1 July 2020
Acquired through business combination
Net exchange differences
Balance at 30 June 2021
Accumulated Impairment
Balance at 1 July 2020
Impairment loss recognised
Net exchange differences
Balance at 30 June 2021
(a) Impairment testing
Consolidated
2021
$
2020
$
2,833,853
2,833,502
47,080,457
(295)
-
351
49,914,015
2,833,853
(23,000)
(23,000)
-
-
(23,000)
(23,000)
49,891,015
2,810,853
For the purpose of annual impairment testing, goodwill is allocated to the following cash-generating unit, which is
the unit expected to benefit from the synergies of the business combination in which the goodwill arises.
Praemium Asia Limited
Plum Software Limited
Praemium Retirement Services Ltd
Powerwrap Limited
Goodwill allocation at 30 June 2021
Consolidated
2021
$
2020
$
653,725
717,523
1,900,907
1,844,597
255,926
248,733
47,080,457
-
49,891,015
2,810,853
The recoverable amounts of the cash-generating units were determined based on value-in-use calculations, covering
a detailed five-year forecast, followed by an extrapolation of expected cash flows for the unit’s remaining useful life
using the growth rate determined by management. The present value of the expected cash flows of each segment
is determined by using a suitable discount rate.
(b) Growth rates
The growth rates reflect the long-term average growth rates for the product lines and industries of the segments (all
publicly available). The growth rate for Praemium Asia is 2.0% (2020: 3.0%), Plum Software is 2.0% (2020: 2.0%) and
Powerwrap is 2.0% (2020: n/a).
(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% (2020: 12.32%), Plum Software is 7.10% (2020: 8.10%), and Powerwrap
is 9.10% (2020: n/a).
(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.
59
Praemium Annual Report 2021 12. Other Intangible Assets
Intangible Assets 2021
Gross carrying amount
Balance at 1 July 2020
Additions
Acquired through business acquisition
Net exchange differences
Balance at 30 June 2021
Amortisation and Impairment
Balance at 1 July 2020
Amortisation
Acquired through business acquisition
Impairment losses
Net exchange differences
Balance at 30 June 2021
Consolidated
Customer
Contracts
$
Database and
Software Costs
$
Total
$
2,140,824
12,990,772
15,131,596
-
-
6,437,132
6,437,132
5,450,116
5,450,116
52,088
84,860
136,948
2,192,912
24,962,880
27,155,792
(1,678,614)
(4,235,364)
(5,913,978)
(122,384)
(5,662,653)
(5,785,037)
-
-
(1,746,084)
(1,746,084)
-
-
(41,020)
86,493
45,473
(1,842,018)
(11,557,608)
(13,399,626)
Carrying amount 30 June 2021
350,894
13,405,272
13,756,166
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
Net exchange differences
Balance at 30 June 2020
Consolidated
Customer
Contracts
$
Database and
Software Costs
$
Total
$
2,142,332
8,139,005
10,281,337
-
4,915,487
4,915,487
(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
Database assets includes Plum’s technical database and capitalised software costs. As at 30 June 2021, we
had software assets under development amounting to $4,817,246 (2020: $2,856,384). As these assets were not
installed and ready for use, no amortisation has been charged on the amounts.
Additions to database include $11,887,248 (2020: $4,915,487) of capitalised software costs for internally generated
assets. Database includes $13,221,076 for capitalised software costs and $184,196 for technical database.
Praemium has assessed that the customer contracts and technical database intangibles are amortised on a
straight-line basis over 5 years (2020: 5 years). The capitalised software costs are amortised on a straight-line basis
over 3 years (2020: 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. The $5,662,653 of
amortisation expense in databases are all related to capitalised software costs.
60
13. Deferred Tax Assets and Liabilities
Deferred taxes arising from temporary differences and unused tax losses can be summarised as follows:
Deferred tax assets/(liabilities) 2021
Current assets
Trade and other receivables
Non‑current assets
Intangible assets
Right-of-use assets
Amounts reversed
Blackhole expenditure
Non‑current liabilities
Consolidated
1 July
2020
$
Recognised
in Business
Combination
$
Recognised
in Profit and
Loss
$
30 June
2021
$
21,056
-
22,418
43,474
(1,564,042)
(420,130)
424,351
(1,559,821)
(446,302)
23,400
(154,697)
(577,599)
450,350
3,179
149,537
603,066
-
479,894
45,353
525,247
Pension and other employee obligations
515,799
450,788
140,863
1,107,450
Current liabilities
Provisions
Unused tax losses
1,062,978
117,882
(779,169)
401,691
-
2,547,602
217,459
2,765,061
Net deferred tax assets/(liabilities)
39,839
3,202,615
66,115
3,308,569
Deferred tax asset as represented on the Statement of Financial Position
Deferred tax liability as represented on the Statement of Financial Position
Total
3,316,972
(8,403)
3,308,569
Deferred tax assets/(liabilities) 2020
Current assets
Trade and other receivables
Non‑current assets
Intangible assets
Right-of-use assets
Plant, property & equipment
Non‑current liabilities
Consolidated
1 July
2019
$
Recognised in
Profit and Loss
$
30 June
2020
$
1,528
19,528
21,056
(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
21,245
465,531
1,062,978
(21,245)
-
Net deferred tax assets
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
61
Praemium Annual Report 2021 14. Trade and Other Payables
Unsecured liabilities
Trade payables
Accrued expenses
Good and services tax
Other payables
15. Provisions
Consolidated
2021
$
1,796,985
6,557,599
754,097
252,187
2020
$
1,118,928
3,003,063
776,838
334,550
9,360,868
5,233,379
All amounts are short term and the carrying values are considered to be a reasonable approximation of fair value.
