Appendix 4E
Preliminary final report
1. Company details
Name of entity:
Sequoia Financial Group Limited
ABN:
90 091 744 884
Reporting period:
For the year ended 30 June 2022
Previous period:
For the year ended 30 June 2021
2. Results foR announCement to the maRket
Revenues from ordinary activities
up
26.5%
to 147,312,720
Profit from ordinary activities after tax attributable to the owners
of Sequoia Financial Group Limited
Profit for the year attributable to the owners of Sequoia Financial
Group Limited
up
up
3.0%
to
5,714,296
3.0%
to
5,714,296
$
Dividends
details of dividends (1)
2021 Final dividend (paid 11 October 2021) (2)
2022 Interim dividend (paid 15 March 2022) (3)
2022 Final dividend declared (4)
(1) All dividends are fully franked
Cents per share
$
0.60
0.50
0.90
791,882
662,121
1,226,517 (5)
(2) 2021 Final dividend comprised of a cash dividend paid of $636,101 and dividend reinvestment allotment of $155,781
(3) 2022 Interim dividend comprised of a cash dividend paid of $528,116 and dividend reinvestment allotment of $134,005
(4) The record date for determining entitlement to the final dividend is 12 September 2022 and is to be paid on 10 October 2022. No dividend reinvestment
plan is applicable
(5) Estimated total dollar value based on number of shares at 30 June 2022
Comments
The profit for the Group after providing for income tax amounted to $5,714,296 (30 June 2021:
$5,548,262).
i
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022
Appendix 4E
Preliminary final report
3. net tangible assets
Net tangible assets per ordinary security
Calculated as follows:
Net assets
Less: Right-of-use assets
Less: Intangibles
Add: Lease liabilities
Total tangible assets
Total number of shares issued
4. ContRol gained oveR entities
Reporting period
Cents
previous period
Cents
9.87
10.44
Consolidated
2022
$
2021
$
48,375,290
41,117,459
(1,700,335)
(2,130,577)
(35,654,445)
(28,241,840)
2,436,915
2,979,338
13,457,425
13,724,380
136,279,689
131,507,805
profit/(loss) from ordinary
activities before income tax
Contribution
during period
$
Whole previous
period
$
name of entities (or group of entities)
date control gained
Argent Insurance Brokers Pty Ltd
17 November 2021
454,444
-
Docscentre Legal Pty Ltd
10 January 2022
(246,487)
18,726
Informed Investor Pty Ltd, Sharecafe Pty Ltd,
Corporate Connect Research Pty Ltd
(Informed Investor group)
5. loss of ContRol oveR entities
6 April 2022
95,736
303,693
313,342
332,068
name of entities (or group of entities)
Centreboard Super Pty Ltd
date control lost
July 2021
profit/(loss) from ordinary
activities before income tax
Contribution
during period
$
previous
period whilst
controlled
$
-
(377,736)
i i
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Appendix 4E
Preliminary final report
6. dividends
Current period
details of dividends (1)
2021 Final dividend (paid 11 October 2021) (2)
2022 Interim dividend (paid 15 March 2022) (3)
2022 Final dividend declared (4)
(1) All dividends are fully franked
Cents per share
$
0.60
0.50
0.90
791,882
661,123
1,226,517 (5)
(2) 2021 Final dividend comprised of a cash dividend paid of $636,101 and dividend reinvestment allotment of $155,781
(3) 2022 Interim dividend comprised of a cash dividend paid of $528,116 and dividend reinvestment allotment of $134,005
(4) The record date for determining entitlement to the final dividend is 12 September 2022 and is to be paid on 10 October 2022. No dividend reinvestment
plan is applicable
(5) Estimated total dollar value based on number of shares at 30 June 2022
Previous period
details of dividends (1)
2020 Final dividend (paid 12 October 2020) (2)
2021 Interim dividend (paid 15 March 2021) (3)
(1) All dividends are fully franked
Cents per share
$
0.40
0.40
506,901
520,097
(2) 2020 Final dividend comprised of a cash dividend paid of $316,579 and dividend reinvestment allotment of $190,322
(3) 2021 Interim dividend comprised of a cash dividend paid of $403,137 and dividend reinvestment allotment of $116,960
7. dividend Reinvestment plans
On 4 May 2022, the Group announced the cancellation of the Dividend Reinvestment plan (‘DRP’) for
the remainder of the 2022 calendar year. Prior to cancellation, shares allocated to shareholders under
the DRP were allocated at an amount equal to 97.5% of the average of the daily weighted average
market price of ordinary shares of the Company traded on the ASX over the period of five trading days
prior to the closing date.
8. details of assoCiates and joint ventuRe entities
name of associate / joint venture
%
%
$
$
Reporting entity’s
percentage holding
Contribution to profit/(loss)
(where material)
Reporting
period
previous
period
Reporting
period
previous
period
Taking Control Pty Ltd (joint venture)
50.00%
50.00%
Group’s aggregate share of associates and joint
venture entities’ profit/(loss) (where material)
Profit/(loss) from ordinary activities before income tax
Income tax on operating activities
-
-
-
-
-
-
i i i
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Appendix 4E
Preliminary final report
9. foReign entities
Details of origin of accounting standards used in compiling the report:
Not applicable.
10. audit qualifiCation oR RevieW
Details of audit/review dispute or qualification (if any):
The financial statements have been audited and an unmodified opinion has been issued.
11. attaChments
Details of attachments (if any):
The Annual Report of Sequoia Financial Group Limited for the year ended 30 June 2022 is attached.
12. signed
Signed ___________________________
Date: 18 August 2022
John Larsen
Chairman
Sydney
i v
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Sequoia Financial
Group Limited
abn 90 091 744 884
Annual Report
3 0 JuNE 202 2
Contents
Chief Executive Officer and Chairman’s report .......................................................................... 3
Directors’ report ............................................................................................................................... 6
Auditor’s independence declaration ......................................................................................... 21
Consolidated statement of profit or loss and other comprehensive income ........................ 22
Consolidated statement of financial position ............................................................................ 23
Consolidated statement of changes in equity .......................................................................... 25
Consolidated statement of cash flows ....................................................................................... 26
Notes to the consolidated financial statements ........................................................................ 28
Directors’ declaration .................................................................................................................... 76
Independent auditor’s report to the members
of Sequoia Financial Group Limited ............................................................................................ 77
Shareholder information ............................................................................................................... 83
Corporate directory ....................................................................................................................... 86
2
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Chief Executive Officer and Chairman’s report
30 June 2022
Dear Shareholders,
We are very pleased to report a strong financial performance and confirm that the group
remains on track to achieve the long-term strategic target of $300m in revenue at a 10%
EBITDA key performance measurement by 2026.
The past year has seen the group achieve excellent growth in both revenue and operating
cash flow, whilst continuing to implement a targeted capital management program. We
have been investing both organically and by acquisition in those aspects of our group that
broaden the diversified service offerings to the financial services market, using operating
cash flow, to ensure we do not dilute shareholders equity.
We believe the revenue growth of 26.5% with operating net cash flow pre-tax growth of
36.2% is confirmation that our group is successfully driving the synergies from the targeted
acquisition program that we initiated and implemented over the past three years.
Total operating expenses increased by $3.2m to assist our revenue growth initiatives which
included the hire of more personnel in the areas of sales, marketing, and legal services.
The Government COVID grants received in FY21 ($320k), were no longer available in
FY22 and this along with investing heavily in technological enhancements to improve the
company’s cyber security capability and our general customer service offering slightly
impacted our short-term EBITDA margins.
We invested $5.9m of the $14.7m of operating net cash flow before tax to fund acquisitions.
A mix of organic growth and bolt on acquisitions remains our core capital management
strategy. Avoiding dilutionary capital raises by issuing large parcels of shares to fund
acquisitional growth remains paramount in our thinking.
As we have mentioned in previous years’ reports we remain focused on steadily increasing
dividends, whilst continuing to use a large part of our profit to fund acquisitions. Aligned to
this strategy we are pleased to report an increase in the dividend pay-out ratio to 33% in
2022, representing 1.4 cents of fully franked dividend, which is a 40% uplift from the 1.0 cent
distributed in 2021.
Our intention is to increase the payout ratio from the 25% in 2021 to 33% in 2022, to 40% in
2023, 50% in 2024, 60% in 2025 towards a long-term target payout ratio of 70% post 2026,
being the backend of our current long-term strategic plan. The company’s current franking
credit balance of $12.9m ensures the company is well placed to deliver on this stated
objective.
We currently have 136.3m shares on issue, which equates to 10.9 cents per share in cash
on our balance sheet. At a share price of 60 cents per share the current enterprise value of
$67m is equivalent to 4.6 times operating net cash flow before tax, a discount to our market
peers and in the opinion of Directors indicates the share price is undervalued. The share buy-
back program has been successful to date. The number of shares buy-back and cancelled
was 485,834.
The company intends to recommence this share buyback on 23 August 2022 after the
blackout period ends and to maintain cancellation of the previous Dividend Reinvestment
Plan (‘DRP’).
Shareholders (including the Directors) may elect to use the proceeds of their respective
dividends to buy additional shares on market.
3
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Chief Executive Officer and Chairman’s report
30 June 2022
fy2022 financial results
• Total revenue of $147.3m, was an increase of $30.85m or 26.5% on FY21
• Operating net cash flow pre-tax of $14.7m was 36.2% over FY21
• Operating net cash flow pre-tax remained at or around 10% of total revenue
• Total operating expenses increased $3.2m over last year
• EBITDA of $12.4m was an increase of 7.3%
• EBITDA margin remained at 8.4% for the year
• NPAT of $5.7m was a 3% increase over last year
• Cash conversion ratio to EBITDA of 119.4% compared to 94% in FY21
• Fully Diluted Earnings per share (EPS) of 4.23 cents
• Dividend payout ratio increased to 33% representing a 1.4 cents per share FY22 distribution
and an increase of 40% on FY21
• Cash on balance sheet increased to $14.9m from $13.7m.
• Revenue growth of 75% from $84m in 2020 to $147m in 2022 over the first 3 years of 7-year
target to reach $300m in revenue
divisional financial performance
All the Divisions achieved significant growth throughout FY22:
Sequoia Licensees Services (formerly Sequoia Wealth)
Sequoia Licensees Services revenue increased by 15.2% in FY22
Revenue
EBITDA
EBITDA margin
$64m
$5.5m
8.6%
Sequoia Professional Services
Sequoia Professional Services revenue increased by 55.8% in FY22
Revenue
EBITDA
EBITDA margin
$11m
$2.9m
26.4%
Sequoia Equity Markets
Sequoia Equity Markets revenue increased by 34.0% in FY22
Revenue
EBITDA
EBITDA margin
$70m
$6.3m
9.0%
Sequoia Direct Investment
Sequoia Direct Investment revenue increased by 37.7% in FY22
Revenue
EBITDA
EBITDA margin
$2.6m
$0.96m
37.8%
4
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Chief Executive Officer and Chairman’s report
30 June 2022
outlook
The company is in a very strong position to move towards our longer-term revenue target of
$300m with more than 10% operating net cash flows pre-tax and EBITDA by 2026.
The margin in the Sequoia Professional Services and Sequoia Direct Investment Divisions
is now above 25% and we expect to see very strong revenue growth in those Divisions in
the years ahead. We are also looking to lift the margin within Sequoia Equity Markets and
Sequoia Licensees Services to above 10% as these businesses evolve.
We thank our shareholders for their ongoing support and look forward to continuing to deliver
strong results for all our shareholders in 2023.
Garry Crole
Managing Director/CEO
John Larsen
Chairman of the board
5
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Directors’ report
30 June 2022
The directors present their report, together with the financial statements, on the consolidated entity
(referred to hereafter as the ‘Group’) consisting of Sequoia Financial Group Limited (referred to
hereafter as the ‘Company’ or ‘parent entity’) and the entities it controlled at the end of, or during,
the year ended 30 June 2022.
diReCtoRs
The following persons were directors of Sequoia Financial Group Limited during the whole of the financial
year and up to the date of this report, unless otherwise stated:
Garry Crole
John Larsen
Kevin Pattison
Charles Sweeney
Managing Director and Chief Executive Officer
Non-Executive Director and Chairman
Non-Executive Director
Non-Executive Director
pRinCipal aCtivities
The Group’s principal activity is to offer financial planners, stock brokers, self-directed investors,
superannuation funds and accountants a range of services that include but is not limited to licensing
services, business support and advice, coaching, compliance, education, wholesale clearing and
execution, legal document establishments, investments, media and administration services.
There was no change in the principal activities during the financial year.
dividends
details of dividends (1)
2021 Final dividend (paid 11 October 2021) (2)
2022 Interim dividend (paid 15 March 2022) (3)
(1) All dividends are fully franked
Cents per share
$
0.60
0.50
791,882
662,121
(2) 2021 Final dividend comprised of a cash dividend paid of $636,101 and dividend reinvestment allotment of $155,781
(3) 2022 Interim dividend comprised of a cash dividend paid of $528,116 and dividend reinvestment allotment of $134,005
RevieW of opeRations
The profit for the Group after providing for income tax amounted to $5,714,296 (30 June 2021:
$5,548,262).
Operating revenue from ordinary operating activities of the Group increased to $147,312,720, up from
$116,462,659 in the corresponding year ended 30 June 2021 an increase of 26.5%.
Underlying Profitability
The directors are of the view that the best guide to the Group’s performance is the underlying Profit
or normalised EBITDA which is defined as earnings before interest, tax, depreciation and amortisation
(‘EBITDA’) excluding the impact of:
• Non-operational items (i.e. acquisition-related costs, redundancy costs, impairment charges, and fair
value adjustments); and
6
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Directors’ report
30 June 2022
• Non-cash amortisation charges relating to separately identifiable intangible assets acquired under
business combinations and other intangible assets.
The underlying profit over the financial year ended 30 June 2022 increased from $11,516,560 to
$12,354,607.
This year, the Board revised the objectives and initiatives for the Group over a 7-year period to 2026:
(1) To generate strong cash flow from all 4 operating divisions;
(2) To provide a ROE* on non-cash equity of 15% or above;
(3) To rebuild investor confidence in the Company’s ability to generate ROE of 15%;
(4) To have the share price trading at or above equity per share; and
(5) To distribute shareholder dividend payments at 20 -70% of Net Profit After Tax (‘NPAT’).
* Return on Equity (‘ROE’) is underlying profit over Total equity.
The Company continues to make significant progress on each of the 5 key focuses. Operating revenue
and underlying Profit compared to the prior year are presented in the following table:
Financial Performance
2022
$
2021
$
Change
$
Change
%
Operating revenue from ordinary activities
147,312,720
116,462,659
30,850,061
Statutory net profit after income tax
Underlying Profit*
5,714,296
5,548,262
12,354,607
11,516,560
166,034
838,047
26.5%
3.0%
7.3%
* underlying Profit is the measure that the Group uses to assess performance as it excludes certain non-cash and one-off or non-operational items. underlying
Profit is a financial measure that is not recognised under Australian Accounting Standards and may not be comparable to similarly titled measures used by
other companies. underlying Profit has been audited.
7
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Directors’ report
30 June 2022
Normalised adjustments have been applied as set out in the following reconciliation between the
Group’s underlying Profit and the statutory net profit for the current and prior years:
Underlying Profit for the year
Add/(deduct) normalisation adjustments:
Acquisition costs
Restructure costs
Share of profits of joint venture
Non-operating other income
EBITDA for the year
Add/(deduct):
Consolidated
2022
$
2021
$
12,354,607
11,516,560
(127,819)
-
-
-
(316,339)
(67,738)
26,246
63,626
12,226,788
11,222,355
Interest revenue calculated using the effective interest method
17,001
15,631
Depreciation and amortisation
Finance costs
(3,385,318)
(2,879,359)
(225,303)
(230,836)
Statutory net profit before income tax for the year
8,633,168
8,127,791
Income tax expense
(2,918,872)
(2,579,529)
Statutory net profit after income tax for the year
5,714,296
5,548,262
signifiCant Changes in the state of affaiRs
On 1 July 2021, the Group acquired a client book of Macro Investment Advisory Pty Ltd for consideration
up to $600,000 made up of cash and shares. This coincided with the launch of Sequoia Family Office, of
which this client book is now a part of. This business targets high net worth investors with investable funds
of $5.0 million to $100.0 million, who are looking for specialist services in managing their financial affairs.
The target is to grow the funds under advice to $2.0 billion over the next 5 years.
On 17 November 2021, the Group successfully completed the acquisition of all shares in Argent
Insurance Brokers Pty Ltd (renamed to Sequoia Insurance Brokers Pty Ltd and which holds a general
insurance AFSL), the customer books of Tag Insurance Brokers Pty Ltd and Windsor Funding Pty Ltd (which
are related businesses to Argent Insurance Brokers) and its associated business assets. The acquisition
consideration is estimated at $2.5 million, payable in cash over a 15 month period and is contingent on
achievement of performance targets. Refer to note 30 ‘Business combinations’.