Current
Employee benefits
Non-current
Employee benefits
16. Shared Capital and Reserves
Consolidated
2021
$
2,887,487
2,887,487
447,847
447,847
2020
$
1,258,069
1,258,069
200,902
200,902
Consolidated
2021
$
2020
$
2021: 501,627,822 (2020: 408,680,474) fully paid ordinary shares
116,065,309
68,402,062
Movement in ordinary share capital
Details
Number Of
Shares
Issue Price
Total
$
Opening Balance
408,680,474
68,402,062
Share issue costs
-
-
(1,922)
Powerwrap acquisition
83,356,023
Issue under employee share plan
2,108,808
Powerwrap acquisition
6,110,131
0.515
0.486
0.515
42,928,352
1,025,570
3,146,717
Powerwrap acquisition costs
-
-
(42,817)
Issue under employee share plan
1,214,698
0.429
520,537
Share issue costs
Issue under employee share plan
Issue under employee share plan
-
115,711
41,977
-
0.628
0.528
(7,992)
72,648
22,154
Balance
501,627,822
116,065,309
Date
01‑July‑2020
13-July-2020
02-October-2020
31-October-2020
06-November-2020
18-November-2020
30-November-2020
22-January-2021
31-March-2021
30-June-2021
30-June-2021
62
(a) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares
present at a meeting in person or by proxy is entitled to one vote, and upon a poll each share is entitled to one vote.
(b) Capital management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence
and to sustain future development of the business. The Group considers its capital to be total equity, which
comprises ordinary share capital, 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
Share based payments reserve
Accumulated losses
Total equity
(c) Movement in reserves
Consolidated
2021
$
2020
$
116,065,309
68,402,062
(514,347)
2,932,361
(626,149)
2,723,282
(38,376,053)
(39,912,140)
80,107,270
30,587,055
Movements in reserves are detailed in the statement of changes in equity.
(d) 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.
Share Based Payments Reserve – This reserve records the fair value of options issued, not forfeited and not
exercised and the market-based measure of replacement awards.
17. Reserves
Foreign currency translation reserve
Share based payments reserve
Total
Consolidated
2021
$
(514,347)
2,932,361
2,418,014
2020
$
(626,149)
2,723,282
2,097,133
63
Praemium Annual Report 2021 18. Auditor’s Remuneration
Remuneration of the auditor of the consolidated entity for:
Grant Thornton
- Audit and review of financial reports
Non‑Grant Thornton firm
- Audit and review of financial reports
Audit services remuneration
Other Services
Auditors of Praemium Limited: Grant Thornton
- Internal controls audit
- Taxation services
Overseas non‑Grant Thornton firm
- Taxation services
- Compliance audit
Total other services remuneration
Total Auditor’s remuneration
19. Contract assets and Liabilities
Contract assets
Revenue from contracts with customers:
Virtual Managed Accounts
Managed accounts platform and investment management
Total contract assets
Consolidated
2021
$
2020
$
236,200
88,093
236,957
473,157
222,693
310,786
136,540
90,850
37,403
46,556
311,349
784,506
Consolidated
2021
$
84,000
4,283,489
4,367,489
93,500
91,773
34,780
37,776
257,829
568,615
2020
$
513,835
2,059,205
2,573,040
Contract assets relate to our rights to consideration for goods or services provided to the customers but for
which we do not have an unconditional right to payment at the reporting date.
The movement in contract assets arising from Virtual Managed Accounts is due to a reduction in services
delivered but not invoiced. The movement in contract assets arising from Managed accounts platform and
investment management is due to the inclusion of Powerwrap Ltd, where services have been delivered but not
invoiced.
Contract liabilities rise from the Group’s obligation to transfer services to customers for which the Group has
received consideration from the customer but the transfer has not yet been completed.
Contract liabilities
Virtual Managed Accounts
Managed accounts platform and investment management
Financial planning software
Total contract liabilities
64
Consolidated
2021
$
1,523,942
712,569
197,397
2020
$
1,940,378
1,564,038
283,405
2,433,908
3,787,821
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.