On 10 January 2022, Sequoia Financial Group successfully completed the acquisition of all shares in the
legal practice previously known as Topdocs Legal Pty Ltd, renamed to Docscentre Legal Pty Ltd, which
is based in Melbourne. This acquisition will enhance the Group’s existing document businesses. The
consideration of $330,000 was paid in cash.
On 6 April 2022, Sequoia Financial Group successfully completed the acquisition of all shares in the Informed
Investor group of businesses, comprising of Informed Investor Pty Ltd, Corporate Connect Research Pty
Ltd and Sharecafe Pty Ltd. The Informed Investor group provides media, research, digital distribution and
technology services to advisers and investors. The acquisition consideration is approximately $5.2 million and
payable in cash and shares over a 12 month period. Refer to note 30 ‘Business combinations’.
There were no other significant changes in the state of affairs of the Group during the financial year.
8
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Directors’ report
30 June 2022
matteRs subsequent to the end of the finanCial yeaR
On 18 August 2022, the Company declared a final dividend for the year ended 30 June 2022 of 0.90
cents per share, fully franked. The record date for determining entitlements to the dividend is 12
September 2022 and is to be paid on 10 October 2022. The financial effect of these dividends has
not been brought to account in the financial statements for the year ended 30 June 2022 and will be
recognised in subsequent financial periods. Estimated total dollar value based on number of shares at
30 June 2022 is $1,226,517. No Dividend Reinvestment Plan is applicable (refer note 20).
No other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may
significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs
in future financial years.
likely developments and expeCted Results of opeRations
The Group does not expect any major developments or variation to results if the Group continues to
operate as normal. However major variations would occur if the Group undertook a key strategic
initiative such as a material acquisition. Currently nothing of this nature is expected to take place in the
foreseeable future but the Group remains open to look at opportunities in this space whenever they are
presented.
enviRonmental Regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or
State law.
infoRmation on diReCtoRs
Name: garry peter Crole
Title: Managing Director and Chief Executive Officer
Experience and expertise: Garry is a highly experienced and well-regarded
Financial Services Executive. He founded Deakin Financial Planning, an ASX listed
company that was later acquired by IOOF. In more recent years, Garry started
Interprac Financial Planning Pty Ltd, which is a leading independently owned
Australian Financial Services Licensee.
Other current directorships: None
Former directorships (last 3 years): Non-Executive Director of Diversa Ltd (ASX: DVA) and Non-Executive
Director of Glennon Small Companies Limited (ASX: GC1)
Special responsibilities: Member of Risk and Compliance Committee, Audit Committee and
Remuneration and Nomination Committee
Interests in shares: 11,048,637 ordinary shares (directly held) and 1,035,035 ordinary shares (indirectly held)
Interests in options: 500,000 options over ordinary shares
Interests in rights: None
9
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Directors’ report
30 June 2022
Name: john larsen
Title: Non-Executive Director and Chairman
Experience and expertise: John brings in excess of 30 years’ experience in
financial services to the Company, including senior management positions and
directorships across various businesses licensed to provide financial services
including funds management and stock broking. John has significant experience
in the management of private portfolios and individually managed accounts. He
was also the Chairman of Odyssey Funds Management between 2002 and 2009, part of the investment
committee responsible for ASX listed, Huntley Investment Company Limited, between 2006 and 2008
and previously held the position of Group Investment Manager at ING (then Mercantile Mutual Group)
retaining responsibility for the entire Australian investments portfolio with over $500 million of funds under
management.
Other current directorships: Non-Executive Director of Glennon Small Companies Limited (ASX: GC1)
Former directorships (last 3 years): None
Special responsibilities: Chair of Audit Committee and member of Remuneration and Nomination
Committee
Interests in shares: 105,438 ordinary shares (directly held) and 2,105,541 ordinary shares (indirectly held)
Interests in options: 500,000 options over ordinary shares
Interests in rights: None
Name: kevin pattison
Title: Non-Executive Director
Experience and expertise: Kevin has over 40 years’ experience in financial
services, specialising in distribution, strategic planning and business remediation.
He has been a Non-Executive Director for the past 4 years on private companies
and prior to that he was the CEO of various large national businesses in the
financial services sector. He is currently the Chairman of Master Builders Insurance
Brokers.
Other current directorships: None
Former directorships (last 3 years): None
Special responsibilities: Chair of Remuneration and Nomination Committee and member of Risk and
Compliance Committee
Interests in shares: 794,869 ordinary shares (indirectly held)
Interests in options: 250,000 options over ordinary shares
Interests in rights: None
1 0
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Directors’ report
30 June 2022
Name: Charles sweeney
Title: Non-Executive Director
Qualifications: B.Comm, LL.B (Melb), Partner of Cooper Grace Ward Lawyers
Experience and expertise: Charles is a partner in Cooper Grace Ward’s corporate
and commercial group. Charles provides wide-ranging general commercial
advice to clients, with particular areas of focus including corporate advisory
and intellectual property / information technology. Acting for listed and unlisted
public and private clients, Charles advises across a broad range of industries, including agribusiness,
financial services, technology and mining. Charles has served as a non-executive director of an ASX
listed company (including during its ASX listing) and has practical experience of the issues faced by
boards in relation to corporate governance, dealings with regulators (especially ASX and ASIC), major
transactions and capital raisings. Charles is also a regular presenter on such topics.
Other current directorships: None
Former directorships (last 3 years): None
Special responsibilities: Chair of Risk and Compliance Committee and member of Audit Committee
Interests in shares: 561,490 ordinary shares (indirectly held)
Interests in options: 250,000 options over ordinary shares
Interests in rights: None
‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless
otherwise stated.
‘Former directorships (last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types
of entities, unless otherwise stated.
Company seCRetaRies
The joint Company secretaries are as follows:
Rebecca Weir, Bachelor of Laws (LLB) - Joint Company Secretary, appointed 9 October 2020
Rebecca is an employee of Boardroom Pty Ltd, the Company’s Corporate Secretarial Services provider.
Rebecca is an associate member of the Governance Institute of Australia and an affiliate member of
the Chartered Governance Institute. Rebecca holds a Bachelor of Laws (LLB) with Forensic Science and
has completed the Graduate Diploma in Applied Corporate Governance and Risk Management.
Lizzie Tan, B.Economics (Accounting), CPA and Fellow member of FINSIA - Joint Company Secretary,
appointed 28 April 2022
Lizzie has been the Company’s Chief Financial Officer since 23 April 2020. Lizzie is an experienced
finance, audit, risk and corporate transactional executive who has held senior Finance and Audit roles
with ANZ, AXA, Legg Mason Australia and Deloitte.
1 1
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Directors’ report
30 June 2022
meetings of diReCtoRs
The number of meetings of the Company’s Board of Directors (‘the Board’) and of each Board
committee held during the year ended 30 June 2022, and the number of meetings attended by each
director were:
G Crole
J Larsen
K Pattison
C Sweeney
G Crole
J Larsen
K Pattison
C Sweeney
full board
audit Committee
attended
held
attended
held
6
6
6
6
Risk and Compliance
Committee
attended
held
3
-
3
3
6
6
6
6
3
-
3
3
3
3
-
3
Remuneration and nomination
Committee
attended
held
3
3
3
-
Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.
RemuneRation RepoRt (audited)
The remuneration report details the key management personnel remuneration arrangements for the
Group, in accordance with the requirements of the Corporations Act 2001 and its Regulations.
The remuneration report contains the following sections:
(a) Key management personnel covered in this report
(b) Executive reward framework
(c) Remuneration and nomination committee
(d) Non-executive directors arrangement
(e) Elements of remuneration
(f) use of remuneration consultants
(g) Voting and comments made at the Company’s 2021 Annual General Meeting (AGM)
(h) Details of key management personnel remuneration
(i) Service agreements
(j) Share-based compensation
(k) Additional disclosures relating to key management personnel
3
3
-
3
3
3
3
-
1 2
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Directors’ report
30 June 2022
(a) Key management personnel covered in this report
The key management personnel are defined as those persons having authority and responsibility
for planning, directing and controlling the activities of the Group, directly or indirectly, including
all directors.
The key management personnel of the Group during the financial year are as follows:
• Garry Crole - Managing Director and Chief Executive Officer
• John Larsen - Chairman and Non-Executive Director
• Kevin Pattison - Non-Executive Director
• Charles Sweeney - Non-Executive Director
Other key management personnel:
• Lizzie Tan – Chief Financial Officer and Joint Company Secretary
(b) Executive reward framework
The objective of the Group’s executive reward framework is to ensure reward for performance is
competitive and appropriate for the results delivered. The framework aligns executive reward with the
achievement of strategic objectives and the creation of value for shareholders, and it is considered
to conform to the market best practice for the delivery of reward. The Board of Directors ensures that
executive reward satisfies the following key criteria for good reward governance practices:
• competitiveness and reasonableness;
• acceptability to shareholders;
• performance linkage / alignment of executive compensation; and
• transparency.
(c) Remuneration and Nomination Committee
The Board of Directors, through its Remuneration and Nomination Committee, accepts responsibility for
determining and reviewing remuneration arrangements for the directors and the senior management
team. The Remuneration and Nomination Committee assesses the appropriateness of the nature and
amount of remuneration of directors and senior managers on a periodic basis by reference to relevant
employment market conditions, giving due consideration to the overall profitability and financial
resources of the Group, with the objective of ensuring maximum stakeholder benefit from the retention
of a high quality Board and executive team.
In accordance with best practice corporate governance, the structure of non-executive director and
executive director remuneration is separate.
(d) Non-executive directors arrangement
Fees and payments to non-executive directors reflect the demands which are made of the directors
in fulfilling their responsibilities. Non-executive director fees are reviewed annually by the Board. The
constitution of the Company provides that the non-executive directors of the Company are entitled to
such remuneration, as determined by the Board, which must not exceed in aggregate the maximum
amount determined by the Company in general meeting. The most recent determination was at the
Annual General Meeting held on 19 November 2020 where the shareholders approved an aggregate
remuneration of $300,000.
1 3
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Directors’ report
30 June 2022
(e) Elements of remuneration
Executive remuneration comprises:
• Fixed remuneration component;
• Variable remuneration component including short-term incentive (‘STI’)
• Variable remuneration including long-term incentive (‘LTI’); and
• An Employee Share Option Plan that was approved at a meeting of shareholders on the 27 November
2015 (LTI).
Fixed remuneration
Fixed remuneration consists of base remuneration as well as employer contributions to superannuation.
Remuneration levels are reviewed annually through a process that considers individual performance
and that of the overall Group.
Variable remuneration – short-term incentive (‘STI’)
STIs are available to executives who achieve performance criteria including compliance. The Board is
responsible for determining who is eligible to participate in STI arrangements as well as the structure of
those arrangements.
Variable remuneration – long-term incentive (‘LTI’)
The objective of the LTI plan is to reward senior managers in a manner which aligns this element of
remuneration with the creation of shareholder wealth. As such, LTI grants are only made to executives
who are able to influence the generation of shareholder wealth and thus have a direct impact on the
Group’s performance against relevant long term performance hurdles. LTI grants to executives are
delivered in the form of options or shares.
Sequoia Employee Incentive Plan (‘SEIP’)
On 1 February 2017, the Company established an employee equity scheme, called the Sequoia
Employee Incentive Plan to offer options and performance rights to certain employees employed
in the Company.
(f) Use of remuneration consultants
During the financial year ended 30 June 2022, the Group did not engage remuneration consultants,
to review its existing remuneration policies and provide recommendations.
(g) Voting and comments made at the Company’s 2021 Annual General Meeting (‘AGM’)
At the 18 November 2021 AGM, 100% of the votes received supported the adoption of the remuneration
report for the year ended 30 June 2021. The Company did not receive any specific feedback at the
AGM regarding its remuneration practices.
1 4
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Directors’ report
30 June 2022
(h) Details of key management personnel remuneration
Details of the remuneration of key management personnel of the Group are set out in the following
tables.
short-term benefits
post-
employment
benefits
share-based
payments
2022
Cash salary
and fees
$
Cash
bonus **
$
directors’
fees
$
movement
in leave
entitlements
$
super-
annuation
$
options ***
$
total
$
Non-Executive Directors:
J Larsen
K Pattison
C Sweeney
90,909
-
-
Executive Directors:
G Crole*
462,026
Other Key Management
Personnel:
L Tan
251,829
804,764
-
-
-
-
-
-
-
65,000
65,000
-
-
130,000
-
-
-
9,133
-
-
38,049
19,025
19,025
138,091
84,025
84,025
(13,088)
23,568
38,049
510,555
11,103
(1,985)
23,568
56,269
35,564
322,064
149,712
1,138,760
* Cash salary and fees include expense reimbursement of $850 and annual leave cash out of $48,184.
** No cash bonus paid/payable during the year.
*** Directors options have vesting completion dates 1 January 2022 and 1 January 2024. Other key management personnel options have vesting completion
dates of 15 July 2021, 1 January 2022, 30 June 2022 and 1 January 2023.
short-term benefits
post-
employment
benefits
share-based
payments
Cash salary
and fees
$
Cash
bonus
$
directors’
fees
$
movement
in leave
entitlements
$
super-
annuation
$
options
$
total
$
89,709
-
-
-
-
-
-
63,967
64,167
-
-
-
8,522
-
-
47,769
23,884
23,884
146,000
87,851
88,051
2021
Non-Executive Directors:
J Larsen
K Pattison
C Sweeney
Executive Directors:
G Crole*
378,247
60,000
Other Key Management
Personnel:
L Tan
219,178
40,000
-
-
687,134
100,000
128,134
* Cash salary and fees include expense payment of $4,547.
25,014
21,694
47,769
532,724
14,910
39,924
20,822
51,038
35,885
330,795
179,191
1,185,421
1 5
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Directors’ report
30 June 2022
The proportion of remuneration linked to performance and the fixed proportion are as follows:
name
2022
2021
2022
2021
2022
2021
fixed remuneration
at risk - sti
at risk - lti
Non-Executive Directors:
J Larsen
K Pattison
C Sweeney
Executive Directors:
G Crole
Other Key Management
Personnel:
73%
77%
77%
67%
73%
73%
93%
80%
L Tan
89%
77%
(i) Service agreements
-
-
-
-
-
-
-
-
27%
23%
23%
33%
27%
27%
11%
7%
9%
12%
11%
11%
Where contracts have been established, employment terms and conditions of key management
personnel and Group executives are formalised in standard contracts of employment. All contracts are
for no fixed term with one to three months’ notice required for termination by either party.
(j) Share-based compensation
Issue of options and performance rights
During prior years, options were granted to the directors and other key management personnel of the
Company as part of their compensation. The number of options over ordinary shares in the Company
held during the financial year by each director and the other member of the key management
personnel of the Group, including their personally related parties, is set out below:
Options over ordinary shares
G Crole*
J Larsen
K Pattison
C Sweeney
L Tan
* 500,000 options lapsed on 1 July 2022
balance at
the start of
the year
granted
exercised
expired/
forfeited/
other
balance at
the end of
the year
1,000,000
1,000,000
500,000
500,000
500,000
3,500,000
-
-
-
-
-
-
-
(500,000)
(500,000)
(250,000)
(250,000)
(250,000)
-
-
-
-
500,000
500,000
250,000
250,000
250,000
(1,250,000)
(500,000)
1,750,000
1 6
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Directors’ report
30 June 2022
(k) Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year by each director and the other
member of the key management personnel of the Group, including their personally related parties, is set
out below:
Ordinary shares
G Crole*
J Larsen*
K Pattison*
C Sweeney*
L Tan*
balance at
the start of
the year
Received
on exercise
of options
additions
disposals/
other
balance at
the end of
the year
11,991,973
1,584,320
542,166
306,336
52,969
-
500,000
250,000
250,000
250,000
91,699
126,659
2,703
5,154
892
14,477,764
1,250,000
227,107
-
-
-
-
-
-
12,083,672
2,210,979
794,869
561,490
303,861
15,954,871
* Shares acquired via on-market trade or dividend re-investment plan.
Transactions with key management personnel and their related parties
During the financial year, $122,580 was paid or payable for services provided by Cooper Grace Ward,
a related party entity of director, Charles Sweeney. This is not deemed personal remuneration.
This concludes the remuneration report, which has been audited.
1 7
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Directors’ report
30 June 2022
shares under option
unissued ordinary shares of Sequoia Financial Group Limited under option at the date of this report are
as follows:
grant date
19 November 2020 Type 2
18 January 2021 Type 2
expiry date
30 June 2024
30 June 2024
exercise price
number under option
$0.450
$0.450
1,500,000
500,000
2,000,000
No person entitled to exercise the options had or has any right by virtue of the option to participate in
any share issue of the Company or of any other body corporate.
shaRes undeR peRfoRmanCe Rights
There were no unissued ordinary shares of Sequoia Financial Group Limited under performance rights
outstanding at the date of this report.
shaRes issued on the exeRCise of options
The following ordinary shares of Sequoia Financial Group Limited were issued during the year ended
30 June 2022 and up to the date of this report on the exercise of options granted:
date options granted
19 November 2020
18 January 2021
exercise price
number of shares issued
$0.360
$0.360
1,000,000
475,000
1,475,000
shaRes issued on the exeRCise of peRfoRmanCe Rights
The following ordinary shares of Sequoia Financial Group Limited were issued during the year ended 30
June 2022 and up to the date of this report on the exercise of performance rights granted:
date performance rights granted
19 July 2021
share price
as at date of
exercise
number of
shares issued
$0.600
97,500
indemnity and insuRanCe of offiCeRs
The Company has indemnified the directors and executives of the Company for costs incurred, in their
capacity as a director or executive, for which they may be held personally liable, except where there is
a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors
and executives of the Company against a liability to the extent permitted by the Corporations Act
2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the
premium.
1 8
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Directors’ report
30 June 2022
indemnity and insuRanCe of auditoR
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify
the auditor of the Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the
auditor of the Company or any related entity.
pRoCeedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to intervene in any proceedings to which the Company
is a party for the purpose of taking responsibility on behalf of the Company for all or part of those
proceedings.
non-audit seRviCes
Details of the amounts paid or payable to the auditor for non-audit services provided during the
financial year by the auditor are outlined in note 26 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor
(or by another person or firm on the auditor’s behalf), is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 26 to the financial statements do
not compromise the external auditor’s independence requirements of the Corporations Act 2001 for the
following reasons:
• all non-audit services have been reviewed and approved to ensure that they do not impact the
integrity and objectivity of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out
in APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued
by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the
auditor’s own work, acting in a management or decision-making capacity for the Company, acting
as advocate for the Company or jointly sharing economic risks and rewards.
auditoR’s independenCe deClaRation
A copy of the auditor’s independence declaration as required under section 307C of the Corporations
Act 2001 is set out immediately after this directors’ report.
1 9
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Directors’ report
30 June 2022
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the
Corporations Act 2001.
On behalf of the directors
___________________________
John Larsen
Chairman
18 August 2022
Sydney
2 0
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Auditor’s independence declaration
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT
2001 TO THE DIRECTORS OF SEQUOIA FINANCIAL GROUP LIMITED
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2022 there have
been:
— no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in
relation to the audit; and
— no contraventions of any applicable code of professional conduct in relation to the audit.
William Buck Audit (Vic) Pty Ltd
ABN 59 116 151 136
N. S. Benbow
Director
Melbourne, 18 August 2022
Level 20, 181 William Street, Melbourne VIC 3000
+61 3 9824 8555
vic.info@williambuck.com
williambuck.com.au
William Buck is an association of firms, each trading under the name of William Buck
across Australia and New Zealand with affiliated offices worldwide.
Liability limited by a scheme approved under Professional Standards Legislation.
Auditors Independence Declaration - Sequoia Financial Group Ltd
2 1
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022
Consolidated statement of profit or loss and other comprehensive income
Revenue
expenses
Data fees
Dealing and settlement
Commission and hedging
Employee benefits
Occupancy
Telecommunications
Marketing
General and administrative
Operating profit
Interest revenue calculated using the effective interest method
Share of profits of joint venture accounted for using the equity method
Restructure costs
Non-operating other income
Depreciation
Amortisation
Acquisition costs
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense for the year attributable to the owners of
sequoia financial group limited
other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Consolidated
note
2022
$
2021
$
5
147,312,720
116,462,659
(2,125,666)
(1,648,306)
(20,916,675)
(17,848,953)
(84,717,442)
(63,076,085)
6
(17,403,428)
(14,973,184)
(409,399)
(289,670)
(2,097,044)
(1,665,917)
(312,731)
(304,714)
(6,975,728)
(5,139,272)
12,354,607
11,516,558
17,001
-
-
-
15,631
26,246
(67,738)
63,626
(1,291,270)
(1,271,652)
(2,094,048)
(1,607,705)
(127,819)
(316,339)
(225,303)
(230,836)
8,633,168
8,127,791
(2,918,872)
(2,579,529)
5,714,296
5,548,262
6
6
6
7
Gain on the revaluation of financial assets at fair value through other comprehensive
income, net of tax
Other comprehensive income for the year, net of tax
total comprehensive income for the year attributable to the owners of
sequoia financial group limited
59,833
59,833
93,889
93,889
5,774,129
5,642,151
Basic earnings per share
Diluted earnings per share
Cents
Cents
33
33
4.296
4.233
4.324
4.188
The above consolidated statement of profit or loss and other comprehensive income should be read
in conjunction with the accompanying notes
2 2
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Consolidated statement of financial position
assets
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets and deferred costs
Inventories
Investments in shares
Derivative financial instruments
Prepayments
Total current assets
non-current assets
Contract assets and deferred costs
Investments accounted for using the equity method
Derivative financial instruments
Other non-current financial assets
Plant and equipment
Right-of-use assets
Goodwill and intangible assets
Deferred tax
Deposits
Total non-current assets
total assets
Consolidated
note
2022
$
2021
$
8
9
10
11
9
11
12
13
14
7
36,607,635
31,302,580
6,660,126
30,499
1,589,036
3,316,339
848,728
34,643,167
32,858,840
7,797,637
37,259
1,797,447
9,202,491
881,331
80,354,943
87,218,172
2,793,800
16,246
3,316,919
51,246
7,035,038
13,074,689
62,302
1,336,629
1,700,335
62,322
1,534,735
2,130,577
35,654,445
28,241,840
6,000,655
744,679
6,056,870
723,738
55,344,129
55,192,936
135,699,072
142,411,108
The above consolidated statement of financial position should be read in conjunction
with the accompanying notes
2 3
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Consolidated statement of financial position
liabilities
Current liabilities
Trade and other payables
Contract liabilities and deferred revenue
Interest bearing loans and borrowings
Lease liabilities
Derivative financial instruments
Income tax payable
Employee benefits
Contingent consideration
Total current liabilities
non-current liabilities
Contract liabilities and deferred revenue
Lease liabilities
Derivative financial instruments
Deferred tax
Employee benefits
Contingent consideration
Client trading and security bond
Total non-current liabilities
total liabilities
net assets
equity
Issued capital
Reserves
Accumulated losses
total equity
Consolidated
note
2022
$
2021
$
15
16
17
18
11
19
16
18
11
7
19
20
21
48,412,396
8,908,663
490,777
911,234
3,316,339
665,883
1,869,371
3,140,182
51,028,728
10,602,740
317,253
785,499
9,202,491
1,349,648
1,453,637
1,400,000
67,714,845
76,139,996
3,540,648
1,525,681
7,035,038
4,605,502
155,953
-
2,746,115
4,205,041
2,193,839
13,074,689
3,967,939
288,687
479,350
944,108
19,608,937
25,153,653
87,323,782
101,293,649
48,375,290
41,117,459
54,491,225
51,524,175
717,474
765,224
(6,833,409)
(11,171,940)
48,375,290
41,117,459
The above consolidated statement of financial position should be read in conjunction
with the accompanying notes
2 4
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Consolidated statement of changes in equity
Consolidated
issued
capital
$
financial
assets at fair
value
reserve
$
share-
based
payments
reserve
$
accumulated
losses
$
total
equity
$
Balance at 1 July 2020
48,497,215
394,507
40,064
(15,693,204)
33,238,582
Profit after income tax expense for the year
Other comprehensive income for the year,
net of tax
Total comprehensive income for the year
Transactions with owners in their capacity
as owners:
Contributions of equity, net of transaction costs
(note 20)
Vesting of share-based payments
Dividends paid and effect of dividend
reinvestment plan (note 22)
-
-
-
-
93,889
93,889
2,693,353
26,325
307,282
-
-
-
-
-
-
-
236,764
5,548,262
5,548,262
-
93,889
5,548,262
5,642,151
-
-
2,693,353
263,089
-
(1,026,998)
(719,716)
Balance at 30 June 2021
51,524,175
488,396
276,828
(11,171,940)
41,117,459
Consolidated
issued
capital
$
financial
assets at fair
value
reserve
$
share-
based
payments
reserve
$
accumulated
losses
$
total
equity
$
Balance at 1 July 2021
51,524,175
488,396
276,828
(11,171,940)
41,117,459
Profit after income tax expense for the year
Other comprehensive income for the year,
net of tax
Total comprehensive income for the year
Transactions with owners in their capacity
as owners:
Contributions of equity, net of transaction costs
(note 20)
Share buy-backs
Vesting of share-based payments
Transfer of fair value on exercised options
Transfer of fair value on lapsed options
Transfer of fair value on exercised performance
rights
Dividends paid and effect of dividend
reinvestment plan (note 22)
-
-
-
-
59,833
59,833
2,735,507
(291,254)
-
174,511
-
58,500
289,786
-
-
-
-
-
-
-
-
-
-
-
-
203,666
(174,511)
(78,238)
5,714,296
5,714,296
-
59,833
5,714,296
5,774,129
-
-
-
-
78,238
2,735,507
(291,254)
203,666
-
-
-
(58,500)
-
-
(1,454,003)
(1,164,217)
Balance at 30 June 2022
54,491,225
548,229
169,245
(6,833,409)
48,375,290
The above consolidated statement of changes in equity should be read in conjunction
with the accompanying notes
2 5
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Consolidated statement of cash flows
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Net cash (used in)/from client related operations
Interest received
Interest and other finance costs paid
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Payment for purchase of businesses, net of cash acquired
Further payments for prior period purchase of business
Payments for investments in shares
Payments for plant and equipment
Payments for asset acquisitions
Proceeds from disposal of investments in shares
Proceeds of distributions from joint venture
Net cash used in investing activities
Cash flows from financing activities
Proceeds from exercise of options
Payments for share buybacks
Repayment of borrowings
Repayment of lease liabilities
Dividends paid
Consolidated
note
2022
$
2021
$
155,726,590
118,961,645
(140,867,813)
(108,043,943)
(1,315,309)
7,986,328
13,543,468
18,904,030
17,001
(129,032)
15,631
(104,276)
(2,908,858)
(2,088,199)
10,522,579
16,727,186
(3,269,619)
(366,963)
(450,000)
(535,514)
(375,411)
-
(983,447)
(347,939)
(1,529,350)
(2,351,060)
188,953
35,000
621,787
15,000
(5,935,941)
(3,412,622)
32
30
12
531,000
(291,253)
(808,430)
(889,270)
22
(1,164,217)
300,000
-
(345,161)
(863,837)
(724,149)
Net cash used in financing activities
(2,622,170)
(1,633,147)
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
1,964,468
34,643,167
11,681,417
22,961,750
Cash and cash equivalents at the end of the financial year
36,607,635
34,643,167
The above consolidated statement of cash flows should be read in conjunction
with the accompanying notes
2 6
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Consolidated statement of cash flows
Cash and cash equivalents
Cash at bank*
Client funds**
Consolidated
2022
$
2021
$
14,892,498
21,715,137
13,692,472
20,950,695
36,607,635
34,643,167
* The Group holds cash reserves which are required to meet its broker licensing conditions. The conditions of the license, amongst other requirements,
mandate that its wholly owned subsidiary, Morrison Securities, must maintain at all times core capital greater than $7,500,000 (30 June 2021: $7,500,000),
where at least 90% of this core capital is cash at bank.
** Client funds are not available for general use by the Group.
The above consolidated statement of cash flows should be read in conjunction
with the accompanying notes
2 7
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 note 1. geneRal infoRmation
The financial statements cover Sequoia Financial Group Limited as a Group consisting of Sequoia
Financial Group Limited (‘Company’ or ‘parent entity’) and the entities it controlled at the end of, or
during, the year (referred to in these financial statements as the ‘Group’). The financial statements are
presented in Australian dollars, which is Sequoia Financial Group Limited’s functional and presentation
currency.
Sequoia Financial Group Limited is a listed public company limited by shares, incorporated and
domiciled in Australia. Its registered office and principal place of business are:
Registered office
principal place of business
Level 7
Level 8
7 Macquarie Place
525 Flinders Street
Sydney NSW 2000
Melbourne VIC 3000
A description of the nature of the Group’s operations and its principal activities are included in the
directors’ report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on
18 August 2022. The directors have the power to amend and reissue the financial statements.
note 2. signifiCant aCCounting poliCies
The principal accounting policies adopted in the preparation of the financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
new or amended accounting standards and interpretations adopted
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting
period. The adoption of these Accounting Standards and Interpretations did not have any significant
impact on the financial performance or position of the Group.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not
been early adopted.
basis of preparation
These general purpose financial statements have been prepared in accordance with Australian
Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’)
and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements
also comply with International Financial Reporting Standards as issued by the International Accounting
Standards Board (‘IASB’).
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where
applicable, the revaluation of financial assets at fair value through other comprehensive income,
financial assets and liabilities at fair value through profit or loss and derivative financial instruments.
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Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 2. signifiCant aCCounting poliCies (Continued)
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process of applying the Group’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions
and estimates are significant to the financial statements, are disclosed in note 3.
parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the
Group only. Supplementary information about the parent entity is disclosed in note 29.
principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Sequoia
Financial Group Limited as at 30 June 2022 and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They are de-consolidated from
the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the
Group are eliminated. unrealised losses are also eliminated unless the transaction provides evidence of
the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change
in ownership interest, without the loss of control, is accounted for as an equity transaction, where the
difference between the consideration transferred and the book value of the share of the non-controlling
interest acquired is recognised directly in equity attributable to the parent.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities
and non-controlling interest in the subsidiary together with any cumulative translation differences
recognised in equity. The Group recognises the fair value of the consideration received and the fair
value of any investment retained together with any gain or loss in profit or loss.
operating segments
Operating segments are presented using the ‘management approach’, where the information
presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers
(‘CODM’). The CODM is responsible for the allocation of resources to operating segments and assessing
their performance.
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Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 2. signifiCant aCCounting poliCies (Continued)
Revenue recognition
The Group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected
to be entitled in exchange for transferring goods or services to a customer. For each contract
with a customer, the Group: identifies the contract with a customer; identifies the performance
obligations in the contract; determines the transaction price which takes into account estimates of
variable consideration and the time value of money; allocates the transaction price to the separate
performance obligations on the basis of the relative stand-alone selling price of each distinct good or
service to be delivered; and recognises revenue when or as each performance obligation is satisfied in
a manner that depicts the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer
such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any
other contingent events. Such estimates are determined using either the ‘expected value’ or ‘most
likely amount’ method. The measurement of variable consideration is subject to a constraining principle
whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal
in the amount of cumulative revenue recognised will not occur. The measurement constraint continues
until the uncertainty associated with the variable consideration is subsequently resolved. Amounts
received that are subject to the constraining principle are recognised as a refund liability.
Timing of revenue recognition
Sequoia Equity Markets Group: The Group offers structured products to investors seeking exposure to
investment opportunities. Management determined after lengthy evaluation that there are different
types of structured product revenue. Each revenue type has numerous and distinct performance
obligations, which allows for a different treatment to each of these revenue streams.
The different revenue streams include:
• application fee revenue is recognised up-front (upon execution of delivery of product to the
customer) and is non-refundable;
• structured product revenue is released over the duration of the contract as it is earned over a period
of time (duration of the contract); and
• coupon premium revenue is earned upon completion of the contract, as it is earned upon concluding
the contract (conclusion of contract).
The costs of entering into the contract with wholesale counter parties are matched to the revenue
streams.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method
of calculating the amortised cost of a financial asset and allocating the interest income over the
relevant period using the effective interest rate, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to the net carrying amount of
the financial asset.
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Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 2. signifiCant aCCounting poliCies (Continued)
Other revenue from client services
Revenues from other services, including brokerage, financial planning, superannuation and corporate
advisory services are performed as they are rendered to the customer, net of any commissions. For
brokerage, this occurs upon the date of settlement of clearing the underlying transaction on behalf of
the client. For corporate advisory income relating to a transaction, this occurs upon the execution of
the transaction. Where corporate advisory services relate to fees earned under a retainer agreement,
revenue is accrued pro-rata according to the servicing of that retainer.
Government grants
Government grants claimed during the COVID pandemic were reported as received and deducted
from employee benefit expenses. Refer to note 6 for further information.