The Australia segment derives revenue from the provision of virtual managed accounts and financial planning
software licences and administering the Australian managed account platform.
The International segment derives revenue from the provision of financial planning software licences and
administering the International managed account platform.
(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 2021 is as follows:
2021
Revenue
Consolidated
Australia
International
Total
Revenue from contracts with customers
53,076,032
11,793,388
64,869,420
Total segment revenue
53,076,032
11,793,388
64,869,420
EBITDA profit/(loss)
Interest income
Interest expense
Intercompany interest and margin
Depreciation and amortisation
Unrealised FX
Unit trust income
Unrealised gain on financial instruments
17,844,045
(3,866,060)
13,977,985
137,289
70
137,359
(470,078)
(76,363)
(546,441)
2,662,752
(2,662,752)
-
(6,645,465)
(1,375,909)
(8,021,374)
(27,419)
(38,099)
(65,518)
1,666
4,629,712
-
-
1,666
4,629,712
Restructure, arbitration and acquisition costs
(2,808,402)
(587,724)
(3,396,126)
Loss on disposal of fixed assets
Share based payments
Net Profit/(loss) Before Tax
Segment assets
Segment liabilities
(15)
(3,385,216)
-
-
(15)
(3,385,216)
11,938,869
(8,606,837)
3,332,032
96,017,075
15,760,776
111,777,851
(27,091,711)
(4,578,870)
(31,670,581)
Employee benefits expense
25,521,998
10,043,953
35,565,951
Additions to non-current assets (other than financial assets, deferred tax,
post-employment benefit assets, rights arising under insurance contracts)
306,221
128,510
434,731
65
Praemium Annual Report 2021 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 income
Interest expense
Intercompany interest and margin
Depreciation and amortisation
Unrealised FX
Unit trust income
18,314,790
(4,142,142)
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 on financial instruments
1,972,073
27,128
1,999,201
Restructure, arbitration and acquisition costs
(1,157,055)
(174,706)
(1,331,761)
Profit on disposal of fixed assets
Share based payments
Net Profit/(loss) Before Tax
Segment assets
Segment liabilities
58
-
58
(2,048,413)
(1,873)
(2,050,286)
16,808,100
(8,803,995)
8,004,105
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
(c) Reconciliation
(i) EBITDA
A reconciliation of EBITDA to operating profit before income tax is provided as follows:
EBITDA
Depreciation and amortisation
Interest revenue
Interest expense
Unrealised FX
Unit trust income
Unrealised gain on financial instruments
Restructure, abitration and acquisition costs
Share based payments
Profit/(loss) on disposal of fixed assets
Net profit before tax
66
Consolidated
2021
$
13,977,985
(8,021,374)
137,359
(546,441)
(65,518)
1,666
4,629,712
(3,396,126)
(3,385,216)
(15)
2020
$
14,172,648
(4,669,919)
-
(161,050)
39,078
6,136
1,999,201
(1,331,761)
(2,050,286)
58
3,332,032
8,004,105
20. Segment Information Continued
(ii) 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
Total assets as per the statement of financial position
Consolidated
2021
$
111,777,851
111,777,851
2020
$
49,230,194
49,230,194
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 $61,315,777 (2020: $9,352,553)
and the total of these non-current assets located in other countries is $6,149,399 (2020: $7,726,057). Segment
assets are allocated to countries based on where the assets are located.
(iii) Segment liabilities
The amounts provided to the Board of Directors with respect to total liabilities are measured in a manner consistent
with that of the financial statements. These liabilities are allocated based on the operations of the segment.
Reportable segments’ liabilities are reconciled to total liabilities as follows:
Segment liabilities
Consolidated
2021
$
2020
$
(31,670,581)
(18,643,139)
Total liabilities as per the statement of financial position
(31,670,581)
(18,643,139)
(c) Entity-wide information
The entity is domiciled in Australia. The amount of its revenue from external customers in Australia is $53,076,032
(2020: $38,800,594), from UK is $10,635,867 (2020: $10,334,403) and the total revenue from external customers
in other countries is $1,157,521 (2020: $1,018,967). Segment revenues are allocated based on the country in which
revenue and profit are derived.
Revenues of $6,176,462 (2020: $5,384,696) are derived from a single external customer. These revenues are
attributable to the Australian segment.
67
Praemium Annual Report 2021 21. Events after The Reporting Date
On 20 May 2021, the Board had appointed Deloitte Corporate Finance to undertake a strategic review of Praemium’s
international business. On 13 July 2021, the Board approved the recommendation of the divestment of the
international business through a formal sale process and made the announcement to the market on 14 July 2021.
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 2021 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.
The financial report was authorised for issue on 16 August 2021 by the Board of Directors.