Contract assets and contract liabilities
Contract assets relate to contract costs and contract liabilities relate primarily to structured product
revenues. The contract assets represents costs deferred and contract liabilities represent revenue
deferred due to recognition requirements where the revenue and cost are spread over the product life.
income tax
The income tax expense or benefit for the period is the tax payable on that period’s taxable income
based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred
tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment
recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected
to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are
enacted or substantively enacted, except for:
• When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset
or liability in a transaction that is not a business combination and that, at the time of the transaction,
affects neither the accounting nor taxable profits; or
• When the taxable temporary difference is associated with interests in subsidiaries, associates or joint
ventures, and the timing of the reversal can be controlled and it is probable that the temporary
difference will not reverse in the foreseeable future.
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.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each
reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable
that future taxable profits will be available for the carrying amount to be recovered. Previously
unrecognised deferred tax assets are recognised to the extent that it is probable that there are future
taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset
current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and
they relate to the same taxable authority on either the same taxable entity or different taxable entities
which intend to settle simultaneously.
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Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 2. signifiCant aCCounting poliCies (Continued)
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-
current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or
consumed in the Group’s normal operating cycle; it is held primarily for the purpose of trading; it
is expected to be realised within 12 months after the reporting period; or the asset is cash or cash
equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after
the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group’s normal operating
cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the
reporting period; or there is no unconditional right to defer the settlement of the liability for at least
12 months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions,
other short-term, highly liquid investments with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost
using the effective interest method, less any allowance for expected credit losses. Trade receivables are
generally due for settlement within 30 days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a
lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been
grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and
are subsequently remeasured to their fair value at each reporting date. The accounting for subsequent
changes in fair value depends on whether the derivative is designated as a hedging instrument, and if
so, the nature of the item being hedged.
Derivatives are classified as current or non-current depending on the expected period of realisation,
based upon the maturity date set in the underlying derivative agreement.
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Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 2. signifiCant aCCounting poliCies (Continued)
joint ventures
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement
have rights to the net assets of the arrangement. Investments in joint ventures are accounted for
using the equity method. under the equity method, the share of the profits or losses of the joint
venture is recognised in profit or loss and the share of the movements in equity is recognised in other
comprehensive income. Investments in joint ventures are carried in the statement of financial position
at cost plus post-acquisition changes in the Group’s share of net assets of the joint venture. Goodwill
relating to the joint venture is included in the carrying amount of the investment and is neither amortised
nor individually tested for impairment. Income earned from joint venture entities reduce the carrying
amount of the investment.
investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included
as part of the initial measurement, except for financial assets at fair value through profit or loss. Such
assets are subsequently measured at either amortised cost or fair value depending on their classification.
Classification is determined based on both the business model within which such assets are held and
the contractual cash flow characteristics of the financial asset unless an accounting mismatch is being
avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been
transferred and the Group has transferred substantially all the risks and rewards of ownership. When
there is no reasonable expectation of recovering part or all of a financial asset, its carrying value is
written off.
Financial assets at amortised cost
A financial asset is measured at amortised cost only if both of the following conditions are met: (i) it is
held within a business model whose objective is to hold assets in order to collect contractual cash flows;
and (ii) the contractual terms of the financial asset represent contractual cash flows that are solely
payments of principal and interest.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income
are classified as financial assets at fair value through profit or loss. Typically, such financial assets will be
either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an
intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where
permitted. Fair value movements are recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the
Group intends to hold for the foreseeable future and has irrevocably elected to classify them as such
upon initial recognition.
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Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 2. signifiCant aCCounting poliCies (Continued)
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets which are either
measured at amortised cost or fair value through other comprehensive income. The measurement of
the loss allowance depends upon the Group’s assessment at the end of each reporting period as to
whether the financial instrument’s credit risk has increased significantly since initial recognition, based
on reasonable and supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a
12-month expected credit loss allowance is estimated. This represents a portion of the asset’s lifetime
expected credit losses that is attributable to a default event that is possible within the next 12 months.
Where a financial asset has become credit impaired or where it is determined that credit risk has
increased significantly, the loss allowance is based on the asset’s lifetime expected credit losses. The
amount of expected credit loss recognised is measured on the basis of the probability weighted present
value of anticipated cash shortfalls over the life of the instrument discounted at the original effective
interest rate.
For financial assets mandatorily measured at fair value through other comprehensive income, the loss
allowance is recognised in other comprehensive income with a corresponding expense through profit
or loss. In all other cases, the loss allowance reduces the asset’s carrying value with a corresponding
expense through profit or loss.
plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment.
Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of plant and
equipment (excluding land) over their expected useful lives as follows:
Leasehold improvements
Plant and equipment
Over the term of the lease
3 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate,
at each reporting date.
An item of plant and equipment is derecognised upon disposal or when there is no future economic
benefit to the Group. Gains and losses between the carrying amount and the disposal proceeds are
taken to profit or loss.
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Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 2. signifiCant aCCounting poliCies (Continued)
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is
measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable,
any lease payments made at or before the commencement date net of any lease incentives received,
any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of
costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site
or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership
of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of
use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-
term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these
assets are expensed to profit or loss as incurred.
goodwill and intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured
at their fair value at the date of the acquisition. Intangible assets acquired separately are initially
recognised at cost. Finite life intangible assets are subsequently measured at cost less amortisation
and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of
intangible assets are measured as the difference between net disposal proceeds and the carrying
amount of the intangible asset. The method and useful lives of finite life intangible assets are
reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for
prospectively by changing the amortisation method or period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested
annually for impairment, or more frequently if events or changes in circumstances indicate that it might
be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill
are taken to profit or loss and are not subsequently reversed.
Brand name
Brand name arises on the acquisition of a business. Brand name is not amortised. Instead, brand name is
tested annually for impairment, or more frequently if events or changes in circumstances indicate that it
might be impaired, and is carried at cost less accumulated impairment losses.
Customer list
Customer lists are amortised on a straight-line basis over their finite life. The finite life is the period of
expected benefit, which ranges from 5 to 20 years depending on factors such as, their significance to
the Group, acquisition consideration and estimated customer turnover.
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Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 2. signifiCant aCCounting poliCies (Continued)
Regulatory memberships and licences
Costs in relation to regulatory memberships and licences are capitalised as an asset. These costs are
not subsequently amortised but reviewed annually for impairment. Management consider regulatory
memberships and licences to have indefinite useful lives because the potential to generate cash flows is
unlimited.
impairment of non-financial assets
Goodwill and intangible assets of indefinite life are not subject to amortisation and are tested annually
for impairment, or more frequently if events or changes in circumstances indicate that they might
be impaired. Other non-financial assets are reviewed 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 carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. The
value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax
discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not
have independent cash flows are grouped together to form a cash-generating unit.
trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the
financial year and which are unpaid. Due to their short-term nature they are measured at amortised
cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of
recognition.
interest bearing loans and borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received,
net of transaction costs. They are subsequently measured at amortised cost using the effective
interest method.
lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially
recognised at the present value of the lease payments to be made over the term of the lease,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined,
the Group’s incremental borrowing rate. Lease payments comprise of fixed payments less any lease
incentives receivable, variable lease payments that depend on an index or a rate, amounts expected
to be paid under residual value guarantees, exercise price of a purchase option when the exercise of
the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease
payments that do not depend on an index or a rate are expensed in the period in which they
are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying
amounts are remeasured if there is a change in the following: future lease payments arising from a
change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and
termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding
right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
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Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 2. signifiCant aCCounting poliCies (Continued)
employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave
expected to be settled wholly within 12 months of the reporting date are measured at the amounts
expected to be paid when the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the
reporting date are measured at the present value of expected future payments to be made in respect
of services provided by employees up to the reporting date. Consideration is given to expected future
wage and salary levels, experience of employee departures and periods of service. Expected future
payments are discounted using market yields at the reporting date on high-quality corporate bonds with
terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date; and assumes
that the transaction will take place either: in the principal market; or in the absence of a principal
market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset
or liability, assuming they act in their economic best interests. For non-financial assets, the fair value
measurement is based on its highest and best use. Valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair value, are used, maximising
the use of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy
that reflects the significance of the inputs used in making the measurements. Classifications are
reviewed at each reporting date and transfers between levels are determined based on a reassessment
of the lowest level of input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal
expertise is either not available or when the valuation is deemed to be significant. External valuers are
selected based on market knowledge and reputation. Where there is a significant change in fair value
of an asset or liability from one period to another, an analysis is undertaken, which includes a verification
of the major inputs applied in the latest valuation and a comparison, where applicable, with external
sources of data.
issued capital
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.
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Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 2. signifiCant aCCounting poliCies (Continued)
earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Sequoia
Financial Group Limited, 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 financial year.
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.
goods and services tax (‘gst’) and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST
incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the
acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net
amount of GST recoverable from, or payable to, the tax authority is included in other receivables or
other payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing
or financing activities which are recoverable from, or payable to the tax authority, are presented as
operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable
to, the tax authority.
new accounting standards and interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but
are not yet mandatory, have not been early adopted by the Group for the annual reporting period
ended 30 June 2022. The Group has not yet assessed the impact of these new or amended Accounting
Standards and Interpretations.
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Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 3. CRitiCal aCCounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements. Management continually
evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue
and expenses. Management bases its judgements, estimates and assumptions on historical experience
and on other various factors, including expectations of future events, management believes to be
reasonable under the circumstances. The resulting accounting judgements and estimates will seldom
equal the related actual results. The judgements, estimates and assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective
notes) within the next financial year are discussed below.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic
has had, or may have, on the Group based on known information. This consideration extends to the
nature of the products and services offered, customers, supply chain, staffing and geographic regions in
which the Group operates. Other than as addressed in specific notes, there does not currently appear
to be either any significant impact upon the financial statements or any significant uncertainties with
respect to events or conditions which may impact the Group unfavourably as at the reporting date or
subsequently as a result of the Coronavirus (COVID-19) pandemic.
Business combination versus asset acquisition
During the financial year, the Directors evaluated each purchase and determined that the purchases of
Argent Insurance Brokers Pty Ltd, Docscentre Legal Pty Ltd and Informed Investor group met the criteria
of a business combination (refer to note 30), while the purchase of Macro Investment Advisory did not.
Assessment of achieving revenue targets attached to contingent consideration
Contingent consideration is deemed a critical estimate as there may be estimated amounts included
in the transaction price of acquired businesses. These estimates are largely based on an assessment
of anticipated performance and all information (historical, current and forecasted) that is reasonably
available.
Assessment of fair value on acquired assets and liabilities in business combinations
Business combinations are initially accounted for on a provisional basis. The fair value of assets acquired,
liabilities and contingent liabilities assumed are initially estimated by the Group, taking into account all
available information at the reporting date. Fair value adjustments on the finalisation of the business
combination accounting is retrospective, where applicable, to the period the business combination
occurred and may have an impact on the assets, liabilities, depreciation and amortisation reported.
Goodwill
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment,
whether goodwill has suffered any impairment, in accordance with the accounting policy stated in
note 2. The recoverable amounts of cash-generating units have been determined based on value-in-
use calculations. These calculations require the use of assumptions, including estimated discount rates
based on the current cost of capital and growth rates of the estimated future cash flows.
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Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 3. CRitiCal aCCounting judgements, estimates and assumptions
(Continued)
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The Group assesses impairment of non-financial assets other than goodwill and other indefinite life
intangible assets at each reporting date by evaluating conditions specific to the Group and to the
particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount
of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations,
which incorporate a number of key estimates and assumptions.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease
liability. Judgement is exercised in determining whether there is reasonable certainty that an option to
extend the lease or purchase the underlying asset will be exercised, or an option to terminate the lease
will not be exercised, when ascertaining the periods to be included in the lease term. In determining the
lease term, all facts and circumstances that create an economical incentive to exercise an extension
option, or not to exercise a termination option, are considered at the lease commencement date.
Factors considered may include the importance of the asset to the Group’s operations; comparison
of terms and conditions to prevailing market rates; incurrence of significant penalties; existence of
significant leasehold improvements; and the costs and disruption to replace the asset. The Group
reassesses whether it is reasonably certain to exercise an extension option, or not exercise a termination
option, if there is a significant event or significant change in circumstances.
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate
is estimated to discount future lease payments to measure the present value of the lease liability at the
lease commencement date. Such a rate is based on what the Group estimates it would have to pay a
third party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use asset,
with similar terms, security and economic environment.
Derivatives and investments
The fair value of derivatives and investments is determined by marking-to-market. Refer to note 2, Fair
value measurement section, and note 24 Fair value measurement.
4 0
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 4. opeRating segments
Identification of reportable operating segments
The Group is organised into five operating segments, which are based on the internal reports that are
reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers
(‘CODM’)) in assessing performance and in determining the allocation of resources.
On a monthly basis the CODM reviews operating profit, which is earnings before interest, taxation,
depreciation and amortisation, and non-operational items (such as, acquisition-related costs,
redundancy costs and impairment charges).
Types of products and services
The principal products and services of each of the Group’s operating segments are as follows:
sequoia
licensees
services
group
(formerly
sequoia
Wealth group)
sequoia
professional
services
group
sequoia equity
markets group
The Licensees Services Group is the core driver of the company business thematic.
The Licensees Services Group is the area of the business where we provide licensee
services to Financial Planners, Wealth Managers, Equity advisers and a Corporate
advisory business unit.
The Licensees Services Group specialises in providing the adviser market a full service
licensing and support service so they can operate as an adviser in a market that is
heavily legislated. Our role is to charge a fee for service and assist with a range of
value propositions including compliance, marketing, coaching, education, research,
and technical support.
The advisers are primarily accountants, financial planners, mortgage brokers,
insurance advisers, equity market advisers and investment professionals with their AFS
licensing, merger and acquisitions corporate advice.
The Professional Services Group provides services to intermediaries including licensed
advisers, accountants and lawyers. This service provision includes SMSF administration,
general insurance broking, legal document establishment services and company
secretarial services. The division has relationships with over 3,000 accountants and
financial planners across Australia, who have used at least one service from the division.
The Equity Markets Group provides services to licensed advisers, self directed investors
and superannuation funds. The companies fully owned subsidiary Morrison Securities
delivers white label Australian Stockbroking and Specialised Investment solutions to
third party institutional and adviser networks that operate their own AFSL.
sequoia direct
investment
group
The Direct Investment Group provides a range of media services, research and
general advice to self directed investors. In addition, the division looks to support AFSL
holders with tools to reduce the cost of advice by providing news, research and data
on managed funds, direct shares and bonds.
head office
Head Office relates to the corporate running costs of the Group.
All products and services are provided predominantly to customers in Australia.
Intersegment transactions
Intersegment transactions were made at cost. Intersegment transactions are eliminated on consolidation.
4 1
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 4. opeRating segments (Continued)
Intersegment receivables, payables and loans
Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable
and loans payable that earn or incur non-market interest are not adjusted to fair value based on market
interest rates. Intersegment loans are eliminated on consolidation.