22. Cash Flow Information
Profit attributable to members of the Group
1,536,087
4,863,366
Consolidated
2021
$
2020
$
Non cash flows in profit from ordinary activities
Depreciation and amortisation
Share based payments
Bad debt expense
Unrealised foreign exchange gain / (loss)
(Loss) / gain on disposal of plant and equipment
Interest expense
8,021,374
3,385,216
74,727
65,518
-
546,441
4,669,919
2,040,932
72,112
(39,078)
58
186,506
Revaluation on financial instruments
(4,629,712)
(2,002,887)
Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade payables and accruals
Increase/(decrease) in employee provisions
(Decrease)/increase in tax asset / payable
Increase in deferred tax asset
619,512
(1,369,494)
1,745,095
(5,792,754)
1,699,010
(932,648)
995,819
(163,507)
1,161,097
1,397,377
Net cash provided by operating activities
5,901,020
12,249,066
68
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.
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
2021
Grant date
Vesting date
22-Dec-10
27-Apr-11
6-Sep-12
30-Sep-13
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
30-Sep-19
20-Sep-17
30-Sep-18
30-Sep-19
30-Sep-20
16-Oct-18
30-Sep-19
30-Sep-20
30-Sep-21
33,333
33,333
60,000
60,000
750
6,780
16,000
23,530
11,664
29,535
192,000
233,199
34,611
91,126
292,311
418,048
119,802
205,671
2,269,085
2,594,558
68,413
492,363
1,336,786
-
‑
-
‑
-
-
-
‑
(33,333)
(33,333)
(60,000)
(60,000)
(750)
-
-
(750)
-
‑
-
‑
-
6,780
16,000
22,780
10,206
20,475
50,400
81,081
17,870
58,962
142,708
219,540
49,372
106,591
387,435
543,398
49,976
116,952
-
‑
-
‑
-
6,780
16,000
22,780
10,206
20,475
50,400
81,081
17,870
58,962
142,708
219,540
49,372
106,591
387,435
543,398
49,976
116,952
-
-
-
‑
-
-
-
‑
-
-
-
‑
-
-
(1,458)
(9,060)
(141,600)
(152,118)
(16,741)
(32,164)
(149,603)
(198,508)
(70,430)
(99,080)
(1,881,650)
(2,051,160)
(18,437)
-
‑
-
‑
-
-
-
‑
-
-
-
‑
-
-
-
‑
-
-
-
‑
-
-
-
50,011
(425,422)
-
(45,986)
(199,320)
1,091,480
-
1,897,562
50,011
(489,845)
(199,320)
1,258,408
166,928
1-Jul-19
30-Sep-22
11,000,000
-
-
(2,000,000)
9,000,000
16-Sep-19
30-Sep-20
30-Sep-21
30-Sep-22
592,240
987,078
2,368,920
100,000
(521,837)
(3)
(42,186)
(65,390)
170,400
879,502
-
(258,171)
2,110,749
-
170,400
-
-
24-Sep-20
30-Sep-21
30-Sep-22
30-Sep-23
27-Nov-20
30-Sep-21
30-Sep-22
30-Sep-23
14,948,238
100,000
(564,023)
(2,323,564)
12,160,651
170,400
-
-
-
‑
-
-
-
‑
964,832
(25,539)
(104,733)
834,560
1,608,077
3,859,296
-
-
(217,122)
1,390,955
(521,088)
3,338,208
6,432,205
(25,539)
(842,943)
5,563,723
134,603
224,347
538,406
897,356
-
-
-
‑
(7,128)
(11,881)
(28,510)
(47,519)
127,475
212,466
509,896
849,837
-
-
-
‑
-
-
-
‑
20,208,468
7,479,572
(3,481,194)
(3,507,428)
20,699,418
1,204,127
69
Praemium Annual Report 2021 2020
Grant date
Vesting date
22-Dec-10
27-Apr-11
6-Sep-12
30-Sep-13
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
30-Sep-19
20-Sep-17
30-Sep-18
30-Sep-19
30-Sep-20
16-Oct-18
30-Sep-19
30-Sep-20
30-Sep-21
1-Jul-19
30-Sep-22
16-Sep-19
30-Sep-20
30-Sep-21
30-Sep-22
Balance at
start of the
year
Granted
during the
year
Exercised
during the
year
Forfeited
during the
year
Balance at
end of the
year
Exercisable
at end of the
year
Number
Number
Number
Number
Number
33,333
33,333
60,000
60,000
85,000
85,000
16,500
45,750
61,000
123,250
31,955
64,106
339,600
435,661
49,739
166,043
1,558,704
1,774,486
146,854
1,015,647
2,348,285
3,510,786
269,645
578,784
1,388,998
2,237,427
-
‑
-
‑
-
‑
-
‑
-
-
-
‑
-
-
-
-
‑
-
‑
(85,000)
(85,000)
(15,750)
(38,970)
(45,000)
(99,720)
(20,291)
(34,571)
(147,600)
(202,462)
(15,128)
(74,917)
(1,263,993)
‑
(1,354,038)
(27,052)
-
‑
-
‑
-
‑
-
‑
-
-
-
‑
-
-
(2,400)
(2,400)
-
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
292,311
292,311
418,048
418,048
119,802
205,671
119,802
205,671
-
-
-
‑
-
-
-
‑
(789,476)
(20,500)
-
(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
-
-
-
-
‑
11,000,000
605,764
1,009,618
2,423,015
-
-
-
-
-
11,000,000
(13,524)
(22,540)
592,240
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
(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.