Consolidated - 2022
Revenue
Revenue
sequoia
licensees
services
group
$
sequoia
professional
services
group
$
sequoia
equity
markets
group
$
sequoia
direct
investment
group
$
head
office
$
total
$
64,232,315
11,000,628
70,080,206
2,555,464
58,912
147,927,525
Gains/(losses) on portfolio investments
(514,996)
-
63
-
(99,872)
(614,805)
total revenue
63,717,319
11,000,628
70,080,269
2,555,464
(40,960)
147,312,720
Operating profit
Depreciation
Amortisation
Acquisition costs
Interest revenue
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense
Consolidated - 2021
Revenue
Revenue
5,474,804
2,908,978
6,312,770
965,647
(3,307,592)
12,354,607
(1,291,270)
(2,094,048)
(127,819)
17,001
(225,303)
8,633,168
(2,918,872)
5,714,296
sequoia
licensees
services
group
$
sequoia
professional
services
group
$
sequoia
equity
markets
group
$
sequoia
direct
investment
group
$
head
office
$
total
$
54,493,541
7,060,988
52,279,912
1,856,073
(48,595)
115,641,920
Gains on portfolio investments
804,501
-
16,239
-
-
820,739
total revenue
55,298,042
7,060,988
52,296,151
1,856,073
(48,595)
116,462,659
Operating profit
Depreciation
Amortisation
Acquisition costs
Interest revenue
Finance costs
Restructuring costs
Non-operating other income
Profit before income tax expense
Income tax expense
Profit after income tax expense
6,123,786
2,106,165
5,898,463
594,460
(3,206,316)
11,516,558
(1,271,652)
(1,607,705)
(316,339)
15,631
(230,836)
(67,738)
89,872
8,127,791
(2,579,529)
5,548,262
4 2
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 5. Revenue
Sales revenue
Data subscriptions fees
Brokerage and commissions revenue
Superannuation product revenue
Structured product revenue
Corporate advisory fees
Media revenue
Other income
Other revenue
Consolidated
2022
$
2021
$
348,654
529,247
90,934,448
73,803,588
2,559,998
40,616,051
10,298,816
845,577
2,323,981
2,306,465
27,902,934
8,087,523
830,834
2,181,329
147,927,525
115,641,920
Gains/(losses) on portfolio investments
(614,805)
820,739
Revenue
147,312,720
116,462,659
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Consolidated - 2022
Timing of revenue recognition
Services transferred at a point
in time
sequoia
licensees
services
group
$
sequoia
professional
services
group
$
sequoia
equity
markets
group
$
sequoia
direct
investment
group
$
head
office
$
total
$
64,232,315
11,000,628
29,464,155
1,362,397
58,912
106,118,407
Services transferred over time
-
-
40,616,051
1,193,067
-
41,809,118
64,232,315
11,000,628
70,080,206
2,555,464
58,912
147,927,525
Consolidated - 2021
Timing of revenue recognition
Services transferred at a point
in time
sequoia
licensees
services
group
$
sequoia
professional
services
group
$
sequoia
equity
markets
group
$
sequoia
direct
investment
group
$
head
office
$
total
$
54,493,541
7,060,988
24,376,978
623,334
(48,595)
86,506,247
Services transferred over time
-
-
27,902,934
1,232,739
-
29,135,673
54,493,541
7,060,988
52,279,912
1,856,073
(48,595)
115,641,920
4 3
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 6. expenses
Profit before income tax includes the following specific expenses:
Depreciation
Leasehold improvements
Plant and equipment
Land and buildings - right-of-use assets
Total depreciation
Amortisation
Customer list
Regulatory memberships and licences
Other intangibles
Total amortisation
Total depreciation and amortisation
Finance costs
Interest and finance charges paid/payable on borrowings
Interest and finance charges paid/payable on lease liabilities
Finance costs expensed
Employee benefits
Wages and salaries
Government COVID grants
Redundancies and terminations
Share-based payments
Commissions and discretionary bonus
Defined contribution superannuation expense
Other employment costs
Total employee benefits
Consolidated
2022
$
2021
$
99,871
482,381
709,018
108,257
450,675
712,720
1,291,270
1,271,652
1,926,943
1,441,875
4,418
162,687
4,418
161,412
2,094,048
1,607,705
3,385,318
2,879,357
129,032
96,271
225,303
10,859,134
-
-
203,666
2,181,843
1,188,999
2,969,786
104,276
126,560
230,836
9,162,489
(319,500)
87,715
290,764
2,415,598
992,253
2,411,603
17,403,428
15,040,922
4 4
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 7. inCome tax
Income tax expense
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustment recognised for prior periods
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
Decrease in deferred tax assets
Decrease in deferred tax liabilities
Consolidated
2022
$
2021
$
2,873,100
2,497,508
(40,847)
86,619
103,111
(21,090)
2,918,872
2,579,529
796,964
1,292,553
(837,811)
(1,189,442)
Deferred tax - origination and reversal of temporary differences
(40,847)
103,111
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Amortisation of intangibles
Net research and development credit
Sundry items
Adjustment recognised for prior periods
Income tax expense
8,633,168
8,127,791
2,589,950
2,438,337
429,740
318,591
(101,616)
(140,194)
(85,821)
(16,115)
2,832,253
2,600,619
86,619
(21,090)
2,918,872
2,579,529
4 5
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 7. inCome tax (Continued)
Deferred tax asset
Deferred tax asset comprises temporary differences attributable to:
Allowance for expected credit losses
Employee benefits
Accrued expenses
Deferred income
Net fair value loss on investment
Lease liability
Deferred tax asset
Movements:
Opening balance
Charged to profit or loss
Additions through business combinations (note 30)
Recognition of deferred tax asset on lease liability
Other reclass
Closing balance
Deferred tax liability
Deferred tax liability comprises temporary differences attributable to:
Financial assets at fair value through other comprehensive income
Deferred expenses
Intangibles
Lease asset
Deferred tax liability
Movements:
Opening balance
Credited to profit or loss
Additions through business combinations (note 30)
Recognition of deferred tax liability on lease asset
Other reclass
Closing balance
Consolidated
2022
$
2021
$
6,000
679,676
626,189
6,075
565,526
673,449
3,734,793
4,442,334
222,921
731,076
41,037
328,449
6,000,655
6,056,870
6,056,870
7,267,653
(796,964)
(1,292,553)
-
740,749
-
79,239
-
2,531
6,000,655
6,056,870
Consolidated
2022
$
2021
$
234,910
224,731
2,853,139
3,361,666
967,824
549,629
381,542
-
4,605,502
3,967,939
3,967,939
4,903,818
(837,811)
(1,189,442)
734,625
740,749
-
250,528
-
3,035
4,605,502
3,967,939
4 6
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 8. tRade and otheR ReCeivables
Current assets
Trade receivables
Less: Allowance for expected credit losses
Other receivables*
Consolidated
2022
$
2021
$
1,786,867
1,169,486
(20,000)
(20,250)
1,766,867
1,149,236
29,535,713
31,709,604
31,302,580
32,858,840
* Includes trade settlement receivable for Morrison Securities Pty Ltd of $27,602,440 as at 30 June 2022 (30 June 2021: $29,800,778). The remaining balance
relates to commissions receivable.
Allowance for expected credit losses
The ageing of the receivables and allowance for expected credit losses provided for above are
as follows:
Consolidated
Not overdue
1 to 30 days overdue
31 to 60 days overdue
expected credit loss rate
Carrying amount
allowance for expected
credit losses
2022
%
2021
%
2022
$
2021
$
2022
$
2021
$
-
-
-
-
-
-
30,992,893
32,615,802
101,086
59,873
168,728
66,753
106,013
90,522
31,322,580
32,879,090
-
-
-
-
-
-
20,000
20,000
20,250
20,250
Over 60 days overdue
11.85%
22.37%
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additional provisions recognised
Receivables written off during the year
unused amounts reversed
Closing balance
Consolidated
2022
$
2021
$
20,250
-
-
(250)
20,000
57,000
30,191
(28,366)
(38,575)
20,250
4 7
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 9. ContRaCt assets and defeRRed Costs
Current assets
Contract assets - deferred costs
Non-current assets
Contract assets - deferred costs
Consolidated
2022
$
2021
$
6,660,126
7,797,637
2,793,800
3,316,919
Contract assets – deferred costs relate to the costs of revenue contracts for structured products. These
costs (and associated revenues) are amortised over the life of the contract.
Changes in contract assets and liabilities reflect both:
(a) the release of deferred revenues and costs to the profit and loss through the performance of a
contract; and
(b) new receipts and prepayments for contracts that are yet to be performed.
note 10. investments in shaRes
Current assets
Investments in shares
Reconciliation
Reconciliation of the fair values at the beginning and end of the current and previous
financial year are set out below:
Opening fair value
Net additions
Revaluation taken to profit or loss
Revaluation recognised in other comprehensive income
Reclassified from non-current financial assets
Consolidated
2022
$
2021
$
1,589,036
1,797,447
1,797,447
346,561
(614,805)
59,833
-
443,759
390,816
820,739
93,889
48,244
Closing fair value
1,589,036
1,797,447
Refer to note 24 for further information on fair value measurement.
Ordinary shares are held in ASX listed companies and are actively traded.
4 8
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 11. deRivative finanCial instRuments
Current assets
Derivatives - financial assets
Non-current assets
Derivatives - financial assets
Current liabilities
Derivatives - financial liabilities
Non-current liabilities
Derivatives - financial liabilities
Consolidated
2022
$
2021
$
3,316,339
9,202,491
7,035,038
13,074,689
(3,316,339)
(9,202,491)
(7,035,038)
(13,074,689)
-
-
Refer to note 23 for further information on financial instruments.
Refer to note 24 for further information on fair value measurement.
The Group is party to derivative financial instruments in the normal course of business in order to
hedge exposure to fluctuations in the value of its investment products issued to the Group’s investors in
accordance with the Group’s financial risk management policies (refer to note 23).
The Group offers its clients investment products structured legally as loans, which provide clients a
derivative exposure to underlying market movements to those products. These exact market risks are
in-turn hedged with exact like-for-like products offered by commercial institutions, leaving the Group
with no exposure to the underlying market risks.
Information about the Group’s exposure to market risk, liquidity risk, and credit risk is disclosed in note 23.
The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each
class of derivative financial assets outlined above.
Sequoia has an obligation to its clients to pay the value of the investment at expiry. The current asset
amount and the non-current asset amount equals that of the investment obligation described as a
current liability and a non-current liability. The carrying amount equals the amount of the investment
obligation. The rise or fall offset each other.
4 9
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 12. plant and equipment
Non-current assets
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Reconciliations
Consolidated
2022
$
2021
$
921,060
921,060
(655,006)
(555,135)
266,054
365,925
5,941,345
5,561,044
(4,870,770)
(4,392,234)
1,070,575
1,168,810
1,336,629
1,534,735
Reconciliations of the written down values at the beginning and end of the current and previous
financial year are set out below:
Consolidated
Balance at 1 July 2020
Additions
Additions through business combinations (note 30)
Depreciation expense
Balance at 30 June 2021
Additions
Additions through business combinations (note 30)
Disposals
Depreciation expense
Balance at 30 June 2022
leasehold
improvements
$
plant and
equipment
$
total
$
471,810
1,240,989
1,712,799
2,372
-
356,565
21,931
358,937
21,931
(108,257)
(450,675)
(558,932)
365,925
1,168,810
1,534,735
-
-
-
375,411
375,411
10,386
(1,650)
10,386
(1,650)
(99,871)
(482,382)
(582,253)
266,054
1,070,575
1,336,629
5 0
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 13. Right-of-use assets
Non-current assets
Buildings - right-of-use
Less: Accumulated depreciation
Equipment - right-of-use
Less: Accumulated depreciation
Consolidated
2022
$
2021
$
4,537,481
4,478,783
(2,971,438)
(2,348,206)
1,566,043
2,130,577
141,340
(7,048)
134,292
-
-
-
1,700,335
2,130,577
The Group leases buildings for its offices under agreements of between three to seven years with, in
some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the
leases are renegotiated.
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous
financial year are set out below:
Consolidated
Balance at 1 July 2020
Additions through business combinations (note 30)
Depreciation expense
Balance at 30 June 2021
Additions
Revaluation
Depreciation expense
Balance at 30 June 2022
buildings -
right-of-use
$
equipment -
right-of-use
$
2,764,559
78,738
(712,720)
2,130,577
172,732
(35,296)
-
-
-
-
141,340
-
total
$
2,764,559
78,738
(712,720)
2,130,577
314,072
(35,296)
(701,970)
(7,048)
(709,018)
1,566,043
134,292
1,700,335
For other lease related disclosures refer to the following:
• note 6 for details of depreciation on right-of-use assets, interest on lease liabilities and other lease
payments;
• note 18 for lease liabilities and maturities of lease liabilities; and
• consolidated statement of cash flow for repayment of lease liabilities.
5 1
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 14. goodWill and intangible assets
Non-current assets
Goodwill
Less: Impairment
Customer list - at cost
Less: Accumulated amortisation
Consolidated
2022
$
2021
$
18,576,048
12,192,932
(1,019,547)
(1,019,547)
17,556,501
11,173,385
16,474,363
13,425,614
(4,233,800)
(2,306,857)
12,240,563
11,118,757
Regulatory memberships and licences - at cost
3,831,867
3,836,285
Brand name - at cost
Other intangibles - at cost
Less: Accumulated amortisation
Reconciliations
1,821,233
1,821,233
852,339
779,059
(648,058)
(486,879)
204,281
292,180
35,654,445
28,241,840
Reconciliations of the written down values at the beginning and end of the current and previous
financial year are set out below:
Consolidated
goodwill
$
Customer
list
$
Regulatory
memberships
and
licences
$
brand
name
$
other
intangibles
$
total
$
Balance at 1 July 2020
10,822,525
7,999,597
3,840,703
1,200,832
453,592
24,317,249
Additions
-
3,731,491
Additions through business
combinations (note 30)
Disposals
Amortisation expense
350,860
835,093
(5,549)
(1,441,875)
(4,418)
-
620,401
-
-
-
-
-
3,731,491
1,806,354
(5,549)
(161,412)
(1,607,705)
Balance at 30 June 2021
11,173,385
11,118,757
3,836,285
1,821,233
292,180
28,241,840
Additions
-
600,000
Additions through business
combinations (note 30)
Disposals
Amortisation expense
6,383,116
2,448,749
-
(1,926,943)
(4,418)
-
-
-
-
-
600,000
74,788
8,906,653
-
-
(162,687)
(2,094,048)
Balance at 30 June 2022
17,556,501
12,240,563
3,831,867
1,821,233
204,281
35,654,445
5 2
-
-
-
-
-
-
-
-
-
-
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 14. goodWill and intangible assets (Continued)
Impairment testing of intangible assets of indefinite life
Intangible assets of indefinite life, consisting of goodwill, regulatory memberships and licences and
brand names acquired through business combinations have been allocated to the following cash
generating units:
Consolidated - 2022
Cash-generating units ('CGUs'):
Sequoia Licensees Service Group
Sequoia Professional Services Group
Sequoia Equity Markets Group
Sequoia Direct Investments Group
Consolidated - 2021
Cash-generating units ('CGUs'):
Sequoia Licensees Service Group
Sequoia Professional Services Group
Sequoia Equity Markets Group
Sequoia Direct Investments Group
goodwill
$
Regulatory
memberships
and licences
$
brand
name
$
total
$
1,809,211
4,930,386
4,862,392
5,954,512
267,661
1,200,832
-
620,401
3,564,206
-
-
-
3,277,704
5,550,787
8,426,598
5,954,512
17,556,501
3,831,867
1,821,233
23,209,601
goodwill
$
Regulatory
memberships
and licences
$
brand
name
$
total
$
1,023,335
4,736,880
4,862,392
550,778
272,079
1,200,832
-
620,401
3,564,206
-
-
-
2,496,246
5,357,281
8,426,598
550,778
11,173,385
3,836,285
1,821,233
16,830,903
The recoverable amount of the Group’s CGus has been determined by a value-in-use calculation using
a discounted cash flow model, based on a 12-month projection period approved by management and
extrapolated for a further 4 years by using key assumptions.
Key assumptions are those to which the recoverable amount of an asset or CGus is most sensitive.
The following key assumptions were used in the discounted cash flow model in relation to the intangible
assets of indefinite life associated to various CGus:
key assumptions
Sequoia Licensees Services Group
Sequoia Professional Services Group
Sequoia Equity Markets Group
Sequoia Direct Investment Group
Revenue growth rate
%
Cost of sales growth rate
%
pre-tax discount rate
%
3.0%
3.0%
3.0%
1.0%
2.5%
2.5%
2.5%
2.5%
15.0%
15.0%
15.0%
15.0%
The intangible assets of indefinite life are considered to be sensitive to these assumptions and are carried
in the statement of financial position at a written-down value.
5 3
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 14. goodWill and intangible assets (Continued)
Sensitivity
The directors have made judgements and estimates in respect of impairment testing of intangible
assets of indefinite life. Should these judgements and estimates not occur the resulting goodwill carrying
amount may decrease. The sensitivities are as follows:
(a) Revenue growth would need to decrease by 2.4% before intangible assets of indefinite life would
need to be impaired, with all other assumptions remaining constant.
(b) The discount rate would be required to increase by 21.0% before intangible assets of indefinite life
would need to be impaired, with all other assumptions remaining constant.
Management believes that other reasonable changes in the key assumptions on which the recoverable
amount of intangible assets of indefinite life is based would not cause the CGus carrying amount to
exceed its recoverable amount.
If there are any negative changes in the key assumptions on which the recoverable amount of
intangible assets of indefinite life is based, this would result in a further impairment charge for intangible
assets of indefinite life.
note 15. tRade and otheR payables
Current liabilities
Trade payables*
Accrued expenses
Security bond
Other payables
Consolidated
2022
$
2021
$
41,072,315
44,962,720
6,519,831
4,999,217
25,000
795,250
-
1,066,791
48,412,396
51,028,728
* Includes Trade settlement payables for Morrison Securities Pty Ltd of $40,560,744 as at 30 June 2022 (30 June 2021: $44,074,390).
Refer to note 23 for further information on financial instruments.
5 4
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 16. ContRaCt liabilities and defeRRed Revenue
Current liabilities
Contract liabilities - deferred revenue
Non-current liabilities
Contract liabilities - deferred revenue
Consolidated
2022
$
2021
$
8,908,663
10,602,740
3,540,648
4,205,041
Contract liabilities - deferred revenue relate primarily to structured product revenues. The revenue is
deferred due to recognition requirements where the revenue and cost are spread over the product life.
Changes in contract assets and liabilities reflect both:
(a) the release of deferred revenues and costs to the profit and loss through the performance of a
contract; and
(b) new receipts and prepayments for contracts that are yet to be performed.