Number issued
Value
Weighted average
fair value
-
-
636,640
291,321
-
0.46
Consolidated – 2021
Consolidated – 2020
70
23. Share-Based Payments
(c) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee
costs were as follows:
Shares issued as employee bonus
Performance rights
24. Earnings Per Share
Reconciliation of earnings to profit or loss:
Profit attributable to the shareholers of the parent entity
Earnings used to calculate basic EPS
Earnings used in calculation of diluted EPS
Weighted average number of ordinary shares outstanding during the year:
Number used in calculating basic EPS
Number used in calculating diluted EPS
2021: 19,495,291 (2020: 19,046,472) performance rights outstanding are not included in the calculation.
Consolidated
2021
$
-
3,385,216
3,385,216
2020
$
(11,844)
2,052,778
2,040,934
Consolidated
2021
$
1,536,087
1,536,087
1,536,087
2020
$
4,863,366
4,863,366
4,863,366
Consolidated
2021
$
2020
$
476,839,404
407,796,150
478,043,530
408,958,147
71
Praemium Annual Report 2021
25. Parent Entity Information
The following details information related to the parent entity, Praemium Limited, at 30 June 2021. The information
presented here has been prepared using consistent accounting policies as presented in Note 1.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Contributed equity
Accumulated losses
Option reserve
Total equity
Loss for the year
Other comprehensive income/(loss) for the year
2021
$
2020
$
797,571
10,278,693
178,006,420
97,725,353
178,803,991
108,004,046
6,180,133
3,819,958
154,515,546
121,947,015
160,695,679
125,766,973
116,065,309
68,402,062
(101,363,731)
(88,888,271)
3,406,734
2,723,282
18,108,312
(17,762,927)
(12,475,459)
(8,625,748)
-
-
Total comprehensive income/(loss) for the year
(12,475,459)
(8,625,748)
72
26. Group Entities
The consolidated financial statements include the financial statements of Praemium Limited and those entities
detailed in the following table:
Subsidiaries
Country of
incorporation
Ownership interest
% 2021
Ownership interest
% 2020
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
Powerwrap Limited
MWH Capital Proprietary Limited
UK
UK
UK
UK
UK
UK
UK
Jersey
Armenia
Hong Kong
China
UK
UK
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Praemium Limited is the ultimate Australian parent entity and the ultimate parent entity of the Group.
100
100
100
100
100
100
100
100
100
100
100
100
100
100
15
-
73
Praemium Annual Report 2021 27. Related party transactions
Praemium Australia Limited and Powerwrap Limited are subsidiaries of Praemium Limited and are respectively
the Responsible Entity of the Praemium Managed Account and Powerwrap Managed Investment Scheme. Both
derive management fees for managing the operations of the Managed Investment Scheme in accordance with the
scheme’s constitution.
ConsoConsolidated
2021
$
2020
$
Management fees:
Managed accounts platform revenue
36,830,192
20,975,804
The following disclosures should be read in conjunction with Remuneration Report contained in the Directors’
Report. Details of Key Management Personnel are disclosed in the Remuneration Report.
Key management personnel compensation (including non-executive directors)
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
ConsoConsolidated
2021
2020
2,135,199
1,261,159
84,152
5,931
189,703
86,385
17,929
358,419
2,414,985
1,723,892
74
28. Business acquired
The Group accounts for business combinations using the acquisition method when control is transferred to the
Group. The consideration transferred in the acquisition is measured at fair value, as are the identifiable net assets
acquired. Any goodwill that arises is tested annually for impairment. Transaction costs are expensed as incurred,
except if related to the issue of debt or equity securities.
Acquisition of Powerwrap Ltd
On 9 July 2020, Praemium Ltd announced an off-market conditional takeover bid for all of the issued fully paid
ordinary shares of Powerwrap Ltd which it did not presently hold.
With Praemium and Powerwrap both ASX listed entities, the acquisition was conducted via an agreed off-market
takeover to acquire 85% of the outstanding shares of Powerwrap not already owned by Praemium. The offer was
subject to Defeating Conditions, which were waived on 28 August 2020, therefore making acceptances binding. On
4 September 2020, acceptances received were greater than 50% and when the offer closed, acceptances reached
94%.
The remaining 6% of shareholders was completed via compulsory acquisition on 6 November 2020. Management
have determined that control was obtained on 4 September 2020 when greater than 50% of acceptances were
received, making this the date of acquisition.
Praemium and Powerwrap both operate in the investment platform market, a high growth sub-set of the Australian
financial investments market, with total platform funds under administration (FUA) in excess of $850 billion. The
combined business will be positioned as a platform provider of choice for many of Australia’s leading advisor
groups, creating a strong contender in both the high-net-wealth segment and the broader investment platform
market.
Combining the resources and capabilities of both Praemium and Powerwrap will create a business with greater
scale, international reach, improved inflows, a more diversified customer base, improved liquidity and a larger and
more flexible balance sheet.
Details of the purchase consideration, the net assets acquired and goodwill are as follows:
Purchase Consideration
Cash paid
Ordinary shares issued ¹
Less amounts attributable to post combination services
Total purchase consideration
Assets acquired
Cash and cash equivalents
Trade and other receivables
Contract assets
Prepayments
Other financial assets
Property, plant and equipment
Right‑of‑use asset
Intangible Assets: Database
Deferred Tax Asset
Trade and other payables
Contract liabilities
Provisions
Lease Liabilities
Net identifiable assets acquired
Add: goodwill
Net assets acquired
¹ Consideration of ordinary shares issued excludes securities exchange costs of $42,817.
$
23,053,394
46,075,069
(1,380,200)
67,748,263
14,644,463
1,873,309
1,152,300
528,416
220,387
359,253
975,664
3,704,032
3,202,615
(3,416,425)
(314,248)
(1,207,421)
(1,054,539)
20,667,806
47,080,457
67,748,263
75
Praemium Annual Report 2021 Consideration transferred
On the acquisition date, the Group held 31,082,272 (15.1%) Powerwrap shares previously accounted for as a
financial asset at fair value through profit or loss. Under AASB 3 Business Combinations, the acquirer shall
remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognise the
resulting gain or loss in profit or loss or other comprehensive income.
Accordingly, the shares were revalued from $5,128,575 to $9,635,504. A cumulative gain of $4,506,929 arose from
changes in the fair value of the investment and was recognised under unrealised gain on financial instruments in
the statement of profit and loss and other comprehensive income.
The fair value of the 89,466,154 shares issued as part of the consideration paid for Powerwrap Ltd ($46,075,069)
was based on the published share price on 4 September 2020 of $0.515 per share.
Goodwill
The goodwill is attributable to the expected upside of significant cost and revenue synergies, expanded
diversification of customer base and a larger and more flexible balance sheet of the acquired business. It will not be
deductible for tax purposes.
There were no acquisitions in the year ending 30 June 2020.
Powerwrap’s contribution to the Group results
Powerwrap generated a profit of $3,186,627 for the ten months from 4 September 2020 to the reporting date.
Revenue for the ten months from 4 September 2020 to the reporting date was $16,328,057.
The period between the beginning of the annual reporting period and the date of acquisition was not business as
usual due to the announcement of the takeover, making it impracticable to determine revenue and profit or loss
generated in that period.
Acquisition-related costs
Acquisition-related costs of $1,318,075 (2020: $291,398) that were not directly attributable to the issue of
shares are included in restructure, arbitration and acquisition costs in the statement of profit or loss and other
comprehensive income and in operating cash flows in the statement of cash flows.
Previously held investment in Powerwrap Ltd
On the acquisition date, the Group’s 15.1% investment in Powerwrap Ltd, previously accounted for as a financial
asset at fair value through profit or loss was revalued to Powerwrap Ltd’s share price on acquisition date.
On that date, a cumulative gain of $4,506,929 arose from changes in the fair value of the investment and has
been recognised under unrealised gain on financial instruments in the statement of profit and loss and other
comprehensive income. The previously held investment is considered part of what was given up by the Group to
obtain control of Powerwrap Ltd. Accordingly, the fair value of the investment is included in the determination of
goodwill.
Provisional accounting
While the financial effects of the transaction have been brought to account at 30 June 2021, due to the complexity
and timing of the transaction, new information may arise from facts and circumstances that existed at the
acquisition date and adjustments will be disclosed in the half year report for the period ending 31 December 2021.
Change in accounting policy
Management have re-assessed the useful life of the capitalised software costs. Core applications and frontend user
interface previously had a useful life of 10 years and 5 years respectively. Both have been decreased to 3 years,
based on an estimate of customers’ future term using Praemium’s services.
There were no other material policy changes relating to the integration of the Powerwrap during the year ending 30
June 2021.
76
Directors’ Declaration
The Directors of the Company declare that:
1. The financial statements and notes, as set out on pages 35-76, 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 2021 and of the performance for the year
ended on that date of the consolidated entity.
2. The Chief Executive Officer and Chief Financial Officer have each declared that:
a.The financial records of the Company for the financial year have been properly maintained in accordance
with section 286 of the Corporations Act 2001;
b.The financial statements and notes for the financial year comply with the Accounting Standards; and
c.The financial statements and notes for the financial year give a true and view of the financial position and
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.