Unsatisfied performance obligations
The aggregate amount of the transaction price allocated to the performance obligations that are
unsatisfied at the end of the reporting period was $12,449,311 as at 30 June 2022 ($14,807,780 as at
30 June 2021) and is expected to be recognised as revenue in future periods as follows:
1 year or less
Between 1 and 2 years
Between 2 and 3 years
Consolidated
2022
$
2021
$
8,908,663
10,602,740
3,136,805
3,929,131
403,843
275,909
12,449,311
14,807,780
Revenue recognition is calculated on the product term remaining up to the maturity date.
note 17. inteRest beaRing loans and boRRoWings
Current liabilities
Other unsecured loans*
Consolidated
2022
$
2021
$
490,777
317,253
* Other unsecured loans relates to funding for Professional Indemnity Insurance Premium at an interest rate of 4.23% (30 June 2021: 3.32%).
Refer to note 23 for further information on financial instruments.
5 5
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 18. lease liabilities
Current liabilities
Lease liability
Non-current liabilities
Lease liability
Consolidated
2022
$
2021
$
911,234
785,499
1,525,681
2,193,839
The following table details the Group’s remaining contractual maturity for its lease liabilities:
1 year or
less
$
between 1
and
2 years
$
between 2
and
3 years
$
between 3
and
4 years
$
between 4
and
5 years
$
over
5 years
$
Remaining
contractual
maturities
$
2022
Lease liability
911,234
908,275
559,194
31,931
26,282
2021
Lease liability
785,499
846,914
835,332
511,593
-
-
-
2,436,916
2,979,338
The cash flow in the maturity analysis above are present values of future payments and are not
expected to occur significantly earlier than contractually disclosed.
note 19. Contingent ConsideRation
Current liabilities
Contingent consideration
Non-current liabilities
Contingent consideration
Consolidated
2022
$
2021
$
3,140,182
1,400,000
-
479,350
Contingent considerations relate to future instalment payments for the acquisitions of Argent Insurance
Brokers, Informed Investor group and a client book purchased during the last financial year. Refer to
note 30 ‘Business combinations’.
note 20. issued Capital
Ordinary shares - fully paid
136,279,689
131,507,805
54,491,225
51,524,175
Consolidated
2022
shares
2021
shares
2022
$
2021
$
5 6
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 20. issued Capital (Continued)
Movements in ordinary share capital
details
date
shares
issue price
$
Balance
Issue of shares on exercise of performance rights
Issue of fully paid shares to executives as part of
remuneration
1 July 2020
9 July 2020
9 July 2020
121,216,770
48,497,215
97,500
$0.270
26,325
102,500
$0.270
27,675
Issue of shares on acquisition of Libertas Financial Planning 9 July 2020
3,810,000
$0.210
800,100
Issue of shares on acquisition of Total Cover Australia's
customer base
6 August 2020
1,500,001
$0.220
330,000
Issue of shares on acquisition of YieldReport's assets
6 October 2020
Issue of shares for dividend reinvestment plan FY20
13 October 2020
100,000
574,799
Issue of shares on acquisition of Panthercorp CST Pty Ltd
1 February 2021
2,000,000
$0.300
$0.331
$0.400
30,000
190,322
800,000
Issue of shares as consideration under purchase of assets
agreement with First Option Management Pty Ltd
1 February 2021
625,000
$0.480
300,000
Issue of shares for dividend reinvestment plan HY21
15 March 2021
Issue of shares on exercise of options
23 April 2021
261,235
1,000,000
$0.448
$0.300
116,960
300,000
Issue of shares as part consideration for purchase of
assets agreement with InterPrac Securities Pty Ltd and
SFG Financial Services Pty Ltd
Issue of shares on acquisition of FF Planning Solutions
customer base
21 May 2021
20,000
$0.500
10,000
9 June 2021
200,000
$0.500
100,000
Share issue transaction costs
Balance
Opening balance adjustment
30 June 2021
131,507,805
69
(4,422)
51,524,175
-
Issue of shares on exercise of performance rights
19 July 2021
97,500
$0.600
58,500
Issue of shares as part consideration for the acquisition of
a client book from Macro Investment Advisory Pty Ltd
3 August 2021
300,000
$0.500
150,000
Issue of shares on exercise of options
25 August 2021
Issue of shares for dividend reinvestment plan FY21
11 October 2021
Share buy-back
17 January 2022
75,000
244,146
(28,879)
$0.504
$0.638
$0.680
37,821
155,781
(19,638)
Issue of shares as part consideration for the acquisition of
a client book from Macro Investment Advisory Pty Ltd
27 January 2022
223,214
$0.672
150,000
Issue of shares for dividend reinvestment plan HY22
15 March 2022
197,066
$0.680
134,005
Issue of shares as part consideration for the acquisition of
the Informed Investor business group
6 April 2022
2,720,723
$0.700
1,904,507
Issue of shares on exercise of options
Issue of shares on exercise of options
Issue of shares on exercise of options
Share buy-back
Share buy-back
Share buy-back
Share buy-back
Share buy-back
4 May 2022
20 May 2022
23 May 2022
14 June 2022
15 June 2022
20 June 2022
21 June 2022
22 June 2022
100,000
250,000
750,000
(97,000)
$0.504
$0.466
$0.466
$0.610
50,428
116,494
349,483
(59,170)
(303,000)
$0.596
(180,550)
(1,412)
(55,542)
(1)
$0.560
$0.560
$0.560
(791)
(31,104)
(1)
5 7
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 20. issued Capital (Continued)
details
date
shares
issue price
$
Issue of shares on exercise of options
Issue of shares on exercise of options
29 June 2022
30 June 2022
250,000
50,000
$0.504
$0.504
126,071
25,214
Balance
30 June 2022
136,279,689
54,491,225
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the
Company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary
shares have no par value and the Company does not have a limited amount of authorised capital.
On a poll, whether in attendance or by proxy, each share shall have one vote.
Share buy-back
On 26 November 2021, the Company proposed to buy-back unmarketable parcels of shares (worth less
than $500) from eligible shareholders. On 17 January 2022, the share buy-back was completed with the
Company buying 28,879 shares at a cost of $19,638.
On 4 May 2022, the Company proposed an on-market buy-back of shares from eligible shareholders for
a period of one year commencing 25 May 2022. As at 30 June 2022, 456,955 shares had been bought-
back at a cost of $271,616.
Capital risk management
The Group’s objectives when managing capital is to safeguard its ability to continue as a going
concern, so that it can provide returns for shareholders and benefits for other stakeholders and to
maintain an optimum capital structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt.
Net debt is calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid
to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group would look to raise capital when an opportunity to invest in a business or company was
seen as value adding relative to the current Company’s share price at the time of the investment. The
Group is not actively pursuing additional capital raises as it continues to integrate and grow its existing
businesses in order to maximise synergies.
As per ASX listing rules, the Group also has the ability to raise capital flexibly, in line with the placement
capacity. This is broadly 15% of its fully paid ordinary issued capital, within a 12 month period.
The capital risk management policy remains unchanged from prior years.
Dividend Reinvestment Plan
On 4 May 2022, the Group announced the cancellation of the Dividend Reinvestment plan (‘DRP’) for
the remainder of the 2022 calendar year. Prior to cancellation, shares allocated to shareholders under
the DRP were allocated at an amount equal to 97.5% of the average of the daily weighted average
market price of ordinary shares of the Company traded on the ASX over the period of five trading days
prior to the closing date.
5 8
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 21. ReseRves
Financial assets at fair value through other comprehensive income reserve
Share-based payments reserve
Consolidated
2022
$
2021
$
548,229
169,245
488,396
276,828
717,474
765,224
Financial assets at fair value through other comprehensive income reserve
The reserve is used to recognise increments and decrements in the fair value of financial assets at fair
value through other comprehensive income.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as
part of their remuneration, and other parties as part of their compensation for services.
note 22. dividends
details of dividends (1)
2021 Final dividend (paid 11 October 2021) (2)
2022 Interim dividend (paid 15 March 2022) (3)
(1) All dividends are fully franked
Cents per share
$
0.60
0.50
791,882
662,121
(2) 2021 Final dividend comprised of a cash dividend paid of $636,101 and dividend reinvestment allotment of $155,781
(3) 2022 Interim dividend comprised of a cash dividend paid of $528,116 and dividend reinvestment allotment of $134,005
Franking credits
Consolidated
2022
$
2021
$
Franking credits available for subsequent financial years based on a tax rate of 30%
12,985,289
10,648,715
The above amounts represent the balance of the franking account as at the end of the financial year,
adjusted for:
• franking credits that will arise from the payment of the amount of the provision for income tax at the
reporting date
• franking debits that will arise from the payment of dividends recognised as a liability at the reporting
date
• franking credits that will arise from the receipt of dividends recognised as receivables at the reporting
date
5 9
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 23. finanCial instRuments
Financial risk management objectives
The Group’s financial instruments consist mainly of deposits with banks, accounts receivable and
payable, derivative assets and liabilities and loans payable.
This note provides details of the Group’s financial risk management objectives and policies and
describes the methods used by management to control risk. In addition, this note includes a
discussion of the extent to which financial instruments are used, the associated risks and the
business purpose served.
One of the Group’s main activities is to issue investments to its product holders which provide returns
based on the performance of an underlying reference asset, typically a single index or a single listed
equity. Different underlying reference assets, with varying features are issued in separate series. The
series are exposed to securities listed on global or local exchanges. The products issued to the product
holders have a maturity of between 18 months and 48 months from the date of issue. On maturity, if
the investment has performed sufficiently, the product holder has the option to contribute in cash the
notional value of the investment on issue date to receive a delivery asset (a liquid security on the ASX)
equal to the value of the underlying reference asset or the value in cash of the financial liability. The
Group enters into a financial instrument with an investment bank, which hedges each series that is
offered to its product holders. The Group ensures that the notional exposure across all its products are
covered via the arrangement, and as such mitigates its risk in this fashion.
The Group’s activities expose it to a variety of financial risks: market risk (including interest rate risk), credit
risk and liquidity risk.
The Board of Directors monitor and manage financial risk exposures of the Group. The Board of Directors
monitors the Group’s financial risk management policies and exposures and approves financial
transactions within the scope of its authority. It also reviews the effectiveness of internal controls relating
to financing risk and interest rate risk.
financial assets
Cash and cash equivalents
Trade and other receivables
Derivative assets
Other financial assets
Total financial assets
financial liabilities
Trade and other payables
Derivative liabilities
Lease liabilities
Contingent consideration
Other loans
Total financial liabilities
Consolidated
2022
$
2021
$
36,607,635
34,643,167
31,322,580
32,879,090
10,351,377
22,277,180
1,651,338
1,859,769
79,932,930
91,659,206
48,412,396
51,028,728
10,351,377
22,277,180
2,436,915
2,979,338
3,140,182
1,879,350
490,777
317,253
64,831,647
78,481,849
6 0
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 23. finanCial instRuments (Continued)
Market risk
Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates
will affect the Group’s income or value of its holdings of financial instruments. The objective of market
risk management is to manage and control market risk exposures within acceptable parameters, while
optimising the return on risk.
The Group issues a structured product to the product holder that is hedged with the financial instrument
that it purchases from an investment bank. The details of the financial instruments are such that the
future cash flows from the financial assets offset the cash flows needed to settle the financial liabilities.
The Group uses this arrangement to mitigate the market risks below, except for credit risk.
Price risk
Price risk arises from changes in underlying investments designated in the financial instruments held by
the Group for which values in the future are uncertain.
The Group mitigates the above price risk by ensuring that price risk in the financial instruments is offset
with one another. The difference in fair value between the financial asset and liability held through profit
or loss is as a result of the premium associated with the financial liability arising from being issued in the
retail market. The Group does not monitor the price risk associated with the premium, as price risk would
only result if the Group were to transfer the liability, and since the Group has no intention of transferring
the financial liability, no disclosures regarding the sensitivity to price risk have been made.
The Group is, therefore, not exposed to any significant price risk in relation to issued structured products.
The Group has an exposure to price risk on its listed and unlisted equity investments and, as at year end,
a 20% increase or decrease in price would affect the shareholding value by approximately $316,000.
Interest rate risk
Interest rate risk is the risk that the value of the Group’s financial instruments will fluctuate due to
changes in market interest rates.
The Group’s cash and cash equivalents are exposed to interest rate risk, however the Directors of the Group
manage financial instruments to ensure that interest rate risk remains hedged and is therefore offsetting.
The Group is not exposed to any significant interest rate risk.
Credit risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance
date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those
assets, as disclosed in the statement of financial position and notes to the financial statements.
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to
trade receivables through the use of a provisions matrix using fixed rates of credit loss provisioning.
These provisions are considered representative across all customers of the Group based on recent sales
experience, historical collection rates and forward-looking information that is available.
Credit risk is managed through the maintenance of procedures (such procedures include the utilisation
of systems for the approval, granting and renewal of credit limits, regular monitoring of exposures against
such limits and monitoring of the financial stability of significant customers and counterparties), ensuring
to the extent possible, that customers and counterparties to transactions are of sound credit worthiness.
6 1
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 23. finanCial instRuments (Continued)
Such monitoring is used in assessing receivables for impairment.
Generally, trade receivables are written off when there is no reasonable expectation of recovery.
Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement
activity and a failure to make contractual payments for a period greater than 1 year.
Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit
rating, or in entities that the Board of Directors has otherwise cleared as being financially sound. Where
the Group is unable to ascertain a satisfactory credit risk profile in relation to a customer or counterparty,
the risk may be further managed by obtaining security by way of personal or commercial guarantees
over assets of sufficient value which can be claimed against in the event of any default.
The financial products issued by Sequoia Specialist Investments Pty Ltd (‘Issuer’) are secured obligations
of the Issuer. Investors are granted a charge which is held on trust by the security trustee. If the Issuer fails
to (i) make a payment or delivery on its due date; or (ii) meet any other obligation and in the Security
Trustee’s opinion, the failure is materially adverse to the investors and cannot be remedied (or has not
been remedied within 5 business days of written notice), the Security Trustee may enforce the charge.
In this case the investors are unsecured creditors of the provider of the hedge assets. Investors’ rights
of recourse against the Issuer on a default are limited to the assets subject to the charge. This structure
has the effect of passing through the credit rating of the provider of the hedge asset and protecting
different financial product series from cross-liability issues (other than on an insolvency of either the Issuer
or the provider of the hedge asset). The Issuer will only deal with an investment-grade (or better) bank or
a subsidiary of an investment-grade (or better) bank.
Investments grades are a rating or indicator of particular debt obligations which have a low risk of
default. Various rating agencies rate an investment bank’s creditworthiness. Different rating firms
use different designations. Sequoia Specialist Investments Pty Ltd hedge providers are considered
“investment grade” and the credit worthiness of our investment bank hedge contracts providers are
between high credit quality (‘AAA’ and ‘AA’ ) and medium credit quality (‘A’ and ‘BBB’). Therefore, the
risk of default of the selected hedge providers are considered low. In addition, if the investment bank
were to unexpectedly default the resulting financial risk would be ultimately borne by the end investor,
due to the pass through of the credit risk of the hedge provider to the end investor.
The following tables detail the Group’s potential exposure, should the counterparties be unable to meet
their obligations:
Consolidated - 2022
Derivative assets
Consolidated - 2021
Derivative assets
Liquidity risk
fair value
$
notional value
$
10,351,377
242,695,393
fair value
$
notional value
$
22,277,180
325,617,928
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and
cash equivalents) and available borrowing facilities to be able to pay debts as and when they become
due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing
facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles
of financial assets and liabilities.
6 2
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 23. finanCial instRuments (Continued)
Remaining contractual maturities
The following tables detail the Group’s maturity for its financial instrument liabilities. The tables have been
drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on
which the financial liabilities are required to be paid.
Consolidated - 2022
non-derivatives
Non-interest bearing
Trade payables
Other payables
Client trading and security bond
Contingent consideration
Interest-bearing - variable
Other loans
Total non-derivatives
derivatives
Value hedges, net settled
Total derivatives
Consolidated - 2021
non-derivatives
Non-interest bearing
Trade payables
Other payables
Client trading and security bond
Contingent consideration
Interest-bearing - variable
Other loans
Total non-derivatives
derivatives
Value hedges, net settled
Total derivatives
1 year or less
$
between 1
and 5 years
$
Remaining
contractual
maturities
$
41,072,315
795,250
-
-
41,072,315
795,250
-
2,746,115
2,746,115
3,140,182
490,777
-
-
3,140,182
490,777
45,498,524
2,746,115
48,244,639
3,316,339
7,035,038
10,351,377
3,316,339
7,035,038
10,351,377
1 year or less
$
between 1
and 5 years
$
Remaining
contractual
maturities
$
44,962,720
1,066,791
-
-
44,962,720
1,066,791
-
944,108
944,108
1,400,000
479,350
1,879,350
317,253
-
317,253
47,746,764
1,423,458
49,170,222
9,202,491
13,074,689
22,277,180
9,202,491
13,074,689
22,277,180
The cash flows in the maturity analysis above are not expected to occur significantly earlier than
contractually disclosed above.