Barry Lewin , Chairman
16 August 2021
77
Praemium Annual Report 2021
Auditor’s Independence Declaration
Collins Square, Tower 5
727 Collins Street
Melbourne VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Praemium Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Praemium
Limited for the year ended 30 June 2021, I declare that, to the best of my knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
Grant Thornton Audit Pty Ltd
Chartered Accountants
C S Gangemi
Partner – Audit & Assurance
Melbourne, 16 August 2021
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
7878
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Independent Audit Report
Collins Square, Tower 5
727 Collins Street
Melbourne VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of Praemium Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Praemium Limited (the Company) and its subsidiaries (the Group), which
comprises the consolidated statement of financial position as at 30 June 2021, the consolidated statement of profit or loss
and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows
for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting
policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its performance for the year
ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
Praemium Annual Report 2021
79
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Praemium Annual Report 2021
Insert title
Independent Audit Report
2
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
Revenue Recognition Note 3
How our audit addressed the key audit matter
The Group has recognised $64,869,420 of revenue from service
based contracts with customers to deliver services over a period of
time.
Service based revenue consists predominately of portfolio services
and platform revenue derived from both virtually managed accounts
(VMA) and separately managed accounts (SMA). The Group also
recognised $16,328,057 of service based revenue during the period
generated from the Powerwrap platform after its acquisition date.
Revenue derived from the delivery of services may be complex and
involves significant management judgement due to revenue to being
recognised when performance obligations are satisfied. The audit
team is required to obtain sufficient audit evidence as to whether the
assumptions used by management to recognise revenue are
reasonable and appropriate in the circumstances.
This area is a key audit matter due to the complexity associated with
service revenue as well as the presumed risk of fraud in revenue.
Our procedures included, amongst others:
• Assessing revenue recognition policies of individual customer
agreements and contractual arrangements to ensure compliance
with AASB 15 Revenue from Contracts with Customers;
• Documenting and testing the operating effectiveness of the internal
controls in respect to VMA and SMA revenue from the rendering of
services;
• Documenting and testing the operating effectiveness of internal
controls in respect to Powerwrap's platform revenue from the
rendering of services;
• Testing a sample of revenue recognised during the year to
supporting documentation to verify occurrence and accuracy; and
• Assessing relevant disclosures within the financial statements to
ensure adequate.
Business Combinations Note 28
During the year, the Group completed the acquisition of Powerwrap
Limited via an off-market takeover. This is a significant acquisition for
the Group, and has been accounted for under AASB 3 Business
Combinations.
Accounting for this transaction is complex and judgemental, in
particular determining the fair value of assets and liabilities acquired,
including the valuation of goodwill and identifiable intangible assets
such as customer contracts.
This area is a key audit matter due to the significance of the
transaction, as well as the level of judgement involved in the fair value
accounting.
Our procedures included, amongst others:
• Obtaining and reviewing the legal documents and management’s
memorandum on the acquisition accounting for compliance with
AASB 3;
• Assessing the Group’s determination of the acquisition date and
other key assumptions by reference to the transaction documents;
• Evaluating management's identification of and valuations of assets
and liabilities acquired, including consideration of any previously
unrecognised intangible assets;
• Engaging with internal valuation experts to review management’s
determination of the fair value of separately identifiable intangible
assets, particularly customer contracts and relationships;
• Assessing management’s determination of the deferred tax
position arising on the net assets acquired on acquisition and the
ability to access the pre-existing tax loss balance in Powerwrap;
• Reporting any discrepancies identified to management; and
• Assessing relevant disclosures within the financial statements to
ensure adequate.
Goodwill (Powerwrap Limited) Note 11
As a result of the acquisition of Powerwrap Limited, the Group
recorded goodwill of $47,080,457 during the period.
Goodwill acquired in a business combination must be allocated to the
Group’s cash generating units (CGUs). Goodwill acquired from the
Powerwrap transaction has been allocated to a single CGU.
In accordance with AASB 136 Impairment of Assets, the Group is
required to assess at least annually, if the carrying value of each Cash
Generating Unit (“CGU”) is in excess of the recoverable value. The
Group determines recoverable value utilising a value in use model.
Our procedures included, amongst others:
• Assessing management's determination of a single CGU being
associated with the Powerwrap goodwill based on our
understanding of the nature of the business, the economic
environment in which Powerwrap operates and the internal
reporting structure;
• Assessing the value in use model for compliance with AASB 136
Impairment of Assets;
80
80
Independent Audit Report
This area is a key audit matter as impairment testing involves a high
degree of estimation and judgement by management and there is
subjectivity involved relating to assumptions and key inputs.
Capitalised Database and Software Costs Note 12
Capitalised product development costs in respects to databases and
software had a net carrying value of $13,405,272 at 30 June 2021.