6 3
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 24. faiR value measuRement
Fair value hierarchy
The following tables detail the Group’s assets and liabilities, measured or disclosed at fair value, using
a three level hierarchy, based on the lowest level of input that is significant to the entire fair value
measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly
Level 3: unobservable inputs for the asset or liability
Consolidated - 2022
Assets
Listed ordinary shares
unlisted ordinary shares
Derivative financial instruments
Total assets
Liabilities
Derivative financial instruments
Contingent consideration
Total liabilities
Consolidated - 2021
Assets
Listed ordinary shares
unlisted ordinary shares
Derivative financial instruments
Total assets
Liabilities
Derivative financial instruments
Contingent consideration
Total liabilities
level 1
$
level 2
$
level 3
$
total
$
1,589,036
-
-
-
-
-
1,589,036
62,302
62,302
10,351,377
-
10,351,377
1,589,036
10,351,377
62,302
12,002,715
-
-
-
10,351,377
3,140,182
13,491,559
level 1
$
level 2
$
level 3
$
-
-
-
-
10,351,377
3,140,182
13,491,559
total
$
1,797,447
1,797,447
-
-
-
-
62,322
62,322
22,277,180
-
22,277,180
1,797,447
22,277,180
62,322
24,136,949
-
-
-
22,277,180
1,879,350
24,156,530
-
-
-
22,277,180
1,879,350
24,156,530
There were no transfers between levels during the financial year.
The carrying amounts of trade and other receivables, trade and other payables and other financial
liabilities approximate their fair values due to their short-term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at
the current market interest rate that is available for similar financial liabilities.
6 4
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 24. faiR value measuRement (Continued)
Valuation techniques for fair value measurements categorised within level 2 and level 3
Financial instruments that are not traded in an active market are determined using valuation
techniques. These valuation techniques maximise the use of observable market data where it is
available and relies as little as possible on entity specific estimates. If all significant inputs required to fair
value an instrument are observable, the instrument is included in level 2. If one or more of the significant
inputs is not based on observable market data, the instrument is included in level 3.
unquoted investments have been valued using prices evident in recent third party transactions.
The valuation process is managed by the Chief Operating Decision Makers (‘CODM’) of the Group
who perform and validate valuations of non-property assets required for financial reporting purposes
(including level 3 fair values). Discussion on valuation processes and outcomes are held between the
CODM, CFO and audit committee every six months.
Level 3 assets and liabilities
Movements in level 3 assets and liabilities during the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2020
Transfers out level 3
Additions
Balance at 30 June 2021
Disposals
Balance at 30 June 2022
unlisted
ordinary shares
$
110,546
(48,244)
20
62,322
(20)
62,302
note 25. key management peRsonnel disClosuRes
Compensation
The aggregate compensation made to directors and other members of key management personnel of
the Group is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Consolidated
2022
$
2021
$
932,779
56,269
149,712
955,192
51,038
179,191
1,138,760
1,185,421
Refer to the ‘Remuneration report (audited)’ section of the Directors’ report for a detailed breakdown.
6 5
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 26. RemuneRation of auditoRs
During the financial year the following fees were paid or payable for services provided by William Buck,
the auditor of the Company:
Audit services - William Buck Audit (Vic) Pty Limited
Audit or review of the financial statements
Other services - William Buck (Vic) Pty Limited
Tax services
Other services
Consolidated
2022
$
2021
$
163,561
158,500
18,253
24,212
42,465
18,515
19,153
37,668
206,026
196,168
note 27. Contingent liabilities
The Group has given bank guarantees as at 30 June 2022 of $723,469 (30 June 2021: $677,238) in relation
to rental bonds. These are held in term deposit accounts with Westpac Banking Corporation.
The Group’s legal counsel is currently acting on several matters referred to the Australian Financial
Complaints Authority (‘AFCA’) relating to the provision of financial services to its retail clients. The Group
has assessed any potential obligations relating to these complaints after pursuing a recourse from the
advisers in the following manner:
• Those complaints for which there is a probable likelihood of restitution being paid, have been accrued
in these financial statements, together with any associated legal costs and net of any available
insurance cover; and
• The Directors have assessed complaints for which there is less than a probable likelihood of restitution
(including the impact of legal costs and insurance), and have chosen not to disclose the likely amount
as they are still subject to proceedings with AFCA and potential recourse from the advisers, and the
disclosure of such amounts is likely to prejudice those proceedings.
6 6
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 28. Related paRty tRansaCtions
Parent entity
Sequoia Financial Group Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 31.
Key management personnel
Disclosures relating to key management personnel are set out in note 25 and the remuneration report
included in the directors’ report.
Transactions with related parties
During the financial year, $122,580 (30 June 2021: $71,726) was paid or payable for services provided by
Cooper Grace Ward, a related party entity of director, Charles Sweeney. This is not deemed personal
remuneration.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
note 29. paRent entity infoRmation
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
parent
2022
$
2021
$
(1,629,219)
(1,236,360)
(1,629,219)
(1,236,360)
6 7
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 29. paRent entity infoRmation (Continued)
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Financial assets at fair value through other comprehensive income reserve
Share-based payments reserve
Accumulated losses
Total equity
parent
2022
$
2021
$
138,094
715,334
84,613,580
75,740,720
4,034,094
2,991,480
54,934,380
44,662,579
90,424,345
87,457,293
46,070
169,245
46,070
276,828
(60,960,460)
(56,702,050)
29,679,200
31,078,141
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries.
Contingent liabilities
The parent entity has considerations payable relating to the acquisitions of Argent Insurance Brokers,
Informed Investor group and a client book purchased during the last financial year.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2022
and 30 June 2021.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note
2, except for the following:
• Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
• Dividends received from subsidiaries are recognised as other income by the parent entity and its
receipt may be an indicator of an impairment of the investment.
6 8
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 30. business Combinations
2022
Argent Insurance Brokers Pty Ltd (‘Argent’)
On 19 November 2021, the Group successfully completed the acquisition of 100% of shares in Argent
Insurance Brokers Pty Ltd (which holds a general insurance AFSL), the customer books of Tag Insurance
Brokers Pty Ltd and Windsor Funding Pty Ltd (which are related businesses to Argent Insurance Brokers)
and its associated business assets. Argent Insurance Brokers Pty Ltd has been renamed to Sequoia
Insurance Brokers Pty Ltd.
The acquisition consideration is estimated at $2.5 million and payable in cash over a 15 month period.
The last tranche payment is subject to revenue targets being achieved.
During the year ended 30 June 2022, Sequoia Insurance Brokers Pty Ltd contributed revenue of $965,002
and operating profit of $318,026. If the acquisition had happened at the beginning of the financial year,
the revenue and operating profit would have been the same, as this entity had not started operating
prior to acquisition.
Docscentre Legal Pty Ltd (‘Docscentre Legal’)
On 10 January 2022, Sequoia Financial Group successfully completed the acquisition of 100% of shares
in the legal practice previously known as Topdocs Legal Pty Ltd, renamed to Docscentre Legal Pty Ltd,
which is based in Melbourne. This acquisition will enhance the Group’s existing document businesses. The
total consideration of $330,000 was paid in cash.
Informed Investor group (‘Informed Investor’)
On 6 April 2022, the Group successfully completed the acquisition of 100% of shares in the Informed
Investor group of businesses, comprising of Informed Investor Pty Ltd, Corporate Connect Research Pty
Ltd and ShareCafe Pty Ltd. The Informed Investor group provides media, research, digital distribution
and technology services to advisers and investors.
On completion of the acquisition, as part payment of the consideration, the Company issued 2,720,723
fully paid ordinary shares at 70 cents per share to the sellers, representing a fair value of $1,904,506,
and paid cash of $1,132,885. A contingent consideration of shares is to be issued in February 2023. The
contingent consideration is tiered according to revenue targets being met, but has been capped at
3,128,831 fully paid ordinary shares at 70 cents per share, representing a fair value of $2,190,182.
During the year ended 30 June 2022, the Informed Investor group contributed revenue of $509,201 and
operating profit of $95,736. If the acquisition had happened at the beginning of the financial year, the
contribution would have been revenue of $1,555,815 and operating loss of $145,215.
6 9
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 30. business Combinations (Continued)
Details of the acquisitions are as follows:
Cash and cash equivalents
Trade and other receivables
Income tax refund due
Plant and equipment
Customer list
Other intangible assets
Trade and other payables
Deferred tax liability
Employee benefits
Convertible notes
Net assets/(liabilities) acquired
Goodwill**
docscentre
legal
informed
investor
provisional*
fair value
$
fair value
$
total
$
176,748
880
518
-
-
-
101,518
119,902
-
10,386
278,266
120,782
518
10,386
-
2,448,749
74,788
74,788
(174,576)
(734,625)
(14,831)
(26,821)
(147,755)
-
(14,831)
-
-
argent
fair value
$
-
-
-
-
2,448,749
-
-
(734,625)
-
-
-
(335,000)
(335,000)
1,714,124
785,876
136,494
193,506
(176,161)
5,403,734
1,674,457
6,383,116
Acquisition-date fair value of the total consideration
transferred
2,500,000
330,000
5,227,573
8,057,573
Representing:
Cash paid or payable to vendor
1,750,000
330,000
1,132,885
3,212,885
Sequoia Financial Group Limited shares issued
to vendor
Contingent consideration
-
750,000
-
-
1,904,506
1,904,506
2,190,182
2,940,182
2,500,000
330,000
5,227,573
8,057,573
Acquisition costs expensed to profit or loss
53,671
-
71,081
124,752
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration
transferred
2,500,000
330,000
5,227,573
8,057,573
Less: cash and cash equivalents
-
(176,748)
(101,518)
(278,266)
Less: contingent consideration
(750,000)
Less: shares issued by Company as part of
consideration
Add: payment of convertible notes
-
-
-
-
-
(2,190,182)
(2,940,182)
(1,904,506)
(1,904,506)
335,000
335,000
Net cash used
1,750,000
153,252
1,366,367
3,269,619
* Provisional values assigned to assets and liabilities may be altered until 5 April 2023.
** Goodwill is not expected to be deductible for tax purposes.
7 0
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 31. inteRests in subsidiaRies
The consolidated financial statements incorporate the assets, liabilities and results of the following
subsidiaries in accordance with the accounting policy described in note 2:
Wholly owned subsidiaries
name
Sequoia Financial Group Limited
Sequoia Financial Australia Ltd
The Cube Financial Group Pty Ltd
Trade Dealer Online Pty Ltd
MDSnews.com Pty Ltd
Sequoia Group Holdings Pty Ltd
My Own Super Fund Pty Ltd
Sequoia Wealth Group Pty Ltd
Docscentre Pty Ltd
Informed Investor Pty Ltd
Sequoia Insurance Brokers Pty Ltd
Sequoia Lending Pty Ltd
parent
principal place
of business /
Country of
incorporation
ownership
interest
2022
%
ownership
interest
2021
%
(a)
(a)
(a)
(a)
Australia
Australia
Australia
Australia
Australia
(a)(1)
Australia
(a)
(a)
(a)
(a)
(a)
(b)
Australia
Australia
Australia
Australia
Australia
Australia
Acacia Administrative Sevices Pty Ltd
(b)(2)
Australia
Sequoia Direct Pty Ltd
Morrison Securities Pty Ltd
Sequoia Specialist Investments Pty Ltd
Sequoia Asset Management Pty Ltd
Morsec Nominees Pty Ltd
Sequoia Nominees No.1 Pty Ltd
Sequoia Home Loans Pty Ltd
Sequoia Family Office Pty Ltd
Sequoia Wealth Management Pty Ltd
Sequoia Corporate Finance Pty Ltd
Libertas Financial Planning Pty Ltd
InterPrac Financial Planning Pty Ltd
Sage Capital Group Pty Ltd
Interprac Securities Pty Ltd
Australian Practical Superannuation Fund Pty Ltd
Interprac General Insurance Pty Ltd
Tax Engine Pty Ltd
PantherCorp CST Pty Ltd
Docscentre Legal Pty Ltd
(b)
(b)
(b)
(b)
(c)
(d)
(e)
(f)(4)
(f)
(f)
(f)(5)
(f)(6)
(f)(4)
(f)(4)
(g)
(g)
(g)
(g)
(g)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
7 1
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 31. inteRests in subsidiaRies (Continued)
name
Bourse Data Pty Ltd
Finance TV Pty Ltd
Corporate Connect Research Pty Ltd
ShareCafe Pty Ltd
Yieldreport Pty Ltd
Sequoia Superannuation Pty Ltd
SMSF Engine Pty Ltd
parent
principal place
of business /
Country of
incorporation
ownership
interest
2022
%
ownership
interest
2021
%
(h)(5)
(h)(3)
(h)
(h)
(i)(4)
(j)(3)
(j)(4)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
-
-
100%
100%
100%
100%
100%
Sequoia Premium Funding Pty Ltd (formerly Interprac Corporate
Insurance Pty Ltd)
(k)(9)
Australia
Centreboard Super Pty Ltd
(b)(g)(7)
Australia
Non-wholly owned subsidiaries
name
parent
non-controlling interest
principal place
of business /
Country of
incorporation
ownership
interest
2022
%
ownership
interest
2021
%
ownership
interest
2022
%
ownership
interest
2021
%
TakingControl Pty Ltd
(8)
Australia
50%
50%
50%
50%
(a) Subsidiary of Sequoia Financial Group Limited
(b) Subsidiary of Sequoia Group Holdings Pty Ltd
(c) Subsidiary of Morrison Securities Pty Ltd
(d) Subsidiary of Sequoia Specialist Investments Pty Ltd
(e) Subsidiary of Sequoia Asset Management Pty Ltd
(f) Subsidiary of Sequoia Wealth Group Pty Ltd
(g) Subsidiary of Docscentre Pty Ltd
(h) Subsidiary of Informed Investor Pty Ltd
(i) Subsidiary of Finance TV Pty Ltd
(j) Subsidiary of My Own Super Fund Pty Ltd
(k) Subsidiary of Sequoia Insurance Brokers Pty Ltd
(1) Formerly a subsidiary of Sequoia Financial Australia Pty Ltd
(2) Acacia Administrative Services Pty Ltd acts as a service entity for the Group with all employees engaged under this entity
(3) Formerly a subsidiary of Sequoia Group Holdings Pty Ltd
(4) Formerly a subsidiary of Docscentre Pty Ltd
(5) Formerly a subsidiary of Sequoia Financial Group Limited
(6) Formerly 50% owned by Docscentre Pty Ltd and 50% owned by Sage Capital Group Pty Ltd
(7) Deregistered in July 2021. Formerly 50% owned by Sequoia Group Holdings Pty Ltd and 50% owned by Docscentre Pty Ltd
(8) Docscentre Pty Ltd owns 50% of Taking Control Pty ltd
(9) Formerly a subsidiary of Interprac General Insurance Pty Ltd
7 2
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 32. Cash floW infoRmation
Reconciliation of profit after income tax to net cash from operating activities
Profit after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Net fair value loss/(gain) on investments
Share-based payments
Net loss on disposal of non-current assets
Interest for lease accounting
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease/(increase) in client related receivables
Decrease in contract assets and deferred costs
Decrease/(increase) in inventories
Decrease in deferred tax assets
Decrease/(increase) in prepayments
Decrease/(increase) in other operating assets
Increase in trade and other payables
Increase/(decrease) in client related payables
Decrease in contract liabilities and deferred revenue
Increase/(decrease) in provision for income tax
Increase/(decrease) in deferred tax liabilities
Increase in employee benefits
Increase in other operating liabilities
Net cash from operating activities
Consolidated
2022
$
2021
$
5,714,296
5,548,262
3,385,318
3,009,359
614,805
203,677
-
68,070
(846,985)
290,764
(23,626)
126,560
(553,187)
165,876
2,198,337
(20,372,197)
1,660,629
3,695,294
6,760
56,216
32,603
(37,678)
707,834
(30,384)
1,210,783
(76,831)
21,460
139,060
(3,513,646)
28,358,524
(2,358,471)
(5,802,747)
(683,765)
351,658
637,562
(1,071,110)
104,459
1,309,787
2,278,760
723,679
10,522,579
16,727,186
7 3
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 32. Cash floW infoRmation (Continued)
Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2020
Net cash used in financing activities
Changes through business combinations (note 30)
Interest on lease liability
Balance at 30 June 2021
Net cash used in financing activities
Additions
Interest on lease liability
Other changes
Balance at 30 June 2022
note 33. eaRnings peR shaRe
Capital
finance and
other
loans
$
lease
liability
$
total
$
462,414
3,632,287
4,094,701
(145,161)
(862,297)
(1,007,458)
-
-
84,328
84,328
125,020
125,020
317,253
2,979,338
3,296,591
(808,430)
(889,270)
(1,697,700)
982,054
314,072
1,296,126
-
101,699
101,699
(100)
(68,924)
(69,024)
490,777
2,436,915
2,927,692
Consolidated
2022
$
2021
$
Profit after income tax attributable to the owners of Sequoia Financial Group Limited
5,714,296
5,548,262
Weighted average number of ordinary shares used in calculating basic earnings
per share
Adjustments for calculation of diluted earnings per share:
number
number
133,001,089
128,315,340
Options over ordinary shares
2,000,000
4,150,000
Weighted average number of ordinary shares used in calculating diluted earnings
per share
135,001,089
132,465,340
Basic earnings per share
Diluted earnings per share
Cents
Cents
4.296
4.233
4.324
4.188
7 4
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 note 34. events afteR the RepoRting peRiod
On 18 August 2022, the Company declared a final dividend for the year ended 30 June 2022 of
0.90 cents per share, fully franked. The record date for determining entitlements to the dividend is
12 September 2022 and is to be paid on 10 October 2022. The financial effect of these dividends has
not been brought to account in the financial statements for the year ended 30 June 2022 and will
be recognised in subsequent financial periods. Estimated total dollar value based on number of shares
at 30 June 2022 is $1,226,517. No Dividend Reinvestment Plan is applicable (refer note 20).
No other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may
significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs
in future financial years.
7 5
Notes to the consolidated financial statementsSequoia Financial Group limited ANNuAl RepoRt — 30 JuNe 2022 Directors’ declaration
In the directors’ opinion:
• the attached financial statements and notes comply with the Corporations Act 2001, the Accounting
Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements;
• the attached financial statements and notes comply with International Financial Reporting Standards
as issued by the International Accounting Standards Board as described in note 2 to the financial
statements;
• the attached financial statements and notes give a true and fair view of the Group’s financial position
as at 30 June 2022 and of its performance for the financial year ended on that date; and
• there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the
Corporations Act 2001.
On behalf of the directors
___________________________
John Larsen
Chairman
18 August 2022
Sydney
7 6
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Independent auditor’s report to the members
of Sequoia Financial Group Limited
Sequoia Financial Group Limited
Independent auditor’s report to members
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Sequoia Financial Group Limited (the Company) and its controlled
entities (together, the Group), which comprises the consolidated statement of financial position as at 30
June 2022, the consolidated statement of profit or loss and other comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then ended, and
notes to the financial statements, including a summary of significant accounting policies and other
explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group, is in accordance with the Corporations Act
2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial
performance for the year ended on that date; and
(ii) 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.
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.
Level 20, 181 William Street, Melbourne VIC 3000
+61 3 9824 8555
vic.info@williambuck.com
williambuck.com.au
William Buck is an association of firms, each trading under the name of William Buck
across Australia and New Zealand with affiliated offices worldwide.
Liability limited by a scheme approved under Professional Standards Legislation.
Audit Report - Sequoia Financial Group Ltd
7 7
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022
Independent auditor’s report to the members
of Sequoia Financial Group Limited
BUSINESS COMBINATIONS
Area of focus
How our audit addressed it
The Group acquired the issued share capital of
Argent Insurance Brokers Pty Ltd, Docscentre
Legal Pty Ltd and Informed Investor Pty Ltd
during the year ended 30 June 2022. The
business combinations were considered
significant acquisitions for the group. Areas of
complexity for this transaction were around the
following:
— Determining the acquired entities met the
accounting definition of a business;
— Accounting and appropriately fair valuing
initial consideration paid and subsequent
deferred and contingent consideration paid
for the transaction, including amounts paid
through cash and scrip;
— Identifying, measuring and allocation of
provisional goodwill and intangible assets
acquired to the appropriate cash-generating
unit (CGU);
— Appropriately measuring and classifying in
the profit or loss transaction costs relating to
each acquisition;
— Recognition and measurement of deferred
tax asset or liability arising from the assets
and liabilities acquired; and
— Setting an appropriate accounting policy for
the amortisation of identifiable intangible
assets arising from the purchase.
Accounting for business combinations were
considered a key audit matter due to the
complexity of the arrangement and judgements
in measuring fair values.
The Group has disclosed in note 30 of the
financial statements details of the business
combinations including the fair values of net
assets acquired.
Our audit procedures included:
— Reviewing the acquisition agreements to
understand the key terms and conditions of
the acquisitions including consideration
arrangements;
— Reviewing the accounting treatment
adopted by the Group to assess if the
transaction met the requirements of AASB 3
Business Combinations;
— Comparing the completion accounting of net
assets acquired to independent purchase
price allocation reports;
— Obtaining and testing a sample of
transaction costs related to the acquisitions
to assess if appropriate treatment in being
expensed when incurred;
— Discussing with management their program
for finalising their analysis of fair values of
identified assets and liabilities acquired by
the anniversary of the acquisition date;
— Obtaining the goodwill and intangible asset
allocation journals processed and reviewed
for appropriateness of recognition and
valuation and assessed the qualification of
the independent valuation specialist;
— Verifying and reviewing deferred tax bases
to income tax calculations; and
— Assessing the appropriateness of the
allocation of intangible assets to their CGU,
as included in the Group’s impairment
calculations.
We also considered the adequacy of the
Group’s disclosures in relation to the business
combinations.
7 8
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022
Independent auditor’s report to the members
of Sequoia Financial Group Limited
REVENUE RECOGNITION FOR SEQUOIA SPECIALIST INVESTMENTS PRODUCTS
Area of focus
How our audit addressed it
Our audit procedures included:
— For a sample of structured products, we
agreed the terms and conditions, including
but not limited to, interest rates, notional
hedged units, product maturity, trade dates
and hedge premiums paid to supporting
documents, including Product Disclosure
Statements, Market-to-Market (MTM)
valuations, Market registry allotment reports
and bank statements.
— We confirmed the valuations of the
derivative financial instruments at year end
through to supporting valuations obtained
directly from relevant investment banks.
— Performed an assessment for the
appropriateness of management’s product
model to recognise deferral and recognition
of revenue and costs;
— An assessment of the credit worthiness of
the investment banks;
— We tested a sample of application fees and
coupon fees and vouched that they were
accrued to the appropriate accounting
period; and
— We tested the reasonableness of the current
and non-current classification of deferred
revenue and deferred costs to underlying
support.
We assessed the reasonableness of the
Group’s financial statement disclosures in
relation to revenue recognition and reported
segments in accordance with AASB 8 Operating
Segments.
The Sequoia Specialist Investments operating
segment (SSI) represents a significant portion of
the revenues and profitability of the Group. SSI
earns revenue by issuing structured financial
products principally being commodities, foreign
exchange and equities.
SSI effectively on-sells the financial exposure it
has with its clients to Tier 1 investment banks
with derivative contracts that completely match
that derivative exposure.
The revenue margin it earns from this
arrangement is priced separately and is
deferred (together with direct costs) on a
straight-line over the course of each contract on
a gross basis in the financial statements
(deferred costs and deferred revenue). The
derivative positions are held at fair value on the
statement of financial position.
The key risks for this arrangement include the
following matters:
- The risk that client-driven derivative
exposures are not matched 1-for-1 with
wholesale contracts;
- The risk of credit default by the investment
banks providing wholesale derivative hedge
positions; and
- The potential for revenue to be recognised
in-advance of the services provided to the
client, including other revenues related with
SSI including non-refundable application
fees, which are earned up-front and at-risk
coupon fees, which are earned at the close
of each contract.
This matter was considered a key audit matter
due to the significance of the balance and the
complexity of contractual arrangements. The
Group has disclosed in note 2, note 23 and note
24 respectively its revenue recognition
accounting policy, financial instrument risks and
fair value measurement.
7 9
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022
Independent auditor’s report to the members
of Sequoia Financial Group Limited
ASSESSMENT OF CARRYING VALUE OF GOODWILL AND INTANGIBLE ASSETS
Area of focus
How our audit addressed it
The Group’s non-current assets include a
significant carrying value attributed to goodwill
and intangible assets, the majority of which
have originated from acquisitions.
There is a risk that the entities in the Group may
not trade in line with financial forecasts,
resulting in the carrying amount of goodwill and
intangible assets exceeding the recoverable
amount and therefore requiring impairment.
The recoverable amounts of the four cash
generating units (CGUs) have been calculated
based upon on their value-in-use. These
recoverable amounts use discounted cash flow
forecasts in which the Directors make
judgements over certain key inputs, for example
but not limited to revenue growth, discount rates
applied, long term growth rates and inflation
rates.
Overall due to the high level of judgement
involved, and the significant carrying amounts
involved, we have determined that this is a key
judgemental area that our audit concentrated
on.
The Group has disclosed in note 14 the Group’s
impairment approach, including significant
underlying assumptions and the results of its
assessment.
Our audit procedures included:
— Assessment of the Group’s determination of
CGUs. This included reviewing internal
management reporting, comparison to our
knowledge and understanding of Group’s
operations and confirming CGUs are no
larger than operating segments;
— A detailed evaluation of the Group’s
budgeting procedures upon which the
forecasts are based and testing the
principles and reasonableness of the
discounted future cash flow models;
— Testing the mathematical accuracy of the
calculation derived from each cash flow
forecast model and we assessed key inputs
in the calculations such as revenue growth,
discount rates and working capital
assumptions, by reference to the Board
approved forecasts, data external to the
Group and our own views; and
— Performing sensitivity analysis in respect of
assumptions noted above to ascertain the
extent of changes in those assumptions
which would materially impact the
recoverable amount of the CGUs.
We assessed the appropriateness of the
Group’s financial reporting disclosures in
relation to the impairment testing approach and
input assumptions.
Other Information
The directors are responsible for the other information. The other information comprises the information in
the Group’s annual report for the year ended 30 June 2022 but does not include the financial report and the
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.
8 0
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022
Independent auditor’s report to the members
of Sequoia Financial Group Limited
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has 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 these financial statements is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our independent auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2022.
In our opinion, the Remuneration Report of Sequoia Financial Group Limited, for the year ended 30 June
2022, complies with section 300A of the Corporations Act 2001.
8 1
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022
Independent auditor’s report to the members
of Sequoia Financial Group Limited
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.
Yours Faithfully
William Buck Audit (Vic) Pty Ltd
ABN 59 116 151 136
N. S. Benbow
Director
Melbourne, 18 August 2022
8 2
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022
Shareholder information
In accordance with the ASX listing rule 4.10, the Company provides the following information to
shareholders not disclosed elsewhere in this Annual Report. The information is current as at 1 August 2022
(‘reporting date’).
distRibution of equitable seCuRities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
The number of holders of less than a marketable parcel of ordinary shares as at the
reporting date (less than $500, based on the share price of $0.557) is:
voting rights
ordinary shares
number
of holders
% of total
shares issued
81
148
78
220
128
655
59
0.03
0.31
0.43
6.24
92.99
100.00
0.02
The only class of equity securities on issue in the Company that carries voting rights is ordinary shares.
8 3
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Shareholder information
equity seCuRity holdeRs
Twenty largest quoted equity security holders
The Company has only one class of quoted securities, being ordinary shares. The names of the twenty
largest security holders of quoted equity securities are listed below:
ordinary shares
number held
% of total
shares issued
MR GARRY CROLE
uNRANDOM PTY LTD
J P MORGAN NOMINEES AuSTRALIA PTY LIMITED
COJONES PTY LTD
BNP PARIBAS NOMS PTY LTD
HuNTLEY GROuP INVESTMENTS PTY LTD
EXLDATA PTY LTD
TOCLO INVESTMENTS PTY LTD
STRATEGIC VALuE PTY LTD
MR NEIL CLIFFORD DuNCAN
LIBERTAS SOLuTIONS PTY LTD
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
Mr PETER STIRLING + Mrs ROS STIRLING
HSBC CuSTODY NOMINEES (AuSTRALIA) LIMITED
TRIFERN PTY LTD
TIBARRuM PTY LTD
Mr TIM PADRAIC MCGOWEN
DMX CAPITAL PARTNERS LIMITED
HSBC CuSTODY NOMINEES (AuSTRALIA) LIMITED - A/C 2
Mr ANTHONY CHRISTOPHER JONES
Unquoted equity securities
Distribution of options over ordinary shares is as follows:
distribution
Options over ordinary shares issued
1 to 100,000
100,001 and over
11,036,137
10,724,746
9,233,931
7,742,988
4,818,111
4,439,973
3,717,533
3,564,894
3,229,384
3,031,000
2,710,000
2,300,000
2,237,500
2,146,508
2,105,541
1,885,000
1,807,116
1,783,289
1,715,102
1,549,952
8.10
7.87
6.78
5.68
3.54
3.26
2.73
2.62
2.37
2.22
1.99
1.69
1.64
1.58
1.55
1.38
1.33
1.31
1.26
1.14
81,778,705
60.04
number on issue
number of holders
100,000
1,900,000
2,000,000
1
6
7
8 4
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Shareholder information
substantial holdeRs
As at the reporting date, the names of the substantial holders in the Company as disclosed in the
substantial holding notices given to the Company are as follows:
Cojones Pty Ltd
unrandom Pty Ltd
Mr Garry Crole
Acorn Capital Ltd
Anthony & Ryan Young
number of ordinary
shares disclosed
13,817,804
11,974,738
11,401,500
8,342,474
7,096,147
seCuRities subjeCt to voluntaRy esCRoW
Distribution of ordinary shares subject to escrow is as follows:
distribution
Ordinary shares
100,001 and over
otheR infoRmation
expiry date
number of shares
number of holders
5 April 2023
2,409,442
3
The Company commenced an on-market share buy-back starting from 25 May 2022 and ending
24 May 2023.
There are no issues of securities approved for the purpose of item 7 of section 611 of the Corporations
Act, which have not yet been completed.
No securities were purchased on-market during the reporting period under or for the purposes of an
employee incentive scheme or to satisfy the entitlements of the holders of options or other rights to
acquire securities granted under an employee incentive scheme.
8 5
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Directors
Corporate directory
Garry Crole
John Larsen
Kevin Pattison
Charles Sweeney
Company Secretaries
Rebecca Weir
Lizzie Tan
Notice of annual
general meeting
The Company advises that its Annual General Meeting will be held
on or around 23 November 2022. The time and other details relating
to the meeting will be advised in the Notice of Meeting to be sent to
all shareholders and released to the ASX immediately after dispatch.
In accordance with the ASX Listing Rules, valid nominations for the
position of Director are required to be lodged at the registered office
of the Company by 5:00pm (AEST) on 5 October 2022.
Registered office
Level 7
7 Macquarie Place
Sydney NSW 2000
Telephone: + 61 2 8114 2222
Facsimile: + 61 2 8114 2200
Principal place of business
Level 8
525 Flinders Street
Melbourne VIC 3000
Share registry
Registry Direct
Level 6
2 Russell Street
Melbourne VIC 3000
Telephone: 1300 556 635
Facsimile: + 61 3 9111 5652
William Buck
Level 20
181 William Street
Melbourne VIC 3000
Auditor
8 6
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022 Corporate directory
Bankers
National Australia Bank
330 Collins Street
Melbourne VIC 3000
Westpac Australia Bank
Royal Exchange, Cnr Pitt & Bridge Streets
Sydney NSW 2000
Maldon & District Community Bank® Branch of Bendigo Bank
81 High Street
Maldon VIC 3463
Macquarie Bank Limited
Level 32, South Tower
80 Collins Street
Melbourne VIC 3000
Australia and New Zealand Banking Group Limited
388 Collins Street
Melbourne VIC 3000
Stock exchange listing
Sequoia Financial Group Limited shares are listed on
the Australian Securities Exchange (ASX code: SEQ)
Website
www.sequoia.com.au
Corporate Governance
Statement
The Board of Directors of Sequoia Financial Group Limited
is committed to maintaining high standards of Corporate
Governance. This Corporate Governance Statement discloses the
extent to which the Company has followed the 4th Edition of the ASX
Corporate Governance Council’s Corporate Governance Principles
and Recommendations (‘ASX Principles and Recommendations’).
The Corporate Governance Statement has been adopted by the
Board and is current as at 18 August 2022. In accordance with ASX
Listing riles 4.10.3 and 4.7.4, the corporate governance statement will
be available for review on the Company’s website, www.sequoia.
com.au/about-sequoia/corporate-governance/, and will be lodged
together with an Appendix 4G with the ASX at the same time that
this Annual Report is lodged with the ASX.
8 7
Sequoia Financial Group limited AnnuAl RepoRt — 30 June 2022