During the year the Group capitalised $6,437,132 of project
development costs. These intangible assets are being amortised over
a 3 year period, and an amortisation expense of $5,662,653 has been
included in the statement of profit or loss and other comprehensive
income.
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.
Given the nature of the industry in which the Group operates, there is
also a risk that there could also be a material impairment to
capitalised development costs carried as intangible assets, which
needs to be considered under accounting standard AASB 136
Impairment of Assets.
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.
3
• Testing the mathematical accuracy of the model;
• Assessing the key growth rate assumptions by comparing them to
historical results, economic and industry forecasts;
• Engaging with internal valuation experts to review the methodology
applied in the model and support in evaluating the reasonableness
of key assumptions through sensitivity analysis including the
discount rate, terminal growth rates and forecast growth
assumptions;
• Performing sensitivity analysis of the key assumptions in the
model; and
• Assessing relevant disclosures within the financial statements to
ensure adequate.
Our procedures included, amongst others:
• Assessing the Group’s accounting policy in respect of product
development costs for adherence to AASB 138;
• Evaluating management’s assessment of each project for
compliance with the recognition criteria set out in AASB 138,
including discussing project plans with management and project
leaders to develop an understanding of the nature and feasibility of
key projects at 30 June 2021;
• Testing a sample of costs capitalised to supporting documentation
to understand the nature of the item and whether the expenditure
was attributable to the development of the related asset and
assessing compliance with the recognition criteria set out in AASB
138;
• 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;
• 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
projections as well as the Group’s historical ability to forecast
accurately; and
• Assessing relevant disclosures within the financial statements to
ensure adequate.
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 2021, 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.
Praemium Annual Report 2021
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Praemium Annual Report 2021
Independent Audit Report
4
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/auditors_responsibilites/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 22 to 28 of the Directors’ report for the year ended 30 June
2021.
In our opinion, the Remuneration Report of Praemium Limited, for the year ended 30 June 2021 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, 16 August 2021
82
Praemium Annual Report 2021
82
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
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
MR MICHAEL OHANESSIAN
MR DONALD STAMMER
BOND STREET CUSTODIANS LIMITED
SUPERTCO PTY LTD
CS THIRD NOMINEES PTY LIMITED
NELCAN PTY LTD
MEROMA PTY LIMITED
PACIFIC CUSTODIANS PTY LIMITED
R & JS SMITH HOLDINGS PTY LTD
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
EPR SUPERANNUATION FUND PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
PATCHEOAK PTY LTD
MR PAUL GUTTERIDGE
CS FOURTH NOMINEES PTY LIMITED
TOTAL
Balance of Register
Grand TOTAL
31 July 2021
52,605,139
46,366,838
37,038,426
15,396,759
15,131,704
13,982,659
11,648,866
9,500,000
7,500,000
6,787,061
6,217,501
5,353,304
4,729,130
3,860,939
3,725,944
3,402,937
2,779,107
2,350,000
2,340,906
2,323,187
%IC
10.5%
9.2%
7.4%
3.1%
3.0%
2.8%
2.3%
1.9%
1.5%
1.3%
1.2%
1.1%
0.9%
0.8%
0.7%
0.7%
0.5%
0.5%
0.5%
0.5%
253,040,407
248,587,415
50.4%
49.6%
501,627,822
100.0%
Substantial Holdings
There are 501,627,822 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, there are no substantial holders in the Company.
83
Praemium Annual Report 2021 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
389,939,959
91,468,775
12,180,067
7,553,080
485,941
77.8%
18.2%
2.4%
1.5%
0.1%
416
2,811
1,517
2,602
755
%
5.2%
34.7%
18.7%
32.1%
9.3%
501,627,822
100.0%
8,101
100.0%
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
16,525,851
3,727,500
318,730
45,153
2,090
80.2%
18.1%
1.5%
0.2%
0.0%
31
125
48
13
4
%
14.0%
56.6%
21.7%
5.9%
1.8%
20,619,324
100.0%
221
100.0%
84
Corporate Information
Share Registry
Link Market Services:
Level 12, 680 George Street,
Sydney, NSW 2000.
Phone: Within Australia:
1300 554 474
Outside Australia:
+61 2 8280 7111
Auditor
Grant Thornton:
Collins Square, 727 Collins Street,
Melbourne, VIC 3008.
Phone: +613 8320 2222
Registered office and
principal place of business
The registered office of the
Company is Praemium Limited,
Level 19, 367 Collins Street,
Melbourne, VIC 3000.
Phone: 1800 571 881
Fax: +613 8622 1200
Website: www.praemium.com
Board of Directors
Barry Lewin
Stuart Robertson
Daniel Lipshut
Anthony Wamsteker
Executive Director & CEO
Anthony Wamsteker
Company Secretary
Paul Gutteridge
85
Praemium Annual Report 2021 Notes
86
Notes
87
Praemium Annual Report 2021 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
88